December 11, 2009
MINUTES OF THE BROOKNEAL TOWN COUNCIL
5:00 PM – Meeting of the Brookneal Town Council continued from December 8, 2009
The municipal government of the Town of Brookneal met with the following members present:
Phyllis Campbell, Mayor
James Nowlin, Vice Mayor
Richard Adams, Robert Jean, Kenneth Jennings, Tracy Meisenbach and Phillip Sheppard, Council Members
Buster Nicholson, Town Manager
Bobbie Waller, Clerk/Treasurer
RESOLUTION TO AUTHORIZE THE MAYOR TO SIGN FOR INTERIM FINANCING FOR WATER SYSTEM IMPROVEMENTS
Town Manager Buster Nicholson told the Council that the rate for the interim financing that BB&T has proposed is 3.07%. The interest will be paid by USDA. Upon motion by Tracy Meisenbach, seconded by Robert Jean, and unanimously carried, the Council voted to adopt the following resolution. A verbal vote was taken as follows:
Mr. Sheppard Aye Ms. Meisenbach Aye
Mr. Jean Aye Mr. Jennings Aye
Mr. Adams Aye Mr. Nowlin Aye
Mayor Campbell Aye
A RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF A $2,500,000.00 WATER DISTRIBUTION SYSTEM IMPROVEMENTS GENERAL OBLIGATION BOND, SERIES 2009 FOR THE CONSTRUCTION OF WATER DISTRIBUTION SYSTEM IMPROVEMENTS IN THE TOWN OF BROOKNEAL, VIRGINIA AND PROVIDING FOR THE FORM, DETAILS AND PAYMENT THEREOF
WHEREAS, the Town of Brookneal, Virginia (the “Town”), is a public body politic and corporate of the Commonwealth of Virginia duly created by Charter under Ch. 420 of the Acts of Assembly of 1964, approved March 31, 1964, (the “Charter”) which Act repealed Ch. 60 of the Acts of Assembly of 1908, under which Act the Town had originally been established ("the Charter"); and
WHEREAS, the Town has determined to issue its $2,500,000.00 Water Distribution System Improvements General Obligation Bond, Series 2009 ("the Bond") for the purpose of financing the construction of water distribution system improvements in the Town of Brookneal ("the Project"); and
WHEREAS, Branch Banking and Trust Company (the "Purchaser") has offered to purchase the Bond upon the terms set forth herein;
NOW, THEREFORE, BE IT RESOLVED BY COUNCIL OF THE TOWN OF BROOKNEAL, VIRGINIA:
ARTICLE 1
AUTHORIZATION OF BOND
Section 1.1 Authorization of Bond. There is hereby authorized to be issued a general obligation bond of the Town in the principal amount of $2,500,000.00 to provide funds for the Project. The Bond shall be designated the “Town of Brookneal Water Distribution System Improvements General Obligation Bond, Series 2009.”
Section 1.2 Bank Qualification. The Bond is hereby designated as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Neither the Town nor any "subordinate entity" within the meaning of Section 265(b) of the Code has issued any tax-exempt obligations (not including private activity bonds for entities other than organizations described in Section 501(c)(3) of the Code) during calendar year 2009, and the reasonably anticipated amount of tax-exempt obligations (not including private activity bonds for entities other than organizations described in Section 501(c)(3) of the Code) which will be issued by the Town and all "subordinate entities" thereof during calendar year 2009 will not exceed $10,000,000.00. The Town will not designate more than $10,000,000.00 of qualified tax-exempt obligations pursuant to Section 265(b) during the calendar year 2009.
Section 1.3 Details of Bond. The Bond shall be issued as a single fully registered bond without coupons, shall be numbered R-1, shall be dated the date on which the Bond is delivered to the Purchaser against payment of the purchase price therefor (the "Closing Date"), and shall bear interest at the rate of Three and Seven Hundredths Percent (3.07%) per year computed on a 30/360 day basis. One payment of all accrued interest and principal shall be due on December 20, 2010. Payments shall be applied first to interest and then to principal.
Payment shall be in lawful money of the United States of America. Payment shall be upon presentation and surrender of the Bond at the office of the Registrar.
Section 1.4 Execution of Bond. The Bond shall be signed by the Mayor of the Town and countersigned by its Clerk and its seal shall be affixed thereto.
Section 1.5 Delivery of Bond. The Mayor and the Clerk are hereby authorized and directed to take all proper steps to have the Bond prepared and executed in accordance with its terms and to deliver the Bond to the Purchaser upon payment therefor. The Mayor and the Clerk are further authorized and directed to agree to and comply with, on behalf of the Town, any and all further conditions and requirements of the Purchaser not inconsistent with this resolution in connection with its purchase of the Bond.
Section 1.6 Prepayment of Bond. The Bond may be prepaid in whole at the option of the Town at any time upon 15 days written notice to the holder thereof, without penalty or premium. Prepayments shall be limited to one.
Section 1.7 Form of the Bond. The Bond shall be substantially in the form attached hereto as Exhibit A, with such appropriate variations, omissions and insertions as permitted or required by this resolution.
ARTICLE 2
PARTICULAR COVENANTS
Section 2.1 Payment of Bond. The Town shall pay promptly, as provided herein, the principal of, prepayment charge, if any, and interest on the Bond.
Section 2.2 No Default under Obligations. The Town is not in default under any of the provisions of any of its other indebtedness, and the Town is not in default of any representation, warranty or covenant contained in any certificate, agreement or other instrument executed and delivered by it in connection any of its other indebtedness.
Section 2.3 Tax Covenant. The Town shall not take or approve any action, investment or use of the proceeds of the Bond which would cause loss of the exclusion of interest on the Bond from gross income for federal income tax purposes under Sections 103, and 141 through 150 of the Code.
Section 2.4 Maintenance and Existence. The Town shall maintain its existence as a political subdivision of the Commonwealth of Virginia and, without the consent of the Purchaser, shall not dissolve or otherwise dispose of all or substantially all of its assets or consolidate or merge with or into another entity. Notwithstanding the foregoing, the Town may consolidate or merge with or into, or sell or otherwise transfer to a political subdivision of the Commonwealth of Virginia, all or substantially all of its assets, and the Town may thereafter dissolve, if the surviving, resulting or transferring political subdivision, if other than the Town, assumes, in written form acceptable to the Purchaser, all of the obligations of the Town contained in the Bond and this Resolution, and there is furnished to the Purchaser, an opinion of counsel acceptable to the Purchaser to the effect that such assumption constitutes a legal, valid and binding obligation of the surviving, resulting or transferring political subdivision enforceable against it in accordance with its terms.
Section 2.5 Financial Records and Statements. The Town shall have an annual audit of the financial condition of the Town made by an independent certified public accountant and, within 120 days after the end of each of its fiscal years, shall furnish to the Purchaser copies of the report of such accountant, including statements in reasonable detail, certified by such accountant, reflecting the financial position of the Town at the end of such fiscal year and the results of its operations and change in the financial position of its funds for the fiscal year. The Purchaser shall also furnish to the Purchaser a certificate of such accountant, to the effect that during the course of such accountant's regular examination of the financial condition of the Town, nothing has come to the accountant's attention which would constitute a default under the Bond, this resolution or any instrument delivered in connection herewith.
Section 2.6 Certificate as to No Default. The Town shall deliver to the Purchaser, within 120 days after the close of each of the Town's fiscal years, a certificate signed by an authorized official of the Town stating that, during the year and as of the date of such certificate, no event or condition has happened or existed, or is happening or existing, which constitutes a default under the Bond, this Resolution or any instrument delivered in connection therewith, or if such event or condition has happened or existed, or is happening or existing, specifying the nature and period of the event or condition and what action the Town has taken, is taking or proposes to take with respect thereto.
Section 2.7 Disposition and Deposit of Funds. The Town shall account for the proceeds from the sale of the Bond through a fund kept separate and apart from all other funds of the Town. All monies collected for the payment of the Bond shall be deposited or invested in accordance with Section 15.2-2625 of the Code of Virginia, 1950, as amended.
Section 2.8 Further Assurances. The Town shall to the fullest extent permitted by law adopt, make and deliver such further resolutions, acts, instruments and assurances as may be necessary or desirable to carry out the purposes of this Resolution.
Section 2.9 Pledge of Grant Proceeds and Water System Revenues. All revenue derived by the Town from the use and services furnished by the Town’s water distribution system as it now or hereafter exists and all proceeds of the Town’s grant from the USDA with respect to the Project are hereby pledged to the payment of principal and interest on the Bond, subject however with respect to the revenue derived from the water system to the Town’s right in the absence of a payment default to use such revenue for any lawful purpose.
ARTICLE 3
DEFAULT AND REMEDIES
Section 3.1 Default and Remedies. Upon default by the Town (a) in the payment of principal of or interest on the Bond, (b) in the performance of any covenant or agreement contained in the Bond or in this Resolution or (c) upon the filing of a petition in bankruptcy by the Town, the holder of the Bond at its option may:
(a) declare the entire unpaid principal amount of the Bond then outstanding and accrued interest thereon to be immediately due and payable;
(b) incur and pay such reasonable expenses for the account of the Town as may be necessary to cure the cause of any default;
(c) proceed to protect and enforce its rights under the Bond and this Resolution by a suit, action or special proceeding at law or in equity, either for the specific performance of any covenant or agreement or execution of any power or for the enforcement of any proper legal or equitable remedy as may be deemed most effectual to protect and enforce such rights.
Section 3.2 Remedies Cumulative. No remedy conferred hereby is intended to be exclusive of any other remedy, and every remedy shall be cumulative and in addition to every other remedy herein or now or hereafter existing in equity, at law or by statute.
EXHIBIT A TO COUNCIL OF TOWN OF BROOKNEAL RESOLUTION
DATED DECEMBER 11, 2009
No. R-1 $2,500,000.00
UNITED STATES OF AMERICA
COMMONWEALTH OF VIRGINIA
TOWN OF BROOKNEAL
WATER DISTRIBUTION SYSTEM IMPROVEMENTS
GENERAL OBLIGATION BOND, SERIES 2009
The Town of Brookneal, Virginia (the “Town”), is a public body politic and corporate of the Commonwealth of Virginia duly created by Charter under Ch. 420 of the Acts of Assembly of 1964, approved March 31, 1964, (the “Charter”) which Act repealed Ch. 60 of the Acts of Assembly of 1908, under which Act the Town had originally been established (the "Charter"), for value received, hereby promises to pay to Branch Banking & Trust, Charleston, West Virginia, or registered assigns, (the "Holder") the principal sum of
TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000.00)
and to pay to the Holder interest until payment of the entire principal sum at the rate of Three and Seven Hundredths percent (3.07 %) per year (the "Tax Exempt Rate"). Interest shall be calculated on the basis of a 360-day year assuming twelve 30-day months. One payment of all accrued interest and principal shall be due on December 20, 2010. Payments shall be applied first to interest and then to principal. Payment shall be in lawful money of the United States of America upon presentation and surrender hereof at the office of the Registrar.
The Town has designated the Bond as a "qualified tax-exempt obligation" for the purpose of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code")
The Tax-Exempt Rate shall be subject to adjustment as set forth in the following paragraphs:
(1) (a) In the event that at any time whether before or after payment of this Bond all or any part of any payment of interest on this Bond or any interest accrued by the Holder by reason of the Holder’s owning this Bond or receiving interest on this Bond is determined by the Commissioner or any District Director of the Internal Revenue Service or any court of competent jurisdiction not be excluded from gross income (other than pursuant to the alternative minimum tax imposed on corporations under Section 56 of the Code as in effect on the date hereof) under Section 103 of the Code, then the Town shall pay to the Holder, as supplemental interest, in immediately available funds on the maturity date (or if such obligation arises after such date, on the date such obligation arises) an amount which, after giving effect to all taxes attributable to the inclusion of such amount in the gross income of the Holder under the laws of any Federal, state or local governmental or other taxing authority (such taxes to be calculated at the maximum statutory tax rate applicable to the Holder, after taking into account deductions attributable to imposition of state and local taxes), shall be equal to the amount of the tax preference or similar tax attributable to this Bond multiplied by the rate of the preference or similar tax.
(b) In the event that at any time whether before or after payment of this Bond, all or part of any interest paid or accrued by the Holder by reason of the Holder’s owning this Bond or receiving interest on this Bond (such as, for example, interest on indebtedness incurred or continued to purchase or carry this Bond) or any other amount in respect of or related to owning or receiving interest on this Bond, as a whole or in part, is determined by the Commissioner or any District Director of the Internal Revenue Service or any court of competent jurisdiction not deductible by the Holder from its Federal gross income in the year paid or accrued by reason of Section 265 of the Code as in effect on the date hereof, then the Town shall pay to the Holder, as supplemental interest, in immediately available funds on the maturity date (or if such obligation arises after such date, on the date such obligation arises) an amount (together with interest on such amount from the date payment is due until payment in full at the Holder’s prime rate) which, after giving effect to all taxes attributable to the inclusion of such amount in the gross income of the Holder under the laws of any Federal, state or local governmental or other taxing authority (such taxes to be calculated at the maximum statutory tax rate applicable to the Holder, after taking into account deductions attributable to imposition of state and local taxes), shall be equal to the amount of such nondeductible item multiplied by the maximum rate of Federal income tax applicable to the Holder.
(2) If the Town becomes obligated to make payments to the Holder pursuant to paragraph (1), the amount of the income or similar item or the nondeductible item with respect to any semiannual period ending within or after the first taxable year of the Holder during which such payments first become payable shall be calculated on the basis of the date in the most recent semi-annual period of the Holder prepared prior to the date interest on this Bond was or is due and payable, as if (i) the income or similar tax were imposed, or the semi-annual amount of the nondeductible item were computed, on a semi-annual basis, and (ii) the semi-annual period ended on the date interest on this Bond was or is due and payable.
The amount of the income or similar item or of the nondeductible item in respect of any other period shall be computed on the basis of the Federal income tax return of the Holder. The computation of any amount payable under this paragraph (2) shall be made in good faith by the Holder, but absent manifest error shall be conclusive as to the amount thereof. Every reference to the Holder shall include the entity filing tax returns in which the Holder as holder of this Bond reports its income.
(3) The intent of the foregoing provisions is to fix for the Holder a yield on this Bond equal at all times to the yield receivable under tax law, regulations and interpretations existing as of the date of original issue of this Bond, which yield has been used in determining the interest rate on this Bond, and to impose on the Town the obligation to pay supplemental interest in an amount necessary to compensate the Holder if the interest on this Bond is not excluded from gross income or is not exempt from the alternative minimum tax or the 80% deduction for “cost of carry” is not available under Section 265 of the Code. The foregoing provisions should be construed accordingly.
This Bond has been authorized by a resolution adopted by the Town Council on December 11, 2009 (the Bond Resolution), and is issued pursuant to the Charter and the Virginia Public Finance Act to provide funds, together with other available funds, to finance improvements to the Town’s water system. Copies of the Bond Resolution are on file at the Town Hall, Brookneal, Virginia. Reference is hereby made to the Bond Resolution and any amendments thereto for the provisions, among others, describing the pledge and covenants securing the Bond, the nature and extent of the security, the terms and conditions upon which the Bond is issued, the rights and obligations of the Town and the rights of the Bondholder.
Both principal of and interest on this Bond constitute an indebtedness of and a pledge of the full faith and credit of the Town of Brookneal, Virginia.
This Bond may be prepaid in whole at the option of the Town at any time upon 15 days written notice to the holder thereof, without penalty or premium. Prepayments shall be limited to one.
This Bond is fully registered as to both principal and interest. Transfer of this Bond may be registered upon books maintained for that purpose by the Registrar. Prior to due presentment for registration of transfer the Registrar shall treat the registered owner as the person exclusively entitled to payment of principal and interest and the exercise of all other rights and powers of the owner.
All acts, conditions and things required by the Constitution and statutes of the Commonwealth of Virginia to happen, exist or be performed precedent to and in the issuance of this Bond have happened, exist and have been performed.
IN WITNESS WHEREOF, the Town has caused this Bond to be signed by its Mayor, to be countersigned by its Clerk, its seal to be affixed hereto and this Bond to be dated December ____, 2009.
COUNTERSIGNED:
______________________________ ______________________________
Clerk, Town of Brookneal Mayor, Town of Brookneal
TRANSFER OF BOND
Transfer of this Bond may be registered by the registered owner of his duly authorized attorney upon presentation hereof to the Registrar who shall make note of such transfer in books kept by the Registrar for that purpose and in the registration blank below.
Date of Name of Signature
Registration Registered Owner of Registrar
12/ /2009 Branch Banking & Trust ____________________
_______________ ____________________ ____________________
_______________ ____________________ ____________________
_______________ ____________________ ____________________
_______________ ____________________ ____________________
_______________ ____________________ ____________________
_______________ ____________________ ____________________
ARTICLE 4
MISCELLANEOUS
Section 4.1 Contract with Bondholders. The provisions of this resolution shall constitute a contract between the Town and the holder of the Bond for so long as the Bond and interest thereon are outstanding.
Section 4.2 Town Officers and Agents. The officers and agents of the Town shall do all acts and things required of them by this Resolution, the Bond and the Virginia Public Finance Act for the complete and punctual performance of all the terms, covenants and agreements contained therein, including the filing of a certified copy of this Resolution with the Circuit Court of the County of Campbell pursuant to Sections 15.2-2607 and 15.2-2627 of the Code of Virginia, 1950, as amended.
Section 4.3 Limitation of Rights. Nothing expressed or mentioned in or to be implied from this resolution or the Bond is intended or shall be construed to give to any person or company other than the parties hereto and the holder of the Bond any legal or equitable right, remedy or claim under or in respect to this resolution or any covenants, conditions and agreements herein contained; this resolution and all of the covenants, conditions and agreements hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the holders of the Bond as herein provided.
Section 4.4 Limitation of Liability of Officials of Town. No covenant, condition or agreement contained herein shall be deemed to be a covenant, agreement or obligation of a present or future member, officer, employee or agent of the Town in his individual capacity, and neither the members of the Town Council nor any officer thereof executing the Bond shall be liable personally on the Bond or be subject to any personal liability or accountability by reason of the issuance thereof. No member, officer, employee or agent of the Town shall incur any personal liability with respect to any other action taken by him pursuant to this resolution or the Act, provided he acts in good faith.
Section 4.5 Conditions Precedent. Upon the issuance of the Bond all acts, conditions and things required by the Constitution and statutes of the Commonwealth of Virginia or this resolution to have happened, exist and to have been performed precedent to or in the issuance of such Bond shall have happened, exist and have been performed.
Section 4.6 Non-Arbitrage Certificate. The Mayor and Clerk and such other officers as may be requested are hereby authorized to sign a certificate or certificates setting forth the expected use and investment of the proceeds of the Bond in order to show that such expected use and investment will not violate the provisions of Sections 103(c) and 141 through 150 of the Internal Revenue Code of 1986, as amended, and regulations issued pursuant thereto, applicable to "arbitrage bonds".
Section 4.7 Repeal of Resolutions in Conflict. All other resolutions, or parts thereof, in conflict with this Resolution are hereby repealed.
Section 4.8 Successors and Assigns. All the covenants, stipulations, promises and agreements of the Town contained in this resolution shall bind and inure to the benefit of its successors and assigns, whether so expressed or not.
Section 4.9 Headings. Any headings in this resolution are solely for convenience of reference and shall not constitute a part of the resolution nor shall they affect its meaning, construction or effect.
Section 4.10 Severability. If any court of competent jurisdiction shall hold any provision of this resolution to be invalid and unenforceable, such holding shall not invalidate any other provision hereof.
Section 4.11 Effective Date. This resolution shall take effect immediately. The Clerk of the Town is hereby authorized and directed to file a certified copy of this resolution in the office of the Town.
This Resolution was passed by a vote of the Brookneal Town Council on the 11th day of December, 2009.
_________________________________
Mayor
ATTEST:
_________________________________
Clerk of Council
ADJOURNMENT
Upon motion from James Nowlin, seconded by Robert Jean, and unanimously carried, Mayor Campbell announced that the December 11, 2009, Council meeting was adjourned.
___________________________ ____________________________
Bobbie A. Waller Phyllis L. Campbell
Clerk/Treasurer Mayor
