§ 4. Compensation.

(a) In consideration of this contract franchise ordinance, SBC Kansas agrees to remit to the City a franchise fee of 5% of Gross Receipts. To determine the Franchise Fee, SBC Kansas shall calculate the Gross Receipts and multiply such receipts by 5%. Thereafter, compensation for each calendar year of the remaining term of the contract franchise ordinance shall continue to be based on a sum equal to 5% of Gross Receipts, unless the City notifies SBC Kansas prior to ninety days (90) before the end of the calendar year that it intends to switch to an access line fee in the following calendar year. In the event the City elects compensation based on an access line fee, nothing herein precludes the City from switching back to a gross receipts fee provided the City notifies SBC Kansas prior to ninety days (90) before the end of the calendar year.

(b)

Beginning January 1, 2004, and every 36 months thereafter, the City, subject to the public notification procedures set forth in K.S.A. 12-2001 (1) and (m), as amended, may elect to adopt an increased access line fee or gross receipts fee subject to the provisions and maximum fee limitations contained in K.S.A. 12-2001, as amended, or may choose to decline all or any portion of any increase in the access line fee.

(c)

The Franchise Fee shall be due and payable on a monthly basis within thirty (30) calendar days after the end of the remittal period. If any Franchise Fee, or any portion thereof, is not postmarked or delivered on or before the due date, interest thereon shall accrue from the due date until received, at the applicable statutory interest rate.

(d)

Franchise Fee payments shall be accompanied by a 9K2 statement showing the manner in which the Franchise Fee was calculated on a quarterly basis. No acceptance by the City of any Franchise Fee shall be construed as an accord that the amount paid is in fact the correct amount, nor shall acceptance of any Franchise Fee payment be construed as a release of any claim of the City. Any dispute concerning the amount due under this Section shall be resolved in the manner set forth in K.S.A. 12-2001, as amended.

(e)

The City or its designated representatives shall have the right to examine, upon written notice to SBC Kansas no more often than once per calendar year, those records necessary to verify the correctness of the Franchise Fees.

(f)

Within sixty (60) days of the effective date of this contract franchise ordinance, SWBT shall pay to the City a one-time application fee of One Thousand Dollars ($1000.00). The parties agree that such fee reimburses the City for its reasonable, actual and verifiable costs of reviewing and approving this contract franchise ordinance. SWBT shall additionally pay the publications costs of this ordinance.

(g)

The Franchise Fee required herein shall be in addition to, not in lieu of, all taxes, charges, assessments, licenses, fees and impositions otherwise applicable that are or may be imposed by the City under K.S.A. 12-2001 and 17-1902, as amended. The Franchise Fee is compensation for use of the Public Right-of-Way and shall in no way be deemed a tax of any kind.

(h)

SBC Kansas shall remit a Franchise Fee to the City on those access lines that have been resold to another telecommunications local exchange service provider, but in such case the City shall not collect a franchise fee from the reseller telecommunications local exchange service provider and shall not require the reseller to enter a contract franchise ordinance.