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HomeMy WebLinkAbout15-33 unsigned Resolution No. 15-33 RESOLUTION AUTHORIZING EXECUTION OF A SETTLEMENT AGREEMENT AND RELEASE WITH NORTHERN ILLINOIS GAS COMPANY D/B/A NICOR GAS COMPANY REGARDING THE AUDIT OF NICOR COLLECTIONS BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that David J. Kaptain, Mayor, and Kimberly A. Dewis, City Clerk, be and are hereby authorized and directed to execute a Settlement Agreement and Release on behalf of the City of Elgin with Northern Illinois Gas Company d/b/a Nicor Gas Company regarding the audit of Nicor collections, a copy of which is attached hereto and made a part hereof by reference. s/David J. Kaptain David J. Kaptain, Mayor Presented: February 25, 2015 Adopted: February 25, 2015 Vote: Yeas: 9 Nays: 0 Attest: s/Kimberly Dewis Kimberly Dewis, City Clerk SETTLEMENT AGREEMENT AND RELEASE This Settlement Agreement and Release ("Agreement") is made between the City of Elgin, Illinois (the "City") and Northern Illinois Gas Company d/b/a Nicor Gas Company ("Nicor"), on February 25 , 2015. The City and Nicor are sometimes referred to herein collectively as the "Parties" or individually as "Party." WITNESSETH WHEREAS, the City retained Azavar Audit Solutions, Inc. ("Azavar") to audit Nicor's payment of taxes owed under the City's Municipal Utility Tax, Title 4, Chapter 4.18 of the City's Code ("MUT"); WHEREAS, on February 24, 2014, Azavar, on behalf of the City, issued a notice of audit to Nicor; WHEREAS, Nicor gas collects municipal gas use taxes owed under the City's Municipal Gas Use Tax, Title 4, Chapter 4.19 of the City's Code ("GUT") pursuant to the Municipal Gas Use Tax Collection Agreement between the Parties dated July 1, 2012 (the "GUT Collection Agreement"); WHEREAS, in connection with the above-described audit ("Audit"), Nicor issued a summary report dated January 5, 2015 (the "Audit Summary") identifying any addresses that required a change in Nicor's records, the nature of the change that was made (i.e. the previous and current coding), and the date the change was made ("Updated Addresses"); WHEREAS, in connection with the above Audit, questions and disputes have arisen regarding whether Nicor owed unpaid amounts; WHEREAS, the Parties, without admitting any liability whatsoever to each other, and in order to avoid the expense and burden of litigation, now desire to close the Audit and to resolve 1 entirely all issues relating to the Audit and any other matters specified herein by entering into this Agreement; NOW THEREFORE, in consideration of the above premises and the mutual covenants, agreements and releases set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows: 1. Recitals. The recitals set forth above are incorporated herein by reference and are explicitly made part of this Agreement. 2. Closure of Audit(s). On the Effective Date, any open audits related to Nicor's compliance with the MUT or the GUT Collection Agreement shall be deemed to be closed. Within ten (10) business days of the Effective Date, the City shall provide to Nicor a written audit closure report containing no findings or conclusions other than that all potential issues raised, or that could have been raised, by the Audit have been resolved by this Agreement. The City shall not, directly or through any agent, initiate any future audits of Nicor's compliance with the MUT or the GUT Collection Agreement with respect to any period of time before the Release Date (as defined in Paragraph 5) or otherwise request or require Nicor to provide any information about Nicor's compliance with the MUT or the GUT Collection Agreement with respect to any period of time before the Release Date. 3. Other Municipality Agreements and Effective Date of this Agreement. The Parties acknowledge that 15 other municipalities have retained Azavar to conduct municipal tax audits involving Nicor, including: Bellwood, Cortland, Deer Park, Evanston, Genoa, Glen Ellyn, Itasca, Kirkland, Lake Zurich, Maple Park, Milledgeville, Roselle, Thornton, Westchester, and Westmont ("Other Municipalities"). It is the expectation and understanding of the Parties that Nicor and the Other Municipalities will execute agreements substantially similar to this Agreement ("Other Municipality Agreements"). Should Nicor or any of the Other Municipalities fail to execute any of 2 the Other Municipality Agreements on or before March 2, 2015, Nicor expressly reserves the right to withdraw from this Agreement. In the event Nicor elects to exercise its right to withdraw from this Agreement, it shall do so by providing the City written notice of such withdrawal, which must be provided by March 6, 2015 unless Nicor requests an extension in writing and such deadline is extended by the City in writing. Absent such written notice to the City of withdrawal by Nicor, this Agreement shall become effective on the date that is the earlier of: (a) the date that the last of the Other Municipal Agreements has been executed by Nicor and the applicable Other Municipality; or (b) March 6, 2015 (the "Effective Date"). In the event Nicor timely exercises its right to withdraw from this Agreement, the releases provided herein and the respective rights and obligations of the Parties contained in this Agreement shall not become effective. 4. Payment by Nicor. In consideration of the full and final settlement of the City's claims against Nicor, and in exchange for the releases contained in this Agreement, Nicor shall pay to the City the sum of$1,646.84. The payment shall be made by check made payable to the City and sent by overnight (next business day) mail to Aaron Cosentino, City of Elgin, 150 Dexter Court, Elgin, IL 60120 within ten (10)business days of the Effective Date. 5. Mutual Release of Claims. Each of the Parties, on its own behalf and on behalf of its agents, representatives, successors and assigns, does hereby fully, finally and forever remit, release, discharge and acquit the other Party and its respective affiliates and their respective predecessors, members, managers, shareholders, contractors, consultants, administrators, successors, directors, officers, employees, agents and assigns (the "Nicor Released Parties" in the case of Nicor, and the "City Released Parties" in the case of the City) from and against any and all claims, notices of tax liability, charges, complaints, causes of action, lawsuits, debts, demands, account liens, bonds, judgments, damages, expenses, liabilities, or controversies of any nature, kind or character whatsoever, audits, accountings, liens, forfeitures, fines, penalties, late payment fees, interest 3 charges, attorneys' fees or expenses whether asserted or unasserted, known or unknown, whether in contract or in tort or under any statute or under any legal theory, and whether in law or in equity, matured or unmatured, fixed or contingent, that previously existed, arose or could have arisen up to and including the Release Date (as defined below) relating in any way to (i) compliance with the GUT Collection Agreement, (ii) the recordkeeping for, reporting of, audit of, payment and remittance of tax in accordance with, or compliance with the MUT, or (iii) any statute, regulation, ordinance, order, directive, demand or other requirement of law applicable to such recordkeeping, reporting, auditing, payment and remittance of tax, or compliance (hereinafter, the "Mutual Released Claims"). For the avoidance of doubt, the Nicor Released Parties are not released for liability for undisputed taxes associated with recent revenues that, in the ordinary course, have not yet been remitted to the City. As used herein, "Release Date" means (a) for all Mutual Released Claims other than with respect to matters relating to addresses reviewed in the Address Reconciliation Process (as defined in Paragraph 7), the Effective Date, or (b) for all Mutual Released Claims with respect to matters relating to addresses reviewed in the Address Reconciliation Process, the Reconciliation Process End Date (as defined in Paragraph 8). Notwithstanding the foregoing, Nicor shall be permitted to credit remittances to the City after the Release Date for MUT or GUT payments made by Nicor to the City prior to the Release Date with respect to, and the foregoing release of the City Released Parties shall not extend to: (i) anticipated receipts that are later written off by Nicor in accordance with its customary accounting procedures because they have not been collected; (ii) anticipated GUT collections that are not actually collected; (iii) receipts or collections that are later refunded to customers due to bill corrections; and (iv) receipts or delivered quantities of gas that are later determined not to be taxable because they are attributable to gas service that is not subject to MUT and/or GUT if, and to the extent that, 4 Nicor has refunded the amount of such MUT or GUT payments to customers or has paid the amount of such MUT or GUT payments to another municipality. 6. Representations and Warranties. Each Party represents and warrants that: (a) such Party has all necessary power and authority to enter into this Agreement; (b) the execution of this Agreement and performance of the duties of such Party thereunder does not conflict with the organizational or governing documents or any other material agreement of such Party; (c) this Agreement has been duly and validly authorized by all necessary and appropriate proceedings of such Party, (d) this Agreement constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or law). If action of the governing body of the City or Nicor is required in order to approve this Agreement, such Party represents and warrants that it has obtained such approval. 7. Limited Address Reconciliation Process. Following the Effective Date, Nicor will cooperate with the City to complete the limited additional address reconciliation process described in Exhibit A to this Agreement ("Address Reconciliation Process"). It is expressly agreed and acknowledged that any and all disputes that arise concerning the Address Reconciliation Process or compliance with this Paragraph 7 shall not be grounds to invalidate this Agreement, and shall have no effect on the validity and effectiveness of the releases within this Agreement. 8. Reconciliation Process End Date: The day Nicor tenders to the City and Azavar the Address Correction Report(as defined in Exhibit A) shall be the"Reconciliation Process End Date." 5 9. Future Audits: The City will not initiate a new audit of Nicor's compliance with the MUT or GUT Collection Agreement at any time before one year after the Reconciliation Process End Date. 10. No Admission. This Agreement is not and shall not be construed as, or be deemed to be evidence of, an admission or concession by either Party. The Parties specifically deny any and all liability, but agree to this Agreement solely to avoid further litigation expense and inconvenience. 11. Waiver and Modification. Any waiver by any Party of any provision of this Agreement or any right hereunder shall not be deemed a continuing waiver, and shall not prevent or estop such Party (or any other Party) from thereafter enforcing such provision or right or any other provision or right. The failure of any Party to insist in any one or more instances upon the strict performance of any of the terms or provisions of this Agreement by any other Party shall not be construed as a waiver or relinquishment of any such term or provision or any other provision or right,but that term or provision shall continue in full force and effect. 12. Non-Assignment. The City represents and warrants that it has not transferred to any third party any claims it now has or ever had against the Nicor Released Parties. Nicor represents and warrants that it has not transferred to any third party any claims it now has or ever had against the City Released Parties. 13. Choice of Law. This Settlement Agreement shall, in all respects, be interpreted and enforced in accordance with the laws of the State of Illinois, without reference to principles of choice or conflict of laws. 14. Advice of Counsel. Each Party represents that before signing this Agreement it (a) has been advised by counsel of its own choosing, (b) has carefully read this Agreement, (c) has reviewed this Agreement with counsel, (d) understands each provision thereof, and (e) voluntarily entered into this Agreement with the advice of chosen counsel. 6 15. Construction. In the interpretation and construction of this Agreement, no account shall be taken of which among the Parties was the originator or drafter of this Agreement, or of any of its specific provisions. 16. Parties Shall Bear Own Costs. Each of the Parties shall be responsible for and bear their own costs, including but not limited to attorneys' fees, that were or may be incurred as a result of the dispute or the preparation, negotiation and execution of this Agreement including, without limitation, all fees, costs and expenses of its respective legal counsel and professional advisors. 17. Counterparts. This Agreement may be executed in two or more identical counterparts, and either Party may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. 18. Confidentiality. The nature, terms, conditions, and substance of this Agreement shall be kept confidential by the each Party and its members, managers, shareholders, contractors, consultants, administrators, successors, directors, officers, employees, agents, and assigns and shall not be disclosed by them at any time to any other person or entity. Notwithstanding the foregoing the Parties shall be entitled to disclose this Agreement and/or its nature, terms, conditions and substance, (a) in response to any order by any court of competent jurisdiction, (b) to its legal counsel or accountants, (c) as required by law including but not limited to the Illinois Freedom of Information Act, 5 ILCS 140/1 et seq., or the Illinois Open Meetings Act, 5 ILCS 120/1 et seq., or (d) to the extent necessary to enforce the other Party's obligations under this Agreement. On or before the Effective Date, the City shall cause Azavar to provide a written undertaking to Nicor in form and substance reasonably acceptable to it confirming Azavar's agreement to comply with the confidentiality obligations set forth in this Paragraph 18. 7 19. Severability. Should any provision of this Agreement be held invalid or illegal, the Parties agree that such invalidity or illegality shall not invalidate the whole of this Agreement, but rather the Agreement shall be construed as if it did not contain the invalid or illegal part, and the rights and obligations of the Parties shall be construed and enforced accordingly. 20. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of each of the Parties to this Agreement and their respective successors and permitted assigns. Neither Party may assign this Agreement without the prior written consent of the other Party. Any attempted assignment in violation of this Paragraph 20 shall be null and void and of no effect. 21. Integration Clause; Amendments. This Agreement (including Exhibit A hereto) contains the entire understanding of the Parties with respect to the subject matter contained herein. There are no promises, representations, warranties, covenants or undertakings governing the subject matter of this Agreement other than those expressly set forth in this Agreement. This Agreement supersedes all prior agreements and understandings among the Parties with respect to the subject matter hereof. This Agreement may not be changed, altered or modified, except in a writing signed by the Parties. IN WITNESS THEREOF, the Parties have caused this Agreement to be duly executed as of the date set forth above. THE CITY OF ELGIN ATTE T: BY: ;J eJ ii(e. ,r hial Name: David J. '.pta./ City Clerk Title: Mayor NORTHERN ILLINOIS GAS COMPANY d/b/a NICOR GAS COMPANY By: 8 Exhibit A Address Reconciliation Process 1. Address Reconciliation Process: The process defined in this Exhibit A shall be known as the "Address Reconciliation Process." 2. Defined Terms: Unless otherwise specified, all defined terms in this Exhibit A shall have the same meaning as defined in the Settlement Agreement and Release between the Parties. 3. Nicor List of Addresses: On or about April 17, 2014, Nicor provided to Azavar by electronic mail an electronic file based on Nicor's computerized customer billing records identifying (i) Nicor service addresses located within the incorporated limits of the City ("Incorporated Addresses"), (ii) Nicor service addresses located within the unincorporated limits of the City ("Unincorporated Addresses"), (iii) Nicor Incorporated Addresses that are exempt from MUT ("Exempt Addresses") and (iv) Nicor service addresses that list the City in such address, but would be subject to taxation by another community("Other Taxing Codes") (collectively, the "Nicor Address Lists"). 4. City's Request for Field Investigation and Address Challenge List: Within the forty five (45) business day period following the Effective Date, the City and/or Azavar may ask Nicor questions that relate specifically to the Nicor Address Lists, and/or request that Nicor search for additional addresses in its billing records. Within such forty five (45) business day period, the City and/or Azavar (i) may prepare a written request Nicor to undertake a field investigation of up to 10 addresses selected by the City and/or Azavar ("Field Investigation Request") and (ii) shall prepare a list of addresses that it reasonably believes may be incorrectly coded in or is missing from Nicor's Address Lists for MUT purposes (the "Address Challenge List"), and will submit the same to Nicor. For the purposes of the Field Investigation Request, a single building containing more than one unit shall count as one address. In response to the Field Investigation Request, Nicor will (i) send Nicor representatives to the City to (A) attempt to locate each of the addresses identified in the Field Investigation Request and (B) for addresses that are located, do an exterior visual inspection of the 1 buildings to attempt to determine whether the addresses receive gas service and to obtain meter numbers where exterior gas meters are found, and (ii) where exterior gas meters are found, review Nicor's billing records to determine the service addresses associated with those meters and the tax status of those service addresses. For each address on the Address Challenge List, the City or Azavar must provide either: (a) a meter number; or (b) other specific and credible information indicating that there may be a Nicor gas customer within the City that may be missing from or incorrectly coded in Nicor's Address Lists. Prior to providing the Address Challenge List to Nicor, the City shall, for each address considered for inclusion on the Address Challenge List(a) verify that such address is located within the municipal boundaries of the City; and (b) make a determination in good faith that such address is not likely to be an "address variant," defined as an address that is only slightly different from a premises identified on the Nicor Address Lists as coded to the City but with a slightly different address (e.g., a different directional or street type). The City shall not include on the Address Challenge List any address that it has not verified as being located within the City or that it has not confirmed in good faith is unlikely to be an address variant. Upon request, the City shall provide Nicor with the information relied upon by the City to verify that addresses included on the Address Challenge List are located within the municipal boundaries of the City and, with respect to addresses claimed to be missing from the Nicor Address Lists, are current customers of Nicor. 5. Nicor's Response to Field Investigation Request: Within ninety (90) business days following the Effective Date, Nicor will provide to the City and/or Azavar the results of Nicor's field investigation ("Field Investigation Report") in the form of an electronic file that lists each of the addresses that were part of the field investigation and indicates into which of the following five categories each of the addresses falls: (a) Address Found; No Gas Service at Address; (b) Address Found; No External Evidence of Gas Service; (c) Address Found; Master Meter Identified; (d) 2 Address Found; Meter Number Identified; and (e) Unable to Verify. With respect to categories (c) and (d), the Nicor Field Investigation Report will indicate whether the meter identified was correctly coded in Nicor's records to the City. 6. Nicor Response to the City's Address Challenge List: Within ninety (90) business days following the Effective Date, Nicor will review the City's Address Challenge List and report preliminary conclusions reached to the City and/or Azavar (the "Preliminary Address Correction Report"). With respect to each address on the Address Challenge List, Nicor shall use the information provided by the City and/or Azavar to conduct a good-faith search in its computerized customer billing records to determine if the address reasonably can be identified as a gas service address and, if so, whether such address is correctly coded for municipal tax purposes. In reviewing the City's Address Challenge List, except as to those addresses that are included on the City's Field Investigation Request, Nicor will be under no obligation to conduct field audits or field investigations. Instead, Nicor's response will be limited to a review of information contained within Nicor's computerized customer billing records. Except as to those addresses that are included on the City's Field Investigation Request, Nicor is under no obligation to review or respond to an address on the Address Challenge List for which none of the information described in Paragraph 4 has been provided. With respect to those addresses that are included on the City's Field Investigation Request,Nicor is under no obligation to conduct field audits or field investigations beyond the scope of the field audit described in Paragraph 4. 7. City's Response to Nicor's Conclusions: If the City believes in good faith that there are substantive errors or omissions in the Field Investigation Report and/or the Preliminary Address Correction Report affecting specific addresses evaluated, it may provide a list of such addresses and a detailed explanation of the alleged substantive errors or omissions to Nicor ("City Objections List") within twenty (20) business days of receiving the Field Investigation Report and the 3 Preliminary Address Correction Report. As to each such address, the City shall provide either a meter number or other specific and credible information supporting its good faith belief that the Field Investigation Report and/or the Preliminary Address Correction Report contain an error or omission. 8. Address Correction Report: Within forty (40) business days of the issuance of the City Objections List, Nicor will tender to the City and Azavar a final report (the "Address Correction Report") reflecting the addresses from the Field Investigation Report and/or the Address Challenge List that Nicor determined, in good faith after taking into account information, if any, timely provided to Nicor in the City's Objections List, required a change in Nicor's records, the nature of the change that was made (i.e. the previous and current coding), and the date the change was made. The Address Correction Report shall also identify, with respect to each of the Updated Addresses, the date Nicor first began remitting taxes to the City with respect to each of the Updated Addresses and the amount of MUT and GUT remitted between the date the change was made and December 31, 2014. 9. Annual Reporting. Nicor shall provide an annual report to the City on or before April 30 of 2016, 2017 and 2018 that shows, for the previous calendar year, (1) the amount of MUT and GUT, if any, remitted to the City for each address on the Address Correction Report, and (2) the total amount of MUT remitted to the City with respect to late payment charges and NSF fees. On or before April 30, 2015, Nicor shall report the total amount of MUT remitted to the City with respect to late payment charges and NSF fees between December 1, 2013 and December 31, 2014, exclusive of the past due MUT remitted to the City in or around December 2013. 4 SETTLEMENT AGREEMENT AND RELEASE This Settlement Agreement and Release ("Agreement") is made between the City of Elgin, Illinois (the "City") and Northern Illinois Gas Company d/b/a Nicor Gas Company ("Nicor"), on February 25 , 2015. The City and Nicor are sometimes referred to herein collectively as the "Parties"or individually as "Party." WITNESSETH WHEREAS, the City retained Azavar Audit Solutions, Inc. ("Azavar") to audit Nicor's payment of taxes owed under the City's Municipal Utility Tax, Title 4, Chapter 4.18 of the City's Code ("MUT"); WHEREAS, on February 24, 2014, Azavar, on behalf of the City, issued a notice of audit to Nicor; WHEREAS, Nicor gas collects municipal gas use taxes owed under the City's Municipal Gas Use Tax, Title 4, Chapter 4.19 of the City's Code ("GUT") pursuant to the Municipal Gas Use Tax Collection Agreement between the Parties dated July 1, 2012 (the "GUT Collection Agreement"); WHEREAS, in connection with the above-described audit ("Audit"), Nicor issued a summary report dated January 5, 2015 (the "Audit Summary") identifying any addresses that required a change in Nicor's records, the nature of the change that was made (i.e. the previous and current coding), and the date the change was made ("Updated Addresses"); WHEREAS, in connection with the above Audit, questions and disputes have arisen regarding whether Nicor owed unpaid amounts; WHEREAS, the Parties, without admitting any liability whatsoever to each other, and in order to avoid the expense and burden of litigation, now desire to close the Audit and to resolve 1 entirely all issues relating to the Audit and any other matters specified herein by entering into this Agreement; NOW THEREFORE, in consideration of the above premises and the mutual covenants, agreements and releases set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows: 1. Recitals. The recitals set forth above are incorporated herein by reference and are explicitly made part of this Agreement. 2. Closure of Audit(s). On the Effective Date, any open audits related to Nicor's compliance with the MUT or the GUT Collection Agreement shall be deemed to be closed. Within ten (10) business days of the Effective Date, the City shall provide to Nicor a written audit closure report containing no findings or conclusions other than that all potential issues raised, or that could have been raised,by the Audit have been resolved by this Agreement. The City shall not, directly or through any agent, initiate any future audits of Nicor's compliance with the MUT or the GUT Collection Agreement with respect to any period of time before the Release Date (as defined in Paragraph 5) or otherwise request or require Nicor to provide any information about Nicor's compliance with the MUT or the GUT Collection Agreement with respect to any period of time before the Release Date. 3. Other Municipality Agreements and Effective Date of this Agreement. The Parties acknowledge that 15 other municipalities have retained Azavar to conduct municipal tax audits involving Nicor, including: Bellwood, Cortland, Deer Park, Evanston, Genoa, Glen Ellyn, Itasca, Kirkland, Lake Zurich, Maple Park, Milledgeville, Roselle, Thornton, Westchester, and Westmont ("Other Municipalities"). It is the expectation and understanding of the Parties that Nicor and the Other Municipalities will execute agreements substantially similar to this Agreement ("Other Municipality Agreements"). Should Nicor or any of the Other Municipalities fail to execute any of 2 the Other Municipality Agreements on or before March 2, 2015, Nicor expressly reserves the right to withdraw from this Agreement. In the event Nicor elects to exercise its right to withdraw from this Agreement, it shall do so by providing the City written notice of such withdrawal, which must be provided by March 6, 2015 unless Nicor requests an extension in writing and such deadline is extended by the City in writing. Absent such written notice to the City of withdrawal by Nicor, this Agreement shall become effective on the date that is the earlier of: (a) the date that the last of the Other Municipal Agreements has been executed by Nicor and the applicable Other Municipality; or (b) March 6, 2015 (the "Effective Date"). In the event Nicor timely exercises its right to withdraw from this Agreement, the releases provided herein and the respective rights and obligations of the Parties contained in this Agreement shall not become effective. 4. Payment by Nicor. In consideration of the full and final settlement of the City's claims against Nicor, and in exchange for the releases contained in this Agreement, Nicor shall pay to the City the sum of$1,646.84. The payment shall be made by check made payable to the City and sent by overnight (next business day) mail to Aaron Cosentino, City of Elgin, 150 Dexter Court, Elgin, IL 60120 within ten(10)business days of the Effective Date. 5. Mutual Release of Claims. Each of the Parties, on its own behalf and on behalf of its agents, representatives, successors and assigns, does hereby fully, finally and forever remit,release, discharge and acquit the other Party and its respective affiliates and their respective predecessors, members, managers, shareholders, contractors, consultants, administrators, successors, directors, officers, employees, agents and assigns (the "Nicor Released Parties" in the case of Nicor, and the "City Released Parties" in the case of the City) from and against any and all claims, notices of tax liability, charges, complaints, causes of action, lawsuits, debts, demands, account liens, bonds, judgments, damages, expenses, liabilities, or controversies of any nature, kind or character whatsoever, audits, accountings, liens, forfeitures, fines, penalties, late payment fees, interest 3 charges, attorneys' fees or expenses whether asserted or unasserted, known or unknown, whether in contract or in tort or under any statute or under any legal theory, and whether in law or in equity, matured or unmatured, fixed or contingent, that previously existed, arose or could have arisen up to and including the Release Date (as defined below) relating in any way to (i) compliance with the GUT Collection Agreement, (ii) the recordkeeping for, reporting of, audit of, payment and remittance of tax in accordance with, or compliance with the MUT, or (iii) any statute, regulation, ordinance, order, directive, demand or other requirement of law applicable to such recordkeeping, reporting, auditing, payment and remittance of tax, or compliance (hereinafter, the "Mutual Released Claims"). For the avoidance of doubt, the Nicor Released Parties are not released for liability for undisputed taxes associated with recent revenues that, in the ordinary course, have not yet been remitted to the City. As used herein, "Release Date" means (a) for all Mutual Released Claims other than with respect to matters relating to addresses reviewed in the Address Reconciliation Process (as defined in Paragraph 7), the Effective Date, or (b) for all Mutual Released Claims with respect to matters relating to addresses reviewed in the Address Reconciliation Process, the Reconciliation Process End Date (as defined in Paragraph 8). Notwithstanding the foregoing, Nicor shall be permitted to credit remittances to the City after the Release Date for MUT or GUT payments made by Nicor to the City prior to the Release Date with respect to, and the foregoing release of the City Released Parties shall not extend to: (i) anticipated receipts that are later written off by Nicor in accordance with its customary accounting procedures because they have not been collected; (ii) anticipated GUT collections that are not actually collected; (iii)receipts or collections that are later refunded to customers due to bill corrections; and (iv) receipts or delivered quantities of gas that are later determined not to be taxable because they are attributable to gas service that is not subject to MUT and/or GUT if, and to the extent that, 4 Nicor has refunded the amount of such MUT or GUT payments to customers or has paid the amount of such MUT or GUT payments to another municipality. 6. Representations and Warranties. Each Party represents and warrants that: (a) such Party has all necessary power and authority to enter into this Agreement; (b) the execution of this Agreement and performance of the duties of such Party thereunder does not conflict with the organizational or governing documents or any other material agreement of such Party; (c) this Agreement has been duly and validly authorized by all necessary and appropriate proceedings of such Party, (d) this Agreement constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or law). If action of the governing body of the City or Nicor is required in order to approve this Agreement, such Party represents and warrants that it has obtained such approval. 7. Limited Address Reconciliation Process. Following the Effective Date, Nicor will cooperate with the City to complete the limited additional address reconciliation process described in Exhibit A to this Agreement ("Address Reconciliation Process"). It is expressly agreed and acknowledged that any and all disputes that arise concerning the Address Reconciliation Process or compliance with this Paragraph 7 shall not be grounds to invalidate this Agreement, and shall have no effect on the validity and effectiveness of the releases within this Agreement. 8. Reconciliation Process End Date: The day Nicor tenders to the City and Azavar the Address Correction Report (as defined in Exhibit A) shall be the"Reconciliation Process End Date." 5 9. Future Audits: The City will not initiate a new audit of Nicor's compliance with the MUT or GUT Collection Agreement at any time before one year after the Reconciliation Process End Date. 10. No Admission. This Agreement is not and shall not be construed as, or be deemed to be evidence of, an admission or concession by either Party. The Parties specifically deny any and all liability,but agree to this Agreement solely to avoid further litigation expense and inconvenience. 11. Waiver and Modification. Any waiver by any Party of any provision of this Agreement or any right hereunder shall not be deemed a continuing waiver, and shall not prevent or estop such Party (or any other Party) from thereafter enforcing such provision or right or any other provision or right. The failure of any Party to insist in any one or more instances upon the strict performance of any of the terms or provisions of this Agreement by any other Party shall not be construed as a waiver or relinquishment of any such term or provision or any other provision or right,but that term or provision shall continue in full force and effect. 12. Non-Assignment. The City represents and warrants that it has not transferred to any third party any claims it now has or ever had against the Nicor Released Parties. Nicor represents and warrants that it has not transferred to any third party any claims it now has or ever had against the City Released Parties. 13. Choice of Law. This Settlement Agreement shall, in all respects, be interpreted and enforced in accordance with the laws of the State of Illinois, without reference to principles of choice or conflict of laws. 14. Advice of Counsel. Each Party represents that before signing this Agreement it (a) has been advised by counsel of its own choosing, (b) has carefully read this Agreement, (c) has reviewed this Agreement with counsel, (d) understands each provision thereof, and (e) voluntarily entered into this Agreement with the advice of chosen counsel. 6 15. Construction. In the interpretation and construction of this Agreement, no account shall be taken of which among the Parties was the originator or drafter of this Agreement, or of any of its specific provisions. 16. Parties Shall Bear Own Costs. Each of the Parties shall be responsible for and bear their own costs, including but not limited to attorneys' fees, that were or may be incurred as a result of the dispute or the preparation, negotiation and execution of this Agreement including, without limitation, all fees, costs and expenses of its respective legal counsel and professional advisors. 17. Counterparts. This Agreement may be executed in two or more identical counterparts, and either Party may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. 18. Confidentiality. The nature, terms, conditions, and substance of this Agreement shall be kept confidential by the each Party and its members, managers, shareholders, contractors, consultants, administrators, successors, directors, officers, employees, agents, and assigns and shall not be disclosed by them at any time to any other person or entity. Notwithstanding the foregoing the Parties shall be entitled to disclose this Agreement and/or its nature, terms, conditions and substance, (a) in response to any order by any court of competent jurisdiction, (b) to its legal counsel or accountants, (c) as required by law including but not limited to the Illinois Freedom of Information Act, 5 ILCS 140/1 et seq., or the Illinois Open Meetings Act, 5 ILCS 120/1 et seq., or (d) to the extent necessary to enforce the other Party's obligations under this Agreement. On or before the Effective Date, the City shall cause Azavar to provide a written undertaking to Nicor in form and substance reasonably acceptable to it confirming Azavar's agreement to comply with the confidentiality obligations set forth in this Paragraph 18. 7 19. Severability. Should any provision of this Agreement be held invalid or illegal, the Parties agree that such invalidity or illegality shall not invalidate the whole of this Agreement, but rather the Agreement shall be construed as if it did not contain the invalid or illegal part, and the rights and obligations of the Parties shall be construed and enforced accordingly. 20. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of each of the Parties to this Agreement and their respective successors and permitted assigns. Neither Party may assign this Agreement without the prior written consent of the other Party. Any attempted assignment in violation of this Paragraph 20 shall be null and void and of no effect. 21. Integration Clause; Amendments. This Agreement (including Exhibit A hereto) contains the entire understanding of the Parties with respect to the subject matter contained herein. There are no promises, representations, warranties, covenants or undertakings governing the subject matter of this Agreement other than those expressly set forth in this Agreement. This Agreement supersedes all prior agreements and understandings among the Parties with respect to the subject matter hereof. This Agreement may not be changed, altered or modified, except in a writing signed by the Parties. IN WITNESS THEREOF, the Parties have caused this Agreement to be duly executed as of the date set forth above. THE CITY OF ELGIN T TEST: By: _di..A Name: David J. 'apt. n �' L `�. City Clerk Title: Mayor NORTHERN ILLINOIS GAS COMPANY d/b/a NICOR GAS COMPANY By: 8 Exhibit A Address Reconciliation Process 1. Address Reconciliation Process: The process defined in this Exhibit A shall be known as the "Address Reconciliation Process." 2. Defined Terms: Unless otherwise specified, all defined terms in this Exhibit A shall have the same meaning as defined in the Settlement Agreement and Release between the Parties. 3. Nicor List of Addresses: On or about April 17, 2014,Nicor provided to Azavar by electronic mail an electronic file based on Nicor's computerized customer billing records identifying (i) Nicor service addresses located within the incorporated limits of the City ("Incorporated Addresses"), (ii) Nicor service addresses located within the unincorporated limits of the City ("Unincorporated Addresses"), (iii) Nicor Incorporated Addresses that are exempt from MUT ("Exempt Addresses") and (iv) Nicor service addresses that list the City in such address, but would be subject to taxation by another community("Other Taxing Codes") (collectively,the "Nicor Address Lists"). 4. City's Request for Field Investigation and Address Challenge List: Within the forty five (45) business day period following the Effective Date, the City and/or Azavar may ask Nicor questions that relate specifically to the Nicor Address Lists, and/or request that Nicor search for additional addresses in its billing records. Within such forty five (45) business day period, the City and/or Azavar (i) may prepare a written request Nicor to undertake a field investigation of up to 10 addresses selected by the City and/or Azavar ("Field Investigation Request") and (ii) shall prepare a list of addresses that it reasonably believes may be incorrectly coded in or is missing from Nicor's Address Lists for MUT purposes (the "Address Challenge List"), and will submit the same to Nicor. For the purposes of the Field Investigation Request, a single building containing more than one unit shall count as one address. In response to the Field Investigation Request, Nicor will (i) send Nicor representatives to the City to (A) attempt to locate each of the addresses identified in the Field Investigation Request and (B) for addresses that are located, do an exterior visual inspection of the buildings to attempt to determine whether the addresses receive gas service and to obtain meter numbers where exterior gas meters are found, and (ii) where exterior gas meters are found, review Nicor's billing records to determine the service addresses associated with those meters and the tax status of those service addresses. For each address on the Address Challenge List, the City or Azavar must provide either: (a) a meter number; or (b) other specific and credible information indicating that there may be a Nicor gas customer within the City that may be missing from or incorrectly coded in Nicor's Address Lists. Prior to providing the Address Challenge List to Nicor, the City shall, for each address considered for inclusion on the Address Challenge List(a) verify that such address is located within the municipal boundaries of the City; and (b) make a determination in good faith that such address is not likely to be an "address variant," defined as an address that is only slightly different from a premises identified on the Nicor Address Lists as coded to the City but with a slightly different address (e.g., a different directional or street type). The City shall not include on the Address Challenge List any address that it has not verified as being located within the City or that it has not confirmed in good faith is unlikely to be an address variant. Upon request, the City shall provide Nicor with the information relied upon by the City to verify that addresses included on the Address Challenge List are located within the municipal boundaries of the City and, with respect to addresses claimed to be missing from the Nicor Address Lists, are current customers of Nicor. 5. Nicor's Response to Field Investigation Request: Within ninety (90) business days following the Effective Date, Nicor will provide to the City and/or Azavar the results of Nicor's field investigation ("Field Investigation Report") in the form of an electronic file that lists each of the addresses that were part of the field investigation and indicates into which of the following five categories each of the addresses falls: (a) Address Found; No Gas Service at Address; (b) Address Found; No External Evidence of Gas Service; (c) Address Found; Master Meter Identified; (d) 2 Address Found; Meter Number Identified; and (e) Unable to Verify. With respect to categories (c) and (d), the Nicor Field Investigation Report will indicate whether the meter identified was correctly coded in Nicor's records to the City. 6. Nicor Response to the City's Address Challenge List: Within ninety (90) business days following the Effective Date, Nicor will review the City's Address Challenge List and report preliminary conclusions reached to the City and/or Azavar (the "Preliminary Address Correction Report"). With respect to each address on the Address Challenge List, Nicor shall use the information provided by the City and/or Azavar to conduct a good-faith search in its computerized customer billing records to determine if the address reasonably can be identified as a gas service address and, if so, whether such address is correctly coded for municipal tax purposes. In reviewing the City's Address Challenge List, except as to those addresses that are included on the City's Field Investigation Request, Nicor will be under no obligation to conduct field audits or field investigations. Instead,Nicor's response will be limited to a review of information contained within Nicor's computerized customer billing records. Except as to those addresses that are included on the City's Field Investigation Request, Nicor is under no obligation to review or respond to an address on the Address Challenge List for which none of the information described in Paragraph 4 has been provided. With respect to those addresses that are included on the City's Field Investigation Request, Nicor is under no obligation to conduct field audits or field investigations beyond the scope of the field audit described in Paragraph 4. 7. City's Response to Nicor's Conclusions: If the City believes in good faith that there are substantive errors or omissions in the Field Investigation Report and/or the Preliminary Address Correction Report affecting specific addresses evaluated, it may provide a list of such addresses and a detailed explanation of the alleged substantive errors or omissions to Nicor ("City Objections List") within twenty (20) business days of receiving the Field Investigation Report and the 3 Preliminary Address Correction Report. As to each such address, the City shall provide either a meter number or other specific and credible information supporting its good faith belief that the Field Investigation Report and/or the Preliminary Address Correction Report contain an error or omission. 8. Address Correction Report: Within forty (40) business days of the issuance of the City Objections List, Nicor will tender to the City and Azavar a final report (the "Address Correction Report") reflecting the addresses from the Field Investigation Report and/or the Address Challenge List that Nicor determined, in good faith after taking into account information, if any, timely provided to Nicor in the City's Objections List, required a change in Nicor's records, the nature of the change that was made (i.e. the previous and current coding), and the date the change was made. The Address Correction Report shall also identify, with respect to each of the Updated Addresses, the date Nicor first began remitting taxes to the City with respect to each of the Updated Addresses and the amount of MUT and GUT remitted between the date the change was made and December 31,2014. 9. Annual Reporting. Nicor shall provide an annual report to the City on or before April 30 of 2016, 2017 and 2018 that shows, for the previous calendar year, (1) the amount of MUT and GUT, if any, remitted to the City for each address on the Address Correction Report, and (2) the total amount of MUT remitted to the City with respect to late payment charges and NSF fees. On or before April 30, 2015, Nicor shall report the total amount of MUT remitted to the City with respect to late payment charges and NSF fees between December 1, 2013 and December 31, 2014, exclusive of the past due MUT remitted to the City in or around December 2013. 4