Kanab, Utah Ordinance

Section 17-100 FRANCHISE GRANTED TO SOUTH CENTRAL

Section I: Telephone Franchise Granted to South Central

a. Authority for Grant - The City of Kanab under the authority and with permitted municipal legislation of Article I, Section 23 of the Constitution of the State of Utah and consistent with the statutes of the United States and the State of Utah there is hereby granted a non-exclusive franchise (the "Franchise") to South Central Utah Telephone Association, Inc. ("South Central" or "Grantee:"), a corporation with its principal office in Escalante, Utah to construct, maintain, operate, use and furnish to the public including governmental, industrial, commercial and individual and all other consumers a telephone system and all incidental or like facilities for communications within all present and future highways, streets, public places, alleys and property granted or dedicated to or by the City extending to above and below ground poles, towers, wires, conduits, telegraph and telephone lines for the exercise of any power with South Central Utah Telephone Association, Inc. as authorized by law at the present or in the future to conduct so long as they are constructed, maintained, erected, or operated in such manner as to constitute the least interference with traffic in and upon highways, streets and alleys.

b. Non-exclusive Character and Term of Franchise - The Franchise hereby granted shall be non-exclusive and shall be for the term of twenty-five (25) years from date hereof (September 27, 1994). At the end of that term additional terms and extensions will be negotiated upon terms and conditions deemed reasonable to both the City and the Grantee.

The Franchise hereby granted shall be non-exclusive and shall be for the term of twenty-five (25) years from date hereof (September 27, 1994). At the end of that term additional terms and extensions will be negotiated upon terms and conditions deemed reasonable to both the City and the Grantee.

Section II: Non-Liability of City for Acts of Grantee - All facilities constructed shall be established in accordance with lawful activities with respect to telephone, telegraph or communication enterprises and South Central Utah Telephone Association, Inc. will comply with all ordinances of the City of Kanab presently existing or as amended from time to time.

Section III: Acceptance - The City of Kanab declares that it shall not at any time ever become liable or responsible to any person, firm, corporation or individual for any damage, injury (including loss of life), or loss by reason of the activities of South Central Utah Association, Inc. hereby indemnifies Kanab City to hold it harmless against all such liabilities, loss, cost, damage or expense which may be incurred by the City of Kanab by reason of the exercise or arising out of the implementation of this ordinance.

Section 17-105 FRANCHISE GRANTED TO SOUTH CENTRAL COMMUNICATIONS - CABLE TELEVISION SERVICE.

Section 1 Definitions. When used in this ordinance, unless the context otherwise requires, the following terms and their derivatives shall have the meaning herein given (and when not inconsistent with the context, words used in the present tense include the future, words in the plural number include the singular, and words in the singular number include the plural):

1. "City" means the City of Kanab.

2. "Council " means the governing body of the City.

3. "Grantee" means South Central Communications, Inc., its successors and assigns, the grantee of rights under this ordinance.

4. "Person" means any natural person, company or entity of any kind.

5. "Franchise area" means that area within the corporate limits of the city as now or hereafter constituted.

6. "Street" means the surface of and the space above and below any public street, way, place, right of way, road, highway, freeway, bridge, tunnel, lane, path, bike path, alley, court, sidewalk, parkway, drive, communications or utility easement, by whatever name called, now or hereafter existing as such within the franchise area.

7. "Property of Grantee" means all property owned, installed or used by the grantee in the conduct of a CATV business in the city.

8. "CATV" means a cable television or similar or like system.

9. "Cable Television System" means a system composed of, without limitation, antenna, cables, wires, lines, towers, wave guides, or any other conductors, converters, equipment or facilities, designed, constructed or wired for the purpose of producing, receiving, amplifying and distributing by coaxial cable radio, television or other electronic or electrical signals to and from persons, subscribers and locations in the franchise area.

10. "Basic CATV Service" means the distribution of broadcast television signals by the grantee.

11. "Subscriber" means any person or entity receiving and paying for basic CATV service.

12. "Basic Subscriber Revenue" means all remuneration received directly by the company from subscribers in payment for regularly furnished basic CATV service, but shall not include any taxes on services furnished by the grantee imposed on any subscriber or user by any government, governmental unit, political subdivision, agency or instrumentality, and collected by the grantee.

Section 2.  Grant of Authority.  There is hereby granted by the City to the grantee the right and privilege to engage in the business of operating and providing a CATV system in the city, and for that purpose to erect, install, construct, repair, replace, reconstruct, maintain and retain in, on , over, under, upon, across and along any street or streets laid out or dedicated and all extensions thereof and additions thereto in the franchise area, such poles, wires, cable, conductors, ducts, conduit, vaults, manholes, pedestals, amplifiers, appliances, attachments, and other property as may be necessary and appurtenant to the CATV system; and in addition, so to use, operate, and provide similar facilities or properties rented or leased from other persons, including by not limited to any public utility or other grantee franchised or permitted to do business in the city.

Section 3. Non-Exclusive Grant.  The right to use and occupy said streets for the purposes herein set forth, shall not be exclusive to the grantee.

Section 4 Term of Franchise. The franchise and rights herein granted shall commence on the date of the final passage hereof and shall continue in force and effect for 15 years after said effective date, subject to such modifications as to which the City and the grantee may hereafter agree. Thereafter, the franchise and rights granted herein shall automatically renew for successive 15-year periods unless the City revokes such franchise and rights by ordinance on or before the expiration of the initial term or any renewal period hereof.

Section 5 Conditions of Street Occupancy.  (1) All transmission and distribution structures, poles, lines, and equipment installed or erected by the grantee within the franchise area shall be so located as to cause minimum interference with the proper use of streets and with the rights and reasonable convenience of property owners who adjoin any of said streets. The CATV system shall be constructed and operated in compliance with applicable governmental construction and electrical codes.

(2) In case of disturbance of any street or paved area, the grantee shall, at its expense and in accordance with generally accepted construction practices, replace and restore such street or paved area in as good condition as theretofore.

(3) The grantee shall, at its expense, protect, support, temporarily disconnect, relocate in the same street or other public place, or remove from the street or other public place, any property of the grantee when lawfully required by the city by reason of traffic conditions, public safety, street vacation, 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 city; but, the grantee shall in all cases have the right of abandonment of its property, subject to city ordinances, and if public funds are available to any utility company for the purpose of defraying the cost of any of the foregoing, such funds shall also be made available to the grantee.

(4) The grantee shall, on 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 buildings, 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 three (3) business days advanced notice to arrange for such temporary wire changes.

5. The grantee shall have the authority to trim trees overhanging any  streets in the franchise area so as to prevent branches from coming in contact with the grantee’s wires and cables, except that at the option of the city, such trimming may be done by it or under its supervision and direction at the grantee’s expense.

6. Subject to any applicable state or federal regulations or tariffs, the city shall have the right to make additional use, for any public purpose, of any poles or conduits controlled or maintained exclusively by or for the grantee in any street, provided:

(a)  such use by the City does not interfere with the use by the grantee; and

(b)  the City holds the grantee harmless against and from all claims, demands, causes of actions, suits, actions, proceedings, damages, costs or liabilities of every kind and nature whatsoever arising out of such use of said poles or conduits.

Section 6 Safety Requirements.  (1) The grantee shall at all times employ ordinary care and shall install and maintain in use commonly accepted methods and devices for preventing failures and accidents which are likely to cause damage, injuries or nuisances to the public.

(2) All structures and all lines, equipment and connections in, over, under and upon all streets of the franchise area shall be kept and maintained in a safe and suitable condition and in good order and repair.

Section 7 System Construction and Extension.

(1) The grantee is hereby authorized to extend the system within the franchise area to the extent that such extension is or may become technically and economically feasible.

(2)  Whenever the grantee shall have received written requests for service from at least 15 subscribers within 400 cable meters (1300 cable feet of its aerial trunk cable, or from at least 25 subscribers within 400 cable meters (1300 cable feet) of is underground truck cable, it shall extend its system to such subscribers solely for the usual connection and service fees for all subscribers, provided that such extension is technically and economically feasible. The 400 meters shall be measured in extension length of grantee’s cable required for service located within the public way or easement and shall not include length of necessary drop to the subscriber’s home or premises.

(3) No person in the grantee’s service area shall be arbitrarily refused service; but in recognition of the capital costs involved in unusual circumstances, including, without limitation, instances when the distance from distribution cable to connection of service to subscribers is more than 45 meters (150 cable feet) or when a subscriber density exists less than the density specified hereinabove, service maybe made available on the basis of costs of materials, labor and easements, in order to prevent inequitable burdens on cable subscribers in more densely populated areas.

Section 8 Operational Standards; Force majeure.

(1) The grantee shall operate and maintain its cable television system in full compliance with the standards set forth by the Federal Communications Commission.

(2) The grantee shall have no obligation to construct or extend the system, nor to provide, repair, replace, maintain or operate CATV service, for any cause beyond grantee’s control, including, without limitation, acts of God, fire, flood, earthquakes, hurricane, unavoidable casualty, extraordinary delays in transportation, strikes, lockouts, picketing, boycotts, embargoes, government orders or other requirements, acts of civil or military authorities, governmental restrictions, regulations or controls, enemy or hostile governmental action, civil commotion, energy shortages, acts or omissions of carriers, or activities or other emergency conditions including weather conditions incompatible with good quality workmanship.

Section 9 Office; Complaints. The grantee shall maintain a business office or agent which subscribers may telephone during regular business hours without incurring added message or toll charges, so that complaints regarding cable television operations may be promptly reported to the grantee.

Section 11 Franchise Payments.

(1). The grantee shall pay the city a sum equal to three percent (3%) of the gross revenue per annum derived by the grantee from all local gross service revenue received from subscribers located within the city.

(2) Gross revenues for purposes of this ordinance are defined as all revenues received from "basic," "tier," and "pay" television supplied to subscribers within the city, including connection and service charges.

(3) Within 60 days after the first day of July of each year, during the term of this ordinance, the grantee shall file with the city a report of such revenues as described within this section for the next proceeding twelve (12) month period, which report shall include a computation of the tax due. The city shall determine the accuracy of the tax computation, and if he finds any errors, shall report the same to grantee for correction. The records of the grantee reflecting the information relevant in determining revenues described in this section shall be available for inspection by the Kanab City Council or its duly authorized representative at all reasonable hours and upon reasonable notice of not less than 15 days.

(4) The payments described in this section shall be in lieu of any and all other franchise, occupation, privilege, pole, wire, instrument, excise or other taxes except general ad valorem property taxes, sales taxes, city license tax and other special improvement taxes lawfully levied by the city or any other subdivision of the State of Utah pursuant to law.

(5) The business of cable television is hereby classified as a "retail business" for licensing purposes and the franchise shall pay the annual license fee for such business at the rate in effect each year for such businesses, but it will not be singled out for tax treatment different from other members of that general class of business. The grantee is authorized to charge and collect this franchise fee in addition to the charges for services heretofore or hereafter approved by the city in the same manner as such billing and collection is authorized under the utility franchisees issued by the city.

6.  The grantee shall deposit with city the amount of $2,000 cash which shall be a non-refundable advance payment of franchise fees due hereunder.  This deposit must be made within ten (10) days of the grant of this franchise.

Section 12 Indemnification of City.

(1). The grantee shall at all times protect and hold the city harmless from all claims, actions, suites, liability, loss, expense or damages of every kind and description, including investigation costs, court costs, and reasonable attorney’s fees, which may accrue to or be suffered or claimed by any person or persons arising out of the negligence of the grantee in the ownership, construction, repair, replacement, maintenance and operation of said cable television system and by reason of any license, copyright, property right or patent of any article or system used in the construction or use of said system, provided the city gives the grantee prompt notice of any such claims, actions, and suites, without limitation, in writing. The grantee shall maintain in full force and effect during the life of any franchise, public liability and property damage insurance for an amount of at least $1,000,000.00 single limit liability from the time of the commencement of construction of the CATV system.

(2) All such insurance may contain reasonable deductible provisions not to exceed $10,000 for any type of coverage. The city may require that any and all investigation of claims made by any person against the city arising out of any use or misuse of privileges granted to the grantee hereunder shall be made by, or at the expense of the grantee or its insurer. The grantee may bring its obligations to carry any insurance required hereby within the coverage of any so-called blanket policy or policies of insurance now or hereafter carried, by appropriate amendment, endorsement or otherwise, provided, however, the interests of the city shall be as fully protected thereby as if the grantee had obtained individual policies of insurance.

Section 13 Procedures.

(1) Any inquiry, proceeding, investigation or other action to be taken or proposed to be taken by the city in regard to the operations of the grantee’s cable television system, shall be taken only after 30 days written notice to the grantee of such action or proposed action, and the grantee has been given an opportunity to respond in writing and at any hearing which may be specified by the city.

(2) The notice required by this section shall state clearly the action or proposed action to be taken, the time provided for response and the person or persons in authority to whom such responses should be addressed, and such other procedures as may be specified by the city. If a hearing is to be held, the notice shall give the date and the time of such hearing, whether public participation will be allowed and the procedures by which such participation may be obtained. The company shall be a necessary party to any hearing conducted in regard to its operations.

Section 14 Procedure Upon Termination. Upon expiration of the franchise, if the grantee shall not have acquired an extension renewal thereof and accepted the same, it may have and it is hereby granted, the right to enter upon the streets or other property of the city, for the purposes of removing therefrom any or all of its property or otherwise. In so removing said property, the grantee shall refill, at its expense, any excavations that it shall make and shall leave said streets in as good condition as that prevailing prior to the grantee’s removal of its property.

Section 15 Approval of Transfer. The grantee shall not sell or transfer its plant or system to another, other than a person controlling, controlled by or under common control with the grantee, nor transfer any rights under this franchise to another without prior written notification to the city. No sale or transfer of the grantee’s assets used in the performance of this franchise shall be effective until the vendee, assignee or lessee has filed in the office of the city clerk an instrument duly executed reciting the fact of such sale, assignment or lease, accepting the terms of the franchise and agreeing to perform all the conditions thereof. Neither this section or other sections of this franchise shall preclude the mortgaging, hypothecating, or assigning of rights in the system, or the pledge of stock by the grantee for the purpose of financing.

Section 16 Miscellaneous Provisions.

(1). When not otherwise prescribed herein, all matters herein required to be filed with the city shall be filed with the city clerk.

(2). The grantee shall assume the cost of publication of this franchise ordinance when such publication is required by law. A bill for publication costs shall be presented to the grantee by the city clerk.

(3) In the case of any emergency or disaster, the grantee shall, upon request of the city make available its facilities to the city for emergency use during the emergency or disaster period.

Section 17 Compliance with Applicable Laws and Ordinances. The grantee shall at all times during the life of this franchise be subject to all lawful exercise of the police power by the city. The city reserves the right to adopt from time to time in addition to the provisions herein contained such ordinances as may be necessary to the exercise of police power. Such regulation shall be reasonable and not in derogation of the rights herein granted, nor in conflict with the laws of the state or other local or federal laws or regulations.

Section 18 Violations; Penalties.

(1) From and after the effective date of this title, it shall be unlawful for any person to construct, install or maintain within any public street in the city, or within any other public property of the city, or within any privately-owned area within the city which has not yet become a public street but is designated or delineated as a proposed public street on any tentative subdivision map approved by the city, any equipment or facilities for distributing any television signals or radio signals through a CATV system, unless a franchise authorizing such use of such street or property or area has first been obtained, and unless such franchise is in full force and effect.

(2) It shall be unlawful for any person to make any unauthorized connection, whether physically, electrically, acoustically, inductively, or otherwise, with any part of the franchised CATV system within this city for the purpose of enabling anyone to receive any television signal, radio signal, picture, sound, or other transmission, without payment to the grantee.   

(3) It shall be unlawful for any person, without the consent of the owner, willfully to tamper with, remove or injure any cables, wires or equipment used for distribution of television signals, radio signals, pictures, sound or other transmission.

(4) Any person violating or failing to comply with any of the provisions of this section shall be guilty of a class C misdemeanor.

Section 19 Line Severing. If at any time the grantee’s cable and/or other equipment is disturbed, damaged, or severed the cost of repair shall be paid by the party responsible for said damage. The grantee may charge the responsible party for the time and materials expended for repair of said damage. The city will cooperate with the grantee to assist in enforcing any charge or penalty arising from cable severing or other damage to grantee’s property.

Section 20 Separability. If any part of this ordinance is from any reason held invalid by the decision of any court or regulatory body of competent jurisdiction, such decision shall not affect the validity of the remaining portions. The invalidity of any portion of this ordinance shall not abate, reduce or otherwise affect any consideration or other obligation required of the Grantee. All ordinances or parts of ordinances in conflict with the provisions of this ordinance are hereby repealed.

Section 21 Effective Date. This ordinance shall become effective on February 28, 2006.

Section 17-120 FRANCHISE GRANTED TO US POSTAL SERVICE

Section 1. GRANT OF FRANCHISE. The U.S. Postal Service shall have the right and privilege to construct, erect, operate, and maintain neighborhood postal delivery boxes in, upon, and along the streets, alleys and public ways and places now laid out or dedicated and all extensions thereof and additions thereto in Kanab City. The specific location of each neighborhood postal delivery box must be approved in advance by Kanab City.

Section 2. NON-EXCLUSIVE RIGHT. The right to use and occupy said streets, alleys and public ways and places for the purposes herein set forth shall be non-exclusive and Kanab City reserves the right to grant similar use of said streets, alleys and public ways and places to any other person at any time during the period of this franchise. Nothing herein shall be construed to give the U.S. Postal Service, its successors or assigns, any exclusive right to the privileges herein granted.

Section 3. FRANCHISE SUBJECT TO ORDINANCES. The U.S. Postal Service shall, at all times during the life of this franchise, be subject to the terms of their franchise and to all lawful exercises of the police power by Kanab City and to such reasonable regulation as Kanab City shall hereafter provide.

Section 4. TERRITORY. This franchise relates to the present territorial limits of Kanab City, and to any area hence-forth added thereto during the term of this franchise.

Section 5. INDEMNITY. The U.S. Postal Service shall hold Kanab City harmless against any and all damages that may be caused to any and every person or persons, by reason of the neighborhood postal delivery boxes in the territorial area involved, and the U.S. Postal Service shall cause to be defended at its own expense all actions that may be commenced against Kanab City for damages by reason of the neighborhood postal delivery boxes in the territorial area involved.

Section 6. EXERCISE OF CARE. The U.S. Postal Service shall at all times employ ordinary and reasonable care and skill in installing, maintaining and using the postal delivery boxes, and shall install, maintain and use commonly accepted methods and devices for preventing damages, injuries, or nuisances to the public.

Section 7. COMPLIANCE WITH LAW. The U.S. Postal Service shall install, maintain and use the neighborhood postal delivery boxes in accordance with the requirements of Kanab City ordinances now or hereafter adopted, any other applicable safety code and the laws of the State of Utah and in such manner that the boxes will not interfere with any installations of Kanab City, with any public utility serving Kanab City, or with the passage of public traffic.

Section 8. RESTORATION OF STREET. In case of any disturbance of pavement, sidewalk, driveway or other surfacing, the U.S. Postal Service shall, at its own expense, replace and restore all paving, sidewalk, driveway or other surface of any sidewalk, street or alley disturbed, in accordance with the standards and specifications of Kanab City.

Section 9. CHANGE OF LOCATION. If at any time during the period of this ordinance Kanab City shall elect to alter or change the grade or location of any street, alley, sidewalk or other public way, the U.S. Postal Service shall, upon reasonable notice by Kanab City, remove and relocate its neighborhood postal delivery boxes at its own expense, and, in each instance, comply with the standards and specifications of Kanab City.

Section 10. DURATION OF FRANCHISE. This franchise and the rights, privileges and authority hereby granted, shall take effect and be in force from and after January 1, 1992, and shall continue in full force and effect for a term of thirty (30) years.

Section 11. TRANSFER OF FRANCHISE. The U.S. Postal Service may not assign or transfer its rights under this franchise without the consent of Kanab City; except, that this franchise may be transferred in trust or by mortgage, or other hypothecation to secure an indebtedness.

Section 12. PROCEDURE UPON TERMINATION. Upon expiration of the franchise, if the U.S. Postal Service shall not have acquired an extension or renewal thereof and accepted the same, it may have and it is hereby granted, the right to enter upon the streets, alleys and public ways of Kanab City for the purposes of removing therefrom any or all of its property. In so removing said property, the U.S. Postal Service shall fill, at its own expense, any excavation that shall be made by it, and shall leave said streets, sidewalks and public ways and places in as good condition as that prevailing prior to removal of its property.

Section 13. MAINTENANCE OF APPROACH AND SURROUNDING RIGHTS-OF-WAY. Where the need is determined in writing by the City and the U.S. Postal Service, Kanab City will maintain and upgrade the right-of-way around neighborhood delivery box units. The U.S. Postal Service assumes no responsibility for maintenance of public rights-of-way.

17-130 FRANCHISE GRANTED TO GARKANE POWER

1.  Short Title.  This ordinance shall be known and may be cited as the "Garkane Power Association Electric Distribution Franchise Ordinance."

2. Definitions. For the purposes of this ordinance, the following terms, phrases, words, and their derivations shall have the meaning given herein:

a. "City is Kanab City.

b. "Company is Garkane Power Association, Inc., a Utah corporation, the grantee of rights under this Franchise, and its successors and assigns.

c. "Council" is the City Council of Kanab City.

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

e. "Prudent Utility Practice" is any of the practices, methods and acts, as changed from time to time, engaged in or approved by a significant portion of the electric utility industry to operate electrical equipment lawfully and in a safe, dependable, efficient and economic manner, or any practices, methods and acts which, in the exercise of reasonable judgment in the light of the known facts, could be expected to accomplish the desired result at reasonable cost and consistent with reliability, safety and expedition and the requirements of governmental agencies having jurisdiction. Prudent Utility practices are not intended to be limited either to the optimum or least costly practice, method or act to the exclusion of all others, but rather to be a range of reasonable practices, methods or acts.

f. "Franchise" is the right, authority, and contractual undertakings granted to the Company in Sections 4 and 5.

g. "Franchise Area" is that area west of Kanab Creek and incorporated by annexation within the corporate limits of the City, as specifically described in APPENDIX A hereto. Because of unique circumstances surrounding the adoption of this Ordinance, any area bordering on the Franchise Area that is annexed into, merged with, or otherwise coming within the corporate limits of the City hereafter shall be included in the Franchise Area to the extend that the Company is providing electric service to consumers in such area at such time pursuant to a certificate granted to the Company by the Utah Public Service Commission except to the extent that the City can demonstrate by clear and convincing evidence produced at the time of such annexation, that the Company would not be an effective supplier of electric service to such customers. Absent written assertion by the City prior to any such annexation to the effect that the City believes such annexed area will not be part of the Franchise Area, such annexed area(s) shall be deemed to be included with the Franchise Area.

h. When not inconsistent with the context, words used in the present tense include the future, words in the plural number include the singular number, and words in the singular number include the plural number. The word "shall" is always mandatory and not merely directory.

3. Purpose and Effect. The purpose of this ordinance is to provide authority to the Company to use City streets, roads, alleys, parks and other public ways and places within the Franchise Area and to set forth the terms of the agreement between the City and the Company for the grant o fan exclusive contractual franchise to the Company for the purpose of distributing at retail electrical power and energy to residents, businesses, and Persons located within the Franchise Area. By filing acceptance as provided in Section 14, the Company accepts all of the terms of this ordinance and agrees to comply with, and be bound by, all terms hereof, whereupon the Company and the City shall be bound contractually to the terms of the Franchise granted hereby.

4. Grant of Authority. There is hereby granted by the City to the Company the right and privilege to do the following:

a. Construct, erect, relocate, upgrade operate and maintain in, upon, along, across, above, over and under the streets, roads, alleys, parks and other public ways and places now laid out or dedicated, and all extensions additions, improvements, or upgrades thereof, in the Franchise Area, poles, wires, cables, underground conduits, manholes and other electric fixtures necessary or proper for the construction, maintenance and operation in the Franchise Area of an electric distribution and transmission system, and such other services as generally are provided or offered to the members of the Company, including any and all wires and associated equipment connected therewith.

b. Supply, sell, distribute and furnish electrical power and energy, associated services, and such other incidental services as generally are provided or offered to the members of the Company at retail in the Franchise Area.

c. Provide such additional services, perform or make such additional improvements, and construct such additional facilities as may from time to time be required by applicable federal, state, or local law with respect to any activities the Company within the Franchise Area.

With respect to the intermingled customers of the City and the Company outside the Franchise Area served by each over the facilities of the other, the City will continue to co-operate with the Company in serving, providing access to, exchanging or taking over service to those customers by the electrical distribution service supplier that is most effective for that customer in a mutually convenient manner; provided that distribution wheeling charges may be assessed by either Party where appropriate. The City and the Company shall work together to document the identity, location and service category of all such intermingled customers.

5. Exclusive Franchise. This Franchise is an exclusive franchise to the extent that the Company has been granted an exclusive certificate by the Utah Public Service Commission to sentence, or as otherwise expressly provided hereinbelow, the City will not grant a franchise in the Franchise Area to any other Person in the same business. The City shall not directly or indirectly, during the term of the Franchise, undertake in any manner to sell, supply, distribute or furnish electric power and energy for retail or end-use consumption to any Person located within the Franchise Area, except as required by federal or state statute; provided that the City shall not exercise any option it may have under such statutes in a way that would have the effect of nullifying its commitment under this provision, if it can reasonably avoid doing so in a manner consistent with its obligations to its citizens and ratepayers.

6. Compliance With Applicable Laws and Ordinances. The Company shall, at all times during the term of this Franchise, be subject to and shall comply with all lawful exercise of the police power by the City, such lawful regulation of general and non-discriminatory application as the City shall from time to time by resolution or ordinance provide, and all rules and regulations of any other governing authority having jurisdiction. The Company shall, at all times during the term of this Franchise, furnish and supply electric power and energy to residents of the City within the Franchise Area in such a manner as shall be reasonably calculated to satisfy any legal obligation of the City to provide for such utility service within the corporate limits of the City. In particular, the Company represents and warrants that it shall use its best efforts to upgrade and maintain its electric distribution system in the Franchise Area as necessary to provide retail electric service to its members that is similar in quality and reliability to the service that similarly situated customers of the City receive, and that it shall use its best efforts to provide such service at rates that are not substantially in excess of those paid by similarly situated customers of the City. Taxes and Fees imposed on the Company by the City shall not be included in such service rate comparison. Notwithstanding the foregoing, to the extent any costs of service to be provided hereunder is augmented or increased by the action of the City in withholding any consent hereunder or imposing any requirements not expressly set forth to the foregoing limitation. In particular, the Company shall comply with the requirements set forth in APPENDIX B with respect to the construction, installation, maintenance, repair and replacement of its electric transmission and distribution facilities within the Franchise Area.

Furthermore, the Company shall notify the City no less that 10 days in advance of any capital expenditures in excess of $100,000 that it intends to make during any calendar quarter on repairs, replacements or upgrades of its distribution facilities in the Franchise Area after a notice of termination of this Franchise has been given in accordance with Section 14. The Company shall follow Prudent Utility Practice in maintaining and making capital expenditures in the repair and replacements or upgrades of the distribution facilities in the Franchise Area.

7. Municipal Energy Sales and Use Tax. The Company shall pay any lawful Municipal Energy Sales and Use Tax levied and collected by or on behalf of the City pursuant to Utah Code Section 10-1-31 et seq. on the delivered value of electric power and energy sold by the Company to members and customers within the Franchise Area during the term of this Franchise. the Company may include any such tax in its rates or bills to the customers in the Franchise Area.

8. Company Liability - Indemnification. The City shall not be liable nor responsible for any accident or damage that may occur in the construction, operation or maintenance by the Company of its transmission or distribution facilities. The acceptance of this Franchise shall be deemed an agreement on the part of the Company to indemnify the City and hold it harmless against any and all liability, loss, cost, damage and expense (including, without limitation, attorney's fees) which may accrue to the City by reason of the negligence, fault or misconduct of the Company, its agents or employees, or violation of any applicable environmental regulations or standards, in the construction, operation, maintenance or removal and disposal of the Company's transmission and distribution facilities under this Franchise, provided however, that nothing herein shall expand or otherwise modify any obligation, standard, or duty owed by the Company to any third person(s) in the conduct of its electric transmission and distribution business as otherwise set forth in or pursuant to applicable law.

9. Assignment or Transfer. This Franchise and the rights hereunder are non-transferable and non-assignable, except as such assignment or transfer is approved by the City in writing.

10. City Rights in Franchise Area. Notwithstanding anything to the contrary herein, the City shall have the following rights to use the Company's system within the corporate limits of the City:

(a) Use of System by City. The City shall have the right, during the term 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, fire alarm and communication system, for City's own municipal use for city employees or municipal facilities (but not for any City-owned or operated retail communication or cable TV system), such wires and fixtures to be constructed and maintained to the satisfaction of the Company and in accordance with its specifications.

(i) Compliance with Company Rules. 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 so that there may be a minimum danger of contract or conflict between the wires and fixtures of the Company and the wires and fixtures used by the City.

(ii) Liability. The City shall be solely responsible for all damage to Persons or property arising out of the construction or maintenance of said wires and fixtures authorized by this Paragraph (a) and shall indemnify and save the Company harmless from all claims and demands whatsoever arising out of the attachment, maintenance, use, change or removal of said wires and fixtures. In case of rearrangement of the Company plant or removal of poles or fixtures, the City shall indemnify and save the Company harmless from any damage to Persons or property arising out of the removal or construction of the City's wire or other fixtures. The City shall be solely responsible for the cost of relocating, maintaining, and operating any wire or fixtures authorized by this Paragraph (a).

Procedure after Termination or Revocation. Upon the revocation of this Franchise, or at the end of the term of this Franchise, all rights, duties, and obligations or undertakings of the Company.

12. Inspection Obligation. The right of the City to supervise and/or inspect the work or facilities of the Company shall impose no obligation upon the City to discover or correct any defects in the work or facilities of the Company.

13. Records and Reports. During the term of the Franchise, the City shall have access at all reasonable hours to all the Company's accounting, financial, statistical, customer and service records relating to the properties and the operation of the Company within the Franchise Area.

14. Effective Date and Term. The Franchise shall take effect when both of the following two conditions have been met: (a) the Company executes this ordinance in the space below and delivers the executed ordinance to the City Recorder, and (b) the Third Judicial District Court for Salt Lake County has entered its Order Dismissing all Claims and Counterclaims with Prejudice in the civil action captioned Deseret Generation & Transmission Co-operative v the City of Kanab, Utah, Civil No. 990901937 CN, pursuant to a Stipulation and Joint Motion to Dismiss with Prejudice, entered into by the City and Deseret Generation & Transmission Cooperative. The Franchise shall continue in force and effect for a term of ten (10) years after the effective date, unless sooner terminated as provided herein. The Franchise shall be extended automatically for an additional five years unless the City or the Company gives the other Party written notice of termination not less than two years prior to the end of the initial term or any extension thereof.