APPENDIX I - Franchises

ORDINANCE NO. 523, PASSED SEPTEMBER 22, 2005, GRANTING A NONEXCLUSIVE FRANCHISE TO ATMOS ENERGY CORPORATION


ARTICLE 1 - Definitions
For the purpose of this franchise, the following words and phrases shall have the meaning given in this Article.  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 mandatory and may is permissive.  Words not defined in this Article shall be given their common and ordinary meaning.
1.1    "Board" or "Board of Trustees" refers to and is the legislative body of the Town of Eaton.
1.2    "Company" refers to and is Atmos Energy Corporation, a Texas and Virginia corporation, and its successors and assigns.
1.3    "Distribution Facilities" refer to and are only those facilities reasonably necessary to provide gas within the Town.
1.4    "Facilities" refer to and are all facilities reasonably necessary to provide gas into, within and through the Town and include plants, works, systems, lines, equipment, pipes, mains, underground links, gas compressors and meters.
1.5    "Gas" or "Natural Gas" refers to and is such gaseous fuels as natural, artificial, synthetic, liquefied natural, liquefied petroleum, manufactured, or any mixture thereof.
1.6    "PUC" refers to and is The Public Utilities Commission of the State of Colorado or other authority succeeding to the regulatory powers of The Public Utilities Commission of the State of Colorado.
1.7    "Revenues" refer to and are those amounts of money which the Company receives from its customers within the Town for the sale of gas under rates, temporary or permanent, authorized by the PUC and represents amounts billed under such rates as adjusted for refunds, the net write-off of uncollectible accounts, corrections or other regulatory adjustments.
1.8    "Streets and Other Public Places" refer to and are streets, alleys, viaducts, bridges, roads, lanes, easements, public ways and other public places in said Town.
1.9    "Town" refers to and is the Town of Eaton, Weld County, Colorado, and includes the territory as currently is or may in the future be included within the boundaries of the Town of Eaton.


ARTICLE II - Grant of Franchise

2.1    Grant of Franchise.  The Town hereby grants to the Company, for the period specified and subject to the conditions, terms and provisions contained in this Ordinance, the right to furnish, transport, sell and distribute gas to the Town and to all persons, businesses and industries within the Town, the right to acquire, construct, install, locate, maintain, operate and extend into, within and through the Town all facilities reasonably necessary to provide gas to the Town and to all persons, businesses and industries within the Town and in the territory adjacent thereto; and the right to make reasonable use of all streets and other public places as may be necessary to carry out the terms of the Ordinance.
2.2    Terms of Franchise.  The term of this franchise shall be for twenty (20) years, beginning October 25, 2005, and expiring  October 25, 2025.


ARTICLE III - Franchise Fee

3.1    Franchise Fee.  In consideration for the grant of this franchise, the Company shall collect and remit to the Town a sum equal to three percent (3%) of the revenues derived annually from the sale of gas within the Town, excluding the amount received from the Town itself for gas service furnished it.  The Franchisee fee prescribed herein shall be paid to the Town quarterly on or before the 30th day after the end of each calendar quarter after the effective date of the franchise.  Payments at the beginning and end of the franchise shall be prorated.
3.2    Franchise Fee Payment in Lieu of Other Fees.  Payment of the franchise fee by the Company is accepted by the Town in lieu of any occupancy tax, license tax, permit charge, inspection fee or similar tax, assessment or excise upon the pipes, mains, meters or other personal property of the Company or on the privilege of doing business or in connection with the physical operation thereof, but does not exempt the Company from any lawful taxation upon its real property or any other tax not related to the franchise or the physical operation thereof.


ARTICLE IV - Conduct of Business

4.1    Conduct of Business.  The Company may establish, from time to time, such rules, regulations, terms and conditions governing the conduct of its business as shall be reasonably necessary to enable the Company to exercise its rights and perform its obligations under this franchise; provided, however, that such rules, regulations, terms and conditions shall not be in conflict with the laws of the State of Colorado.
4.2    Tariffs on File.  The Company shall keep on file in its nearest office copies of all its tariffs currently in effect and on file with the PUC.  Said tariffs shall be available for inspection by the public.
4.3    Compliance with PUC Regulations.  The Company shall comply with all rules and regulations adopted by the PUC.
4.4    Compliance with Company Tariffs.  The Company shall furnish gas within the Town to the Town and to all persons, businesses and industries within the Town at the rates and under the terms and conditions set forth in its tariffs on file with the PUC.
4.5    Applicability of Company Tariffs.  The Town and the Company recognize that the lawful provisions of the Company's tariffs on file and in effect with the PUC are controlling over any inconsistent provision in this franchise dealing with the same subject matter.


ARTICLE V - Construction, Installation & Operation of Company Facilities

5.1    Location of Facilities.  Company facilities shall not unreasonably interfere with the Town's water mains, sewer mains or other municipal use of streets and other public places.  Company facilities shall be located so as to cause minimum interference with public use of streets and other public places and shall be maintained in good repair and condition.
5.2    Excavation and Construction.  All construction, excavation, maintenance and repair work done by the Company shall be done in a timely and expeditious manner that minimizes the inconvenience to the public and individuals.  All such construction, excavation, maintenance and repair work done by the Company shall comply with all applicable state and federal codes.  All public and private property whose use conforms to restrictions in easements disturbed by Company construction or excavation activities shall be restored as soon as practicable by the Company at its expense to substantially its former condition.  The Company shall comply with the Town's requests for reasonable and prompt action to remedy all damage to private property adjacent to streets or dedicated easements where the Company is performing construction, excavation, maintenance or repair work.  The Town reserves the right to restore property and remedy damages caused by Company activities at the expense of the Company in the event the Company fails to perform such work within a reasonable time after notice from the Town.
5.3    Relocation of Company Facilities.  If at any time the Town requests the Company to relocate any distribution gas main or service connection installed or maintained in streets or other public places in order to permit the Town to change street grades, pavements, sewers, water mains or other Town works, such relocation shall be made by the Company at its expense.  The Company is not obligated hereunder to relocate any facilities at its expense, which were installed in private easements obtained by the Company, the underlying fee of which was, at some point subsequent to installation, transferred to the Town.  Following relocation, the Company, at its expense, shall restore all property to substantially its former condition.
5.4    Service to New Areas.  If during the term of this franchise the boundaries of the Town are expanded, the Company may extend service to the newly incorporated areas in accordance with Company’s main extension policy then in effect under Company’s tariffs on file with the PUC. Service to annexed areas shall be in accordance with the terms of this franchise Ordinance.
5.5    Restoration of Service.  In the event the Company's gas system, or any part thereof, is partially or wholly destroyed or incapacitated, the Company shall use due diligence to restore its system to satisfactory service within the shortest practicable time.
5.6    Supply and Quality of Service.  The Company shall make available an adequate supply of gas to provide service in the Town.  The Company's facilities shall be of sufficient quality, durability and redundancy to provide adequate and efficient gas service to the Town.
5.7    Safety Regulations by the Town.  The Town reserves the right to adopt, from time to time, reasonable regulations in the exercise of its police power which are necessary to ensure the health, safety and welfare of the public, provided that such regulations are not destructive of the rights granted herein.  The Company agrees to comply with all such regulations, in the construction, maintenance and operation of its facilities and in the provision of gas within the Town.
5.8     Inspection, Audit and Quality Control.  The Town shall have the right to inspect, at all reasonable times, any portion of the Company's system used to serve the Town and its residents.  The Town also shall have the right to inspect and conduct an audit of Company records relevant to compliance with any terms of this Ordinance at all reasonable times.  The Company agrees to cooperate with the Town in conducting the inspection and/or audit and to correct any discrepancies affecting the Town's interest in a prompt and efficient manner.


ARTICLE VI - Saving Clause

6.1    Saving Clause.  If a court of competent jurisdiction declares any portion of this franchise to be illegal or void, the remainder of the Ordinance shall survive and not be affected thereby.


ARTICLE VII - Compliance

7.1    Compliance With Federal, State and Local Laws.  The Company shall comply with all Federal, State and Local laws.  The Company shall use its best efforts to take measures which will result in its facilities meeting the standards required by applicable Federal and State air and water pollution laws.  Upon the Town’s request and at intervals not less than every twelve (12) months, the Company will provide the Town with a status report of such measures.


ARTICLE VIII - Indemnification of the Town

8.1    Town Held Harmless.  The Company shall indemnify, defend, and save the Town harmless from and against all liability or damage and all claims or demands whatsoever in nature arising out of the operations of the Company within the Town pursuant to this franchise and the securing of and the exercise by the Company of the franchise rights granted in this ordinance and shall pay all reasonable expenses arising there from.  The Town and the Company will each provide prompt written notice to the other of the pendency of any claim or action against either party arising out of the exercise by the Company of its franchise rights.  The Company and the Town will each be permitted, at its own expense, to appear and defend or to assist in defense of such claim.  Notwithstanding any provision hereof to the contrary, neither the Town nor the Company shall be obligated to indemnify, defend or hold the other party harmless to the extent any claim, demand or lien arises out of or in connection with any negligent act or failure to act of the other party or any of its officers or employees.  If litigation arises between the parties, the prevailing party shall be entitled to recover reasonable attorney’s fees and costs. 
8.2    Payment of Expenses Incurred by Town in Relation to Ordinance.   At the Town’s option, the Company shall pay in advance or reimburse the Town for actual expenses incurred in publication of notices and ordinances, and for photocopying of documents arising out of the negotiations or process for obtaining the franchise.


ARTICLE IX - Transfer of Franchise

9.1    Consent of Town Required.  The Company shall not transfer or assign any rights under this franchise to a third party, excepting only corporate reorganizations of the Company not including a third party, unless the Town shall approve such transfer or assignment as required by law.  Approval of the transfer or assignment shall not be unreasonable withheld by the Town.


ARTICLE X - Forfeiture and Cure

10.1  Forfeiture.  Both the Company and the Town recognize there may be circumstances whereby compliance with the provisions of this franchise is impossible or is delayed because of circumstances beyond the Company’s control.  In this instance, the Company shall use its best efforts to comply in a timely manner and to the extent possible.  In the event of a substantial breach by Company of any material provision of this ordinance, the Town, acting by and through its Town Board, may terminate the franchise and rights granted to Company hereunder; provided, however, that such termination shall not be effective unless and until the procedures described below have been followed: 10.2  Judicial Review.   Any such declaration of forfeiture shall be subject to judicial review as provided by law in the District Court of Weld County, Colorado.


ARTICLE XI - Amendments

11.1  Amendments to Franchise.  At any time during the term of this franchise, the Town, through its Town Board, or the Company may propose amendments to this franchise by giving thirty (30) days written notice to the other of the proposed amendment (s) desired and both parties thereafter, through their designated representatives, will negotiate within a reasonable time in good faith in an effort to agree on mutually satisfactory amendment(s), unless otherwise provided by this franchise or law.


ARTICLE XII - Force Majeure

Notwithstanding anything expressly or impliedly to the contrary contained herein, in the event Company is prevented, wholly or partially, from complying with any obligation or undertaking contained herein by reason of any event of force majeure, then, while so prevented, compliance with such obligations or undertakings shall be suspended, and the time during which Company is so prevented shall not be counted against Company for any reason.  The term “force majeure,” as used herein, shall mean any cause not reasonably within Company control and includes, but is not limited to, acts of God, strikes, lockouts, wars, riots, orders, or decrees of any lawfully constituted federal, state or local body; contagions or contaminations hazardous to human life or health; fires, storms, floods, wash-outs, explosions, breakages or accidents to machinery or lines of pipe; inability to obtain or the delay in obtaining rights-of-way, materials, supplies, or labor permits; temporary failures of gas supply; or necessary repair, maintenance or replacement of facilities used in the performance of the obligations contained in this Ordinance.