City of Pawtucket, RI Article IV Bonds, Insurance and Indemnification

§ 364-21 Performance bond and letter of credit.

A. Prior to the effective date of the franchise, the grantee shall obtain and maintain during the entire term of any franchise and any extensions and renewals thereof, at its cost and expense, and file with the city, a corporate surety bond in an amount specified in the franchise to guarantee the faithful performance of the grantee of all its obligations provided under this chapter and the franchise or a letter of credit. Failure to timely obtain, file and maintain said bond or letter of credit shall constitute a violation within the meaning of this section. Such bond must be issued by a surety and in a form reasonably acceptable to the city.

B. The performance bond shall be issued by a surety licensed to do business in Rhode Island and shall provide the following conditions: that the same shall be recoverable by the city jointly and severally from the principal and/or surety, any and all fines and liquidated damages due to the city and any and all damages, losses, costs and expenses suffered or incurred by the city resulting from the failure of the grantee to faithfully comply with the provisions of this chapter and the franchise; comply with the provisions of this chapter and the franchise; comply with all orders, permits and directives of any city agency or body having jurisdiction over its acts or defaults; pay fees due to the city; and pay any claims, liens or taxes due the city which arise by reason of the construction, operation, maintenance or repair of the telecommunications systems. Such losses, costs and expenses shall include but not be limited to attorneys' fees and other associated expenses.

C. As may be specified in the franchise or upon written application by the grantee, the city may, at its sole option, permit the amount of the bond to be reduced or waive the requirements for a performance bond if the grantee demonstrates a reasonable basis thereafter. Reductions granted or denied upon application by the grantee shall be without prejudice to the grantee's subsequent applications or to the city's right, at its sole discretion, to require the restoration of the full bond at any time thereafter. However, no application shall be made by the grantee within one year of any prior application.

D. If a performance bond is not provided, the grantee shall obtain, maintain and file with the city an irrevocable letter of credit from a financial institution acceptable to the city and licensed to do business in the state in an amount specified in the franchise, naming the city as beneficiary. The form and contents of such letter of credit shall be acceptable to the city, and the letter shall be released only upon expiration of the franchise or upon the replacement of the letter of credit by a successor grantee. Failure to obtain the letter of credit or performance bond within the time specified herein shall constitute a violation within the meaning of this section.

E. As may be specified in the franchise or upon written application by the grantee, the city may, at its sole option, permit the amount of the letter of credit to be reduced or waive the requirements for a letter of credit if the grantee demonstrates a reasonable basis thereafter. Reductions granted or denied upon application by the grantee shall be without prejudice to the grantee's subsequent applications or to the city's right, at its sole discretion, to require the restoration of the full letter of credit at any time thereafter. However, no application shall be made by the grantee within one year of any prior application.

F. The city may draw upon the letter of credit up to the amount of damage suffered by the city if the grantee fails to faithfully comply with the provisions of this chapter and the franchise; comply with all orders, permits and directives of any city agency or body having jurisdiction over its acts or defaults; pay fees due to the city; or pay any claims, liens or taxes due the city which arise by reason of the construction, operation, maintenance or repair of the telecommunications system.

G. Use of performance bond and letter of credit. After the time specified for cure and prior to drawing upon the letter of credit for the performance bond for the purposes described in this section, the city shall notify the grantee, in writing, that payment is due, and the grantee shall have 10 days from the receipt of such written notice to make a full and complete payment. If the grantee does not make the payment within 10 days, the city may withdraw the amount thereof, with interest and penalties, from the letter of credit or the performance bond.

H. Within three days of withdrawal from the letter of credit or performance bond, the city shall send to the grantee, by certified mail, return receipt requested, written notification of the amount, date and purpose of such withdrawal.

I. No later than 30 days after mailing to the grantee, by certified mail, notification of a withdrawal pursuant to Subsection F above, the grantee shall replenish the letter of credit or performance bond in an amount equal to the amount so withdrawn unless the grantee has challenged such withdrawal and/or is the basis thereafter. Failure to make timely replenishment of such amount to the letter of credit and/or performance bond shall constitute a violation of this chapter.

J. The performance bond or letter of credit required herein shall be in a form reasonably satisfactory to the city and shall require 30 days written notice of any nonrenewal, alteration or cancellation to both the city and the grantee. The grantee shall, in the event of any such cancellation notice, obtain, pay all premiums for and file with the city written evidence of the issuance of replacement bond or policies within 30 days following receipt by the city or the grantee of any notice of cancellation.

K. The rights reserved to the city with respect to the performance bond or letter of credit are in addition to all other rights of the city, whether reserved by this chapter, the franchise or authorized by law, and no action, proceeding or exercise of a right with respect to such a bond or letter of credit shall affect any other right the city may have.

L. If the city becomes aware of the financial condition of any bonding or insurance company issuing a performance bond or insurance policy to the grantee as required herein where, if such conditions were known at the time, the city would not have approved the surety of the bond or the city would not have found the form of the bond or the insurance policies satisfactory or if the financial condition of such bonding or insurance company materially change to the extent that such approvals would not have been made, the city may, at any time, require that any such bond or insurance policy be replaced with such other bond or insurance policy consistent with the requirements set forth in this section.

M. The grantee shall provide coverage for any contractor or subcontractor involved in the construction, installation, maintenance or operation of its telecommunications systems by either obtaining the necessary endorsements to its insurance policies or requiring such contractor or subcontractor to obtain appropriate insurance coverage consistent with this section and appropriate to the extent of its involvement in the construction, installation, maintenance or operation of the grantee's telecommunications system.

§ 364-22 Liability and insurance.

A. Prior to commencement of construction, but in no event later than 60 days after the effective date of the franchise and thereafter continuously throughout the duration of the franchise and any extensions or renewals thereof, the grantee shall furnish to the city certificates of insurance, approved by the city, for all types of insurance required under this section. Failure to furnish said certificates of insurance in a timely manner shall constitute a violation of this chapter.

B. A certificate of insurance obtained by the grantee in compliance with this section shall be filed and maintained with the City Clerk during the term of the franchise.

C. All insurance policies maintained pursuant to this chapter or the franchise shall contain the following, or a comparable, endorsement: It is hereby understood and agreed that this insurance policy may not be modified or canceled by the insurance company nor the intention not to renew be stated by the insurance company until 30 days after receipt by the City Clerk's office, by certified mail, return receipt requested, of written notice of such intention to cancel or not to renew.

D. All insurance policies provided under the provisions of this chapter or the franchise shall be written by companies authorized to do business in the state and approved by the state.

E. At any time during the term of the franchise, the city may request and the grantee shall comply with such request to include the city as a named insured for all insurance policies written under the provisions of this chapter or the franchise.

F. The grantee shall maintain and by its acceptance of any franchise granted hereunder specifically agrees that it will maintain throughout the term of the franchise general liability insurance insuring the grantee in the minimum of:

(1) One million dollars for property damage per occurrence;

(2) Two million dollars for property damage in the aggregate;

(3) One million dollars for personal bodily injury or death to any one person; and

(4) Two million dollars for bodily injury or death in the aggregate per single accident or annual aggregate.

G. Such general liability insurance must include coverage for all of the following: occurrence form, premises operations, explosion and collapse hazard, underground hazard, products/completed operations hazard, contractual insurance, broad form property damage and personal injury.

H. The grantee shall maintain, and by its acceptance of any franchise granted hereunder specifically agrees that it will maintain throughout the term of the franchise, automobile liability insurance for owned, nonowned or rented vehicles in the minimum amount of:

(1) Two million dollars for bodily injury and consequent death per occurrence;

(2) One million dollars for bodily injury and consequent death to any one person; and

(3) Five hundred thousand dollars for property damage per occurrence.

I. The grantee shall maintain, and by its acceptance of any franchise granted hereunder specifically agrees that it will maintain throughout the term of the franchise, workers' compensation and employer's liability, valid in the state, in the minimum amount of the statutory limit for workers' compensation.

J. None of the provisions of this chapter or any insurance policy required therein, or any damages recovered by the city hereunder, shall be construed to excuse the faithful performance by or limit the liability of the grantee for damages under this chapter or the franchise.

§ 364-23 Indemnification.

A. The grantee shall, at its sole cost and expense, fully indemnify, defend and hold harmless the city, its officers, boards and commissions and city employees against any and all claims, suits, actions, liability and judgments for damages (including but not limited to expenses for reasonable legal fees and disbursements and liabilities assumed by the city in connection therewith):

(1) To persons or property in any way arising out of or through the acts or omissions of the grantee, its servants, agents or employees or to which the grantee's negligence shall in any way contribute.

(2) Arising out of the grantee's failure to comply with the provisions of any federal, state or local statute, ordinances or regulation applicable to the grantee in its business hereunder.

B. The foregoing indemnity is conditioned upon the following: The city shall give the grantee prompt notice of any claim or the commencement of any section, suit or other proceeding covered by the provisions of this section. Nothing herein shall be deemed to prevent the city from cooperating with the grantee and participating in the defense of any litigation by its own counsel at its own costs and expense. Any sum received by the city as liquidated damages shall be deducted from any recovery which the city might have against the grantee under the terms of this section.