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HomeMy WebLinkAboutO-693ORDINANCE NO. �1 AN ORDINANCE AUTHORIZING THE ISSUANCE OF $2,192,000 PRINCIPAL AMOUNT OF WATER REVENUE BONDS BE IT ORDAINED by the Mayor and City Council of the City of Fairhope, Alabama, as follows: ARTTI LF T DEFINITIONS AND USE OF PHRASES Section 1.1 Definitions. The following words and phrases and others evidently intended as the equivalent thereof shall, in the absence of clear implication herein otherwise, be given the following respective in- terpretations herein: "Bonds" means the Bonds herein authorized to be issued. "Bond Fund" means the 1982 Water System Bond and Interest Fund created in Section 8.3 hereof. "Callable Bonds" means those of the Bonds which under the terms thereof may be redeemed at the option of the City prior to their respective maturities. "City" means the City of Fairhope in the State of Alabama and includes its successors and assigns and any municipal corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party. "Council" means the Mayor and City Council, or other govern- ing body of the City. "Counsel" means an attorney who is duly licensed to practice before the Supreme Court of Alabama. 01 f "Coupon Bonds" means all Bonds issued in coupon form, i.e., all Bonds other than those issued in fully registered form. "Coupons" means those issued hereunder and evidencing the interest on the applicable Coupon Bond or Bonds. "Extension Fund" means the 1982 Water System Replacement and Extension Fund created in Section 8.5 hereof. "Federal Securities" means any securities that are direct obligations of the United States of America and any securities with respect to which payment of the principal thereof and the interest thereon is unconditionally guaranteed 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 primarily to news of financial matters. "Fiscal Year" means the period beginning on October 1 of one calendar year and ending on September 30 on the next succeeding calendar year. "Fully Registered Bond" means, if the Bonds are issued in fully registered form pursuant to the provisions of Section 3.1 hereof, the single Fully Registered Bond issued to evidence the Bonds. "Holder" when used in conjunction with Coupons or unregis- tered Bonds means the person in possession and the apparent owner of the designated item and when used in conjunction with a Registered Bond or the Fully Registered Bond means the person in whose name such Bond is registered. "Improvements" means the Improvements to the System re- ferred to in Section 2.2 hereof. "Independent Auditor" means a public accountant who is not a full time employee of the City and who is regularly engaged in the auditing of financial records. "Independent Engineer" means an engineer who is duly regis- tered and qualified to practice the profession of engineering under the laws of Alabama and who is not a full time employee of the City. 3 ._. "Newspaper" means a newspaper printed in the English lan- guage and published not less than six days during each calendar week in the locality specified. "Operating Expenses" means, for the applicable period or periods, (a) the reasonable and necessary expenses of efficiently and economically administering and operating the System and in maintaining it in good repair and operating condition (not including, however, interest, depreciation, payments into any of the special funds created or referred to herein or any expenses for items properly chargeable by good accounting practice to fixed capital account), (b) the fees and charges of the deposi- tories for any of the special funds created or referred to herein, and (c) any other charges herein expressly stated to constitute an operating expense. "Operation Fund" means the Water, Gas and Sewer Operation and Maintenance Fund created in Section 9.5 of the 1961 Indenture. "Permitted Encumbrances" means, as of any particular time, (a) liens for ad valorem taxes not then delinquent, (b) easements, restric- tions and exceptions that an Independent Engineer 'certifies will not inter- fere with or impair the operation of the System, (c) minor clouds, encum- brances, defects and restrictions of the type that customarily exist with respect to properties of a size and character similar to those comprising the System and that do not, in the opinion of Counsel, in the aggregate materially impair the use of such properties in the operation of the System, (d) the lien or charge of the 1961 Indenture and the statutory mortgage lien therein created, all for the benefit of the 1961 Indenture Bonds, and (e) the lien or charge of the 1953 Indenture, all for the benefit of the 1953 Indenture Bonds. "Redemption Date" means the date fixed for redemption of Callable Bonds in any published notice of redemption. "Redemption Price" means the price at which the Callable Bonds called for redemption may be redeemed on the Redemption Date. "Registered Bonds" means those Coupon Bonds registered as to principal pursuant hereto. "Registrar" means the clerk of the City in his or her capacity as registrar and transfer agent for the Bonds. "Reserve Fund" means the 1982 Water System Debt Service Reserve Fund created in Section 8.4 hereof. 4 r i "Resolution" means a resolution or ordinance duly adopted by the Council. "Revenue Account" means the Water, Sewer and Gas Revenue Account created in Section 9.2 of the 1961 Indenture. "System" means the entire water works plant and distribution system of the City, as the same may at any time exist. "Temporary Note" means the $2,192,000 principal amount Water Revenue Bond Anticipation Note dated May 12, 1981. "1953 Indenture" means that certain Mortgage and Deed of Trust by The Water Works and Sewer Board of the City of Fairhope to The Merchants National Bank of Mobile, dated as of July 1, 1953, pursuant to which there were issued $85,000 aggregate principal amount of Water and Sewer Revenue Bonds, Second Series, dated July 1, 1953, which are now outstanding in the aggregate principal amount of $25,000 and the payment of the principal of and interest on which has been assumed by the City. "1953 Indenture Bonds" means those bonds heretofore issued under, and secured by, the 1953 Indenture. "1961 Indenture" means that certain Trust Indenture between the City of Fairhope and The Merchants National Bank of Mobile, dated as of December 1, 1961, as amended by supplemental indentures dated as of December 1, 1972, and as of December 1, 1978, pursuant to which there are now outstanding $495,000 aggregate principal amount of Water, Gas and Sewer Revenue Bonds, Series 1961, dated December 1, 1961, $640,000 aggregate principal amount of Water, Gas and Sewer Revenue Bonds, Series 1972, dated December 1, 1972, and $360,000 aggregate principal amount of Water, Gas and Sewer Revenue Bonds, Series 1978, dated December 1, 1978. "1961 Indenture Bonds" means those bonds heretofore issued under, and secured by, the 1961 Indenture. Section 1.2 Use of Phrases. "Herein," "hereby," "hereunder," "hereof," "hereinbefore," "hereinafter" and other equivalent words refer to this resolution as an entirety and not solely to the particular portion thereof in which any such word is used. The definitions set forth in Section 1.1 hereof include both singular and plural. Whenever used herein, any pronoun shall be deemed to include both singular 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. 5 ARTICLE II REPRESENTATIONS AND FINDINGS Section 2.1 Representations. The City represents, as a basis for the undertakings herein contained, as follows: it is in the process of acquiring and constructing certain extensions to and improvements of the System; and it owns and operates the only water works plant and distribution system furnishing water to the public in the City and in the nearby unincorporated area. Section 2.2 Findings Respecting Need for Construction of Improvements to the System, and Estimated Costs Thereof. The Council has heretofore ascertained and does now hereby declare (a) that it is necessary and desirable that the City acquire and construct certain im- provements to the System, consisting of 14.2 miles of 8" lines, 36 miles of 6" lines, 3.8 miles of 3" lines, two 500 gpm wells, two 300,000 gallon elevated storage tanks, 55 6" fire plugs and 600 customer connections, (b) that the total estimated costs of acquiring and constructing the said improvements would be not less than $2,192,000, and (c) that for the purpose of temporarily financing the aforesaid cost estimate, it has heretofore issued the Temporary Note. The Council hereby reaffirms the aforesaid cost estimate, hereby estimates the period of usefulness of the Improvements to be in excess of forty (40) years from January 1, 1982, and hereby declares that the Temporary Note is a valid and binding special obligation of the City payable solely out of the revenues from the System. M ARTICLE III THE BONDS Section 3.1 Authorization and Description of the Bonds. Pursuant to the applicable provisions of Article 5 of Chapter 81 of Title 11 of the Code of Alabama of 1975, as amended, and for the purpose of providing for the permanent financing of the costs of constructing the Improvements by paying the principal of the Temporary Note and paying certain construction costs, there are hereby authorized to be issued by the City $2,192,000 principal amount of Water Revenue Bonds. The Bonds shall be initially issued as one Fully Registered Bond in the form prescribed in Section 3.3 hereof and exchangeable for Coupon Bonds in the form pre- scribed in Section 3.2 hereof as specified in Section 5.3 hereof. The Coupon Bonds shall (subject to the provisions of Section 5.3 hereof) be dated January 1„ 1982, shall be numbered from 1 to 439, inclusive, and shall be in the denomination of $5,000 each (except for that Coupon Bond numbered 1 which shall be in the denomination of $2,000). The Fully Registered Bond shall be dated the date of its issuance. The principal of the Bonds, whether issued as Coupon Bonds or as one Fully Registered Bond, shall mature and become payable on January 1 as follows (the bond 'numbers specified below being applicable only to Coupon Bonds): Bond Numbers Year of Aggregate Principal (both inclusive) Maturity Amount Maturing 1 - 2 1985 $ 7,000 3 - 4 1986 10,000 5 - 6 1987 10,000 7 - 8 1988 10,000 9 - 10 1989 10,000 11 - 13 1990 15,000 14 - 16 1991 15,000 17 - 19 1992 15,000 20 - 23 1993 20,000 24 - 27 1994 20,000 28 - 33 1995 30,000 34 - 40 1996 35,000 41 - 48 1997 40,000 49 - 56 1998 40,000 57 - 65 1999 45,000 66 - 74 2000 45,000 75 - 83 2001 45,000 84 - 93 2002 50,000 -" 94 - 103 2003 50,000 104 - 114 2004 55,000 115 - 125 2005 55,000 126 - 137 2006 60,000 138 - 150 2007 65,000 7 Bond Numbers Year of Aggregate Principal (both inclusive) Maturity Amount Maturing 151 - 163 2008 $ 65,000 164 - 177 2009 70,000 178 - 192 2010 75,000 193 - 208 2011 80,000 209 - 224 2012 80,000 225 - 241 2013 85,000 242 - 259 2014 90,000 260 - 278 2015 95,000 279 - 298 2016 100,000 299 - 319 2017 105,000 320 - 341 2018 110,000 342 - 364 2019 115,000 365 - 388 2020 120,000 389 - 413 2021 125,000 414 - 439 2022 130,000 The Bonds shall bear interest from their date until their respective maturities at such per annum rate or rates, not exceeding 5%, as shall be hereafter fixed by Resolution. Such interest shall be payable on January 1, 1983, and annually on each January 1 thereafter until and at the respective maturities of the Bonds and (except with respect to the Fully Registered Bond) shall be evidenced by separate interest Coupons attached thereto. Both the principal of and the interest on the Bonds shall bear interest at the rate of 8% after the respective maturities of such principal and interest and shall be payable in lawful money of the United States of America at the principal office of The First National Bank of Baldwin County, Fairhope, Alabama (except that the principal of and the interest on the Fully Registered Bond shall be payable in the United States of America as shall be specified by the successful bidder for the Bonds or at such other place in the United States of America as may be thereafter designated by written notice furnished to the City by the then Holder of such Fully Registered Bond). Section 3.2 Form of (Coupon) Bonds and Coupons. The Bonds issued in coupon form and the Coupons and the certificate of registration applicable thereto shall be in substantially the following forms, respectively, with such changes as may be necessary to conform to the provisions hereof: r /- No. [ Form of (Coupon) Bond] UNITED STATES OF AMERICA STATE OF ALABAMA CITY OF FAIRHOPE WATER REVENUE BOND On the 1st day of January, , for value received, the CITY OF FAIRHOPE, a municipal corporation under the laws of Alabama (herein called "the City"), will pay to the bearer hereof, or if this bond be registered then to the registered holder hereof, solely out of the revenues hereinafter referred to, the sum of THOUSAND DOLLARS with interest thereon from the date hereof until the maturity hereof at the rate of % per annum, payable annually on January 1 in each year until and at the maturity hereof upon surrender of the annexed interest coupons as they severally mature. Both this bond and the said interest coupons are payable in lawful money of the United States of America at the principal office of The First National Bank of Baldwin County, Fairhope, Alabama. This bond is one of a duly authorized issue of bonds designated Water Revenue Bonds (herein called "the Bonds") authorized to be issued in the aggregate principal amount of $2,192,000 and consists of bonds num- bered from 1 to 439, inclusive. The principal of and the interest on the Bonds are payable solely out of revenues from the water works plant and distribution system of the City (which, as presently or hereafter constituted, is herein called "the System") remaining after payment of the costs of maintaining and operating the same, and are secured, pro rata and without priority of one bond over another, by a valid pledge of the revenues out of which they are payable. Those of the Bonds having stated maturities in 1993 and thereafter are subject to redemption prior to their respective maturities, at the option of the City, on January 1, 1992, and on any interest payment date thereafter, as a whole or in part (but if in part, in their inverse numerical order) after notice published at least one time not less than thirty days prior to the date fixed for redemption, at and for a redemption price, -with 9 respect to each such bond redeemed, equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption. The bonds are issued under the provisions of Article 5 of Chapter 81 of Title 11 of the Code of Alabama of 1975, as amended, and an ordinance of the City duly adopted, for purposes for which bonds are authorized to be issued under the provisions of said Article. The covenants and representations herein contained or con- tained in the said ordinance 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 breach of any such covenant and 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 constitu- tional provision or statutory limitation. It is hereby certified that all conditions, actions 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 per- formed and have happened in due and legal form, and that provision has been made for the deposit into a special fund of revenues from the operation of the System in amounts sufficient to pay the principal of and the interest on the Bonds at the time outstanding as said principal and interest shall respectively mature. This bond shall pass by delivery unless registered as to principal in the owner's name on the books of the clerk of the City, the registrar and transfer agent of the City, with such registration noted hereon by the said registrar. If registered, no transfer of this bond shall be valid unless it is presented at the office of the City with written power to transfer, properly stamped if required, in form and with guaranty of signature satisfactory to the said registrar, and such bond may be discharged from registration by being in like manner transferred to bearer. It may again from time to time be registered or discharged from registration in the same manner. Such registration shall not affect the negotiability of the coupons appertaining hereto, which shall continue to be transferred by delivery. The said registrar shall not be required to register or transfer any bond during the period of ten days next preceding the stated maturity date of such bond; if this bond by its terms is subject to redemption prior to its maturity, the said registrar shall not be required to register or transfer it during the period of ten days next preceding the thirty -day period prior to any date on which it is subject to be redeemed; and in the event this bond is subject to redemption as aforesaid and is duly called for redemption, said registrar shall not be required to register or transfer it during the period of thirty days next preceding the date fixed for its redemption. 10 r 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 furnished by the System as shall be sufficient to provide for payment of the principal of and the interest on the Bonds as 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 System and of maintaining it in good repair and working order, to build up a reserve for depreciation of the System and to build up a reserve for improvements, betterments and extensions to the System, other than those necessary to maintain it in good repair and working order as hereinabove provided. IN WITNESS WHEREOF, the City has caused this bond to be executed in its name and behalf with a facsimile of the signature of its ;Mayor, has caused a facsimile of its seal to be hereunto imprinted and attested with the manual signature of its Clerk, both said officers being hereunto duly authorized, has caused the attached coupons to be executed with a facsimile of the signature of said Mayor and' has caused this bond to be dated January 1, 1982. Attest: City Clerk Coupon No. CITY OF FAIRHOPE [ Form of Coupon] Mayor On the 1st day of January, , the CITY OF FAIRHOPE, a municipal corporation under the laws of Alabama, will pay to the bearer hereof, solely out of the revenues derived from the operation of its water works plant and distribution system, upon surrender hereof at the principal office of The First National Bank of Baldwin County, Fairhope, Alabama, Dollars in lawful money of the United States of America, being interest then due on its Water Revenue Bond, dated January 1, 1982, No. Attest: Mayor City Clerk [ Form of Registration] (No writing on this bond except by registrar) Date of Registered Owner Registrar Registration Following the maturity date contained in each of the Coupon Bonds having a stated maturity in 1993 and thereafter, there shall be inserted the following: "(unless this bond shall have been duly called for prior redemp- tion and payment duly provided for)," Following the maturity date of each coupon due on or after January 1, 1993, there shall be inserted the following: "(unless the bond to which this coupon is applicable shall have been duly called for prior redemption and payment duly provided for)," �l Section 3.3 Form of (Fully Registered) Bond. If initially issued in fully registered form, the Bonds and the certificate of registration applicable thereto shall be in substantially the following forms, respectively, with such insertions, omissions and other variations as may be necessary to conform to the provisions hereof: $2,192,000 (Form of (Fully Registered) Bond) UNITED STATES OF AMERICA STATE OF ALABAMA CITY OF FAIRHOPE WATER REVENUE BOND $2,192,000 For value received, the CITY OF FAIRHOPE, a municipal corporation under the laws of Alabama (herein called "the City"), will pay to or registered assigns, solely out of the revenues hereinafter referred to, the aggregate principal sum of TWO MILLION ONE HUNDRED NINETY-TWO THOUSAND DOLLARS in installments on January 1 in the following respective years and principal amounts: Year Amount 1985 $ 7,000 1986 10,000 1987 10,000 1988 10,000 1989 10,000 1990 15,000 1991 15,000 1992 15,000 1993 20,000 1994 20,000 1995 30,000 1996 35,000 1997 40,000 1998 40,000 13 Year Amount 1999 $ 45,000 2000 45,000 2001 45,000 2002 50,000 2003 50,000 2004 55,000 2005 55,000 2006 60,000 2007 65,000 2008 65.000 2009 70,000 2010 75,000 2011 80,000 2012 80,000 2013 85,000 2014 90,000 2015 95,000 2016 100,000 2017 105,000 2018 110,000 2019 115,000 2020 120,000 2021 125,000 2022 130,000 with interest on the then unpaid principal balance hereof from the date hereof at the rate of % per annum, payable on January 1, 1983, and annually on each January 1 until the due date of the last maturing installment of principal hereof. Both the principal of and the interest on this bond is payable in lawful money of the United States of America at [ here will be inserted the name and location of the place at which this fully registered bond will be initially payable] , or at such other place in the United States of America as may be designated by written notice furnished to the City by the then registered holder hereof. All installments of the principal of and the interest on this bond shall bear interest after their respective due dates until paid at the rate of 8% per annum. This bond evidences a duly authorized issue of bonds desig- nated Water Revenue Bonds (herein called "the Bonds") and authorized to be issued in the aggregate principal amount of $2,192,000. The principal of and the interest on the Bonds are payable solely out of revenues from the water works plant and distribution system of the City (which, as presently or hereafter constituted, is herein called "the System") remaining after pay- ment of the costs of maintaining and operating the same, and are secured, pro rata and without priority of one bond over another, by a valid pledge of the revenues out of which they are payable. Those of the principal installments hereof coming due in 1993 and thereafter are subject to prepayment, without penalty or premium, prior to their respective maturities, at the option of the City, on January 1, 1992, and on any interest payment date thereafter, as a whole or in part (but if in part, in multiples of $5,000 and in the inverse order of their maturities), after notice published at least one time not less than thirty days prior to the date fixed for prepayment. The bonds are issued under the provisions of Article 5 of Chapter 81 of Title 11 of the Code of Alabama of 1975, as amended, and an ordinance of the City duly adopted, for purposes for which bonds are authorized to be issued under the provisions of said Article. The covenants and representations herein contained or con- tained in the said ordinance 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 breach of any such covenant and 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 constitu- tional provision or statutory limitation. It is hereby certified that all conditions, actions 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 per- formed and have happened in due and legal form, and that provision has been made for deposit in a special fund of revenues from the operation of the System in amounts sufficient to pay the principal of and the interest on the Bonds at the time outstanding as said principal and interest shall respec- tively mature. This bond is transferable by the registered holder hereof, in person or by authorized attorney, only on the books of the clerk of the City, the registrar and transfer agent of the City, with the name of the transferee and new registered holder hereof noted hereon. The Bonds are also issuable as coupon bonds, registrable as to principal only, in the denomination of $5,000 each. Provision is made in the ordinance authorizing the Bonds for the exchange of this fully registered bond for coupon bonds payable to bearer (but registrable as to principal only) in an aggregate principal amount equal to the then unpaid principal amount of this bond, all as requested by the holder surrendering this fully registered bond and upon the terms and conditions specified in said ordinance. ,5 f The said registrar and transfer agent shall not be required either to transfer or to exchange this bond during the period of ten days next preceding any January 1 or during the period of ten days next preceding the thirty -day period prior to any date on which any installment of principal hereof is subject to prepayment; and, in the event that any installment of principal hereof is subject to prepayment as aforesaid and is duly called for such prepayment, the said registrar and transfer agent shall not be required either to transfer or exchange this fully registered bond during the period of thirty days next preceding the date fixed for such prepayment. IN WITNESS WHEREOF, the City has caused this bond to be executed in its name and behalf by its ,Mayor, has caused its seal to be hereunto affixed and attested by its City Clerk, both of said officers being hereunto duly authorized, and has caused this bond to be dated Attest: City Clerk CITY OF FAIRHOPE Mayor [ Form of Registration] (No writing on this bond except by registrar) Date of Registered Owner Registrar Registration 16 Section 3.4 Redemption Provisions. Those of the Bonds having stated maturities in 1993 and thereafter may be redeemed and paid prior to their respective maturities, at the option of the City, as a whole or in part (but if in part, in their inverse numerical order), on January 1, 1992, and on any interest payment date thereafter, at and for a Redemption Price, with respect to each such Bond redeemed, equal to the principal amount thereof plus accrued interest thereon to the Redemption Date. The preceding provisions of this Section 3.4 shall be applicable, with the necessary changes in detail, to those installments of principal of the Fully Registered Bond that come due in 1993 and thereafter, it being understood that such installments are subject to such redemption and prepayment at the option of the City in the inverse order of their due dates and in multiples of $5,000. Any such redemption or prepayment shall be subject to the provisions of and shall be effected in the manner provided by Article VI hereof. 17 ARTICLE IV EXECUTION OF THE BONDS Section 4.1 Execution of Bonds. The Bonds shall be executed by the Mayor, and the seal of the City shall be affixed thereto and attested by the Clerk of the City; provided that in the case of Coupon Bonds, the signature of the Mayor thereon may be a facsimile of the signature of such officer and the seal of the City may be imprinted thereon rather than manually affixed thereto. The Coupons shall be authenticated with a facsimile of the signature of the said :Mayor. Signatures on the Bonds and the Coupons by persons who were officers of the City at the time such signatures were written or printed shall continue effective although such persons cease to be such officers prior to the delivery of the Bonds and the Coupons. Section 4.2 Replacement of Mutilated, Lost, Stolen or Destroyed Bonds and Coupons. In the event any Bond is mutilated, lost, stolen or destroyed, the City may execute and deliver a new Bond of like tenor and denomination as that mutilated, lost, stolen or destroyed, which such new Bond shall have attached thereto Coupons corresponding in all respects to those (if any) 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 (b) in the case of any such lost, stolen or destroyed Bond, there is first furnished to the City evidence of such loss, theft or destruction satisfactory to it, together with indemnity satisfactory to it. 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 4.3 Removal of Past Due Coupons. No exchange or substitution of Bonds hereunder shall effect any gain or loss in interest to the Holder thereof, and, to the extent required to effect such result, upon delivery of any Coupon Bond all past due Coupons for which the City has provided moneys shall be paid and all other past due Coupons (except those evidencing interest in payment of which the City is in default) shall be cancelled. 18 i ARTICLE V REGISTRATION AND NEGOTIABILITY OF THE BONDS Section 5.1 Registration of Bonds. The Clerk of the City shall be the Registrar and transfer agent of the City and shall keep at his or her office proper registry and transfer books in which the said Registrar will note the registration and transfer of such Bonds as are presented for those purposes, all in the manner and to the extent hereinafter specified. The Fully Registered Bond shall be transferable only on the transfer books of the City. No transfer of any such Bond shall be valid hereunder unless it is presented at the office of the City with written power to transfer signed by the registered owner thereof in person or by duly authorized. attorney, properly stamped if required, in form and with guar- anty of signature satisfactory to the Registrar, with such registration noted thereon by the Registrar. The person in whose name any such Fully Registered Bond is registered on the books of the City shall be the sole person to whom or on whose order payments on account of the principal. thereof and the interest thereon may be made. Any Coupon Bond may be registered as to principal only, with such registration noted thereon, but unless so registered shall pass and be transferable by delivery. Such registration shall conclusively designate the registered owner as the sole person to whom or on whose order payment of the principal of such Coupon Bond may be made, but shall not affect the negotiability of the Coupons appertaining thereto. After such registration no transfer of a Registered Bond shall be valid unless it is presented at said office with written power to transfer, properly stamped if required, in form and with guaranty of signature satisfactory to the Registrar, with such registration noted thereon by the Registrar. Any Registered Bond may be discharged from registration by being in like manner transferred to bearer, after which transferability by delivery shall be restored. Any Coupon Bond may from time to time be registered or discharged from registration in the same manner. The Registrar shall not be required to register or transfer any Coupon Bond during the period of ten days next preceding the stated maturity date thereof or during the period of ten days next preceding the thirty -day period immediately prior to any date on which such Coupon Bond is subject to be redeemed; and, if any Coupon Bond shall be duly called for redemption, the Registrar shall not be required to register or transfer such Coupon Bond during the period of thirty days next preceding the date fixed for its redemption. 19 Section 5.2 Persons Deemed Owners of Bonds and Coupons. The City and any institution at which the Bonds and the Coupons are or may be payable may deem and treat the Holder of a Coupon as the absolute owner thereof for all purposes other than to receive payment of outstanding Coupons appertaining thereto; they may deem and treat the person in whose name a Registered Bond is registered as the absolute owner thereof for all purposes other than to receive payment of outstanding Coupons appertaining thereto; they may deem and treat the person in whose name the Fully Registered Bond is registered as the absolute owner thereof for all purposes; they shall not be affected by notice to the contrary; and all payments by any of them to the Holders of such Coupons and unregistered Coupon Bonds and to the person in whose name a Registered Bond or the Fully Registered Bond is registered shall to the extent thereof fully discharge and satisfy all liability for the same. Section 5.3 Exchange of Bonds. Upon the request of the Holder of the Fully Registered Bond, the City shall execute and deliver, upon surrender to the City of such Bond and in exchange therefor, Coupon Bonds (in the applicable form prescribed in Section 3.3 hereof) of like tenor, having stated maturities and aggregating the same principal amount as the then unpaid installments of principal of the Fully Registered Bond so surrendered and being subject to redemption prior to their respective stated maturities on the respective date or dates and at the respective price or prices as are applicable to the corresponding principal installments of such Fully Registered Bond. In the event of any such surrender of a Fully Registered Bond pursuant to the provisions of this section, it shall be accompanied by written power to transfer signed by the registered owner thereof in person or by duly authorized attorney, properly stamped if required, in form and with guaranty of signature satisfactory to the Registrar. Each Coupon Bond delivered upon any exchange effected pursuant to the provisions hereof shall be accompanied by such unmatured Coupons as shall be required in order to evidence interest at the applicable rate or rates of the Fully Registered Bond exchanged therefor and by such matured Coupons as may be necessary to evidence any interest not paid or made available for payment on the Fully Registered Bond surrendered in exchange for such Coupon Bond, all to the end that no gain or loss in interest shall result from any such exchange. The provisions of Section 3.1 hereof to the contrary notwithstanding, in the event of any such exchange effected prior to January 1, 1983, the Coupon Bonds delivered upon any exchange for the Fully Registered Bond shall be dated the date of the Fully Registered Bond so exchanged for such Coupon Bonds, and the Coupon due January 1, 1983, that is attached to each such Coupon Bond shall be in such amount as is necessary to evidence interest thereon from the date of such Coupon Bond to January 1, 1983. 20 E-116411 OWMAi GENERAL PROVISIONS RESPECTING REDEMPTION OF CALLABLE BONDS Section 6.1 Manner of Effecting Redemption of Callable Bonds. Any redemption of any Callable Bonds shall be effected in the following manner: (a) Call. The Council shall adopt a Resolution containing the following: (1) a call for redemption, on a specified date when they are by their terms subject to redemption, of Callable Bonds bearing stated numbers and series designations; (2) a statement that the City is not in default hereunder; and (3) a summary of any applicable re- strictions upon or conditions precedent to such redemption and the provisions made to comply therewith. (b) Publication. Not less than thirty (30) days prior to the Redemption Date, the City shall cause to be published one time in a Newpaper published in the City of Birmingham, Alabama, a notice stating the following: that Callable Bonds bearing stated numbers and series designations have been called for redemption and will become due and payable at the Redemption Price or Redemption Prices on a specified Re- demption Date ( which shall be the date provided for such redemption in the Resolution required in subsection (a) of this section]; and that all interest thereon will cease after the Redemption Date. In the event there is no Newspaper being published in the City of Birmingham at the time the City directs such notice to be published, then such publication may be made either a Newspaper or Financial Journal published in the City of New York, New York. 1_ (c) Notice by Registered Mail. In the event any of the Callable Bonds so called for redemption shall be also a Registered Bond or any installment of principal (or portion thereof) of the Fully Registered Bond, the City shall forward by United States Registered Mail to the registered owner thereof, at the address of such registered owner as such address appears on the registry books of the Registrar pertain- ing to the registration of the Bonds, a notice stating the following: that Callable Bonds bearing stated numbers and series designations have been called for redemption and will become due and payable at the Redemption Price or Redemp- tion Prices on a specified Redemption Date (which shall be the date provided for such redemption in the Resolution required 21 in subsection (a) of this section); and that all interest thereon will cease after the Redemption Date. Such notice shall be so mailed not less than thirty (30) days prior to the Redemption Date, but Holders of any Registered Bonds or Fully Registered Bonds may waive the requirements of this subsection with respect to the Registered Bonds or Fully Registered Bonds held by them without affecting the validity of the call for redemption of any other Callable Bonds. (d) Deposit of Funds. On or prior to the Redemption Date the City shall make available at the bank or banks at which the Bonds are payable the total Redemption Price of the Callable Bonds so called and shall further furnish to such bank or banks the following: a certified copy of the Resolution required in subsection (a) of this section; appropriate affi- davits showing compliance with the requirements of sub- sections (b) and (c) of this section; and, in the case of the redemption of any Callable Bond when such Callable Bond may then be redeemed only with funds from a specified source or is subject to some other restriction or requirement, evidence satisfactory to such banks showing compliance with such restriction or requirement; provided, however, that in the event of the prepayment of all or a portion of the then unpaid principal of the Fully Registered Bond, said funds shall be made available, at the place at which said Bond is payable, to the Holder thereof on the Redemption Date and said docu- ments shall be furnished to such Holder on or before such date. Section 6.2 Presentation of Callable Bonds for Redemption. Bonds to Cease to Bear Interest. Upon compliance by the City with the requirements contained in Section 6.1 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, anything herein or in the Callable Bonds to the contrary notwithstanding; the Holders thereof shall then and there surrender 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 hereof but shall look solely to the moneys made available under the provisions of this article; and out of the moneys so deposited with them, the bank or banks at which the Bonds are payable shall make provision for payment of the Callable Bonds so called for redemption at the Redemption Price on the Redemption Date. 22 Section 6.3 Payment of Coupons Maturing on a Redemption Date and Applicable to Callable Bonds Called on that Date. No bank or any other institution at which the Coupon Bonds 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 on that date 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, to the City or to _ anyone whomsoever; and provided, further, that each such bank and any such institution shall pay such Coupon if the Holder thereof shall present to it evidence satisfactory to it or such institution, as the case may be, 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. Section 6.4 Provisions Respecting Prepayments of Principal Installments of the Fully Registered Bond. The preceding provisions of this Article VI with respect to redemption of Bonds prior to their respective maturities shall apply, with the necessary changes in detail, to the Fully Registered Bond, the principal installments of which shall therefore be subject to prepayment and redemption prior to their, respective due dates on the same respective Redemption Dates and at the same respective Redemp- tion Prices as the Coupon Bonds; provided, however, that in the event of the prepayment and redemption of less than all the installments of principal of the Fully Registered Bond that at the time are subject to such prepayment and redemption, (a) the Resolution, publication and notice referred to in Section 6.1 hereof shall, with respect to the principal installments of the Fully Registered Bond to be so prepaid, state the year or years in which such principal installments have stated due dates, in lieu of the numbers thereof, and (b) the Holder of such Fully Registered Bond shall, in lieu of surrender- ing it for cancellation, surrender it to the City for notation thereon of the date of such prepayment and of the principal installments so prepaid. Section 6.5 Redemption with Consent of Holder. Any Bond may be redeemed by the City, with the consent of the Holder and without the necessity of compliance with the provisions of this Article VI, on any interest payment date prior to maturity, at and for a Redemption Price with respect to each such Bond redeemed, equal to the principal amount thereof plus accrued interest thereon to the Redemption Date. 'L J ARTICLE VII SOURCE OF PAYMENT OF THE BONDS, PLEDGE FOR PAYMENT THEREOF, AND SEVERANCE OF REVENUES FROM PHYSICAL PROPERTIES Section 7.1 Source of Payment of the Bonds. The principal of and the interest on the Bonds shall be payable solely out of revenues derived from the operation of the System. The general faith and credit of the City are not pledged for payment of the Bonds or the Coupons, and the Bonds and the Coupons shall not be general obligations of the City. Neither this Resolution nor any of the Bonds or the Coupons shall be deemed to impose upon the City any obligation to pay the principal of or the interest on the Bonds, or any other sum, except with revenues derived from the operation of the System. The Bonds and the Coupons shall not constitute indebtedness of the City within the meaning of any state constitutional provision or statutory limitation. None of the agreements, representations or warranties made or implied in this Resolution, or in the issuance of the Bonds and the Coupons, shall ever impose any personal or pecuniary liability or charge upon the City, whether before or after any breach by the City of any such agreement, representation or warranty, except with respect to the revenues derived from the operation of the System. Nothing contained in this section shall, however, relieve the City from the performance of the several agreements and representations on its part herein contained so long as such performance does not impose a personal, pecuniary or general liability or charge upon the City. Section 7.2 Pledge of Revenues. The revenues derived from the operation of the System are hereby irrevocably pledged for payment of the principal of and the interest on the Bonds, pro rata and without prefer- ence or priority of one Bond over another by reason of priority in issuance or acquisition or otherwise, and for the payments into the special funds created in Article VIII hereof, to the extent herein provided. The City represents that, except for the pledge and other agreements contained in the 1953 Indenture for the benefit of the 1953 Indenture Bonds and the pledge and other agreements contained in the 1961 Indenture for the benefit of the 1961 Indenture Bonds, the pledge and agreements herein made constitute the only outstanding pledge and agreements with respect to the revenues derived from the operation of the System. Section 7.3 Severance of Revenues. In order to safeguard the aforesaid pledge and the performance and observance 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 System shall be and the same hereby are severed from the physical properties comprising the System to such extent as shall be necessary to fulfill and preserve inviolate the said pledge and to fulfill the said agreements and covenants. 24 r ARTICLE VIE DISPOSITION OF REVENUES FROM THE SYSTEM AND CREATION OF SPECIAL FUNDS Section 8.1 Revenue Account. The City will continue the Revenue Account until the principal of and the interest on the Bonds are paid in full. The City will deposit in the Revenue Account, as received by it, all the revenues derived by it from the operation of the System. During each succeeding month beginning with the month during which the Bonds are issued, the City will, after complying with the provisions set forth in Section 9.3 of the 1961 Indenture, apply the moneys on deposit in the Revenue Account that may be withdrawn therefrom, in accordance with the provi- sions of Section 9.3 of the 1961 Indenture, for the following purpose, to the extent necessary and to the extent that the moneys on deposit in the Revenue Account are sufficient therefor: On or before the first day of each such month, payment into the special funds created in Sections 8.3 to 8.5, inclusive, hereof, of such amounts as are required hereby to be paid therein on or before such date, in the order in which said funds are herein created, to the respective extents herein provided. Section 8.2 Operation Fund. The City will continue the Operation Fund until the principal of and interest on the Bonds are paid in full. The moneys on deposit in the Operation Fund shall be used only for payment of Operating Expenses as such expenses become due and payable. Section 8.3 Bond Fund. There is hereby created a special fund, the full name of which shall be the "1982 Water System Bond and Interest Fund" and which shall be continued until 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) Simultaneously with the issuance and sale of any of the Bonds and out of the proceeds derived from such sale, the City will pay into the Bond Fund such part of the proceeds from said sale as is allocable to premium (if any) and accrued interest. (b) On or before the first day of the month immedi- ately succeeding the month during which the Bonds are issued, the City will pay into the Bond Fund, out of the moneys in the Revenue Account, an amount which, when added to the 25 r amount paid into the Bond Fund pursuant to the provisions of subsection (a) of this section and the amount that is required by the provisions of subsection (c) of this section to be paid into the Bond Fund on or before December 31, 1982, will equal the principal (if any) and interest maturing with respect to the Bonds on January 1, 1983. (c) On or before the first day of the month next succeeding that during which the Bonds are issued and on or before the first day of each succeeding 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 Revenue Account, an amount equal to the sum of (i) one -twelfth (1/12) of the annual installment of interest that will mature on the then outstanding Bonds on the then next succeeding January 1, plus (ii) one -twelfth (1/12) of the principal (if any) that will mature on the then outstanding Bonds on the then next succeeding January 1; provided, how- ever, that there shall be credited on the payments due under the preceding clause (i) all amounts paid into the Bond Fund pursuant to the provisions of subsection (a) of this section that have not theretofore been credited on previous payments due into the Bond Fund hereunder. (d) In the event that the moneys paid or transferred into the Bond Fund with respect to any calendar month shall be less than the amount required by the provisions of this section to be paid therein with respect to such calendar month, then on or before the last day of the next succeeding calendar month and on or before the last day of each calendar month thereafter until such time as the payments into the Bond Fund are current, the City will pay into the Bond Fund in addition to the monthly payments provided for in subsection (c) of this section all moneys remaining in the Revenue Account on the last day of each of said months after compli- ance with the then applicable provisions of Section 9.1 of the 1961 Indenture and after payment of the amount required in subsection (c) of this section to be paid into the Bond Fund with respect to such month. 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 and interest then remaining unpaid with respect to the Bonds, no further payments need I WEI j_. thereafter be made into the Bond Fund except to make good moneys paid therein which may become lost or which may not be immediately available for withdrawal under the provisions of this section. Section 8.4 Reserve Fund. There is hereby created a special fund, the full name of which shall be the "1982 Water System 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. On or before the first day of each successive calendar month beginning with the month immediately succeeding the month during which the Bonds are issued and continuing thereafter until the amount on deposit in the Bond Fund equals or exceeds $129,600, the City will pay into the Reserve Fund, out of the moneys on deposit in the Revenue Account and after compliance with the then applicable provisions of Sections 8.1 and 8.2 hereof, the sum of $1,080. The moneys forming a part of the Reserve Fund shall be transferred to the Bond Fund for payment of the principal of and the interest on the Bonds, but only when the moneys on deposit in the Bond Fund shall not be sufficient to pay a maturing installment of such principal or interest and only for payment of principal or interest so maturing as to which there would otherwise be a default. 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 sentence of the first paragraph of this section), on or before the first day of each successive month, beginning with the month during which such transfer was made and continuing until the sum transferred shall have been restored, all moneys then remaining in the Revenue Account after compliance with the then applicable provisions of Sections 8.1 and 8.3 hereof and the second sentence of the first paragraph 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 principal and interest then remaining unpaid with respect to the Bonds, no further payments need be made into the Reserve Fund. Section 8.5 Extension Fund. There is hereby created a special fund, the full name of which shall be the "1982 Water System Replacement and Extension Fund." On or before the first day of each successive calendar month beginning with the month immediately succeeding the month during which the Bonds are issued and continuing thereafter until the amount on deposit in the Extension Fund equals or exceeds $64,800, the City will pay into the Extension Fund out of the moneys remaining in the Revenue Account after compliance with the then applicable provisions of Sections 8.1, 8.3 and 8.4 hereof, the sum of $540. The moneys on deposit in the Extension Fund shall be used solely for the purpose of replacing any portion of the System that has become worn out or inadequate for the rendition of efficient service and of constructing or acquiring capital improvements. Whenever the moneys on 27 deposit in the Extension Fund shall equal or exceed the sum of $64,800, the City may discontinue making further payments therein, but whenever and as often as any of said moneys are used to such an extent that the amount thereof remaining on deposit therein shall be less than $64,800, then the City shall resume monthly payments therein, out of moneys remaining in the Revenue Account after compliance with the then applicable provisions of Sections 8.1, 8.3 and 8.4 hereof, at the rate of $540 per month, until such time as the total of the moneys on deposit in the Extension Fund shall again equal or exceed $64,800. So long as the City shall not be in default hereunder, the moneys forming a part of the Extension Fund may be withdrawn by the City from time to time as the Council in its sound discretion deems it advantageous to the System that such withdrawal be made for use for any purpose for which the Extension Fund was created. Section 8.6 Disposition of Surplus Revenues. After compli- ance with the provisions of Article IX of the 1961 Indenture and the then applicable provisions of Sections 8.1 to 8.5 hereof, the balance remaining in the Revenue Account on the first day of each calendar month shall, to the extent necessary, be paid into the Bond Fund, the Reserve Fund and the Extension Fund, in the order named, for the purpose of making good any delinquency or deficit existing in either of said funds by reason of the failure to pay therein any amounts required to be paid therein by the provisions of Sections 8.3, 8.4 and 8.5, respectively, of this Resolution. Thereafter and while all monthly payments herein provided to be made into the Bond Fund, the Reserve Fund and the Extension Fund are current and each of said funds is in a current condition, and after reserving in the Revenue Account an amount equal to the estimated Operating Expenses for the next two calendar months, the balance remaining on deposit in the Revenue Account on the first day of each calendar month may be withdrawn by the City and used for any lawful purpose. Section 8.7 Security for Special Funds. The moneys at any time on deposit in the Revenue Account, the Operation Fund, the Bond Fund, the Reserve Fund and the Extension Fund shall be and at all times remain public funds impressed with a trust for the purposes for which said account and funds were respectively created. The depository for each such fund and account shall at all times keep the moneys on deposit in the account or fund 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, Federal Securities, or other marketable securities eligible as security for the deposit of trust funds under regulation of the Comptroller of the Currency, having a market value (exclusive of accrued interest) not less than the amount of moneys on deposit in the account or fund being secured, or 28 (b) if the furnishing of security in the manner pro- vided by the foregoing clause (a) of this section is not permitted by the then applicable laws and regulations, then in such other manner as may be required or permitted by the then applicable state and federal laws and regulations respect- ing 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 8.8 Investment of Reserve Fund and Extension Fund Moneys. So long as the City shall not be in default hereunder, it may at any time and from time to time at its option cause any or all of the moneys in the Reserve Fund and the Extension Fund to be invested in any Federal Securities. In the event of any such investment, such securities, together with all income therefrom, shall become a part of the fund from which moneys were used to make such investment and shall be held by the depository therefor to the same extent as if they were moneys on deposit therein. The City may likewise from time to time cause any such securities to be sold or otherwise converted into cash, and the depository for the Reserve Fund may cause any such securities forming a part of the Reserve Fund to be sold or otherwise converted into cash if and to the extent that 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 depository for any such fund shall be fully protected in making any such investment, sale or conversion of any such securities upon directions given in a Resolution, and the depository for the Reserve Fund shall be fully protected in making any sale or conversion into cash of securities forming a part of the Reserve Fund without such a Resolution if in its sole discretion it deems such sale or conversion 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 said moneys shall be so invested it shall not be necessary for the depository therefor 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 amount of moneys at any time forming a part of the Reserve Fund or the Extension Fund, all such securities in which any portion of said funds is at the time so invested shall be included in the appropriate fund at their then market value. Section 8.9 Continuance of Special Funds; Conditions under which Maintenance of Special Funds May be Suspended. The special funds created in this article shall be continued until all the principal of and the interest on the Bonds have been paid; provided that the City may withdraw the moneys and securities at the time in the Bond Fund, the Reserve Fund 29 and the Extension Fund and, subject to the provisions of the 1961 Indenture and the 1953 Indenture, the Revenue Account and the Operation Fund, and use the same for any lawful purpose if there shall be placed on file in the office of the Clerk of the City, at the time of or prior to such withdrawal, each of the following: (a) A trust agreement making provision for the retirement of all the Bonds then outstanding by creating for such purpose an irrevocable trust fund sufficient to provide for payment and retirement of all such Bonds (including payment of the interest that will mature thereon until and on the dates they are retired, as such interest becomes due and payable), either by redemption prior to their respective maturities or by payment of part thereof at their respective maturities and redemption of the remainder prior to their respective maturi- ties, which said trust fund shall consist of (i) Federal Securi- ties which are not subject to redemption prior to their respec- tive maturities at the option of the issuer and which, if the principal thereof and the interest thereon are paid at their respective maturities, will produce funds sufficient so to provide for payment and retirement of all the Bonds, or (ii) both cash and such Federal Securities which together will produce funds sufficient for such purpose, or (iii) cash suffi- cient for such purpose; (b) A certified copy of a Resolution calling for redemption those of the Bonds that, according to said trust agreement, are to be redeemed prior to their respective maturities, and (c) Evidence that notice of such redemption has been given pursuant to the requirements of Article VI hereof or that irrevocable powers for the giving of such redemption notice have been conferred on the bank or trust company holding the said trust fund. So long as the said trust fund shall continue sufficient for the said purposes for which it is created, the City may discontinue making any further payments into the said special funds. Any such trust agreement shall be between the City and a bank or trust company which is qualified to administer trusts and is also a member of the Federal Reserve System or of any other agency of the United States of America, if there be any such " agency, that may succeed to its functions. Section 8.10 Depositories for Special Funds. The Council may at any time and from time to time designate any banking institution or institutions as depository or depositories for the Revenue Account, the Operation Fund, the Bond Fund, the Reserve Fund and the Extension Fund, 3U provided that each such depository so designated 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. Each such depository shall be fully protected in paying out moneys from the account or fund for which it is the depository on checks, vouchers or drafts signed by any duly authorized officer, employee or agent of the City, and no such depository shall be liable for the misapplication by the City of any moneys so withdrawn if such moneys shall be so withdrawn without knowledge or reason on the part of such depository to believe that such disbursement constitutes a misapplication of funds. The First National Bank of Baldwin County in Fairhope, Alabama, is hereby designated as depository for the Revenue Account, the Operation Fund, the Bond Fund, the Reserve Fund and the Extension Fund. 31 ARTICLE IX PARTICULAR COVENANTS OF THE CITY Section 9.1 To Pay the Bonds, the 1953 Indenture Bonds and the 1961 Indenture Bonds. To Comply with Certain Agreements, Laws Etc. The City will pay, out of the revenues derived from the operation o the System, the principal of and the interest on the 1953 Indenture Bonds, the 1961 Indenture Bonds and the Bonds as specified therein, herein, in the 1953 Indenture and in the 1961 Indenture, -and it will otherwise perform all obligations which, either expressly or by reasonable implication, are imposed on it in this Resolution, the 1953 Indenture and in the 1961 Indenture, and it will not default thereunder. Further, the City will perform and comply with, in every respect, (a) any Loan and Grant Agreement that it may have with the United States of America (acting by and through the Farmers Home Administration, United States of America) or any other governmental agency, and (b) all applicable state laws and regulations. Section 9.2 To ,Maintain Proper Books and Records and to Furnish Annual Audits. The City will maintain complete books and records pertaining to the System and all receipts and disbursements with respect thereto, which shall be kept separate and apart from all other records of the City. The City will operate the System on a Fiscal Year basis, each Fiscal Year to begin on October 1 and end on the next succeeding September 30. The City will, within sixty (60) days following the close of each Fiscal Year, cause an audit of its books for such Fiscal Year to be made by an Independent Auditor. Each such audit, in addition to whatever matters may be thought proper by the Independent Auditor to be included *herein, shall include the following matters with respect to the System: (a) a statement in reasonable detail of the revenues and expenditures during such Fiscal Year; (b) a balance sheet as of the end of such Fiscal Year; (c) a statement analyzing each of the special funds created or referred to herein, including all deposits and withdrawals therefrom and the balances in each account and fund at the beginning and ending of the Fiscal Year; (d) the Independent Auditor's comments regarding the manner in which the City has carried out the requirements hereof, and the Independent Auditor's recommendations for any changes or improvements in the operation of the System; (e) a statement showing the schedule of rates charged for each class of service at the end of such Fiscal Year; (f) a list of the names and titles of the officers of the City at the end of such Fiscal Year; (g) a general comment concerning any event or circumstance that might materially affect the financial status of the System; (h) a list of the insurance policies and fidelity bonds in force with respect to the System at the end of the Fiscal Year, setting out with respect to each such policy the amount thereof, the risk covered, the name of the insurer and the expiration date of the policy; and (i) the following information as of the end of the Fiscal Year as the same shall be disclosed by the records of the City without any requirement for physical verification thereof: the number of customers of the System. All 32 expenses incurred in the making of each such audit shall constitute and be paid as an Operating Expense. Within ninety (90) days following the end of each Fiscal Year, the City will furnish a copy of such an audit with respect to that Fiscal Year to the original purchaser of the Bonds from the City 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 Independent Auditor making the same and to secure from the Independent Auditor such additional information respecting the matters herein or therein set out as may be reasonably required. Section 9.3 To Furnish No Free Service. The City will not furnish or permit to be furnished by or from the System any free water or free service of any kind to any incorporated municipality, to any county or to any agency, instrumentality, person, firm or corporation whatsoever. All water and other service of any kind furnished from the System shall be charged for at the rates at the time established therefor. No water from the System shall be furnished to any customer of the System except through a standard water meter, sprinkler system or fire hydrant. Section 9.4 To Maintain Adequate Rates. The City will make and maintain such rates and charges for water and other services supplied from the System and will make collections from the users thereof in such manner as shall produce revenues sufficient (a) to pay, when due, all Operating Expenses, and (b) to make all monthly payments provided herein and in the 1953 Indenture and in the 1961 Indenture to be made into any of the funds created under the 1961 Indenture, the Bond Fund, the Reserve Fund and the Extension Fund, all at the times and in the manner required by Sections 8.3, 8.4 and 8.5, respectively, of this Resolution and Section 9.3 of the 1961 Indenture. The City will make from time to time such increases and other changes in such rates and charges as may be necessary to produce said amounts. Each schedule of rates shall provide that all charges for water and other service supplied from the System shall become due not less often than once during each calendar month. Section 9.5 To Discontinue Service on Non ay went of Bills. If the account of any user of water supplied from the System shall remain unpaid for a period of thirty (30) days after such account shall become due, the City thereupon will promptly discontinue furnishing water to such user whose account shall so remain unpaid, but upon subsequent payment of such account, including any penalties or charges for connection or disconnection, or either of them, which may be provided for in the schedule of rates of the City, the City may thereafter furnish water to such user until such time as his said account shall again remain unpaid for a period of forty-five (45) days after it becomes due, whereupon the furnishing of water shall again be discontinued. Section 9.6 To Continue Operation of the System. The City will continuously operate the System or cause the same to be operated so long as the principal of or the interest on any of the Bonds remain unpaid, 33 and it will keep the same in good repair and in efficient operating condition, making from time to time all needful 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, or the transfer of the System as an entirety to, any municipality, county, or public corporation having corporate authority to carry on the business of operating the System, provided that upon any such consolidation, merger or transfer, the due and punctual payment of the principal of and the interest on the Bonds according to their tenor and the due and punctual performance and observance of all the agreements and conditions provided in this Resolution to be kept and performed by the City shall be expressly assumed in writing by the corporation formed by such consolidation or into which such merger shall have been made or to which the System shall be transferred as an entirety, as the case may be, and provided, further, that such consolidation, merger or transfer shall not cause or result in any mortgage or other lien being affixed to or imposed on or becoming a lien on the System or on the revenues therefrom that will be prior to the lien of the pledge herein made for the benefit of the Bonds. Nothing herein contained shall prevent the City from hereafter disposing of any property (or interest therein) forming a part of the System if such property (or interest therein) is worn out, obsolete or unnecessary or undesirable in the operation of the System. Section 9.7 To Respect Priority of Pledge of Revenues. The pledge of revenues from the operation of the System herein made shall be prior and superior to any pledge thereof hereafter made for the benefit of any securities hereafter issued or any contract hereafter made by the City, and the City agrees that in the event it should hereafter issue any securities or make any contract payable out of the revenues from the operation of the System or for which any part of said revenues may be pledged or any part of the System may be mortgaged, the City will recognize in the proceedings 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. The City agrees that it will not, and hereby waives and relinquishes any right that it now has or may hereafter have to issue any parity securities under the reserved right so to do contained in Article VII of the 1961 Indenture. Section 9.8 To Keep System Free from Prior Liens. The City will keep the System free from all liens and encumbrances prior to the pledge herein made (other than Permitted Encumbrances) but it may defer payment pending the bona fide contest of any claim unless by such action any part of the System 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 conditional or lease sale contract or subject to vendor's lien or purchase money mortgage, and as to all property so purchased the pledge herein made shall be subject and subordinate to such conditional or lease sale contract, vendor's lien or purchase money mortgage. 34 Section 9.9 To Permit Inspection of the System by Bond- holders. The City will permit the Holders of any of the Bonds to inspect, at any reasonable time, any and every part of the System and the books and records of the City appertaining thereto and will assist in furnishing facilities for such inspection. Section 9.10 To Warrant Title. The City warrants its title to each and every part of the System presently in existence as being free and clear of every lien, encumbrance, trust or charge prior hereto, other than Permitted Encumbrances, warrants that it has power and authority to subject the System and the revenues therefrom to the lien of the pledge herein made and that it has done so hereby, and warrants that said revenues are not subject to any lien or charge, other than the lien or charge of the 1953 Indenture for the benefit of the 1953 Indenture Bonds and the lien or charge of the 1961 Indenture for the benefit of the 1961 Indenture Bonds, that is prior to the charge thereon created herein for the benefit of the Bonds. Section 9.11 Par Clearance. All remittances of principal of and interest on the Bonds and the Coupons to the Holders thereof shall be made at par without any deduction for exchange or - other costs, fees or ex- penses. The bank or banks at which the Bonds or the Coupons shall at any time be payable shall be considered, by acceptance of their duties here- under, to have agreed that they will make or cause to be made, out of the moneys supplied to them for that purpose, remittances of principal and interest on the Bonds and the Coupons to the Holders thereof in bankable funds at par without any deduction for exchange or other costs, fees or expenses. The City will pay to such bank or banks all reasonable charges made and expenses incurred by them in making such remittances in bankable funds at par. Section 9.12 Statutory Mortgage Lien Created. The City hereby creates a statutory mortgage lien upon the System to and in favor of the Holders of the Bonds, and each of them, without priority or preference of one such Bond over another, which lien shall take effect immediately upon the delivery of any of the Bonds; provided, however, that said statutory mortgage lien shall not be construed to give any authority to compel the sale of the System or any part thereof at a foreclosure sale, and no fore- closure proceedings shall ever be had with respect to the System or any part thereof under the authority of this ordinance. Promptly following the sale and issuance of the Bonds, the :Mayor of the City is hereby directed to file in the office of the Judge of Probate of Baldwin County, Alabama, a notice containing a brief description of the System and of the Bonds and a declaration that said statutory mortgage lien has been created for the benefit of the Holders of the Bonds and the Coupons appurtenant thereto. Section 9.13 With Respect to the Issuance of Other Securities. In the event that the United States of America, Farmers Home Administra- 35 MA tion, is at any time the Holder of any of the Bonds, the City agrees, so long as said Farmers Home Administration is the said Holder, not to issue any securities or otherwise incur any obligations payable out of the revenues from the operation of the System for the purpose of terminating or defeating the lien on the said revenues herein created for the benefit of the Bonds, unless simultaneously with the issuance of the said securities or the incurring of the said obligations, the City, with the consent of the Farmers Horne Administration, redeems the Bond at a price equal to the principal amount thereof plus accrued interest thereon to the date upon which the Bond is redeemed. 36 r ARTMT.F. Y PROVISIONS RESPECTING INSURANCE Section 10.1 Insurance on the System. The City will keep all above -ground structures forming a part of the System, as well as all other insurable portions of the System that are of a character and type custom- arily insured by organizations operating a business similar to the System, insured with responsible insurance companies against loss by fire, including extended coverage, tornado and windstorm, to the extent of the full insurable value thereof. All proceeds of such insurance shall be applied by the City to the repairing or restoration of the property damaged or destroyed or to the acquisition or construction of other property useful in the operation of the System. Section 10.2 Other Insurance. The City will also carry (a) insurance against liability for, the death of or injury to persons, and for damage to property of others, resulting from the operation of the System, and (b) workmen's compensation insurance, in such amounts and to such extent as is customarily carried by like organizations engaged in the business of operating properties similar to the System in size and character. Section 10.3 Fidelity Bonds. The City will at all times carry fidelity bonds on all of its officers and employees who may handle funds of the City appertaining to the System, such fidelity bonds to be in such amounts as are customarily carried by organizations engaged in the business of operating properties similar to the System in size and character, but not less than $100,000. 37 r ARTICLE XI REMEDIES OF BONDHOLDERS Section 11.1 Events of Default Defined. Any of the following shall constitute default hereunder by the City: (a) Failure by the City to pay the principal of or the interest on any of the 1953 Indenture Bonds, the 1961 Inden- ture Bonds or the Bonds when such principal and interest respectively become due and payable, whether by maturity or otherwise; (b) Failure by the City to perform any of the agreements on its part herein contained (other than payment of the principal of and interest :on the Bonds and the Coupons) after thirty (30) days' written notice to it of such failure made by the Holders of twenty-five per cent (25%).of the Bonds then outstanding; (c) Default by the City under the 1953 Indenture or under the 1961 Indenture; or (d) Determination by a court having jurisdiction that the City is insolvent or bankrupt, or appointment by a court having jurisdiction of a receiver for the City or for all or a substantial part of the System, or the approval by a court of competent jurisdiction of any petition for reorganization of the City or rearrangement or readjustment of its obligations under any provisions of the bankruptcy laws of the United States. Section 11.2 Remedies on Default. Upon any default by the City in any one of the ways defined in Section 11.1 hereof, the Holders of the Bonds and the Coupons shall have the following rights and remedies: (a) Acceleration. The Holders of a majority in principal amount of the Bonds then outstanding may, by written notice to the City, declare the principal of all the Bonds forthwith due and payable, and thereupon 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 '8 I and interest, then the Holders of a majority in principal amount of the then outstanding Bonds, by written notice to the City, may waive such default and its consequences, but no such waiver shall affect any subsequent default or right relative thereto. (b) Suits at Law or in Equity. The Holder of any Bond or Coupon is empowered i to sue on such Bond or Coupon, (ii) by mandamus, suit or other proceeding, to enforce all agreements of the City herein contained, including the fixing of rates, the collection and proper segregation and application of the revenues from the System, (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 Holder of any Bond or Coupon shall be entitled to and shall have, regardlgss of the suffi- ciency of any security or the availability of any other remedy, the appointment of a receiver to administer and operate the System and perform the covenants 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 System: cash on hand or on deposit, accounts and notes receivable, stocks, evidences of indebtedness, choses in action, customers' service and exten- sion deposits, and water and other property held for sale in the ordinary course of business or for consumption in the operation of the System. Nothing herein contained, however, shall be construed to give any authority to the Holders of any of the Bonds or Coupons to compel a sale of the System or any part thereof, and no foreclosure proceedings or sale shall ever be had with respect to the System or any part thereof under the authority of this Resolution. Section 11.3 Disposition of Receivership Moneys. Any moneys received from the operation of the System by a receiver appointed pursuant to the provisions of subsection (c) of Section 11.2 hereof shall, after applying such moneys to any charges thereon prior to the charge thereon for the benefit of the Bonds, be applied to the payment of the following items in the following order: (a) All costs of the receivership, including receiver's fees and the fees and charges of his attorneys and the costs of 39 r administration and operation of the System and the mainte- nance thereof in good repair and good working order; (b) All due and unpaid installments of interest 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 which are due (whether by maturity or otherwise) 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 this Resolution to be paid into the special funds created or referred to in Article VIII hereof, in order that there shall be on deposit in each of said funds the amount at the time required to be maintained therein and that each of said funds shall be in a current condition; and (e) The surplus, if any there be, to the City. Section 11.4 Waiver of Rights against Incorporators and Others. iks a condition hereof, the Holders waive and release any right, cause of action or remedy now or hereafter existing or imposed in any jurisdiction against any past, present or future incorporator, director or officer of the City for the payment of the principal of or the interest on the Bonds or for the performance of any agreements by the City herein contained. Nothing contained in this section, however, shall relieve any such incorporator, director or officer from the obligation of performing all the duties of his office and of taking all actions that may be necessary to enable the City to perform the agreements on its part herein contained. Section 11.5 Delay No Waiver. No delay or omission by any Holder 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 Holders may be exercised from time to time and as often as deemed expedient. 40 i ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.1 Disclaimer of General Liability. It is hereby expressly made a condition of this Resolution that any agreements or representations herein contained or contained in the Bonds or the Coupons 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 agreement 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 relieve the City from the observance and performance of the several covenants, representations and agreements on its part herein contained. Section 12.2 Provisions Constitute Contract. The provisions of this Resolution shall constitute a contract between the City and each Holder of the Bonds and the Coupons. Section 12.3 Severability. The provisions of this Resolution are hereby declared to be severable. In the event any court of competent jurisdiction should hold any provision hereof to be invalid or unenforceable, such holding shall not invalidate or render unenforceable any other provision of this Resolution. Section 12.4 Publication of Notice. The City Clerk is hereby authorized and directed to cause the following notice to be published once a week for two successive weeks in Eastern Shore Courier, which the Council hereby finds and declares to be a Newspaper published and having general circulation in the City: NOTICE OF PASSAGE OF ORDINANCE M THE CITY OF FAIRHOPE, ALABAMA An ordinance authorizing the issuance of $2,192,000 principal amount of Water Revenue Bonds of the City of Fairhope, Alabama, under the provisions of Title 11, Chapter 81, Article 5 of the Code of Alabama of 1975, as amended, was duly passed by the City Council of the City of Fairhope, Alabama, on the day of , 1982, for the purpose of providing funds necessary for the permanent financing of the costs of the acquisition and M construction of extensions, additions and improvements to the existing water works system in and for the said City, and paying incidental costs in connection with said financing. The said bonds will be secured by a pledge of revenues derived from the operation of the said water works system. Any action or proceeding questioning the validity of said ordinance must be commenced within thirty days after the first publica- tion of this notice. Evelyn Phillips City Clerk 42 4 �r ARTICLE XIII AGREEMENTS RESPECTING CONSTRUCTION AND ACQUISITION OF THE IMPROVEMENTS AND SALE OF BONDS Section 13.1 Construction and Acquisition of the Im rov- ements. The City has, as specified in Section 2.2 hereof, commenced and substantially completed the construction and acquisition of improvements to the System in accordance with the plans and specifications therefor prepared by Moore Engineering Co., of Fairhope, Alabama. The City will complete such construction and acquisition, including the acquisition of such real estate (or easements or other interests therein) as may be necessary therefor, 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, to the extent that it has not previously paid such expenses, promptly pay, as and when due, all expenses incurred in and about the construction and acquisition of the Improvements, and it will not suffer or permit any mechanics' or material- men's liens which might be filed or otherwise claimed or established upon or against the System or any part thereof, and which 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 material- men's lien claims so filed or established and, in the event that such lien claims are so contested, may permit the mechanics' 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 establishment of such liens„ unless by such action the title of the City to any part of the System (or any part thereof) shall be subject 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. Section 13.2 Contractors' Surety Bonds. The City will cause each contractor with whom it hereafter enters into a contract for construc- tion or acquisition of all or any part of the Improvements to all or any part of the System to deposit with it a surety bond signed by a surety company authorized to do business in the State of Alabama and guaranteeing to the City the performance of such contract, the completion of the work provided for therein and the payment of all bills incurred thereunder for materials and labor. Section 13.3 Sale of Bonds; Form of Official Invitation for Bids. The Bonds shall be offered for public sale on sealed bids on March 22, 1982. The City Clerk is hereby authorized and directed to cause an Official Invitation for Bids to be published once a week for two successive weeks in Eastern Shore Courier, a Newspaper published and having general circulation 43 in the City, the first of said publications to be at least ten (10) days before the date of said sale. The said Official Invitation for Bids shall be in substantially the following form: OFFICIAL INVITATION FOR BIDS CITY OF FAIRHOPE, ALABAMA $2,192,000 WATER REVENUE BONDS DATED JANUARY 1, 1982 The CITY OF FAIRHOPE, ALABAMA, a municipal corporation under the laws of Alabama (herein called "the City"), invites sealed bids for the purchase from it of $2,192,000 principal amounts of its Water Revenue Bonds to be dated January 1, 1982 (herein called "the Bonds"), until 6:30 o'clock, P.M., Central Standard Time, on Monday, March 22, 1982. The Bonds will consist of four hundred thirty-nine coupon bonds, registrable as to principal only, will be in the denomination of $5,000 each (except for that bond numbered 1, which will be in the denomination of $2,000), will be numbered from 1 to 439, inclusive, and will mature in their numerical order on January 1 in the following principal amounts and years (all years inclusive): YEAR AMOUNT YEAR AMOUNT 1985 $ 7,000 2004 $ 55,000 1986 10,000 2005 55,000 1987 10,000 2006 60,000 1988 10,000 2007 65,000 1989 10,000 2008 65,000 1990 15,000 2009 70,000 1991 15,000 2010 75,000 1992 15,000 2011 80,000 1993 20,000 2012 80,000 1994 20,000 2013 85,000 1995 30,000 2014 90,000 1996 35,000 2015 95,000 1997 40,000 2016 100,000 1998 40,000 2017 105,000 1999 45,000 2018 110,000 2000 45,000 2019 115,000 2001 45,000 2020 120,000 44 YEAR AMOUNT YEAR AMOUNT 2002 50,000 2021 125,000 2003 50,000 2022 130,000 Those of the Bonds having stated maturities in 1993 and thereafter will be subject to redemption and payment prior to their respective maturities at the option of the City, as a whole or in part (but if in part, in their inverse numerical order), after notice published at least one time not less than thirty days prior to the date fixed for redemption, on January 1, 1992, and on any interest payment date thereafter, at and for a redemption price, with respect to each Bond redeemed, equal to the face value thereof plus accrued interest thereon to the date fixed for redemption. Interest on the Bonds will be payable annually on each January 1. The principal of and the interest on the Bonds will be payable, with par clearance guaranteed, at the principal office of The First National Bank of Baldwin County, Fairhope, Alabama. If one person, firm or corporation is the successful bidder for all the Bonds, they may, at the option of such person, firm or corporation, be initially issued as one fully registered bond dated the date of its issuance and exchangeable for coupon bonds as specified above (but not thereafter subject to reconversion into fully registered form). The Bonds, which will be issued for the purpose of providing for the permanent financing of the costs of constructing extensions, additions and improvements to an existing water works system in and for the City, will be payable solely from revenues derived from the operation of the said water works system (which is herein called "the System") and will be secured by a pledge of such revenues, subject to prior pledges of the revenues from the System made for the benefit of certain bonds now outstanding and to the prior agreements respecting the application of such revenues made by the City in the proceedings authorizing said prior lien bonds. The ordinance authorizing the Bonds contains provisions simi- lar to those customarily included in bond ordinances of Alabama municipal- ities relating to bonds such as those offered hereby, including provisions requiring payment of revenues from the operation of the System into special funds created for debt service, debt service reserve and replacement and extension, and provisions requiring maintenance of adequate rates, annual audits and insurance on physical properties. Each bidder shall state in his bid (1) the dollar price he will pay for the Bonds, which must be not less than the face value thereof plus accrued interest thereon from their date to the date of delivery thereof, and 45 (2) the annual rate or rates of interest to be borne by the Bonds, subject to the following qualifications: (a) all Bonds having the same maturity must bear the same rate of interest throughout their life; (b) all interest on any Bond payable on any interest payment date must be evidenced by a single coupon; and (c) no rate named may exceed 5%. The Bonds will be awarded to the bidder offering to purchase them at the lowest net interest cost to the City, computed from their date to their respective maturities; provided that the City reserves the right to reject any or all bids; and provided, further, that if the same lowest net interest cost is reflected by more than one bid, the Bonds will be awarded to the bidder offering to pay the highest dollar price therefor. The lowest net interest cost will be determined by aggregating the total amount of interest payable on the Bonds from their date until their respective maturities, computed at the rate or rates specified in such bid, and deducting therefrom the amount of any premium reflected by such bid. No bid will be considered for less than all the Bonds. If the City does not receive an acceptable bid for the Bonds in response to, and meeting the requirements of, this invitation, it proposes to sell and award the Bonds at private sale at par to the Farmers Home Administration, an agency of the United States of America, in which case the per annum interest rate to be borne by the Bonds will be fixed at 5% and they will be dated the date of their issuance, rather than January 1, 1982. Each proposal must be accompanied by a certified check or a cashier's check in the amount of 2% of the face value of the Bonds, which check shall be payable to the order of the City and drawn on a bank having membership in the Federal Reserve System. No interest will be allowed on any such checks. The checks of the unsuccessful bidders will be returned promptly following the award of the Bonds. The check of the successful bidder will be retained by the City as security for the performance of the successful bid and at the time the sale is consummated will either be returned or applied on the purchase price of the Bonds, at the option of the City. The Bonds will be delivered as a whole against payment thereof in bankable funds in Birmingham, Alabama, as soon after the award as the Bonds and the supporting documents may be prepared, and will be accompanied by the customary closing papers reciting that there is no litigation pending affecting the validity of the Bonds. The City will furnish to the successful bidder, without cost, the printed Bonds and the legal opinion of Messrs. Bradley, Arant, Rose do White, Bond Counsel of Birming- ham, Alabama, approving the validity of the Bonds and stating in substance that under existing statutes, regulations and decisions, the interest income on the Bonds is exempt from the Federal income tax. No conditional bids will be considered, except that all bids will be construed as having been conditioned upon the provisions of this Official Invitation for Bids. 46 All bids must be filed with the undersigned on or prior to 6:30 o'clock, P.M., Central Standard Time, on March 22, 1982, at which time all bids will be publicly opened and read at the City Hall in the City. If any bid is accepted, such acceptance will be made on the same date and at the same place. CITY OF FAIRHOPE By Evelyn Phillips City Clerk Section 13.4 Application of Proceeds from Sale of the Bonds. The entire proceeds derived from the sale of the Bonds shall be applied, promptly following the receipt by the City of such proceeds, for the following purposes only and in the following order: (a) payment into the Bond Fund of any accrued interest and premium received on the sale of the Bonds; (b) application of such amount of said proceeds as is necessary to pay and retire the principal of and interest on the Temporary Note; and (c) payment of the balance (if any) of said proceeds into the 1980 Water System Improvements Construction Ac- count created by resolution of the City adopted on July 24, 1980, to pay the remaining costs of constructing the Improve- ments. ADOPTED and APPROVED this 0 day of March, 1982. Mayor of the City of Fairhope Authenticated: QN City Clerk 4 47