HomeMy WebLinkAboutO-197ORDINANCE NO. 197
AN ORDINANCE TO PROVIDE FOR THE
ISSUANCE OF FIRST MORTGAGE GAS
REVENUE BONDS OF THE CITY OF
FIARHOPE FOR THE PURPOSE OF
DEFRAYING THE COST OF CONSTRUCT-
ING A GAS DISTRIBUTION SYSTEM
TOGETHER WITH THE NECESSARY TRANSMISSION
MAINS AND OTHER APPURTENANCES IN
CONNECTION THEREWITH AND TO PROVIDE
FOR A MORTGAGE AND RED OF TRUST
AS SECURITY THEREFOR
Be IT ORDAINED by the City Council. (herein
called "the•cduAcil") of the City of Fairhope (herein
called "the city") in the State of Alabama as follows:
Section 1. There is hereby authorized to
be constructed by the city a gas distribution system to-
gether with transmission mains and other appurtenances
in connection therewith (herein together called "the
system") in the city and in nearby territories, which
system is more particularly referred to in the mortgage
and deed of trust (herein called "the indenture") pro-
vided for in Section 9 of this ordinance. The council
has caused an estimate to be made of the cost of con-
structing the system, including the acquisition of real
estate in connection therewith, financing costs and
the interest which will accrue during such construction
and for six months thereafter. According to such -esti-
mate the total of said costs will be $755,000. In order
to raise the funds required therefor it will be necessary
that the city sell and issue its bonds hereinafter au-
thorized in anticipation of the revenues that will be
derived from the operation of the system. The period
of usefulness of the system is hereby estimated to be
not less than forty years from the completion thereof,
and it is hereby further estimated that it will require
twelve months to complete such construction.
Section 2. Pursuant to the provisions of
Chapter 6, Article 2, Subdivision 3, of Title 37(Section
308 to 340, inclusive) of the Code of Alabama of 1940,
as amended, there are hereby authorized to be issued the
First Mortgage Gas Revenue Bonds (herein called "the bonds")
of the city in'the aggregate principal amount of Seven
Hundred Fifty-five Thousand Dollars ($755,000),.consisting
of seven hundred fifty-five coupon bonds numbered from 1
to 755, inclusive, each in the principal amount of $1,000,
which shall bear interest from their date until their
respective maturities at such rate or rates and for such
period or periods of time as may be fixed by ordinance of
the city at the time of the sale thereof. Such interest
payable at and prior to maturity of the bonds shall be
payable semi-annually on February 1 and August 1 as shall
be evidenced by separate interest coupons (herein called
"the coupons") attached thereto, and both the bonds and
the coupons shall bear interest after their respective
maturities at the rate of 6% per annum. The provisions
and details pertaining to the bonds and the coupons shall
be as is provided for in the indenture.
Section 3. The principal of and interest on
the bonds and the coupons shall be payable solely from•the
revenues derived from the operation of the system, includ-
ing all additions thereto and extension thereof which may
hereafter be made. The general faith and credit of the
city are not pledged to the payment of the bonds and the
coupons, and they shall hot be general obligations of the
city. Neither this ordinance nor any of the bonds or the
coupons shall be deemed to impose upon the city any obli-
gation to pay the principal of or interest on the bonds
and the coupons except with the moneys directed to be
paid into the Gas System Bond and Interest Redemption Fund
created in the indenture, and shall not constitute an in-
debtedness of the city within the meaning of any state
constitutional or statutory limitation. None of the
agreements, representations or warranties made or implied
in this ordinance or in the issuance of the bonds and
the coupons, shall ever impose any personal, pecuniary
or general liability or charge upon the city, whether
before or after any breach by the city of any such agree-
ment, representation or warranty of the city, except with
the moneys herein provided. Nothing contained in this
section, however, shall relieve the city or its officers
from the performance of the several agreements and
representations on the part of the city contained in this
ordinance so long as such performance does not impose
a personal, pecuniary, or general liability or charge upon
the city.
Section 4. The gross revenues derived from
the operation of the system shall be deposited by the city,
daily as collected by it, into the Gas System Gross Revenue
Account (herein called "the gross revenue account")
created in Article V of the indenture. The depository for
the gross revenue account shall make the transfers there-
from provided for in said Article V of the indenture at
the times and to the respective extents therein provided
and to the extent that the moneys on deposit in the gross
revenue account shall be available therefor. All liability
of the depository of the gross revenue account shall cease
as and to the extent to which the moneys on deposit therein
shall be so transferred by it. So long as any of the
moneys are held by the said depository in the gross revenue
account, the same shall constitute a trust fund for the
benefit of the city and the holders of the bonds and the
coupons as their respective interests may appear. Acceptance
of appointment as a depository of the gross revenue ac-
count by any such depository shall be signified by indi-
cating its acceptance on a copy of this ordinance.
Section 5. All remittances of principal of and
interest on the bonds and the coupons to the holders thereof
shall be made at par without any deduction for exchange or
other costs, fees or expenses. The bank or banks at which
the bonds or the coupons shall at any time be payable shall
be considered, by acceptance of their duties hereunder, to
have agreed that they will make or cause to be made, out
of the moneys supplied to them for that purpose, remittances
of principal of and interest on the bonds and the coupons
to the holders thereof in bankable funds at par without
any deduction for exchange or other costs, fees or expenses.
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The city will pay to such bank or banks all reason-
able charges made and expenses incurred by them in
making such remittances in bankable funds at par.
Section 6. The bonds shall be sold at public
sale as may be authorized from time to time by the
council, and the proceeds received therefrom shall
be applied as provided in Article Vlof the indenture.
Section 7. The provisions of this ordinance
shall constitute a contract between the city and each
holder of the bonds and the coupons.
Section 8. The city hereby creates a
statutory mortgage lien upon the system to and in
favor of the holders of the bonds,and each of them,
without priority or preference of one bond over
another, which lien shall take effect immediately
upon the delivery of any of the bonds authorized to
be issued hereunder; provided, however, that said
statutory mortgage lien shall not be construed to
give any autrority to compel the sale of the system
or any part thereof at a foreclosure sale, and no
foreclosure proceedings shall ever be had with re-
spect to the system or any part thereof.
Section 9. As additional security for the
payment of the principal of and interest on the
bonds, pro rata and without preference or priority
of one over another, the city does hereby authorize
and direct the mayor to execute and .deliver the
indenture in the name of and in behalf of the city
covering all properties of any kind whatsoever now
or hereafter constituting the system and all ex-
tensions thereof and additions thereto, dnd does
hereby authorize and direct the city clerk to affix
to the indenture and attest the corporate seal of
the city. The indenture shall be in substantially
the following form, it being hereby specifically
declared and agreed by the city that all the provisions
contained therin shall constitute a part of this
ordinances
r
INDENTURE between THE CITY OF FAIRHOPE, a
municipal corporation under the laws of the State of
Alabama, party of the first part, and THE N'ERCHAXTS
NA^IONA.L BANK OF :UiOBIhE, a national banking corporation
a.z;horized to administer trusts, party of the second
Palm
D E F I N I T I O N S
The following words and phrases and others
evidently intended as the equivalent thereof shall, in
the ab,sance of clear implication herein otherwise, be
glven the following respective interpretations herein:
"City" means the party of the first part hereto
and, subject to the provisions of Section 8 of Article
V 7 hereof, includes its successors and assigns and
any corporation resulting from any merger or consoli-
dation to which it or its successors may be a party.
"Trustee" means the party of the second part
hereto and its successors and any corporation result-
inim from any merger or consolidation to which it or
ins successors may be a party.
"Council" means the governing body of the city
as from time to time constituted.
"Resolution" means a resolution duly adopted
by the council and duly certified under the seal of the
city by the clerk of the city. -
"Bonds" means those issued hereunder.
"Coupons" means those issued in pursuance
hereof and evidencing the interest on the principal
evidenced by the applicable bond or bonds.
"Registered bonds" means those bonds registered
pursuant hereto.
"Callable bonds" means those of the bonds
maturing in 1960 and thereafter.
"Redemption date" means the date fixed for
the redemption of callable bonds in the published
notice of redemption.
"Redemption price" means the price at which
the callable bonds called for redemption may be redeemed
on the redemption date♦
"Holder" when used in conjunction with bonds
or coupons means the person in possession and the
apparent owner of the designated item.
"Indenture" means these presents and every
supplemental agreement with the trustee in pursuance
hereof.
"Mortgaged property" includes all property and
rights of every kind described or referred to or intended
16
r
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so to be in the granting clauses hereof (including the
after -acquired property clauses hereof) or in any way
subject to the lien hereof.
"The gysten", whore said words are used together,
mean the nature gas system required to be constructcd by
tre city under the provisions of Article VI hereof.
"Gross Revenue Account" means the Gas System
Gross Revenue Account created in Section 1 of Article
V hereof.
"Bond fundtt means the Gas System Bond and
Interest Redemption Fund created in Section 2 of
Article V hereof.
"Operation and Maintenance Fund" means the
Gas System Operation and Maintenance Fund created in
Section 3 of Article V hereof.
"Depreciation fund" means the Gas System
Depreciation Fund created in Section 4 of Article V
hereof.
ttContingent fund" means the Gas System Con-
tingent Fund created in Section 5 of Article V hereof.
"Fiscal year" means the period beginning on
October 1 of one calendar year and ending on September
30 of the following calendar year.
"Newspaper" means a newspaper published not
less than six days during each calendar week in the
locality specified.
"Financial journal" means a journal devoted
primarily to news of financial matters and having
general circulation among those interested in financial
matters.
"Herein", "hereby".. "hereunder". "hereof",
"hereinbefore", "hereinafter" refer to the indenture and
not solely to the particular portion thereof in which
such word is used.
Definitions include both singular and plural.
Pronouns include both singular and plural and
cover all genders.
Any percentage of bonds is to be figured on
the unpaid principal amount thereof then outstanding.
g S C 1 T A L S
The city makes the following recitals of
faets as the basis of the undertaking following:
By proper corporate action the -city has duly author-
ized the issuance of the bonds, payable solely from
the limited source hereinafter referred to, in the
principal amount of $755,000. To secure the repay-
-3-
ment of the principal thereof and the interest thereon
the board has by proper corporate action duly author-
ized the execution and delivery of the indenture.
G R A A 1I N G C C JA U S E S
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In order to secure to the holders thereof the
payment of the principal of and interest on the bonds
and the coupons and the performance and observance of
the covenants and conditions therein and herein contained,
and in consideration of their purchase and acceptance
of the bonds and of the acceptance by the trustee of
the trusts herein provided, the city does hereby grant,
bargain, sell and convey, assign, transfer and, pledge
to and with the trustee the following described
properties of the city now owned or hereafter acquired:
The entire gas system of the city situated
J.n Baldwin County Alabama, including odoriz-
ing station, regulator -or pressure -reduction
stations, mains, -pipes, regulators, meters,
valves, fittings, and services in connection
therewith,•and all of the city's other
properties real, personal and mixed, tangible
and intangible, forming a part of or appertain-
ing to -or used in connection with said gas
system, whether any of said properties are now -
owned by the city or may be hereafter acquired,
including particularly but without limiting
the generality of the language hereinbefore
or hereinafter contained, the following
described real estate located in Baldwin County,
Alabama:
riptift
i � be twoft" � ftm a
Powt of the of 40w
w 4 -
Together with all lands and interests in lands
which are used in the operation of the gas system now
or hereafter owned -by the city, and all franchises,
permits, easements, rights of way, crossing agreements,
privileges, immunities and licenses of the city under
and pursuant to which the city is authorized to engage
in the operation in the city, in the Town of Daphne,
and in -the County of Baldwin of a gas distribution
system, including particularly that certain franchise
for thecperation of a gas system heretofore granted to
the city by the Town of Daphne by ordinance adopted by
the town council of the Town of Daphne on
Also together with that certain gas supply
agreement dated January 1950, between United Gas
Pipe Line Company and the city;
Also together with all personal property, and
all tolls, rents, revenues, issues, earnings, income
and profits from the gas system now or hereafter owned
by the city;
Also together with all franchises, licenses
and privileges and real and personal property which
the city might hereafter acquire as a part of or an
improvement to or extension of the gas system of the
city, and any extensions thereof and additions there-
to; it being the intention hereof that all property,
rights and privileges acquired by the city after the
date hereof for use as a part of its gas system shall
be fully covered hereby as if such property, rights
and privileges were now owned by the city and were
specifically described herein and conveyed hereby.
Saving and exce t� ine, however, from the
property hereby mortgaged and pledged, all of the
following (whether now owned by the city or hereafter
acquired by it): Cash on hand and on deposit (but
moneys or securities in the Bond -Fund hereinafter
referred to are not so excepted), accounts and notes
receivable, chores in action, customerst service
and extension deposits, and gas and other properties
acquired for sale in the ordinary course of business
or for consumption in the operation of the mortgaged
property.
TO HAVE AND TO HOLD the same unto the trustee,
its successor trustees and assigns forever; IN TRUST,
NEVERTHELESS, upon the terms and trusts herein set forth
for the equal and pro rata protection and benefit of
the holders, present and future, of the bonds and the
coupons equally and ratably, without preference,
priority or distinction of any over others by reason
of priority in issuance or acquisition or otherwise,
as if all of the bonds at any time outstanding had
/been executed, sold, certified, delivered and
negotiated simultaneously with the execution and de-
livery hereof.
For the aforesaid consideration and the
Mutual covenants herein contained, it is hereby agreed
4.a
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between the city, the trustee and the bondholders
(the bondholders evidencing their consent hereto by
their acceptance of the bonds), ca.ch with each of the
others as follows (prov:Lder,, that:, in the performance
of any of the agreements of the city here�.n contained
any obligation it may thereby incur for the payment
of money shall not be a general debt of the city but
shall be payable solely out of the revenues from the
mortgaged property):
ARTICLE I
AMOUNT, MATURITIES, AND FORM OF
AND INTEREST ON THE BONDS
Section 1. The total principal amount of
bonds authorized to be issued hereunder is limited to
$755,000.00. The bonds shall be dated February 1, 1950,
shall be numbered from 1 to 755, inclusive, shall be
in the principal amount of $1,000 each, and shall be
payable as follows:
Bond Numbers
Aggregate Principal
_(both
inclusive)
Maturity Date
Amount Maturing
1
to
14
February
1;
1953
$14-000
15
to
28
February
1;
1954
1 ;000
29
to
44
February
1;
1955
16;000
45
to
60
February
1;
1956
16;000
61
to
78
February
1;
1957
1$000
79
to
96
February
1;
1978
1$0000
97
to
116
February
li
1959
20;000
117
to
136
February
li
1960
20.000
137
to
158
February
1;
1961
22;000
159
to
180
February
1,
1962
220000
181
to
204
February
1;
1963
24;000
205
to
228
February
1;
1964
24;000
229
to
254
February
1";
1965
26.000
255
to
280
February
1;
1966
26,000
281
to
308
February
1;
1967
2$,000
309
to
336
February
1;
1968
2$,000
337
to
36a
February
1;
1969
30;000
367
to
39k
February
1;
1970
30;000
397
to
428
February
1;
1971
32;000
429
to
460
February
1;
1972
32;000
461
to
494
February
li
1973
34;000
495
to
528
February
1;
1974
34;000
529
to
564
February
1;
1975
36;000
565
to
600
February
l;
19?6
36;000
601
to
638
February
1;
1977
38i000
639
to
676
February
1;
1978
3$;000
677
to
715
February
1;
1979
39;000
716
to
755
February
10
1980
409,000
Section 2. The bonds shall bear interest from
their date until their respective maturities at the
. ll wing per annum rates:
(Here v1U be Inserted the interest rates
on the bonds vim such rates shad have been
iYxtd yet the sale of th* bonds.
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Such interest shall be payable semi-annually on
February 1 and August 1 in each year and shall be
evidenced by the coupons attached to the bonds. Each
bond and coupon shall bear interest at the rate of 6%
per annum after its maturity and shall be payable in
lavrful money of the United States of America at the
principal office of The Merchants National Bank of
Mobile, in the City of Mobile in the State of Alabama.
Section 3. The bonds, the coupons, the
certificate of registration and the trustee's certifi-
cate shall be in substantially the•following forms,
respectively, with such insertions, omissions, and
other variations as may be necessary to conform to the
provisions hereof:
No. _
(Form of Bond)
UNITED STATES OF AMERICA
STATE OF ALABAMA
CITY OF FAIRHOPE
FIRST MORTGAGE GAS REVENUE BOND
•On the 1st day of February, 19 , for value
received, the City of Fairhope (herein called "the
city"), -a municipal corporation under the laws of
Alabama, hereby promises to pay to the bearer hereof,
or if this bond be registered then to the registered
holder hereof, solely out of the revenues hereinafter
referred to, the sum of
O N E T H O U S A N D D 0 L L A R S
with interest thereon from the date hereof until the
maturity hereof at the rate of per annum, pay-
able semi-annually on February 1 and August 1 in each
year until and at the maturity hereof upon surrender
of the anne-Ked interest coupons as they severally
mature. Both the principal hereof and interest hereon
are payable in lawful money of the United States of
America at the principal office of The Merchants
National Bank of Mobile,in the City of Mobile in the
State of Alabama.
This bond is one of a duly authorized issue
limited to the aggregate principal amount of $755,000
and numbered from 1 to 755, inclusive (herein called
"the bonds"). The principal of and interest on the
bonds are payable solely out of the revenues from the
gas system of the city as presently or hereafter
constituted (herein called "the system"), and are
equally and ratably secured by a valid pledge of the
said revenues for payment of the principal of and
interest on the bonds without priority of one bond
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over another by reason of prior issuance or otherwise.
The bonds are further equally and ratably secured by
a mortga a and deed of trust (herein called "the in-
denture"f from the city to The Merchants National
Bank of Mobile (herein called "the trustee") of Mobile,
Alabama, dated as of February 1, 1950, covering the
system. The indenture provides, inter alia, that in
the event of default by the city in the manner and
for the time therein provided the trustee may declare
the principal of this bond as immediately due and pay-
able, whereupon the same shall thereupon become im-
mediately due and payable and the trustee shall be
entitled to pursue the remedies provided in the indenture,
but the indenture shall not be subject to foreclosure.
Those of the bonds maturing in 1960 and there-
after are subject to redemption prior to their re-
spective maturities at the option of the city on
February 1; 1955, and on any interest payment date
thereafter, as a whole or in part in inverse numerical
order, after not less than thirty days' prior notice
given in the manner provided in the indenture, at the
face value of the bonds redeemed plus accrued interest
thereon to the redemption date and a premium equal to
twelve months' interest on the bonds redeemed computed
at the rate they would bear on the redemption date if
they had not been called for redemption; provided, that
any such redemption prior to February 1, 1960, may be
effected solely out of either surplus revenues derived
from the operation of the system while the amounts on
deposit in the bond fund and the contingent fund
created in the indenture shall be not less than the
maximum amounts respectively required to be paid
therein and while all special funds created in the
indenture are in current condition, or out of the
proceeds received by the city from the sale of that
portion of the system which may be purchased by the
Town of Daphne pursuant to an option granted to it.
The covenants and representations herein con-
tained or contained in the indenture do not and shall
never constitute a personal or pecuniary liability or
charge against the general credit of the city, and in
the event of breach of any such covenant or representation
no personal or pecuniary liability or charge payable
directly or indirectly from the general revenues of
the city shall arise therefrom. No holder of the bonds
or the coupons shall ever have the right to compel
the exercise of the taxing power of the city for pay-
ment of the principal of or interest on the bonds, and
this bond does not constitute a debt of the city within
any state constitutional provision or statutory limi-
tation.
The bonds are issued pursuant to the provisions
of Chapter-6 of Title•37 (including articularly Sections
308 to 340, inclupive, of said title of the Code of
Alabama of 1940, as amended, and an ordinance of the
city duly enacted, for the purpose of raising funds to
construct the system, to acquire properties in connection
therewith, and to pay the costs of financing the same
and the interest which will accrue on the bonds during
such construction and for six months thereafter.
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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.
City Clerk
Coupon
No.
WQ
VIAMAJ A
(Form of Coupon)
On the 1at-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 monthst
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 , Registered O,wner Registrar
:
(Form of Trusteets 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, the#e shall be inserted the following:
"(unless his bond shall have been duly
called or prior payment),"
Following the maturity date of each coupon due
on and after Augusts 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
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
WIPLUMOM • z :•
Section 1. All or any part of the callable
bonds may be called for redemption at the option of the
city on February 13, 1955, and on any interest payment
date thereafter; provided, that any such redemption 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.
- 12 -
Section 2. Any such redemption shall beef
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 redemptd4n
price and on the redemption date the callable
bonds so called which may be presented to it.
9
- 13 -
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
�rior to the redemption date shall no longer be entitled
iche 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
Lo 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
s
Section 1. There is hereby created a special
trust fund which shall be known as the "Gas System Gross
Revenue Account". The city will deposit daily as received
by it all revenues derived from the operation of the
mortgaged property into the gross revenue account. On
or prior to the last day 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 Fund' for the purpose of pro-
viding 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
- 14 -
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 I
1950, on February 1, 1951 and on August 1, 1951• t
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 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 fullan 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 propertyfor 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 exceed $47 000. The moneys forming a
part of said cushion shall constitute a part of the
bond fund but shall be kept in a separate account therein
and shall be used only in those fiscal years in which
the moneys on deposit in the bond fund exclusive of
the moneys in the said cushion shall not be sufficient
to pay the principal of and interest on the bonds matur-
ing during such fiscal year and may be so used 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 further payments are required to be made
therein except to replace moneys used therefrom pursuant
to the provisions of this subsection (b).
- 15 -
(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 shall 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 of providing for the
payment of all 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 Tbut 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 dxpenses 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 find 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 moneyp 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 !frown as the "Gas System Contingent
Fund"- for tha purl ooe. of building up a reserve for im-
provements, repla-.�inents and extensions to the mortgaged
property consisting cf 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 sum of W3.34 during each
month during which moneys are available for said purpose,
beginning with the month of August, 1951, and continuing
thereafter until the moneys on deposit in the contingent.
fund shall equal or exceed 05,000. The moneys paid
into the contingent fund shal:i bE., used by the -city
solely for the purpose of making improvements, better-
ments and extensions to the mortgaged property of such
nature as are properly chargeable under good accounting
practice to fixed capital aocount, as distinguished from
expenditures for repairs and maintenance normally neces-
sary to maintain the nzoh^tgaged property in good repair
and in good working order; provided, that if at any
time the moneys on deposit in the bond fund, including
the cu,9hion therein, shall not bo sufficient to pay any
maturing installment of the bonds or coupons as the
same shall respectively mature, then the moneys on de-
posit 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 payment thereof. As and when any moneys in the con-
tingent fund shall be used for any such purpose, the
moneys so used shall thereafter be replaced by continu-
ing payments into the contingent fund each month there-
after in the amount and manner herein provided until
such time -as the moneys in the contingent fund shall
reach ,"35,000.
Section 6. After compliance with the provi-
sions 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 neces-
sary for such purpose, shall be paid into the bond fund,
the operation 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, in-
clusive, of this article; any balance thereafter re-
maining in the gross revenue account may be used by
the city for any lawful purpose.
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; provided, that no such anticipation shall be made
if it will prevent or jeopardize the making of the pay.
ments herein required to be made into any other special
funds herein created.
24
17 -
Section 8.• 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 funa, ths, 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 Suoh investment, such securities together with
all income derived therefrom shall become a part of,:and
shall be hold by the :depository, therefor to the same
extent as if they were moneys on deposit in, the re-
spective fund whose moneys were used for such investment.
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
making 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 time be
the depository for. the bond fund, and all moneys herein
required to be paid into the bond fund shall be remitted
to the trustee. Out of the moneys deposited with it in
the bond fund or transferred thereto, the trustee shall
make provision for payment of the bonds and the coupons
as the same shall respectively mature.
Section 10. The council may at any time and
from time to time -designate any banking institution or
institutions 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 act-
ing 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
contingent 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 neces-
sary 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 pursuant to the written order of an officer
of the city authorized by resolution so to do and with-
out knowleQge or reason on the part of such depository
to believe that such disbursement constitutes a mis-
application of funds.
-18-
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-
STRUCTION OF 131PROVEMENTS
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 supstantially 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
mechanicst 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 engineerts and
legal expenses incurred in ac uiring real estate for -and
in constructing the system; (qb) payment of the rea-
sonable expenses and charges of the trustee in connection
with the construction fund; (c) payments for labor,
- 19 -
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,
upon 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 sectionthe 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
-20-
the said Goodwin Engineers, 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 under the provisions of this section shall
have the same effect as an approval or certification
by the s&id Goodwin Engineers, Inc.
Section 6. tiYhenever 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 mi�►terials and labor. "othing contained in
this section shall impose on the trustee any duty or
liabilit-y with respect to the appropriateness or suf-
ficienc;r of such surety bond or with respect to the
completion of the system as therein and herein provided.
ARTICLE VII
PARTICUL.aR COVEIWA6 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 grs.nted to become effective on the date of the appoint-
ment of such receiver or receivers. Such franchise
so grunted 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:
- 21 -
AN ORDINANCE,GRANTING A
GAS FRANCHISE TO
AND HIS (ITS OR THEIR �
SUCCESSORS IN OFFICE, IN
THE CITY OF FAIRHOPE,
ALABAMQ
BE IT ORDAINED by the (here insert the name
of the then governing body of the cityr of the City
of Feirhope, 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 appointment) 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 azld
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-
.4.ng 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.
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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
auditor's 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
im rovements in the operation of the mortgaged property;
(dy 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 d-te of
the -policy; and (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
t�:e 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
-23-
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
liss than the maximum amounts respectively required to
be maintained therein. The city will at all times
classify the customers who use gas and services from the
mortgaged property into three classifications consisting
of W domestic and small commercial customers, (b) large
commercial customers, and (c) large industrial custorr_srs.
Section $.• 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 property
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
opera."e 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 pre-
vent 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 con-
solidation, merger or transfer, the due and punctual
payment of the principal of and interest on the bonds
a.cording 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
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
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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
vendor's 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 of Article IX 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 11. 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, including 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;
advances and compensation shall be secured hereby, shall
be entitied•to priority of payment over any of the bonds
and coupons, and shall bear interest until paid at the
rate of six per centum (6I) 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 h6lders-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 rll and
every part -of th-e mo-rtgaged property,,,gs free aad' clear of
ev"erg lieri, etcumbran-cat trust or chi°rge prior .herebb; that it
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has power and authority to subject the same to the lien
hereof and that it has done so hereby; and that it will
forever warrant and defend the title to the same unto
the trustee against the lawful claims of all persons
whomsoever.
Section 15. The city will, upon reasonable
request, execute and deliver such further instruments
and do such further acts as may be necessary or proper
to carry out more effectually the purpose of the indenture,
and in particular (without in any way limiting the
generality of the foregoing) to make subject to the lien
hereof any property hereafter acquired by it for use as
a part of the mortgaged property, and to transfer to -
any successor trustee or trustees the assets, powers,
instruments and funds held in trust hereunder and to
confirm 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 instruments or the doing of such acts or be deemed
to affect 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
another gas distribution system in competition with the
business conducted through the mortgaged property.
ARTICLE VIII
PROVISIONS RESPECTING 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
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as its interest may appear. All such policies evidencing
the insurance herein provided for shall be delivered to
and deposited with the trustee I" and prior to the expiration
date of any such policy the city will furnish the trustee
satisfactory evidence that such policy has been renewed
or replaced by another policy or that there is no neces-
sity therefor hereunder.
Section 2. All proceeds of fire, tornado or
windstorm insurance coming into the hands of the trustee
:Call 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
or 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
r ich in the opinion of the council shall be
cf equal value and equal utility in the
operation of a gas distribution 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 equal value and equal utility to the property
damaged or destroyed, or that the property damaged or
destroyed has been repaired or renewed in a workmanlike
and suitable manner satisfactory to such engineer; and
gib) A certificate of independent counsel
satis.factorv- 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 city and the validity of the indenture as a first
mortgage thereon and, in the case of the repair or
renewa:4_ of a.ny damaged or destroyed property, that there
are no mech?nicst or materialments liens caused by such
repair or renewal.
Section 3. The city will carry workmen's
compensation ins�irance 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.
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ARTICLE IX
POSSESSION, USE AND RELEASE
_ OF THE_IORTGAGED PROPERTY -
Section 1. Until default by the city in any
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 the
same, and may collect, use and enjoy the rents, revenues,
income and profits thereof to such extent as is in no-
wise 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
any 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,
unsuitable 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 pity is not in default
to the knowledge of the trustee i^ the payment of any
bond or coupon outstanding hereurider or in respect of
any of ',;hc covenants on the part 'c.-L" city herein
conta %c,!,. he -city may obtain the release of any of
the mo�:-c,Z1aC.od property not needed by it as a part of
its guff distribution system and the trustee shall release
the same from the lien hereof upon deposit by the city
with tips tr*1:.3tee of the following:
t) A -esolution describir_j the property
to be :c•�,-:Iezasej in reasonable detail, stating
that C.,3 city is not in default -under any of
ti'e Pr-C-'131.C11 of the indenture,
and request-
ir_s VW.h release.
(2) A certificate of an independent
en.gincer satisfactory to the trustee made and
dated not more than sixty (60) dOys prior to
the date of the release stating :, full value,
in the opinion -of the signer, of -the property
to be released, and stating that Cuch property
is not and will not be needed by the city as
a part of its gas distribution sya-,t.em, that
such release is in the opinion o.�' t'ae 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.
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Upon compliance by the city with the foregoing conditions
the trustee shall, at the expense of the city, execute
and deliver to the city any and all instruments that may
be necessary to release from the lien of the indenture
that portion of the mortgaged property with respect to
which said conctions shall have been complied with.
Section 4. If any part of the mortgaged
property shall be taken by any eminent domain proceed-
ings the whole compensation therefor shall be paid
direct to the trustee. Upon receipt by the trustee -of
the entire compensation therefor, the trustee shall,
at the expense of the city, execute and deliver to the
city or any corporation or governmental agency success-
fully conducting such condemnation proceedings any and
all instruments that may be necessary to release from
the Lien of this indenture that portion of the mortgaged
proper'-•y which may have been taken by such eminent domain
proceedings.
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 ^-f* the indenture
wh`�.ch in the opinion of the council- shall be
o`' �4uai value and equal utility in the operation
of w 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 thi c-Lty, it shall
furnish to the t_-r_ stee the following[;;
,1) A certificate of an independent
engineer satisfactory to the trustee that
such property so proposed to be acquired or
constructed has b3en acquired or constructed
in a manner snisiactory 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 mechanics'
or materialments liens caused by such con-
struction.
- 29 -
Section 6. By agreement dated January ,
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 corporate limits 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 city agrees to exhaust as nearly as may be practicable
all of the 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
utilize 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.
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ARTICLE X _
REMEDIES 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
(30) days' written notice to it of such failure
made 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 readjustmen- 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 tru=,cee may, by written notice to the city, declare -
the pri._�cipal of all the bonds forthwith due and payable,
and the-eupon they shall so be, anything herein or therein
to the contrary notwithstanding. If, however, thereafter
the city 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 mak3 reimbursement of all the expenses of the
trustee, thc;Z the holders of a majority in principal
amount of t1i_- then outstanding bonds, by written notice
to the truV,,-e, 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
- 31 -
following then on hand which shall be applicable to the
mortgaged property: -Cash on hand or on deposit, accounts
and notes receivable, stocks, evidences of indebtedness,
choses in action, customerts service and extension 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 the 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 attorneyfs 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-
v'.sions of Article V hereo,' to be paid into
i:_�e special funds created in that article;
(4) The surplus, if any there be, to
the c:iLy.
Section 5. All remedies hereunder are vested
exclusively in the trustee for the equal and pro rata
benefit of .11 holders of the bonds and the coupons,
unless the -.rustee refuses or neglects to act within a
reasonable -:•ime after written request to so act addressed
to the trustee by the holders of twenty-five per centum
(25%) of the outstand;ng bonds, accompanied by indemnity
satis'L*'actory 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.
-32-
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
a=)nts, 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 not be answerable
fcr 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 ncr need it exercise any of its rights or
powers arising therefrom unless so requested in
writing by the holders of twenty-five per centum
(25%) of the.then outstanding bonds; it may do so,
if it t�i:inks advisable, without any such request;
it sha"i do so when so requested. Whenever it
has a �--'oice 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, anythingtherein 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.
-33-
(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
of 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 6% 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
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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
control 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.
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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
shall retain from any moneys transferred to it for the
purpose of paying said bonds and coupons so due, for the
benefit- of the holders thereof, a sum of money sufficient
to pay such bonds or coupons when the same are presented
by the holders 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 tq 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
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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.
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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 acceptanceof 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 ist
day of February, 1950.
CITY OF FAIRHOPE
Attest: By 04-------
I s yor
City Clerk
THE MERCHANTS NATIONAL BANK
OF MOBILE
Attest:
By
Its
STATE OF ALABAMA
COUNTY OF
Its
IV , a Notary Public in
and for said state, here y certify that T. J. KlumppI
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 -instrument '
ithin instrument, he, as such officer and
with full authority, executed the same voluntarily for
and as the act of saia' 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
corporatign.
Given under my hand and official seal of office
this day of February, 1950•
o ary c
1950/ Adopted and approved this 23rd day of January,
Attest: