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2001-484FILE REFERENCE FORM 2001-484 X Additional File Exists Additional File Contains Records Not Public, According to the Public Records Act Other Date Initials Amended by Ordinance No. 2002-202 ~ 06/18/02 ~ ) R Amended by Ordinance No. 2002-288 ~ 09/03/02 ~ )R Amended by Ordinance No. 2008-179 ~ 08/19/08 ~ )R ORDINANCE NO. TO GAS DISTmUTION, D~ISION OF TXU GAS COMPAq, ITS SUCCESSORS ~ ASSIGNS, A F~CHISE TO F~SH, T~NSPORT ~ S~PLY GAS TO THE GENE~ P~LIC ~ THE CITY OF DENTON, DENTON CO~TY, TE~S, FOR THE T~NSPORT~G, DELIVERY, SALE, A~ DIST~BUTION OF GAS ~, OUT OF, A~ THROUGH S~D ~CIP~ITY FOR ~L P~OSES, PROVID~G FOR THE PA~ENT OF A FEE OR CH~GE FOR THE USE OF THE ST~ETS, ~LEYS, ~ P~LIC WAYS, ~PE~G ~L P~VIOUS GAS F~C~SE O~CES A~ O~ANCES ~ CO~LICT HE~TH, PROVID~G THAT IT SHALL BE ~ LIEU OF OTHER FEES ~ CH~GES, EXCEPT~G ~ VALO~M T~ES, P~SC~B~G THE TE~S, CO~ITIONS, OBLIGATIONS A~ L~ITATIONS ~ER ~ICH SUCH F~NCHISE SH~L BE EXERCISED, PROVID~G A SAV~GS CLAUSE, A SEVE~ILITY CLAUSE, ~ ~ EFFECTIVE DATE ~E~AS, T~ G~ Dm~butlon Comply, a dlwmon ofTXU G~ Comply, hereinafter refe~ed m as "Comply," ~ough a merger w~th Lone St~ G~ Comply, assmed the prewous ff~chlse m use ~d occupy the pubhc rights-of-way ~d pubhc prope~ of the Cl~ for the p~ose oflay~ng, mmntmmng, constructing, protecting ~d operatmg their system as grmted by Ordln~ce No 82-56, as mended by Ordln~ce No 90-108, ~d ~E~AS, ~e previous ~chlse refe~ed to above expired on Au~st 19, 2001, ~d ~E~AS, the Comply ~d ~e C~ty desire to enter into a new ~ch~se a~eement to au~onze ~e Comply, its successors ~d asm~s, ~e rights to use ~d occupy ~e pubhc rights-of-way ~d o~er pubhc prope~y of~e City as set fo~h ~n the body of ~xs ordmmce, NOW, THE~FORE, THE CO~CIL OF THE CITY OF DENTON HE.BY O~A~S SECTION 1 G~NT OF AUTHO~TY (A) The City of Denton, Texas, hereto after called "City," hereby ~ts to T~ G~ Dmmbut~on, a dlwmon of TXU Gas Company, herema~er called "Comply," ~ts successom md asm~s, pnwlege ~d hcense to use md occupy the present ~d ~t~e Pubhc ~ghts-of- Way of the City for the pu~ose of la. rig, mmntmmng, constructing, protecting, operating, and replacing the System and all other appurtenantequlpment needed and necessaryto dehver, transport and distribute gas ~n, out of, and through smd C~ty and to sell gas to persons, firms, and corporations, ~nclu&ng all the general pubhc, w~thln the City's corporate hm~ts (B) Smd privilege and license being granted by th~s ordinance Is for a term from August 19, 2001 through December 31,2011 Provided, however, the Company shall pay the franchise fee set forth m Section 20 on gross revenues as defined ~n Section 8 of this ordinance beglnmng with the effective date ofthls ordinance Untd that date Company shall continue to pay revenues based on the franchise fee payment due under the previous franchise which expired on August 19, 2001 (C) The provisions set forth ~n this ordinance represent the terms and con&t~ons under whmh the Company shall construct, operate, and mmntatn the System w~thxn the C~ty In granting thru franchise, the C~ty does not in any manner surrender or wmve its regulatory or other rights and powers under and by wrtue of the Constitution and statutes of the State of Texas as the same may be amended, nor any or,ts rights and powers under or by wrtue of present or future or&nantes of the C~ty, and it is expressly provided that nothing here~n shall ~mpmr the right of the C~ty to fix, w~th~n constitutional and statutory hmlts, a reasonable price to be charged for natural gas, or to provide and fix a scale of prices for natural gas, and other charges, to be charged by Company to res~dentml customers, commercial customers, ~ndustrlal customers, or to any combination of such customers, within the terntorml limits of the C~ty as same now ernst or as such hmits may be extended from t~me to t~me hereinafter and to ~nsure the maintenance of Company's property in good repmr throughout the term of th~s franchise Company, by its acceptance of this franchise, agrees that all such lawful regulatory powers and rights as the same may be from t~me to time vested in the C~ty shall be ~n full fome and effect and subject to the exercise thereof by the C~ty at any t~me By entenng into th~s franchise neither Company nor 2 C~ty waives any clmms or defenses they may have ~n the litigation styled Ctty of Denton, Texas, et al vs TXUElectrtc Company, et al, currently pending ~n the 134~ Judicial District Court of Dallas County, Texas ("TXU L~t~gat~on") SECTION 2 ACCEPTANCE OF TERMS OF FRANCHISE (A) The Company shall have thirty (30) days from and after the passage and approval of the ordmance to file ~ts written acceptance thereof with the C~ty Secretary The effective date shall be determmed ~n accordance w~th the reqmrements of Section 28 and Section 13 01 of the City Charter (B) If the Company, ~ts successors and assigns, shall ftuthfully comply with all the terms, and fmthfully perform all the duties and obhgatmns, and fatthfully observe and recogmze all the limitations and regulations contmned m th~s ordinance and in the vahd ordinances of the City relatmg to the conduct of Company's business adopted hereunder or under the pohce powers of the C~ty, then the rights, franchises and privileges herein granted shall extend from the date of the acceptance ofth~s ordinance by Company through December 31,2011, otherwise, the City, after any material breach of the terms of th~s franchise has been determined by the City Council of the C~ty, may declare all rights granted hereunder to be abated, forfeited or terminated in accordance w~th the termination procedures provided hereto (C) At mldmght on December 31,2011, ALL rights, franchises and pnwleges herein granted, unless they have already at that t~me ceased or been forfeited, shall at once cease and terminate SECTION 3 NO THIRD PARTY BENEFICIARIES This franchise is made for the exclusive benefit of the C~ty and the Company, and nothing here~n ~s mtended to, or shall confer any right, claim, or benefit in favor of any third party 3 SECTION 4 SUCCESSORS AND ASSIGNS No assignment or transfer of this franchise shall be made, in whole or in part, without approval of the City Council of the City The City will grant such approval unless withheld for good cause Upon approval, the rights, privileges, and franchise herein granted to the Company shall extend to and include its successors and assigns The terms, conditions, provisions, requirements and agreements contmned in this franchise shall be bln&ng upon the successors and assigns of the Company SECTION 5 COMPLIANCE WITH LAWS~ CHARTER AND ORDINANCES This franchise is granted subject to the laws of the United States of America and its regulatory agencies and commissions and the laws of the State of Texas, the Denton City Charter of 1959, as amended, lnclu&ng Article XIII "Franchises" of said Charter, and all other applicable ordinances of the City of Denton, not inconsistent herewith SECTION 6 CONFLICTING ORDINANCES All ordinances and parts of ordinances of the City of Denton, Texas, m conflict with the provisions of this ordmance are hereby repealed, to the extent of that conflict only SECTION 7 NOTICES Any notices required or desired to be given from one party to the other party to this ordinance shall be m writing and shall be given and shall be deemed to have been served and received (whether actually received or not) if (0 delivered in person to the address set forth below, (n) deposited in an official depository under the regular care and custody of the Umted States Postal Service located within the confines of the United States of America and sent by certified mml, return receipt requested, and addressed to such party at the address hereinafter specified, or (m) delivered to such party by courier receipted delivery Either party may designate another address within the confines of the continental United States of America for 4 not~ce, but until wnttan notice of such change is actually received by the other party, the last address of such party designated for not,ce shall remain such party's address for notice CITY COMPANY City Manager Town Manager C~ty of Denton TXU Gas D~stnbut~on 215 E McKmney 100 W Mulberry Denton, Texas 76201 Denton, Texas 76201 SECTION 8 DEFINITIOI~S For the purposes of this ordinance, the following terms, phrases, words, and their derivations shall have the meanings g~ven hereto When not ~ncons~stent with the context, words ~n the present tense ~nclude the future, words in the plural number include the singular number, and words ~n the smgular number include the plural number The word "shall" is always mandatory and not merely directory (A) "City" shall mean the City of Denton, Texas (B) "Company" shall mean TXU Gas Distribution, a d~vls~on of TXU Gas Company (C) "Gross Revenues" shall mean all revenue derived or received, d~rectly or indirectly, by the Company from or in connection with the operation of the System and for ~ts services and related servmes provided by the Company to residential, commercial, ~ndustnal, governmental, mtmmlpal and all other customers located within the corporate limits of the C~ty, save and except sales to the Spencer Generating Station as ~ndmated in subsection 8(C)(5)(e) The revenues included in Gross Revenues shall ~nclude w~thout hmltatlon ( 1 ) all revenues received by the Company from the sale of gas within the City to all customers w~th~n the C~ty, (2) all revenues received by the Company from the transportation of gas, including third party natural gas, through the System of Company to residential, commemml, ~ndustnal and transportation service customers and all other customers 5 within the City, (3) to the extent not included in paragraphs (1) and (2), above, the total value of gas, ~ncludmg third party natural gas, whmh shall ~nclude all affiliate revenues, transported ~n Denton through the System of Company to all customers w~thln the C~ty, and (4) other revenues of the Company derived from lawful charges (a) to connect gas service within the City, (b) to d~sconnect gas serwce within the City, and (c) to handle returned checks from customers within the C~ty and other such serwce charges and charges as may, from time to time, be authorized ~n the rates and charges on file with the City (5) Gross revenues shall ~nclude, regardless of the outcome of the TXU htlgatlon mentioned in Section I(C), all transportation service, ~ndustnal and mlscellaneousrevenues Gross revenues shall not ~nclude (a) the revenue ofany person including w~thout hmitat~on, a TXU affihate, to the extent such revenue is already mcluded m Gross Revenues of the Company (b) taxes ~mposed by law on customers that the Company is obhgated to collect and which the Company passes on, m full, to the applicable tax authority or authorities other than sales taxes, (c) any ~nvestment ~ncome earned by the Company (d) sales taxes, fee on fee revenues or monies received by Company from customers as a contribution in aid of construction unless these revenues are found by a finaljudgment of the Court or through a settlement of the TXU lltlgat~onto be included within "Gross Revenues", (e) revenues derived from sales to the Spencer Generating Station (f') the parties agree that at the exclusive option of the City, the definition of "Gross Revenues" under th~s franchise will be amended to ~nclude all addmonal revenues which are found by a final judgment of the court or through a 6 settlement of the TXU ht~gatlon to be ~ncluded or ~ncludable within "Gross Revenues" The parties further agree to amend thru fi'anchtse to adopt and approve rate ordinances and tariffs as necessary m order to add any such add~tlonaI revenues (D) "Person" shall mean any natural person, or any assoc~aUon, firm, parmershlp, joint venture, corporation, or other legally recognized entity, whether for-profit or not-for-profit, but shall not, unless the context clearly intends otherwise, include the City or any employee, agent, servant, representative or officml of the C~ty (E) "Public Raght-of-Way" shall mean pubhc streets, alleys, highways, bridges, easements, pubhc places, publtc thoroughfares, grounds, s~dewalks and all other public real property of the City, as they now exmt or may be hereafter constructed, opened, lind out or extended within the present limits of the City, or in such temtory as may hereafter be added to, consohdated or annexed to the City (F) "System" shall mean all of the Company's pipes, pxpehnes, gas roams, laterals, feeders, regulators, meters, fixtures, connections, and any other equipment or ~nstmmentalmes used xn or incident to provldmg dehvery, transportation, dxstnbuUon, supply and sales of natural gas for heatmg, hghtmg, power, and any other purpose for whmh natural gas may now or hereafter be used, located within the copporate hmlts of the C~ty (G) "TXU Affihate" shall mean xn relation to the Company, a Person that controls, xs controlled by, or is under common control w~th the Company As used ~n th~s defimtlon, the term "control" means, w~th respect to a Person that ~s a corporation, the ownershap, d~rectly or lndlrectly, of more than 50% of the votxng securities of such person or, with respect to a Person that is not a corporation, the power to direct the management or pohcles of such Person, whether by operation of law, by contract or otherwise (H) Transportation Service Customer shall mean any person or entity for which 7 Company transports gas through the pipehne system of Company within the City to customers for delivery or consumption within the City SECTION 9 PARAGRAPH FIEADINGS CONSTRUCTION The paragraph headings contmned in this ordinance are for convenience only and shall m no way enlarge or limit the scope or meaning of the various and several paragraphs hereof Both parties have participated in the preparation of this ordinance and this ordinance shall not be construed either more or less strongly agmnst or for either party SECTION 10 CONDITIONS OF OCCUPANCY (A) All construction and the work done by Company, and the operation of its business, under and by virtue of this ordmance, shall be in conformance with the ordinances, rules and regulations of City now m rome and that may hereafter be adopted by the City relating to the use of its Public Rights-of-Way and grounds of the City (B) Company shall lay, mmntmn, construct, operate, and replace its papes, mmns, laterals and other eqmpment so as to interfere as little as possible with traffic The placement of all mams, pipes, laterals, and other appurtenant equipment shall be subject to the approval of the City Manager or his designee pnnr to construction which approval shall not unreasonably be withheld Reproducible copras of all nraps showmg the location of all mains, pipes, laterals, and other appurtenant equipment shall be furnished to the City Manager (C) In determining the location of Company's pipeline within the City, Company shall minimize interference with then-existing underground structures of City or other utility franchisees Likewise, in deterunmng the location of the facilities of the City and other utility franclusees w~thln the City, City shall mlmmize interference with existing facilities of Company and shall request other utility franchisees to rmmmlze interference with existing facilities of Company 8 (D) When Company makes or causes to be made excavations or places or causes to be placed obstructions m any Pubhc Right-of-Way or other pubhc place, the pubhc shall be protected by barriers and hghts placed, erected, marked and mmntmned by Company m accordance w~th apphcable state and federal reqmrements Company shall repmr, clean up, and restore to as good a condmon as before commencement of work, all Pubhc R~ghts-of-Way or other pubhe places disturbed dunng the construction and repair of~ts gas dlstnbutlng system In the event the Company fails to restore the Pubhc Rights-of-Way or pubhc places to as good a eondmon as before the commencement of the work and within a reasonable Ume, the City may restore or mtuntam same, after g~wng the Company thirty (30) days' written not~ce, prowded however that ff the Company ~s proceeding thhgently to restore the property, the tame for restoration shall be extended for such t~me as ~s necessary for the Company to complete the restoratmn If the Company fails to restore the Pubhc R~ghts~of-Way or pubhc places appropriately, the Company will receive a bill for the cost of the C~ty repamng same The Company shall, w~tinn thirty (30) days after rece~wng such bill, pay the actual cost for such service After the third such Instance of a fmlure, and in each Instance of failure thereafter, to restore the Pubhc R~ght of Way or pubhc places appropriately m any calendar year, the City may include a penalty ofup to ten percent (10%) ofthe C~ty's cost ofrepmrs Any penalty ofless than One Hundred Dollars ($100 00) shall be wmved as de mtmmus (E) If C~ty abandons any Pubhc Right-of-Way ~n whmh Company has facilities, Company shall have the right to continue ~ts use of the former Pubhc Right-of-Way upon reasonable conditions to be determined by the C~ty (F) The Company will msure agatnst all the risks undertaken pursuant to thru franchtse including general habfl~ty ~nsurance w~th a combined smgle hm~t of $1,000,000 per occurrence 9 Such ansurance may be in the form of self-ansurance to the extent permatted by applicable law, under a Company approved formal plan of self-msurance mmntaaned m accordance wath sound accounting and risk-management praetaees Such msurance coverage or plan of self-insurance as subject to the approval of the Rask Manager of the City, whose approval shall not be unreasonably withheld or delayed A certlf'lcate of msurance shall be provaded to the City annually, no later than October 1sC for each year dunng the term of Company's fi:anchlse, evldencmg such coverage, and addataonally wattun tharty (30) calendar days of any substantial changes m the nature of ats coverage under thas Sectaun Should Company elect to self-insure, ars annual notice to the City shall contain mformataon clearly adentafylng the process for filmg a claim agaanst such coverage The Caty acknowledges that Company as self-insured or desares the abahty to be self- insured Nothing herem prevants the C~ty from agreeing to substatute self-msurance coverage for the prevaously hsted coverage requarements, upon proof of such self-insurance submatted to the Caty, and such agreement shall not be unreasonably wathheld SECTION 11 MAPPING OF DISTRIBUTION SYSTEM The Company shall wlthm one (1) year after the grantmg ofthas franchise file wath the City Manager or has desagnee a map or maps in eonvement book, atlas form, or digital format 0f avaalable and requested by Caty) or shall correct and bnng up to date any map or maps now on file (meluchng providing the map or maps in dagltal format, if avaalable and requested by the City) The maps shall show with reasonable detail Company's entire gas dastnbutmg system m the Caty, as same then exasts, which shall include the locanons and damenslons and depths, to the extent reasonably possible, of all mmns, papes, manholes, connections wath premases and other apparatus employed by Company, and whach map shall be corrected and brought up to date by Company annually The mformanon provaded pursuant to thas paragraph shall be based on Company' s original mstallataon speelficataons unless otherwase noted It as further agreed by 10 City and Company that provision of this information does not relieve the Company, City or other third parties from an obhgatlon to utilize all appropriate procedures to locate underground facilities, aneludmg the obhgaUon to notify a notification center estabhshed pursuant to Tex Utility Code Chapter 251, prior to conducting work an the right of way such as excavating, dnlhng, underground bonng, jacking, or open cutting SECTION 12 RELOCATION OF COMPANY EQUIPMENT (A) If the City m constructing its sewers, streets, utlhtles or other public works should require any mares, p~pes or other System faclhues or equipment to be sh~fied or relocated, such mains, p~pes or other System equipment shall be timely shifted or relocated by Company at its own expense as and when required by the City The City shall not reqmre Company to remove the facllmes entirely from a street, sidewalk, curb, alley, highway, or public way unless suitable alternatives are available for relocation of its facilities (B) When the Company is required by the C~ty to remove or relocate ~ts mains, laterals, and other System facilities or equipment to accommodate construction ofPubhc R~ghts- of-Way or other public or City-owned faelhtles and the Company ~s ehgable for reimbursement or surcharge under federal, state, county, local or other programs for reimbursement of costs and expenses Incurred by the Company as a result of the ordered relocation, and the application for reimbursement or surcharge ~s reqmred by statute, written governmental policies, or rules to be filed and processed by the City, the C~ty shall make reasonable efforts to nmely and promptly noUfy the Company of any apphcatlon deadlines of which it may be aware, and Company costs and expenses shall be included in any application by City for reimbursement, If Company submits its costs and expense documentation to the City prior to the filing of the application Nothing herein shall be construed to prohibit, alter or modify in any way the right of the Company to seek or recover a surcharge pursuant to Section 104 112 of the Texas Utilities Code 11 SECTION 13 LAYING OF LINES IN ADVANCE OF PAVING (A) Whenever the City shall conclude to pave any Public Right-of-Way in which mains and pipes already exist or m which Company may propose to lay its mains or pipes, the Company may be required, at no expense to the City, in advance of such paving, to renew such mains or pipes, if defective or inadequate m size pipes and to lay service lines, or renew same, if inadequate in size or defective, to the property lines where buildings are already located without regard to the number of customers along the line (B) The Company shall be given one hundred twenty (120) days' wnttan notice of the lmentlon of the City to pave any such Pubhe Right-of-Way and specifying the new locations for the lines Wlthm one hundred twenty (120) days fi.om receipt of such notice, the Company shall untlate work and thereafter proceed m a workmanlike manner to completion of the necessary work If the Company should fall to so proceed, and such street or alley is thereupon paved, except in an emergency, the Company shall for two (2) years thereafter not be allowed to cut such pavement or excavate in such paved street or alley for any purpose, except by written permission of the City Manager under such terms and conditions as the City Manager may reasonably subscribe SECTION 14 CONFLICTING FRANCHISES If the Company, in laying its pipes, shall come into conflict with the rights of any other person or corporation having a franchise fi.om the City, the City Council shall decide all questions eoneermng the conflicting rights of the respective parties, and shall determine the location of the structures of the said parties and shall reconcile their differences The Company records shall be available to City for review and inspection for compliance with this franchise at reasonable t~mas and upon reasonable notice SECTION 15 INSTALLATION OF METER 12 Company shall ~nstall upon or ~mmedlately adjacent to the premises of each residential customer a meter of standard type for the purpose of accurately measunng the gas consumed by such customer If a meter ~s installed m or near the Pubhc R~ghts of Way, Company agrees to d~scuss w~th the C~ty Engineer or fus delegate the aesthetms ofthe meter placement Ifagreement cannot be reached, the Company may mstall standard eqmpment SECTION 16 EXTENSIONS FOR RESIDENTIAL CUSTOMERS Company shall be required to extend d~stnbutmn mmns m any street up to one hundred (100) feet for any one residential customer, ~n accordance with ~ts extension policy that has been approved by the City, prowded, however, ~f the ant~mpated connected load is calculated to profub~t Company a reasonable return on ~ts ~nvestment as may be allowed by statute, law, or regulation and the provision of service ~s not econommally feasible, the cost of such extension shall be borne by customer Company shall not be requtred to extend transmission mains ~n any Public R~ghts-of-Way w~th~n City or to make a tap on any transmission mmn w~tfun C~ty unless Company agrees to such extension by a written agreement between Company and a customer SECTION 17 DUTY TO SERVE The Company hereby agrees that it wall not arbitrarily refuse to prowde servme to any one that it ~s economically feasible for the Company to serve In the event that a party ~s refused service, smd party may request a heanng before the C~ty Counml of the C~ty, smd heanng to be held w~thln forty-five (45) days from the date of the request for heanng The Councd may order the Company to prowde service, amend the franchise or take any other actton necessary to bnng the Company into compliance with the ~ntent of the Counml ~n granting thru franchise, ~ncludmg termination or forfeiture of the franchise ~n accordance w~th Section 25 The Council shall render ~ts op~mon at its next regular meeting but m no event shall ~t be required to act In less than seven (7) days 13 SECTION 18 RATES Company shall furnish reasonably adequate service to the pubhc at reasonable rates and charges therefor and Company shall mmntmn ~ts System ~n good order and cond~taon Such rates shall be estabhshed ~n accordance wath all apphcable statutes and ordinances Company shall mmnta~n on file w~th the C~ty copaes of ~ts current tariffs, schedules or rates and charges, customer serwce provaslons, and hne extensaon pohcles The rates and charges collected from ~ts customers in the C~ty shall be subject to revision and change by e~ther the C~ty or Company ~n the manner provided by law SECTION 19 INSTAI,I,ATION CHARGES, DEPOSITS AND OTHER COMPANY CHARGES (A) In add~tmn to the rates charged for gas supphcd and transported, Company may make and enforce reasonable charges, rules and regulations for servace rendered m the conduct of 1ts busaness m accordance wath ~ts tariffs, rate schedules, servme pohmes, and Quahty of Servtce Rules as approved by the Caty and filed w~th the Texas Rmlroad Commass~on Company may reqmre, before furmslung service, the executmn of a contract for such servme (B) Company shall be entitled to reqmre each and every customer, before servme ~s commenced or remstated, to satisfactorily estabhsh credit pursuant to the Company's Quahty of Servme Rules as may be m effect dunng the term ofthas franchise Smd depomt shall be retmned and refunded m accordance w~th such Quahty of Servme Rules and shall bear anterest, as provaded an Sectaon 183 001 through 183 006 Tex Utd Code, (Vemon's 2001), anclud~ng any and all future amendments to smd Amcle Upon termanatmn of service, Company shall be entitled to apply said deposit, w~th accrued ~nterest, to any ~ndebtedness owed Company by the customer makmg the deposat (C) Company shall have the right to contract wlth each customer with reference to the 14 installation of, and payment for, any and all of the gas piping from the connection thereo fwlth the Company's main in the right-of-way to and throughout the customer's premises Company shall own, operate and maintain all sennee lines, which are defined as the supply lines extenchng from the Company's main to the customer's meter where gas is measured by Company The customer shall own, operate, and maintain all yard lines and house piping, which are defined as supply lines extendang fi.om the point of connection with the Company's customer meter where gas is measured to the point of connection with customers house piping SECTION 20 PAYMENTS TO THE CITY (A) In consideration of the privilege and license granted by Caty to Company to use and occupy the Public Rights-of-Way m the City for the conduct of as business, Company, its successors and assigns, agrees to pay and City agrees to accept such franchise fees in the anaount and manner described herein Such payments shall be made on a quarterly basis, on or before the forty-fifth (45th) day following the end of each calendar quarter The franchise fee shall be a sum of money that shall be equivalent to four percent (4%) of the quarterly Gross Revenues, as defined an Section 8(C), received by the Company from the sale of gas to its customers, including but not limited to residential, commercial, industrial, governmental, mumclpal and Iransportatlon service customers wahm the corporate hmlts of Cay The first payment hereunder shall be due and payable on or before Apnl l, 2002, and shall be based upon Company' s Gross Revenues received during the calendar year ending December 3 l, 2001 and shall be payment for the rights and privileges granted hereunder dunng the period of January 1, 2001 through December 31, 2001 Subsequent payments shall be due and payable quarterly thereafter on or before the fifteen (15~) day of the second month following the end of the calendar quarter upon which the payment is based and shall be payment for the rights and privileges granted hereunder dunng the calendar quarter in which payment is made, that it, the quarterly payments shall be as follows 15 Payment Quarter Upon Which Quarter For Which Due Date Payment Is Based Payment Is Made Mayl5 Jan 1-Mar 31 Jan 1-Mar 31 Aug 15 Apr 1-June30 Apr 1-June30 Nov 15 July 1 - Sept 30 July 1 - Sept 30 Feb 15 Oct 1-Dec 31 Oct 1-Dec 31 Provided, however, ~f Company, prior to April 1, 2002, can prowde the City with sufficient evidence to demonstrate that Company's predecessor--Lone Star Gas Company--had been prepaying ats francluse fee under the franctuse entered mto by the part~es under Ordinance No 82- 56 so that each payment constituted a payment for the rights and pnwleges granted dunng the calendar year ~n whmh the payment ns made, the part,es agree to amend this franchise to revise the quarterly payment schedule to reflect and account for the prepayment (B) The value of gas transported by Company for Transport Customers shall be determined as set forth ~n th~s paragraph Should the transportation customer fml or refuse to d~sclose or furnish such purchase price to Company, Company shall estabhsh same by ut~hz~ng 110% of the Houston Sh~p Channel ~ndex of prices for large packages of gas pubhshed each month m Inside FERC's Gas Market Report (or a successor pubhcat~on or another pubhcatlon agreed upon by the C~t¥ and Company) for the period of t~me the transportation service ~s performed Company agrees to g~ve to C~ty, upon Request, access to confidential mformat~on so removed m order for the C~ty to verify the accuracy of the ~nformat~on prowde to the C~ty under the proms~ons o f th~s paragraph Failure or ~nabfi~ty of Company to collect the 4% franchise fee from ~ts Transport Customers does not relieve ~t of ~ts respons~bthty and obhgatlons to remit payment m the amount of 4% of value of such gas to the C~ty (C) The aforesmd franchise fee shall be in heu of any and all other additional 16 occupation taxes, municipal hcense, permit and inspection fees, street or alley rentals or charges, and all other and additional charges, levies, fees, and rentals of whatsoever kind or character which C~ty may now impose or hereafter levy and collect from Company or Company's agents, save and except the Company's obhgatlon to reimburse the City for street repairs and regulatory expenses in excess of $25,000 under Section 103 022 of the Gas Utility Regulatory Act (Tex Utd Code Section 103 022) or any successor law, and the payment of ad valoremtaxes, sales and use taxes, specml taxes, and assessments for public improvements, and any fees associated vath the use of City-owned poles, which are not affected by Company's payment of franchise fees hereunder Franchise fees are payable by Company to C~ty m addition to general or special ad valorem taxes whmh City is authorized to levy and impose upon real and personal property, sales and use taxes, and the spemal taxes and assessments and fees excepted above Should City not have the legal power to agree that the payment of the foregoing sums of money shall be in lieu of occupation taxes, licenses, fees, street or alley rentals or charges, easements or franchise taxes, then City agrees that it will apply so much of smd sums of money paid as may be necessary to satisfy Company's obhgatlons, if any, to pay such occupation taxes, hcenses, charges, fees or rentals (D) If the Company fails to pay when due any payment prowded for in th~s Section, Company shall pay such amount plus interest at the current prime rate per annum, from such due date until payment is received by City The reimbursement of the C~ty by Company for hmng experts ~n connection wath the rate making process pursuant to state law for which the Company may be legally liable shall not be deducted from the gross receipts payment (E) Company shall not~fy the City of the identity of any customer of Company that changes from a tariffed rate to a contract rate with forty-five (45) days of such change SECTION 21 BOOKS AND RECORDS 17 (A) Company agrees that at the time of each quarterly payment, Company shall also submit to the C~ty a sworn statement showing 0) its Gross Revenues for the preceding calendar quarter from the sale of gas to ~ts customers, including but not hm~ted to residential, commercial, ~ndustnal, governmental and mtm~clpal customers, within said corporate hm~ts, meludmg the amount of revenues received by Company for the transportation of gas, (n) the coded identity of Company's transportation service customers dunng the precedmg calendar quarter, and (Ill) the value, volume, and transport fee of gas transported dunng the proceeding calendar quarter for such transportation service customers, calculated m accordance w~th Section 20(B) above Upon request, City shall have access at Company's office to the actual ~dent~ty of Company's Transport Customexs and their supphers as long as such lnformatlun shall remain confidential, and no copies of such reformation may be made (B) City may, if it sees fit, have the books and records of Company examined by a representative of said City to aseertam the correctness of the sworn reports agreed to be filed herem If such an examination reveals the Company has underpaid the City, then C~ty shall provide Company wntten notification from City regarding the existence of such underpayment, Company shall remit the amount of underpayment to City w~thm 10 days SECTION 22 RESERVATION OF RIGHTS: GENERAL (A) The City reserves to itself the right and power at all times to exercise, in the mterest of the pubhc and m accordance w~th state law, regulation and control of Company's rates and serwees to insure the rendenng of efficient pubhc service at reasonable rates, and the maintenance of Company's System m good repar throughout the terms of this franchise (B) The rights, privileges, and franchises granted by th~s ordinance are not to be considered exaluslve, and C~ty hereby expressly reserves the right to grant, at any time, like privileges, rights, and franchises as it may see fit to any other person or corporation for the 18 purpose of fum~slung gas for light, heat, and power and for City and the ~nhabitants thereof (C) C~ty expressly reserves the right to own and/or operate its own system for the purpose of transporting, delivering, chstnbutlng, or selling gas to and for the City and inhabitants thereof and may, in accordance with apphcable state law and the Denton C~ty Charter, purchase this franchrse from the Company SECTION 23 RIGHT TO INDEMNIFICATION AND TO BE HELD HARMLESS The Company shall ~ndemmfy, defend and hold harmless the City and all of its present, future and former agents, employees, officials and representatives in their officml, inchvidual and representative capac~t~as from and agmnst any and all habihty created by, arising from or an any manner relating to the construction, operataon, maintenance, repair or replacement of the Company's System and facilities or the use of the Public Rights-of-Way or in any way growing out of the granting of th~s franchise, e~ther directly or lnd~rectly, or by reason of any act, neghgence, or nonfeasance of the contractors, agents or employees of the Company As used here~n, the term "habfllty" includes, but is not hm~ted to, any and all claims, demands, causes of action, judgments, hens, and expenses 0ncluchng attorney's fees, whether contractual or statutory), costs and damages (whether common law or statutory, and whether actual, punitive, consequential or incidental) of any conceivable character, due to or arising from ~njunes to persons 0nelud~ng death) or to property (both real and personal) The indemmty provided hereto expressly includes any habfllty arising through the doctnnes of strict or products habfl~ty and any habfllty arising trader the constitutions of the Umted States or Texas Upon the commencement of any suit or proceeding at law agmnst the C~ty relating to or covenng any matter covered by this ~ndemmty, the Caty shall tender the defense of said suat or proceeding at law to the Company, and the Company shall thereupon at its own cost and expense defend, compromise, or settle the same Any settlement revolving a clmm or cause of action against the C~ty shall, unless otherwise 19 agreed to by the C~ty, release the C~ty from any and all hablhty as a result of sa~d clatm or cause of action. Tbas mdenm~ty and hold harmless agreement shall not apply to any s~tuatlon to the extent the e~ty ~s solely hable for the actions, su~ts or claims of injury or damage by reason of City's sole neghgence SECTION 24 RENEGOTIATION If either C~ty or Company requests renegot~atlon of any term of th~s franchise ordinance, Company and C~ty agree to renegot~ate m good fatth rews~ons to any and all terms of th~s franchise ordinance If the part, es cannot come to agreement upon any prows~ons being renegot~ated, then the ex~st~ng prows~ons of the franchise ordinance w~ll continue in effect for the rema~mng term of the franchise SECTION 25 TERMINATION (A) In addition to any rights set out elsewhere ~n this orthnance, the C~ty reserves the right to terminate the franchise and all rights and privileges pertalmng thereto, m the event that the Company wolates any mater~al prows~on of the franchise or the Company becomes ~nsolvent, or ~s adjudged bankrupt (B) Procedures for Termination (1) The C~ty may, at any t~me, terminate th~s franchise for a contmumg mater~al violation by the Company of any of the substantial terms hereof In such event, the City shall g~ve to Company written not~ce, specifying all grounds on which termination or forfeiture ~s cla~med, by registered ma~l, addressed and dehvered to the Company at the address set forth in Section 7 hereof The Company shall have s~xty (60) days after the receipt o f such not,ce w~thm which to cease such wolat~on and comply v~th the terms and provisions hereof In the event Company fatls to cease such wolat~on or otherwise comply w~th the terms hereof, then Company's franchise ~s subject to 20 termination under the following provisions Provided, however, that, if the Company commences work or other efforts to cure such violations within thirty (30) days after receipt of written notice and shall thereafter prosecute such curative work with reasonable diligence until such curative work is completed, then such violations shall cease to exist, and the franchise will not be terminated (2) Termination shall be declared only by written decision of the City Council after an appropriate pubhe proceeding whereby the Company is afforded the full opportunity to be heard and to respond to any such notice of violation or failure to comply The Company shall be provided at least ten (10) days prior written notice ofanY public heanng eoncermng the termination of the franchise In addition, ten (10) days notice by publication shall be given of the date, time and place of any pubhe heanng to interested members of the public, which notice shall be paid for by the Company (3) The City, after full public heanng, and upon finding material violation or £allure to comply, may terminate the franchise or excuse the violation or failure to comply, upon a showing by the Company of mitigating circumstances or upon a showing of good cause of said violation or failure to comply as may be determined by the City Council (4) Nothing herein stated shall prevent the City from seeking to compel eomphance by suit in any court of competent jurisdiction if the Company fails to comply with the terms of flus franchise after due notice and the providing of adequate time for Company to comply with said terms SECTION 26 SEVERABILITY Tbas ordinance and every provision hereof, shall be considered severable, and the invalidity or unconstitutionality of any section, clause, provision, or portion of this ordmanee 21 shall not affect the vah&ty or constltut~onahty of any other portion of this ordinance If any term or prows~on of this or&nance is held to be illegal, invalid or unenforceable, the legahty, val~&ty or unenforceab~hty of the remmmng terms or prows~ons of th~s ordinance shall not be affected thereby SECTION 27 NO WAIVER E~ther C~ty or the Company shall have the nght to waive any requirement contained m th~s ordinance, which ~s ~ntended for the Wmvlng party's benefit, but, except as otherwise provided here~n, such waiver shall be effective only ~f ~n writing executed by the party for whose benefit such reqmrement is intended No waiver of any breach or violation of any term ofth~s or&nance shall be deemed or construed to constitute a wmver of any other breach or violation, whether concurrent or subsequent, and whether of the same or a different type of hreach or violation SECTION 28 EFFECTIVE BATE This franchise shall be effective only after (a) its final passage by the City Council, (b) receipt by the C~ty of Company's acceptance as provided by Section 2 here~n, and (c) final pubhcat~on as required by law The ordinance shall be passed by a malonty vote of the entire C~ty Council at three regular meetings of Council The City Secretary shall pubhsh, at the Company's expense, the complete text ofth~s or&nance in a newspaper of general circulation Pubhcatlonshalltake place once each week for three consecutive weeks ~n the official newspaper pubhshed in the Cny of Denton The ordinance shall not become effective until thirty days after its final passage in accordance with the City Charter The above-referenced actions having taken place, the effective date ofth~s ord~nancewfll be January 17, 2002 PRESENTED, AND GIVEN first rea&ng on the 18 day of September , 2001, at a 22 regular meeting of the City Council of the City of Denton, Texas, and given second reading, passed and approved on the 1.8 dayof December 2001., by a vote of 5 .ayesand ~ noes at a regular meeting of thc City Council of the City of Denton, Texas RONI BEASLEY,z~,~Y'OR ~t~O TEM ATTEST JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY BY The City of Denton, Texas, acting hereto by its duly constituted authorities, hereby declares the foregoing Or&nance passed on first reading on the 18th day of September, 2001, and passed on second reading on the 16day of October ., 2001, and passed on third r adln o . .y n ,,y 17 day of January , /s/ Abstmned /s/ Eullne Brock, Mayor M~k-~ough'~, ~Mem~r Rom Behsley, Council ~;~inber Isl ~t, Jan~(~u,!~t'll~-, Council Menjkler// l~lke l~hflhps, Co"~illed-~l~mber Ra~ond ~on, Council Member 23 The above and foregoing ordinance read, adopted on first reading and passed to second reading by the following votes, this the 18th day of September, 2001, at a regular session of the C~ty Council Euhne Brock, Mayor, abstained from voting Mark Burroughs, Councd Member, voting aye Rom Beasley, Council Member, voting aye Perry McNe~ll, Councd Member, voting aye Jane Fulton, Council Member, voting aye M~ke Phillips, Council Member, voting aye Raymond Redmon, Council Member, voting aye The above and foregoing ordinance read, adopted on second reading and passed to third reading by the following votes, th~s the 16th day of October, 2001, at a regular session of the C~ty Councd Euhne Brock, Mayor, abstained from voting Mark Burroughs, Council Member, absent Rom Beasley, Cotmcfl Member, voting aye Perry McNefll, Council Member, voting aye Jane Fulton, Council Member, voting aye M~ke Phllhps, Council Member, voting aye Raymond Redmon, Council Member, voting aye The above and foregoing ordinance read, adopted on third reading and passed by the following votes, this the 18th day of December, 2001, at a regular session of the C~ty Council Euhne Brock, Mayor, abstained from voting Mark Burroughs, Council Member, voting aye Rom Beasley, Council Member, voting aye Perry McNelll, Council Member, voting aye 24 Jane Fulton, Council Member, voting aye Mike Phflhps, Council Member, voting aye Raymond Redmon, Council Member, absent 25 ACCEPTANCE WHEREAS, the C~ty Council of the C~ty of Denton, Texas, &d on the 18th day of De c emb er ,2001, enact an Or&nance entitled AN ORDINANCE GRANTING TO TXU GAS DISTRIBUTION, A DIVISION OF TXU GAS COMPANY, ITS SUCCESSORS AND ASSIGNS, A FRANCHISE TO FURNISH, TRANSPORT AND SUPPLY GAS TO THE GENERAL PUBLIC 1N THE CITY OF DENTON, DENTON COUNTY, TEXAS, FOR THE TRANSPORTiNG, DELIVERY, SALE, AND DISTRIBUTION OF GAS IN, OUT OF, AND THROUGH SAID MUNICIPALITY FOR ALL PURPOSES, PROVIDiNG FOR THE PAYMENT OF A FEE OR CHARGE FOR THE USE OF THE STREETS, ALLEYS, AND PUBLIC WAYS, REPEALING ALL PREVIOUS GAS FRANCHISE ORDiNANCES AND ORDINANCES IN CONFLICT HEREWITH, PROVIDING THAT IT SHALL BE IN LIEU OF OTHER FEES AND CHARGES, EXCEPTING AD VALOREM TAXES, PRESCRIBING THE TERMS, CONDITIONS, OBLIGATIONS AND LIMITATIONS UNDER WHICH SUCH FRANCHISE SHALL BE EXERCISED, PROVIDING A SAVINGS CLAUSE, A SEVERABILITY CLAUSE, AND AN EFFECTIVE DATE WHEREAS, smd Or&nance was on the 18th. day of December ,2001, duly approved and subscribed by the Mayor Pro Tem of said C~ty, and the seal of smd C~ty was thereto affixed and attested to by the C~ty Secretary, NOW, THEREFORE, TXU Gas Dlsmbut~on, a dlwslon of TXU Gas Company, hereby m all respects ACCEPTS, APPROVES AND AGREES TO smd Ordinance, and the same shall constitute and be a binding contractual obhgat~on of TXU Gas D~stnbuOon, a division of TXU Gas Company, and of the C~ty, without wmver of any other remedy by TXU Gas Dlsmbutlon, a thvmon of TXU Gas Company, or the C~ty, and TXU Gas Dlsmbutlon, a &ws~on of TXU Gas Company does hereby file this, its written acceptance, with the C~ty Secretary of the C~ty of Denton, Texas, m her office. DATED th~s the 1 ~*~3'day of f~d},/tt~O,A-O1/ ,200~, TXf~j GAS 0 DISTRIBUTION, a division of TXU GAS COMPANY ATTEST ~ ~ ~ 26 TANCFILED xn the Office ofthe~C~ty Secretary of the Cxty of Denton, Texas, th~s the ay of ~_(--~. 1~ ('A~ ,20~I' e~f[~' ~lters, C~ty Secretary 27