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2002-103ORDINANCE NO. ~DO~-/~ AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE MAYOR TO EXECUTE AN INTERLOCAL COOPERATION AGREEMENT BY AND BETWEEN THE CITY OF DENTON, TEXAS AND THE CITY OF KRUM, TEXAS PERTAINING TO THE DESIGN AND CONSTRUCTION BY KRUM AND THE OVERSIZE COST PARTICIPATION BY DENTON FOR THE KRUM GRAVITY PLOW WASTEWATER MAIN; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the Mayor, or in her absence the Mayor Pro Tern, is hereby authorized to execute, on behalf of the City, an Interlocal Cooperation Agreement between the City of Denton, Texas and the City of Krum, Texas for the design and construction by Krum and the oversize cost participation by Denton, and concerning certain condemnation provisions contained therein, for the Krum Gravity Flow Wastewater Main, substantially in accordance with the Intedocal Cooperation Agreement which is attached hereto and incorporated by reference herein. SECTION 2. That the expenditure of funds as set forth in the Interlocal Cooperation Agreement is hereby authorized. SECTION 3. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the rT~-'~Lt' day of ~ ,2002. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY S:\Our Documents\Ordinances\02~Interlocal Agrmt-City ofKmm WW Line 2002.doc THE STATE OF TEXAS § COUNTY OF DENTON § INTERLOCAL COOPERATION AGREEMENT BY AND BETWEEN THE CITY OF DENTON, TEXAS AND THE CITY OF KRUM, TEXAS PERTAINING TO THE DESIGN AND CONSTRUCTION BY KRUM AND OVERSIZE COST PARTICIPATION BY DENTON FOR THE KRUM GRAVITY FLOW WASTEWATER MAIN THIS AGREEMENT is made and entered into by and between the City of Denton, Texas, a Texas municipal corporation (hereafter "Denton"), whose principal offices are located at 215 East McKinney Avenue, Denton, Texas 76201; and the City of Krum, Texas, a Texas municipal corporation (hereafter "Knun"), whose principal offices are located at 102 West McCa*t, P.O. Box 217, Krum, Texas 76249; each organized and existing under the laws of the State of Texas, and acting by and through the authority of their respective governing bodies and officials; and WHEREAS, Denton and Krum are local governmental entities, both of whom have the authority to perform the activities set forth in this Agreement individually, and who mutually desire to enter into an interlocal cooperation agreement, as provided for in Chapter 791 of the Texas Government Code (Vernon 1994) in order to maximize the benefits to the citizens of Denton and Krum to be derived from each taxpayer and/or ratepayer dollar expended; and WHEREAS, Krum has planned, and intends to construct, install, and manage a wastewater transmission line that is to be located in Denton and Krum, in Denton County, Texas, in order to provide wastewater infrastructure to existing and future developments, which line is called the "Krum Gravity Flow Wastewater Main" (hereafter the "Krum Line"); and this Project is called the Krum Wastewater Main Project (hereafter the "Project"); and which Kmm Line shall extend generally along a tributary of Hickory Creek; along Egan Road; then crossing Highway 380 to Masch Branch Road; and then parallel to Masch Branch Road to Denton's Hickory Creek Wastewater Interceptor; and WHEREAS, Denton and Kmm, each in accordance with its respective ordinances, desire to jointly implement the Project. WHEREAS Krum will design, construct, manage, and install a sewer line; and Denton will participate in oversizing the above sewer line for Krum. The oversizing is anticipated to be twenty-one (21") inch, twenty-four (24'') inch, and twenty-seven (27") inch diameter sewer pipe. The final oversize line for the Krum Line Project, for the purposes of providing facilities to adequately receive, transport, treat, and dispose of wastewater, shall be determined during the final design of the Project; and WltEREAS, Denton has been and is willing to accept the responsibility of providing improved wastewater treatment and services to entities located outside of its corporate limits to protect water quality and develop reuse potential; and Denton and Krum intend to enter into a separate contract entitled "Wholesale Wastewater Treatment Services Contract Between the City of Denton, Texas and the City of Khan," (hereafter the "Contract") wherein Krum desires to obtain wastewater treatment service on behalf of its customers, and Denton shall provide Kmm with regional wastewater treatment service on a wholesale basis; and WItEREAS, Denton and Krum desire to pool their respective financial resources to avoid unnecessary or duplicitous costs and expenses; intend to coordinate the collection, treatment, and reclamation of wastewater; and intend to attain mutual advantage and benefit by achieving economies of scale, resulting in savings to the taxpayers and ratepayers of Denton and Krnm; and WItEREAS, Denton and Kmm, by this Interlocal Cooperation Agreement (hereafter the "Agreement") express their mutual understanding that the relationship to be created by implementation of Agreement is that of two local governmental entities providing resources for the construction of the Krum Line; and there is a valid governmental purpose served by this Agreement by Denton and Krum to provide for construction and installation of the Krnm Line; and WHEREAS, Denton and Krmn represent that all payments made in connection with governmental functions provided for by this Agreement, shall be made fi.om revenues available to Krum in accordance with the provisions of Section 791.01 l(d)(3)of the Texas Government Code; and that the payments received by Denton hereunder are adequate and fairly compensate Denton for the services, functions, or activities performed, in accordance with the provisions of Section 791.01 l(e) of the Texas Government Code; and WltEREAS, the Interlocal Cooperation Act, now contained in Chapter 791 of the Texas Government Code (Vernon 1994), authorizes Denton and Krum to enter into this Agreement for the purpose of achieving the govemmental functions and providing the services, functions, or activities represented by this collective, cooperative undertaking; and NOW, THEREFORE, Denton and Krum, for and in consideration of the premises and the mutual promises and covenants set forth in this Interlocal Cooperation Agreement, and pursuant to the authority granted by the respective governing bodies of each of the parties hereto, in accordance with Section 791.01 l(d)(1) of the Texas Government Code, do hereby AGREE as follows: I. ADOPTION OF PREAMBLE All matters and recitations stated in the Preamble of this Agreement are true and correct and are hereby incorporated by reference into the provisions of this Agreement for all purposes pertinent. II. DEFINITION OF TERMS In addition to the definitions stated in the Preamble hereof, some of the terms and expressions as hereinafter used in this Agreement, unless the context clearly indicates otherwise, shall have the following meanings: 2 (a) "Average Day Wastewater Flow" means the daily average flow rate computed by dividing the total quantity of wastewater flow generated over a calendar year divided by 365 days per year. (b) "Project" means the Krum Wastewater Main Project. (c) "Bonds" as used herein, means the issuance of debt, including principal and interest, by Denton for the pnrpose of financing the Project. (d) "Interest Factor" as used herein, means the rate utilized herein which consists of Denton's average interest cost paid to retire the issuance of debt pertaining to the Project. (e) "SFE" means single-family equivalent. On a daily average basis, one (1) SFE generates 320 gallons per day (GPD) of wastewater flow. (f) "Maximum Day Flow Rate" means the expected maximum wastewater quantity generated over a 24-hour day. For purposes of this Agreement, the maximum day flow rate equals to the average day flow rate times two (2). (g) "Peak Hourly Flow Rate" means the expected maximum.wastewater quantity that could occur in any given sixty (60)-minute period. For purposes of this Agreement, the peak hourly flow rate equals to the average day flow times four (4). (h) "Project Costs" means all capital, construction, planning, engineering, surveying, easement/right-of-waY acquisition, financing, and other typical costs associated with the implementation of the Project; including without limitation, the bond issuance costs, bond insurance premiums, underwriter's discount, and deposits to the deposit reserve fund. (i) "Parties" means Denton and Krum referred to collectively. III. TERMS AND PROVISIONS OF THE AGREEMENT 1. Kmm shall design, install, and construct the Krum Wastewater Main Project which includes, but is not limited to, approximately 26,000 linear feet of a fifteen (15")-inch diameter capacity sewer pipe; along with all necessary appurtenances thereto (including, without limitation, metering station, manholes, etc.), and Denton will participate in the oversizing of a fifteen (15") inch diameter capacity sewer line, as generally shown on Exhibit I, attached hereto and incorporated herein by reference. The Project shall commence at the current downstream terminus of a sewer main located immediately upstream of Knun's proposed metering station (termed the "Point of Beginning"). The Project shall terminate at Denton's existing Hickory Creek Wastewater Interceptor Main (termed the "End-Point"). 2. The Parties agree that in the Krum Line Project, Krum shall have access up to the full capacity of a fifteen (15") inch diameter sewer line and Denton will have access to the oversize capacity above and beyond the capacity of a fifteen (15") inch diameter sewer line 3. Prior to the beginning of construction of the Krum Line Project, Knun shall obtain, as part of the Project Cost, all necessary permits and licenses. Kruna shall also obtain, as part of the Project Cost, all necessary easements. The deeds, plats, and other documents so obtained by Krum shall be reviewed and approved as to form and substance by Denton prior to the beginning of construction. Kmm has informed Denton that it needs to speed up the development of the Kmm Line Project by possibly performing construction of the line in phases. Denton recognizes that fact, and agrees to reasonably approve a construction contract providing for multiple phases; and Denton is willing to approve the easements obtained, as to form and substance, in construction phases, if need be; but Knnn understands that Denton will not, and cannot assume any additional financial risks or liabilities attributable to its serial approval of easements throughout the term of the Project. In the event Krum is unable to acquire any needed easements and Condemnation becomes necessary, Denton shall immediately assist Kmm, upon its request. Krum shall provide Denton with information and any requested documentation of its efforts to obtain such easements, including evidence of the negotiations and offers made to the affected property owners. Prior to condemnation suits brought by Krum, the City of Denton reserves the right to negotiate with the property owners, in order to assist Krum. Any easements for the Krum Line Project obtained by Kmm within the City of Denton shall be assigned to Denton, if easements are not already acquired in Denton's name, prior to acceptance of the Krum Line Project. Further, that subject to the terms and conditions contained herein, Denton authorizes Krum to acquire such easements within the city limits of Denton by purchase or by eminent domain proceedings. Denton f'mds that there is a public need and necessity to acquire these easements by purchase or eminent domain proceedings. Should eminent domain proceedings be necessary, Krum is authorized to condemn and acquire said easements for this Project, in the name of Denton. 4. Kmm's share of the Project Cost shall be computed as the cost to survey, design, acquire easements, and construct a fifteen (15") inch diameter sewer line, including all appurtenances such as manholes, metering station, etc. for a complete project. 5. Denton's share of the Project Costs as between Denton and Krum shall be computed as the difference between the total Project Costs and Krum's share of the Project Costs. Each party's respective share of the Project Costs shall be based upon final audited numbers. 6. By way of example, Krum's portion of the Project Costs for the Knun Line Project is currently estimated and projected to be $1,800,000. Krum will fund $1,400,000 fi:om its existing bond sale. The remainder of the Krum share: $400,000 plus $20,000 in estimated bond selling costs (hereinafter termed the "Principal Component Amount"), is computed by the procedure and methodology as set forth in the "Contract Payment Schedule" which is marked as Exhibit II, and is attached hereto and incorporated herewith by reference. The Principal 4 Component Amount shall include Krum's share of the capital cost for the Kru_m Line Project plus Krum's share of the portion of the other Project Costs, as defined in paragraph II.(h.) hereinabove, also including, without limitation, any interest accruing on the Bonds during the construction phase of the Project. Krum shall also pay its share of the portion of such other and further costs and expenses, if any, as calculated by Denton to Krum that are reasonably incurred and are associated with the construction and installation of the Knma Line Project, that are mutually agreeable as between the Parties. 7. The Principal Component Amount plus the total Interest Factor amount [i.e., the cumulative annual interest amortized over a payout period of twenty (20) years based upon financing the Principal Component Amount at the Interest Factor] computed over twenty (20) years at Denton's Interest Factor, which is 5.25% ]estimated until fixed by Bond Sale] per annum, and which shall be hereinafter termed the "Repayment Amount." By way of example, the annual Repayment Amount on a projected Principal Component Amount of $420,000 is $34,170.68 [estimated until the interest rate is fixed by Bond Sale], as computed and set forth in Exhibit II attached hereto and incorporated herewith by reference. 8. Krum shall pay Denton the Repayment Amount in contractual payments in accordance with the following provisions and factors, and as shown as the "Contract Payment Schedule" attached hereto as Exhibit II: Krum will pay 1/40 of the product of Krum's allocable percentage share of Project Costs times the combined total of the Principal Component Amount and the Interest Factor amount portion of each payment respecting total Project Costs in level payments, due and payable on January 1 and July 1 of each calendar year for a period of twenty (20) successive years; such payments being hereinafter referred to as the "Contractual Payments," with the first such Contractual Payment being payable from Krum to Denton on July 1, 2003; and The Interest Factor amount utilized over the twenty (20) year Contract Payment Schedule to determine the amount of the level Contractual Payments, shall be that interest rate paid by Denton on the Bonds issued by Denton used to fmance the Project, which is the rate of $.25% [estimated rate until fixed by Bond salel per annum. For purposes of determining the level Contractual Payment amount due hereunder, the Principal Component Amount shall be based and amortized on a standard twenty (20) year debt amortization schedule and upon the declining balance method (applying the Interest Factor amount) respecting the determination of the Contract payoff balance in the event that Krum's contractual obligations to Denton hereunder are prepaid as permitted by the provisions of paragraph III.8.d. hereinbelow. Provided however, Krum reserves the fight to prepay its contractual obligations arising hereunder to Denton, without penalty, at any time after the fifth anniversary date of the execution date of this Agreement. 5 Prepayment during the first five (5) years following the execution date of this Agreement shall be prohibited, unless both the City of Denton and the City of Krum mutually agree to waive such prepayment restriction in writing. The Contractual payoff balance shall be determined at the time of the prepayment, as if the Contract Payment Schedule attached hereto as Exhibit II, were a mortgage debt being prepaid. In the event of prepayment, Krum shall be responsible only for the Interest Factor amount calculated to the date of prepayment, and shall not be responsible for the payment of any further sums hereunder to Denton, other than the remaining, unpaid Principal Component Amount. In the event Krum prepays its contractual obligations hereunder, in whole or in part, on a date other than a scheduled Contract payment due date, then the Parties agree that interest shall be prorated through the date of such payment(s). 9. To determine the final Project Costs of the Krum Line, Denton shall have the right to inspect any and all records of Krum, its agents, employees, contractors or subcontractors, and shall have the right to require Knnn to submit any necessary information, documents, invoices, receipts or other records to verify the final audited Project Costs of the Kmm Line Project. 10. Kmm will deliver wastewater to the Denton wastewater system at the following "Point of Entry": a. To the Hickory Creek Interceptor Main 11. Under this Agreement Denton agrees to receive wastewater from Krum up to the full capacity of a fifteen (15") inch diameter sewer line. The capacity of a fifteen (15") inch sewer line shall be determined based on the minimum slope in the sewer line fi'om the final design drawings, and may be revised based on as-built conditions. The Parties agree that Kmm's contractual right respecting the foregoing amount of capacity shall survive the payment and/or prepayment of this Agreement, and is a contractual property right owned by Kmm that survives the term of this Agreement. 12. Krum will pay one hundred (100%) pement of the cost to construct wastewater metering stations, meeting Denton criteria, to measure the quantity and rate of wastewater being delivered at each Point of Entry to the Denton wastewater system. Upon construction and completion of the metering stations, Denton shall own and operate these facilities. Denton shall calibrate these facilities with regard to flow measurements at least once a year, or more often if required. The cost of calibration of these facilities shall be bome by Denton as a System Cost under the Wholesale Wastewater Treatment Services Contract Between the Cities of Denton and Krum, Texas. 13. Under this Agreement, Krum is purchasing and acquiring a contractual right and interest in and to the equivalent of the capacity of a fifteen (15") inch diameter sewer pipe of wastewater service capacity within the Kmm Line Project and shall have an exclusive right to retain such capacity. This contractual right and interest in and to such capacity shall survive the term of this Agreement unless otherwise lawfully terminated. Kmm reserves the right to 6 sell, trade, transfer, or assign to any other entity all or a part of its fifteen (15") inch diameter sewer capacity interest in the Kmm Line Project, provided that such transfer meets all four (4) of the following conditions: Only wastewater, as defined in Dentoffs Sewer Use Ordinance, is delivered to the Denton wastewater system; and Wastewater can only be delivered at the point of entry described in paragraph III. 10. hereinabove; and Co Quantity and rate ofwastewater delivery shall not exceed those specified in paragraph III. 2., above; and Denton provides written approval for any such transfer or assignment of Krum's ownership in the contractual rights and wastewater capacity rights acquired pursuant to this Agreement. Denton agrees that it shall not unreasonably withhold its approval of any such transfer or assignment, if the proposed transfer or assignment does not violate the intent or spirit of this Agreement. 14. This Agreement may be terminated by Krum at any time after the fifth anniversary date of the execution of this Agreement by Krum paying and/or pre-paying the total amount due and owing Denton as determined by paragraphs 111.7. and 111.8. hereinabove, and as set forth in Exhibit 11 attached hereto. In the event of such termination, Krum's rights and interests respecting the fifteen (15") inch diameter pipe wastewater capacity, as described in paragraph III. 13. hereinabove, shall survive and shall not be terminated. 15. In the event that Krum does not "begin construction" (hereafter defined as the date that a Notice to Proceed document is executed and issued by a duly-authorized representative of Krum with the prime contractor for the Krmn Line Project) of the Project within twelve (12) months from the date of execution of this Agreement by Krum and Denton, then Denton shall have the option to terminate this Agreement, upon thirty (30) days written notice delivered to Krtlm. 16. During the Kmm Line Project design and construction phases, Krum and Denton shall hold construction meetings at least once per month, and more often, as may be necessary and appropriate, in order to coordinate their activities on the Project. 17. This Agreement embodies the entire agreement of the parties hereto and there are no promises, terms, conditions, understandings, or obligations other than those contained or incorporated herein. This Agreement shall supersede all previous communications, representations or agreements, whether verbal or written, between the parties hereto with respect to the subject matter of this Agreement. 18. This Agreement is subject to modification, waiver, amendment, addition, or deletion, only by means of a written document duly executed by both of the Parties hereto. 7 19. This Agreement shall not be assigned by Denton without the express written consent of Kmm, which consent shall not be unreasonably withheld. 20. Any and all suits for breach of this Agreement, or any other suit pertaining to or arising out of this Agreement, shall be brought in a court of competent jurisdiction in Denton County, Texas. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 21. The paragraph headings contained in this Agreement are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several paragraphs hereof. 22. Both of the Parties hereto have actively participated in 'the negotiation and preparation of this Agreement and the Exhibits attached hereto, and the Parties accordingly agree that this Agreement shall not be construed either more or less strictly against or for either party hereto. EFFECTIVE DATE AND TERM This Agreement shall become effective as of the date of execution hereof by both Parties, following the approval of their respective governing bodies. This Agreement shall be for a term of one (1) year, from and after the date that this Agreement is approved by the governing bodies of Denton and Krmn (hereafter the "Effective Date"), and shall thereafter be automatically renewable, without further action by Denton and Krum for successive one (1) year terms thereafter, as provided by and as permitted under applicable State law MUTUAL HOLD HARMLESS COVENANT 1. To the extent allowed by the Constitution and statutes of the State of Texas, and without waiving any immunity or limitation as to liability, Krum agrees to and shall indemnify and hold harmless Denton, its officials, officers, agents, employees, attorneys, and its independent contractors from and against any and all claims, damages; causes of action, lawsuits, and reasonable attorney's fees and costs of court, for injury or death of any person; or for damages to any property, real, personal, or mixed, arising out of or in connection with the construction, installation and operation of the Krum Line, where the injury or death or property damage is caused by the negligence of Kmm, its officials, officers, agents, employees, attorneys, and its independent contractors, except that Kmm assumes no liability for the sole negligent acts of Denton, its officials, agents, employees, attorneys, and its independent Contractors. 2. To the extent allowed by the Constitution and statutes of the State of Texas, and without waiving any immunity or limitation as to liability, Denton agrees to and shall indemnify and hold harmless Knun, its officials, officers, agents, employees, attorneys, and its independent contractors from and against any and all claims, damages, causes of action, lawsuits, and reasonable attorney's fees and costs of court, for injury or death of any person, or for damages to 8 any property, real, personal, or mixed, arising out of or in connection with the construction, installation, and operation of the Krum Line, where the injury or death or property damage is caused by the negligence of Denton, its officials, officers, agents, employees, attorneys, and its independent contractors, except that Denton assumes no liabihty for the sole negligent acts of Krum, its officials, agents, employees, attorneys, and its independent contractors. VI. FORCE MAJEURE 1. Krum shall construct and shall provide Denton with use of a fully-functional Krum Line. The Parties agree that Denton shall not be liable for any damages, costs, or losses, if such wastewater transmission line should fail; should use of the line be interrupted or reduced; should the Krum Line become defective; be seriously impacted by either an Act of God, a catastrophic disaster, an action of the elements, a serious flooding condition, accidents, strikes, labor problems, sabotage, terrorism, the breakdown of equipment, or arising out of a lawful order or action of a governmental authority having jurisdiction over the Krum Line and the Parties, or for any other cause beyond the reasonable control of Denton. 2. The Parties agree that in no event shall Denton be liable in consequential damages to Krum hereunder for any fome majeure event, as set forth in this Paragraph VI hereof. VII. · NOTICE PROVISIONS 1. Any notice, request oi: other communication made by either party pursuant to this Agreement shall be given in writing and shall be deemed to have been given by either party to the other party at the addresses shown below upon any of the following dates: a. The date of notice by telecopy or other similar telecommunications, the receipt of which is confirmed promptly in Writing by the recipient; b. Three (3) business days after the date of receipt stated on the return receipt showing the mailing thereof by U.S. Mall, postage prepaid (as shown by the post office receipt if mailed to the other party hereto by means of registered or certified mail, return receipt requested); c. The date Of actual receipt of notice by the other party hereto, if not provided pursuant to V. 1.a. or V. 1.b. hereinabove. 2. The addresses of the Parties for the purpose of providing the other party notices under this Agreement shall be as follows, unless written notification of a change of address is provided by either or both Parties to this Agreement: City Manager City of Denton, Texas 215 East McKinney Street 9 Denton, Texas 76201 Mayor City of Krum, Texas P.O. Box 609 Krum, Texas76226-0609 VIII. MEDIATION AND ALTERNATE DISPUTE RESOLUTION The Parties agree that if any dispute arises under this Agreement, that they will, in good faith, attempt to resolve such dispute in a reasonable and expedient .manner. The Parties recognize that they should strongly consider settling any such dispute by submitting the dispute to mediation or some other form of dispute resolution. No mediation or other form of alternate dispute resolution activity arising out of, or relating to this Agreement, may be required or forced by one party upon the other party, without the Parties' mutual agreement. In the event that the Parties agree that mediation or some other form of alternate dispute resolution is appropriate, then they hereby agree to expedite such mediation or other alternate dispute resolution activity, and further agree to each be responsible for one-half of all mediation or other alternate dispute resolution activity fees and expenses incurred. SEVERABLLITY If any clause, provision or paragraph of this Agreement should be held illegal or invalid by any court, the invalidity of such clause, provision or paragraph shall not affect any of the remaining clauses, provisions or paragraphs hereof, and this Agreement shall be construed and enforced as if such illegal or invalid clause, provision or paragraph had not been contained herein. IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate original counterparts by and through the duly-authorized o~cials and officers, of the City of Denton, Texas and the City of Kmm, Texas on this the r~_~_~TzL day of ~29/~l [ , 2002. ' "DENTON" CITY OF DENTON, TEXAS A Texas Municipal Corporation EULINE BROCK, MAYOR 10 ATTEST: JENNWER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY By: CITY OF KRUM, TEXAS A Texas Municipal Corporation By: ~J3~ DAVID P~LLEY, MAYOR ATTEST: KATHY RENSHAW, CITY SECRETARY APPROVED AS TO LEGAL FORM: PATRICK' CITY ATTORNEY By: ~ Draft-Inteflocal Cooperation Agreement- Denton Krum WW Line 031802.doc 11