-DRAFT-
LEASE AGREEMENT
Introductory language, recitals, and consideration statement
SECTION 1. Lease of Fiber Optics. The City shall grant to Customer and Customer accept from the City an exclusive and indefeasible license solely for Authorized Use of Customer’s Fibers in the City’s Fiber Optic System, as provided in the Agreement. The Customer shall have no further right, title or other interest in the City’s Fiber Optic System or in the Customer’s Leased Fiber Optics. The City shall have the right to grant and renew rights to any entity to use the City’s Fiber Optic System or any other property of the City; provided, however, that during the term of the Agreement, the City shall have no right to grant and renew any rights to any entity with respect to Customer’s Leased Fibers.
SECTION 2. Ownership. The CUSTOMER’s Leased Fibers shall at all times remain the sole and exclusive property of the City and legal title shall be held by the City. Neither the provision or the use of the CUSTOMER’s Fiber Optics by the City to the CUSTOMER hereunder, nor the payments by the CUSTOMER contemplated hereby, shall create or vest in the CUSTOMER any easement, interest, or any other ownership or property right of any nature in the CUSTOMER’s Leased Fiber Strands, except that the City agrees to the CUSTOMER’s right to use the CUSTOMER’s Fibers for Authorized Use during the term of this Agreement. The CUSTOMER shall not grant any security interest in the CUSTOMER’s Fibers or any part or component thereof.
SECTION 3. Customer’s Rent. In consideration for the lease of City Fiber the CUSTOMER shall pay, as Rent, the following:
(a) Annual Rent: $250 per strand per mile with a minimum fee of $250. The full length of each leased Dark Fiber strand segment shall be used to calculate the monthly lease rent. Shall be payable monthly, to the City Clerk, late fees etc.
SECTION 4. Term. The Initial Term of this Lease and License Agreement shall be five (5) years, commencing on the date that this Lease and License Agreement is executed by the parties (“the Commencement Date”).
SECTION 5. Option Terms. CUSTOMER and the City shall have the mutual option to extend the initial term of this Lease Agreement for two (2) additional and successive five (5) year option periods (individually, “the Option Term” and, collectively, “the Option Terms”). The Lease Agreement shall, at the end of the Initial Term or any Option Term, unless it is the second Option Term, automatically be extended an additional Option Term, unless either party notifies the other party of its intent to terminate or to renegotiate this Lease Agreement at least one hundred eighty (180) days prior to the termination of the then-current Term. Option Terms shall be deemed a continuation of this Lease Agreement and shall not be considered a new Lease Agreement or an amendment hereto.
SECTION 6. Work.
(a) The City shall use best efforts to provide, construct and install the Fiber Optics within the City’s Fiber System along the Route within the amount of time specified in each Addendum to this Agreement. The City covenants that the segments of the Fiber Optics along the Route that it constructs pursuant hereto shall be constructed substantially and in all material respects in accordance with standard outside plant specifications. Work shall include the labor and materials.
(b) The City shall test all of the CUSTOMER’s Leased Fibers in accordance with Exhibit A to this Agreement to verify that the CUSTOMER’s Fibers are installed and operational in accordance with the fiber optic specifications included on Exhibit B to this Agreement. When the City has determined that the results of the testing with respect to the CUSTOMER’s Fibers show that the CUSTOMER’s Fibers so tested are installed and operating to the specifications, the City shall promptly notify and provide the CUSTOMER with the fiber test results.
(c) When the City gives notice to the CUSTOMER that the Fibers are complete, the CUSTOMER shall provide the City with notice accepting (or rejecting by specifying the defect or failure in the testing that is the basis for such rejection) the CUSTOMER’s Fibers. If the CUSTOMER fails to notify the City of its acceptance or rejection of the final test results with respect to the CUSTOMER’s Fibers within thirty (30) days after the CUSTOMER’s receipt of notice of such test results, the CUSTOMER shall be deemed to have accepted the CUSTOMER’s Leased Fibers. If, during the course of such construction, installation and testing, any material deviation from standard specifications is discovered, the construction or installation of the affected portion of the segment shall be repaired to such specification by the City. The date of such notice of acceptance (or deemed acceptance) of all the CUSTOMER’s Fiber Optics for the Route shall be the “Acceptance Date” for the Route.
SECTION 7. Use.
(a) The CUSTOMER shall use the CUSTOMER’s Fibers to provide Internet access to residents of the City who desire to enter into contracts with the CUSTOMER for the provision of Internet access, all at CUSTOMER’s sole cost and expense, and all as subject to the terms and conditions established in the Lease Agreement.
(b) The CUSTOMER further agrees that it shall use the CUSTOMER’s Leased Fibers in accordance with all applicable federal, state, and local laws.
(c) This Lease Agreement does not grant the CUSTOMER the authority or right to provide “Cable Service” or “Local Exchange Service.” For the purposes of this Lease Agreement, “Cable Service” is defined as the one-way transmission to subscribers of video programming or other programming services, and subscriber interaction, if any, which is required for the selection of such video programming or other programming service.
(d) This Lease Agreement is not a franchise agreement under K.S.A. 12-2001 et seq. The CUSTOMER hereby acknowledges, however, its obligation to enter into a contract franchise with the City before using the CUSTOMER’s Leased Fibers, which are located in the City’s conduit in the public rights of way, for the provision of “Cable Services,” “Local Exchange Service,” or other Telecommunications Services to the City or its inhabitants.
(e) The grant of this Lease Agreement shall not convey title, equitable or legal, to the CUSTOMER in any property of the City, including CUSTOMER’s Fibers, the City conduit, or the City’s public rights of way, and shall only give to the CUSTOMER the right to use the CUSTOMER Fibers for the purposes and for the period of time stated in this Lease Agreement.
SECTION 8. Inter-connection.
(a) Subject to the terms and conditions of the Lease Agreement, the City will bring the CUSTOMER’s Fibers to the demarcation points described in EXHIBIT X to the Lease Agreement. The CUSTOMER may only inter-connect with the CUSTOMER’s Leased Fibers at and outside the described demarcation points. EXHIBIT X is hereby adopted and incorporated herein by reference as if set forth in full.
(b) Any and all of the CUSTOMER’s inter-connections with the CUSTOMER’s Leased Fibers, including equipment, labor, etc., shall be at the sole cost and expense of the CUSTOMER.
(c) The CUSTOMER may request, in writing, access to the CUSTOMER’s Fibers at additional demarcation points in the future. The City agrees to cooperate, to the extent that it is feasible, with such requests. All costs and expenses, including equipment, labor, etc., of additional inter-connections shall be borne solely by the CUSTOMER. In the event, additional demarcation points are created, the parties agree to amend EXHIBIT X to show the actual location of all demarcation points.
(d) The CUSTOMER may not have access to the CUSTOMER’s Fibers, except outside the demarcation points described in EXHIBIT X or any writing amending EXHIBIT X. The CUSTOMER is also prohibited from having access to or any physical contact with the City’s conduit or Fiber Optics located in the City’s conduit.
SECTION 9. Maintenance and Repair.
(a) The City, or a City-approved vendorshall be solely responsible to maintain the CUSTOMER’s Fiber Optic Strands on the City’s side of the demarcation point. The CUSTOMER shall cooperate with and assist the City, as reasonably may be required, in performing said maintenance. In the event of a disruption in service, the City shall begin restoration activities as soon as practicable after the City becomes aware of such disruption.
(b) Notwithstanding anything to the contrary contained herein, the CUSTOMER shall solely be responsible, at its own expense, for the construction, installation, operation, maintenance, repair and any other activity engaged by or on behalf of the CUSTOMER relating to all light communications transmission equipment and other terminal equipment and facilities required in connection with the use, electronics or signals of the CUSTOMER’s Fiber Optics beyond the defined point of demarcation.
(c) The City, or a City-approved vendor of CUSTOMER’s selection shall be responsible for all necessary splicing on the City’s Fiber Optics. Where the City’s Fiber Optics connect to the CUSTOMER’s fiber optic cables, the associated Addendum or Service Order will detail and describe the Parties’ splicing responsibilities. The CUSTOMER may request and the city shall grant access to the CUSTOMER’s Fiber Optics at additional access/splice points along the Route, provided that (i) such access/splice points are technically feasible in the City’s reasonable opinion, (ii) the CUSTOMER agrees to pay a reasonable splice fee to the City or a City-approved vendor at the time, (iii) all work is performed by the City or a City-approved vendor as provided in Section 7, and (iv) the agreements governing the City’s use and occupancy of the right of way at the access/splice points do not otherwise prohibit such access by parties other than the City.
(d) Should the CUSTOMER perform, authorize, or contract any splices or other work not in accordance with the provisions of this Agreement (specifically Section 7 stating the City or City-approved vendor must do the work), the City may at its option correct said condition. The City shall notify the CUSTOMER in writing prior to performing such work whenever practicable. However, when such conditions pose an immediate threat to the physical integrity of the City’s facilities, the City may perform such work and take such action that it deems necessary without first giving notice to the CUSTOMER. As soon as practicable thereafter, the City shall advise the CUSTOMER of the work performed and the action taken and shall endeavor to arrange for re-accommodation of the CUSTOMER’s Fiber Optics so affected. The CUSTOMER shall promptly reimburse the City for all reasonable costs incurred by the City for all such work, action and re-accommodation performed by the City.
(e) The CUSTOMER shall, at its sole cost and expense, promptly respond to and remediate any Hazardous Discharge to and from the City’s Fiber System resulting from the CUSTOMER’s operations.
(f) The City shall be responsible for obtaining and maintaining from the appropriate public or private authority any pole attachment agreements, franchises, licenses, state, local or right-of-way permits or other authorizations required to enter upon the property where the City’s Fiber System is located and to operate and maintain the CUSTOMER’s Fiber Optics in the City’s Fiber System. The CUSTOMER will not engage in any activity which affects the City’s right-of-way interests without the written permission of the City.
(g) The CUSTOMER, at its sole cost and expense, shall (i) use CUSTOMER’s Fiber Optics and (ii) conduct all work in or around the City’s Fiber System in a safe condition and in a manner reasonably acceptable to the City, so as not to physically, electronically or inductively conflict or interfere or otherwise adversely affect the City’s Fiber System or the facilities placed therein by the City.
(h) The CUSTOMER must obtain prior written authorization, which such authorization shall not be unreasonably withheld, conditioned or delayed, from the City approving any further work and the party performing such work before the CUSTOMER shall perform any work in or around the City’s Fiber System.
(i) In the event the CUSTOMER receives information that the Fiber Optics are damaged, it shall notify the City of said damage by phone at (785) 832-3326 or by e-mail CUSTOMER SERVICE ACCOUNT. In the event the City receives information that the CUSTOMER’s Fiber Optic are damaged, THE CITY will notify the CUSTOMER of said damage by phone. In each case, the caller shall provide the following information:
(i) Name of entity making report.
(ii) Location reporting problem.
(iii) Name of contact person reporting problem.
(iv) Description of the problem in as much detail as possible.
(v) Time and date the problem occurred or began.
(vi) State whether or not the problem presents a jeopardy situation to the City’s Fiber System or the CUSTOMER’s Fiber Optics.
(j) The City shall designate the particular Strands of Dark Fiber that will constitute the CUSTOMER’s Fiber Optics and the location and manner in which they will enter and exit the City’s Fiber System. This information shall be contained on each executed Addendum.
(k) If the City moves, replaces or changes the location, alignment or grade of the City’s Fiber System (“Relocation”), the City shall concurrently relocate the CUSTOMER’s Fiber Optics. If the Relocation is because of an event of Force Majeure or of any governmental or third party authority, including and taking by right of eminent domain, the CUSTOMER shall reimburse the City for the CUSTOMER’s proportionate share of the costs of the Relocation of the City’s Fiber System. To the extent the City receives reimbursement from a third party which is allocable to a Relocation of the City’s Fiber System, it will credit or reimburse the CUSTOMER for its proportionate share of the reimbursement. If the City relocates the City’s Fiber System solely for its own benefit, the CUSTOMER shall not be required to reimburse the City for the costs of the Relocation of the City’s Fiber System. The CUSTOMER’s proportionate share shall be the combined calculation of: (a) a fraction, the numerator of which shall be the number of conduits occupied by the CUSTOMER’s Fiber Optics and the denominator of which shall be the total number of conduits affected in the City’s Fiber System, and (b) a fraction, the numerator of which shall be the number of Strands of the CUSTOMER’s Fiber Optics and the denominator of which shall be the total number of Strands in the City’s conduit containing the CUSTOMER’s Fiber Optics.
SECTION 10. Default. If either the City or the CUSTOMER fails to perform or observe any material term, covenant, provision, or condition of this Lease Agreement, then that party will be in default under this Lease Agreement.
SECTION 11. Right to Cure. From the date of written Notice of Default from the other party, the party in default shall have thirty (30) days to cure any default.
SECTION 12. Failure to Cure. If the party in default fails to cure the default in the time prescribed by Section 11, supra, then the other party shall have the right to terminate this Lease Agreement and may, at its discretion, pursue any other remedies that may be available to it at law or in equity not otherwise proscribed by the terms of this Lease Agreement.
SECTION 13. Force Majeure.
(a) A “Force Majeure Event” is any event or cause beyond the reasonable control of the party claiming relief, including any action by or omission of a governmental agency or authority (including any government-imposed moratorium on activities related to this Lease Agreement or any subsequent change in government rules, regulations, codes, ordinances, or laws), material shortages, third-party labor disputes, floods, earthquakes, fires, lightning, epidemic, war, riot, civil disturbance, act of public enemy or enemies, terrorist act, sabotage, or any act of God.
(b) Neither the City nor the CUSTOMER will be considered in default under this Lease Agreement if such party’s performance is delayed by virtue of a Force Majeure Event. Upon the occurrence of such event, the parties agree to confer in good faith and to agree upon an equitable, reasonable action to continue performance under this Lease Agreement. The City and the CUSTOMER will use commercially reasonable efforts to minimize the delay caused by any Force Majeure Event and to resume affected performance when reasonably possible.
(c) In the event that a Force Majeure Event prevents either party from performing under the contract for a period of 180 days, then either party, upon written notice to the other, may terminate this Lease Agreement. Upon such termination, all parties will be relieved of performance under this Lease Agreement, except that a party will continue to be liable for any breaches that occurred and were not cured prior to termination.
SECTION 14. Rights upon Expiration or Termination of the Agreement. Upon the expiration or termination of this Lease Agreement, the CUSTOMER’s rights to the CUSTOMER’s Fibers shall terminate and the CUSTOMER’s Fibers shall revert to the City. Upon expiration or termination of this Lease Agreement, the CUSTOMER shall have no continuing rights or obligations hereunder, except that any uncured defaults or any other obligations that are stipulated in this Lease Agreement shall survive the expiration or termination of this Lease Agreement. Any and all equipment furnished or supplied by the CUSTOMER to inter-connect to the CUSTOMER’s fibers shall remain the property of the CUSTOMER. Any and all equipment furnished or supplied by the City under this Lease Agreement shall remain the property of the City.
SECTION 15. Insurance.
(a) The CUSTOMER agrees to obtain and maintain the following insurance: (i) Commercial General Liability, including coverage for (A) premises/ operations, (B) products/completed operations, (C) personal and advertising injury, and (D) contractual liability, with a combined single limit of not less than $1,000,000.00 each occurrence or the equivalent; (ii) Workers’ Compensation in amounts required by applicable law and Employer’s Liability with a limit of at least $1,000,000.00 each accident; (iii) Automobile Liability, including coverage for owned/leased, non-owned, or hired automobiles with combine single limit of not less than $300,000.00 each accident; and (iv) umbrella coverage with a limit of at least $1,000,000.00.
(b) The CUSTOMER will obtain and maintain “all risk” property insurance in an amount equal to the full replacement cost of all electronic, optronic, and other equipment that the CUSTOMER will utilize in connection with its inter-connection with and use of the CUSTOMER’s Fibers.
(c) Unless otherwise agreed upon by the parties in writing, all insurance policies obtained and maintained by the CUSTOMER shall be with companies rated A or better by Best’s Key Rating Guide and the CUSTOMER will, upon request, provide the City with insurance certificate(s) confirming compliance with the terms of this Section.
(d) Notwithstanding anything to the contrary in this Lease Agreement, the City and the CUSTOMER mutually waive their rights of recovery against each other, including against officers, directors, shareholders, partners, joint venturers, employees, agents, customers, invitees, or business visitors, for any loss arising from any cause covered or that would be covered by fire, extended risk, “all risk,” or other insurance required to be carried under this Lease Agreement or currently or hereafter existing for the benefit of the respective parties. The CUSTOMER will obtain from the insurance company providing the coverage required by this Lease Agreement, a waiver of subrogation against the City.
(e) In the event that the CUSTOMER fails to maintain the insurance coverage required by this Lease Agreement and a claim is made or an injury is suffered, the CUSTOMER agrees, in addition to what is set forth in Section 16, infra, to indemnify and to hold harmless the City from any and all claims for which the required insurance would have provided coverage.
(f) With respect to all activities under this Lease Agreement, the City will be self-insured.
SECTION 1. Indemnification.
(a) The CUSTOMER, and any successor or assign, agrees to indemnify, defend, save, and hold harmless the City, its officers, commissioners, agents, employees, grantees, and assigns, from and against all claims, actions, liabilities, damages, costs, expenses, and judgments, including attorneys’ fees, which relate to, arise out of, or are in any way associated with the CUSTOMER’s use of the CUSTOMER’s Fibers and activities taken in the public rights of way under the terms of this Lease Agreement on account of any injury to persons (including death) or any damage to property. This indemnification clause shall not apply to any injury or damage caused by the City’s own negligence or the City’s intentional conduct. This indemnity provision shall extend beyond the termination or expiration of this Lease Agreement.
(b) The City and the CUSTOMER shall promptly advise the other in writing of any known claim or demand against the CUSTOMER or the City related to or arising out of the CUSTOMER’s activities under this Lease Agreement.
SECTION 17. Limitation of Liability. Neither party shall be liable to the other for lost profits, special, incidental, punitive, exemplary, or consequential damages, including but not limited to frustration of economic or business expectations, loss of profits, loss of capital, cost of substitute product(s), facilities, or services, or down time costs, even if advised of the possibility of such damages. Further, the liability of one party to the other for damages under this Lease Agreement, excluding liabilities relating to a party’s indemnification obligations as set forth in Section 16, supra, or any other damages permitted under this Lease Agreement, is limited to the total amount payable by the CUSTOMER to the City under this Lease Agreement to which the dispute relates.
SECTION 18. Assignment. This Lease Agreement may not be sold, assigned, transferred, or sublet without the prior written approval or consent of the City’s governing body.
SECTION 19. Authorization. Each of the persons executing this Lease Agreement, in behalf of the respective parties, represents and warrants that he or she has the authority to bind the party in behalf of whom he or she has executed this Lease Agreement, and that all acts required and necessary for authorization to enter into and to execute this Lease Agreement have been completed.
SECTION 20. Notice. All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed given if personally delivered or mailed by first class mail:
If to the City, to:
City of Lawrence, Kansas
Attn: City Clerk
6 East 6th
P. O. Box 708
Lawrence, KS 66044
With a copy to:
City of Lawrence, Kansas
Attn: Director, Legal Department
6 East 6th
P. O. Box 708
Lawrence, KS 66044
If to CUSTOMER, to:
Either party may change where notices, requests, demands, or other communications are to be given by giving written Notice to the other party of any said change.
SECTION 21. Successors and Assigns. This Lease Agreement shall be binding upon and inure to the benefit of the parties, their respective heirs, personal representatives, successors, and assigns.
SECTION 22. Non-waiver. Failure of either party to insist on strict performance of any of the conditions, covenants, terms, or provisions of this Lease Agreement or to exercise any of its rights hereunder shall not waive such rights, but the party shall have the right to enforce such rights at any time and to take such action as might be lawful or authorized hereunder, whether in law or equity.
SECTION 23. Personal Immunities. No personal recourse shall be had for the creation of this Lease Agreement, for any claim arising out of this Lease Agreement, nor for any representation, obligation, covenant, or agreement set forth in this Lease Agreement, against any past, present, or future officer, member, employee, or agent of the City, under any rule of law or equity, any statute or constitution, or by the enforcement of any assessment or penalty, or otherwise, and any liability of any such officer, member, employee, or agent is hereby expressly waived and released by the CUSTOMER as a condition of and in consideration for the execution of this Lease Agreement. Furthermore, the CUSTOMER agrees that no past, present, or future officer, member, employee, or agent of the City shall be personally liable to the CUSTOMER, or any successor in interest of the CUSTOMER, for any default or breach under this Lease Agreement by the City.
SECTION 24. Severability. If any section, sentence, clause, or phrase of this Lease Agreement is found to be invalid by any court of competent jurisdiction, it shall not affect the validity of any remaining provision of this Lease Agreement.
SECTION 25. Governing Law. This Lease Agreement shall be governed by the laws of the State of Kansas.
SECTION 26. Miscellaneous.
(a) This Lease Agreement supersedes all prior discussions and negotiations and contains all agreements and understandings between the City and the CUSTOMER with respect to the subject matter hereof. This Lease Agreement may only be amended by a writing signed by all parties.
(b) Exhibits “A” and “B”are incorporated into this Lease Agreement by reference.
(c) The provisions of the Lease Agreement relating to indemnification shall survive any termination or expiration of this Lease Agreement. Any provision of this Lease Agreement that would require performance subsequent to the termination or expiration of this Lease Agreement shall likewise survive any such termination or expiration.
(d) This Agreement is contingent upon the CUSTOMER, or any successor or assign hereunder, obtaining all necessary governmental approvals, permits, or licenses.
(e) This Agreement is contingent upon the CUSTOMER being a corporation in good standing with the Kansas Secretary of State. Any corporate successor or assign hereunder must also be a corporation in good standing with the Kansas Secretary of State (OPTIONAL; If corporation)
(f) This Lease Agreement may be executed in duplicate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The signature pages from one (1) or more counterparts may be removed from such counterparts and such signature pages all attached to a single instrument.
(g) The prevailing party in any litigation arising hereunder shall be entitled to reimbursement from the other party of its reasonable attorneys’ fees and court costs, including the prosecution of any appeal.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the undersigned have caused this Lease Agreement to be executed as of the date noted above.
CUSTOMER:
__________________________ __
President
STATE OF KANSAS )
) ss:
COUNTY OF DOUGLAS )
The foregoing Lease and License Agreement was acknowledged before me this ____ day of ________________, 2011, by _______________________, ____________________ of COMPANY., in behalf of the Corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal on the day and year last above written.
_____________________________________
Notary Public
My commission expires:
CITY: CITY OF LAWRENCE, KANSAS, a municipal corporation
__ ______________________________
City Manager
Acknowledgment