HomeMy WebLinkAbout11-13-1961 Regular Meeting#oition by Counc i I man Nel son n seconded by Council-
man Boone that LiquidiPetroleum Gas Ordinance #283 introduced at the regular
meeting of November 13, 1961 be adopted as introduced. Motion -unanimously
carried:
Motion by Counci I man Nei son seconded by Counci I man Poser that a street I i ght
be installed on George Street between Nichols.S.treet and White Avenue.
Motion carried. ,
Motion by Counc i I man Ne I.son seconded by C ounc i I man Gaston that the. following
Resolution be adopted:
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAIRHO°E, ALABAMA,
that Joe Schneider, Mayor, and:Marie Moore, City Clerk, are hereby authorized
to: execute a contract with The Chicago Bridge and Iron Company/ for construction
of a:. one million gallon fresh water stowage tank for the sum of $ 143,600.00
iin accordance with the provisions of their contract. Motion unanimously
adopted.
Motion by Councilman Nelson seconded! by Councilman Boone that the application
of Ray Powers to retai 1 package beer at Ray• s Grocery be approved. Upon
being put to vote the? fo l l owing, vote was recorded:. Fort Councilmen Boone,
Gaston,, Nelson and Poser. Againstr Schemer. Motion carried.
Motion by Councilman Boone seconded; by Councilman Poser that the City Council;
dispense with the regular meeting of; December 25,, 1961. Motion tarried,
Motion by Councilman Boone seconded -by
Counc i I man Gaston that the following
bills be: approved -for payments Motion
carried.
Alabama Pipe Co.
$ 90.87
Armco, Drainage and. Metal Products
506.66
American Meter Co.
2,226.73
Andrews Restaurant
4.42
Robert S. Bateman and Assoc.
475-00
Baldwin Transfer
3•613.
Bedso,l et s;
172.65
Betbueze Spring Seery i ce
10.2!
Bru 1 i n & Co., Inc.
76.00
Burford-Toothaker Tractor CompanW
25.03
Busy Bee Garage
2.75
e i ty Market and Grocery
8.88
W:. S. Dar l ey & Coo
7.30
W. E'. Duncan Co.
32.74
Fairhope Photo Shop
2.10
Fairhope Auto Parts
g•53
Fairhope-Clay Products
60,00,
Fairhope: Hardware
25.00
Fairhope Service Center
11.25
Fairhope Title & Survey
35,00`
Foley Tractor Co.:
178-75
Forbes Electronics
1-3.00
Garden Center
6.45
Gurwi tch.t s
« 240.50'
Hands We I d i ng,
L128..00
Hat f i e 1. d and Co.;
1,365.60
Virgil Herston
20.00
Wsl ter A. Hoffman
3.50
Jim House & Assoc.
1,297.12
Huffman I!ns. Agency
110.50
Standard 0 i 1 C omparry
16.W
Jansen Mfg. Co.
5.80
Walter Kidde Sales and Service.
4.50'
Klumpp Motor do.
41.41
Koen Upholstery Co.
8.00
McGraw-H i b I Publishing Co.
6.00
McKean Paint and,Hdwe.
15.70
Melton Garage
78.15
Len -Meyer Co.
43.00
Moore -Handley Hdwe.
43.23
�_t
V
Moore Supply Co,
108.99.
Mueller Co.
15.40
Mun i o i pa I Code? C cr p.
1,15.0:..00
Nix an&Fleming:
157.74
Parker Publishing Co,
6.28
Poser Printing Co.
461.35
Ray —Snooks, Machinery
404-95
E. G. R ickarby
35.00
Rivier&Utilities
11,91
Riviera Utilities
I1,007.21
F. H. Ross. and Co.
98.97
Ruffles Co.
125.00
Sears Roebuck and Co.
68.94
Joe Schneider & Son,. linc.
293-75
Smith, Dukes: and Buckelewc
1,600.00
Material Sales Co.
77.28•
Turner Supply Co.
t4.16
Ruffles Co.
8`,25
Fairhops Welding and Machine Shop
5.00
Electric Shoe Shop
1.00
Wei t t i chen C hermi cal; C o.
38.25
Western Auto
5.82
Wg:l I e:r Bros,.
6.7.54,
Standard Equipment
2„522.87
Threadgill. Body Shots
71.88
Ab i e 4t rats- i s
3.09,
Steele and Associates
26.50
Simplex Time Recorder Co.
9.07
StandardOil Company
473.52
Merchants National Bank
412.50
Ridgood Stationery Co.
4.80
Universal Controls Corp..
367.84
Western Lumber and Supply
388.90
Gaston Motor Co.
145.61
There being no further., business to come before the meeting, the same was
on, motion duly made,, seconded and adopted,. adjourned until December 1.5, 1961
at 7:30 otclock P.M.
Mayor
Authenticateds:
i ty Clerk
EXHIBIT "A"
TRUST INDENTURE between the CITY OF FAIRHOPE,
a municipal corporation under the laws of the State of
Alabama, party of the first part, and The Merchants National
Bank of Mobile, a national banking association authorized
to administer trusts, party of'*the second part;
R E C I T A L S:
The party of the first part makes the following
recitals of facts as the basis of the undertaking follow-
ing: By proper corporate action it has duly authorized
the issuance of the initial bonds hereinafter referred to,
payable solely from the limited source likewise herein-
after referred to. To secure payment of the principal of
and the interest on all bonds that may be issued hereunder,
it has by proper corporate action duly authorized the exe-
cution and delivery of this indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For the aforesaid purpose and in consideration
of the respective agreements herein contained,; it is here-
by agreed between the parties signatory hereto and the
holders of all bonds that may at any time be issued here-
under (the holders of the said bonds evidencing their con-
sent hereto by their acceptance of the said bonds and the
parties signatory hereto evidencing their consent hereto
by their execution hereof), each with each of the others,
as follows (provided, that in the performance of any of
the agreements of the party of the first part herein con-
tained, any obligation it may thereby incur for the payment
of money shall not be a general debt on its part but shall
be payable solely out of revenues from the systems herein-
after referred to):
ARTICLE I
DEFINITIONS AND USE OF PHRASES
Section 1.1 Definitions. The following words
and phrases and others evidently intended as the equivalent
thereof, whenever used in this instrument, shall, in the
absence of clear implication herein otherwise, be given
the following respective interpretations herein:
"Additional bonds" means those of the bonds issued
subsequent to the initial bonds.
. "Annual debt service requirement" means the amount
of principal and interest having a stated maturity during
a fiscal year.
"Annual net income" means the total revenue de-
rived from the operation of the systems during a fiscal
year less the total operating expenses with respect to
the systems during such fiscal year.
"Board" means The Water Works and Sewer Board
of the City of Fairhope, a public corporation organized
under the laws of Alabama.
"Bond fund" means the Water, Sewer and Gas Bond
and Interest Redemption Fund created in Section 9.4 here-
of.
"Bonds" means those issued hereunder.
"Callable bonds" means those of the bonds which,
under the terms thereof, may be redeemed and paid prior to
their respective maturities.
"Capital improvements" means improvements, exten-
sions, and additions to the water and sewer system, the gas
system, or both, as the case may be, that are properly
chargeable to fixed capital account by good accounting practice,
including real estate (and easements and other interests
therein) on or under which any such improvements, exten-
sions or additions are, or are proposed to be, located.
"City" means the party of the first part hereto
and., subject to the provisions of Section 10.10 hereof, in-
cludes its successors and assigns and any corporation result-
ing from or surviving any consolidation or merger to which
it or its successors may be a party.
"Construction engineer" means the engineer or
engineers designated as construction engineer in or pur-
suant to Section 8.6 hereof.
"Construction fund" means the Water and Gas Con-
struction Fund created in Section 8.2 hereof.
"Council" means the governing body of the city as
from time to time constituted.
"Counsel" means an attorney who is duly licensed
to practice before the Supreme Court of Alabama.
"Coupons" means those issued hereunder and evidenc-
ing the interest on the applicable bond or bonds.
"Excepted encumbrances" means, as of any particu-
lar time, (a) liens for ad valorem taxes not then due, (b)
easements, restrictions and exceptions that an independent
engineer certifies will not interfere with or impair the
operation of the water and sewer system, or the gas system,
as the case may be, (c) such minor defects, irregularities,
encumbrances and clouds on title as normally exist with
respect to properties of the size and character of those
comprising the water and sewer system, or the gas system,
as the case may be, and as do not, in the opinion of
independent counsel, materially impair the use of the
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property affected thereby for the purpose for which it is
held ')y the city, and (d) the option agreement between the
city and the Town of Daphne, Alabama, dated January 23,
1950, and referred to in Section 12.3 hereof.
"Federal securities" means and includes any securi-
ties that are direct general obligations of the United States
of America and any securities that are unconditionally guaran-
teed as to both principal and interest by the United States
of America.
"Financial journal" means a journal printed in
the English language, customarily published not less than
five days during each calendar week, and devoted pr1marily
to news of financial matters.
"Fiscal year" means the period beginning on October
1 of one calendar year and ending on September 30 of the
following calendar year.
"Gas bonds" means the First Mortgage Gas Revenue
Bonds of the city dated February 1, 1950, issued in the
original principal amount of 1�755,000 pursuant to the pro-
visions of Ordinance No. 197 of the city adopted on January
23, 1950, and now outstanding in the aggregate principal
amount of $336,000.
"Gas indenture" means the mortgage and deed of
trust by the city to The Merchants National Bank of Mobile
dated as of February 1, 1950, securing the gas bonds.
"Gas system" means the entire natural gas distri-
bution system of the city, together with all improvements,
additions, and extensions thereto that may be hereafter
made, including odorizing station, regulator or pressure
reduction stations, mains, pipes, regulators, meters, valves,
fittings, and services in connection therewith, and all of
the city's other properties, real, personal and mixed, tangi-
ble and intangible, forming a part of or appertaining to or
used in connection with said natural gas distribution system,
whether any of said properties are now owned by the city
or may be hereafter acquired by it.
"Holder" when used in conjunction with the bonds
or the coupons means the person in possession and the apparent
owner of the designated item.
"Indenture" means these presents and every supple-
mental agreement with the trustee in pursuance hereof.
"Independent auditor" means (a) a certified public
accountant who is not a full time employee of the city and
who is regularly engaged in the auditing of financial re-
cords, or (b) an employee of the State of Alabama whose
official duties include the audit of books, records, and
accounts of municipal corporations.
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"Independent counsel"
duly licensed to practice before
Alabama and who is not regularly
"Independent engineer"
is duly registered and qualified
fession of engineering under the
who is not a full time employee
means an attorney who is
the Supreme Court of
employed by the city.
means an engineer who
to practice the pro -
laws of Alabama and
of the city.
"Initial bonds" means the Series 1961 bonds pro-
vided for in Article VI hereof.
"Maximum required reserve" means as of any par-
ticular time the following: (a) if at such time no addi-
tional bonds have been issued, the sum of $69,350.00
being an amount equal to the maximum annual debt, service
requirement with respect to the initial bonds; and (b)
if at such time any of the additional bonds have been
issued, an amount equal to the maximum annual debt ser-
vice requirement (with respect to all bonds outstanding
under the indenture immediately following the issuance
of those of the additional bonds that have then been
most recently issued) during any one fiscal year suc-
ceeding the fiscal year during which additional bonds
shall then have last been issued hereunder.
"Month" means a calendar month.
"Newspaper" means a newspaper printed in the
English language and published not less than six days dur-
ing each calendar week in the locality specified.
"Operating expenses" means, for the applicable
period or periods, the reasonable and necessary expenses of
efficiently and economically administering and operating that
one or both of the systems that may be referred to in the
context in which the defined term is used and maintaining such
system or systems in good repair and operating condition (not
including, however, interest on the bonds or any other obliga-
tion, depreciation, or any expenses for items properly chargeable
by good accounting practice to fixed capital account), and with-
out limiting the generality of the foregoing, includes the
fees and expenses of the trustee under the indenture and any
other charges herein expressly stated to constitute an opera-
ting expense.
"Operation fund" means the Water, Sewer and Gas
Operation and Maintenance Fund created in Section 9.5 hereof.
"Redemption date" means the date fixed for the
redemption of callable bonds in any resolution adopted pur-
suant to the provisions of subsection (a) of Section 5.1
hereof.
'Redemption price" means the price at which the
callable bonds called for redemption may be redeemed on the
redemption date.
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"Replacement fund"
Gas Replacement and Extension
hereof.
means the Water, Sewer and
Fund created in Section 9.7
"Reserve fund" means the Water, Sewer and Gas
Debt Service Reserve Fund created in Section 9.6 hereof.
"Resolution" and "ordinance" mean a resolution or
ordinance duly adopted by the council.
"Revenue account" means the Water, Sewer and Gas
Revenue Account created in Section 9.2 hereof.
"Secular day" means any day on which business is
normally transacted and does not include any Sunday or
legal holiday.
"Supplemental indenture" means an agreement supple-
mental hereto.
"Systems" means the water and sewer system and
the gas system.
"Then effective revenue account or accounts" means
the following account or accounts, at the times hereinafter in-
dicated: (a) the underlying water and sewer revenue account and
the underlying 1958 revenue account, if at the time the under-
lying 1958 indenture and either or both of the other two under-
lying indentures remain outstanding and undischarged;(b) the
underlying water and sewer revenue account and the revenue account,
if at the time the underlying 1958 indenture shall have been sat- '
isfied and discharged and either or both of the other two under-
lying indentures remains outstanding and undischarged;(c) the
underlying 1958 revenue account, if at the time the underlying
1958 indenture remains unsatisfied and undischarged and both of
the other two underlying indentures shall have been satisfied
and discharged;and (d) the revenue account, if at the time all of
the underlying indentures shall have been satisfied and discharged.
"Trustee" means the party of the second part hereto
and its successors and any corporation or association resulting
from or surviving any consolidation or merger to which it or
its successors may be a party.
"Underlying 1950 water and sewer bonds" means the Mort-
gage Water and Sewer Revenue Bonds of the board dated July 1, 1950,
issued in the original principal amount of $260,000 pursuant to a
resolution adopted by the directors of the board on August 28,
1950, and now outstanding in the aggregate principal amount of
$i)94,000.
"Underlying 1950 water and sewer indenture" means the
mortgage and deed of trust by the board to The Merchants National
Bank of Mobile dated as of July 1, 1950, securing the underlying
1950 water and sewer bonds.
"Underlying 1953 bonds means the Water and Sewer Reve-
nue Bonds, Second Series, of the board dated July 1, 1953, issued
in the original principal amount of $85,000 pursuant to resolution
adopted by the directors of the board on December 9, 1953, and
now outstanding in the aggregate principal amount of $60,000.
" "Underlying 1953 indenture" means the mortgage and
deed of trust by the board to The Merchants National Bank of
Mobile dated as. of July 1, 1953, securing the underlying 1953
bonds,
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"Underlying 1958 revenue account" means the Utilities
Systems Revenue Account created in Section 10.2 of the underlying
1958 indenture.
"Underlying 1958 warrants" means the Water, Sewer and
Gas Revenue Refunding Warrants, Series 1958, of the city dated
December 1, 1958, issued in the original principal amount of
$210,000 pursuant to Ordinance No. 258 of the city adopted
January 12, 1959, and now outstanding in the aggregate principal
amount of y165,000.
"Underlying 1958 indenture" means.the mortgage and
deed of trust by the board to The Merchants National Bank of
Mobile, dated as of December 1, 1958, securing the underlying
1958 warrants.
"Underlying indentures" means the underlying 1950
water and sewer indentures, the underlying 1953 indenture and
the underlying 1958 indenture.
"Underlying securities" means the underlying 1950
water and sewer bonds, the underlying 1953 bonds and the under-
lying 1958 warrants.
"Underlying water and sewer revenue account" means,
as of any period when the underlying 1950 water and sewer inden
ture remains outstanding and undishcarged, the Water and Sewer
Revenue Account created in Section 1 of Article V of the under-
lying 1950 water and sewer indenture and, following satisfaction
and discharge of the underlying 1950 water and sewer indenture,
the System Revenue Account created in Section 8.1(a) of the
underlying 1953 indenture.
"Water and sewer system" means the entire water works
and sanitary sewer system of the city together with all improve-
m6nts, additions, and extensions thereto that may be hereafter
made, including wells, pumps and appurtenances thereto, water
treatment facilities, reservoirs, tanks, pipes, water trans-
mission mains, water distribution system, meters, hydrants, valve
and services in connection therewith, sanitary sewers, consist-
ing of both mains and laterals, manholes and the appurtenances
thereto, outfall sewers, sewage disposal plant, sewage treat-
ment Facilities, lift and pumping station, and all of the city's
other properties, real, personal and mixed, tangible and in-
tangible, forming a part of or appertaining to or used or ac-
quired f6r use in connection with the said water works and
sanitary sewer system, whether any of said properties are now
owned by the city or may be hereafter acquired by it.
Section 1.2 Use of Phrases. "Herein", "hereby",
"hereunder", "hereof", erei n e o erer ", "hereinafter", and
other equivalent words refer to the indenture as an entirety
and not solely to the particular portion thereof in which
such word is used. The definitions set forth in Section 1.1
hereof include both singular and plural. Whenever used
herein, any pronouns shall be deemed to include both singu-
lar and plural and to cover all genders. Any percentage of
bonds, specified herein for any purpose, is to be figured
on the unpaid principal amount thereof then outstanding.
ARTICLE II
PLEDGE, SEVERANCE OF REVENUES, AND
STATUTORY MORTGAGE LIEN
Section 2.1 Pledge of Revenues. In order to se-
cure to the holder thereof payment of the principal of and
the interest on the bonds and the coupons and the performance
and observance of the covenants and conditions therein and
herein contained, and in consideration of their purchase and
acceptance of the bonds and of the acceptance by the trustee
of the trusts herein provided, the city has pledged and does
hereby pledge with the trustee the revenues derived from the
operation of the systems, to the extent hereinafter provided.
The aforesaid pledge is made for the equal and pro rata pro-
tection and benefit of the holders, present and future, of
the bonds and the coupons, without preference or priority of
one over another by reason of priority in issuance or acquisi-
tion or otherwise, as if all the bonds at any time outstand-
ing hereunder had been executed, sold, authenticated, delivered
and negotiated simultaneously with the execution and delivery
hereof. The pledge herein made is subject only to the fol-
lowing: (a) With respect to the revenues from the water and
sewer system only, a pledge of revenues from the water and
sewer system for the benefit of the underlying 1950 water
and sewer bonds and a pledge of revenues from the water and
sewer system for the benefit of the underlying 1953 bonds;
(b) With respect to the gas system only, a pledge of reve-
nues from the gas system for the benefit of the gas bonds;
and (c) With respect to both of the systems, a pledge of
the revenues from the systems for the benefit of the under-
lying 1958 warrants. The city represents that the pledges
and agreements herein made constitute the only outstanding
pledges and agreements with respect to the revenues derived
from operation of the water and sewer system except the
pledges and agreements made in the underlying indentures;
and that the pledges and agreements herein made constitute
the only outstanding pledges and agreements with respect to
the revenues derived from operation of the gas system except
the pledges and agreements made in the gas indenture and
in the underlying 1958 indenture. The city hereby expressly
recognises that the pledges and agreements made in the under-
lying indentures are prior and superior to the pledges and
agreements herein made with respect to the revenues derived
from operation of the water and sewer system, and that the
pledges and agreements made in the gas indenture and in the
underlying 1958 indenture are prior and superior to the
pledges and agreements herein made with respect to the reve-
nues derived from operation of the gas system.
Section 2.2 Severance of Revenues. In order to
safeguard the aforesaid pledge and the performance and ob-
servance of the agreements and covenants of the city herein
contained, the city does hereby declare its intention that
the revenues derived from the operation of the systems shall
be and the same hereby are severed from the physical properties
comprising the systems to such extent as shall be necessary
to fulfill and preserve inviolate the said pledge and to ful-
fill the said agreements and covenants.
Section 2.3 Creation of Statuto Mortgage Lien.
Pursuant to the provisions off` —Subdivision AFFiEIF-2 of
Chapter 6 of Title 37 of the Code of Alabama of 1940, as
amended, the city hereby creates a statutory mortgage lien,
in favor of the holders of the bonds and the coupons, on the
systems. The said statutory mortgage lieu is for the benefit
of the holders of all the bonds and the coupons, without
preference or priority of one bond over another, and shall
take effect immediately upon the delivery of any of the bonds
authorized to be issued hereunder; provided however, that
said statutory mortgage lien shall not be construed to give
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any authority to compel the sale of either of the systems or
any part of either thereof at a foreclosure sale, aid no
foreclosure proceedings shall ever be had with respect to
either of the systems or any part of either thereof. There
shall be filed for record in the office of the Judge of
Probate of the county in which the systems are located,
promptly following the issuance of each series of the bonds,
a notice containing a brief description of the systems and
of that series of the bonds, an appropriate reference to
the indenture, and a declaration that said statutory mort-
gage lien has been created upon the systems for the benefit
of the holders of the bonds issued under the indenture and
the interest coupons applicable thereto. The mayor or other
chief executive officer of the city and the city clerk of
the city are hereby authorized and directed so to file and
execute such notice in the name and behalf of the city and
to affix the seal of the city thereto, and the city clerk
of the city is hereby authorized and directed to attest
said seal. The city represents that the statutory mortgage
lien herein created is and will -be subject only, with re-
spect to the water and sewer system, to the lien of the
underlying indentures and, with respect to the gas system,
to the lien of the underlying 1958 indenture, and also,
until February 1, 1962, to the lien of the gas indenture.
ARTICLE III
ISSUANCE OF BONDS IN SERIES
AND FORM THEREOF
Section 3.1 Issuance of Bonds in Series. 'The
bonds may be issued in different series, an3 ea c and
shall have an appropriate series designation. All of the
bonds and the coupons respectively applicable thereto shall
be equally and ratably secured by the indenture, the pledge
made herein, and the statutory mortgage lien herein created.
Section 3.2 Dates, Maturities and Place of Pay-
ment of Bonds and Coupons - In General. Each series of he
bonds shall e dated either the June I or December 1 falling
in the period of 360 days next preceding the date of their
issuance and shall mature on December 1 in each of the years
that may be fixed for their maturities. Interest on the bonds
from their respective dates until their respective maturities
shall be payable semiannually on June 1 and December 1 and
shall be evidenced by coupons attached to the bonds. The
bonds and the coupons shall be payable in lawful money of the
United States of America at the principal office of the trus-
tee and any series of additional bonds, together with the cou-
pons applicable thereto, may be made payable also at such
other bank or banks as may be desJgnated as co -paying agent
or co -paying agents therefor in the supplemental indenture
under which such series of additional bonds may be issued.
The bonds and the coupons shall bear interest at the rate
of 6% per annum after their respective maturities until
paid or until moneys sufficient for payment thereof shall
have been deposited for that purpose with the trustee.
Section 3.3 Form of Bonds, etc. The bonds, the
coupons, and the trustee's autHentication certificate appli-
cable thereto shall be in substantially the following forms,
respectively, with such insertions, omissions and other varia-
tions as may be necessary to conform to the provisions hereof
OEM
and, with respect to the additional bonds, as the council
may determine in accordance with the provisions of the
indenture and as may be incorporated in the respective
supplemental indentures under which they may be issued:
No.
(Form of Bond)
UNITED STATES OF AMERICA
STATE OF ALABAMA
P1
CITY OF FAIRHOPE
WATER, GAS AND SEWER REVENUE BOND
SERIES
On the lst day of December, for value re-
ceived, the City of Fairhope (herein called "the city"), a
municipal corporation under the laws of Alabama, hereby
promises to pay to the bearer hereof solely out of the reve-
nues hereinafter referred to, the sum of
D O L L A R S
with interest thereon from the date hereof until the ma-
turity hereof at the rate of �, per annum, payable semi-
annually on June 1 and December 1 in each year until and at
the maturity hereof upon surrender of the annexed interest
coupons as they severally mature. Both the principal here-
of and the interest hereon are payable in lawful money of
the United States of America at the principal office of The
Merchants National Bank of Mobile in the City of Mobile
in the State of Alabama.
This bond is one of a duly authorized issue of
bonds of the city issuable in series, designated Water, Gas
and Sewer Revenue Bonds (herein called "the bonds"), and issued
under a Trust Indenture dated as of December 1, 1961 (herein
called "the indenture"), between the city and The Merchants
National Bank of Mobile (herein called "the trustee"), of
Mobile, Alabama. The bonds are not limited in aggregate
principal amount except as provided in the indenture. The
principal of and the interest on the bonds are payable solely
out of the revenues derived from the operation of the city's
water works and sanitary sewer system and its natural gas
distribution system, as they may be presently or hereafter
constituted (herein together called "the systems'), and are
secured, pro rata and without priority of one bond over
another, by a valid pledge of said revenues out of which they
are payable. The indenture provides, inter alia, that in
the event of default by the city in the manner and for the
time therein provided, the trustee may declare the principal
of this bond as immediately due and payable, whereupon the same
shall thereupon become immediately due and payable and the
trustee shall be entitled to pursue the -remedies provided in
the indenture.
The series of the bonds of which this is one is
designated Series , is authorized to be issued in the
aggregate principal amount of $ , and consists of
bonds numbered from 1 to , inclusive.
The covenants and representations herein contained
or contained in the indenture do not and shall never consti-
tute a personal or pecuniary liability or charge against the
general credit of the city, and in the event of breach of any
such covenant or representation no personal or pecuniary
liability or charge payable directly or indirectly from the
general revenues of the city shall arise therefrom. No
holder of the bonds or the coupons shall ever have the right
to compel the exercise of the taxing power of the city for
payment of the principal of or the interest on the bonds, and
this bond does not constitute a debt of the city within any
state constitutional provision or statutory limitation.
The bonds are issued under the provisions of
Chapter 6 of Title 37 (including particularly Subdivision
3 of Article 2 of said chapter in said title) of the Code
of Alabama of 1941.0, as amended, and an ordinance of the city
duly adopted in order to raise moneys for purposes for
which bonds are authorized to be issued under said subdivision.
It is hereby certified that all conditions, ac-
tions and things required by the constitution and laws of
Alabama to exist, be performed and happen precedent to or
in the issuance of this bond exist, have been performed and
have happened in due and legal form and that provision has
been made for the deposit in a separate fund of revenues
from the operation of the systems in amounts sufficient to
pay the principal of and the interest on the bonds as said
principal and interest shall respectively mature.
The principal of and the interest on this bond
are exempt from any and all state, county and municipal and
other taxation whatsoever under the laws of the State of
Alabama.
The city hereby covenants that it will at all
times maintain such rates for water, gas and sanitary sewer
service furnished by the systems as shall be sufficient to
provide for payment of the principal of and the interest on
the bonds as the said principal and interest become due, to
create a bond and interest redemption fund therefor, to
provide for the payment of the expenses of administering
and operating the systems and of maintaining them in good
repair and working order, to build up a reserve for deprecia-
tion of the systems and to build up a reserve for improve-
ments, betterments and extensions to the systems, other than
those necessary to maintain them in good repair and working
order as hereinabove provided.
Execution by the trustee of its authentication
certificate hereon is essential to the validity hereof and
is conclusive of the due issue hereof under the indenture.
IN WITNESS WHEREOF, the city has caused this
bond to be executed in its behalf by its mayor and its
city clerk, hao caused the corporate seal of the city to
- 10 -
be hereunto affixed by its city clerk, whose signature
hereon shall constitute attestation of such seal, has caused
the attached coupons to be executed with the facsimile signa-
tures of said two officers, and has caused this bond to be
dated
Attest:
City Clerk
Coupon
No.
CITY OF FAIRHOPE
By
s Mayor
(Form of Coupon)
w
On the 1st day of , 19 ,
the City of Fairhope, a municipal corpora on in the S�Te
of Alabama, will pay to the bearer hereof, solely out of
the revenues derived from the operation of its water works
and sanitary sewer system and its natural gas distribution
system, upon surrender hereof at the principal office of
The Merchants National Bank of Mobile in the City of Mobile,
Alabama,
Dollars in lawful money of the Uhited a ea of Amer ca,
being interest then due on its Water, Gas and Sewer Revenue
Bond, Series , dated , No.
Attest:
CITY OF FAIRHQPE
4
By ('
s Mayor
City Clerk
(Form of Trustee's Authentication Certificate)
The within bond is one of those described in the
within mentioned Trust Indenture.
THE MERCHANTS NATIONAL BANK OF MOBILE
By
r M—Authorizea officer
11 -
In addition to any other insertions, omissions and
variations that may be necessary to conform to the provisions
of the indenture, the following insertions and variations
Ehall be made in the bond form set forth above;
(a) If any series of additional bonds
shall be made payable at some bank or banks
in addition to the trustee, there shall be
inserted in the first paragraph of each bond
of that series and in the coupons applicable
thereto an appropriate reference to each
additional co -paying agent;
(b) There shall be inserted in the
second paragraph of each of the additional
bonds an appropriate reference to any supple-
mental indenture or supplemental indentures
that shall have been executed and delivered
prior to or simultaneously with the delivery
of such bond;
(c) There shall be inserted at the
end of and as a part of the third paragraph
of each bond of each series containing any
callable bonds an appropriate sentence or
sentences briefly designating the bonds of
the sAid series that are subject to redemp-
tion prior to maturity and briefly reciting
the redemption price, the dates on which said
redemption may be effected, and any restric-
tions upon or conditions precedent to such
redemption;
(d) The following shall be inserted
after the maturity date contained in the first
line of the first paragraph of each of the
callable bonds:.
"(unless this bond shall have been
duly called for prior payment),"
(e) The following shall be inserted
after the maturity date of each coupon which
is applicable to any callable bond and which
is due subsequent to the first date on which.
such callable bond is subject to redemption:
"(unless the bond to which this
coupon is applicable shall have
been duly called for prior pay-
ment),"
(f) If one of the signatures on the
bonds of any series is to be a facsimile, or
if the facsimile of the corporate seal of the
city is to be imprinted or otherwise repro-
duced on the bonds of any series in lieu of
the impressment thereon of the seal itself,
the testimonimum clause of each bond shall
make appropriate reference to any such fact
or facts.
- 12 -
ARTICLE IV
EXECUTION, AUTHENTICATION AND
DELIVERY OF THE BONDS
Section 4.1 Execution of Bonds. The bonds shall
be executed on behalf of e ci y by M mayor or other
chief executive officer and by its city clerk, and the seal
of the city shall be affixed thereto by its city clerk,
whose signature thereon shall constitute attestation of such
bond and seal; provided, however, that, if the ordinance
authorizing the issuance of any series of the bonds shall so
provide, the signature of either the said mayor or the said
city clerk may be imprinted or otherwise reproduced in fac-
simile on the bonds of that series, if the other of the said
signatures is manually subscribed thereon; and provided, fur-
ther, that, if the ordinance authorizing the issuance of any
series of the bonds shall so provide, the said seal may be
imprinted or otherwise reproduced in facsimile on the bonds
of the said series in lieu of being impressed thereon. The
coupons shall be executed by the facsimile signatures of
said two.officers. Signatures on the bonds and the coupons
by any such officers at the time such signatures were written
or printed shall continue effective although such persons
cease to be such officers prior to the authentication and
delivery of the bonds.
Section 4..2 Authentication Certificate of Trustee.
A duly executed authentica ion certificate by the trustee in
the form hereinabove recited shall be endorsed on each of the
bonds and shall be essential to its validity. Such certificate
shall be conclusive of the due issue of such bond hereunder.
Section 4.3 Replacement of Mutilated, Lost,
Stolen or Destroyed Bonds and Coupons. In the event any
bond mutilated, lost, stolen or destroyed, the city
may execute, and the trustee shall thereupon authenticate
and deliver, a new bond of like tenor and denomination to
that mutilated, lost, stolen or destroyed, which such new
bond shall have attached thereto coupons corresponding in
all respects to those on the bond mutilated, lost, stolen
or destroyed; provided that (a) in the case of any such
mutilated bond, such bond together with all coupons (if any)
appertaining thereto is first surrendered to the city and
the trustee, and (b) in the case of any such lost, stolen,
or destroyed bond, there is first furnished to the city and
the trustee evidence of such loss, theft or destruction satis-
factory to them, together with indemnity satisfactory to them,
In the event any coupon is mutilated, lost, stolen or destroyed,
the city may issue a duplicate coupon upon the same terms
and conditions as those provided in the preceding sentence
hereof respecting replacement of mutilated, lost, stolen or
destroyed bonds. The city may charge the holder with the
expense of issuing any such new bond or coupon.
Section 4.4 Removal of Past Due Coupons. Upon
the authentication of any bo-na by the rus ee, all past
due coupons evidencing interest not paid or made available
for payment on such bond shall be removed and cancelled
by the trustee.
- 13 -
Section 4.5 Consideration for Sale of Bonds.
Nothing herein contained shall affect n any way a power
of the city to fix the consideration for which the bonds
may be sold by it.
ARTICLE V
GENERAL PROVISIONS RESPECTING
REDEMPTION OF CALLABLE BONDS
Section 5.1 Manner of Effecting Redemption of
Callable Bonds. Any rede_m_p=on_of any callable bonds of
any series shall be effected in the following manner:
(a) Call. The council shall adogt a reso-
lution con'faining the following: (1) a call for
redemption, on a specified date when they are by
their terms subject to redemption, of callable
bonds bearing a stated series designation and
stated numbers; (2) a statement that the city
is not in default under the indenture; and (3)
in the case of the redemption of any callable bonds
that are also additional bonds and with respect
to the redemption of which any additional re-
quirement or condition may have been provided
for in a supplemental indenture, a summary of
the applicable requirement or condition and of
the actions taken or provisions made to comply
therewith.
(b) Publication. Not less than thirty (30)
days: prior t—b -TFie re3emption date, the city shall
cause to be published one time in a financial
journal published in the City of New York, New
York, and also a newspaper published in the City
of Mobile, Alabama, a notice stating the following:
that callable bonds bearing a stated series desig-
nation and stated numbers have been called for
redemption and will become due and payable at
the redemption price or redemption prices on a
specified redemption date (which shall be the date
provided for such redem tion in the resolution re-
quired in subsection (a� of this section); and
that all interest thereon will cease after the
redemption date. In the event that there is no
newspaper being published in the said City of
Mobile at the time the city directs such notice
to be published, then publication of said notice
in a financial journal published in the said City
of New York, as aforesaid, will slIf'fice.
(c) Deposit with Trustee. On or prior to the
redemption date the city s = deposit with the trus-
tee the total redemption price of the callable bonds
so called and shall further furnish to the trustee
the following: (1) a certified copy of the resolu-
tion required in subsection (a) of this section;
(2) an appropriate affidavit showing compliance
with the requirements of subsection (b) of this
section; and (3) in the case of the redemption of
callable bonds that are also additional bonds
and with respect to the redemption of which any
additional requirement or condition may have been
- 14 -
provided for in a supplemental indenture, evi-
dence satisfactory to the trustee showing com-
pliance with any such additional requirement or
condition.
Section 5.2 Presentation of Callable Bonds for
Redemption. Bonds Cease to Bear Interest, pon comp iance
y tHe city with e requirements contained in Section 5.1
hereof, and if the city is not on the redemption date in
default in payment of the principal of or the interest on
any of the bonds, the callable bonds so called for redemption
shall become due and payable at the place at which the same
shall be payable at the redemption price or redemption prices
and on the redemption date specified in such notice, any-
thing herein or in the callable bonds to the contrary not-
withstanding; the holders thereof shall then and there sur-
render them for redemption; all future interest on the
callable bonds so called for redemption shall cease to accrue
after the redemption date and the coupons maturing after
the redemption date shall be void; the callable bonds so
called and the coupons applicable thereto which matured
on and prior to the redemption date shall no longer be
entitled to the benefit of the security hereof but shall
look solely to the moneys deposited with the trustee under
the provisions of this article; and out of the moneys so
deposited with it, the trustee shall make provision for
payment of the callable bonds so called for redemption at
the redemption price on the redemption date.
Section 5.3 Payment of Coupons Maturing on
Redemption Date and Appl c3 aM to Call le Bonds.—�Neither
e trustee nor any -Institution at whien the 537nds may at
any time be payable shall be required to pay any coupon
maturing on the redemption date which is applicable to
any callable bond so called for redemption unless the
callable bond to which such coupon is applicable is also
presented for payment; provided, that in the event any
such coupon should be so paid without payment of the
applicable callable bond no one shall be liable to the
holder of such applicable callable bond, or to the city,
or to anyone whomsoever; and provided further, that the
trustee and any such institution shall pay such coupon if
the holder thereof shall present to the trustee or to such
institution evidence satisfactory to the trustee or to such
institution that such holder is the owner of the coupon
so presented and is not the owner of the callable bond to
which such coupon is applicable.
ARTICLE VI
THE INITIAL BONDS
Section 6.1 Series Designation, Date, Prin-
cipal Amount, Denomination, an Numbers of Initial
Bonds. e initial bonds issued nereunder shall e the
er es 1961 bonds. The total principal amount of the
initial bonds is limited to $1,000,000. The initial
bonds shall be dated December 1, 1961, shall be in the
denomination of $1,000 each and shall be numbered from
l to 1,000, inclusive.
- 15 -
Section 6.2 Maturity Schedule of Initial Bonds.
The initial bonds shall mature on December I in thefol-
lowing principal amounts and years:
Bond Numbers
Aggregate Principal
(both
inclusive
Year of Maturity
Amount Maturing
1
to
15
1962
$15,000
16
to
30
1963
15,000
31
to
45
1964
15,000
46
to
6o
1965
15,000
61
to
75
1966
15,000
76
to
90
1967
15,000
91
to
110
1968
20,000
Ill
to
130
1969
20,000
131
to
150
1970
20,000
151
to
170
1971
20,000
171
to
190
1972
20,000
191
to
225
1973
35,000
226
to
26o
1974
�5,000
261
to
300
1975
0,000
301
to
340
1976
4o,000
341
to
38o
1977
4o,000
381
to
420
1978
4o,00
421
to
460
1979
0
461
to
505
1980
45,000
506
to
550
1981
45,000
551
to
595
1982
45,000
596
to
640
1983
45,000
641
to
6$5
1984
45,000
686
to
?30
1935
45,000
731
to
775
1986
45,000
776
to
820
1987
45,000
821
to
865
1988
45,000
866
to
9lo
1089
45,000
911
to
955
1990
45,000
956
to
1000
1991
45,000
Section 6.3 Interest Rates of Initial Bonds.
The initial bonds shall bear interest rom heir da e until
their respective maturities at the following per annum rates:
6% on those having stated maturities in 1962 to 1965, in-
clusive; 3-7/8% on those having stated maturities in 1966
to 1979, inclusive; and 4% on those having stated maturities
in 1980 to 1991, inclusive.
Section 6.4 Redemption Provisions Respecting
Callable Initial Bonds. Those of the iFitial bonds having
stated maturities in 1972 and thereafter may be redeemed
and paid prior to their respective maturities, at the option
of the city, in whole or in part (but if in part, in the
inverse order of their numbers), on December 1, 1971, and
on any interest payment date thereafter, at and for a redemp-
tion price, with respect to each such bond redeemed, equal
to its face value plus accrued interest thereon to the re-
demption date and a premium equal to twelve months' interest
thereon computed at the coupon rate thereof. Any redemp-
tion of callable initial bonds shall be subject to the
provisions of and shall be effected in the manner provided
by Article V hereof.
- 16 -
Section 6.5 Execution and Delivery of the Initial
Bonds. The initial bonds sT all be forthwith executed
ERE-
e vered to the trustee and shall be authenticated and de-
livered by the trustee from time to time upon receipt by
the trustee of an order signed on behalf of the city by its
mayor requesting such authentication and delivery and desig-
nating the person or persons to receive the same or any part
thereof.
Section 6.6 Use of Proceeds from Sale of Initial
Bonds. The entire proceeds derived from the sale of the ini-
i� almonds shall be used for the following purposes only and
in the following order: (a) payment into the bond fund of
the accrued interest received on the sale of the initial
bonds; (b) payment of the expenses incurred in the issuance
and sale of the initial bonds, including the initial charge
of the trustee under the indenture, the fiscal, legal, print-
ing, engineering and recording fees and expenses incurred in
connection therewith; (c) refunding the gas bonds by deposit-
ing with the trustee under the gas indenture an amount equal
to the principal of those of the gas bonds due on February
1, 1962, plus an amount equal to the redemption price, exclu-
sive of accrued interest, of those of the gas bonds that have
stated maturities after February 1, 1962, to the end that they
may be redeemed and paid on that date; and (d) payment of
the balance of said proceeds into the construction fund.
ARTICLE VII
THE ADDITIONAL BONDS
Section 7.1 Additional Bonds - In General. While
the city is not to the knowledge of the trustee in efault
under the indenture, it may at any time and from time to
time issue additional bonds, within the limitations of and
upon compliance with the provisions of this Article VII, for
the purpose of paying the cost of the acquisition, by con-
struction or otherwise, of capital improvements to the water
and sewer system, the gas system, or both. The additional
bonds may be in such denomination or denominations, shall
bear interest at such rate or rates, shall mature in such
year or years and may contain such provisions for redemption
prior to maturity, all as may be provided in the supplemental
indenture under which they are issued; provided, that any re-
demption of additional bonds prior to maturity shall be
effected in the manner set forth in and shall be subject to
the provisions of Article V hereof. Each of the additional
bonds shall contain an appropriate series designation.
Section 7.2 Conditions Precedent to Issuance of
Additional Bonds. Prior to the issuance of any of the addi-
tional bonds the city shall deliver to the trustee those of
the additional bonds proposed to be issued, duly executed
and sealed, accompanied by the following:
(a) Supplemental Indenture. A supplemental
indenture, duly executed, sealed and acknowledged
on behalf of the city and containing the following:
(i) a description of the additional bonds proposed
to be issued, including the aggregate principal
amount, the numbers and series designation, the
- 17 -
denomination or denominations, the interest rate
or rates and the maturity or maturities of such
additional bonds, and any provisions for redemp-
tion thereof prior to maturity; (ii) a statement
of the purpose for which the additional bonds are
proposed to be issued; and (iii) any other pro-
visions that do not conflict with the provisions
hereof;
(b) Proceedings. A certified copy of the
proceedings a en y the council authorizing the
sale and issuance of the additional bonds proposed
to be issued and the execution and delivery of the
supplemental indenture providing therefor;
(c) Resolution. A resolution requesting the
trustee to authienticate and deliver to the pur-
chaser the additional bonds pro osed to be issued
and reciting the following: (i� that the city is
not at the time in default hereunder and that no
such default is imminent; (ii) the number and series
designation of the additional bonds proposed to be
issued; (iii) the person or persons to whom such
additional bonds shall be delivered; (iv) the
sale price of such additional bonds; v) a list
of all additional bonds theretofore issued by the
city hereunder and at the time outstanding and of
the supplemental indentures under which they were
issued; (vi) a list of all of the underlying securi-
ties that then remain outstanding; and (vii) a brief
description of the capital improvements for acquisi-
tion of which the additional bonds are proposed to
be issued;
(d) Engineer's Certificate. A certificate
of an indepenaent engineer satisfactory to the
trustee expressing an opinion to the following
effect: (i) that the improvements proposed to be
acquired or constructed by the city with the
principal proceeds derived from the sale of the
additional bonds with respect to which such
certificate is made are of such nature as to
be properly chargeable to fixed capital account
by good accounting practice and will form a part
of the water and sewer system, or the gas system,
as the case may be; (ii) that the said improvements
are needed either to supply water, gas or sanitary
sewer service to prospective customers desiring the
same or for the efficient operation of the water...
and sewer system, the gas system, or both, (iii) that
the cost to the city of the said improvements plus
the reasonable expenses estimated to be incurred by
the city in the issuance and sale of the additional
bonds with respect to which such certificate is made
will together be not less than the principal proceeds
which will be realized by the city from the sale of
the additional bonds proposed to be issued for the
purpose of such acquisition; (iv) that the cost to
the city of the said improvements will represent the
reasonable value thereof; and (v) that the acquisi-
tion or construction of said improvements and the
issuance of the additional bonds proposed to be
issued therefor will be feasible;
('e) Certificates Respecting Revenues. One of
the following:
(1) A certificate made by a certified public
accountant acceptable to the trustee, certifying
that the average annual net income derived from
the operation of the systems during the two fis-
cal years next preceding the date of issuance of
the additional bonds then proposed to be issued
was not less than 1500 of the maximum annual debt
service requirement during any then succeeding
fiscal year with respect to the underlying securi-
ties and all bonds that will be outstanding under
the indenture immediately following the issuance.
of the said additional bonds;
(2) Separate certificates, each prepared by a
certified public accountant acceptable to the trus-
tee, and each certifying the amount of the annual
net income derived from the operation of the sys-
tems during a different one of the two::fiscal years
next preceding the date of the issuance of the addi-
tional bonds then proposed to be issued; provided,
that the average annual net income from the systems
for the said two fiscal years, as such average annual
net income shall be determined by the trustee from
an examination of said separate certificates, must
not be less than 150% of the maximum annual debt
service requirement during any then succeeding fis-
cal year with respect to the underlying securities
and all bonds that will be outstanding immediately
under the indenture following the issuance of said
additional bonds; or
(3) A resolution adopted after the commencement
of the earlier of the two fiscal years next preced-
ing the issuance of any proposed additional bonds,
establishing a revised schedule of rates for water,
gas, or sanitary sewer service, or any thereof, fur-
nished from the systems,.accompanied by a certificate
by an independent engineer who shall be acceptable to
the trustee stating that if the revised schedule of
rates set forth in the said resolution had been in
effect throughout the said two fiscal years next pre-
ceding the date of issuance of the additional bonds
then proposed to be issued, the average annual net
income derived from operation of the systems during
those two fiscal years would have been not less than
150% of the maximum annual debt service requirement
during any then succeeding fiscal year with respect
to the underlying securities and all of the bonds
that will be outstanding immediately following the
issuance of the said additional bonds; provided, that
each such certificate shall be.accompanied by and
shall recite that it is based, inter alia, upon an
examination by the independent engineer making the
said certificate of one of the following: (i) a
certificate by a certified public accountant who
shall be acceptable to the trustee certifying the
amount of the annual net income derived from the
operation of the systems during each of the two fis-
cal years next preceding the date of issuance of
the proposed additional bonds; or (ii) two separate
certificates, each prepared by a certified public
accountant acceptable to the trustee, and each
certifying the amount of the annual net income de-
rived from the operation of the systems during a
different one of the said two fiscal years;
- 19 -
(f) Opinion of Independent Counsel. An
opinion, dated on tHe Me of issuance of such
additional bonds, signed by independent counsel
accepthble to the trustee approving the forms of
all documents required in the preceding portions
of this section to be delivered to the trustee
and expressing the opinion that they comply with
the applicable requirements of this article.
Upon receipt of the documents required by the provisions of
this section to be furnished to it, the trustee shall, unless
it has cause to believe any of the statements set out in
said documents to be incorrect, thereupon execute the supple-
mental indenture so presented, and, further, shall authenticate
the additional bonds with respect to which the said documents
shall have been made and shall deliver the additional bonds
so authenticated to the purchaser thereof upon payment to
the city of the purchase price therefor.
ARTICLE VIII
AGREEMENTS RESPECTING CONSTRUCTION
OF CAPITAL IMPROVEMENTS
Section 8.1 Construction of Capital Improvements.
The city will proceed continuously and with reasonable dis-
patch with the construction of capital improvements to the
water system forming a part of the water and sewer system
and capital improvements to the gas system, all substantially
in accordance with plans and specifications therefor prepared
by Donald Mills, Consulting Engineer, of Selma, Alabama.
The city will complete said construction as soon as may be
practicable, delays incident to strikes, riots, acts of God
and the public enemy and similar acts beyond the.reasonable
control of the city only excepted. The city will promptly
pay, as and when due, all expenses incurred in and about
the said construction, and it will not suffer or permit
any mechanics' or materialmen's liens that might be filed
or otherwise claimed or established upon or against either
of the systems or any part thereof, and that might be or
become a lien thereon, to remain unsatisfied and undischarged
for a period exceeding thirty (30) days after the filing or
establishment thereof; provided, however, that the city may
in good faith contest any such mechanics' or materialmen's
lien claims so filed or established and, in the event that
such lien claims are so contested, may permit the merchanics'
or materialmen's liens so contested to remain unsatisfied
and undischarged during the period of such contest and any
appeal therefrom, irrespective of whether such period extends
beyond the thirty (30) day period after the filing or establish-
ment of such liens, unless by such action the trustee shall
be of the opinion that either of the systems shall be sub-
ject to loss or forfeiture, in which event such mechanics'
or materialmen's liens shall be satisfied prior to the
expiration of said thirty (30) day period.
- 20 -
Section 8.2 Construction Fund. There is hereby
created a special trust fund, Me full name of which shall
be the "Water and Gas Construction Fund", for the purpose
of providing funds for the construction required in Sec-
tion 8.1 hereof. The trustee shall be and remain the
depository, custodian and disbursing agent for the con-
struction fund. The moneys in the construction fund shall
be paid out from time to time for the following purposes
only and in the following manner:
(a) Payment of the cost of acquiring any
real estate (including easements) provided there
is first furnished to the trustee (1) a requisition
for such payment signed either by the mayor and
city treasurer of the city or by a member of the
council and said mayor or treasurer; (2) a certi-
ficate by the construction engineer stating (i)
that such real estate is necessary and suitable
for the construction thereon of, or for use in
connection with, any part or parts of the said
capital improvements to the systems and` -has'
a value not less than the cost of its acquisition,
and (ii) that the amount that will remain on
deposit in the construction fund after withdrawal
therefrom of the cost of acquisition of such
real estate will, in the opinion of the con-
struction engineer, be sufficient to pay all
costs of completing said capital improvements
according to the said plans and specifications
therefor; and (3) a certificate of counsel accep-
table to the trustee approving the title of the
city to such real estate, subject only to the
underlying indentures, any excepted encumbrances,
the statutory mortgage lien herein created, and
(if the certificate is made prior to February 1,
1962) , the gas indentures;
(b) Payment for labor, services, materials,
and supplies furnished in constructing the said
capital improvements; provided that each such pay-
ment shall be based upon a contractor's estimate
or.bill approved by the mayor and city treasurer
of the city or by a member of the council and said
mayor or treasurer and approved also by the con-
struction engineer and shall be accompanied by a
certificate of the construction engineer with
respect to each such estimate or bill stating
that the amount that will remain on deposit in
the construction fund after such payment will,
in the opinion of the construction engineer,
be sufficient to pay all costs of completing
the aforesaid capital improvements according to
the said plans and specifications therefor; pro-
vided, however, that no payment shall be made
under this subsection (b) with respect to any
contract as to which a surety bond has not been
deposited with the trustee in accordance with the
requirements of Section 8.8 hereof;
- 21 -
(c) Payment of all lawful fees and ex-
penses (including reasonable fees and expenses
of engineers and attorneys, and recording fees)
in connection with the matters referred to in
subsections (a) and (b) of this section; pro-
vided, that such payments shall be approved by
the mayor and city treasurer of the city or by a
member of the council and said mayor or treasurer
and approved also by the construction engineer;
and
(d) Payment of the reasonable expenses and
charges of the trustee in connection with the
construction fund.
After certification by the construction engineer that con-
struction of the capital improvements referred to in Sec-
tion 8.1 hereof has been completed in substantial,aecordance
with the said plans and specifications therefor, and after
certification by the mayor of the city that all of the
items referred to in subsections (a), (b) and (c) of this
section have been paid in full, and after the disburse-
ments provided for in subsection (d) of this section have
been made, any moneys then remaining in the construction
fund shall be paid into the reserve fund.
Section 8.3 Trust Nature of Construction Fund.
The moneys at any time on aeposit in the construction fund
shall be and at all times remain public funds impressed with
a trust for the construction provided for in Section 8.1
hereof. The trustee shall be fully protected in making with-
drawals and payments out of the construction fund for the
purposes specified in Section 8.2 hereof upon presentation
to it of the respective approvals and certificates provided
for in said Section 8.2, but the trustee may in its discretion
and shall, when requested in writing so to do by the holders
of not less than twenty-five per centum of the bonds then
outstanding, require•- as a condition precedent to any with-
drawal or disbursement from the construction fund su.ch addi-
tional evidence as it may deem appropriate respecting the
application of any moneys previously disbursed from the con-
struction fund, or as to the correctness of any estimate,
bill or requisition presented to it pursuant to the pro-
visions of said Section 8.2,.
Section 8.4 Investment of Construction Fund
Moneys. So long as the city shall not be in de au here-
under, it may at any time and from time to time at its option
cause any part of the moneys in the construction fund, which
in the opinion of the council will not be needed in the then
immediate future for the purposes for which the construction
fund is created, to be invested in any federal securities
that have a specified maturity prior to the date when the
council is of the opinion such moneys will be needed for
the aforesaid purposes. The trustee shall make any such
investment upon receipt of instructions to make such
investment given to it in a resolution; provided, that
there shall be filed with the trustee along with any such
resolution a certificate by the construction engineer that
in his opinion the moneys to be so invested will not be
needed for the aforesaid construction purposes until the
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maturity date of the federal securities specified in such
resolution. The federal securities in which any such
investment shall be made, together with the income from
such securities, shall become a part of the construction
fund and shall be held by the trustee as a part of the
construction fund. The trustee shall from time to time,
upon receipt of directions given it in a resolution, cause
any such federal securities to be sold or otherwise con-
verted into cash, whereupon the net proceeds derived from
any such sale or conversion shall become a part of the
construction fund. The trustee shall be fully protected
in making any such investment or sale of any such federal
securities upon receipt of directions so to do given in a
resolution.
Section 8.5 Security for Construction Fund
Moneys. The moneys at any time on deposit in the construc-
Y o5nund shall be and at all times remain public funds
impressed with a trust for the construction provided for
in Section 8.1 hereof. The trustee shall at all times
keep the moneys on deposit in the construction fund con-
tinuously secured, for the benefit of the city and the
holders of the bonds, either (a) by holding on deposit,
as collateral security, federal securities or other
marketable securities eligible as security for the deposit
of trust funds under regulations of the Board of Governors
of the Federal Reserve System, having a market value (ex-
clusive of accrued interest) not less than the amount of
moneys then in the construction fund, or (b) if the fur-
nishing of security in the manner provided by the foregoing
subsection (a) of this section is not permitted by the
then applicable law and regulation, then in such other
manner as may be required or permitted by the then appli-
cable state and federal laws and regulations respecting
the security for, or granting a preference in the case
of, the deposit of trust funds; provided however, that
it shall not be necessary for the trustee so to secure
any portion of the construction fund moneys on deposit
with it that are insured by the Federal Deposit Insurance
Corporation or other agency of the United States of
America that may succeed to its functions; and provided,
further, that it shall not be necessary for the trustee
so to secure any portion of the construction fund moneys
that may at the time be invested pursuant to the provi-
sions of Section 8.4 hereof.
Section 8.6 Construction Engineer. Donald Mills,
Consulting Engineer, Selma, A a ama, s hereby designated
as the construction engineer. In the event said Donald
Mills should become unavailable or unable to take any action
provided in this article to be taken by the construction
engineer, another engineer or firm of engineers licensed
under the laws of Alabama and acceptable to the trustee
shall thereupon by resolution of the city be appointed con-
struction engineer and authorized to take such actions. If
the city fails to appoint a successor construction engineer
for a period of thirty days following the date on which Donald
Mills becomes unavailable or unable to take any of said
actions, the trustee may then appoint as successor construc-
tion engineer any engineer or firm of engineers licensed
under the laws of Alabama. Any approval or certificate by
a successor construction engineer appointed under the pro-
visions of this section shall have the same effect as an
approval or certificate by the said Donald Mills.
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Section 8.7 Trustee May Complete Construction.
If the moneys on deposil-In—the construction runa s all not
be sufficient to make all payments provided for in subsec-
tions (a) to (d), inclusive, of Section 8.2 hereof, or if
the city should abandon or unreasonably delay the construc-
tion provided for in Section 8.1 hereof, or if for any reason
whatsoever said construction shall not be completed as pro-
vided in said Section 8.1, the trustee may at its election,
but without prejudice to any other eight which it may have
in case of such default, complete the said construction or
such portion thereof as the trustee may deem it feasible
so to complete. For such purpose the trustee may make any
and all necessary contracts, either in its own name or in
the name of the city, for engineers, contractors, labor,
materials, and supplies in connection with the completion
of said construction. In the event that the trustee shall,
pursuant to the provisions of this section, elect to com-
plete said construction, the trustee may thereafter make
disbursements from the construction fund, without any
approval of such disbursements by the city, or by any
officer of the city, for the purpose of paying the cost
of completing the said construction and also of discharging
any unpaid bills previously incurred by the board for such
construction; provided, that if any such disbursement is
for payment of the cost of acquiring real estate, the trustee
shall obtain a certificate of counsel acceptable to it (who
may be counsel to the city) approving the title of the city
to such real estate, subject only to the underlying indentures,
any excepted encumbrances, the statutory mortgage lien here-
in created, and (if the certificate is made prior to
February 1, 1962) the gas indenture. The trustee shall be
fully protected in making disbursements from the construction
fund pursuant to the provisions of this section. Regardless
of whether or not the trustee may undertake the completion
of said construction or any part thereof, as herein provided,
and regardless of whether or not any lien claims may have
been filed or established, the trustee may at its option
advance any funds necessary to make up any deficit in paying
the cost of completing the said construction or any part
thereof. All amounts so advanced by the trustee, together
with interest thereon at the rate of 6% per annum from the
respective dates of any such advancements, shall be tacked
to the indebtedness hereby secured (subordinate only to the
payment of the principal of and interest on the bonds) and
shall be entitled to the benefit of the lien hereof, and
the city agrees to repay the same upon demand with interest
at said rate.
Section 8.8 Surety Bonds Respecting onstruction.
Whenever the city shall enter i~nto a contract with a con-
tractor for any of the construction provided for in Section
8.1 hereof, the city will cause such contractor to deposit
with the trustee a surety bond signed by a surety company
authorized to do business in the State of Alabama and
guaranteeing the performance of such contract and the pay-
ment of all bills incurred thereunder for materials and
labor. Each such surety bond shall designate as the
obligees thereunder the city and the trustee, as their
respective interests may appear; provided, that any such
bond may designate only the city as the obligee thereunder,
if such bond shall be duly assigned by the city to the
trustee. If, prior to the delivery of this instrument,
the city shall have entered into a contract for any part
of the said construction, the city will cause the contractor
under any such contract to deposit with the trustee such
a surety bond promptly following delivery of this instru-
ment.
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Section 8.9 Trustee Not Liable With Respect
to Construction and Con rac s Per a ning There -to. No k-
ing contained in the indenture shall'impose on the trustee
any duty or liability with respect to the appropriateness
or sufficiency of any contract for the construction re-
ferred to in Section 8.1 hereof, or any surety bond re-
quired by Section 8.8 hereof, or with respect to the com-
pletion of the said construction.
ARTICLE IX
DISPOSITION OF REVENUES FROM
THE SYSTEMS AND CREATION OF
SPECIAL FUNDS
Section 9.1 Disposition of Revenues Pursuant
to Provisions of Underlying Indentures. So long as any of..
e un er ying in en ures are ou s an ing and undischarged,
the city will continue in effect the special funds respectively
created in the underlying indentures at the time outstand-
ing, and will make the deposits into the said special funds
provided for in the underlying indentures, out of the reve-
nues therein specified, and will make withdrawals from said
special funds only for the purposes provided therefor in
the respective underlying indentures. The revenues derived
from the operation of the systems remaining at the expira-
tion of each period provided for in the respective underlying
indentures which are not required in any of the underlying
indentures to be paid into any of the special funds therein
created shall, to the extent and in the order provided in
Section 9.3 hereof, be paid into the special funds created
in Sections 9.4 to 9.7, inclusive, hereof.
Section 9.2 Disposition of Revenues Following
Satisfaction of Any of the Underlying Indentures; Creation
of the Revenue Account. There is hereby createcreatea a special
trust fund tFie fullname of which shall be the Water, Sewer
and Gas Revenue Account. The revenue account shall be
opened and placed in effect immediately following the satis-
faction and discharge of the underlying 1958 indenture. At
all times following the satisfaction and discharge of the
underlying 1958 indenture, the city will pay into the reve-
nue account, as received by it, all of the revenues derived
from the operation of the gas system. At all times follow-
ing the satisfaction and discharge of the last of the under-
lying indentures to be satisfied and discharged, the city
will pay into the revenue account, as received by it, all
of the revenues derived from the operation of the water and
sewer system. On or prior to the last secular day of each
successive month beginning with the month during which the
revenue account shall be opened and placed in effect as here-
in provided, moneys on deposit in the revenue account shall,
to the extent and in the order provided in Section 9.3 here-
of, be paid into the special funds created in Sections 9.4
to 9.7, inclusive, hereof.
Section 9.3 Payments Into Special Funds Herein
Created.. On or prior to a -last secular ciay or eac
successive month beginning with the month of December, 1961)
moneys in the then effective revenue account or accounts
shall be withdrawn and disbursed by the city as follows:
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(a) The city shall pay into the bond fund
out of the moneys remaining on deposit in the
then effective revenue account or accounts after
compliance with all applicable requirements of
any of the underlying indentures then outstanding,
such amount of money as may be provided in Sec-
tion 9.4 hereof to be paid into the bond fund on
or prior to the last secular day of such month;
(b) The city shall pay into the operation
fund, out of the moneys remaining on deposit in
the then effective revenue account or accounts
after compliance with all applicable requirements
of any of the underlying indentures then outstand-
ing and with the provisions of subsection (a) of
this section with respect to that month, the moneys
provided in Section 9.5 hereof to be paid into
the operation fund on or prior to the last secular
day of such month;
(c) The city shall pay into the reserve
fund, out of the moneys remaining on deposit
in the then effective revenue account or accounts
after compliance with all applicable requirements
of any of the underlying indentures then outstand-
ing and with the provisions of the foregoing
subsections (a) and (b) of this section with re-
spect to that month, the moneys provided in Sec-
tion 9.6 hereof to be paid into the reserve fund
on or prior to the last secular day of such month;
and
(d) The city shall pay into the replace-
ment fund, out of the moneys remaining on deposit
in the then effective revenue account or accounts
after compliance with all applicable requirements
of any of the underlying indentures then outstanding
and with the provisions of the foregoing subsec-
tion (a), (b), and (c) of this section with respect
to that month, the moneys provided in Section 9.7
hereof to be paid into the replacement fund on or
prior to the last secular day of such month.
At the end of any month following compliance for that month
with the applicable provisions of any of the underlying in-
dentures that are then outstanding and with the foregoing
subsections (a), (b), (c) and (d) of this section, and when
all monthly payments at the time required by.Sections 9.4,
9.5, 9.6 and 9.7 hereof to have been made from the revenue
account into the bond fund, the operation fund, the reserve
fund, and the replacement fund, respectively, have been made
and when no delinquency exists with respect to the monthly
payments provided for in any of said sections, moneys then
remaining in the then effective revenue account or accounts
may be withdrawn by the city and used for any lawful purpose.
Ao withdrawals shall be made from the revenue account. -at
any time except pursuant to and in accordance with the provi-
sions of this.section.
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Section 9.4 Bond Fund. There is hereby created
a special trust fund, tFie -fu11 name of which shall be the
"Water, Sewer and Gas Bond and Interest Redemption Fund",
for the purpose of providing for payment of the principal
of and the interest on the bonds. The bond fund shall be
maintained until both the principal of and the interest
on the bonds shall have been paid in full. There shall be
paid into the bond fund the following:
(a) The city will pay into the bond fund,
simultaneously with the issuance of any of the
bonds and out of the proceeds derived from the
sale thereof, the accrued interest and any pre-
mium received by it upon such sale;
(b) On or before the last secular day of
December, 1961, and on or before the last secular
day of each successive month thereafter until the
principal of and the interest on the bonds shall
have been paid in full, the city will pay into
the bond fund, out of the moneys in the then
effective revenue account or accounts, an amount
equal to one -sixth (1/6) of the semiannual in-
stallment of interest that will mature on the
bonds then outstanding on the then next succeeding
interest payment date plus an amount equal to
one -twelfth (1/12) of the principal that will ma-
ture on the bonds then outstanding on the then
next succeeding December 1; provided that there
shall be credited on the amounts required by this
subsection (b) to be paid into the bond fund any
amount that shall have been paid into the bond
fund pursuant to the provisions of subsection (a)
of this section;
(c) In the event that the moneys in the
then effective revenue account or accounts shall
be insufficient to make any monthly payment pro-
vided by subsection (b) of this section to be made
into the bond fund, then a delinquency shall be
deemed to exist with respect to the payments pro-
vided in this section to be made into the bond
fund and an amount equal to the deficiency in any
such monthly payment shall be added to the monthly
payment provided in said subsection (b) to be made
into the bond fund on or before the last secular
day of each successive month thereafter until the
delinquency shall have been cured; provided, however,
that upon the transfer of moneys into the bond
fund from the reserve fund to be applied for pay-
ment of bonds and coupons when due, any then exist-
ing delinquency with respect to payments into the
bond fund shall be deemed to have been cured to
the extent of the amount of moneys so transferred
from the reserve fund into the bond fund; and
(d) Simultaneously with the issuance of any
of the additional bonds, the city will pay into
the bond fund such additional sum as, when added
to (1) the sum that will be on deposit in the bond
fund immediately following such issuance, and (2)
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the subsequent payments that are herein required
to be made into the bond fund between the time of
such issuance and the then next succeeding December
1, will make available on the then next succeeding
December 1 an amount equal to the principal and
interest maturing on that December 1 with respect
to the bonds and on the June 1, if any, occurring
between the date of the issuance of such additional
bonds and said then next succeeding December l,an
amount equal to the interest maturing with respect
to the bonds on the said June 1; the sums paid into
the bond fund pursuant to this subsection (d) to
be paid therein out of moneys in the then effective
revenue account or accounts, except to the extent
that such sums may be provided in a supplemental
indenture to be paid out of the proceeds derived
from the sale of such additional bonds.
All moneys paid into the bond fund shall be used only for
payment of the principal of and the interest on the bonds
upon or after the respective maturities of such principal
and interest; provided that if at the final maturity of
the bonds, however the same may mature, there shall be in
the bond fund moneys in excess of what shall be required
to pay in full the principal of and the interest on the
bonds, then any such excess shall thereupon be returned
to the city. When the amount of money on deposit in the
bond fund equals or exceeds the aggregate of the principal
of and the interest to their respective maturities on the
bonds then remaining unpaid, no further payments need be
made into the bond fund except to make good moneys paid
therein that may become lost or that may not be immediately
available for withdrawal under the provisions of this sec-
tion; provided, that in the event any of the additional
bonds should thereafter be issued, monthly payments into
the bond fund shall be resumed in accordance with the pro-
visions of subsections (b) and (c) and of this section and
the payments required by subsection (d) of this section
shall also be made with respect to such additional bonds.
Section 9.5 Operation Fund. There is hereby
created a special trust fund, e ull name of which shall
be the "Water, Sewer and Gas Operation and Maintenance
Fund", for the purpose of providing for payment of opera-
ting expenses of the systems. The operation fund shall
not be opened or established until the underlying 1958
indenture shall have. been satisfied and discharged,,but
shall be opened and placed in effect immediately following
the satisfaction and discharge of the underlying 1958 in-
denture. At any time when the underlying 1958 indenture
shall have been satisfied and discharged and either of the
other underlying indentures shall remain outstanding and
undischarged, the city will pay into the operation fund,
out of the moneys in the then effective revenue account or
accounts, on or before the last secular day of each month
such amount or amounts as (when added to the amount then
on deposit in the operation fund) shall be sufficient to
pay the operating expenses of the gas system, as then esti-
mated, to be incurred during the then next succeeding month
and any unpaid operating expenses incurred with respect to
the gas system during the then current or any then preceding
month, At any time when all of the underlying indentures
V
shall have been satisfied and discharged, the city will
pay into the operation fund, out of the moneys in the then
effective revenue account or accounts, on or before the
last secular day of each month such amount or amounts as
(when added to the amount then on deposit in the operation
fund) :shall be sufficient to pay the operating expenses of
the systems,as then estimated, to be incurred during the then
next succeeding month and any unpaid operating excjenses in-
curred with respect to the systems during the then current
and Sny then preceding month.
Section 9.6 Reserve Fund. There is hereby created
a .special trust fund, the full name of which shall be the
"Wester, Sewer and Gas Debt Service Reserve Fund", and which
shall be continued until the principal of and the interest on
the bonds shall. have been paid in full. The city ohall pay
into the reserve fund, out of the moneys in the then effective
revenue account or accounts, the sum of $963.20
on or before the last secular day of each successive month
beginning with the month of December, 1961, and continuing
for seventy-one (71) successive months thereafter, and until
the sum of $69,350.00 shall have been paid into the re-
serve fund pursuant to the provisions of this sentence. At
the tinie of the issuance of any of the additional bonds, the
council shall com`oute the amount of the maximum required re-
serve that will be applicable immediately following the issu-
ance of such additional bonds, and the amount of the maximum
required reserve shall remain at the same figure, regardless
of the subsequent retirement of any of the bonds, until addi-
tional bonds shall again be issued under the indenture. When-
ever any additional bonds shall be issued, then the city shall
thereafter pay into the reserve fund, out of the moneys in
the then effective revenue account or accounts, in addition:
to the sums required in the second sentence of this section
to be paid into the reserve fund, on or before the last secular
day of each successive month beginning with the month during
which such additional bonds shall be issued and continuing for
seventy-one (YI) successive months thereafter, an amount equal
to one -seventy-second (1/72) of the difference, if any,
between (a) the maximum required reserve immediately follow-
ing the issuance of such additional bonds, and (b) the maximum
required reserve immediately prior to the issuance of such
additional bonds; all to the end that after six years from
the date of each issuance of any of the additional bonds there
shall have been paid into the reserve fund an amount equal to
the maximum required reserve that is applicable immediately
following such issuance. In the event the moneys on deposit
in the then effective revenue account or accounts shall be
insufficient to make any monthly payment required by the fore-
going provisions of this section to be made into the reserve
fund, then a delinquency shall be deemed to exist with respect
to the payments provided in this section to be made into the
reserve fund and an amount equal to the deficiency in any
such monthly payment shall be added to the monthly payment
hereinabove provided to be made into the reserve fund on or
before the last secular day of each successive -month there-
after until the delinquency shall have been cured. Moneys
forming a part of the reserve fund shall be transferred to
the bond fund for payment of the principal of and interest on
the bonds, but may be so transferred only when the moneys on
deposit in the bond fund on any interest payment date shall
not be sufficient to pay the interest and the principal, if
any, maturing with respect to the bonds on that interest pay-
ment date, and such moneys shall be so transferred only for
-29-
payment of the principal of and interest on the bonds so
maturing as to which there would otherwise be a default;
provided, however, that moneys may be withdrawn from the
reserve fund pursuant to the provisions of,Section 9.13
hereof; and provided, further, that moneys transferred to
the reserve fund from theconstruction fund pursuant to
the provisions of Section 8.2 hereof may be used to purchase
any of the bonds for retirement, with the consent of the
holder of any bond so purchased, but that portion of the pur-
chase price of any bond so purchased for retirement that is paid
out of moneys so transferred from the construction fund shall
not exceed the face value of such bond. Whenever any of
the moneys forming a part of the reserve fund shall be so
transferred to the bond fund, the city will restore the same
by thereafter paying into the reserve fund, in addition to
the monthly payments provided for in the second and fourth
sentences of this section, on or before the last secular
day of each successive month beginning with the month during
which such transfer shall be made and continuing until the
sum transferred shall have been restored, all of the moneys
remaining in the then effective revenue account or acctounts
at the end of each such month after compliance with the appli-
cable provisions of any of the underlying indentures and with
the provisions of Section 9.4 and 9.5 hereof and the second
and fourth sentences of this section. When the amount of
moneys in the reserve fund plus the amount of moneys in the
bond fund equals or exceeds the aggregate of the principal of
and interest on the bonds then remaining unpaid, the moneys
on deposit in the reserve fund may be transferred to the bond
fund, in which event no further payments need be made into
the reserve fund; provided, that if, after any such transfer
of all moneys in the reserve fund into the bond fund, any of
the additional bonds should be thereafter issued, then the
city shall thereafter pay into the reserve fund, out of ,the money;
in the then effective revenue account or accounts,on or before
the last secular day of each successive month beginning with the
month in which such additional bonds shall be issued and con-
tinuing for seventy-one (71) su.ccessive months thereafter,
an amount equal to one seventy-second (1/72) of the amount
of the maximum required reserve that is applicable immediately
following the issuance of such additional bonds.
Section 9.7 Replacement Fund. There is hereby
created a special trust fund, the fulI name of which shall
be the "Water, Sewer and Gas Replacement and Extension -Fund"
and which shall be continued until the principal of and the
interest on the bonds shall have been paid in full. The city
shall pay into the replacement fund, out of the moneys in the
then effective revenue account or accounts, the sum of $347.23
on or before the last secular day of each successive month,
beginning with the month of December, 1961, and continuing
each month thereafter until the sum on deposit in the replace-
ment fund equals or exceeds the sum of $25,000.00. Any moneys
on deposit in the replacement fund shall be used solely for
the purpose of acquiring by construction or otherwise (a)
property to replace any portion of either of the systems that
shall become worn out or that shall become inadequate for -the
rendition of efficient service; or (b) capital improvements to
either of the systems; provided that any property so acquired
to replace a portion of either of the systems shall be of such
nature as to be chargeable under good accounting practice to
fixed capital account; provided, further, that if at any time
the moneys on deposit in the bond fund and the reserve fund
shall not be sufficient to pay any of the bonds or coupons at
their respective maturities, then the moneys on deposit in the
- 30 -
replacement fund shall be used to pay the bonds and coupons
at their respective maturities but only to such extent as
may be necessary to prevent default in the payment thereof.
Whenever the amount on deposit in the replacement fund shall
equal or exceed the sum of $25,000.00, the city may thereafter
discontinue making further payments therein, but whenever
any of said moneys are used to such an extent that the a-
mount thereof remaining on deposit therein shall be less
than $25,000.00, the city shall resume paying into the re-
placement fund, out of the moneys in the then effective
revenue account or accounts, the sum of $347.23 on the last
secular day of each successive month thereafter until the
total of the moneys on deposit in the replacement fund again
amounts to $25,000.00. In the event the moneys on deposit
in the revenue account shall be insufficient to make any
monthly payment provided by the preceding provisions of
this section to be made into the replacement fund, then a
delinquency shall be deemed to exist with respect to the
payments provided in this section to be made into the re-
placement fund and an amount equal to the deficiency in any
such monthly payment shall be added to the amount of the
monthly payment hereinabove provided to be made into the
replacement fund on or before the last secular day of each
successive month thereafter until the delinquency shall have
been cured. So long as the city shall not be in default here-
under, the moneys forming a part of the replacement fund may
be withdrawn by the city from time to time as the council
in its sound discretion shall deem it advantageous to the city
that such withdrawal be made for use for any purpose for
which the replacement fund is created.
Section 9.8 Determination of Adequate of Re-
serve Fund and Replacement Fund Provisions. The council
hereby determines-7-hat an amount equal o the maximum
required reserve from time to time applicable hereunder,
being a sum equal to the maximum annual debt service re-
quirement in any then succeeding fiscal year, constitutes
a reasonable reserve for payment of the principal of and
interest on the bonds and that six years constitutes a reason-
able period wherein such reserve shall be built up. The
council hereby further determines that $25,000.00 constitutes
a reasonable reserve for depreciation and for capital im-
provements to the systems and six years constitutes a reason-
able period wherein such reserve shall be built up.
Section 9.9 City May Anticipate Required Payments.
Any payments required by his article to be made into any
of the special funds created in this article may be antici-
pated by the city at any time, provided that no such anti-
cipation shall be made if it will prevent or jeopardize the
making of the payments herein required to be made into any
other special fund herein created.
Section 9.10 Security for Special Funds. The
moneys at any time on deposit in the revenue account, the
bond fund, the operation fund, the reserve fund, and the
replacement fund shall be and at all times remain public
funds impressed with a trust for the purposes for which
said account and funds are respectively created. The city
will cause the depository for each such account or fund to
keep the moneys at any time on deposit in the account, fund
or funds for which it is depository continuously secured,
for the benefit of the city and the holders of the bonds,
either (a) by holding on deposit, as collateral security,
- 31 -
federal securities, or other marketable securities eligible
as security for the deposit of trust funds under regula-
tion of the Board of Governors of the Federal Reserve Sys-
tem, having a market value (exclusive of accrued interest)
not less than the amount of moneys on deposit in the ac-
count or fund being secured, or (b) if the furnishing of
security in the manner provided by the foregoing clause
(a) of this section is not permitted by the then appli-
cable law and regulation, then in such other manner as
may be required or permitted by the then applicable state
and federal laws and regulations respecting the security
for, or granting a preference in the case of, the deposit
of trust funds; provided however, that it shall not be
necessary for any such depository so to secure any portion
of the moneys on deposit in any such account or fund that
is insured by the Federal Deposit Insurance Corporation
or by any agency of the United States of America that may
succeed to its functions.
Section 9.11 Administration of Bond Fund and
Reserve Fund. The trustee shall at all times be the
deposiEoory,^custodian and disbursing agent for the bond
fund and the reserve fund, and all moneys herein required
to be paid into said funds shall be remitted to the trus-
tee. Out of the moneys deposited with it in the bond
fund or transferred thereto, the trustee shall make pro-
vision for payment of the bonds and the coupons as the
same shall respectively nature. The trustee shall apply
the moneys in the reserve fund in accordance with the
applicable provisions of Sections 9.6 and 9.13 hereof.
Section 9.12 Depositories for Revenue Account,
Operation Fund and Rep�_l�acement *Fund. The council may a
any time and from time time deisgnate any banking insti-
tution or institutions as depository or depositories for the
revenue account and the operation fund; provided, that any
depository so de gnated shall at all times while acting as
such be and remain a member of the Federal Deposit Insurance
Corporation or of any agency of the United States of America
that may succeed to its functions, if there be any such, and
shall be and remain duly qualified and doing business in
the State of Alabama. The trustee shall at all times be
the depository for the replacement fund. Each depository
for the revenue account, the operation fund, or the replace-
ment fund, shall be fully protected in paying out any moneys
from the revenue account, the operation fund, or the re-
placement fund, as the case may be, on checks, vouchers or
drafts signed by any duly authorized officer or employee of the
city and any such depository shall not be liable for the mis-
application by the city of any moneys withdrawn by such checks,
vouchers or drafts from the said account or either of the said
funds unless such depository has knowledge or reason to believe
that such withdrawal constitutes a misapplication of funds.
Section 9.13 Investment of Reserve and Replace-
ment Fund Moneys. So long as the city shall no be —in
default ereunder, it may at any time and from time to
time at its option cause any or all of the moneys in
the reserve fund or the replacement fund which the coun-
cil may by resolution determine shall not be needed during
the then ensuing six calendar months for the respective
purposes for which said funds are created, to be invested
in any federal securities that have a stated maturity within
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twenty-four (24) months after the date of such investment,
or that are by their terms redeemable at the option of the
holder thereof at a stated price and time not later than
twenty-four (24) months after the date of such investment.
In the event of any such investment, such securities, to-
gether with all income therefrom, shall become a part of
the respective fund from which moneys were used to make
such investment and shall be held by the trustee to the
same extent as if they were moneys on deposit in said fund.
The city may, by resolution of the council, likewise from
time to time cause any such securities to be sold or other-
wise converted into cash, and the trustee may cause any such
securities to be sold or otherwise converted into cash if
such sale or conversion is necessary to obtain funds to
prevent a default in payment of the principal of or the
interest on the bonds. In the event of any such sale or
conversion, the net proceeds derived therefrom shall become
a part of the fund of which such securities formed a part.
The trustee shall be fully protected in making any such in-
vestment or sale of any such securities upon direction
given in a resolution and, further, shall be fully protected
in making any sale of securities without a resolution if in
its sole discretion it deems such sale necessary to obtain
funds to prevent a default in payment of the principal of or
the interest on the bonds. In the event any of the moneys
in either of the said funds shall be invested as herein pro-
vided, it shall not be necessary for the trustee to secure
any such investment (in any case where security for such
moneys might otherwise be required) so long as such moneys
shall remain so invested. In any determination of the a-
mount of moneys at any time forming a part of the reserve
fund or the replacement fund, all federal securities forming
a part of either of said funds shall be counted at their
then market value. Notwithstanding any of the other provi-
sions of this section, the city may withdraw and use for
any lawful purpose any moneys on deposit in the reserve fund
which consist of income on any investment in federal securi-
ties or of capital gain upon any such investment, whenever
the amount that will remain on deposit in the reserve fund
immediately following such withdrawal is not less than the
then applicable maximum required reserve.
ARTICLE X
PARTICULAR COVENANTS OF THE CITY
Section 10.1 Compliance with Applicable Laws.
The bonds are issued under and pursuant o the provisions
of Sections 308 to 340, inclusive, of Title 37 of the
Code of Alabama of 1940, as amended. The city agrees
faithfully to do and perform, in the manner and at the
times therein provided, all acts required in said sec-
tions to be done and performed by it.
Section 10.2 Representations Respecting the
Gas Indenture. The city represents that it has duly called
for re emption on February 1, 1962, all of the gas bonds
having stated maturities after that date; that it has
entered into a trust agreement with The Merchants National
Bank of Mobile, the trustee under the gas indenture, where -
under the city has deposited in an irrevocable trust fund
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a sum in cash sufficient to pay all principal and interest
maturing on February 1, 1962, with respect to the gas
bonds and to effect the redemption on that date of all of
the gas bonds having stated maturities after that date;
agrees that it will give or cause to be given for and in
the name of the city the notice of such redemption that is
required by the terms of the gas indenture; and that the
trustee under the gas indenture will on February 1, 1962, be
authorized and required under the terms of the gas indenture
to execute and deliver a satisfaction piece acknowledging
the discharge and satisfaction of the gas indenture.
Section 10.3 Representations and Covenants Re-
specting Underlying Indenture. The oar will per orm, at
the imes and in the manner provided in the underlying in-
dentures, all obligations which, either expressly or by
reasonable implication, are imposed on it in any of the
underlying indentures; and it will not default under any of
the underlying indentures. Out of the revenues derived
from the operation of the systems, the board will pay the
principal of and the interest on the underlying securities
and will make, in the manner and at the times therein pro-
vided, all payments required by each of the underlying in-
dentures to be made into the special trust funds therein
created. The city represents that the only bonds hereto-
fore issued by it under the underlying 1953 indenture are
those of the Water and Sewer Revenue Bonds, Second Series,
therein provided for that are numbered 1 to 85, inclusive,
aggregating $85,000 in principal amount, of which $60,000
aggregate principal amount now remains outstanding; re-
presents that those of the Water and Sewer Revenue Bonds,
Second Series, numbered 86 to 100, inclusive, aggregating
$15,000 in principal amount, that are provided for in the
underlying 1953 indenture and referred to therein as
"additional bonds" have not been issued; and agrees that
it will not hereafter at any time issue any bonds under
the underlying 1953 indenture and specifically that none
of the said bonds numbered 86 to 100, inclusive, and re-
ferred to as "additional bonds" in the underlying 1953 in-
denture, will hereafter be issued. The city represents
that the only securities heretofore issued by it under the
underlying 1958 indenture are the city's $210,000 Water,
Sewer and Gas Refunding Warrants, Series 1958, dated
December 1, 1958, numbered 1 to 210, inclusive, and aggre-
gating $210,000 in principal amount, of which $165,000 aggregatE
principal amount now remains outstanding; represents that none
of the securities referred to in the.underlying 1958 indenture
as -additional securities" and provided for in Article
VIII of the underlying 1958 indenture have been issued;
and agrees that it will not hereafter at any time issue
any securities under the underlying 1958 indenture and
specifically that none of the additional securities provi-
ded for in Article VIII of the 1958 indenture will hereafter
be issued.
Section 10.4 Payment of Bonds and Coupons. The
city will pay the principal of and the Interest on the
bonds as.specified therein, it will otherwise perform all
obligations which, either expressly or by reasonable impli-
cation, are imposed on it in the indenture, and it will permit
no default by it hereunder to occur.
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Section 10.5 To Maintain Proper Books and
Records. The city will maintain comple e and separate books
and records pertaining to each of the systems and all receipts
and disbursements with respect thereto. The books;and re-
cords with respect to each of the systems shall be kept
separate and apart from the books and records with respect
to the other of the systems and from all other records of
the city.
Section 10.6 To Furnish Annual Audits. (a)
The city will operate the systems on a fiscal year basis
beginning on October 1 in each calendar year and continuing
until and including September 30 in the following calendar
year. The city will, within thirty days following the close
of each such fiscal year, cause to be made for such fiscal
year by an independent auditor who is acceptable to the
trustee an audit of its books pertaining to the water and
sewer system, and a separate audit of its books pertaining
to the gas system. Each such audit, in addition to what-
ever other matters may be thought proper by the auditor to
be included therein, shall include the following matters
pertaining to that one of the systems with respect to which
the audit is made: (a) a statement in reasonable detail
of the revenues from and expenditures made with respect to
that system during such fiscal year; (2) a balance sheet
as of the end of such fiscal year with respect to that sys-
tem; (3) the auditor's recommendations for any changes or
improvements in the operation of that system; (4) a list
of the insurance policies and fidelity bonds in force with
respect to that system at the end of the fiscal year, set-
ting out with respect to each such policy the amount thereof,
the risk covered, the name of the insurer, and the expira-
tion date of the policy; (5) the total amount of money ex-
pended'for capital improvements to that system during such
fiscal year; and (6) the following information as of the end
of the fiscal year as the same shall be disclosed by the
records of the city and without requirement of any physical
verification of such information; the number of properties
connected with and served by the system with respect to
which the audit is made; the number of metered customers
served by that system; and the number of unmetered customers
served by that system. Each audit with respect to either
of the systems shall include also the following: (i) a
statement of the total deposits and withdrawals made during
such fiscal year into and from each of the special funds
herein created, and a statement of the balance on deposit
in each of said funds at the end of such fiscal year; (ii)
a statement of the total deposits and withdrawals made during
such fiscal year into and from each of the special funds
created in any of the underlying indentures that are then
outstanding, and a statement of the balance on deposit in
each of the said special funds at the end of such fiscal
year; and (iii) the auditor's comments regarding the manner
in which the city has carried cut the requirements of the
indenture. All expenses incurred in the making of such
audits shall constitute and be paid as an operating expense
of the system with respect to which it is made. Within
ten days following receipt of each such audit report, the
city will furnish a copy thereof to the trustee, to Hugo
Marx & Co., Birmingham, Alabama, and to the holder of any
of the bonds who may request the same, and each of them is
granted the right to discuss the contents of the audit with
the auditor making the same and to secure from the auditor
such additional information respecting the matters herein
or therein set out as may be reasonably required.
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(b) In the event that the audit required by the
provisions of subsection (a) of this section has not been
furnished the trustee within silcty (60) days following the
close of any fiscal year, the trustee may, at the expiration
of said period of sixty (60) days, employ an independent
auditor satisfactory to it to make an audit for such fiscal
year, and the city hereby covenants and agrees to permit any
auditor so employed to inspect any and every part of the sys-
tems and the books and records of the city pertaining there-
to and to assist in furnishing facilities for such inspect-
tion. The city agrees to pay any auditor employed by the
trustee for such purposes reasonable compensation for its
services. The trustee may at its option advance to the city
the amount of such compensation by paying directly to the
auditor so employed by the trustee a reasonable amount -as
compensation for his services, which amount so advanced by
the trustee, together with interest thereon at the rate of
6% per annum from the date of such advancement, shall be en-
titled to priority of payment over any of the bonds or coupons,
and the city agrees to repay the same upon demand with inter-
est at the said rate.
Section 10.7 Maintenance of Adequate Rates. The
city will at all times main ain such ra es and charges for
water, sewer and gas service furnished by the systems and
make collections from the users thereof in such manner as
shall be sufficient to provide for payment of the principal
of and the interest on the bonds as the said principal and
interest become due, to create a bond and interest redemption
fund therefor, to provide for the payment of the expenses of
administering and operating the systems and maintaining them
in good repair and working order, to build up a reserve for
depreciation of the systems and to build up a reserve for
improvements, betterments and extensions to the systems, other
than those necessary to maintain them in good repair and work-
ing order as hereinabove provided. The city will from time
to time make such increases and other changes in such rates
and charges as may be necessary to produce said amounts.
Section 10.8 No Free Service; Rate Schedules. The city
will not furnish or perml� o e furn s e y e sys ems any
free water, sewer or gas service, or other free service of any
kind whatsoever to the city or any county or incorporated munici-
pality, or to any agency, instrumentality, person, firm or cor-
poration whatsoever. All water, sanitary sewer service and gas
furnished by the systems shall be charged for at the rates at
the time established therefor. Each schedule of rates shall pro-
vide that all charges for water, sanitary sewer service, gas,
and any other service supplied from either of the systems shall
become due not less often than once during each calendar month.
Section 10.9 Discontinuance of Service on Non -Payment
of Bills. (a) 1�.ater and Sewer Service. If the account of any
user or water and sewer service, or either, from the water and
sewer system shall remain unpaid for a period of thirty (30)
days after such account shall become due, the city thereupon
will promptly discontinue furnishing both water and sanitary
sewer service to such user whose account shall so remain unpaid,
but upon subsequent payment of such account, including any
penalties or charges for connection and disconnection, or either
of them, which may be provided for in the schedule of rates of
the city, the city may thereafter resume water and sanitary
sewer service to such user until such time as his account shall
again remain unpaid for a period of thirty (30) days after such
account become due, whereupon the furnishing of water and sani-
tary sewer service shall again be discontinued.
(b) Gas. If the account of any user of gas from the gas
system shall remain unpaid for a period of thirty (30) days after
such account shall become du.e, the city thereupon will promptly
discontinue furnishing gas to such user whose account shall so
remain unpaid, but upon subsequent payment of such account, in-
cluding any penalties or charges for connection and disconnection,
- 36 -
or either of them, which may be provided for in the schedule
of rates of the city, the city may thereafter resume gas
service to such user until such time as his account shall
again remain unpaid for a period of thirty (30) days after
such account becomesdue, whereupon the furnishing of gas shall
again be discontinued.
Section 10.10 Continued Operation of Systems;
Maintenance of Systems in Repair. The city will not hereafter
sell, use or In any manner =spose of the whole or any
integral part of either of the systems, nor will it subject
the whole or any integral part of either of the systems to
the lien of a foreclosable mortgage, unless and until all of
the bonds and the coupons shall have been paid in full, or
unless and until provision for such payment shall have been
made. The city will continuously operate the systems or
cause the same to be operated so long as any of the bonds
and the coupons remain unpaid, and it will keep the same in
good repair and in efficient operating condition, making
from time to time all needed repairs and replacements thereto
and thereof. If the laws of Alabama at the time shall permit
such action to be taken, nothing contained in this section
shall prevent the consolidation of the city with, or merger
of the city into, any municipal or other public corporation
having authority to carry on the business of operating the
systems, or the transfer by the city of both of the systems
as an entirety to another public corporation or instrumentality
whose property and income are not subject to taxation; pro-
vided that upon any such consolidation, merger or transfer,
the due and punctual payment of the principal of and the in-
terest on the bonds according to their tenor and the due and
punctual performance and observance of all the agreements
and conditions of the indenture to be kept and performed by
the city shall be expressly assumed in writing by the body
resulting from or surviving such consolidation or merger to
which the systems shall be transferred; and provided further,
that such consolidation, merger or transfer shall not cause or
result in any foreclosable mortgage or lien being affixed to,
imposed on, or becoming a lien on either of the systems and
shall not cause or result in any lien being affixed to, imposed
on, or becoming a lien on either of the systems or the reve-
nues therefrom that will be prior to the lien of the indenture
and of the pledge made herein for the benefit of the bonds.
Nothing contained in this section shall be construed to pre-
vent the city from dispos3.ng of property pursuant to the pro-
visions of Sections 12.2,�12.3 and 12.4 hereof.
Section 10.11 Priority of Pledge Herein Made.
The pledge of the revenues from the opera ion of the sys-
tems herein made shall be prior and superior to any pledge
thereof hereafter made for the benefit of any securities
hereafter issued by the city other than the bonds, and the
city agrees that in the event it should hereafter issue
any securities or make any contract payable out of the reve-
nues from the operation of the systems, or either of them,
other than the bonds, or for which any part of the said
revenues may be pledged, it will recognize in the proceed-
ings under which any such securities or contract are hereafter
authorized the priority of the pledge of said revenues made
herein for the benefit of the bonds.
Section 10.12 Systems to be Kept Free From Prior
Liens. The city will keep each of the sys ems free from
all liens and encumbrances prior to the lien hereof (other
than excepted encumbrances and the lien of the underlying
indentures), but it may defer payment pending the bona fide
contest of any claim unless by such action the trustee shall
be of the opinion that the lien herein created as to either
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of the systems shall be materially endangered or either
of the systems shall be subject to loss or forfeiture, in
which event any such payment then due shall not be deferred.
Nothing herein contained shall be construed to prevent the
city from hereafter purchasing additional property on con-
ditional or lease sale contract or subject to vendor's lien
or purchase money mortgage, and as to all property so pur-
chased the indenture shall be subject and subordinate to
such conditional or lease sale contract, vendor's lien or
purchase money mortgage; provided, however, that the pro-
visions contained in this sentence shall not be applicable
to property purchased under the provisions of Section 12.2
hereof to replace inadequate, obsolete, worn out, unsuitable,
undesirable or unnecessary property then subject to the lien
herein created, which substituted property shall be acquired
and shall become subject to the lien herein created free of
all liens and encumbrances prior to the lien herein created,
other than excepted encumbrances and the lien of the underlying
indentures. Nothing herein contained shall be construe& to
prevent the acquisition of property that is subject to excepted
encumbrances.
Section 10.13 Payment of Advances, etc. by
Trustee. The city will discharge, pay or sa is ac orily
provide to the trustee all liabilities, expenses and
advances reasonably incurred, disbursed or made by the
trustee in the execution of the trusts hereby created,
and it will from time to time pay to the trustee reason-
able compensation for the tru.stee's services hereunder,
including extra compensation for unusual or extraordinary
services. All such liabilities, expenses, advances and
compensation shall be secured hereby, shall be entitled
to priority of payment over any of the bonds and coupons
and shall bear interest until paid at the rate of six
per centum (6;0) per annum from the respective dates on
which such liabilities, expenses and advances are in-
curred, disbursed or made, and on which compensation
shall be earned.
Section 10.14 Inspection of Systems and Re-
cords by Trustee and Bond olders. The city will permit
e trus ee anT the o deis o any of the bonds to inspect,
at any reasonable time, any and every part of each of the
systems and the books and records of the city pertaining
to Each thereof, and will assist in furnishing facilities
for such inspection.
Section 10.15 Warranty of Title. The city
warrants its title to every part of each of the systems
presently in existence as free and clear of every lien,
encumbrance, trust or charge prior to the statutory mort-
gage lien herein created, other than any excepted encum-
brances, the lien of the underlying indentures on the water
and sewer system and the lien of the underlying 1958 in-
denture and the gas indenture on the gas system; warrants
that it has power and authority to subject the systems to
the said statutory mortgage lien and that it has done so
hereby; and the city will forever warrant and defend the
title to the systems against the lawful claims of all persons
whomsoever except those claiming under excepted encumbrances,
those claiming as to the water and sewer system under any
of the underlying indentu.res, and those claiming as to the
gas system under the underlying 1958 indenture or (until
February 1, 1962) under the gas indenture. The city war-
rants further that the gas bonds will be paid in full and
retired on February 1, 1962.
Section 10.16 Further Assurances. The city
will, upon reasonable request, execute and deliver such
further instruments and do such further acts as may be
necessary or proper to carry out more effectually the
purpose of the indenture, and in particular (without in
any way limiting the generality of the foregoing) to make
subject to the lien herein created any property ;hereafter
acquired by it for use as a part of the water and sewer
system or the gas system and to transfer to any successor
trustee or trustees the assets, powers, instruments and
funds held in trust hereunder and to confirm the lien
herein created with respect to any bonds issued hereunder.
No failure to request such further instruments or further
acts shall be deemed a waiver of any right to the execution
and delivery of such instruments or the doing of such acts
or be deemed to affect the interpretation of any provision
of the indenture.
Section 10.17 No Competing Systems. The city
will not grant to any person, firm or corporation the
right, privilege or franchise to use the streets or other
public ways of the city for the purpose of operating
thereover, therein or thereunder a system for the trans-
mission and distribution of water, a system for the collec-
ti6n, transportation, treatment or disposal of sanitary sewage,
or a system for the distribution of gas, in such wise as will
result in competition with the business conducted through
the water and sewer system or the gas system; it will not
permit the said streets or other public ways to be used by
others for said purposes in competition with the business.
conducted through the water and sewer system, or the gas sys-
tem; and it will not conduct or operate another water works
plant and distribution system, another sanitary sewer system,
or another gas distribution system, or any part of any there-
of, in competition with the business conducted through the
water and sewer system or the gas system,
Section 10.18 Agreement to Grant Franchises
upon Appointment of Receiver. In the event a receiver or
receivers should be appoin e by any court of competent
jurisdiction to administer and operate any one or both of
the systems following any default by the city hereunder,
the city agrees that such receiver or receivers or any
successors thereto may use the streets, avenues, alleys
and other public ways within the corporate limits of the
city for the construction, operation, maintenance, replace-
ment, extension and enlargement therein and thereover of the
system or systems with respect to which such receiver or re-
ceivers shall be appointed. The city agrees that upon request
so to do by such receiver or receivers the city will thereupon
forthwith grant to such receiver or receivers a franchise
conveying said rights. The franchise so granted shall be in
the Following form with appropriate provisions and changes
therein for the nature of the system or systems with respect
to which the franchise is granted and for the name of the
grantee or grantees therein, the name of the then governing
body of the city, and appropriate phraseology applicable
thereto:
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AN ORDINANCE GRANTING A FRANCHISE TO
AND HIS (ITS
OR THEIR) SUCCESSORS IN OFFICE FOR
THE CONSTRUCTION, OPERATION, MAINTENANCE,
REPLACEMENT, EXTENSION AND ENLARGEMENT
OF A SYSTEM
(OR SYSTEMS) IN THE CITY OF FAIRHOPE,
ALABAMA
BE IT ORDAINED by the (here will be inserted
the name of the governing body of the city) of the City
of Fairhope, in the State of Alabama, as follows:
(1) The word "city" as used herein means the
City of Fairhope in the State of Alabama as it is
now constituted, together with any corporation result-
ing from or surviving any consolidation or merger to
which it or its successors may be a party. The word
"receiver" as used herein (here will be inserted the
name of the receiver or receivers), in his (or their)
capacity as receiver under appointment by a (here
will be inserted the name of the court making the
appointment) in that certain cause in said court
entitled (here will be inserted the title of the
proceeding in which the appointment is made).
(2) There is hereby granted to the receiver
the right, privilege, authority and franchise to ac-
quire, own, constru.ct,.ope-rate, maintain, replace,
enlarge and extend in the city (here will be inserted
the character or characters of the system or systems
with respect to which the franchise is granted) to-
gether with the right, privilege, authority, and fran-
chise to lay, construct and maintain pipes, mains,
meters, fixtures, conductors and related appurtenances
in, along, across and under the streets, avenues, alleys,
and other public places of the city for the purpose of
(here will be inserted the purpose for which the fran-
chise is granted, e.g.,conveying and distributing water
or gas, or transporting and disposing of sewage in and
through the city) and to repair, renew, relay and
extend such pipes, mains, meters, fixtures, conductors
and related appurtenances thereto and make all exca-
vations therefor.
The receiver shall, and b accepting this
franchise agrees, that he (it, they will, upon making
any excavations of the streets, avenues, alleys, public
ways and public places in the city, restore the surface
of the paving at the point of such excavations in sub-
stantially the same condition as before the work was
done, all as promptly as may be practicable and within
a reasonable length of time thereafter.
(4) The rights, privilege, franchise and
authority hereby granted may be exercised by the re-
ceiver or any successors in office to him (it, them)
subject, nevertheless, to the conditions and obliga-
tions herein contained, for such period or periods of
-4o-
time as the receiver and any successor or successors
in office thereto shall legally be in control of such
plant and system (or systems), but in no event to ex-
ceed the maximum time, if any, from the effective date
hereof which may be permitted or limited by the con-
stitution and laws of Alabama in effect on the effective
date hereof.
ARTICLE XI
PROVISIONS RESPECTING INSURANCE
Section 11.1 Insurance on Physical Properties.
The city will keep all portions of the system ha are -of
the character and type customarily insured by organiza-
tions operating businesses similar to the systems insured
in responsible insurance companies, satisfactory to the
trustee, against loss by fire, including extended coverage,
tornado and windstorm to the extent of the full insurable
value thereof. The policies evidencing the insurance
required in this Section llJ shall contain standard mort-
gage clauses providing for any loss thereunder in excess
of $1,000 to be payable to the trustee as its interest
may appear; and all such policies shall be delivered to
and deposited with the trustee. Prior to the expiration
date of any such policy the city will furnish the trustee
satisfactory evidence that such policy has been renewed
or replaced by another policy or that there is no neces-
sity therefor hereunder.
Section 11.2 Disposition of Insurance Proceeds.
All proceeds of insurance carried under the provisions o
the preceding section coming into the hands of the trustee
shall be applied by the trustee in that one of the follow-
ing ways which may be directed by a resolution:
(a) To the purchase of additional property
which the council shall deem to have utility in
the operation of the water and sewer system or
the gas system, as the case may be, equal to that
of the property damaged or destroyed, which addi-
tional property shall thereupon become a part of
the water and sewer system or the gas system, as
the case may be;
(b) To the construction of additional
property subject to the lien of the indenture
which in the opinion of the council shall have
utility in the operation of the water and sewer
system or the gas system, as the case may be, equal
to that of the property damaged or destroyed; or
(c) To the repairing or renewing of
the property damaged or destroyed;
provided, that the trustee may pay such proceeds to the
city upon being furnished by the city with the following:
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(1) A certificate of an independent
engineer who shall be acceptable to the trus-
tee stating that the additional property
described in said certificate and with re-
spect to which no such certificate has been
previously made has been acquired or constructed
by the city as a part of the water and sewer
system or the gas system, as the case may be,
and such additional property is of equal utility
to the property damaged or destroyed, or that
the property damaged or destroyed has been re-
paired or renewed in a workmanlike and suitable
manner satisfactory to such engineer; and
(2) A certificate of counsel (who may
be counsel to the city) satisfactory to the
trustee approving the title of the city to
any such additional property so acquired or
constructed by the city, subject to no liens
prior to the lien herein created other than any
excepted encumbrances and the liens of the under-
lying indentures.if such additional property
constitutes part of the water and sewer system,
or the lien of the underlying 1958 indenture if
such additional property constitutes part of the
gas system; and, in the case of the repair or
renewal of any damaged or destroyed property, stat-
ing that there are and can be no mechanics' or
materialmen's liens caused by such repair or re-
newal.
Section 11.3 Other Insurance. The city will
carry workmen's compensa ion insurance and public liability
insurance in such amounts and to such extent as is custo-
marily carried by organizations engaged in the business of
operating properties of a size and character similar to
those comprising the systems.
Section 11.4 Fidelity Bonds. The city will at
all times carry fidelity on s on a of its officers
and employees who may handle funds of the city pertaining
to the water and sewer system or the gas system, or both,
such bonds to be in such amounts as are customarily carried
by organizations engaged in the business of operating
properties of a size and character similar to those com-
prising the systems.
ARTICLE XII
POSSESSION, USE AND RELEASE
OF THE SYSTEMS
Section 12.1 Retention of Possession of Sys-
tems by City. While the city is not in defaul hereunder,
it may regain actual possession of the systems and may
manage, operate and use the same, and may collect, use
and enjoy the rents, revenues, income and profits there-
of to such extent as is in nowise violative of its covenants
herein contained.
- 42 -
Section 12.2 _Release of Worn Out Personal Prop-
erty. While the city is not in default hereunder, i may
a any time and from time to time, without any release or
consent by the trustee, sell or otherwise dispose of, free
from the lien herein created, any mains, pipes, movable
machinery, equipment, motor vehicles, office furniture,
supplies, tools, implements and other movable personal
property (including that embedded in land but not including
land itself or any building thereon) that shall have be-
come inadequate, obsolete, worn out, or unsuitable or
undesirable or unnecessary for use as a part of the water
and sewer system or the gas system, as the case may be,
upon replacing the same with, or substituting for the
same, subject to the lien herein created and free from
all prior liens (other than excepted encumbrances), other
property useful as a part of the water and sewer system or
the gas system, as the case may be, and having a value at
least equal to the value, at the time of disposal, of
the property disposed of.
Section 12.3 Sale and Release of That Portion
of the Gas System in the Town of Daphne. By op ion agree-
menT datedJanuary �3,'Ic he c y granted to the Town
of Daphne an option for the purchase from the city of
that portion of the gas system lying within the corporate
limits of said town and of an interest in the properties
whereby gas is supplied thereto. In the underlying 1958
indenture the city agreed that in the event the said town
should exercise the option granted by said option agreement,
then upon payment to the city of the full purchase price
provided for in the said option agreement the city would
pay over to the trustee under the underlying 1.9 8 indenture
the entire of the said purchase price and would exhaust as
nearly as might be practicable all of the said purchase price
by redeeming under the provisions of the underlying 1958
indenture securities issued thereunder and, subject to re-
demption, on the earliest date or dates thereafter on which
such redemption may be effected. If the said option should
be exercised at any time while any of the underlying 1958
warrants are outstanding and the purchase price paid pur-
suant to said option agreement should exceed the amount -
necessary to redeem all the underlying 1958 warrants then
outstanding, the city agrees to pay to the trustee here-
under all that portion of said purchase price in excess of
the amount required to redeem all the underlying 1958 war-
rants then outstanding. If the said option should be exer-
cised at a time when none of the underlying 1958 warrants
is outstanding, the city agrees that it will pay to the
trustee hereunder the entire of said purchase price. Upon
exercise of the said option by the said town and receipt
by the city of the full purchase price provided for in the
said option agreement and upon compliance by the city with
those provisions of the three preceding sentences that may
be applicable, the city shall be authorized to convey to the
said town the properties specified in the said option agree-
ment and the trustee hereunder, shall at the expense -of , the' city,
execute and deliver to the city any and all instruments that
may be necessary to release from the lien herein created the
properties specified in the said option agreement. The city
shall exhaust as nearly as may be practicable that part or
all of the said purchase price that may be paid to it by
redeeming callable bonds pursuant to the provisions of Article
V hereof on the earliest date or dates thereafter on which
such redemption may be effected, and the trustee hereunder
shall utilize for such redemption the moneys so paid to it.
_43-
The city agrees that it will not make any sale to the said
town of any portion of the gas system other than pursuant
to the provisions of the said option agreement.
Section 12.4 Release of Other Property. While
the city is not in default hereunder to the knowledge of
the trustee, it may obtain the release of any part of the
water and sewer system or the gas system not needed by it
in the operation thereof, and the trustee shall release
the same from the lien herein created upon deposit by the
city with the trustee of the following:
(a) A resolution describing the property
to be released in reasonable detail, stating that
the city is not in default under any of the pro-
visions of the indenture and requesting such re-
lease;
(b) A certificate of an independent engi-
neer who shall be acceptable to the trustee made
and dated not more than sixty (60) days prior to
the date of the release stating the full value,
in the opinion of the signer, of the property to
be released, and stating that such property is
not and will not be needed by the city in the
operation of the water and sewer system or the,
gas system, as the case may be, and that the city
is not to the knowledge of the signer in default
under any of the provisions of the indenture;
and
(c) An amount in cash equal to the full
value of the property to be released as specified
in said engineer's certificate.
Upon compliance by the city with the foregoing conditions,
the trustee shall, at the expense of the city, execute
and deliver to the city any and all instruments that may
be necessary to release from the lien herein created that
portion of the water and sewer system or the gas system, as
the case may be, with respect to which said conditions shall
have been complied with.
Section 12.5 Eminent Domain Provisions. If any
part of the water and sewer system or the gas system shall
be taken by any eminent domain proceedings at any time, the
whole compensation therefor shall be paid direct to the
trustee. Upon receipt of such compensation, the trustee
shall, at the expense of the city, execute and deliver
to the city or to the corporation or governmental agency
successfully conducting such condemnation proceedings
any and all instruments that may be necessary to release
from the lien herein created that portion of the water
and sewer system or the gas system that may have been taken
by such eminent domain proceedings.
Section 12.6 Disposition of Release and Condemna-
tion Moneys. All money received by the trustee under he
foregoing provisions of this article shall be applied by
the trustee in that one of the following ways which may
be directed by a resolution:
- 44 -
(a) To the purchase of additional property
which the council may deem of utility in the
operation of the water and sewer system or the gas
system, as the case may be, which additional prop-
erty shall thereupon become a part of the water
and sewer system or the gas system, as the case may
be; or
(b) To the construction of other property
subject to the lien herein created which in the
opinion of the council will have utility in the
operation of the water and sewer system or the
gas system, as the case may be;
provided, that prior to the application of such moneys in
any manner so designated by the council, the city shall
furnish to the trustee the following:
(1) A certificate of an independent engi-
neer acceptable to the trustee stating (i) that
the property so acquired or constructed has been
acquired or constructed in a manner satisfactory
to such engineer, (ii) that in his opinion such
property is of utility in the operation of the
water and sewer system or the gas system, as the
case may be, and (iii) that the value of such prop-
erty is not less than the sum of money to be applied
by the trustee to its acquisition or construction;
and
(2) A certificate of counsel (who may be
counsel to the city) acceptable to the trustee
approving the title of the city to any property
so acquired or constructed, subject to no liens
prior to the lien herein created other than excepted
encumbrances and the liens of the underlying in-
dentures, if the property acquired constitutes part
of the water and sewer system, or the lien of the
underlying 1958 indenture if the property acquired
constitutes part of the gas system; and stating
further, with respect to any property so constructed,
that there are and can be no mechanicst or material-
menis liens resulting from such construction.
ARTICLE XIII
REMEDIES OF TRUSTEE AND BONDHOLDERS
Section 13.1 Events of Default Defined. Any of the fol-
lowing shall constitute default hereunder 15y the city:
(a) Default under any of the underlying
indentures;
(b) Failure by the city to pay the principal
of or the interest on any bond when such principal
and interest respectively become due and payable,
whether by maturity or otherwise;
(a) Failure by the city to perform any of
the agreements on its part herein contained (other
than payment of the principal of and the interest
- 45 -
on the bonds and coupons) after thirty (30) days'
written notice to it of such failure made by the
trustee or by the holders of 25% of the bonds then
outstanding; or
(d) Appointment by a court having jurisdiction
of a receiver for the water and sewer system, the gas
system, or both, or for a substantial part of either
thereof, or approval by a court of competent juris-
diction of any petition for reorganization of the water
and sewer system, the gas system, or both, or rearrange-
ment or readjustment of the obligations of the city
under any provisions of the bankruptcy laws of the
United States.
Section 13.2 Remedies on Default. Upon any de-
fault by the city in any one of he ways defined in Section
13.1 hereof, the trustee shall have the following rights
and remedies:
(a), Acceleration. The trustee may, by writ-
ten noticeto the'cityy, declare the principal of
all the bonds forthwith due and payable, and there-
upon they shall so be, anything herein or therein
to the contrary notwithstanding. If, however, the
city shall make good that default and every other
default hereunder (except the principal so declared
payable), with interest on all overdue payments of
principal and interest, and make reimbursement of
all the expenses of the trustee, then the holders
of a majority in principal amount of the then out-
standing bonds, by written notice to the trustee,
may waive such default a4d its consequences, but
no such waiver shall affect any subsequent default
or right relative thereto.
(b) Suits at Law or in Equity. The trustee
is empowered i o sue on the bonds, (ii) by man-
damus, suit or other proceeding, to enforce all
agreements of the city herein contained, including
the fixing of rates, the collection and proper
segregation of the revenues from the systems and
the proper application thereof, (iii) by action or
suit in equity, to require the city to account as
if it were the trustee of an express trust for the
holders of the bonds, and (iv) by action or suit in
equity, to enjoin any act or things which may be
unlawful or a violation of the rights of the holders
of the bonds.
(c) Receivership. The trustee shall be en-
titled to and shall have, regardless of the suffi-
ciency of any security or the availability of any
other remedy, the appointment of a receiver to ad-
minister and operate the systems and perform the
covenants and agreements on the part of the city
herein contained. Any receiver so appointed shall
be entitled to take over and administer all of the
following then on hand which shall be applicable
to the systems: Cash on hand. or on deposit, accounts
and notes receivable, stocks, evidences of indebted-
ness, choses in action, customers' service and exten-
sions deposits, and water, gas and other property
held for sale in the ordinary course of business or
for consumption in the operation of the systems.
- 46 -
Nothing herein contained, however, shall be construed to
give any authority to the trustee or the holders of any
of the bonds or coupons to compel a sale of the water and
sewer system or the gas system or any part of either thereof,
and no foreclosure proceedings or sale shall ever be had
with respect to either of the systems or any part of
either thereof.
Section 13.3 Disposition of Receivership Moneys.
Any moneys received by a receiver for the systems from the
operation of the systems shall be applied to the payment
of the following items in the following order:
(a) All costs of the receivership, includ-
ing receiver's fees and the fees and expenses of
his attorneys, the operating expenses of the sys-
tems and all charges and expenses of the trustee
under the indenture, and all payments required by
any of the underlying indentures;
(b) All due and unpaid installments of in-
terest on the bonds, in the order of the maturity
of such installments, with interest on overdue
installments of interest;
(c) All amounts of the principal of the
bonds that are due (whether by maturity or other-
wise) and unpaid, with interest on all overdue
principal, payment thereof to be made to the
holders of the bonds then outstanding, pro rata
and without any preference or priority whatever;
(d) All amounts required by Article IX
of the indenture to be paid into the.special
funds therein created, in the order in which
said payments are provided in said Article IX
to be made; and
(e) The surplus, if any there be, to the city.
Section 13.4 Remedies Vested in Trustee for
Benefit of Bondholders. All remedies ereun er are vested
exclusively in the trUstee for the equal and pro rata bene-
fit of all holders of the bonds and the coupons, unless the
trustee refuses or neglects to act within a reasonable
time after written request so to act addressed to the trus-
tee by the holders of twenty-five per centum (25%) of the
outstanding bonds, accompanied by indemnity satisfactory
to the trustee, in which event the holder of any of the
bonds or coupons may thereupon so act in the name and
behalf of the trustee or may so act in his own name in
lieu of action by or in the name and behalf of the trustee.
Except as above provided, no holder of any of the bonds
or coupons shall have the right to enforce any remedy
hereunder, and then only for the equal and pro rata bene-
fit of the holders of all the bonds and coupons.
- 47 -
Section 13.5 Delay No Waiver. No delay or
omission by the trustee or by any bondholders to exercise
any available -right, power or remedy hereunder shall impair
or be construed a waiver thereof or an acquiescence in the
circumstances giving rise thereto; every right, power or
remedy given herein.to the trustee or to the bondholders
may be exercised from time to time and as often as deemed
expedient.
ARTICLE VIX
CONCERNING THE TRUSTEE
Section 14.1 Acceptance of Trusts. The trustee
accepts the truste hereby createcreatea and agrees to perform
the duties herein required of it, either expressly or by
reasonable implication, subject however, to the following
conditions:
(a) It shall not be answerable for anything
whatever in connection with this trust, except its
wilful misconduct or gross neglect.
(b) It may employ agents and attorneys in
fact and shall not be answerable, except as to
moneys received by it or by its authorized agents,
for the default or misconduct of any such agents
or attorneys in fact selected by it with reasonable
care.
(c) It may consult counsel on any matters
connected herewith and shall not be answerable for
any action taken or failure to take any action in
good faith on the advice of counsel.
(d) It need not recognize a bondholder as
such without the submission of his bonds for in-
spection and the satisfactory establishment of
his title thereto.
(e) It shall not be answerable for any action
taken in good faith on any notice, request, consent,
certificate or other paper or document which it be-
lieves to be genuine and to be signed or acknowledged
by the proper party.
(f) It need not notice any default hereunder
unless requested in writing so to do by the holders
of twenty-five per centum T25%) of the then outstand-
ing bonds.
(g) In the event ofdefault by the city here-
under the trustee need not"exercise any of its
rights or powers specified in Section 13.2 hereof.,
or take any action under said Section'13.2 unless
requested in writing so to do by the holders of
twenty-five per centum (25%) of the then outstand-
ing bonds; it may exercise any such rights or powers
or take any such action, if it thinks advisable,
without any such request; it shall so do when
so requested; provided that the furnishing of
indemnity, satisfactory to the trustee, against
its prospective liabilities and expenses by the
holders requesting any action by the trustee
under said Section 13.2 shall be a condition
precedent to the duty of the trustee to take or
continue any action under said Section 13.2 which
in the opinion of the trustee would involve it
in any such liabilities and expenses. Whenever
it has a choice of remedies under said Section 13.2
or a discretion as to details in the exercise
of its powers thereunder, it must follow any
specific written directions given by the holders
of a majority of the bonds at the time outstand-
ing, anything therein or herein to the contrary
notwithstanding, unless the observance of su.ch
directions would, in the opinion of the trustee,
unjustly prejudice the nonassenting bondholders.
(h) It shall be entitled to reasonable com-
pensation for its services hereunder, including
extra compensation for unusual or extra services.
(i) Any action taken by it at the request of
and with the consent of the holder of a bond will
bind all subsequent holders of the same bond or
any bond issued hereunder in lieu thereof.
(j) It may be the holder of bonds as if not
trustee hereunder.
(k) It shall not be liable for the proper ap-
plication of any moneys other than those which may
be paid to or deposited with it.
(1) All moneys received by the trustee to
be held by it hereunder shall be held as trust
funds until disbursed in the manner herein provided
therefor. The trustee shall not be liable to pay
or allow interest thereon and shall not be required
to set aside or deposit any security therefor, ex-
cept as expressly required herein.
(m) The recitals of facts herein and in the
bonds are statements by the city and not by the
trustee, and the trustee is in no way responsible
for the validity or security of the bonds, the exist-
ence of the water and sewer system or the gas system,
the value thereof, the title of the city thereto,
the security afforded thereby or the validity or
priority of the lien herein created.
Section 14.2 Trustee Authorized to Pay Prior
Charges. Without relieving the city from the consequences
of any default in connection therewith, the trustee may
pay any charge which the failure of the city to pay has
- 49 -
made or will make an encumbrance or lien prior hereto
on either of the systems, and, in the event the city
shall fail to take out insurance on the systems to
the extent required by the indenture, the trustee may
take out such insurance on the systems, or either of
them, that the city has failed to furnish and may pay
the premiums thereon. The tru.stee, however, shall not
be required to pay any such charge or take out any such
insurance, and it shall not be liable in any manner for
any failure to do so. All sums expended by the trustee
under the provisions of this section shall be secured by
the indenture, shall bear interest at the rate of 60
per annum from the date of payment thereof and shall be
entitled to priority of payment over any of the bonds
or coupons. The city agrees to reimburse the trustee
on demand for all sums so expended by the trustee, to-
gether with interest at said rate.
Section 14.3 Filing of Claims by Trustee.
The trustee may at any time rile a claim in its own name
or for the benefit of the holders of the bonds and cou-
pons in any court proceeding where any such claim may
be permitted or required, whether such proceeding be
by way of reorganization, bankruptcy, receivership or
of any other nature. The holders of the bonds and of
the coupons do hereby constitute and appoint the trus-
tee as their irrevocable agent and attorney in fact
for the purpose of filing any such claim, but such
authorization shall not include the power to agree to
accept new securities of any nature in lieu of the
bonds and coupons or to alter the terms of the bonds
and coupons.
Section 14.4 Resignation and Removal of Trustee.
The trustee may resign and be discharged of the trusts
hereby created upon written notice specifying the effective
date of such resignation, such notice to be given to the
city and published by the trustee one time in a newspaper
published in the City of Mobile, Alabama. The effec-
tive date of the resignation shall be at least thirty (30)
days after the notice to the city and the first published
notice unless it be coincident with the appointment by
the holders of the bonds of a successor trustee as herein
provided. The trustee may at any time be removed by a
written instrument signed by the holders of a majority
of the bonds then outstanding. If the trustee resign.or
be removed, it shall be reimbursed for all its proper
prior expenses reasonable under the circumstances.
Section 14.5 Appointment of Successor Trustee.
If the trustee resign, be removed,— e p ace y a cour
or governmental authority under the control of a receiver
or other public officer, or otherwise become incapable
of acting, a successor may be appointed by a written
instrument signed by the holders of a majority of the
bonds then outstanding (which instrument shall be filed
for record in the office of the Judge of Probate of each
county in which any part of either of the systems is
located) and in the interim by an instrument executed
by the city, such interim successor trustee to be immedi-
ately and ipso facto superseded by one appointed as above
by the said holders. The city shall advertise such interim
- 50 -
appointment, in the event such is made, one time in a
newspaper published in the City of Birmingham, Alabama,
and when the appointment of a successor trustee, as
selected by the holders of a majority of the bonds
then outstanding, becomes effective, the city shall
advertise that fact one time in a newspaper published
in the City of Birmingham, Alabama.
Section 14.6 Concerning any Successor Trustee.
Any successor trustee shall execu e and deliver to the
city an instrument accepting the trust and shall thereupon
ipso facto succeed to all the rights, powers and responsi-
bilities of the retiring trustee hereunder. The city will,
upon request of the successor trustee, execute and deliver
to it any instrument reasonably requested in further assurance
thereof. Any such instrument so executed shall be filed
for record in the office of the Judge of Probate of each
county in which any part of either of the systems are located.
Section 14.7 Authentication of Bonds by Suc-
cessor Trustee. Any successor rus ee may e ecEively
adopt he au entication certificate of a predecessor
trustee on bonds already authenticated and not delivered,
and may so deliver them; and it may effectively authenticate
bonds in its own name.
Section 14.8 .Applicability of Indenture to Suc-
cessor Trustees. Each of the provisions 77 tHis indenture
as to the trustee shall apply to its successor or successors.
ARTICLE XV
SATISFACTION OF THE INDENTURE
AND CANCELLATION OF THE BONDS
Section 15.1 Satisfaction of Indenture. When-
ever the entire outstanding indebtedness secured by the
indenture, including all proper charges of the trustee
hereunder, shall have been dully paid, the trustee shall
cnacle, satisfy and discharge the lien herein created and
shall execute and deliver to the city such instrument as shall
be requisite to satisfy of record the lien herein created.
For the purposes of this section, any of the bonds and
any of the coupons shall be deemed to have been paid when
the city shall have deposited with the trustee for payment
thereof the entire amount due or to be due thereon until
and at maturity, and any of the callable bonds, together
with the then unmatured coupons applicable thereto, shall
be deemed to have been paid when the city shall have deposi-
ted with the trustee the following: the redemption .price
of such callable bond on the earliest date thereafter on
which it is by its terms subject to be redeemed; an amount
equal to the interest that will accrue with respect to such
callable bond to the said earliest date on which it is
subject to be redeemed; a certified copy of a resolution
calling such bond for redemption on said earliest date
when it is subject to be redeemed and complying with the
requirements of subsection (a) of Section 5.1 hereof;
evidence satisfactory to the trustee as to compliance
with any special requirements respecting, or conditions
- 51 -
precedent to, the redemption of such callable bond;
and either (a) evidence satisfactory to the trustee
that notice of redemption of such callable bond on
the said earliest date on which it is subject to be
redeemed has been given as provided in Article V
hereof or (b) irrevocable powers authorizing the
trustee to give such redemption notice.
Section 15.2 Cancellation of Paid Bonds and
Coupons. When and as the bonds and coupons are paid,
those so paid shall be forthwith cancelled by the trustee
and delivered to the city. Likewise all mutilated bonds
replaced by new bonds shall forthwith be cancelled by the
trustee and delivered to the city.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 Disclaimer of General Liability.
It is hereby e:cpressly made is condition of this In en ure
that any covenants or representations herein contained or
contained in the bonds or the coupons or contained in any
ordinance of the city authorizing the issuance of bonds
hereunder do not and shall never constitute a personal or
pecuniary liability or charge against the general credit
of the city, and in the event of a breach of any such
covenant or representation no personal or pecuniary
liability or charge payable directly or indirectly from
the general revenues of the city shall arise therefrom.
Nothing contained in this section, however, shall re-
lieve the city from the observance and performance of
the several covenants and agreements on its part herein
contained. -
Section 16.2 Retention of Moneys for Payment
of Bonds and Coupons. Should any of the bonds or the cou-
pons not be presen ed for payment when due, whether by
maturity or otherwise, the trustee shall retain from any
moneys transferred to it for the purpose of paying said
bonds and coupons so due, for the benefit of the holders
thereof, a sum of money sufficient to pay such bonds or
coupons when the same are presented by the holders there-
of for payment (which sum shall be secured in the manner
required by Section 9.10 hereof, but upon which sum the
trustee shall not be required to pay interest). All
liability of the city to the holders of such bonds and
coupons and all rights of such holders against the city
under the bonds and coupons or under the indenture shall
thereupon cease and determine, and the sole right of
such holders shall thereafter be against such deposit.
If any bond or coupon shall not be presented for payment
within the period of ten years following the date when
such bond or coupon becomes due, whether by maturity or
otherwise, the trustee shall return to the city the moneys
theretofore held by it for payment of such bond or coupon,
and such bond or coupon shall (subject to the defense of
any applicable statute of limitations) thereafter be an
unsecured obligation of the city.
- 52 -
Section 16.3 Form of Requests, etc. by Bond -
Holders. Any request, di:cection or other instrument re-
quired�o be signed or executed by holders of the bonds
may be in any number of concurrent instruments of similar
tenor, signed or executed in person, or by agent appointed
in writing. Such signature or execution may be proved
by the certificate of a notary public or other officer
at the time authorized to take acknowledgments to deeds
to be recorded in Alabama, stating that the signer was
known to him and acknowledged to him the execution thereof.
Section 16.4 Limitation of Rights. Nothing
herein or in the bonds shall confer any right on anyone
other than the city, the trustee and the holders of the
bonds and the coupons.
Section 16.5 Indemnity Bonds. Any indemnity
herein provided for shall be in the form of a bond of
a surety company having paid in capital of not less than
One Million Dollars indemnifying the city and the trustee,
or either of them, as the case may be, against loss as a
result of the action for which such indemnity is required.
Section 16.6 Persons D_-emed Owners of Bonds and
Coupons. The city, the trustee and any institution at
which the bonds and the coupons are or may be payable may
deem and treat the bearer of a coupon as the absolute owner
thereof for all purposes; they may deem and treat the bearer
of bonds as the absolute owner thereof for all purposes
other than to receive payment of outstanding coupons apper-
taining thereto; they shall not be affected by notice to
the contrary; and any payments by any of them to the bearer
of a bond or a coupon shall to the extent thereof fully
discharge and satisfy all liability for the same.
Section 16.7 Manner of Proving Ownership of Bonds-.
The ownership at any given time of a bond may be proved b
the certificate, if deemed satisfactory ro the trustee, oy
any trust company, bank or bankers, wherever situated, stating
that on the date stated the stated party had on deposit with
or exhibited to it the bond described.
Section 16.8 Indenture Governed by Alabama Law.
The indenture shall in all respects be governed by the laws
of the State of Alabama.
Section 16.9 Notices to City. The trustee or the
holder or any of the bonds may serve any notice upon the city
by delivering such notice, in written form, in person to the
mayor or other chief executive officer of the city, or by
depositing the same in a post office in a sealed and duly
stamped envelope addressed to the mayor or other chief
executive officer of the city at Fairhope, Alabama.
IN WITNESS WHEREOF, the city has caused this in-
denture to be executed in its corporate name and behalf by its
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mayor and its corporate seal to be hereunto affixed and
attested by its city clerk, and the trustee, to evidence
its acceptance of the trusts hereby created, has caused
this indenture to be executed in its corporate name and
behalf and its corporate seal to be hereunto affixed and
attested by its officers, all of whom are thereunto duly
authorized by proper corporate action, in three counter-
parts, each of which shall be deemed an original, and
has caused this indenture to be dated as of December 1,
1061, although actually executed on December ,
1961.
Attest:
r
Ci y Clerk
Attest:
Its
CITY OF FAIRHOPE
By
Its Mayor
THE MERCHANTS NATIONAL BANK OF MOBILE
Its
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M
STATE OF ALABAMA )
COUNTY OF )
I, , a Notary Public
in and for said county in said s ate, hereby certify that
Joe Schneider, whose name as Mayor of the CITY OF FAIRHOPE,
a municipal corporation under the laws of the State of
Alabama, is signed to the foregoing instrument and who
is known to me, acknowledged before me on this day that,
being informed of the contents of the within instrument,
he, as such officer and with full authority, executed the
same voluntarily for and as the act of said municipal
corporation.
Given under my hand and official seal of office
this day of December, 1�61.
Notary Public
STATE OF ALABAMA )
COUNTY OF )
I, , a Notary Public
in and for said county in said s a e, ere y certify that
, whose name as
of The Merchants National Bank
of Mobile, a national banking association, is signed to the
foregoing instrument and who is known to me, acknowledged
before me on this day that, being informed of the contents of
the within instrument, he, as such officer and with full
authority, executed the same voluntarily for and as the act
of said association.
Given under my hand and official seal of office
this day of December, 1961.
No dry Public
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