063-03
,/
/
APPROVAL RESOLUTION OF THE BOARD OF SUPERVISORS OF
FREDERICK COUNTY IN CONNECTION WITH ISSUANCE OF EXEMPT AND
TAXABLE OBLIGATIONS BY MILLWOOD STATION FIRE AND RESCUE
COMPANY 21, INC. TO PROVIDE FUNDS TO FINANCE A NEW FIRE HOUSE AND
RELATED FACILITIES THERETO TO BE LOCATED IN THE COUNTY
WHEREAS, the Millwood Station Fire and Rescue Company 21, Inc., (the "Company")
is a non-stock, membership corporation organized for the purposes of providing fire-fighting
services to protect citizens and property located in Frederick County, Virginia (the "County"),
and the surrounding areas, by the operation of a volunteer fire department; and
WHEREAS, the Company has been providing such fire-fighting services for a
continuous period for approximately 50 years; and
WHREAS, in order to memorialize the terms and provisions of the fire-fighting services
to be provided by the Company, the County and the Company entered into that certain Fire and
Rescue Services Agreement, dated in July 1998 (the "Agreement"), a copy of which is attached
hereto as Exhibit A); and
WHEREAS, the membership of Company has duly published notice and held a public
hearing on May 12, 2003 in connection with the approval by the Company of an Authorizing
Resolution (the "Authorizing Resolution", a certified copy of which is attached hereto as Exhibit
B) to approve a $2,160,000 Tax-Exempt Revenue Note (Fire House Project), Series 2003
("Bank-Qualified") (referenced hereinafter as the "Tax-Exempt Note") and to approve a
$2,140,000 Commercial Note (the "Commercial Note") in order for the Company to finance the
costs to (i) acquire, construct, and equip a new firehouse and related facilities thereto to be
located at Lot 5, Costello Drive, Prince Frederick Office Park, Winchester, Virginia 22602, in
the County; and (ii) pay the costs of issuance therefor; and
WHEREAS, Branch Banking and Trust Company has offered to purchase the Tax-
Exempt Note and the Commercial Note (sometimes collectively referenced herein as the
"Notes"); and
WHEREAS under Sections 150 and 147 of the Internal Revenue Code of 1986 (the
"Code"), the Tax-Exempt Note of the Company is subject to the public approval and other
requirements as set forth therein; and
WHEREAS the Company now desires for the County to approve such proposed Tax-
Exempt Note as required under the Code, and also the Commercial Note, and, further, to confirm
the Agreement, and the Board of Supervisors of the County (the "Board") desires to evidence its
approval thereof for the Company to issue the Notes and, further, its confirmation of the
Agreement.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS
OF FREDERICK COUNTY, VIRGINIA:
1. Approval of Notes To Be Issued bv C?mpanv. To the extent required by law, the
Board her,eby approve~, concurs and consents to the Issuance. by the Company of its Tax-Exempt
Note and Its CommercIal Note for the purposes set forth herem, all as described above.
2. Confirmation of Agreement. In order to express continued support for the fire-
fighting services provided by the Company as a volunteer fire-fighting company for the benefit
of the County and surroundmg areas, the Board hereby confirms the terms and provisions of the
Agreement.
3. No Endorsement of Creditworthiness of Company. It is to be understood that the
approval herem of the issuance by the Company of the Notes shall not constitute an endorsement
to a prospective purchaser of the Notes of the credit-worthmess of the Company or the projects
being financed by the Company with the proceeds of the Notes.
4. No Pledge of Full Faith and Credit of County. Each of the Notes shall provide
that the debts mcurred thereby shall be payable solely from the revenues and monies of the
Company pledged therefor, and that such Notes shall not be deemed to constitute a debt or
pledge of the faith and credit or taxing power of the Commonwealth of Virginia, or any political
subdivision thereof, includmg the County, and neither the Commonwealth of Virginia, or the
County or any other political subdivision thereof, shall be obligated to pay the principal of,
premium, if any, or interest on the Notes or any other costs incident thereto, and neither the faith
and credit nor the taxing power of the Commonwealth of Virginia, or any political subdivision
thereof, including the County, shall be pledged for the payment of principal or premium, if any,
or interest on the Notes or any other costs incidental thereto.
5.
Effective Date. This Resolution shall be effective immediately.
Adopted:
May 14, 2003
\
Q~OQ~
Chairman, Board of Supervisors,
County of Frederick, Virginia
B~:~wtt>t:~\1YJCB~7il)2\ 1 w8fu028~oc
2
CERTIFICATE OF VOTES
Record of the roll-call vote by the Board of Supervisors of the County of
Frederick, Virginia, on a resolution entitled, APPROVAL RESOLUTION OF THE
BOARD OF SUPERVISORS OF FREDERICK COUNTY IN CONNECTION
WITH ISSUANCE OF EXEMPT AND TAXABLE OBLIGATIONS BY
MILLWOOD STATION FIRE AND RESCUE COMPANY 21, INC. TO PROVIDE
FUNDS TO FINANCE A NEW FIRE HOUSE AND RELATED FACILITIES
THERETO TO BE LOCATED IN THE COUNTY duly adopted at a regular meeting
of the Board of Supervisors held on May 14, 2003:
MEMBER AYE NAY ABSTAIN ABSENT
Richard C. Shickle, Chairman )(
Margaret B. Douglas )(
Sidney A. Reyes >(
RObert M. Sager X.
'r#. Harrington Smith, Jr. X
Lynda 1. Tvler X
Gina A. Forrester ^
Date: May 14,2003
[SKAl]
Clerk 0* e oard 6 Supervisors
ofFr,ed~rick County, Virginia
.'-'"
3
George R Aldhizer. Jr.
Donald E. Showalter
Glenn M. Hodge
M. Bruce Wallinger
Douglas L Guynn
Gregory T. St. Ours
Charles F. Hilton
Daniel L Fitch
Thomas E, Ullrich
Carolyn Madden Petry
Marshall H, Ross
G, Chris Brown
Cathleen p, Welsh
WHARTON ALDHIZER & WEA VERPLC
ArrORNEYS AT LAW
5/7/03 :-
~~
TELEPHONE
HARRISONBURG (540) 434-0316
LEXINGTON (540) 463-3691
STAUNTON (540) 885-0199
FAX (540) 434-5502
G, Rodney Young. II
Mark W, Botkin
Stephan W, Milo
Jennifer E, Shirkey
Jared L Burden
Lucy V, Ivanoff
Brian K, Brake
Martha J, Damon
Walter P. Sowers, II
Dana R. Cormier
Humes J. Franklin, III
Matthew W, Light
100 SOUTH MASON STREET
P. 0, Box 20028
HARRISONBURG, VIRGiNiA 22801-7528
WRITER'S DIRECT DIAL: (540) 438-5356
WRITER'S E-MAIL.CPERRY@WAWLAW.COM
Leringwn Office
George H. Roberts, Jr.
May 6, 2003
John R. Riley, Jr., County Administrator
Frederick County, Virginia
107 North Kent Street
Winchester, Virginia 22601
Re: Approval Concurrence By Frederick County For Millwood Station Fire and
Rescue Company 21, Inc. To Issue Exempt and Taxable Debt
Dear Mr. Riley:
On behalf of Millwood Station Fire and Rescue Company 21, Inc., I respectfully request
for you to include on the agenda for the May 14 meeting of the Board of Supervisors the
consideration of the enclosed Resolution for the benefit of the Millwood Company.
Internal Revenue Code Requirements Affectioe: Company's Exempt OblilZations
The Company desires tax-exempt and conventional financing in order to pay the costs to
construct a new Fire House in the County and related facilities thereto. Under federal tax laws,
however, the Company is required to publish notice, hold a public hearing and obtain governing
body approval for the issuance of exempt debt by the Company.
Such public hearing will be held by the Company at its existing Fire House on Monday,
May 12, after which hearing it is reasonably anticipated that the membership shall approve the
incurrence of $2.16 Million exempt debt and $2.14 Million taxable debt in order to provide funds
to construct a new Fire House in the County and related facilities thereto.
No Liability For Frederick County Or Adverse Affect
In addition, as bond counsel for this financing, I would advise the County that approval
by the Supervisors of the enclosed Resolution shall not obligate the County to pay the
Company's debt under any circumstances, and shall not be counted as debt of the County for any
purposes. Further, approval of the enclosed Resolution shall have no impact whatsoever on the
County's $10 Million "bank-qualified" eligibility under Internal Revenue Code Section 265 (in
May 6, 2003
Page 2
the event such designation capacity is important to the County this year). Finally, approval of
the enclosed Resolution shall not constitute any representation by the County of the credit-
worthiness of the Company, or even the viability of the projects to be financed with its debt
proceeds.
Approval of Resolution
Please let me know if there are any questions regarding the approval by the Board of
Supervisors of the enclosed Resolution at the Board's regular meeting on May 14.
In the meantime, for the sake of convenience, we have enclosed three (3) originals of this
proposed Resolution, including attached Exhibit A (which is the Agreement between the County
and the Company for the provision of fire-fighting services being confirmed) and attached
Exhibit B (which is the "form" of authorizing resolution by the Company to be approved on May
12). In this regard, the Company will file an executed copy of its authorizing resolution with the
County prior to the Board's meeting on May 14 so that the County's records will be complete.
Assuming approval by the Supervisors, please keep one executed Resolution for the
County's official records, and kindly return the other two (2) original executed Resolutions to
our office in the enclosed envelope. In addition, we have e-mailed the form of this Resolution to
County Staff in order to provide this Resolution in electronic form.
As a final matter, please let me know if it would be necessary or helpful for me to attend
the Board's meeting on May 14 to present this Resolution. To the extent that you think my
attendance at the Board's meeting would not be necessary, please let me know in order for our
firm to minimize the Company's legal fees and costs for this important financing transaction.
On behalf of the Millwood Company, I thank you and the other County Staff for your
assistance to the Company to exploit the most advantageous financing options available under
the law for construction of a new Fire House.
Enclosures
May 6, 2003
Page 3
cc: Carol Bayliss, Deputy County Administrator, Frederick County
Lawrence R. Ambrogi, County Attorney, Frederick County
John Harden, President, Millwood Station Fire and Rescue Company 21, Inc
T. Joe Tisinger, Counsel to Millwood Station Fire and Rescue Company 21, Inc.
Gregory D. Price, Vice President, BB&T Winchester
B. Scott Arthur, Senior Vice President, BB&T Winchester
57802-1ICMPIEA2214.DOC
Exhibit A
COUNTY OF FREDERICK, VIRGINIA
FIRE AND RESCUE SERVICES AGREEMENT
I. PARTIES TO THE AGREEMENT
The parties to this Agreement are as follows: The County Board of Supervisors of Frederick
County, Virginia (hereafter referred to as the "County"), the Frederick County Fire and
Rescue Department (hereafter referred to as the "Department") and the MILLWOOD
STATION Volunteer Fire & Rescue Company, Inc. (hereafter referred to as the
"Company").
D. BACKGROUND
The County and its Volunteer Fire and Rescue Companies have, for several decades,
cooperated in order to provide exemplary fire and rescue services to the citizens of Frederick
County, Virginia. The County is committed to continued growth and improvement of its
Volunteer Fire and Rescue Companies and assuring the safe and efficient provision of
essential fire and rescue services. The Volunteer Fire and Rescue Companies are committed
to utilizing their personnel and resources to achieve the same goals. As growth within the
County has continued, fire and rescue service demands have increased. This has created a
need for the fire and rescue system within the County to evolve into a combination volunteer
and career fire and rescue service. In order to provide additional support to the Volunteer
Companies, plan for future service needs, and provide management and supervision for
career fire and rescue personnel, the County has established as an agency of the County
government a Fire and Rescue Department. This agency is headed by the Director of Fire
and Rescue. The director shall serve as the County's representative on all fire and rescue
issues and shall perform duties and responsibilities in accordance with the established job
description. The County remains committed to maintaining a strong and viable volunteer
1
fire and rescue system that is supplemented by career fire and rescue employees as needed.
This agreement is intended to further enhance the partnership that exits between the County,
Volunteer Companies, and the Department by providing greater clarity to the role and
responsibility of each party. This agreement is also intended to support our mission to
provide the most efficient and cost effective fire and rescue services to the people of
Frederick County.
m. PURPOSE OF THE AGREEMENT
The purpose of this agreement is to provide a clear framework within which the Company,
Department, and County mutually operate to deliver fire and rescue services to the public.
This agreement is also designed to address a number of specific areas of responsibility that
have proven to be sources of conflict within combination fire and rescue systems of other
jurisdictions as they evolved. This document revises or supercedes any and all prior
agreements, either written or verbal, entered into between these parties to the extent that the
subject matter of any prior agreements is addressed or related to in the subject matter ofthis
document.
IV. CONDITIONS OF AGREEMENT
It is agreed that each party to this agreement acknowledge and respects the fact that each has
a primary responsibility and role in providing fire and rescue services to the citizens of
Frederick County, Virginia. It is further agreed that the relationship between the County,
Company, Department, and all members and employees shall reflect an attitude of
cooperation toward the achievement of effective and efficient fire and rescue services for
county citizens. It is intended that each party understand and respect the need for clear
policy and procedure so that a common sense of expectations can be maintained. Since this
agreement cannot address every policy or procedural issue that may be encountered, it is
understood that formal revisions of this agreement will be required from time to time.
Revisions may be made by mutual agreement of the parties.
2
V. PROVISO
A. SERVICE RESPONSIBILITY AND COMMITMENT:
I. It is the responsibility of the Company to deliver emergency fire, rescue, and
medical services to the citizens of the designated response area of the
Company in accordance with County dispatch and response procedure.
2. The Company further agrees to assist other County Fire and Rescue
Companies in delivering emergency fire, rescue, and medical services to the
citizens of Frederick County as needed, and in accordance with County
dispatch and response procedures.
3. The Company also agrees to provide assistance to other Fire and Rescue
Companies and governmental jurisdictions with which Frederick County has
established mutual aid agreements, in accordance with County dispatch and
response procedures.
4. The Company / Department shall aggressively work to recruit, train, and
maintain a viable Volunteer Fire and/or Rescue Company in accordance with
all applicable laws, rules, and regulations of the Commonwealth of Virginia
and the County of Frederick, Virginia.
S. The Company shall be responsible to provide and maintain a fire-rescue
station and appropriate fire and rescue vehicles and equipment for the area
serviced. In the event that a need for a specialized fire or rescue vehicle is
identified through the County Fire and Rescue Service planning process, the
Volunteer Company and the County shaH discuss procurement responsibility
as such needs occur.
6. As the governing body, the County accepts overall responsibility for the
provision of effective fire, rescue, and emergency medical services to the
citizens of Frederick County, Virginia.
7. The County, through its Fire and Rescue Department, is committed to
operating a combination volunteer and career fire and rescue system to
service the needs of public safety in the most cost effective manner. Primary
3
emphasis will be to preserve and perpetuate the continuation of a
predominantly volunteer fire and rescue system and to supplement the
staffing needs of the Company as required.
B. STATION STAFFING
1. Volunteer personnel of the Company shall, so far as possible, provide
staffing 24 hours a day, seven days a week as required for response to
incidents. The Company shall ensure that volunteer personnel responding to
incidents are trained and qualified in accordance with Federal, State, or
County requirements to perform required duties and that any required
licenses or certifications are maintained.
2. The County I Department agree to provide station staffing with career
personnel to supplement volunteers 10 hours per day, Monday through
Friday, excluding designated holidays. Actual work hours will be determined
by mutual agreement between the volunteer leadership of the Company and
the Fire and Rescue Department Director.
3. Subject to the availability of personnel, the County intends that coverage is
to be provided with a minimum of two (2) career employees per assigned
apparatus. Career personnel shall be NFPA Firefighter level one (1) and
EMT-B certified as a minimum. The Department shall ensure that career
personnel responding to incidents are trained and qualified in accordance
with Federal, State, or County requirements to perform required duties and
that any licenses or certifications required are maintained.
4. Career employees of the Fire and Rescue Department are permitted to
participate as members of County Volunteer Fire Companies during their off
duty hours. In order to guard both the Volunteer Company and the Fire and
Rescue Department from potential conflicts of interest, all parties to this
agreement recognize the need to restrict the level of management
4
participation in a Volunteer Company by County career employees. It is
agreed that career employees of the Fire and Rescue Department shall not be
permitted to serve as Chief, Assistant Chief, Deputy Chief, Rescue Captain,
President, Vice-President, or Treasurer ofa Volunteer Company or serve as
a voting delegate, officer, or committee chair of the Frederick County
Volunteer Fire and Rescue Association.
C. SELECTION AND ASSIGNMENT OF CAREER PERSONNEL
1. As the legal employer, the County shall have full responsibility for the
processing and selection of career employees of the Department. A single
screening and selection process shall be used to employ career personnel for
the Department regardless of the station to which the employee is ultimately
assigned.
2. The Fire and Rescue Department Director shall ensure that basic job
descriptions and employment qualifications, as well as the screening and
selection process for career personnel yield. employees that will adequately
serve the needs of the Volunteer Companies and the public. Volunteer input
into the requirements and procedures used shall be solicited through the
Frederick County Volunteer Fire and Rescue Association.
3. The Fire and Rescue Department Director shall be responsible for making
station assignments of career personnel. The Director's decisions on
personnel to be assigned to volunteer stations shall be made in consultation
with the volunteer leadership of the applicable company. The Director shall
also have the right to re-assign career personnel whenever, in his discretion,
it is deemed necessary. In all matters of personnel assignments and station
coverage, primary consideration shall be given to public safety needs.
4. Providing adequate funds are available within the Department's budget, part-
time temporary employees may be employed to provide coverage for full-
time career employees who are absent due to leave, training, special
5
assignment, or when a position is vacant. Part-time employees shall be
assigned at the Department's discretion.
D. EMPLOYEE SUPERVISION AND EVALUATION
1. As employees of the Fire and Rescue Department, career personnel are
ultimately responsible to the Department Director. By this agreement, the
Director of the Department delegates to the Company Chief his authority
over the career personnel while they are on duty at the volunteer station.
2. Day to day operation of the Company and routine supervision of career
personnel shall rest with the Company Chief or his designee. Work
assignments shall be of a nature consistent with the public safety mission of
the Company.
3. Career personnel assigned or detailed to the Company shall be subject to the
authority of the Company Chief or his designee and the applicable standards
and procedures of the Company.
4. In order to provide consistent direction throughout the work day, one of the
career employees assigned to the station shall be designated as the "senior
firefighter". The senior firefighter shall ensure that routine daily activities are
carried out as assigned. This person shall also serve as the officer in charge
of emergency incidents in the absence of an authorized volunteer officer. The
designated senior firefighter shall be selected by mutual agreement between
the volunteer Company Chief and the Fire and Rescue Department Director.
5. The Fire and Rescue Department's Director reserves the right to utilize career
personnel for projects or other work related assignments. Every effort shall
be made to ensure that a balance is maintained between Company, County,
and Department priorities and goals.
6. The Fire and Rescue Department Director shall be responsible for formal
performance evaluations of employees, as required under County personnel
policies. Evaluations of employees assigned to volunteer companies shall be
6
completed with input from the Company Chief
7. Disciplinary actions required for career employees must be administered by
the Director. Formal complaints concerning employee behavior or
performance must be forwarded from the Company Chief to the Director, in
writing, for official investigation. As a part of the personnel process, any
complaint must remain confidential between all parties connected with the
complaint.
8. Formal employee grievances concernmg Issues related to the volunteer
company must be forwarded from the employee to the Director, in writing,
for official investigation. Grievance procedures will be available to all career
employees pursuant to County personnel procedures.
9. Leave for career employees shall be taken in accordance with County
procedures except that only one career firefighter assigned to a station shall
be granted general leave at a time. Leave requests shall be made to the
Director, through the volunteer Company Chief, on appropriate leave request
forms.
E. F ACILITlES AND WORK ENVIRONMENT
I. Volunteer and career personnel have the right to an adequate, clean, and safe
work environment that is conducive to productive performance and good
morale among co-workers and the organizations. As the party responsible to
provide and maintain the fire station, it is the Company's responsibility to
provide and maintain a structurally safe and healthful work place that meets
all applicable code requirements for occupancy.
2. The facility shall have and maintain potable water, working plumbing,
adequate ventilation, heating, cooling, lighting, and trash removal. Any
deficiencies to these basic utilities shall be corrected in the most expedient
manner possible.
3. In addition to the basic service utilities, the Company shall provide and
7
maintain the following items to provide for the personal needs of employees
during the workday:
. Refrigerator
. Stove or microwave oven
. Space for personal lockers
. Furnished rest area / lounge
. Shower facility
. File space
. Protective clothing storage
4. Station maintenance and major repair is the responsibility of the Company.
Career personnel will participate in light cleaning and minor repair of the
station and grounds so as to maintain good order. General custodial duties
shall be shared equally by volunteer and career personnel.
D. APPARATUS AND EQUlPMENT
I. As the registered owner of the station's apparatus and equipment, the
Company agrees to authorize career employees of the Department to drive,
operate, and utilize same, providing its operation and use is in accordance
with established Company procedures. The Company Chief, or his designee,
shall be responsible for providing full orientation training to all new career
personnel assigned to the station on the proper operation and use of Company
apparatus and equipment.
2. The Company recognizes that in addition to emergency response, their
apparatus and equipment will be used by career personnel to perform routine
duties such as physical fitness training, public fire and rescue safety
education programs, fire prevention inspections, fire and EMS training, pre-
fire planning, mapping, etc.
3. It is the responsibility of the Company to maintain all apparatus and
equipment that is in service, in proper safe working order. While vehicle.
8
maintenance and repair is the responsibility ofthe Company, career personnel
will participate in cleaning and minor preventative maintenance. Minor
repairs to apparatus and equipment may be made by career personnel when
such repairs are within their mechanical capability and the work has been
authorized by the Company Chief.
4. Daily apparatus and equipment inspections and testing shall be performed by
career personnel to ensure operational readiness. Deficiencies found shall be
noted and reported to the appropriate Company officer.
5. The Company agrees that all apparatus and equipment to be used by County
personnel will conform to all applicable standards including those required
by Local, State, and Federal law.
G. TRAINING
1. The Department will require career personnel to maintain knowledge and
skill proficiency through an in-station training program. Volunteer personnel
who are available during hours the station is staffed by career personnel are
encouraged to participate in the in-station training.
2. The Department will assist Volunteer Companies with their station training
program as available and requested. The Department will also assist with the
development of countywide courses that will be coordinated through the
County Fire and Rescue Association.
3. From time to time, the Department may send one or more career people to
special training programs while on duty. When this occurs, every effort shall
be made to cover the vacant position with a qualified volunteer or part-time
career employee.
H. FUNDING
1. As the governing body responsible for the overall provision of Fire and
Rescue Service, the County recognizes its obligation to provide financial
9
assistance to the Volunteer Companies that have accepted responsibility for
actual service delivery to the citizens.
2. State code of the Commonwealth of Virginia enable local government to
make both donations and loans to Volunteer Fire and Rescue Companies.
Based on this authority, the County intends to make public funds available
to Volunteer Companies, subject to appropriations, to support their public
safety mission.
3. Monetary contributions made to the Company, by the County, shall be
appropriated through the annual County budget process. Funding allocated
to individual Companies shall be consistent with a funding formula that has
been mutually agreed to by the County and the Volunteer Fire and Rescue
Association.
4. Should the County choose to make loans available to Volunteer Companies,
they shall be subject to appropriations and made in accordance with
contractual procedures promulgated by the County and all applicable laws
and regulations.
5. The County is authorized under State code to solicit voluntary contributions
to public services from developers as part of the zoning process. The County
recognizes that proffers to aide in providing fire and rescue services should
be included in discussions with zoning applicants. Fire and rescue proffer
policies shall be developed in conjunction with the Volunteer Fire and
Rescue Association.
6. Under law, the County is required to ensure that public funds which it
disburses, are expended properly for their intended purpose. Each Company
that receives public funds provided from Federal, State, or Local government
sources shall maintain records of receipt and expenditure of such funds so as
to document proper use of said funds for their intended purpose. The County
shall have the right to audit the records of expenditure of public funds by the
Company if deemed necessary.
10
7. Each Volunteer Fire or Rescue Company who receIVes public funds
disbursed by the County shaH file the required Annual Financial Statement
using such forms and procedures as prescribed by the County.
8. Receipt of public funds by a Company shall not in anyway effect the
Company's right to solicit or raise money locally from the community,
providing such local fund-raising activities are conducted within the bounds
of applicable laws or regulations.
9. During the County's annual budget process, individual Companies may make
requests for special appropriations. Such requests shall be forwarded through
the Fire and Rescue Department along with the recommendation of the Fire
and Rescue Association.
1. INSURANCE AND LIABILITY
1. Each party shall provide insurance or a program of self-insurance which shall
cover damage or loss to real or personal property caused by simple acts or
omissions by their members or employees.
2. Each party shall provide insurance or a program of self-insurance which shall
cover injury or death suffered during the performance of authorized duties by
their representative members or employees. Such insurance shall include
benefits for medical expenses, coverage for lost wages due to disability, and
survivor benefits due to loss of life. The specific limits of such coverages
shall be determined by each party for their respective personnel.
3. Each party shall indemnify, defend, and hold the other parties to this
agreement harmless from and against any and all claims, liabilities, suits,
losses, cost, expenses, or damages arising from any negligent act or omission
by their organization, members, employees, servant, or agent.
4. Each party shall participate in a risk prevention program to mmlllllze
liability of death or injury to personnel and damage or loss of property.
11
--_......_<--'--.---~-
J. MODIFICATION AND TERMINATION OF AGREEMENT
I. This agreement supercedes all prior conflicting oral or written contracts,
memorandums of understanding, or other agreements between or among the
parties.
2. This agreement can only be amended or modified by a document in writing,
signed by all parties hereto.
3. This agreement may be terminated by either party only upon six (6) months
written notification to the other.
4. Should the Company dissolve its organization by its own act, or should the
Company be dissolved due to its failure to comply with required laws or
regulation, this agreement shall automatically terminate.
5. Since the assets of the Company were derived through public contribution,
the Company agrees in the event of dissolution to vest title to all land,
buildings, apparatus, and equipment to an organization who will be
committed to carrying on the Company's public safety services to the citizens
of Frederick County, Virginia.
6. This agreement shall come into effect when signed by all executing parties
and shall remain in effect, subject to modifications as described above.
12
K. EXECUTING PARTIES
l.~~L.-
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-:DCA~u.\..cn :\\\~\.~
Chief
Volunteer Fire and Rescue Company
~~~,JL~
Director
Frederick County Fire and Rescue Department
~~~
Chairman
Frederick County Board of Supervisors
~
Fredenc County Adm' istrator
ATTEST
;J'lld~ T ~71; ~
.:[}p/Clerk to the Board of Supervisors
County of Frederick, Virginia
13
Date
Date
Date
Date
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Date
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Date
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---------,-~
Exhibit B
DRAFT
RESOLUTION
OF THE MEMBERSHIP OF THE MILLWOOD STATION FIRE AND
RESCUE COMPANY 21, INC., REGARDING A $2,160,000 TAX-EXEMPT
REVENUE NOTE (FIRE HOUSE PROJECT), SERIES 2003
("BANK-QUALIFIED") AND A $2,140,000 COMMERCIAL NOTE
WHEREAS, the Millwood Station Fire and Rescue Company 21, Inc., (the "Comoanv")
is a non-stock, membership, not-for-profit, tax-exempt corporation with the purpose of protecting
the citizens of the County of Frederick, Virginia, and the surrounding area from fire, and to assist
in the preservation of life and property from hazardous elements by forming and operating a
volunteer fire department; and
WHEREAS, the Company desires to obtain to (i) acquire, construct, and equip a new
firehouse and related facilities thereto to be located at Lot 5, Costello Drive, Prince Frederick
Office Park, Winchester, Virginia 22602, in Frederick County, (the "Countv"); and (ii) pay the
costs of issuance thereof (the "Project"); and
WHEREAS, Section 150( e) of the Internal Revenue Code of 1986 (the "Code"), among
other things, requires a written agreement between a qualified volunteer fire department and a
municipality in order for a fire department loan to qualify for favorable tax treatment under the
Code; and
WHEREAS, in connection with the consideration of these matters by the Company's
members (the "Members"), the draft forms of the following documents have been presented by
legal counsel at this meeting and described to the Members:
A. Specimen $2,160,000 Tax-Exempt Revenue Note (the "Tax-Exempt Note")
(attached hereto as Exhibit A) and specimen $2,140,000 Commercial Note (the
"Commercial Note") (attached hereto as Exhibit B) (collectively, the "Notes");
B. Tax Certificate ofthe Company, dated as of May 1, 2003 ("Tax Certificate");
C. Loan Agreement, dated as of May 1, 2003, between the Bank and the Company
("Loan Agreement"), including the Notes;
D. Credit Line Deed of Trust dated as of May 1, 2003, from the Company to the
Deed of Trust trustees, acting for the benefit of the Bank ("Deed of Trust");
E. Security Agreement, dated as of May 1, 2003, between the Company and the
Bank ("Security Agreement").
_o~____..._______._____________~
DRAFT
The foregoing documentation, including various additional documents, agreements and
certificates as may be necessary or desirable to consummate the transactions contemplated by the
financing of the Project, all as may be advised by legal counsel to the Company, are referred to
collectively herein as the "Basic Documents";
WHEREAS the Company has properly published, in a newspaper of general circulation
in the County, due public notice and held a public hearing on the date hereof in compliance with
Section 147(f) of the Code regarding the financing; and
WHEREAS, financing plans of the Company are being finalized at this time.
NOW, THEREFORE, BE IT RESOLVED BY THE MEMBERS OF THE
MILLWOOD STATION FIRE AND RESCUE COMPANY 21, INC.:
1. Essential Governmental Purpose of Proiect. It is hereby determined to be
necessary, advisable, and in furtherance of an essential governmental purpose for the Company
to borrow an aggregate amount of $4,300,000 to pay, in part, the costs of the Project.
2. Designated Officers. The President and Vice-President of the Company, either
one of whom may act are hereby empowered, authorized and directed to negotiate, approve,
execute, and deliver appropriate, final and complete forms of any Basic Documents, as may be
advised by legal counsel to the Company, and as shall be determined by the officers of the
Company to be in the best interests of the Company to carry out the purposes and intent of this
Resolution. The execution and delivery thereof shall be conclusive evidence of the approval of
the final form of such Basic Documents pursuant to the authority and direction of the Members
of the Company as provided by this Resolution.
3. Approval of Forms of Basic Documents. The forms of the Basic Documents that
will be required for the financing of the Project, as presented to and described to the Members,
are hereby approved in all respects, with such modifications, insertions, completions or
omissions as may be approved by the President of the Company (the "President"), or the Vice-
President of the Company (the "Vice-President"), either of whom may act, on the advice ofIegal
counsel. The execution and delivery of the Basic Documents by the President or the Vice-
President shall be conclusive evidence of the approval ofthe final form thereof, and the President
or the Vice-President is hereby further authorized and directed to execute and deliver any such
additional instruments as may be necessary or desirable to consummate the transactions
contemplated by the financing of the Project. Such execution and delivery thereof shall be
conclusive evidence of the final approval pursuant to the authority and direction of the Members,
all as provided by this Resolution.
4. Authorization of Additional Instruments. In addition, all officers of the Company
are hereby directed and authorized to take all such further actions and to execute and deliver all
such additional instruments as shall be necessary or desirable, or as may be advised by legal
counsel to the Company, to carry out the financing plans ofthe Company, all as described above.
2
-"-~---
DRAFT
5. Authorization and Ratification of Additional Acts. All acts of any officers of the
Company that have been or will be taken in furtherance of the purposes and intent of this
Resolution are hereby approved, pre-approved, authorized, directed, confirmed and ratified in all
respects.
6. Execution of Basic Documents and Related Documents. Any officers of the
Company as may be required are hereby authorized to execute and to deliver (and the Secretary
of the Company is authorized to attest to such signatures as may be required) the Basic
Documents to which the Company is a party and all other instruments related to them, all as may
be advised by legal counsel to the Company in connection with the Project.
7. Incorporation of Agreement. The terms and provisions of the Agreement with the
County, dated July 30, 1998, (the "Agreement") whereby the Company agrees to provide fire
protection services to the County as stated therein, are hereby ratified, and are incorporated in
full into this Resolution as if fully stated herein.
8. Incorporation of Bank Commitment Letter. The terms and conditions contained
in that certain Commitment Letter proposed by Branch Banking and Trust Company of Virginia,
dated May _, 2003, regarding the financing of the Project and the issuance of the Bonds by the
Authority (a copy being attached hereto to this Resolution as Exhibit C), are hereby approved,
agreed and consented to by the Company.
9. Certification Regarding Use of Proceeds of Notes. The Company certifies that
over ninety-five percent (95%) of the proceeds of the Tax-Exempt Note, as described herein,
shall be used for the purpose of providing funding for the Project in compliance with Section
150(e) of the Code, all as may be advised by legal counsel. Further, the Company certifies that it
shall use the proceeds of the Commercial Notes for portions of the Project that shall not qualify
for exempt financing under Section 150(e) of the Code, all as may be advised by legal counsel.
10. Compliance with Basic Documents. The Company shall adopt and implement
such programs of operation as will assure continued compliance by the Company with the terms
and conditions imposed upon it by the Basic Documents and with the applicable provisions of
the Code of Virginia, 1950, as amended.
11. Designation by the Companv of the Tax-Exempt Note as "Bank-Oualified". In
accordance with the Commitment Letter, the Company hereby designates the $2,160,000 Tax-
Exempt Note as a qualified tax-exempt, "bank-qualified" obligation under the provisions of
Section 265(b)(3) of the Code, and, further, the Company hereby affirms its reasonable
expectations to comply with the $10 million limitations as set forth in the Code.
12. Authorization of Further Action. The Members hereby authorize, approve and
direct the officers of the Company to take all such further action as may be necessary or desired
in order to carry out the purposes and intent of this Resolution and in order to consummate the
transactions contemplated by the financing of the Project.
3
DRAFT
This Resolution shall take effect immediately.
Dated: May 12, 2003
President, Millwood Station Fire
and Rescue Company 21, Inc.
CERTIFICATE
The foregoing Resolution was duly approved upon a majority vote of at least a quorum of
the eligible voting members of the Millwood Station Fire and Rescue Company 21, Inc. (the
"CompanY"), at a general meeting 0 the Company duly held on May 12,2003, as required in the
Articles ofIncorporation of the Company, Bylaws and the Constitution.
Respectfully submitted,
By:
Secretary, Millwood Station Fire
and Rescue Company 21, Inc.
DGW0464.DOC
Signature Page and Certificate to
Resolution
George R Aldhizer. Jr.
Donald E. Showalter
Glenn M. Hodge
M. Bruce Wallinger
1'-'\glas L. Guynn
ory T. St. Ours
cnarles F. Hilton
Daniel L. Fitch
Thomas E. Ullrich
Carolyn Madden Perry
Marshall H. Ross
G. Chris Brown
Carhleen P. Welsh
~OJ\~OC-+ ~
WHARTON ALDHIZER & WEA VERPLC
ATTORNEYS AT LAW
\"nn.h 1) ,
TELEPHONE
HARRISONBURG (540) 434.0316
LEXINGTON (540) 463.3691
STAUNTON (540) 885.0199
FAX (540) 434.5502
G. Rodney Young, II
Mark W. Botkin
Stephan W. Milo
Jennifer E. Shirkey
Jared L. Burden
Lucy V. Ivanoft
Brian K. Brake
Martha J. Damon
Walter P. Sowers, II
Dana R. Cotmier
Humes J. Franklin, III
Matthew W. Light
100 SOUTI-I MASON STREET
P. O. Box 20028
HARRISONBURG, VIRGINIA 22801.7528
WRITER'S DIRECT DIAL: (540) 438.5356
WRITER'S E.MAIL: CPERRY@WAWlAW.COM
lexingtOn Office
George H. Roberts, Jr.
May 13,2003
VIA OVERNIGHT MAIL
John R. Riley, Jr., County Administrator
Frederick County, Virginia
107 North Kent Street
Winchester, Virginia 22601
Re: Approval Concurrence by Frederick County for Millwood Station Fire and Rescue
Company 21, Inc.(the "Company") to Issue Exempt and Taxable Debt
Dear Mr. Riley:
Enclosed please find three (3) approval resolutions, complete with all of the necessary
attachments, to be considered tomorrow by the Board of Supervisors of Frederick County, Virginia (the
'\.... "Board"). For your convenience, we have prepared three new resolution packages for you, which include
an executed copy of the Company's authorizing resolution, approved by the Company on May 12,2003,
attached as Exhibit B, so that you may replace the previously mailed ones with the ones enclosed in this
letter. Please note that no changes have been made to the approval resolution being considered by the
Board on Wednesday May 14,2003.
~ndicated to my secretary, Erika, that she wanted to distribute the executed Company
resolution to the members of the Board. Therefore, we have enclosed one extra copy of that resolution for
copymg purposes.
Please do not hesitate to contact me should you need assistance in any way.
Sincerely yours,
~
zt;JuA. ~
Carolyn Madden Perry
Enclosure
cc: letter only via regular mail
Carol Bayliss, Deputy County Administrator, Frederick County
Lawrence R. Ambrogi, County Attorney, Frederick County
John Harden, President, Millwood Station Fire and Rescue Company 21, Inc
T. Joe Tisinger, Counsel to Millwood Station Fire and Rescue Company 21, Inc.
Gregory D. Price, Vice President, BB&T Winchester
B. Scott Arthur, Senior Vice President, BB&T Winchester
57802/1/CMP/EA2242.DOC
.
RESOLUTION
OF THE MEMBERSHIP REGARDING THE AUTHORIZATION FOR
THE ISSUANCE, SALE AND DELIVERY OF THE OF THE $2,160,000
MILLWOOD STATION FIRE AND RESCUE COMPANY 21, INC., TAX-
EXEMPT REVENUE NOTE (FIRE HOUSE PROJECT), SERIES 2003
("BANK-QUALIFIED") AND A $2,140,000 COMMERCIAL NOTE, AND
PROVIDING FOR THE FORM AND DETAILS THEREOF
WHEREAS, the Millwood Station Fire and Rescue Company 21, Inc., (the "Company")
is a non-stock, membership, Virginia corporation with the purpose of protecting the citizens of
Frederick County, Virginia (the "County") and the surrounding area from fire, and to assist in the
preservation of life and property from hazardous elements by forming and operating a volunteer
firedepanrnent;and
WHEREAS, the Company desires to (i) acquire, construct, and equip a new firehouse
and related facilities thereto to be located at Lot 5, Costello Drive, Prince Frederick Office Park,
Winchester, Virginia 22602, in the County, and (ii) pay the costs of issuance thereof (the
"Project"); and
WHEREAS, Section l50(e) of the Internal Revenue Code of 1986 (the "IRe"), among
other things, requires a written agreement between a qualified volunteer fire department and a
municipality in order for a fire department loan to qualify for favorable tax treatment under the
IRC; and
WHEREAS, the Company, upon due notice therefor, has duly held a public hearing
immediately prior to the holding of the regular meeting of the membership of the Company (in
compliance with Section 147(f) of the IRC), in connection with the authorization ofthe issuance,
sale and delivery to Branch Banking and Trust Company of Virginia (the "Bank") of the
Company's $2,160,000 Tax-Exempt Reyenue Note (the "Tax-Exempt Note") and the
Company's $2,140,000 Commercial Note (the "Commercial Note") in order to provide funds for
the Company to pay a portion of Project; and
WHEREAS, in connection with the consideration of these matters by the Company's
members (the "Members"), the draft forms of the following documents have been presented by
legal counsel at this meeting and described to the Members:
A. Specimen Tax-Exempt Revenue Note (attached hereto as Exhibit B) and
specimen Commercial Note (attached hereto as Exhibit C) (collectively, the
"Notes")'
-,
B. Tax Certificate of the Company, dated as of May 1,2003 ("Tax Certificate");
C. Loan Agreement, dated as of May 1, 2003, between the Bank and the Company
("Loan Agreement"), including the Notes;
D. Credit Line Deed of Trust, dated as of May 1, 2003, from the Company to the
Deed of Trust trustee, acting for the benefit of the Bank ("Deed of Trust"); and
E. Escrow Agreement, dated as of May 1, 2003, among the Company, the Bank (as
purchaser ofthe Tax-Exempt Note) and the Bank (as Escrow Agent) (the "Escrow
Agreement").
The foregoing documentation, including various additional documents, agreements and
certificates as may be necessary or desirable to consummate the transactions contemplated by the
financing of the Project, all as may be advised by legal counsel to the Company and bond
counsel, are referred to collectively herein as the "Basic Documents"; and
WHEREAS it is reasonably anticipated that the Board of Supervisors of Frederick
County, Virginia, as the governing body thereof, shall adopt an approval and concurrence
resolution on May 14, 2003, in connection with the issuance, sale and delivery of the Tax-
Exempt Note by the Company, as required under Section 147 of the IRC; and
WHEREAS, financing plans of the Company are being finalized at this time for a
closing on the Notes as soon as practicable,
NOW, THEREFORE, BE IT RESOLVED BY THE MEMBERS OF THE
MILLWOOD STATION FIRE AND RESCUE COMPANY 21, INC.:
1. Essential Governmental Purpose of Proiect. It is hereby determined to be
necessary, advisable, and in furtherance of essential governmental purposes for the Company to
borrow an aggregate amount of $4,300,000 to pay, in part, the costs of the Project.
2. Designation of Notes; Officers. The Company hereby approves the issuance, sale
and delivery of its Tax-Exempt Note to be designated: $2,160,000 Millwood Station Fire and
Rescue Company 21, Inc, Tax-Exempt Revenue Note (Fire House Project), Series 2003 ("Bank-
Qualified"); and further the issuance, sale and delivery of its $2,140,000 Commercial Note, to
the Bank, pursuant to the terms and conditions set forth in that certain Commitment Letter
proposed by Branch Banking and Trust Company of Virginia, dated May 6, 2003, regarding the
financing of the Project and the issuance of the Tax-Exempt Note and the Commercial Note by
the Company to the Bank (a copy being attached hereto as Exhibit A). Such terms and
provisions of the Commitment Letter are hereby approved, agreed and consented to by the
Company. The Notes shall be in the substantial forms attached hereto as Exhibit B and Exhibit
C, which terms thereof are incorporated herein by reference thereto and hereby approved and
confirmed.
The President and Vice-President of the Company, either one of whom may act
are hereby empowered, authorized and directed to negotiate, approve, execute, and deliver
appropriate, final and complete forms of any Basic Documents, as may be advised by legal
counsel to the Company and bond counsel, and as shall be determined by the officers of the
Company to be in the best interests of the Company to carry out the purposes and intent of this
Resolution. The execution and delivery thereof shall be conclusive evidence of the approval of
the final form of such Basic Documents pursuant to the authority and direction of the Members
of the Company as provided by this Resolution.
2
3. Approval of Forms of Basic Documents. The forms of the Basic Documents that
will be required for the financing of the Project, as presented to and described to the Members,
are hereby approved in all respects, with such modifications, insertions, completions or
omissions as may be approved by the President of the Company (the "President"), or the Vice-
President of the Company (the "Vice-President"), either of whom may act, on the advice ofIegal
counsel and bond counsel. The execution and delivery of the Basic Documents by the President
or the Vice-President shall be conclusive evidence of the approval of the final form thereof, and
the President or the Vice-President is hereby further authorized and directed to execute and
deliver any such additional instruments as may be necessary or desirable to consummate the
transactions contemplated by the financing of the Project. Such execution and delivery thereof
shall be conclusive evidence of the final approval pursuant to the authority and direction of the
Members, all as provided by this Resolution.
4. Authorization of Additional Instruments. In addition, all officers of the Company
are hereby directed and authorized to take all such further actions and to execute and deliver all
such additional instruments as shaIl be necessary or desirable, or as may be advised by legal
counsel to the Company and bond counsel, in order to carry out the financing plans of the
Company, all as described above.
5. Authorization and Ratification of Additional Acts. All acts of any officers of the
Company that have been or will be taken in furtherance of the purposes and intent of this
Resolution are hereby approved, pre-approved, authorized, directed, confirmed and ratified in all
respects.
6. Execution of Basic Documents and Related Documents. Any officers of the
Company as may be required are hereby authorized to execute and to deliver (and the Secretary
of the Company is authorized to attest to such signatures as may be required) the Basic
Documents to which the Company is a party and all other instruments related to them, all as may
be advised by legal counsel to the Company and bond counsel in connection with the Project.
7. Incorooration of Agreement. The terms and provisions of the Agreement with the
County, dated July 30, 1998, (the "Agreement") whereby the Company agrees to provide fire
protection services to the County as stated therein, are hereby ratified, and are incorporated in
full into this Resolution as if fully stated herein.
8. Certification Regarding Use of Proceeds of Notes. The Company certifies that
over ninety-five percent (95%) of the proceeds of the Tax-Exempt Note, as described herein,
shall be used solely for the purpose of providing funding for the Project that shall comply with
Section l50(e) of the IRC, all as may be advised by bond counsel (such costs being referenced
hereinafter as the "Fire House Costs"). Further, the Company certifies that it shall use the
proceeds of the Commercial Note, or otherwise lawfuIly available funds therefor, to pay the costs
of the portions of the Project that shall not constitute work on the Project allocable to the Fire
House Costs, and, accordingly, shall not qualify for exempt financing under Section 150(e) of
the IRC, all as may be advised by bond counsel.
9. Compliance with Basic Documents. The Company shall adopt and implement
such programs of operation as will assure continued compliance by the Company with the terms
3
and conditions imposed upon it by the Basic Documents and with the applicable provisions of
the Code of Virginia, 1950, as amended, and the IRe.
10. Registration. Transfer and Exchange. The Company hereby appoints the
Secretary of the Company as its registrar and transfer agent to keep books for the registration and
transfer of the Tax-Exempt Note and to make such registrations and transfers on such books
under such reasonable regulations as the Company may prescribe.
Upon surrender for transfer or exchange of the Tax-Exempt Note at the office of
the Secretary, the Company shall cause the execution and delivery in the name of the transferee
or registered owner, as applicable, of the new Tax-Exempt Note for a principal amount equal to
the Tax-Exempt Note surrendered and of the same date and tenor as the Tax-Exempt Note
surrendered, subject in each case to such reasonable regulations as the Company may prescribe.
If surrendered for transfer, exchange, redemption or payment, the Tax-Exempt Note shall be
accompanied by a written instrwnent or instruments of transfer or authorization for exchange, in
fonn and substance reasonably satisfactory to the Secretary, duly executed by the registered
owner or by his or her duly authorized attorney-in-fact or legal representative.
The new Tax-Exempt Note delivered upon any transfer or exchange shall be valid
general obligations of the Company, evidencing the same debt as the Tax-Exempt Note
surrendered and shall be entitled to all of the security and benefits of this Authorizing Resolution
to the same extent as the Tax-Exempt Note surrendered.
11. Designation bv the Company of the Tax-Exempt Note as "Bank-Qualified". In
accordance with the Commitment Letter, the Company hereby designates its Tax-Exempt Note
as a qualified tax-exempt, "bank-qualified" obligation under the provisions of Section 265(b)(3)
of the IRC, and, further, the Company hereby affinns its reasonable expectations to comply with
the $10 million limitations as set forth in the IRC for the Calendar Year 2003.
12. Escrow Agreement. It is to be understood that the proceeds of the Tax-Exempt
Note, upon the issuance and funding thereof, shall b~ subject to the terms and provisions of the
Escrow Agreement in order for the Company to comply with the provisions of the IRC in
connection with exempt obligations of a qualified volunteer fire department, all as described
therein.
13. Authorization of Further Action. The Members hereby authorize, approve and
direct the officers of the Company to take all such further action as may be necessary or desired
in order to carry out the purposes and intent of this Resolution and in order to consummate the
transactions contemplated by the financing of the Project.
This Resolution shall take effect immediately.
Dated: May12,2003
4
CERTIFICATE
The foregoing Resolution was duly approved upon a majority vote of at least a quorum of
the eligible voting members of the Millwood Station Fire and Rescue Company 21, Inc. (the
"Company"), at a general meeting 0 the Company duly held on May 12, 2003, after the holding
of a public hearing on the issuance, sale and delivery to the Bank of the Company's Tax-Exempt
Note and the Commercial Note, all as required in the Articles of Incorporation, the Bylaws and
the Constitution of the Company.
Respectfully submitted,
By:
Secr ary, Millwood Station Fire
and Rescue Company 21, Inc.
Exhibit A:
Exhibit B:
Exhibit C:
Bank Commitment Letter
Tax-Exempt Note
Commercial Note
DGW0464.DOC
Exhibit A
BB&T
Branch Banking & Trust Co.
of Virginia
Commercial Loans
115 N. Cameron Street
Winchester, VA 22601
May 12, 2003
Mr. John A. Harden,
President
Millwood Station Volunteer Fire and Rescue Company 21
P. O. Box 3037
Winchester, VA 22604
Dear Mr. Harden:
Re: Revised Commitment Letter - Construction Loan
Branch Banking and Trust Company of Virginia ("Bank") is pleased to offer its commitment to make a construction loan in
the amount offour million three hundred thousand ($4,300,000) to Millwood Station Volunteer Fire and Rescue Company
21 ("Borrower"). This letter does not set forth all the terms and conditions of the loan offered herein. Rather, it is only an
outline, in summary format, of the major points of understanding which shall be the basis of the final loan documentation
(all of which are collectively referred to as the "Loan Documents"), most of which are described below. The date on which
the last of the Loan documents is executed is hereinafter referred to as the "Closing Date." The Loan Documents shall have
many terms and conditions not set forth herein, including but not limited to conditions precedent, representations and
warranties, affurnative covenants, negative covenants, events of default, definition of terms, and other provisions customary
to fmancing (1) by Bank generally and (2) of the type contemplated by this letter.
A) Tax Exempt Financing:
Loan Amount. The Loan Amount shall equal $2,160,000.00
Purpose. Proceeds of the loan shall be used for constructing and equipping a New Fire Station House (the "Improvements")
located on Lot 5 Prince Frederick Office Park, Phase 2, Shawnee District, Frederick County, V A 22602. (Collectively the
"Property") .
Interest Rate. 75% of the Bank's Prime Rate, as adjusted from time to time by Bank. Based on the Bank's Prime Rate of
4.25%, the initial interest rate would be 3.1875% if the loan were to close today.
Prepayment Compensation. Any prepayment of the principal of the loan from proceeds of a transaction from another
financial institution shall be accompanied by an appropriate prepayment penalty of not less than 1% of the prepayment
amount.
Fees. Payment due on the closing date of a non-refundable origination fee of $ 1,000.00. In addition, Borrower shall pay
all legal fees, recording fees, appraisal fees, and other costs incUrred by Bank in connection with the making, documenting
and closing of the loan.
Repayment Terms. Borrower shall pay accrued interest monthly commencing on the 30th day of the month following the
Closing Date and the 30th day of each month thereafter for a period of thirty-six (36) months. Principal curtailments shall
be at the borrower's discretion.
\R....R.l'lES\2001\CurltllliUlICm lelIa COlIslruclion Tl'J'lll (AliI 4_!7.0I
Corrunitment Letter
Page 2
05/08/03
Collateral. To secure payment of the loan, Borrower shall grant, pledge, or convey to Bank the following collateral:
1. A first and prior deed of trust on the real property, improvements and fixtures owned by Millwood
Station Volunteer Fire and Rescue Company 21 and situated in Frederick County, Virginia.
2. A pledge agreement of the BB&T Trust Account with a minimum balance maintenance of $1,000,000
subject to semi-annual testing of the trust account. The borrower has the ability to use the fimds from the
trust for fimding and other needs as the company deems necessary. The bank will establish two testing
dates of June 30 and December 30 of each year to ensure that the minimum balance requirement is
maintained.
Qualifications. In order for Millwood Station Volunteer Fire and Rescue Company 21 to qualifY for a tax-exempted rate,
the Bank will require an attorney's opinion, by an attorney acceptable to the Bank, addressing the following:
I. Eligible use of funds for essential assets only;
2. Evidence of the filing of the necessary IRS Forms;
3. Evidence of compliance for a Public Notice and Hearing requirements;
4. Borrower's status as a small or large issuer; and
5. Acceptability of contract with Frederick CountylCity of Winchester for tax exempt
eligibility.
B) The Taxable Transaction - The "Commercial Loan" amount will equal $2,140,000 to cover the financing of the
equipment and construction of the Banquet Facility.
a. Interest Rate. Bank's Prime Rate minus .50 percent per annum, as adjusted from time to time by
Bank subject to a maximum rate of 8.25% and a minimum rate of 3.75%. If the loan closed today,
the starting interest rate on the loan would be 3.75%.
b. Purpose. Proceeds of the loan shall be used for constructing and equipping the Banquet Facility (the
"Improvements") located on Lot 5 Prince Frederick Office Park, Phase 2, Shawnee District,
Frederick County, VA 22602. (Collectively the "Property").
c. Prepayment Compensation. Any prepayment of the principal of the loan from proceeds of a
transaction from another financial institution shall be accompanied by an appropriate prepayment
penalty of not less than 1 % of the prepayment amount.
d. Fees. Payment upon acceptance on the closing date ofa non-refundable origination fee of $1,000.00.
In addition, Borrower shall pay all legal fees, recording fees, appraisal fees, and other costs incurred
by Bank in connection with the making, documenting and closing of the loan.
e. Repayment Terms. Borrower shall pay accrued interest monthly commencing on the 30th day of the
month following the Closing Date and the 30th day of each month thereafter for a period of thirty-six
(36) months. Principal curtailments shall be at the borrower's discretion.
f. Collateral. To secure payment of the loan, Borrower shall grant, pledge, or convey to Bank the
following collateral:
1. A first and prior deed of trust on the real property, improvements and fixtures owned by
Millwood Station Volunteer Fire and Rescue Company 21 and situated in Frederick County,
Virginia.
11. An assignment of proceeds from the sale of existing property with a minimum of $850,000
applied to the principal balance.
Ill. A pledge agreement of the BB&T Trust Account with a minimum balance maintenance of
$1,000,000 subject to semi-annual testing of the trust account. The borrower has the ability to
Commitment Letter
Page 3
05/08/03
use the funds from the trust for funding and other needs, as the company deems necessary. The
bank will establish two testing dates of June 30 and December 30 of each year to ensure that the
minimum balance requirement is maintained.
Copy of Organizational Documents and Authorization. If requested by Bank, Borrower shall furnish a true and
complete copy of its Articles of Organization, Operating Agreement and Certificate of Filing as filed with the Virginia
State Corporation Commission. Further, the Borrower hereby authorizes Bank to file such UCC Financing Statements
describing the collateral in any location deemed necessary and appropriate by Bank in order to ensure that UCC filings are
made on or prior to the anticipated Closing Date.
Hazard Insurance. On the Closing Date, Borrower shall provide Bank a hazard insurance policy for the replacement cost
of the insurable items of the Collateral, naming Bank as lienholder/loss payee. The insurance company issuing the policy
must be acceptable to Bank. The borrower shall have general liability insurance.
Title Insurance. At least five days prior to the Closing Date, a title corrunitment from a title insurance company acceptable
to Bank listing all liens, encumbrances, and easements covering the Property. On the Closing Date, a title insurance policy
insuring Bank's interest as mortgagee for the full amount of the loan which may contain only those exceptions acceptable to
Bank. The title insurance company issuing the policy must be acceptable to Bank.
Environmental Audit. Prior to the Closing Date, Borrower shall obtain an environmental ASTM Report from an
enviromnental firm acceptable to Bank, as Bank may require in its sole discretion, which shall be satisfactory to Bank in its
sole discretion.
Appraisal. Prior to the Closing Date, an appraisal of the real property and improvements, ordered by and acceptable to
Bank, indicating an as-built value of at least $ 4,300,000.00.
Loan Agreement. Borrower shall execute a comprehensive loan agreement ("Loan Agreement") with Schedule CC
attached which shall supersede this Commitment Letter and all agreements formed by its acceptance, which shall contain,
among other things:
A. Key financial ratios and limitations to be contained in the loan agreement shall include:
1. Cash Flow Coverage Ratio: 1.00 times Debt Service. Cash Flow is defined as net profit after taxes,
plus depreciation and amortization and interest. Debt Service is defined as current maturities of long term
debt plus interest expense.
2. Capital Expenditure Limitation: Expenditures for fixed assets in any fiscal year shall not exceed in the
aggregate the sum of$ 100.000.00 without the prior written consent of Bank.
3. Notice of Litigation: The borrower shall provide the Bank with notice of litigation in an amount of
$500,000 or more.
4. Minimum Liquidity: The borrower shall maintain a minimum liquidity of $1,000,000 during the term of
this loan transaction on the appropriate testing dates as stated herein.
5. Trust and Operating Accounts: The borrower shall maintain the Trust and operating accounts with
BB&T.
6. The borrower shall maintain its current tax-exempt status as a 501(C)(3) or 501(C)(4) organization
whichever is applicable.
B. Non-exclusive list of covenants.
I. Borrower shall not be permitted to incur any additional debt or grant security interest in, or permit liens to
be filed on, any of its assets for the benefit of any creditor other than Bank.
Commitment Letter
Page 4
05108103
2. Borrower shall not be permitted to incur any additional lease obligation or grant security interest in, or
permit liens to be filed on, any of its assets for the benefit of any creditor other than Bank.
3. Borrower shall maintain its current form of existence; maintain adequate liability and hazard insurance on
its buildings, equipment, and inventory; and comply with all local, state and federal laws and government
regulations to which it is subject.
4. Borrower shall maintain its current management and ownership; and not be permitted to merge into or
acquire the capital stock of any entity.
5. Borrower shall not be permitted to acquire substantially all of the assets of any other entity. or to sel! any
of its assets other than in the ordinary course of business.
C. Financial Information. During the term of the loan, Borrower shall provide Bank, in form and content
acceptable to Bank:
1. It's fiscal year-end financial statement as soon as available and in any event within 120 days of
Borrower's fiscal year-end.
2. Its Federal Tax Returns on an annual basis as soon as available and in any event within 120 days of
Borrower's fiscal year-end.
Current Covenants. At all times prior to the Closing Date, Borrower shall:
I. Not incur additional funded debt or enter into leases that would increase annual lease payments; or grant
security interests in, or permit liens to be filed on, any of its assets for the benefit of any creditor other
than Bank.
2. Furnish as soon as available its interim financial statements and its annual fiscal year-end financial
statement and federal tax return, as soon as they shall become available.
3. The borrower shall maintain is status as a 501(C)(3) or 501 (C)(4) organization whichever is applicable.
Loan Documentation. In addition to the Loan Agreement, Borrower shall execute and deliver to Bank any and all
documents Bank deems necessary in connection with this credit facility. The Loan Documents shal! be in a form
acceptable to Bank and its counsel must be properly executed and, where necessary, recorded or filed in the appropriate
office of recordation. The Loan Documents shall include, without limitation, the following:
I. Note - a promissory note evidencing the loan.
2. Deed of Trust - A Deed of Trust securing the Note and constituting a first lien on the Property.
3. Assignment of Proceeds from sale of existing property with a minimum of $850,000 applied to principal
balance of the corrunercialloan.
4. Assignment of Construction Contract - An Assignment of Construction Contract executed by Borrower
and consented to by the General Contractor, approved by Bank.
5. Assignment of Architect's (and/or Engineer's) Contract and Plans and Specifications - An assignment of
Architect's (and/or Engineer's) Contract and Plans and Specifications executed by Borrower and
consented to by the Architect employed by Borrower.
6. Certificate and Indemnification Agreement with Respect to Environmental Matters - Borrower shall
provide Bank complete and accurate certifications as to any environmental conditions existing on the
Real Property and an indemnification as to any liability as a result of such existing conditions or future
use of the Real Property.
Conunitrnent Letter
Page 5
05/08103
Closing Documents. Borrower shall deliver to Bank the following documents, each of which must be in form and content
satisfactory to Bank in its sole discretion:
1. Title Insurance - A mortgagee title insurance policy in favor of Bank in an amount equal to the full
amount of the Loan issued by a title insurance company acceptable to Bank insuring the first lien position
of the Deed of Trust The title insurance policy shall not contain any exceptions objectionable to Bank or
its counseL
2. Survey - A current plat of survey of the real property, prepared and certified by a registered land surveyor
or civil engineer shall be delivered to Bank at least ten (10) days prior to the Closing Date. The survey
must show all the dimensions of the real property, together with appropriate courses and distances, all
access routes to the real property from public streets, the distance to and names of the nearest intersecting
streets, the location of all easements, rights of way, encroachments, set back and side lines, and the
location and dimensions of all existing buildings and improvements and the location of all easements
appurtenant to the Real Property and a metes and bounds description of the Real Property. The survey
and all matters revealed by it are subject to Bank's approvaL Prior to the initial disbursement of the loan,
Borrower shall obtain and deliver to Bank a foundation survey satisfactory to Bank.
3. Plans and Specifications - Detailed plans and specifications prepared by a duly licensed architect or
engineer must be delivered to the Bank as soon as possible or at least ten (10) days prior to the Closing
Date. Such plans and specifications shall have been approved by Borrower and all general contractors and
shall be those used for construction.
4. Insurance - Builder's risk insurance, casualty insurance and such other insurance as Bank may require,
with all policies in amounts and issued by companies acceptable to Bank, without coinsurance
requirements must be delivered to Bank at least ten (10) days prior to closing. All such policies shall
contain a New York standard long form mortgagee clause naming Bank as insured mortgagee and shall
provide that they may not be altered or canceled without at least thirty (30) days written notice to Bank.
5. Flood Certification or Insurance - Evidence of whether the Property is located in a "special flood, mud
slide, or erosion hazard area" shall be delivered to Bank at least ten (10) days prior to closing. If the
Property is located within such an area, this conunitrnent shall be unenforceable as to Bank unless
Borrower provides Bank, prior to closing, with flood insurance acceptable to Bank in its sole discretion.
6. Compliance with Laws - Written evidence from appropriate governmental authorities that the intended
use of the Property and all existing uses are in full compliance with all applicable laws and regulations,
including without limitation all applicable zoning and subdivision ordinances, land use laws and
regulations, and aU laws and regulations relating to environmental matters.
7. Utilities - Written evidence of the availability of all necessary utilities to adequately service the existing
and proposed uses of the Real Property, including without limitation, the availability of water and sewer,
electricity, and telephone service.
8. Building Permit - A copy of all building permits required by appropriate governmental regulations
authorizing construction of the proposed Improvements.
9. Environmental Report - A current environmental audit report prepared by an environmental engineering
firm acceptable to Bank stating with a reasonable degree of certainty that no hazardous or toxic materials
were found on, under or within the Real Property or any improvements on the Property.
10. Project Budget - A complete Project Budget showing in detail all construction costs, all non-construction
expenses and land acquisition costs shall be delivered to Bank prior to closing. The project budget is
subject to review and acceptance by the Bank and the loan amount may be subject to the final project
budget that is approved and accepted by the Bank.
11. Construction Contracts - A copy of the construction contract entered into by Borrower and Howard
Shockey & Sons, Inc. ("General Contractor") with respect to the proposed Improvements. Also, a lien
Commitment Letter
Page 6
05/08/03
subordination agreement executed by the General Contractor by which the General Contractor
subordinates its lien to Bank's Deed of Trust. The construction contract must be a lump sum or fixed price
contract for an amount acceptable to Bank.
12. Architect' Contract - A copy of all contracts with all architects, engineers, landscape architects or other
professionals engaged by Borrower. Executed lien subordination agreements must be submitted to Bank
from each such professional subordinating each professional's lien to that of Bank's.
13. Labor and Material Payment Bond and Performance Bond - A Labor and Material Payment Bond and a
Performance bond naming Bank as dual obligee, satisfactory to Bank, guaranteeing completion of the
proposed Improvements in accordance with the construction contract.
Disbursements. The loan shall be structured to allow for the periodic funding necessary to complete the Improvements. All
disbursement requests shall be prepared on AlA documents G- 702 and G-703 and shall be certified after inspection by an
architect approved by Bank, and then certified by Borrower. Sufficient time shall be required between the submission of the
architect certified draw requests and the actual advances in order to allow on-site inspection by an authorized officer of
Bank. One construction advance under the loan may be made each 30 days for material and labor costs as determined by
the architect certified draw request and Bank inspection, less a 5% retainage. Borrower shall furnish evidence satisfactory
to Bank with each draw request demonstrating that all soft costs incurred to the date of such draw request have been paid in
fulL The 5% retainage on all hard cost items shall be cumulative and shall be available for disbursement upon receipt of the
Certificate of Occupancy or equivalent. Borrower agrees that Bank shall not be obligated to disburse funds unless (I) the
remaining funds retained by Bank shall be sufficient to complete the Improvements in accordance with the plans and
specifications, costs estimates, approved change orders on file with Bank and (2) Bank shall be satisfied that Borrower has
paid all costs incurred in connection with the construction of the Improvements prior to the date of any requested loan
disbursement.
Architect. Bank may require Borrower to employ. and/or may itself employ at Borrower's expense, an architect/engineer
satisfactory to Bank to review the plans and specifications, to inspect construction work and to approve construction loan
draw requests. Construction loan draw requests shall be on AlA certificate forms and shall be approved by Borrower as
owner, the General Contractor and by the architect.
Signs. Borrower shall permit Bank to construct and maintain upon the Real Property such sign or signs as Bank deems
appropriate advertising the fact that Bank has provided construction financing.
Other Documents and Terms. The Loan Documents may contain material terms and conditions designed to protect the
position of Bank and its collateral. The Bank shall require a legal opinion letter from Borrower's attorney, which must be
acceptable to the Bank and Bank's counsel.
Non-Assignability or Modification of Commitment. The commitment evidenced by this letter shall not be assignable by
you. The terms of this letter may not be waived or modified unless such waiver or modification is expressly stated as such
and specifically agreed to by the parties in writing and shall be enforceable by Bank and its successors and assigns. The
Loan Documents when executed shall evidence the final commitment to Borrower, and upon said execution, this letter shall
have no further force or effect.
Indemnification by Borrower. Borrower agrees to indemnify and hold harmless Bank from and against any and all
claims. damages, liabilities and expenses which may be incurred by or asserted against Bank in connection with any
proceeding arising out of this loan commitment or Borrower's use of the proceeds of the loan.
Confidentiality. Borrower shall keep the contents of this letter confidential and shall not use it or its contents as a
representation of Borrower's credit worthiness. Third parties are cautioned against relying on the contents hereof in
extending credit to Borrower in reliance hereon.
Basis of Commitment. The undersigned acknowledge that this commitment is based materially upon financial information
provided to it by Borrower and others, and the undersigned hereby warrant and represent that such information was true and
correct in all material respects when rendered and that no material change has occurred therein through the date of the
execution of this commitment. All material facts relating to the loan or to the assets, business, profits, prospects, or
conditions (financial or otherwise) of Borrower have been disclosed to Bank by the Borrower and Guarantors.
Commitment Letter
Page 7
05/08/03
V oidability of Commitment. This commitment shall be voidable at the option of Bank should any of the following events
occur:
I. A material adverse change in Borrower's business, or financial condition, or disposal of a material
portions of its assets other than in the ordinary course of business.
2. A proceeding is commenced by or against Borrower under any bankruptcy or insolvency law.
3. A default by Borrower or any Guarantor on any other obligation they may have for money borrowed.
4. Any change in management or ownership of Borrower unacceptable to Bank.
S. Should any law or regulation affecting Bank entering into the financing transactions contemplated hereby
shall impose upon Bank any potential obligation, fee, liability, loss, claim, cost, expense, or damage
which is not contemplated herein.
6. Any violation or breach by Borrower of the terms of this commitment.
Acceptance and Closing Date. This commitment shall expire if not accepted or extended in writing by the close of
business on May 31,2003 (the "Commitment Expiration Date"). If this commitment is accepted, time being of the essence,
the Loan made pursuant hereto must close on or before the close of business on June 30, 2003 (the "Closing Date").
Borrower acknowledges that the interest rate and other terms of the Loan outlined in the Commitment are based upon
acceptance of this Commitment and closing of the Loan within the time periods set forth above and that these time periods
are material factors in Bank offering this Commitment. However, Borrower shall retain the obligation if the Commitment
has been accepted to pay any fees or expenses incurred by Bank in connection with the negotiation and preparation of this
Commitment.
If this commitment is acceptable to you, please iudicate your acceptance by signing in the space provided below and
returning the original letter to me. A copy is enclosed for your records. Upon its acceptance and execution of this
commitment, the Borrower hereby certifies to Bank that:
a. It is incorporated, organized or registered in the State or Commonwealth of Virginia.
b. The name shown above is its exact legal name, as registered and on file with the State Corporation Commission.
c. Its chief executive office (if Borrower/Debtor has more than one place of business), place of business (if
Borrower/Debtor has one place of business), or principal residence (if Borrower/Debtor is an individual) is at the
address set forth above.
d. Its Tax Identification Number is 54-6045102.
e. It is a tax-exempt entity.
We appreciate the opportunity to offer this commitment to your company and look forward to establishing a continuing,
mutually beneficial relationship.
Sincerely,
BRANCH BANKING AND TRUST COMPANY OF VIRGINIA
By:
Title:
Phone:
Commitment Letter
Page 8
05108/03
Accepted:
MillW~,~ 'on VOluntee~r Fire and Rescue Company 21
B . r l"l....
y: \ ~.
Name:~ A. Harden Date
Title: Pre ident
L~ ) '"L(.> \J '3
~
BY~~
N~e: John
Title: Vice President
By: ~ rt(~p
Name. G Belc er .
Titl,~mry
By: ~
Nam. i'
Titlr _ Tr surer
""~ _ r-
I.) ~;t1d.ff
Date
/f)..,h1tJ.v ~
Date /
/2-417 05
Date
Exhibit B
R-l
$2,160,000
UNITED STATES OF AMERICA
COMMONWEALTH OF VIRGINIA
$2,160,000 MILLWOOD STATION FIRE AND RESCUE
COMPANY 21, INC. REVENUE TAX-EXEMPT NOTE
(FIRE HOUSE PROJECT) SERIES 2003
("BANK-QUALIFIED")
The MILLWOOD STATION FlRE AND RESCUE COMPANY 21, me., a Virginia
nonstock membership corporation (the "Companv"), for value received, hereby acknowledges
itself indebted and promises to pay to Branch Banking and Trust Company of Virginia, or its
successor or assignee (the "Bank") the principal sum of TWO MILLION ONE HUNDRED
SIXTY THOUSAND DOLLARS ($2,160,000), on or before May 30, 2006 (the "Maturity
Date"), unless sooner prepaid as provided herein, and to pay a variable rate of interest on the
outstanding principal amount as described herein.
Monthly installments of interest shall be payable on this Tax-Exempt Note, commencing
on June 30, 2003, and continuing on the 30th day of each month thereafter during the term
hereof, at the mmual rate equal to seventy-five percent (75%) of the Prime Rate (defined below),
as announced by the Bank from time to time (such rate of interest being referenced hereinafter as
the "Tax-Exemot Rate"). "Prime Rate" shall mean the rate of interest per annum announced by
the Bank from time to time and adopted as its Prime Rate, which is one of several rate indexes
employed by the Bank when extending credit, and may not necessarily be the Bank's lowest
lending rate. The Tax-Exempt Rate (and the corresponding taxable rate, as further described
below) shall be determined by the Bank, and, absent manifest error, shall be conclusive. The
Bank shall promptly convey the Tax-Exempt Rate (and the corresponding taxable rate, if
applicable) to the Company within two business days of calculating the Tax -Exempt Rate. In all
cases, the Tax-Exempt Rate (and the corresponding taxable rate, if applicable) on this Tax-
Exempt Note shall be computed based on a 30-day monthly interest period divided by a 360-day
year.
If any installment of such monthly interest is not paid within ten (10) days after its due
date, the Company shall be obligated to pay the registered owner hereof an alllount equal to five
percent (5%) of the overdue installment.
Installments of principal hereunder shall be payable at any time by the Company, only as
specifically provided herein.
All principal and interest on this Tax-Exempt Note, including any other amounts payable
under documentation in connection with this Tax-Exempt Note, shall be due and payable, unless
sooner paid as provided herein, together with all other amounts payable hereunder, if any, on the
Maturity Date.
Both principal of and interest on this Tax-Exempt Note are payable in lawful money of
the United States of America by check or wire transfer sent to the registered owner hereof at its
address as it appears on the registration books of the Secretary of the Company, as Registrar,
except that the final installment of all principal and accrued interest due and payable on this Tax-
Exempt Note shall be payable upon presentation and surrender hereof to the Registrar at the
business offices of the Company. Transfer of this Tax-Exempt Note may be registered upon
books maintained for that purpose by the Registrar hereof at the offices of the Company. Prior to
due presentment for registration of transfer, the Registrar shall treat the registered owner hereof
as the person exclusively entitled to payment of principal and interest and the exercise of all
other rights and powers of the owner hereof.
In case the date of the principal due on the Maturity Date, including accrued interest
thereon, or in the case of any other date fixed for redemption hereof, and such date shall be a day
on which banking institutions are authorized or obligated by law to close at the place where the
corporate office of the Bank or its successor is located, then such installment need not be made
on such date, but may be made on the next succeeding date which is not such a date, and ifmade
on such next succeeding date, then no additional interest shall accrue on this Tax-Exempt Note
for the period after such Maturity Date or other date fixed for redemption hereof.
This Tax-Exempt Note is issued as a registered Tax-Exempt Note, Number R-l, without
coupon, and has been authorized by the Company, pursuant to the Virginia Nonstock
Corporation Act, Chapter 10, Title 13.1, Code of Virginia of 1950, as amended, and, further
Section 150 ofthe Internal Revenue Code of 1986, as amended ("the IRC") to pay costs eligible
under the IRC to (i) acquire, construct, and equip a new firehouse and related facilities thereto to
be located at Lot 5, Costello Drive, Prince Frederick Office Park, Winchester, Virginia 22602, in
Frederick County, (the "Countv"); and (ii) pay the costs of issuance thereof (the "Proiect"). It is
to be understood that costs of the Project that are not eligible under the IRC shall be paid by the
Company either from the proceeds of the Commercial Note (described below) or from other
lawfully available funds of the Company therefor.
This Tax-Exempt Note has been authorized pursuant to the authorizing resolution duly
approved by the Company on May 12, 2003, after due notice and the holding of a public hearing
in connection therewith (the "Authorizing Resolution") in compliance with the requirements set
forth under the IRC, as applicable to exempt obligations of a qualified volunteer fire department,
and approved by the Board of Supervisors of Frederick County, Virginia, as the governing body
thereof (the "County), all in accordance with the requirements under the IRC. In addition, the
Company and the County have previously entered into a written agreement, as ratified and
confirmed by the Company and the County, all in accordance with the requirements under the
IRC.
This Tax-Exempt Note evidences a portion of the borrowing by the Company on the date
hereof as described under the Authorizing Resolution, and is subject to and secured by, and shall
be paid and enforced in accordance with, the terms of that certain Loan Agreement, dated as of
May 1, 2003, between the Company and the Bank (the "Agreement"), and, further, that certain
Deed of Trust, dated as of May 1,2003, conveyed by the Company to the nallled Trustee therein
acting for the benefit of the Bank (the "Deed of Trust"). The terms and provisions of the
Agreement and the Deed of Trust are hereby incorporated herein by reference and made a part
2
hereof. Specifically, the Company also has issued, delivered and sold its $2,140,000
Commercial Note, of even date herewith, to the Bank (the "Commercial Note"), which
constitutes the other portion of the borrowing by the Company as described under the
Authorizing Resolution, and is subject to and secured by, and shall be paid and enforced in
accordance with, the terms of the Loan Agreement and the Deed of Trust. Accordingly, it is to
be understood that any default hereunder shall also constitute a default under the Commercial
Note.
The principal of and interest on this Tax-Exempt Note are payable solely from the
revenues, money and property of the Company as described in the Agreement and the Deed of
Trust (collectiyely, "Security"), which Security has been pledged by the Company and assigned
to the registered owner hereof to secure payment of this Tax-Exempt Note.
THIS TAX-EXEMPT NOTE AND PRINCIPAL AND INTEREST HEREON ARE
LIMITED OBLIGATIONS OF THE COMPANY AND ARE PAYABLE SOLELY FROM
THE REVENUES OF THE COMPANY AND FROM THE SECURITY INTEREST IN
OTHER PROPERTY OF THE COMPANY WHICH HAS BEEN ENCUMBERED BY
LIEN UNDER THE TERMS OF THE AGREEMENT AND THE DEED OF TRUST, TO
SECURE PAYMENT HEREOF. THE PRINCIPAL OF AND INTEREST ON THIS TAX-
EXEMPT NOTE WILL NOT BE DEEMED TO CONSTITUTE A DEBT OF THE
COMMONWEALTH OF VIRGINIA OR ANY OF ITS POLITICAL SUBDIVISIONS,
AGENCIES OR OTHER BODIES, INCLUDING THE COUNTY, OTHER THAN THE
COMPANY. NEITHER THE COMMONWEALTH OF VIRGINIA NOR ANY OF ITS
POLITICAL SUBDIVISIONS, INCLUDING THE COUNTY AND THE COMPANY,
ARE OBLIGATED TO PAY THE PRINCIPAL OF, OR PREMIUM, IF ANY, OR
INTEREST ON THIS TAX-EXEMPT NOTE OR OTHER COSTS INCIDENT TO IT
EXCEPT FROM THE REVENUES, MONEY OR PROPERTY OF THE COMPANY
PLEDGED FOR SUCH PURPOSES, AND NEITHER THE FAITH AND CREDIT NOR
THE TAXING POWER OF THE COMMONWEALTH OF VIRGINIA OR ANY OF ITS
POLITICAL SUBDIVISIONS, INCLUDING THE COUNTY AND THE COMPANY, IS
PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, OR INTEREST
ON THIS TAX-EXEMPT NOTE OR OTHER COSTS INCIDENT TO IT.
The Company may prepay this Tax-Exempt Note, in whole or in part, at any time or from
time to time, without penalty or premium, provided that in the event of any prepayment of the
principal hereof from proceeds obtained by the Company as a result of a refinancing the
outstanding amount of this Tax-Exempt Note through a banking institution other than the Bank,
then the Company shall pay a prepayment penalty in the amount of one percent (1.0%) of the
principal prepayment amount.
If this Tax-Exempt Note has been duly called for redemption and payment of the
principal and accrued interest hereunder, notwithstanding that this Tax-Exempt Note has not
been surrendered for cancellation, interest on this Tax-Exempt Note will cease to accrue from
such redemption date, and, from and after such redemption date, the owner hereof will no longer
be entitled to any lien, benefit or security hereunder or under any other lien on other property
provided by the Company to secure this Tax-Exempt Note, and the registered owner hereof will
3
have no ~g~ts in respect ofthis Tax-Exempt Note except to receive payment of such principal of
and unpaId mterest accrued to the date fixed for such redemption on this Tax-Exempt Note.
This Tax-Exempt Note has been properly designated as a "qualified tax-exempt
obligation" eligible for the exception from the disallowance of the deduction of interest by
financial institutions allocable to the cost of carrying tax-exempt obligations in accordance with
the provisions of Section 265(b)(3) of the IRC.
No notation is required to be made on this Tax-Exempt Note of the payment of any
principal installment. HENCE, THE FACE AMOUNT OF THIS TAX-EXEMPT NOTE
MAY EXCEED THE PRINCIPAL SUM REMAINJNG OUTSTANDING AND DUE
HEREUNDER.
The Tax-Exempt Rate shall be subject to adjustment as set forth in the following
paragraphs:
A. The interest rate on this Tax-Exempt Note is subject to increase or decrease as
provided herein. So long as no event of taxability has occurred, if at any time, or from time to
time, there is an increase or decrease in the maximum federal marginal income tax rate
applicable to the Owner of this Tax-Exempt Note (the "Owner"), then the interest rate hereon
shall be increased or decreased, effective as of the effective date of the increase or decrease in
such maximum federal marginal income tax rate, to the tax equivalent yield on this Tax-Exempt
Note multiplied by the difference between one (1) and the new federal marginal income tax rate
(expressed as a decimal). The Company acknowledges this Tax-Exempt Note is being purchased
on the assumption that the interest hereon shall be exempt from federal income tax and that the
tax equivalent yield on this Tax-Exempt Note would be a correlating (but higher) rate of interest
to reflect that interest hereon shall be ineligible for the exemption from federal income tax. If
there shall be any change in the federal income tax laws, by statute or regulation, or in the
interpretation thereof the effect of which is to increase the Owner's cost of holding the Tax-
Exempt Note (e.g., a change in Section 265 of the IRe), by the complete or partial disallowance
of a deduction or otherwise, the Company shall reimburse the Owner for such increase in cost
plus the additional federal and state income taxes which the Owner will incur by reason of
including the reimbursement in its income. The Owner's good faith estimate of such increase
and such additional taxes, absent clear and manifest error, shall be determinative of the amount
payable by the Company as provided herein. Such amount shall be payable with respect to each
taxable year of the Owner and shall be paid within thirty (30) days after the later of (i) the
Owner's notification to the Company of the amount payable with respect to such taxable year,
and (ii) the last day of such taxable year. For purposes of this paragraph, the failure of the Tax-
Exempt Note to be a qualified tax-exempt obligation (as defined in Section 265(b)(3) ofthe IRe)
shall be deemed to be such a change in the federal income tax laws.
B. From and after an event of taxability, in addition to the interest on this Tax-
Exempt Note, as set forth above, the Company shall pay to the Owner of this Tax-Exempt Note,
supplemental interest hereon such that the interest rate hereon is equal to the corresponding
conventional rate to be equivalent to the tax-exempt rate stated herein. The term "interest," as
used herein, shall include such supplemental interest, to the extent payable. Supplemental
4
interest accruing prior to a determination of taxability shall be immediately due and payable on
the date of such determination of taxability. Supplemental interest accruing thereafter shall be
payable at the same time, together with any regularly scheduled installments of principal and
interest, at the same time and in the same manner.
C. Additionally, the Owner hereof shall be paid a supplemental payment equal to the
amount required to be paid by the Company to reimburse the Owner of this Tax-Exempt Note for
any interest, penalties or other charges assessed by reason of failure to include interest on this
Tax-Exempt Note in the Owner's federal gross income (hereinafter "Unpaid Tax Penalties").
The Company shall make payments of supplemental interest and Unpaid Tax Penalties to each
person who presents written proof satisfactory to the Company that on or after the event of
taxability, such person was an Owner of this Tax-Exempt Note. It is expressly intended that to
the extent interest received on this Tax-Exempt Note may become subject to federal income
taxation as a result of a determination of taxability, the supplemental interest and Unpaid Tax
Penalties which would have been payable to the Owner hereof but for the payment or authorized
transfer hereof shall continue, notwithstanding such payment or transfer, as an obligation of the
Company.
D. The Owner of this Tax-Exempt Note by its acceptance hereof shall agree, if
requested by the Company, to have an attorney-in-fact, qualified to practice before the Internal
Revenue Service, designated by the Company for the purpose of appealing or challenging any
determination of taxability, provided the Company, to the extent permitted by law, shall provide
indemnity or other assurance reasonably satisfactory to the Owner of this Tax-Exempt Note to
indemnify or otherwise save it harmless against any additional tax liability, penalties or interest
that may result from any such appeal and agrees to pay legal fees and costs incurred in
prosecuting such appeal including all reasonable legal fees and costs. In the event a final
judgment or order shall have been entered within ninety (90) days of the determination of
taxability finding that no event of taxability has occurred, the Owner of this Tax-Exempt Note
shall reimburse to the Company all supplemental interest which has been paid hereon, and no
additional supplemental interest shall be payable unless and until an event of taxability shall
subsequently occur. Notwithstanding anything herein to the contrary, the right of the Company
to challenge any determination of taxability shall terminate if no such final judgment or order
shall have been entered within ninety (90) days after the occurrence of the determination of
taxability, unless the Owner of this Tax-Exempt Note shall otherwise agree, and after the
expiration of such ninety (90) day period without the entry of a final judgment or order, the
Owner of this Tax-Exempt Note may exercise its right to call the Tax-Exempt Note in full, in
which case the Company shall prepay the Tax-Exempt Note in full. In addition, unless the
Company shall otherwise provide reasonable indemnification or other acceptable assurance to
the Owner of this Tax-Exempt Note, the right of the Company to challenge any determination of
taxability shall terminate if the exercise of such right would cause any tax return of the Owner to
be inaccurate or would delay the timely filing thereof or would in the Owner's opinion result in
an adverse impact on its tax returns.
The intent of the foregoing provisions is to fix for the Owner hereof a yield on this Tax-
Exempt Note equal at all times to the yield receivable under tax law, regulations and
interpretations existing as of the date of original issue of this Tax-Exempt Note which yield has
5
been used in determining the interest rate on this Tax-Exempt Note, and, further, to impose on
the Company the obligation to pay supplemental interest in an amount necessary to compensate
the Owner hereof if the interest on this Tax-Exempt Note is not excluded from gross income or is
not exempt from the alternative minimum tax or the statutory deduction for "cost of carry" is not
available under Section 265 ofthe IRC. Such provisions shall be construed accordingly.
It is to be understood that interest shall accrue on this Tax-Exempt Note at the correlating
taxable rate from the date interest on this Tax-Exempt Note becomes subject to federal income
taxation as a result of a determination of taxability (as described above). Interest at such
correlating taxable rate shall be payable at the same times and in the same manner as otherwise
provided herein.
Nothing herein shall limit any right granted to the Bank by any other instrument or by
law or equity.
The Company hereby waives demand, protest, notice of demand, protest and nonpayment
and any other notice required by law relative hereto, except to the extent as otherwise may be
provided for in the Deed of Trust. Further, the Company agrees that if upon any failure to pay
any amount when due hereunder and any such amount is thereafter collected by law or through
an attorney at law, the Company shall pay all reasonable costs of collection, including, without
limitation, reasonable attorneys' fees.
All acts and conditions required to happen, exist or be performed precedent to and in
connection with the issuance of this Tax-Exempt Note have happened, exist and have been
performed.
IN WITNESS WHEREOF, the Millwood Station Fire and Rescue Company 21, Inc., has
caused this Tax-Exempt Note to be executed by the manual signature of its authorized
representative, and this Tax-Exempt Note to be dated May _,2003.
MILLWOOD STATION FIRE AND
RESCUE COMPANY 21, INe.
By:
Its:
6
(Form of Assignment)
FOR VALUE RECEIVED the undersigned sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type Name and Address, including postal zip code of Transferee)
the within Tax-Exempt Note and all rights under it, irrevocably constituting and appointing
, Attorney to transfer the Tax-Exempt Note on the
books kept for its registration, with full power of substitution.
Date:
Signature Guaranteed
NOTICE: Signature(s) must be
guaranteed by a member firm ofthe
New York Stock Exchange or a
commercial bank or trust company
Registered Owner
NOTICE: The signature above must
correspond with the name of the Registered
Owner exactly as it appears on the front of
this Tax-Exempt Note.
(End of Form of Assignment)
57802/lIDGW0478.DOC
Exhibit C
May _, 2003
$2,140,000
COMMERCIAL NOTE
FOR VALUE RECEIVED, the undersigned, the MILLWOOD STATION
FIRE AND RESCUE COMPANY 21, INC., a Virginia nonstock membership corporation
providing volunteer fife-fighting services (the "Company"), promises to pay to the order of
BRANCH BANKING AND TRUST COMPANY OF VIRGINIA (the "Bank"), at the office
of the Bank in Winchester, Virginia, or at such other place as the Bank hereafter may direct in
writing, or registered assigns, in legal tender of the United States of America, the principal sum
equal to the amount of principal advances shown on the Certificate of Principal Advances
attached hereto (the "Certificate"), but not to exceed the sum of Two Million One Hundred Forty
Thousand and no/lOO Dollars ($2,140,000), or so much thereof as may be disbursed and remain
outstanding from time to time hereafter during the term hereof. Each of the Principal Advances
hereunder may be endorsed on the Certificate (provided, however, that any failure by the Bank to
make any such endorsement shall not limit, modify or affect the obligations of the Company
hereunder) .
Monthly installments of interest on this Commercial Note shall be payable on the
30th day of each month, commencing on June 30, 2003, and continuing until this Commercial
Note shall be paid in full. The amount of the monthly installment of interest shall be computed
based on the aggregate Principal Advances made hereunder, from time to time, at the rate per
annum equal to the Bank's Prime Rate (as defined below) minus Fifty-Hundredths Percent
(.50%), subject to maximum rate of 8.25% and a minimum rate of 3.75%. "Prime Rate" shall
mean the rate of interest per annum announced by the Bank from time to time and adopted as its
Prime Rate, which is one of several rate indexes employed by the Bank when extending credit,
and may not necessarily be the Bank's lowest lending rate.
All principal and interest on this Commercial Note shall be due and payable,
unless sooner paid as provided herein, together with all other amounts payable hereunder, if any,
on May 30, 2006.
Accrual of interest on this Commercial Note shall be computed based on a 30-day
monthly interest period divided by a 360-day year.
If any such installment of interest hereunder is not paid within ten (10) days after
its due date, the Company shall be obligated to pay the Bank an amount equal to five percent
(5%) of the overdue installment.
This Note has been authorized pursuant to the authorizing resolution duly
approved by the Company on May 12, 2003, after due notice and public hearing in connection
therewith (the "Authorizing Resolution"), and, further, pursuant to the approval of the Board of
Supervisors of Frederick County, Virginia, as the governing body thereof (the "County"). In
addition, the Company and the County have entered into a written agreement in compliance with
the requirements set forth under Section ISO of the Internal Revenue Code of 1986, as amended
(the "IRC").
This Commercial Note evidences a portion of the borrowing described under, is
subject to and secured by, and shall be paid and enforced in accordance with, the terms of that
certain Loan Agreement, dated as of May I, 2003, between the Company and the Bank (the
"Agreement"), and, further, that certain Deed of Trust, dated as of May 1, 2003, conveyed by the
Company to the named Trustee therein acting for the benefit of the Bank (the "Deed of Trust"),
the terms and provisions of which Agreement and Deed of Trust are hereby incorporated herein
by reference and made a part hereof. The Company also has issued, delivered and sold its
$2,160,000 Millwood Station Fire and Rescue Company 21, Inc. Tax-Exempt Revenue Note
(Fire House Project) Series 2003 ("Bank-Qualified"), of even date herewith, to the Bank (the
"Tax-Exempt Note"), which constitutes the other portion of borrowing by the Company
described under, subject to and secured by, and shall be paid and enforced in accordance with,
the terms of the Loan Agreement and the Deed of Trust, among other documentation specific to
the Tax-Exempt Note. Accordingly, it is to be understood that any default hereunder shall
constitute a default under the Tax-Exempt Note.
Nothing herein shall limit any right granted to the Bank by any other instrument
or by law or equity~
The principal of and interest on this Commercial Note are payable solely from the
revenues, money and property of the Company as described in the Agreement and the Deed of
Trust (collectively, "Security"), which Security has been pledged by the Company and assigned
to the owner hereof to secure payment of this Commercial Note.
THIS COMMERCIAL NOTE AND PRINCIPAL AND INTEREST
HEREON ARE LIMITED OBLIGATIONS OF THE COMPANY AND ARE PAYABLE
SOLELY FROM THE REVENUES OF THE COMPANY AND FROM THE SECURITY
INTEREST IN OTHER PROPERTY OF THE COMPANY WHICH HAS BEEN
ENCUMBERED BY LIEN UNDER THE TERMS OF THE AGREEMENT AND THE
DEED OF TRUST, TO SECURE PAYMENT OF THIS COMMERCIAL NOTE. THE
PRINCIPAL OF AND INTEREST ON THIS COMMERCIAL NOTE WILL NOT BE
DEEMED TO CONSTITUTE A DEBT OF THE COMMONWEALTH OF VIRGINIA OR
ANY OF ITS POLITICAL SUBDIVISIONS, AGENCIES OR OTHER BODIES,
INCLUDING THE COUNTY, OTHER THAN THE COMPANY. NEITHER THE
COMMONWEAL TH OF VIRGINIA NOR ANY OF ITS POLITICAL SUBDIVISIONS,
INCLUDING THE COUNTY AND THE COMPANY, ARE OBLIGATED TO PAY THE
PRINCIPAL OF, OR PREMIUM, IF ANY, OR INTEREST ON THIS COMMERCIAL
NOTE OR OTHER COSTS INCIDENT TO IT EXCEPT FROM THE REVENUES,
MONEY OR PROPERTY OF THE COMPANY PLEDGED FOR SUCH PURPOSES,
AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE
COMMONWEALTH OF VIRGINIA OR ANY OF ITS POLITICAL SUBDIVISIONS,
INCLUDING THE COUNTY AND THE COMPANY, IS PLEDGED TO THE PAYMENT
OF THE PRINCIPAL OF, PREMIUM, OR INTEREST ON THIS COMMERCIAL
NOTE OR OTHER COSTS INCIDENT TO IT.
2
The Company hereby waives demand, protest, notice of demand, protest and
nonpayment and any other notice required by law relative hereto, except to the extent as
otherwise may be provided for in the Deed of Trust, if at all.
The Company may prepay this Commercial Note, in whole or in part, at any time
or from time to time, without penalty or premium, provided that in the event of any prepayment
of this Commercial Note from proceeds obtained by the Company as a result of a refinancing the
outstanding amount hereof from a banking institution other than the Bank, then the Company
shall pay a prepayment penalty in the amount of one percent (1.0%) of the principal prepayment
amount.
The Company agrees that if the Company fails to pay any amount when due under
this Commercial Note and any such amount is thereafter collected by law or through an attorney
at law, the Company shall pay all reasonable costs of collection, including, without limitation,
reasonable attorneys' fees.
IN WITNESS WHEREOF, the Company has caused this Commercial Note to
be duly executed under seal as of the day and year first above written.
MILLWOOD STATION FIRE AND RESCUE
COMPANY 21, INC., a Virginia nonstock corporation
By:
Name:
Title:
John A.Harden
President
DGW0480.DOC
3
CERTIFICATE OF PRINCIPAL ADVANCES
The amount and date of Principal Advances not to exceed the face amount hereof, shall
be entered hereon by an authorized officer of the Branch Banking and Trust Company of
Virginia when the proceeds of such Principal Advances are delivered to the Millwood Station
Fire and Rescue Company 21, Inc.
Amount
Date
Authorized Signature
dgw()480
4