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1999-024AN ORDINANCE WHEREBY THE CITY OF DENTON, TEXAS, GRANTS TO COSERV GAS A NON-EXCLUSIVE FRANCHISE TO FURNISH, TRANSPORT, SELL AND DISTRIBUTE GAS TO CUSTOMERS IN DENTON, TEXAS, FOR A PERIOD OF TEN (10) YEARS FOR A FRANCHISE FEE IN THE AMOUNT OF 3% OF REVENUES COLLECTED AND PROVIDING DEFINITIONS, PROVIDING A PAYMENT SCHEDULE AND STATEMENT OF REVENUES, PROVIDING FRANCHISE FEE NOT IN LIEU OF OTHER FEES AND CONTRACT OBLIGATIONS, PROVIDING DEPENDABLE GAS SUPPLY AT LOWEST REASONABLE COSTS, PROVIDING OBLIGATIONS REGARDING COMPANY FACILITIES, LONG-RANGE PLANNING FOR CAPITAL IMPROVEMENT PROJECTS, CITY REVIEW OF CONSTRUCTION AND DESIGN, REQUESTS BY CITY FOR RELOCATION OF COMPANY FACILITIES AND WORK BY OTHERS, PROVIDING FOR CHANGING BOUNDARIES OF CITY AND ABANDONMENT, PROVIDING CITY NOT REQUIRED TO ADVANCE FUNDS, PROVIDING FOR TECHNOLOGICAL IMPROVEMENTS, PROVIDING FOR COMPLIANCE WITH CITY RULES AND REGULATIONS, RAILROAD COMMISSION SPECIFICATIONS AND REGULATIONS, AND ENVIRONMENTAL LAWS, PROVIDING OFFICE LOCATION, REPORTS ON COMPANY OPERATIONS AND ACTIVITIES AND DETAILED BILLS, PROVIDING CITY HELD HARMLESS AND INDEMNIFICATION, NOTICE TO COMPANY, INSURANCE AND BONDS, PROVIDING PAYMENT OF EXPENSES INCURRED BY CITY IN RELATION TO ORDINANCE, PROVIDING RIGHT OF FIRST PURCHASE, RIGHT TO PURCHASE OR CONDEMN, LIMITATIONS OF COMPANY REMOVAL OF FACILITIES, TRANSPORTATION AND PROCUREMENT OF GAS BY CITY AND CURTAILMENT, PROVIDING CIVIL PENALTIES, FORECLOSURE, FORFEITURE AND TERMINATION AND OTHER LEGAL REMEDIES, PROVIDING NO WAIVER, RIGHTS OF SUCCESSORS AND ASSIGNS, REPRESENTATIVES AND NOTICES, SEVERABILITY, ENTIRE AGREEMENT, COMPANY APPROVAL, ANNEXATION TO THE CITY AND THIRD PARTIES, PROVIDING COMPLIANCE WITH CITY CHARTER AND APPLICATION OF TERMS ,IN COMPETING FRANCHISES, AND PROVIDING AN EFFECTIVE DATE, NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS TABLE OF CONTENTS 1 DEFINITIONS 2 GRANT OF FRANCHISE 3 TERM OF FRANCHISE 4 FRANCHISE FEE 5 PAYMENT SCHEDULE 6 STATEMENT OF REVENUES 7 FRANCHISE FEE NOT IN LIEU OF OTHER FEES 8 CONTRACT OBLIGATION 9 DEPENDABLE GAS SUPPLY AT LOWEST REASONABLE COSTS 10 OBLIGATIONS REGARDING COMPANY FACILITIES LONG RANGE PLANNING FOR CAPITAL IMPROVEMENT PROJECTS 12 CITY REVIEW OF CONSTRUCTION AND DESlGN 13 REQUESTS BY CITY FOR RELOCATION OF COMPANY FACILITIES 14 WORK BY OTHERS, CONSTRUCTION BY ABUTTING OWNERS 5 CHANGING BOUNDARIES OF CITY AND ABANDONMENT 16 CITY NOT REQUIRED TO ADVANCE FUNDS 7 TECHNOLOGICAL IMPROVEMENTS 18 CITY RULES AND REGULATIONS 19 COMPLIANCE WITH CITY AND RAILROAD COMMISSION QUALITY SPECIFICATIONS AND REGULATIONS 20 COMPLIANCE WITH ENVIRONMENTAL LAWS I OFFICE LOCATION 22 REPORTS ON COMPANY OPERATIONS AND ACTIVITIES 23 DETAILED BILLS 24 CITY HELD HARMLESS 25 NOTICE TO COMPANY 26 INSURANCE 27 BONDS 28 PAYMENT OF EXPENSES INCURRED BY CITY IN RELATION TO ORDINANCE 29 RlGHT TO FIRST PURCHASE 30 CITY'S RIGHT TO PURCHASE OF CONDEMN 31 LIMITATIONS OF COMPANY REMOVAL OF FACILITIES 32 TRANSPORTATION AND PROCUREMENT OF GAS BY C1TY 33 CURTAILMENT 34 PENALTIES 35 FORECLOSURE 36 FORFEITURE AND TERMINATION 37 OTHER LEGAL REMEDIES 38 NO WAIVER 39 SUCCESSORS AND ASSIGNS 40 REPRESENTATIVES AND NOTICES 41 SEVERABILITY 42 ENTIRE AGREEMENT 43 COMPANY APPROVAL 44 ANNEXATION TO THE CITY 45 THIRD PARTIES 46 COMPLIANCE WITH CITY CHARTER 47 APPLICATION OF TERMS IN COMPETING FRANCHISE 48 EFFECTIVE DATE DEFINITIONS For the purpose of this Franchise, the following words and phrases shall have meaning given m th~s section When not Inconsistent w~th the context, words used ~n the present tense include future tense, words ~n the plural number ~nelude the s~ngular number, and words m the s~ngular number include the plural number The word "shall" ~s mandatory and "may" ~s permissive Words not defined m th~s section shall be g~ven their common and ordinary meamng "Affihate" means any enUty controlhng, controlled by or under common control wtth the entity m question "Ctty" means the mumctpal corporatton designated as the City of Denton and includes the territory as currently ts or may tn the future be tncluded wtthm the boundaries of the City of Denton "Ctty Council" means the legtslattve body of the Ctty "C~ty Manager" means the Ctty Manager of the Ctty of Denton or hts designee "Company" means CoServ Gas, but does not include tts Affiliates, subsidiaries or any other enttty m which tt has an ownershtp tnterest "Facthttes" means all property both real and personal of the Company which are reasonably necessary to promde Gas tnto, wtthm and through the City, mcludtng without hmltatton, rights of way, transmission and d~strlbutton ptpes, matns, Gas compressors and meters "Frenchtse" means the rights and obhgattons of the City and the Company set forth tn this Frenchtse ordinance as the same may be amended from ttme to t~me and includes those rights and duties prowded under the laws of Texas and of the Umted States "Gas" means such gaseous fuels as natural, artffictal, synthetm, liquefied natural, hquefied petroleum, manufactured, or any m~xture thereof "Pubhc Easement" means easements permitted by the City for the use of Company "Pubhc Streets" tncludes, but ts not hmlted to, streets, methans, boulevards, roads, lanes, alleys, vtaducts, bridges and pubhc rights of way that are deeded, dethcated or otherwise avadable for Company use within the Ctty "Railroad Commtsston" means the Radroad Commlsston of the State of Texas or other authority succeedtng to the regulatory powers of the Railroad Commtsslon "Restdents" means all persons, businesses, mdustry, governmental agenmes, and any other entity whatsoever, located, m whole or part, wlthm the Ctty that are or may be served by the Company hereunder "Revenue" means those amounts of money and other benefits which the Company receives from the A All Revenues recetved by Company from the sale of Gas, lncluthng compressed Gas, within the Ctty to all customers wtthm the City B All Revenues received by Company from the transportation of Gas through the ptpehne system of Company wtth the Ctty to commermal industrial customers wtthm the City, and C The value of Gas transported by Company for Transport Customers through the ptpehne system of Company wtthm the Ctty 2 GRANT OF FRANCHISE (A) Pursuant to the Constitution of the State of Texas, State Statutes and the City's home rule charter, the C~ty hereby grants to the Company, for the period specified m and subject to the conditions, terms and provisions contained m this Franchise, a non-exclusive r~ght to furnish, transport, sell and thstnbute Gas to the C~ty and its Residents Subject to the condmons, terms and provisions contained m this Franchise, the City also hereby grants to the Company a non-exclusive right to aeqmre, construct, install, locate, maintain, operate and extend Facilities into, w~thin and through the C~ty and a non-exclusive right to make use of the public streets and Public Easements as may be necessary to carry out the terms of th~s Franchise These rights shall extend to all areas of the City as ~t ~s constituted from Ume to time (B) This Franchise does not grant to the Company the right, privilege or authority to engage ~n any other business within the C~ty other than the provision of Gas sales, transportation, distnbuuon and the furmshmg of Gas to the City and its Residents (C) The right to use and occupy the public streets and Public Easements as set forth herein ~s not an exclusive Franchise, and the City reserves the right to make or grant a s~mdar use of pubhc streets and Public Easements for the C~ty and to any other person, firm, or corporation 3 TERM OF FRANCHISE (A) Unless terminated earher as provided herein, the term of this Franchise shall be for ten (10) years, beginning on the effective date of this Ordinance 4 FRANCHISE FEE (A) As further consideration for the grant of th~s Franchise, which prowdes for the use by the Company of pubhc streets and easements, which are valuable pubhc properties acquired and maintained by the City at great expense to its Residents, and m recogmt~on that the grant to the Company of the use of those public streets and Pubh¢ Easements is a valuable right without which the Company would be reqmred if permitted by the C~ty to invest substantial t~me and capital in right-of-way costs and acqms~tions, the Company shall pay to the City a Franchise fee m the amount three percent (3%) of the Revenue, accruing to the Company This fee shall change to the fee assessed Lone Star Gas m its new franchise, The Company shall report to the C~ty within sixty days of the execution of a subsequent Franchise of any change of Franchise m another municipality m the State of Texas Should such Franchise or change in Franchise provide for services or consideration not prowded hereunder, Company shall offer to prowde such services and/or consideration to the C~ty and ~ts Residents upon the same or similar terms, and provide the City a copy of such Franchise or change (B) The value of Gas transported by Company for Transport Customers shall be determined as set forth m this paragraph In the absence of documentary ewdence to the contrary prowded by Company to C~ty, the value of Gas so transported shall be presumed to be equal to the total volume of Gas transported for such Transport Customer times the rates charged for Gas as indicated on Schedule N of Company's tariff, as such tariff rates may be amended from time to time by the Texas Railroad Commission, or its successor agency If Company submits documents to the C~ty to indicate the actual value of Gas transported by Company, the Company may remove therefrom any mformat~on that would d~sclose e~ther the ~dentity of the customer or other information deemed confidential by Company, so long as such removal does not prevent the City from determining the monetary value of the Gas transported Company agrees to give the City, upon request, access to the confidential mformaUon so removed m order for the City to verify the accuracy of the information provided to the C~ty under the provisions of this paragraph Failure or ~nabflity of Company to collect the three percent (3%) Franchise fee from its Transport Customers does not relieve it of its responsibility and obligation to remit payment m the amount of three percent (3 %) of the value of such Gas to the City 5 PAYMENT SCHEDULE (A) For the Franchise fee owed on Revenues accruing to the Company after the effective date of this Franchise from the sale and transportation of Gas, payment shall be made m quarterly installments not more than ten days following the close of the quarter for which payment IS to be made Imtial and final payments shall be prorated for the portions of the months at the beginning and end of the term of this Franchise All payments shall be made to the City and accompanied by supporting documentation satisfactory to the City (B) In the event an error by the Company results m an overpayment of the Franchise fee to the City and said overpayment is m excess of $5,000 00, credit for the overpayment shall be spread over the same period the error was undmcovered if the overpaymant is $5,000 00 or less, credit shall be taken against the next payment In the event an error by the Company results in an under payment of the Franchise fees to the City and said underpayment Is m excess of $5,000 00, Company shall repay the difference between the underpayment and the correct payment over the same period the error was undiscovered If the underpayment Is $5,000 00 or less, company shall repay the difference in the next payment (C) No charges to the City by Company for any sales or transportation of gas or other services shall exceed the lowest charge for similar services provided by the Company to any other similarity situated customer or consumer of the Company 6 STATEMENT OF REVENUES (A) Company shall file annually with the City, no later than April 15, the Company's annual report to the Railroad Commission of Texas, or its successor, if such report specifically allocates Revenues arising within City's corporate hmits Should the Railroad Commission or its successor fall to require this information, Company shall file annually with the City, no later than four (4) months after the end of the Company's fiscal year, an audited annual statement of Revenues attributable to the operations of the Company's Facilities within the City m conformance with the NARUC system of accounts by a certified public accountant (B) Any transactions which have the effect of circumventing payment of required Franchise fees and/or evasion of payment of Franchise fees by non-collection or non-reporting of gross receipts, bartering, or any other means which evade the actual collection of Revenues or fees for business pursued by Company are prohibited (C) Company shall provide the City with access at reasonable times and for reasonable purposes, to examine, audit, review and/or obtain copies of the papers, books, accounts, documents, maps, plans and other records of Company pertaining to this Franchise ordinance Company shall fully cooperate in making available its records and otherwise assisting in these actlv~ties (D) The City may, at any time, make inquiries pertaining to Company's operation of its Facilities within the City Company shall respond to such inquires on a timely basis 7 FRANCHISE FEE NOT IN LIEU OF OTHER FEES (A) Payment of the fees and other conslderatton due hereunder by the Company is not accepted by the C~ty m heu of any occupatmn tax, hcense tax or similar tax on the privilege of doing business ~n the C~ty or reimbursement of regulatory cost Payment of the fees and other consideration due hereunder does not exempt the Company from payment of taxes that are umform and generally appbcable to other persons conducting business within the City, such as property, sales and use taxes (B) Payment of the fees and other considerations due hereunder shall not m any way hm~t or mh~b~t any of the privileges of the C~ty whether under th~s Franchise ordinance or otherwise 8 CONTRACT OBLIGATION This Franchise constitutes a vahd and b~ndlng contract between the Company and the C~ty In the event that the fees and other consideration specffied m th~s Franchise is declared illegal, unconstitutional or vmd for any reason by any court or other proper authority, the Company shall be contractually bound to pay the C~ty, on the same schedule as provided here~n for the fees and other consideration, an aggregate amount equal to the amount which would have been prod as fees and other consideration In the alternative, the City shall have the right to ~mpose on the Company and the Company shall pay occupation and hcense fees and permit charges reasonably eqmvalent on an annual basis to the fees and other consideration payable hereunder 9 DEPENDABLE GAS SUPPLY AT LOWEST REASONABLE COSTS (A) The Company shall at all times take reasonable and necessary steps to assure a dependable supply of Gas to the City and its Residents at the lowest reasonable cost consistent w~th long term rehable supphes Should Gas be made available to the Company from whatever source, including any agency or ~nstrumentahty of the State, at less total cost that the total cost whmh would be ~ncurred by the Company to supply such Gas from its own supphes, the Company agrees to purchase such lower-cost Gas and to pass on to the Residents all sarongs resulting from the purchase Should Gas be offered to the Company for a prtce less that being provided to the C~ty and as Residents and Company not accept such offer, Company shall not~fy City of such offer and the reason(s) that such offer was not accepted (B) If the supply of Gas to the City or its Residents should be interrupted, the Company shall ~mmedmtely take all necessary and reasonable actions to restore such supply at the earhest possible t~me (C) The Company shall prowde to the City a telephone number which ~s not available to the pubhc whereby the C~ty will be able to obtam status reports from the Company on a twenty-four hour bas~s concerning ~nterrupt~ons of the supply of Gas m any port,on of the C~ty (D) The Company shall ~nstall, repmr, mmntmn and replace ~ts Famht~es ~n a good and workmanhke manner The Company's Facflittes shall be of reasonable quahty, redundancy and durabthty to prowde umnterrupted and efficient Gas service to the C~ty and ~ts Residents 10 OBLIGATIONS REGARDING COMPANY FACILITIES (A) All work by the Company shall be done 1 In a good workmanhke manner, 2 Ina timely and expeditious manner, 3 In a manner which minimizes tnconvemence to the Restdents, 4 In a cost-effective manner, and 6 5 In accordance w~th all apphcable codes, rules and regulations of the City and the Railroad Commission (B) Company Facd~tles shall not ~nterfere w~th power, telephone, cable or water Facthtles, sanitary or storm sewer Facilities or other municipal or pubh¢ use of pubhe streets and Pubhc Easements Company Facdmes shall be installed and mmnta~ned so as to minimize ~nterference w~th other property, trees, ~mprovements and natural features (C) The Company shall promptly repair all damage caused by Company actlwtles or Facdlt~es If such damage poses threat to health, safety or welfare of the pubhc or Residents, the C~ty may cause repairs to be made at the Company's expense unless the Company makes such repmrs promptly upon the City's request (D) The installation, repair, mamtanance, and replacement of any Facthttes m public streets and pubhe easements by the Company shall be subject to ~nspectlon and approval by the City Such inspection ~and approval may melude, but not be hm~ted to the following matters location of Faeflmes in public streets and Pubhc Easements, cutting and trimming of trees and shrubs, and d~sturbances of pavements, s~dewalks and surfaces of pubhc streets and Pubhe Easements The Company agrees to cooperate fully w~th the Oty ~n conducting the inspection The Company shall promptly perform reasonable remedial action reqmred by the C~ty pursuant to such an inspection (E) The Company shall reqmre its contractors working tn pubhc streets and Pubhc Easements to hold all necessary contracting hcenses and permits required by the C~ty (F) The Company shall reimburse the C~ty for the costs of upgrading the Gas d~stnbnt~on system or facility of any Ctty budding or facd~ty that uses Gas where such upgrading is caused or occasioned by the Company's decision to increase the dehverabd~ty and/or pressure of delivered Gas 11 LONG RANGE PLANNING FOR CAPITAL IMPROVEMENT PROJECTS (A) The Company shall keep the C~ty informed as to ex~stmg and planned system capacity, construction, maintenance and other activities of the Company within the C~ty Regular planning and coordination meetings will be held Representatives of the Company and the C~ty shall meet at least annually to d~seuss long term planning for capital ~mprovement projects contemplated by each The Companylshall ~nclude w~thm ~ts capital Improvement projects the plans of the C~ty relating t° same The Company shall submit reports of long-term planning for capital improvement projects Descriptions of reqmred street cuts, excavation, digging and related construction act~wtles, ~nclud~ng w~thout hm~tatton, cop~es of work plans and drawings should be submitted to the C~ty w~thm thirty days after ~ssuance of the report Except for emergencies, the Company shall coordinate all ~nstallat~ons with the Oty's capital improvement programs Company shall not proceed w~th constructmn until the plans and drawings have been app~'oved by the City Within 60 days after the C~ty Couned adopts the City budget for the following year, the C~ty shall forward, m writing, a hst of the ~mprovement projects (including street w~demng iprojects, street overlay projects, bridge ~mprovement projects, new street construction projects, drmnage ~mprovement projects, and park ~mprovement projects) which are included in the adopted budget W~th~n 60 days of receipt of the City's hst of ~mprovement projects the Company shall make available ~mformat~on regarding each City project w~thm the pubhc streets and Pubhc Easements that ldent~fies, and generally describes the ex~stmg and anticipated Company Facdmes that are or may be w~thm orI cross through the project boundaries Smd mformat~on shall (1) tdent~fy the s~ze, type and general 16cat,on of any ex~st~ng Company facility (2) address the current condition of any ex~st~ng Compan~ facd~ty (e g capacity, mtegnty, expected service hfe, ete) (3) ~dentlfy any scheduled or 7 anticipated upgrades, repairs or replacemems of any existing Company facility (4) identify generally what activities will be required to be performed by the Company in order to accommodate the City project and the necessary time frame for completion of such activities and (5) provide any other reasonable information that may be pertinent (B) The City and the Company shall designate to each other their respective officials to serve as their representative for coordination of this exchange of information and planning on any such project ConstructiOn, installation, maintenance, alteration or replacement of the Company's Facilities resulting from the City's lmprovemem projects shall be performed at the Company's expense 12 CITY REVIEW OF CONSTRUCTION AND DESIGN (A) Except for emergencies, the Company shall advise the C~ty at least thirty (30) days prior to any major construction The Company shall provide the initial work plans and drawings for the proposed construction In addition, the Company shall assess and report on the impact of its proposed construction on the City environment Such plans and reports may be reviewed by the City to ensure that, among other items, (1) aesthetic and good planning principles have been given due consideration, (2) adverse impact on the environment has been minimized, and (3) that all applicable laws including budding and zoning codes and air and water pollution regulations are complied with Changes requested by the City shall be incorporated into the Company's construction (B) Upon request of the City, Company shall remove and abate any portion of the Facilities that is dangerous to life or property, and in case Company, after notice, fails or refuses to act, the City may remove orlabate the same, at the sole cost and expense of Company, all without compensation or liability for damages to the Company (C) Company shall promptly restore the public streets, Public Easemems and private property to their condition prior to Company's construction, maintenance or excavation, to the satisfaction of the City consistem with their existing City codes and specifications (D) Company shall excavate only for the construction, installation, expansion, repair, removal, and maintenance of all or a portion of the Facilities (E) Except in an emergency, Company shall not excavate m any public street or Public Easement without first securing permission of the City and all applicable permits at least 24 hours prior to initiation of excavation Such work shall be performed to minimize interference with the use of Public Easements and public streets The City shall be notified as soon as practicable regarding work performed under emergency conditions (F) Within thirty (30) days of completion of the Company's construction of Facilities Company shall supply the City with a complete set of "as built" drawings for that segment Further, after each replacement, relocation, reconstruction, or removal Company shall promptly notify the City of the exact changes made and shall provide a new set of "as built" drawings for each modification to the Facilities Companyl shall provide annually a complete set of as-built drawings incorporating these changes (G) Company shall be capable of providing services to the City no later than nine (9) months after the passage of this Franchise ordinance Company shall promptly provide the City with evidence satisfactory to the City, including without limitation "as-built" drawings, establishing that these requirements have been met 13 REQUESTS BY CITY FOR RELOCATION OF COMPANY FACILITIES (A) If at any time the C~ty requests the Company to relocate any facility installed or maintained ~n pubhc streets or Public Easements, pursuant to th~s Franchise or prewous Franchises, ~n order to permit the C~ty to make any public use ofpubhc streets or Pubhc Easements, 2 to construct any pubhc ~mprovement, 3 to build any public project, or 4 to pursue any mumc~pal purpose m which the C~ty has a financml or ownership interest, Such relocation shall be made by the Company at its expense w~thm a reasonable period of t~me not to exceed forty-five (45) days after notice of request from C~ty unless otherwise specifically agreed to by the C~ty (B) As and when requested by the City, representatives of the C~ty and the Company shall meet to share lnformatton regarding anticipated City projects which will reqmre relocation of Company Facdit~es Such meetings shall be for the purpose of prowding the City w~th the estimated t~me table w~th~n which the ~nvolved Company Faeflittes shall be relocated, including an anticipated start date (within a thirty day window), so as to facilitate coordmat~on with the t~me table to be established by the C~ty for completion of the City project (C) Whenever by reason of the changes in the grade of any street or ~n the location or the manner of constructing any water pipes, sewers, electric hnes, or any other underground or overhead structure for any purpose whatever, It shall be deemed necessary by the C~ty to alter, change, adapt or conform the Faethties thereto, such alteratmns or changes shall be promptly made by the Company when requested by the City, w~thout claim for reimbursement or damages against the C~ty (D) In the event that Company has not relocated those of ~ts affected Faciht~es which are located in a pubhc street or Public Easement within a reasonable length of t~me as determined by the C~ty prior to the C~ty's commencement date for public street or Public Easement construction, the C~ty shall have the right to relocate or cause to be relocated the affected port~on of Company's Facilities and the Company shall reimburse the City for all costs of relocation within ten (10) days of the City's bflhng to the Company (E) Following relocation, all property shall be restored to substantmlly ~ts former cond~tion by the Company at ~ts expense m accordance with then existing Ctty codes and specifications (F) Nothing herein contained shall be construed to ~mpose any obhgat~on upon the City to make any payment for any relocation of the Company's Faclht~es (G) Relocated underground Facflittes shall be under ground Relocated aboveground Faclht~es shall be above ground unless specified otherwise by the Ctty 14 WORK BY OTHERS, CONSTRUCTION BY ABUTTING OWNERS, ALTERATION TO CONFORM WITH PUBLIC IMPROVEMENT The C~ty reserves the right to lay and permit to be laid, electric power, sewer, Gas, water, and other p~pe lines or cables and conduits, and to do and permit to be done, any underground and overhead work that may be deemed necessary or proper by the City ~n, across, along, over and under any pubhc street or Pubhc Easement occupied by Company, and to change any curb or sidewalk or the grade of any street In 9 permtthng such work to be done, the Ctty, ~ts officers or employees, shall not be hable to Company for any damages caused by the neghgence of the City, tts officers or employees, promdtng, however, nothing herem shall relieve any other person or entity from habd~ty for damage to Company's Famhttes Any work done by any person or entity other than C~ty, tts officers or employees, shall be performed m a safe and workmanhke manner so as to m~mm~ze the risk of damage to Company's Famht~es 15 CHANGING BOUNDARIES OF CITY AND ABANDONMENT (A) If, during the term of th~s Franchise, the boundaries of the Ctty are expanded from t~me to trine, the Company shall extend tts existing mare hnes, tf any, m the area of expansion 100 feet at Company's expense ~f residents of the newly ~ncorporated areas wtll use gas apphances Company may reqmre contnbuttons m a~d of construction for other extensions Servtce to newly expanded areas tn accordance wah the terms of thts Franchise, lncludmg w~thout hm~tatton, payment of Franchtse fees and other fees and payments provided here~n (B) In the event that the Ctty shall close or abandon any pubhc street or Pubhc Easement whtch contatns any portton of Company's Faclhttes, any conveyance of land contmned tn such closed or abandoned public streets of Pubhc Easement shall be subject to the rights heretn granted 16 CITY NOT REQUIRED TO ADVANCE FUNDS Upon recetpt of the Ctty's authorization for billing and constructton, the Company shall extend tts Faed~ttes to prowde Gas for municipal uses within the Ctty or for any major mumc~pal facthty outstde the Ctty hmtts w~thout requmng the C~ty to advance funds prior to constructton 17 TECHNOLOGICAL IMPROVEMENTS (A) The Company shall generally introduce and tnstall, as soon as practtcable, technologmal advances tn ~ts equipment and sermce w~th~n the C~ty when such advances are techmcally and economtcally feastble and are safe and beneficial to the C~ty and tts Residents Upon request, the Company shall remew and promptly report advances which have occurred in the Gas utd~ty tndustry that have been ~ncorporated ~nto the Company's operattons tn the City ~n the prevtous year or wtll be so incorporated tn the stx months following the C~ty's request (B) The Company shall report m advance to the Ctty any plans to mclude technologmal advances whmh may utlhze Gas Factht~es already tn place, whtch may be ~nstalled by the Company for tts use, the use of the Ctty, or for use of others as the C~ty may hcense The C~ty may use satd Famhttes for tts own use wtthout cost, except such additional expense whtch may be mcurred by the Company as a result of the Ctty's use In no event shall the C~ty's use materially ~mpatr the Company's abthty to use tts own Facthttes for the purposes specffied hereto Upon request of the City, the Company wdl provtde a detaded report for the use of such technological advances Nothing contained hereto shall be construed to authorize the Company to engage m actlmt~es other than Gas sales and transportation for servtce to the Ctty and ~ts Residents 18 CITY RULES AND REGULATIONS (A) The Ctty expressly reserves, and the Company expressly recogmzes, the C~ty's right and duty to adopt, from t~me to time, m addmon to the provts~ons herein contatned, such cost of servtce, cost of Gas, 10 charter promslons, ordtnances, rules and regulations as the C~ty deems necessary (B) The construetton, expansion, reconstruction, excavation, use, maintenance, repair and operatton of the Facthttes shall be subject to all laws, rules and regulations of the City, including without hmttatton pohce, bmldmg code, and safety code regulattons as they may be amended from time to time The Company shall comply wtth the same (C) At a reasonable ttme and for a reasonable purpose, the City may mspect, or cause to be tnspected, the books and records of Company, 2 lnvantory and appratse or cause to be tnventoned or appratsed the Faclbtles of Company wtthm the Ctty, 3 compel the attendance of wttnesses and the production of books and records 19 COMPLIANCE WITH CITY AND RAILROAD COMMISSION QUALITY SPECIFICATIONS AND REGULATIONS (A) The Gas which the Company sells and transports shall conform with tile specifications promulgated by the Ctty, as the same may be amended from ttme to ttme The Cay shall have access to all records and Facthttes of the Company to momtor compliance with such specifications (B) Prior to final adoption by the City of this Franchtse ordinance, the Company shall file wtth the City and Ratlroad Commtssion such amendments to its tariffs as may be necessary to make its tariff provtstons compattble wtth the provtslons of the ordmance, and shall report to the City any changes that have been made for thts purpose (C) The Company shall file w~th the City all tariffs, rules, regulations and policies under consideration m addttton to those approved by the Ctty Council, by the Radroad Commtssion relatmg to the Famlmes and operattons tn the City, any matters affecting the use of public streets and Public Easements, or thts Franchtse The Company shall provide the City with a copy of filings it makes with the Railroad Commtsston affecttng the same In addttton, the Company will provtde the City coptes of the Company's most recent annual report, and all petttions, non-pnvdeged communicat~on reports, non- pnvtleged adwce letters, audtts, complaints and apphcations together with supporting pre-filed testtmony and exhtbtts filed by the Company or third parttes wtth the Railroad Commtssion that relate to the Ctty or this franchtse 20 COMPLIANCE WITH ENVIRONMENTAL LAWS Company shall take such measures whmh will result tn its Facthtles meettng the standards required by apphcable federal, state and environmental laws The Company will provide the City w~th status reports of such measures 21 OFFICE LOCATION Company shall mmntmn an office and provide local and toll free telephone number, whtch shall provide 11 prompt, reasonable responses to Residents' service requests Company shall prowde a 24-hour toll free telephone number for emergency use Company shall always keep and mmntam ~ts books, records, contracts, accounts, documents and papers and shall make them available for ~nspect~on by C~ty officmls and employees upon request 22 REPORTS ON COMPANY OPERATIONS AND ACTIVITIES (A) The Company shall submit reports and tnformatlon to the City in the manner and form prescribed by the Railroad Commission, or as successor, except as otherwise provided hereto Upon the C~ty*s request, the Company and the C~ty shall meet to share reformation regarding excavations ~n pubhc streets, Pubhc Easements, and other pubhc properttes made by the Company w~thm the C~ty Information shared shall include a Exact locations of excavations b Date(s) excavating made c C~ty pernnt number d Contractor e Purpose f Cost 2 Should Company transport Gas w~thm the C~ty on behalf of third pames mcludtng affihates, Company shall not~fy the C~ty of the sh~pper's name, address, telephone number, volume transported, duration of transport arrangement, transport fee and such other mformatton requested by Ctty from t~me to t~me, but m no event later than 72 hours prior to lmtml dehvenes 23 DETAILED BILLS All bills sent to the C~ty by the Company shall include all tnformat~on requested by the C~ty including w~thout hnntat~on account numbers, address and ~tems metered and they shall specify the type of account for which charges are made for Gas service The Company shall provide the C~ty annually w~th a complete hst~ng of all the C~ty's accounts 24 C1TY HELD HARMLESS AND INDEMNIFIED (A) The Company shall construct, mamtmn and operate ~ts Famht~es ~n a manner which prowdes, reasonable protection agmnst ~njury or damage to persons or property (B) Notw~thstanthng any other prows~on of th~s Franchise, Company (the "lndemmtor") acknowledges ~ts primary responsththty for the day-to-day operation of ~ts Famht~es ~n full accordance w~th the terms of the Franchise The Indemmtor covenants, warrants and represents that Company will conduct, operate and manage ~ts bus~ness and affmrs m comphance w~th all federal and state laws and all rules and regulations, ~n addtt~on to all of the terms, reqmrements and prows~ons of th~s Franchise TIlE INDEMNITOR AGREES TO DEFEND, INDEMNIFY AND IIOLD CITY, ITS OFFICERS, AGENTS AND EMPLOYEES FULLY HARMLESS AGAINST ANY AND ALL CLAIMS INCLUDING ENVIRONMENTAL CLAIMS, THAT MAY ARISE FROM OR BE OCCASIONED BY ANY INTENTIONAL, WILLFUL, NEGLIGENT OR STRICTLY LIABLE VIOLATION (CIVIL OR CRIMINAL) OF A FEDERAL, STATE OR LOCAL LAW, RULE OR REGULATION BY THE INDEMNITOR, OR BY ANY PERSON OR FIRM HIRED BY OR CONTRACTING WITH THE INDEMNITOR, OR IN THE OPERATION OR MAINTENANCE OF INDEMNITORS FACILITIES THE INDEMNITOR SHALL FULLY REIMBURSE CITY FOR ALL PENALTIES, FINES, FEES, COSTS, EXPENSES, DAMAGE SETTLEMENTS OR JUDGEMENTS INCURRED OR PAID BY CITY AS A RESULT OF ANY OF THE INDEMNITOR'S VIOLATIONS DESCRIBED ABOVE (C) Nothtng herein contatned shall be construed as an acknowledgment by the parties that the Company, m exerctstng tts rights and obhgattons under thts Franchtse, is an entity controlled by, subject to the control of or acttng on behalf of the Ctty (D) In the event the Ctty mstttutes httgat~on agatnst the Company for a breach of th~s Franchise or for an tnterpretatton of the Franchise, and the Ctty ts the pmvadtng party, the Company shall reimburse the Ctty for all costs related thereto, tncludmg w~thout hmttat~on court costs and reasonable a~orney's fees None of the Ctty,s costs retmbursed by the Company under this Section shall be surcharged bY the Company 25 NOTICE TO COMPANY (A) Promptly after recetpt by an Indemmtee of any clatm or notice of the commencement of any actton, admmtstrattve or legal proceedmg, or ~nvesttgatlon as to which the Indemmty provided for tn the above Sectton hereof may apply, the Indemmtee shall not~fy the Company ~n wnttng of such fact Company shall assume the defense thereof with counsel designated by Company and satisfactory to the Indemmtee (B) Should an Indemmtee be entttled to tndemmficatton under the above Section as a result of a claim by a thtrd party, and Company fails to assume the defense of such clmm, the Indemmtee wdl, at the expense of Company, contest (or, wtth the prior written consent of Company, settle) such thtrd party claim 26 INSURANCE (A) Company shall obtain and mamtam tn full force and effect throughout the term of th~s franchise ordinance, and any extension or renewal thereof, insurance w~th an insurance company approved to do business m the State of Texas and acceptable to the Ctty's R~sk Manager which conforms to the reqmrements set forth hereto below The msurance shall be insured tn the standard form approved by the Texas Department &Insurance and shall meet the reqmrements set forth hereto below Company shall provide the Ctty's R~sk Manager wtth proof of such ~nsurance so reqmred at the t~me of fihng the acceptance of franchtse The C~ty reserves the right to rewew these ~nsurance reqmrements durmg the effective period of the franchise ordinance, and any extension or renewal thereof, and to adjust Insurance coverage and thetr hmtts when deemed necessary and prudent by the City's Risk Manager based upon changes In statutory law, court dectstons or the claims history of the industry, as well as Company 13 (B) Subject to Company's right to maintain deductibles in such amounts as are approved by the City's Risk Manager, Company shall obtain and maintain m full force and effect for the duration of this franchise ordinance, and any extension or renewal thereof, at Company's sole expense, insurance policy coverage m the following type(s) and minimum amounts FACILITIES OPERATION Type Amount I Workers' Compensation and Statutory Employers Liability $100,000/500,000/100,000 2 Commercial General (public) Combined single limit for Liability insurance including bodily injury and property damage of $10,000,000 per 0) All premises/operations occurrence or its equivalent (il) Independent contractors (iii) Products/completed operations 0¥) Personal & advertising injury (v) Contractual liability (no limItations) (vi) Explosion, collapse and underground hazards 3 Comprehensive Automobile Combined single hmit for Liability insurance, including bodily injury and property coverage for loading and unloading damage of $1,000,000 per hazards, for occurrence or its equivalent 0) Owned/leased automobiles (n) Non-owned automobiles (ill) Hired automobiles FACII.ITIES MAINTENANCE REPAIR AND/OR CONSTRUCTION Type Amount 1 Workers' Compensation and Statutory Employers Liability $500,000/500,000/500,000 2 Commercial General (public) Combined single limit for Liability insurance including bodily injury and property damage of $10,000,000 per (0 All premises/operations occurrence or its equivalent 0t) Independent contractors (iii) Products/completed operations 0v) Personal & advertising injury (v) Contractual liability (no limitations) (vt) Explosion, collapse and underground hazards 3 Comprehensive Automobile Combined single limit for Liability insurance, including bodily inJury and property coverage for loading and unloading damage of $1,000,000 per hazards, for occurrence or its equivalent 0) Owned/leased automobiles (it) Non-owned automobiles (m) Hired automobiles (c) The City shall be entitled, upon request and without expense, to receive copies of the pohcies and all endorsements hereto The City may make any reasonable requests for deletion, revision or modification of particular policy terms, conditions, limitations or exclusions, except where policy provisions are established by law or regulation binding upon either City or Company or upon the underwriter for any of such policies Upon request for deletion, revision or modification by the City, Company,shall exercise reasonable efforts to accomplish the changes in policy coverages, and shall pay the cost thereof (d) Company agrees that with respect to the above required insurance, all insurance contracts will contain the following required provisions Name the City and its officers, employees, board members and elected representatives as additional msureds (as the interests of each insured may appear) as to all applicable coverage, 2 Provide for thirty (30) days notice to the City for cancellation, non-renewal, or material change at the address shown below by registered or certified mall, 3 Company agrees to waive subrogation against the City, its officers and employees, for personal injuries (including death), property damage or any other loss, 4 Provide that all provisions of the franehme ordinance, as amended, concermng habfllty, 15 duty, and standard of care, including Indemnity, contractual liability coverage sufficient to include such obhgat~ons within apphcable pohc~es, and 5 Prowde that the "other insurance" clause shall not apply to the Ctty where City Is an additional msured shown on the pohcy (e) Company shall not~fy C~ty m the event of any changes in coverage and shall give such nottces not less than thirty (30) days prior to the change, whtch notice must be accompanied by a replacement Certfficate of Insurance All notmes shall be given to C~ty at the following addresses City Manager City of Denton 215 E McKmney Denton, Texas 76201 (f) Company shall ~mmedmtely advise the C~ty Rtsk Manager of any actual or potentml lltigat~on that may develop that would affect th~s insurance (g) Insurers shall have no right of recovery against the City, it being the mtentmn that the insurance pohc~es shall protect Company and the C~ty and shall be primary coverage for all losses covered by the pohcies (h) Compames lssmng the insurance pohmes shall have no recourse against the City for payment of any premmms or assessments whmh are the sole responslbthty of Company 0) I Without bruiting any of the other obligations or habihties of Company, Company shall require each subcontractor performing work under the franchise ordinance to maintain, at the subcontractor's own expense, during the term of the franchtse ordinance, the same sttpulated minimum insurance, including the reqmred provis~ons and addmonal policy conditions as shown In (b) above As an alternative, Company may include its subcontractors as additional msureds on ~ts own coverage as prescribed under these reqmrements (except for worker's compensation insurance, which the subcontractors must separately obtain) Company's certificate of insurance shall note In the event that the subcontractors are included as addition msureds 2 Company shall obtain and monitor the certificates of insurance from each subcontractor m order to assure comphance with the ~nsurance requirements Company must retain the certificates of insurance for the duration of this Franchise, and shall have the responsibihty of enforcing these insurance reqmrements among ~ts subcontractors The City shall be entitled, upon request and w~thout expense, to receive copies of these certificates (j) Approval, disapproval or failure to act by the City regarding any ~nsurance supphed by Company or its subcontractors shall not reheve Company of full respons~bdity or liability for damages and accidents as set forth ~n th~s Franchtse Neither shall bankruptcy, insolvency or denial of liability by the ~nsurance company exonerate Company from habfllty (k) Company may self-insure to the extent permitted by apphcable law under any plan of self- insurance, mamtamed m accordance with sound accounting practices, against risks described m th~s section and shall not be required to maintain insurance, prowded that Company furnishes the City satisfactory evidence of the existence of an insurance reserve adequate for the risks covered by such plan of self-insurance (1) Company shall provide the City w~th evidence of the form and bas~s for insurance coverages or self ~nsurance prior to the effective date of this franchise ordinance Should Company elect to change the form or basis of insurance dunng the term of th~s Franchise, Company shall not~fy the City Company shall provide all doeumentatton necessary for review by the C~ty of the changed ctreumstances of Company Company shall not undertake any activtty reqmrmg insurance pursuant to th~s franchise ordinance, until receiving written confirmation from the City that the reqmrements contatned ~n th~s section have been met Failure to comply w~th thts prowslon may result in the tmmedlate term~natton of th~s franchise ordtnance 27 BONDS (A) Company shall obtain and ma~ntmn, at its sole cost and expense, and file w~th the C~ty Secretary prior to the commencement of any construetton anthorlzed by th~s franchise, a corporate surety bond with a surety Company anthonzed to do bustness ~n the State of Texas and m accordance w~th Section 2253 021 of the Texas Government Code m the amount of One Hundred Thousand Dollars ($100,000 00) to guarantee Company's performance for the construction of Company's facdtt~es The bond may be adjusted in subsequent years in accordance wtth Construction Projecnons ~n the Exhibit attached to 25% of the projected constructton costs, but tn no event less than $25,000 (B) The rights reserved to the City wtth respect to the bond are ~n addition to all other rights of the City, whether reserved by thts Franchise ordinance or authorized by law, and no action, proceeding or exermse of a right wtth respect to such bond shall affect any other rights the C~ty may have 28 PAYMENT OF EXPENSES INCURRED BY CITY IN RELATION TO ORDINANCE (A) At the C~ty's option, the Company shall pay tn advance or reimburse the C~ty for expenses tncurred tn any proposed transfer of the Franchtse including, without hm~tatlon attorney's fees, consultants' fees, pubhcation of nottces and ordtnances and for photocopying of documents arlstng form the negottation ofthts Franchise (B) All City expenses retmbursed by the Company under th~s section shall not be surcharged by the Company 29 RIGHT OF FIRST PURCHASE (A) In the event the Company at any ttme during the term of the Franchise proposes to sell or dispose of any of tts Facflmes located wtthtn the City, it shall grant to the C~ty the right of first purchase of same The Company shall obtain a quahfied appratsal on any such Famht~es and the C~ty shall have s~xty days from the ttme such appraisal ts provtded to the Ctty ~n which to exercise the right of first purchase by 17 g~wng written not,ce to the Company Should the City not prowde the reqmred written not,ce, the Company may proceed to negotiate w~th others for the sale of such Fac~ht~es provided that the Company may not sell such FacthtleS for an amount less than 95 percent of the appraised value w~thout first prowdmg the Ctty an opportumty to purchase such property at such lesser price, ~n which event the C~ty must not~fy the Company m writing within 30 days ffw~shes to purchase such Fatalities (B) Upon the exercise of the C~ty's option to purchase, other than under subsection (A) above, the part~es shall negotiate m good froth to determine a mutually acceptable purchase price No value shall be g~ven to the Franchise or to pubhc r~ght-of-way (C) Notwtthstand~ng anything herein to the contrary, ~f the C~ty and the Company cannot reach agreement as to the purchase price or acceptable payment terms w~thm mnety (90) days after commencement of negotiat~ons, the C~ty may commence condemnation proceedings, and each party shall have rtghts prowded by law relating to condemnation prowded, however, no award shall be made for the value of the Franchise or pubhc r~ght-of-way 30 CITY'S RIGHT TO PURCHASE OR. CONDEMN Company agrees, acknowledges, and affirms City's right to construct, purchase or condemn any pubhc utd~ty works, Facthties or rights-of-ways of the Company ~s hereby expressly reserved (A) In the event the C~ty exercises ~ts optmn to purchase or condemn, the Company agrees that ~t, at the C~ty's request, will continue to prowde the services ~t provides under th~s Ordinance untd further not~fied otherwise by the C~ty (B) The Company shall cooperate w~th the C~ty by making available the ex,sting pertinent Company records to enable the C~ty to evaluate the feas~b~hty of acqmsmon by the C~ty of Company Facd~ties (C) The Company shall take no action which could ~nh~b~t the C~ty's ab~hty to effectively or effictently use the aeqmred Factht~es (D) At the C~ty's request, the Company shall supply Gas for use by the C~ty m the C~ty-owned Facdmes according to Company's latest approved tariff 31 LIMITATIONS OF COMPANY REMOVAL OF FACILITIES (A) In the event th~s Franchise tn not renewed at the expiration of ~ts term, ~s forfetted, or the Company terminates any service provided hereto for any reason whatsoever, and the C~ty has not purchased or condemned the Facdit~es and has not prowded for alternative Gas service, the Company shall not remove the Facthttes pending resolution of the dlsposmon of the Factht~es The Company further agrees it w~ll not w~thhold any temporary services necessary to protect the pubhc and shall be entitled only to monetary compensation tn no greater amount than to which ~t would have been entitled were such services prowded during the term of th~s Franchise Only upon receipt of written not,ce from the Ctty stating that the C~ty has adequate alternative Gas sources and dehvery systems to prowde for the Residents of the C~ty shall the Company be entitled to remove any or all of the Fac~ht~es m use under the 18 terms of th~s Franchise (B) Upon request from the C~ty and within a reasonable time, the Company, at its expense, shall remove from the public streets easements and other pubhc properties the above ground distribution Facilities helongmg to the Company which are not otherwise purchased by the City at the termination of the Franchise All property affected by such removal shall be restored by the Company to substantially its former condition after said removal 32 TRANSPORTATION AND PROCUREMENT OF GAS BY CITY The City expressly reserves the right to procure, transport and resell Gas If requested by the City the Company shall transport Gas purchased by the City through its Faclhtles for use by the City ~n its Facilities and/or its Residents pursuant to separate transportation contracts with the City and in accordance w~th Grantee's tariffs 33 CURTAILMENT The Company shall not curtail Gas dehvenes except in compliance with the Company's curtailment plan approved by the Rmlroad Comm~ssion 34 PENALTIES For the violation of any of the following prowslons of this Franchise, penalties shall be paid by Company w~thln ten days of assessment by City Resolution m addition to any other rights or remedies the C~ty may have at law or In eqmty (A) For fadure to complete construction m accordance with agreed plans, unless the City specifically approves the delay, Company shall pay Two Hundred Dollars ($200 00) per day for each day, or part thereof, that the fmlure continues (B) For fadure to provide data, documents, reports, information or to cooperate with City during an audit, Company shall pay Two Hundred Dollars ($200 00) per day for each day the violation occurs or continues (C) For failure to comply with any financial obligation required herein, Company shall pay to City Two Hundred Dollars ($200 00) per day for each day, or part thereof, that such noncompliance continues (D) For failure of Company to comply with operational or maintenance standards, Company shall pay to City Two Hundred Dollars ($200 00) per day for each day, or part thereof, that such noncomphance continues (E) For failure to provide In a continuing manner the services specified herein, Company shall pay Two Hundred Dollars ($200 00) per day for each day, or part thereof, that each noncompliance continues (F) C~ty will not adopt resolution prior to consideration at a public hearing presided over by City's 19 govermng body, setting forth alleged fadures complained of and allowance of company to respond to alleged fatlures Company to reeetve thtrty (30) days written notice of failures complatned of and thtrty (30) days written notice of the pubhc heanng date and t~me to constder adoption of resolutton (G) Should the new Lone Star Gas Franehtse result m an mcrease m the franchise fee to 4%, then per Section 4(A) thts franchtse tncreases as well and the datly ctwl penalty m subsectton (A) through (E) shall be reduced to $100 If Lone Star's franchtse fee does not increase but ~ts penalty ~s reduced below $200, then thts penalty provtslon will be adjusted aecordtngly 35 FORECLOSURE Immedtately upon Company recelwng nottce or knowledge of attempt to foreclose, foreclosure proceedtngs or other judicial actton pertaining to all or a substantml part of the Faclhttes, or upon the termmatton of any lease covering all or a substanttal part of the Facd~ttes, the Company shall notify the Ctty of such fact, and such notfficatlon shall be treated as a notfficatton that a change m ownershtp of the Company has taken place, and the provlstons of thts Franchtse govermng the consent of the C~ty to such change m ownership of the Company shall apply 36 FORFEITURE AND TERMINATION (A) In addltton to all other rights and powers retmned by the Ctty under th~s Franehtse or otherwtse, the Ctty reserves the right to forfett and termtnate the Franchise and all rights and pnvdeges of the Company,hereunder in the event of a breach of ~ts terms and condtttons A breach by Company shall tnclude, but shall not be hmlted to, the following Repeated molatton of any provtston of the Franchise or any rule, order, regulation or determtnaUon of the Ctty made pursuant to the Franchise after receipt of written notme from Ctty, 2 Attempt to dtspose of any of the Faetlmes or property of tts Fac~llttes or real property to prevent the Ctty from purchasing tt, as provtded for herem, 3 Attempt to evade any provtslon of the Franchise or to practme any fraud or dece~t upon the City or tts Restdents, 4 Failure to begtn or complete Gas facd~ty constructton and/or extension as agreed to w~th the City, 5Repeated fadure to provide the services set forth in the Franchtse, 6 Repeated fatlure to restore servtce after 48 consecutive hours of mterrupted servtce, except when approval of such tnterruptton ts obtained from the City or "force majure" exists, or 7Material m~srepresentatlon of fact tn the apphcat~on for or negottatton of the Franchise 8 Convmtlon of any director, officer, employee, or agent of the Company of the offense of bribery or fraud connected w~th or resulting from the awarding of thts Franchtse to the Company (B) The foregoing shall not constttute a breach tf the vtolat~on occurs w~thout fault of the Company or occurs,as a result of circumstances beyond tts control whmh could not have been avoided as a result of 20 the exercise of reasonable care Company shall not be excused by mere economic hardsh,p nor by misfeasance or malfeasance of Its &rectors or officers (C) The City Council retains the right to terminate this Franchise ordinance, Company's use of the public streets or Public Easements ,s ,nconsistent with the public use or whenever the Company's use has (D) The City may make a written demand that the Company comply with any such provis~on, rule, order, or determination under or pursuant to this Franchise If the violation by the Company continues for a period of thirty (30) days following such written demand without written proof that the corrective action has been taken or is being actively and expeditiously pursued, the City may take under consideration, at a public hearing presided over by the City's governing body, the issue of tenmnat,on of the Franchise The City shall cause to be served upon Company, at least th,rty (30) days prior to the date of such a hearing, a wr,tten notice of intent to request such termination and the time and place of the hearing Public notice shall be given of the hearing and the issue which the City is to consider (E) The City shall hear and consider the issue and shall hear any person tnterested therein C,ty Council thereafter shall determine whether or not any violation by the Company has occurred (F) If the City shall determine that the violation by the Company was the fault of Company and within its control and could not have been avoided with exercise of reasonable care, the C,ty may declare the Franchise of the Company forfeited and terminated, or the Council may grant to Company a period for compliance 37 OTHER LEGAL REMEDIES/RIGHT OF APPEAL (A) Neither the City nor the Company by accepting this Ordinance waives its right to seek all appropriate legal and equitable remedies as allowed by law upon violation of the terms of this Ordinance by the other party, including seeking injunctive rehef m a court of competent jurisdictmn Such right to seek injunctive relief is expressly reserved and all terms and provisions hereof shall be enforceable through injunctive relief (B) Nothing herein shall be deemed to constitute a waiver, release, or rehnqulshment of the City's or the Grantee's right to contest or appeal any action or decision of the other party made contrary to any federal, state or local law, rule or regulation 38 NO WAIVER Neither the City nor the Company shall be excused from complying with any of the terms and conditions of this Franchise by any failure &the other, or any of its officers, employers, or agents, upon any one or more occasions to insist upon or seek compliance with any such terms and conditions 39 SUCCESSORS AND ASSIGNS The rights, privileges, and obhgatlons granted and contmned ~n this Franchise shall ~nure to the benefit of and be binding upon the Company, its successors and assigns 40 REPRESENTATIVES AND NOTICES (A) Upon request by the C~ty, the Company shall prowde annually to the Cay a current chain of command chart showing all managers and supervisors, along w~th their names, titles, addresses, telephone numbers, up to the Chief Executive Officer of the Company, who have responsibility for prowdmg servmes wtth~n the C~ty (B) All notices, mcludmg commumcat~ons and statements whmh are reqmred or permitted under the terms of this Agreement, shall be ~n writing, and evidenced by receipt Servme of a not~ce may be accomphshed by personal service, registered or certified marl (postage prepmd) or reputable overnight courier service Notices shall be sent to the Partms at the following addresses I C~ty C~ty Manager C~ty of Denton 215 E McK~nney Denton, Texas 7620 t 2 Company Director of Regulatory Affmrs CoSer~ Gas 3501 FM2181 Corinth, Texas 76205 From t~me to t~me C~ty and Company each may designate a new address for itself for purpose of not~ce hereunder by written notme to the other duly g~van as prowded hereto 41 SEVERABILITY Should any one or more prowslons of th~s Franchise be determined to be illegal or unenforceable, all other prows~ons nevertheless shall remain effective prowde, however, the parties shall forw~th enter into good froth negottattons and proceed wtth due diligence to draft a term that will achieve the original intent of the pames hereunder 42 ENTIRE AGREEMENT This Franchise constitutes the entire agreement of the pames There have been no representations made other than those contained in this Franchise 43 COMPANY APPROVAL The Company shall file with City Manager written approval of this Franchise and of all of its terms and provisions at least ten days prior to the City Council meeting at which the ordinance granting the Franchise is to be approved 44 ANNEXATION TO THE CITY When any property owned by the Company becomes eligible for voluntary annexation to the City and ~s not simultaneously eligible for voluntary annexation to another municipal corporation, the Company shall petition to annex the same upon request made by the City, provided that no condition of such annexation shall impair the Company's ownership or then existing use of its property Except as hereto provided, the Company agrees to meet all terms and conditions imposed upon the annexation by the C~ty that are no more stringent than those imposed generally upon property owners seeking annexation of their land to the City The Company shall be exempted from a public donation of land, money or water rights arising from such mandatory annexation under this section to the extent that the land being annexed is committed, dedicated and being utilized by Facilities directly involved In transporting or distributing Gas under this ordinance, and provided further that said exemption from public donation shall not extend to any unimproved land or land not so committed, dedicated and currently used 45 THIRD PARTIES Nothing contained in this Franchise shall be construed to provide rights to third parties 46 COMPLIANCE WITH CITY CHARTER Company recognizes, accepts and agrees that the terms, conditions and provisions of this Franchise are subject to the applicable provisions of the City Charter Any request by Company for a modification to this Franchise shall be subject to a review by the City Attorney for comphance with the applicable provisions of the City Charter 47 APPLICATION OF TERMS IN COMPETING FRANCHISES The terms of this Franchise which are not contained in the franchise of any entity obtmmng or renewing a franchise for gas within City from and after January 1, 1999 shall be unenforceable To the extent terms more favorable to the franchisee are contained in another franchise for gas obtmned or renewed by the City from and after January 1, 1999, such terms shall be applicable to Company as if contained herein and shall control over the terms contained herein 48 EFFECTIVE DATE This Franchise ordinance shall take effect twenty-one (21) days after its final passage, pending 23 pubhcat~on of the ordinance as reqmred by Sec 13 02 of the C~ty Charter, and acceptance m accordance w~th the provisions of the Charter of the C~ty and it ~s accordingly so ordamed PASSED AND APPROVED this the ff6~day of L~_~/_g.r'~'~/~/ ,19 ff~:~ J . YOR ff Mem Councd Member Councd Member ATTEST JENNIFER WALTERS, CITY SECRETARY ~pROvE~D AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY The above and foregotng or~,ance read, adopted on first reading and pas.sed to second reading by the followmgvotes, thlsthe ~ ~ dayof LV'-rZt'//Z6?.,~&{ , 19~d~ , at a regular sess~on of the City Councd ~0/7/' d'"~&O~/~t~ Council Member, voting &6~/~ (t~/-Z~FO~5]~~ Council Member, voting /r~//~t~ ~)~'t~ Coune,1 Member, voting ounc. Member. vot,n /fr; Ob.C ou.cd Member, vot,n (..../' The above and foregoing ordinance read, adopted on s~cond reading and passed by the following votes, tb,st~e /q~ dayof ~Tanaa.r~ ,~¢q ,atare~nlar~ess,o. oftbeOtyConnc" ~ek ~rill~er Mayor, voting ~n~~a~lcu ¢ounc. Member, votm~ / We/~/~6/~f6~.4~ Counc,l Member, voting Council Member, voting STATE OF TEXAS § COUNTY OF DENTON § I, (~lt~L~/~]~C~ty Secretary of the C~ty of Denton, Texas, do hereby certify that the a~e and[~oreg[tn~ ts a tree and co~ect copy of the fr~ch~se for gas ordinance be~een the C~ of D~nton, Texas, and CoSe~ Gas, an affihate of Denton Coun~ Elecmc and that the full text of the ordinance was pubhshed once each week for ~o consecutive weeks ~n the Denton Record-Chromcle, the officml newspaper of the C~ of Denton The same ~s now recorded as Or&nance No ~ofthe Or&nance Records of the C~ of Denton, Texas w~m~ss ~ ~N~ ~,~ th~ d~y of~ ~ ~, ~ q g 25 ACCEPTANCE WHEREAS, the C~ Councd of the Cfly of Denton, Texas, did on the ! q day of ~(~lu, C~ ,19 q~ , enact an Ordinance entitled AN ORDINANCE WHEREBY THE CITY OF DENTON, TEXAS, GRANTS TO COSERV GAS A NON-EXCLUSIVE FRANCHISE TO FURNISH, TRANSPORT, SELL AND DISTRIBUTE GAS TO CUSTOMERS IN DENTON, TEXAS, FOR A PERIOD OF TEN (10) YEARS FOR A FRANCHISE FEE IN THE AMOUNT OF 3% OF REVENUES COLLECTED AND PROVIDING DEFINITIONS, PROVIDING A PAYMENT SCHEDULE AND STATEMENT OF REVENUES, PROVIDING FRANCHISE FEE NOT IN LIEU OF OTHER FEES AND CONTRACT OBLIGATIONS, PROVIDING DEPENDABLE GAS SUPPLY AT LOWEST REASONABLE COSTS, PROVIDING OBLIGATIONS REGARDING COMPANY FACILITIES, LONG-RANGE PLANNING FOR CAPITAL IMPROVEMENT PROJECTS, CiTY REVIEW OF CONSTRUCTION AND DESIGN, REQUESTS BY CITY FOR RELOCATION OF COMPANY FACILITIES AND WORK BY OTHERS, PROVIDING FOR CHANGING BOUNDARIES OF CITY AND ABANDONMENT, PROVIDING CITY NOT REQUIRED TO ADVANCE FUNDS, PROVIDING FOR TECHNOLOGICAL IMPROVEMENTS, PROVIDING FOR COMPLIANCE WITH CITY RULES AND REGULATIONS, RAILROAD COMMISSION SPECIFICATIONS AND REGULATIONS, AND ENVIRONMENTAL LAWS, PROVIDING OFFICE LOCATION, REPORTS ON COMPANY OPERATIONS AND ACTIVITIES AND DETAILED BILLS, PROVIDING CITY HELD HARMLESS AND INDEMNIFICATION, NOTICE TO COMPANY, INSURANCE AND BONDS, PROVIDING PAYMENT OF EXPENSES INCURRED BY CITY IN RELATION TO ORDINANCE, PROVIDING RIGHT OF FIRST PURCHASE, RIGHT TO PURCHASE OR CONDEMN, LIMITATIONS OF COMPANY REMOVAL OF FACILITIES, TRANSPORTATION AND PROCUREMENT OF GAS BY CITY AND CURTAILMENT, PROVIDING CIVIL PENALTIES, FORECLOSURE, FORFEITURE AND TERMINATION AND OTHER LEGAL REMEDIES, PROVIDING NO WAIVER, RIGHTS OF SUCCESSORS AND ASSIGNS, REPRESENTATIVES AND NOTICES, SEVERABILITY, ENTIRE AGREEMENT, COMPANY APPROVAL, ANNEXATION TO THE CITY AND THIRD PARTIES, PROVIDING COMPLIANCE WITH CITY CHARTER AND APPLICATION OF TERMS IN COMPETING FRANCHISES, AND PROVIDING AN EFFECTIVE DATE, and WHEREAS, smd Ordinance was on the Iq day of~ 19~"~ , duly approved by the Mayor of said City and the seal ofsa~ City was the~to aflixet~ and attested ~yytl~e C~ty Secretary, NOW, THEREFORE, CoServ Gas, an affiliate of Denton County Electric, hereby in all respects accepts, approves, and agrees to smd Ordinance, and same shall constitute and be a binding contractual obhgat~on of CoServ Gas and of the City without wmver of any other remedy by CoServ Gas or the City and files thts ~ts written acceptance w~th the City Secretary of the City of Denton, Texas, in h~s/her office Datedth~s t,~ff dayof t~bn~t~ AD 19 ~ COSERV GAS, AN AFFILIATE OF DENTON COUNTY ELECTRIC ATTEST Secretary Acceptance filed in the office of the City Secretary of Denton, Texas, this ~'~day of City ~tretary Ga$ Corh~th, Tex~ 76205 Metro 817-430-1195 FAX 940-497.6525 December 10, 1998 Mr Michael Bucek F~rst Assistant C~ty Attorney City of Denton 215 E McKInney Denton, TX 76201 Dear Mr. Bucek By th~s leffer, CoServ Gas formally accepts the draft franchise dated December 9, 1999 and transmitted by you on that date via e-mad We appreciate your efforts to negotiate complex issues over a relatively short period of time We also appreciate the need to erasure that franchise agreements protect the City and the public It serves However, we do not believe it appropriate to impose requirements on CoServ Gas that are more stringent than those for other gas utilities Gwen more time, we would I~ave been able to make a persuasive argument that ~t was neither equitable nor necessary to do so However, we must meet obligations we have made, and therefore accept the franchise as you have amended IL Again, we appreciate your efforts In expediting th~S matter, end please let us know wha we can do to expedite/s consideration by the Council Thank you Since Director of Regulatory Affairs ~~~~UNIVERSAL SURETY OF AMERIC TEXAS .STATUTORY PERFORMANCE BOND (Public Works) Bond No TX 3531473 00 KNOW ALL MEN BY THESE PRESENT5 THAT, CoServ Gas. Ltd (hereinafter called the Principal), as principal and UNIVERSAL sURETY OF AMERICA, a corporatmn orgamzed and ex~stmg under the laws of the State of Texas, hcensed to do business m the State of Texas and admitted to wrote bonds, os surety, (hereinafter called the Surety), and held and firmly bound unto C~ty o[ Denton. Texas (hereinafter called the Obhgee), m the amount of One Hundred Thousand and no/]OO .......................................... (Dollar's) ($ 100,000,00) for the payment whereof, the smd Pmnc~pal and Surety brad themselves, and their heirs, administrators, executors, successors, and assigns, jointly and severally, f,rmly by these presents ¢'/~ WHEREAS, the Principal has entered into franchise agreement w~th the Obhgee, dated the lq day of .~maar~ .1gq ~, for furmshma transport, sell and d~stmbute gas to custo ers in Denton Tex~s which contract s hereby referred to and made a port hereof as fully and to the same extent as ff copmd at length harem The term of th~s bond ~s for one year begmnmg ,~-°l-lqq°l and ending ¢q-~-~.o~o Th,s bond ~s subject to renewal annually by executmn of a new bond NOW, THEREFORE, THE CONDITION OF THIS OBL~&ATION I,~ SUCH That ~f the smd Principal shall fmthfully perform the work m accordance w~th the plans, spec~ficatmns and contract documents, then, th~s obhgatlon shall be null and vmd otherwise to remmn m full force and effect PROVIDED, HOWEVER, that th~s bond ~s executed pursuant to the prowsmns of Chapter 2253 of the Texas ~overnment Code and all liabilities on this bond shall be determined in accordance w~th the provlmons, conditions and hm~tat~ons of sa~d Chapter to the same extent as ~f ~t were copmd at length herein ZN WZTNE$5 WHEREOF, the said Principal and Surety hove mgned and sealed this ,nstrument th~s q¥~ day of ~¢bruaro. ,19 q~ Prmc~pal cos y t_To Surety UNIVERSAL SURETY OF AMER]:CA ~ttorney-I~-Fact ~" 1 cne Ie ueqnon ~~~~UNIVERSAL SURETY OF AMERICA giV: !R SAL S RETY OF AMERICA UI .~ 2. ~ ,!'~ '.p.O~BOX 106~ ,H~uston, Texas 77251-1068 ~ GRNR~ PO~ E ATTO~EY - CERTIFIED COPY ,1 ' TX 3531473 00 ~ow All Meg ~ ~ "*~*~' *~' ~'" ~ -" '~ ~ ......... ~ ~otnt ~e S~le ofTex~, ~ ~ lts,~olpal offi~ m Ho~, Text, ~s,bY ~e~ Pr*~nts ~' mnsnm~ ~ a~v La. -~ ' ¢I ~nMn D~d John D ~e~on of D~ , [' ~ S~te of T~s , ~ l its ~ ~d hw~ A~mey(s)-m-Faot, w~ ~11 power ~ a~on~ ~by ~ l , Bo~ not ~oxc~ $250,~ ~ ~ss ~ch is aocomp~od by le~r ~f , ~ ~ ~a~W ~d by ~e ~st~nt, S~c~ or ~xwuave Vice ,;~ *g~v*~ ~nv ~ m ~,~eX~t ~ ifs~h ~nds were sl~ by ae ~si~ so~ wt~ ao c~ora~ ~al of~o ~ to brad ~ ~ml ~..~-~-Yt~-aT~-~-. ~., ~,t.~ ~ c~mo all ~t ~ smd A~m~(s).m-~t ~y ~ ~ ~ s~ ~mn~ ~d,su~ a~ogW, t~ to i~n~,~e ~l L 6/~0/~000 , Smd ~pom~nt ~s ~ ~ ~ ~Y aumon~ el me d.,~_ ~.~a.;~ ..a ~V ~ice ~id*nt Se~m-- or ~y Asms~t Se~e~ s~ll be ~ is ~by ves~ ~ ~11 ~we lut ~v o~ Or mo~ ~t~le ~nS ~ A~mey(s)-m-Fact to ~pm~nt ~d act for ~d on ~f of ~ mp~y "RESOLVED ~ ~0 a~ of ay offi~r qf ~ c~gr~on, ~ ~o ~at of ~ ~o~pmu~n.~ ~e affix~ or lie ~ ~y pow~ ofa~y of ~e oq~aflonf~ ~ ~h pnn~f~o ~e ~ ~t ~11 oe vain ~a mn~ng upon me ~ WItn~s ~ ~f, U~e~sal 8u~ ~*~*~ has ~used ~e p~snts m be sl~ by I~ Pr~lden~ Jack Mc~ynol~ and ~ora~ s~l m b ~ h~re~ ~ ~ lnd d~y of J~a~~, A~, 1~ On ~is 2m a~ of Ja~s~ ~ the vSar l~8,]~fore me, Estela ~lJ~ s nota~ publl~ ~e~on~ appeared J~ck. Mc~eynol~ penonsl* ~o' ~ m5~ ~ p~n~h~ eg~uad tSe ~am ins~umeut ~ ~sldent, onoehaU o~the eorpo~Uon ne~m nameo Ong~l Pow~ of ~ ~ t~ by ~ Comply, ~ ~mby ~ c~ ~t ~ ~d Power ofi~o~ Is mill in ~ff~ ~ ~y' l~t~ont iss~ in ~ws* of ~o ~ ~ above Is to~y void ~d without ~y va~d~ ~ vefifl0a~on of ~e au~W of~s pow~ you ~y telephone (713) 722~6~ 14~1-1~0