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HomeMy WebLinkAboutResolution 1996-042RESOLUTION NO. 96-42 WHEREAS, the City of North Richland Hills has been involved in litigation with the City of Watauga concerning an option to purchase a portion of the North Richland Hills Water and Sewer System; and WHEREAS, the parties have mediated and settled the case under court ordered mediation in Cause No. 236-i554oa-94; and WHEREAS, these mediation and settlement activities have taken place under a court imposed silence order and all deliberations of this City Council have taken place in executive session; and WHEREAS, this City Council has heretofore passed Resolution No. 96-35 and 96-36 which authorize the settlement and further authorize the Mayor and City Manager to execute the settlement agreements in connection with said litigation; and WHEREAS, the on the 14th day of June, 1996 the settlement agreements in their final form were executed by the two cities. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, that: 1. The passage and approval of Resolution 96-35 and 96-36 be, and are hereby, in all things ratified, 2. All findings in both Resolution 96-35 and Resolution 96-36 are hereby readopted and ratified. 3. The City Council, further finds that the portions of the water and sewer systems sold to the City of Watauga, as a result of the settlement of Cause No. 236-155408, are no longer needed to provide efficient and effective water and sewer service to the City of North Richland Hills and its inhabitants. It further finds that a registered professional engineer who is not an employee of the City of North Richland Hills, but whose professional services have been engaged by the City of North Richland Hills, has certified that the consideration to be paid to the City of North Richland Hills by the City of Watauga pursuant to the settlement agreement are sums not less than the value of the portions of the systems sold to the City of Watauga. It further finds that the terms of the settlement agreements do not violate the covenants contained in prior revenue bond ordinances and that the bondholders who were intervenors in Cause No. 236-155408, have approved said settlement agreements as evidenced by signatures of counsel on the Motion to Dismiss and Order of Dismissal in Cause No. 236-155408. 4. The settlement documents which have been executed by the parties in Cause No. 236-155408 are identified as follows: (1) Exhibit "A" to this resolution entitled SETTLEMENT AND PURCHASE AGREEMENT; (2} Exhibit "B" to this resolution entitled FACILITIES OPERATING AGREEMENT; (3} Exhibit "C" to this resolution entitled JOINT USE AGREEMENT. These agreements and their execution by officials of this City are hereby ratified and they are ordered attached to this resolution as Exhibits, above described. PASSED AND APPROVED this 24th day of June, 1996. APPROVED: Tommy Brown, r ATTEST: Patricia Hutson, City Secretary APPROVED AS TO FORM AND LEGALITY: ~ ,.h J;' f ~ '~~,~ tom/ / ,~ Re ~~, Attor~(e~~6rtt~he~City 2 ~~eh ~b~ t ,QED/Gf ~i an A ~l/a 9~ ya- ~oU'' SETTLEMENT AND PURCHASE AGREEMENT BETWEEN THE CITY OF WATAUGA AND THE CITY OF NORTH RICHLAND HILLS For the purpose of resolving disputed claims and pursuant to the authority of the Interlocal Cooperation Act, this Settlement and Purchase Agreement (the "Agreement") is made and entered into by and between the City of Watauga, Texas, ("Watauga") and the City of North Richland Hills, Texas, ("NRH"), both being Texas home-rule municipal corporations. PREAMBLE WHEREAS, on the 6th day of April 1971, Watauga passed its Ordinance No. 79, a copy of which is attached as Exhibit A to this Agreement, which gave its consent to the use of its present and future streets, alleys, highways, and public grounds by NRH for the purpose of constructing, maintaining, and operating a water and wastewater system for public and private use within Watauga's city limits; and WHEREAS, in Ordinance No. 79, Watauga granted to NRH a franchise to provide water and wastewater service within the city limits of Watauga; hereinafter called the "Franchise Area"; and WHEREAS, Ordinance No. 79 was accepted by NRH on April 29, 1971; and WHEREAS, Paragraph 7 of Ordinance 79 provides that Watauga has a continuing option to purchase said water and wastewater system from NRH at any time; and WHEREAS, because of other ordinances passed and approved by the cities of NRH and Watauga, NRH contends that Section 7 of Ordinance 79 cannot be construed to give the City of iziz~ooaooz.cuv Watauga the right to specific performance thereunder and a lawsuit has resulted which both parties wish to settle; and WHEREAS, both Watauga and NRH enter into this agreement to finally settle all issues in Cause No. 236-155408-94 in the 236th District Court of Tarrant County; and WHEREAS, Watauga desires to assume service and responsibilities in its city limits and NRH agrees to sell to Watauga certain water and wastewater facilities in Watauga that Watauga agrees to buy pursuant to the terms of this Agreement; and WHEREAS, the properties that are sold to Watauga by NRH are no longer needed by NRH to provide efficient service to the inhabitants of NRH; and WHEREAS, NRH, as part of the sale, agrees to also sell and transfer its certificate of convenience and necessity to serve the Watauga Franchise Area; and WHEREAS, Watauga and NRH desire to provide for an orderly transfer of the operation of the water and wastewater facilities in the Franchise Area by allowing NRH to operate and maintain the facilities for Watauga for a period of time after the purchase and transfer to Watauga. NOW THEREFORE, in consideration of the mutual promises and releases set forth herein, the performance of each, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Watauga and NRH contract and agree as follows: SECTION 1: DEFINITIONS For the purposes of this Agreement, the following words, terms, phrases, and their derivations shall have the meanings given herein. When not inconsistent with the context, words iz i2~ooo-oo2.ccrr 2 used in the present tense include the future tense, words in the plural number include the singular number, and words in the singular number include the plural number. The word "shall" is always mandatory and not merely directory. 1.1 "Date of Transfer" means the effective date of the sale and conveyance of facilities pursuant to Section 14.1 of this Agreement, which shall occur between October 1, 1996, and January 1, 1997. 1.2 "Facilities Operatine Agreement" means the document entitled Facilities Operating Agreement Between the City of Watauga and the City of North Richland Hills executed by Watauga and NRH simultaneously with this Agreement. The Facilities Operating Agreement is the instrument by which NRH will provide operation, maintenance, billing, and collection services to Watauga during the Transition Period. 1.3 "Franchise Area" means the land contained within the city limits of the City of Watauga. 1.4 "Franchise Area Svstem" means the water and wastewater transmission mains, distribution and collection lines, facilities, and appurtenances used to provide water and wastewater service within the Franchise Area as more specifically described in Sections 4.1 through 4.5 of this Agreement. 1.5 "Fort Worth Water Contract" means the Contract for Water Service Between the City of Fort Worth, Texas and North Richland Hills, Texas, dated July 6, 1989, and all amendments thereto. 1.6 "Joint Use Agreement" means the document entitled Joint Use Agreement Between the City of Watauga and the City of North Richland Hills executed by Watauga and NRH iz iz~ooa~ooz.cr..ty 3 simultaneously with this Agreement. The Joint Use Agreement is the instrument by which Watauga and NRH share the use of certain water and wastewater facilities owned by each city. 1.7 "Transition Period" means the three year period from the Date of Transfer during which NRH and Watauga intend to implement an orderly transition of the operations of the facilities purchased by Watauga from NRH. SECTION 2: MUTUAL RELEASE OF CLAIMS AND DISMISSAL OF PROCEEDINGS 2.1 In consideration for the mutual releases set forth in this Paragraph, as well as for other good and valuable consideration, Watauga and NRH hereby RELEASE AND FOREVER DISCHARGE the other and their respective predecessors, officers, council members, insurers, agents, servants, representatives, employees, attorneys, consultants, successors and assigns, and any and all persons and entities in privity with them, jointly and severally, (whether current or former) from any and all claims, demands, obligations, debts, costs, liabilities, actions, and causes of action (hereinafter referred to as "claims") of whatever kind or character that Watauga or NRH may now have or hereafter have against the other for or by reason of any matter, cause or thing whatsoever occurring prior to the date of this instrument, whether known or unknown, suspected or unsuspected, asserted or unasserted, related to or arising under Paragraph 7 of Watauga Ordinance No. 79 or relating to the matters or things set forth and alleged in the claims and/or defenses made in Cause No. 236-155408-94 filed in the 236th Judicial District Court of Tarrant County, Texas. 2.2 Further, in consideration of the promises and covenants stated herein, Watauga and NRH agree to dismiss within ten (10) days of the execution of this Agreement their claims in 1212\OOa002.CLN 4 Cause Number 236-155408-94 pending in the 236th Judicial District Court of Tarrant County, Texas, with prejudice to the refiling of same in any form or in any court, with the understanding that court costs shall be taxed against the Parties incurring same. Watauga and NRH agree to bear their own attorneys' fees incurred in Cause No. 236-155408-94 as well as any expenses or fees incurred in connection with this matter prior to the filing of such cause. The Joint Motion to Dismiss with Prejudice and the proposed Order of Dismissal with Prejudice shall be in the form attached hereto as Exhibit B. SECTION 3: PURCHASE OF WATER AND WASTEWATER FACILITIES 3.1 Because of Watauga's desire to assume service obligations for the water and wastewater demand in the Franchise Area, the NRH water and wastewater facilities used to provide service within the Franchise Area, with the exception of those water facilities retained by NRH, are excess property and are no longer needed by NRH; therefore NRH enters into this Agreement for the purpose of selling this surplus property. 3.2 Except as specifically reserved or excluded in this Agreement, Watauga agrees to pay NRH the sum of $9,200,000.00 for the water and wastewater transmission mains, distribution and collection lines, facilities, and appurtenances installed, owned or operated by NRH and used to provide water and wastewater service within the Franchise Area, as more specifically described in Section 4 of this Agreement, pursuant to the provisions of Ordinance No. 79, dated April 6, 1971 and accepted by NRH on April 29, 1971 (Exhibit A) and NRH agrees to transfer its rights, title, and interest to such property, both real and personal, as more specifically described in Section 4, to Watauga upon the receipt of $9,200,000.00. 1212\000-002.CLN 5 SECTION 4: WATER AND WASTEWATER FACILITIES 4.1 NRH agrees to sell and Watauga agrees to purchase, the NRH water mains, distribution lines, facilities, and related appurtenances comprising a part of the water system used to provide water service in the Franchise Area and certain NRH water mains and related appurtenances connected to the water system, together with all and singular the rights and appurtenances pertaining thereto, including such right, title and interest NRH has in and to any special purpose rights-of--way or easements across private property that contain any of the said mains or appurtenances, and together with any improvements, fixtures, and personal property situated thereon or attached to the water system, including but not limited to any and all wells, pumps, pipes, valves, electrical connections, storage tanks, meters, meter vaults, fire hydrants, and any and all other appurtenances thereto. The above-described facilities include all water system facilities used to provide water service within the city limits of Watauga except the following facilities that will continue to be owned by NRH: a. The present water connection with the City of Fort Worth located at the NRH's Booster Pump Station #2, S l0.SWestern Center Blvd. (Saginaw-Watauga Road). b. NRH's Booster Pump Station #2 located at 5105 Western Center Blvd. c. The 2,000,000 gallon ground storage facility located at 5105 Western Center Blvd. d. The real property upon which a, b, and c, are situated. e. Any interest owned by NRH in the water line and easement from the Fort Worth water source at Beach Street to the station at 5105 Western Center Boulevard. f. The Watauga Road Water Lines consisting of the following: Approximate Length 1) 24" Water Line from Pump Station south to Watauga Road 400 feet iziz~ooaooz.cuv 6 2) 16" Water Line from the 24" Water Line connection to Denton Highway 2,550 feet 3) 12" Water Line from Denton Highway to Saramac Road 8,149 feet 4) 8" Water Line from Saramac Road to Stardust Road 1,830 feet 5) 12" Water Line from Stardust Road to Rufe Snow Drive 2,519 feet Pursuant to the Joint Use Agreement executed simultaneously herewith, Watauga and NRH will share the use of the above-listed facilities a. through f., that will continue to be owned by NRH. 4.2 NRH agrees to replace the 8" water line running along Watauga Road from Saramac Road to Stardust Road. The replacement water line shall be a minimum of 12" diameter line. NRH agrees to complete construction of the replacement water line within one year from the Date of Transfer. 4.3 Pursuant to the Joint Use Agreement, Watauga and NRH agree to share use of the following water facilities that will be owned by Watauga: Approximate Length a. D.L. Hall 24" Transmission Line 5,497 feet b. Denton Highway Transmission Line 1) 16" Water Line from Watauga Road to Chapman 2,792 feet 2) 24" Water Line from Chapman to Hightower 2,377 feet c. Hightower Road 16" Transmission Line 1) Denton Highway to Whitley 2,180 feet 2) Whitley to Echo Hills 1,530 feet 3) Echo Hills to McCoy 2,400 feet 1212\00Q002.CLN 7 4) McCoy to Rufe Snow Drive 1,300 feet d. Starnes Road Transmission Line 1) 16" Water Line from Denton Highway to Whitley 2,050 feet 2) 12" Water Line from Whitley to Indian Springs 2,455 feet 3) 16" Water Line from Indian Springs to Rufe Snow 3,377 feet 4.4 The Franchise Area System does not include customer water meters in the Franchise Area. Watauga shall purchase the customer water meters by paying NRH on the Date of Transfer the depreciated value of the customer meters, which has been determined to be $40,000. 4.5 NRH agrees to sell, and Watauga agrees to purchase, the NRH wastewater mains, collection lines, facilities, and related appurtenances comprising the wastewater system used to provide wastewater service in the Franchise Area and certain NRH wastewater mains and related appurtenances connected to the wastewater system, together with all and singular the rights and appurtenances pertaining thereto, including such right, title and interest NRH has in and to any special purpose rights-of--way or easements across private property that contain any of the said mains or appurtenances, and together with any improvements, fixtures, and personal property situated thereon or attached to the wastewater system, including but not limited to any and all manholes, structures, meters, meter vaults, pipes, electrical connections, and any and all other appurtenances thereto. The wastewater facilities to be purchased by the City of Watauga include all wastewater system facilities within the city limits of the City of Watauga and also include the wastewater transmission main that extends from the southern city limits of Watauga to the point of entry to the City of Fort Worth's wastewater system south of NE Interstate Loop 820. This iz iz~ooo-ooz.cL.ty 8 sewer main south of the Watauga border to the Fort Worth main is in an easement with a sewer main retained by NRH and the parties agree to share this easement for the stated purpose of maintaining both the sewer main sold to Watauga and the main retained by NRH. NRH shall convey to Watauga a 50% undivided interest in this easement so that Watauga may have full rights of use and enjoyment of the easement. NRH shall obtain for Watauga's benefit any consent or authorization from landowners or additional grant of easement rights that are necessary to allow Watauga to exercise full rights of use and enjoyment of the easement in which the sewer mains are located. 4.6 On or before the Date of Transfer, NRH agrees to provide Watauga with a set of up-to-date as-built plans and GIS Data for the Franchise Area System in hard copy and on computer media in a format that can be readily used by Watauga. If Watauga, after exercising due diligence, is unable to locate any of the facilities comprising the Franchise Area System, NRH shall, at Watauga's request, provide assistance to Watauga in locating them. NRH's obligation to provide such assistance to Watauga shall survive the Date of Transfer. NRH agrees to provide Watauga with maintenance records for the past ten year period for all Franchise Area System facilities. These records shall include, but not be limited to, water main leak repairs, wastewater main blockages, replacement, and rehabilitation. 4.7 Watauga shall assume responsibility for inspection, operation, maintenance, and repair of the Franchise Area System two years after the Date of Transfer in accordance with the Facilities Operating Agreement. iz~z~ooo-ooz.c[av 9 SECTION 5: TRANSITION PERIOD OPERATION 5.1 During the Transition Period, NRH agrees to operate and maintain the Franchise Area System according to the terms and conditions in the Facilities Operating Agreement. SECTION 6: INSTALLATION OF SUBTRACTION METERS 6.1 Watauga and NRH agree that the amount of water delivered to Watauga will be calculated by use of meters measuring the amount of water leaving Watauga and entering NRH (the "subtraction meters"). The subtraction meters will be installed at the boundary between Watauga and NRH at the following three locations: a. Starnes Road 16" Transmission Line at Rufe Snow Drive, b. Hightower Road 16" Transmission Line at Rufe Snow Drive, and c. Watauga Road 12" Transmission Line at Rufe Snow Drive. 6.2 Watauga shall purchase and install the subtraction meters and meter vault structures at its expense, but North Richland Hills shall own the meters. Watauga will consult with North Richland Hills and the City of Fort Worth concerning the design of the subtraction meters and metering stations. North Richland Hills shall pay for the operation, maintenance, testing, and replacement of the subtraction meters as provided in the Joint Use Agreement. SECTION 7: ACCESS TO RIGHTS-OF-WAY 7.1 Watauga agrees to cooperate with NRH with respect to granting NRH future licenses for the construction, operation, and maintenance of water and/or wastewater trunk mains and related appurtenances within Watauga's street or drainage rights-of--way in the Franchise Area iziz~ooaooz.c[.iv 10 and gives NRH the right to condemn private property in Watauga for future water and wastewater improvements necessary for NRH to serve its citizens within the city limits of NRH. If NRH performs any construction, operation, or maintenance activity in any rights-of--way in Watauga, NRH shall properly replace and repair the surface, base, and landscape treatment of any sidewalk, street, or right-of--way that may be excavated or damaged by reason of such activities within a reasonable time after completion of the work in accordance with the standards of Watauga in effect at the time of the work. 7.2 NRH agrees to cooperate with Watauga with respect to granting Watauga future licenses for the construction, operation, and maintenance of water and/or wastewater trunk mains and related appurtenances within NRH's street or drainage rights-of--way and gives Watauga the right to condemn private property in NRH for future water and wastewater improvements necessary for Watauga to serve its citizens within the city limits of Watauga. If Watauga performs any construction, operation, or maintenance activity in any rights-of--way in NRH, Watauga shall properly replace and repair the surface, base, and landscape treatment of any sidewalk, street, or right-of--way that may be excavated or damaged by reason of such activities within a reasonable time after completion of the work in accordance with the standards of NRH in effect at the time of the work. 7.3 NRH specifically agrees that all construction, maintenance, and operational activities conducted by NRH within the city limits of Watauga will be performed in accordance with such regulations or ordinances as Watauga may from time to time adopt to address such activities. iziz~ooaooz.cuv 11 SECTION 8: TERMINATION OF EXISTING CONTRACT 8.1 Watauga and NRH agree that after the execution of this Agreement, the Facilities Operating Agreement, and the Joint Use Agreement, the provisions of Ordinance No. 79 that established the NRH franchise are no longer needed and the franchise shall be deemed terminated as of the Date of Transfer. 8.2 Watauga and NRH agree that upon the execution of this Agreement, the Facilities Operating Agreement, and the Joint Use Agreement, the option to purchase granted in Paragraph 7 of Ordinance No. 79 shall be considered exercised and no longer operative. SECTION 9: PAYMENTS AND COSTS 9.1 Watauga shall make full payment for the Franchise Area System by a one-time lump sum payment. Watauga's payment of $9,200,000.00 to NRH shall occur by means of a wire transfer between October 1, 1996 and January 1, 1997. 9.2 Pursuant to the Facilities Operating Agreement, NRH shall be responsible for the cost of operation and maintenance of the Franchise Area System for a period of two years beginning on the Date of Transfer. During this two year period, Watauga shall pay NRH $1,500,000 per year in equal monthly payments of $125,000.00 for the operation and maintenance services, including meter reading and billing but shall not include cost of water or Fort Worth charges for wastewater transportation and treatment. After the conclusion of the two-year operation and maintenance period, NRH shall continue to read the meters and to bill for the accounts served by the Franchise Area System for an additional year. During this one-year period, Watauga shall pay NRH $250,000.00 in equal monthly payments of $20,833.33 for meter izi2~ooaoo2.cuv 12 reading and billing services. If Watauga has adequate staff to assume the meter reading and billing responsibilities during the third year of the Transition Period, Watauga shall have the option to perform these services. If Watauga exercises the option to perform the meter reading and billing services, Watauga shall pay NRH a reduced amount equal to $140,000 instead of $250,000. 9.3 Revenue generated from accounts in the Franchise Area and collected by NRH shall be paid to Watauga as required by the Facilities Operating Agreement. On the Date of Transfer, Watauga shall pay NRH the sum of $150,000 as settlement for the garbage administration fee for two years. If Watauga does not exercise the option concerning meter reading and billing services contained in Section 9.2, Watauga shall pay NRH $75,000 at the beginning of the third year of the Transition Period as settlement for the garbage administration fee. 9.4 Watauga shall bear the costs incurred in disconnecting the Franchise Area System from NRH's water and wastewater system in accordance in the plan described in Section 13.1 of this Agreement. SECTION 10: CERTIFICATES OF CONVENIENCE AND NECESSITY 10.1 NRH shall file an application with the Texas Natural Resource Conservation Commission seeking transfer of the applicable portion of NRH's Certificate(s) of Convenience and Necessity ("CCN") to Watauga. NRH shall provide any required notices and shall diligently prosecute its application to conclusion. 1212\OOd002.CLN 13 10.2 Watauga shall cooperate and assist with the filing and prosecution of NRH's application to transfer the CCN. SECTION 11: FIRE HYDRANTS 11.1 Watauga agrees to allow the NRH Fire Department to utilize, without charge, fire hydrants located in the city limits of Watauga within 200 feet of the common boundary of Watauga and NRH along Rufe Snow, for fire protection of property within the NRH city limits in that vicinity; provided, however, that this provision shall never be construed as a guarantee or warranty that water pressure will be sufficient at such fire hydrants or that Watauga will be responsible for fire protection within the area described in this section. 11.2 NRH agrees to allow the Watauga Department of Public Safety to utilize, without charge, fire hydrants located in the city limits of NRH within 200 feet of the common boundary of Watauga and NRH along Rufe Snow, for fire protection of property within the Watauga city limits in that vicinity; provided, however, that this provision shall never be construed as a guarantee or warranty that water pressure will be sufficient at such fire hydrants or that NRH will be responsible for fire protection within the area described in this section. SECTION 12: CONTRACTS WITH THE CITY OF FORT WORTH 12.1 Potable water will be provided to serve the Franchise Area pursuant to the Fort Worth Water Contract. If, for any reason, Fort Worth imposes any type of penalty, charge or surcharge in order to accommodate this concept of resale by NRH, such penalty, charge or surcharge shall be passed on to Watauga. iziz~ooo-oo2.crav 14 12.2 Watauga will contract separately with the City of Fort Worth for wastewater service. The wastewater contract between Watauga and the City of Fort Worth shall be effective as soon after the Date of Transfer as is practicable. SECTION 13: STUDIES AND INVESTIGATIONS 13.1 Watauga shall develop and submit to NRH for review and approval a preliminary plan for separating the Franchise Area System from NRH's water and wastewater systems, and the approval by NRH will not be unreasonably withheld. 13.2 During the Transition Period, Watauga and NRH shall discuss and arrive at a method for determining each city's share of demand charges arising under the Fort Worth Contract. Until a method is determined, each City's share of demand charges shall be based upon each City's proportionate use of water during the period in question. 13.3 Watauga and NRH intend to continue collecting community impact fees for their water and wastewater systems after the Date of Transfer. Watauga and NRH shall share, on a 50/50 basis, the cost of a study to update the impact fees applicable in NRH and Watauga. Watauga and NRH shall cooperate in selecting and hiring any consultants necessary for preparing the impact fee study. 13.4 Watauga shall have the same review and supervision authority as NRH concerning the Carter & Burgess, Inc. investigation being conducted in response to the U.S. Environmental Protection Agency's (EPA) Administrative Order, Docket No. VI-96-1207, dated February 16, 1996, to the extent the investigation concerns the Franchise Area System. If Watauga decides to seek EPA's reconsideration and amendment of Administrative Order, Docket No. VI-96-1207, 1212\000-002.CLN ~ 15 as it relates to the Franchise Area System, NRH shall provide Watauga any necessary information. NRH will pay for the total cost of the response to the original EPA Administrative Order and the initial phases of testing and study from surcharges to be levied on all users of the wastewater system. NRH will calculate its surcharge to completely pay for the initial study and testing by levying the surcharge for a period not to exceed eighteen (18) months. At the Date of Transfer, Watauga may, at its option, pay its remaining portion of the surcharge in a lump sum payment to NRH. In the event the final cost of the response and the Carter & Burgess, Inc. investigation is more or less than anticipated, an adjustment to the surcharge shall be made. 13.5 During the Transition Period, NRH shall propose an agreement for the handling of an emergency connection between the water supply systems owned by the cities to be applicable when the water supply systems are separated. SECTION 14: EFFECTIVE DATE OF TRANSFER OF FACILITIES 14.1 NRH and Watauga agree that the Date of Transfer of ownership of the Franchise Area System shall occur between October 1, 1996 and January 1, 1997, and shall be the day on which NRH transfers ownership and Watauga pays the purchase price as provided in this section. The transfer of ownership will be effected by an instrument of conveyance from NRH, in which NRH will quitclaim all of the right, title, and interest it has in the real and personal property in the Franchise Area System. NRH shall deliver the fully executed instrument of conveyance to Watauga simultaneously with Watauga's payment of $9,200,000 pursuant to this Agreement. The transfer of operation of the Franchise Area System shall occur as provided in the Facilities Operating Agreement. iziz~ooo-ooz.cuv 16 SECTION 15: NRH'S REPRESENTATIONS. WARRANTIES. AND COVENANTS 15.1 NRH hereby represents and warrants as follows, which representations and warranties shall be true and correct as of the date of execution of this Agreement and the Date of Transfer and shall survive the Date of Transfer, and the truth of which representations and warranties shall be a condition precedent to Watauga's obligation to close and complete the transaction contemplated by this Agreement: (A) NRH has, without the joinder of any other person or entity, the full right, power and authority to sell and convey by quitclaim the Franchise Area System to Watauga and to carry out the obligations of NRH hereunder, and no third party, except as specifically set forth herein, has any interest in or right to acquire the Franchise Area System. (B) To the best knowledge of NRH, there is no condition existing with respect to the Franchise Area System or any part thereof which violates any law, rule, regulation, ordinance, code, order, decree or ruling of any city, state or federal governmental agency or court. (C) Except as referenced in Section 2 of this Agreement, there is no existing or pending litigation, nor are there any known existing or pending claims, condemnations or sales in lieu thereof, contracts of sale, options to purchase, or rights of first refusal with respect to any portion of the Franchise Area System, nor have any such actions, suits, proceedings, claims or other such matters been threatened or asserted, save and except EPA Administrative Order VI-96-1207. izi2~ooaoo2.ctty 17 (D) The party or parties executing this Agreement on behalf of NRH have been duly authorized and are empowered to bind NRH to this Agreement. (E) NRH will not, after the date of execution of this Agreement, without the express prior written consent of Watauga, create or allow to be placed upon the Franchise Area System or any part thereof any restrictions, encumbrances, liens, easements or any other matters that would constitute an encumbrance upon the Franchise Area System. Nothing herein shall be construed to prevent the issuance by NRH of Revenue Bonds which are secured by the future revenues of the NRH water and sewer system. 15.2 Each of the foregoing warranties and representations are true and correct as of the date hereof and shall be true and correct as of the Date of Transfer. If any of the representations or warranties contained herein are untrue or incorrect, NRH shall, at all times before the Date of Transfer, use best efforts to make such representations or warranties true and correct and shall take all action as may be necessary or appropriate in connection therewith. 15.3 As a continuing obligation, NRH agrees to indemnify, defend, and hold Watauga harmless against all legal or administrative proceedings brought against Watauga, and all demands, claims, fines, damages, liabilities, penalties, or costs of whatever nature occasioned by the negligent or intentional activities of NRH or its employees or agents during its ownership and/or operation of the property purchased by Watauga pursuant to this Agreement and arising out of such ownership and/or operation or arising from any breach of any warranty and/or representation contained in this Section. i2 i2~ooo-ooz.ct.ty 18 SECTION 16: CASUALTY LOSS 16.1 All risk of loss or damage to the Franchise Area System shall remain upon NRH prior to the Date of Transfer, except that this obligation does not include such loss or damage caused by: (1) Watauga, its officers, agents or employees, or an independent contractor of Watauga, in the course of disconnecting the Franchise Area System from the NRH system; or (2) any negligent act or omission of Watauga, its officers, agents, employees or independent contractors in the course of business prior to the Date of Transfer. Except as otherwise provided in this section, in the event of loss, damage or destruction to the Franchise Area System prior to the Date of Transfers, NRH shall, at NRH's expense, repair the same prior to the expiration of six months after the Date of Transfer. SECTION 17: MANDATORY MEDIATION PROVISIONS 17.1 Notwithstanding any other provisions of this Agreement, Watauga and NRH agree that prior to either Party bringing suit for specific performance, injunction, or damages for the alleged failure of the other Party to comply with any terms, conditions, or provisions of this Agreement, this Agreement shall be submitted for mediation in accordance with this section. 17.2 In order to institute mediation, either Party may, on written notice to the other Party, initiate non-binding mediation before a single mediator affiliated with Judicial Arbitration and Mediation Service, Inc. ("JAMS") in Tarrant County, Texas, or another mediation service mutually agreeable to the Parties. The Mediator shall be selected by agreement of the Parties within thirty (30) days after either Party first requests mediation of the other. If a single mediator cannot be agreed upon, then each Party shall select its own mediator from those on the approved iziz~ooaoo2.c[.ty 19 list of the mediation service used; those two mediators will then select a third independent Mediator who will conduct the mediation session(s). 17.3 Neither Party shall be excused from complying with any of the terms and conditions of this Agreement because of any failure of the other Party upon any one or more occasions to insist upon or to seek compliance with any such terms or conditions. SECTION 18: GENERAL PROVISIONS 18.1 NOTICES. Any notices required to be given herein shall be deemed to have been sufficiently given to either party for all purposes hereof if mailed by certified mail, postage prepaid, addressed as follows: TO CITY OF NORTH RICHLAND HILLS City Manager City of North Richland Hills 7301 N.E. Loop 820 North Richland Hills, Texas 76182-0609 TO CITY OF WATAUGA City Manager City of Watauga 7101 Whitley Road Watauga, Texas 76148 or to such other respective address as the parties may designate from time to time in writing in accordance with this notice provision. 18.2 GOVERNING LAW. This Agreement shall be governed and construed pursuant to the laws of the State of Texas. All obligations herein shall be performable and all payment shall be due and payable in Tarrant County, Texas. 18.3 INCORPORATION. The Preamble set forth before Section 1 of this Agreement is hereby incorporated by reference as if set forth fully at this point. iziz~ooaooz.cr.ty 20 18.4 ENTIRE AGREEMENT. This Agreement contains all commitments and agreements of NRH and Watauga with respect to the subject matter hereof, and no verbal or written commitments, other than the Joint Use Agreement or the Facilities Operating Agreement shall have any force or effect if not contained herein. This Agreement may not be modified or amended other than by a written instrument executed by Watauga and NRH. 18.5 SEVERABILITY. If any section, subsection, sentence, clause, phrase, term, provision, condition, covenant or portion of this Agreement is for any reason held invalid or unenforceable by any court of competent jurisdiction, the remainder of this Agreement shall not be affected thereby but shall be deemed as a separate, distinct and independent provision, and such holding shall not affect the validity of the remaining portions hereof, and each remaining section, subsection, sentence, clause, phrase, term, provision, condition, covenant and portion of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 18.6 CAPTIONS AND CONSTRUCTION. All section titles or captions contained in this Agreement shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of this Agreement or any provision hereof. Both parties have participated in the preparation of this Agreement so that this Agreement shall not be construed either more or less favorably for or against either party. 18.7 TRANSFER BY QUITCLAIM. The parties agree that any term in the above and foregoing agreement which calls for NRH to SELL, BARGAIN, ASSIGN, TRANSFER OR CONVEY shall be construed as an assignment by quitclaim. iziz~ooaooz.ct_ty 21 IN WITNESS WHEREOF, the Parties, acting under authority of their respective governing bodies, have caused this Agreement to be duly executed in several counterparts, each of which shall constitute an original, all as of this day of .~(.1,1~I c! 1996. CITY OF WATAUGA, TEXAS By: _ O _ v `~ , Ma o ATTEST: ./ /~ ,City Secretary (SEAL) CITY OF NORTH RICHLAND HII.LS, TEXAS /= By: ~ i~~ /f ,Mayor By ATTEST: ~' ity Sec ary (SEAL) ~ City Manager inz~ooaooz.cuv 22 APPROVED AS TO FORM AND CONTENT: B ~~ ~. K/~i~ -~1~w 7~- /_/Ark C ~:f7vkl y ~/~irf Iy ORDINANCE GRANTING TO NORTH RICHLAND HILLS A FRANCHISE F OR A PERIOD Or^ THIRTY FIVE YEARS FOR THE OPERATION OF A WATER~IORKS AND SEWER SYSTEM I~' THE TOWN OF WATAUGA AND ORDAINING OTHER \/iATTERS RELATING TO THE SUR7ECT. ~~VHER~AS, fne Tarrant County Water Supply Corporation, which provides water and se~arerage service to the Tovm of Watauga, i~ comprised OI tha C'.j' V- ~.'Jr til Rtc::tand iiii~J, The To~fm of Richla:.d Ili11S, +l~C ~.itTjl of Azle a.^.d Lakeside Village, all sound together by a joint ana mutual contract which brought the aforesaid cor: oration (non-profit) into being; and, ~V:~EREAS, aithoug'r~ the Town of Watauga is not a ccnstitt~.ent member or shareholder in the Tarrant County Water Supply Corpcratio.^., it is nevertheless vitally corcerred anc af:ected by sae functi:.::s •r.' said corporatio„ vrit in its r :anicipal 'ccundaries; ard, G,T=;EnEAS, North .=.ich'_anc :ills i:; prepsred to accuire, on behal: of the Tovm cf 'vlatauga, the existing waver Gazd seure;° -y::tem n,;w operated within. the Towr. of Watauga by Tarrant County Water Supp'_y •'_,orporacion; and, tJ,rEREAS, all water arc se~t~er pre;,arties cf Corparatic~. G:e ccvered by a si r~gle indenture of :•~:^•tgare and ~ee~~ c. ' rust snd S~^pl•.:z;er~t:: thereto, to secse the payment c? Cerporatior.'s cL.'atanding bonds in t'r.e amount of $5, 750, OOC. 00; and, WHEREAS, said Indenture of Mortgage and Deed of Trust, including Supplements, provides that when said bonds in said sum are paid i^ full ( the last mataring bonds being dce in tr.e year 1995, A. D. )that title to EXHiBtT ~ said water and sewer or water or sewer properties, as the case may be, and those adjacent thereto shall revert to and be owned by said constituent member munucipal corporations individually; and, ~V?•iFREAS, North Richland Hills has agreed with all other municipal corporations herein named to fund and pa;- at1 ct the Corporation's out- standing bonds, and all other municipal corporations have agreed that upon such payment of said 'ponds that North Richland Hills would thereupon become the owner of a1i properties of Corporation wherever situated; and, ~~~ ~~R~AS, it is for the benefit of the Tcwn of Watauga and is citizens ghat `,ort ;Richland 'Hills arnish water service to its citi~tns: 3F ?T JRl)~!?+.J BY THE ^_'C't.'lvT COUNCIL OF THE TOUN OF WATAUG_S, TF~AS, '.' AT: Sec~ior_ 1. 1 Ge 10VI ; Of ..c:2C ja, :2Xc~ '.l:~rclnaI:2r SOT :etlmry5 Ca1'.ed " i~0'1r.1"), hereby ~__•ant:. is consent tc the cse c° itsrresent e.rd future streets, alleys, highways and public grounds co the C~*_y of Nort}~ :tichland -ri'.1s, a rnunicipai Corpcxa~ion Cnereinafter called "lvtZH"), within the corporate limits of u~atavga, for the purpose of constructing, maintaining 2.rd cperatinc; its water (and se~cer) system, including its mains, pipes, conduits, and other distributing appliances necessary and proper fcr the conducting any? furnish- ing of wa~er (and sewer) service for cublic snd private use- to s2.id Town aria i ~S i^ f:~b l`cntS. Section 2. The tam hereof shall be for a period of thirty-five (3~) years, or until all bonds issued by the NRH and as subsequently refn.*~ded or refiManced have been paid and retired. Section 3. X11 mains, lines and appliances shall be so constructed as to not unreasor.2.b1y i:,terfere witn the traffic on streets and alleys, and such EXNi~lY ~ system shall be laid not less than eighteen (lil) inches under the s~:x*'ace of the street. A11 said mains and appurtenances shall be instilled and main- twined in a good workmanlike manner. Section 4. The NRH agrees to restore any street or other public place which it is necessary to break or open for the erection, construction, extension or maintenance of its system to its former condition. i^ accordance with the requirements of thy. ordinances of :ne Tuwn. :1Ra :ssun:es sll Liability which may be occasioned as a result of the breaki:: or opening of a :;: street or public place and the failure to properly restore ::a.-ne,_nd •:.. this connection t e NRH will hold and save the Tovm of ~~~atauga harmless fror_~ any and all claims, causes of action or damages resulting from,4 or in connection with, the opening or breaking of any of said straets or publ:;; places. Section 5. Li lieu of all other ices, 1lcenses and ta~:es ~: 311 kind a::~_' c^~racter on said water ar_d sewer system, saving and excapti.rg any ad valorem tax_ . , ., now or at a.-~y time hereafter levied by the Town o*' ~ila:auga, NR.Ii shall pay to the Towr_ an amount equal tc two per c. =.~a of the gross receipts ,~, .. received by NRH from the sale of water an~~ from. sewer service charges to .. its domestic and commercial customers within the City limits of said Town; said amount shall be paid on or before Janu~~y 15 and July 15 of each year covering said amount due daring the six-mcr::hs perioc prier tc trio first day of January and July, respectively. Said 1vfZH, upon. the payment of said moneys, :.hall file with the Tovm Secretar y a swcr ^ statement showin.J the gross rECeipts fiom_ the sale o: water (ana of the sewer service charges) to its . .;• domestic and commercial users vrithin the Ciry limits of said Town for the respective periods of time covered 'cy said payment. ' As soon alter the close of each operating year as may reascnably be done the NRH shall have the books, records and accounts of t'ne Corporation ~HlRIT ~ audited by an independent certified public acccurtant or accounting firm and small file a CO;`V O Such ailClt ~.xliCti": th? 10'J,~'1 Secreia_,~, and t^O `rOl"v?? t)y itS agents, engineers, accountants and attorneys shall have the right at all reasonable times to examine and inspect the property, books and records of NRFi. Section 6. N-RH shall not charge rates for water and sewer services in amounts that will be more than that sufficient to pay the cost of operating and main- taining the ~arater (and sewer) system; to pay the interest on the bonds issued by NRH as such comes due; to pay the principal of such bonds as such mature and establish a •siric'_ng fund therefor; to set aside the amounts rewired by the indenture cf trusi, or ot::er instruments securing such bonds, tc be placed in the customary reserve funds established by such indenture or other in- struments; to pay the amount to the Town required by Section 5 hereof; and to accommodate the grov~th of the Town AND TO SP.RVICE T?,RRITORIF,S TAKEN IN BY EXTENSIONS OF BOIINDRIFS AND ANNF~XATIONS. Section 7. The Towr. of ~,~iatauga shall have the option to purchase from \'RH said water and sewer system at any time, the price bayed upon engineering studies at the time o purchase or as otherwise agreed upon between the parties, taki:~g into consideration any penalties or added expenses that may occur in said purchase. Section 8. The b'rarchise herein granted shall never be carried on the bc;oks of NF~H at a value in excess of One ($1.00) Dollar, nor shall any value be attached t?:ereto °n excess of said su:n for gray purpcse. SECTION 9 Anal at ne time shall the customers residing is the T•wn of Watauga be charged ~ rate on water and sewage ex-• ceeding the rates charted the customers residing in N•rth 2lchland Hills. ' _ -~ - ~H161T ~ .., Section 10 This ordinance sha11 become effective upon its acceptance by NRH. PASSED AND APPROVED this W DAY OF APRIL 1971 ~~ ~ iGIA'~'~R of he ~ovm of Watauga, eta ATTEST: ' ~ ~r~~1~t/'4 TOWN SEC: ~ETARY of the Town of Watauga, Texas THE STATE OF TEXAS Y , . COUNTY OF TARRANT I I, ttia u;ldersigned Town Secretary of the Town of Watauga, Texas, 3o hereby certify that the foregoing is a true, full, and correct copy o: 2n Ordinance passed by tha To~tn Council of the Tewn cf Watauga, Texas, on :he ~ day of APRIL' ~ 1971 granting to the City of North Richland Sills (NRH), a municipal corporation, sewer franchise, said Ordinance Being duly of record in the minutes of the said Town Council. EXECUTED under m ~f ~`.-APBI~ .1971 ~-~ 'EXHIBIT ~ ~.y..~ r.XrjC~.. y hand and seal of said Town this the ~ day . ~ / Town Secretat~, Town of Watauga, Texas "' ,. ;' * . . NOW COMES the City of North Richland Hills, a municipal corpcration, and accepts all~the terms and conditions of the above Ordinance and agrees to aside by and be bound by all the terms and conditions of said Orainance. CITY OF NORTH RICHLAND HILLS, TEXAS 3y: ~! tiC~~~~~/iYI Mayor Pro Tem ATTEST: ~.~~~~- t /Cit Secret~.ry THE STATE OF TEXAS i COUNTY OF TARR.?NT I BEFORE ME, the undersioned auth:.riry, ~ this day personally appeared Dick Faram ,who, after being duly sworn by me, deposes and states 'hat he. has affixed his signature to the foregoing instrument for the purposes and consideration and in the capacity therein stated. SUBS.CrZIBED AND S':~IORN TO before me by the said Dick Faram this 29 day of April 1971. Notzry Public in and for Tarrant Couiib,~, Texas ~XX~I~iT ~ NO. 236-155408-94 THE CITY OF WATAUGA, TEXAS § IN THE DISTRICT COURT V. § 236TH JUDICIAL DISTRICT THE CITY OF NORTH RICHLAND § HILLS, TEXAS § TARRANT COUNTY, TEXAS JOINT MOTION TO DISMISS WITH PREJUDICE TO THE HONORABLE JUDGE OF SAID COURT: The City of Watauga, Texas, Plaintiff, the City of North Richland Hills, Defendant, and Raymond Watson, James K. and Jane G. Biggs, Susan Cross Cornell (for Lee Douglas Cornell), Patricia A. Foffum, Gregg A. Fusazo, Debra Kirkham, Myron Krom, John W. Langford, Lloyd McGhee, Rob McLellan, Martha Nickell, Kevin Pearson, Travis Ratliff, Robert F. Rigamonti, Patricia C. Ritthaler, and Ethel B. Schwartz, Intervenors and file this Motion to Dismiss with Prejudice and in support thereof would respectfully show as follows: Plaintiff, Defendant, and Intervenors have fully and finally compromised and settled all matters of fact, disputes, and things in controversy between them. Plaintiff, Defendant, and. Intervenors request that the Court enter an order dismissing this case in its entirety, including any counterclaims, cross claims, and claims in intervention, with prejudice to the rights of any party to refile the action or any part of it, and that all costs of court be taxed to the party incurring same. MOTION TO DISMISS WITH PREJUICE Page 1 1212\000-029.PLD EXHIBIT B Respectfully submitted, LLOYD, GOSSELINK, FOWLER, BLEVINS & MATHEWS P.C. 111 Congress Avenue Suite 1800 Austin, Texas 78701 (512) 322-5800 FAX (512) 472-0532 LAMBETH TOWNSEND State Bar No. 20167500 RICHARD L. HAMALA State Bar No. 08810750 LAW OFFICES EVANS, GANDY, DANIEL & MOORS Sundance Square 115 West Second Street Suite 202 Fort Worth, Texas 76102 (817) 332-3822 FAX (817) 332-2763 MARK G. DANIEL State Bar No. 05360050 ATTORNEYS FOR CITY OF WATAUGA MOTION TO DISMISS WITH PREJUICE Page 2 1212\000-029.PLD EXHIBIT B REX McENTIRE State Bar No. 13590000 P.O. Box 820609 7301 N.E. Loop 820 North Richland Hills, Texas 76182-0609 (817) 581-5501 FAX (817) 581-5516 ATTORNEY FOR DEFENDANT, CITY OF NORTH RICHLAND HILLS, TEXAS LAW OFFICES OF EARL RUTLEDGE, P.C. 1845 Precinct Line Road Suite 209 Hurst, Texas 76054 (817) 577-2332 metro FAX (817) 577-1630 EARL RUTLEDGE State Bar No. 17641000 ATTORNEY FOR INTERVENORS MOTION TO DISMISS WITH PREJUICE Page 3 1212\000-029.PLD EXHIBIT B NO. 236-155408-94 THE CITY OF WATAUGA, TEXAS § IN THE DISTRICT COURT V. § 236TH JUDICIAL DISTRICT THE CITY OF NORTH RICHLAND § HILLS, TEXAS § TARRANT COUNTY, TEXAS ORDER OF DISMISSAL WITH PREJUDICE On this day came on for consideration the Joint Motion to Dismiss with Prejudice filed by Plaintiff, Defendant, and Intervenors in this case. The parties have announced that they have fully compromised and settled this lawsuit and requested that this case be dismissed in its entirety with prejudice. The Court, after having considering the Motion, finds that the Motion should be in all things GRANTED. IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that the above-entitled and numbered cause, including any counterclaims, cross claims, and claims in intervention filed therein, be, and the same hereby aze, DISMISSED WITH PREJUDICE TO THE RIGHTS OF ANY PARTY TO REFILE THE ACTION OR ANY PART OF IT. IT IS FURTHER ORDERED that all court costs be taxed against the parties incurring same. SIGNED this day of , 1996. JUDGE THOMAS LOWE ORDER OF DISMISSAL WITH PREJUDICE Page 1 12121000-030.PLD EXHIBIT B APPROVED AS-TO-FORM: LLOYD, GOSSELINK, FOWLER, BLEVINS & MATHEWS, P.C. 111 Congress Avenue, Suite 1800 Austin, Texas 78701 (512) 322-5800 FAX (512) 472-0532 LAMBETH TOWNSEND State Baz No. 20167500 RICHARD L. HAMALA State Bar No. 08810750 LAW OFFICES EVANS, GANDY, DANIEL & MOORE Sundance Squaze 115 West Second Street Suite 202 Fort Worth, Texas 76102 (817) 332-3822 FAX (817) 332-2763 MARK G. DANIEL State Baz No. 05360050 ATTORNEYS FOR PLAINTIFF, CITY OF WATAUGA, TEXAS ORDER OF DISMISSAL WITH PREJUDICE Page 2 REX McENTIRE State Baz No. 13590000 P.O. Box 820609 7301 N.F,. Loop 820 North Richland Hills, Texas 76182-0609 (817) 581-5501 FAX (817) 581-5516 ATTORNEY FOR DEFENDANT, CITY OF NORTH RICHLAND HILLS, TEXAS LAW OFFICES OF EARL RUTLEDGE, P.C. 1845 Precinct Line Road, Suite 209 Hurst, Texas 76054 (817) 577-2332 metro FAX (817) 577-1630 EARL RUTLEDGE State Baz No. 17641000 ATTORNEY FOR INTERVENORS 1212\000-030.PLD EXHIBIT B NO. 236-155408-94 THE CITY OF WATAUGA, TEXAS § IN THE DISTRICT COURT V, § 236TH JUDICIAL DISTRICT THE CITY OF NORTH RICHLAND § . HILLS, TEXAS § TARRANT COUNTY, TEXAS JOINT MOTION TO DISMISS WITH PREJUDICE TO THE HONORABLE JUDGE OF SAID COURT: The City of Watauga, Texas, Plaintiff, the City of North Richland Hills, Defendant, and Raymond Watson, James K. and Jane G. Biggs, Susan Cross Cornell (for Lee Douglas Cornell), Patricia A. Foffum, Gregg A. Fusaro, Debra Kirkham, Myron Krom, John W. Langford, Lloyd McGhee, Rob McLellan, Martha Nickell, Kevin Pearson, Travis Ratliff, Robert F. Rigamonti, Patricia C. R.itthaler, and Ethel B. Schwartz, Intervenors and file this Motion to Dismiss with Prejudice and in support thereof would respectfully show as follows: Plaintiff, Defendant, and Intervenors have fully and finally compromised and settled all matters of fact, disputes, and things in controversy between them. Plaintiff, Defendant, and Intervenors request that the Court enter an order dismissing this case in its entirety, including any { ~ counterclaims, cross claims, and claims in intervention, with prejudice to the~igfits o~a~iy party a~~ a, j :' to refile the action or any part of it, and that all costs of court be taxed tQ~-the part ncurr~gj,t ~ V ~ I..,, same. ~ ~ ~. r~RT ~ ~r°0 .. '. cn ~ v MOTION TO DISMISS WITH PREJUICE Page 1 1212\000-029.PLD Respectfully submitted, LLOYD, GOSSELINK, FOWLER, BLEVINS & MATHEWS P.C. 111 Congress Avenue Suite 1800 Austin, Texas 78701 (512) 322-5800 FAX (512) 472-0532 _ LAMBETH TOWNSEND - ~ State Bar No. 20167500 RICHARD L. HAMALA State Bar No. 08810750 LAW OFFICES EVANS, GANDY, DANIEL & MOORE Sundance Square 115 West Second Street Suite 202 Fort Worth, Texas 76102 (817) 332-3822 FAX (817) 332-2763 MARK G. DANIEL State Bar No. 05360050 ATTORNEYS FOR CITY OF WATAUGA MOTION TO DISMISS WITH PREJUICE Page 2 1212\000-029.PLD REXI~vicENTIRE State Bar No. 13590000 P.O. Box 820609 7301 N.E. Loop 820 North Richland Hills, Texas 76182-0609 (817) 581-5501 FAX (817) 581-5516 ATTORNEY FOR DEFENDANT, r CITY OF NORTH RICHLAND HILLS, TEXAS LAW OFFICES OF EARL RUTLEDGE, P.C. 1845 Precinct Line Road Suite 209 Hurst, Texas 76054 (817) 577-2332 metro FAX (817) 577-1630 ~~ EARL RUTLEDGE State Bar No. 17641000 ATTORNEY FOR INTERVENORS MOTION TO DISMISS WITH PREJUICE Page 3 1212\000-029.PLD M c~o~~ N0.236-155408-94 THE CITY OF WATAUGA, TEXAS § IN THE DISTRICT COURT V, § 236TH JUDICIAL DISTRICT THE CITY OF NORTH RICHLAND § HILLS, TEXAS § TARRANT COUNTY, TEXAS ORDER OF DISMISSAL WITH PREJUDICE On this'day came on for consideration the Joint Motion to Dismiss with Prejudice filed by Plaintiff, Defendant, and Intervenors in this case. The parties have announced that they have fully compromised and settled this lawsuit and requested that this case be dismissed in its entirety with prejudice. The Court, after having considering the Motion, finds that the Motion should be in all things GRANTED. IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that the above-entitled and numbered cause, including any counterclaims, cross claims, and claims in intervention filed therein, be, and the same hereby aze, DISMISSED WITH PREJUDICE TO THE RIGHTS OF ANY PARTY TO REFILE THE ACTION OR ANY PART OF IT. IT IS FURTHER ORDERED that all court costs be taxed against the parties incurring same. / SIGNED this (~ da of ~~~ , 1996. Y v JUI~ THOMAS LOWS ORDER OF DISMISSAL WITH PREJUDICE Page 1 1212\000-030.PLD A APPROVED AS TO FORM: LLOYD, GOSSELINK, FOWLER, BLEVINS & MATHEWS, P.C. 111 Congress Avenue, Suite 1800 Austin, Texas 78701 (S 12) 322-5800 FAX (512) 472-0532 LAMBETH TOV~NSEND State Baz No. _20167500 ' RICHARD L. HAMALA State Bar No. 08810750 LAW OFFICES EVANS, GANDY, DANIEL & MOORE Sundance Square 115 West Second Street Suite 202 Fort Worth, Texas 76102 (817) 332-3822 FAX (817) 332-2763 MARK G. DANIEL State Bar No. 05360050 ATTORNEYS FOR PLAINTIFF, CITY OF WATAUGA, TEXAS ORDER OF DISMISSAL WITH PREJUDICE Page 2 FAX McF{~TIRE State Baz No. 13590000 P.O. Box 820609 7301 N.E. Loop 820 North Richland Hills, Texas 76182-0609 (817) 581-5501 FAX (817) 581-5516 ATTORNEY FOR DEFENDANT, CITY OF NORTH RICHLAND HILLS, TEXAS LAW OFFICES OF EARL RUTLEDGE, P.C. 1845 Precinct Line Road, Suite 209 Hurst, Texas 76054 (817) 577-2332 metro FAX (817) 577-1630 EARL RUTLEDGF~ State Bar No. 17641000 ATTORNEY FOR INTERVENORS 1212\000-030.PLD a ~Xhr6~f ~ ,Qe,SDlutior /U0. ~~- ~~ FACILITIES OPERATING AGREEMENT, BETWEEN THE CITY OF WATAUGA AND THE CITY OF NORTH RICHLAND HILLS, THE CITY OF WATAUGA, TEXAS, ("Watauga") and THE CITY OF NORTH RICHLAND HILLS ("NRH"), both being Texas home-rule municipal corporations and together sometimes referred to herein as the Parties, enter into this Facilities Operating Agreement (the "Agreement"). The purpose of this Agreement is to establish the method by which the responsibility to operate and the obligation to provide services in relation to certain Water and Wastewater Facilities will be transferred to Watauga pursuant to the Settlement and Purchase Agreement executed by the Parties simultaneously with this Agreement. PREAMBLE WHEREAS, the Parties have entered into a Settlement and Purchase Agreement conveying ownership of certain Water and Wastewater Facilities from NRH to Watauga; and WHEREAS, the Parties desire to provide for an orderly transfer of the operation of such Water and Wastewater Facilities by allowing NRH to continue to operate and maintain the Facilities and bill Facilities Customers for a period of time after the Facilities are purchased by and transferred to Watauga, NOW, THEREFORE, in consideration of the mutual promises, covenants, benefits, and releases set forth herein, Watauga and NRH contract and agree as follows: l2! 2!000-003.CLN 1 i SECTION 1. DEFINITIONS For the purposes of this Agreement, the following words, terms, phrases, and their derivations shall have the meanings set forth below. When not inconsistent with the context, words used in the present tense include the future tense, words in the plural number include the singular number, and words in the singular number include the plural number. The word "shall" is always mandatory and not merely directory. 1.1 "Date of Transfer" means the date at which ownership of the Facilities is transferred from NRH to Watauga pursuant to Section 14.1 of the Settlement and Purchase Agreement. 1.2 "Facilities" or "Water and Wastewater Facilities" mean the water and wastewater facilities transferred from NRH to Watauga pursuant to the Settlement and Purchase Agreement and include, but are not limited to, all water and wastewater transmission mains, distribution and collection lines, facilities, appurtenances, easements, special purpose rights of way, improvements, fixtures, and attached personal property (such as wells, pumps, pipes, valves, electrical connections, storage tanks, meters, meter vaults and fire hydrants and any and all appurtenances thereto) located within the city limits of Watauga and the wastewater transmission main extending from the southern city limit of Watauga to the point of entry into the City of Fort Worth's wastewater system. For the purposes of this Agreement, the term does NOT include facilities located within the city limits of Watauga that were NOT transferred to Watauga pursuant to the Settlement and Purchase Agreement as listed below: (1) The present water connection with the City of Fort Worth located at the NRH #2 Booster Pump Station, 5101 Western Center Blvd. (Saginaw-Watauga Road). 1212!000-003.CLN 2 (2) North Richland Hills Booster Pump Station #2 located at 5105 Western Center Blvd. (3) The 2,000,000 gallon ground storage facility located at 5105 Western Center Blvd. (4) The real property upon which (1), (2), and (3 ), are situated. (5) Any interest owned by NRH in the water line and easement from the Fort Worth water source at Beach Street to the station at 5105 Western Center Boulevard. (6) The Watauga Road Water Lines consisting of the following: Approximate Length a) 24" Water Line from Pump Station south to Watauga Road 400 feet b) 16" Water Line from the 24" Water Line connection to Denton Highway 2,550 feet c) 12" Water Line from Denton Highway to Saramac Road 8,149 feet d) 8" Water Line from Saramac Road to Stardust Road 1,830 feet e) 12" Water Line from Stardust Road to Rufe Snow Drive 2,519 feet 1.3 "Facilities Customers" means those utility customers located within the Service Area that are provided water and wastewater service by the Facilities that are the subject of this Agreement. The term includes all present and future customers within the Service Area unless otherwise indicated. 1.4 "Operate" or "Operations" means to manage, inspect, maintain, and repair the Facilities. The term includes, but is not limited to, the provision of standby personnel for emergencies; routine Facilities inspections, including those mandated by all applicable statutes, 12121000-003.CLN 3 ordinances, and regulations; compliance with reporting requirements of regulatory agencies; and the maintenance and repair of the Facilities. 1.5 "Revenues" means all amounts of money collected by NRH from Facilities Customers during the Transition Period relating to water and wastewater service including but not limited to water and wastewater fees, drainage utility fees, service connectldisconnect fees, delinquent billing fees, donations, garbage fees, and any other special fees assessed on Facility Customers except the surcharge for the cost of the response and investigation relating to U.S. Environmental Protection Agency's Administrative Order, Docket No. VI-96-1207. 1.6 "Service Area" means the area located within the city limits of Watauga that contains the Water and Wastewater Facilities transferred to Watauga from NRH pursuant to the Settlement and Purchase Agreement. The Service Area includes all customer accounts previously served by NRH that have been transferred to Watauga in accordance with the Settlement and Purchase Agreement. 1.7 "Service Fee" means those fees paid by Watauga to NRH as set forth in Section 6 of this Agreement in consideration of NRH's continued Operation of the Facilities and continued billing and collection from Facilities Customers during the Transition Period. 1.8 "Settlement and Purchase Agreement" means the document entitled "Settlement and Purchase Agreement Between the City of Watauga and the City of North Richland Hills" executed by Watauga and NRH simultaneously with this Agreement. The Settlement and Purchase Agreement is the instrument by which Watauga and NRH contracted for the sale of the Water and Wastewater Facilities that are the subject of this Agreement. 1 2 1 21000-00 3.CLN 4 1.9 "Transition Period" means three years from the Date of Transfer. During this three year period, NRH and Watauga intend to implement an orderly transition of the Operations of the Facilities purchased by Watauga from NRH as provided in this Agreement. SECTION 2. TERM 2.1 This Agreement will remain in full force and effect for a period of three years from the Date of Transfer. SECTION 3. FACILITIES INSPECTION. OPERATION. MAINTENANCE. AND REPAIR, 3.1 NRH shall Operate the Facilities on behalf of Watauga for the first two years of the Transition Period beginning from the Date of Transfer. During this two year period, NRH shall be obligated to deliver water and wastewater services to Facilities Customers in accordance with the Customers' needs and demands. 3.2 In the event that NRH is unable to repair and maintain the Facilities in proper working condition during the first two years of the Transition Period as required by Section 3.1 because of a catastrophic event, Watauga may, upon reasonable notice, perform maintenance and repairs by use of either Watauga's employees, independent contractors, or both. NRH shall reimburse Watauga for the cost of all labor, materials, equipment, and supplies used in performing maintenance and repairs. "Repair maintenance" as used herein does not include maintenance required by EPA AO Docket No. VI96-1207 or an EPA order resulting from the studies done pursuant to EPA AO VI96-1207. 1212/000-003.CLN 5 3.3 On the first day of the third year of the Transition Period, Watauga will take over responsibility for the Operation of the Facilities from NRH. During the third year of the Transition Period, NRH will not be responsible for Operations of the Facilities. 3.4 Watauga shall be responsible for collection of water and sewer connection fees including deposits and all water and sewer impact fees at the time of permitting in the City of Watauga. Collection of any special costs will also be the responsibility of Watauga. The following items will be delivered to NRH by Watauga concerning these fees: (a) A copy of the receipt for each customer's payment will be delivered to the NRH Utility Billing Department. These receipts will account for all monies paid by the customer concerning water and sewer service. (b) Separate accounting of the City of Fort Worth access fees collected along with payment will be delivered to the Finance Director by the 10th day of the month following their collection. (c) The cost of the water meter will be paid by Watauga to NRH including any special costs associated with the installation of the service. Special costs shall include such charges as contract charges for boring under streets and tapping of concrete steel cylinder pipe. 3.5 The work of maintaining and operating the Facilities shall be done under the regulations and policies of the NRH Public Works Department. 3.6 If the repair, maintenance, and/or operation of the Facilities requires the excavation of any Rights-of--Way in Watauga, NRH shall replace and properly relay and repair the surface, base, and landscape treatment of any sidewalk or Right-of--Way that may be excavated or 1212/000-003.CLN 6 damaged by reason of such maintenance, repair, and/or operation of the Facilities within a reasonable time after completion of the work in accordance with existing standards of Watauga in effect at the time of the work. 3.7 Except in an Emergency, NRH shall not excavate any Right-of--Way without first notifying the Department of Public Works of Watauga. The Director of the Watauga Department of Public Works or designee shall be notified as soon as practicable regarding work performed under Emergency conditions, and NRH shall comply with any reasonable requirements of Watauga for the restoration of the Rights-of--Way. 3.8 Watauga and NRH agree that their obligations hereunder shall include compliance with the requirements made under all applicable and valid laws, and any rules and regulations issued pursuant thereto, provided, however, that nothing contained herein shall be construed as affording any rights, causes of action, or remedies to any person not a party to this Agreement. 3.9 Within 30 days after the last day of the second year of the Transition Period, NRH shall provide Watauga with an updated set of all of the data, plans, and GIS system information specified in Section 4.6 of the Settlement and Purchase Agreement. This information shall be provided in hard copy and compatible computer media and shall include all available information developed for the Facilities. SECTION 4. BILLING 4.1 NRH agrees to read Facilities Customer meters and bill Facilities Customers during the entire three year Transition Period. Provided, however, Watauga may exercise its option to 12121000-003.CLN 7 perform the meter reading and billing services during the third year of the Transition Period as provided in Section 9.2 of the Settlement and Purchase Agreement. 4.2 During the Transition Period, NRH shall continue to bill Watauga customers on the first billing cycle, which is currently the 7th day of the month. SECTION 5. COLLECTION AND TRANSFER OF REVENUES 5.1 NRH agrees to collect Revenues from Facilities Customers, on behalf of Watauga, during the Transition Period and transfer such Revenues on a monthly basis to Watauga less the Service Fee provided in Sections 6.1 and 6.2 below. NRH's monthly transfer of Revenues to Watauga will be made no later than the 10th day of the month following the month in which the Revenues were collected. There shall be subtracted from the Revenues the cost of water and the cost of sewer treatment and transportation paid to Fort Worth. 5.2 NRH shall keep accurate books of accounting concerning its collection of Watauga's Revenues. 5.3 Watauga shall have the right and privilege by and through its auditor or other persons designated by it to freely examine the books, vouchers, and records maintained by NRH at any reasonable time upon request, for any reason, including without limitation, to determine that correct amounts of Revenue are transferred to Watauga. 5.4 In the event Watauga determines that NRH has underpaid amounts owed to Watauga, Watauga shall promptly notify NRH. 12 t Z/000-003.CLN 8 SECTION 6. SERVICE FEES PAID BY WATAUGA 6.1 Watauga agrees to pay NRH $1,500,000.00 per year for the first two years of the Transition Period, payable in monthly installments of $125,000.00. Such monthly installments shall be deducted from NRH's monthly transfer of Revenues collected on behalf of Watauga as provided in Section 5.1 above. 6.2 Watauga agrees to pay NRH $250,000.00 during the third year of the Transition Period, payable in monthly installments of $20,833.33, unless the option provided in Section 9.2 of the Settlement and Purchase Agreement is exercised. If the option is exercised, Watauga shall pay NRH $140,000 during the third year of the Transition Period in equal monthly installments. Such monthly installments shall be paid by Watauga to NRH by the 15th day of each month. 6.3 In the event that NRH's cost of providing the services to be performed by NRH under this Agreement exceed the Service Fees to be paid to NRH by Watauga, NRH shall not be entitled to any additional compensation and will remain obligated to perform all of the services provided under the terms of this Agreement. SECTION 7. CUSTOMER SERVICE, ACCOUNTS, AND SECURITY DEPOSITS, 7.1 NRH shall maintain all Facilities Customer accounts and security deposits during the Transition Period or until Watauga exercises the option to perform the meter reading and billing services as provided in Section 9.2 of the Settlement and Purchase Agreement. NRH shall endeavor to settle any Facilities Customer disputes regarding amounts owed to NRH for service provided by NRH prior to the Date of Transfer. 1212/000-003.CLN g 7.2 On the last day of the Transition Period or at the time Watauga exercises the option provided in Section 9.2 of the Settlement and Purchase Agreement, NRH shall transfer all Facilities Customer accounts and security deposits to Watauga. NRH may retain a customer's security deposit to the extent such deposit reimburses NRH for outstanding payments due NRH for services provided to such customer by NRH prior to the Date of Transfer. SECTION 8. FACILITIES INSURANCE 8.1 NRH shall be liable for claims arising from its negligence in operation of the facilities during the first two years of the transition period. SECTION 9. GENERAL PROVISIONS. 9.1 NOTICES. Except the notice required by Sections 3.2 and 3.7 of this Agreement, any notices required to be given herein shall be deemed to have been sufficiently given to either party for all purposes hereof if mailed by certified mail, postage prepaid, addressed as follows: TO CITY OF NORTH RICHLAND HILLS, City Manager City of North Richland Hills 7301 N.E. Loop 820 North Richland Hills, Texas 76182-0609 TO CITY OF WATAUGA City Manager City of Watauga 7101 Whitley Road Watauga, Texas 76148 or to such other respective address as the parties may designate from time to time in writing in accordance with this notice provision. 12127000-003.CLN 10 9.2 PUBLIC PURPOSE; RESERVATION OF RIGHTS,. All of the regulations provided in this Agreement are hereby declared to be for a public purpose and the health, safety, and welfare of the general public. Any member of the governing body or city official or employee of either Party charged with the enforcement of this Agreement, acting in the discharge of his or her duties, shall not thereby be rendered personally liable; and is hereby relieved from all personal liability for any damage that might accrue to persons or property as a result of any act required or permitted in the discharge of said duties. 9.3 SEVERABILITY. If any section, subsection, sentence, clause, phrase, term, provision, condition, covenant or portion of this Agreement is for any reason held invalid or unenforceable by any court of competent jurisdiction, the remainder of this Agreement shall not be affected thereby but shall be deemed as a separate, distinct and independent provision, and such holding shall not affect the validity of the remaining portions hereof, and each remaining section, subsection, sentence, clause, phrase, term, provision, condition, covenant and portion of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 9.4 ENTIRE AGREEMENT. This Agreement shall constitute the entire Agreement between Watauga and NRH and may not be modified or amended other than by a written instrument executed by both Parties. 9.5 INDEMNIFICATION. (a) To the extent allowed by law, NRH shall indemnify and hold Watauga harmless against all claims, causes of action, costs, expenses (including reasonable attorney fees) and damages to persons or property, to the extent proximately caused by the negligence or willful misconduct of NRH's officers, employees or agents arising directly or indirectly out of the Operation of the Facilities during the Transition Period. This duty to 1 2 1 21000-0 0 3.CLN 11 indemnify only applies where, and to the extent, NRH's negligence or willful misconduct is either the sole or a contributing cause of the injury, death or damage. It does not extend to any portion of any injury, death or damage caused by either the sole or contributing negligence or intentional act or omission of Watauga or any third party under the control of Watauga. Watauga shall give written notice to NRH within fifteen (15) days of receipt by Watauga of any claim against Watauga that might give rise to a claim based on the indemnity provided herein, stating the nature and basis of the claim and the amount thereof. Watauga shall have the sole right and authority to determine the disposition of any action, suit, claim or proceeding brought against it, provided that Watauga in exercising its rights and discharging its obligation under this indemnity, shall at all times act in good faith and shall settle, compromise or dispose of such actions, suits, claims or proceedings as if it were ultimately liable with respect thereto. However, in the event any action, suit or proceeding is brought with respect to which NRH may have liability under the indemnity provided herein, NRH shall have the right, without prejudice to Watauga's rights hereunder, at its sole expense, to be represented by counsel of its own choosing and with whom counsel for Watauga shall confer in connection with the defense of any action, suit or proceeding. In such a case, each party shall make available to the other party, and its counsels and accountants, all books and records of such party relating to such action, suit or proceeding and the parties agree to render to each other such assistance as may reasonably be requested in order to insure the proper and adequate defense of any such action, suit or proceeding. In the event NRH may be obligated under this Section to indemnify Watauga, NRH shall be entitled to assume the defense of such action, suit, claim or proceeding upon the delivery to Watauga of written notice of its election so to do. After delivery of such notice, NRH shall not be liable to 1212/000-003.CLN 12 Watauga under this Agreement for any fees of counsel subsequently incurred by Watauga with respect to the same proceeding, provided that (i) Watauga shall have the right to employ its own counsel in any such proceeding at Watauga's own expense; and (ii) if (A) the employment of counsel by Watauga has been previously authorized by NRH, (B) Watauga shall have reasonably concluded that there may be a conflict of interest between NRH and Watauga in the conduct of any such defense, or (C) NRH shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Watauga's counsel shall be borne by NRH. (b) To the extent allowed by law, Watauga shall indemnify and hold NRH harmless against all claims, causes of action, costs, expenses (including reasonable attorney fees) and damages to persons or property, to the extent proximately caused by the negligence or willful misconduct of Watauga's officers, employees or agents arising directly or indirectly out of Watauga's Operation of the Facilities during the Transition Period. This duty to indemnify only applies where, and to the extent, Watauga's negligence or willful misconduct is either the sole or a contributing cause of the injury, death or damage. It does not extend to any portion of any injury, death or damage cause by either the sole or contributing negligence or intentional act or omission of NRH or any third party under the control of NRH. NRH shall give written notice to Watauga within fifteen (I S) days of receipt by NRH of any claim against NRH that might give rise to a claim based on the indemnity provided herein, stating the nature and basis of the claim and the amount thereof. NRH shall have the sole right and authority to determine the disposition of any action, suit, claim or proceeding brought against it, provided that NRH in exercising its rights and discharging its obligation under this indemnity, shall at all times act in good faith and shall settle, compromise or dispose of such actions, suits, claims or proceedings as if it were {212)000-003.CLN 13 ultimately liable with respect thereto. However, in the event any action, suit or proceeding is brought with respect to which Watauga may have liability under the indemnity provided herein, Watauga shall have the right, without prejudice to NRH's rights hereunder, at its sole expense, to be represented by counsel of its own choosing and with whom counsel for NRH shall confer in connection with the defense of any action, suit or proceeding. In such a case, each party shall make available to the other party, and its counsels and accountants, all books and records of such party relating to such action, suit or proceeding and the parties agree to render to each other such assistance as may reasonably be requested in order to insure the proper and adequate defense of any such action, suit or proceeding. In the event Watauga may be obligated under this Section to indemnify NRH, Watauga shall be entitled to assume the defense of such action, suit, claim or proceeding upon the delivery to NRH of written notice of its election so to do. After delivery of such notice, Watauga shall not be liable to NRH under this Agreement for any fees of counsel subsequently incurred by NRH with respect to the same proceeding, provided that (i) NRH shall have the right to employ its own counsel in any such proceeding at NRH's own expense; and (ii) if (A) the employment of counsel by NRH has been previously authorized by Watauga, (B) NRH shall have reasonably concluded that there may be a conflict of interest between Watauga and NRH in the conduct of any such defense, or (C) Watauga shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of NRH's counsel shall be borne by Watauga. (c) Neither paragraph (a) or (b) is intended to create liability for the benefit of third parties but are solely for the benefit of Watauga and NRH. 1 2 1 21000-00 3.CLN 1 9.6 MANDATORY MEDIATION PROVISIONS. (a) Notwithstanding any other provisions of this Agreement, Watauga and NRH agree that prior to either Party bringing suit for specific performance, injunction, or damages for the alleged failure of the other Party to comply with any terms, conditions, or provisions of this Agreement, this Agreement shall be submitted for mediation in accordance with paragraph (b) this Section 9.6. (b) In order to institute mediation, either Party may, on written notice to the other Party, initiate non-binding mediation before a single mediator affiliated with Judicial Arbitration and Mediation Service, Inc. ("JAMS") in Tarrant County, Texas, or another mediation service mutually agreeable to the Parties. The Mediator shall be selected by agreement of the Parties within thirty (30) days after either Party first requests mediation of the other. If a single mediator cannot be agreed upon, then each Party shall select its own mediator from those on the approved list of the mediation service used; those two mediators will then select a third independent Mediator who will conduct the mediation session(s). (c) Neither Party shall be excused from complying with any of the terms and conditions of this Agreement because of any failure of the other Party upon any one or more occasions to insist upon or to seek compliance with any such terms or conditions. 9.7 OPERATING EXPENSES. Watauga represents and covenants that all payments to be made by it under this Agreement shall constitute reasonable and necessary "operating expenses" of its combined waterworks and sewer system, as defined in Article 1113, Tex. Rev. Civ. Stat. Ann., as amended, and that all such payments shall be payable solely from the revenues of its combined waterworks and sewer system. Watauga represents and has determined that the Operation of the Facilities that is the subject of this Agreement is absolutely necessary and 12121000-003.CLN 15 essential to the present and future operation of its water system and, accordingly, all payments required under this Agreement to be made by Watauga shall constitute reasonable and necessary operating expenses of Watauga's system as described above. 9.8 FORCE MAJEURE. In case by reason of force majeure, as hereafter defined, either Party shall be rendered unable wholly or in part to carry out its obligations under this Agreement, then if such Party shall give notice and full particulars of such force majeure in writing to the other Party within a reasonable time after occurrence of the event or cause relied on, the obligation of the Party giving such notice, so far as it is affected by such force majeure, shall be suspended during the continuance of the inability then claimed, but for no longer periods, and any such Party shall endeavor to remove or overcome such inability with all reasonable dispatch. The term "force majeure" as employed herein, shall mean: acts of God; strikes, lockouts, or other industrial disturbances; acts of public enemy; orders of any kind of the Government of the United States, of the State of Texas, or of any civil or military authority; insurrections; riots; epidemics; landslides; lightening; earthquakes; fires; hurricanes; storms; floods; washouts; droughts; arrests; restraining of government and people; civil disturbances; explosions; breakage or accidents to machinery, pipe lines, or canals; partial or entire failure of water supply; any other causes not reasonably within the control of the party claiming such inability. It is understood and agreed that the settlement of strikes and lockouts shall be entirely within the discretion of the Party having the difficulty, and that the above requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes and Iockouts by acceding to the demands of the striking or opposing parties when such settlement is unfavorable in the judgment of the Party having the difficulty. 1212/000-003.CLN 16 9.9 REGULATORY BODIES. This Agreement shall be subject to all valid rules, regulations, and laws applicable hereto passed or promulgated by the United States of America, the State of Texas, or any governmental body or agency having lawful jurisdiction, or any authorized representative or agency of any of the above. 9.10 GOVERNING LAW. This Agreement shall be governed and construed pursuant to the laws of the State of Texas. All obligations herein shall be performable and all payment shall be due and payable in Tarrant County, Texas. 9.11 CAPTIONS AND CONSTRUCTION. All section titles or captions contained in this Agreement shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of this Agreement or any provision hereof. Both parties have participated in the prepazation of this Agreement so that this Agreement shall not be construed either more or less favorably for or against either party. 9.12 INCORPORATION. The Preamble set forth before Section 1 of this Agreement is hereby incorporated by reference as if set forth fully at this point. IN WITNESS WHEREOF, the Parties, acting under authority of their respective governing bodies, have caused this Agreement to be duly executed in several counterparts, each of which shall constitute an original, all as of this day of ~.J G .v. , 1996. CITY OF WATAUGA, TEXAS 1212/000-003.CLN ay: ~ ---- Mayor ~ 17 s ATTEST: _~~~~. ~(J ,City Secretary (SEAL) ATTEST: _ ~ fin, ,~ X~L r ity Sec (SEAL) CITY OF NORTH RICHLAND HILLS, TEXAS ,Mayor By: / ,City anager APPROVED AS TO FORM AND CONTENT: By: ~ C • L''~i~ I~ ~~ C~ANi~~ City Att rney for the City of Wata By: i L .~ .mil City Att3~ney or the City of North Rich`rand Hills 1212/000-003.CLN 18 ~esalut~or~ No goo y ~ ~`~,. JOINT USE AGREEMENT BETWEEN THE CITY OF WATAUGA AND THE CITY OF NORTH RICHLAND HILLS THIS JOINT USE AGREEMENT (the "Agreement"), by and between the City of Watauga ("Watauga") and the City of North Richland Hills ("NRH"), both being Texas home-rule municipal corporations, together sometimes referred to herein as the Parties, is for the operation and maintenance of water utility facilities jointly serving Watauga and NRH. PREAMBLE WHEREAS, the Parties have entered into a Settlement and Purchase Agreement, wherein the Parties have agreed to the terms and conditions whereby certain utility facilities will be sold by NRH and purchased by Watauga; and WHEREAS, certain water utility facilities will remain in the ownership of NRH, but will also be used by Watauga to provide water utility services to the citizens of Watauga, and certain water utility facilities will be owned by Watauga but will also be used by NRH to provide water utility services to the citizens of NRH (both herein referred to as the "Joint Use Facilities"); and WHEREAS, the Parties hereto desire to set forth the terms and conditions under which each Party will have the use of the Joint Use Facilities, and under which the Parties will share in the costs of maintenance and operation of such Joint Use Facilities; NOW, THEREFORE, for and in consideration of the mutual promises, covenants, benefits and obligations hereinafter set forth, NRH and Watauga hereby contract as follows: 1212/000-004.CLN 1 SECTION 1. DEFINITIONS For the purposes of this Agreement, the following words, terms, phrases, and their deriva- tions shall have the meanings given herein. When not inconsistent with the context, words used in the present tense include the future tense, words in the plural number include the singular number, and words in the singular number include the plural number. The word "shall" is always mandatory and not merely directory. 1.1 "Adiusted O & M Fee" means the O & M Fee described in Section 4, as adjusted after each Annual Payment Period, as provided in this Agreement. 1.2 "Annual Pavment Period" means the period beginning on October 1 of each calendar year and ending on the last day of September of the next calendar year. 1.3 "Date of Transfer" has the same meaning as in the Settlement and Purchase Agreement by and between NRH and Watauga, executed simultaneously with this Agreement, and refers to the effective date of the sale and conveyance of facilities under the terms of the Settlement and Purchase Agreement, which shall occur between October 1, 1996, and January 1, 1997. 1.4 "Emergency" means a reasonably unforeseen occurrence with a potential to endanger personal safety or health, or cause substantial damage to property, that calls for immediate action. 1.5 "Fort Worth Contract" means the Contract for Water Service Between the City of Fort Worth, Texas and North Richland Hills, Texas, dated July 6, 1989, and all amendments thereto. 1212/000-004.CLN 2 1.6 "Joint Use Facilities" means the following described water lines that are owned by Watauga and the use of which will be shared between NRH and Watauga: Approximate Length a. D.L. Hall 24" Transmission Line 5,497 feet b. Denton Highway Transmission Line 1) 16" Water Line from Watauga Road to Chapman 2,792 feet 2) 24" Water Line from Chapman to Hightower 2,377 feet c. Hightower Road 16" Transmission Line 1) Denton Highway to Whitley 2,180 feet 2) Whitley to Echo Hills 1,530 feet 3) Echo Hills to McCoy 2,400 feet 4) McCoy to Rufe Snow Drive 1,300 feet d. Starnes Road Transmission Line 1) 16" Water Line from Denton Highway to Whitley 2,050 feet 2) 12" Water Line from Whitley to Indian Springs 2,455 feet 3) 16" Water Line from Indian Springs to Rufe Snow 3,377 feet "Joint Use Facilities" shall also mean the following described water facilities and lines that are owned by NRH and the use of which will be shared between NRH and Watauga: a. The present water connection with the City of Fort Worth located at the NRH's Booster Pump Station #2, 5101 Western Center Blvd. (Saginaw-Watauga Road). b. NRH's Booster Pump Station #2 located at 5105 Western Center Blvd. c. The 2,000,000 gallon ground storage facility located at S 105 Western Center Blvd. 1212/000-004.CLN 3 d. The real property upon which a, b, and c are situated. e. Any interest owned by NRH in the water line and easement from the Fort Worth water source at Beach Street to the station at 5105 Western Center Boulevard. £ The Watauga Road Water Lines consisting of the following: Approximate Length 1) 24" Water Line from Pump Station south to Watauga Road 400 feet 2) 16" Water Line from the 24" Water Line connection to Denton Highway 2,550 feet 3) 12" Water Line from Denton Highway to Saramac Road 8,149 feet 4) 8" Water Line from Saramac Road to Stardust Road 1,830 feet 5) 12" Water Line from Stardust Road to Rufe Snow Drive 2,519 feet 1.7 "Rate of Use Charge" means the charge so designated in the Fort Worth Contract, representing the charge for: (1) Maximum Day Demand in excess of Average Daily Use; and (2) Maximum Hour Demand in excess of Maximum Day Demand. 1.8 "Right-of-Wav", or "Riehts-of-Wav" means the surface of, the space within, and the space above and below any public street, sidewalk, alley, or other public passage now or hereafter existing as such within Watauga. 1.9 "Settlement and Purchase Agreement" means the document entitled "Settlement and Purchase Agreement Between the City of Watauga and the City of North Richland Hills" executed by Watauga and NRH simultaneously with this Agreement. The Settlement and Purchase Agreement is the instrument by which Watauga and NRH contracted for the sale of the Water and Wastewater Facilities that are the subject of this Agreement. 1212/000-004.CLN 4 SECTION 2. TERM 2.1 This Agreement shall remain in effect from and after the Date of Transfer and continue for the life of the Joint Use Facilities and any replacements thereof. SECTION 3. MAINTENANCE AND REPAIR OF SHARED FACILITIES 3.1 NRH agrees that it shall throughout the term of this Agreement continuously maintain and keep the Joint Use Facilities that it owns in good and working condition in order that their usefulness to Watauga and structural integrity shall be at all times protected and maintained. 3.2 Watauga agrees that it shall throughout the term of this Agreement continuously maintain and keep the Joint Use Facilities that it owns in good and working condition in order that their usefulness to NRH and structural integrity shall be at all times protected and maintained. 3.3 NRH and Watauga agree that the O & M Fee payments made by Watauga hereunder shall be sufficient to pay its share of all expected maintenance and operation expenses, and all scheduled repairs. However, to the extent that unexpected repairs are necessary, NRH agrees that it will promptly undertake all such repairs, and any outages or other periods of time in which the Joint Use Facilities are not operational due to such unexpected repairs shall be kept to an absolute minimum. 1212/000-004.CLN 5 SECTION 4. OPERATIONS AND MAINTENANCE FEE 4.1 As consideration for Watauga's use of Joint Use Facilities owned by NRH, Watauga agrees to pay NRH an annual Operations and Maintenance Fee ("O & M Fee") calculated as described herein. Watauga shall not be obligated to begin paying the O & M Fee until twenty-four (24) months after the Date of Transfer. 4.2 The O & M Fee shall be calculated on an annual basis. On or before June 1 of each year of this Agreement, NRH shall give Watauga written notice of the anticipated operations and maintenance costs ("O & M Costs") relating to the Joint Use Facilities owned by NRH to be incurred by NRH for the ensuing Annual Payment Period. NRH shall also provide to Watauga budgetary documentation supporting such estimate of O & M Costs. Watauga's annual O & M Fee shall be the product of multiplying the total anticipated O & M Costs of the Joint Use Facilities owned by NRH by a percentage representing the ratio for the previous year of the volume of water used by Watauga compared to the total volume of water received from the City of Fort Worth at the connection located at the NRH Booster Pump Station #2, 510 Western Center Blvd. Watauga shall pay its annual O & M Fee in twelve (12) approximately equal monthly installments, to the extent that equal installments are practical, on or before the tenth (10th) day of each month. 4.3 At the close of each Annual Payment Period, NRH shall determine the actual amount of O & M Costs incurred by NRH during the Annual Payment Period and related to the Joint Use Facilities owned by NRH. NRH shall calculate Watauga's Adjusted O & M Fee by determining the difference between: 1212/000-004.CLN (') a. the estimated amount of O & M Costs for Joint Use Facilities owned by NRH that was the basis for the O & M Fee paid by Watauga during the Annual Payment Period, and b. the actual amount of O & M Costs for Joint Use Facilities owned by NRH during the Annual Payment Period. The difference, if any, between estimated and actual O & M Costs shall be multiplied by the same percentage used in calculating the O & M Fee, and the product shall be applied as a credit or debit to Watauga's account with NRH, and shall be credited or debited in one-twelfth (1/12) increments to Watauga's next twelve (12) monthly payments, or as otherwise agreed upon between Watauga and NRH, provided the total amount of the credit or debit shall be made within the next twelve (12) months. 4.4 If Watauga at any time disputes the amount to be paid by it to NRH, Watauga shall nevertheless promptly make the disputed payment or payments, but if it is subsequently determined by agreement or court decision that the disputed amount paid by Watauga should have been less, or more, NRH shall promptly revise and reallocate Watauga's annual O & M Fee in a manner that Watauga, or NRH, will recover the amount due. SECTION 5. REPLACEMENT FUND 5.1 As additional consideration for the use of the Joint Use Facilities owned by NRH, Watauga shall escrow an amount annually for Watauga's pro-rata share of replacement costs of the Joint Use Facilities owned by NRH into an escrow account administered by NRH. NRH shall deposit such money into an escrow account with a banking institution of Watauga's choice. The escrow account (Replacement Fund) will be earmarked for use in accordance with this section, i.e. replacement of the Joint Use Facilities owned by NRH. Watauga shall be entitled to show 1212/000-004.CLN 7 the fund as a Watauga asset on its balance sheet. Watauga's pro-rata share shall be the ratio of the volume of the water used in Watauga to the total volume of water received from the City of Fort Worth at the connection located at NRH Booster Pump Station #2, 5105 Western Center Blvd. 5.2 The amount paid into the Replacement Fund shall be based on a per 1000 gallon volume charge for all water used by the City of Watauga. Funds will be disbursed for replacement projects on Joint Use Facilities owned by NRH upon approval of both cities. The Replacement Fund fee shall be escrowed monthly at a rate that will accumulate sufficient funds to satisfy Watauga's pro-rata share of the replacement cost of the Joint Use Facilities owned by NRH. The amount to be paid by Watauga will be adjusted annually in October by computing the ratio of water used by Watauga to the total volume of water received from the City of Fort Worth the preceding year from the pump station at 5105 Western Center Blvd. 5.3 NRH intends to pay its pro-rata share to replace the Joint Use Facilities owned by NRH by normal capital funding. NRH's share and Watauga's share of replacement cost shall be based upon the ratio of water used by each City from the pump station at 5105 Western Center Blvd. during the period that Watauga has been required by this Agreement to pay into the Replacement Fund. 5.4 The parties agree that replacement cost of the 2 MG ground storage tank at 5105 Western Center Blvd. will be $700,000 with a life expectancy of 30 years; that the replacement cost of the pumps/motors and control values will be $300,000 with a life expectancy of 15 years; and that the replacement cost of the balance of the facilities owned by NRH is $1,200,000 based 1212/000-004.CLN g upon a 30 year life expectancy. These costs and life expectancies shall be adjusted each five yeazs on the anniversary date of the Date of Transfer, by one engineer chosen by each City. 5.5 Watauga shall retain investment rights over the Replacement Fund and shall have unrestricted rights to interest accruing on the Replacement Fund. Also, should the balance of the Replacement Fund become excessive based on replacement estimates, Watauga may request a distribution of the excess funds from its account. Watauga shall request written approval from NRH prior to receiving any excess distribution, with such approval not being unreasonably withheld. 5.6 Any deficiency for Watauga's pro-rata shaze of replacement costs of the Joint Use Facilities owned by NRH shall be the responsibility of Watauga and shall be required at the time of replacement. SECTION 6. MONTHLY WATER USE CHARGES 6.1 NRH is a wholesale treated water customer of the City of Fort Worth under the provisions of the Fort Worth Contract. The water connection with the City of Fort Worth, a Joint Use Facility owned by NRH, is the point of entry for water service to both NRH and Watauga, and the meter at the water connection thereby measures water use by both NRH and Watauga. In order to determine the amount of water from the City of Fort Worth used by Watauga, Watauga shall construct and install subtraction meters at the Starnes Road, Hightower Road, and Watauga Road connections with NRH's water lines. After such construction and installation, NRH shall own such meters and shall be responsible for reading the meters, shall maintain and operate such meters, and shall replace such meters when necessary, all at no cost to Watauga. 1212/000-004.CLN 9 6.2 NRH and Watauga shall, on a regular monthly basis, jointly read the subtraction meters, and shall subtract the readings therefrom from the meter reading at the water connection with the City of Fort Worth. The difference between the total readings of the subtraction meters and the meter at the water connection with the City of Fort Worth shall be the volume of water used by Watauga during the preceding monthly period. 6.3 The rates paid by NRH to the City of Fort Worth are composed of a Treatment, Pumping and Transmission Chazge, a Raw Water Charge, a Rate of Use Chazge, and a Service Chazge. NRH shall, on a regular monthly basis, prepaze and provide a bill to Watauga for Watauga's monthly water use, as determined in Section 6.2 above. All such bills shall be due and payable by Watauga not more than thirty (30) days from the billing date. It is the intent of the parties hereto that billings from NRH to Watauga for Watauga's actual water use shall be a "pass-through" of the charges due to the City of Fort Worth, and NRH shall not retain any revenues resulting from such billings, but shall pass the revenues on directly to the City of Fort Worth. 6.4 The monthly water use bill prepazed by NRH from Fort Worth's actual bill shall be submitted to Watauga along with a copy of the total bill from Fort Worth. 6.5 Watauga's Rate of Use chagge shall be calculated based on Watauga's consumption compared to NRH's total consumption of water from the City of Fort Worth; i.e. if the total monthly Rate of Use charge from the City of Fort Worth is $50,000 and if Watauga's consumption is 20% of the total water taken from Fort Worth, Watauga's Rate of Use chagge for that month would be 20% of $50,000. The final bill from the City of Fort Worth for each fiscal 1212/000-004.CLN 10 year ("Settle-Up") will determine the ultimate annual Rate of Use charge to each City, based upon percentage of use. SECTION 7. SYSTEM ACCESS FEE 7.1 Under the terms of the Fort Worth Contract, NRH is obligated to pay to the City of Fort Worth a System Access Fee for each new connection made to NRH's water system. Watauga agrees that it shall charge to and collect from each new connection to its water system a fee at least sufficient to pay the System Access Fee to the City of Fort Worth and remit those access fees to NRH monthly. 7.2 The amount of and conditions under which such System Access Fee shall be collected by Watauga for payment to the City of Fort Worth through NRH shall be governed by the Fort Worth Contract. The accounting records in the form required by the City of Fort Worth shall be kept by Watauga and a copy submitted monthly to NRH with payment. SECTION 8. METERS 8.1 NRH shall routinely test for accuracy, and service and calibrate if necessary, the subtraction meters described in Section 6 above, no less than once during each twelve (12) month period. Copies of the results of such calibration and all related information shall be provided to Watauga. Watauga shall have access to the metering facilities at all reasonable times; provided, however, that any reading, calibration or adjustment to such metering equipment shall be done by employees or agents of NRH, or other mutually approved third party calibration agent, in the presence of representatives of Watauga and NRH, if so requested by Watauga. Notification of 1212/000-004.CLN 11 any proposed test shall be provided to Watauga at least seventy-two (72) hours prior to such test being conducted and Watauga may observe such test, if so desired. Testing cost shall be shared equally by Watauga and NRH. 8.2 Upon any calibration, if it is determined that the accuracy envelope of such meter or meters is found to be lower than ninety-five percent (95%) or higher than one hundred five percent (105%) expressed as a percentage of the full scale of the meter, the registration of the flow as determined by such defective meter shall be corrected for a period extending back to the time such inaccuracy began, if such time is ascertainable, or, if such time is not ascertainable, then for a period extending back one-half (''/z) of the time elapsed since the date of the last calibration, but in either event the correction shall not be extended back for a period greater than six (6) months. All meters will be properly sealed, and the seals shall not be broken unless representatives of both parties have been notified and given a reasonable opportunity to be present. 8.3 If any meter used to determine the flow of treated water from Watauga to NRH is out of service or out of repair so that the amount of water metered cannot be ascertained or computed from the reading thereof, the water delivered during the period such meter is out of service or out of repair for the period determined according to Section 8.2 shall be estimated and agreed upon by the parties hereto upon the basis of the best data available. The basis for estimating such flow includes, but is not limited to, extrapolation of past patterns of flow for said metering station under similar conditions. In the event that the parties hereto cannot agree on the extrapolated estimate of water volume delivered, agreement on the flow volume will be determined by mediation, as hereinafter provided. 1212/000-004.CLN 12 SECTION 9. GENERAL CONDITIONS OF USE 9.1 The work of maintaining and operating the Joint Use Facilities owned by NRH shall be done under the ordinances, regulations and policies governing the NRH Public Works Department. 9.2 If the repair, maintenance, and/or operation of the Joint Use Facilities owned by NRH requires the excavation of any Rights-of--Way in Watauga, NRH shall replace and properly relay and repair the surface, base, and landscape treatment of any sidewalk or Right-of--Way that may be excavated or damaged by reason of such maintenance, repair, and/or operation of the Joint Use Facilities within a reasonable time after completion of the work in accordance with existing standards of Watauga in effect at the time of the work. 9.3 NRH agrees to provide Watauga with maintenance records and related costs for all Joint Use Facilities owned by NRH. The records provided shall include but not be limited to water main leak repairs, replacement, and rehabilitation. The records shall be provided annually during the term of this Agreement. 9.4 Except in an Emergency, NRH shall not excavate any Right-of--Way without first notifying the Department of Public Works of Watauga. The Director of the Watauga Department of Public Works or designee shall be notified as soon as practicable regarding work performed under Emergency conditions, and NRH shall comply with any reasonable requirements of Watauga for the restoration of the Rights-of--Way. 9.5 Watauga and NRH agree that their obligations hereunder shall include compliance with the requirements made under all applicable and valid laws, and any rules and regulations 1212/000-004.CLN 13 issued pursuant thereto, provided, however, that nothing contained herein shall be construed as affording any rights, causes of action, or remedies to any person not a party to this Agreement. SECTION 10. OWNERSHIP AND LIABILITY 10.1 No provision of this Agreement shall be construed to create any type of joint or equity ownership of any property, any partnership or joint venture, nor shall same create any other rights or liabilities. Watauga's payments to NRH for use of Joint Use Facilities owned by NRH shall not be construed as granting Watauga partial ownership of or equity in the NRH water system. NRH's use of the Joint Use Facilities owned by Watauga shall not be construed as granting NRH partial ownership of or equity in the Joint Use Facilities owned by Watauga. 10.2 Neither Party hereto shall bear any responsibility for the quality of water passing through the Joint Use Facilities. 10.3 Contracts made and entered into by either Watauga or NRH for the construction, reconstruction, or repair of any Joint Use Facilities shall include the requirement that the contractor must provide adequate insurance protecting both Watauga and NRH as co-insureds. Such contract must also provide that the contractor covenant to indemnify, hold harmless and defend both Watauga and NRH against any and all suits or claims for damages of any nature arising out of the performance of such contract. 1212/000-004.CLN 1 Gl SECTION 11. GENERAL PROVISIONS 11.1 NOTICE. Any notices required to be given herein shall be deemed to have been sufficiently given to either party for all purposes hereof if mailed by certified mail, postage prepaid, addressed as follows: TO CITY OF NORTH RICHLAND HILLS City Manager City of North Richland Hills 7301 N.E. Loop 820 North Richland Hills, Texas 76182-0609 TO CITY OF WATAUGA City Manager City of Watauga 7101 Whitley Road Watauga, Texas 76148 or to such other respective address as the parties may designate from time to time in writing in accordance with this notice provision. 11.2 PUBLIC PURPOSE: RESERVATION OF RIGHTS. All of the regulations provided in this Agreement aze hereby declazed to be for a public purpose and the health, safety, and welfare of the general public. Any member of the governing body or city official or employee of either Party charged with the enforcement of this Agreement, acting in the dischazge of his duties, shall not thereby render himself personally liable; and he is hereby relieved from all personal liability for any damage that might accrue to persons or property as a result of any act required or permitted in the discharge of his said duties. 11.3 SEVERABILITY. If any section, subsection, sentence, clause, phrase, term, provision, condition, covenant or portion of this Agreement is for any reason held invalid or unenforceable by any court of competent jurisdiction, the remainder of this Agreement shall not be affected thereby but shall be deemed as a separate, distinct and independent provision, and such holding shall not affect the validity of the remaining portions hereof, and each remaining 1212/000-004.CLN 15 section, subsection, sentence, clause, phrase, term, provision, condition, covenant and portion of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 11.4 ENTIRE AGREEMENT. This Agreement shall constitute the entire Agreement between Watauga and NRH and may not be modified or amended other than by a written instrument executed by both parties. 11.5 INDEMNIFICATION. (a) To the extent allowed by law, NRH shall indemnify and hold Watauga harmless against all claims, causes of action, costs, expenses (including reasonable attorney fees) and damages to persons or property, to the extent proximately caused by the negligence or willful misconduct of NRH's officers, employees or agents arising directly or indirectly out of the operation, repair, and, maintenance of the Joint Use Facilities. This duty to indemnify only applies where, and to the extent, NRH's negligence or willful misconduct is either the sole or a contributing cause of the injury, death or damage. It does not extend to any portion of any injury, death or damage caused by either the sole or contributing negligence or intentional act or omission of Watauga or any third party under the control of Watauga. Watauga shall give written notice to NRH within fifteen (15) days of receipt by Watauga of any claim against Watauga that might give rise to a claim based on the indemnity provided herein, stating the nature and basis of the claim and the amount thereof. Watauga shall have the sole right and authority to determine the disposition of any action, suit, claim or proceeding brought against it, provided that Watauga in exercising its rights and discharging its obligation under this indemnity, shall at all times act in good faith and shall settle, compromise or dispose of such actions, suits, claims or proceedings as if it were ultimately liable with respect thereto. However, in the event any action, suit or proceeding is brought with respect to which NRH may have liability under the 1212/000-004.CLN 16 indemnity provided herein, NRH shall have the right, without prejudice to Watauga's rights hereunder, at its sole expense, to be represented by counsel of its own choosing and with whom counsel for Watauga shall confer in connection with the defense of any action, suit or proceeding. In such a case, each party shall make available to the other party, and its counsels and accountants, all books and records of such party relating to such action, suit or proceeding and the parties agree to render to each other such assistance as may reasonably be requested in order to insure the proper and adequate defense of any such action, suit or proceeding. In the event NRH may be obligated under this Section to indemnify Watauga, NRH shall be entitled to assume the defense of such action, suit, claim or proceeding upon the delivery to Watauga of written notice of its election so to do. After delivery of such notice, NRH shall not be liable to Watauga under this Agreement for any fees of counsel subsequently incurred by Watauga with respect to the same proceeding, provided that (i) Watauga shall have the right to employ its own counsel in any such proceeding at Watauga's own expense; and (ii) if (A) the employment of counsel by Watauga has been previously authorized by NRH, (B) Watauga shall have reasonably concluded that there may be a conflict of interest between NRH and Watauga in the conduct of any such defense, or (C) NRH shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Watauga's counsel shall be borne by NRH. (b) To the extent allowed by law, Watauga shall indemnify and hold NRH harmless against all claims, causes of action, costs, expenses (including reasonable attorney fees) and damages to persons or property, to the extent proximately caused by the negligence or willful misconduct of Watauga's officers, employees or agents arising directly or indirectly out of the use by Watauga of the Joint Use Facilities. This duty to indemnify only applies where, and to 1212/000-004.CLN 17 the extent, Watauga's negligence or willful misconduct is either the sole or a contributing cause of the injury, death or damage. It does not extend to any portion of any injury, death or damage caused by either the sole or contributing negligence or intentional act or omission of NRH or any third party under the control of NRH. NRH shall give written notice to Watauga within fifteen (15) days of receipt by NRH of any claim against NRH that might give rise to a claim based on the indemnity provided herein, stating the nature and basis of the claim and the amount thereof. NRH shall have the sole right and authority to determine the disposition of any action, suit, claim or proceeding brought against it, provided that NRH in exercising its rights and discharging its obligation under this indemnity, shall at all times act in good faith and shall settle, compromise or dispose of such actions, suits, claims or proceedings as if it were ultimately liable with respect thereto. However, in the event any action, suit or proceeding is brought with respect to which Watauga may have liability under the indemnity provided herein, Watauga shall have the right, without prejudice to N1ZI-I's rights hereunder, at its sole expense, to be represented by counsel of its own choosing and with whom counsel for NRH shall confer in connection with the defense of any action, suit or proceeding. In such a case, each party shall make available to the other party, and its counsels and accountants, all books and records of such party relating to such action, suit or proceeding and the parties agree to render to each other such assistance as may reasonably be requested in order to insure the proper and adequate defense of any such action, suitor proceeding. In the event Watauga may be obligated under this Section to indemnify NRH, Watauga shall be entitled to assume the defense of such action, suit, claim or proceeding upon the delivery to NRH of written notice of its election so to do. After delivery of such notice, Watauga shall not be liable to NRH under this Agreement for any fees of counsel subsequently 1212/000-004.CLN 1 g incurred by NRH with respect to the same proceeding, provided that (i) NRH shall have the right to employ its own counsel in any such proceeding at NRH's own expense; and (ii) if (A) the employment of counsel by NRH has been previously authorized by Watauga, (B) NRH shall have reasonably concluded that there may be a conflict of interest between Watauga and NRH in the conduct of any such defense, or (C) Watauga shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of NRH's counsel shall be borne by Watauga. (c) Neither paragraph (a) or (b) is intended to create liability for the benefit of third parties but aze solely for the benefit of Watauga and NRH. 11.6 MANDATORY MEDIATION PROVISIONS. (a) Notwithstanding any other provisions of this Agreement, Watauga and NRH agree that prior to either Party bringing suit for specific performance, injunction, or damages for the alleged failure of the other Party to comply with any terms, conditions, or provisions of this Agreement, this Agreement shall be submitted for mediation in accordance with this Section 11.6. (b) In order to institute mediation, either Party may, on written notice to the other Party, initiate non-binding mediation before a single mediator affiliated with Judicial Arbitration and Mediation Service, Inc. ("JAMS") in Tarrant County, Texas, or another mediation service mutually agreeable to the Parties. The Mediator shall be selected by agreement of the Parties within thirty (30) days after either Party first requests mediation of the other. If a single mediator cannot be agreed upon, then each Party shall select its own mediator from those on the approved list of the mediation service used; those two mediators will then select a third independent Mediator who will conduct the mediation session(s). 1212/000-004.CLN 19 .~ (c) Neither Party shall be excused from complying with any of the terms and conditions of this Agreement because of any failure of the other Party upon any one or more occasions to insist upon or to seek compliance with any such terms or conditions. 11.7 OPERATING EXPENSES. Watauga represents and covenants that all payments to be made by it under this Agreement shall constitute reasonable and necessary "operating expenses" of its combined waterworks and sewer system, as defined in Article 1113, Texas Revised Civil Statutes, as amended, and that all such payments shall be payable solely from the revenues of its combined waterworks and sewer system. Watauga represents and has determined that its use of the Joint Use Facilities owned by NRH is absolutely necessary and essential to the present and future operation of its water system and, accordingly, all payments required under this Agreement to be made by Watauga shall constitute reasonable and necessary operating expenses of Watauga's system as described above. 11.8 FORCE MAJEURE. In case by reason of force majeure, as hereafter defined, either party hereto shall be rendered unable wholly or in part to carry out its obligations under this Agreement, then if such party shall give notice and full particulars of such force majeure in writing to the other party within a reasonable time after occurrence of the event or cause relied on, the obligation of the party giving such notice, so far as it is affected by such force majeure, shall be suspended during the continuance of the inability then claimed, but for no longer periods, and any such party shall endeavor to remove or overcome such inability with all reasonable dispatch. The term "force majeure" as employed herein, shall mean: acts of God; strikes, lockouts, or other industrial disturbances; acts of public enemy; orders of any kind of the Government of the United States, of the State of Texas, or of any civil or military authority; 1212/000-004.CLN 2~ r insurrections; riots; epidemics; landslides; lightening; earthquakes; fires; hurricanes; storms; floods; washouts; droughts; arrests; restraining of government and people; civil disturbances; explosions; breakage or accidents to machinery, pipe lines, or canals; partial or entire failure of water supply; any other causes not reasonably within the control of the party claiming such inability. It is understood and agreed that the settlement of strikes and lockouts shall be entirely within the discretion of the party having the difficulty, and that the above requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes and lockouts by acceding to the demands of the opposing party or parties when such settlement is unfavorable in the judgment of the party having the difficulty. 11.9 REGULATORY BODIES. This Agreement shall be subject to all valid rules, regulations, and laws applicable hereto passed or promulgated by the United States of America, the State of Texas, or any governmental body or agency having lawful jurisdiction, or any authorized representative or agency of any of the above. 11.10 GOVERNING LAW. This Agreement shall be governed and construed pursuant to the laws of the State of Texas. All obligations herein shall be performable and all payment shall be due and payable in Tarrant County, Texas. 11.11 CAPTIONS AND CONSTRUCTION. All section titles or captions contained in this Agreement shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of this Agreement or any provision hereof. Both parties have participated in the preparation of this Agreement so that this Agreement shall not be construed either more or less favorably for or against either party. 1212/000-004.CLN 21 . . 11.12 INCORPORATION. The Preamble set forth before Section 1 of this Agreement is hereby incorporated by reference as if set forth fully at this point. IN WITNESS WHEREOF, the parties hereto, acting under authority of their respective governing bodies, have caused this Agreement to be duly executed in several counterparts, each of which shall constitute an original, all as of this /~ /h day of ~.~ e. , 1996. CITY OF WATAUGA, TEXAS ATTEST: ~~ ~/ ~ ,City Secretary (SEAL) 1212/000-004.CLN B. v ,Mayor f CITY OF NORTH RICHLAND HILLS, TEXAS By: a~ Mayor By: ~ ~ ~ , Cit~ Manager 22 ATTEST: ~- ~~('~ity S etary (SEAL) APPROVED AS TO FORM AND CONTENT: B h / WQr ~ l~~v ~ r/~ V • ~~C y' - - _~ City Attorney for the City o~atau w ~ ~_ C By: City~Attor ey for the City of North Richland Hills 1212/000-004.CLN 23