APPENDIX

Editor’s note: This appendix consists of: (1) Ordinance No. 660 adopted on July 24, 1979, authorizing the city to become a constituent member municipality of the Arkansas River Power Authority, a governmental entity and a political subdivision of the State of Colorado; and (2) the organic contract creating and establishing that authority. Words appearing in [brackets] have been added for clarity.

Art. I. Ordinance No. 660 of July 24, 1979, Authorizing the City to Become a Member

Art. II. Organic Contract of November 8, 1979, Establishing the Authority

ARTICLE I. ORDINANCE NO. 660 OF JULY 24, 1979,
AUTHORIZING THE CITY TO BECOME A MEMBER

ORDINANCE NO. 660

AN ORDINANCE CONCERNING THE DEVELOPMENT OF ELECTRIC ENERGY RESOURCES AND THE PRODUCTION AND TRANSMISSION OF ELECTRIC ENERGY; AUTHORIZING THE ESTABLISHMENT OF THE ARKANSAS RIVER POWER AUTHORITY AS A SEPARATE GOVERNMENTAL ENTITY AND AS A SUCCESSOR TO THE EXISTING NONPROFIT CORPORATION OF THE SAME NAME; AND AUTHORIZING THE MAKING OF AN ORGANIC CONTRACT FOR SUCH PURPOSES.

WHEREAS, the Cities of La Junta, Lamar, Las Animas, Trinidad and Walsenburg, Colorado, and the City of Raton, New Mexico (“Municipalities”), each owns and operates electric systems and are members of the Arkansas River Power Authority, a non-profit Colorado corporation (“Non-Profit Corporation”), which was organized to provide substantially the same function, service and facility as the governmental entity to be authorized by this Ordinance; and

WHEREAS, the New Mexico Joint Powers Agreements Act, Section 11-1-1 et seq., NMSA 1978 (“New Mexico Joint Powers Agreements Act”), provides that the City of Raton may contract with municipalities in an adjoining state to exercise any power common to the contracting parties if authorized by its Governing Body; and

WHEREAS, the City of Raton, after extensive study of the matter, deems it in the best interests of the City to exercise the powers granted it by the New Mexico Joint Powers Agreements Act and to contract together with the other Municipalities, pursuant to Section 29-1-204, C.R.S. 1973, which was enacted by the 1975 Colorado General Assembly, to establish a separate governmental entity, to be the successor to the Non-Profit Corporation and, as such successor, to assist in supplying the electric energy requirements of the Municipalities.

NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF RATON, NEW MEXICO:

Section 1.

Contingent only upon similar authorizing action being taken by each of the other Municipalities and the approval of the terms and conditions of the Organic Contract, whose execution is authorized by this Ordinance, by the Director of the [state] Department of Finance and Administration, the City shall contract with the other Municipalities to establish a separate governmental entity to effect the development of electric energy resources and production and transmission of electric energy in whole or in part for the benefit of the inhabitants of the contracting Municipalities, the governmental entity to be known as the Arkansas River Power Authority (“Authority”) by the execution and delivery of the ORGANIC CONTRACT ESTABLISHING THE ARKANSAS RIVER POWER AUTHORITY AS A SEPARATE GOVERNMENTAL ENTITY (“Organic Contract”) in the form of said Organic Contract presented to this meeting and a copy of which shall be retained on file by the City Clerk; and the Mayor and City Clerk are hereby authorized and directed to execute said Contract on behalf of the City.

Section 2.

Upon the effective date of the Organic Contract, the Authority is acknowledged and recognized as the successor to the Non-Profit Corporation and the City does hereby approve, consent and agree that all contracts, agreements, indemnifications, obligations, undertakings or other instruments (“Existing Documents”) which this Municipality has heretofore entered into with or on behalf of the Non-Profit Corporation shall, where applicable, be assigned and transferred to the Authority by the Non-Profit Corporation and shall after such transfer and assignment remain in full force and effect according to their respective terms and conditions which the Existing Documents shall include; and the Mayor is hereby authorized to execute any consents to such assignment which may be requested by the Authority.

Section 3.

If any section, paragraph, clause or provision of this Ordinance shall be held invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any other provision of this Ordinance.

Section 4.

All ordinances, resolutions, bylaws and regulations of the City in conflict with this Ordinance are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed to revive any ordinance, resolution, bylaw, or regulation, or part thereof, heretofore repealed.

Section 5.

This Ordinance shall be in full force and effect as provided by law.

Section 6.

Pursuant to Section 3-17-5, NMSA 1978, the title and a general summary of the subject matter contained in this ordinance shall be published in substantially the following form:

(Form of Summary of Ordinance for Publication)

CITY OF RATON, NEW MEXICO

NOTICE OF ADOPTION OF ORDINANCE NO. _______-1979

Notice is hereby given of the title and of a general summary of the subject matter contained in Ordinance No. ______, duly adopted and approved by the City Commission of the City of Raton, New Mexico, on ____________, 1979. Complete copies of Ordinance No. ______ are available for public inspection during the normal and regular business hours of the City Clerk, Municipal Building, 131 North Second Street, Raton, New Mexico.

The title of Ordinance No.______-1979 is:

AN ORDINANCE CONCERNING THE DEVELOPMENT OF ELECTRIC ENERGY RESOURCES AND THE PRODUCTION AND TRANSMISSION OF ELECTRIC ENERGY; AUTHORIZING THE ESTABLISHMENT OF THE ARKANSAS RIVER POWER AUTHORITY AS A SEPARATE GOVERNMENTAL ENTITY AND AS A SUCCESSOR TO THE EXISTING NON-PROFIT CORPORATION OF THE SAME NAME; AND AUTHORIZING THE MAKING OF AN ORGANIC CONTRACT FOR SUCH PURPOSES.

The following is a general summary of the subject matter contained in Ordinance No. ______:

Preambles recite such matters as the fact that the Cities of La Junta, Lamar, Las Animas, Trinidad and Walsenburg, Colorado and the City of Raton, New Mexico, each owns and operates electric systems and are members of the Arkansas River Power Authority, a non-profit Colorado corporation (“Non-Profit Corporation”); that the Non-Profit Corporation was organized to provide substantially the same function, service and facility as the governmental entity to be authorized by the Ordinance; refer to the statutory authority by which Raton may contract with the Colorado municipalities; recite the determination of the Governing Body that it is in the best interests of the City of Raton to contract together with the other Municipalities to establish a separate governmental entity to be known as the Arkansas River Power Authority (“Authority”) to be a successor to the Non-Profit Corporation.

Section 1 provides that, contingent on similar authorizing action by the other Municipalities and the approval of the terms and conditions of the Organic Contract, whose execution is authorized by this Ordinance, by the Director of the Department of Finance and Administration, the City of Raton contract with the other Municipalities to establish a separate governmental entity to succeed the Non-Profit Corporation by the execution and delivery of the Organic Contract and authorizes and directs the Mayor and City Clerk to execute said Contract on behalf of the City.

Sections 3 through 6 provide severability and repealer clauses, an effective date and provide for a summary for publication.

This notice constitutes compliance with Chapter 350, Laws of New Mexico, 1975.

Witness my hand and the seal of the City of Raton, New Mexico, this ____ day of ____________, 1979.

__________________________________

City Clerk

(SEAL)

(End of Form of Summary of Ordinance for Publication)

PASSED, ADOPTED, SIGNED AND APPROVED THIS 24th DAY OF JULY, 1979.

/s/ Mike J. Pappas

Mayor

CITY OF RATON,

NEW MEXICO

(SEAL)

ATTEST:

/s/ Eva Mae Sproule

City Clerk

ARTICLE II. ORGANIC CONTRACT OF NOVEMBER 8, 1979, ESTABLISHING THE AUTHORITY
ORGANIC CONTRACT, ESTABLISHING ARKANSAS
RIVER POWER AUTHORITY AS A SEPARATE
GOVERNMENTAL ENTITY

THIS ORGANIC CONTRACT, made and entered into effective on the 8th day of November, 1979, by and among the parties of this Contract which are: CITY OF LA JUNTA, COLORADO, a municipal corporation of the State of Colorado (“La Junta”), CITY OF LAMAR, COLORADO, a municipal corporation of the State of Colorado (“Lamar”), CITY OF LAS ANIMAS, COLORADO, a municipal corporation of the State of Colorado (“Las Animas”), CITY OF TRINIDAD, COLORADO, a municipal corporation of the State of Colorado (“Trinidad”), CITY OF WALSENBURG, COLORADO, a municipal corporation of the State of Colorado (“Walsenburg”), CITY OF RATON, NEW MEXICO, a municipal corporation of the State of New Mexico (“Raton”), and the ARKANSAS RIVER POWER AUTHORITY, a non-profit corporation created under the laws of the State of Colorado (the “Non-Profit Corporation”). When specificity is not required, individual municipal corporations which are parties hereto will hereinafter be referred to as a “Municipality”; and the municipal corporations located in the State of Colorado will be referred to as the “Colorado Municipalities”; and all of such municipal corporations located in the State of Colorado will be referred to as the “Municipalities”.

WITNESSETH:

WHEREAS, La Junta owns and operates a municipal electric system which supplies electric power and energy at retail to users located within the city limits of La Junta and the adjacent service area of the La Junta electric system; and

WHEREAS, Lamar owns and operates a municipal electric system which supplies electric power and energy at retail to users located within the city limits of Lamar and the adjacent service area of the Lamar electric system; and

WHEREAS, Las Animas owns and operates a municipal electric system which supplies electric power and energy at retail to users located within the city limits of Las Animas and the adjacent service area of the Las Animas electric system; and

WHEREAS, Trinidad owns and operates a municipal electric system which supplies electric power and energy at retail to users located within the city limits of Trinidad; and

WHEREAS, Walsenburg owns and operates a municipal electric system which supplies electric power and energy at retail to users located within the city limits of Walsenburg; and

WHEREAS, Raton owns and operates a municipal electric system which supplies electric power and energy at retail to users located within the city limits of Raton and the adjacent service area of the Raton electric system; and

WHEREAS, the Municipalities heretofore created the Non-Profit Corporation as their agency and instrumentality, to investigate, plan, develop and supply their electric power and energy requirements; and

WHEREAS, Raton is a member of the Non-Profit Corporation and, as such, fully participated in the activities of the Non-Profit Corporation; and

WHEREAS, due to Raton’s geographic proximity to the Colorado Municipalities and the relative size and operating characteristics of its electric system, Raton and the Colorado Municipalities possess a commonality of interests with respect to the joint development of electric energy resources and the production and transmission thereof; and

WHEREAS, Raton is a City organized and existing under the laws of the State of New Mexico, a state sharing a common border with the State of Colorado; and

WHEREAS, Raton is specifically authorized to become a constituent member Municipality of the power authority created hereunder by virtue of C.R.S. 1973, § 29-1-204, as amended, inasmuch as it is located not more than fifteen miles from the common border of the States of Colorado and New Mexico, and pursuant to N.M.S. 1978, Annotated, § 11-1-1 through § 11-1-7; and

WHEREAS, the Municipalities now desire to establish a power authority as a separate governmental entity, pursuant to the provisions of C.R.S. 1973, § 29-1-204, as amended, to be the successor to the Non-Profit Corporation and as its successor to effect the development of electric energy resources and the production and transmission of electric energy in whole or in part for the benefit of the inhabitants of the Municipalities;

NOW, THEREFORE, the Parties agree as follows:

1. EFFECTIVE DATE: This Contract shall become effective when it has been duly executed by all the Municipalities and the Non-Profit Corporation and has been duly filed with the Colorado Division of Local Government.

2. ESTABLISHMENT OF ARKANSAS RIVER POWER AUTHORITY: The Municipalities do hereby establish a separate governmental entity, to be known as Arkansas River Power Authority (the “Authority”), to be used by the Municipalities to effect the development of electric energy resources and the production and transmission of electric energy in whole or in part for the benefit of the inhabitants of the Municipalities.

2.1 PURPOSE: The purpose of the Authority is to conduct its business and affairs for the benefit of the Municipalities and their inhabitants and to provide the wholesale electric power and energy requirements of the Municipalities pursuant to the organizational concept set forth in this Organic Contract and pursuant to subsequent agreements to be executed by the Authority and the Municipalities which are not inconsistent with this Organic Contract or this Organic Contract as amended.

2.2 FUNCTIONS AND RESPONSIBILITIES OF THE AUTHORITY: The functions and responsibilities of the Authority, subject to the provisions of Section 2.4 hereunder, are as follows:

(i) To provide comprehensive planning for obtaining the wholesale electric power and energy requirements of the Municipalities and the transmission thereof to mutually agreed upon load centers.

(ii) To undertake or coordinate and monitor the design, construction and operation of facilities necessary for obtaining the wholesale electric power and energy requirements of the Municipalities and the transmission thereof, upon approval by the Authority’s Board of Directors and, if required, the approval of the Municipalities, as described and provided herein under Section 2.4.

(iii) To plan for and undertake or coordinate and monitor the economic dispatching of the power and energy supplied by the system of the Authority and supplied by the electric systems of the individual Municipalities and other entities to which such systems are interconnected, pursuant to subsequent agreement(s) between the Municipalities, the Authority and any other entity.

(iv) To purchase electric power and energy for the benefit of the inhabitants of the Municipalities from any federal power marketing supplier or any other supplier, upon approval by the Authority’s Board of Directors and, if required, the approval of the Municipalities, as described and provided herein under Section 2.4.

(v) To acquire, construct, own, reconstruct, improve, rehabilitate, repair, operate and maintain generating plants and transmission systems, or interests therein, for the purpose of delivering to the Municipalities electric power and energy generated therefrom or purchased from other suppliers, upon approval by the Authority’s Board of Directors and, if required, the approval of the Municipalities, as described and provided herein under Section 2.4.

(vi) Subject to the provisions of Section 2.3, to supply the entire electric power and energy requirements of the Municipalities pursuant to the terms and conditions of subsequent agreement(s) between the Municipalities and the Authority.

(vii) To sell, exchange and otherwise dispose of, under the most economically advantageous terms and conditions obtainable, any and all surplus power and energy which the Authority owns and produces or which it is obligated by contract to purchase.

(viii) To provide accounting and cost allocation services.

(ix) To provide such other services or functions as the Authority and the Municipalities, from time to time, shall determine to be appropriate and necessary.

2.3 COMMITMENT TO PURCHASE POWER AND ENERGY FROM THE AUTHORITY: Subject to the terms, conditions and limitations set forth in this Section 2.3, the Municipalities agree to purchase and obtain all their wholesale power and energy requirements from the Authority.

2.3.1 Terms: As used herein, the following terms shall have the definition set forth below:

a. “Emergency conditions” shall mean:

(i) any event or occurrence which results in total or partial failure for short periods of time of the facilities owned and operated by any one Municipality for generation or transmission and such condition represents a danger or threat of immediate danger to the health, safety and welfare of the electric service customers of the Municipality and the Authority is unable to provide the power and energy required during the period of such total or partial failure; and

(ii) any event or occurrence which results in total or partial failure of the facilities owned, operated or leased by the Authority for generation or transmission and such condition represents a danger or threat of immediate danger to the health, safety and welfare of the electric service customers of one or more of the Municipalities and the Authority is unable to provide or obtain, by purchase power contract or any other means, the power and energy required by any one or more of the Municipalities during the period of such total or partial failure.

b. “Power Sales Agreement” shall mean, for the purposes of this Section 2.3, the first agreement entered into by and between the Authority and the Municipalities designating their respective approval of a Project as that term is defined in this Organic Contract pursuant to Section 2.4.1.e.

c. “Rated Capacity” shall mean the maximum load expressed in net kilowatts (kw) that a generating source is capable of supplying under prudent operating conditions.

2.3.2 Purchase of power and energy by the municipalities from the authority: Each Municipality shall purchase and receive from the Authority all power and energy which it shall require for the operation of its electric system in excess of the amount[:]

(i) supplied, or capable of being supplied, by any generation or transmission facilities owned by it on the effective date of the Power Sales Agreement to be subsequently entered into by and between the Authority and the Municipalities, including generation and transmission facilities under construction on such effective date of the Power Sales Agreement, and improvements or extensions of generating facilities which increase the rated capacity of the same so long as the increase during the term of this Organic Contract does not exceed 10%; provided, however, that the Municipalities and the Authority may, in writing, waive such 10% limit, and

(ii) supplied by any purchase power contract(s) which a Municipality has entered into prior to the effective date of the Power Sales Agreement to be subsequently entered into by and between the Authority and the Municipalities.

Each Municipality further agrees that it will not acquire, construct or lease any transmission facility, or any interest therein, subsequent to the effective date of the Power Sales Agreement; provided, however, that any one Municipality may acquire, construct or lease any transmission facility, or any interest therein, in the event that to forego such action would materially impact that Municipality’s ability to meet its financial and contractual obligations to the Authority and such action will not adversely affect the other Municipalities.

The foregoing provisions of this section shall have no application to the purchase or exchange of power and energy by a Municipality under emergency conditions and under existing power pool and interchange agreements entered into prior to the effective date of the Power Sales Agreement to be subsequently entered into by and between the Authority and the Municipalities.

2.4 APPROVAL OF PROJECTS: Notwithstanding any other provision of this Organic Contract to the contrary, the Authority, prior to issuing any bonds in connection with a Project or a Reliability Project, as hereinafter defined, will request the approval of the Municipalities for the financing of the Project or the Reliability Project from the proceeds of bonds. No prior approval of the Municipalities shall be required in the event that the Authority’s Board of Directors approves an expenditure for, or the issuance of bonds for, a Planning, Operation and Maintenance Expenditure.

2.4.1 Terms: As used herein, the following terms shall have the definitions set forth below:

a. “Act” shall mean Colorado Revised Statutes 1973, § 29-1-204, and all laws amendatory thereof or supplemental thereto.

b. “Bonds” shall mean all bonds issued by the Authority pursuant to the Act.

c. “Operating and Maintenance Expenses” shall mean all expenses incurred by the Authority which are properly accounted for such purpose under the Uniform System of Accounts. Such term does not include depreciation or obsolescence charges or reserves therefor, interest charges and charges for the payment of principal, or amortization, of bonds or other indebtedness of the Authority.

d. “Planning, Operation and Maintenance Expenditure” shall mean any one or more of the following:

(i) preliminary and developmental work to determine whether any work should be undertaken as a Project or as a Reliability Project, or engineering, legal and financial studies in connection with the planning, development or utilization of power resources, or

(ii) repairs, replacements or modifications to a generating or transmission facility owned in whole or in part by the Authority, or leased by the Authority under circumstances where the Authority is contractually obligated for maintaining, replacing or repairing said leased facility, and which are designed to maintain the operating efficiency of the facility, or

(iii) any operating and maintenance expenses incurred by the Authority with respect to any facility owned in whole or in part by the Authority, or leased by the Authority under circumstances where the Authority is contractually obligated for operating and maintenance expenses, or

(iv) any other purpose authorized by the Authority’s Board of Directors consistent with the purposes and objects set forth in this Organic Contract, except a Project or a Reliability Project.

e. “Project” shall mean one or more of the following:

(i) any power generating facility (or interest therein) to be constructed or acquired by the Authority as well as fuel therefor and any transmission facility required to connect or interconnect such generating facility with a Municipality or others, or

(ii) any addition or improvement to a power generating or transmission facility which is then owned, in whole or in part, by the Authority, and which is designed to increase the operating efficiency of the facility, or

(iii) any contract right to purchase or receive a power supply or transmission capacity[:]

(a) by the making of a prepayment of capital costs which are associated with the supply or capacity so purchased, or

(b) [by] the execution of a take or pay contract having a duration of more than 10 years, including any renewals thereof, or

f. “Rated Capacity” shall mean the maximum load expressed in net kilowatts (kw) that a generating source is capable of supplying under prudent operating conditions.

g. “Reliability Project” means those expenditures which the Authority determines, under prudent utility practices, should be expended for[:]

(i) transmission and related facilities to increase the reliability of the delivery of power and energy by the Authority, or

(ii) the exploration for, development of or the acquisition of a fuel supply or supplies in order to provide fuel for generating facilities which are not then owned or in the process of construction for and on behalf of the Authority, or

(iii) repairs, replacements or modifications to an existing generating facility (owned in whole or in part by the Authority or under construction by it) which are designed to increase the rated capacity of such generating facility.

Such expenditures, which are to be paid from the proceeds of several series of bonds, shall be considered a single Reliability Project.

h. “Uniform System of Accounts” shall mean the accounting principles, methods and terminology followed and construed, as nearly as practicable, in conformity with the Uniform System of Accounts for Class A and Class B Public Utilities and Licensees and accounting rules and regulations thereunder prescribed by the Federal Energy Regulatory Commission, or any successor regulatory agency, or such other system as may be required by any regulatory agency.

2.4.2 Submission of Plans to Municipalities: Prior to the issuance and sale of bonds to provide funds for each Project and each Reliability Project, the Authority shall submit a written notice to each Municipality. The written notice of the Authority’s intention to provide funds (through the issuance of bonds) for a Project or a Reliability Project shall contain a description of the Project or Reliability Project, the projected sources and use of funds for all aspects of the construction and testing of the Project or Reliability Project, and a statement that, in the opinon of the Authority, the Project or Reliability Project is economically feasible and is necessary for the Authority to meet its commitment to supply the wholesale power and energy requirements of the Municipalities, together with an explanation of the Authority’s basis for this opinion.

2.4.3 Action by the Municipalities: Within sixty (60) days after the receipt of the written notice described above in Subsection 2.4.2, or within any extension of time thereof requested by any one Municipality, not to exceed thirty (30) days if such request is received by the Authority within the original sixty (60) day notice period, and if unanimous consent is obtained for such extension of time from the Municipalities, each Municipality shall give the Authority written notice of its approval or disapproval of the Project or Reliability Project. If a Municipality fails to give the Authority such written notice within such sixty (60) day period, or any extension thereof, then said Municipality shall be deemed to have approved the Project or Reliability Project.

2.4.4 Action by Authority Subsequent to Receipt of Decisions by the Municipalities:

a. If all of the Municipalities approve a Project or Reliability Project, then the Authority may proceed with the issuance, sale and delivery of bonds to fully provide funds for the Project or Reliability Project, including the design, construction and the placing of same in commercial operation, or to meet any requirement of law, including those of a regulatory agency having jurisdiction, or to pay judgments or casualty losses not covered by insurance, or to meet a safety or overriding public necessity.

b. If one or more of the Municipalities should disapprove a Project or Reliability Project, then the Authority shall give each Municipality written notice advising them which of the Municipalities approved and which of the Municipalities disapproved the Project or Reliability Project. Any of the Municipalities which approved the Project or Reliability Project may then give the Authority written notice of its or their desire that the design and construction of the Project or Reliability Project be commenced; and, if the Authority determines that the Project or Reliability Project is still feasible, it may proceed with the issuance, sale and delivery of bonds.

c. If any Municipality disapproves a Project or Reliability Project, and the Authority thereafter proceeds with the issuance of bonds as provided above in Subsection 2.4.4.b, then the Municipality which failed to approve the Project or Reliability Project shall be required to, within sixty (60) days of being notified by the Authority that it will proceed with the issuance, sale and delivery of bonds for such Project or Reliability Project, elect which of the two options, described below, that will govern with respect to its pre-existing obligations to the Authority and its future responsibilities to and relationship with the Authority.

(i) Option One. If a Municipality elects Option One, it will continue to remain a constituent member Municipality of the Authority and it will be entitled to participate in all future Projects or Reliability Projects approved by the Authority, subject, however, to the provisions of this Section 2.4. A Municipality selecting Option One will continue to be obligated to pay to the Authority its proportionate share of all expenses incurred by the Authority, including debt service, for all Projects, Reliability Projects, Planning, Operation and Maintenance Expenditures and all other proper and appropriate expenses for which the Authority has become obligated up to the time of the effective date of the selection by the Municipality of Option One. Further, the disapproving Municipality electing Option One shall be obligated to pay its proportionate share of all other expenses incurred by the Authority subsequent to its selection of Option One, except those costs, including debt service, directly allocated to the disapproved Project or Reliability Project, as determined by generally accepted accounting principles and the Uniform System of Accounts.

(ii) Option Two. If a Municipality elects Option Two, it will sever its future relationship with the Authority and will not be entitled to participate in any future Projects or Reliability Projects approved by the Authority. A Municipality selecting Option Two will be entitled to receive power from any Project or Reliability Project that it participated in prior to the selection of Option Two and will continue to be obligated to pay to the Authority its proportionate share of all expenses incurred by the Authority, including debt service, for all Projects, Reliability Projects, Planning, Operation and Maintenance Expenditures and all other proper and appropriate expenses for which the Authority has become obligated up to the time of the effective date of the selection by the Municipality of Option Two. Notwithstanding the foregoing, in the event that all other Municipalities unanimously agree to assume the pre-existing obligations as described above, the disapproving Municipality shall be relieved of any other financial obligations to the Authority.

The foregoing options described in Subsection 2.4.4.c. may be modified if, and to the extent that, such modification is approved by bond resolutions or other agreements subsequently entered into by and between the Authority and the Municipalities.

2.5 BOARD OF DIRECTORS: The governing body of the Authority shall be a Board of Directors in which all legislative power of the Authority is vested.

2.5.1 Number: Each Municipality which becomes a party to this Contract or any amendment or modification thereof shall have two (2) representatives on the Board of Directors. The initial Board of Directors shall consist of twelve (12) members.

2.5.2 Appointment: The governing body of each of the Municipalities (acting alone, or with the concurrence of its Utilities Board, Power Board, or other appropriate local agency, in the discretion of the governing body, unless such concurrence be required by home rule charter or other applicable law) shall appoint two (2) members to the Board of Directors. Each Director so appointed shall be a citizen and resident of the appointing Municipality, or a customer receiving electric service within the appointing Municipality’s service area.

The City Council or City Commission may seek the advice of its Power Board or Utilities Board prior to making the appointments required hereunder. Further, the City Council or Commission may, but shall not be required to, request that its Power Board or Utilities Board submit a list of qualified candidates to the City Council or Commission to assist the members thereof in making the appointments to the Board of Directors.

Each Director shall file with the Board of Directors a certified copy of the appropriate action taken by the Municipality evidencing his appointment. The initial appointments to the Board and the term of office of the Directors shall be made in accordance with Section 2.5.3.

2.5.3 Term:

INITIAL BOARD OF DIRECTORS

Each Municipality shall nominate and appoint its two (2) representatives to serve on the initial Board of Directors in the following manner:

a. One Director shall be appointed by each Municipality to serve on initial term to expire on December 31, 1985 and until his successor is appointed and written notice thereof has been received by the Authority.

b. The second representative appointed to the initial Board by each Municipality shall serve a term to expire on December 31, 1983 and until his successor is appointed and written notice thereof has been received by the Authority.

APPOINTMENTS SUBSEQUENT TO EXPIRATION OF TERM OF INITIAL BOARD OF DIRECTORS

Successive representatives on the Board of Directors shall be appointed for a period of four (4) years and until their successors are appointed and written notice of such appointments has been received by the Authority.

2.5.4 Removal: Any Director appointed by a Municipality may be removed at any time by such Municipality, with or without cause.

2.5.5 Vacancies: A vacancy occurring on the Board of Directors, whether such vacancy be the result of resignation, death, removal or disability, shall be filled by the appointment of a successor Director by the Municipality which appointed the Director whose office has become vacant. Any such successor Director so appointed shall serve the unexpired remainder of the term of the Director causing the vacancy.

2.5.6 Compensation: Directors shall not receive compensation for their services, but the Board of Directors may, by resolution, provide for reimbursement to Directors of their actual expenses for attendance at meetings of the Board of Directors and for expenses otherwise incurred on behalf of the Authority.

2.5.7 Annual meetings: An annual meeting of the Board of Directors shall be held on the second Tuesday in January in each year at such time and place as shall be designated in the notice of the meeting, for the purpose of electing officers, passing upon reports for the preceding fiscal year and to transact such other business as may come before the Board. If the day fixed for the annual meeting shall fall on a legal holiday, the annual meeting shall be held on the next succeeding business day. Failure to hold the annual meeting at a designated time, or failure to hold the annual meeting in any year, shall not cause a forfeiture or dissolution or otherwise affect the Authority.

2.5.8 Regular meetings: The Board of Directors may, from time to time, provide by resolution for the time and place for the holding of any regular meetings without notice to Directors other than such resolution. The Secretary shall provide each Director with a written agenda of matters intended to be considered at said regular meeting at least five (5) days prior to the meeting; provided, however, that the Board of Directors may transact any business properly before it at such meeting, whether or not listed on the written agenda.

2.5.9 Special meetings: Special meetings of the Board of Directors may be called by the President or any two Directors; provided, however, that the two Directors desiring the special meeting are not representatives of the same Municipality. It shall thereupon be the duty of the Secretary to cause notice of such meeting to be given as hereinafter provided. Under circumstances wherein the President is unable to act by reason of absence, disability or any other reason, the Vice President shall assume the authority of the President herein provided. Special meetings of the Board of Directors shall be held at such time and place as shall be fixed by the President (or Vice President) or the Directors calling the meeting.

2.5.10 Notice of meetings: Written notice of the annual or of any special meeting of the Board of Directors shall be delivered to each Director not less than five (5) nor more than thirty-five (35) days before the date fixed for such meeting, either personally or by mail, by or at the discretion of the Secretary, or, upon his default, by the person calling the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Director at his address as it appears on the records of the Authority, with postage thereon prepaid. The written notice shall include an agenda of matters to be considered at the annual or special meeting.

2.5.11 Waiver of notice: Whenever any notice is required to be given to any Director of the Authority under the provisions of law or this Contract, a waiver thereof in writing signed by such Director, whether before or after the time stated therein, shall be equivalent to the giving of such notice. Attendance of a Director at any meeting of the Board of Directors shall constitute a waiver by such Director of notice of such meeting except when such Director attends such meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.

2.5.12 Quorum: A majority of the number of the voting Directors then in office and present at a meeting in person and representing a majority of the constituent Municipalities shall constitute a quorum for the transaction of business; provided that, if less than a quorum is present at a meeting, a majority of the Directors present may adjourn the meeting from time to time; and, provided further, that the Secretary shall notify any absent Directors of the time and place of such adjourned meeting.

2.5.13 Voting: Subject to the conditions hereinafter provided, the act of a majority of the Directors voting at a meeting at which a quorum is present shall be the act of the Board of Directors. If any one Director from a Municipality is not in attendance at any meeting, the other Director from the same Municipality as the absent Director may cast two votes for that particular Municipality.

If, however, on any question coming before the Board at least forty (40) per cent of the votes are cast in the minority with respect to said question, then in such event, and notwithstanding the provision stated above regarding majority voting, any Director voting in the minority shall have the right to request a “weighted vote.” The act of a majority of the weighted vote cast at the meeting shall be determinative of the question before the Board. Voting under the provisions for a weighted vote shall be by constituent Municipality; provided, however, that if the individual Directors present at a meeting from a constituent Municipality are unable to agree on a collective vote for their Municipality, then, in that event, each Director from the Municipality shall cast a vote equal to fifty (50) per cent of the weighted vote accorded to that Municipality. If any one Director from a Municipality is not in attendance at a meeting, the other Director from the same Municipality as the absent Director may cast the entire weighted vote assigned to that particular Municipality.

The weighted vote for each Municipality shall be determined as follows:

(A) The percentage which the KWH sold by a Municipality for the preceding calendar year bears to the total KWH sold by all the constituent Municipalities during the same period; said percentage shall then be expressed in numerical form in proportion to the total number of votes on the Board of Directors,

and

(B) To the weighted figure determined in accordance with paragraph (A) immediately above, two votes shall be added thereto, the result thereof being the weighted vote of the Municipality.

2.5.14 Vote in case of a deadlock: In the event the Board of Directors is deadlocked and unable to obtain a majority vote of the Directors at a meeting at which a quorum is present either in favor of or in opposition to a matter being considered by the Board for action, any Director may require a weighted vote. A weighted vote shall then be taken in accordance with the weighted vote provisions of Section 2.5.13. The act of a majority of the weighted vote shall be the act of the Board of Directors.

2.5.15 Advisory members of the board: Each Municipality shall be entitled, if it so desires, to have in attendance at any meeting of the Board of Directors, as a non-voting member of the Board, in an advisory capacity, any designated representative of the Municipality involved.

2.5.16 Duties: The duties of the Board of Directors shall be:

(i) To govern the business and affairs of the Authority.

(ii) To exercise all power of the Authority.

(iii) To comply with the provisions of law, including, without limitation, parts 1, 2, 5 and 6 of Article I of Title 29 of C.R.S. 1973.

(iv) To adopt, and from time to time amend, a fiscal resolution, which complies with statutory and other restrictions imposed by law on the affairs of the Authority, to govern the financial transactions of the Authority, including the receipt, custody and disbursement of its funds, securities and other assets, and to provide for the services of a firm of independent certified public accountants to examine, at least annually, the financial records and accounts of the Authority and to report thereupon to the Board of Directors.

(v) To keep the minutes of its proceedings.

2.6 OFFICERS: The officers of the Authority shall be a President, Vice President, Secretary, Treasurer, General Manager and such other officers and assistant officers as may be authorized by the Board of Directors from time to time to perform such duties as may be designated by the Board of Directors. The President and Vice President shall be members of the Board of Directors, but other officers of the Authority need not be members of the Board of Directors.

2.6.1 Initial election of officers: At the first meeting of the Board of Directors, the members of the Board of Directors shall elect officers. Subject to the exception provided below, said officers shall serve as such officers of the Authority until the next succeeding annual meeting of the Board of Directors and until their successors are elected. The General Manager shall serve at the pleasure of the Board of Directors and an annual election shall not be required for the office of General Manager.

2.6.2 Regular elections and term of office: With the exception of the General Manager, the officers shall be elected annually by the Board of Directors at the annual meeting of the Board of Directors. If the election of officers shall not be held at such meeting, such election shall be held within sixty (60) days after the date of the annual meeting. Vacancies or new offices may be filled at any meeting of the Board of Directors. Except as to the provisions governing removal of officers, each officer shall hold office until the next succeeding annual meeting of the Board of Directors and until his successor is elected.

2.6.3 Removal: Any officer or agent elected or appointed by the Board of Directors, including the General Manager, may be removed by majority vote of the Board of Directors, with or without cause, unless otherwise controlled by the terms and conditions of any employee agreements entered into by the Board of Directors, and whenever in its judgment the best interests of the Authority would be served thereby.

2.6.4 Duties of officers: In addition to duties designated by the Board of Directors, the duties of the officers shall include the following:

2.6.4.1 President: The President shall preside at all meetings of the Board of Directors and, except as otherwise delegated by the Board of Directors, shall execute all legal instruments of the Authority. When and while a vacancy exists in the office of General Manager, the President shall act as the principal executive officer of the Authority, and shall perform such other duties as the Board of Directors may prescribe from time to time.

2.6.4.2 Vice President: The Vice President shall, in the absence of the President, or in the event of his inability or refusal to act, perform the duties of the President and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice President shall also perform such other duties as may be prescribed by the Board of Directors from time to time.

2.6.4.3 Secretary: The Secretary shall maintain the official records of the Authority, including this Contract, Regulations adopted by the Board of Directors, the minutes of meetings of the Board of Directors and a register of the names and addresses of Directors and officers, and shall issue notices of meetings, be custodian of the books and records of the Authority, attest and affix the corporate seal to all documents of the Authority, shall act as Secretary of the Board of Directors, shall perform all duties incident to the office of Secretary and such other duties as the Board of Directors may prescribe from time to time.

2.6.4.4 Treasurer: The Treasurer shall serve as the chief financial officer of the Authority and shall, pursuant to the fiscal resolution adopted by the Board of Directors governing the financial transactions of the Authority and the restrictions imposed by law, be responsible for the receipt, custody, investment and disbursement of the Authority’s funds and securities and for duties incident to the office of Treasurer, and shall perform other duties as the Board of Directors may prescribe from time to time.

2.6.4.5 General Manager: The General Manager shall be the principal executive officer of the Authority with full responsibility for the planning operations, and administrative affairs of the Authority, and the coordination thereof, pursuant to policies and programs approved by the Board of Directors and pursuant to any employee agreements entered into by the Authority. The Board of Directors may, if they so desire, appoint an officer of the Authority or an executive committee of the Board to supervise the responsibilities assigned by the Board to the General Manager. The General Manager shall be the agent for service of process on the Authority.

2.6.5 Bonds of officers: The Treasurer and any other officer or agent of the Authority charged with responsibility for the custody of any of its funds or property shall give bond in such sum and with such surety as the Board of Directors shall determine. The Board of Directors, in its discretion, may also require any other officer, agent or employee of the Authority to give bond in such amount and with such surety as it shall determine. The cost of such bond shall be an expense payable by the Authority.

2.6.6 Compensation: The President, Vice President, Secretary and Treasurer shall not receive compensation for their services, but the Board of Directors may, by resolution, provide for reimbursement of their actual expenses for attendance at meetings of the Board of Directors and for expenses otherwise incurred in carrying out their duties on behalf of the Authority. The General Manager shall receive a salary for the services rendered to the Authority and the compensation for such services shall be fixed from time to time by the Board of Directors. The compensation of subordinate officers and employees shall also be fixed by the Board of Directors.

2.7 INDEMNIFICATION OF OFFICERS AND DIRECTORS: Each Director and officer of the Authority, whether or not then in office, and his personal representatives, shall be indemnified by the Authority against all costs and expenses actually and necessarily incurred by him in connection with the defense of any action, suit or proceeding in which he may be involved or to which he may be made a party by reason of his being or having been such Director or officer, except in relation to matters as to which he shall be finally adjudged in such action, suit or proceding to be liable for negligence or misconduct in the performance of duty. Such costs and expenses shall include amounts reasonably paid in settlement for the purpose of curtailing the costs of litigation, but only if the authority is advised in writing by its counsel that in his opinion the person indemnified did not commit such negligence or misconduct. The foregoing right of indemnification shall not be exclusive of other rights to which he may be entitled as a matter of law or by agreement.

2.8 TERM OF CONTRACT: This Contract shall continue in force and effect until December 31, 2024, and until thereafter terminated by any Municipality, following not less than six (6) months written notice to the other Municipalities of its intention to terminate; PROVIDED, HOWEVER, that this Contract may be amended, modified, rescinded or terminated at any time by a written document approved and executed by each and every Municipality which, at such time, is a party to this Contract; PROVIDED FURTHER, HOWEVER, that this Contract may not in any event be rescinded or terminated so long as the Authority has bonds, notes or other obligtaions outstanding, unless provision for full payment of such obligations, by escrow or otherwise, has been made pursuant to the terms of such obligations.

2.9 PROPERTIES: All assets and properties of the Authority shall be held in trust for the purposes herein mentioned, including the payment of liabilities of the Authority.

2.10 DISTRIBUTION OF ASSETS UPON TERMINATION: In the event of the rescission or termination of this Contract and the dissolution of the Authority, all the assets of the Authority shall be distributed by the Board of Directors. In distributing the assets, the then governing Board of Directors shall have the power and obligation to sell, transfer or otherwise dispose of the assets of the Authority. Said disposition may be to any person, firm or corporation, including any contracting Municipality or combination of such Municipalities, upon such terms and conditions as may be deemed appropriate by the then governing Board of Directors of the Authority. All sales proceeds or other revenues obtained as a result of transfers upon termination, and all assets of the Authority shall be distributed to each contracting Municipality, including the distribution of assets in kind, on the basis of the proportion which the total dollar amount of electric power and energy purchased and paid for by such Municipality from the Authority during its existence bears to the total dollar amount of all electric power and energy committed to be purchased and paid for by the Municipalities from the Authority during its existence; provided further, however, that in the event that the Authority is dissolved prior to the actual delivery and purchase of electric power and energy by the Municipalities from the Authority, then, in that event, the assets of the Authority shall be distributed on the basis of the pro rata share that each contracting Municipality contributed in money or property to the Authority when compared to the total contribution in money or property made by all contracting Municipalities during the existence of the Authority.

For the purposes of this section, the term “assets” shall not include any assets held or set aside for full payment of the Authority’s bonds, notes or other outstanding obligations as set forth in Section 2.8 hereof.

The determination made by the Board of Directors of the Authority in calculating the manner in which the assets shall be distributed to the contracting Municipalities, including distribution of assets in kind, shall be in good faith.

In the event that there shall be a dispute concerning the distribution of assets to the Municipalities upon termination of the Authority, any Municipality so desiring shall have the right to refer the dispute to arbitration. Without limiting the generality of the foregoing, the following shall be considered disputes for the purpose of arbitration:

(1) all questions relating to the manner in which the assets of the Authority are to be distributed to the Municipalities;

(2) all questions relating to the determination and application of the distribution formula hereinabove stated;

(3) all questions relating to the valuation of assets under circumstances where distribution, in whole or in part, is to be made in kind.

It is the intent and purpose of the parties hereto to make the submission to arbitration of any controversy, claim or demand relating to the distribution of assets upon termination, as stated above, a condition precedent to any action at law, suit in equity or court proceeding of any nature. Any judicial proceeding instituted with respect to any dispute arising out of the distribution of assets upon termination shall be stayed or dismissed pending resolution thereof by arbitration.

Any Municipality desiring to elect to proceed to arbitration hereunder shall first provide thirty (30) days’ written notice of its intention to so proceed to the Board of Directors of the Authority and all contracting Municipalities. Said written notice shall specify the reasons under which said Municipality believes the distribution so determined by the Board to be erroneous or improper. Upon receipt of the aforesaid written notice, the Board shall thereupon call a special meeting for the purpose of reconsidering its decision concerning the distribution of assets in light of the reasons specified in the written notice of the moving party. The Board shall review the entire distribution formula in the reconsideration of its decision as hereinabove provided.

Said special meeting of the Board shall be held no earlier than five (5) days nor later than fifteen (15) days after receipt of the written notice of intent to proceed to arbitration. If the Board of Directors shall, upon reconsideration, determine that its decision governing the distribution of assets should not be modified, then the moving party shall have the right to proceed to arbitration. The right to submit a dispute to arbitration shall arise upon the expiration of the thirty (30) days’ notice or the decision of the Board made after reconsideration in the special meeting provided above, whichever is earlier. All other contracting Municipalities shall have the right to intervene and fully participate in any such arbitration proceeding. If, upon reconsideration of its initial decision as set forth above, the Board modifies said decision, then any contracting Municipality shall thereafter have the right to proceed to arbitration without the necessity of requesting reconsideration by the Board.

Any Municipality desiring arbitration shall, upon satisfaction of the conditions stated above, forward a written request for selection of a competent arbitrator to the Chairman of the Colorado Public Utilities Commission. The parties agree to abide by the decision of the Commission Chairman in selecting the arbitrator. It is also agreed that the Commission Chairman, in making his selection of an arbitrator, may seek the advice and counsel of the other Commissioners of the Colorado Public Utilities Commission.

If the Commission Chairman fails to act in the selection of an arbitrator within thirty (30) days after receipt of the written request, or if the arbitrator selected fails or is unable to act, a panel of three arbitrators shall be selected, one by the Municipality requesting arbitration, one by the Board of Directors of the Authority and the third by the two so chosen, and the decision of any two of said arbitrators shall be the decision of the arbitration panel.

No one shall be qualified to act as an arbitrator who is a resident of any member Municipality, or who has, directly or indirectly, any financial interest in the Authority, or who has, directly or indirectly, any business relationship with the Authority.

The arbitration proceeding shall be held within forty-five (45) days following the selection and qualification of the arbitrator or arbitration panel. Notice of the time and place of the arbitration hearing shall be provided by the Secretary of the Authority to each contracting Municipality at least thirty-five (35) days prior to the hearing.

The fees and expenses of the arbitration and the assessment thereof shall be determined by the arbitrator or arbitration panel and included in the award.

Arbitration of any dispute under this section shall be conducted in accordance with the Colorado Uniform Arbitration Act, C.R.S. 1973, § 13-22-201 et seq., and the then current rules and practices of The American Arbitration Association, except that if such rules and practices shall conflict with the Colorado Uniform Arbitration Act or Colorado Rules of Civil Procedure or any other provision of Colorado law then in force, such Colorado law and rules shall govern. Arbitration may proceed in the absence of any party if notice of the proceedings has been given to such party. Appearance at the hearing waives any defect in the notice thereof unless said appearance is made for the express purpose of objecting to the commencement of the arbitration proceeding on the grounds that proper notice was not provided as required herein.

The procedures governing the confirming, vacating, correction, modification and appeal of the award of the arbitrator or arbitration panel shall be as set forth in the Colorado Uniform Arbitration Act, C.R.S. 1973, § 13-22-201 et seq., or any amendments thereto.

It is specifically agreed and understood that any party hereto may seek judicial review of the decision of the arbitrator or arbitration panel, and pending said judicial review, the moving party may obtain a stay of execution on the judgment or award. Said stay of execution shall remain in full force and effect until all remedies for judicial review have been exhausted.

The parties hereto agree that the award of the arbitrator or arbitration panel may be filed with the Clerk of the District Court in the judicial district wherein the principal place of business of the Authority is located, as a basis of judgment and the issuance of execution thereon, and, at the election of the party making such filing, with the Clerk of one or more courts, state or federal, having jurisdiction over the parties herein.

The parties hereto agree that the foregoing provision regarding arbitration shall be severable and, if any court having jurisdiction thereof determines that the said arbitration provision is invalid or void, such determination shall not render the entire contract invalid.

2.11 SEAL: The Corporate Seal of the Authority shall be in the form of two concentric circles and shall have inscribed thereon “SEAL, ARKANSAS RIVER POWER AUTHORITY, COLORADO.”

2.12 CONTRACTS: Except as otherwise provided by law, the Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract, or execute and deliver any instrument in the name and on behalf of the Authority.

2.13 FUNDS: The Board of Directors shall have authority to seek and receive federal funds, state funds or funds from any other governmental sources in order to carry out the purpose and functions of the Authority.

2.14 CHECKS, DRAFTS, ETC.: All checks, drafts or other orders for payment of money, and all notes, bonds or other evidences of indebtedness issued in the name of the Authority shall be signed by such officer or officers, agent or agents, employee or employees of the Authority and in such manner as shall from time to time be determined by resolution of the Board of Directors.

2.15 DEPOSITS: All funds of the Authority shall be deposited from time to time to the credit of the Authority, pursuant to law, in such bank or banks as the Board of Directors may select, provided that any such deposits shall be secured by a surety bond or pledge of collateral security as required under the provisions of C.R.S. 1973, § 32-1-701, as amended.

2.16 FISCAL YEAR: The fiscal year of the Authority shall be the calendar year or as may otherwise be provided by law.

2.17 PRINCIPAL PLACE OF BUSINESS: The principal place of business of the Authority shall be as determined from time to time by the Board of Directors. Annually, on or before the first day of February of each year, and within thirty (30) days following any change, the Authority shall file with the Division of Local Government the name and address of the agent for service of process on the Authority and the address of the principal place of business of the Authority.

3. GENERAL POWERS: The general powers of the Authority shall include the following powers:

3.1 Electric energy: To develop electric energy resources and produce and transmit electric energy in whole or in part for the benefit of the inhabitants of the Municipalities.

3.2 Contracts: To make and enter into contracts of every kind with the Municipalities, the United States, any state or political subdivision thereof, and any individual, firm, association, partnership, corporation or any other organization of any kind. The Authority is specifically authorized to enter into agreements with municipalities of adjoining states which own electric systems, irrespective of whether such municipalities are parties to this Organic Contract, or any amendments thereto. Without limiting the generality of the foregoing, the Authority is specifically authorized to enter into contracts with municipalities of the State of Colorado and of adjoining states for the sale of any electric power and energy generated, purchased or otherwise obtained by the Authority.

3.3 Agents and employees: To employ agents and employees, including, without limitation, security guards for the protection of the facilities owned, leased, managed or otherwise used by the Authority.

3.4 Facilities: To acquire, construct, manage, maintain or operate electric energy facilities, works or improvements or any interest therein, including, without limitation, to acquire, construct, reconstruct, improve and rehabilitate, repair, operate and maintain (separately or jointly) electric generating plants and electric transmission systems for the purpose of delivering electrical power and energy generated thereby to the contracting Municipalities and municipalities of the State of Colorado and of adjoining states which have entered into contracts with the Authority pursuant to Section 3.2 hereof, and any mine, well, pipeline, plant, structure or other facility for the development, production, manufacture, storage, fabrication or processing of fossil or nuclear fuel of any kind or wind, solar or other energy sources of any kind, for use, in whole or in major part, in any of such generating plants, and any railroad cars, trackage, pipes, equipment and any structures or facilities of any kind used or useful in the transporting of fuel to any of such generating plants, and to sell, deliver, exchange and otherwise dispose of the power and energy generated by said electric plants, and any of the waste or by-products therefrom, and to purchase, lease or otherwise acquire and equip, maintain, operate, sell, assign, convey, lease, mortgage, pledge and otherwise dispose of electric generating plants and electric transmission systems, together with all lands, buildings, equipment and all other real or personal property, tangible or intangible, necessary or incidental thereto.

3.5 Property: To acquire, hold, lease (as lessor or lessee), sell or otherwise dispose of any real or personal property, commodity or service, including, without limitation, to buy, construct, appropriate, contract for, invest in and otherwise acquire, and to own, hold, maintain, equip, operate, manage, improve, develop, mortgage and deal in and with, and to sell, lease, exchange, transfer, convey and otherwise dispose of and to mortgage, pledge, hypothecate and otherwise encumber real and personal property of every kind, tangible and intangible.

3.6 Water and water rights: To acquire, use, hold, sell or otherwise dispose of water and water rights.

3.7 Condemnation: To condemn property for public use, as provided by law.

3.8 Debt: To incur debts, liabilities or obligations and to borrow money and, from time to time, to make, accept, endorse, execute, issue and deliver bonds, debentures, promissory notes, bills of exchange and other obligations of the Authority for moneys borrowed or in payment for property acquired or for any of the other purposes of the Authority, and, to the extent permitted by law, to secure the payment of any such obligations by mortgage, pledge, deed, indenture, agreement or other collateral instrument, or by other lien upon, assignment of, or agreement in regard to, all or any part of the properties, rights, assets, contracts, easements, revenues and privileges of the Authority wherever situated, whether now owned or hereafter to be acquired.

3.9 Litigation: To sue and be sued, to complain and defend and to participate in administrative or other proceedings, in the name of the Authority.

3.10 Seal: To have and use the Corporate Seal.

3.11 Rates: To fix, maintain and revise fees, rates and charges for functions, services or facilities provided by the Authority.

3.12 Regulations: To adopt, by resolution, regulations respecting the exercise of its powers and the carrying out of its purposes.

3.13 Agents: To do and perform any acts and things authorized by this section under, through or by means of an agent, fiduciary or independent contractor, whether a person, firm or corporation, or the United States or any state or political subdivision or agency thereof.

3.14 Joint ownership: To own, operate and maintain real and personal property and facilities in common with others, as permitted by law, and to conduct joint, partnership, cooperative or other operations with others and to exercise all of the powers granted in this Contract in joint partnership or cooperative efforts and operations with others.

3.15 Other powers: To exercise any other powers which are essential, necessary, incidental, convenient or conducive to providing the wholesale electric power and energy requirements of the Municipalities.

4. POLITICAL SUBDIVISION: The Authority shall be a political subdivision and a public corporation of the State of Colorado, separate from the contracting Municipalities, and shall be a validly created and existing political subdivision and public corporation of the State of Colorado, irrespective of whether a contracting Municipality, including a city or town of an adjoining state, withdraws (whether by operation of law or otherwise) from such governmental entity subsequent to its creation, and it is hereby agreed that such withdrawal shall not itself result in the rescission or termination of this Contract, or any amendments thereto. The Authority shall have the duties, privileges, immunities, rights, liabilities and disabilities of a public body politic and corporate.

5. DEBT NOT THAT OF MUNICIPALITIES: The bonds, notes and other obligations of the Authority shall not be the debts, liabilities or obligations of the contracting Municipalities.

6. REVENUE BONDS: The Authority is authorized to issue bonds, notes or other obligations pursuant to the terms, conditions and authorization contained in C.R.S. 1973, § 29-1-204(7), and all laws hereafter adopted amendatory thereof or supplemental thereto, except as such amendments or supplementation, if applied, would result in an impairment of contract in violation of state or federal constitutions.

7. LIMITATIONS ON FUNDS: In addition to any other requirements or limitations with respect to funds of the Authority, the limitations imposed by C.R.S. 1973, § 32-1-701, and all acts amendatory thereof or supplemental thereto, shall be observed by the Directors and officers of the Authority.

8. AUTHORITY IS SUCCESSOR: The Authority is hereby determined to be and shall be the successor to the Non-Profit Corporation, and the Authority is and shall be entitled to all rights and privileges and shall assume all obligations and liabilities of the Non-Profit Corporation under contracts to which the Non-Profit Corporation is a party and which contracts are existing on the date the Authority is established. As soon as practicable after the Authority has been established, and the approvals, if any are required, of the Colorado Public Utilities Commission, lenders, joint participants or others, as the case may be, have been obtained, the Non-Profit Corporation shall assign, transfer and convey all of its properties, whether real or personal, tangible or intangible, to the Authority and the Authority shall assume all obligations and liabilities of the Non-Profit Corporation. After such succession and transition has been completed, the Non-Profit Corporation shall be dissolved.

9. DELINQUENCY: Subject to the terms, conditions or limitations set forth in other sections of this Organic Contract, each Municipality may be assessed, from proprietary funds, for its proportionate share of the expenses incurred or budgeted by the Authority. Said proportionate share shall be determined on the basis of each Municipality’s KWH sales in the preceding calendar year to the total KWH sales of all the Municipalities in the preceding calendar year. The Authority shall bill each Municipality for its proportionate share of the Authority’s expenses, as described above, on a monthly basis. If a Municipality fails to make any payment within sixty (60) days following the date of receipt of the bill from the Authority, the remaining Municipalities which are current in the payment of their bills may, by unanimous approval, terminate the delinquent Municipality’s further participation in the activities of the Authority and under this Organic Contract. Said sixty (60) day period may be extended by unanimous consent of the Municipalities upon request by a delinquent Municipality.

10. FILING OF CONTRACT: A copy of this Organic Contract, and any amendment or modification thereof, shall be filed with the Division of Local Government of the State of Colorado as soon as practicable following its execution by the Municipalities and in all events within ten (10) days after its execution by the Municipalities. On or before February 1 of each year, the Authority shall file, with the Colorado Division of Local Government, an informational list of all contracts in effect with other political subdivisions, pursuant to the requirements of C.R.S. 1973, § 29-1-205, and all laws amendatory thereof or supplemental thereto.

11. NOTICES: In addition to the manner of providing notice to the Board of Directors as a prerequisite for action to be taken by the Board, any formal notice, demand or request otherwise provided for in this Organic Contract shall be in writing and shall be deemed properly served, given or made if delivered in person or sent by registered or certified mail, postage prepaid, to the persons specified below:

City of La Junta, Colorado

c/o Electric Superintendent

Post Office Box 489

La Junta, Colorado 81050

City of Lamar, Colorado

c/o Lamar Utilities Board

Lamar, Colorado 81052

City of Las Animas, Colorado

c/o Electric Superintendent

Post Office Box 271

Las Animas, Colorado 81054

City of Trinidad, Colorado

c/o Electric Superintendent

135 North Animas Street

Trinidad, Colorado 81082

City of Walsenburg, Colorado

c/o Public Works Director

122 East 6th

Walsenburg, Colorado 81089

City of Raton, New Mexico

ATTN: Electric Superintendent

Post Office Box 40

Raton, New Mexico 87740

Arkansas River Power Authority

c/o General Manager

Post Office Box 70

Lamar, Colorado 81052

12. SEVERABILITY: In the event that any of the terms, covenants or conditions of this Contract or their application shall be held invalid as to any person, corporation or circumstance by any court having jurisdiction, the remainder of this Contract and the application and effect of its terms, covenants or conditions to such persons, corporations or circumstances shall not be affected thereby.

13. REGULATORY JURISDICTION: The Authority shall abide by and conform to all applicable federal, state and local laws and regulations to the extent that said laws and regulations are held to apply to the accomplishment of the purposes and the carrying out of the functions and services stated in this Contract.

14. DUPLICATE ORIGINALS: This Contract may be executed in several counterparts, each of which will be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Municipalities and the Non-Profit Corporation have caused this Contract to be executed effective as of the [8th] day of [November], 1979.

ARKANSAS RIVER POWER AUTHORITY

A Non-Profit Corporation

/s/ George N. Baker
President

(SEAL)

ATTEST: /s/ Ronald Passarelli

Secretary

STATE OF COLORADO )

) ss.

COUNTY OF [PROWERS] )

The foregoing instrument was acknowledged before me this 11th day of October, 1979, by George N. Baker, as President, and Ronald Passarelli, as Secretary, of the Arkansas River Power Authority.

Witness my hand and official seal.

/s/ Teresa Birkenfeld

Notary Public

(SEAL)

Commission Expires August 31, 1983.

CITY OF RATON, NEW MEXICO

/s/ Mike J. Pappas

Mayor

(SEAL)

ATTEST: /s/ Eva Mae Sproule

City Clerk

STATE OF NEW MEXICO )

) ss.

COUNTY OF COLFAX )

The foregoing instrument was acknowledged before me this 6th day of October, 1979, by Mike J. Pappas, as Mayor, and Eva Mae Sproule, as City Clerk, of the City of Raton, New Mexico.

Witness my hand and official seal.

/s/ Margaret Siemantel

Notary Public

(SEAL)

Commission Expires June 19, 1980.

CITY OF LA JUNTA, COLORADO

/s/ C.A. Denney

Mayor

(SEAL)

ATTEST : /s/ Robert N. Gray

City Clerk

STATE OF COLORADO )

) ss.

COUNTY OF OTERO )

The foregoing instrument was acknowledged before me this 15th day of October, 1979, by C. A. Denney, as Mayor, and Robert N. Gray, as City Clerk, of the City of La Junta, Colorado.

Witness my hand and official seal.

/s/ Barbara R. Blakney

Notary Public

(SEAL)

Commission Expires August 21, 1983.

CITY OF LAMAR, COLORADO

/s/ Joseph H. Garbaoz

Mayor

(SEAL)

ATTEST: /s/ Francis L. Hiigel

City Clerk

STATE OF COLORADO )

) ss.

COUNTY OF PROWERS )

The foregoing instrument was acknowledged before me this 24th day of October, 1979, by Joseph H. Garbaoz, as Mayor, and Francis L. Hiigel, a City Clerk, of the City of Lamar, Colorado.

Witness my hand and official seal.

/s/ Teresa Birkenfeld

Notary Public

(SEAL)

Commission Expires August 31, 1983.

CITY OF LAS ANIMAS, COLORADO

/s/ Gerald R. Garcia

Mayor

(SEAL)

ATTEST: /s/ Tayeko Namura

Deputy City Clerk

STATE OF COLORADO )

) ss.

COUNTY OF BENT )

The foregoing instrument was acknowledged before me this 24th day of October, 1979, by Gerald R. Garcia, as Mayor, and Tayeko Namura, as Deputy City Clerk, of the City of Las Animas, Colorado.

Witness my hand and official seal.

/s/ Teresa Birkenfeld

Notary Public

(SEAL)

Commission Expires August 31, 1983.

CITY OF TRINIDAD, COLORADO

/s/ John Rino

Mayor

(SEAL)

ATTEST: /s/ Frank Hoch

City Clerk

STATE OF COLORADO )

) ss.

COUNTY OF LAS ANIMAS )

The foregoing instrument was acknowledged before me this 22nd day of October, 1979, by John Rino, as Mayor, and Frank Hoch, as City Clerk, of the City of Trinidad, Colorado.

Witness my hand and official seal.

/s/ Lila Valdez

Notary Public

(SEAL)

Commission Expires February 9, 1980.

CITY OF WALSENBURG, COLORADO

/s/ Leo Maes

Mayor

(SEAL)

ATTEST: /s/ Rita L. Vigil

City Clerk

STATE OF COLORADO )

) ss.

COUNTY OF HUERFANO )

The foregoing instrument was acknowledged before me this 22nd day of October, 1979, by Leo Maes, as Mayor, and Rita L. Vigil, as City Clerk, of the City of Walsenburg, Colorado.

Witness my hand and official seal.

/s/ Flora Rice

Notary Public

(SEAL)

Commission Expires June 12, 1980.

APPENDIX “A”
CONTRACT

Weighted Vote Determination

An illustrative sample of the method by which the weighted vote for each Municipality will be determined is as follows:

Municipality	KWH Sales1	% of Total KWH Sales	Convert to Numerical Form2	Equal Vote	Vote Wtd.	Wtd. Vote %
La Junta	53,666,768	22.7%	2.73	+2	4.73	19.7%
Lamar	77,853,558	33.0%	3.96	+2	5.96	24.8%
Las Animas	19,777,175	8.4%	1.01	+2	3.01	12.5%
Raton	34,177,988	14.5%	1.73	+2	3.73	15.6%
Trinidad	34,344,395	14.5%	1.74	+2	3.74	15.6%
Walsenburg	16,377,000	6.9%	.83	+2	2.83	11.8%
TOTAL	236,196,884	100.0%	12.00	12	24.0	100.0%

The weighted vote will only be cast if (1) under standard voting (2 votes for each member municipality) at least 40% of the votes are cast in opposition to a question before the Board and a Director in the minority requests a weighted vote; or (2) the weighted vote is necessary to break a deadlock on the Board.

1KWH sales based on data for calendar year 1978

2Determined by multiplying the percentage figure in Column 2 by the total number of votes on the Board-12.

STATE OF NEW MEXICO )

) ss.

COUNTY OF SANTA FE )

Pursuant to the “Joint Powers Agreements Act”, §§ 11-1-1 to 11-1-7, NMSA 1978, the above and foregoing Organic Contract Establishing Arkansas River Power Authority as a Separate Governmental Entity is hereby approved by me this 31st day of October, 1979.

/s/ David King

Direct or, Depart ment of Financ e and Admin istratio n [State of New Mexico]

/s/ Jim Macias

Depart ment of Financ e & Admin istratio n [State of New Mexico]

APPROVED

LOCAL GOVERNMENT DIVISION

AL ROMERO

NOV. 5, 1979

ELECTRIC FRANCHISE

Editor’s note: Material enclosed in brackets [] has been added for clarity.

ORDINANCE NO. 731

AN ORDINANCE RELATING TO THE RATON PUBLIC
SERVICE COMPANY AND GRANTING A UTILITY
FRANCHISE TO SAID COMPANY

[PREAMBLE]

WHEREAS, the Raton Public Service Company (hereinafter called the company), a New Mexico corporation, has for many years operated a utility in the City of Raton, New Mexico, acting under franchise from the city, the existing franchise being set forth in Ordinance No. 512 of the City of Raton, adopted and approved September 10, 1960, and subsequently ratified and approved at a special election conducted for that purpose, which franchise expired, by its terms, on June 30, 1985, but, which has been extended temporarily; and

WHEREAS, the City of Raton, (hereinafter called the city), is the beneficial owner of all of the capital stock of the company, which stock (except for qualifying shares of other directors) is presently held in the names of John H. Lackey, Larry Stolarczyk and Curtis L. Keeler as trustees; and

WHEREAS, the city is the absolute owner of the electric utility system heretofore operated and managed by the company pursuant to said Ordinance No. 512, together with the right to furnish service within a service area allowed by law; and

WHEREAS, the city is a member of the Arkansas River Power Authority (ARPA), a political subdivision of the State of Colorado, under authority of contract ordinance, and law (in particular, section 3-24-14, NMSA 1978), with which it has various contractual obligations and from which the city is currently purchasing wholesale power, in addition to the power generated locally, at a substantial saving over what it might otherwise be required to pay for purchased power, and the day-to-day coordination with ARPA requires the delegation of administrative and operational responsibility comparable to that required for the generation of electricity; and

WHEREAS, it is considered desirable both by the company and by the city that the operation and management of the city’s now owned or hereafter acquired energy production, services, sources, generation, and distribution systems and plants (“utility system”) and the handling of the financial operations of the utility be continued in a manner similar to that heretofore established by Ordinance No. 512, except as hereinafter modified; and

WHEREAS, the company has made written application to the city commission of the City of Raton requesting the due enactment of this ordinance and specifically consenting to all of the terms and provisions of this ordinance, and the said John H. Lackey, Larry Stolarczyk and Curtis L. Keeler have likewise requested and consented to all of the terms and provisions of this ordinance.

NOW THEREFORE, BE IT ORDAINED by the city commission of the City of Raton, New Mexico:

Section 1: Grant of franchise.

From and after the effective date of this ordinance, and subject to all the terms and provisions herein contained, the city does hereby grant to the company the right, privilege and franchise, for a term ending December 31, 2010, to maintain and operate within the city and within all future additions to the city and within the city’s lawful utility service area as the same may exist from time to time hereafter, the city’s electric utility system, including its generating plant and distribution system and such other energy utility systems as may be transferred to the company, and the rights, privileges and facilities available through ARPA (as may be determined from time to time by the company), for the furnishing of utility services to the city, and as may lawfully be furnished to others. Throughout the term of this ordinance the company shall have the right to the free use of the rights-of-way, streets, avenues, alleys and public places of the city and all future additions thereto, for the purpose of erecting and maintaining poles or other supports or otherwise emplacing utility systems, and for wires, transformers, pipes, lines, appliances, and other equipment, and for the laying and maintaining of conduits, pipes, lines, appliances, wires and other equipment for the transmission and distribution of energy and energy sources; provided, however, that the same shall be placed in such reasonable locations as may be permitted by the city commission, and in such manner as not to interfere with traffic or other necessary public uses.

Section 2: Fixing of rates.

The company shall at all times furnish an ample supply of its owned, generated or acquired energy to the city, its inhabitants and to others as may be lawful. The city commission shall, from time to time, set, fix, determine, and alter the rate schedules and the rates, charges and rate classifications pertaining to all service to be rendered by the company. It shall be the duty of the city to maintain rates at such a level and with such reasonable classifications as shall permit the funding requirements set forth in paragraph [section] 20 of this ordinance. Such rate tariffs shall be sufficient to meet the efficient and long term operation of the utility by the company and also provide for the city a sufficient net income to meet all debt service, operational expense and reserve requirements of this ordinance and of obligations of the city in respect of energy utility system bonds, or other similar energy utility system obligations as the city may issue from time to time. Until changed by the city, the existing rate schedules, rates, charges and rate classifications shall remain in effect. The company may recommend to the city commission, from time to time, such changes in rate schedules and rates as appear necessary and desirable.

Section 3: Discounts.

The company shall allow such discounts for prompt payment of bills as may be from time to time required by the city commission. No such discount shall in any event be allowed to any customer who shall at the time of payment be, and remain in default in the payment of, any previous bill. Until the establishment of some different rule by the city commission, the company shall allow a ten-percent (10%) discount on all bills paid on or before the tenth day of the month succeeding the month for which such bills were incurred.

Section 4: Discontinuance of service.

Payment for all service furnished by the company shall be made by customers at the office of the company on or before the tenth day of the month succeeding the month in which the service was rendered; and in default of such payment the company may, at its option, discontinue the service.

Section 5: Meter deposits.

The company may require an advance deposit from any customer, which deposit shall cover all meters installed and all energy to be furnished to such customer. The deposit required by the company shall not exceed the estimated bill for a two-month period. Each deposit shall be considered as a guaranty fund to assure to the company the payment of all bills to become due from the customer and ultimate return of the meter or meters concerned in good condition, reasonable wear excepted. Upon the customer’s request for termination of service, his meter deposit (less appropriate deduction, if any) shall be refunded to him. The company may, at its election, waive the requirement of a deposit in any particular case or accept in lieu of a deposit such other security as may be acceptable to the company.

Section 6: Municipal uses.

The company shall furnish to the city all electric energy needed by the city for the lighting of its municipal offices, for street lighting, and for general municipal purposes within the city’s electric utility service area, all without requiring payment therefor from the city. For all power and electric energy taken by the city and its departments for its proprietary purposes, including but not limited to water treatment and pumping and sewage treatment and disposal purposes, the city shall pay to the company the actual cost thereof, computed as the rolling three-month average of fuel and purchased energy costs of the energy furnished.

Section 7: Rules and regulations of the company.

The company may make reasonable rules and regulations specifying and controlling the types of equipment, appliances, devices, connections, easements and operating practices which may be required in order for a customer to receive service from the company or in order to entitle customers to the several rate classifications now or hereafter in force. The company shall not be required to make any service connection unless its reasonable requirements have been complied with. The current such rules and practices of the company are herewith approved and ratified by the city. The company may hereafter adopt and file with the city clerk additional such regulations with the city and, unless within thirty (30) days of such filing the city shall disapprove of such regulationss adopted by the company under this section, then such regulations shall be deemed to be approved and enacted by the city and in effect. Within such thirty-day period the city commission shall have the power to require modifications or may set aside such newly filed regulation and establish in its stead such regulation as the city commission may consider proper and a copy of such city enacted regulation shall then be filed with the city clerk within thirty (30) days of its adoption.

Section 8: Internal operations.

The company shall be solely responsible for governing its internal operations, personnel, billing, and operational activities, and the company shall from time to time establish policies and procedures concerning such internal matters as it deems necessary and appropriate. The city adopts, confirms and ratifies the existing policies and procedures of internal matters.

Section 9: Discrimination forbidden.

The company shall never commit, practice or permit any unfair discrimination between its customers. All rates and charges shall be applied fairly to the end that there shall always be a uniform charge for like service under like conditions.

Section 10: Power and authority of the company.

The company is granted, and shall have, exercise, enjoy and use, all powers and authority set forth under sections 3-24-1 through [3-24]-18, NMSA 1978, as amended and as may be amended, except that reserved to the city commission in this ordinance, and except as lawfully exercised only by the city commission.

Section 11: Police power of city.

The city commission of the city shall adopt and enforce all such ordinances, rules and regulations as may be necessary for the protection of the company and the lawful conduct of its operations. The rights and privileges granted to the company by this ordinance shall at all times be subject to the police power and reasonable dominion of the city as the same may be exercised by general ordinance, not destructive, however, of the rights and privileges hereby granted.

Section 12: Company’s duty to repair.

Whenever the company shall enter upon any street or public place for the purpose of constructing or maintaining any portion of the transmission or distribution system, it shall be the duty of the company to repair any damage done by it and to remove all debris resulting from its operations.

Section 13: Agreement concerning corporate management of the company.

In consideration of the right, privilege and franchise granted to the company by this ordinance, and in consideration of the fact that the city is the beneficial owner of all of the issued and outstanding capital stock of the company, it is mutually agreed by the city and the company that the corporate management of the company is herewith transferred and vested in the board of directors of the company, except as is otherwise retained or reserved by this ordinance or the laws of New Mexico to the city commission. Such corporate management and the ownership and control of its capital stock and the disposition of the utility system earnings shall in all respects be governed by the terms and provisions of this ordinance, including particularly sections 14 through 20, inclusive, hereinafter set forth.

Section 14: Capital stock held in trust.

It is recognized that the present holders of all of the issued and outstanding capital stock of the company hold the same as trustees for the use and benefit of the city, and it is agreed that the city is and shall always continue to be the beneficial owner of all the capital stock of the company which is now, or at any time hereafter may be, issued and outstanding. The legal holders (trustees) of said stock shall have the right, power and duty to vote the same, but they shall always hold the same for the use and benefit of the city. The capital stock shall carry with it no attribute, privilege or power other than the right to vote the same, in due and proper time and manner, for the election of three (3) of the directors of the board of directors of the company, and for other corporate purposes not inconsistent with this franchise.

Section 15: Trustees.

As soon as this ordinance becomes effective, all of the issued and outstanding capital stock of the company (except the necessary qualifying shares to be issued to and to stand in the names of the respective directors of the company, not more than one such qualifying share for each director) shall be issued to and thereafter be held equally by those persons named hereinafter as trustees, each of whom shall serve until the date specified for the expiration of his term. Thereafter, the city commission shall have the duty to appoint or re-appoint a trustee or successor trustee for an additional term of six (6) years. The terms of the trustees being staggered, one such regular appointment or re-appointment will occur every two (2) years during the life of the franchise. The persons serving initially as trustees are John H. Lackey, for a term expiring June 30, 1987, Larry Stolarczyk, for a term expiring June 30, 1989, and Curtis L. Keeler, for a term expiring June 30, 1991. Each of the trustees shall vote the shares held by him in the election of three (3) of the corporate directors. Each of the trustees shall continue to hold his said stock until such time as his appointed term may expire or until such time as he may die or resign or be removed from office as hereinafter provided.

Section 16: Removal of trustees.

A trustee may be removed from office by the city commission during his or her appointed term for one or more of the following reasons:

(a) Legal incapacity;

(b) Willful neglect of duty or willful failure to comply with the terms of this franchise or the laws governing the operation of a municipal utility;

(d) Conviction of a crime involving moral turpitude; or

(e) Failure of the trustee to maintain his or her status as a resident of Raton, New Mexico, or of its lawful utility service area.

The power of removal shall be vested in a majority of the commission. The trustee shall be entitled to a full evidentiary hearing after reasonable notice and upon a written specification of the charges against him or her. The vote of each member shall be announced openly and shall be recorded in the minutes, and the concurring vote of the majority of the members of the whole commission shall be necessary to accomplish a removal.

Section 17: Appointment of successor trustees.

Upon the expiration of the appointed term of each such trustee, and in case of the death, resignation or removal of any of the trustees above named or of any successor trustee, a successor shall be appointed by the city commission; and thereupon all of the capital stock previously held by the former trustee shall be promptly transferred to such successor trustee and shall thereafter stand in his or her name and be voted in like manner as if he or she were specifically named in this ordinance as one of the trustees. Any successor trustee appointed by the commission must be a resident of the City of Raton, New Mexico, or of its lawful utility service area.

Section 18: Directors.

The directors of the company shall be five (5) in number. The mayor of the city and one other member of the city commission (to be selected by the city commission) shall be directors of the company. The remaining three (3) directors shall be elected by the trustees, and must be residents of the City of Raton or of its lawful utility service area. Except as hereinabove expressly provided, the qualifications of the directors, the method of selecting them, and the powers of the entire board of directors shall be governed by the ordinary business corporation laws of the State of New Mexico. Each director of the company may receive such compensation for his services as the company may determine, not to exceed a maximum of one hundred dollars ($100.00) per month; except that said maximum amount may be increased with the consent and approval of the city commission. No director shall serve as manager of the company or as an employee of the company (except as a corporate officer). No trustee or director of the company, whether acting as an officer of the company or not, shall receive any other compensation than that above mentioned.

Section 19: Manager.

The company shall employ a competent manager and such other help, technical or otherwise, as may be necessary to assure the efficient and economical operation of the City’s energy utility system. The compensation of such manager and other employees shall be a proper operation and maintenance charge against the gross revenues of the system.

Section 20: Rate and income requirements and disposition of system revenues.

(a) The company shall set aside the entire gross income and revenues of the utility system into a special fund to be known as the “City of Raton Utility System Gross Income Fund,” hereafter sometimes designated as the “income fund,” from which fund the board shall make the operational, reserve and debt payments below described. After payment of such monies in subparagraphs [subsections] 20(B)(1), (2), (3), (4), (5) and (6), then the company each year shall transfer and pay over to the city treasurer all remaining income and revenues derived from the operation of the system for any lawful purpose or purposes then required or permitted under the constitution and laws of the State of New Mexico and the bond ordinances and other ordinances of the city.

(b) So long as this franchise shall remain in force and effect, the city shall set the utility system rates in an amount designed to achieve the following income, and the income shall be expended in the following priorities, to wit:

(1) The company shall first set aside each month into a fund called “operation and maintenance fund,” monies sufficient to pay current expenses of the operation of the utility system, excluding depreciation and amortization expenses, as they become due and payable;

(2) From any remaining income the company shall next set aside funds as required for debt service and bond reserves, under any ordinances of the city creating and issuing energy utility system bonds for improvements, replacements, or expansion of the city’s energy utility system. The city shall continue to retain full authority to create and issue system bonds and to enact such ordinances and revenue guarantees as shall be appropriate and lawful for such system bonds.

(3) From any remaining income the company shall next set aside each month into a reserve fund called “operation reserve fund,” an accumulation of cash reserves adequate to permit the payment of the average cash expenses (exclusive of fuel and purchased power and energy capacity) required for a sixty-day period. Upon execution of this ordinance, the sum of seventy five thousand dollars ($75,000.00) shall be set aside into such fund, for the amount of the fiscal year ending June 30, 1985. Thereafter, this reserve is to be maintained at an amount determined to be a sixty-day average of the preceding year’s cash expenses (exclusive of fuel and purchased power and energy capacity) or seventy five thousand dollars ($75,000.00), whichever is greater.

(4) From any remaining income the company shall next set aside, each month, one twelfth (1/12) of two and one-half (2½) per cent of the immediately preceding fiscal year’s gross annual revenues into the “reserve for annual overhaul, inspection and repair of boilers and generation equipment” reserve. As used throughout this ordinance, “gross annual revenues” shall mean all revenues paid to the company by rate payers for the retail sale of energy, and earned interest, but shall not include (1) taxes or surcharges; (2) insurance proceeds; (3) payments from other utilities, cogenerators, producers or transmitters of energy; (4) damage awards; (5) proceeds from sale of assets; (6) payments from the City of Raton for energy consumed; or (7) other revenues received from sources other than sales to rate paying customers and earned interest. Amounts in said fund shall be used to pay, in whole or in part, periodic repairs, inspection, and overhaul costs of the boilers and generation equipment; provided, however, that such fund shall be stabilized when the accumulated balance of the amounts set aside equals four and one-half (4½) per cent of the gross annual revenues for the immediately preceding fiscal year. Upon execution of this ordinance, the sum of seventy five thousand dollars ($75,000.00) shall be set aside into such fund for the amount of the fiscal year ending June 30, 1985.

(5) From any remaining income the company shall next set aside in monthly payments of one-twelfth each, to the “City of Raton Utility System, Capital Improvement and Replacement Fund,” a cash reserve as will be equal during each fiscal year to ten (10) per cent of the gross annual revenues for the immediately preceding fiscal year. The monies in the company’s present capital improvement reserve shall be transferred to such fund. Amounts in said fund shall be available to pay, in whole or in part, periodic inspection, overhaul and repair, and the costs of additions, extensions and improvements to the energy utility system; provided, however, that such fund shall be stabilized when the amounts in the reserve fund equal fifty (50) per cent of the gross annual revenues of the company for the preceding fiscal year. Thereafter, the maximum amount in such fund may be increased by the city, from year to year, by resolution of the city commission.

(6) From any remaining income the company shall next pay to the city, in monthly payments of one-twelfth (1/12) each, an amount equal to three (3) per cent of the immediately preceding fiscal year’s gross annual revenues, as defined above.

(7) The residue of revenues of the company shall be paid to the city, annually.

Section 21: Use of city property.

Throughout the life of the franchise granted by this ordinance, the company shall have the use and possession of all of the physical assets, including generation facilities and transmission and distribution lines, pipes and appliances, belonging to the city’s utility system, all for the purpose of the operation of the system by the company under the terms of this ordinance.

Section 22: Reports and audits.

(a) On or before April 25 of each year the company shall prepare and deliver to the city a report containing an estimate of its anticipated revenue, expenses, payments to the city, reserve set-asides and its bond requirements (if any, for the succeeding fiscal year).

(b) The fiscal year of the company shall be from July 1 to June 30 of the succeeding year, this arrangement to be changed only with the consent of the city commission. The company shall make written reports to the city, at least quarterly, showing the balance sheet, statement of profit and loss, and statement of costs. Following the end of each fiscal year, the company shall also cause an audit to be made of the utility system by a reputable auditor covering that fiscal year and shall furnish a copy of the audit to the city. The books and records of the company shall at all times be open for inspection by the city commission or any representative designated by it.

Section 23: Actions of the city commission.

The expression “city commission,” wherever used in this ordinance, shall be interpreted to mean the governing body of the city, regardless of the particular form of government which may be in effect. Any action, consent, approval or permission to be taken or given by the city commission pursuant to this ordinance may be accomplished by a simple motion of the city commission.

Section 24: Transition provisions.

From and after the effective date of this ordinance, this ordinance shall immediately supersede and replace Ordinance No. 512; and the franchises granted by said Ordinance No. 512 shall no longer be of any force or effect except as to acts previously done and performed in pursuance thereof. Upon the effective date of the ordinance, the company shall retain the funds necessary for the initial funding of the reserves set forth in paragraphs [subsections] 20(B)(3), (4) and (5).

Section 25: Ordinance treated as contract.

This entire ordinance shall be considered as a solemn and binding contract between the city and the company.

Section 26: Severability and interpretation.

If any section, paragraph, clause or provision of this ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of any such section, paragraph, clause or provision shall not effect any of the remaining provisions of this ordinance. In the event of inconsistency, the titles to the sections shall not be deemed a part of the enactment.

Section 27: Effective date.

This ordinance shall become effective on the thirty-first day after its enactment; provided, however, that if an election should be required pursuant to a sufficient petition presented within the time and manner provided by section 3-42-1 NMSA 1978, then the effective date of this ordinance shall be postponed until the result of the election is known.

ADOPTED AND APPROVED this 14th day of January, 1986.

/s/ Roger A. Carlson

Mayor

Attest:

/s/ Eva Mae Sproule

City Clerk

CABLE TELEVISION FRANCHISE

ORDINANCE NO. 849

AN ORDINANCE WITH RESPECT TO THE RATES TO BE CHARGED BY THE FRANCHISEE.

AN ORDINANCE GRANTING A FRANCHISE TO TCI CABLEVISION OF NEW MEXICO, INC., ITS SUCCESSORS AND ASSIGNS, TO OPERATE AND MAINTAIN A COMMUNITY TELEVISION SYSTEM IN THE CITY OF RATON, NEW MEXICO, SETTING FORTH CONDITIONS ACCOMPANYING THE GRANT OF FRANCHISE, MAKING IT UNLAWFUL FOR ANY PERSON, WITHOUT THE CONSENT OF THE FRANCHISEE, TO TAMPER WITH OR INJURE CABLES, WIRES OR OTHER EQUIPMENT OF THE CABLE SYSTEM; PRESCRIBING PENALTIES FOR THE VIOLATION OF ITS PROVISIONS; AND REPEALING CERTAIN ORDINANCES.

WHEREAS, pursuant to Ordinance No. 677 of the City of Raton (City), TCI Cablevision of New Mexico, Inc., a New Mexico Corporation successor to Mesa Cable Inc.; and

WHEREAS, under the terms of said Ordinance No. 677, the City Commission had the duty to fix and alter the rate schedule and the rates, charges and rate classifications pertaining to all service to be rendered by the Company; and

WHEREAS, the existing rate schedules for TCI Cablevision of New Mexico, Inc., no longer yield a reasonable return to TCI Cablevision of New Mexico, Inc., and the City and that the current rates are no longer just and equitable.

NOW THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF RATON, NEW MEXICO:

SECTION 1. TITLE

1.1 This Ordinance may be cited as the Raton Cablevision Ordinance.

SECTION 2. PREAMBLE

2.1 This Ordinance was passed after a full, open, and public hearing upon prior notice and opportunity of all interested parties to be heard, and upon careful consideration of the qualifications Of TCI Cablevision of New Mexico, Inc., a New Mexico Corporation, including its legal character, financial and technical qualifications.

SECTION 3. DEFINITION OF TERMS

3.1 For the purpose of this Franchise, the following terms, phrases, words, and abbreviations shall have the meanings ascribed to them 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:

A. “Basic Cable” is the lowest priced tier of service that includes the retransmission of local broadcast television signals.

B. “Cable Act” collectively means the Cable Communications Policy Act of 1984 and the Cable Television Consumer Protection and Competition Act of 1992, as amended.

C. “Expanded Basic” currently means an optional level of cable service provided by Grantee generally containing a number of satellite delivered programming services that are bundled together and available to the subscriber for a monthly price. Nothing herein shall preclude or prohibit Grantee from offering these services on an a la carte basis or from eliminating expanded basic in its entirety.

D. “FCC” means Federal Communications Commission, or successor governmental entity thereto.

E. “Franchise” shall mean the initial authorization, or renewal thereof, issued by the Franchising Authority, whether such authorization is designated as a franchise, permit, license, resolution, contract, certificate, or otherwise, which authorizes construction and operation of the System.

F. “Franchising Authority” means the City of Raton, New Mexico or the lawful successor, transferee, or assignee thereof.

G. “Grantee” means TCI Cablevision of New Mexico, Inc., or the lawful successor, transferee. or assignee thereof.

H. “Gross Revenues” mean the monthly Basic and Expanded Basic revenues received by the Grantee from subscribers of the System, provided, however, that such phrase shall not include any fees or taxes which are imposed directly or indirectly on any Subscriber thereof by any governmental unit or agency, and which are collected by the Grantee on behalf of such governmental unit or agency.

I. “Person” means an individual, partnership, association, joint stock company, trust, corporation, or governmental entity.

J. “Public Way” shall mean the surface of, and the space above and below, any public street, highway, freeway, bridge, land path, alley, court, boulevard, sidewalk, parkway, way, lane, public way, drive, circle, or other public right-of-way, including, but not limited to, public utility easements, dedicated utility strips, or rights-of-way dedicated for compatible uses and any temporary or permanent fixtures or improvements located thereon now or hereafter held by the Franchising Authority in the Service Area which shall entitle the Franchising Authority and the Grantee to the use thereof for the purpose of installing, operating, repairing, and maintaining the System. Public Way shall also mean any easement now or hereafter held by the Franchising Authority within the Service Area for the purpose of public travel, or for utility or public service use dedicated for compatible uses, and shall include other easements or rights-of-way as shall within their proper use and meaning entitle the Franchising Authority and the Grantee to the use thereof for the purposes of installing and operating the Grantee’s System over poles, wires, cable, conductors, ducts, conduits, vaults, manholes, amplifiers, appliances, attachments, and other property as may be ordinarily necessary and pertinent to the System.

K. “Service Area” means the present municipal boundaries of the Franchising Authority, and shall include any additions thereto by annexation or other legal means.

L. “Subscriber” means a person or user of the System who lawfully receives communications and other services therefrom with the Grantee’s express permission.

M. “System” shall mean a system of antennas, cables, wires, lines, fiber optic cable, towers, wave guides or other conductors, converters, equipment or facilities, used for producing, receiving, amplifying, storing, processing, or distributing audio video, digital or other forms of signals to and from Subscribers.

SECTION 4. GRANT OF FRANCHISE

4.1 GRANT. The Franchising Authority hereby grants to the Grantee a nonexclusive Franchise which authorizes the Grantee to construct and operate a System in, along, among, upon, across, above, over, under, or in any manner connected with Public Ways within the Service Area and for that purpose to erect, install, construct, repair, replace, reconstruct, maintain, or retain in, on, over, under, upon, across, or along any Public Way and all extensions thereof and additions thereto, such poles, wires, cables, conductors, ducts, conduits, vaults, manholes, pedestals, amplifiers, appliances, attachments, and other related property or equipment as may be necessary or appurtenant to the System.

4.2 TERM. The Franchise granted hereunder shall be for an initial term of 15 years commencing on the effective date of the Franchise as set forth below, unless otherwise lawfully terminated in accordance with the terms of this Franchise.

SECTION 5. STANDARDS OF SERVICE

5.1 Conditions of Street Occupancy.

A. All transmission and distribution structures, poles, other lines, and equipment installed or erected by the Grantee pursuant to the terms hereof shall be located so as to cause a minimum of interference with the proper use of Public Ways and with the rights and reasonable convenience of property owners property who own property that adjoins any of such Public Ways.

B. All poles and conduit within the system’s Service Area shall be made available for attachment or use by the Grantee at just and reasonable rates comparable to those rates established under the federal pole attachment statute and applicable FCC regulations.

5.2 Access for Franchised System. In case of new construction or property development where utilities are to be placed underground, the developer or property owner shall give the Grantee reasonable notice of not less than 30 days prior to such construction or development, of the particular date on which open trenching will be available for the Grantee’s installation of conduit, pedestals and/or vaults, and laterals to be provided at Grantee’s expense. The Grantee shall also provide specifications as needed for trenching. Cost of trenching and easements required to bring service to the development shall be born by the developer or property owner.

5.3 Restoration of Public Ways. If during the course of the Grantee’s construction, operation, or maintenance of the System there occurs a disturbance of any Public Way by the Grantee, it shall, at its expense, replace and restore such Public Way to a condition reasonably comparable to the condition of the Public way existing immediately prior to such disturbance.

5.4 Relocation at Request of the Franchising Authority. Upon its receipt of reasonable advance notice, not to be less than five business days, the Grantee shall, at its own expense, protect, support, temporarily disconnect, relocate in the Public Way, or remove from the Public Way, any property of the Grantee when lawfully required by the Franchising Authority by reason of traffic conditions, public safety, street abandonment, freeway and street construction, change or establishment of street grade, installation of sewers, drains, gas or water pipes, or any other type of structures or improvements by the Franchising Authority; but, the Grantee shall in all cases have the right of abandonment of its property. If public funds are available to any person using such street, easement, or right of way for the purpose of defraying the cost of any of the foregoing, the Franchising Authority shall make application for such funds on behalf of the Grantee.

5.5 Relocation at Request of Third Party. The Grantee shall, on the request of any person holding a building moving permit issued by the Franchising Authority, temporarily raise or lower its wires to permit the moving of such building, provided: (a) the expense of such temporary raising or lowering of wires is paid by said person, including, if required by the Grantee, making such payment in advance; and (b) the Grantee is given not less than 10 business days advance written notice to arrange for such temporary wire changes.

5.6 Trimming of Trees and Shrubbery. The Grantee shall have the authority to trim trees or other natural growth overhanging any of its System in the Service Area so as to prevent branches from coming in contact with the Grantee’s wires, cables, or other equipment. The Grantee shall reasonably compensate the Franchising Authority for any damages caused by such trimming, or shall, in its sole discretion and at its own cost and expense, reasonably replace all trees or shrubs damaged as a result of any construction of the System undertaken by the Grantee. Such replacement shall satisfy any and all obligations the Grantee may have to the Franchising Authority pursuant to the terms of this Section.

5.7 Safety Requirements. Construction, installation, and maintenance of the System shall be performed in an orderly and workmanlike manner. All such work shall be performed in substantial accordance with applicable FCC or other federal, state, and local regulations and the National Electric Safety Code. The System shall not unreasonably endanger or interfere with the safety of persons or property in the Service Area.

5.8 Aerial and underground Construction. In those areas of the Service Area where all of the transmission or distribution facilities of the respective public utilities providing telephone communications and electric services are underground, the Grantee likewise shall construct, operate, and maintain all of its transmission and distribution facilities underground; provided that such facilities are actually capable of receiving the Grantee’s cable and other equipment without technical degradation of the System’s signal quality. In those areas of the Service Area where the transmission or distribution facilities of the respective public utilities providing telephone communications, and electric services are both aerial and underground, the Grantee shall have the sole discretion to construct, operate, and maintain all of its transmission and distribution facilities, or any part thereof, aerially or underground. Nothing contained in this Section shall require the Grantee to construct, operate, and maintain underground any ground-mounted appurtenances such as subscriber taps, line extenders, system passive devices (splitters, directional couplers), amplifiers, power supplies, pedestals, or other related equipment. Notwithstanding anything to the contrary contained in this Section, in the event that all of the transmission or distribution facilities of the respective public utilities providing telephone communications and electric services are placed underground after the effective date of this Franchise, the Grantee shall only be required to construct, operate, and maintain all of its transmission and distribution facilities underground if it is given reasonable notice and access to the public utilities’ facilities at the time that such are placed underground.

5.9 Required Extensions of Service. The System, as constructed as of the date of the passage and final adoption of this Franchise, substantially complies with the material provisions hereof. Whenever the Grantee shall receive a request for service from at least 15 residences within 1320 cable-bearing strand feet (one-quarter cable mile) of its trunk or distribution cable, it shall extend its system to such Subscribers at no cost to said Subscribers for System extension, other than the usual connection fees for all Subscribers; provided that such extension is technically feasible, and if it will not adversely affect the operation, financial condition, or market development of the System, or as provided for under section 5.10 this Franchise.

5.10 Subscriber Charges for Extension of Service. No Subscriber shall be refused service arbitrarily. However, for unusual circumstances, such as a Subscriber’s request to locate his cable drop underground, existence of more than 150 feet of distance from distribution cable to connection of service to Subscribers, or a density of less than 15 residences per 1320 cable bearing strand feet of trunk or distribution cable, service may be made available on the basis of a capital contribution in aid of construction, including cost of material, labor, and easements. For the purpose of determining the amount of capital contribution in aid of construction to be borne by the Grantee and Subscribers in the area in which service may be expanded, the Grantee will contribute an amount equal to the construction and other costs per mile, multiplied by a fraction whose numerator equals the actual number of residences per 1320 cable-bearing strand feet of its trunks or distribution cable, and whose denominator equals 15 residences. Subscribers who request service hereunder will bear the remainder of the construction and other costs on a pro rata basis. The Grantee may require that the payment of the capital contribution in aid of construction borne by such potential Subscribers be paid in advance.

5.11 Service to Public Buildings. The Grantee shall, upon request, provide without charge, one outlet of Basic Service to those Franchising Authority offices, fire station(s), police station(s), and public school building(s) that are passed by its system.

SECTION 6. REGULATION BY THE FRANCHISING AUTHORITY

6.1 Franchise Fee.

A. The Grantee shall pay to the Franchising Authority a franchise fee equal to four percent (4%) of Gross Revenues (as defined in Section 3.1 of this Franchise) received by the Grantee from the operation of the System on an annual basis; provided, however, that the Grantee may credit against any such payments: (i) any tax, fee, or assessment of any kind imposed by the Franchising Authority or other governmental entity on a cable operator, or Subscriber, or both, solely because of their status as such; (ii) any tax, fee or assessment of general applicability which is unduly discriminatory against cable operators or Subscribers (including any such tax, fee, or assessment imposed, both on utilities and cable operators and their services), and (iii) any other special tax, assessment, or fee such as a business, occupation, and entertainment tax. For the purpose of this Section, the 12-month period applicable under the Franchise for the computation of the franchise fee shall be a calendar year, unless otherwise agreed to in writing by the Franchising Authority and the Grantee. The increased franchise fee will be payable by the Grantee to the Franchising Authority after a thirty (30) day written notice to Grantee of the increase and the collection of the increase in franchise fees by Grantee from its subscribers. The franchise fee payment shall be due and payable ninety (90) days after the close of the preceding calendar year. Each payment shall be accompanied by a brief report from a representative of the Grantee showing the basis for the computation.

B. Limitation on Franchise Fee Actions. The period of limitation for recovery of any franchise fee payable hereunder shall be five years from the date on which payment by the Grantee is due. Unless within seven years from and after such payment due date the Franchising Authority initiates a lawsuit for recovery of such franchise fees in a court of competent jurisdiction, such recovery shall be barred and the Franchising Authority shall be estopped from asserting any claims whatsoever against the Grantee relating to any such alleged deficiencies.

6.2 Rates and Charges. The Franchising Authority may regulate rates for the provision of Basic Cable and equipment as expressly permitted by applicable law.

6.3 Renewal of Franchise. The Franchising Authority and the Grantee agree that any proceedings undertaken by the Franchising Authority that relate to the renewal of the Grantee’s Franchise shall be governed by and comply with the provisions of Section 626 of the Cable Act, as amended, unless the procedures and substantive protection set forth therein shall be deemed to be preempted and superseded by the provisions of any subsequent provision of federal or state law.

In addition to the procedures set forth in said Section 626(a), the Franchising Authority agrees to notify the Grantee of all of its assessments regarding the identity of future cable-related community needs and interests, as well as, the past performance of the Grantee under the then current Franchise term. The Franchising Authority further agrees that such a preliminary assessment shall be provided to the Grantee promptly so that the Grantee has adequate time to submit a proposal under Section 626(b) of the Cable Act and complete renewal of the Franchise prior to expiration of its term. Notwithstanding anything to the contrary set forth in this Section, the Grantee and the Franchising Authority agree that at any time during the term of the then current Franchise, while affording the public appropriate notice and opportunity to comment, the Franchising Authority and the Grantee may agree to undertake and finalize informal negotiations regarding renewal of the then current Franchise and the Franchising Authority may grant a renewal thereof. The Grantee and the Franchising Authority consider the terms set forth in this Section to be consistent with the express provisions of Section 626 of the Cable Act.

6.4 Conditions of Sale. If a renewal or extension of the Grantee’s Franchise is lawfully denied or the Franchise is lawfully terminated, and the Franchising Authority either lawfully acquires ownership of the System or by its actions lawfully effects transfer of ownership of the System to another party, and such acquisition or transfer shall be at the price determined pursuant to the provisions set forth in section 627 of the Cable Act.

The Grantee and the Franchising Authority agree that in the case of a final determination of a lawful revocation of the Franchise, at the Grantee’s request, which shall be made in its sole discretion, the Grantee shall be given a reasonable opportunity to effectuate a transfer of its System to a qualified third party. The Franchising Authority further agrees that during such a period of time, it shall authorize the Grantee to continue to operate pursuant to the terms of its prior Franchise; however, in no event shall such authorization exceed a period of time greater than six months from the effective date of such revocation. If, at the end of that time, the Grantee is unsuccessful in procuring a qualified transferee or assignee of its System which is reasonably acceptable to the Franchising Authority, the Grantee and the Franchising Authority may avail themselves of any rights they may have pursuant to federal or state law; it being further agreed that the Grantee’s continued operation of its System during the six-month period shall not be deemed to be a waiver, nor an extinguishment of, any rights of either the Franchising Authority or the Grantee.

6.5 Transfer of Franchise. The Grantee’s right, title, or interest in the Franchise shall not be sold, transferred, assigned, or otherwise encumbered, other than to an entity controlling, controlled by, or under common control with the Grantee, without the prior consent of the Franchising Authority, such consent not to be unreasonably withheld. No such consent shall be required, however, for a transfer in trust, by mortgage, by other hypothecation, or by assignment of any rights, title, or interest of the Grantee in the Franchise or System in order to secure indebtedness. Within 30 days of receiving the request for transfer, the Franchising Authority shall, in accordance with FCC rules and regulations, notify the Grantee in writing of the information it requires to determine the legal, financial and technical qualifications of the transferee. If the Franchising Authority has not taken action on the Grantee’s request for transfer within 120 days after receiving such request, consent by the Franchising Authority shall be deemed given.

SECTION 7 COMPLIANCE AND MONITORING

7.1 Testing for Compliance. The Franchising Authority may perform technical tests of the System during reasonable times and in a manner which does not unreasonably interfere with the normal business operations of the Grantee or the System in order to determine whether or not the Grantee is in compliance with the terms hereof and applicable state or federal laws. Except in emergency circumstances, such tests may be undertaken only after giving the Grantee reasonable notice thereof, not to be less than two business days, and providing a representative of the Grantee an opportunity to be present during such tests. In the event that such testing demonstrates that the Grantee has substantially failed to comply with a material requirement hereof, the cost of such testing shall be borne by the Grantee. In the event that such testing demonstrates that the Grantee has substantially complied with such material provisions hereof, the cost of such testing shall be borne by the Franchising Authority. Expect in emergency circumstances, the Franchising Authority agrees that such testing shall be undertaken no more than once a year, and that the results thereof shall be made available to the Grantee.

7.2 Books and Records. The Grantee agrees that the Franchising Authority upon reasonable notice to the Grantee may review such of its books and records at the Grantee’s business office, during normal business hours and on a nondisruptive basis, as is reasonably necessary to ensure compliance with the terms hereof. Such records shall include, but shall not be limited to, any public records required to be kept by the Grantee pursuant to the rules and regulations of the FCC. Notwithstanding anything to the contrary set forth herein, the Grantee shall not be required to disclose information which it reasonably deems to be proprietary or confidential in nature. The Franchising Authority agrees to treat any information disclosed by the Grantee as confidential and only to disclose it to employees, representatives, and agents thereof that have a need to know, or in order to enforce the provisions hereof. The Grantee shall not be required to provide Subscriber information in violation of Section 631 of the Cable Act.

SECTION 8. INSURANCE AND INDEMNIFICATION

8.1 Insurance Requirements. The Grantee shall maintain in full force and effect, at its own cost and expense, during the term of the Franchise, Comprehensive General Liability Insurance in the amount of $1,000,000 combined single limit for bodily injury, and property damage. The Grantee shall provide a Certificate of Insurance designating the Franchising Authority as an additional insured. Such insurance shall be noncancellable except upon 30 days prior written notice to the Franchising Authority.

8.2 Indemnification. The Grantee agrees to indemnify, save and hold harmless, and defend the Franchising Authority, its officers, boards and employees, from and against any liability for damages and for any liability or claims resulting from property damage or bodily injury maintenance of its System, including, but not limited to, reasonable attorneys’ fees and costs, provided that the Franchising Authority shall give the Grantee written notice of its obligation to indemnify the Franchising Authority within 10 days of receipt of a claim or action pursuant to this Section. If the Franchising Authority determines that it is necessary for it to employ separate counsel, the costs for such separate counsel shall be the responsibility of the Franchising Authority.

SECTION 9. ENFORCEMENT AND TERMINATION OF FRANCHISE

9.1 Notice of Violation. In the event that the Franchising Authority believes that the Grantee has not complied with the terms of the Franchise, it shall notify the Grantee in writing of the exact nature of the alleged noncompliance.

9.2 Grantee’s Right to Cure or Respond. The Grantee shall have 30 days from receipt of the notice described in Section 10.1:(a) to respond to the Franchising Authority, contesting the assertion of noncompliance, or (b) to cure such default, or (c) in the event that, by the nature of default, such default cannot be cured within the 30 day period, initiate reasonable steps to remedy such default and notify the Franchising Authority of the steps being taken and the projected date that they will be completed.

9.3 Public Hearing. In the event that the Grantee fails to respond to the notice described in Section 10.1 pursuant to the procedures set forth in Section 10.2, or in the event that the alleged default is not remedied within 30 days of the date projected pursuant to 10.2(c) above, the Franchising Authority shall schedule a public hearing to investigate the default. Such public hearing shall be held at the next regularly scheduled meeting of the Franchising Authority which is scheduled at a time which is no less than five business days therefrom. The Franchising Authority shall notify the Grantee in writing of the time and place of such meeting and provide the Grantee with an opportunity to be heard.

9.4 Enforcement. Subject to applicable federal and state law, in the event the Franchising Authority, after such meeting, determines that the Grantee is in default of any provision of the Franchise, the Franchising Authority may:

A. Seek specific performance of any provision, which reasonably lends itself to such remedy, as an alternative to damages;

B. Commence an action at law for monetary damages or seek other equitable relief; or

C. In the case of a substantial default of a material provision of the Franchise, declare the Franchise Agreement to be revoked in accordance with the following:

The Franchising Authority shall give written notice to the Grantee of its intent to revoke the Franchise on the basis of a pattern of noncompliance by the Grantee including one or more instances of substantial noncompliance with a material provision of the Franchise. The notice shall set forth the exact nature of the noncompliance. The Grantee shall have 90 days from such notice to object in writing and to state its reasons for such objection. In the event the Franchising Authority has not received a response satisfactory from the Grantee, it may then seek termination of the Franchise at a public meeting. The Franchising Authority shall cause to be served upon the Grantee, at least 10 days prior to such public meeting, a written notice specifying the time and place of such meeting and stating its intent to request such termination.

At the designated meeting, the Franchising Authority shall give the Grantee an opportunity to state its position on the matter, after which it shall determine whether or not the Franchise shall be revoked. The Grantee may appeal such determination to an appropriate court, which shall have the power to review the decision of the Franchising Authority “de novo” and to modify or reverse such decision as justice may require. Such appeal to the appropriate court must be taken within 60 days of the issuance of the determination of the Franchising Authority.

The Franchising authority may, at its sole discretion, take any lawful action which it deems appropriate to enforce the Franchising Authority’s rights under the Franchise in lieu of revocation of the Franchise.

9.5 Impossibility of Performance. The Grantee shall not be held in default or noncompliance with the provisions of the Franchise, nor suffer any enforcement or penalty relating thereto, where such noncompliance or alleged defaults are caused by strikes, acts of God, power outages, or other events reasonably beyond its ability to control.

SECTION 10. MISCELLANEOUS PROVISIONS.

10.1 Actions of Parties. In any action by the Franchising Authority or the Grantee that is mandated or permitted under the terms hereof, such party shall act in a reasonable, expeditious, and timely manner. Furthermore, in any instance where approval or consent is required under the terms hereof such approval or consent shall not be unreasonably withheld.

10.2 Equal Protection. In the event the Franchising Authority enters into a franchise, permit, license, authorization, or other agreement of any kind with any other person or entity other than the Grantee to enter into the Franchising Authority’s streets and public ways for the purpose of constructing or operating a cable system or providing cable service to any part of the Service Area, the material provisions thereof shall be reasonably comparable to those contained herein, in order that one operator not be granted an unfair competitive advantage over another, and to provide all parties equal protection under the law.

10.3 Theft of Service. In addition to those criminal and civil remedies provided by state and federal law, it shall be a misdemeanor for any person, firm, or corporation to create or make use of any unauthorized connection, whether physically, electrically, acoustically, inductively, or otherwise, with any part of the System without the express consent of the Grantee. Further, without the express consent of the Grantee, it shall be a misdemeanor for any person to tamper with, remove, or injure any property, equipment, or part of the System or any means of receiving services provided thereto. Subject to applicable federal and state law, the Franchising Authority shall incorporate into its criminal code, if not presently a part thereof, criminal misdemeanor law which will enforce the intent of this Section 10.3.

10.4 Notice. Unless expressly otherwise agreed between the parties, every notice or response required by this Franchise to be served upon the Franchising Authority or the Grantee shall be in writing, and shall be deemed to have been duly given to the required party five business days after having been posted in a properly sealed and correctly addressed envelope when hand delivered or sent by certified or registered mail, postage prepaid

The notice or responses to the Franchising Authority shall be addressed as follow:

City of Raton

P.O. Box 910

Raton, New Mexico 87740

The notices or responses to the Grantee shall be addressed as follows:

TCI Cablevision of New Mexico, Inc.

1026 S. Second Street

Raton, New Mexico 87740

with a copy to:

TCI Cablevision of New Mexico, Inc.

Attention: Legal Department

4700 S. Syracuse Street, Suite 1100

Denver, Colorado 80237

The Franchising Authority and the Grantee may designate such other address or addresses from time to time by giving notice to the other.

10.5 Descriptive Headings. The captions to Sections contained herein are intended solely to facilitate the reading thereof. Such captions shall not affect the meaning or interpretation of the text herein.

10.6 Severability. If any Section, sentence, paragraph, term, or provision hereof is determined to be illegal, invalid, or unconstitutional, by any court of competent jurisdiction or by any state or federal regulatory authority having jurisdiction thereof, such determination shall have no effect on the validity of any other Section, sentence, paragraph, term or provision hereof, all of which will remain in full force and effect for the term or provision hereof, all of which will remain in full force and effect for the term of the Franchise, or any renewal or renewals thereof.

10.7 Effective Date. The effective date of this Franchise is August 23, 1995, pursuant to the provisions of applicable law. This franchise shall expire on August 23, 2010, unless extended by the mutual agreement of the parties.

Passed, adopted and effective this 23rd day of August, 1995, subject to applicable federal, state and local law.

IN WITNESS WHEREOF, the parties hereto have entered into this Franchise Agreement on August 23, 1995.

City of Raton, New Mexico

/s/ Joe F. Apache

Title: Mayor

/s/ Eva Mae Sproule

Clerk

ORDINANCE NO. 935

AN ORDINANCE AMENDING THE ORGANIC CONTRACT AND POWER SALES AGREEMENT WITH ARPA.

WHEREAS, the City Commission (“Governing Body”) of the City of Raton, New Mexico (the “City”), has received, and there are now on file in the office of the City Clerk, copies of a proposed Third Amendment to Organic Contract Creating and Establishing the Arkansas River Power Authority as a Separate Governmental Entity (“Third Amendment”) and copies of a proposed First Amendment to Agreement for the Supply of Electric Power and Energy to Municipal Members of the Arkansas River Power Authority (“First Amendment”), for consideration, execution and delivery; and

WHEREAS, the Third Amendment is a proposed agreement among the Cities of Holly, La Junta, Lamar, Las Animas, Raton, Springfield and Trinidad (the “Municipalities”) and the Arkansas River Power Authority (the “Authority”); and

WHEREAS, the First Amendment is a proposed agreement among the Cities of Holly, La Junta, Lamar, Las Animas, Raton, Springfield and Trinidad (the “Municipalities”) and the Arkansas River Power Authority (the “Authority”); and

WHEREAS, the Third Amendment and First Amendment provide for (a) an extension of the term of the Organic Contract and Power Sales Agreement in order to accommodate the issuance of bonds to finance the Lamar Repowering Project, a long term power supply project, (b) making certain clarifying revisions to commitments of the Municipalities to acquire their wholesale power supply resources from the Authority, and (c) making certain housekeeping revisions to reflect changed circumstances since the original adoption of the Organic Contract and Power Sales Agreement.

WHEREAS, the provisions contained in the Third Amendment and First Amendment are deemed advisable and in the best interests of the City.

NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF RATON, NEW MEXICO:

Section 1. Contingent only upon approval of the Joint Operating Agreement between the City of Lamar, Colorado, The Lamar Utilities Board, and the Arkansas River Power Authority.

Section 2. The Mayor and the City Clerk be, and they hereby are, directed to execute and deliver the Third Amendment and First Amendment on behalf of the City.

Section 3. All action heretofore taken by the City and its officers in authorizing, executing and delivering the original Organic Contract Creating and Establishing the Arkansas River Power Authority as a Separate Governmental Entity and the original agreement for the Supply of Electric Power and Energy to Municipal Members of the Arkansas River Power Authority, and all action taken pursuant thereto, be, and the same hereby is, ratified, approved and confirmed.

Section 4. If any section, paragraph, clause or provision of this Ordinance shall be held invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any other provision of this Ordinance.

Section 5. All ordinances, resolutions, bylaws and regulations of the City in conflict with this Ordinance are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed to revive any ordinance, resolution, bylaw or regulation, or part of any thereof, heretofore repealed.

Section 6. This Ordinance shall be published in full and take effect as provided by law.

PASSED, ADOPTED, SIGNED AND APPROVED THIS 26th DAY OF October, 2004.

CITY OF RATON

Joe F. Apache /s/

Joe F. Apache, Mayor

(SEAL)

ATTEST:

Michael Anne Lannon /s/

Michael Anne Lannon, City Clerk/Treasurer

ORDINANCE NO. 936

AN ORDINANCE OF THE CITY OF RATON REAFFIRMING
ORDINANCE NO. 935 AND CLARIFYING ITS INTENT TO SERVE AS
APPROVAL FOR THE ISSUANCE OF REVENUE BONDS BY THE
ARKANSAS RIVER POWER AUTHORITY TO FINANCE THE LAMAR
REPOWERING PROJECT; AND PROVIDING OTHER DETAILS IN
CONNECTION THEREWITH.

WHEREAS, the City of Raton, New Mexico (the “City”) is a member of the Arkansas River Power Authority, a separate governmental entity and political subdivision of the State of Colorado (the “Authority” or “ARPA”), having heretofore executed and delivered the “Organic Contract Creating and Establishing the Arkansas River Power Authority as a Separate Governmental Entity” and amendments thereto (collectively, the “Organic Contract”); and

WHEREAS, the Authority was established by the City, the Town of Holly, Colorado; the City of La Junta, Colorado; the City of Lamar, Colorado; the City of Las Animas, Colorado; the Town of Springfield, Colorado; and the City of Trinidad, Colorado (collectively the “Member Municipalities” or individually each a “Member Municipality”) to plan, develop and acquire the electric power resources needed by the Member Municipalities to reliably serve their respective electricity customers; and

WHEREAS, Section 2.4 of the Organic Contract provides that the Authority must request the approval of the Member Municipalities prior to issuing any bonds in connection with a Project (as said term is defined in the Organic Contract); and

WHEREAS, Section 2.4.2 of the Organic Contract provides that written notice of the Authority’s intention to provide funds (through the issuance of bonds) for a Project must be submitted to each Member Municipality and that the notice must contain a description of the Project, the projected sources and uses of funds for all aspects of the construction and testing of the Project, and a statement that, in the opinion of the Authority, the Project is economically feasible and is necessary for the Authority to meet its commitment to supply the wholesale power and energy requirements of the Municipalities, together with an explanation of the Authority’s basis for this opinion; and

WHEREAS, each Member Municipality, including the City, has received a written “Notice of Intent to Commit Funds” (the “Notice”) from the Authority containing the information required pursuant to Section 2.4.2 of the Organic Contract and stating that the Authority intends to issue revenue bonds (the “Bonds”) to finance the repowering of the existing 25 megawatt steam generating unit owned by the Lamar Utilities Board from a natural gas-fired operation to a coal-fired operation with a resulting increase in net output rating to approximately 38.5 megawatt, all as more specifically described in the Notice (the “Lamar Repowering Project”); and

WHEREAS, in order for the Authority to issue the Bonds, the Notice states that revisions must be made to the Organic Contract and to the “Agreement For The Supply of Electric Power and Energy to Municipal Members of the Arkansas River Power Authority” (the “Power Sales Agreement”), including (a) extending the base terms of both documents; (b) clarifying the power supply commitments between the Authority and the Member Municipalities and the Member Municipalities to each other and to the Authority; and (c) incorporating several housekeeping amendments necessitated by changed circumstances since the Organic Contract and Power Sales Agreement were originally executed; and

WHEREAS, the revisions to the Organic Contract are embodied in the “Third Amendment to Organic Contract Creating and Establishing the Arkansas River Power Authority as a Separate Governmental Entity” (the “Organic Contract Third Amendment”) and the revisions to the Power Sales Agreement are embodied in the “First Amendment to the Agreement for the Supply of Electric Power and Energy to Municipal Members of the Arkansas River Power Authority” (the “Power Sales Agreement First Amendment”), both of which have been approved by the ARPA Board of Directors and the City Commision of the City (the “Governing Body”); and

WHEREAS, each Member Municipality is to give the Authority written notice of its approval or disapproval of (i) the financing of the Lamar Repowering Project from proceeds of the Bonds, (ii) the Organic Contract Third Amendment and (iii) the Power Sales Agreement First Amendment within a period of time specified in Section 2.4.3 of the Organic Contract, and it was intended by the Governing Body that the adoption of Ordinance No. 935 on October 26, 2004 constitute such approval by the City; and

WHEREAS, representatives of ARPA appeared before the Governing Body prior to the adoption of Ordinance No. 935 to present the details of the Lamar Repowering Project and respond to questions of the Governing Body; and

WHEREAS, the Board of Directors of The Raton Public Service Company, prior to the adoption of Ordinance No. 935, considered and recommended to the Governing Body that it approve the Lamar Repowering Project, the issuance of the Bonds, the Organic Contract Third Amendment and the Power Sales Agreement First Amendment; and

WHEREAS, in connection with the development of the Lamar Repowering Project and subsequent to the adoption of Ordinance No. 935, the Authority, the City of Lamar and the Lamar Utilities Board entered into a Joint Operating Agreement for the Development of the Lamar Repowering Project and Operations and Maintenance in Support of the Lamar Repowering Project (the “Joint Operating Agreement”); and

WHEREAS, the purpose of this Ordinance (the “Ordinance”) is to reaffirm Ordinance No. 935, to clarify its intended purposes, and to provide other details in connection therewith;

NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF RATON, NEW MEXICO:

Section 1. Approval of Organic Contract Third Amendment and Power Sales Agreement First Amendment. Upon receiving notice that the Joint Operating Agreement between the City of Lamar, Colorado, the Lamar Utilities Board and the Authority has been approved, the Mayor and the City Clerk executed and delivered the Organic Contract Third Amendment and Power Sales Agreement First Amendment on behalf of the City.

Section 2. Approval of the Financing of the Lamar Repowering Project through the issuance of the Bonds.

(a) The financing of the Lamar Repowering Project from the proceeds of the Bonds, which was intended through the adoption of Ordinance No. 935, is in all respects approved and authorized. In accordance with the terms of the Notice, the Bonds may be issued in one or more series which shall, in the aggregate, incorporate and be subject to the following parameters:

(i) The principal amount of the financing for the engineering, equipment procurement, and construction of the Repowering Project shall not exceed $66 million, plus such additional costs of issuance related to the financing, including, but not limited to, capitalized interest, the creation of a bond reserve fund, underwriting discount, legal costs, and bond insurance premiums;

(ii) The term of the Bonds (maturity) shall be for a period which, in the best judgment of the Authority after obtaining the advice and counsel of the Authority’s expert financial advisors, does not exceed the useful life of the Repowering Project and results in annual debt service payments which enable the Authority to provide a long term supply of baseload energy at reasonable cost to the Member Municipalities; provided, however, that the maturity of the initial issue shall not extend beyond forty (40) years from the bond issuance date;

(iii) The Authority shall use its best efforts to obtain the lowest net effective interest rate on the Bonds, through a public or negotiated sale, giving due consideration to the length of the financing and market conditions at the time of closing; and

(iv) By approving the issuance of Bonds by the Authority, the City shall be deemed to also give its approval to the placement by the Authority of interim financing for the Repowering Project, as determined by the Authority’s Board of Directors to be necessary or desirable prior to closing on the Bonds.

(b) The Bonds shall not be considered a debt, liability, or obligation of the City and are collectible only from the proper pledged revenues and the bondholders may not look to any municipal fund of the City for the payment of the principal and interest on the Bonds.

Section 3. Findings and Determinations. The Governing Body hereby finds and determines as follows:

(a) the Notice, in form and content, meets the requirements established pursuant to Section 2.4.2 of the Organic Contract for written notice to Member Municipalities;

(b) at least one Member Municipality requested an extension to the sixty (60) day notice period provided in Section 2.4.3 of the Organic Contract and the request of the Member Municipality was received by the Authority within the original sixty (60) day period, and the City consented to an extension of time for thirty (30) days;

(c) all Member Municipalities have, by action of the Member Municipalities within the meaning of Section 2.4.3 of the Organic Contract, approved and authorized the financing of the Lamar Repowering Project from proceeds of the Bonds, and approved and authorized the Organic Contract Third Amendment and the Power Sales Agreement First Amendment;

(d) the Authority has provided the City with written notification that the Joint Operating Agreement has been executed by all parties to said agreement; and

(e) Ordinance No. 935 shall constitute action by the City within the meaning of Section 2.4.3 of the Organic Contract.

Section 4. City Cooperation and Execution of Certificates and Instruments. The Mayor, City Clerk and other officials and employees of the City are hereby authorized to execute and deliver for and on behalf of the City any and all certificates and instruments which may be reasonably requested in connection with the issuance of the Bonds by the Authority, and to perform all other acts that they may deem necessary or appropriate in order to implement and carry out the purposes of this Ordinance. Without limitation of the foregoing provisions, the City Clerk is hereby authorized and directed to deliver a certified copy of this Ordinance to the Authority indicating that this Ordinance has been duly approved and, together with the Mayor or, in the absence of the Mayor the Mayor Pro Tem, provide a certification to the Authority when and if all provisions of this Ordinance are in full force and effect. Additionally, the Mayor or, in the absence of the Mayor the Mayor Pro Tem, shall be authorized to certify to the Authority that all conditions and parameters established pursuant to this Ordinance have been met and such certification shall be deemed to conclusively establish on behalf of the City that all conditions and parameters have been met.

Section 5. Headings. The headings to the various sections and paragraphs to this Ordinance have been inserted solely for the convenience of the reader, are not a part of this Ordinance, and shall not be used in any manner to interpret this Ordinance.

Section 6. Ratification and Approval of Prior Actions. Those actions and all actions heretofore taken by the City and its officers in connection with the Lamar Repowering Project and the Bonds, including but not limited to the adoption of Ordinance No. 935, are hereby ratified, approved and confirmed. The Governing Body hereby acknowledges and agrees that the Notice is sufficient for the purposes of the City and satisfies the requirements of the Organic Contract.

Section 7. Severability. If any section, paragraph, clause or provision of this Ordinance shall be held invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any other provision of this Ordinance.

Section 8. Repeater. All ordinances, resolutions, bylaws and regulations of the City in conflict with this Ordinance are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed to revive any ordinance, resolution, bylaw or regulation, or part thereof, heretofore repealed.

Section 9. Effective Date. This Ordinance shall be in full force and effect five (5) days after publication following final passage and adoption.

PASSED, ADOPTED, SIGNED AND APPROVED THIS 18th DAY OF January, 2005.

[SEAL]

By Joe F. Apache /s/

Joe F. Apache, Mayor

Attest:

By Michael Anne Lannon /s/

Michael Anne Lannon, City Clerk/Treasurer

ELECTRIC FRANCHISE

ORDINANCE NO. 942

AN ORDINANCE RELATING TO THE RATON PUBLIC SERVICE COMPANY AND GRANTING A UTILITY FRANCHISE TO SAID COMPANY

WHEREAS, the Raton Public Service Company (hereinafter called the Company), a New Mexico Corporation, has for many years operated a utility in the City of Raton, New Mexico, acting under franchise from the City, the existing franchise being set forth in Ordinance No. 731 of the City of Raton, adopted and approved January 14, 1986; and

WHEREAS, the City of Raton, (hereinafter called the City), is the beneficial owner of all of the capital stock of the Company, which stock (except for qualifying shares of other directors) is presently held in the names of Kathy McQueary, Charles Miller and Steve Cunico as trustees; and

WHEREAS, the City is the absolute owner of the electric utility system heretofore operated and managed by the Company pursuant to said Ordinance No. 731, together with the right to furnish service within a service area allowed by law; and

WHEREAS, the City is a member of the Arkansas River Power Authority (ARPA), a political subdivision of the State of Colorado, under authority of contract Ordinance and law (in particular, Section 3-24-14 NMSA 1978), with which it has various contractual obligations and from which the City is currently purchasing wholesale power, in addition to the power generated locally, at a substantial saving over what it might otherwise be required to pay for purchased power, and the day-to-day coordination with ARPA requires the delegation of administrative and operations responsibility comparable to that required for the generation of electricity; and

WHEREAS, it is considered desirable both by the Company and by the City that the operation and management of the City's now owned or hereafter acquired energy production, services, sources, generation and distribution systems and plants ("utility system") and the handling of the financial operations of the utility be continued in a manner similar to that heretofore established by Ordinance No. 731, except as hereinafter modified; and

WHEREAS, the Company has made written application to the City Commission of the City of Raton requesting the due enactment of this Ordinance and specifically consenting to all of the terms and provisions of this ordinance, and the said Kathy McQueary, Charles Miller and Steve Cunico have likewise requested and consented to all of the terms and provisions of this Ordinance.

NOW THEREFORE, BE IT ORDAINED by the City Commission of the City of Raton, New Mexico:

Section 1: Grant of Franchise.

From and after the effective date of this ordinance, and subject to all the terms and provisions herein contained, the City does hereby grant to the Company the right, privilege and franchise, pursuant to N.M.S.A. 1978, Section 3-42-1 for a term ending November 11, 2030, to maintain and operate within the City and within all future additions to the City and within the City's lawful utility service area as the same may exist from time to time hereafter, the City's electric utility system, including its generating plant and distribution system and such other energy utility systems as may be transferred to the Company, and the rights, privileges and facilities available through ARPA (as may be determined from time to time by the Company), for the furnishing of utility services to the City, and as may lawfully be furnished to others. Throughout the term of this ordinance the Company shall have the right to the free use of the rights-of-way, streets, avenues, alleys and public places of the City and all future additions thereto, for the purpose of erecting and maintaining poles or other supports or otherwise emplacing utility systems, and for wires, transformers, pipes, lines, appliances and other equipments, and for the laying and maintaining of conduits, pipes, lines, appliances, wires and other equipment for the transmission and distribution of energy and energy sources; provided, however, that the same shall be placed in such reasonable locations as may be permitted by the City Commission, and in such manner as not to interfere with traffic or other necessary public uses.

Section 2: Fixing of Rates.

The Company shall at all times furnish an ample supply of its owned, generated or acquired energy to the City, its inhabitants and to others as may be lawful. The City Commission shall from time to time set, fix, determine and alter the rate schedules and the rates, charges and rate classifications pertaining to all services to be rendered by the Company. It shall be the duty of the City to maintain rates at such a level and,with such reasonable classifications as shall permit the funding requirement set forth in Section 19 of this ordinance. Such rate tariffs shall be sufficient to meet the efficient and long term operation of the utility by the Company and also provide for the City a sufficient net income to meet all debt service, operational expense and reserve requirements of this Ordinance and of obligations of the City in respect of energy utility system bonds, or other similar energy utility system obligations as the City may issue from time to time. Until changed by the City, the existing rate schedules, rates, charges and rate classifications shall remain in effect. The Company may recommend to the City Commission, from time to time, such changes in rate schedules and rates as appear necessary and desirable.

Section 3: Discounts.

The Company shall allow such discounts for prompt payment of bills as may be from time to time required by the City Commission. No such discount shall in any event be allowed to any customer who shall at the time of payment be, and remain in default in the payment of, any previous bill. Until the establishment of some different rule by the City Commission, the Company shall allow a ten percent (10%) discount on all bills paid on or before the tenth (10th) day of the month succeeding the month for which such bills were incurred.

Section 4: Discontinuance of Service.

Payment for all services furnished by the Company shall be made by customers as directed by the Company; and in default of such payment the Company may, at its option, and subject to applicable laws, discontinue the service.

Section 5: Municipal Uses.

In consideration for this franchise agreement, the Company shall furnish to the City all electric energy needed by the City for the lighting of its municipal offices, for the street lighting and for general municipal purposes within the City's electric utility service area, all without requiring payment therefor from the City, as a franchise fee. For all power and electric energy taken by the City and its departments for its proprietary purposes, including but not limited to water treatment and pumping and sewage treatment and disposal purposes, the City shall pay to the Company the actual cost thereof, computed as the rolling three-month average of fuel and purchased energy costs of the energy furnished.

Section 6: Rules and Regulations of the Company.

The Company may make reasonable Rules and Regulations specifying and controlling the type of equipment, appliances, devices, connections, easements and operating practices which may be required in order for a customer to receive service from the Company or in order to entitle customers to the several rate classifications now or hereafter in force. The Company shall not be required to make any service connection unless its reasonable requirements have been complied with. All current Rules and practices of the Company are herewith approved and ratified by the City. The Company may hereafter adopt and file with the City Clerk additional such Regulations with the City and, unless within thirty (30) days of such filing the city shall disapprove of such Regulations adopted by the Company under this Section, then such Regulations shall be deemed to be approved and enacted by the City and in effect. Within such thirty (30)-day period the City Commission shall have the power to require modifications or may set aside such newly filed Regulation and establish in its stead such regulation as the City Commission may consider proper and a copy of such City enacted Regulation shall then be filed with the City Clerk within thirty (30) day of its adoption.

Section 7: Internal Operations.

The Company shall be solely responsible for governing its internal operation, personnel, billing and operational activities, and the Company shall from time to time establish polices and procedures concerning such internal matters as it deems necessary and appropriate. The City adopts, confirms and ratifies the existing policies and procedures of internal matter.

Section 8: Discrimination Forbidden.

The Company shall never commit, practice or permit any unfair discrimination between its customers. All rates and charges shall be applied fairly to the end that there shall always be a uniform charge for like service under like conditions.

Section 9: Power and Authority of the Company.

The Company is granted, and shall have, exercise, enjoy and use all powers and authority set forth under Section 3-24-1 through 18, NMSA 1978, as amended and as may be amended, except that reserved to the City Commission in this Ordinance, and except as lawfully exercised only by the City Commission.

Section 10: Police Power of the City.

The City Commission of the City shall adopt and enforce all such ordinances, rules and regulations as may be necessary for the protection of the Company and the lawful conduct of its operations. The rights and privileges granted to the Company by this ordinance shall at all times be subject to the police power and reasonable dominion of the City as the same may be exercised by general ordinance, not destructive, however, of the rights and privileges hereby granted.

Section 11: Company's Duty to Repair.

Whenever the Company shall enter upon any street or public place for the purpose of construction or maintaining any portion of the transmission or distribution system, it shall be the duty of the Company to repair any damage done by it and to remove all debris resulting from its operations.

Section 12: Agreement Concerning Corporate Management of the Company.

In consideration of the right, privilege and franchise granted to the Company by this ordinance, and in consideration of the fact that the City is the beneficial owner of all of the issued and outstanding capital stock of the Company, it is mutually agreed by the City and the Company that the corporate management of the Company is herewith transferred and vested in the Board of Directors of the Company, except as is otherwise retained or reserved by this Ordinance or the laws of New Mexico to the City Commission. Such corporate management and the ownership and control of its capital stock and the disposition of the utility system earnings shall in all respects be governed by the terms and provisions of this ordinance, including particularly Sections 13 through 19 inclusive, hereinafter set forth.

Section 13: Capital Stock Held in Trust.

It is recognized that the present holders of all of the issued and outstanding capital stock of the Company hold the same as Trustees for the use and benefit of the City, and it is agreed that the City is and shall always continue to be the beneficial owner of all the capital stock of the Company which is now, or at any time hereafter may be, issued and outstanding. The legal holders (Trustees) of said stock shall have the right, power and duty to vote the same, but they shall always hold the same for the use and benefit of the City. The capital stock shall carry with it no attribute, privilege or power other than the right to vote the same, in due and proper time and manner, for the election of three of the Directors of the Board of Directors of the Company, and for other corporate purposes not inconsistent with this franchise.

Section 14: Trustees.

As soon as this Ordinance becomes effective, all of the issued and outstanding capital stock of the Company shall be issued to and thereafter be held equally by those persons named hereinafter as trustees, each of whom shall serve until the date specified for the expiration of his term. Thereafter, the City Commission shall have the duty to appoint or re-appoint a trustee or successor trustee for an additional term of six years; provided, however, no trustee shall be re-appointed to serve more than two complete, consecutive six year terms. The terms of the trustees being staggered, one such regular appointment or reappointment will occur every two years during the life of the franchise. The persons serving initially as trustees are Kathy McQueary, for a term expiring June 30, 2009, Steve Cunico, for a term expiring June 30, 2011, and Charles Miller, for a term expiring June 30, 2007. Each of the trustees shall vote the shares held by him or her in the election of three of the corporate directors. Each of the trustees shall continue to hold his or her said stock until such time as his appointed term may expire or until such time as he may die or resign or be removed from office as hereinafter provided.

Section 15: Removal of Trustees.

A trustee may be removed from office by the City Commission during his or her appointed term for one or more of the following reasons:

(a) Legal incapacity;

(b) Willful neglect of duty or willful failure to comply with the terms of this franchise or the laws governing the operation of a municipal utility;

(d) Conviction of a crime involving moral turpitude; or

(e) Failure of the trustee to maintain his or her status as a resident of Raton, New Mexico, or of its lawful utility service area.

The power of removal shall be vested in a majority of the Commission. The trustee shall be entitled to a full evidentiary hearing after reasonable notice and upon a written specification of the charges against him or her. The vote of each member shall be announced openly and shall be recorded in the minutes, and the concurring vote of the majority of the members of the whole Commission shall be necessary to accomplish a removal.

Section 16: Appointment of Successor Trustees.

Upon the expiration of the appointed term of each such trustee, and in case of the death, resignation or removal of any of the trustees above named or of any successor trustee, a successor shall be appointed by the City Commission; and thereupon all of the capital stock previously held by the former trustee shall be promptly transferred to such successor trustee and shall thereafter stand in his or her name and be voted in like manner as if he or she were specifically named in this Ordinance as one of the trustees. Any successor trustee appointed by the Commission must be a resident to the City of Raton, New Mexico, or of its lawful utility service area.

Section 17: Directors.

The directors of the Company shall be five (5) in number. The mayor of the City and one other member of the City commission (to be selected by the City Commission) shall be directors of the Company. The remaining three (3) directors shall be elected by the trustees, and must be residents of the City of Raton or of its lawful utility service area. Except as hereinabove expressly provided, the qualifications of the Directors, the method of selecting them, and the powers of the entire Board of Directors shall be governed by the ordinary Business Corporation laws of the State of New Mexico. No director who is not a trustee of the Company shall be issued any qualifying shares. Each director of the Company may receive such compensation for his services as the Company may determine, not to exceed a maximum of $100.00 per month; except that said maximum amount may be increased with the consent and approval of the City Commission. No director shall serve as a manager of the Company or an employee of the Company (except as a corporate officer). No trustee or director of the Company, whether acting as an officer of the Company or not, shall receive any other compensation than that above mentioned.

Section 18: Manager.

The Company shall employ a competent manager and such other help, technical or otherwise, as may be necessary to assure the efficient and economical operation of the City's energy utility system. The compensation of such manager and other employees shall be a proper operation and maintenance charge against the gross revenues of the system.

Section 19: Rate and Income Requirements and Disposition of System Revenue.

(A) The Company shall set aside the Gross Annual Revenues of the utility system into a special fund to be known as the "City of Raton Electric Utility System Gross Income Fund" hereinafter sometimes designated as the "Income Fund" from which fund the Board shall make the operational, reserve and debt payments below described. As used throughout this Ordinance, "Gross Annual Revenues" shall mean all revenues paid to the Company by rate payers for the retail sale of energy, and earned interest, but shall not include (1) taxes or surcharges; (2) insurance proceeds; (3) payments from other utilities, co-generators, producers or transmitters of energy; (4) damage awards; (5) proceeds from sale of assets; (6) payments from City of Raton for energy consumed; or (7) other revenues received from sources other than sales to rate paying customers, and earned interest.

(B) So long as this franchise shall remain in force and effect, the City shall set the utility rates in an amount designed to achieve the following income, and the income shall be expended in the following priorities, to-wit:

(1) The Company shall first set aside each month in the Gross Income Account monies sufficient to pay one month average expenses of the operation of the utility system, excluding depreciation and amortization expenses, as they become due and payable. Upon execution of this Ordinance, the sum of $339,000.00 shall be set aside in the Gross Income fund, for the amount of the fiscal year ending June 30, 2005. Thereafter, this reserve's maximum allowable balance is to be maintained at an amount determined by an independent annual audit to be a one month average of the preceding year's cash expenses of the operation of the utility system, excluding depreciation and amortization expenses. No transfers will be made until such time as the "Gross Income Account" balance exceeds the calculated maximum allowable balance;

(2) From any remaining income, the Company shall next transfer into a reserve fund called "Debt Service Reserve" funds as required for debt service and bond reserves, under any ordinances or resolutions of the City creating and issuing energy utility system bonds or approving other lawful means of borrowing monies for improvements, replacements, or expansion of the City's energy utility system. The maximum allowable balance of the "Debt Service Account" is not to exceed one half of the annual debt service requirements, including principal, interest and other costs associated with said debt. The City shall continue to retain full authority to create and issue system bonds and to enact such ordinances and revenue guarantees as shall be appropriate and lawful for such system bonds or the repayment of other approved loans. No additional transfers will be made until such time as the maximum allowable balance of the "Debt Service Account" has been attained;

(3) From any remaining income the Company shall next transfer into a reserve fund called "Operation Reserve Fund" an accumulation of cash reserves adequate to permit the payment of the average cash expenses (exclusive of fuel and purchased power and energy capacity) required for a sixty-day period. At no time shall the "Operation Reserve Fund" balance exceed the maximum allowable balance, as determined by an independent annual audit. Upon execution of this Ordinance, the monies in the Company's present Operation Reserve Fund shall remain in such fund and the maximum allowable balance shall remain in force. Thereafter, this reserve's maximum allowable balance is to be determined, by an independent annual audit, to be a sixty-day average of the preceding year's cash expenses (exclusive of fuel and purchased power and energy capacity). No additional transfers will be made until such time as the maximum allowable balance of the "Operation Reserve Fund" has been attained;

(4) From any remaining income, the Company shall next transfer, for the current month, an amount not to exceed the "maximum allowable transfer" equal to one-twelfth (1/12) of two and one-half percent (2 1/2%) of the immediately preceding fiscal year's gross annual revenues into the "Reserve for Annual Overhaul, Inspection, and Repair of Boilers and Generation Equipment" reserve. In addition, if in any prior month, within the current fiscal year, funds were not adequate for the maximum allowable transfer, those funds shall also be transferred into the "Reserve for Annual Overhaul, Inspection, and Repair of Boilers and Generation Equipment" reserve. Amounts in said fund shall be used to pay, in whole or in part, periodic repairs, inspection, overhaul costs of the boilers and generation equipment, and closure and retirement costs of the generation facility or facilities. The balance of such fund shall not exceed the maximum allowable balance equal to four and one-half percent (4 1/2%) of the gross annual revenues of the Company, as determined annually by an independent audit, for the preceding fiscal year. Upon execution of this Ordinance, the monies in the Company's present "Reserve for Annual Overhaul, Inspection, and Repair of Boilers and Generation Equipment" reserve shall remain in such fund and the maximum allowable balance and maximum allowable transfers shall remain in force. If in the event all municipally owned power generation is retired from service, all remaining funds in the "Reserve for Annual Overhaul, Inspection, and Repair of Boilers and Generation Equipment" reserve following retirement and closure of such municipally owned generation shall be transferred to the "City of Raton Electric Utility System, Capital Improvement and Replacement Fund". No additional transfers will be made until such time as all maximum allowable transfers for the current fiscal year or the maximum allowable balance of the "Reserve for Annual Overhaul, Inspection, and Repair of Boilers and Generation Equipment" has been attained;

(5) From any remaining income the Company shall next transfer, for the current month, an amount not to exceed the "maximum allowable transfer" equal to one-twelfth (1/12) of ten percent (10%) of the immediately preceding fiscal year's gross annual revenues into the "City of Raton Electric Utility System, Capital Improvement and Replacement Fund". In addition, if in any prior month, within the current fiscal year, funds were not adequate for the maximum allowable transfer, those funds shall also be transferred into the "City of Raton Electric Utility System, Capital Improvement and Replacement Fund". Upon execution of this Ordinance, the monies in the Company's present "City of Raton Electric Utility System, Capital Improvement and Replacement Fund" shall remain in such fund and the maximum allowable balance and maximum allowable transfers shall remain in force. Amounts in said fund shall be available to pay, in whole or in part, periodic inspection, overhaul and repair, and the costs of additions, extensions and improvements to the electric utility system. Additionally, amounts in said fund shall be available, without restriction, to pay or prepay current and future principal and interest on any debt owed by the Company. The balance of such fund shall not exceed the maximum allowable balance equal to two hundred percent (200%) of the gross annual revenues of the Company, as determined annually by an independent audit, for the preceding fiscal year.

(6) All residual funds shall remain in the "Gross Income Account" until June 30 of each year, at which time, after payment of such monies in subparagraphs 19(B)(1), (2), (3), (4), and (5), then the Company shall transfer and pay over to the City Treasurer all remaining income and revenues derived from the operation of the system for any lawful purpose or purposes then required or permitted under the constitution and laws of the State of New Mexico and the bond and other ordinances of the City.

Section 20: Use of City Property.

Throughout the life of the franchise granted by this ordinance, the Company shall have the use and possession of all of the physical assets, including generation facilities and transmission and distribution lines, pipes and appliances belonging to the City's utility system, all for the purpose of the operation of the system by the Company under the terms of this Ordinance.

Section 21: Reports and Audits.

(A) On or before June 1st of each year the Company shall prepare and deliver to the City a report containing an estimate of its anticipated revenue, expenses, payment to the City, reserve set-asides and its bond requirements (if any, for the succeeding fiscal year).

(B) The fiscal year of the Company shall be from July 1 to June 30 of the succeeding year, this arrangement to be changed only with the consent of the City Commission. The Company shall make written reports to the City, at least quarterly, showing the balance sheet, statement of profit and loss, and statement of costs. Following the end of each fiscal year, the Company shall also cause an audit to be made of the utility system by a reputable auditor covering that fiscal year and shall furnish a copy of the audit to the City. The books and records of the Company shall at all times be open for inspection by the City Commission or any representative designated by it.

Section 22: Action of the City Commission.

The expression, "City Commission", wherever used in this Ordinance, shall be interpreted to mean the governing body of the City, regardless of the particular form of government which may be in effect. Any action, consent, approval or permission to be taken or given by the City Commission pursuant to this Ordinance may be accomplished by a single motion of the City Commission.

Section 23: Transition Provisions.

From and after the effective date of this Ordinance, this Ordinance shall immediately supersede and replace Ordinance No. 731; and the franchise granted by said Ordinance No. 731 shall no longer be of any force or effect except as to acts previously done and performed in pursuance thereof. Upon the effective date of the Ordinance, the Company shall retain the funds necessary for the initial funding of the reserves set forth in paragraphs 19(B) (1), (2), (3), (4) and (5).

Section 24: Ordinance Treated as Contract.

This entire Ordinance shall be considered as a solemn and binding contract between the City and the Company.

Section 25: Severability and Interpretation.

If any section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of any such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. In the event of inconsistency, the titles to the Sections shall not be deemed a part of the enactment.

Section 27: Effective Date.

This Ordinance shall become effective on the thirty-first (31st) day after its enactment; provided, however, that if an election should be required pursuant to a sufficient petition presented within the time and manner provided by Section 3-42-1 NMSA 1978, then the effective date of this Ordinance shall be postponed until the result of the election is known.

ADOPTED AND APPROVED this 11th day of October, 2005.

/s/

Mayor Pro-Tem

Jesse Johnson

Attest:

/s/

Michael Anne Lannon

City Clerk

ORDINANCE NO. 975

An Ordinance granting a franchise, with certain rights incident thereto, to Baca Valley Telephone Company, Inc., its successors and designees, in the City of Raton, Colfax County, New Mexico, and providing that the City shall receive cash payments and other considerations therefore.

SECTION 1. Grant of Authority. There is hereby granted by the City of Raton, hereinafter called the "City", to Baca Valley Telephone Company, Inc., its successors and assigns, hereinafter called the "Company", the nonexclusive right and privilege to construct, erect, operate and maintain, in, upon, along, across, above, over and under the streets, alleys, public ways and public places now in use or dedicated, and all extensions thereof, and additions thereto, in said City, poles, wires, cables, underground conduits, manholes and other telecommunications fixtures and/or facilities necessary or proper for the maintenance and operation in said City of the Company's telecommunications business; provided, however, that no poles or other fixtures and/or facilities shall be placed where the same will interfere with any street, roadway, or traffic control fixture or with any existing utility fixtures and/or facilities, the operation, maintenance, or replacement of any electric fixtures and/or facilities including, but not limited to transformers, poles, overhead conductors, pedestals, junction boxes, conduit, light standards, water hydrants or water mains. In the event of the Company's fixtures and/or facilities are deemed by the City to be causing an interference, the Company will remove or relocate the fixtures and/or facilities to eliminate any interference, at their cost. In addition, all poles and other fixtures shall be placed where the same will cause a minimum interference with the rights of reasonable convenience, of property owners who adjoin any of said streets, alleys or public ways and places, and all such poles or other facilities and/or fixtures placed in any street shall be placed in any street shall be placed on the outer edge of the sidewalk and inside the curb lines, and those placed in the alleys shall be placed close to the line of the lots abutting on said usual travel on said streets, alleys and public ways, and shall not require the City for the change in any street, roadway or traffic control fixture and/or facility caused by the change of the locations by the company. The cost thereof shall be paid by the Company. Additionally, approval, prior to making any pavement cuts, and the location thereof shall be by prior approval of the City, and all cuts shall be restored with like material, at Company's expense.

SECTION 2. Company Liability. The Company shall, at all times during the life of this franchise, be subject to all lawful exercise of the police power by the City and to such regulations as the City may, by resolution or ordinance, hereinafter provide. It is expressly understood and agreed by and between the Company and the City that the Company shall save the City harmless from all loss sustained by the City on account of any suit, judgment, execution, claim or demand whatsoever, resulting from negligence on the part of the Company in the construction or maintenance of its telecommunications system in the City.

SECTION 3: Use of System by Municipality. The City shall have the privilege, during the life of this franchise, free of charge, where aerial construction exists, of maintaining upon the poles of the Company within the City limits wire and pole fixtures necessary for a police and fire alarm and utility control system, such wires and fixtures to be placed and maintained under the supervision of the Company. The City in its use and maintenance of such wires and fixtures shall at all times comply with the rules and regulations of the Company and the provisions of the latest edition of the National Electrical Safety Code, so that there may be minimum danger of contact or conflict between the wires and fixtures of the Company and the wires and fixtures of the City. It is further agreed, in order to avoid danger to life and property, that the above privilege is granted on condition that no such police or fire alarm wires or fixtures of the City shall be placed on poles carrying electric light or power wires, so that said police or fire and utility control alarm wires or other fixtures shall not be exposed, without the consent of the Company, to the danger of contact with any conductor carrying a voltage greater than the normal telephone voltage. The City shall be solely responsible for all injury to persons or damage to property arising out of the construction or maintenance of said police and fire alarm fixtures, or arising out of the attachment, maintenance or removal of said wires and fixtures to the poles of the Company. In cases or rearrangement of the Company's plant, or removal of poles or fixtures, the City shall care for or remove, at its own cost and expense, its own fixtures, and shall save the Company harmless from any damage or injury to persons or property, including property of the City, arising out of the removal or construction of its wires or other fixtures.

SECTION 4: Repair of Streets. In case of any disturbance of pavement, sidewalk, driveway or other surfacing, the Company shall, at its own cost and expense and in a manner entirely satisfactory to the City, and subject to the jurisdiction of said City respecting the subject, replace and restore all paving, sidewalk, driveway or surface of any streets or alleys disturbed, in as good a condition as before said work was commenced. This requirement shall apply to all construction, surfaced or unsurfaced and in the case of disagreement, as to the prior condition, the Company agrees that the City shall determine what the prior condition was. The Company will abide by the "one-call" doctrine (otherwise known as the "calling before you dig" doctrine) as established by the City before commencing any construction or repair. The Company shall comply with any NEC (National Electrical Code), NESC (National Electrical Safety Code), ANSI (American National Standards Institute) and any other Federal, State, County or Municipal requirements or regulations, whether now in existence, or hereinafter enacted. This Section as to costs shall apply, except to the extent reimbursement is provided for by Section 67-8-18 NMSA, 1978, Comp. or any successor statute governing reimbursement for such costs. If requested by the City, in order to accomplish construction and maintenance activities directly related to improvements for the health, safety, and welfare of the public, the Company shall remove its facilities from the public right of way or shall relocate or adjust its facilities within the public right of way at no cost to the City. Such relocation or adjustment shall be completed as soon as reasonably possible within the time set forth in any request by the City for such relocation or adjustment. Any damages suffered by the City or its contractors as a result of the Company's failure to timely relocate or adjust its facilities shall be borne by the Company. Any relocations, shall be performed with thirty (30) days of written notice for the projects, unless a longer period of time is allowed by the City. If the Company fails to complete such removal or arrangement and in the absence of any extension negotiated by the parties, the Company shall pay liquidated damages in the amount of $100.00 per day until the completion of said removal or rearrangement. The parties agree that the liquidated damages represent their best estimate of the actual damages incurred by the City.

SECTION 5: Removal of Trees or Shrubbery. The right, license, privilege and permission is hereby granted to the Company, its successors, and designees to trim trees upon and overhanging in streets, alleys, sidewalks and public places of the City, so as to prevent the branches of such trees from coming contact with the wires or cables of the Company, and when so ordered by the City, said trimming shall be done under the supervision and direction of the City, or its designee. All trimming shall follow ISA’s Tree Pruning Guidelines or most recent ANSI A300 Pruning Standards, and ANSI Z133.1 Safety Standards, or their successors, or any other Federal, State, County or Municipal Regulations that may then exist or thereafter be enacted.

SECTION 6: House Moving and Other Unusual Use. Any person or corporation desiring to move a building or other structure along, or to make any unusual use of, the streets, alleys and public ways of the City which shall interfere with the poles, wires or fixtures of the Company, shall first give notice to said Company, and shall pay to the Company a sum sufficient to cover the expense and damage incident to the cutting, altering and moving of the wires or other fixtures of said Company and before a permit is given by the City therefore, the applicant shall present a receipt from the Company showing said payment. Thereupon the Company, upon presentation of said permit, shall within a reasonable time thereafter provide for and do such cutting, altering and moving of said wires and fixtures as may be necessary to allow such moving or other unusual use of the streets, alleys and public ways of the City.

SECTION 7: Consideration. As a further consideration for this franchise, the Company shall pay to the City an amount equal to three percent (3%) of the monthly recurring gross revenues, exclusive of all federal and state excise taxes, received for basic local exchange telecommunications services and internet furnished to subscribers of the Company within the City of Raton. Payment shall be made in quarterly installments within sixty (60) days after the end of each calendar quarter during the term of this franchise. The Company shall submit a report of Gross Revenues, if question arises by City as to payments tendered, within thirty (30) days after a written request is made.

SECTION 8: Annexation. Upon any annexation of territory to the City of Raton, monthly, recurring local exchange revenues received from subscribers located within the annexed area shall be included in the base for computation of payments due the City hereunder, effective thirty (30) days following such annexation. The City shall notify the Company of all annexations and shall furnish to the Company copies of all annexation ordinances and maps. The recurring local exchange revenues for services shall include those listed in appendix A attached hereto, which list is not inclusive, nor intended to be, the list being able to be modified based upon technology developed after the adoption of this Ordinance.

SECTION 9: Payment in Lieu of Other Taxes. In consideration of the franchise payments herein above provided for, it is expressly understood and agreed by the Company and the City that these payments shall be in lieu of any and all other franchise, license, occupation, or other forms of excise or revenue taxes based upon or measured by the revenues, employees, payroll, property, facilities or equipment of the Company, excepting, however, general ad valorem property taxes, special assessments for local improvements and sales or gross receipts taxes (all hereinafter referred to as "excepted taxes"). The franchise payments shall continue only so long as the Company is not prohibited from making the payments by any lawful authority having jurisdiction in the premises. Furthermore, if the City does levy, charge or collect or attempt to levy, charge or collect any other franchise, license, occupation or other form of excise or revenue taxes of the type above specified in this paragraph (other than excepted taxes), the obligation to make franchise payments hereunder shall be abated to the extent such other taxes are levied, charged or collected by the City.

SECTION 10: Non-Waiver of Other Rights: It is expressly understood and agreed by and between the City and the Company that neither the grant nor acceptance of this franchise shall constitute a waiver, either upon the part of the Company or the City, of any rights or claims had or made by either with respect to the occupancy of the streets, alleys, and public places of the City, under the Constitution and general statutes of the State of New Mexico, nor shall anything herein in any way prejudice or impair any rights or claims existing independently of this franchise of the City or the Company, or its predecessors or successors, with respect to the construction, operation, and maintenance, either before or after the life of this franchise of a telecommunications system in the City.

SECTION 11: TERM OF FRANCHISE. The franchise and rights herein granted shall continue in force and effect for a term, ten (10) years after the effective date of this franchise.

SECTION 12: SEVERABILITY. If any section, paragraph, subdivision, clause, phrase or provision of this franchise shall be adjudged invalid or unconstitutional, the same shall not affect the validity of this ordinance as a whole or any part of the provisions hereof, other than the part so determined to be invalid or unconstitutional.

SECTION 13: DAMAGES AND REMEDIES. Any damages caused to any City fixtures and/or facilities, of any nature whatsoever that may occur, through the Company's digging through a waterline, sewer tap, knocking over a pedestal, or any other damages, shall include not only the replacement of said fixtures and/or facilities, but any liquidated damages that may be attributable thereto from the loss of any fixtures and/or facilities that cannot be replaced, or for any claims made against the City for the actions of the company.

SECTION 14: Prior Approval before Attachment. Any attachment to City fixtures and/or facilities will require prior approval from the City, and any attachments to utility poles, or water conduits, connections or sewer connections, if applicable, will require a separate pole attachment agreement with the Raton Public Service Company, or the Raton Water Works Company, as the case may be.

SECTION 15: Default and Remedies. In the event of breach of this franchise by either party, the prevailing party shall enjoy all rights and remedies allowed in law or equity and shall recover reasonable attorney's fees in any suit arising from breach or enforcement of this franchise.

SECTION 16: This Ordinance shall take effect and be in full force and effect thirty (30) days after its passage and approval; provided the Company, within said thirty (30) days, shall have filed with the City Clerk of the City of Raton an unconditional acceptance thereof. Within ten (10) days after the filing of said acceptance the City Clerk shall acknowledge in writing the receipt of said acceptance.

SECTION 17: Notices by Parties. All notices and productions required of either party by this franchise shall be delivered to the other party, at the designated address, unless another official or address has been designated in writing by the party to receive the delivery, to:

Municipality: City Manager

City of Raton, New Mexico

224 Savage Avenue

Raton, New Mexico 87740

Company: CEO

Baca Valley Telephone Company, Incorporated

PO Box 67, 532 Broadway Ave.

Des Moines, New Mexico 88418

PASSED, APPROVED and ADOPTED this 15th day of November 2011, at a regular meeting of the City Commission of the City of Raton, State of New Mexico.

CITY OF RATON

James Neil Segotta /s/

JAMES NEIL SEGOTTA

Mayor

ATTEST

Geneva Trujillo /s/

GENEVA TRUJILLO

City Clerk

APPENDIX A

Residential and Business Line Changes

End User Access Charges

Service Features

Internet Service (pursuant to terms in agreement)

ORDINANCE NO. 985

RATON WATER BOARD FRANCHISE - 2013

AN ORDINANCE GRANTING AN EXTENSION OF THE RATON WATER BOARD FRANCHISE AND REPEALING ORDINANCE 824 DATED FEBRUARY 12,1991 PROVIDING THE RATON WATER AND SEWER DEPARTMENT A UTILITY FRANCHISE AND REPEALING ORDINANCE 895 DATED OCTOBER 12,1999 AMENDING ORDINANCE 824.

WHEREAS, the City of Raton Water Board Franchise, hereinafter called the "Board", was created on February 12, 1991 by Ordinance 824, and the Board has, since that time, operated the Water Works and Sewer Systems of the City; and

WHEREAS, the Raton Water Works, hereinafter called the "Water Department", now has almost twenty (20) employees and an annual budget of approximately two million dollars; and

WHEREAS, the Water Department is comprised of a complex history of water rights, litigation, and court decrees, as well as, aging diversion structures, distribution/collection system, and water treatment facility; and

WHEREAS, numerous expensive improvements are needed from time to time to maintain the integrity of the Water and Sewer System; and

WHEREAS, the Safe Drinking Water Act and Wastewater Discharge Regulations are only a small fraction of the complicated maze of laws, policies and regulations which affect the Water Department; and

WHEREAS, such a utility network must be managed as a business oriented enterprise, free of influence from the ever changing political climate; and

WHEREAS, The Board has successfully managed the complex utility system in compliance with New Mexico Environment Department (NMED) and Environmental Protection Agency (EPA) regulations as a cooperative component entity for the City for approximately twenty-two (22) years; and

WHEREAS, the granting of a twenty-five (25) year franchise extension to the Raton Water Board would allow the continuity essential to the proper operation and management of a municipal water system; and

WHEREAS, it is considered desirable by both the Board and the City of Raton, hereinafter called "City", that a twenty-five (25) year franchise extension be granted to the Raton Water Board Franchise.

NOW, THEREFORE, BE IT RESOLVED by the governing body of the City of Raton, New Mexico:

Section 1: Grant of Franchise Extension.

From and after the effective date of this Ordinance, and subject to all the terms and provisions herein contained, the City does hereby grant to the Raton Water Board the right, privilege and franchise, for a term of twenty-five (25) years beginning July 1, 2013 ending June 30, 2038 to maintain and operate within the City and within all future additions to the City and within the City's lawful utility service area as the same may exist from time to time hereafter, the City's complete water and sewer utility system.

Throughout the term of this Ordinance the Board shall have the right to the free use of the rights-of-way, streets, avenues, alleys and public places of the City and all future additions thereto.

Provided, however, that the same shall be placed in such reasonable locations as may be permitted by the City Commission, and in such manner as not to interfere with other necessary public uses.

Section 2: Fixing of Rates.

The City Commission shall from time to time set, fix, determine, and alter the rate schedules and the rates, charges and rate classifications pertaining to all services to be rendered by the Board.

Such rate tariffs shall be sufficient to meet the efficient and long-term operation of the utility by the Board and also provide for the City a sufficient net income to meet all debt service, operational expense, reserve requirements, and obligations of the City with respect to necessary revenue bonds or other similar water and sewer system obligations as the City may issue from time to time. Until changed by the City, the existing rate schedules, rates, charges and rate classifications shall remain in effect. The Board may recommend to the City Commission, from time to time, such changes in rate schedules and rates as appear necessary and desirable. The City shall retain full exclusive authority to set rates and issue revenue bonds necessary for improvements, replacement or expansion of the City water and sewer system.

Section 3: Discontinuance of Service.

Pursuant to Section 3-23-1 of NMSA 1978 payment for all service furnished by the Board shall be made by customers at the office of the Board on or before the tenth (10th) day of the month succeeding the month in which the water, sewer or refuse service was rendered; and in default of such payment the Board may, at its option, discontinue the service.

Section 4: Municipal Uses and Franchise Fee.

In addition to the Franchise Fee specified in Section 14(B) 3, the Board shall also furnish to the City all water and sewer services needed by the City for its municipal offices, and for general municipal purposes within the City's service area, all without requiring payment therefore from the City.

Section 5: Rules and Regulations of the Board.

The Board may make reasonable Rules and Regulations specifying and controlling the types of equipment, appliances, devices, connections, meter deposits, easements and operating practices which may be required in order for a customer to receive service from the Board or in order to entitle customers to the several rate classifications now or hereafter in force. The Board shall not be required to make any service connection or main extension unless it's reasonable requirements have been complied with. The current such Rules and practices of the Board are herewith approved and ratified by the City. The Board may hereafter adopt and file with the City Clerk additional such Regulations with the City and, unless within thirty (30) days of such filing the City shall disapprove of such Regulations adopted by the Board under this Section, then such Regulations shall be deemed to be approved and enacted by the City and in effect. Within such thirty (30) day period the City Commission shall have the power to require modifications or may set aside such newly filed Regulation and establish such Regulation as the City Commission may consider proper and a copy of such City enacted Regulation shall then be filed with the City Clerk within thirty (30) days of its adoption.

Section 6: Internal Operations:

The Board shall be solely responsible for setting policy and governing its internal operations, personnel, billing, and operational activities, and the Board shall from time to time establish policies and procedures concerning such internal matters as it deems necessary and appropriate. Applicable City personnel policies shall also apply to employees of the Board and the Water and Sewer Utility.

The Board is granted, and shall have, exercise, enjoy and use all powers and authority set forth under Section 3-23-1 through 10,NMSA 1978, as amended and as may be amended.

It is mutually agreed by the City and the Board that the management and operation of the Utility is herewith transferred and vested in the Raton Water Board, except as is otherwise retained or reserved by this Ordinance or the laws of the State of New Mexico.

Section 7: Discrimination Forbidden.

The Board shall never commit, practice or permit any unfair discrimination between its customers. All rates and charges shall be applied fairly to the end that there shall always be a uniform charge for like service under like conditions.

Section 8: Police Power of City.

The City Commission shall adopt and enforce all such ordinances, rules and regulations as may be necessary for the protection of the Board and the lawful conduct of its operations. The rights and privileges granted to the Board by this Ordinance shall at all times be subject to the police power and reasonable dominion of the City as the same may be exercised by general ordinance, not destructive, however, of the rights and privileges hereby granted.

Section 9: Board of Utility Commissioners.

The Raton Water Board shall consist of a five (5) member Board of Utility Commissioners to manage, operate and perform the general administration of the affairs of the Water and Sewer System owned by the City of Raton.

Three (3) members shall be appointed by the Mayor with the consent of the City Commission and must be residents of the water utility service area. The fourth member shall be the Mayor Pro-Tem, and the fifth member shall be a City Commissioner appointed after each City Commission election or reorganization by majority vote of the City Commission.

The initial terms of the three (3) current resident members shall be staggered for four (4), five (5) and six (6) years respectively, and all following terms shall be for a period of six (6) years.

Section 10: Removal of Utility Commissioners.

A Utility Commissioner may be removed from office by the City Commission during his or her appointed term for one or more of the following reasons:

a) Legal incapacity;

b) Willful neglect of duty or willful failure to comply with the terms of this franchise or the laws governing the operation of a municipal utility;

c) Malfeasance in office;

d) Conviction of a crime involving moral turpitude; or

e) Failure to maintain his or her status as a resident of Raton, New Mexico, or of its lawful utility service area;

f) Failure to attend at least 75% of regularly scheduled meetings in any twelve (12) month period, excluding excused absences.

The power of removal shall be vested in a majority of the City Commission. The Utility Commissioner shall be entitled to a full evidentiary hearing after reasonable notice and upon a written specification of the charges against him or her. The vote of each member shall be announced openly and shall be recorded in the minutes, and the concurring vote of the majority of the members of the whole Commission shall be necessary to accomplish a removal.

Section 11: Appointment of Successor Utility Commissioners.

Upon the expiration of the appointed term of each such Utility Commissioner, and in case of the death, resignation or removal, within sixty (60) days a successor shall be appointed by the Mayor with consent of the City Commission for the remainder of the term. Any successor Utility Commissioners appointed must be a resident of the water utility service area.

Section 12: Compensation.

Each Utility Commissioner shall receive compensation for his services in the amount of $100.00 per month; except that said amount may be increased with the consent and approval of the City Commission. No member shall serve as manager of the Company or as an employee of the Board.

Section 13: General Manager.

The Board shall employ a competent general manager and such other help, technical or otherwise, as may be necessary to assure the efficient and economical operation of the City's entire Water and Sewer System. The Water Board General Manager shall employ and discharge all persons engaged in the service of the utility and he/she may be terminated for just cause by majority vote of the entire Board.

Section 14: Rate and Income Requirements and Disposition of System Revenues.

OPERATING FUND:

A. The Board shall set aside the entire gross income and revenues of the utility system into a special fund to be known as the "Water Board Gross Income Fund", hereinafter sometimes designated as the "Water Operating Fund", from which fund the Board shall make the operational, reserve and debt payments below described. After such payments the Board each year shall transfer and pay over to the City Treasurer all remaining income and revenues derived from the operation of the utility for any lawful purpose or purposes then required or permitted under the constitution and laws of the State of New Mexico and the bond ordinances and other ordinances of the City.

B. So long as this franchise shall remain in force and effect, the City Commission shall set the utility system rates in an amount designed to achieve the following income, and the income shall be expended in the following priorities, to-wit:

1. Monthly Operating Expenses: The Board shall first pay current expenses of the operation of the utility system, excluding depreciation and amortization expenses, as they become due and payable from the "Water Operating Fund". Upon execution of this Ordinance, the sum of $200,000.00 shall be set aside into such fund. Thereafter, this fund is to be maintained at an amount determined to be a thirty (30) day average of the preceding year's cash expenses or $250,000, whichever is greater.

2. Bond Fund: All outstanding water revenue bonds issued for utility system improvements shall be paid from revenue from the "One Cent Supplemental Water" gross receipts tax. Should the one cent tax be repealed, the Board shall set aside necessary funds and recommend the necessary water and sewer rate increase as required for debt service and bond reserves, under any ordinances of the City creating and issuing utility system bonds for improvement, replacements, or expansion of the City's water and sewer utility system. All outstanding sewer revenue bonds issued for utility system improvements shall be paid from revenue from the "Water Operating Fund" as per Section 14(A). The City shall continue to retain full authority to create and issue system bonds and to enact such ordinances and revenue guarantees as shall be appropriate and lawful for such system bonds.

3. Franchise Fee: From any remaining income the Board shall next pay to the City, in monthly payments of one-twelfth (1/12) each, an amount equal to four percent (4%) of the immediately preceding fiscal year's gross annual revenues, as defined above.

4. Capital Improvement Fund:

a. With One Cent Supplemental Gross Receipts Tax: From any remaining income, the Board shall set aside in monthly payments of one-twelfth (1/12) each, to the "Water Board Capital Improvement Fund" a cash reserve as will be equal during each fiscal year to ten percent (10%) of the gross annual revenue for water and sewer capital improvements, based upon the total revenues for the immediately preceding fiscal year. The monies in the Board's present Water and Sewer Capital Improvements Reserve shall be transferred to such fund. The funds shall be limited to a combined total cap of fifty percent (50%) of the gross annual revenues of the Board for the preceding fiscal year, and the maximum amount in such fund may be increased by Resolution of the City Commission. Amounts in said fund shall be available to pay, in whole or in part, the costs of equipment purchases, for the utility system.

Revenue from the "One Cent Supplemental Water" gross receipts tax shall be used for all the costs of water additions, extensions, improvements and line replacements for the utility.

b. Without One-Cent Supplemental Gross Receipt Tax: Should the one cent supplemental tax be repealed, the Board shall increase payments to the Water Board Capital Improvement Fund to fifteen percent (15%) of the gross annual revenues from the immediately preceding fiscal year. The Water Board Capital Improvement Fund cap shall also be increased to 100% of the previous fiscal year's gross annual revenue. Once the one cent fund is gone, costs of all equipment, additions, extensions, improvements, expansions, filter plant improvements and repairs, sewer plant improvements and repairs, new line costs, line replacements and all new fire hydrants shall be paid from Water Department revenues by way of the Water Board Capital Improvement Fund.

The Board shall determine and recommend the rate increases necessary to accomplish aforesaid repairs and capital improvements. The maximum amount in the Water Board Capital Improvement Fund may be increased by Resolution of the City Commission.

5. Annual Payment to the City: The residue of revenues of the Board shall be paid to the City, annually, at the end of the fiscal year.

Section 15: Use of City Property.

Throughout the life of the franchise granted by this Ordinance, the Board shall have the use and possession of all of the physical assets, including reservoirs, transmission and distribution lines, pipes and appliances, belonging to the City's utility system, all for the purpose of the operation of the system by the Board under the terms of this Ordinance. The franchise shall also be granted use of operational space in City Hall.

Section 16: Reports and Audits.

The Board shall prepare an annual budget and submit quarterly reports in a timely manner to the City Commission to be incorporated into the City budget and quarterly reports respectively.

The Water Department shall be audited as part of the City audit each year.

Section 17: Actions of the City Commission.

The expression "City Commission", wherever used in this Ordinance, shall be interpreted to mean the governing body of the City, regardless of the particular form of government which may be in effect. Any action, consent, approval or permission to be taken or given by the City Commission pursuant to this Ordinance may be accomplished by a simple motion of the City Commission.

Section 18: Transition Provisions.

From and after the effective date of this Ordinance, this Ordinance shall immediately supersede and replace Ordinance Numbers 685, 824 and 895 and are hereby repealed.

Section 19: Ordinance Treated as Contract.

This entire Ordinance shall be considered as a solemn and binding contract between the City and the Board.

Section 20: Severability and Interpretation.

If any section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of any such section, paragraph, clause or provision shall not affect any of the remaining provision of this Ordinance. In the event of inconsistency, the titles to the Sections shall not be deemed a part of the enactment.

Section 21: Effective Date.

Pursuant to Section 3-42-1 NMSA 1978, this Franchise Ordinance is authorized and shall become effective thirty-one (31) days after adoption and shall be published twice in full at least seven (7) days apart.

PASSED, APPROVED and ADOPTED this 25th day of June, 2013, at a regular meeting of the City Commission of the City of Raton, State of New Mexico.

City of Raton

Bobby LeDoux /s/

Bobby LeDoux, Mayor

ATTEST:

Tricia Garcia /s/

Tricia Garcia, City Clerk

GAS FRANCHISE

ORDINANCE NO. 987

ORDINANCE NO. 987 PURSUANT TO SECTION 3-42-1, N.M.S.A., 1978 COMP., AN ORDINANCE GRANTING TO RATON NATURAL GAS COMPANY, A NEW MEXICO CORPORATION, ITS LEGAL REPRESENTATIVES, SUCCESSORS, LESSEES AND ASSIGNS, GRANTEE HEREIN, CERTAIN POWERS, LICENSES, RIGHTS-OF-WAY, PRIVILEGES AND FRANCHISE TO CONSTRUCT OPERATE AND MAINTAIN IN THE CITY OF RATON, NEW MEXICO, AS NOW OR HEREAFTER CONSTITUTED, WORKS, SYSTEMS AND PLANTS FOR THE HANDLING, PRODUCTION, MANUFACTURING, TRANSPORTING, STORING, SALE, AND DISTRIBUTION OF GAS INTO, OUT OF AND THROUGH SAID MUNICIPALITY; AND FOR THE DISTRIBUTION AND SALE TO SAID MUNICIPALITY, ITS INHABITANTS, AND OTHERS, INCLUDING CUSTOMERS INSIDE THE LIMITS OF SAID MUNICIPALITY; AND TO USE THE STREETS, AVENUES, EASEMENTS, RIGHTS-OF-WAY, ALLEYS, HIGHWAYS, SIDEWALKS, BRIDGES AND OTHER STRUCTURES AND PUBLIC PLACES AND GROUNDS IN SAID MUNICIPALITY FOR A PERIOD OF TWENTY -FIVE (25) YEARS; AND PRESCRIBING CERTAIN RIGHTS, DUTIES, TERMS AND CONDITIONS HEREIN MENTIONED; AND PROVIDING FOR THE PAYMENT TO SAID MUNICIPALITY OF A PERCENTAGE OF CERTAIN REVENUES OF GRANTEE FROM ITS OPERATIONS THEREIN; AND REPEALING CONFLICTING ORDINANCES.

NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF RATON, NEW MEXICO, AS FOLLOWS:

Section I. Title

This Ordinance shall be known and may be cited as the "Raton Natural Gas Company Franchise Ordinance."

Section II. Definitions

For the purposes of this ordinance, the following terms shall have the meanings given herein:

(a) "City" refers to the City of Raton, New Mexico;

(b) "Company/Grantee" refers to the Raton Natural Gas Company, its successors and assigns;

(d) "Person" is any individual, firm, partnership, association, corporation, company or organization of any kind.

(e) "Franchise" is the rights, privileges and obligations generated to franchisee by the terms of this ordinance.

Section III. Grant of Authority

There is hereby granted to the Grantee the right, privilege and authority to locate, build, construct, acquire, purchase, extend, maintain and operate within and through said City as the same now exists or may hereafter be extended, a gas system and works for the processing, transmission and distribution of gas, either natural, artificial or mixed, consisting of pipes, mains, conduits, services or otherwise, over, under, along, across and through any and all streets, alleys, viaducts, bridges, roads, lanes and gas easements in said City and over,- under-, along, across and through any extension, connection with or continuation of the same and/or over, under, along, across and through any and all such new streets, alleys, viaducts, bridges, roads, lanes and gas easements as may be hereafter laid out, opened, located or constructed within the territory now or hereafter included in the boundaries of said City.

This franchise and the right to use and occupy said streets, alleys, public ways and places shall not be exclusive, and the City reserves the right to grant the use of said streets, alleys, public ways and places, to any person or entity during the period of this franchise.

This franchise constitutes a valid and binding contract between the Grantee and the City. The City has exercised its governmental authority in granting this franchise. In the event that a franchise fee specified herein is declared illegal, unconstitutional, or unenforceable by any court of competent jurisdiction, the Grantee agrees to cooperate with the City in modifying the franchise to assure that the Grantee collects and the City receives an amount in franchise fees or some other form that is Consistent with the intent of this franchise to the extent permitted by law.

Section IV. General Conditions

The Grantee is further granted the right, privilege and authority to excavate in, occupy and use any and all streets, alleys, viaducts, bridges, roads, lanes, and other public ways and places under the supervision of the properly constituted authority for the purpose of bringing gas into, within and through the City, and supplying gas to said City and the inhabitants, thereof, provided however, that the Grantee shall so locate its works, transmission and distribution structures, equipment, mains, pipes, conduits, services or other appurtenances within said City in a manner to meet with the approval of the City and further in locating said facilities shall do so in such manner as to cause minimum interference with the proper use of streets, alleys and other public ways and places and to cause minimum interference with the rights or reasonable convenience of property owners whose property adjoins any of the said streets, alleys, or other public ways and places. Should it become necessary for the Grantee, in exercising its rights and performing its duties hereunder, to interfere with any sidewalk, graveled or paved streets, roads or alleys, or any other public or private improvement, the Grantee shall repair at its own expense in a workmanlike manner subject to the approval by the City and in accordance with the provisions of the City Municipal Code, such sidewalk, graveled or paved street, road, alley, or other improvement after the installation of its pipes or other structures. The Grantee shall use due care not to interfere with or damage any water mains, sewers, or other structures now in place or which may hereafter be placed in said streets, alleys, or other public places, and said Grantee shall, at its own expense, repair in a workmanlike manner subject to the approval of the City, any such water mains, sewers, or other structures which are damaged through the action of Grantee, provided, however, that the City may make such repairs and charge the reasonable cost thereof to the Grantee.

Section V. Indemnification, Insurance and Bonds or Other Surety

A. General Indemnification. The Grantee agrees to indemnify, save and hold harmless, and defend the City, its officers, elected or appointed officials, employees, agents, boards and employees, from any action or claim, including third party claims, for injury, damage, loss, liability, cost or expense, including administrative hearing, court and appeal costs and attorneys' and expert witness fees and expenses, arising from any casualty, accident, injury or loss to person or property, including, without limitation, copyright infringement and defamation, and all other damages in any way arising out of, or by reason of, any construction, excavation, operation, maintenance, or reconstruction of the Grantee within the City and the securing of and exercise by the Grantee of the rights granted in this franchise, or any act done under or in connection with this franchise by or for the Grantee, its agents, or its employees by reason of any negligence or other fault of the Grantee.

B. Defense. The City may participate in the defense of a claim. The Grantee may settle any claims affecting the City without the City's approval, or the Grantee may relieve itself of all duty to defend and indemnify the City by paying to the City that sum which the claimant has offered to accept and which the Grantee would have paid but for the City's objection, but in any such case, only if such settlement or payment would fully discharge and satisfy all claims against the City arising from or related to such claim.

C. Non-Waiver. The fact that the Grantee carries out any activities under this franchise through independent contractors shall not constitute an avoidance of or defense to the Grantee's duty to defend and indemnify under this section.

D. Notice to Grantee. The City shall provide prompt written notice to the Grantee of the pendency of any claim or action against the City arising out of the exercise by the Grantee of its franchise rights. The Grantee shall be permitted, at its own expense, to appear and defend or to assist in defense of such claim.

E. Fault. The obligations under Paragraphs A-D shall not extend to any injury, loss or damages to the extent it is caused by the act, omission, error, professional error, mistake, negligence, or other fault of the City elected or appointed officials, its officers, agents, boards or its employees.

F. Insurance. The Grantee shall maintain in full force and effect, at its own cost and expense, during the term of this franchise, Comprehensive General Liability Insurance in the amount of not less than $1,000,000 combined single limit for bodily injury, and property damage for the City, its officers, employees and insurers, and the policy or policies shall name the City as an additional insured. Such insurance shall be non-cancelable except upon thirty (30) days' notice to the City. Grantee, upon request, shall furnish a certificate of insurance to the City for said insurance. Grantee shall procure and maintain the minimum insurance coverages identified or referenced above. The insurance limits hereunder shall be revised upward in the event the statutory maximums applicable to local governments in New Mexico are increased, upon sixty (60) days advance written notice to the Grantee by the City. The Grantee shall have had notice of the pendency of any action against the City arising out of such exercise by the Grantee of said rights and privileges and be permitted at its own expense to appear and defend or assist in the defense of the same. Company agrees to provide evidence to City from time to time, upon request, that such insurance is in force, provided, however, City shall keep the amounts of such insurance, confidential, unless it is directed to do so otherwise by final court order issued by a court having authority to issue such an order.

G. Damages. Grantee hereby waives any claim for damages to its property within streets, alleys and gas easements against the City, its officers and employees, except for damages caused by the negligence, recklessness, or the specific intent of the City, elected or appointed officials, its officers, agents, boards or its employees.

Section VI. Relocation of Facilities

The City may undertake City projects including, but not limited to, the change of grade, new construction, installation or repair of sewers, storm sewers, drainages, waterlines, power lines or any government-owned communication system, public work or improvement, or any government-owned utility or public right-of-way vacation. City projects, by definition, are not emergency situations. If at any time it shall be necessary for Grantee to change the position of any gas main or service connection to permit the City to undertake such a City project or as a result of an emergency situation, the Grantee shall do so at its own expense if the City project or emergency situation is necessitated by public health and safety or is not eligible for payment in part of in whole by the State of New Mexico pursuant to Sections 67-8-15 to 67-8-21, N.M.S.A. 1978 Comp., or successor statutes. During the preliminary stages of planning and engineering of any City project which may require the Grantee to relocate its facilities and at any time at which the City determines that it may materially modify such City project, the City shall provide notice to Grantee of such City project or material modification of such City project and offer to meet and confer with Grantee on date(s) and at time(s) and location(s) that are mutually acceptable to the City and Grantee. The purpose of such meeting(s) is to seek Grantee's input and explore means of reducing the costs to the Grantee or, as applicable, to the City, and to provide the City with a timetable within which the involved Grantee facilities will be relocated, including anticipated start date, so as to facilitate coordination with the timetable to be established by the City for completion of the City project. The City shall make reasonable efforts to mitigate the financial impact of any such project on the Grantee.

If the City and the Grantee meet and confer and agree on a facilities relocation plan, the Grantee shall complete such relocations by the deadline agreed upon in the facilities relocation plan; except that the Grantee may be granted an extension of time for completion equivalent to any delay caused by conditions not under its control. However, if the City and the Grantee meet and confer but do not agree on a facilities relocation plan, the Grantee may request a review by the Raton City Manager. Upon review, the decision by the Raton City Manager shall be final, subject only to judicial review, and Grantee shall fully comply with the conditions set forth in the final facilities relocation plan absent judicial review.

Following relocation conducted at Grantee's expense, all property identified in the facilities relocation plan shall be restored by the Grantee to substantially its former condition. Such restoration work shall be performed at the Grantee's expense.

Section VII. Service Standards

A. Reliability

The New Mexico Public Regulation Commission has general and exclusive power and jurisdiction to regulate and supervise Company in respect to its rates and service regulations and in respect to its securities, all in accordance with provisions of the New Mexico Public Utility Act (Section 62-3-1 et seq., N.M.S.A. 1978 Comp.). A copy of Company's rates and service regulations are on file for public reading at the office of the City Clerk during normal working hours.

If at any time the New Mexico Public Utility Act (Section 62-3-1 et seq., N.M.S.A. 1978 Comp.) is amended or repealed with the effect of such action being the deletion of standards of service as are now in effect, the City reserves the right to establish standards of service not inconsistent with the terms of said statute or regulations promulgated pursuant thereto prior to said amendment or repeal.

Grantee shall provide to the City telephone numbers and e-mail addresses of the Grantee's management personnel responsible for utility service in the City and shall, upon request, provide the City with status reports on a twenty-four hour basis concerning interruptions of the supply of utility service in any portion of the City.

B. Inspections and As-Built Work

1. Work performed by Grantee maybe subject to municipal ordinances requiring inspections of work to ensure that the work has been performed in accordance with the requirements of the laws, ordinances, and regulations of the City. Such inspection may include, but not be limited to, the following matters: location of facilities in streets; cutting and trimming of trees and shrubs; disturbance of pavements, sidewalks, and surfaces of streets. Grantee shall promptly perform reasonable remedial action required by the City pursuant to said inspections. If no such ordinances, the Grantee shall be required to perform pursuant to the provisions, less the language "subject to municipal ordinances."

2. It shall be a condition of the City's approval that for any major facility installed, renovated, or replaced after the effective date of this franchise, Grantee shall provide the City with as-built drawings of each such facility in such formats and providing such details as reasonably requested by the City.

3. Location - All above-ground fixtures shall be so placed as to not interfere with the usual travel on said rights-of-way. Underground facilities may be located under the traveled portion of rights-of way provided the surface of such right-of-way is restored as hereunder provided.

4. Restoration - If, while installing, repairing or maintaining its facilities, the Company disturbs the surface of any right-of-way or public place, the Company shall, at its own cost and expense, and in a manner approved by the City, replace and restore all paving, sidewalk, driveway or surface so disturbed in as good condition as before said work was commenced.

5. Specifications and Standards - All fixtures installed, repaired, maintained or operated shall be done so in compliance with all applicable City, State and Federal specifications and standards.

6. Relocation of Facilities - In the event that any time during the period of this franchise, the City shall elect to alter or change the grade or location of any publicly owned utility, street, easement, alley or other public way for the purpose of sewer or street improvement, the Company, upon reasonable notice by the City of the necessity, and after due consideration being given to Company's seasonal load requirements, shall remove, relay or relocate, at Company's determination, its underground pipelines, manholes and other related fixtures. Such relocation shall be at Company's own cost and expense if required by public necessity, health, or safety, but shall be at the City's expense if the change made by the city is based only on considerations of aesthetics or convenience, and may be at the State's expense if eligible under Sections 67-8-15 to 67-8-21, N.M.S.A. 1978 Comp., or successor statutes.

7. Maps - Grantee shall prepare and submit to the City a map showing any addition to or change in the location of its distribution system, showing location and size, as applicable, of lines, valves, gates and all appurtenances incident to the distribution system, so far as the location of such facilities can reasonably be projected. This map will be provided to the City thirty (30) days prior to any actual construction of new facilities or relocation of existing facilities.

8. Permits - Grantee shall be responsible for obtaining all applicable permits, including any excavation or tree cut permits, in the manner required by the laws, ordinances, and regulations of the City.

9. Extensions of Service - Grantee shall make such reasonable extensions of its mains from time to time as may be required to furnish service within the City to consumer(s) making application therefore, in accordance with the rules, regulations, and orders of the New Mexico Public Regulation Commission.

Section VIII. Franchise Fees

In consideration of the rights and privileges herein granted, the Grantee shall pay to the City, effective the first complete billing cycle after this franchise becomes effective, a franchise fee or fee equivalent to 4 percent (4%) of monthly gross receipts exclusive of all taxes derived from gas utility services within the corporate limits of the City that is billed by Grantee. Payments to the City shall be made quarterly within 60 days after the end of each calendar quarter and each such payment shall be accompanied by a statement supporting the payment. The City may on each five (5) year anniversary of this franchise request review and prospective adjustment of the franchise fees to be billed to Company's customers and paid to the City consistent with the amounts charged to other utilities that have a franchise with the City or with the amounts charged to Grantee by other New Mexico municipalities with which Grantee has a franchise, but in no event will the city be required to take less than the amount provided in this Ordinance so long as that amount is lawful.

To assure proper payment as herein provided, the books of the company shall be open to inspection by the City at all reasonable times, but shall nevertheless remain confidential, unless disclosure is agreed to by the parties hereto, court order, or governmental or administrative order.

Such payment shall be in lieu of any and all other fees, charges, licenses, taxes or assessments which said City may impose for the rights and privileges herein granted for the use of the rights of way, and in the event any such fee, charge, license, tax or assessment shall be imposed by said City; the payment to be made in accordance with the provisions of this section shall be refunded in an amount equal to the annual burden of such fee, charge, license tax or assessment imposed upon the Grantee. Ad Valorem property taxes imposed generally upon all real and personal property within said City shall not be deemed to affect the obligation of the Grantee under this section.

If at any time during the term of this franchise the manner in which a franchise fee specified herein is calculated, collected or paid is changed, whether by action of the Grantee, the PRC, or any entity having jurisdiction thereof, the Grantee agrees to cooperate with the City in modifying the franchise to assure that the Grantee collects and the City receives an amount in franchise fees or some other form that is consistent with the intent of this franchise to the extent permitted by law.

Section IX. Term

This franchise and the rights, privileges, and franchises hereby granted shall be and remain in full force and effect for a period of twenty-five (25) years from the effective date of this franchise as set forth below.

Section X. Termination of Franchise

A. Upon the termination of this franchise if the Grantee shall not have acquired an extension or renewal thereof and accepted same, Grantee may have and is hereby granted the right to enter upon the streets, alleys, bridges, viaducts, roads, lanes and other public places of the City, for the purpose of removing there from any or all of its plants, structures, pipes, mains or equipment pertaining thereto, at any time after the City has had ample time and opportunity to purchase, condemn or replace them. In so removing said pipes, mains or other property, the Grantee shall, at its own expense and in a workmanlike manner, refill any excavations that shall be made by it in the graveled or paved streets, alleys, bridges, viaducts, roads, lanes and other public places after the removal of its mains, pipes or other structures, and repair all surfaces to the condition prior to such removal.

B. If any payment herein provided to be paid is not paid when due after thirty (30) days written notice from city to company of such non-payment (which period of 30 days commences with the day after receipt of such notice), this franchise may be terminated by the City. If the Company substantially fails to comply with any of the other provisions of this franchise and fails to cure the same or is unable to provide justification for such non-compliance within sixty (60) days after it has received written notice from the City claiming such non-compliance with any of the terms and provisions of this franchise, the City shall give Company an additional written notice that this franchise will be terminated effective ninety (90) days after receipt of said notice to Company, unless the Company corrects such non-compliance within said period of time. If the City and company disagree over whether Company has substantially failed to comply with any of the other provisions of this franchise or has failed to cure an alleged non-compliance, the franchise shall continue until agreement is reached between the City and company resolving the matter or until the matter has been litigated through the Courts to final judgment. Non-compliance by company of any terms and provisions of this franchise due to force majeure or any cause beyond its control does not constitute reason for termination of this franchise.

Section XI. Assignment

The Grantee may assign this franchise, or the rights granted hereunder by providing prior written notice to the City Manager, and by first obtaining the written consent of the City, and upon any necessary approval by the New Mexico Public Regulation Commission. The City's consent to such an assignment shall not be unreasonably withheld, and this section shall not be construed to restrict or prevent the issuance of bonds, debentures, or other evidence of indebtedness, needed or useful for the purpose of financing the system or any portion thereof.

Section XII. Ordinance Repealed

Ordinance No. 836 enacted on September 22, 1992, is hereby repealed and of no further force or effect.

Section XIII. Successors and Assigns

The rights, powers, limitations, duties and restrictions herein provided for shall insure to and be binding upon the parties hereto and upon their respective successors and assigns

Section XIV. Police Power

Grantee shall, at all times during the term of this franchise, be subject to all lawful exercises of the police power of the City. The right is hereby reserved to the City to adopt, in addition to the provisions herein contained and any other existing applicable ordinances, such additional applicable ordinances as it shall find necessary in the exercise of its police power, provided that such additional ordinance shall be reasonable, shall not conflict with or alter in any manner the rights granted herein, and shall not conflict with the orders, rules and regulations of the New Mexico Public Regulation Commission, the laws of the State of New Mexico or the laws of the United States of America.

Section XV. Miscellaneous Provisions

A. No waiver of governmental immunity nothing herein shall be in any way construed as a waiver on behalf of the City of any of the protections and provisions of the New Mexico Governmental Immunity Act.

B. Captions. The captions to Sections contained herein are intended solely to facilitate the reading hereof. Such captions shall not affect the meaning or interpretation of the text herein.

C. Continuing Jurisdiction. This franchise and the ordinance approving the same and the respective rights and obligations of the parties hereunder are subject to all present and future valid governmental legislation or regulation, whether federal or state, of duly constituted authorities which have jurisdiction over this franchise, one or both of the parties, or any transaction hereunder.

D. Venue. Venue for all judicial actions shall be in Colfax County, New Mexico.

E. No Waiver. Neither the City nor Grantee shall be excused from complying with any of the terms and conditions of this franchise by any failure of the other, or any of its officers, employees, or agents, upon one or more occasions, to insist upon or to seek compliance with any terms and conditions.

F. Representatives. Both parties shall designate from time to time in writing representatives for the Grantee and the City who will be persons to whom notices shall be sent regarding any action to be taken under this franchise. Notices shall be in writing and forwarded by certified mail or hand delivered to the person and address stated, unless the person and address are changed at the written request of either party, delivered in person or by certified mail. Until such change shall hereafter be made, notices shall be sent as follows:

To the City:

The City of Raton

City Manager

To the Grantee:

President & General Manager

Raton Natural Gas Company

223 N Guadalupe St Suite 306

Santa Fe, New Mexico 87501

(or such other address as may be designated, from time to time)

G. Severability. Should any one or more provisions of this franchise be held invalid, void, unconstitutional or to be illegal or unenforceable by any court of competent jurisdiction, such portion shall be deemed separate and distinct from the balance and such declaration shall not affect the validity of the remaining provisions herein; provided, however, the parties shall forthwith enter into good faith negotiations and proceed with due diligence to draft a substitute term for each such provision held to be illegal or unenforceable that will achieve the original intent of the parties hereunder, if possible.

H. Payment of Expenses Incurred by City in Relation to Approval of this Franchise Agreement. Grantee shall reimburse the City for expenses incurred in publication of notices and publication of ordinances.

Section XVI. Acceptance and Effective Date

This franchise shall become effective and be in full force and effect from and after final passage of the ordinance approving the same by the Raton City Commission, the ordinance's publication as by law required, and upon written acceptance and ratification by Grantee as set forth herein below.

APPROVED, PASSED AND ADOPTED this 23rd day of December, 2013.

CITY OF RATON

By: /s/

Bobby LeDoux

Its Mayor

ATTEST:

Tricia Garcia /s/

City Clerk

ACCEPTANCE

Whereas, the City Commission of the City of Raton, Colfax County, New Mexico, enacted on the 23rd day of December, 2013, an Ordinance No. 987 entitled: Raton Natural Gas Franchise

PURSUANT TO SECTION 3-42-1, N.M.S.A., 1978 COMP., AN ORDINANCE GRANTING TO RATON NATURAL GAS COMPANY, A NEW MEXICO CORPORATION, ITS LEGAL REPRESENTATIVES, SUCCESSORS, LESSEES AND ASSIGNS, GRANTEE HEREIN, CERTAIN POWERS, LICENSES, RIGHTS-OF-WAY, PRIVILEGES AND FRANCHISE TO CONSTRUCT OPERATE AND MAINTAIN IN THE CITY OF RATON, NEW MEXICO, AS NOW OR HEREAFTER CONSTITUTED, WORKS, SYSTEMS AND PLANTS FOR THE HANDLING, PRODUCTION, MANUFACTURING, TRANSPORTING, STORING, SALE, AND DISTRIBUTION OF GAS INTO, OUT OF AND THROUGH SAID MUNICIPALITY; AND TO USE THE STREETS, AVENUES, EASEMENTS, RIGHTS-OF-WAY, ALLEYS, HIGHWAYS, SIDEWALKS, BRIDGES AND OTHER STRUCTURES AND PUBLIC PLACES AND GROUNDS IN SAID MUNICIPALITY FOR A PERIOD OF TWENTY-FIVE (25) YEARS; AND PRESCRIBING CERTAIN RIGHTS, DUTIES, TERMS AND CONDITIONS HEREIN MENTIONED; AND PROVIDING FOR THE PAYMENT TO SAID MUNICIPALITY OF A PERCENTAGE OF CERTAIN REVENUES OF GRANTEE FROM ITS OPERATIONS THEREIN; AND REPEALING CONFLICTING ORDINANCES.

WHEREAS, said Ordinance was duly approved by the Mayor and attested by the City Clerk;

NOW THEREFORE, in compliance with the terms of said Ordinance as enacted, approved and attested, Raton Natural Gas Company hereby accepts said Ordinance and files this as a written Acceptance with the Clerk of the City of Raton.

DATED this 23rd day of December, 2013

RATON NATURAL GAS COMPANY

By:/s/

Its President

ATTEST:

/s/

Secretary

Acceptance filed in the office of the City Clerk of Raton, Colfax County, New Mexico, this 23rd day of December, 2013.

/s/

City Clerk

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