020 of 2012 - Granting a franchise to McLeodUSA dba PAETEC Business Services 0 12-1
C 12-203
SALT LAKE CITY ORDINANCE
No.20 of 2012
(Granting to McLeodUSA Telecommunications Services,LLC d/b/a PAEI'EC Business
Services and Its Successors,a Telecommunication Franchise)
WHEREAS,McLeodUSA Telecommunications Services,LLC d/b/a PAETEC
Business Services,an Iowa limited liability company(the"Company")desires to
provide certain telecommunication services within Salt bake City,Utah(the"City"),and
in connection therewith to establish a network in,under,along,over,and across present
and future streets,alleys and rights-of-way of the City,consisting of telecommunication
lines and cables,together with all necessary and desirable appurtenances;and
WHEREAS,the City,in the exercise of its police power,ownership,use or rights
over and in the public rights-of-way,and pursuant to its other regulatory authority,
believes it is in the best interest of the public to provide to the Company,and its
successors,a non-exclusive franchise to operate its business within the City;and
WHEREAS,the City and the Company propose to enter into a Franchise
Agreement,the substantially final form of which has been presented to the City Council
at the meeting at which this Ordinance is being considered for adoption;and
WHEREAS,the City desires to approve the execution and delivery of such
Franchise Agreement and to otherwise take all actions necessary to grant the referenced
Franchise to the Company;and
WIIEREAS,the City believes this Ordinance to be in the best interest of the
citizens of the City,
NOW,THEREFORE,be it ordained by the City Council of Salt bake City,Utah,
as follows:
SECTION 1. Purpose. The purpose of this Franchise Ordinance is to grant to
the Company, and its successors and assigns, a non-exclusive right to use the present and
future streets, alleys, viaducts, bridges, roads, lanes and public way within and under
control of the City for its business purposes, under the constraints and for the
compensation enumerated in the Franchise Agreement attached hereto as Exhibit A, and
by this reference incorporated herein, as if fully set forth herein (the "Franchise
Agreement").
SECTION 2. Short Title. This Ordinance shall constitute the McLeodUSA
Telecommunications Services, LLC d/b/a PAETEC Business Services Franchise
Ordinance.
SECTION 3. Franchise Description. There is hereby granted to the Company,
and its successors and assigns, in accordance with the terms and conditions of the
Franchise Agreement, the right, privilege, and franchise (collectively, the "Franchise"), to
construct, maintain and operate in, under, along, over and across the present and future
streets, alleys, and rights-of-way and other property of the City, all as more particularly
described in Section 3.1 of the Franchise Agreement, a network consisting of
telecommunication lines and cables, together with all the necessary or desirable
appurtenances (including without limitation fiber-optic and copper lines and cables,
underground and above ground conduits and structures, poles, towers, wires and cables)
(the "Network"). The Network shall be used by the Company for the purpose of
supplying high-speed digital data transmission telecommunication services (including
without limitation high-speed internet access, voice and multimedia transmissions) to the
City, the inhabitants thereof, and persons and corporations beyond the limits thereof.
This Franchise Ordinance does not relate to, and does not authorize the Company to
provide, or govern the operation by the Company of, cable television services as defined
in the United States Cable Communication Policy Act of 1984, as amended to any
customer in the City, without a separate franchise. If in the future, the Company decides
to offer cable television or other bundled services, the approval and issuance by the City
of the appropriate franchise shall not be unreasonably withheld.
SECTION 4. Term. The term of the Franchise is for a period from and after the
effective date of this Ordinance and its acceptance by the Company, until January 1,
2022.
The Company shall pay all costs of publishing this Ordinance.
SECTION 5. Acceptance by Company. Within thirty (30) days after the
effective date of this Ordinance, the Company shall file an unqualified acceptance of this
Ordinance, in a form approved by the City Attorney, with the City Recorder of Salt Lake
City; otherwise, this Ordinance and the rights granted hereunder shall be null and void.
SECTION 6. Consideration and Payment Dates.
(a) For and in consideration of the Franchise, and as fair and reasonable
compensation to the City for the use by the Company of the City's Right-of-Way, the
Company agrees to pay to the City an annual franchise fee (the "Franchise Fee"), in an
amount equal to, and consisting of, the municipal telecommunications license tax (the
"Municipal Telecommunications Tax") authorized pursuant to the Utah Municipal
Telecommunications License Tax Act, Title 10, Chapter 1, Part 4, Utah Code Annotated
1953, as amended (the "Municipal Telecommunications Tax Act"), and imposed and
levied pursuant to Salt Lake City Code, Title 3, Chapter 10. Such Franchise Fee shall be
calculated in the manner provided in the Municipal Telecommunications Tax Act, and
shall be paid by the Company to the Utah State Tax Commission, as agent for the City
under an Interlocal Cooperation Agreement by and among the City, the Utah State Tax
Commission, and others, at the times and in the manner prescribed in the Municipal
Telecommunications Tax Act, and any rules and regulations promulgated thereunder.
Compliance by the Company with the terms and provisions of the Municipal
Telecommunications Tax Act, and any rules and regulations promulgated thereunder,
shall satisfy all requirements of this Agreement with respect to the calculation and
payment of the Franchise Fee.
(b) Notwithstanding the provisions of Section 6(a) above, the Franchise Fee
shall be calculated and payable as described therein only so long as the Company and the
services provided within the City by the Company by means of the Company Facilities
are subject to the Municipal Telecommunications Tax. In the event all or any portion of
the Company Facilities ceases to be used by the Company to provide services subject to
the Municipal 'Telecommunications Tax, the Company shall pay, in lieu of the Franchise
Fee, a charge with respect to such portion of the Company Facilities, payable from and
after the (i) the date Company ceases to provide such services, or (ii) the date the
Municipal Telecommunications Tax ceases to apply to the services provided by the
Company, which shall be calculated in the same manner as the charge then imposed by
the City on other Companies occupying the Right-of-Way with similar facilities, and
which do not provide telecommunication services subject to the Municipal
Telecommunications Act. The City and the Company agree to negotiate in good faith
any amendments to this Agreement as shall be necessary to accommodate the change in
the Municipal Telecommunications Tax Act,including payment provisions;provided
such new or changed provisions shall conform substantially with the provisions contained
in any permits held by other similarly situated companies.
(c) The Company represents to the City that one of the purposes for entering
into this Agreement is to obtain authority to build a network within the City to provide
telecommunication services to customers within the City. Upon completion of the
Company Facilities,the Company will actively market customer services and generate
local gross receipts within the meaning of the Municipal Telecommunications Tax Act.
The Company represents that it expects to generate more than a nominal amount of gross
receipts from local customers,and that the use of the Company Facilities for other
purposes,or to otherwise provide services to customers located outside of the City,is not
the sole or preeminent objective of the Company.
(d) Upon the written request of the City no more than once per year,the
Company shall submit to the City a certificate signed by a corporate officer of the
Company certifying whether or not all elements of the Company Facilities have been
used to provide services which generate gross receipts attributed to the City(within the
meaning of the Municipal Telecommunications Tax Act)during the preceding calendar
year. Any elements of the Company Facilities not so used shall be identified.
SECTION 7. Rights Reserved to the City. Without limitation upon the rights
that the City might otherwise have,the City expressly reserves the following rights,
powers and authorities to:(a)exercise its governmental powers now or hereafter to the
full extent that such powers may be vested in or granted to the City;(b)grant additional
franchises to the same property covered by the Franchise within the City to others, under
competitively neutral and non-discriminating basis as conditions acceptable to the City;
or (c) exercise any other rights, powers, or duties required or authorized, under the
Constitution of the State of Utah, the law of Utah, or the City ordinances.
SECTION 8. Extension of City Limits. Upon the annexation of any territory to
the City, the right and Franchise hereby granted shall extend to the territory so annexed to
the extent the City has authority. All facilities owned, maintained, or operated by the
Company located within, under, or over streets, alleys and rights-of-way of the territory
so annexed shall thereafter be subject to all terms hereof.
SECTION 9. Early Termination or Revocation of Franchise.
9.1 The City may terminate or revoke the Franchise and all rights and privileges
herein provided for any of the following reasons:
(a) The Company fails to make timely payments of the Franchise Fee as
required under Article II of this Agreement and does not correct such failure within
twenty (20) business days after receipt of written notice by the City of such failure,
provided, however, that any payment made pursuant to such written notice shall not be
deemed to constitute a waiver of the Company's right to challenge the calculation of the
Franchise Fee;
(b) The Company by act or omission materially violates a term or condition
(other than as provided in (a) above) herein set forth within the Company's control, and
with respect to which redress is not otherwise herein provided. In such event, the City,
acting by or through its City Council, may after public hearing, determine that such
failure is of a material nature; and thereupon, after written notice given to Company of
such determination, Company shall, within thirty (30) days of such notice, commence
efforts to remedy the conditions identified in the notice, and will have six (6) months
from the date it receives notice to remedy the conditions. After the expiration of such six
(6) month period and failure to correct such conditions, the City may declare the
Franchise forfeited and the Franchise Agreement terminated, and thereupon the Company
shall have no further rights or authority hereunder or under the Franchise Agreement;
provided however, that any such declaration of forfeiture and termination shall be subject
to judicial review as provided by law, and provided further that in the event such failure
is of such nature that it cannot be reasonably corrected within the six (6) month period
above, the City shall provide additional time for the reasonable correction of such alleged
failure;
(c) The Company becomes insolvent, unable or unwilling to pay its debts, is
adjudged bankrupt, or all or part of its facilities should be sold under an instrument to
secure a debt and is not redeemed by the Company within sixty (60) days;
(d) In furtherance of the Company policy or through acts or omissions done
within the scope and course of employment, a member of the Board of Directors or an
officer of the Company knowingly engages in conduct or makes a material
misrepresentation with or to the City, that is fraudulent or in violation of a felony
criminal statute of the state of Utah; or
(e) Upon adoption of a new ordinance as described in Section 11 hereof,
which new ordinance shall operate to extend the Franchise pursuant to the terms of such
new ordinance, upon acceptance thereof by the Company.
9.2. Nothing contained herein shall be deemed to preclude the Company for
pursuing any legal or equitable rights or remedies it may have to challenge the action of
the City.
9.3 No Franchise revocation or termination may be effected until the City
Council shall first adopt an ordinance terminating the Franchise and setting forth the
reasons therefor, following not less than thirty (30) days prior written notice to the
Company of the proposed date of the ordinance adoption. The Company shall have an
opportunity on said ordinance adoption date to be heard upon the proposed termination.
SECTION 10. Severability.
10.1. If any section, sentence, paragraph, term or provision of the Franchise
Agreement or this Franchise Ordinance is for any reason determined to be or is rendered
illegal, invalid, or superseded by other lawful authority including any state or federal,
legislative, regulatory or administrative authority having jurisdiction thereof or
determined to be unconstitutional, illegal or invalid by any court of competent
jurisdiction, such portion shall be deemed a separate, distinct, and independent provision
and such determination shall have no effect on the validity of any other section, sentence,
paragraph, term or provision hereof or thereof, all of which will remain in full force and
effect for the term of the Franchise or any renewal or renewals thereof, except for Section
6 hereof and Article II of the Franchise Agreement.
10.2. Section 6 hereof and Article II of the Franchise Agreement are essential to
the adoption of this Ordinance and should they be challenged by the Company, or
determined to be illegal, invalid, unconstitutional or superseded, in whole or in part, the
entire Franchise shall be voided and terminated, subject to the following: (a) in the event
of a judicial, regulatory or administrative determination that Section 6 hereof or Article II
of the Franchise Agreement is illegal, invalid, unconstitutional and superseded, such
termination shall be effective as of the date of a final appealable order, unless otherwise
agreed upon by the City and the Company; and (b) in the event of any legislative action
that renders Section 6 hereof or Article II of the Franchise Agreement unconstitutional,
illegal, invalid or superseded, such termination shall be effective as of the effective date
of such legislative action.
10.3. Notwithstanding the foregoing, if the City stipulates in writing to judicial,
administrative or regulatory action that seeks a determination that Section 6 hereof or
Article II of the Franchise Agreement is invalid, illegal, superseded or unconstitutional,
then a determination that Section 6 hereof or Article II of the Franchise Agreement is
invalid, illegal, unconstitutional or superseded shall have no effect on the validity or
effectiveness of any other section, sentence, paragraph, term or provision of the
Franchise, which shall remain in full force and effect.
10.4. In the event this Franchise Ordinance or the Franchise Agreement is
terminated pursuant to paragraph 10.2 hereof or Article X of the Franchise Agreement,
the City grants to the Company a lease according to the same terms and conditions as set
forth in the Franchise Agreement. Accordingly, the Company shall pay, as fair market
rental value, the same amounts. at the same times, required for the payment of the
Franchise Fee pursuant to Section 6 hereof and Article II of the Franchise Agreement and
shall be bound by all other terms and conditions contained herein; provided, however,
that in no event will the Company be obligated to pay a higher percentage of revenues
derived from the sale of telecommunication services within the City than is paid by other
similarly situated franchisees serving within the City.
SECTION 11. This Ordinance shall take effect immediately upon publication.
Passed by the City Council of Salt Lake City, Utah, this 24 day of April ,
2012.
1. t
ERSON
ATTEST:
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F DEP CI Y REC4ER
Transmitted to Mayor on April 27, 2012 •
Mayor's Action: X Approved. Vetoed.
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MAYOR
ATTEST:
APPROVED AS*Fs F:^,9m
11IEF DEPUTY Y RECO fait ;¢C i'.>t�sfne;<<Giiia9
Date 2.
(SEAL)
BY
Bill No. 20 of 2012. ,
Published: `
HB ATTY-N21907-vI-McLeod Ordinance.DOC
EXHIBIT"A"
FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT (this "Agreement"), dated as of its date of
recordation with the Salt Lake City Recorder, by and between SALT LAKE CITY
CORPORATION, a municipal corporation of the State of Utah (the"City"), and McLeodUSA
Telecommunications Services,LLC d/b/a PAETEC Business Services,an Iowa limited liability
company(the"Company").
RECITALS
A. The Company desires a non-exclusive franchise to provide telecommunication
services to residents, businesses, and other customers within the boundaries of the City, and to
utilize City rights-of-way tin such purpose.
B. The City considers it to be in the best interests of the City,and in furtherance of
the health, safety, and welfare of the public, to grant such franchise to the Company, and in
connection therewith desires to authorize the use of City rights-of-way in accordance with the
provisions of this Agreement, and all applicable City ordinances and state and federal law,
including, without limitation, the Federal Telecommunications Act of 1996 (the
"Telecommunications Act").
C. In recognition of the separation of powers inherent in the City's Council Mayor
optional form of government,the Mayor has negotiated this Agreement for legislative and policy
approval by the City's legislative body.
NOW,THEREFORE,in consideration of the premises and other good and valuable
consideration and, further, in contemplation of subsequent approval by legislative action of the
City Council as hereinafter provided, the parties mutually agree as follows:
ARTICLE I
FRANCHISE ORDINANCE
1.1 Ordinance. The City Council has adopted a franchise ordinance entitled
McLeodUSA Telecommunications Services, LLC d/b/a PAETEC Business Services, Franchise
Ordinance (the "Ordinance"), approving the execution of this Agreement. Execution of this
Agreement constitutes the unqualified acceptance of the Ordinance by the Company. Such
Ordinance is incorporated herein by reference, and made an integral part of this Agreement.
1.2 Franchise Description. The Ordinance confers upon the Company, and its successors
and assigns, the right, privilege, and franchise (the "Franchise"), to construct, maintain and
operate in, under, along, over, across, and through portions of the City's Right-of-Way (as
defined in Section 3.1 hereof), facilities consisting of telecommunication lines and cables
(including, without limitation, fiber-optic and copper lines and cables), together with all
necessary and desirable appurtenances (including without limitation underground and above
ground conduits and structures, poles, towers, wire and cable) (collectively the "Company
Facilities"). Upon the annexation of any territory to the City, all rights hereby granted, and the
Franchise, shall automatically extend to the territory so annexed, to the extent the City has
authority to so extend the Franchise. All facilities owned, maintained, or operated by the
Company located within, under, or over streets of the territory so annexed shall thereafter be
subject to all terms hereof. The Company Facilities may be used by the Company (and others, as
provided herein), for the purpose of providing any of the services contemplated to be provided by
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telecommunications providers under the Telecommunications Act,and involving any switched or
other one-way or two-way transmission of voice or data,including but not necessarily limited to
(i)services interconnecting interexchange carriers for the purpose of any transmission of voice or
data: (ii) services connecting interexchange carriers or competitive access carriers to local
exchange providers for the purpose of any transmission of voice or data;(iii)services connecting
interexchange carriers to any entity, other than another interexchange carrier or the local
exchange provider for the purpose of any transmission of voice or data; (iv)services providing
private line point-to-point service fir end users for the purpose of any transmission of voice or
data; (v) video, video conferencing or point-to-point private line service, or (vi) any service
regulated by state regulatory agencies or the Federal Communications Commission which the
state of Utah or Federal Communications Commission has authorized the Company to provide.
Anything in this Agreement to the contrary notwithstanding,the Company may not use
the Company Facilities to provide,to any customer within the City,cable television services as
defined in the federal Cable Communication Policy Act of 1984,as amended,without a separate
franchise therefor.
1.3 Term. The term of the Franchise is for a period from and after the date hereof,until
January 1,2022.
ARTICLE II
FRANCHISE FEE;ADMINISTRATION FEE
2.1 Franchise Fee. (a) For and in consideration of the Franchise, and as fair and
reasonable compensation to the City for the use by the Company of the City's Right-of-Way,the
Company agrees to pay to the City an annual franchise lee (the"Franchise Fee"),in an amount
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equal to, and consisting of, the municipal telecommunications license tax (the "Municipal
Telecommunications Tax") authorized pursuant to the Utah Municipal Telecommunications
License Tax Act, Title 10, Chapter 1. Part 4, Utah Code Annotated 1953, as amended (the
"Municipal Telecommunications Tax Act"), and imposed and levied pursuant to Salt Lake City
Code,Title 3.Chapter 10. Such Franchise Fee shall be calculated in the manner provided in the
Municipal Telecommunications Tax Act, and shall be paid by the Company to the Utah State
'fax Commission,as agent for the City under an Interlocal Cooperation Agreement by and among
the City,the Utah State Tax Commission,and others,at the times and in the manner prescribed
in the Municipal Telecommunications Tax Act, and any rules and regulations promulgated
thereunder. Compliance by the Company with the terms and provisions of the Municipal
Telecommunications Tax Act, and any rules and regulations promulgated thereunder, shall
satisfy all requirements of this Agreement with respect to the calculation and payment of the
Franchise Fee.
(b) Notwithstanding the provisions of Section 2.1(a)above,the Franchise Fee shall be
calculated and payable as described therein only so long as the Company and the services
provided within the City by the Company by means of the Company Facilities arc subject to the
Municipal Telecommunications Tax. In the event all or any portion of the Company Facilities
ceases to be used by the Company to provide services subject to the Municipal
Telecommunications Tax, the Company shall pay, in lieu of the Franchise Fee, a charge with
respect to such portion of the Company Facilities, payable from and after the (i) the date
Company ceases to provide such services,or(ii)the date the Municipal Telecommunications Tax
ceases to apply to the services provided by the Company,which shall be calculated in the same
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manner as the charge then imposed by the City on other Companies occupying the Right-of-Way
with similar facilities, and which do not provide telecommunication services subject to the
Municipal Telecommunications Act. The City and the Company agree to negotiate in good faith
any amendments to this Agreement as shall be necessary to accommodate the change or
elimination of the Municipal Telecommunications Act, including payment provisions; provided
such new or changed provisions shall conform substantially with the provisions contained in any
permits held by other similarly situated companies.
(c) The Company represents to the City that one of the purposes for entering into this
Agreement is to obtain authority to build or maintain a network within the City to provide
telecommunication services to customers within the City. Upon completion of the Company
Facilities, the Company will actively market customer services and generate local gross receipts
within the meaning of the Municipal Telecommunications Tax Act. The Company represents
that it expects to generate more than a nominal amount of gross receipts from local customers,
and that the use of the Company Facilities for other purposes, or to otherwise provide services to
customers located outside of the City, is not the sole or preeminent objective of the Company.
(d) Upon the written request of the City no more than once per year, the Company
shall submit to the City a certificate signed by a corporate officer of the Company certifying
whether or not all elements of the Company Facilities have been used to provide services which
generate gross receipts attributed to the City (within the meaning of the Municipal
Telecommunications Tax Act) during the preceding calendar year. Any elements of the
Company Facilities not so used shall be identified.
(e) For each calendar year, those elements of the Company Facilities that are not used
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to provide services which generate gross receipts attributed to the City within the meaning of the
Municipal Telecommunications Tax Act shall be subject to the per linear foot charge provided
for in Salt Lake City Code § 14.32.425, or successor ordinance, as if such elements of the
Company Facilities were installed and maintained pursuant to a telecommunications right of way
permit (the "Non-Taxed Facilities"). On or before March lst each year, Company shall pay to
City the per linear foot charges for its Non-Taxed Facilities for the preceding calendar year, as
provided for in Salt Lake City Code § 14.32.425, regardless of whether City requests the report
pursuant to Section 2.1(d). In the event an element of Company Facilities is changed from a Non-
Taxed Facility to a facility that provide services which generate gross receipts attributable to the
City within the meaning of the Municipal Telecommunications Tax Act, the per linear foot
charges for that particular element for the preceding year shall be pro-rated to the date of
dedication to such local services.
2.2 Report of Franchise Fee Payment. Upon the written request of the City, the
Company shall prepare and deliver to the City, at such frequency as the City shall request, but not
more frequently than monthly, a report summarizing Company payments to the Utah State Tax
Commission for the requested period. Such report shall include such information related to such
payment as the City shall reasonably request, including by way of example, and not limitation,
the gross receipts of the Company from telecommunications service that are attributed to the City
during such period, and the methodology for calculating such gross receipts.
2.3 Record Inspection. The records of the Company pertaining to the reports and
payment required in this Agreement, including but not limited to any records deemed necessary
or useful by the City to calculate or confirm gross receipts, and all other records of the Company
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reasonably required by the City to assure compliance by the Company with the terms of this
Agreement, shall be open to inspection by the City and its duly authorized representatives upon
reasonable notice at all reasonable business hours of the Company. The Company may require
such inspection to be performed at any Company Facilities where such records may be located;
provided that in the event such records are not located at Company Facilities within the City,
such records shall be delivered by the Company for inspection by the City at the address of the
City set forth in Section 13.1 hereof.
2.4 Service of Process. The Company agrees to use its best efforts to provide a local
office within the City for purposes of acceptance of process. Otherwise, the Company agrees to
advise City of a person or office where such process may be served.
2.5 Administrative Fee. In addition to the annual Franchise Fee described above, the
Company shall pay to the City, upon execution and delivery hereof, a one-time administrative fee
of$5,000, which shall compensate the City for (but which does not exceed), the direct costs and
expenses incurred by the City in preparing, considering, approving, executing and implementing
the Ordinance and this Agreement.
ARTICLE III
COMPANY USE OF RIGI IT-OF-WAY
3.1 Franchise Rights to Use Right-of-Way. (a) The Company shall have the right to
excavate in, occupy and use any present and future City-owned street, alley, viaduct, bridge,
road, lane and public way within the City, including the surface, subsurface and airspace
(collectively the 'Right-of-Way'), subject to the terms and conditions of this Agreement. In
addition, the Company shall have the right to utilize any easement across private property granted
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to the City for utility purposes, provided (i) the prior written consent of the director of the City
department which controls such easement is obtained in each case, and (ii) the documents
granting such easement to the City authorize such use. In all cases, the precise location of the
Company Facilities within, on, over, under, across or through the Right-of-Way shall be subject
to City approval, and the right to use such City streets shall be subject to the terms of this
Agreement, and all applicable and lawful City ordinances, rules and regulations now existing or
from time to time adopted or promulgated..
(b) The rights granted to the Company herein do not include the right to (i) excavate
in, occupy or use any City park, recreational areas or other property owned by the City, or (ii)
attach or locate any of the Company Facilities to or on, or otherwise utilize any of, any City-
owned property or facilities or structures, including without limitation light poles, towers,
buildings and trees. The use of such City-owned property or facilities by the Company shall be
considered by the City on a case-by-case basis, and shall be subject to payment of additional
compensation to the City. Similarly, the rights granted herein by the City to the Company do not
include the right to situate any Company Facilities on poles or other property owned by entities
other than the City and situated in the City's Right-of-Way. It shall be the responsibility of the
Company to negotiate any pole-attachment agreements or similar agreements with the owners of
such poles or facilities, and to pay to such owners any required compensation.
3.2 Company Duty to Relocate. (a) Whenever the City shall require the relocation or
reinstallation of any of the Company Facilities situated within the Right-of-Way, it shall be the
obligation of the Company, upon notice of such requirement and written demand made of the
Company, and within a reasonable time thereof, but not more than thirty (30) days from the date
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of notice, to commence to remove and relocate or reinstall such Company Facilities as may be
reasonably necessary to meet the requirements of the City, which relocation shall be completed
within a reasonably practicable time thereafter, but in no event longer than one hundred twenty
(120) days, unless extended by mutual agreement. Such relocation may be required by the City
for any lawful purpose, including, without limitation, the resolution of existing or anticipated
conflicts or the accommodation of any conflicting uses or proposed uses of the Right-of-Way,
whether such conflicts arise in connection with a City project or a project undertaken by some
other person or entity, public or private. The City agrees to cooperate with the Company to
provide alternate space where available, within the Right-of-Way, at no additional cost to the
Company.
(b) Such relocation shall be accomplished by the Company at no cost or expense to
the City. In the event the relocation is ordered to accommodate the facilities of an entity other
than the City or the Company, the cost and expense of such relocation shall be borne by such
other entity. Any money and all rights to reimbursement from the State of Utah or the federal
government to which the Company may be entitled for work done by the Company pursuant to
this paragraph, shall be the property of the Company. City shall assign or otherwise transfer to
the Company all rights it may have to recover costs for such work performed by the Company
and shall reasonably cooperate with the Company's efforts to obtain reimbursement.
3.3 City Duty to Obtain Approval to Move Company Property; Emergency Exception.
Except as otherwise provided herein, the City shall not, without the prior written approval of the
Company, intentionally alter, remove, relocate or otherwise interfere with any portion of the
Company Facilities. However, if it becomes necessary, in the judgment of the City
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Representative(as defined in Section 6.1 hereof),to cut or move any of the Company Facilities
because of a fire,flood. emergency, earthquake disaster or other imminent threat thereof or to
relocate any portion of the Company Facilities upon the Company's failure to do so following a
request by the City under Section 3.2 hereof, these acts may be done without prior written
approval of the Company and the repairs thereby rendered necessary shall be made by the
Company,without charge to the City. Any written approval required shall he promptly reviewed
and processed by the Company and approval shall not be unreasonably withheld.
3.4 Annual Information Coordination. On or before February 28 of each calendar year,
or such other date as the Company and City may agree upon from year to year,the Company and
the City shall meet .for the purpose of exchanging information and documents regarding
construction and other similar work within the City, with a view toward coordinating their
respective activities in those areas where such coordination may prove mutually beneficial. Such
information exchange shall be in addition to, and not in lieu of, the requirements of Title 14,
Chapter 32 of the Salt Lake City Code.
3.5 Common Use of Facilities. (a) In order to minimize the adverse impact to the Right-
of-Way and to City facilities,and inconvenience to the public,caused by construction,repair and
maintenance activities multiple utility franchisees, it is the policy of the City to encourage and
require the shared use of telecommunication facilities by City franchisees and permittees
whenever practicable.
(b) Except when necessary to service a subscriber,and subject to the written approval
and conditions of the City, the Company shall, prior to constructing any Company Facilities,
fully utilize any excess capacity reasonably and cost-effectively available on any existing poles or
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within any existing conduit, under such terms and agreements as the Company negotiates with
the owners of such poles or conduits. The City shall cooperate with the Company in negotiating
and obtaining permission to use such facilities.
(c) Whenever another franchisee or permittee of the City which is subject to a
provision substantially similar to this provision of this Agreement requests permission to utilize
any poles or other equipment of the Company for the purpose of attaching or locating therein or
thereon any facilities of such franchisee or permittee, the Company shall negotiate in good faith
with such franchisee or permittee to grant such permission under terms and conditions which (i)
are commercially reasonable, (ii) do not place such franchisee or permittee at a competitive
disadvantage relative to the Company or any other franchisee or permittee of the City, (iii) would
not constitute a `'barrier to entry" under the Telecommunications Act, if imposed by the City, and
(iv) are, in any event, no less onerous than those permitted or required under the
Telecommunications Act. Without limiting the generality of the foregoing, the provisions of this
subsection (c) shall apply to all co-location of fiber optic lines or other cables within excess
conduit installed by the Company pursuant to Section 14.32.095 of the Salt Lake City Code. The
Company shall be required to grant such permission only to the extent the facilities of such
requesting franchisee or permittee do not (i) interfere with the Company Facilities, (ii) conflict
with uses proposed by the Company, or anticipated within the reasonably foreseeable future, or
(iii) create a safety or quality of services hazard. In the event the Company and the requesting
franchisee or permittee are unable to agree upon such terms and conditions, the Company and the
requesting franchisee or permittee shall resolve any disagreements in such legal or other forum as
may be provided by law; provided, however, that if the result of the Company's inability to reach
11
a reasonable agreement is that the City might be required by law to authorize the requesting
franchisee or permittee to erect additional poles in the Right-of-Way, then, in that case, the
Company agrees that the City may arbitrate any outstanding disputes, and that the City's
decisions shall be binding on all parties.
(d) No Company Facilities shall be installed or the installation thereof commenced on
any existing pole within the Right-of-Way until the proposed location, specifications and manner
of installation thereof are set forth upon a plot or map showing the existing poles, where such
installations are proposed. The plot or map shall be submitted for approval to the City
Representative.
(e) If the Company is required to locate Company Facilities within the Right-of-Way
other than Company Facilities which may be attached to utility poles, the nature of such
Company Facilities shall be disclosed to the City Representative for approval as to the need
thereof and as to the location within the Right-of-Way. The installation shall be made under such
conditions as the City Representative shall prescribe.
(f) The Company may trim trees overhanging the Right-of-Way of the City to prevent
the branches of such trees from coming in contact with Company Facilities. All trimming on
City property shall be done under the direction of the City's Urban Forester and at the expense of
the Company.
(g) The Company shall, at the request of any person holding a building moving permit
issued by the City, temporarily raise or lower its wires to permit the moving of such building.
The expense of such temporary removal or raising or lowering of the wires shall be paid by the
person requesting the same and the Company shall have the authority to require such payment in
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advance. The City agrees to cause prior written notice of the necessity to move wires to be given
as far in advance as possible, provided that in no event shall less than forty-eight (48) hours
advance notice be given.
3.6 Duty to Underground. It is the policy of the City to have lines and cables placed
underground to the greatest extent reasonably practicable. In furtherance of this policy, the
Company agrees as follows:
(a) In addition to the installation of underground lines as provided in the applicable
rules and regulations of the Public Service Commission, the Company shall, upon payment of the
charges provided in its tariffs or their equivalent, place newly constructed lines and cables
underground in (i) new residential subdivision areas, if required by subdivision regulations
adopted by the City, and (ii) within the Central Business District of the City.
(b) In any area of the City in which there are no aerial facilities other than antennas or
other facilities required to remain above ground in order to be functional, or in any portion of the
Right-of-Way in which all telephone wires and cables reasonably capable of undergrounding
have been placed underground, the Company shall not be permitted to erect poles, but shall lay
wires, cables, or other facilities on existing poles or underground in the manner required by the
City. The Company acknowledges and agrees that if the City does not require the
undergrounding of Company Facilities at the time of initial installation, the City may, at any time
in the future, require the conversion of the Company's above-ground and/or aerial facilities to
underground installation at the Company's expense whenever telephone utilities are placed
underground in the immediate vicinity of Company's Facilities.
3.7 Company Duty to Comply With Rules and Regulations. Company Facilities located
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on, upon, over and under the Right-of-Way shall be constructed, installed, maintained, cleared of
vegetation, renovated or replaced in accordance with such lawful rules and regulations as the City
may issue. The Company shall acquire, and comply with the fees of, such permits as may be
required by such rules and regulations, and the City may inspect the manner of such work and
require remedies as may be necessary to assure compliance.
3.8 Incorporation of Technology. The Company shall use its best efforts to incorporate
technological advances into its equipment and service when such advances have been shown to
be technically and economically feasible, safe and beneficial. Without limiting the generality of
the foregoing, the Company shall endeavor to make available to all of its customers within the
City, and continually improve, its high-speed internet service, if any. The Company shall, in the
regular course of its business, review technological advances that have occurred in the
telecommunication industry.
3.9 Compliance With Applicable Law. All Company Facilities installed or used under
color of this Agreement shall be used, constructed and maintained in accordance with applicable
federal, state and city laws and regulations, including without limitation environmental laws;
provided that this provision shall not be construed to require the Company to modify or retrofit
any existing facilities to meet new code standards unless otherwise required by law. Nothing in
this Agreement shall constitute a waiver of either party's right to challenge any portion of this
Agreement which is not in accordance with applicable federal, state and local laws.
3.10 Location to Minimize Interference. All Company Facilities shall be reasonably
located so as to cause minimum interference with the use of the Right-of-Way by others, and so
as to cause minimum interference with the rights of the owners of property which abuts any
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portion of the Right-of-Way.
3.11 Repair Damage. If during the course of work on Company Facilities, the Company
causes damage to or alters any portion of the Right-of-Way, or any City facilities or other public
property or facilities, the Company shall (at its own cost and expense and in a manner approved
by the City Representative), replace and restore such portion of the Right-of-Way or any City
facilities or other public or private property or facilities, in accordance with applicable City
ordinances, policies and regulations relating to repair work of similar character.
3.12 Guarantee of Repairs. For a period of one year following the completion of any
work in the Right-of-Way or any repair work performed pursuant to Section 3.11, the Company
shall maintain, repair, and keep in good condition those portions of the Right-of-Way or property
or facilities restored, repaired or replaced, to the reasonable satisfaction of the City Engineer.
3.13 Safety Standards. The Company's work, while in progress, shall be properly
protected at all times with suitable barricades, flags, lights, flares, or other devices in accordance
with applicable safety regulations or standards imposed by law.
3.14 Landscaping. The Company shall maintain the general appearance of any of its
buildings located within the City in a manner consistent with the surrounding properties, and the
appearance of Company Facilities in a manner consistent with best industry practice. Such
obligation to maintain the appearance of property shall include but not be limited to the
landscaping of front yards and parkways in residential zones; the installation of curb, gutter,
sidewalk and parkway landscaping in those areas where similar improvements have been, or are
being, installed on contiguous properties; and the screening of such property directly abutting a
public street or abutting residential property with appropriate landscaping or screening material
15
as required by the City's Planning Commission.
3.15 Inspection by the City. The Company Facilities shall be subject to inspection by the
City to the extent reasonably necessary to assure compliance by the Company with the terms of
this Agreement. The City shall inspect Company Facilities at reasonable times and upon
reasonable notice to the Company; provided, however, the inspection shall not interrupt or
interfere with any services provided by the Company.
3.16 Company's Duty to Remove Company Facilities from the Right-of-Way.
(a) Subject to subsection (c) below, the Company shall promptly remove from the Right-
of-Way all or any part of the Company Facilities, when one or more of the following conditions
occur:
(i) The Company ceases to operate such Company Facilities for a continuous
period of twelve (12) months, except when the cessation of service is a direct result of a natural
or man-made disaster;
(ii) The construction or installation of such Company Facilities does not meet
the requirements of this Agreement; or
(iii) The Franchise is terminated or revoked pursuant to notice as provided
herein.
(b) Upon receipt by the Company of written notice from the City setting forth one or
more of the occurrences specified in subsection (a) above, the Company shall have ninety (90)
days from the date upon which said notice is received to remove such Company Facilities, or, in
the case of subsection (a), to begin operating the Company Facilities.
(c) The Company may abandon any underground Company Facilities in place, subject
16
to the reasonable requirements of the City, and with the prior written consent of the City, which
may be granted or withheld in the City's sole and absolute discretion. In such an event, the
abandoned system shall become the property of the City and the Company shall have no further
responsibilities or obligations concerning those facilities. The City shall not use the possibility of
obtaining ownership of the abandoned system as a rationale for terminating or revoking the
Franchise.
3.17 Operational Reports. During the period of construction of any Company Facilities,
the Company shall furnish the City with written progress reports indicating in detail the area of
construction. Such periodic reports shall be furnished at three-month intervals, the first report to
be made three (3) months after the construction commencement date.
3.18 Removal of Facilities Upon Request. Upon termination of service to any
subscriber, the Company shall promptly remove Company Facilities and equipment from the
premises of such subscriber at the written request of such subscriber, and at no cost to the
subscriber, unless the Company's agreement with such subscriber provides otherwise.
Notwithstanding the foregoing, as long as regulations of the Utah Public Service Commission
govern the removal of Company Facilities, and the Company is in compliance with such
regulations, this Section 3.18 shall not apply.
ARTICLE IV
CITY USE RIGIITS
4.1 City Use of Poles and Overhead Structures. The City shall have the right, without
cost, to use all poles and suitable overhead structures owned by the Company within the City for
fire alarms, police signal systems, or any other lawful use; provided, however, any said uses by
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the City shall be for activities owned, operated or exclusively used by the City for any public
purposes and shall not include the provision of telecommunication services to third parties.
4.2 Use of Trenches. Whenever the Company proposes to install new underground
conduits or replace existing underground conduits within or under the Right-of-Way, it shall
notify the City Representative as soon as practical and shall allow the City, at its own expense,
and without charge to the Company, to utilize any such trench opened by the Company to lay the
City's facilities therein; provided, that such action will not unreasonably interfere with Company
Facilities or delay the accomplishment of the Company's project; and provided further that the
Company may require the City to agree to reasonable terms and conditions of such use.
4.3 Use of Company Corridors. The City may identify corridors which the Company
now or in the future owns in fee within the City and which are similar in nature to transmission
corridors of electric utility companies. The City may identify portions of such corridors, if any,
as being desirable locations for public parks, playgrounds or recreation areas. In such event, and
upon notice by the City, the Company shall negotiate with the City in good faith to reach an
agreement providing for such uses by the City; provided that such use shall not be allowed where
the Company in good faith believes such use would interfere with the Company's use of the
corridor or materially prejudice its interests in safety. The Company shall assume no liability nor
shall it incur, directly or indirectly any additional expense in connection therewith.
4.4 Limitation on Use Rights. Nothing in this Article shall be construed to require the
Company to increase pole capacity or trench size, alter the manner in which the Company
attaches equipment to the poles or installs facilities, or alter the manner in which it operates and
maintains its equipment. The City may attach to or otherwise utilize Company Facilities only
18
after written approval by the Company. Such approval may include requirements regarding
maintenance of such City facilities, either to be done for a reasonable fee by the Company or by a
qualified party who shall fully indemnify and hold the Company harmless from any liability and
whose service would not materially prejudice the Company's interests in safety and insulation
from liability.
ARTICLE V
POLICE POWER
The City expressly reserves, and the Company expressly recognizes, the City's right and
duty to adopt, from time to time, in addition to the provisions herein contained, such ordinances,
rules and regulations as the City may deem necessary in the exercise of its police power for the
protection of the health, safety and welfare of its residents and their properties.
ARTICLE VI
CITY REPRESENTATIVE
6.1 City Representative. Except as provided hereinafter, the City Engineer, or his/her
designee, or such other person as the Mayor may designate from time to time (which designation
shall be communicated to the Company in writing), is hereby designated the official of the City
having full power and authority to take appropriate action for and on behalf of the City and its
inhabitants to enforce the provisions of this Agreement and to investigate any alleged violations
or failures of the Company to comply with said provisions or to adequately and fully discharge its
responsibilities and obligations hereunder. The City Engineer or such other designee is referred
to herein as the City Representative. The failure or omission of the City Representative to so act
shall not constitute a waiver or estoppel. The City Representative shall be the Company's initial
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point of contact with the City. Unless specifically provided otherwise, all decisions, consents or
approvals required of the `'City" shall be made or given by the City through the City
Representative. The City Representative shall coordinate with other City officials, personnel and
departments in all matters relating to this Agreement.
6.2 Company Duty to Cooperate. In order to facilitate such duties of the City
Representative, the Company agrees:
(a) To allow the City Representative to inspect Company Facilities in accordance
with Section 3.15.
(b) That the City Representative may convey to the Company, and, with notice to the
Company in accordance with this Agreement, to the Federal Communications Commission, the
Utah Public Service Commission and any other regulatory agency having jurisdiction, any
complaint of any customer of the Company within the City with respect to the quality and price
of telecommunication services and the appropriate standards thereof; provided, however, that
City Representative's failure to provide any such notice to the Company shall not constitute a
breach of this Agreement..
(c) To submit to the City Representative a letter advising the City of any application
by the Company which, if approved, would materially affect the Franchise Fee. A copy of such
letter shall also be submitted to the City Attorney.
ARTICI,E VII
COMPANY SERVICE TO CITY
If the City elects to purchase capacity or telecommunications services from the Company
for municipal uses, the Company agrees to extend such services and capacity to City facilities
20
identified by the City. without requiring advance payments from the City. The City agrees that
extension of service to City facilities may be conditioned by the Company on the payment by the
City of all costs incurred by the Company in connection with such extension of services and
typically charged by the Company to the customer. The provisions of this Article shall not be
construed as requiring the Company to extend its facilities until such time as the Company, in its
judgment, deems such extension to be technically and economically feasible, and in no event
shall the City's request delay the Company's construction.
ARTICLE VIII
CONTINUATION OF SERVICE
In the event the Company is or becomes the exclusive local exchange carrier providing
basic telephone exchange services within the City, the removal of Company Facilities, and the
discontinuation of telecommunication services by the Company within the City, shall be subject
to applicable regulations and procedures of the Public Service Commission, or any successor
regulatory body and, in the event the Utah Public Service Commission or such successor
regulatory body no longer regulates local exchange carriers providing basic telephone exchange
services within the City, such removal of facilities and discontinuation of services shall be
subject to the applicable regulations and procedures of any public body (including the City) then
regulating such carriers.
ARTICLE IX
TRANSFER OF FRANCHISE
(a) The Company shall not sell, transfer, lease, assign, sublet or otherwise make
available to any person or entity other than the Company, in whole or in part, either by forced or
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involuntary sale, or by ordinary sale, contract, consolidation or otherwise, the Franchise or any
rights or privileges under this Agreement, without the prior written consent of the City. The
following events (by way of illustration and not limitation) shall be deemed to be a sale.
assignment or other transfer of the Franchise requiring compliance with this Article: (i) the sale,
assignment or other transfer of all or a majority of the Company's assets to another Person; (ii)
the sale, assignment or other transfer of capital stock or partnership, membership or other equity
interests in the Company by one or more of its existing shareholders, partners, members or other
equity owners, so as to create a new Controlling Interest in the Company: (iii) the issuance of
additional capital stock or partnership, membership or other equity interest by the Company so as
to create a new Controlling Interest in the Company; or (iv) the entry by the Company into an
agreement with respect to the management or operation of the Company or its facilities
(including the Company Facilities).
(b) The consent required shall be given or denied by the City not later than one-
hundred twenty (120) days following receipt by the City of a written request for consent, and
shall not be unreasonably withheld. For the purpose of determining whether it shall grant its
consent, the City may inquire into the qualifications of the Proposed Transferee, and the
Company shall assist the City in the inquiry. The Proposed Transferee shall indicate by affidavit
whether it:
(i) has ever been convicted or held liable for acts involving deceit including
any violation of federal, State or local law or regulations, or is currently under an indictment,
investigation or complaint charging such acts;
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(ii) has ever had a judgment in an action for fraud, deceit, or misrepresentation
entered against the Proposed Transferee by any court of competent jurisdiction;
(iii) has pending any material legal claim, lawsuit, or administrative proceeding
arising out of or involving a system similar to the Company Facilities, except that any such
claims, suits or proceedings relating to insurance claims, theft or service, or employment matters
need not be disclosed;
(iv) is financially solvent, by submitting financial data, including financial
statements, that have been audited by a certified public accountant, along with any other data that
the City may reasonably require; and
(v) has the financial and technical capability to enable it to maintain and
operate the Company Facilities for the remaining term of this Agreement.
The Company shall provide to the City information regarding any failure by the Company
to comply with any provision of this Agreement or of any applicable customer or consumer
service standards promulgated or in effect in the City's jurisdiction at any point during the term
of this Agreement.
(c) Notwithstanding the foregoing, the City's consent shall not be required in
connection with:
(i) The intracorporate transfer from one wholly-owned subsidiary to another
wholly-owned subsidiary of a parent corporation;
(ii) Any transfer in trust, a mortgage, or other instrument of hypothecation of
the assets of the Company, in whole or in part, to secure an indebtedness, provided that
such pledge of the assets of the Company shall not impair or mitigate the Company's
23
responsibility and capability to meet all its obligations under the provisions of this
Agreement:
(iii) Any sale or other transfer by the Company of worn out, obsolete
equipment or property no longer required by the Company in connection with its
operations in the normal course of business;or
(iv) interconnection or use agreements pursuant to which the Company
Facilities may he used by another entity providing telecommunication services within the
City,provided that any such other entity has obtained a franchise from the City.
(d) The consent or approval of the City to any transfer by the Company shall not
constitute a waiver or release of any rights of the City in or to its Right-of-Way and any transfer
shall by its own terms be expressly subject to the terms and conditions of this Agreement.
(e) A sale,transfer or assignment of this Agreement may not be approved without the
Proposed Transferee becoming a signatory to this Agreement by executing an unconditional
acceptance of this Agreement.
(1) For purposes of this Article IX, the following terms shall have the following
meanings:
(i) "Control" or "Controlling Interest" means actual working control in
whatever manner exercised, including, without limitation, working control through ownership,
management,debt instruments or negative control,as the case may be,of the Company Facilities
or of the Company. A rebuttable presumption of the existence of Control or a Controlling
Interest shall arise from the beneficial ownership,directly,by any person,or group of persons or
entities acting in concert, of more than fifty percent (50%) of the Company. "Control" or
24
"Controlling Interest" as used herein may be held simultaneously by more than one Person.
(ii) "Person" means any individual, sole proprietorship, partnership,
association or corporation, or any other form of organization, and includes any natural
person.
(iii) "Proposed Transferee" means a proposed purchaser, transferee, lessee,
assignee or person acquiring ownership or control of the Company.
ARTICLE X
EARLY TERMINATION OR REVOCATION
OF FRANCHISE
10.1 Grounds for Termination. The City may terminate or revoke this Agreement and all
rights and privileges herein provided for any of the following reasons:
(a) The Company fails to make timely payments of the Franchise Fee as required
under Article II of this Agreement, or any other fee due to the City under the terms of this
Agreement, and does not correct such failure within twenty (20) business days after receipt of
written notice by the City of such failure.
(b) The Company, by act or omission, violates a material term or condition herein set
forth within the Company's control, and with respect to which redress is not otherwise herein
provided. In such event, the City, acting by or through its City Council, may after public hearing,
determine that such failure is of a material nature and thereupon, after written notice given to the
Company of such determination, the Company shall, within thirty (30) days of such notice,
commence efforts to remedy the conditions identified in the notice, and shall have six (6) months
from the date it receives notice to remedy the conditions. After the expiration of such six (6)
25
month period and upon failure by the Company to correct such conditions, the City may declare
the Franchise forfeited and this Agreement terminated, and thereupon the Company shall have no
further rights or authority hereunder; provided, however, that any such declaration of forfeiture
and termination shall be subject to judicial review as provided by law, and provided further that
in the event such failure is of such nature that it cannot be reasonably corrected within the six (6)
month period above, the City shall provide additional time for the reasonable correction of such
alleged failure if the Company (i) commences corrective action during such six (6) month period,
and (ii) diligently pursues such corrective action to completion.
(c) The Company becomes insolvent, unable or unwilling to pay its debts, is adjudged
bankrupt, or all or part of its facilities should be sold under an instrument to secure a debt and is
not redeemed by the Company within sixty (60) days.
(d) In furtherance of the Company policy or through acts or omissions done within
the scope and course of employment, a member of the Board of Directors or an officer of the
Company knowingly engages in conduct or makes a material misrepresentation with or to the
City, that is fraudulent or in violation of a felony criminal statute of the State of Utah.
10.2 Reserved Rights. Nothing contained herein shall be deemed to preclude the
Company from pursuing any legal or equitable rights or remedies it may have to challenge the
action of the City.
ARTICI,E XI
COMPANY INDEMNIFICATION; INSURANCE
11.1 No City Liability. The City shall in no way be liable or responsible for any loss or
damage to property or any injury to, or death, of any person that may occur in the construction,
26
operation or maintenance by the Company of the Company Facilities.
11.2 Company Indemnification of City. The Company shall indemnify, defend and hold
the City harmless from and against claims, demands, liens and all liability or damage of
whatsoever kind on account of or arising from the exercise by the Company of its rights
hereunder and under the Ordinance, and shall pay the reasonable costs of defense, including
reasonable attorneys' fees. Said indemnification shall include but not be limited to the
Company's negligent acts or omissions pursuant to its use of the rights and privileges of this
Agreement, including construction, operation and maintenance of the Company Facilities
whether or not any such use, act or omission complained of is authorized, allowed or prohibited
by this Agreement.
11.3 Notice of Indemnification. The City shall (a) give prompt written notice to the
Company of any claim, demand or lien with respect to which the City seeks indemnification
hereunder and (b) unless in the City's judgment a conflict of interest may exist between the City
and the Company with respect to such claim, demand or lien, permit the Company to assume the
defense of such claim, demand, or lien with counsel satisfactory to City. If such defense is not
assumed by the Company, the Company shall not be subject to any liability for any settlement
made without its consent. Notwithstanding any provision hereof to the contrary, the Company
shall not be obligated to indemnify, defend or hold the City harmless to the extent any claim,
demand or lien arises out of or in connection with any negligent act or failure to act of the City or
any of its officers or employees.
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11.4 Insurance.
(a) The Company, at its own cost and expense, shall secure and maintain, and shall
ensure that any subcontractor to the Company shall secure and maintain, during the term of this
Agreement the following policies of insurance:
(i). Commercial General Liability Insurance. Commercial general liability
insurance with the City as an additional insured, in the minimum amount of $2,000,000
per occurrence with a $3,000,000 general aggregate and $3,000,000 products completed
operations aggregate. The policy shall protect the City and the Company from claims for
damages for personal injury, including accidental death, and from claims for property
damage that may arise from the Company's operations under this Agreement. Such
insurance shall provide coverage for premises operations, and completed operations. The
Company may utilize its umbrella policy to meet the required limits.
(ii) Business Automobile Liability Insurance. Commercial automobile
liability insurance that provides coverage for owned, hired, and non-owned automobiles,
with the City as an additional insured, with a combined single limit of $2,000,000 per
occurrence. "I'he Company may utilize its umbrella policy to meet the required limits.
(iii) Workers' Compensation and Employer's Liability. Worker's
compensation and employer's liability insurance sufficient to cover all of the Company's
employees pursuant to Utah law. This requirement includes those who are doing business
as an individual and/or as a sole proprietor as well as corporations and partnerships. In the
event any work is subcontracted, the Company shall require its subcontractor(s) similarly
28
to provide worker's compensation insurance for all of the latter's employees. unless a
waiver of coverage is allowed and acquired pursuant to Utah law.
(b) General Insurance Requirements.
(i) Any insurance coverage required herein that is written on a"claims made-
form rather than on an "occurrence-form shall (A) provide full prior acts coverage or
have a retroactive date effective before the date of this Agreement,and(B)be maintained
for a period of at least two(2)years following the end of the term of this Agreement or
contain a comparable "extended discovery" clause. Evidence of current extended
discovery coverage and the purchase options available upon policy termination shall be
provided to the City.
(ii). All policies of insurance shall be issued by insurance companies
authorized to do business in the state of Utah and either:
(A) Currently rated A-or better by A.M.Best Company:and
(A(1)) for construction contracts only,the insurer must also have an
A.M.Best Company financial size category rating of not less than VII.
OR
(B) Listed in the United States Treasury Department's current Listing
of Approved Sureties(Department Circular 570), as amended.
(iii) The Company shall furnish certificates of insurance, acceptable to the
City,verifying the foregoing matters concurrent with the execution hereof and thereafter
as required.
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(iv) In the event any work is subcontracted, the Company shall require its
subcontractor, at no cost to the City, to secure and maintain all minimum insurance
coverages required of the Company hereunder.
(v) In the event that governmental immunity limits are subsequently altered by
legislation or judicial opinion,the Contractor shall provide a new certificate of insurance
within thirty (30) days after being notified thereof in writing by the City, certifying
coverage in compliance with the modified limits or, if no new limits are specified, in an
amount acceptable to the City.
(vi) All required certificates and policies shall provide that insurers of
coverage thereunder shall provide 30 days prior written notice of cancellation to the City
in a manner approved by the City Attorney.
(vii) In the event that City's tender of defense based on Company's alleged
negligence is rejected by Company or Company's insurer,and Company is later found by
a court of competent jurisdiction to have been negligent as aforesaid,then in addition to
any other remedies City may have, Company agrees to pay the City's reasonable costs,
expenses and attorney's fees in proving such negligence, defending itself and enforcing
this indemnity provision.
(viii) In the event that the limits of damage exposure to which the City is at risk
are modified by either statute or judicial decision,Company shall cause the commercial
general liability and business automobile liability insurance coverages specified in
paragraphs (a)(i) and (a)(ii) above to be increased to any new limit or, if no limit is
established,in an amount acceptable to the City.
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ARTICLE XII
REMEDIES
12.1 Duty to Perform. The Company and the City agree to take all reasonable and
necessary actions to assure that the terms of this Agreement are performed and neither will take
any action for the purpose of securing modification of this Agreement before either the Public
Service Commission or any court of competent jurisdiction; provided, however, that neither shall
be precluded from taking any action it deems necessary to resolve differences in interpretation of
this Agreement.
12.2 Remedies at Law. In the event the Company or the City fails to fulfill any of its
respective obligations under this Agreement, the City, or the Company, whichever the case may
be, shall have a breach of contract claim and remedy against the other in addition to any other
remedy provided by law; provided that no remedy that would have the effect of amending the
specific provisions of this Agreement shall become effective without such action that would be
necessary to formally amend the Agreement.
ARTICLE XIII
NOTICES
13.1 City Designee and Address. Unless otherwise specified herein, all notices from the
Company to the City pursuant to or concerning this Agreement shall be delivered to the City
Representative at 'Telecommunications Franchise Administrator, Management Services, at 451
South State Street, Room 248, P.O. Box 145460, Salt Lake City, Utah, 84114-5460, with a copy
to the City Attorney, at 451 South State Street, Room 505, P.O. Box 145478 Salt Lake City, Utah
84114-5478, and (b) such other offices as the City may designate by written notice to the
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Company.
13.2 Company Designee and Address. The Company shall maintain in the City
throughout the term of this Agreement an address for services of notices by mail,and an office
and telephone number for the conduct of matters relating to this Agreement and the Franchise
during normal business hours.Unless otherwise specified herein,all notices from the City to the
Company pursuant to or concerning this Agreement or the Franchise shall be delivered to (a)
ROW Department, 929 Martha's Way, Hiawatha. IA 52233, with a copy to Legal Department,
400 Willowbrook Office Park, Fairport,NY 14450, and(b) such other offices as the Company
may designate by written notice to the City.
ARTICLE XIV
AMENDMENT
14.1 Changing Conditions;Duty to Negotiate. (a) The Company and the City recognize
that many aspects of the telecommunications business are currently the subject of discussion,
examination and inquiry by different segments of the industry and affected regulatory authorities,
and that these activities may ultimately result in fundamental changes in the way the Company
conducts its business. In recognition of the present state of uncertainty respecting these matters,
the Company and the City each agree, at the request of the other during the term of this
Agreement,to meet with the other and discuss in good faith whether it would be appropriate,in
view of developments of the kind referred to above during the term of this Agreement,to amend
this Agreement or enter into separate, mutually satisfactory arrangements to effect a proper
accommodation of any such developments.
(b) Either party may propose amendments to this Agreement by giving thirty(30)days
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written notice to the other of the proposed amendment(s) desired, and both parties thereafter,
through their designated representatives, will, within a reasonable time, negotiate in good faith in
an effort to agree upon mutually satisfactory amendment(s).
14.2 Amendment Approval Required. No amendment or amendments to this Agreement
shall be effective until mutually agreed upon by the City and the Company and an ordinance or
resolution approving such amendments is approved by the City Council.
ARTICLE XV
MISCELLANEOUS
15.1 Conditions. If any section, sentence, paragraph, term or provision of this
Agreement or the Ordinance is for any reason determined to be or rendered illegal, invalid, or
superseded by other lawful authority including any state or federal, legislative, regulatory or
administrative authority having jurisdiction thereof, or determined to be unconstitutional, illegal
or invalid by any court of competent jurisdiction, such portion shall be deemed a separate,
distinct, and independent provision and such determination shall have no effect on the validity of
any other section, sentence, paragraph, term or provision hereof or thereof, all of which will
remain in full force and effect for the term of this Agreement and the Ordinance or any renewal
or renewals thereof, except for Article II hereof.
15.2 No Waiver or Estoppel. Neither the City nor the Company shall be excused from
complying with any of the terms and conditions of this Agreement by any failure of the other, or
any of its officers, employees, or agents, upon any one or more occasions to insist upon or to seek
compliance with any of such terms and conditions.
15.3 Fee Article Essential. (a) Article II hereof is essential to the adoption of this
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Agreement. The Company agrees not to initiate, sponsor or support any litigation that seeks to
invalidate the Franchise Fee provisions contained in Article II hereof, or to reduce the amount of
the Franchise Fee payable hereunder. In the event the Franchise Fee provisions hereof are
determined to be illegal, invalid, unconstitutional, or are superseded by legislation, in whole or in
part, this entire Agreement and the Franchise shall, to the fullest extent not prohibited by law,
and subject to the following provisions of this Article, be voided and terminated. Such
termination shall be effective as of the date of a final appealable order, or the effective date of
any such legislation, unless otherwise agreed by the City and the Company.
15.4 Waiver of Non-Severability. Notwithstanding the foregoing, if City stipulates in
writing to judicial, administrative or regulatory action that seeks a determination that Article II is
invalid, illegal, superseded or unconstitutional, then a determination that Article II is invalid,
illegal, unconstitutional or superseded shall have no effect on the validity or effectiveness of any
other section, sentence, paragraph term or provision of this Agreement, which shall remain in full
force and effect.
15.5 Lease Terms Upon Termination. In the event this Agreement is terminated pursuant
to Section 10.1 hereof, the City grants to the Company a lease according to the same terms and
conditions as set forth in this Agreement. Accordingly, the Company shall pay, as fair market
rental value, the same amounts, at the same times, required for the payment of the Franchise Fee
pursuant to Article II hereof, and shall be bound by all other terms and conditions contained
herein; provided, however, that in no event will the Company be obligated to pay a higher
percentage of gross receipts than is paid by other similarly situated franchisees serving within the
City.
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15.6 Parity Among Providers. The City and Company mutually,agree that Company will
at all times he treated, regarding fees assessed and charges and all other franchise rights and
privileges hereunder,on parity with other telecommunications providers.
15.7 Utah Governmental Records Management Act. Whenever the Company is required
to deliver to the City, or make available to the City for inspection,any records of the Company.
and such records are delivered to or made available to the City with a written claim of
confidentiality which meets, in the judgment of the City Representative,the requirements of the
Utah Governmental Records Management Act("GRAMA"),such records shall be classified by
the City as"protected"within the meaning of GRAMA, and shall not be disclosed by the City
except as may otherwise he required by GRAMA,by court order,or by applicable City ordinance
or policy.
15.8 Timeliness of Approvals. Whenever either party is required by the terms of this
Agreement to request the approval or consent of the other party,such request shall be acted upon
at the earliest reasonable convenience of the party receiving the request, and the approval or
consent so requested shall not be unreasonably denied or withheld.
15.9 Representation Regarding Ethical Standards for City Officers and Employees and
Former City Officers and Employees. The Company represents that it has not(1) provided an
illegal gift or payoff to a City officer or employee or former City officer or employee,or his or
her relative or business entity; (2)retained any person to solicit or secure this contract upon an
agreement or understanding for a commission, percentage, brokerage or contingent fee, other
than bona fide employees or bona fide commercial selling agencies for the purpose of securing
business; (3) knowingly breached any of the ethical standards set forth in the City's conflict of
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interest ordinance, Chapter 2.44, Salt Lake City Code;or(4) knowingly influenced, and hereby
promises that it will not knowingly influence.a City officer or employee or former City officer or
employee to breach any of the ethical standards set forth in the City's conflict of interest
ordinance,Chapter 2.44,Salt Lake City Code.
WITNESS WHEREOF,this Franchise Agreement is executed in duplicate originals as of
the day and year first above written.
SALT LAKE CITY CORPORATION
Bv:
MAYOR
Attest and Countersign:
City Recorder
Approved As To Form:
Senior City Attorney
MCLEODUSA TELECOMMUNICATIONS
SERVICES, LLC d/b/a PAETEC BUSINESS
SERVICES
By:
Its:
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State of )
:ss
County of )
On the day of , 2012, personally appeared before me
, who, being by me duly sworn did say that he/she is the of
McLeodUSA Telecommunications Services, LI,C d/b/a PAETEC Business Services, an Iowa
limited liability company, and that the foregoing instrument was signed on behalf of said
company and said person acknowledged to me that he/she is authorized to execute such
instrument on behalf of said company.
NOTARY PUBLIC, residing in County,
My Commission Expires:
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