HomeMy WebLinkAbout01-25-1950 Adjourned Regular MeetingEXCERPTS FROM THE MINUTES OF
AN ADJOURNED REGULAR MEETING
AX OF THECITY COUNCIL OF THE
CITY OF FAIRHOPE, ALABAMA,
HELD ON THE 25TH DAY OF
JANUARY, 1950
The City Council of the City of Fa irhope,
Alabama, met in adjourned regular session at the city
hall in the said city on January 25, 1950, at 2:00
o'clock p.m., pursuant to adjournment of the regular
meeting held on January 23, 1950. The meeting was
called to order by the mayor and upon roll call the
following were found to be present: Mayor T. J. Klumpp,
and the following members of the city council: Messrs.
i.„17 J. T. Bradford, R. H. Brown, Edward B.
Overton and Ira N. Steele; and the following members of
the city council were found to be absent: ,�R6,C��✓
The mayor presided at
the meeting and announced that a quorum was present and
that the meeting was open for the transaction of business.
Marie Moore, the city clerk, was also present at the
meeting and acted as clerk thereof.
The mayor stated that this was the time and place
which had been fixed by resolution adopted by the council
on January 3, 1950, for the sale at public auction of $755,000
principal amount of First Mortgage Gas Revenue Bonds of the
city authorized by ordinance adopted at a meeting thereof held
on January 23, 1950. The mayor announced that notice of the
proposed sale of the said bonds, in the form provided therefor
in the resolution authorizing such notice adopted by the
council on January 3, 1950, had been published once a week for
two consecutive weeks in The Fairhope Courier, a newspaper
published and having general circulation in the city, in the
issues of that newspaper published on January �_, 1950, and
January 117/, 1950, the first of the said publications having
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been more than ten days prior -to this date, that a
copy of said notice was filed with the Department of
Finance of the State of Alabama on January 9, 1950, v.,hich
was more than fourteen days prior to this date, and that
the said Department of Finance had by order entered at a
hearing before it on January 2.5, 1950, granted its
consent to the issuance and sale of the said bonds.
Councilman B,RF_h6 n/ then introduced the following
resolution in writing, which was read to the meeting:
RESOLVED that the City Council of the City of
Fairhope do now proceed to offer for sale at
-public auction $755,000 principal amount of First
Mortgage Gas Revenue Bonds to be dated February
1 1950, heretofore authorized to be issued under
tie provisions of an ordinance adopted by the
council on January 23, 1950, that the terms of
the sale be as set forth in the resolution pro-
viding for such sale adopted by the council on
January 3, 1950, and that the mayor act as
auctioneer in conducting said sale.
Councilman moved that the foregoing
resolution be adopted, which motion was seconded by
Councilman 2 1RAo. �0 2, 1, and upon roll call the
following votes were recorded: Yeas: Mayor Klumpp
and Councilmen , Bradford, Brown, Overton
and Steele; Naps: None. The mayor thereupon de-
clared the resolution had been unanimously adopted.
The mayor then announced that those who
desired to qualify as bidders should deposit a cashierts
check or certified checkfor $15,100 payable to the order
of the city, as provided in the said notice of sale, where-
upon the following qualified as bidders by depositing
said checks:
(1) Shields & Company; Stubbs, Smith & Lombardo; Hendrix & Mayes;
Thornton, Mohr & Company; Harold E. Wood & Company.
(2) Cumberland Securities Corporation; J. M. Dain & Company;
J. C. Bradford & Company.
(3) Fox, Reusch & Company; Walter, Woody & Heimerdinger;
W. E. Hutton & Company; Brodnax & Knight.
(4) Watkins, Morrow & Company and Associates.
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The bidding for the said bonds then proceeded among those
who had qualified as bidders and after all bids had been
made and the mayor had called for further bids but none
were made, the council proceeded to consider the bids so
made. After due consideration thereof the following reso-
lution was introduced in writing by Councilman O V'fR f o /)/
and read to the meeting:
RESOLVED by the City Council of the City of
Fairhope that the bid of Watkins, Morrow &
Company and Associates
for the purchase of $755.,00 principal amount
of First Mortgage Gas Revenue Bonds of the city,
to be dated February 1, 1950, authorized to
be issued under the provisions of an ordinance
of the city adopted on January 23, 1950,
bearing interest at the following per annum
rates:
4% for those bonds maturing 1953/55, inclusive
3 1/2% for those bonds maturing 1956/67, inclusive
3 3/4% for those bonds maturing 1968/80, inclusive.
which interest shall be payable semi-annually
on February 1 and August 1, at and for the purchase
price of 755,000.00 plus accrued
interest to the date of delivery, representing
a net interest cost to the city of 3.697
per annum for the said bonds, be and the said bid
hereby is ascertained and declared to be the bid
for the said bonds which reflects the lowest net
interest cost to the city therefor, and the said
bid is hereby accepted by the city and the said
bonds are hereby sold and awarded to the said
bidders.
Councilman / moved that unanimous consent
be given for immediate consideration of and action on
said resolution, which motion was seconded by Councilman
and upon the motion being put to vote the
following vote was recorded: Yeas: Mayor gLumpp, and
Councilmen Beeg4alaa�) Bradford, Brown, Overton and Steele;
Nays: None. The mayor thereupon declared the motion for
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unanimous consent for the immediate consideration of and
action on said resolution had been unanimously carried.
Councilman ' thereupon moved that the said
resolution be finally adopted, which motion was seconded
by Councilman _42y& t t o ^1 , and upon the motion being
put to vote the following vote was recorded: Yeas:
Mayor Klumpp and Councilmen Bradford, Brown,'
Overton and -Steele; Nays: None. The mayor thereupon
declared that the resolution had been unanimously
adopted.
Councilman 13 Ro YV N then introduced
the following ordinance in writing, which was read to
the meeting
ORDINANCE NO. 9-4
AN ORDINANCE FIXING THE RATES
OF INTEREST TO BE BORNE BY
$7552000 PRINCIPAL AMOUNT OF
FIRST MORTGAGE GAS REVENUE BONDS
OF THE CITY OF FAIRHOPE TO BE
DATED FEBRUARY is 1950
BE IT ORDAINED by the City Council of the
City of Fairhope in the State of Alabama that the
$755,000 principal amount of First Mortgage Gas
Revenue Bonds of the city to be dated February 1
1950, which were authorized to be issued under tAe
provisions of an ordinance adopted by the city
council of the city and approved on January 23,
1950, and which were sold by the city by resolution
adopted by the council on January 25, 1950, shall
bear interest at the following per annum rates:
4% for those bonds maturing 1953/55, inclusive
3 1/2% for those bonds maturing 1956/67, inclusive
3 3/4P for those bonds maturing 1968/80, inclusive.
which interest shall be payable semi-annually on
February 1 and August 1; that the said rates of
interest shall be inserted in the said bonds; and
that the denomination of the respective coupons
applicable to the said bonds shall be computed at
the said applicable rate.
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Adopted and approved this 25th day of January,
1950.
ATTEST: �2LII
ayor \
City Clerk
Councilman 5Re r✓'-r moved that the rules be suspended
and unanimous consent be given for immediate consideration
of and action on said ordinance, which motion was seconded
by Councilman 51 k k .0 ,C , and upon the motion being put
to vote the following vote was recorded: Yeas: Mayor
Slumpp and Councilmen Bradford, Brown, Overton,
and Steele;. Nays: None. The mayor thereupon declared
that the motion for unanimous consent for immediate con-
sideration of and action on said ordinance had been
unanimously carried. Councilman R?AT roR �_ thereupon
moved that the said ordinance be finally adopted, which
motion was seconded by Councilman tOiy J. and
upon said motion being put to vote the following vote was
recorded: Yeas: Mayor $lumpp and Councilmen Be-pg ,
Bradford, Brown, Overton and Steele; Nays: None. The
mayor then announced that the motion for adoption of
said ordinance had been unanimously carried and he there-
upon signed the same in approval thereof.
There being no further business to come before
the meeting the same was on motion duly adjourned.
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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 performed and have happened in due and legal
form, and that provision has been made for the deposit
in a separate fund of revenues from the operation of the
system in amounts sufficient to pay the principal of
and interest on the bonds as said principal and interest
shall respectively mature.
This bond shall pass by delivery unless regis-
tered as to principal in the owner's name on the books
of the trustee, such registration being noted hereon
by the trustee. If registered, no transfer of this
bond shall be valid unless it is presented at -the office
of the trustee with written power to transfer, properly
stamped if required, in form and -with guaranty of signa-
ture satisfactory to the trustee, with such new regis-
tration noted hereon by the trustee. If registered
this 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 apper-
taining hereto, which shall continue to be transferred
by delivery.
The principal of and 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 gas and services
furnished by the system as shall be sufficient to pro-
vide for the payment of the principal of and interest
on the bonds as the said principal and interest become
due, and to maintain the special funds therefor as
provided in the indenture.
Execution by the trustee of its certificate
hereon is essential to the validity hereof and is
conclusive of the due issue hereof under the indenture.
IN WITNESS WHEREOF, the city has caused this
bond to be executed by its mayor and city clerk and its
corporate seal to be hereunto affixed, has caused the
attached coupons to be executed with the facsimile
signatures of its mayor and city clerk, and has caused
this bond to be dated February 1, 1950.
ft~ City Clerk r Mayor
(Form of Coupon)
Coupon
No.
On the lst-day of , 19 ,
the City of Fairhope, a municipal corporation in Alabama,
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will pay to bearer, solely out of the revenues derived
from the operation of its gas system, upon surrender
hereof at the principal office of The Merchants National
Bank of -Mobile, in the City of Mobile in the State of
Alabama, Dollars in lawful
money of the United States of America, being six months'
interest•then due on its First Mortgage Gas Revenue
Bond dated February 1, 1950, and numbered
City Clerk Mayor
(Form of Registration)
(No writing on this bond except by registrar)
Date of Registration : Reaistered O.yvner :.Registrar
(Form of Trustee's Certificate)
The within bond is one of those described in
the within mentioned mortgage and deed of trust.
THE MERCHANTS NATIONAL BANK
OF MOBILE, Trustee
By
Its Authorized Officer
Following the maturity date of each of the
callable bonds, there shall be inserted the following:
"(unless this bond shall have been duly
called for prior payment)."
Following the maturity date of each coupon due
on and after August 1, 1955, there shall be inserted the
following: '
"(unless the bond to which this coupon
is applicable shall have been duly
called for prior payment),"
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ARTICLE II
EXECUTION, CERTIFICATION
AND DELIVERY OF THE BONDS
Section 1. The bonds shall be executed by the
mayor and clerk of the city and the seal of the city
shall be affixed thereto. The.coupons shall be authenti-
cated by the facsimile signatures of the said mayor and
clerk. Signatures on the bonds and the coupons by any
such officer at the time such signatures were written
shall continue effective although said persons cease
to be such officers prior to the certification or de-
livery of the bonds.
Section 2. A duly executed certificate by the
trustee in the form hereinabove recited shall be endorsed
on each of the bonds and shall be essential to its
validity. Such certificate shall be conclusive of the
due issue of such bond hereunder.
Section 3. The bonds shall be forthwith
executed.and delivered to the trustee and shall be
certified and delivered by the trustee from time to
time upon receipt by the trustee of an order signed in
behalf of the city by its mayor requesting such certi-
fication and delivery and designating the person to
receive the same or any part thereof.
Section 4. The city may execute, and the
trustee may certify and deliver, bonds with unmatured
coupons attached to replace in all respects mutilated
bonds which are surrendered with all-unmatured coupons
attached. The city may also execute,and the trustee
may certify and deliver, bonds with unmatured coupons
attached to replace in all respects bonds which may have
been lost, stolen, or destroyed, or bonds all or any
part of whose unmatured coupons have been lost, stolen,
or destroyed; provided, there is first furnished to the
city and the trustee evidence of such loss, theft, or
destruction together with indemnity satisfactory to the
city and the trustee. The city may charge the holder
with the expense of issuing any such new bond.
Section 5. Upon certification of any bond
by the trustee, all past due coupons shall be removed
and cancelled by it. Nothing herein contained shall
affect in any way the power of the city to fix the
consideration for which the bonds may be sold by it.
ARTICLE III
REGISTRATION AND NEGOTIABILITY
OF THE BONDS
Section 1. The trustee shall be the registrar
and transfer agent of the city, and shall keep at its
office proper registry books in which it will register,
as to principal only, such bonds as are presented for
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that purpose, noting the registry on the bond. Such
registration shall conclusively designate the registered
owner as the sole person to whom or on whose order pay-
ment of the principal of the bond may be made, but shall
not affect the negotiability of the coupons. All bonds
shall pass by delivery unless so registered. 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 trustee, with such registration noted thereon by
the trustee. 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 bond may from time to time be registered
or discharged from registration -in the same manner.
Section 2. The city, the trustee and any in-
stitution 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; they
may deem and treat the holder'of an unregistered bond as
the absolute owner thereof for all purposes other than
to receive payment of outstanding coupons; 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;
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 bonds, and to the person in whose name
a registered bond is registered, shall to the extent
thereof fully discharge and satisfy all liability for
the same.
ARTICLE IV
REDEMPTION OF CALLABLE BONDS
Section 1. All or any part of the callable
bonds may be called for redemption at the option of the
city on February 1, 1455, and on any interest payment
date thereafter; provided, that any such redem tion made
prior to February 1, 1960, may be made only (a� out of
eurplus revenues derived from the operation of the
mortgaged property while the amounts on deposit in the
bond fund and in the contingent fund shall be not less
than the maximum amounts respectively required to be
paid therein and while all special funds created in
Article V hereof shall be in current condition, or (b)
out of proceeds received by the city from the sale to
the Town of Daphne of that portion of the mortgaged
property pursuant to the provisions of the option referred
to in Section 6 of Article IX hereof. If less than all
of the callable bonds at the time outstanding are called
for redemption then the same shall be called in the
inverse order of the numbers of those at the time out-
standing. Any such redemption shall be at the face
value of the callable bonds so called for redemption,
plus accrued interest thereon to the redemption date and
a premium equal to twelve months' interest thereon
computed at the rate they would have borne on the
redemption date if they had not been called for redemption.
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Section 2. Any such redemption shall be ef-
fected in the following manner:
(1) The council by resolution shall call
for redemption on a stated date callable bonds
bearing stated numbers. If the redemption date
is prior to February 1, 1960, there shall be
recited in the resolution a statement showing
that the source of the moneys that will be used
to effect the redemption is such as to comply
with the proviso contained in the first sentence
of Section 1 of this article.
(2) The city shall cause to be published
one time in,a newspaper published in the City
of Birmingham, Alabama, a notice of redemption
stating the numbers of the callable bonds which
have been so.called for redemption, stating
that the callable bonds bearing such numbers
will become due and payable at the redemption
price on the redemption date specified, and
that all interest thereon will cease after the
redemption date. In the event there is no .
newspaper published in said City of Birmingham
at the time the city directs such publication
to be made, then such publication may be made
one time in either a newspaper or a financial
journal published in the City of New York, New
York. Any such notice shall be published not
less than thirty (30) days prior to the re-
demption date.
(3) In the event any of the callable bonds
so called for redemption shall be also a 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
trustee pertaining to the registration of the
bonds, a notice stating the numbers of the
callable bonds which have been so called for
redemption and stating that the callable bonds
bearing such numbers will become due and pay-
able at the redemption price on the redemption
date specified, 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.
(4) On or prior to the redemption date
the city shall deposit with the trustee the
total redemption price of the callable bonds
so called, and shall further furnish to the
trustee a certified copy of the resolution
required in paragraph (1) of this section and
appropriate affidavits showing compliance with
the requirements of paragraphs (2) and (3) of
this section. Out of any moneys so deposited
with it, the trustee shall pay at the redempr-ion
price and on the redemption date the callable
bonds so called which may be presented to it.
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Section 3. Upon compliance by the city with the
requirements on its part contained in Section 2 of this
article, 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 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; the callable bonds so called
and the coupons applicable thereto which matured on and
prior to the redemption date shall no longer be entitled
the the benefit of the lien hereof but shall look solely
to the moneys so deposited with the trustee for payment
thereof; and the coupons maturing after the redemption
date shall be void.
Section 4. Neither the trustee nor any in-
stitution at which the bonds may at any time be payable
shall be required to pay any coupon maturing on the re-
demption date which is applicable to any callable bond
so called for redemption unless the callable bond to
which such coupon -is applicable is also presented for
payment; provided, that in the event any such coupon
should be so paid without payment of the applicable
callable bond no one shall be -liable to the holder of
such applicable callable bond, or to the city, or to
anyone whomsoever; and provided further, that the trustee
shall pay such coupon if the holder thereof shall
present to the trustee evidence satisfactory to the
trustee that such holder is the owner of the coupon so
presented and is not the owner of the callable bond to
which such coupon is applicable.
ARTICLE V
CREATION OF SPECIAL FUNDS
Section 1. There is hereby created a special
trust fund which shall be known as the "Gass System Gros
Revenue Account". The city will deposit a�_3 ily as received
a revenues derived from the operation of the
mortgaged property into the gross revenue account. On
or prior to the last clay of each successive month beginning
with the month in which the first collections are made
from the operation of the mortgaged property, the
depository for the gross revenue account shall trans-
fer therefrom the entire moneys then on deposit therein
into the special funds provided in the following sections
numbered 2 to 5, inclusive, of this article, all in the
order and to the respective extents as therein set out
and to the extent that the moneys on deposit in the
gross revenue account shall be available therefor.
Section 2. (a) There is hereby created a
special trust fund to be known as the "Gas System Bond
and Interest Redemption FurV for the purpose of pro-
VIU-ng for payment of the principal of and interest on
the bonds. The bond fund shall be maintained until
both the principal of and interest on the bonds shall
have been paid in full. Out of the proceeds derived
from the sale of the bonds there shall be paid into the
bond fund, promptly following delivery of the bonds to
the purchaser thereof, an amount sufficient to pay the
interest which will -mature on the bonds on -„august 1
.1950, on Februar 1951 and on August 1,_1951. Out
o t e gross revenues c er ved from the operation of the
mortgaged property there shall be -paid into the bond
fund, on or prior to the last day of each calendar month
beginning with the month.of August, 1951, and continuing
until and including the month of January, 1952, an amount
equal to 1/6 of the interest which will be payable on
February 1, 1952, on the bonds then outstanding. Out
of the gross revenues derived from the operation of the
mortgaged property there shall be paid into the bond
fund, on or prior to the last day of each calendar
month beginning with the month of February, 1952, and
continuing until the principal of and interest on all
the bonds shall have been paid in full, an amount equal
to the total of 1/6 of the interest which will mature
on the bonds then outstanding on the next interest pay-
ment date plus 1/12 of the principal of the bonds then
outstanding which will mature on the next principal pay-
ment date.
(b) In addition to -the payments above required
to be made into the bond fund, there shall further be
paid therein out of the gross revenues derived from the
operation of the mortgaged property, for the purpose of
providing a cushion to -meet any deficiencies which may
occur in the bond fund, the sum of $783.34 during each
calendar month beginning with the month of August,-
1951, and continuing until the amount of said cushion
shall equal or 2= ed 47 00 The moneys forming a
part of said cushion s a constitute a part of the
bond fund but shall be kept i�separat_ a account therein
and shall _b used only in�h,o_se fisc_ al years in which
the moneys on deposit in the bond fund exclusi�ve of
th6 moneys n sa d cusHi o-n ssha r not Ue su'ff�cie t
to pay -the principal of and interest on tie bonds matur-
ing-�dcx�g-such-fisc�l-year;-and-inay-bso used `e only
for payment of the principal''of and interest on the
bonds so maturing as to which there would otherwise be
a default. Whenever any of the moneys forming a, part
of the said cushion shall be so used the city will
restore the same by thereafter paying into the bond
fund, in addition to the monthly payments herein other-
wise required to be paid therein and for the purpose
of restoring the said cushion, on or before the last
day of each successive month beginning with the month
during which the moneys shall be so used and continuing
until the moneys so used shall have been restored, all
moneys remaining in the gross revenue account after
making the monthly payment into the bond fund required
in subsection (a) of this section and in the first
sentence of this subsection (b). When the amount on
deposit in the said cushion shall equal or exceed the
said $47,000 no firther__payments are required to be made-
t'herein except to replace moneys used therefrom pursuant
to the provisions of this subsection (b).
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(c) When the amount of moneys in the bond
fund equals or exceeds the aggregate of the principal
of and interest on the bonds then remaining unpaid, no
further payments need 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 with-
drawal under the provisions of this section.
(d) In the event the gross revenues derived
from the operation of the mortgaged property during any
fiscal year shall not be sufficient to pay the principal
of and interest on the bonds maturing in such fiscal
year and there shall not be moneys then in the said
cushion sufficient for such purpose, then all of the
gross revenues thereafter derived from the operation of
the mortgaged property shell be paid into the bond fund
each month thereafter until the delinquencies in the
bond fund shall have been made good.
Section 3. There is hereby created a special
trust fund to be known as the "Gas System Operation and
Maintenance Fund" for the purpose o provi ng For to
en o expenses of administering and operating
the mortgaged property and such expenses incurred in
the maintenance thereof as may be necessary to preserve
the mortga ed property in good repair and in good work-
ing order but not including payment for items properly
chargeable to fixed capital account by good accounting
practice). Out of the gross revenues derived from the
operation of the mortgaged property remaining each month
after payments have been made into the bond fund in
accordance with the provisions of Section 2 of this
article, there shall be paid into the operation and
maintenance fund each month during which moneys are
available for such purpose such amount or amounts as the
council by resolution may from time to time find shall
be necessary to pay the reasonable expenses incurred
during the then current monthly period and any prior
monthly periods for such administration, operation, and
maintenance of the mortgaged property. The following
items shall be included in the expenses of operation:
the charges and expenses of the trustee and of any
depository for any of the special funds; and the
premiums on all insurance policies and fidelity bonds
carried pursuant to the requirements hereof.
Section 4.. There is hereby created a special
trust fund to be known as the "Gas —System Depreciation
Fund" for the purpose of building up a reserve for
depreciation of the mortgaged property. Out of the
gross revenues derived from the operation of the
mortgaged property remaining each month after payments
have been made into the bond fund and the operation and
maintenance fund in accordance with the provisions of
this article, there shall be paid into the depreciation
fund the sum of $1.00 each month during which moneys
are available for such purpose. The city has found and
does hereby determine that in view of the serial ma-
turities of the bonds and the moneys herein provided to
be set aside for their payment, the said payments into
the depreciation fund will be sufficient to build up a
reserve for the depreciation of the mortgaged property*
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Section 5. There is hereby created a special
trust fund to be known as the "Gas System Contingent Fund'
for the purpose of building up a reserve for improvements,
replacements and extensions to the mortgaged property
consisting of items properly chargeable to fixed capital
account by good accounting practice. Out of the gross
revenues derived from the operation of the mortgaged property
remaining each month after payments have been made into
the bond fund, the operation and maintenance fund, and the
depreciation fund in accordance with the provisions of this
article there shall be paid into the contingent fund the
surf of 4583.34 during each month during which moneys are
a•railable for said purpose, beginning with the month of
August, 19511, and continuing thereafter until the moneys
on deposit in the contingent fund shall equal or exceed
$35,000. The moneys paid into the contingent fund shall
be u.ed by -the city solely,for the purpose of making im-
provements, betterments and extensions to the mortgaged
property of such nature as are properly chargeable under
good accounting practice to fixed capital account, as
distinguished from expenditures for repairs and mainte-
nance normally necessary to maintain the mortgaged -property
in good repair and in good working order; provided, that
if at any time the moneys on deposit in the bond fund, in-
cluding the cushion therein, shall not be sufficient to
pay any maturing installment of the bonds or coupons as
the same shall respectively mature, then the moneys on
deposit in the contingent fund may be used for payment
of the bonds and the coupons so maturing but only to such
extent as may be necessary to prevent default in the pay-
ment, thereof. As and when any moneys in the contingent
Pzid shall be used for any such purpose, the moneys so
used shall thereafter be replaced by continuing payments
into the contingent fund each month thereafter in the
amount and manner herein provided until such time as the
moneys in the contingent fund shall reach $35,000.
Section 6. There is hereby created a special
trust fund to be known as the "G s S stem Sur "
for the purpose of providing moneys or t e redemption of
bonds prior to their maturity: After compliance with the -
provisions of Sections 2 to 5, inclusive, of this article,
the balance remaining in the gross revenue account at the
end of each successive month, to the extent necessary for
such purpose, shall be paid into the bond fund, the oper-
ation and maintenance fund, the depreciation fund, and the
contingent fund, in the order named, for the purpose of
making good any delinquency or deficit existing in any of
said funds by reason of failure to pay therein the amounts
respectively required to be paid therein by the provisions
of Sections 2 to 5, inclusive, of this article; any balance
thereafter remaining in the gross revenue account shall be
divided into two equal parts, one of which may be used by
the city for any lawful purpose and the other of which
shall be paid into the surplus fund. The moneys so paid
therein shall be used from time to time at the option of
the council for the redemption of the callable bonds at
the times and under the conditions and subject to the pro-
visions for redemption of callable bonds set out in Article
IV hereof; provided, that if at any time it should be
necessary to use the moneys in the surplus fund for pay-
ment of the principal of or interest on the bonds in order
to prevent default therein, then the said moneys to the
extent necessary therefor shall be used for that purpose.
Whenever the moneys in the surplus fund shall be sufficient
to redeem on the earliest date thereafter on which callable
bonds may be redeemed under the provisions of Article IV
hereof as much as $5,000 principal amount of callable bonds,
the city shall as nearly as may be practicable exhaust said
moneys in effecting redemption of callable bonds on the
earliest date thereafter on which they may be so redeemed.
- 21 -
Y
Section 7. Any payments required in this article
to be made into any of the special funds created in this
article may be anticipated by the city at any time; pro-
vided, that no such anticipation shall be made if it will
prevent or jeopardize the making of the payments herein re-
quired to be made into any other special funds herein created.
Section•$. 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 bond
fund, the depreciation fund and the contingent fund which
the board may determine shall not be needed during the
then ensuing six calendar months for the purposes for which
said funds are respectively created, to be invested in any
securities which are direct general obligations of the
United States of America or which are unconditionally
guaranteed as to both principal and interest by the United
States of America. In the event of any such investment,
such securities together with all income derived therefrom
shall become a part of, and shall be held by the depository
therefor to the same extent as if they were moneys on deposit
in, the respective fund whose moneys were used for such in-
vestment. The city may likewise from time to time cause
any such securities to be sold or otherwise converted into
cash, whereupon the net proceeds therefrom shall become a
part of the fund to which such securities were applicable.
The applicable depository shall be fully protected in mak-
ing any such investment, sale or conversion of any such
securities upon direction given in a resolution. 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.
Section 9. The trustee shall at all times be the
depository for the bond fund and the surplus fund, and all
moneys herein required to be paid into the bond fund and
the surplus fund shall be remitted to the trustee. The
trustee shall make provision for payment of the bonds and
the coupons as the same shall respectively mature with the
moneys in the bond fund, and it shall use the moneys in the.
surplus fund in effecting redemption of the callable bonds
called for redemption as provided in Section 6 of this article.
Section 10. The council may at any time and from
time to time designate any bankinginstitution or insti-
tutions -as depository or depositories for the gross revenue
account, the operation and maintenance fund, the depreciation
fund, and the contingent fund. Any 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 agencies which may succeed to it if there be any such,
and shall be and remain duly qualified and doing business
in the State of Alabama. Any moneys at any time forming a
part of the operation and maintenance fund and the contin-
gent fund may be withdrawn therefrom by the city at such
times and from time to time as in the sound discretion of
the council such action shall be necessary for the purposes
for which those funds are herein respectively created 'and
any depository for any of said funds shall not be liable
for the misapplication by the city of any moneys at any time
forming a part thereof if such moneys shall be disbursed by
such depository Pi4rsuant to the written order of an officer
of the city autho4zed by resolution so to do and without
knowledge or reason on the part of such depository to
believe that such d�pbursement constitutes a misapplication
of funds.
- 22 -
Section 11. If at the expiration of twenty
(20) years following the respective maturities of the
bonds and coupons (regardless of hovr*such maturities may
be effected) any moneys then remain in the hands of the
trustee for the purpose of paying any of the bonds and
the coupons which may not have been presented for
payment, all rights of the holders of such bonds and
coupons not so presented within said twenty (20) year
period shall thereupon.cease and the trustee shall then
pay to the city or to its successor in interest the
moneys so remaining on deposit.
ARTICLE VI
AGREEMENTS RESPECTING PROCEEDS
FROM SALE OF BONDS AND CON-
STTRUCTION OF IMPROVEMENTS
Section 1. The entire proceeds derived from
the sale of the bonds shall be used for the following
purposes only and in the following order: (a) payment
of the expenses incurred in issuing the bonds, includ-
in the charges of the trustee in connection therewith!
(bi payment into the bond fund of an amount equal to
the interest which will become due on the bonds during
the first eighteen months after their date, represent-
ing the estimated period required for the construction
of the system and six months thereafter! and (c) pay-
ment of the balance of said proceeds into a special
trust fund designated the ',Construction Fund',', of which
the trustee shall be and remain the depository.
Section 2. The city will forthwith acquire
the real estate necessary for the construction and
operation of a natural gas system substantially in
accordance with the plans and specifications therefor
prepared by Goodwin Engineers, Inc., and it will there-
after go forward with and will complete the construction
of the system thereon 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.
Section 3. The city will promptly pay, as
and when due, all expenses incurred in and about the
acquisition of real estate for and the construction
of the system, and it will not suffer or permit any
mechanics# or materialments liens which might be filed
or otherwise claimed or established upon or against
the mortgaged property or any part thereof, and which
might be or become a lien superior to the lien hereof,
to remain unsatisfied and undischarged for a period
exceeding thirty days after the filing or establishment
thereof. The moneys in the construction fund shall be
paid out by the trustee from time to time for the fol-
lowing purposes only: (a) payment of engineerls and
legal expenses incurred in ac uiring real estate for -and
in constructing the system; b) payment of the rea-
sonable expenses and charges of the trustee in connection
with the construction fund-, (c) payments for labor,
.GAF d.0 f
-23-
services, materials, and supplies furnished in construct-
ing the system, provided such payments are based upon
contractorts estimates or bills approved by the mayor of
the city and also by said Goodwin Engineers, Inc. The
trustee shall be fully protected in making payments out
of the construction fund upon presentation to it of
contractorts estimates or bills approved as provided
in the foregoing clause (c). The city will furnish
monthly reports of all expenditures from the construction
fund to the holder of any of the bonds who may request
such reports. Upon certification by said Goodwin Engi-
neers, Inc., that the system has been completed in sub-
stantial accordance with said plans and specifications,
uoon certification by the mayor of the city that all of
the items referred to in the foregoing clauses (a) and
(c) in this section have been paid in full, and upon
payment of the expenses and charges referred to in the
foregoing clause (b) in this section, the trustee shall
thereupon pay any moneys then remaining in the con-
struction fund into the contingent fund created in
Article V of the indenture.
Section 4. If the money on deposit in the
construction fund shall not be sufficient to pay all
expenses incurred in the acquisition of real estate for
and the construction of the system in accordance with
the provisions of Section 2 of this article, or if the
city should abandon or unreasonably delay the completion
of such work, or if for any reason whatsoever the system
should not be constructed as .herein provided, the
trustee may at its election, but without prejudice to
any other right which the trustee may have in case of
such default, discharge any unpaid bills theretofore
incurred in the acquisition of -such real estate and in
the construction of the system, and may also acquire
the necessary real estate therefor and complete the
construction thereof. For such purpose the trustee may
make any and all necessary contracts for engineers,
contractors, labor, materials, and supplies in con-
nection therewith, whether in its own name or in the
name of the city, and may utilize and pay out for such
purpose all or so much as may be necessary of the moneys
then remaining in the construction fund. The trustee
shall be fully protected in making such payments under
such circumstances when such payments are approved by
Goodwin Engineers, Inc. The trustee may further at
its option advance any funds necessary to make up any
deficit in connection with the completion of the con-
struction of the system, regardless of whether or not
any lien claims have been filed or -established. All
amounts so advanced by the trustee, together with
interest thereon at the rate of 6% per annum from the
respective dates of such advancements, shall be tacked
to the indebtedness hereby secured and shall be entitled
to the benefit of the lien hereof, and the city agrees
to repay the same upon demand therefor with interest at
said rate.
Section 5. In the event the said Goodwin
Engineers, Inc., shall for any reason be unavailable to
take any action provided in Sections 3 and 4 of this
article to be taken by it, any engineer who is licensed
under the laws of Alabama and who is acceptable to the
trustee may be appointed by, resolution to take any such
action. If the city fails to appoint such an engineer
for a period of thirty (30) days following the date when
- 24 -
the said Goodwin Lngineers, Inc., becomes unavailable
to take any of said actions, the trustee may then
appoint an engineer licensed under the laws of Alabama.
tiny approval or certification made by an engineer
appointed unaer the provisions of this section shall
have the same effect as an approval or certification
by the said Goodwin Engineers, Inc.
Section 6. Whenever the city shall enter
into a contract with a contractor for the construction
of the system or any part thereof, the city,will cause
such contractor to deposit with the trustee"a surety
bond signed by a surety company authorized'to do busi-
ness in the State of Alabama and guaranteeing to the
city and to the trustee the performance of such
contract and the payment of all bills incurred there-
under for materials and labor. vothing contained in
this section shall impose on the trustee any duty or
liability with respect to the appropriateness or suf-
ficiency of such surety bond or with respect to the
completion of the system as therein and herein provided.
ARTICLE VII
PARTICUL.uR COVEiiAhTS OF THE CITY
Section 1. The bonds are issued under and
pursuant to the provisions of Sections 308 to 340,
inclusive, of Title 37 of the Code of Alabama of 1940,
as amended. The city agrees faithfully to do and
perform, in the manner and at the times therein pro-
vided, all acts required in said sections to be per-
formed by it.
Section 2. The city will pay the principal
of and interest on the bonds as specified therein, and
it will otherwise perform all obligations which, either
expressly or by reasonable implication, are imposed on
it in the indenture, and it will permit no default by
it hereunder to occur.
Section 3. In the event a receiver or re-
ceivers should be appointed by any court of competent
jurisdiction to administer and operate the mortgaged
property following any default hereunder on the part of
the city, the city agrees that such receiver or receivers
and any successor thereto may use the streets, avenues,
alleys and other public ways within the corporate limits
of the city for the construction, operation and main-
tenance of the mortgaged property therein and thereover.
The city agrees that upon request so to do by such
receiver or receivers the city will thereupon forthwith
grant to such receiver or receivers a franchise conveying
said rights in all respects as if such franchise were pre-
sently granted to become effective on the date of the appoint-
ment of such receiver or receivers. Such franchise
so granted shall be in the following form, with appropri-
ate provisions and changes therein for the name of the
grantee or grantees therein, the name of the then
governing body of the city, and appropriate phraseology
applicable thereto:
-25-
AN ORDINANCE GRANTING A
GAS FRANCHISE TO
AND HIS ITS OR THEIR �
SUCCESSORS IN OFFICE, IN
THE CITY OF FAIRHOPE,
-- ALABAMA,.
BE IT ORDAINED by the (here insert the name
of the then governing body of the city)of the City
of Fairhope, in the State of Alabama, as follows:
(1) The word "city" as used herein means
the City of Fairhope in the State of Alabama, as it
is now constituted and as it may hereafter be extended
or enlarged. The word "receiver" as used herein means
(here insert the name of the receiver or receivers),
in his (or their) capacity as receiver under appoint-
ment by (herein insert the name of the court making
the a pointment) in that certain cause in said court
entitled (herein insert the title of the proceedings
in which the appointment is made).
(2) There is hereby granted to the re-
ceiver the -right, privilege, authority, and franchise
to acquire, own, maintain, construct, enlarge, azid
operate in the city a gas -plant and gas distribution
system, or either of -them, together with the right,
privilege, authority, and franchise to lay, construct,
and maintain pipes, mains, and other conductors, fixtures,
and related appurtenances in; along, across, and under
the streets, avenues, alleys, and other public places
of the city for the purpose of conveying and distribut-
ing gas in any form in and through the city; and to
repair, renew, relay; and extend such pipes, mains,
conductors, fixtures, and related appurtenances and to
make all excavations necessary therefor.
(3) The receiver shall, and by accepting
this franchise agrees, that he (it, they) will; upon
making any excavations of the streets, avenues, alleys,
public ways, and public places of the city, restore
the surface or paving at the point of such excavations
in substantially the same condition as before such
work was done, all as promptly as may be practicable
and within a reasonable length of time thereafter.
(4) The rights, privileges, franchise and
authority hereby granted may be exercised by the re-
ceiver or any successors in office to him (it, thgm)
all subject, nevertheless, to the conditions and obli-
gations herein contained, for such period of time as
the receiver and any successor or successors in office
thereto shall legally be in control of such plant and
system, but in no event to exceed the maximum time, if
any, from the effective date hereof which may be per-
mitted or limited by the constitution or laws of Ala-
bama in effect on the effective date hereof.
Section 4. The city will maintain complete
books and records pertaining to the mortgaged property and
all receipts and disbursements with respect thereto, which
shall be kept separate and apart from all other records of
the city.
- 26 -
Section 5. The city will within thirty days
following the close of each fiscal year, beginning with
that fiscal year during which the city shall begin
operation of the mortgaged property, cause an audit of
its books for such fiscal year to be made by an independent
auditor who shall be a certified public accountant
satisfactory to the trustee (who may be a certified
public accountant for the city) or by an employee of the
State of -Alabama whose official duties include the audit
of books, records and accounts of municipal and other
public corporations. Each such audit, in addition to
whatever matters may be thought proper by the auditor
to be included therein, shall include the following:
(a) a statement in reasonable detail of the expenditures
made with respect to the mortgaged property for such
fiscal year; (b) a balance sheet respecting the mortgaged
property as of the end of such fiscal year; (c) the
auditors comments regarding the manner in which the
city has carried out the requirements of the indenture,
and the auditor's recommendations for any changes or
improvements in the operation of the mortgaged property;
M a list of the insurance policies and fidelity bonds
in force 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; gnd (e) the following information as disclosed
by the records of the city without any requirement for
verification thereof by the auditor: the number of
properties connected to and served by the mortgaged
property at the end of the fiscal year; the number of
metered gas customers of the city at the end of the
fiscal year; and the number of unmetered gas customers
of the city at the end of the fiscal year. All expenses
incurred in the making of such audits shall constitute
and be paid as an operating expense. Within ten days
following the receipt of such audit the city will
furnish a copy thereof to the trustee, 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 auditor making the same and to secure
from the auditor such additional information respecting
the matters therein set out as may be reasonably required.
Section 6. The city will not furnish or per-
mit to be furnished by or from the mortgaged property any
free gas or free service of any kind whatsoever to the
city or to -any county or incorporated municipality or to
any agency, instrumentality, person, firm, or corporation
whatsoever. All gas and services furnished from the
mortgaged property shall be charged for at the rates at
the time established therefor.
Section 7. The city will maintain such rates
and charges for the gas and services supplied from the
mortgaged property and make collections from the users
thereof in such manner as shall produce amounts sufficient
at all times to pay into the special funds created in
Article V hereof all payments required to be made therein
to the respective extents and at the respective times
therein provided. 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. The
city will make no reduction in the schedule of gas rates
- 27 -
effective at the time of the delivery of the indenture
until such time as the amounts required to be maintained
in the bond fund and in the contingent fund shall be not
less than the maximum amounts respectively required to
be maintained therein.
Section 8: The city agrees that it will not
hereafter sell, lease, mortgage or in any manner dispose
of the whole or any integral part of the mortgaged proper-
ty until all -of the bonds and the coupons shall have been
paid in full, or unless and until provision for such pay-
ment shall have been made. The city will continuously
operate the mortgaged property or cause the same to be
operated so long as any of the bonds and coupons remain
unpaid, and it will keep the same in good repair and in
efficient operating condition, making from time to time
all needed repairs and replacements thereto and thereof.
If the laws of Alabama at the time shall permit such
action to be taken, nothing contained in this section
shall prevent the consolidation of the city with, or
merger of the city into, any municipal or other public
corporation having corporate authority to carry on the
business of operating the mortgaged property, or the
transfer by the city of the mortgaged property as an
entirety to another public corporation whose property and
income are not subject -to taxation; provided that, upon
any such consolidation, merger or transfer, the due and
punctual payment of the principal of and interest on the
bonds according to their tenor and the due and punctual
performance and observance of all the agreements and
conditions of the indenture to be kept and performed by
the city shall be expressly assumed in writing by the
corporation formed by such consolidation or into which
such merger shall have been made or to which the mortgaged
property shall be transferred as an entirety; and pro-
vided 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
mortgaged property or the revenues therefrom that will be
prior to the liens of the indenture and of the pledge
herein for the benefit of the bonds. Nothing contained
in this section shall be construed to prevent the city
from disposing of property pursuant to the provisions
of Sections 2 and 6 of Article IX hereof.
Section 9. The pledge of revenues from the
operation of the mortgaged property herein made shall be
prior and superior to -any pledge thereof hereafter made
for the benefit of any securities hereafter issued by 1.
the city, and the city agrees to recognize in the pro-
ceedings under which any securities are hereafter au-
thorized to be issued the priority of the pledge of said
revenues made herein for the benefit of the bonds.
Section 10. The city will keep the mortgaged
property free from all liens and encumbrances prior to
;the lien hereof, but it may defer payment pending the
bona fide contest of any claim unless by such action the
trustee shall be of the opinion that the lien of this
indenture as to any of the mortgaged property shall be
materially endangered or the mortgaged property 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
vendorts.lien or purchase money mortgage. and as to all
property so.purchased this indenture ,shall be subject
and subordinate to such conditional or lease sale con-
tract; vendor's lien or purchase money mortgage; pro-
vided, however, that the provision contained in this
sentence shall not be applicable to property purchased
under the provisions of Section-2 af.Article I% hereof
to replace inadequate., obsolete, worn out, unsuitable,
undesirable; or unnecessary property then subject to the
lien hereof, which substituted property shall be acquired
and shall become subject to the lien hereof free of all
liens and encumbrances prior to the lien hereof.
Section 114 If the account of any user of
gas or services supplied from the mortgaged property
shall remain unpaid for a period of -thirty (30) days
after such account shall become due, the city thereupon
will promptly discontinue supplying gas and rendering
service to such user whose account shall so remain
unpaid, but upon subsequent payment of such account, in-
cluding any penalties which may be provided for in the
schedule of rates of the city, the city may thereafter
furnish gas and services to such user until such time
as his account shall again remain unpaid.for a period of
thirty (30) days after such account shall become due,
whereupon such gas and services shall again be discontinued.
The schedule of rates for such gas and services shall
provide that all accounts for such gas and service shall
become due not less often than once each calendar month.
Section 12. The city will discharge, pay or
satisfactorily provide to the trustee all liabilities,
expenses and advances reasonably incurred, disbursed or
made by -the trustee in the execution of the trusts hereby
created and it will from time to time pay to the trustee
reasonable compensation for the trusteets services here-
under, including extra compensation for unusual or -,extra-
ordinary services. All such liabilities, expenses, ad-
vances, and compensation shall be secured hereby, shall
be entitled -to priority of payment over any of the bonds
and coupons, and shall bear interest until paid at the
rate of six per centum (6%) per-annum from the respective
dates on which such liabilities; expenses and advances
are incurred, disbursed or made, and on which such com-
pensation shall be earned.
Section 13. The city will permit the trustee.
and the holders -of any of the bonds to inspect, at any
reasonable time, any and every part of the mortgaged
property and the books and records of the city pertaining
to the mortgaged property, and will assist in furnishing
facilities for such inspection.
Section 14. The city warrants its title to all
and every part of the mortgaged property as free and clear of
every lien, encumbrance, trust or charge prior hereto; that it
,r
9
- 29 -
hGs pewar anu authority to subject tht
hereof -and that it has done so hereby;
forever warrant and defend the title to
the trustee against the lawful'claims o
whomsoever.
saru;, Gu -i ike lic,i
and that it will
the same unto
f all persons
Section 15. The city will, upon reasonable
request, execute and deliver such further instruments
t.nd do such further acts as may be necessary or props -.:-
to carry out more effectually the purpose of the indenture,
and in particular (without in any way limiting the
generality of the foregoing) to make subject to the lien
hereof any property hereafter acquired -by it for use as
a partof the mortgaged property, and to transfer to -
any successor trustee or trustees the assets, powers,
instruments and funds held in trust hereunder and to
confiiir, the lien of the indenture with respect to any
bonds issued hereunder.' No failure to request such
further instruments or further acts shall be deemed a
waiver of any right to the execution and delivery of
such -ristruments or the doing of such acts or be deemed
to af{cct the interpretation of any provision of the
indenture.
Section 16. The city will -not grant to any
person, firm or corporation the right, privilege or
franchise to use the streets or other public ways in the
city for the purpose of operating thereover, therein or
thereunder a system for the distribution of gas in any
form for sale to the public in such wise that will result
in competition with the business conducted through the
mortgaged property; it will not permit the said streets
or other public ways to be used by others for said pur-
pcse in competition with the business conducted through
the mortgaged property; and it will not conduct or operate
e.-�,.other gas distribution system in competition with the
business conducted through the mortgaged property.
ARTICLE VIII
PROVISIONS RESEECTING_INSURANCE
Section 1. The city will keep the improvements
at any time forming a part of the mortgaged property in-
sured in responsible insurance companies, satisfactory
to the trustee, against loss of such kinds and in such
amounts as are customarily carried with respect to other
gas distribution properties of comparable size; provided
that it shall not be required to carry such insurance in
any amount in excess of the par value of the bonds at the
time outstanding; and provided further, that if the carry-
ing of such insurance of any such class in an amount
less than the full insurable value of the property insured
shall result in the city's being a co-insurer, then the
city will carry insurance of such class to such extent
as will fully cover the value of the property insured.
The policies evidencing such insurance shall contain
standard mortgage clauses providing for any loss there-
under in excess of $1,000.00 to be payable to the trustee
-3p-
�, as its interest may appear. All such policies evidencing
• the insurance herein provided for shall be delivered to
and deposited with the trustee, and prior tc the expiration
date 0f any such policy the city will furnish the trustee
satisfactory evidence that such policy has been renewed
or replaced by another policy or that there is no neces-
sity therefor hereunder.
Section 2. All proceeds of fire, tornado or
vr-ndstorm insurance coming into the hands of the trustee
L..all be applied by the trustee in that one of the fol-
lowing ways which may be directed by a resolution:
(1) To the purchase of additional
property which the council shall deem of equal
value and equal -utility to the property damaged
cr destroyed, which additional property shall
thereupon become a part of the mortgaged proper-
ty;
(2) To the construction of additional
property subject to the lien of the indenture
i-..hich in the opinion of the council shall be
of equal value and equal utility in the
operation of a gas,dietribution_system to.the
property damaged or destroyed; or
(3) To the repairing or renewing of the
property damaged or destroyed;
provided, that the trustee may pay such proceeds to the
city upon being furnished by the city -with the following:
(a) A certificate of an independent engineer
satisfactory to the trustee stating that additional
property has been acquired or constructed by the city
having aqual value and equal utility to the property
damage` or c=estroyed, or that the property damaged or
destroyed has been repaired or renewed in a workmanlike
and suitable manner satisfactory to such engineer; and
(b) A certificate of independent counsel
satisfactory to the trustee approving the title -of the
city, subject to no lien prior to the indenture, to any
such additional property so acquired or constructed by
the ci',-,y ar_;: the validity of the indenture as a first
mortgage thereon and, in the case of the repair or
r,anewul of any damaged or destroyed property, that there
are no mechanics' or materialments liens caused by such
repair or renewal.
Section 3. The city will carry workmen's
compensation insurance and public liability insurance
in such amounts and to such extent as is customarily
carried by like organizations engaged in like business
of comparable size.
Section 4. The city will at all times carry
fidelity bonds on all of its officers and employees who
may handle funds of the city, such bonds to be in such
amounts as are customarily carried by like organizations
engaged in like business of comparable size.
- 31 -
ARTICLE IX
POSSESSION, USE AND RELEASE
OF THE MORTGAGED PROPERTY
Section 1. Until default by the city in
one of -the ways defined in Section 1 of Article X
hereof, the city may retain actual possession of the
mortgaged property and may manage, operate, and use
any
the .
sa►e, and may collect, use and enjoy the rents, revenues,
i;n.come and profits thereof to such extent as is in no-
w:f.se violative of the city's covenants herein contained.
Section 2. Until default by the city in any
of the ways defined in Section 1 of Article X -hereof,
the city may at any time and from time to time, without
arty release or consent by the trustee, sell or other-
wise dispose of, • free from the lien of -the indenture,
any mains, pipes, machinery, equipment, tools, imple-
ments, or any other property other -than real-estate
which shall -.have become inadequate, obsolete, worn out,
un-suitable for use or undesirable or unnecessary for
use as a part -of the mortgaged property, upon replacing
the same with, or substituting for the same, subject to
the lien of -the indenture and -free from all prior liens
other -mains, pipes, machinery, equipment, tools, imple-
ments, or other property having a value and utility at
least equal to the value and utility, at the time of
disposal, of the property disposed of.
Section 3. While the city is not in default
to the knowledge of the trustee in the payment of any
bond or coupon outstanding hereunder or in respect of
any of the covenants on the part of the city herein
contained, the City may obtain the release of any of
the mortgaged property not needed by it as a part of
its gas distribution system and the trustee shall release
the same from the lien hereof upon deposit by the city
with the trustee of the following:
(1) A resolution describing the property
to be released in reasonable detail, stating
that the city is not in default -under any of
the pro�risions of the indenture, and request-
ing such release.
(2) A certificate of an independent
engineer satisfactory to the trustee made and
dated not more than sixty (60) days prior to
the date of the release stating the full value,
in the opinion -of the signer, of the property
to be released, and stating that such property
is not and will not be needed by the city as
a part of its gas distribution system, that
such release is in the opinion of the signer
desirable in the operation of the city's gas
distribution system, and that the city is not
to the knowledge of the signer in default
under any of the provisions of the indenture.
(3) An amount in cash equal to the full
value of the property to be released as specified
in said engineer's certificate.
-32-
Upon compliance by the city with the foregoing conditions
the trustee s"all, at the expense of the city, execute
and deliver to the city any and all instruments that may
be necessary to release from the lien of the indenture
that portion of the mortgaged property with respect to
which said concUtions shall have been complied with.
Section 4. If any part of the mortgaged
property shall be taken by any eminent domain proceed-
in7s the whole compensation therefor shall be paid
d rect to the trustee. Upon receipt by the trustee of
t.,.e entire compensation therefor, the trustee shall,
at the expense of the city, execute and deliver to the
c.ty or any corporation or governmental agency success-
fully conducting such condemnation proceedings any and
a-11 instruments that may be necessary to release from
tl�e lien of this indenture that portion of the mortgaged
property which may have been taken by such eminent domain
proceed'i.ngs.
Section 5. All money received by the trustee
under the foregoing provisions of this article shall be
applied by the trustee in that one of the following ways
which may be directed by a resolution.:
(1) To the purchase of additional
property which the council may deem of equal
value and equal utility to the -property released
from the lien of the indenture, which additional
property shall thereupon become a part of the
mortgaged property; or
(2) To the construction of other
property subject to the lien of the indenture
which in the opinion of the council shall be
of equal value and equal utility in the operation
of a gas distribution system to the property
released from the lien of the indenture;
provided that prior to the application of such moneys
in any manner so designated by the city, it shall
furnish to the trustee the following:
(1) A certificate of an independent
engineep satisfactory to the trustee that
such prcperty so proposed to be acquired or
constructed has been acquired or constructed
in a manner satisfactory to such engineer and
in the opinion of such engineer is of equal
value and equal utility in the operation of the
mortgaged property to the property released
from the lien of the indenture;
(2) a certificate of independent
counsel satisfactory to the trustee (a)
with respect to any property so acquired,
approving the title of the city thereto
and the validity of this indenture as a
first mortgage thereon, and (b) with -re-
spect to any property so constructed, re-
citing that there are and can be no mechanicst
or materialments liens caused by such con-
struction.
-33-
Section 6. By agreement dated January 23,
1950, the city has granted to the Town of Daphne an
option for the purchase from the city of that portion
of the gas distribution system of the city lying Within
the corporate limits,of said town and of an interest -
in the portions of the mortgaged property whereby gas
is supplied to the said gas distribution system located
within the corporatelimits of the said town. In the
event the said town should exercise the said option,
then upon payment by it to the city of the full purchase
price provided for in the said agreement the city will
thereupon pay over to the trustee the entire purchase
price so received by the city, whereupon the city shall
be authorized to convey to the said town the property
specified in said agreement and the trustee shall, at
the expense of the city, execute and deliver to the
city any and all instruments that may be necessary to
release the said property from the lien of the indenture.
The citf agrees to exhaust as nearly as may be practicable
all c� she said purchase price by redeeming callable
bonds pursuant to the provisions of Article IV hereof
on the earliest date or dates thereafter on which such
redemption may be effected, and the trustee shall
ut'-lize for such redemption the moneys so paid to it.
The city agrees that it will not make any sale to the
.said town other than pursuant to the provisions of the
said option.
MCZM
ARTICLE
REMDIES OF TRUSTEE AND BONDHOLDERS
Section 1. Any of the following shall
constitute default hereunder by the city:
(a) Failure by the city to pay the princi-
pal of or interest on any bond or coupon as and
when the -same become due as therein and herein
provided, whether such shall become due 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 princi al of and
interest on the bonds and coupons after thirty
C1,O) days' written notice to it of such failure
m3.de by the trustee or by the holders of 25% of
the bonds then outstanding and secured hereby;
or
(c) Appointment by a court having juris-
diction of a receiver for the mortgaged property
or for a substantial part thereof, or approval by
a court of competent jurisdiction of any petition
for reorganization of the mortgaged property or
rearrangement or readjustment of the obligations
of the city under any provisions of the bankruptcy
laws of the United States.
Section 2. Upon default by the city in any
one of the ways -defined in Section 1 of this article,
the trustee 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, thereafter
the cii.y make good that default and every other default
hereunder (except the principal declared payable); with
interest on all overdue payments of principal and inter-
est and make reimbureement� of all the expenses of the
trustee, then the holders of a majority in principal
amount of th.e then outstanding bonds, by written notice
to the true. ee, may waive such default and its conse-
quences, but no such waiver shall affect any subsequent
default,or right relative thereto.
Section 3. Upon default by the city in any
of the ways defined in Section 1 of this article, the.
trustee is empowered to proceed, either at law or in
equity, by suit; action, mandamus or other proceedings
to enforce and compel performance of all agreements of
the city herein contained, including the fixing of
rates, the collection and proper segregation of the
revenues of the mortgaged property, and the proper
application thereof, and shall be entitled to and
shall have, regardless of the sufficiency of any security
or the availability of any other remedy, the appointment
of a receiver to administer and operate the mortgaged
property 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
-35-
following then on hand which shall be applicable to the
mortgaged property: -Cash on hand or on deposit, accounts
and notes ri_:;eivaLle, stocks, evidences of indebtednas,
choses in action, customer's service and e;;tension deposits,
and property held for sale in the ordinary course of
business or for consumption in the operation of the
mortgaged property. Nothing herein contained, however,
shall be construed to give any authority to the trustee
or tho holders of any of the bonds or coupons to compel
a sale of the mortgaged property or any part thereof,
and no foreclosure proceedings or sale shall ever be had
with respect to the mortgaged property or any part thereof.
Section 4. Any moneys received by the receiver
from the operation of the mortgaged property shall be
applied to the payment of the following items in the fol-
lowing order:
(1) All costs of the receivership,
including receiver's fees and attorney's fees,
the costs of administration and operation of
the mortgaged property and the maintenance
thereof in good repair and good working order,
and all charges and expenses of the trustee;
(2) The amount due the holders of the
bonds for the payment of the principal thereof
and interest thereon, with interest on overdue
installments of principal and interest, or if
the funds be insufficient to pay all, then
the principal and interest installments
ratably and without preference;
(3) All amounts required by the pro-
visions of Article V hereof to be paid into
the special funds created in that article;
(4) The surplus, if any there be, to
the city.
Section 5. All remedies hereunder are vested
exclusively in the trustee for the equal and pro rata
benefit of all holders of the bonds and the coupons,
unles-s the trustee refuses or neglects to act within a
reasonable }:ime after written request to so act addressed
to the tru::tee by the holders of twenty-five per cent -um
(25%) of the outstanding bonds, accompanied by indemnity
satisfactory to the trustee, in which event the holder
of any of the bonds or coupons may thereupon so act in
the name and behalf of the trustee or may so act in his
own name in lieu of action by or in the name and behalf
of the trustee. Except as above provided, no holder
of any of the bonds or coupons shall have the right to
enforce any remedy hereunder, and then only for the equal
and pro rata benefit of the holders of all the bonds and
coupons.
Section 6. No delay or omission by the trustee
or by any bondholder to exercise any available right,
power or remedy hereunder shall .impair or be construed
a waiver thereof or an acquiescence in the circumstances
giving rise thereto; every right, power or remedy given
herein to the trustee ,or to the bondholders may be
exercised from time to time and as often as deemed
expedient.
-36-
ARTICLE XI
CONCERNING THE TRUSTEE
Section 1. The trustee accepts the trusts
hereby created -and agrees to perform the duties herein
required of it, -either expressly or by reasonable impli-
cation, subject, however, to the following conditions:
(1) It shall not be answerable for any-
thing whatever in connection with this trust,
except its wilful misconduct or gross neglect;
(2) It may employ agents and -attorneys
in fact and shall not be answerable, except as
to moneys received by it or by its authorized
ants, for the default or misconduct of any
such agents or attorneys in fact selected by it
with reasonable care;
(3) It may consult counsel 'on any matters
connected herewith and shall ;lot be answerable
for any action taken or failure to take any
action in good faith on the advice of counsel;
(4) It need not recognize a bondholder as
such without the submission of his bonds for
inspection and the satisfactory establishment
of his title thereto.
(5) It shall not be answerable for any
action taken in good faith on any notice, request,
consent, certificate or other paper or document
which it believes to be genuine and signed or
acknowledged by the proper party.
(6) It need not notice any default here-
under nor need it exercise any of its rights or
pourers arising therefrom unless so requested in
writing by the holders of twenty-five per centum
(25%) cf the.then outstanding bonds; it may do so,
if it thinks advisable, without any such request;
it shall do so when so requested. Whenever it
has a choice of remedies or a discretion as to
details in the exercise of its powers hereunder
it must follow any specific written directions
given by the holders of -a majority of the bonds
at the time outstanding, anything therein or
herein to the contrary notwithstanding, -unless
the observance of such -directions would, in the
opinion of the trustee, unjustly prejudice the
nonassenting bondholders; but satisfactory
indemnity to the trustee by the holders request-
ing such action against its prospective expenses
and liabilities is a condition precedent to its
duty to take or continue any such action hereunder
which in its opinion would involve it in such
expenses and liabilities.
(7) The trustee shall be entitled to reason-
able compensation for its services hereunder, in-
cluding'extra compensation for unusual or extra-
ordinary services.
- 37 -
(8) Any action taken by the trustee at
the request of and with the consent of the
holder of a bond will bind all subsequent holders
off' the same bond or any bond issued hereunder in
lieu thereof.
(9) It may be the holder of bonds as if
not trustee hereunder.
(10) It shall not be liable for the proper
application of any moneys other than those which
may be paid to or deposited with it.
(11) All moneys received by the trustee to
be held by it hereunder shall be held as trust
funds until disbursed in the manner herein pro-
vided therefor. The trustee shall not be liable
to pay or allow interest thereon and shall not
be required to set aside or deposit any security
therefor.
(12) The recitals of facts herein and in
the bonds are statements by the city And not by
the trustee, and the trustee is in no way responsi-
ble for the validity or security of the bonds,
the existence -of the mortgaged property, the -
value thereof, the title of the city thereto,
the security afforded thereby, or the validity
or priority of the lien hereof.
Section 2. Without relieving the city from
the consequences of any default in connection therewith,
the trustee may pay any charge which the failure of the
city to pay has made or will make an encumbrance or
lien prior hereto on the mortgaged property, and the
trustee may further' take out any insurance of any type
on the mortgaged property which it may deem advisable
and pay the premiums thereon if it considers the amount
of or any form of insurance herein agreed by the city
to be carried by it to be insufficient. The trustee,
however, shall not be required -to pay any such charge
or take out any such insurance, and it shall not be
liable in any manner for any failure to do so. All
sums expended by the trustee under the provisions of
this section shall be secured by this indenture, shall
bear interest at the rate of 6f per annum from the
date of payment thereof, and shall be entitled to
priority of payment over any of the bonds or coupons.
The city agrees to reimburse the trustee on demand
for all sums so expended by the trustee, together with
interest at said rate.
Section 3. The trustee may at any time file
a claim in its own name or for the benefit of the holders
of the bonds and coupons in any court proceeding where
any such claim may be permitted or required; whether
such proceeding be by way of reorganization, bankruptcy,
receivership or of any other nature. The holders of
the bonds and of the coupons do hereby constitute and
appoint the trustee as their irrevocable agent and
attorney in fact for the purpose of filing any such
claim, but such authorization shall not include the
power to agree to accept new securities of any nature
in lieu of the bonds and coupons or to alter the terms
of the bonds and coupons.
Section 4. The trustee may resign and be
discharged of the trusts hereby created upon written
notice specifying the effective date of such resignation,
such notice to be given to the city and published by
the trustee one time in a newspaper published in the
City of Birmingham, Alabama. The effective date of the
resignation shall be at least thirty (30) days after
the notice to the city and the first published notice
unless it be coincident with the appointment by the
holders of the bonds of a successor trustee as herein
provided. The trustee may at any time be removed by
a written instrument signed by the holders of a majority
of the bonds then outstanding. If the trustee resign
or be removed, it shall be reimbursed for all its proper
prior expenses reasonable under the circumstances.
Section 5. If the trustee resign, be removed,
be placed by a court or governmental authority under the
contrcl of a receiver or other public officer, or other-
wise become incapable of acting, a successor may be ap-
pointed by a written instrument signed by the holders of
a majority of the bonds then outstanding (which instru-
ment shall be filed -for record in that public office in
Baldwin County, Alabama, in which deeds of con-
veyance are then required by law to be filed in order
to constitute public notice of the existence thereof)
and in the interim by an instrument executed by the
city, such interim successor trustee to be immediately
and ipso facto superseded by one appointed as above by
the said holders. The city shall advertise such interim
appointment, in the event such is made, one time in a -
newspaper published in the City of Birmingham, Alabama,
and when the appointment of a successor trustee, as
selected by the holders of a*majority in principal amount
of the bonds then outstanding, becomes effective, the
city shall advertise that fact one time in a newspaper
published in the City of Birmingham, Alabama.
Section 6. Any successor trustee shall
execute and deliver to the city an instrument accept
ing the trust and shall thereupon ipso facto succeed to
all the estate and title of the retiring -trustee to
the mortgaged property and to its rights, powers and
responsibilities hereunder. The city will, upon request
of the successor trustee, execute and deliver to it any
instrument reasonably requested in further assurance
thereof. Any such instrument so executed shall be
filed for record in that, public office in Baldwin
County, Alabama, in which deeds of conveyance are then
required by law to be filed in order to constitute
public notice thereof.
Section 7. Any successor trustee may
effectively adopt the certificate of a predecessor trustee
on bonds already certified and not delivered, and may so
deliver them; and it may effectively certify bonds in
its own name.
Section 8. Each of the provisions of this
indenture as to the trustee shall apply to its successor
or successors.
- 39 -
ARTICLE XII
SATISFACTION OF THE INDENTURE
AND CANCELLATION OF THE BONDS
Section 1. If, when all -the bonds and
coupons have -become due and payable, whether by maturity
or otherwise, there shall be paid to the holders thereof
(or deposited with the trustee for paying the same) -the
whole amount due thereon for principal and interest, and
the city shall have fully performed all the obligations
herein imposed on it, then the title, estate, rights and
powers of the trustee hereunder shall forthwith cease,
the mortgaged property shall revert to the city or to
its successor in interest, and the trustee shall satisfy
this indenture of record, whereupon all obligations of
the board hereunder shall then cease; otherwise this in-
denture shall remain in full force and effect.
Section 2. Should any of the bonds or the
coupons applicable thereto not be presented for payment
when due, whether by maturity or otherwise, the trustee
stall retain from any moneys transferred to it for the
purpose of paying said bonds and coupons so due, for the
benefit of the holders thereof, a sum of money sufficient
to pay such bonds or coupons when the same are presented
by the holders thereof for payment (upon which sum the
trustee shall not be required to pay interest). All
liability of the city to the holders of such bonds and
coupons and all rights of such holders against the city
under the bonds and coupons or under the indenture shall
thereupon cease and determine, and the sole right of
such holders shall thereafter be against such deposit.
Section 3. When and as the bonds and coupons
are paid, those so paid shall be forthwith cancelled by
the trustee and delivered to the city. Likewise all
mutilated bonds replaced by new bonds shall forthwith
be cancelled by the trustee and delivered to the city.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
. Section 1. It is hereby expressly made a
condition of this indenture that any covenants or re-
presentations,herein contained or contained in the
bonds or the coupons or contained in the resolution
hereinabove referred to do not and shall never constitute
a personal or pecuniary liability or charge against the
general credit of the city, and in the event of a breach
of any such covenant or representation no personal or
pecuniary liability or charge payable directly or in-
directly from the general revenues of the city shall
arise therefrom. Nothing contained in this section,
however, shall relieve the city from the performance
of the several covenants and representations on its
part herein contained.
Section 2. Any request, direction, or other
instrument required to be signed or executed by holders
-4p-
of the bonds may be in -any number of concurrent instru-
ments of similar tenor, signed, or executed in person or
by agent appointed in writing. Such signature or exe-
cution may be proved by the certificate of a notary
public or other officer at the time authorized to take
acknowledgments to deeds to be recorded in Alabama,
stating that the signer was known to him and acknowledged
to him the execution thereof.
Section 3. Nothing herein or in the bonds
shall confer any right on anyone other than the city,
the trustee and the holders.of the bonds and coupons.
Section 4. Any indemnity herein provided
for shall be in the form of a bond of a surety company
having paid in capital of not less than One Million
Dollars indemnifying the city and the trustee, as the
case may be, against loss as a result of the action
for which such indemnity is required.
Section 5. The ownership at any given time
of an unregistered bond may be proved -by the certificate,
if deemed satisfactory to -the trustee, of any trust
company, bank, or bankers, wherever situated, stating
that on the date stated the stated party had on deposit
with or exhibited to it the bonds described. The owner-
ship at any given time of a registered bond may be
proved by a certificate of the trustee stating that on
the date stated the bonds described were registered on
its books in the name of the stated party.
Section 6. The indenture shall in all re-
spects be governed by the laws of the State of Alabama.
Section 7• The trustee or the holder of any
of the bonds may serve -any notice upon the city by
delivering such notice, in written form; in person upon
the chief executive officer of the city, or by deposit-
ing the same in a post office in a sealed and duly stamped
envelope addressed to the chief executive officer of the
city at Fairhope, Alabama.
IN WITNESS WHEREOF, the city has caused this
indenture to be executed in its corporate name and in
its behalf by its mayor and its corporate seal to be
hereunto affixed and attested by its city clerk, and the
trustee; to evidence its acceptance of the trusts hereby
created, has caused this indenture to be executed in its
corporate name and in its behalf and its corporate seal
to be hereunto affixed and attested by its officers, all
of whom are hereunto duly authorized by proper corporate
action, all in four counterparts, each'of which shall be
deemed an original, this day of February, 1950,
and has caused this indenture to be dated as of the 1st
day of February, 1950.
CITY OF FAIRHOPE
Attest:
By
Its Mayor
City Clerk
THE MERCHANTS NATIONAL BANK
OF MOBILE
Attest:
By
Its
STATE OF ALABAMA
COUNTY OF
Its
Is , a Notary Public in
and for said state, hereby certify that T. J. Klumpp,
whose name as Mayor of the City of Fairhope, a municipal
corporation in the State of Alabama, is signed to the
foregoing instrument and who is known to me, acknowledged
before me on this day that, being informed of the con-
tents of the within•inst'rument, he, as such officer and
with full authority, executed the same voluntarily for
and as the act of sai- corporation.
Given under my hand and official seal of office
this _ day of February, 1950.
Notary Public
STATE OF ALABAMA )
COUNTY OF
I , a Notary Public in
and for said county in said state, hereby certify that
, whose name as
of THE MERCHANTS NATIONAL BANK OF MOBILE,
a corporation, is signed to the foregoing instrument -and
who is known to me, acknowledged before me on this day
that; being informed of the contents of the within instru-
ment, he, as such officer and with full authority, exe-
cuted the same voluntarily for and as the act of said
corporation.
Given under my hand and official seal of office
this day of February, 19500
o ary Public
le
-42-
Adopted and approved this 23rd day of Janu_;aarry-,
1950.
ATTEST:
aMayor
City'Clerk
Councilman moved that the rules be suspended
and unanimous consent be given for immediate consideration
of and action o said ordinance, which motion was seconded
by Councilman , and upon the motion being put
to vote the following vote was recorded: Yeas: Mayor
Klumpp and Councilmen Berglin, Bradford, Brown, Overton,
and Steele; Nays: None. The mayor thereupon declared
that the motion for unanimous consent for immediate con-
sideration of and action on said ordinance had been
unanimously carried. Councilman thereupon
moved that the said ordinance be finally adopted,,Ahich
motion was seconded by Councilman , and
upon said motion being put to vote the following vote was
recorded: Yeas: Mayor Klumpp and Councilmen Berglin,
Bradford, Brown, Overton, and Steele; Nays: None. The
mayor they announced that the motion for adoption of
said ordinance had been unanimously carried and he there-
upon signed the same in approval thereof.
Councilman introduced the follow-
ing ordinance in writing which was read to the meeting:
L
ORDINANCE NO.
AN ORDINANCE ESTABLISHING A
SCHEDULE OF RATES FOR GAS
AND SERVICE FURNISHED FROM
THE GAS DISTRIBUTION SYSTEM
OF THE CITY OF FAIRHOPE
— 43-
BE IT ORDAINED by the City Council of the City
of Fairhope that the following schedule of rates for gas
and service furnished from the gas distribution system
of the City of Fairhope in the said city and in all
territory served thereby be and the same hereby is adopted:
SCHEDULE OF GAS RATES
CITY OF FAIRHOPE
Domestic
and
Small
Commercial Rate:
First
300
cu.ft.
each
month -
$1.00
Next
19000
it it
it
it -
.15 per 100 cu.ft.
Next
197PO
It It
It
1t -
613 tt It It tt
Next
17, OQO
it It
it
It -
.08 It It It It
Next
309 000
tt_ it
It
It -
. 065 it it it it
All over 50, 000
It It
it
it -
; p5' It it It it
Minimum
monthly
bill
-
1.00
Large Commercial and Industrial Rate:
A monthly demand charge of $2.00 for each 10000 cu.ft.
based on the maximum quantity of gas delivered to the
customer on any day during the twelve calendar month
period ending with the close of the current month (or
portion of said period if service was initially started
less than twelve calendar months prior to the ending of
the current month), plus a monthly commodity charge equal
to the following quantity of gas consumed during such
current month:
First 2501,000 cu.ft. each month - $ .50 per 1,000 cu.ft.
Next 750, 000 it it It it - .40 tt it it It
All over 1, 000 , 000 It it it It - - 312 5 tt It It it
Large Industrial Rate:
For large industrial users the rates shall be such as may
be negotiated between the city -and the user but which shall
be not greater than .31250 for each 1,000 cu.ft. and not
less than .160 for each 1,000 cu.ft. used each month.
Consumers' Deposits
Each consumer shall keep on deposit with the city $5.00
as security for the payment of bills rendered to such
consumer; provided, that any consumer who uses in excess
of 503,000 cu.ft. of gas from the system each month shall
not be required to maintain such deposit but may be re-
quired to maintain a deposit sufficient to cover the
average monthly bills of such consumer.
— 44 —
Due Dates of Bills and Dis-
continuance of Service for Nonpay-
ment of Bills
All bills for gas and service shall be rendered monthly
and each bill shall be in the amount of the minimum
charge for the ensuing monthly period following the date
of such bill, plus any excess for gas and service furnished
during the preceding monthly period. Each bill shall be
due when rendered and shall become delinquent ten days
after the date thereof. If any such bill shall not be
paid within twenty days after it becomes delinquent
service shall thereupon be discontinued to the consumer
whose bill is so delinquent and the city shall apply
toward payment of such delinquent bill any sum remaining
of the deposit and minimum charge paid by the consumer
so delinquent. A penalty of $2.00 shall be added to the
delinquent bill when service is disconnected, and if
such service shall be disconnected then such bill plus
an additional penalty of $2.00 for reconnecting the
service shall be paid before the service is restored.
The term "monthly period" as used herein shall be con-
strued to mean the period,between the date of the read-
ing of the meter during one calendar month and the date
of reading the same meter during the ensuing calendar
month.
Adopted and approved this,23rd day of
January , 1950.
ATTEST:
N
OW
LojaNAM
WN oar I Tt� - YMWM�M%A"61
MMOMM
Councilman �R'W , moved that the rules be suspended
and unanimous consent be given for immediate consideration
of and action on said ordinance which motion was seconded
by Councilman , and upon the motion being put
to vote the following vote was recorded: Yeas: Mayor
Klumpp and Councilmen Berglin, Bradford, Brown, Overton,
and Steele; Nays: None. The mayor thereupon declared
that the motion for unanimous consent for immediate con-
sideration of and action on said ordinance ad been
unanimously carried. Councilman thereupon
moved that the said ordinance be finally adopted, which
i
-45-
motion was seconded by Councilman ILL, and upon
said motion being put to vote the following vote was re-
corded: Yeas: Mayor Klumpp and Councilmen Berglinf
Bradford, Brown, Overton, and Steele; Nays: None. The
mayor then announced that the motion for adoption of said
ordinance had been unanimously carried and he thereupon
signed the same in approval thereof.
Upon motion duly made and seconded by adoption
of the vote of all members of the council it was ordered
that said ordinance be published one time in The Fairhope
Courier, a newspaper published and having general circulation
in the city.
Councilman f�`introduced the following
resolution in writing which was read to the meeting:
BE IT RESOLVED by the City Council of the City
of Fairhope, Alabama, that pursuant to the requirements
of Section 340 of Title 37 of the Code of Alabama of
1940 the city clerk of said city is hereby authorized and
directed to cause the following notice to be published in
The Fairhope Courier, a newspaper published and having
general circulation in said city once a week for two
consecutive weeks:
NOTICE OF PASSAGE OF ORDINANCE BY THE
CITY OF FAIRHOPE, ALABAMA
An ordinance authorizing the issuance of
$755,000 principal amount of First Mortgage Gas Revenue
Bonds of the City of Fairhope under the provisions of
Title 37, Chapter 6, Article 2 Subdivision 3 (embracing
Sections 308 to 340, inclusive of the Code of Alabama of
1940, as amended, was duly passed by the city council of
said city on the 23rd day of January, 1950, for the pur-
pose of providing funds necessary for the construction of
a gas system to render gas service in said city and
nearby territories, including the expenses to be incurred
in connection with such -construction, to acquire properties
in connection therewith, and to pay the costs of financing
the same and the interest which will accrue on the said
bonds during such construction and for six months there-
after. Any action or proceeding questioning the validity
of said ordinance must be commenced within thirty days
after the first publication of this notice.
City Cle k
- 46 -
Councilman 4hmoved that the rules be suspended
and unanimous consent be given for immediate consideration
of and action on said resolution, which motion was
seconded by Councilman 6.k ',#MA,' -, and upon the motion
being put to vote the following vote was recorded: Yeas:
Mayor Klumpp and Councilmen Berglin, Bradford, Brown,
Overton, and Steele; Nays: None. The mayor thereupon
declared that the motion for unanimous consent for im-
mediate consideration of and action on said resolut on
had been unanimously carried. Councilman
thereupon moved that the said resolution be finally
adopted, which motion was seconded by Councilman
t
and upon said motion being put to vote the following vote
was recorded: Yeas: Mayor Klumpp and Councilmen Berglin,
Bradford, Brown, Overton, and Steele; Nays: None. The
mayor thereupon announced that the motion for adoption of
said resolution had been unanimously carried.
Councilman introduced the following
resolution in writing which was read to the meeting:
BE IT RESOLVED by the City Council of the City
of Fairhope, Alabama, that Bank of Fairhope is hereby
appointed depository of the Gas System Gross Revenue
Account, the Gas System Operation and Maintenance Fund,
the Gas System Depreciation Fund, and the Gas System
Contingent Fund, all of which are created in the mortgage
and deed of trust of said city authorized by Ordinance
No. of said city adopted on this date.
BE IT FURTHER RESOLVED by the city council of
said city that all moneys at any time on deposit in the
Gas System Operation and Maintenance Fund, the said
Gas System Depreciation Fund and the said Gas System
Contingent Fund may be withdrawn at any time -for the
purposes for which said funds were respectively created
by checks, vouchers or drafts signed by the city treasurer
and mayor of the city. Said bank is hereby authorized
until further notice to it by resolution adopted by the
city council and delivered to it, to honor any such
` -47_
Checks, vouchers and drafts when so signed, regardless
of the person or persons to whom the same may be payable.
Councilman moved that the rules be suspended
and unanimous consent be given for immediate consideration
of and action on said resolution, which motion was
seconded by Councilman and upon the motion
being put to vote the following vote was recorded: Yeas:
Mayor Klumpp and Councilmen Berglin, Bradford, Brown,
Overton and Steele; Nays: None.- The mayor thereupon
declared that the motion for unanimous consent for im-
mediate consideration of and action on said resolution
had been unanimously carried. Councilman �-
thereupon moved that the said resolution be finally
adopted, which motion was seconded by Councilman
hit-,�, and upon said motion being put to vote the
following vote was recorded: Yeas: Mayor Klumpp and
Councilmen Berglin, Bradford, Brown, Overton, and Steele;
Nays: None. The mayor thereupon announced that the
motion for adoption of said resolution had been unanimously
carried.
Councilman_ offered the following
Ordinance and moved its adoption:
4
s
0
ORDINANCE NO.
WHEREAS the City of Fairhope proposes to construct,
maintain and operate a gas transmission pipe line from
the United Gas pipe line through the.Town of Daphne for
the purpose of supplying any and all kinds of gas to the
proples of Fairhope, and Daphne and to communities, in-
dividuals and enterprises along such gas transmission
pipe, and to construct, maintain and operate a distribut-
"ion system or systems to serve such proposed gas users;
.AND WHEREAS, it appearing that through the cooper-
ation of the City of Fairhope and of the Town of Daphne
gas service may be made available to the peoples of the
two municipalities at greatly reduced cost, the Town
Council of the Town of Daphne desiring to obtain such
service for the people of the Town of Daphne, did on the
day of January, 1950, grant a franchise to the City
of Fairhope for the construction, operation and mainten-
ance of a gas transmission pipe line through and a dis-
tribution system within the corporate limits of the Town
of Daphne to'serve the people of Fairhope, Daphne and other
users of any and all kinds of gas along such transmission
pipe line. In order to obtain the benefits of gas for the
people of Daphne and Fairhope.
BE IT ORDAINED by the City Council of the City of
Fairhope that the City of Fairhope enter into a contract
with the Town of Daphne for the construction, maintenance
and operation of a gas transmission pipe line through,
and a gas distribution system, within the corporate limits
of the Town of Daphne in words and figures as follows:
/►
STATE OF ALABAMA
BALDWIN COUNTY
THIS 0WORANDUM OF. AGREM ENT, made and entered
into be and between the City of Fairhope, a municipal cor-
poration, and the Town of Daphne, a municipal corporation
in Baldwin County, Alabama, on this the 23rd day of January
19509 WITNESSETH:
THAT VMREAS, the City of Fairhope proposes to
construct, maintain and operate a gas transmission pipe
line from the United Gas Pipe Line through the Town of
Daphne f or,the purpose of supplying natural gas to the
peoples of Fairhope, and Daphne and to communities, indiv-
iduals and enterprises along such gas transmission pipe,
and to construct, maintain and operate a distribution system
or systems to serve such proposed gas users, and to issue
gas revenue bonds to construct the same and to secure such
bonds by deed of trust, with the merchants rational Bank
of Mobile as trustee;
THAT VMEREAS, the Town of Daphne did on the
.day of January, 1950, grant a franchise to the City
of Fairhope for the construction, operation, and maintenance
of a natural gas transmission pipe line and distribution
system within and through the Town of Daphne, to serve the
people of Fairhope, Daphne and other users of gas along
such transmission pipe line. It is hereby agreed by and
between them as follows;
FIRST: So long as such franchise shall be in -
force the Town of Daphne will not give, grant or sell a
franchise or a permit to any other person, firm or corpor-
ation to operate, nor will it operate a similar or compet-
ing service.
SECOND: The object of such franchise granted
by the Town of Daphne to the City of Fairhope is to obtain
for the people of Daphne the benefits to be derived from
a gas service. Fairhope proposes to construct, maintain
2
and operate a gas system for the City of Fairhope and
Town of Daphne and for incorporated or unincorporated
Towns and communities, and individuals or enterprises
in Baldwin County, which may be economically serviced
from its gas transmission lines and to finance the same
by the issuance of Revenue Anticipation Bonds and to
pledge such system, including that portion thereof in
the Town of Daphne, as security therefor, and in the
event it is able to issue such bonds and to procure a
satisfactory contract for the construction of said system
and to procure a satisfactory contract for a supply of
gas, it will construct such gas transmission pipe line
and distribution system or systems, including a distrib-
ution system in the Town of Daphne, but it shall not be
required to construct, maintain and operate such a ser-
vice in the event it shall be unable to sell such bonds
and to enter into such contracts. In the event such
system is constructed, including a distribution system
in the Town of Daphne, Fairhope shall have the right under
such franchise to construct, operate and .maintain the
said gas system and from time to time to enlarge and
extend said system within the Town of Daphne, so as to
render to the citizens of Daphne such service and to
charge reasonable rates for such service; but such rates
within -the Town of Daphne shall not be greater than rates
charged within the City of Fairhope. Such rates may be
lowered or raised, whenever, in the opinion of the City
of Fairhope, it shall be proper to so do. Fairhope shall
not be required hereby to construct a distribution system
within the Town of Daphne unless and until one hundred
or more users shall indicate their desire for gas service
by making the required customers deposit. Fairhope shall
cause the contractor to make all repairs to and restorat-
ion of streets damaged in the construction of such system
in like manner and under like conditions it shall require
of the contractor in the construction within the City of
Fairhope.
Ll
0
I
Such franchise granted by the Town of Daphne
to the City of Fairhope insofar as it relates to the con-
struction, ownership, operation,'maintenance and enlarge-
ment of the gas transmission pipe line through the Town
of Daphne, is irrevocable and subject only to such rights
as the Town of Daphne may acquire therein under this
agreement. Such franchise insofar as it relates to the
construction, ownership and operation of a distribution
gas system within the corporate limits of the Town of
Daphne is subject to this agreement providing for the
ultimate ownership of such distribution system by the
Town of Daphne.
If Fairhope shall not within twelve months
hereafter commence construction of the gas system, fran-
chise for which was granted by the Town of Daphne to the
City of Fairhope as aforesaid, such franchise shall lapse
and be null and void. In the event such system shall be
constructed, and within six months after the completion
of the transmission line through the Town of Daphne, the
City of Fairhope shall not have constructed or be in the
process of constructing a distribution system within the
corporate limits of the Town of Daphne then such franchise
for the construction and operation of a distribution system
within the corporate limits of the Town of Daphne shall
lapse and be null and void; but the franchise insofar as
it relates to the gas transmission line through the Town
of Daphne shall be and remain in full force and effect.
In the event Fairhope shall construct the gas
transmission pipe line through the Town of Daphne, but shall
not construct a distribution system within the corporate
limits of the Town of Daphne, and its franchise shall
lapse as above provided, and Daphne shall thereafter deter-
mine to construct a distribution system within the corpor-
ate limits of the Town of Daphne, the City of Fairhope
agrees that it will sell to the Town of Daphne a one -tenth
interest in that portion of the gas transmission pipe line
between the Town of Daphne and the source of supply, the
purchase price to be one -tenth of the cost of the entire
gas transmission pipe line as determined by the amount
paid to the contractor for such construction.
THIRD: Until such time as Daphne shall acquire
the distribution system within the corporate limits of
the Town of Daphne and an interest in the transmission
Pipe line the revenue derived from the operation of said
natural gas system proposed to be construced, whether
operated by the City of Fairhope as an entirety, or by
the City of Fairhope and by the Town of Daphne under the
lease agreement herein provided, shall be used as provid-
ed by the ordinance authorizing issuance of, and by the
deed of trust executed by the City of Fairhope to secure
gas revenue bonds issued for the purpose of constructing
such gas system.
The Town of Daphne shall acquire the owner-
ship of the natural gas distribution system within the
corporate limits of Daphne and one -tenth interest in
that portion of the natural gas transmission pipe line
lying between the Town of Daphne and the United Gas pipe
line, the source of supply of natural gas, in either of
the following manners:
(1.) When through the operation by the City
of Fairhope of the entire natural gas system the bonds
issued for the construction of the same shall have been
paid in full, principal and interest.
(21) The purchase by the Town of Daphne of
such distribution system and such interest in such portion
of said transmission pipe line.
(3.) When Daphne, having elected to lease
the distribution system within the corporate limits of
the Town of Daphne, shall have paid in full the one -tenth
of the principal and interest of the bonds outstanding
at the time it shall elect to lease the same, and any and
all other amounts required to be paid by Daphne under the
lease agreement.
When Daphne shall acquire the ownership of
said distribution system and interest in said transmission
pipe line, the City of Fairhope will by appropriate in-
strument convey the same to the Town of Daphne. After it
shall have acquired the ownership of the distribution
system and the interest in the transmission pipe line
Daphne shall at all times be entitled to gas from such
transmission pipe line to supply its distribution system
in such quantities as shall be required by it up to the
amount of one -tenth of the volume delivered by the source
of gas supply into such transmission pipe line. Fairhope
shall continue to operate and maintain such transmission
pipe line and make available to Daphne one -tenth of the
volume delivered by the source of gas supply into such
transmission line. Daphne will pay one -tenth of the cost
of operating, repairing and maintaining such gas trans-
mission pipe line and one -tenth of the cost of odorizing gas
therein, and one -tenth the cost of insurance thereon, and
for all gas metered to it, plus its proportionate part �
Of the gas lost in transmission, payments thereof shall
be made upon presentation of bill therefor.
FOURTH: That portion of the natural gas dis-
tribution system within the corporate limits of the Town
of Daphne shall be so constructed that the same may be
separated from the other portion of the distribution system
and operated as a separate unit and that gas may be metered
to it from the gas transmission pipe line.,
FIFTH: The Town of Daphne hereby reserves to
its self, and'the City of Fairhope hereby grants to the
Town of Daphne, the right and option to purchase that
portion of the said proposed natural gas distribution
system within the corporate limits of the Town of Daphne
I
and a one -tenth interest in that portion of the gas trans-
mission pipe line lying between the Town of Daphne and
the United Gas pipe line, the source of supply of natural
gas, on February 1st, 1955, or at any time thereafter,
upon the Tovun .of Daphne's paying to the City of Fairhope
one -tenth of the principal remaining of the unpaid bonds
issued for the,construction of such gas system and one -
tenth of all past due interest, if any, and one -tenth of
accrued interest to the date of execution and delivery of
a proper instrument passing ownership thereof to the. Town
of Daphne. If Daphne shall elect to purchase the said dis-
tribution system and interest in such portion,of the trans-
mission pipe line it shall by resolution entered in the
minutes of the Town Council declare such intent and it shall
give written notice to the City of Fairhope and to the
trustee for the bondholders of its intent to purchase
the same, which notice shall be in the form of a copy
of such resolution of the Town Council of ,the Town of
Daphne, duly certified, one copy of which shall be de-
livered to the City of Fairhope and one copy to the
trustee under the aforesaid deed of trust, and which
notice shall state the date that it is proposed to con-
sumate such purchase. Daphne shall, at its own expense,
install a proper metering system to meter the gas dis-
tributed through that portion of the system within the
corporate limits of the Town of Daphne, and the same
shall be ready for operation on the date of its purchase.
Within ten days after the receipt of such notice the City
of Fairhope and the trustee aforesaid shall advise.Daphne
in -writing the amount of unpaid principal on such bonds
and the amount of interest in arrears, if any, and the
amount of interest that will have accrued to the proposed
date of purchase; and on such date the Town of Daphne
shall pay over to the City of Fairhope the purchase price
above provided, upon the delivery to it of a proper in-
strument of conveyance as aforesaid.
7
SIXTH: The Town of Daphne hereby reserves to
its self, and the City of Fairhope does hereby grant to
the Town of Daphne, the right and option to lease the gas
distribution system within the corporate limits of the
Town of Daphne, on the completion thereof, or at any time
thereafter. In the event the Town of Daphne shall elect
to lease the said portion of the said distribution system,
it shall do so by resolution entered on the minutes of
the Town Council and it shall give notice to the City of
Fairhope and to the trustee under aforesaid deed of trust
stating the date it proposes to lease the same, which said
notice shall be delivered at least ninety days before the
date it proposes to lease the same. Within ten days.after
receipt of such notice-Fairhope and the trustee shall
advise Daphne the amounts and dates of rental payments
herein provided.
In the event that Daphne shall elect to lease
the aforesaid portion of said distribution system it shall
pay as rental therefor each month (a) one -tenth of the
amount required by Fairhope to be paid into the "Gas
System Bond and Interest Redemption Fund" as provided in
Section 2 of Article V of the proposed deed of trust se-
curing the bonds issued for the construction of such system,
and also (b) one -tenth of the amount required by Fairhope
to be paid into the t'Gas System Operation and Maintenance
Fund" required under Section 3 of said Article V and (c)
one -tenth of the amount required to be paid by the City
of Fairhope into the "Gas System Contingent Fund" as pro-
vided in Section 5 of said Article V, and in addition to
said monthly payments provided above the Town of Daphne
shall also pay to the City of Fairhope, when and as the
same shall be billed to it, (d) one -tenth of the amount
spent by the City of Fairhope for the maintenance, repair
and operation of the entire gas transmission line and (e)
one -tenth of the cost of odorizing gas and (f) one -tenth
AN ORDINANCE OF THE CITY OF
FAIR�FIOPE ACCEPTING A GAS FRAN-
CHISE GRANTED TO IT BY THE TOW
OF DAPHNE lef///
tu'n,
BE IT ORDAI13D by the City Council of the City of
Fairhope, Alabama, that the ordinance of the Town of Daphne
granting to the City of Fairhope a gas franchise adopted
January 23, 1950, be and the same is hereby accepted and
which ordinance is in words and figures as follows:
BE IT ORDAINED by the Town Council of the Town of
Daphne, Alabama, as follows:
(1) There is hereby granted by the said Town of
Daphne, (which is herein called "the grantor") to the City
of Fairhope, a municipal corporation under the laws of
-dlabama, and to its successors and assigns, (who are to-
gether: -herein called "the grantee") the right, privilege,
authority and franchise to own, maintain, construct, en-
large and operate within the corporate limits of the grant-
or a plant, plants or system for the manufacture, sale,
transmission and distribution of gas of any and all kinds
for any and all purposes whatsoever, and the consent of
the grantor is hereby given to the grantee to use the
streets, avenues, alleys, public ways and public places
within said corporate limits for the purpose of construct-
ing, maintaining and operating any such plant, plants or
system and any part or parts thereof and any appurtenances
thereto and of transmitting gas through and for use out-
side of the corporate limits of the grantor.
(2) The grantee is hereby granted the right, priv-
ilege and authority at any time and from time to time, and
without any requirement as to permit or remuneration there-
for, to extend, enlarge and improve any such plant, plants
or system and any part or parts thereof, including particular-
ly any pipes, mains or conduits in connection therewith,
under any street, avenue, alley, public way and public place
in the corporate limits of the grantor.
(3) The grantee shall, and by acceptance of this
franchise agrees, that upon making any excavations of the
streets, avenues, alleys, public ways and public places for
the purpose of constructing, maintaining or operating any
plant, plants or system or any part or parts thereof or
thereafter extending, enlarging and improving the same,
the surface or paving at the points of such excavations
shall be restored in substantially the same condition as
before such work was done, all as promptly as may be pract-
icable and within a reasonable length of time thereafter.
(4) The rights, privileges, franchise and authority
hereby granted may be exercised by the grantee for such
period of time as the grantee shall legally be in control
of such plant, plants or system, but in any event not ex-
ceeding the maximum time, if any there be, from the effect-
ive date hereof which may be permitted or limited by the
constitution or laws of Alabama in effect on the effective
date hereof.
Adopted this .21,�Uay of January, 1950.
This ordinance by the City of Fairhope adopted this
January 23, 1950, and approved.
ATTEST:
�Q'Jy
CGPJ � 061E
City Clerk
Mayor
11
And the proposed ordinance having bees read in
f ull Councilman moved that unan-
imous consent be given for immediate consideration of
and action on said ordinance, which motion was seconded
by Councilman and upon the motion
being put to vote If
following vote was recorded: Yeas;
Nays ; / l/�'�'yc.-'� v
The Mayor thereupon declared that the motion for unan-
imous consent for the immediate consideration of and action
on said ordinance had been unanimously carried. Council-
man thereupon moved that the said
ordinance be f ina y adopted, which motion was seconded
by Councilman , and upon the
motion being put to v to the following vote was recorded:
Yeas
Nays ;
The Mayor thereupon announced that the motion for adoption
of said ordinance had been unanimously carried and he there-
upon signed the sam in approval thereof.
Councilman offered the follow3
ordinance and moved its adoption:
OW
8
.r
the amount paid for insurance on entire gas transmission
line, provided for in the aforesaid deed of trust, and as
a part of the rental for the said portion of distribution
system the Town of Daphne shall also pay to the City of
Fairhope for (g) all gas metered to Daphne, (h) one -tenth
of the gas lost in transmission; all gas to be paid for
at the same rate that the City of Fairhope purchases gas
from the United Gas Pipe Line Company, or at the same rate
it pays for gas, whatever the source of supply. The gas
lost in transmission shall be determined by the deduction
of the gas metered to the Town of Daphne and to those
serviced by the City of Fairhope from the gas metered to
Fairhope by the United Gas Pipe Line Company or by the
owners of the source of such gas. The rentals provided
herein to be paid by the Town of Daphne to the City of
Fairhope for rental of the distribution system within
the corporate limits of the Town of Daphne and use of
the gas transmission pipe line for gas to be distributed
through distribution system shall be paid solely out of
the revenues derived from the operation of such distribut-
ion system by the Town of Daphne and nothing herein shall
be corn trued as a pledge by the Town of Daphne of its
tax revenue or revenue from any source other than the
distribution system for the payment of the rental herein
provided.
Upon Daphne's leasing the distribution system
as herein provided and so long as it shall operate the
same it sha11 be entitled to gas from such gas transmission
pipe line to supply its distribution system in such quant-
ities as shall be required by it up to one -tenth of the
volume delivered by the source of gas supply to such gas
transmission pipe line. Fairhope shall continue to operate
the transmission pipe line and make available to Daphne
one -tenth of the volume delivered by the source of gas
supply into the gas transmission pipe line.
9
In the event Daphne shall lease the distribut-
ion.system within the corporate limits of the Town of
Daphne, it at its own expense, shall install a proper
metering system and at its own expense shall operate such
distribution system, keep the same in repgir and maintain
the same and keep all records and books, have all audits
made, make all reports and apply all revenue in the manner
required by the bond ordinance and. the deed of trust under
which the City of Fairhope shall issue bonds.for the con-
struction of such system. The reports required to be made,
shall be made to the City of Fairhope and copies thereof '
furnished to the trustee for the bondholders. And its
operation of the said distribution system and its books
kept thereof shall be available to the City of Fairhope
and to such trustee, and to the bondholders in the same
manner and under the same conditions and for the same pur-
poses as the books and records of the City of Fairhope
are available to such trustee and -to the bondholders.
In the event Daphne shall'be and become in
default in the payment of all or any portion of all sums
required to be paid by it as rental under its lease, or
any one of the same, or any portion thereof, and remain
in default for 30 days the City of Fairhope, after 30 days
notice to the Town of Daphne given in writing of its in-
tention thereof, may unless payment is made within such
30 days, cancel and annul the lease agreement and retake
possession of the said distribution system and operate
the same under the franchise given to it by the Town of
Daphne, but in such event the proceeds thereof shall be
applied as specified in.its bond ordinance and deed of
trust and such default on the part of Daphne: shall not
be construed to forfeit or to have annulled or abridged
the providion in this agreement that after the payment in
full of the bonds issued for constructing such distribution
system and interest in the transmission pipe line the same
shall become and be the property of the Town of Daphne.
The Town of Daphne shall not transfer or assign
its right to lease the aforesaid distribution system pro-
vided hereunder except to a gas utility board or to an
organization or agency organized by the Town of Daphne under
the laws of the State of Alabama for the operation of munici-
pal gas systems.
SEVENTH: Whenever Daphne acquires the owner-
ship of the said portion of transmission line and the dis-
tribution system within the Town of Daphne, or shall lease
the same as herein provided, Fairhope will pay over to
Daphne all customer's deposits held by it for gas users
within the corporate limits of the Town of Daphne, to be
held by the said Town of Daphne subject to the rights of
the depositor thereof.
EIGHTH: From and after the acquisition by
Daphne of title to the distribution system within the
Town of Daphne the franchise granted by the Town of Daphne
to the City of Fairhope for the installation, ownership
and operation of such distribution system shall lapse and
be null and void and no longer in force and effect, but
acquisition by Daphne of title to the distribution system
and interest in the transmission line shall not impair,
abrogate or annul the franchise by the Town of Daphne , to
the City of Fairhope to own, maintain, construct, enlarge
and operate the gas transmission pipe line through the
Town of Daphne, but the franchise as to such gas trans-
mission pipe line shall be and remain in full force and.
effect.
NINETH: In the event it shall become necessary
to increase the capacity of that portion of gas trans-
mission pipe line lying between Daphne and the source of
supply, the cost thereof shall be paid by the City of
Fairhope and by the Town of Daphne in the proportion that
the needs of each has increased beyond the proportions
specified herein, that is, if the need for increased ca-
pacity shall be solely due to the increased needs of
11
Fairhope beyond its ninety per cent of the capacity of
such transmission line, Fairhope shall pay the entire
cost, and if the need for increased capacity shall be
due to the increased need of Daphne beyond its ten per
cent proportion, Daphne shall pay the entire cost; but
if both shall need increased capacity, then the cost of
increasing such capacity shall be borne by them in the
proportion that each needs such increased capacity. If
Daphne's increased needs shall require the transmission
line to be enlarged before Daphne shall have acquired
ownership or shall lease as herein provided,'then the
cost`of such increased needs shall be added to the cost
to Daphne in the acquisition of ownership, or if leased
to the amount of the rental required to be paid by Daphne.
If the source of supply contemplated shall fail and -a
different source of gas shall become necessary the munici-
palities, parties to this contract, shall pay the cost
thereof one -tenth by Daphne and nine -tenths by Fairhope.
TENTH: Nothing in this agreement between
the City of Fairhope and the Town of Daphne shall be con-
strued in any manner to invalidate or to abridge the rights
of the holders of the bonds issued by the City of Fairhope
for the purpose of constructing the said system or to
alter or increase the trustees duties or responsibilities
or liabilities under said deed of trust and the Town of
Daphne does hereby ratify and confirm the provisions of
the City of Fairhope ordinance and deed of trust issuing
and securing such bonds as fully and as completely as if
the same were incorporated herein, and any providion in
this agreement in conflict with the provisions of such
ordinance and deed of trust shall be invalid insofar as
the same would invalidate or abridge the rights of the
holders of such bonds, or to increase the liability of
the trustee under the deed of trust executed by the City
of Fairhope to secure bonds issued for the purpose of con-
structing such system.
I
12
ELEVENTH: The Town of Daphne does further
contract and agree that, in the event it shall acquire
the distribution system within the corporate limits of
the Town of Daphne and the interest in the gas transmission
pipe line, it will not sell or otherwise dispose of the
same without first giving to the City of Fairhope the
right and option to purchase the same at the price and
under the terms and conditions Daphne can sell the same.
-And in the event it obtdins an offer therefor it shall
advise the City of Fairhope in writing of the name of the
proposed purchaser, the proposed selling price and terms
of sale, the City of Fairhope shall have 30 days there-
after in which to exercise its option to purchase, the
exercise of which shall be byyresolution passed by the
governing body of the City of Fairhope, copy of which
duly certified delivered to the Town of Daphne. Fairhope,
having exercised its option to purchase the same, shall
have 90 days after notice to Daphne in which to consumate
the purchase of such property.
TVrELFTH: It is now contemplated by the munici-
palities to this contract that the gas system to be in-
stalled shall be natural gas provided and so long as nat-
ural gas shall be available and it shall be economical
and expedient to use the same, but the intent of. this con-
tract and the objective sought to be obtained is a gas
service to the people of the two municipalities. If at
any time it shall be more economical and more feasible or
advantageous to use gas other than natural gas this con-
tract is and does cover the same and whenever the words
gas and natural gas appear in this contract they shall be
construed to include any and all kinds of gas, and this
contract authorizes the installation, construction, main-
tenance, repair and operation of any and all ways, means,
devises and processes for the acquisition, production,
r
transmission and distribution of gas of any and all kinds,
13
THIRTEENTH: The price for purchase by the
Town of Daphne of the distribution system within the cor-
porate limits of the Town of Daphne and of the interest
in the transmission line as herein provided and the rent-
als herein provided for leasing of the same are based upon.
the estimated number of potential customers within the
corporate limits of the Town of Daphne as they now exist.
In the event the corporate limits of the Town of Daphne
shall be enlarged at any time before Daphne shall purchase
under this contract or at any time before or during the
time Daphne shall be leasing under this contract, then
the purchase price and rentals shall be increalsed in an
amount equal to the fair and reasonable value of the -gas
system owned by the City of Fairhope within that territory
added to the Town of Daphne by the extension of the cor-
porate limits. If they shall not be able to agree as to
the value of the same, at the request of either party
the Public Service Commission of the State of Alabama or
such other body or agency operating in the State of Ala-
bama having regulartory power over gas distribution utility
companys shall determine and fix the value thereof; and
in the event, of'purchase of the same Daphne shall pay
the amount so determined by such body; and in the event
it shall rent the same, its rentals shall be increased
in an amount that will pay the City of Fairhope addition-
al rentals equal to the principal and interest at the
rate of four per cent per annum on such amount within the
time remaining in which the City of Fairhope has for the
payment of its bonds issued for the construction of such
system. Such rental to be distributed and payable in same
ratio and in like manner and at the time provided herein
for the payment of rentals.
FOURTEENTH: This contract has been authorized
to be executed by ordinance of the City Council of the
City of Fairhope, duly adopted and entered on its minutes
of its meeting on January 1950, and by ordinance
of the Town Council of the Town of Daphne, duly adopted
14
and entered on its minutes of its meeting of January
�4, 1950.
FIFTEENTH: This contract shall be in full
force and effect when signed. by a majority of the members
of the governing bodies of the contracting municipalities
and their respective seals attached hereto.
IN WITNESS 114HEREOF the municipalities of
Fairhope and Daphne have caused these presents to be ex-
ecuted in the name of the contracting municipalities by,
the members of the governing bodies of such municipalities.
TOWN OF DAPHNE
BY
Mayor
BY
Councilman
BY
Councilman
BY
Councilman
BY
Councilman
BY
Councilman
ATTEST:
Town Clerk of the Town of
Daphne.
CITY OF FAIRHOPE
BY
Ma yor
BY
Counc-ilman
BY
Councilman
BY
Councilman
BY
Councilman
BY
Councilman
ATTEST:
-�� e9,1". _* - ';�; -:a� _R_ .
City tlerk of the City o
Fairhope.
5
STATE OF ALABAMA
BALDWIN COUNTY
I, W. C. Beebe, Notary Public in and for said
State and County, hereby certify that
whose names as
of the Town of Daphne, are signed
to the foregoing instrument and who are known to me, ack-
nowledged before me on this day that being informed of the
contents, they in their capacity as such officers executed
the same voluntarily on the day the same bears date.
Given under my hand and official seal this the
day of January, 1950.
Notary Public, State of a ama at
large
STATE OF ALABAMA
BALDWIN COUNTY
I, W. C. Beebe, Notary Public in and for said
State and County, hereby certify that
whose names as
of the City of Fairhope, are signed
to the foregoing instrument and who are known to me, ack-
nowledged before me on this day that being informed of the
contents, they in their capacity as such officers executed
the same voluntarily on the day the same bears date.
Given under my hand and official seal this the
day of January, 1950.
Notary Public, State of Alabama at
large.
t -.'
And the proposed ordinance having been read in
full Councilman (l/,sea eP_ __ ; moved that unan-
imous consent be given for immediate consideration of
and action on said ordinance, which motion was seconded
by Councilman and upon the motion
being put to vote the following vote was recorded. Yeas;
The Mayor thereupon declared that the motion for unan-
imous consent for the immediate consideration of and action
on said ordinance had been unanimously carried. Council-
man ZAln2._� thereupon moved that the said
ordinance be finally adopted, which motion was seconded
by Councilman /f,�-[,lt�,cJ , and upon the
motion being put to vote the following 'vote was recoreded:
1V a y 5 ; / / /3_7 T_VC .
The Mayor thereupon announced that the motion for adoption
of said ordinance had been unanimously carr_led and he there-
upon signed the same in approval thereof.
On motion of Councilman Overton seconded by Council-
man Brown the following resolution was unanimously adopted.
Voting for the same, Mayor T.J. Klumpp, Councilmen Berglin,
Bradford, Brown, Overton and Steele, such resolution being
as follows:
BE IT RFL1LVED that the Mayor and City Clerk be and
they are authorized and directed to enter into and execute
} on behalf of the City of Fairhope a contract for the purchase
of natural gas with the United Gas Pi:e Line Company as
follows:
�c
0
Motion by Councilman Steele seconded by Councilman
Brown that the building permit of Sam Lester to
build 25 feet from Powell St. be allowed. Motion carried.
Motion by Councilman Overton seconded by Councilman
Brown that the application df C. C. Baldwin for permit
for addition to store building on Section St. be allowed.
Motion carried.
There being no furhter business to come before the
meeting the same was on motirn duly adjourned to
January 25, 1950 at 2:00 o'clock, P.M.
Mayor
VY
City Clerk
n
e