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HomeMy WebLinkAbout08-434NOVEMBER 25, 2008 08-434 RESOLUTION (CARRIED 7-0 LOST LAID OVER WITHDRAWN ) A Resolution Authorizing the Issuance and Sale of up to $7,287,777 Water System Revenue Bonds, Series 2008 and Providing For Other Details and Covenants With Respect Thereto WHEREAS, the City of Oshkosh, Winnebago County, Wisconsin (the "Municipality's owns and operates a water system (the "System's which is operated for a public purpose as a public utility by the Municipality; and WHEREAS, certain improvements to the System are necessary to meet the needs of the Municipality and the residents thereof, consisting of the construction of a project (the "Project's assigned Safe Drinking Water Loan Program No. 4874-02 by the State of Wisconsin Department of Natural Resources (the "Department of Natural Resources', and as defined in Department of Natural Resources approval letter for the plans and specifications, or portions thereof, issued under Section 281.41 of the Wisconsin Statutes, dated May 14, 2008, and assigned number W-2008-0082; and WHEREAS, under the provisions of Chapter 66 of the Wisconsin Statutes any municipality may, by action of its governing body, provide for purchasing, acquiring, constructing, extending, adding to, improving, operating and managing a public utility from the proceeds of bonds, which bonds are to be payable only from the revenues received from any source by such utility, including all rentals and fees; and WHEREAS, the Municipality has heretofore issued $4,410,000 aggregate principal amount of Water Revenue Bond Anticipation Notes, Series 2008-C, dated June 25, 2008, and issued by the Municipality for the purpose of paying a portion of the costs of the Project (the "Prior Bonds'; and WHEREAS, pursuant to Section 66.0621(4)(b) of the Wisconsin Statutes, as supplemented and amended, any municipality may issue new bonds to provide funds for the payment of any outstanding bonds or notes issued under Section 66.0621 or Chapter 67 of the Wisconsin Statutes, as supplemented and amended, for purchasing, acquiring, constructing, extending, adding to, improving, conducting, controlling, operating and managing a public utility; and WHEREAS, the Municipality deems it to be necessary, desirable and in its best interest to authorize and sell water system revenue bonds of the Municipality, payable solely from the revenues of the System, pursuant to the provisions of Section 66.0621 of the Wisconsin Statutes, to finance a portion of the Project and to refund the Prior Bonds (or a portion thereof), the proceeds of which have been expended; and 08-434 0000400 • CLJ • 11/28/08 WHEREAS, other than "preliminary expenditures" as defined in the Treasury Regulation 26 CFR 1.150-2 in an amount not exceeding 20% of the principal amount of the bonds authorized to be issued by this resolution, or other than a "de minimis" amount as defined in Treasury Regulation 26 CFR 1.150-2 in an amount not exceeding the lesser of $100,000 or 5% of the principal amount of the bonds authorized to be issued by this resolution, all of the proceeds loaned to the Municipality will be used for Project costs paid by the Municipality subsequent to (i) the date which is 60 days prior to the date on which the Municipality adopted a "declaration of intent" pursuant to Treasury Regulation 26 CFR 1.150-2 stating its intent to reimburse other funds of the Municipality previously used to finance the Project, or (ii) the date on which the bonds authorized herein are issued; and WHEREAS, the Municipality has previously issued $2,065,000 aggregate principal amount of its Water Refunding Revenue Bonds, Series 2003-G, dated December 15, 2003, and $12,075,000 aggregate principal amount of its Water Refunding Revenue Bonds, Series 2006-E, dated December 15, 2006 (the "Senior Bonds'; and WHEREAS, the Municipality has previously issued its Water System Revenue Bonds, Series 1998 in the aggregate principal amount of $6,463,697, dated December 16, 1998 (the "Series 1998 Bonds', which were authorized by a resolution adopted by the City Council of the Municipality on December 8, 1998 (the "Series 1998 Resolution', its Water System Revenue Bonds, Series 1999 in the aggregate principal amount of $5,449,975, dated July 14, 1999 (the "Series 1999 Bonds', which were authorized by a resolution adopted by the City Council of the Municipality on June 22, 1999 (the "Series 1999 Resolution', its Water System Revenue Bonds, Series 2000 in the aggregate principal amount of $9,068,816, dated April 26, 2000 (the "Series 2000 Bonds', which were authorized by a resolution adopted by the City Council of the Municipality on April 11, 2000 (the "Series 2000 Resolution', and its Water System Revenue Bonds, Series 2000-B in the aggregate principal amount of $4,567,548, dated December 27, 2000 (the "Series 2000-8 Bonds', which were authorized by a resolution adopted by the City Council of the Municipality on November 28, 2000 (the "Series 2000-8 Resolution', its Water System Revenue Bonds, Series 2001 in the aggregate principal amount of $3,483,912.95, dated December 26, 2001 (the "Series 2001 Bonds', which were authorized by a resolution adopted by the City Council of the Municipality on November 27, 2001 (the "Series 2001 Resolution', and which Series 1998 Bonds, Series 1999 Bonds, Series 2000 Bonds, Series 2000-B Bonds and Series 2001 Bonds are subordinate to the Senior Bonds, any Additional Senior Bonds and the Prior Bonds; and WHEREAS, the Series 1998 Resolution, the Series 1999 Resolution, the Series 2000 Resolution, the Series 2000-B Resolution and the Series 2001 Resolution permit the issuance of additional bonds on a parity with the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds and the Series 2001 Bonds upon certain conditions, and those conditions have been met with respect to the issuance of bonds pursuant to this resolution; and -2- WHEREAS, other than the Prior Bonds and other than the Senior Bonds, the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds and the Series 2001 Bonds, no bonds or obligations payable from the revenues of the System are now outstanding. Now, THEREFORE, be it resolved by the City Council of the City of Oshkosh, Winnebago County, Wisconsin, that: Section 1. Definitions. The following terms shall have the following meanings in this Resolution unless the text expressly or by implication requires otherwise: (a) "Act" means Section 66.0621 of the Wisconsin Statutes, as supplemented and amended; (b) "Additional Senior Bonds" means bonds payable from the revenues of the System and issued on a parity and equality with the Senior Bonds pursuant to the restrictive provisions of Section 11(b) of this Resolution; (c) "Bond Registrar" means the Municipal Treasurer, who shall act as Paying Agent for the Bonds; (d) "Bonds" mean the $7,287,777 aggregate principal amount of Water System Revenue Bonds, Series 2008 of the Municipality, dated their date of issuance, authorized to be issued by this Resolution; (e) "Bond Year" means the twelve-month period ending on each May 1; (f) "Current Expenses" means the reasonable and necessary costs of operating, maintaining, administering and repairing the System, including salaries, wages, costs of materials and supplies, insurance, and audits, but shall exclude depreciation, debt service, tax equivalents and capital expenditures; (g) "Debt Service Fund" means the Debt Service Fund of the Municipality, which shall be the "special redemption fund" as such term is defined in the Act, and which shall be an account in the Surplus Fund; (h) "Financial Assistance Agreement" means the Financial Assistance Agreement by and between the State of Wisconsin by the Department of Natural Resources and the Department of Administration and the Municipality, as supplemented and amended, pursuant to which the Bonds are to be issued and sold to the State, substantially in the form attached hereto and incorporated herein by reference; (i) "Fiscal Year" means the twelve-month period ending on each December 31; (j) "Governing Body" means the City Council of the Municipality, or such other body as may hereafter be the chief legislative body of the Municipality; -3- (k) "Municipal Treasurer" means the Treasurer of the Municipality, who shall act as Bond Registrar and Paying Agent; (I) "Municipality" means the City of Oshkosh, Winnebago County, Wisconsin; (m) "Net Revenues" means the gross earnings of the System after deduction of Current Expenses; gross earnings shall include earnings of the System derived from water charges imposed by the Municipality, all payments to the Municipality under any water service agreements between the Municipality and any contract users of the System, and any other monies received from any source including all rentals and fees and any special assessments levied and collected in connection with the Project; (n) "Parity Bonds" means bonds payable from the revenues of the System, other than the Bonds, but issued on a parity and equality with the Bonds pursuant to the restrictive provisions of Section 11(c) of this Resolution; (o) "Prior Bonds" means the $4,410,000 aggregate principal amount of Water Revenue Refunding Bond Anticipation Notes, Series 2008-C of the Municipality, dated June 25, 2008; (p) "Prior Bond Resolution" means the resolution adopted by the Governing Body on May 27, 2008, authorizing the issuance of the Prior Bonds; (q) "Project" means the Project described in the preamble to this Resolution; all elements of the Project are to be owned and operated by the Municipality as part of the System as described in the preamble hereto; (r) "Record Date" means the close of business on the fifteenth day of the calendar month next preceding any principal or interest payment date; and (s) "Senior Bonds" means (i) the $2,065,000 aggregate principal amount of Water Refunding Revenue Bonds, Series 2003-G of the Municipality, dated December 15, 2003, and (ii) the $12,075,000 aggregate principal amount of Water Refunding Revenue Bonds, Series 2006-E of the Municipality, dated December 15, 2006; (t) "Senior Resolution" means the resolution adopted by the Governing Body on April 16, 1992, as supplemented and amended by the resolutions adopted by the Governing Body on December 19, 1995, February 13, 2001, November 27, 2001, October 14, 2003, and December 12, 2006, authorizing the issuance of the Senior Bonds; (u) "Series 1998 Bonds" means the Water System Revenue Bonds, Series 1998 of the Municipality in the aggregate principal amount of $6,463,697, dated December 16, 1998, which were authorized by the Series 1998 Resolution; -4- (v) "Series 1998 Resolution" means the resolution adopted by the Governing Body of the Municipality on December 8, 1998, authorizing the issuance and sale of the Series 1998 Bonds; (w) "Series 1999 Bonds" means the Water System Revenue Bonds, Series 1999 of the Municipality in the aggregate principal amount of $5,449,975, dated July 14, 1999, which were authorized by the Series 1999 Resolution; (x) "Series 1999 Resolution" means the resolution adopted by the Governing Body of the Municipality on June 22, 1999, authorizing the issuance and sale of the Series 1999 Bonds; (y) "Series 2000 Bonds" means the Water System Revenue Bonds, Series 2000 of the Municipality in the aggregate principal amount of $9,068,816, dated April 26, 2000, which were authorized by the Series 2000 Resolution; (z) "Series 2000 Resolution" means the resolution adopted by the Governing Body of the Municipality on April 11, 2000, authorizing the issuance and sale of the Series 2000 Bonds; (aa) "Series 2000-8 Bonds" means the Water System Revenue Bonds, Series 2000-B of the Municipality in the aggregate principal amount of $4,567,548, dated December 27, 2000, which were authorized by the Series 2000-B Resolution; (bb) "Series 2000-8 Resolution" means the resolution adopted by the Governing Body of the Municipality on November 28, 2000, authorizing the issuance and sale of the Series 2000-B Bonds; and (cc) "Series 2001 Resolution" means the resolution adopted by the Governing Body of the Municipality on November 27, 2001, authorizing the issuance and sale of the Series 2001 Bonds; (dd) "System" means the entire water system of the Municipality, specifically including that portion of the Project owned by the Municipality and including all property of every nature now or hereafter owned by the Municipality for the collection, treatment, storage and distribution of water, including all improvements and extensions thereto made by the Municipality while any of Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and Parity Bonds remain outstanding, including all real and personal property of every nature constituting part of or used or useful in connection with such water system and including all appurtenances, contracts, leases, franchises, and other intangibles. Section 2. Authorization of the Bonds and the Financial Assistance Agreement. For the purpose of financing a portion of the Project and refunding the Prior Bonds (or a portion thereof), the proceeds of which have been spent to finance the Project, there shall be borrowed on the credit of the income and revenue of the System up to the sum -5- of $7,287,777; and fully registered revenue bonds of the Municipality are authorized to be issued in evidence thereof and sold to the State of Wisconsin Safe Drinking Water Loan Program in accordance with the terms and conditions of the Financial Assistance Agreement, which is incorporated herein by this reference, and the City Manager and the Clerk of the Municipality are hereby authorized, by and on behalf of the Municipality, to execute the Financial Assistance Agreement and any amendments to the Financial Assistance Agreement. Section 3. Terms of the Bonds. The Bonds shall be designated "Water System Revenue Bonds, Series 2008" (the "Bonds'; shall be dated December 10, 2008; shall be numbered one and upward; shall bear interest at the rate of 2.365% per annum, calculated on the basis of a 360-day year made up of twelve 30-day months; shall be issued in denominations of $0.01 or any integral multiple thereof; and shall mature on the dates and in the amounts as set forth in Exhibit B of the Financial Assistance Agreement and in Exhibit A to the Bond Form attached to and made a part of this Resolution. Interest on the Bonds shall be payable commencing on May 1, 2009, and semiannually thereafter on May 1 and November 1 of each year. The Bonds shall not be subject to redemption prior to maturity except as provided in the Financial Assistance Agreement. The schedule of maturities of the Bonds is found to be such that the amount of annual debt service payments is reasonable in accordance with prudent municipal utility practices. Section 4. Form, Execution, Registration and Payment of the Bonds. The Bonds shall be issued as registered obligations in substantially the form attached hereto as Exhibit A and incorporated herein by this reference. The Bonds shall be executed in the name of the Municipality by the manual signatures of the City Manager and the Clerk of the Municipality, and shall be sealed with its official or corporate seal, if any. The principal of, premium, if any, and interest on the Bonds shall be paid by the Municipal Treasurer, who is hereby appointed as the Municipality's registrar (the "Bond Registrar'. Both the principal of and interest on the Bonds shall be payable in lawful money of the United States of America by the Bond Registrar. Payment of principal of the final maturity of the Bonds will be payable upon presentation and surrender of the Bonds to the Bond Registrar. Payment of principal of the Bonds (except the final maturity) and each installment of interest shall be made to the registered owner of each Bond who shall appear on the registration books of the Municipality, maintained by the Bond Registrar, on the Record Date and shall be paid by electronic transfer or by check or draft of the Municipality and mailed to such registered owner at his or its address as appears on such registration books or at such other address may be furnished in writing to such registered owner to the Bond Registrar. -6- Section 5. Security for the Bonds. The Bonds, together with interest thereon, shall not constitute an indebtedness of the Municipality nor a charge against its general credit or taxing power within the meaning of any constitutional or statutory debt limitation or provision. The Bonds, together with interest thereon, shall be payable only out of the Debt Service Fund hereinafter established and continued, and shall be a valid claim of any owner thereof only against such Debt Service Fund and the revenues of the System pledged to such fund on a parity with the pledge granted to the owners of the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds and the Series 2001 Bonds, junior and subordinate to the pledge of the revenues of the System granted to the owners of the Senior Bonds, any Additional Senior Bonds and the Prior Bonds. Sufficient revenues are hereby pledged to said Debt Service Fund, and shall be used for no other purpose than to pay the principal of, premium, if any, and interest on the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds as the same become due. Section 6. Funds and Accounts. In accordance with the Act, for the purpose of the application and proper allocation of the revenues of the System, and to secure the payment of the principal of and interest on the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and Parity Bonds, the following funds of the System which were created and established by the Senior Resolution, the Series 1998 Resolution, the Series 1999 Resolution, the Series 2000 Resolution, the Series 2000-B Resolution and the Series 2001 Resolution and are hereby continued, and shall be used solely, subject to the Senior Resolution, the Prior Bond Resolution, the Series 1998 Resolution, the Series 1999 Resolution, the Series 2000 Resolution, the Series 2000-B Resolution and the Series 2001 Resolution, for the following respective purposes: (a) Waterworks Utility Revenue Fund (the "Revenue Fund', into which shall be deposited as received the entire gross earnings of the System, which money shall then be divided among the Operation and Maintenance Fund, the Special Redemption Fund, the Reserve Account, the Prior Bond Fund, the Debt Service Fund, the Depreciation Fund and the Surplus Fund in the amounts and in the manner set forth in Section 7 hereof and used for the purposes described below. (b) Waterworks Utility Operation and Maintenance Account (the "Operation and Maintenance Fund', which shall be used for the payment of Current Expenses. (c) Water Utility Special Redemption Fund (the "Special Redemption Fund', which shall be used for the payment of the principal of, premium, if any, and interest on the Senior Bonds and any Additional Senior Bonds as the same becomes due. -7- (d) The Reserve Account (the "Reserve Fund', into which revenues shall be deposited to provide a reserve for the Senior Bonds and any Additional Senior Bonds, and which Reserve Fund does not secure the payment of the principal of or interest on the Bonds or any Parity Bonds; (e) Water Utility Renewal and Replacement Account (the "Depreciation Fund', which may be expended for repairs, replacements, new construction, extensions or additions to the System. Any money on deposit in the Depreciation Fund not required during the current Fiscal Year for purposes of the Depreciation Fund, may be transferred to the Surplus Fund. (f) Water Utility Surplus Account (the "Surplus Fund', which shall first be used to make required deposits to the "Special Waterworks System Bond Anticipation Note Special Redemption Fund" (the "Prior Bond Fund'; second, to make deposits to the Debt Service Fund to pay the principal of and interest on the Bonds, the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds and any Parity Bonds; third, whenever necessary, to pay the principal of, premium, if any, or interest on the Senior Bonds, any Additional Senior Bonds, the Prior Bonds, the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds (in that order) when the Special Redemption Fund, the Prior Bond Fund or the Debt Service Fund shall be insufficient for such purpose; and thereafter shall be disbursed as follows: (i) at any time, to remedy any deficiency in any of the Funds and Accounts provided in this Section 6; and (ii) money thereafter remaining in the Surplus Fund at the end of any Fiscal Year may be transferred to any of the Funds or Accounts continued herein or to reimburse the general fund of the Municipality for advances made by the Municipality to the System or for any other lawful purpose. Section 7. Application of Revenues. After the delivery of the Bonds, the entire gross earnings of the System shall be deposited as collected in the Revenue Fund, and shall be transferred, subject to the Senior Resolution, the Prior Bond Resolution, the Series 1998 Resolution, the Series 1999 Resolution, the Series 2000 Resolution, the Series 2000-B Resolution and the Series 2001 Resolution, monthly to the funds listed below in the following order of priority and in the manner set forth below: (a) to the Operation and Maintenance Fund, an amount equal to the estimated Current Expenses for such month and for the following month (after giving effect to available amounts in said Fund from prior deposits); (b) to the Special Redemption Fund, an amount equal to one-sixth (1/6) of the next installment of interest coming due on the Senior Bonds and any Additional Senior Bonds then outstanding and an amount equal to one-twelfth (1/12) of the installment of principal of the Senior Bonds and any Additional Senior Bonds coming due during such Bond Year (after giving effect to available -8- amounts in said account from accrued interest, any premium or any other source); (c) to the Reserve Account, an amount required to maintain the required deposit in the Reserve Account; (d) to the Depreciation Fund, an amount determined by the Governing Body to be sufficient to provide a proper and adequate depreciation account for the System; (e) to the Surplus Fund, any amount remaining in the Revenue Fund after the monthly transfers required above have been completed to be applied to make required monthly deposits to the Prior Bond Fund; to make deposits to the Debt Service Fund in an amount equal to one-sixth (1/6) of the next installment of interest coming due on the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds then outstanding and an amount equal to one-twelfth (1/12) of the installment of principal of the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds coming due during such Bond Year (after giving affect to available amounts in the Debt Service Fund from accrued interest, any premium or any other source) and then as provided in Section 6 of this Resolution. Subject to the Senior Resolution and the Prior Bond Resolution, transfers from the Revenue Fund to the Operation and Maintenance Fund, the Special Redemption Fund, the Reserve Fund, the Depreciation Fund and the Surplus Fund shall be made monthly not later than the last day of each month, and such transfer shall be applicable to monies on deposit in the Revenue Fund as of the last day of the month preceding. Subject to the Senior Resolution and the Prior Bond Resolution, any other transfers and deposits to any Fund or Account required or permitted by subsection (a) through (e) of this Section, except transfers or deposits which are required to be made immediately or annually, shall be made on or before the last day of the month. If the last day of any month shall fall on a day other than a business day, such transfer or deposit shall be made on the next succeeding business day. It is the express intent and determination of the Governing Body that the amounts transferred from the Revenue Fund and deposited in the Debt Service Fund shall be sufficient in any event to pay the interest on the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds as the same accrues and the principal thereof as the same matures. Section 8. Deposits and Investments. The Debt Service Fund shall be kept apart from monies in the other Funds and Accounts and the same shall be used for no purpose other than the prompt payment of principal of and interest on the Series 1998 -9- Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds as the same becomes due and payable. All monies therein shall be deposited in special and segregated accounts in a public depository selected under Chapter 34 of the Wisconsin Statutes, as supplemented and amended, and may be temporarily invested until needed in legal investments subject to the provisions of Section 66.0603 of the Wisconsin Statutes. The other funds herein created (except the Water System SDWLP Project Fund) may be combined in a single account in a public depository selected in the manner set forth above and may be temporarily invested until needed in legal investments subject to the provisions of Section 66.0603 of the Wisconsin Statutes, as supplemented and amended. Section 9. Service to the Municipality. The reasonable cost and value of services rendered to the Municipality by the System by furnishing water services for public purposes shall be charged against the Municipality, and shall, to the extent permitted by law, be paid in monthly installments as the service accrues, out of the current revenues of the Municipality collected or in the process of collection, exclusive of the revenues derived from the System; that is to say, out of the tax levy of the Municipality made by it to raise money to meet its necessary current expenses. The reasonable cost and value of such service to the Municipality in each year shall be equal to an amount which, together with other revenues of the System, will produce in each Bond Year Net Revenues equivalent to not less than the annual principal and interest requirements on the Senior Bonds, any Additional Senior Bonds, the Prior Bonds, the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds, any Parity Bonds, and any other debt obligations payable from the revenues of the System then outstanding, times the greater of (i) 120%, as long as the Senior Bonds or any Additional Senior Bonds are outstanding; 110% after the Senior Bonds and any Additional Senior Bonds have been discharged, or (ii) the highest debt service coverage ratio required with respect to any debt obligations payable from the revenues of the System then outstanding. However, such payment out of the tax levy shall be subject to (a) approval of the Public Service Commission, or successors to its function, if applicable, (b) yearly appropriations therefor, and (c) applicable levy limitations, if any; but neither this Resolution nor such payment shall be construed as constituting an obligation of the Municipality to make any such appropriation over and above the reasonable cost and value of the services rendered to the Municipality and its inhabitants or to make any subsequent payment over and above such reasonable cost and value. Section 10. Operation of System; Municipality Covenants. It is covenanted and agreed by the Municipality with the owner or owners of the Bonds, and each of them, that the Municipality will perform all of the obligations as set forth in the Financial Assistance Agreement. -10- Section 11. Additional8onds. (a) General. The Bonds are junior and subordinate to the Senior Bonds, any Additional Senior Bonds and the Prior Bonds. The Bonds are issued on a parity with the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds and the Series 2001 Bonds. No bonds or obligations payable out of the revenues of the System may be issued in such manner as to enjoy priority over the Bonds, except as hereinafter provided. Additional obligations may be issued if the lien and pledge is junior and subordinate to that of the Bonds. (b) Additional Senior Bonds. The Municipality may issue obligations payable from the revenues of the System in such a manner as to enjoy priority over the Bonds or any Parity Bonds (the "Additional Senior Bonds', subject to the Senior Resolution; provided, that all of the following conditions are met: (1) The Net Revenues of the System for the Fiscal Year immediately preceding the issuance of such Additional Senior Bonds must have been in an amount at least equal to the maximum annual interest and principal requirements on all obligations outstanding payable from the revenues of the System, and on the Additional Senior Bonds then to be issued, times the greater of (i) 110%, or (ii) the highest debt service coverage ratio required with respect to any of the Municipality's obligations payable from the revenues of the System. Should an increase in permanent rates and charges, including those made to the Municipality, be properly ordered and made effective during the Fiscal Year immediately prior to the issuance of such Additional Senior Bonds or during that part of the Fiscal Year of issuance prior to such issuance, then Net Revenues for purposes of such computation shall include such additional revenues as an independent certified public accountant, consulting professional engineer or the Wisconsin Public Service Commission may certify would have accrued during the prior Fiscal Year had the new rates been in effect during that entire prior Fiscal Year. (2) Upon such issuance, the rating classification of the Additional Senior Bonds would be confirmed by a publicly released municipal rating (without regard to municipal bond insurance or other credit enhancement) of the "A" quality investment group, or better, as assigned by Moody's Investors Service, Inc., or Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc., or a similar nationally recognized rating agency. (3) The payments required to be made into the funds enumerated in Section 6 of this Resolution must have been made in full. (4) The proceeds of the Additional Senior Bonds must be used only for the purpose of providing extensions or improvements to the System, or to refund obligations issued for such purpose. -11- If at any time any of the foregoing conditions is not satisfied, then no obligations payable from revenues of the System may be issued in such a manner as to enjoy priority over the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds or any Parity Bonds, until such conditions are again satisfied. (c) Parity Bonds. Parity Bonds may be issued only under the following circumstances: (1) Additional Parity Bonds may be issued for the purpose of completing the Project and for the purpose of financing costs of the Project which are ineligible for payment under the State of Wisconsin Safe Drinking Water Loan Program. However, such additional Parity Bonds shall be in an aggregate amount not to exceed 20% of the face amount of the Bonds; or (2) Additional Parity Bonds may also be issued if all of the following conditions are met: (A) The Net Revenues of the System for the Fiscal Year immediately preceding the issuance of such additional bonds must have been in an amount at least equal to the maximum annual interest and principal requirements on all bonds outstanding payable from the revenues of the System, and on the bonds then to be issued, times the greater of (i) 1.20 as along as any Senior Bonds or any Additional Senior Bonds, or 1.10 after the Senior Bonds and any Additional Senior Bonds have been discharged, or (ii) the highest debt service coverage ratio to be required with respect to the additional Parity Bonds then to be issued or on any debt obligations payable from the revenues of the System then outstanding. Should an increase in permanent rates and charges, including those made to the Municipality, be properly ordered and made effective during the Fiscal Year immediately prior to the issuance of such additional Parity Bonds or during that part of the Fiscal Year of issuance prior to such issuance, then Net Revenues for purposes of such computation shall include such additional revenues as an independent certified public accountant, consulting professional engineer or the Wisconsin Public Service Commission may certify would have accrued during the prior Fiscal Year had the new rates been in effect during that entire immediately prior Fiscal Year. (B) The payments required to be made into the Funds and Accounts enumerated in Section 6 of this Resolution must have been made in full. (C) The additional Parity Bonds must have principal maturing on May 1 of each year and interest falling due on May 1 and November 1 of each year. -12- (D) The proceeds of the additional Parity Bonds must be used only for the purpose of providing extensions or improvements to the System, or to refund obligations issued for such purpose. Section 12. Sale of Bonds. The sale of the Bonds to the State of Wisconsin Safe Drinking Water Loan Program for the purchase price of up to $7,287,777, and at par, is ratified and confirmed; and the officers of the Municipality are authorized and directed to do any and all acts, including executing the Financial Assistance Agreement and the Bonds as herein above provided, necessary to conclude delivery of the Bonds to said purchaser, as soon after adoption of this Resolution as is convenient. The purchase price for the Bonds shall be paid upon requisition therefor as provided in the Financial Assistance Agreement. Section 13. Application of Bond Proceeds; Arbitrage; Registered Form. The proceeds of the sale of the Bonds shall be deposited by the Municipality into a special fund designated as "Water System SDWLP Project Fund." The Water System SDWLP Project Fund shall be used solely for the purpose of financing a portion of the Project and refunding the Prior Bonds (or a portion thereof), as more fully described in the preamble hereof and in the Financial Assistance Agreement. Moneys in the Water System SDWLP Project Fund shall be disbursed within three (3) business days of their receipt from the State of Wisconsin, and shall not be invested in any interest-bearing account. The Municipality recognizes that the purchasers and owners of the Bonds will have accepted them on, and paid therefor a price which reflects, the understanding that interest thereon is exempt from Federal income taxation under laws in force at the time the Bonds shall have been delivered. In that connection the Municipality agrees that it shall take no action which may render the interest on any of the Bonds subject to Federal income taxation. The City Manager, the City Clerk or the Finance Director of the Municipality, or any of them, are hereby authorized to execute on behalf of the purchasers and owners of the Bonds a certificate and agreement with respect to arbitrage (the "No Arbitrage Certificate's to assure the purchasers and owners of the Bonds that the proceeds of the Bonds are not expected to be used in a manner which would or might result in the Bonds being "arbitrage bonds" under Section 148 of the Code or the regulations of the United States Treasury Department with respect thereto currently in effect or proposed. Such No Arbitrage Certificate shall constitute a representation and certification of the Municipality and no investment of Bond proceeds or of moneys accumulated to pay the Bonds herein authorized shall be made in violation of the expectations prescribed by the No Arbitrage Certificate. The Municipality further recognizes that the Code currently requires the Bonds to be issued and to remain in fully registered form in order that the interest thereon is exempt from Federal income taxation under laws in force at the time the Bonds are delivered. In this connection, the Municipality agrees that it will not take any action to permit the Bonds to be issued in, or converted into, bearer or coupon form unless the Code is modified to permit such action. -13- Section 14. Amendment to Resolution. After the issuance of any of the Bonds, no change or alteration of any kind in the provisions of this Resolution may be made until all of the Bonds have been paid in full as to both principal and interest, or discharged as herein provided, except: (a) the Municipality may, from to time, amend this Resolution without the consent of any of the owners of the Bonds, but only to cure any ambiguity, administrative conflict, formal defect, or omission or procedural inconsistency of this Resolution; and (b) this Resolution may be amended, in any respect, with a written consent of the owners of not less than two-thirds (2/3) of the principal amount of the Bonds then outstanding, exclusive of Bonds held by the Municipality; provided, however, that no amendment shall permit any change in the pledge of revenues derived from the System or the maturity of any Bond issued hereunder, or a reduction in the rate of interest on any Bond, or in the amount of the principal obligation thereof, or in the amount of the redemption premium payable in the case of redemption thereof, or change the terms upon which the Bonds may be redeemed or make any other modification in the terms of the payment of such principal or interest without the written consent of the owner of each such Bond to which the change is applicable. Section 15. Defeasance. When all Bonds have been discharged, all pledges, covenants and other rights granted to the owners thereof by this Resolution shall cease. The Municipality may discharge all Bonds due on any date by irrevocably depositing in escrow with a suitable bank or trust company a sum of cash and/or bonds or securities issued or guaranteed as to principal and interest by the U.S. Government, or by a commission, board or other instrumentality of the U.S. Government, maturing on the dates and bearing interest at the rates required to provide funds sufficient to pay when due the interest to accrue on each of said Bonds to its maturity or, at the Municipality's option, if said Bond is prepayable to any prior date upon which it may be called for redemption, and to pay and redeem the principal amount of each such Bond at maturity, or at the Municipality's option, if said Bond is prepayable, at its earliest redemption date, with the premium required for such redemption, if any, provided that notice of the redemption of all prepayable Bonds on such date has been duly given or provided for. Section 16. Rebate Fund. The Municipality shall establish and maintain, so long as the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds are outstanding, a separate account to be known as the "Rebate Fund." The Rebate Fund is for the sole purpose of paying rebate to the United States of America, if any, on amounts of Bond proceeds held by the Municipality. The Municipality hereby covenants and agrees that it shall pay from the Rebate Fund the rebate amounts as determined herein to the United States of America. The Municipality may engage the services of accountants, attorneys or other consultants necessary to assist it in determining rebate amounts. The rebate amounts are equal to the sum of the following, calculated solely with respect to amounts of the Bonds held by the Municipality: -14- (i) The excess of (a) the aggregate amounts earned from the date of issuance and delivery of the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds on all nonpurpose obligations in which gross proceeds of the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds have been invested (other than nonpurpose obligations attributable to an excess described herein) over (b) the aggregate amounts which would have been earned if the yield on such nonpurpose obligations (other than nonpurpose obligations attributable to an excess described herein) had been equal to the yield on the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds, plus (ii) any income attributable to the excess described in clause (i) above. The rebate amounts payable to the United States of America shall be determined on or prior to the end of the fifth (5th) Bond Year of the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds or any Parity Bonds and the fifth (5th) anniversary of such date by the Municipality for each Bond Year during which the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds remain outstanding and upon retirement of the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds. Such rebate amounts shall be deposited in the Rebate Fund. The rebate amounts shall be paid to the United States of America in installments, as follows: (I) subject to clause (III) below, the first such installment shall be paid no later than thirty (30) days after the end of the fifth (5th) Bond Year of the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds; (II) subject to clause (III) below, an additional installment shall be paid on or prior to the last day of each additional installment payment period during which the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds remain outstanding. For purposes of this clause (II), an installment payment period shall commence on the last day on which a preceding installment of the rebate amount was required to be paid, and shall end on the day preceding the fifth (5th) anniversary of such payment date; -15- (III) anything herein to the contrary notwithstanding, the last installment shall be paid no later than sixty (60) days after the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds have been retired; and (IV) each installment shall be in an amount which, when aggregated with the amount of any prior installments paid to the United States of America hereunder, will equal at least ninety percent (90%) of the total rebate amount payable to the United States of America hereunder as of the date such installment is paid; provided, however, that the last installment shall be in an amount equal to the entire remaining balance of the rebate amount payable to the United States of America hereunder. Amounts held in the Rebate Fund and the investment income therefrom are not pledged as security for the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2001-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds and may only be used to pay amounts to the United States of America. The Municipality shall maintain or cause to be maintained records of such determinations for each Bond Year until three (3) years after payment in full of the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds, the Series 2001 Bonds, the Bonds and any Parity Bonds and shall make such records available upon reasonable request therefor. The Municipality hereby agrees it will disburse all monies in the Rebate Fund to the United States of America at the times and in the manner set forth in the applicable income tax regulations. Section 17. Resolution a Contract. The provisions of this Resolution shall constitute a contract between the Municipality and the owner or owners of the Bonds, and after issuance of any of the Bonds no change or alteration of any kind in the provisions of this Resolution may be made, except as provided in Section 14 hereof, until all of the Bonds have been paid in full as to both principal and interest. The owner or owners of any of the Bonds shall have the right in addition to all other rights, by mandamus or other suit or action in any court of competent jurisdiction, to enforce such owner's or owners' rights against the Municipality, the Governing Body, and any and all officers and agents thereof including, but without limitation, the right to require the Municipality, its Governing Body and any other authorized body, to fix and collect rates and charges fully adequate to carry out all of the provisions and agreements contained in this Resolution. Section 18. Continuing Disclosure. The officers of the Municipality are hereby authorized and directed, if requested by the State, to provide to the State of Wisconsin Safe Drinking Water Loan Program (the "SDWLP' and to such other persons or entities as directed by the SDWLP such ongoing disclosure regarding the Municipality's financial condition and other matters, at such times and in such manner as the SDWLP -16- may require, in order that securities issued by the Municipality and the SDWLP satisfy rules and regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended or may be amended from time to time, imposed on brokers and dealers of municipal securities before the brokers and dealers may buy, sell, or recommend the purchase of such securities. Section 19. Conflicting Resolutions. All ordinances, resolutions (other than the Senior Resolution, the Prior Bond Resolution, the Series 1998 Resolution, the Series 1999 Resolution, and the Series 2000 Resolution, the Series 2000-B Resolution and the Series 2001 Resolution), or orders, or parts thereof heretofore enacted, adopted or entered, in conflict with the provisions of this Resolution, are hereby repealed, and this Resolution shall be in effect from and after its passage. In case of any conflict between this Resolution and the Senior Resolution, the Prior Bond Resolution, the Series 1998 Resolution, the Series 1999 Resolution, the Series 2000 Resolution, the Series 2000-B Resolution or the Series 2001 Resolution, the Senior Resolution, the Prior Bond Resolution or, on a subordinate basis, the Series 1998 Resolution, the Series 1999 Resolution, the Series 2000 Resolution, the Series 2000-B Resolution or the Series 2001 Resolution shall control as long as the Senior Bonds, any Additional Senior Bonds, the Prior Bonds, the Series 1998 Bonds, the Series 1999 Bonds, the Series 2000 Bonds, the Series 2000-B Bonds and the Series 2001 Bonds are outstanding. -17- Section 20. Call of Prior Bonds. The officers of the Municipality are authorized and directed to call the Prior Bonds in the aggregate principal amount of up to $4,410,000 (when additional advances on the Bonds are made) for prior payment on the earliest date(s) on which they can be redeemed and refunded with proceeds of the Bonds. Passed: November 25, 2008 Approved: November 25, 2008 /s/ Frank Tower Mayor (SEAL /s/ Pamela R. Ubri City Clerk -18- EXHIBIT A FORM OF BOND REGISTERED No. R-1 UNITED STATES OF AMERICA STATE OF WISCONSIN COUNTY OF WINNEBAGO CITY OF OSHKOSH WATER SYSTEM REVENUE BOND, SERIES 2008 Final Maturity Date May 1, 2028 REGISTERED $7,287,777 Date of Original Issue December 10, 2008 REGISTERED OWNER: STATE OF WISCONSIN SAFE DRINKING WATER LOAN PROGRAM KNOW ALL MEN BY THESE PRESENTS that the Clty Of OShkOSh, Winnebago County, Wisconsin (the "Municipality', hereby acknowledges itself to owe and for value received promises to pay to the registered owner shown above, or registered assigns, solely from the funds hereinafter specified, the principal sum of an amount not to exceed Seven Million Two Hundred Eighty-Seven Thousand Seven Hundred Seventy-Seven Dollars ($7,287,777) (but only so much as shall have been drawn hereunder, as provided below) on May 1 of each year commencing May 1, 2010, until the final maturity date written above, together with interest thereon (but only on amounts as shall have been drawn hereunder, as provided below), solely from the funds hereinafter specified, from the dates the amounts are drawn hereunder or the most recent payment date to which interest has been paid, at the rate of 2.365% per annum, calculated on the basis of a 360-day year made up of twelve 30-day months, such interest being payable on the first days of May and November of each year, with the first interest being payable on May 1, 2009. The principal amount evidenced by this Bond may be drawn upon by the Municipality in accordance with the Financial Assistance Agreement entered by and between the Municipality and the State of Wisconsin by the Department of Natural Resources and the Department of Administration including capitalized interest transferred (if any). The principal amounts so drawn shall be repaid in installments on May 1 of each year commencing on May 1, 2010, in an amount equal to an amount which when amortized over the remaining term of this Bond plus current payments of interest (but only on amounts drawn hereunder) at Two and Three Hundred Sixty-Five One-Thousandths percent (2.365%) per annum shall result in equal annual payments of A-1 the total of principal and the semiannual payments of interest. The State of Wisconsin Department of Administration shall record such draws and corresponding principal repayment schedule on a cumulative basis in the format shown on Exhibit A attached to and made a part of this Bond. Both principal hereof and interest hereon are hereby made payable to the registered owner hereof in lawful money of the United States of America. On the final maturity date, principal of this Bond shall be payable only upon presentation and surrender of this Bond at the office of the Municipal Treasurer. Principal hereof (except the final maturity) and interest hereon shall be payable by electronic transfer or by check or draft dated on or before the applicable payment date and mailed from the office of the Municipal Treasurer to the person in whose name this Bond is registered at the close of business on the fifteenth day of the calendar month next preceding such interest payment date. This Bond shall not be redeemable prior to its maturity, except with the consent of the registered owner. This Bond is transferable only upon the books of the Municipality kept for that purpose at the office of the Municipal Treasurer, by the registered owner in person or its duly authorized attorney, upon surrender of this Bond, together with a written instrument of transfer (which may be endorsed hereon) satisfactory to the Municipal Treasurer, duly executed by the registered owner or its duly authorized attorney. Thereupon a replacement Bond shall be issued to the transferee in exchange herefor. The Municipality 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 interest hereof and for all other purposes. This Bond is issuable solely as a negotiable, fully-registered bond, without coupons, and in denominations of $0.01 or any integral multiple thereof. This Bond is issued for the purpose of refunding certain outstanding water revenue refunding bond anticipation notes (the "Prior Bonds', or a portion thereof, pursuant to Article XI, Section 3, of the Wisconsin Constitution, Section 66.0621 of the Wisconsin Statutes, and a resolution adopted November 25, 2008, and entitled: "Resolution Authorizing the Issuance and Sale of up to $7,287,777 Water System Revenue Bonds, Series 2008 and Providing for Other Details and Covenants with Respect Thereto," and is payable only from the income and revenues derived from the operation of the Water System of the Municipality (the "Utility'. This Bond is made expressly subordinate to all revenue bonds and notes previously issued by the Municipality on behalf of the Utility, any Additional Senior Bonds and the Prior Bonds, except that this Bond is issued on a parity with the Water System Revenue Bonds, Series 1998 of the Municipality, dated December 16, 1998, the Water System Revenue Bonds, Series 1999 of the Municipality, dated July 14, 1999, the Water System Revenue Bonds, Series 2000, dated April 1, 2000, the Water System Revenue Bonds, Series 2000-B, dated December 27, 2000, and the Water System Revenue Bonds, Series 2001, dated December 26, 2001. This Bond does not constitute an A-2 indebtedness of the Municipality or a change against its general credit or taxing powers within the meaning of any constitutional or statutory debt limitation or provision. It is hereby certified, recited and declared that all acts, conditions and things required to exist, happen, and be performed precedent to and in the issuance of this Bond have existed, have happened and have been performed in due time, form and manner as required by law; and that sufficient of the income and revenue to be received by said Municipality from the operation of its Utility has been pledged to and will be set aside into a special fund for the payment of the principal of and interest on this Bond. IN WITNESS WHEREOF, the Municipality has caused this Bond to be signed by the signatures of its City Manager and City Clerk, and its official seal (or a true facsimile thereof) to be impressed (or imprinted) hereon, all as of the date of original issue specified above. CITY OF OSHKOSH, WINNEBAGO COUNTY, WISCONSIN [SEAL] By City Manager Attest: City Clerk (FORM OF ASSIGNMENT For Value Received the undersigned hereby sells, assigns and transfers unto (Please print or typewrite name and address, including zip code, of Assignee). Please insert Social Security or other identifying number of Assignee the within Bond, and all rights thereunder, hereby irrevocably constituting and appointing attorney, to transfer said Bond on the books kept for the registration thereof with full power of substitution in the premises. A-3 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, without alteration or enlargement or any change whatever. Signature(s) guaranteed by: A-4 EXHIBIT A TO BOND FORM $7,287,777 CITY OF OSHKOSH, WINNEBAGO COUNTY, WISCONSIN WATER SYSTEM REVENUE BONDS, SERIES 2008 AMOUNT OF DATE OF SERIES OF PRINCIPAL PRINCIPAL DISBURSEMENT DISBURSEMENT BONDS REPAID BALANCE $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ A-5 PRINCIPAL REPAYMENT SCHEDULE DATE PRINCIPAL AMOUNT May 1, 2010 $ 308,265.26 May 1, 2011 315,555.74 May 1, 2012 323,018.63 May 1, 2013 330,658.02 May 1, 2014 338,478.08 May 1, 2015 346,483.09 May 1, 2016 354,677.41 May 1, 2017 363,065.54 May 1, 2018 371,652.04 May 1, 2019 380,441.61 May 1, 2020 389,439.05 May 1, 2021 398,649.28 May 1, 2022 408,077.34 May 1, 2023 417,728.37 May 1, 2024 427,607.64 May 1, 2025 437,720.56 May 1, 2026 448,072.66 May 1, 2027 458,669.57 May 1, 2028 469,517.11 A-6