APPENDIX B – FRANCHISESAPPENDIX B – FRANCHISES\GREELEY GAS COMPANY (GAS FRANCHISE)

ORDINANCE NO. 1009

AN ORDINANCE GRANTING TO GREELEY GAS COMPANY, A DIVISION OF ATMOS ENERGY CORPORATION, ITS SUCCESSORS AND ASSIGNS, A GAS FRANCHISE, PRESCRIBING THE TERMS THEREOF, PROVIDING FOR A FRANCHISE PAYMENT TO BE MADE TO THE CITY CF DE SOTO, KANSAS AND REPEALING ALL ORDINANCES OR PARTS OF ORDINANCES INCONSISTENT OR CONFLICTING WITH THE TERMS THEREOF.

Section 1. Franchise Granted. In consideration of the benefits to be derived by the City of De Soto, Kansas (city) and its inhabitants, there is hereby granted to Greeley Gas Company, a division of Atmos Energy Corporation (company), the company being a Texas corporation which has registered to do business in the State of Kansas for the purposes contemplated by this ordinance, operating a system for the sale and distribution of gas in the State of Kansas, the right, privilege, and authority for a period of 15 years from the effective date of this ordinance, subject to the conditions hereinafter stated, the lawful rules and regulations of the Kansas Corporation Commission, and any other regulatory agency having jurisdiction over the company, and the laws of the State of Kansas, to occupy and use present and future streets, alleys, avenues, roads, bridges and other public places in the city, including any territory hereafter added thereto or coming under the city=s jurisdiction for the placing and maintaining of pipes and all other equipment necessary to carry on the business of selling and distributing natural gas for all purposes to the City of De Soto, Kansas, and its inhabitants, and through the city and beyond the limits there of; to obtain the natural gas from any source available; to do all things necessary or proper to carry on the natural gas business in the city of De Soto, Kansas.

Section 2. Placement, Relocation, and Excavation of Facilities. All mains, service pipes and other equipment necessary to carry on the business of selling and distributing natural gas, which shall be laid or installed under this franchise, shall be located and laid so as not to obstruct or interfere with any public or private water pipes, drains, sewers, structures, or other public or private improvements already installed, and with the lawful use of the streets, alleys, avenues, roads and other public places of the city. Company shall, at its own expense and in a manner reasonably satisfactory to the city, replace disturbed pavement or surface in as good or better a condition as before the work was commenced.

In placing, relocating, and excavating facilities in any easement or on public property in the city, the company will first obtain a permit from the city for such work activity. Permits for emergency excavations may be obtained upon the completion of repairs.

In the event the city should propose to construct, change, or repair any water mains, sewers, pipes, drains, or other public improvements or change the grade of any of the streets, alleys, roads, or public grounds where the company is using the streets, alleys, roads, or public grounds for its mains or other pipes, or equipment then the city shall give reasonable notice of such contemplated changes or repairs to the company and the company shall raise, lower, or relocate at company=s own expense the mains, pipes or other equipment unless funds are available for reimbursing company for such expenses by reason of any laws, rules and regulations, state or federal, applicable to the project necessitating such construction, changes, or repairs.

The company shall furnish the city with a map showing the size and location of its distribution system in the city and, on an annual basis, shall provide the city with updates of the maps noting any changes, additions or deletions in the gas distribution system, as from time to time occurs.

Section 3. Consideration of Franchise. In consideration of the granting of this franchise, and in lieu of any city occupation license or revenue taxes, excluding any ad valorem taxes or special assessments, the company shall pay to the city during the term of this franchise semiannually, in arrears, five percent of the company=s gross receipts for gas sold and/or transported by the company to all customers located in the present or future corporate boundaries of the city. The company shall provide a report and payment to the city on or before the last day of February and August of each year following the effective date hereof. Payments for partial periods, and the accompanying report, covered under the franchise at the beginning and at the end of the term shall be prorated and paid as stated above.

The city or its authorized representatives shall have access and the right to examine at reasonable times and with reasonable notice all books, receipts, files, records and documents of the company necessary to verify that payments have been correctly calculated and paid. If errors in the calculation of revenues are discovered, company shall make payments based on corrected calculations, including interest as authorized by K.S.A. 16-201 and any amendments thereto.

Section 4. Modification. Should either party desire to modify the terms and provisions here of, it shall provide written notice to the other party of such intent. Absent medication due to official action by a regulatory body, including but not limited to, the Kansas Corporation Commission, with regard to the specific rights and obligations hereunder, any modification shall be considered a discretionary modification. Should the Kansas Corporation Commission take any action with respect to this ordinance which would or may preclude the company from recovering from its customers the compensation for the franchise fees provided for hereunder, the parties hereto shall renegotiate the terms of this ordinance. Any modification to any provision hereof will be made by ordinance as prescribed by K.S.A. 12-2002, et seq. and any amendments thereto. The parties agree that any discretionary modification hereof shall not be made more frequently than annually.

Section 5. Service Practices. During the term of this franchise, the company shall furnish gas to the city and its inhabitants in accordance with the terms of this franchise, the rates, charges, rules and regulations now on file with the Kansas Corporation Commission, or such revisions of rates, charges, rules and regulations as may be lawfully established from time to time in accordance with the laws of the State of Kansas and the United States Government.

Company shall, in accordance with various federal and state civil rights legislation, at all times during the term of its franchise, furnish gas to all persons, without discrimination on the basis of race, ethnicity, color, religion, gender, national origin, age, marital status, medical condition, or disability.

It is recognized that the natural gas to be delivered hereunder is to be supplied from company pipeline systems transporting gas from various sources of supply; and the company, by its acceptance of this franchise as hereinafter provided does obligate itself to furnish the natural gas in such quantity and for such length of time warranted by the terms hereof as the company=s sources and pipelines are reasonably capable of supplying.

Section 6. Indemnification. The company, its successors and assigns, in the construction, maintenance, and operation of its gas system, shall use all reasonable and proper precaution to avoid damage or injury to persons or property and shall hold and save harmless the city, its officers, agents, and employees, from any and all damage, injury, and expense caused by any negligence of the company, its successors and assigns, or its agents or servants.

Section 7: Assignment. The company shall have the right to assign this franchise, and the rights and privileges granted hereunder to any person, firm or corporation subject to the approval of the Kansas Corporation Commission of the State of Kansas or anybody having jurisdiction over such assignment and any such assignee by accepting such assignment shall be bound by the terms and provisions contained herein. The city shall be notified by the company of all such assignments in writing and an authenticated copy of documents making and accepting any assignments shall be furnished to the city clerk of the City of De Soto.

Section 8. Savings. If any portion of this franchise ordinance is declared illegal or void by a court of competent jurisdiction, the remainder of the ordinance shall survive and shall not be affected thereby.

Section 9. Acceptance by the Company. The company shall file with the city its unconditional written acceptance of this ordinance. The ordinance shall become effective and be in full force and shall become a binding contract between the parties hereto, their successors and assigns from and after the expiration of 60 days from its final passage, approval, and publication as required by law. In the event company fails to file such acceptance but continues to occupy and use the streets, alleys, easements and public property of the city for replacing and maintaining of its equipment and property for the purpose of carrying on business of selling and distributing natural gas to customers within the city after the effective date of this ordinance, then company shall be deemed to have accepted all the provisions of this ordinance and shall be bound thereby.

This ordinance when accepted as above provided, shall constitute the entire agreement between the city and the company relating to this franchise and the same shall supersede and cancel any prior understandings, agreements, or representation regarding the subject matter hereof or involved in negotiations pertaining hereto whether oral or written.

(4-24-97)