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Frontier - Verizon Communications Cable Television Franchise Agreementflunfier� uerjrzon REQUEST FOR CONSENT TO TRANSFER OF CONTROL OF FRANCHISEE with respect to CABLE FRANCHISE AGREEMENT BETWEEN THE CITY OF EDMONDS, WASHINGTON ►' VERIZON NORTHWEST INC. Timothy J. McCallion President -West Region June 1, 2009 City of Edmonds Attn: Mayor Gary Haakenson 121 5th Avenue North Edmonds, WA 98020 RECEIVED JUN 0 12009 EDMONDS CITY CLERK Re: Request for Consent to Transfer Control of Franchisee Dear Mayor Haakenson: . \, - I �.- velYzan 112 Lakeview Canyon Road, CA501 GA Thousand Oaks, CA 91362 Phone 805 372-7160 Fax 805 373-1471 tim.mccallion@verizon.com As you know, Verizon recently announced plans to transfer its local wireline business serving Washington to Frontier Communications. This transaction includes Verizon Communications Inc. transferring control of Verizon Northwest Inc. to Frontier Communications Corporation. Pursuant to the cable franchise agreement between Edmonds and Verizon Northwest Inc. and 47 C.F.R. § 76.502, Verizon requests the city's consent to transfer control of Verizon Northwest Inc. to Frontier. Enclosed please find an Application For Franchise Authority Consent To Assignment or Transfer of Control of Cable Television Franchise. This transaction has undoubtedly raised questions in your mind. We have already scheduled a meeting with Edmonds officials next week to introduce some of the Frontier executives. While that meeting is not intended to address this request for consent, we look forward to working with the city throughout its review of this request and providing all pertinent information. If, after reviewing the enclosed materials, you desire any additional information regarding Frontier's legal, technical, and financial qualifications to operate the cable system, please submit a written request for such information to: Stoel Rives LLP Attn: Ramona Monroe 600 University Street, Suite 3600 Seattle, WA 98101 We look forward to working with the city throughout this process to facilitate a smooth transition to Frontier. Please do not hesitate to contact Milt Doumit, our local June 1, 2009 Page 2 representative to Edmonds if we can be of any assistance in the city's review of this request. Sincerely, Timothy J. McCallion President -West Region Enclosure Federal Communications Commission Approved By OMB Washington, DC 20554 FCC 394 3060-0573 APPLICATION FOR FRANCHISE AUTHORITY CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL OF CABLE TELEVISION FRANCHISE FOR FRANCHISE AUTHORITY USE ONLY SECTION I. GENERAL INFORMATION DATE 1-Jun-09 1 1. Community Unit Identification Number: WA0859 2. Application for: Assignment of Franchise XX Transfer of Control 3. Franchising Authority: City of Edmonds, Washington 4. Identify community where the system/franchise that is the subject of the assignment or transfer of control is located: City of Edmonds, Washington 5. Date system was acquired or (for system's constructed by the transferor/assignor) the date on which service was provided to the first subscriber in the franchise area: 29-Aug-08 6. Proposed effective date of closing of the transaction assigning or transferring ownership of the system to transferee/assignee: 2nd Quarter 2010 7. Attach as an Exhibit a schedule of any and all additional information or material filed with this application that is identified in the franchise as required to be provided to the franchising authority when requesting its approval of the type of transaction that is the subject of this application. PART I - TRANSFEROR/ASSIGNOR 1 Inrlirnta tha name mailinn aririress nnri telanhona numher of the transferorlassioncr. Exhibit No. N/A Legal name of Transferor/Assignor (if individual, list last name first) Verizon Communications Inc. Assumed name used for doing business (if any) N/A Mailing street address or P.O. Box 140 West St. City State ZIP Code Telephone No. (include area code) New York NY 10007 703) 351-1190 2.(a) Attach as an Exhibit a copy of the contract or agreement that provides for the assignment or transfer of control (including any exhibits or schedules thereto necessary in order to understand the terms thereof). If there is only an oral agreement, reduce the terms to writing and attach. (Confidential trade, business, pricing or marketing information, or other information not otherwise publicly available, may be redacted). (b) Does the contract submitted in response to (a) above embody the full and complete agreement between the transferor/assignor and the transferee/assignee? If No, explain in an Exhibit. Exhibit No. 1 Yes XNo Exhibit No. 1 FCC 394 (Page 1) September 1996 PART II - TRANSFEREE/ASSIGNEE 1 (n) Indicate the name. mailino address. and teleohone number of the transferee/assionee. Legal name of Transferee/Assignee (if individual, list last name first) Frontier Communications Corporation Assumed name used for doing business (if any) N/A Mailing street address or P.O. Box 3 High Rida Park City State ICT ZIP Code 106905 Telephone No. (include area code) 1(203) Stamford 614-5600 !h1 Indicate the name_ mailino address_ and telenhone number of ❑erson to contact. if other than trnnsfPrPP/sssinnPP. Name of contact person (list last name first) Burr, Ann Firm or company name (if any) Frontier Communications Corporation Mailing street address or P.O. Box 180 South Clinton Avenue City State INY ZIP Code 114646 Telephone No. (include area code) 1(585) Rochester 777-6071 (c) Attach as an Exhibit the name, mailing address, and telephone number of each additional person who Exhibit No. should be contacted, if any. N/A d) Indicate the address where the system's records will be maintained Street address 3 High Ridge Park City State ZIP Code Stamford ICT 106905 Or a regional or local office as appropriate 2. Indicate on an attached exhibit any plans to change the current terms and conditions of service and operations of the system as a consequence of the transaction for which approval is sought. Exhibit No. 2 FCC 394 (Page 2) September 1996 SECTION II. TRANSFEREE'S/ASSIGNEE'S LEGAL QUALIFICATIONS 1. Transferee/Assignee is: �R Corporation ❑ Limited Partnership General Partnership Individual a. Jurisdiction of incorporation: d. Name and address of registered agent in Delaware jurisdiction: b. Date of incorporation: CT Corporation Svstem 12-Nov-35 1801 Wet Bay Drive NW, Suite 206 c. For profit or not -for -profit: Olvmpia. WA 98502 For Profit a. Jurisdiction in which formed: c. Name and address of registered agent in iurisdiction: b. Date of formation: a. Jurisdiction whose laws govern formation: b. Date of formation: Other. Describe in an Exhibit. Exhibit No. N/A List the transferee/assignee, and, if the transferee/assignee is not a natural person, each of its officers, directors, stockholders beneficially holding more than 5% of the outstanding voting shares, general partners, and limited partners holding an equity interest of more than 5%. Use only one column for each individual or entity. Attach additional pages if necessary. (Read carefully - the lettered items below refer to corresponding lines in the following table.) (a) Name, residence, occupation or principal business, and principal place of business. (If other than an individual, also show name, address and citizenship of natural person authorized to vote the voting securities of the applicant that it holds.) List the applicant first, officers, next, then directors and, thereafter, remaining stockholders and/or partners. (b) Citizenship. (c) Relationship to the transferee/assignee (e.g., officer, director, etc.). (d) Number of shares or nature of partnersihp interest. (e) Number of votes. (f ) Percentage of votes. (a) See Exhibit 3 (b) (c) (d) (e) (f ) FCC 394 (Page 3) September 1996 3. If the applicant is a corporation or a limited partnership, is the transferee/assignee formed under the Yes 1X No laws of, or duly qualified to transact business in, the State or other jurisdiction in which the system operates? If the answer is No, explain in an Exhibit. Exhibit No. 4 4. Has the transferee/assignee had any interest in or in connection with an applicant which has been ❑ Yes FX] No dismissed or denied by any franchise authority? If the answer is Yes, describe circumstances in an Exhibit. Exhibit No. NIA 5. Has an adverse finding been made or an adverse final action been taken by any court or Yes No administrative body with respect to the transferee/assignee in a civil, criminal or administrative proceeding, brought under the provisions of any law or regulation related to the following: any felony; revocation, suspension or involuntary transfer of any authorization (including cable franchises) to provide video programming services; mass media related antitrust or unfair competition; fraudulent statements to another government unit; or employment discrimination? If the answer is Yes, attach as an Exhibit a full description of the persons and matter(s) involved, Exhibit No, including an identification of any court or administrative body and any proceeding (by dates and file 5 numbers, if applicable), and the disposition of such proceeding. 6. Are there any documents, instruments, contracts or understandings relating to ownership or future Yes IX No ownership rights with respect to any attributable interest as described in Question 2 (including, but not limited to, non -voting stock interests, beneficial stock ownership interests, options, warrants, debentures)? If Yes, provide particulars in an Exhibit. Do documents, instruments, agreements or understandings for the pledge of stock of the ❑ Yes 0 No transferee/assignee, as security for loans or contractual performance, provide that: (a) voting rights will remain with the applicant, even in the event of default on the obligation; (b) in the event of default, there will be either a private or public sale of the stock; and (c) prior to the exercise of any ownership rights by a purchaser at a sale described in (b), any prior consent of the FCC and/or of the franchising authority, if required pursuant to federal, state or local law or pursuant to the terms of the franchise agreement will be obtained? If No, attach as an Exhibit a full explanation. Exhibit No. 6 SECTION III. TRANSFEREE'S/ASSIGNEE'S FINANCIAL QUALIFICATIONS The transferee/assignee certifies that it has sufficient net liquid assets on hand or available from ❑X Yes 7 No committed resources to consummate the transaction and operate the facilities for three months. Attach as an Exhibit the most recent financial statements, prepared in accordance with generally Exhibit IN accepted accounting principals, including a balance sheet and income statement for at least one full !�7 year, for the transferee/assignee or parent entity that has been prepared in the ordinary course of business, if any such financial statements are routinely prepared. Such statements, if not otherwise publicly available, may be marked CONFIDENTIAL and will be maintained as confidential by the franchise authority and its agents to the extent permissible under local law. SECTION IV. TRANSFEREE'S/ASSIGNEE'S TECHNICAL QUALIFICATIONS Set forth in an Exhibit a narrative account of the transferee's/assignee's technical qualifications, experience Exhibit No. and expertise regarding cable television systems, including, but not limited to, summary information about 8 appropriate management personnel that will be involved in the system's management and operations. The transferee/assignee may, but need not, list a representative sample of cable systems currently or formerly owned or operated. FCC 394 (Page 4) September 1996 SECTION V - CERTIFICATIONS Part I - Transferor/Assignor All the statements made in the application and attached exhibits are considered material representations, and all the Exhibits are a material part hereof and are incorporated herein as if set out in full in the application. Signature I CERTIFY that the statements in this application are true, complete and correct to the best of my knowledge and belief and �y are made in good faith. Date zz WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT. U.S. CODE, Print full name TITLE 18, SECTION 1001. Timothy J. McCallion Check appropriate classification: RX Individual General Partner (Indicate Title) Corporate Officer Other. Explain: President, Verizon Northwest Inc. Part 11 - Transferee/Assignee All the statements made in the application and attached Exhibits are considered material representations, and all the Exhibits are a material part hereof and are incorporated herein as if set out in full in the application. The transferee/assignee certifies that he/she: (a) Has a current copy of the FCC's Rules governing cable television systems. (b) Has a current copy of the franchise that is the subject of this application, and of any applicable state laws or local ordinances and related regulations. (c) Will use its best efforts to comply with the terms of the franchise and applicable state laws or local ordinances and related regulations, and to effect changes, as promptly as practicable, in the operation system, if any changes are necessary to cure any violations thereof or defaults thereunder presently in effect or ongoing. Signature I CERTIFY that the statements in this application are true, complete and correct to the best of my knowledge and belief and are made in good faith. WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE Ua:e '�``l PUNISHABLE BY FINE AND/OR IMPRISONMENT. U.S. CODE, Printfull name TITLE 18, SECTION 1001. Daniel J. McCarthy Check appropriate classification: Individual General Partner X (Indicate Title) Corporate Officer Other. Explain: Executive Vice President and Chief Operating Officer, Frontier Comm nic; FCC 394 (Page 5) September 1996 Exhibits FCC Form 394 June 2009 Exhibit 1 Documentation of the relevant agreements, with no redactions, for the transaction is included on the enclosed CD-ROM. The transaction is also depicted in the chart in this Exhibit. Verizon Communications Inc. Verizon Northwest Inc. ` New Communications ILEC New Communications Holdings Inc. Holdings Inc. Verizon contributes the stock of Verizon Northwest Inc. to New Communications ILEC Holdings Inc., an indirect wholly owned subsidiary of Verizon, and then contributes the stock of ILEC Holdings to New Communications Holdings Inc., a wholly owned subsidiary of Verizon. Verizon Communications Inc. New Communications Holdings Inc. New Communications ILEC Holdings Inc. Verizon Northwest Inc. Frontier Communications Corporation Merger After Verizon distributes the stock of New Communications Holdings Inc. to Verizon's shareholders, New Communications Holdings Inc. merges into Frontier Communications Corporation. Verizon's shareholders receive stock of Frontier in the merger, in exchange for their shares of New Communications Holdings Inc. Verizon Communications Inc. Frontier Communications Corporation New Communications ILEC Holdings Inc. Verizon Northwest Inc. [will be renamed] Following the merger, New Communications ILEC Holdings Inc. is a wholly owned subsidiary of Frontier Communications Corp. and Verizon Northwest Inc. is an indirect wholly owned subsidiary of Frontier Communications Corporation. Exhibits FCC Form 394 June 2009 Exhibits, Schedules, and Annexes to the agreement included on the enclosed CD-ROM have been omitted, as provided in Question 2(a), as this information consists of non-public exhibits or schedules not necessary in order to understand the terms of the Agreements or contains confidential trade, business, pricing or marketing information. Exhibits FCC Form 394 June 2009 Exhibit 2 The cable system will be operated pursuant to the terms of the current franchise agreement and applicable law after the consummation of the transaction described in this application. Transferee has no plans to change the current terms and conditions of service or operations of the system to customer locations. Transferee will honor Verizon's existing service availability requirements in Washington. However, Transferee reserves the right to make service and operational changes in accordance with the terms of the current franchise agreement and applicable law. Exhibits FCC Form 394 June 2009 Exhibit 3 Control of the Franchisee, Verizon Northwest Inc., will be transferred to Frontier Communications Corporation ("Frontier"), a publicly traded Delaware corporation. Verizon Northwest Inc. will be a second -tier subsidiary of Frontier. The directors and officers of Frontier are listed below, as well as the directors and officers of all Frontier subsidiaries. No directors or officers hold an equity interest of more than 5% in Frontier. All are United Stated citizens. As of March 18, 2009, the following persons held a 5% or greater ownership interest in any voting class of Frontier Communications Corporation's Common Stock: Number of Shares Name and Address and Nature of Percent of Beneficial Owner Beneficial Ownership of Class Group consisting of: V. Prem Watsa, 1109519 Ontario Limited, The Sixty Two Investment Company Limited, 810679 Ontario Limited and Fairfax Financial Holdings Limited (a) 15,593,600 5.0% (a) Name and Address Group consisting of: V. Prem Watsa, 1109519 Ontario Limited, The Sixty Two Investment Company Limited, 810679 of Beneficial Owner: Ontario Limited and Fairfax Financial Holdings Limited (a). The business address of these beneficial owners is 95 Wellington Street West, Suite 800, Toronto, Ontario, Canada M5J 2N7, except for 1109519 Ontario Limited, whose business address is 1600 Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, Canada V6C 3L3. Based on a statement on Schedule 13G filed on February 17, 2009 by V. Prem Watsa, 1109519 Ontario Limited, The Sixty Two Investment Company Limited, 810679 Ontario Limited and Fairfax Financial Holdings Limited ("Fairfax"). Such Schedule 13G discloses that certain of the shares beneficially owned by the reporting persons are held by subsidiaries of Fairfax and by the pension plans of certain subsidiaries of Fairfax. (b) Citizenship: Canada (c) Relationship to transferee: None d Number of shares: 15 593,600 (e) Number of votes: 15,593,600 (f) Percentage of votes: 5% Exhibits FCC Form 394 June 2009 TIM) Name Bole Tftie : Addr¢ss PPS FRONTIER Abernathy, Kathleen Q. Director Director Bethesda, MD Washington, DC Barnes Jr., Leroy T. Director Director Piedmont, CA Piedmont, CA Bynoe, Peter C.B. Director Director Chicago, IL Chicago, IL Dugan, Michael T. Director Director Parker, CO Englewood, CO Finard, Jeri B. Director Director Larchmont, NY New York, NY Fitt, Lawton Wehle Director Director New York, NY New York, NY Kraus, William M. Director Director Madison, WI Madison, WI Schrott, Howard L. Director Director San Francisco, CA San Francisco, CA Segil, Larraine D. Director Director Encino, CA Los Angeles, CA Ward, David H. Director Director Southport, CT Waterbury, CT Wick, III, Myron A. Director Director San Francisco, CA San Francisco, CA Wilderotter, Mary Agnes Director Chairman of the Board of Directors Oakland, CA Stamford, CT Glassman, Hilary E. Officer Senior Vice President, General Counsel and Secretary New York, NY Stamford, CT Executive Vice President, Sales, Marketing and Business Hayes, Peter B. Officer Development New Canaan, CT Stamford, CT Larson, Robert J. Officer Senior Vice President and Chief Accounting Officer Ridgefield, CT Stamford, CT McCarthy, Daniel J. Officer Executive Vice President and Chief Operating Officer Sandy Hook, CT Stamford, CT McKenney, Cecilia K Officer Executive Vice President Human Resources Bedford, NY Stamford, CT Schwartz, David G. Officer Vice President, Deputy General Counsel & Assistant Secretary Stamford, CT Stamford, CT Shassian, Donald R. Officer Executive Vice President and Chief Financial Officer Rye Brook, NY Stamford, CT White, Melinda Officer Senior Vice President General Manager, New Business Operations Venice, CA Stamford, CT Whitehouse, David R. Officer Senior Vice President and Treasurer Ridgefield, CT Stamford, CT Wilderotter, Mary Agnes Officer Chief Executive Officer and President Oakland, CA Stamford, CT SUBSIDIARIES Wilderotter, Mary Agnes Director Director Oakland, CA Stamford, CT Shassian, Donald R. Director Director Rye Brook, NY Stamford, CT McCarthy, Daniel J. Director Director Sandy Hook, CT Stamford, CT Wilderotter, Mary Agnes Officer Chairman Oakland, CA Stamford, CT Shassian, Donald R. Officer Vice President and Chief Financial Officer Rye Brook, NY Stamford, CT McCarthy, Daniel J. Officer President and Chief Operating Officer Sandy Hook, CT Stamford, CT Exhibits FCC Form 394 June 2009 Peter B. Hayes Officer Vice President, Marketing New Canaan, CT Stamford, CT Robert J. Larson Officer Vice President and Chief Accounting Officer Ridgefield, CT Stamford, CT Glassman, Hilary E. Officer Vice President, General Counsel and Secretary New York, NY Stamford, CT David R. Whitehouse Officer Vice President and Treasurer Ridgefield, CT Stamford, CT Michael Golob Officer Vice President, Engineering Norwalk, CT Stamford, CT Kenneth Mason Officer Vice President, Regulatory Webster, NY Rochester, NY David G. Schwartz Officer Assistant Secretary Stamford, CT Stamford, CT Gregg C. Sayre Officer Assistant Secretary Fairport, NY Rochester, NY Exhibits FCC Form 394 June 2009 Exhibit 4 The franchise itself will not be transferred as a result of the transaction described in Exhibit 1. As a result of the transaction, Verizon Northwest Inc. ("Franchisee") will become an indirect wholly owned subsidiary of Frontier Communications Corporation ("Transferee"). After the transaction, Franchisee will continue to administer the franchise according to the terms of the franchise agreement and applicable law. The transaction will have no effect on Franchisee's qualifications to transact business in the state. Exhibits FCC Form 394 June 2009 Exhibit 5 There have been no adverse findings made, or adverse final actions taken, against Frontier Communications Corporation in a civil, criminal or administrative proceeding with respect to the matters listed in Section II, Question 5. As a courtesy, we provide the following information regarding a final action taken against one of Frontier's subsidiaries: James Corcoran v. Citizens Telecommunications Company of New York, Inc. On October 11, 2005, James Corcoran filed a complaint with the NY State Division of Human Rights ("NYSDHR") alleging that the Company discriminated against him on the basis of his disability by not providing him reasonable accommodations in violation of the NY State Human Rights Law. A hearing was eventually held before an ALJ for the NYSDHR on July 30, 2007. The ALJ ruled that the Company had discriminated against Mr. Corcoran on the basis of his disability in violation of the NY State Human Rights Law. The NYSDHR adopted the ALJ's decision and order in early January, 2008. Under the decision and order issued by the NYSDHR the Company was ordered to pay Mr. Corcoran damages in the amount of $6,025.00. The Company decided not to appeal the matter further and paid Mr. Corcoran the $6,025.00. The case number was NYSDHR Case No. 10108268. Exhibits FCC Form 394 June 2009 Exhibit 6 There are no documents, instruments, agreements or understandings for the pledge of stock of Verizon Northwest Inc. or Frontier Communications Corporation. Exhibits FCC Form 394 June 2009 Exhibit 7 Frontier is a financially strong company. As a result of the transaction, Frontier will have an even stronger balance sheet and greater cash flow generation capabilities than it has today. Most notably, this transaction will "delever" Frontier, i.e., it will reduce significantly the Company's debt to EBITDA ratio.' The increased financial strength is expected to improve Frontier's access to capital and lower its cost of capital, which will inure to the benefit of the franchisee and its customers. Frontier has a highly successful track record of acquiring, operating and investing in telecommunications properties nationally, including over 750,000 access lines it purchased from Verizon between 1993 and 2000. And in more recent years, Frontier Communications has successfully integrated other telecommunications companies, including Rochester Telephone, Commonwealth Telephone and Global Valley Networks. The Annual Report of Frontier Communications Corporation for the year ending December 31, 2008 on Form 10-K is included on the enclosed CD-ROM. ' Currently, Frontier's leverage is approximately 3.8 x EBITDA; after the transaction, its leverage will be reduced to 2.6 x EBITDA. (EBITDA is earnings before interest, taxes, depreciation, and amortization.) Exhibits FCC Form 394 June2009 Exhibit 8 TRANSFEREE'S TECHNICAL QUALIFICATIONS Frontier Communications Corporation ("Frontier"), formerly named Citizens Communications Company, is one of the nation's largest rural and suburban local exchange carriers, offering local and long-distance telephone services, Internet access, wireless Internet access, DISH Network satellite television, computer maintenance and other services in 24 states. Frontier provides a full range of telecommunications services in a number of rural communities, smaller cities, and suburban areas including communities like Rochester, New York and its surrounding suburbs; Elk Grove, California, one of Sacramento's fastest -growing suburbs; and Burnsville, Minnesota and nearby towns in the Minneapolis suburbs. Frontier has more than 5,000 employees, 2.2 million telephone access lines and 500,000 High -Speed Internet subscribers, with revenue exceeding $2.2 Billion in 2008. Frontier telephone companies have provided service for more than 100 years. Frontier is publicly traded and listed on the New York Stock Exchange (ticker symbol FTR). Frontier will continue to provide and deploy video services through the FiOS network under the terms of the franchise. Frontier has a great deal of experience and expertise in the competitive provision of video programming services. Frontier competes head -to -head with cable companies for voice, data and video services in two-thirds of its footprint. Frontier is an experienced provider of video programming through its affiliation with DISH Network. As a reseller, Frontier integrates DISH Network offerings into its triple play (voice, data and video) bundles, as well as offering wireless data services to its customers throughout its existing service territory. Frontier also has previously owned and operated cable television systems in communities in Indiana (Thorntown, Clarks Hill and Boone County), Wisconsin (New Richmond and Star Prairie), Mississippi (Houlka and Rienzi), and California (Needles). Frontier's executives are well positioned to supervise the newly acquired operations. As examples, Frontier's CEO Maggie Wilderotter was previously President and CEO of Wink Communications, Inc., a company providing interactive content creation and customer response systems to cable networks. Melinda White, Frontier's Senior Vice President and General Manager of Marketing and New Business Operations has experience with Wink and with Cox Communications. Reed Spiegel, Frontier's Vice President — Video Solutions has experience with Thomson, Wink and Comcast. Ann Burr, Chairman of Frontier Communications of Rochester has many years of experience with Time Warner Cable in managing large cable operations in Hawaii, San Diego and Rochester, New York. Attached are brief biographies of some of Frontier's key executives. Frontier will be the owner of the franchisee, however Verizon Northwest Inc. will remain the provider of the services. Verizon Northwest Inc. provides services to residents, businesses, and governments within the state of Washington and will continue to provide service to over 500,000 telephone access lines. The provision of these services has been and will continue to be the province of local operations. Exhibits FCC Form 394 June 2009 The system serving your community will be managed by the same experienced and qualified personnel at the local level after the close as it is today. The large majority of the local technical and supervisory employees now providing voice, data and video services will stay with the franchisee and they will continue to provide these services under the Frontier name. Local field engineers and technicians will continue to participate in the planning, construction, operation and maintenance of the local system. The office and technical staff responsible for the management and operation of the franchise will continue to be employees of Verizon Northwest Inc. upon completion of the transfer of control. Frontier will therefore retain the existing workforce's technical qualifications, experience and expertise regarding cable television systems, and Frontier's executive management team is fully qualified to oversee these operations. The current network architecture of Verizon's FiOS system with respect to the provision of cable television services in the Pacific Northwest consists of Super Head Ends (SHEs) in Florida and Indiana, a long -haul transport network to Verizon Business Points of Presence (PoPs), grooming functionality at the PoPs that hands off selected content, Video Hub Offices (VHOs) in Beaverton and Everett, distribution facilities to Video Serving Offices (VSOs) mostly located in Verizon Northwest Inc. central office buildings, outside plant facilities to splitter hubs, dedicated fiber facilities to individual residences and businesses ("drops"), and Optical Network Terminals ("ONTs") located at or in the residences and businesses. After the transaction, Verizon will continue to own the SHEs, the long haul transport network, the PoPs and the grooming functionality. The franchisee will continue to own the VHOs, distribution facilities, VSOs, outside plant, splitter hubs, fiber drops and ONTs. Frontier will be responsible for licensing the programming content from the content owners, a process that is currently under way and that will be completed by the time the transaction closes, and for paying for the transport of the content to the VHOs. Frontier will use the same operational systems — ordering, billing, etc. — that Verizon uses today to provide service; indeed, Verizon will transfer these customer support systems to Frontier. A transition team comprised of Verizon and Frontier representatives will work to ensure customer continuity including billing, customer account systems, plant record systems, and call center operations. Frontier is committed to a local focus in its management structure. Frontier assigns local managers in each of its local areas with day-to-day responsibility for working with local customers and responding to local needs. Summary Biographical Information for Key Frontier Personnel: Maggie Wilderotter Chairman and Chief Executive Officer Maggie Wilderotter is President, Chairman and CEO of Frontier Communications. She joined the company on November 1, 2004, as President and Chief Executive Officer and a member of the Board of Directors. Before this, Ms. Wilderotter was Senior Vice President of Worldwide Public Sector at Microsoft, responsible for strengthening customer and partner outreach in the government and education markets, as well as working across Microsoft's business divisions to develop and coordinate forward -looking strategies. Exhibits FCC Form 394 June 2009 Previously, Ms. Wilderotter was President and Chief Executive Officer of Wink Communications Inc., where she led efforts to develop low-cost, end -to -end e-commerce systems to enable advertisers, merchants, and broadcast and cable networks to create interactive enhancements for traditional television advertisements and programs. Before joining Wink Communications, Ms. Wilderotter was the Executive Vice President of National Operations for AT&T Wireless Services Inc. and Chief Executive Officer of AT&T's Aviation Communications Division. She also served as Senior Vice President of McCaw Cellular Communications Inc. and was a Regional President managing the company's California, Nevada, and Hawaii Region. Ms. Wilderotter serves on the boards of Yahoo! Inc., Xerox Corporation and Tribune Company and on the boards of a number of non-profit organizations. Ms. Wilderotter holds a bachelor's degree in economics and business administration from Holy Cross College. Donald R. Shassian Executive Vice President and Chief Financial Officer Donald R. Shassian is Executive Vice President and Chief Financial Officer. He joined Frontier Communications Corporation on April 17, 2006 as Chief Financial Officer. Beginning in 2001, Mr. Shassian provided M&A consulting to several communications companies including AT&T Inc. (formerly SBC Communications) and Consolidated Communications Inc. He most recently served as the CFO for the Northeast region of Health Net, Inc., a managed healthcare company. In 1999 and 2000, Mr. Shassian was with RSL Communications, Ltd., a $1.6 billion international voice and data communications provider in 22 countries. He joined RSL in 1999 as the Executive Vice President and Chief Financial Officer and was later promoted to Chief Operating Officer. Prior to 1999, Mr. Shassian was the Senior Vice President and Chief Financial Officer for Southern New England Telecommunications Corp. (SNET), which was a provider of communications, information and entertainment services in southern New England, with more than $2 billion in revenues and 10,000 employees. He was responsible for the successful negotiation, sale and integration of SNET into SBC Communications in 1998. Prior to joining SNET in December 1993, Mr. Shassian was with Arthur Andersen for more than 16 years. His last position there was as the Partner -in -Charge of the Telecommunications Industry Practice in North America. A graduate of Bucknell University with a B.S. in business administration, Mr. Shassian is also a C.P.A. Mr. Shassian also serves on the board of directors for UIL Holdings Corporation (NYSE:UIL). Exhibits FCC Form 394 June 2009 Daniel McCarthy Executive Vice President and Chief Operating Officer Daniel McCarthy became Executive Vice President and Chief Operating Officer on January 1, 2006. He is also responsible for Regulatory Affairs. Before this, he was Senior Vice President, Field Operations. Prior to this, Mr. McCarthy was Senior Vice President, Broadband Operations and was President and Chief Operating Officer of Electric Lightwave from January 2002 to December 2004. Mr. McCarthy has been with Frontier Communications Corporation since 1990, when he joined the company's Kauai, Hawaii, electric division. In 1995 he moved to Flagstaff, Arizona, and assumed responsibility for Citizens' energy operations. In 2001 he was promoted to President and Chief Operating Officer of Citizens Public Services sector, responsible for the company's energy and water operations. He earned a bachelor's degree in marine engineering from the New York Maritime College in Fort Schuyler, New York, and holds an M.B.A. from the University of Phoenix. Peter B. Hayes Executive Vice President, Sales, Marketing and Business Development Peter B. (Pete) Hayes became Executive Vice President, Sales, Marketing and Business Development effective January 1, 2006. Previously, he was Senior Vice President, Sales, Marketing and Business Development. Before this, Mr. Hayes was Microsoft's Vice President, Public Sector, Europe, Middle East and Africa, leading sales, services, marketing, programs, government relations and technical teams. Prior to that, he was General Manager, Microsoft US Government, Washington, D.C., responsible for Microsoft's federal, state and local customers in the United States. Prior to this, he was Director, WorldWide Enterprise Field Strategy, Director, Field and Customer Relations, and District Manager, Southeast District, of Microsoft North America. Prior to joining Microsoft in 1991, Mr. Hayes worked for IBM for 12 years, holding various sales, technical and management positions. He earned a bachelor of science degree with a major in finance from the University of South Alabama. Cecilia K. McKenney Executive Vice President of Human Resources and Call Center Sales & Service Cecilia K. McKenney is Executive Vice President of Human Resources and Call Center Sales & Service. Ms. McKenney joined the company as Senior Vice President, Human Resources, in February 2006. She oversees all aspects of Human Resources, Labor Relations, and Call Center Sales and Service. Prior to joining Frontier, Ms. McKenney was Group Vice President of Headquarters Human Exhibits FCC Form 394 June 2009 Resources for the Pepsi Bottling Group, Inc. (PBG) in Somers, New York. In this role, she was responsible for all of PBG's Human Resources functions supporting its worldwide operations. Her organization provided human resources generalist support for PBG's headquarters and call center, in addition to long-term strategic direction and day-to-day business support for Staffing, Compensation and Benefits, Diversity, Training, Talent Development, and Human Resources Systems. Ms. McKenney joined the Pepsi -Cola Company in 1989 in the company's headquarters -based employee benefits group. Following several assignments of increasing responsibility in Human Resources, she was named Human Resources Manager in Pepsi-Cola's Northeast Business Unit in 1993. In less than two years, Ms. McKenney was transferred to Northern California, where she managed human resource issues for the company's San Francisco market. hi 1995, she was appointed Director of Human Resources for PBG's Pacific Northwest Business Unit. When PBG became an independent company near the end of 1998, Ms. McKenney was appointed Vice President, Staffing and Diversity at the Company's headquarters. Prior to Pepsi, Ms. McKenney worked for Mutual of New York and L.F. Rothschild in Human Resource and Management roles. She earned a bachelor's degree in business administration from Franklin & Marshall College, and is a Certified Employee Benefits Specialist. Hilary E. Glassman Senior Vice President, General Counsel and Secretary Hilary E. Glassman has been Senior Vice President, General Counsel and Secretary of Frontier Communications Corporation since July 2005. Prior to joining Frontier, she was Deputy General Counsel and Managing Director of Sandler O'Neill & Partners, L.P., an investment bank with a specialized financial institutions practice. From February 2000 to February 2003, Ms. Glassman was Vice President, General Counsel and Corporate Secretary for NewView Technologies Inc. As Chief Legal Officer and a member of the executive management team, she was responsible for all legal and corporate governance matters related to the company. Prior to this, she was Vice President and Corporate Counsel for Reliance Group Holdings, Inc. From October 1987 to December 1993, Ms. Glassman was an Associate at Weil, Gotshal & Manges. Ms. Glassman received a bachelor of science degree with a major in Accounting from New York University College of Business & Public Administration, graduating with honors. She earned her Juris Doctorate degree from New York University School of Law and is a member of the New York Bar. Melinda White Senior Vice President and General Manager, New Business Operations Melinda M. White is Senior Vice President and General Manager of New Business Operations, responsible for all wireless Internet data access projects and initiatives, all advertising and Internet services related to our multi -state web -based and paper phone directories; new commercial ventures, small businesses and home offices; marketing communications; and the development of alternate sales channels. Ms. White leads the team tasked with launching Exhibits FCC Form 394 June 2009 municipal wireless Internet data access networks within the company's markets, including the execution of agreements with cities, anchor tenants and market "hot spots." Before this, she was Senior Vice President, Commercial Sales and Marketing, responsible for wholesale and retail revenue, product marketing, and wireless operations. Ms. White joined the company in 2005 as Vice President and General Manager of Electric Lightwave, Inc. Before joining Frontier Communications Corporation, Ms. White was Executive Vice President, National Accounts/Business Development for Wink Communications, developing low-cost, end to -end e-commerce systems to enable advertisers, merchants, and broadcast and cable networks to create interactive enhancements for traditional television advertisements and programs. She also held senior leadership positions at Cox Communications and Cellular One (McCaw and the AT&T/AirTouch joint venture). Ms. White earned a Bachelor of Business Administration from Howard Payne University in Texas and a Master of Business Administration degree from Tulane University in New Orleans, Louisiana. Michael Golob Vice President of Engineering and Technology Michael Golob has been Vice President of Engineering and Technology for Frontier since February 15, 2005. Mr. Golob is responsible for Frontier's network planning; new technology development, selection and implementation of all network equipment; 24x7 operations centers; ISP operations; IP TV network architecture, deployments and quality of service; project management; SS7 network; E-911 network; switch translations; and engineering records. Before this he was Vice President of Operations and Engineering for Electric Lightwave, Inc. (ELI), a publicly -traded company formerly owned by Frontier Communications. Mr. Golob's background includes 21 years of experience in military communications and special operations in the U.S. Army. He is a veteran of the Gulf War and Operation Uphold Democracy in Haiti. Prior to joining ELI he was Director of Academic Affairs for the University of Phoenix — Oregon Campus. Mr. Golob earned a Doctorate Degree in Organization and Management from Capella University, a Master's Degree in Business Administration from Central Michigan University, and a Bachelor's Degree in Education from Iowa State University. He is a graduate of the U.S. Army's Command and General Staff College and the National Security Agency's Cryptologic Career Program. Ann Burr Chairman, Frontier Communications of Rochester Ann Burr has held a wide range of general management and executive positions in the cable television and telecommunications industry. She currently serves as Chairman of Frontier Exhibits FCC Form 394 June 2009 Communications in Rochester, New York. She is past Senior Vice President and General Manager for Frontier in Rochester and former Vice President of Government and Regulatory Affairs overseeing Frontier's national advocacy and government affairs programs in 24 states. She previously served as Senior Advisor to Citizens Communications (Frontier) from April 2005 to February 2006. Prior to her roles with Frontier, she served as Executive Vice President for Time Warner Cable in Stamford, Connecticut. Reporting to the Chairman, Ms. Burr had national responsibility for Time Warner's Residential Telephony initiatives, including Time Warner's joint venture with AT&T, and for Information Technology and Human Resources. Ms. Burr was President of Time Warner Communications in Rochester, New York from 1995- 1999. In addition to the successful cable television business, under Ms. Burr's leadership, Rochester was the first Time Warner Division in the nation to offer residential telephone service over it sophisticated hybrid fiber cable network. She oversaw the cable television, residential telephone, cellular, paging, broadcasting and broadband Internet services for the greater Rochester area. From 1986 to 1995, Ms. Burr served as President of Time Warner Cable in San Diego, California as the company's first female Division President where, in addition to the cable television business, Ms. Burr launched Time Warner's first competitive local exchange business. Prior to assuming the position of President, she served as Time Warner's Vice President of Operations for Oceanic Cablevision located in Honolulu, Hawaii. Earlier in her career, she worked in various operations positions for both Mountain Bell Telephone Company and Hawaiian Telephone (GTE). Ms. Burr has received numerous local and national awards. In 2002, she received the Service in Technology Award from Communications Technology Magazine for her work with Time Warner Cable in the development of voice over Internet protocol services. In 1993, she was honored with the cable industry's highest accolade, the National Cable Television Association's Distinguished Vanguard Award for Leadership. In 1996, she was inducted into the National Cable Television Pioneer Hall of Fame. She is the former Chairman of the California Cable Television Association and Greater San Diego Chamber of Commerce. She currently serves as Trustee for Rochester Institute of Technology, WXXI, George Eastman House, Rochester Business Alliance and the County of Monroe Industrial Development Agency. Ms. Burr received a Bachelor of Arts degree from Utah State University and an M.B.A. from Chaminade University in Honolulu. Exhibits FCC Form 394 June 2009 MODEL RESOLUTION RESOLUTION NO. CONSENT TO TRANSFER OF CONTROL WHEREAS, The City of [LFA NAME] ("Franchise Authority") has granted a cable television franchise ("Franchise") to Verizon Northwest Inc. ("Franchisee") which is an indirect wholly owned subsidiary of Verizon Communications Inc ("Verizon"). WHEREAS, Verizon has entered into an agreement with Frontier Communications Corporation ("Frontier") to effect a complete separation of Franchisee from Verizon and a transfer of control of Franchisee from Verizon to Frontier ("Transfer"). WHEREAS, upon completion of the Transfer, Franchisee will become an indirect wholly owned subsidiary of Frontier and, as a result, control of the Franchise will be transferred from Verizon to Frontier; WHEREAS, following the Transfer, Franchisee will continue to hold and be responsible for performance of the Franchise; and WHEREAS, Franchisee has requested that the Franchise Authority consent to the Transfer and, in accordance with the requirements of the Franchise, has filed an FCC Form 394 ("Application") with the Franchise Authority; and WHEREAS, the Franchise Authority is willing to consent to the Transfer. NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS: SECTION 1. The Franchise Authority consents to the Transfer as described above. SECTION 2. This Resolution shall be deemed effective upon adoption. SECTION 3. This Resolution shall have the force of a continuing agreement with the Franchisee and the Franchise Authority shall not amend, revoke, or otherwise alter this Resolution without the consent of the Franchisee. PASSED, ADOPTED AND APPROVED this day of . 2009. By: ATTEST: Clerk March 14, 2008 Stephen Clifton City of Edmonds 121 Fifth Avenue North Edmonds, WA. 98020 DEN ff FRPHY LACE P.L,-L. C. ATTORNEYS AT LAW W. Scott Snyder ssnyder@omwlaw.com Joe Hannan City of Mukilteo 4480 Chennault Beach Road Mukilteo, WA 98275 Eric A. Faison Richard Leahy Town of Woodway City of Woodinville 23920 113th Pl. W. 17301 133rd Avenue N.E. Woodway, WA 98020 Woodinville, WA 98072-8534 Re: Joint Representation Agreement & Potential Conflict of Interest Waiver Dear Stephen, Joe, and Eric: In connection with the North Puget Sound Consortium ("Consortium"), formed to negotiate franchise agreements with Verizon, we are writing to you to suggest joint representation in connection with the drafting of the Verizon franchise agreements. Additionally, we are writing to make you aware of a potential conflict of interest. As you know, our firm serves as counsel to the City of Edmonds, the City of Mukilteo, City of Woodinville and the Town of Woodway. The joint representation of the City of Edmonds, the City of Mukilteo, City of Woodinville and the Town of Woodway, with regard to the franchise agreements with Verizon, would allow us to negotiate with Verizon and provide representation in the Consortium for all three cities. This letter discusses the basis upon which we would be able to undertake this joint representation. Ms. Elana Zana and I, W. Scott Snyder, would perform services under this authorization. Our Rules of Professional Conduct (the State standards governing our ethical obligations) discourage us from representing all three cities unless you each consent after full disclosure. The primary advantage of joint representation is that you will most likely save time and legal fees in having one set of lawyers draft the franchise agreements and participate in the negotiation process. We would be able to attend meetings with Verizon and the Consortium on behalf of all three cities, as well as share lessons learned between the clients in order to best approach the Verizon negotiations. If you prefer to attend the meetings yourself, as well, on behalf of your city you would of course be able to do so. Additionally, the costs associated with the joint negotiations and representation would be equally shared between the three cities. This joint representation agreement does not preclude the individual representation of a city in situations where only one city is negotiating with Verizon, or when addressing a concern unique to that Established 1902 � � A Member of The International Lawyers Network with independent member law firms worldwide 1601 Fifth Avenue, Suite 2100 • Seattle, WA 98101-1686 • 206.4477000 • Fax: 206,4470215 • Web: www.omwlaw.com Stephen Clifton, Joe Hannan, Eric A. Faison, Richard Leahy March 14, 2008 Page 2 specific city. Examples could include a specific item which relates only to the franchise of one city or attendance at a council meeting. You may later decide that another attorney representing solely your interests should review the franchise agreement. However, you are under no obligation to engage such counsel. A risk of common representation is that there could arise a future conflict between the parties. In the event of a future conflict, Ms. Zana and I will withdraw from further representation in this matter for the City of Woodinville, Town of Woodway and the City of Mukilteo and will continue to represent the City of Edmonds. However, if we have acquired confidential knowledge or information about the City of Woodinville, Town of Woodway or the City of Mukilteo that could be used to the benefit of the City of Edmonds with regard to the conflict, we will withdraw from further representation of all parties as it relates to the conflict. Obviously, we will at all times take all reasonable steps to safeguard the confidentiality of all of your affairs. We do not believe that our ability to represent all three cities in connection with this matter will be adversely or materially affected by our representation of the other cities. We will, however, be happy to discuss any reservations that any of you have regarding these matters. We also recommend that you review this letter with other counsel before making a decision, but you are not obligated to do so if you do not wish to. An adjusted rate schedule will apply if joint representation is undertaken. The fees will be as follows: $240/ hour for W. Scott Snyder $180/hour for Elana Zana These fees will be divided evenly between all three cities, so each city will only be charged one third of this billing rate per hour (for example, if Elana works one hour each city/town will only contribute $45 for that hour). Individual services will continue to be charged at the contract rate with each respective city. If the conditions contained in this letter meet with your approval, we ask that you execute the enclosed copy of this letter, date it, and return it to us for our files. Very truly yours, OG MURPHY WALLACE, P.L.L.C. W. Scott Snyder WSS; erz { ERZ689661.DOC;1 /00006.080052 ) Stephen Clifton, Joe Hannan, Eric A. Faison, Richard Leahy March 14, 2008 Page 3 CONSENTED TO THIS I DAY OF MARCH, 2008 Gar Haa n •an Mayor, C. of Edmonds Joe Hannan City Manager, City of Mukilteo Eric Faison City Manager, Town of Woodway Richard Leahy City Manager, City of Woodinville { ERZ689661.DOC;1/00006.080052 } CITY OF EDMONDS GARY HAAKENSON MAYOR 121 5TH AVENUE NORTH • EDMONDS, WA 98020 • (425) 775-2525 CITY CLERK In C. 1 S9a March 19, 2008 W. Scott Snyder Ogden Murphy Wallace 2100 Westlake Center Tower 1601 Fifth Ave. Seattle, WA 98101-1686 Subject: Joint Representation Agreement & Potential Conflict of Interest Waiver Dear Scott: I have enclosed the above -referenced document signed by Mayor Gary Haakenson on March 19, 2008. Please let me know if there is anything further you need. Sincerely, " d" * , � ��/ Sandy Chase Edmonds City Clerk Enclosure • Incorporated August 11, 1890 • Sister City - Hekinan, Japan SURETY RIDER To be attached to and form a part of Bond No. KO8438614 Type of Franchisee -Franchise Bond Bond: dated effective September 04, 2008 (MONTH -DAY -YEAR) executed by Verizon Northwest, Inc. as Principal, (PRINCIPAL) and by Westchester Fire Insurance Company as Surety, (SURETY) in favor of City of Edmonds (OBLIGEE) in consideration of the mutual agreements herein contained the Principal and the Surety hereby consent to changing The principal name from Verizon Northwest, Inc. to Frontier Communications Northwest Inc.. Nothing herein contained shall vary, alter or extend any provision or condition of this bond except as herein expressly stated. This rider is effective July 01, 2010 (MONTH -DAY -YEAR) Signed and Sealed July 29, 2010 (MONTH -DAY -YEAR) Frontier Communications Northwest Inc. (P INCIPAi ) Westchester Fire Insurance By: S-0443/GEEF 10/99 Power of Attorney WESTCHESTER FIRE INSURANCE COMPANY Know all men by these presents: That WESTCHESTER FIRE INSURANCE COMPANY, a corporation of the State of New York, having its principal office in the City of Atlanta, Georgia pursuant- to the following Resolution, adopted by the Board of Directors of the said Company on December 11, 2006, to wit: "RESOLVED, that the following authorrzatim% relate to the execution, for and on behalf of the Company, of bonds, undertakings, recognizancm contracts and other written commitments of the Company entered into the ordinary course of business (raeh a -Written Commitment"): (1) Each of the Chairman, the President and the Vice Presidents of the Company is hereby authorized to execute any Written Commitment for and on behalf of the Company, under the seal of the Company or otherwise, (2) tach duly appointed attomey-in-fact of the Company is hereby authorized to execute any Written Commitment for and an behalf of the Company, under the seal of the Company or otherwise, to the extent that such action is authorized by the granrof powers provided for in such persons written appointment as such attomey-in-fact. (3) Each of the Chairman, tho Prwldert and the V lee Premdkms or the Company is hereby authorized, for and do bohaifaf the Company. to appoint rn writing any person the atmmcy-in-fact of the Company with full power and authority to rxeeuto. ror and on behal f erthe Cwupany, undo the scat of the Cornpany or othmvisc, such written Cvtnmismenu or the Company as maybe specified in such written appointment- whiehspceiitartiort may be by gcncrai type or claw of wtiacn Comrmurtents or by specification of orre armour panwmw written Commltrrients. (4) Fach of rho C'hoirtmn, the President and Vicc Presidents efihc Company In burby authorized, for and on behalfofft Company, so Megaia in writing any other officer of the Company the suihority to cxocuie, ror and on behalror the Company, under au C rupany'sseal or otherwise, such Writim Commitments ofthe Company as are specified in such written delegation, which spcelfca6on may be by gmeral type or ciao of corium Carmnitmems or by specification of one or more partivAu Written Commitments, (5) The signature of any officer or other person executing any Written Commitment of appointment or delegation pursuant to this Resolution, and the seal of the Company, may be affixed by facsimile on such Written Commitment or written appointment or delegation. FURTHER RESOLVED, that the foregoing Resolution shall not be deemed to be an exclusive statement of the powers and authority of officers, employees and other persons to act for and on behalf of the Company, and such Resolution shall not limit or otherwise affect the exercise of any such power or authority otherwise validly granted or vested. FURTHER RESOLVED, that the Resolution of the Board of Directors of the Company adopted at the meeting held on November 8, 1999 relating to the authorization of certain persons to execute, for and on behalf of the Company, Written Commitments and appointments andAclegations, in hereby rescinded. Does hereby nominate, constitute and appoint Barbara A Thompson. Carolyn E Wheeler, Kallic McKinney, Leslie Patterson, Laretta Jones, Novetta Anderson, all of the City of KNOXV ILLE, Tennessee, each individually if there be more than one named; its true and lawful. attomey-in -fact, to maize, execute, seal and deliver on its bdmif, and as its act and deed any and att bonds, undertakings, recognimces, contracts and other writings in the nature therdof in penalties not exceeding Five million dollars & aerct gents ($5,000.400.00) and the execution of sueh Writings in pursuance of these presents shall be as binding upon said Company, as Fully and amply as if they had been duly executed and acknowledged by the regularly elected officers of the Company at its principal office, IN WITNESS WHEREOF, the said Stephen M. Haney, Vice -President, has hereunto subscribed his name and affixed the Corporate seal of the said WESTCHESTER FIRE INSURANCE COMPANY this 22 day of March 2010. WESTCHESTER FIRE INSURANCE COMPANY a� ea swphen M. Haney. vice Ple6dcru 4 COMMONWEALTH OF PENNSYLVANIA COUNTY OF PHILADELPHIA ss. On this 22 day of March, AD. 2010 before me, a Notary Public of the Commonwealth of Pennsylvania in and for the County of Philadelphia came Stephen M. Haney ,Vine -President of the WESTCHESTER FIRE INSURANCE COMPANY to me personally known to be the individual and officerwho executed the preceding instrument, and he acknowledged that he executed the same, and that the seal affixed to the preceding instrument is the corporate seal of said Company: that the said corporate seal and his signature were duly affixed by dhe authority and direction of the said corporation, and that Resolution, adopted by the Board of Direetors of said Company, referred to in the preceding instrument, is now in force. IN TESTIMONY WHEREOF, I have hereunto Set my hand and affixed my official seal at the City of Philadelphia the day and year first above written ��rw„tie, WtA �yx} ��y� r�� "OTT KSM •� p� r v! '� bjtI It BRAN(1T.1.+sRpy PUbiC "dotarJ P�:Tdlr r., � � l�[L litC4ai<aarr�h vase :ester 2Q I, the undersigned Assistant Secretary of the WESTCHESTER FIRE INSURANCE COMPANY, do hereby certify that the original POWER OF ATTORNEY, of which the foregoing is a substantially true and correct copy, is in full force and effect. n 11 In witness whereof, i have hereunto subscribed my name as Assistant Secretary, and affixed the corporate seal of the Corporation, this'�� day of (j'ii4 D " WNAML rurg. AsYiacant n�`rceary THIS POWER OF ATTORNEY MAY NOT BE USED TO EXECUTE ANY BOND WITH AN iNCEPTION DATE AFTER March 22, 2012. THE BACK OF THIS DOCUMENT LISTS VARIOUS SECURITY FEATURES 0 THAT WILL PROTECT AGAINST COPY COUNTERFEIT AND ALTERATION. WESTCHESTER FIRE INSURANCE COMPANY FINANCIAL STATEMENT DECEMBER 31, 2009 ADMITTED ASSETS BONDS $2,060,239,269 SHORT - TERM INVESTMENTS 21,402,589 STOCKS 0 REAL ESTATE 0 CASH ON HAND AND IN BANK 5,053 PREMIUM IN COURSE OF COLLECTION" 106,852,028 INTEREST ACCRUED 18,645,574 OTHER ASSETS 252,407,271 TOTAL ASSETS $2,459,551,784 LIABILITIES RESERVE FOR UNEARNED PREMIUMS $284,403,553 RESERVE FOR LOSSES 1,226,008,303 RESERVE FOR TAXES 1,902,245 FUNDS HELD UNDER REINSURANCE TREATIES 0 OTHER LIABILITIES 139,987,368 TOTAL LIABILITIES 1,652,301,469 CAPITAL: 928,592 SHARES, $4.85 PAR VALUE 4,503,671 CAPITAL: PAID IN 187,844,877 AGGREGATE WRITE-INS FOR SPECIAL SURPLUS FUNDS 85,912,680 SURPLUS (UNASSIGNED) 528,989,087 SURPLUS TO POLICYHOLDERS 807,250,315 TOTAL $2,459,551,784 ('"EXCLUDES PREMIUM MORE THAN 90 DAYS DUE.) STATE OF PENNSYLVANIA COUNTY OF PHILADELPHIA John P. Taylor, being duly sworn, says that he is Vice President of Westchester Fire Insurance Company and that to the best of his knowledge and belief the foregoing is a true and correct statement of the said Company's financial condition as of the 31 st day of December, 2009. Swom before this 1 U Vice esident Notary Pubtic L•OWONWEALTH OF PERNSYLVANIA hlmedel Saar Gtane Wrt8ri4 Hota►rPubila G1ty & Phftd*hls, PMAdalphla County C ysalvn ExplmSAIM. 0. 24S t Am"yMawmber, nn9yiYdnta of hiol&rfes My ccnZ ission expires CITY OF EDMONDS MIKE COOPER MAYOR CITY HALL • THIRD FLOCH 121 5TH AVENUE NORTH • EDMONDS, WA 98020 • (425) 775-7724 • tax (425) 771-0252 COMMUNITY SERVICES / ECONOMIC DEVELOPMENT Inc. 1890 October 31, 2011 Dan Clark General Manager Frontier Communications 1800 41 St Street Mailcode WA0102DM Everett, WA 98201 Re: Frontier Communications Service Area - Franchise Obligations Dear Mr. Clark: On July 25, 2011, I sent you an e-mail noting that Section 3, Provisions for Cable Service, Franchise Agreement for Verizon/Frontier and City of Edmonds, which calls for providing cable services to residential and commercial areas within an initial service area and to all residential areas within 3 years of the Service Date of the Franchise. I also asked whether these requirements have been, or will be met, by this date. The City is sending this letter to formally request a response by Frontier Communications stating whether Frontier has met its obligation under Section 3.1 of the Cable Franchise Agreement between the City of Edmonds and Verizon Northwest, Inc. (Franchise). As you know, the Edmonds City Council approved the transfer of this Franchise and its obligations from Verizon to Frontier Communications Corporation on November 17, 2009, Specifically, Section 3.1 requires Frontier to "offer Cable Service to all residential areas in the Initial Service Area within thirty-six (36) months of the Service Date of the Franchise". The Initial Service Area includes the entire City. The Service Date of the Franchise is defined under Section 1.26 of the Franchise to mean: "The date that the Franchisee first provides Cable Service on a commercial basis directly to multiple subscribers in the Franchise Area. The Franchisee shall memorialize the Service Date by notifying the LFA (City) in writing of the same, which notification shall become a part of this Franchise." The City received confirmation that the Franchise Service Date actually started August 29, 2008. As such, under the Franchise, Frontier as a successor entity to Verizon, had an actual obligation to build out and serve all residential areas within the City by August 29, 2011. Accordingly, the City wants to know whether access to cable service has been provided to residential and commercial areas within the required timeframe established in Section 3.L The City believes that Frontier may not have complied with this section of its Cable Franchise with the City and therefore may be in material breach of the Cable Franchise. We would like to meet and informally discuss this matter with you as soon as possible. Additionally, please provide a schedule detailing how and when Frontier will meet, or has met, its Franchise obligations under Incorporated August 11, 1890 Sister City - Hekinan, Japan Section 3.1. If we are unable to resolve this issue within twenty days, the City reserves the right to commence formal enforcement proceedings. The City looks forward to receiving Frontier's expedited response to this request. Thank yqu-�or Your attestion to this matter. 'Stephen CTii#on, CP Community Services & Econonnic Develapmen.t Director 121 - 5th Avenue North Edmonds, WA 99020 425-771-0251 Clifton c"Ledinonds.wa.us cc; Mike Cooper, Mayor 3eff'raraday, Lighthouse Law (;roue Miclancl R. Brtdlcy. Spocial Counsel for Lighthouse Law Group, PLLC Edmonds City Council Sandy Chase, City Clerk Cindi Cruz, Bxccutive Assistant September 2, 2009 AGREEMENT This Agreement (hereinafter, the "Agreement"), dated this second day of September, 2009, is by and among Verizon Communications Inc. ("Verizon"), Verizon Northwest Inc. ("Verizon Northwest"), Frontier Communications Corporation ("Frontier") and the City of Edmonds, Washington ("City"). WHEREAS, on or about June 1, 2009, Verizon, Verizon Northwest and Frontier filed an FCC Form 394, Exhibits and related materials with the City; WHEREAS, Verizon Northwest is a cable franchisee in the City; WHEREAS, Verizon desires an approval of its application for transfer of control of Verizon Northwest to Frontier; WHEREAS, 47 U.S.C. 537 provides in part that a franchising authority shall have 120 days to act upon any request for approval of such sale or transfer that contains or is accompanied by such information as is required in accordance with Commission regulations and by the franchising authority; WHEREAS, Verizon, Verizon Northwest, Frontier and the City are willing to agree to an extension of time for the City to review the request for a transfer of control. WHEREAS, none of the parties to this Agreement are waiving any of their rights under federal, state or local law regarding this request for transfer of control. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. The City shall have until November 30, 2009 to either grant or deny Verizon's request for transfer of control of Verizon Northwest to Frontier. 2. The November 30, 2009 date may be further extended by mutual agreement of Verizon, Verizon Northwest, Frontier, and the City in accordance with 47 C.F.R. §76.502 (c). 3. By entering into this Agreement, no party to this Agreement is waiving any of its rights under federal, state or local law. 4. This Agreement may be signed in counterparts. Standstill Agreement Verizon/Verizon Northwest/Frontier/City of Edmonds Page 1 I -le 7 //f 01- �- �- `o -11- 053 51 IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the parties as set forth below. VERIZON COMMUNICATIONS INC. By: Title: VERIZON NORTHWEST INC. By: Title: FRONTIER COMMUNICATIONS CORPORATION By:_ Title: CITY OF EDMONDS By:_ Title: ATTEST/AUTHENTICATED : CITY CLERK, APPROVED AS TO FORM: OFFICE OF THE Cl'- ' ATTO NEY: BY Standstill Agreement Verizon/Verizon Northwest/Frontier/City of Edmonds Page 2 July 29, 2008 Gary Haakenson City of Edmonds 121 5th Ave. No. Edmonds, WA 98020 Vle;lr'l�►7 Verizon Northwest Inc. 1800 41 '. St. MC: WA0104OS Everett, WA 98201 Subject: City of Edmonds Verizon Cable Franchise — Reimbursement for Access Channel Reassignment Dear Mr. Haakenson: Pursuant to the Cable Franchise Agreement between the City of Edmonds (the "City") and Verizon Northwest Inc. ("Verizon"), dated AL[ , 2008, Verizon agrees that it will use reasonable efforts to minimize the movement of Access s Channel assignments. In the event that Verizon changes Access Channel assignments more than once in any twelve-month (12) period, Verizon agrees to reimburse the City up to Three Thousand Dollars ($3,000) for such twelve-month (12) period for the necessary cost of replacing printed material resulting from the movement of Access Channel assignments. VERIZON NORTHWEST INC. By: �-, 0,4_a Tim c Ilion, President CITY OF E MONDS By: Ga H aken on, Mayor FOFt4t�O\VrEED Afton - Date _ ---I L7 A part of Verizon Communications Seattle-3435660.1 0010932-00119 Franchise Bond Bond No. 105162447 KNOW ALL MEN BY THESE PRESENTS: That Verizon Northwest Inc.,1800 41" Street, Everette, WA 98201(hereinafter called the Principal), and Travelers Casualty and Surety Company of America, One Tower Square — 2SHS, Hartford, CT 06183 (hereinafter called the Surety), a corporation duly organized under the laws of the State of CT, are held and firmly bound unto City of Edmonds,1215' Ave. North, Edmonds, WA 98020 (hereinafter called the Obligee), in the full and just sum of Twenty Five Thousand nd 00 100 Dollars 25 000. 0 , the payment of which sum, well and truly to be made, the said Principal and Surety bind themselves, their heirs, administrators, executors, and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal and Obligee have entered into a Franchise Agreement dated August 5, 2WLis hereby referred to and made a part hereof. WHEREAS, said Principal is required to perform certain obligations under said Agreement. WHEREAS, the Obligee has agreed to accept this bond as security against default by Principal of performance of its obligations under said Agreement during the time period this bond is in effect. NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH that if the Principal shall perform its obligations under said Agreement, then this obligation shall be void, otherwise to remain in full force and effect, unless otherwise terminated, cancelled or expired as hereinafter provided. PROVIDED HOWEVER, that this bond is executed subject to the following express provisions and conditions: 1. In the event of default by the Principal, Obligee shall deliver to Surety a written statement of the details of such default within 30 days after the Obligee shall learn of the same, such notice to be delivered by certified mail to address of said Surety as stated herein. 2. This Bond shall be effective September 4 2008, and shall remain in full force and effect thereafter for a period of one year and will automatically extend for additional one year periods from the expiry date hereof, or any future expiration date, unless the Surety provides to the Obligee not less than sixty (60) days advance written notice of its intent not to renew this Bond or unless the Bond is earlier canceled pursuant to the following. This Bond may be canceled at any time upon sixty (60) days advance written notice from the Surety to the Obligee. 3. Neither cancellation, termination nor refusal by Surety to extend this bond, nor inability of Principal to file a replacement bond or replacement security for its obligations under said Agreement, shall constitute a loss to the Obligee recoverable under this bond. Bond No.105162447 4. No claim, action, suit or proceeding shall be instituted against this bond unless same be brought or instituted and process served within one year after termination or cancellation of this bond. 5. No right of action shall accrue on this bond for the use of any person, corporation or entity other than the Obligee named herein or the heirs, executors, administrators or successors of the Obligee. 6. The aggregate liability of the surety is limited to the penal sum stated herein regardless of the number of years this bond remains in force or the amount or number of claims brought against this bond. 7. This bond is and shall be construed to be strictly one of suretyship only. If any conflict or inconsistency exists between the Surety's obligations as described in this bond and as may be described in any underlying agreement, permit, document or contract to which this bond is related, then the terms of this bond shall supersede and prevail in all respects. This bond shall not bind the Surety unless it is accepted by the Obligee by signing below. IN WITNESS WHEREOF, the above bounded principal and Surety have hereunto signed and sealed this bond effective this 4th day of Seltember, 2008. Verizon Northwest Inc. Travelers Casualty and Surety Company of America By: By: 6A,4,41 Menuel Jones A rney-in-Fact Accepted 1 ATTEST/AUTHENTICATED: S NDRA S. CHASE, CITY CLERK WARP THIS POWER OF ATTORNEY IS INVALID WITHOUT THE BORDER .Ak POWER OF ATTORNEY TRAVELERS.I Farmington Casualty Company St. Paul Guardian Insurance Company Fidelity and Guaranty Insurance Company St. Paul Mercury Insurance Company Fidelity and Guaranty Insurance Underwriters, Inc. Travelers Casualty and Surety Company Seaboard Surety Company Travelers Casualty and Surety Company of America St. Paul Fire and Marine Insurance Company United States Fidelity and Guaranty Company Attorney -In Fact No. 219095 Certificate No. 0 0 5-6 9 L O KNOW ALL MEN BY THESE PRESENTS: That Seaboard Surety Company is a corporation duly organized under the laws of the State of New York, that St. Paul Fire and Marine Insurance Company, St. Paul Guardian Insurance Company and St. Paul Mercury Insurance Company are corporations duly organized under the laws of the State of Minnesota, that Farmington Casualty Company, Travelers Casualty and Surety Company, and Travelers Casualty and Surety Company of America are corporations duly organized under the laws of the State of Connecticut, that United States Fidelity and Guaranty Company is a corporation duly organized under the laws of the State of Maryland, that Fidelity and Guaranty Insurance Company is a corporation duly organized under the laws of the State of Iowa, and that Fidelity and Guaranty Insurance Underwriters, Inc. is a corporation duly organized under the laws of the State of Wisconsin (herein collectively called the "Companies"), and that the Companies do hereby make, constitute and appoint Erin M. Margelis, Brian St. Clair, Myrna L. Smith, Menuel Jones, Rachel Cole, and Patrick Bannon of the City of Washington , State of D. C. , their true and lawful Attorney(s)-in-Fact, each in their separate capacity if more than one is named above, to sign, execute, seal and acknowledge any and all bonds, recognizances, conditional undertakings and other writings obligatory in the nature thereof on behalf of the Companies in their business of.guaranteeing the fidelity of persons, guaranteeing the performance of contracts and executing or guaranteeing bonds and undertakings required or permitted in any actions or proceedings allowed by law. IN WITNFS WFJEREOF, the Comp �rl?�S�have caused this instrument, to be signed and their' corporate seals to be hereto affixed, this SS eptem r 11J day of Farmington Casualty Company Fidelity and Guaranty Insurance Company Fidelity and Guaranty Insurance Underwriters, Inc. Seaboard Surety Company St. Paul Fire and Marine Insurance Company 7th St. Paul Guardian Insurance Company St. Paul Mercury Insurance Company Travelers Casualty and Surety Company Travelers Casualty and Surety Company of America United States Fidelity and Guaranty Company r.su� t `Y� s�rr yISRE 6 atiriP �kSL.9 JPti ,rsvRy �,p [r +hp� �•p _c.s[r�Gyfl �`T a^ewy. * r t�A* oar+yf �• � a �, f�� % �`�'e��m 'zra n � �7COAPORATFD a ,,, hm m: Wr�r6Rarr _n w e S`H4arH7rm,l� � T92T n� �S: nl �y��Ca$i 2 m 1885 �p� ra' �977 1951 s � �a o. ��pSEAL.Hof t#ypsSEb.L_6D' State of Connecticut City of Hartford ss. By; Georg Thompson, nior ice President 7th September 2007 On this the day of ,before me personally appeared George W. Thompson, who acknowledged himself to be the Senior Vice President of Farmington Casualty Company, Fidelity and Guaranty Insurance Company, Fidelity and Guaranty Insurance Underwriters, Inc., Seaboard Surety Company, St. Paul Fire and Marine Insurance Company, St. Paul Guardian Insurance Company, St. Paul Mercury Insurance Company, Travelers Casualty and Surety Company, Travelers Casualty and Surety Company of America, and United States Fidelity and Guaranty Company, and that he, as such, being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing on behalf of the corporations by himself as a duly authorized officer. G•'Ter In Witness Whereof, I hereunto set my hand and official seal. My Commission expires the 30th day of June, 2011. Marie C. Tetreault, Notary Public 58440-5-07 Printed in U.S.A. QGUN 11�PHY WACE L_C A T T O R N E Y S AT L A W W. Scott Snyder Elana R. Zana (206)447-7000 June 11, 2009 Re: Potential Conflict of Interest Waiver Dear Consortium Member Jurisdictions: Following the submittal by Verizon Northwest, Inc. ("Verizon") and Frontier Communications, Inc. ("Frontier") of the intent to transfer the Verizon franchise to Frontier, several members of the previous North Puget Sound Consortium and some additional jurisdictions have agreed to form a new Consortium to evaluate the transfer documents associated with the transfer of the Verizon franchise. Before engaging in the service as the administrator of the Consortium and if required as negotiator for the Consortium it is necessary that we request a conflict waiver from each of the jurisdictions involved with the Consortium. The following jurisdictions have been invited to participate in this Consortium: City of Bothell, City of Edmonds, City of Everett, City of Kenmore, City of Marysville, City of Mountlake Terrace, City of Mukilteo, Snohomish County, City of Woodinville and Town of Woodway. Of these cities, Ogden Murphy Wallace represents the cities of Edmonds, Mukilteo, Redmond, Woodinville and the Town of Woodway. In the past, we have represented Snohomish County, Shoreline and Bothell. We will be advising our client cities under a joint representation agreement if any separate evaluations or negotiations are necessary. Mr. Snyder will not be representing the Consortium, but will be acting in a supervisory role throughout the process and will be the lead counsel on behalf of Ogden Murphy Wallace client cities. Our Rules of Professional Conduct (the State standards governing our ethical obligations) discourage us from representing the Consortium members as a group unless you each consent after full disclosure. A risk of common representation is that there could arise a future conflict between the parties. In the event of a future conflict, Ms. Zana will withdraw from further representation in this matter for the Consortium members and will only represent our client cities. However, if we have acquired confidential knowledge or information about any of the other Consortium jurisdictions that could be used to the benefit of our client cities with regard to the conflict, we will withdraw from further representation of all parties as it relates to the conflict. Obviously, our firm will at all times take all reasonable steps to safeguard the confidentiality of all of your affairs as you each may require. In addition, the Consortium Interlocal Agreement was drafted by Ms. Zana. it will be approved by separate counsel for other jurisdictions, but we request your waiver with regard to our Eslcblished 1902 A Member of the Internolionol Lawyers Nelwork with independent member law firms worldwide 1b01 Fifth Ar..r�ue. guile 21QD Secwle.WA "101.1686 • 206.447700.0 • Fox: 206.4470215 • Web: www.omwlow.com { ERZ710612.DOC: 1100006.080054i S Consortium Member Jurisdictions June 11, 2009 Page 2 involvement in the creation of the Consortium. If you do not wish to waive this aspect, we encourage you to retain separate counsel to review the Interlocal Agreement. We have concluded that the interests of each member of the Consortium are aligned such that at present there is no actual conflict of interest between the cities or the County in this matter. We will, however, be happy to discuss any reservations that any of you have regarding these matters. We also recommend that you review this letter with other counsel before making a decision, but you are not obligated to do so if you do not wish to. If the conditions contained in this letter meet with your approval, we ask that you execute the enclosed copy of this letter, date it, and return it to Ogden Murphy Wallace for our files. Very truly yours, OGDEN MURPHY WALLACE, P.L.L.C. a W. Scott O&VA-5�v� Elana R. Zana A CONSENTED TO THIS 13 DAY OF _�u.�V , 2009 CITY OF BOTHELL By: Its: CITY OF EVERETT By: Its: {ERZ7306] 2.DOC;1/00006.080054/) CITY AEMONDS By: Its: CITY OF KENMORE By: Its: Consortium Member Jurisdictions June 11, 2009 Page 3 CITY OF MARYSVILLE By: Its: SNOHOMISH COUNTY By: Its: TOWN OF WOODWAY By: Its: ( ERZ730612.DOC;1/00006.080054/) CITY OF MOUNTLAKE TERRACE By: Its: CITY OF WOODINVILLE By: Its: STOEL RIVES qzllk� LLP ATTORNEYS AT LAW November 6, 2009 VIA EMAIL AND OVERNIGHT MAIL Elana Zana Ogden Murphy Wallace P.L.L.C. 1601 Fifth Ave., Suite 2100 Seattle, WA 98101 DOUGLAS I. STEDING Direct (206) 386-7626 djsteding@stoel.com 600 Universlly Street. Suite 3600 Seattle. Washington 98101 main 206 624 0900 fax 106.386.7500 www.stoel.com Re: Background Information on Washington Public Utilities Commission Proceeding Dear Ms. Zana: In the context of the pending applications for approval of transfer of control of the cable television franchises between members of the Verizon/Frontier Transfer Consortium and Verizon Northwest Inc., you have requested from my client, Verizon Communications Corporation ("Verizon"), some further background information concerning, first, the pending Washington Utilities and Transportation Commission ("WUTC") proceeding to consider approval of the Frontier Communications Corporation ("Frontier")-Verizon transaction, and, second, the context for WUTC Staff and Washington Public Counsel's ("Public Counsel") testimony filed November 3, 2009. Verizon and Frontier are happy to oblige -with the following information: 1. Verizon is transferring its landline business to Frontier in 14 states, whiclrincludes -- - approximately 11,000 employees. 2. Several approvals are required at various levels, including the following: a. Frontier Shareholders needed to approve the transaction — complete as of October 27, 2009. b. Federal Communications Commission — pending. c. Department of Justice — completed as of September 1, 2009. d. Federal Trade Commission — completed as of September 1, 2009. j Seattle-3 565375.1 0010932-00174 Oregon Washington ATTACHMENT 4 Calirornia U I a h Idaho Colorado Minnesota Elana Zana November 6, 2009 Page 2 e. Nine (9) State Regulatory approvals: f. California, Nevada, South Carolina — completed. g. Arizona, Illinois, Ohio, Oregon, Washington, West Virginia — in progress. h. Local Franchise Transfer approvals, including 18 in Washington — 6 complete; 12 in progress. 3. The WUTC maintains jurisdiction over regulated telephony service; it does not maintain jurisdiction over cable TV or internet service, including, e.g., FiOS video and data service. In considering a transfer of regulated telephony assets, the WUTC evaluates the effect of the transfer on customers of traditional landline telephony service. 4. Like certain other state regulatory proceedings of this nature, the pending WUTC proceeding ("state proceeding") is adjudicative in nature and thus is designed to be an adversarial process. In proceedings such as this, the WUTC acts as an adjudicatory body, hearing from a number of parties, including Verizon and Frontier, Public Counsel and WUTC Staff. 5. WUTC Staff is actually a party to the state proceeding; it is separated from the WUTC for purposes of the state proceeding. Indeed, as is typical in formal proceedings at the WUTC, in the pending proceeding the Commission noted in an early order that "the Commission's regulatory staff functions as an independent party with the same rights, privileges, and responsibilities as other parties to the proceeding." The order also noted the -existence of the "ex pane wall" that exists between parties §itch as the WUTC Staff and -the Commissioners themselves who serve in the adjudicatory role. Thus, unlike stafffor local government, -for example, WUTC Staff not only does not prepare and provide a staff report to the WUTC; it cannot communicate at all with the WUTC on the matter outside the formal record of the case and instead provides testimony along with other parties. 6. Although Public Counsel resides in the State Attcrney General's office, it is also a party to the state proceeding. Public Counsel was created by statute to represent individual and small business customers of regulated utilities, including regulated telephone utilities. Public Counsel filed its testimony in the state proceeding in this capacity. 7. Concerning WUTC Staff and Public Counsel's testimony regarding Frontier's financial ability, Verizon and Frontier respectfully strongly disagree. It is not unusual, in fact it is normal, for experts of different parties to disagree in regulatory proceedings. Verizon and S� Elana Zana November 6, 2009 Page 3 Frontier will file rebuttal testimony on November 19, 2009 accordingly. In other words, the record in the state proceeding is still under development. 8. A hearing in the state proceeding in Washington is scheduled for the week of December 15, 2009. 9. The hearing process has already concluded before public utility commissions in four states — Arizona, California, Nevada, and South Carolina. In Arizona, the commission has heard evidence and a decision is pending. In California, Nevada and South Carolina, the commissions have already issued decisions approving the transfer. 10. We are confident that the transfer will ultimately be approved in the regulatory proceedings in all nine states, including Washington. Thank you and please let us know whether you would like additional information. Sincerely, v Douglas J.:,teding cc: Peter Camp, Snohomish County -- Tom Duchen, River Oaks Communication Corporation INTERLOCAL AGREEMENT CONSORTIUM FOR NEGOTIATION OF TRANSFER OF CABLE FRANCHISE AGREEMENT FROM VERIZON NORTHWEST, INC. TO FRONTIER COMMUNICATIONS CORPORATION This Interlocal Agreement (the "Agreement") is made and entered into by and between the undersigned Parties pursuant to the provisions of the Interlocal Cooperation Act of 1967, RCW Chapter 39.34. WHEREAS, Snohomish County and some cities of South Snohomish and King County (collectively the "Parties") are or will soon be in the process of negotiating the transfer of control of the cable franchise with Verizon Northwest, Inc. ("Verizon") to Frontier Communications Corporation ("Frontier"); and WHEREAS, while each governmental entity may negotiate on its own behalf, the Parties to this agreement wish to coordinate their efforts in a lawful manner in order: a) to ensure that the public receives the maximum rights and benefits from their respective franchise agreements; b) to better coordinate the transfer process with Verizon and Frontier; (c) to share the costs of the evaluation of the transfer application and any potential negotiations, including hiring a national consultant and attorneys, and if necessary an accountant and technical advisor, to assure the citizens of each jurisdiction that the transfer is consistent with the terms of the Parties' respective franchises; and (d) to create a common transfer resolution template; and WHEREAS, the Interlocal Cooperation Act provides a mechanism to both jointly contract with consultants, including accountants and technical advisors, for common services as well as a mechanism for each Party to utilize the consultant's services, as that Party sees fit, for additional support in negotiation as well as the tailoring of the template to the specific needs of each participating entity; NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, it is agreed that: Ptn•pose. This Agreement shall have the following purposes: 1.1 Create a Consortium, entitled the "Verizon/Frontier Transfer Consortium" ("Consortium"), to assist the Parties in joint and individual negotiations with Verizon and Frontier for the transfer of the cable franchises. 1.2 Provide a vehicle for the Parties to designate a representative to organize the Consortium and lead negotiations. Peter Camp of the Snohomish County executive office is hereby designated as the lead negotiator. 1.3 Provide a vehicle for the Parties to contract with River Oaks Communications Corporation ("Consultant"), for the evaluation of the Request for Consent to {ETtT_734276.DOC;3/13060.080001/} June 17.2009 /• �f Page 1 of 16 Transfer of Control of Franchise, the FCC Form 394 and attached exhibits, and other related transfer documents (hereinafter "Transfer Documents"). 1.4 Engage Consultant to perform certain services as described in the Scope of Work ("Consultant Services"), attached hereto as Exhibit A and incorporated herein by this reference. 1.5 Engage the law firm of Ogden Murphy Wallace, P.L.L.C. ("OMW") to provide administrative and negotiation services for the Consortium. 1.6 If desired by the Parties, enable the Parties to contract with an accountant or technical advisor as provided in Sections 6 and 7. 1.7 This Agreement shall also serve as a vehicle to contract with the Consultant for additional individualized services to be provided as needed to each individual Party. By so doing, the Parties hope to secure a lower cost for the Consultant's services through a joint contracting framework as well as minimize associated travel costs and other expenses by coordinating their efforts. 1.8 The Consortium shall also serve as a vehicle for the Parties to share information now and in the future regarding telecommunications and cable issues, including but not limited to issues such as educational and governmental channel usage, access fees and capital fees, negotiation strategies for franchises, the negotiation of cell tower and other telecommunication leases, right —of --way use requirements, and other similar issues. This information sharing is intended to provide a vehicle for sharing information regarding issues of common public interest. 2. Duration. 2.1 The Effective Date of this Agreement is the date on which the fourth Party signs the Agreement or the date this Agreement is posted on the City of Edmonds website, whichever later occurs. 2.2 The Consortium, as an information —sharing group, may remain in effect for an indefinite term for the mutual benefit and cooperation of the Parties for so long as they individually choose to participate. 2.3 The Consortium, as a body formed to evaluate the transfer documents and as a joint negotiation team, may remain in effect for two (2) years and will terminate at the anniversary of the Effective Date unless otherwise extended by the action of the Parties. 2.4 Any Party may withdraw from this agreement upon the provision of ten (10) days written notice subject to the limitations of Section 3.4. 3. Organization. The Consortium may consist of Snohomish County and the cities of Bothell, Edmonds, Everett, Kenmore, Marysville, Mukilteo, Mountlake Terrace, Redmond, { ERZ730276. DOC;3/ 13060.080001 /} June 17.2009 Page 2 of 16 Shoreline, Woodinville and the Town of Woodway, upon their authorization. The City of Edmonds shall serve as the contracting entity with the Consultant. In addition, other entities authorized to participate in interlocal agreements by statute may join during the term of this Agreement, pursuant to Section 3.3. 3.1 In accordance with RCW 39.34.030, financing of the Consortium and all costs associated with consulting, evaluating, negotiating and attorney services provided to the Consortium shall include an initial amount equal to $2,000 per Party plus an amount based on a Party's population. All costs incurred by the Consortium shall be shared by the Parties on a pro- rata basis based upon the population of the Party. 3.1.1 The population of all Parties is based on the April 2008 Washington State Office of Financial Management Annual Population Estimate and is described in Exhibit B, attached hereto and incorporated herein by this reference. Snohomish County's population is based on the population residing in the proposed build -out area pursuant to the Verizon Franchise, using the April 2006 Washington State Office of Financial Management Annual Population Estimate. 3.1.2 Pro-rata share estimates and associated predicted costs as described in Exhibit B are for illustrative purposes only. The pro—rata share apportioned to each Party is dependent on the number of jurisdictions who agree to join the Consortium. 3.2 The Parties shall attempt to reach a consensus regarding the direction of the Consultant, the administrator, negotiators, accountant, technical advisors, and any other persons working on behalf of the Consortium in the evaluation of the Transfer Documents. In the event that the Parties cannot reach substantial agreement, voting shall be on a weighted basis, with each Party having as many votes as its pro—rata percentage of the costs to be shared. A quorum shall consist of at least Snohomish County and a majority of the member cities. 3.3 Additional cities may join the Consortium upon satisfaction of the following requirements: 3.3.1 Approval of entry of the city applying ("Applicant City") by consensus of the current Parties to the Consortium; July 31, 2009; 3.3.2 Request to join the Consortium is received no later than 3.3.3 The Applicant City agrees to the terms of this Agreement; 3.3.4 The Applicant City may join by paying a fee equal to the amount of its pro—rata share of the total cost incurred and billed through its date of entry. The pro—rata share of the Applicant City shall be determined in accordance with Section 3.1; and 3.3.5 Following admittance into the Consortium, the Applicant City will pay its pro—rata share of costs incurred and billed after its date of entry consistent with all other Parties to this Agreement pursuant to Section 3.1. { ERZ730276.DOC;3/13060.080001 /} June 17, 2009 Page 3 of 16 3.4 A withdrawing Party shall be liable for its pro—rata share of Consortium costs incurred through the date of its departure. Each Party shall be individually liable for all costs associated with individual work requested from the Consultant. Each Party agrees to indemnify and hold the other Parties harmless for the costs which that Party individually incurs. 3.5 All costs of the Consortium incurred under Section 1 shall be billed directly to the individual Consortium members by the Consultant, OMW and any Party or entity providing Accounting Services pursuant to Section 6 or Technical Services pursuant to Section 7. The Parties agree to promptly pay all invoices within forty—five (45) days of the mailing of an invoice for the Parties' share of undisputed joint costs. Late payments (more than forty—five (45) days after mailing) shall bear interest at twelve percent (12%) per annum with a minimum late payment fee of fifty dollars ($50.00), provided, however, that if a cost is adjusted through the dispute resolution procedure outlined in Section 11, no late fee shall attach. 3.6 In the event that any portion of the Consortium's costs are reimbursed by Verizon or Frontier as a part of the resolution of the transfer process, such reimbursement shall first be applied to any unpaid costs of the Consortium. Any excess monies shall be returned to the Consortium members, pro—rata, in the same percentages established by Section 3.1. This Section 3.6 shall be applied and interpreted to ensure that any recovery on behalf of the Consortium is applied to the costs of the Consortium in the same pro—rata manner as costs are assessed. No member shall be entitled to receive an amount in excess of its actual contribution unless all members receive a pro—rata excess distribution. A party which withdraws pursuant to Section 2.4 shall forfeit its pro—rata share of a reimbursement, if any such reimbursement exists. 3.7 Nothing herein shall be interpreted to contract away or limit the legislative authority of the governing legislative body of any Party. Each party shall at its sole discretion approve or reject the transfer of the Verizon franchise to Frontier. 4. 1gdividpaIly Contracting ►%,ith the Consultant. 4.1 The consulting contract may also provide for each Party to independently request certain services provided by the Consultant at the Party's own cost. 4.2 Bills from the Consultant related to services performed at the request of an individual Party pursuant to Section 4 shall be billed by the Consultant directly to the requesting Party. Parties requesting individual services shall indemnify and hold harmless all other Parties from any cost, claim or liability associated with such individual service by the Consultant. 5. Additional Provisions Required by RCW 39.34.030. In addition to the provisions previously stated regarding duration, organization and purpose, the following provisions are included pursuant to the requirements of RCW 39.34.030. 5.1 No joint personal or real property ownership is contemplated under the terms of this Agreement. All rights to the franchise template shall be jointly shared by the Parties, with each having the right to use it at its sole discretion as it deems appropriate. Any { ERZ730276. DOC;3/ 13060.080001 /} June 17, 2009 Page 4 of 16 individualized work done at the direction of a Party, at the Party's own cost, shall be and remain the property of that Party. 5.2 As referenced in Section 1.3, the Parties intend to participate cooperatively in the evaluation of the Transfer Documents provided by Verizon and Frontier. The evaluation shall be through the Consortium consisting of a designated representative from each body, and at the Parties' discretion, legal counsel as appropriate. Decision —making shall be by consensus, provided however, that if significant consensus cannot be reached regarding the joint preparation of a template, voting shall be by weighted vote based upon each Party's pro—rata share of the costs. 5.3 This Agreement shall be posted on the City of Edmonds's website. Parties not listed in the original web —site posting may be joined when the signature page indicating their agreement has been posted on either the City of Edmonds's website or the website of the joining city, whichever first occurs. 6. Accountine Services. At the Parties' discretion the Consortium may employ an accountant to assist in an audit of the transfer of the Verizon franchise to Frontier. The Parties may choose to hire this accountant as a Consortium, or as a separate group of individual jurisdictions. The accountant may be an outside entity or may be an employee or a department of a Party. 6.1 If an audit of Frontier's financial statements and other financial documents associated with the transfer of the Verizon franchise is performed (the "Accounting Services") by an accountant who is an employee of a Party then that Party may be reimbursed at the rate of up to $100.00 per hour to compensate it for its direct employee and reasonable administrative costs. The cost of Accounting Services attributed to the Consortium under this Agreement shall not exceed a total of $5,000. The rate and the monetary cap include that Party's own proportionate share for which that Party is responsible under this Agreement. 6.2 Accounting Services provided by an outside accountant shall not exceed a total of $20,000 (this amount does not include any monies paid to Consultant or OMW). 6.3 The Parties may expand the monetary cap on Consulting Services only upon a consensus agreement of the Parties. If a consensus cannot be reached then voting shall be by weighted vote based upon each Party's pro—rata share of the costs. 7. Technical Services. At the Parties' discretion the Consortium may employ a technical advisor to assist in the audit of the technical capabilities of Frontier and the build -out of the cable system by Verizon ("Technical Services"). These services shall be in addition to any Consultant Services provided by the Consultant. The Parties may choose to hire a technical advisor as a Consortium or as a separate group of individual jurisdictions. 8. Monetary Can on Consulting Services. The cost of the Consulting Services under this Agreement shall not exceed a total of $40,000 (this amount does not include any monies paid to OMW or for Accounting Services or Technical Services provided under Sections {ERZ730276. DOC;3/13060.080001 /} June 17, 2009 Page 5 of 16 6 and 7 respectively). This monetary cap on fees associated with Consulting Services includes all fees and related expenses incurred by the Consultant. This monetary cap on fees associated with Consulting Services does not include additional services requested by an individual Party as described in Section 4. 8.1 The Parties may expand the monetary cap on Consulting Services only upon a consensus agreement of the Parties. If a consensus cannot be reached then voting shall be by weighted vote based upon each Party's pro—rata share of the costs. 8.2 Following a vote to expand the cap pursuant to Section 8.1, Parties not desiring to expand the Consulting Services monetary cap may withdraw from this Agreement pursuant to Section 2A. The withdrawing Party will only be required to pay its share of the pro— rata cost incurred up through the time of withdrawal and in no event shall exceed its pro—rata share of the cap established by Section 6 or previously amended with the approval of the withdrawing Party, (excluding any individually authorized services provided by Consultant). 9. Monetary Cap on OMW Services. OMW will facilitate, organize, report and communicate with the Consortium, Consultant, accountant, technical advisors, Verizon and Frontier, and any other interested party on behalf of the Consortium. Additionally, OMW will provide the services of an assistant negotiator on behalf of the Consortium and will act as the administrator and point of contact for the Consortium. Services to the Consortium will be provided by Elana Zana at a billing rate of $180 per hour. The cost of OMW services attributed to the Consortium under this Agreement shall not exceed a total of $7,000 (this amount does not include any monies paid to Consultant or for Accounting Services or Technical Services provided under Sections 6 and 7 respectively). This monetary cap on fees associated with OMW services includes all legal and administrative services and costs performed on behalf of the Consortium. 9.1 The Parties may expand the monetary cap on OMW services only upon a consensus agreement of the Parties. If a consensus cannot be reached then voting shall be by weighted vote based upon each Party's pro—rata share of the costs. 9.2 Following a vote to expand the cap pursuant to Section 9, Parties not desiring to expand the OMW services monetary cap may withdraw from this Agreement pursuant to Section 2.4. The withdrawing Party will only be required to pay its share of the pro— rata cost incurred up through the time of withdrawal and in no event shall exceed its pro—rata share of the cap established by Section 9 or previously amended with the approval of the withdrawing Party (excluding any individually authorized legal services). 10. Designated Representatives. The County Executive, City Manager or Mayor of each entity shall designate a representative ("Designated Representative"). Notice to the Designated Representative shall be undertaken through e-mail contacts, provided, however, that any decision to terminate the participation of any Party shall be given in writing and shall be effective when provided to the City of Edmonds, Washington at: City of Edmonds JERZ730276 DOC;3/13060.080001/} June 17, 2009 Page 6 of 16 attn: Stephen Clifton 121 5th Ave. No. Edmonds, WA 98020 425-775-2525 with a copy to: Elana Zana Ogden Murphy Wallace, P.L.L.C. 1601 Fifth Avenue Suite 2100 Seattle, WA 98101 206-442-1308 11. Dispute Resolution. 11.1 Any disputes or questions of interpretation of this Agreement that may arise between Parties shall be governed under the Dispute Resolution provisions in this Section 11. The Parties agree that cooperation and communication are essential to resolving issues efficiently. The Parties agree to exercise their best efforts to resolve any disputes that may arise through this dispute resolution process, rather than in the media or through other external means. 11.2 The Parties agree to use their best efforts to prevent and resolve potential sources of conflict through discussion among the Consortium's members. 11.3 The Parties agree to use their best efforts to resolve disputes arising out of or related to this Agreement using good faith negotiations. If unsuccessful, the Parties may but are not obligated to utilize mediation. The costs of mediation shall be shared equally between the Parties to the dispute and the remaining members of the Consortium. As an illustration, if two Parties, A & B, dispute a billing procedure and cost, they shall share the costs of mediation with the remaining members of the Consortium. Party A, 25%, Party B, 25%, and the Consortium, 50% (divided pro—rata among the other Parties as a cost pursuant to Section 3.1). 11.4 Except as otherwise specified in this Agreement, in the event the dispute is not resolved in mediation or the Parties do not agree to mediation, the Parties are free to file suit. At all times prior to resolution of the dispute, the Parties shall continue to perform and make any required payments under this Agreement in the same manner and under the same terms as existed prior to the dispute. 12. Confidentiality. The Parties agree to adhere to the Confidentiality Agreement attached hereto as Exhibit C. 13. No Indemnity. Except as specifically provided in Sections 3.4 and 4.2, no indemnity is imposed by this Agreement. The Parties agree to bear their respective liability to the extent and in the percentage determined under the laws of the State of Washington. 14. General Provisions. {ERZ730276.DOC;3/13060.080001 /} June 17, 2009 Page 7 of 16 14.1 The Parties shall not unreasonably withhold requests for information, approvals or consents provided for in this Agreement. The Parties agree to take further actions and execute further documents, either jointly or within their respective powers and authority, to implement the intent of this Agreement. The Parties agree to work cooperatively with each other to achieve the mutually agreeable goals as set forth in this Agreement. 14.2 This Agreement shall be interpreted, construed and enforced in accordance with the laws of the State of Washington. Venue for any action under this Agreement shall be King County, Washington, 14.3 This Agreement is made and entered into for the sole protection and benefit of the Parties hereto. No other person shall have any right of action based upon any provision of this Agreement. 14.4 This Agreement has been reviewed and revised by legal counsel for all Parties and no presumption or rule that ambiguity shall be construed against the Party drafting the document shall apply to the interpretation or enforcement of this Agreement. 14.5 Each Party shall be responsible for its own costs, including legal fees, incurred in negotiating or finalizing this Agreement, unless otherwise agreed in writing by the Parties. 14.6 The Parties shall not be deemed in default with provisions of this Agreement where performance was rendered impossible by war or riots, civil disturbances, floods or other natural catastrophes beyond their control; the unforeseeable unavailability of labor or materials, or labor stoppages or slow downs, or power outages exceeding back—up power supplies. This Agreement shall not be revoked or a Party penalized for such noncompliance, provided that such Party takes immediate and diligent steps to bring itself back into compliance and to comply as soon as practicable under the circumstances without unduly endangering the health, safety, and integrity of the Parties' employees or property, or the health, safety, and integrity of the public, Public Right -of -Way, public property, or private property. 14.7 This Agreement may be amended only by a written instrument executed by each of the Parties hereto. No failure to exercise and no delay in exercising, on the part of any Party hereto, any rights, power or privilege hereunder shall operate as a waiver hereof, except as expressly provided herein. 14.8 This Agreement constitutes the entire agreement of the Parties with respect to the subject matters hereof, and supersedes any and all prior negotiations (oral and written), understandings and agreements with respect hereto. 14.9 Section headings are intended as information only, and shall not be construed with the substance of the section they caption. {ERZ730276.DOC;3/13060 080001/} June 17, 2009 Page 8 of 16 14.10 In construction of this Agreement, words used in the singular shall include the plural and the plural the singular, and "or" is used in the inclusive sense, in all cases where such meanings would be appropriate. 14.11 This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all counterparts together shall constitute but one and the same instrument. 14.12 In case any term of this Agreement shall be held invalid, illegal or unenforceable in whole or in part, neither the validity of the remaining part of such term nor the validity of the remaining terms of this Agreement shall in any way be affected thereby. 14.13 The provisions of Sections 3.1, 4.2, and 12 shall survive termination of this Agreement or the withdrawal of any Party. IN WITNESS WHEREOF, each of the Parties hereto has executed this Agreement by having its authorized representative affix his/her name in the appropriate space below: SNOHOMISH COUNTY: Date'. By: Its CITY OF BOTHELL: Date: By: Its CITY OF EDMONDS: Az� Date: 0.�, - ;� L2- 2 q By: GaA Haakenson Its Ma or CITY OF EVERETT: By: Its { ERZ730276.DOC;3/13060.080001 /} June 17, 2009 Page 9 of 16 Date: CITY OF KENMORE: By: Its CITY OF MARYSVILLE: By: _ Its CITY OF MOUNTLAKE TERRACE: By: Its CITY OF MUKILTEO: By: Its CITY OF REDMOND: By: Its CITY OF SHORELINE: By: Its { ERZ730276.DOCX13060.080001 /} June 17, 2009 Date: Date: Date: Date: Date: Date: Page 10 of 16 CITY OF WOODINVILLE: By: Its TOWN OF WOODWAY: By: Its { ERZ730276. DOC;3/ 13060.080001 /} June 17.2009 Date: Date: Page 11 of 16 EXHIBIT A RIVER OAKS SCOPE OF WORK This Scope of Work will be performed by River Oaks as follows: Federal Law Requirement of Acceptance or Rejection of Transfer within 120 days: A. Before the 30 day Federal deadline, draft a letter to Frontier and Verizon informing Verizon and Frontier of additional questions which need to be answered and why the transfer application is incomplete. This letter will discuss questions relating to the financial, legal and technical qualifications of Frontier. B. Ensure that both the LFA's and Verizon/Frontier are compliant with 47 C.F.R. 76.502 and the Cable Acts regarding the Transfer. C. Review any additional correspondence or response from Frontier and Verizon regarding Requests for Consent to Transfer of Control of Franchisee or any supplemental information. Review Verizon Communications, Inc.'s and Frontier Communications Corporation's Forms FCC 394 and Exhibits. In the context of this complex financial transaction, review the Distribution Agreement along with the Agreement and Plan of Merger and Request for Consent to Transfer of Control of Franchisee with respect to identifying legal, financial and technical -related issues. D. Request follow-up answers (where needed) from Frontier and Verizon to other pertinent questions and obtain required information from them and address the impact upon the 120 day review period as prescribed under Federal Law which runs from receipt of a complete submittal. E. Assist the LFAs in their review of existing Franchises with Verizon Northwest Inc. and its Affiliates for past performance/compliance issues. F. Correspond and negotiate with Verizon's and Frontier's legal counsel regarding Consortium matters. Financial and Accounting Matters: G. Work closely with in-house LFA finance/accounting departments in the financial review process and facilitate that review. If necessary, work with an outside accounting firm to be designated by the LFAs. That accounting firm will be an additional cost to the Consortium outside of the River Oaks fees and expenses. H. Make inquiries as to whether Frontier will be able to financially meet its Franchise obligations and continuing responsibilities, including build -out and construction of the FIOS system. Review pertinent portions of the 10-K and raise questions regarding the debt being taken on by Frontier and its potential impact upon Frontier's ongoing operations. { ERZ730276.DOC;3/13060.080001 /} June 17, 2009 Page 12 of 16 Technical Issues: Request a representation and warranty from Verizon/Frontier regarding the cable system build -out. Review such representation and warranty as well as a one page overview cable system map for each LFA to be provided by Verizon/Frontier to determine if Verizon has fulfilled its cable system build -out obligations in each LFA Franchise. Discuss with Frontier where their technical people will be located and what their response time will be to citizen inquiries and complaints. K. Inquire as to the cable television customer service capabilities of Frontier and the locations of its customer service centers. L. If necessary, negotiate with Verizon and Frontier regarding an increase in security such as performance and construction bonds related to the build -out of the cable systems. Other Steps: M. Work on other Consortium cable franchise transfer matters as requested. It shall be the LFAs' decision whether to transfer or not transfer the existing cable franchises with Verizon. Fee Schedule In consideration of the services to be performed, the LFAs agree to pay River Oaks on a time and reimbursable cost basis according to the following schedule: Tom Duchen, President - $245 per hour plus expenses Bob Duchen, Vice President - $245 per hour plus expenses Reimbursable direct costs: - Federal Express - Postage - Long Distance Telephone Charges - Outside Clerical - Faxes - Copies - Travel at one-half the hourly rate (upon request) Additional Services Upon request, River Oaks will work with an individual LFA to address LFA specific issues at the hourly rate plus expenses as noted above. { ERZ730276. DOC;3/ 13060.080001 /} June 17, 2009 Page 13 of 16 EXHIBIT B APRIL 2008 POPULATION ESTIMATES & BREAK DOWN OF THE ESTIMATED PRO RATA SHARE Population information from the Washington State Office of Financial Management. All population estimates are from April 2008, except for Snohomish County which is based on the April 2006, Washington State Office of Financial Management population estimate for the proposed build -out area by Verizon. The data provided below is for informational purposes only. The total pro-rata share per Party will depend on the number of Parties agreeing to join or contract with this Consortium. These costs are also subject to change depending on the discretion of the Parties to engage an accountant to perform Accounting Services pursuant to Section 6 or a technical advisor to perform Technical Services pursuant to Section 7. These costs also do not include any independent services provided by Consultant or OMW at the request of individual parties. { ERZ730276. DOC;3/13060.080001 /} June 17, 2009 Page 14 of 16 EXHIBIT C CONSORTIUM CONFIDENTIALITY AGREEMENT 1. The Parties agree that, while they shall be under no obligation to do so, they may from time to time choose, in their respective individual discretion, to exchange among themselves during the pendency of the Consortium any joint materials that are relevant and appropriate to the Consortium. The term "Consortium Materials" shall also include any materials developed for negotiation purposes at the expense of the Parties. 2. Each Party agrees that any documents or materials (hereinafter termed "Consortium Materials") it receives from the other Parties or their Counsel, or created at their joint expense under the Agreement, shall be treated and maintained as privileged and confidential communications between Counsel and Parties. It is further understood and agreed that information that is (a) obtained by any of the Parties from any of the other Parties or (b) developed on behalf of any or all of the Parties, will remain confidential and shall be protected from disclosure to any third party except as provided herein. 3. The Parties further agree that they will not disclose these Consortium Materials or the contents thereof, or information regarding the discussions and preparations for negotiations with Verizon, to any person or entity other than the Parties, the Consultant, OMW, their Counsel, consultants, employees or agents, without first obtaining the consent of all Parties who may be entitled to claim any privilege with respect to such materials. 4. If any person or entity requests or demands, by subpoena, public disclosure request, or otherwise, all or any portion of the designated Consortium Materials, the Party receiving such request or demand will immediately notify Counsel for each of the Parties of such request or demand. Counsel for each of the Parties, as applicable, will take all steps necessary to permit the assertion of all applicable rights and privileges with respect to said Consortium Materials and shall cooperate fully in any judicial proceeding relating in any manner to the Consortium Materials. However, this Agreement is not voided if released via a court order by a court or administrative agency of competent jurisdiction. 5. Pending the completion of the negotiation process, all Consortium Materials will remain confidential until the last Consortium member approves or denies a franchise. Upon approval of a franchise agreement by any member the final agreement shall become a public document to the full extent required by law. 6. Consortium Materials shall be used only for purposes of this Consortium and any subsequent related action and shall not be disclosed in any way that is inconsistent with the maintenance of the attorney —client privilege, work product privilege, or any other privilege of any Party or any Counsel in connection with the Consortium. 7. This Agreement shall apply to any and all joint conferences or communications, whether written or oral, conducted by or between the Parties, and to all communications, whether written or oral, made between the Parties, arising from or in connection with the Consortium. { ERZ730276.DOC;3/13060.080001 /} June 17, 2009 Page 15 of 16 8. This Agreement memorializes prior oral understandings among the Parties and their Counsel with respect to Consortium Materials and negotiations and communications. 9. Each Party shall be obligated to maintain the confidentiality and privileged nature of the Consortium Materials to the extent defined herein. This obligation shall survive the withdrawal of any and all of the Parties from this Agreement or the termination of this Agreement. 10. Each Party agrees that the attorney --client, work product, joint defense, and other privileges applicable to the Consortium Materials may not be waived by any Party or its Counsel without the prior written consent of the Party or Parties that produced, generated or otherwise communicated that privileged information sought to be disclosed. { ERZ730276. DOC;3/13060.080001 /} June 17, 2009 Page 16 of 16 CABLE FRANCHISE AGREEMENT BETWEEN THE CITY OF EDMONDS, WASHINGTON AND VERIZON NORTHWEST INC. 2008 Seattle-3435598.2 0010932-00119 TABLE OF CONTENTS ARTICLE PAGE I. DEFINITIONS...................................................................................................................2 2. GRANT OF AUTHORITY; LIMITS AND RESERVATIONS ....................................... 7 3. PROVISION OF CABLE SERVICE................................................................................ 9 4. SYSTEM OPERATION.................................................................................................. 11 5. SYSTEM FACILITIES...................................................................................................11 6. EG SERVICES................................................................................................................ 12 7. FRANCHISE FEES..........................'............................................................................... 14 8. CUSTOMER SERVICE ....................................... --.......................... ............................... 16 9. REPORTS AND RECORDS........................................................................................... 16 10. INSURANCE AND INDEMNIFICATION.................................................................... 17 11. TRANSFER OF FRANCHISE........................................................................................ 19 12. RENEWAL OF FRANCHISE ................................ ................... •.................................. --- 20 13. ENFORCEMENT AND TERMINATION OF FRANCHISE ........................................ 20 14. MISCELLANEOUS PROVISIONS................................................................................ 23 EXHIBIT A INITIAL SERVICE AREA.................................................................................. 28 EXHIBIT B MUNICIPAL LOCATIONS AND SCHOOLS TO BE PROVIDED FREE CABLESERVICE................................................................................................. 29 EXHIBITC REMITTANCE FORM......................................................................................... 32 EXHIBIT D CUSTOMER SERVICE STANDARDS.............................................................. 33 EXHIBIT E PERFORMANCE BOND ................................................... ............................. 43 Seattle-3435598.2 0010932-00119 11 THIS CABLE FRANCHISE AGREEMENT (the "Franchise" or "Agreement") is entered into by and between the City of Edmonds, a duly organized City under the applicable laws of the State of Washington (the "City") and Verizon Northwest Inc., a corporation duly organized under the applicable laws of the State of Washington (the "Franchisee"). WHEREAS, the City wishes to grant Franchisee a nonexclusive franchise to construct, install, maintain, extend and operate a cable communications system in the Franchise Area as designated in this Franchise; WHEREAS, the City is a "franchising authority" in accordance with Title VI of the Communications Act (see 47 U.S.C. § 522(10)) and is authorized to grant . one or more nonexclusive cable franchises pursuant to Washington State law and federal law; WHEREAS, Franchisee is in the process of installing a Fiber to the Premise Telecommunications Network (the "FTTP Network") in the Franchise Area for the transmission of Non -Cable Services pursuant to authority granted by the state of Washington; WHEREAS, Franchisee intends to construct, install, maintain, and extend the FTTP Network pursuant to Title II of the Communications Act (see 47 U.S.C. § 201 et seq), and. has requested a cable franchise from the City to operate a Cable System over, under, and along the Public Rights -of -Way within the City's jurisdiction, in accordance with Title VI of the Communications Act (see 47 U.S.C. § 521 et seq); WHEREAS, the FTTP Network will occupy the Public Rights -of -Way within the City, and Franchisee desires to use portions of the FTTP Network once installed to provide Cable Services (as hereinafter defined) in the Franchise Area; WHEREAS, the City has identified the future cable -related needs and interests of the City and its community, has considered the financial, technical and legal qualifications of Franchisee, and has determined that Franchisee's plans for its Cable System are adequate, in a full public proceeding affording due process to all parties; WHEREAS, the City desires to protect and manage the Public Rights -of -Way, require high standards of customer service, receive financial compensation relating to Franchisee's use of the Public Rights -of -Way as provided by federal law, obtain educational and governmental channels, establish certain reporting and record access requirements, and provide for the future cable -related needs of its residents; WHEREAS, the City has found Franchisee to be financially, technically, and legally qualified to operate the Cable System; WHEREAS, the City has determined that the grant of a nonexclusive franchise to Franchisee is consistent with the public interest; and WHEREAS, the City and Franchisee have reached agreement on the terms and conditions set forth herein and the parties have agreed to be bound by those terms and conditions. Seattle-34355982 0010932-00119 1 NOW, THEREFORE, in consideration of the City's grant of a franchise to Franchisee, Franchisee's promise to provide Cable Service to residents of the Franchise Area of the City pursuant to and consistent with the Communications Act (as hereinafter defined), pursuant to the terms and conditions set forth herein, the promises and undertakings herein, and other good and valuable consideration, the receipt and the adequacy of which are hereby acknowledged, THE PARTIES DO HEREBY AGREE AS FOLLOWS: 1. DEFINITIONS Except as otherwise provided herein, the definitions and word usages set forth in the Communications Act (as hereinafter defined) are incorporated herein and shall apply in this Agreement. In addition, the following definitions shall apply: 1.1 Access Channel: A video Channel, which Franchisee shall make available to the City without charge for non-commercial Educational or Governmental use for the transmission of video programming as directed by the City. 1.1.1 Educational Access Channel: An Access Channel available for the use solely of the local schools (schools shall include any educational institution, public or private, but excluding home schools) in the Franchise Area. 1.1.2 Government Access Channel: An Access Channel available for the use solely of the City. 1.1.3 EG: Educational and Governmental. 1.2 Additional Service Area: Shall mean any such portion of the Service Area added pursuant to Section 3.1.3 of this Agreement. 1.3 Affiliate: Any Person who, directly or indirectly, owns or controls, is owned or controlled by, or is under common ownership or control with Franchisee. 1.4 Basic Service: Any service tier, which includes the retransmission of local television broadcast signals as well as the EG Channels required by this Franchise. 1.5 Cable Operator: Shall be defined herein as it is defined under section 602 of the Communications Act, 47 U.S.C. § 522(5), but does not include direct broadcast satellite providers. 1.6 Cable Service or Cable Services: Shall be defined herein as it is defined under section 602 of the Communications Act, 47 U.S.C. § 522(6). 1.7 Cable System or System: Shall be defined herein as it is defined under Section 602 of the Communications Act, 47 U.S.C. § 522(7), meaning, "a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, but such term does not include (A) a facility that Seattle-3435598.2 0010932-00119 2 serves only to retransmit the television signals of 1 or more television broadcast stations; (B) a facility that serves subscribers without using any public right-of-way; (C) a facility of a common carrier which is subject, in whole or in part, to the provisions of title II of this Act, except that such facility shall be considered a cable system (other than for purposes of section 621(c)) to the extent such facility is used in the transmission of video programming directly to subscribers, unless the extent of such use is solely to provide interactive on -demand services; (D) an open video system that complies with section 653 of this title; or (E) any facilities of any electric utility used solely for operating its electric utility systems." The Cable System shall be limited to the optical spectrum wavelength(s), bandwidth or future technological capacity that is used for the transmission of Cable Services directly to Subscribers within the Franchise/Service Area and shall not include the tangible network facilities of a common carrier subject, in whole or in part, to Title II of the Communications Act or of an Information Services provider. 1.8 Channel: Shall be defined herein as it is defined under section 602 of the Communications Act, 47 U.S.C. § 522(4). 1.9 City: The City of Edmonds or the lawful successor, transferee, or assignee thereof. 1.10 Communications Act: The Communications Act of 1934, as amended by, among other things, the Cable Communications Policy Act of 1984, the Cable Consumer Protection and Competition Act of 1992, and the Telecommunications Act of 1996, as it may be further amended from time to time. 1.11 Control: The ability to exercise de facto or de jure control over day-to-day policies and operations or the management of Franchisee's affairs. 1.12 FCC: The United States Federal Communications Commission or successor governmental entity thereto. 1.13 Fiber to the Premise Telecommunications Network ("FTTP Network'): The Franchisee's network that transmits Non -Cable Services pursuant to the authority granted under the laws of the state of Washington and under Title II of the Communications Act (which Non - Cable Services are not subject to Title VI of the Communications Act), and that supports the Cable System. 1.14 Force Majeure: Force Majeure is an event or events reasonably beyond the ability of Franchisee to anticipate and control, such as: (a) severe or unusual weather conditions, fire, flood, or other acts of God, strikes, labor disturbances, lockouts, war or act of war (whether an actual declaration of war is made or not), insurrection, riots or act of a public enemy; (b) actions or inactions of any government instrumentality or public utility including condemnation, accidents for which Franchisee is not primarily responsible or work delays caused by waiting for other utility providers to service or monitor utility poles to which Franchisee's FTTP Network is attached, and unavailability of materials and/or qualified labor to perform the work necessary; and Seattle-34355982 0010932-00119 3 (c) telephone network outages only when such outages are outside the control of Franchisee. 1.15 Franchise Area: The incorporated area (entire existing territorial limits) of the City and such additional areas as may be included in the corporate (territorial) limits of the City during the term of this Franchise. 1.16 Franchisee_ Verizon Northwest Inc., and its lawful and permitted successors, assigns and transferees. 1.17 Gross Revenue: All revenue, as determined in accordance with generally accepted accounting principles, which is derived by Franchisee and/or its Affiliates from the operation of the Cable System to provide Cable Service in the Service Area. Gross Revenue shall include but may not be limited to the following items so long as all other Cable operators in the Service Area include the same in Gross Revenues for purposes of calculating franchise fees: (a) fees charged for Basic Service; (b) fees charged to Subscribers for any service tier other than Basic Service; (c) fees charged for premium Channel(s), e.g. HBO, Cinemax, or Showtime; (d) fees charged to Subscribers for any optional, per -channel, or per -program services; (e) charges for installation, additional outlets, relocation, disconnection, reconnection, and change -in-service fees for video or audio programming; (fl fees for downgrading any level of Cable Service programming; (g) fees for service calls; (h) fees for leasing of Channels; (i) rental of customer equipment, including converters (e.g. set top boxes, high definition converters, and digital video recorders) and remote control devices; (j) advertising revenue as set forth herein; (k) revenue from the sale or lease of access Channel(s) or Channel capacity; (1) revenue from the sale or rental of Subscriber lists; (in) revenues or commissions received from the carriage of home shopping channels: (n) fees for any and all music services that are deemed to be a Cable Service over a Cable System; Seattle-3435598.2 0010932-00119 4 (o) revenue from the sale of program guides; (p) late payment fees; (q) forgone revenue that Franchisee chooses not to receive in exchange for trades, barters, services, or other items of value; (r) revenue from NSF check charges; (s) revenue received from programmers as payment for programming content cablecast on the Cable System; and (t) Franchise Fees hereunder. Advertising commissions paid to independent third parties shall not be deducted from advertising revenue included in Gross Revenue. Advertising revenue is based upon the ratio of the number of Subscribers as of the last day of the period for which Gross Revenue is being calculated to the number of Franchisee's Subscribers within all areas covered by the particular advertising source as of the last day of such period, e.g., Franchisee sells two ads: Ad "A" is broadcast nationwide; Ad `B" is broadcast only within Washington. Franchisee has one hundred (100) Subscribers in the Franchise Area, five hundred (500) Subscribers in Washington, and one thousand (1,000) Subscribers nationwide. Gross Revenue as to the City from Ad "A" is ten percent (10%) of Franchisee's revenue therefrom. Gross Revenue as to the City from Ad `B" is twenty percent (20%) of Franchisee's revenue therefrom. Notwithstanding the foregoing, Gross Revenue shall not include: 1.17.1 Revenues received by any Affiliate or other Person in exchange for supplying goods or services used by Franchisee to provide Cable Service over the Cable System; 1.17.2 Bad debts written off by Franchisee in the normal course of its business, provided, however, that bad debt recoveries shall be included in Gross Revenue during the period collected; 1.17.3 Refunds, rebates or discounts made to Subscribers or other third parties; 1.17.4 Any revenues classified, in whole or in part, as Non -Cable Services revenue under federal or state law including, without limitation, revenue received from Telecommunications Services; revenue received from Information Services, including, without limitation, Internet Access service, electronic mail service, electronic bulletin board service, or similar online computer services; and any other revenues attributed by Franchisee to Non -Cable Services in accordance with FCC or state public utility regulatory commission rules, regulations, standards or orders, provided that if any such services are Cable Services at any future time pursuant to applicable law, revenues derived from such services shall be included in Gross Revenues; 1.17.5 Payments by Subscribers for merchandise purchased from any home shopping channel offered as part of the Cable Services; provided, however, that commissions or Seattle-3435598.2 0010932-00119 5 other compensation paid to Franchisee by such home shopping channel for the promotion or exhibition of products or services shall be included in Gross Revenue; 1.17.6 Revenues from the sale of Cable Services on the Cable System to a reseller, when the reseller pays the cable Franchise fees on the resale of Cable Services; 1.17.7 Any tax of general applicability imposed upon Franchisee or upon Subscribers by a city, state, federal or any other governmental entity and required to be collected by Franchisee and remitted to the taxing entity (including, but not limited to, sales/use tax, gross receipts tax, excise tax, utility users tax, public service tax, communication taxes and non -cable franchise fees), provided however, as set forth in Section 1.17(t), Franchise Fees under this Agreement are included in Gross Revenues; 1.17.8 Any foregone revenue which Franchisee chooses not to receive in exchange for its provision of free or reduced cost cable or other communications services to any Person, including without limitation, employees of Franchisee and public institutions or other institutions designated in the Franchise; provided, however, that such foregone revenue which Franchisee chooses not to receive in exchange for trades, barters, services or other items of value shall be included in Gross Revenue; 1.17.9 Sales of capital assets or sales of surplus equipment; 1.17.10 Reimbursement by programmers of marketing costs incurred by Franchisee for the introduction of new programming pursuant to a written marketing agreements; 1.17.11 Directory or Internet advertising revenue including, but not limited to, yellow page, white page, banner advertisement and electronic publishing; 1.17.12 Any fees or charges collected from Subscribers or other third parties for EG Grant. 1.18 Information Services: Shall be defined herein as it is defined under Title I, Section 3 of the Communications Act, 47 U.S.C. §153(20). 1.19 Initial Service Area: The portion of the Franchise Area as outlined in Exhibit A. 1.20 Internet Access: Dial -up or broadband access service that enables Subscribers to access the Internet. 1.21 Non -Cable Services: Any service that does not constitute the provision of Video Programming directly to multiple Subscribers in the Franchise Area including, but not limited to, Information Services and Telecommunications Services. 1.22 Normal Operating Conditions: Those service conditions which are within the control of the Franchisee. Those conditions which are not within the control of the Franchisee include, but are not limited to, natural disasters, civil disturbances, power outages, telephone network outages (to the extent such outages are on non-Verizon networks or caused by Force Majeure), and severe or unusual weather conditions. Those conditions which are ordinarily Seattle-3435598.2 0010932-00119 6 within the control of the Franchisee include, but are not limited to, special promotions, pay -per - view events, rate increases, regular peak or seasonal demand periods, and maintenance or rebuild of the Cable System. See 47 C.F.R. § 76.309(c)(4)(ii). 1.23 Person: An individual, partnership, association, joint stock company, trust, corporation, or governmental entity. 1.24 Public Rights -of -Way: The surface and the area across, in, over, along, upon and below the surface of the public streets, roads, bridges, sidewalks, lanes, courts, ways, alleys, and boulevards, including, public utility easements and public lands and waterways (to the extent the City has authority to grant the use of such waterways) used as Public Rights -of -Way, as the same now or may thereafter exist, which are under the jurisdiction or control of the City. Public Rights -of -Way do not include the airwaves above a right-of-way with regard to cellular or other nonwire communications or broadcast services, nor do Public Rights -of -Way include real property owned in fee by the City unless such property is a public right-of-way. 1.25 Service Area: All portions of the Franchise Area where Cable Service is being offered, including the Initial Service Area and any Additional Service areas. 1.26 Service Date: The date that the Franchisee first provides Cable Service on a commercial basis directly to multiple Subscribers in the Franchise Area. The Franchisee shall memorialize the Service Date by notifying the City in writing of the same, which notification shall become a part of this Franchise. 1.27 Service Interruption: The loss of picture or sound on one or more cable channels. 1.28 Subscriber: A Person who lawfully receives Cable Service over the Cable System with Franchisee's express permission. 1.29 Telecommunications Facilities: Franchisee's existing Telecommunications Services and Information Services facilities and its FTTP Network facilities. 1.30 Telecommunications Services: Shall be defined herein as it is defined under Section 3 of the Communications Act, 47 U.S.C. § 153(46). 1.31 Title II: Title II of the Communications Act. 1.32 Title VT Title VI of the Communications Act. 1.33 Video Programming: Shall be defined herein as it is defined under Section 602 of the Communications Act, 47 U.S.C. § 522(20). 2. GRANT OF AUTHORITY; LIMITS AND RUSERVATIONS 2.1 Grant of Authority: Subject to the terms and conditions of this Agreement and the Communications Act, the City hereby grants the Franchisee the right to own, construct, operate and maintain a Cable System along the Public Rights -of -Way within the Franchise Area, in order Seattle-3435598.2 0010932-001 19 7 to provide Cable Service. No privilege or power of eminent domain is bestowed by this grant; nor is such a privilege or power bestowed by this Agreement. 2.2 City's Regulatory Authority: The parties recognize that Franchisee's FTTP Network is being constructed and will be operated and maintained as an upgrade to and/or extension of its existing Telecommunications Facilities for the provision of Non -Cable Services. The jurisdiction of the City over such Telecommunications Facilities is also governed by federal and state law, and the City shall not assert jurisdiction over Franchisee's FTTP Network in contravention of those laws. Therefore, as provided in Section 621 of the Communications Act, 47 U.S.C. § 541, the City's regulatory authority under Title VI of the Communications Act is not applicable to the construction, installation, maintenance, or operation of Franchisee's FTTP Network to the extent the FTTP Network is constructed, installed, maintained, or operated for the purpose of upgrading and/or extending Verizon's existing Telecommunications Facilities for the provision of Non -Cable Services. Nothing in this Agreement shall affect the City's authority, if any, to adopt and enforce lawful regulations with respect to Franchisee's Telecommunications Facilities in the Public Rights -of -Way. 2.3 Term: This Franchise shall become effective on 2008 (the "Effective Date"). The Term of this Franchise shall be fifteen (15) years from the Effective Date unless the Franchise is earlier revoked as provided herein. 2.4 Grant Not Exclusive: The Franchise and the rights granted herein to use and occupy the Public Rights -of -Way to provide Cable Services shall not be exclusive, and the City reserves the right to grant other franchises for similar uses or for other uses of the Public Rights - of -Way, or any portions thereof, to any Person, or to make any such use themselves, at any time during the term of this Franchise. Any such rights which are granted shall not adversely impact the authority as granted under this Franchise. 2.5 Franchise Subject to Federal and State Law: Notwithstanding any provision to the contrary herein, this Franchise is subject to and shall be governed by all applicable provisions of federal law and state law as they may be amended, including but not limited to the Communications Act and any applicable rules, regulations, and orders of the FCC, as amended. 2.6 No Waiver: 2.6.1 The failure of the City on one or more occasions to exercise a right or to require compliance or performance under this Franchise, the Communications Act or any other applicable state or federal law shall not be deemed to constitute a waiver of such right or a waiver of compliance or performance by the City nor to excuse Franchisee from complying or performing, unless such right or such compliance or performance has been specifically waived in writing. 2.6.2 The failure of Franchisee on one or more occasions to exercise a right under this Franchise or applicable law, or to require performance under this Franchise, shall not be deemed to constitute a waiver of such right or of performance of this Agreement, nor shall it excuse the City from performance, unless such right or performance has been specifically waived in writing. Seattle-3435598.2 0010932-00119 8 2.7 Construction of Agreement: 2.7.1 The provisions of this Franchise shall be liberally construed to effect their objectives. 2.7.2 Nothing herein shall be construed to limit the scope or applicability of Section 625 of the Communications Act, 47 U.S.C. § 545. 2.8 Police Powers: In executing this Franchise Agreement, the Franchisee acknowledges that its rights hereunder are subject to the lawful police powers of the City. Franchisee agrees to comply with all lawful and applicable general laws and ordinances enacted by the City pursuant to such power. Nothing in the Franchise shall be construed to prohibit the reasonable, necessary and lawful exercise of the City's police powers. However, if the reasonable, necessary and lawful exercise of the City's police power results in any material alteration of the terms and conditions of this Franchise, then the parties shall modify this Franchise to the mutual satisfaction of both parties to ameliorate the negative effects on the Franchisee of the material alteration. Any modifications shall be in writing and signed by both parties. If the parties cannot reach agreement on the above -referenced modification to the Franchise, the parties agree to submit the matter to mediation. The matter submitted to mediation shall be limited to what effect, if any, the City's exercise of police powers has on the terms of the Franchise. In the event mediation does not result in an agreement, then the Franchisee may terminate this Agreement without further obligation to the City or, at Franchisee's option, the parties agree to submit the matter to binding arbitration in accordance with the commercial arbitration rules of the American Arbitration Association (but not necessarily administered by the American Arbitration Association) or as otherwise mutually agreed by the parties. The matter submitted to arbitration shall be limited to what effect, if any, the City's exercise of police powers has on the terms of the Franchise. Nothing in this provision shall require the City to pay for the relocation of Telecommucations Facilities. Such matters are outside the scope of this provision and both partini es reserve their rights with respect to such matters. 2.9 Termination of Telecommunications Services. Notwithstanding any other provision of this Agreement, if Franchisee ceases to provide Telecommunications Services over the FTTP Network at any time during the Term and is not otherwise authorized to occupy the Public Rights -of -Way in the Franchise Area, the City may regulate the FTTP Network as a cable system to the extent permitted by Title VI. 3. PROVISION OF CABLE SERVICE 3.1 Service Area: 3.1.1 Initial Service Area: Franchisee shall offer Cable Service to significant numbers of Subscribers in residential areas of the Initial Service Area and may make Cable Service available to businesses in the Initial Service Area, within twelve (12) months of the Service Date of this Franchise, and shall offer Cable Service to all residential areas in the Initial Service Area within thirty-six (36) months of the Service Date of the Franchise, except: (A) for periods of Force Majeure; (B) for periods of delay caused by the City; (C) for periods of delay Seattle-34355982 0010932-00119 9 resulting from Franchisee's inability to obtain authority to access rights -of -way in the Service Area; (D) in areas where developments or buildings are subject to claimed exclusive arrangements with other providers, (E) in areas, developments or buildings where Franchisee cannot access under reasonable terms and conditions after good faith negotiation, as determined by Franchisee; and (F) in developments or buildings that Franchisee is unable to provide Cable Service for technical reasons or which require non-standard facilities which are not available on a commercially reasonable basis; and (G) in areas where the occupied residential household density does not meet the density requirements set forth in Section 3.1.2. 3.1.2 Density Requirement: Franchisee shall make Cable Services available to residential dwelling units in all areas of the Service Area where the average density is equal to or greater than thirty (30) residential dwelling units per mile, as measured in strand footage from the nearest technically feasible point on the active FTIP Network trunk or feeder line. Should, through new construction, an area within the Initial Service Area meet the density requirements after the time stated for providing Cable Service as set forth in Sections 3.1.1 and 3.1.2 respectively, Franchisee shall provide Cable Service to such area within twelve (12) months of receiving notice from the City that the density requirements have been met. 3.1.3 Additional Service Areas: Except for the Initial Service Area Franchisee shall not be required to extend its Cable System or to provide Cable Services to any other areas within the Franchise Area during the term of this Franchise or any Renewals thereof except as set forth in this Section 3.1.3. The parties agree that if any land is annexed by the City during the term of this Agreement, such annexed areas shall become part of the Franchise Area and Franchisee shall be required to extend Cable Service within a reasonable time to such annexed area (subject to the exceptions in Section 3.1.1 above), provided that such annexed area: (a) is contiguous to the City, (b) is within Franchisee's Title II service territory, and (c) is served by the video -enabled MP Network. If Franchisee intends to serve Additional Service Areas within the Franchise Area, Franchisee shall notify the City in writing of such Additional Service Area at least ten (10) days prior to providing Cable Services in such areas. 3.2 Availability of Cable Service: Franchisee shall make Cable Service available to all residential dwelling units and may make Cable Service available to businesses within the Service Area in conformance with Section 3.1 and Franchisee shall not discriminate between or among any individuals in the availability of Cable Service. Franchisee shall not deny access to Cable Services to any group of potential residential Subscribers because of the income of the residents of the local area in which the group resides. In the areas in which Franchisee shall provide Cable Service, Franchisee shall be required to connect, at Franchisee's expense, other than a standard installation charge, all residential dwelling units that are within one hundred fifty (150) feet of trunk or feeder lines not otherwise already served by Franchisee's FTTP Network. Franchisee shall be allowed to recover, from a Subscriber that requests such connection, actual costs incurred for residential dwelling unit connections that exceed one hundred fifty (150) feet and actual costs incurred to connect any non-residential Subscriber. 3.3 Complimentary Cable Service to Public Buildings: Subject to Section 3.1, Franchisee shall provide without charge within the Service Area, one service outlet (unless otherwise specified in Exhibit B) activated for Basic Service to each public school, police and fire station, public library, government offices, and other buildings used for government Seattle-3435598.2 0010932-001 19 10 administration as may be designated by the City, and also required of other cable operators in the Service Area, as provided in Exhibit B; provided, however, that if it is necessary to extend Franchisee's trunk or feeder lines more than one hundred fifty (150) feet solely to provide service to any such school or public building, the City or other appropriate entity shall have the option either of paying Franchisee's direct costs for such extension in excess of one hundred fifty (150) feet, or of releasing Franchisee from the obligation to provide service to such building. Furthermore, Franchisee shall be permitted to recover, from any school or other public building owner entitled to free service, the direct cost of installing, when requested to do so, more than one outlet or concealed inside wiring, or a service outlet requiring more than one hundred fifty (150) feet of drop cable; provided, however, that Franchisee shall charge for the provision of Basic Service to the additional service outlets once installed. Cable Service may not be resold or otherwise used in contravention of Franchisee's rights with third parties respecting programming. Equipment provided by Franchisee, if any, shall be replaced at retail rates if lost, stolen, or damaged due to the negligence or other wrongful acts of the City. 4. SYSTEM OPERATION As provided in Section 2.2, the parties recognize that Franchisee's FTTP Network is being constructed and will be operated and maintained as an upgrade to and/or extension of its existing Telecommunications Facilities. The jurisdiction of the City over such Telecommunications Facilities is restricted by federal and state law, and the City does not and will not assert jurisdiction over Franchisee's FTTP Network in contravention of those limitations. 5. SYSTEM FACILITIES 5.1 Technical Requirement: Franchisee shall operate, maintain, construct and extend the Cable System so as to provide high quality signals and reliable delivery of Cable Services for all cable programming services. The Cable System shall meet or exceed any and all applicable technical performance standards of the FCC, the National Electrical Safety Code, the National Electrical Code and any other applicable federal law and the laws of the State of Washington to the extent not in conflict with federal law and regulations. 5.2 System Characteristics: Franchisee's Cable System shall meet or exceed the following requirements: 5.2.1 The System shall be designed with an initial digital carrier passband between fifty (50) and eight hundred sixty (860) MHz. 5.2.2 The System shall be designed, constructed and maintained to be an active two-way plant for subscriber interaction, if any, required for selection or use of Cable Service. 5.3 Interconnection: The Franchisee shall design its Cable System so that it may be interconnected with other cable systems in the Franchise Area. Interconnection of systems may be made by direct cable connection, microwave link, satellite, or other appropriate methods. Seattle-3435598.2 0010932-00119 11 5.4 Emergency Alert System: Franchisee shall comply with the Emergency Alert System ("EAS") requirements of the FCC and state law in order that emergency messages may be distributed over the System in video and audio formats as required by state and federal law. 6. EG SERVICES 6.1 Access Channels: 6.1.1 In order to ensure availability of educational and government programming, Franchisee shall provide, without charge to the City, on the Basic Service Tier one (1) dedicated Government Access Channel and one (1) shared Educational and Government Access Channel, and Franchisee shall reserve on its Basic Service Tier for the City's future use one (1) additional dedicated Channel for Educational Access and one (1) additional dedicated Channel for Government Access (the "Reserve Channels") (collectively, "Access Channels"). 6.1.2 The parties agree that Franchisee shall retain the right to utilize all such Access Channels, in its sole discretion, during the term of this Franchise until such time that Franchisee activates the City's Access Channels pursuant to Section 6.1 and/or if the City ceases to use the Access Channels during the Term of this Agreement. The City shall comply with applicable law regarding the use of EG Channels. Franchisee shall only be required to provide the Reserve Channels so long as the other Cable Operators in the Franchise Area are also providing similar channels. 6.1.3 Upon the signing of this Agreement, the City hereby notifies Franchisee of its intent to provide programming to be carried on the Government and Educational Access Channels; such notification shall constitute authorization to the Franchisee to transmit such programming within and outside of the City. 6.1.4 The City may activate a Reserve Channel during the Term by providing the Franchisee with written notice of the need for additional Access Channel capacity at least one hundred eighty (180) days prior to the date it intends to activate a Reserve Channel, demonstrated by a programming schedule for EG programming on the existing Government or shared Educational and Government Access Channels, as applicable, consisting of at least six (6) hours per day, which programming for purposes of this calculation shall not include repeat programming generated per day or character -generated programming. Such written notice shall authorize the Franchisee to transmit the Reserve Channel within and outside of the City. 6.1.5 The Franchisee specifically reserves the right to make or change channel assignments in its sole discretion and shall provide notice of such changes as set forth in the Customer Service Standards, Exhibit D, Sections 10.E and IO.G.4. The Access Channels shall be used for community programming related to Educational and/or Governmental activities. The City shall have complete control over the content, scheduling, and administration of the Access Channels and may delegate such functions, or a portion of such functions, to an appropriate designee upon written notice from the City to Franchisee. The Franchisee shall not exercise any editorial control over Access Channel programming. 6.1.6 The City shall provide and ensure suitable video and audio signals for the Access Channels at the Public Safety Building (250 5th Avenue North, Edmonds, WA 98020) Seattle-3435598.2 0010932-00 119 12 for the Government Access Channel and at the Edmonds Community College (20000 68a' Ave. West, Lynnwood, WA 98036) for the shared Educational and Government Access Channel; and subject to written notification pursuant to Section 6.1.4, the City shall provide and ensure suitable video and audio signals for the Reserve Channels at a single mutually agreeable location (all together, the "EG Origination Sites"). The Franchisee's obligations under this Section 6.1, including its obligation to provide upstream equipment, lines and facilities necessary to transmit those video and audio signals, shall be subject to the provision by the City, to the extent applicable and without charge to the Franchisee, of: (1) access to the EG Channel Origination Site facility; (2) access to any required EG equipment within the EG Channel Origination Site facility and suitable required space, environmental conditions, electrical power supply, access, and pathways within the EG Channel Origination Site facility; (3) video and audio signals in a mutually agreed upon format suitable for EG Access Channel programming; (4) any third -party consent that may be necessary to transmit EG signals (including, without limitation, any consent that may be required with respect to third - party facilities, including the facilities of the incumbent cable provider, used to transmit EG content to the EG Channel Origination Site from auxiliary locations); and (5) any other cooperation and access to facilities as are reasonably necessary for the Franchisee to fulfill the obligations stated herein. To the extent suitable video and audio signals are provided to Franchisee and the foregoing conditions in Section 6.1 are met, Franchisee shall, within one hundred eighty (180) days of written notice or provision of suitable video and audio signals, whichever is later, provide, install, and maintain in good working order the equipment necessary for transmitting the EG signal to Subscribers. 6.2 EG Grant: 6.2.1 Franchisee shall provide a grant to the City, or its designee (as evidenced by appropriate notice by the City), to be used in support of the production of local EG programming (the "EG Grant"). Such grant shall be used by the City for EG access equipment, including, but not limited to, studio and portable production equipment, editing equipment and program playback equipment, or for renovation or construction of EG access facilities. 6.2.2 If during the Term of this Franchise, all other Cable Operator(s) in the Franchise Area begin to provide an EG Grant on a per subscriber per month basis, Franchisee agrees to match the EG Grant in the amount of up to $0.35 per Subscriber, per month. Subsequently, such amount can be modified as determined by the City Council no more than once each year and the EG Grant shall be no greater than $1.00, per Subscriber, per month, and shall be the same amount required of all other Cable Operators in the Franchise Area. Franchisee's obligation under this Section 6.2.2. is contingent upon all other Cable Operators making the same grant payment on a per Subscriber, per month basis. The City shall give Seattle-3435598.2 0010932-00119 13 Franchisee sixty (60) days prior written notice before changing the amount of the EG Grant under this Section. The EG Grant payment, shall be delivered to the City concurrent with the Franchise Fee payment. 6.2.3 The Franchisee shall provide to the City an initial EG Grant in the amount of Ten Thousand Dollars ($10,000) within ninety (90) days of the Effective Date. Such amount is competitively equitable to the grant made by the incumbent Cable Operator to the City. 6.2.4 The City shall provide Franchisee with a complete accounting annually of the distribution of funds granted pursuant to this Section 6.2. 6.3 The City shall require all local producers and users of any of the EG facilities or Channels to agree in writing to authorize Franchisee to transmit programming consistent with this Agreement and to defend and hold harmless Franchisee and the City, from and against any and all liability or other injury, including the reasonable cost of defending claims or litigation, arising from or in connection with claims for failure to comply with applicable federal laws, rules, regulations or other requirements of local, state or federal authorities; for claims of libel, slander, invasion of privacy, or the infringement of common law or statutory copyright; for unauthorized use of any trademark, trade name or service mark; for breach of contractual or other obligations owed to third parties by the producer or user; and for any other injury or damage in law or equity, which result from the use of a EG facility or Channel. The City shall establish rules and regulations for use of EG facilities, consistent with, and as required by, 47 U.S.C. § 531. 6.4 To the extent permitted by federal law, the Franchisee shall be allowed to recover the costs of an EG Grant or any other costs arising from the provision of EG services from Subscribers and to include such costs as a separately billed line item on each Subscriber's bill. 7. FRANCHISE FEES 7.1 Payment to City: Franchisee shall pay to the City a Franchise fee of five percent (5%) of annual Gross Revenue ("Franchise Fee"). In accordance with Title VI of the Communications Act, the twelve-month (12) period applicable under the Franchise for the computation of the Franchise Fee shall be a calendar year. Such payments shall be made no later than forty-five (45) days following the end of each calendar quarter. Franchisee shall be allowed to submit or correct any payments that were inadvertently omitted, and shall be refunded any payments that were incorrectly submitted, in connection with the quarterly Franchise Fee remittances within ninety (90) days following the close of the calendar year for which such payments were applicable. 7.2 Supporting Information: Each Franchise Fee payment shall be accompanied by a brief report that is verified by a financial manager of Franchisee showing the basis for the computation, substantially similar to that set forth in Exhibit D. No later than forty-five (45) days after the end of each calendar year, Franchisee shall furnish to the City an annual summary of Franchise Fee calculations. Seattle-3435598.2 0010932-00119 14 7.3 Limitation on Franchise Fee Actions: The parties agree that the period of limitation for recovery of any Franchise Fee payable hereunder shall be four (4) years from the date on which payment by Franchisee is due. 7.4 Interest Charge on Late Payments: Late payments for any (i) Franchise Fees due pursuant to Section 7, (ii) EG Grant due pursuant to Section 6, (iii) Franchise Grant due pursuant to Section 14, and (iv) liquidated damages due pursuant to Section 13 shall be subject to the interest at the then -current rate set forth in RCW 19.52.020, which as of the date of execution of this Agreement is twelve percent (12%) per annum from the due date to the date that such payment is made. 7.5 No Release: The City's acceptance of payment shall not be construed as an agreement that the amount paid was correct, nor shall acceptance be construed as a release of any claim which the City may have for additional sums due under provisions of this Section 7. 7.6 No Limitation on Taxing Authority: Nothing in this Franchise shall be construed to limit any authority of the City to impose any tax, fee, or assessment of general applicability. Nothing in this Franchise is intended to preclude Franchisee from exercising any right it may have to challenge the lawfulness of any tax, fee, or assessment imposed by the City or any state or federal agency or authority, or intended to waive any rights the Franchisee may have under 47 U.S.C. § 542. 7.7 EG Grant and Franchise Grant Not Franchise Fees: Franchisee agrees that the EG Grant and Franchise Grant set forth in Sections 6 and 14 respectively, shall in no way modify or otherwise affect Franchisee's obligation to pay Franchise Fees to the City. Franchisee agrees that although the sum of Franchise Fees and the EG Grant and Franchise Grant may total more than five percent (5%) of Franchisee's Gross Revenues in any twelve-month (12) period, the additional commitments are not to be offset or otherwise credited in any way against any Franchise Fee payments under this Franchise. 7.8 Audits: 7.8.1 The parties shall make every effort to informally consult and resolve any questions or issues regarding Franchise Fee or EG Grant payments and nothing herein shall be construed to preclude such informal consultations or review of Franchisee's books. The City may audit or conduct a Franchise Fee review of Franchisee's books and records no more than once every three (3) years during the Term, provided that the City shall require all other Cable Operators in the Franchise Area to be subject to competitively equitable audit requirements in any renewal or initial granting of such franchises after the Effective Date. 7.8.2 All records reasonably necessary for any such audit shall be made available by Franchisee to the City within thirty (30) days of the City's request. 7.8.3 Each party shall bear its own costs of an audit; provided, however, that if the results of any audit indicate that Franchisee underpaid the Franchise Fees by five percent (50/6) or more, then Franchisee shall pay the reasonable, documented, out-of-pocket costs of the audit up to Fifteen Thousand Dollars ($15,000). Seattle-3435598.2 0010932-00119 15 7.8.4 If the results of an audit indicate an overpayment of Franchise Fees, the parties agree that any undisputed overpayment shall be offset against future payments if applicable, within forty-five (45) days. If the results of an audit indicate an underpayment of Franchise Fees, the parties agree that any undisputed underpayment shall be paid within forty- five (45) days along with interest as set forth in Section 7.4. 7.8.5 Any audit shall be conducted by an independent third party. Any entity employed by the City that performs the audit or Franchise Fee review shall not be permitted to be compensated on a success based formula, e.g. payment based on an underpayment of fees, if any. 7.9 Bundled Services: If Cable Services subject to the Franchise Fee required under this Article 7 are provided to Subscribers in conjunction with Non -Cable Services, the Franchise Fee shall be applied only to the value of the Cable Services, as reflected on the books and records of Franchisee in accordance with applicable federal or state laws, rules, and regulations, or Washington Utilities and Trade Commission regulations, standards or orders. Franchisee shall not allocate revenue between Cable Services and Non -Cable Services with the purpose of evading or substantially reducing the Franchisee's Franchise Fee obligations to the City. 7.10 Alternative Fees: In the event that Franchise Fees are prohibited by any law or regulation, Franchisee agrees to pay any substitute fee or amount allowed by law up to a maximum amount of five percent (5%) of Gross Revenues, so long as the substitute fee is imposed on all other Cable Operators in the Franchise Area and Franchisee is given thirty (30) days notice of the substitute fee by the City. 8. CUSTOMER SERVICE Customer Service Requirements are set forth in Exhibit D, which shall be binding unless amended by written consent of the parties. 9. REPORTS AND RECORDS 9.1 Open Books and Records: Upon reasonable written notice to the Franchisee and with no less than thirty (30) business days written notice to the Franchisee, the City shall have the right to inspect Franchisee's books and records pertaining to Franchisee's provision of Cable Service in the Franchise Area at any time during normal business hours (those hours during which most similar businesses in the community are open to serve customers) and on a nondisruptive basis, at a mutually agreed upon location in the Franchisee's Title II territory in Washington, as are reasonably necessary to ensure compliance with the terms of this Franchise. Such notice shall specifically reference the section of the Franchise which is under review, so that Franchisee may organize the necessary books and records for appropriate access by the City. Franchisee shall not be required to maintain any books and records for Franchise compliance purposes longer than six (6) years, provided that if, as a result of reviewing Franchisee's records, the City identifies specific records and requests that such records be retained beyond the six -year (6) period, Franchisee shall retain those records for an additional twelve (12) months. Notwithstanding anything to the contrary set forth herein, Franchisee shall not be required to disclose information that it reasonably deems to be proprietary or confidential in nature, nor Seattle-3435598.2 0010932-00119 16 disclose any of its or an Affiliate's books and records not relating to the provision of Cable Service in the Service Area. The City shall treat any information disclosed by Franchisee as confidential and only disclose it to employees, representatives, and agents thereof that have a need to know, or in order to enforce the provisions hereof, unless otherwise required by law whereupon the City will notify Franchisee pursuant to Section 9.2. Franchisee shall not be required to provide Subscriber information in violation of section 631 of the Communications Act, 47 U.S.C. § 551. 9.2 Public Disclosure: If, in the course of enforcing this Franchise or for any other reason, the City believes it must disclose any Franchisee confidential information pursuant to Washington law, the City shall provide reasonable advance notice of such disclosure so that Franchisee can take appropriate steps to protect its interests. 9.3 Records Required: Franchisee shall at all times maintain: 9.3.1 Records of all written complaints for a period of three (3) years after receipt by Franchisee. The term "complaint" as used herein refers to complaints about any aspect of the Cable System or Franchisee's cable operations, including, without limitation, complaints about employee courtesy. Complaints recorded will not be limited to complaints requiring an employee service call; 9.3.2 Records of outages for a period of three (3) years after occurrence, indicating date, duration, area, and the number of Subscribers affected, type of outage, and cause; 9.3.3 Records of service calls for repair and maintenance for a period of three (3) years after resolution by Franchisee, indicating the date and time service was required, the date of acknowledgment and date and time service was scheduled (if it was scheduled), and the date and time service was provided, and (if different) the date and time the problem was resolved; 9.3.4 Records of installation/reconnection and requests for service extension for a period of three (3) years after the request was fulfilled by Franchisee, indicating the date of request, date of acknowledgment, and the date and time service was extended; and 9.3.5 A map showing the area of coverage for the provisioning of Cable Services and estimated timetable to commence providing Cable Service. 10. INSURANCE AND INDEMNIFICATION 10.1 Insurance: 10.1.1 Franchisee shall maintain in full force and effect, at its own cost and expense, during the Franchise Term, the following insurance coverage: 10.1.1.1 Commercial General Liability Insurance in the amount of two million dollars ($2,000,000) combined single limit for property damage and bodily injury. Such Seattle-3435598.2 0010932-00119 17 insurance shall cover the construction, operation and maintenance of the Cable System and the conduct of Franchisee's Cable Service business in the City. 10.1.1.2 Automobile Liability Insurance in the amount of two million dollars ($2,000,000) combined single limit for bodily injury and property damage. 10.1.1.3 Workers' Compensation Insurance meeting all legal requirements of the state of Washington. 10.1.1.4 Employers' Liability Insurance in the following amounts: (A) Bodily Injury by Accident: $100,000; and (B) Bodily Injury by Disease: $100,000 employee limit; and (C) Bodily Injury by Disease: $2,000,000 policy limit. 10.1.1.5 Umbrella or excess liability insurance in the amount of three million dollars ($3,000,000). 10.1.2 The City shall be included as an additional insured under each of the insurance policies required in this Article 10 except Worker's Compensation and Employer's Liability Insurance. Franchisee shall provide to the City a copy of the blanket additional insured endorsements for General and Auto liability, or similar documentation demonstrating compliance. Receipt by an the City of any certificate showing less coverage than required is not a waiver of Franchisee's obligations to fulfill the requirements. 10.1.3 Each of the required insurance policies shall be with insurers qualified to do business in the State of Washington with an A.M. Best Financial Strength rating of A- or better. 10.1.4 Franchisee shall not cancel any required insurance policy without obtaining alternative insurance in conformance with this Agreement. In the event that the insurance company cancels the policy, Franchisee will work diligently to obtain replacement insurance so there is no gap in coverage. 10.1.5 Franchisee shall deliver to the City Certificates of Insurance showing evidence of the required coverage within thirty (30) days following the Effective Date of this Agreement. 10.1.6 The limits required above may be satisfied with a combination of primary and excess coverage. 10.2 Indemnification: 10.2.1 Franchisee agrees to indemnify, save and hold harmless, and defend the LFA, its elected officials, officers, agents, boards and employees, from and against any liability, damages or claims, settlements approved by Franchisee pursuant to Section 10.2.2 or judgments, arising out of, or resulting from, the Franchisee's activities pursuant to this Franchise, provided that the LFA shall give Franchisee written notice of its obligation to indemnify the LFA within ten (10) days of receipt of a claim or action pursuant to this Section, (or up to thirty (30) days as long as such notice causes no prejudice to the Franchisee). Notwithstanding the foregoing, Seattle-3435598.2 0010932-00119 18 Franchisee shall not indemnify the LFA, for any damages, liability or claims resulting from the willful misconduct, negligence, or breach of obligation of the LFA, its officers, agents, employees, attorneys, consultants, or independent contractors, for which the LFA is legally responsible, or for any activity or function conducted by any Person other than Franchisee in connection with EG Access or EAS. 10.2.2 With respect to Franchisee's indemnity obligations set forth in Section 10.2.1, Franchisee shall provide the defense of any claims or actions brought against the City by selecting counsel of Franchisee's choice to defend the claim, subject to the consent of the City, which shall not unreasonably be withheld. Nothing herein shall be deemed to prevent the City ing with the Franchisee and participating in the defense of any litigation by its from cooperatown counsel at its own cost and expense, provided however, that after consultation with the City, Franchisee shall have the right to defend, settle or compromise any claim or action arising hereunder, and Franchisee shall have the authority to decide the appropriateness and the amount of any such settlement. In the event that the terms of any such proposed settlement includes the release of the City, and the third party is willing to accept the settlement, but the City does not consent to the terms of any such settlement or compromise, Franchisee shall not settle the claim or action but its obligation to indemnify the City shall in no event exceed the amount of such settlement. 11. TRANSFER OF FRANCHISE 11.1 Transfer of the Franchise means: 11.1.1 Any transaction in which: 11.1.1.1 an ownership or other interest in Franchisee, the Franchise or the Cable System is transferred, directly or indirectly, from one Person or group of Persons to another Person or group of Persons, so that Control of Franchisee is transferred; or 11.1.1.2 the rights held by Franchisee under the Franchise are transferred or assigned to another Person or group of Persons. 11.1.2 However, notwithstanding Sections 11.1.1.1 and 11.11.1.2 above, a Transfer of the Franchise shall not include transfer of an ownership or other interest in Franchisee to the parent of Franchisee or to another Affiliate of Franchisee; transfer of an interest in the Franchise or the rights held by the Franchisee under the Franchise to the parent of Franchisee or to another Affiliate of Franchisee; any action which is the result of a merger of the parent of the Franchisee; or any action which is the result of a merger of another Affiliate of the Franchisee. 11.2 Subject to section 617 of the Communications Act, 47 U.S.C. § 537, no Transfer of the Franchise shall occur without the prior written consent of the City, provided that such consent shall not be unreasonably withheld, delayed or conditioned so long as the transferee assumes the obligations of the Franchisee hereunder. No such consent shall be required, however, for a transfer in trust, by mortgage, by other hypothecation, by assignment of any rights, title, or interest of the Franchisee in the Franchise or Cable System in order to secure indebtedness, or otherwise for transactions otherwise excluded under Section IL 1.2 above. Seattle-3435598.2 0010932-00119 19 12. RENEWAL OF FRANCHISE 12.1 The City and Franchisee agree that any proceedings undertaken by the City that relate to the renewal of this Franchise shall be governed by and comply with the provisions of section 626 of the Communications Act, 47 U.S.C. § 546. 12.2 In addition to the procedures set forth in said section 626 of the Communications Act, the City shall notify Franchisee of all of its assessments regarding the identity of future cable -related community needs and interests, as well as the past performance of Franchisee under the then -current Franchise term. The City further agrees that such assessments shall be provided to Franchisee promptly so that Franchisee has adequate time to submit a proposal under 47 U.S.C. § 546 and pursue renewal of the Franchise prior to expiration of its term. 12.3 Notwithstanding anything to the contrary set forth herein, Franchisee and the City agree that at any time during the term of the then current Franchise, while affording the public appropriate notice and opportunity to comment, the City and Franchisee may agree to undertake and finalize informal negotiations regarding renewal of the then current Franchise and the City may grant a renewal thereof. 12.4 Franchisee and the City consider the terms set forth in this Article 12 to be consistent with the express provisions of 47 U.S.C. § 546. 13. ENFORCEMENT AND TERMINATION OF FRANCHISE 13.1 Security: Within thirty (30) days following the Effective Date of this Agreement, Franchisee shall provide to the City security for the faithful performance by Franchisee of all material provisions of this Agreement, provided that the City shall require all other Cable Operators in the Franchise Area to provide competitively equitable security in any renewal or initial granting of such franchises after the Effective Date. Franchisee shall maintain the Security at Twenty -Five Thousand Dollars ($25,000) throughout the term of this Agreement. The form of the security may, at Franchisee's option, be a performance bond, letter of credit, cash deposit, cashier's check or any other security acceptable to the City (the "Security"). Nothing in this security provision is intended to impair or alter any Title II security fund rights. 13.1.1 If the Franchisee posts a performance bond, it shall be substantially in the form of Exhibit E. 13.1.2 In the event the Security provided pursuant to the Agreement is not renewed, is cancelled, is terminated or is otherwise impaired, Franchisee shall provide new security pursuant to this Article within sixty (60) days of notice. 13.1.3 Neither cancellation, nor termination nor refusal by surety to extend the bond, nor inability of Franchisee to file a replacement bond or replacement security for its obligations, shall constitute a loss to the City recoverable under the bond. 13.2 Liquidated Damages: Seattle-34355982 0010932-00119 20 13.2.1 In the event the City determines that Franchisee has breached this Agreement, after following the procedures in Sections 13.3 and 13.4, the City may assess the following as liquidated damages, provided that the City shall require all other Cable Operators in the Franchise Area to be subject to competitively equitable liquidated damages in any renewal or initial granting of such franchises after the Effective Date: 13.2.1.1 Two hundred fifty dollars ($250) per day for failure to provide EG Access Channels as set forth herein; 13.2.1.2 One hundred fifty dollars ($150) per day for material breach of the customer service standards set forth in Exhibit D; 13.2.1.3 One hundred dollars ($100) per day for failure to provide reports as required by the Franchise; or 13.2.1.4 Up to two hundred fifty dollars ($250) per day for any other material breaches or defaults of this Agreement. 13.2.2 Franchisee shall pay any liquidated damages assessed by the City within thirty (30) days after they are assessed. Liquidated damages shall accrue starting on the first date of the occurrence of the noncompliance. If liquidated damages are not paid within the thirty (30) day period, the City may proceed against the Security. Total liquidated damages shall not exceed Twenty -Five Thousand Dollars ($25,000) in any twelve-month (12) period. 13.2.3 Assessment of liquidated damages shall not constitute a waiver by the City of any other right or remedy it may have under this Franchise or applicable law except as set forth in this Agreement, including without limitation its right to recover from Franchisee such additional damages, losses, costs and expenses, as may have been suffered or incurred by the City by reason of or arising out of such breach of this Franchise. Notwithstanding the foregoing, if the City elects to assess liquidated damages pursuant to this Section, such election shall constitute the City's exclusive remedy for the violation for which the liquidated damages were assessed for a period of sixty (60) days. Thereafter, the remedies provided for in this Agreement are cumulative and not exclusive; the exercise of one remedy shall not prevent the exercise of another remedy, or the exercise of any rights of the City at law or equity, provided that the cumulative remedies may not be disproportionate to the magnitude and severity of the breach for which they are imposed. 13.2.4 Subject to Sections 13.3 and 13.4, and subject to the assessment of any liquidated damages pursuant to Section 13.2, the City may elect to pursue other legal and equitable remedies at any time during the term of this Franchise. 13.3 Notice of Violation: In the event the City believes that Franchisee has not complied with the terms of the Franchise, failed to perform any obligation under this Agreement or has failed to perform in a timely manner, the City shall informally discuss the matter with Franchisee. If these discussions do not lead to resolution of the problem within twenty (20) days, the City shall notify Franchisee in writing, stating with reasonable specificity the nature of the alleged violation (the "Noncompliance Notice"). Seattle-3435598.2 0010932-00119 21 13.4 Franchisee's Right to Cure or Respond. Franchisee shall have thirty (30) days from receipt of the Noncompliance Notice to: (i) respond to the City, if Franchisee contests (in whole or in part) the assertion of noncompliance; (ii) cure such noncompliance; or (iii) in the event that, by its nature, such noncompliance cannot be cured within such thirty (30) day period, initiate reasonable steps to remedy such noncompliance and notify the City of the steps being taken and the date by which cure is projected to be completed. Upon cure of any noncompliance, the City shall provide written confirmation that such cure has been effected. 13.5 Remedies: Subject to applicable federal and state law, in the event the City, after the procedures set forth in Sections 13.3 and 13.4, determines that Franchisee is in default of any material provision of this Franchise, the City may take the following actions: 13.5.1 Seek specific performance of any provision, which reasonably lends itself to such remedy, as an alternative to damages; 13.5.2 Seek liquidated damages as set forth herein; 13.5.3 Commence an action at law for monetary damages or seek other equitable relief, 13.5.4 In the case of a substantial material default of the Franchise, seek to revoke the Franchise in accordance with Section 13.6. 13.6 Revocation: 13.6.1 As set forth in this Section 13.6, the City may seek to revoke this Franchise in the event of a substantial material default of this Franchise. Should the City seek to revoke this Franchise after following the procedures set forth in Sections 13.3 and 13.4, the City shall give written notice to Franchisee of such intent to revoke this Franchise. This notice of intent to revoke is in addition to the Notice of Noncompliance pursuant to Section 13.3. The notice shall set forth with reasonable specificity the reasons for revocation. The Franchisee shall have thirty (30) days to object in writing and to state its reasons for such objection. In the event the City has not received a satisfactory response from Franchisee, it may then seek termination of the Franchise at a public hearing. The City shall notify the Franchisee in writing of the time and place of the public hearing at least thirty (30) days prior to the public hearing. 13.6.2 At the revocation hearing, Franchisee shall be provided a fair opportunity for full participation, including the right to be represented by legal counsel, to introduce relevant evidence, to compel the testimony of persons as permitted by law, and to question and/or cross examine witnesses. The revocation hearing shall be a public hearing at which members of the public may testify under oath. A complete verbatim record shall be made of the revocation hearing by a court reporter. The costs of such court reporter shall be shared equally by the parties. 13.6.3 Following the public hearing, Franchisee may submit its proposed written findings and conclusions within twenty (20) days of the close of the public hearing. Thereafter, the City shall determine: (1) whether an event of default has occurred; (ii) whether such event of default should be excused; and (iii) whether such event of default has been cured or will be cured Seattle-3435598.2 0010932-00119 22 by the Franchisee; and (iv) whether to revoke the Franchise based on the information presented, or, where applicable, grant additional time to the Franchisee to effect any cure. If the City determines that the Franchise shall be revoked, the City shall promptly provide Franchisee with a written decision setting forth its reasoning. Franchisee may appeal such determination of the City to an appropriate court within thirty (30) days of notice of the City's decision. 13.6.4 The City may, at its sole discretion, take any lawful action which it deems appropriate to enforce the City's rights under the Franchise in lieu of revocation of the Franchise. 13.7 Franchisee Termination: Franchisee shall have the right to terminate this Franchise and all obligations hereunder within ninety (90) days after the third anniversary of the Service Date of this Franchise, if at the end of such three (3) year period Franchisee does not then in good faith believe it has achieved a commercially reasonable level of Subscriber penetration on its Cable System. Franchisee may consider subscriber penetration levels outside the Franchise Area but within the Puget Sound metropolitan area in this determination. Notice to terminate under this Section 13.7 shall be given to the City in writing, with such termination to take effect no sooner than one hundred and twenty (120) days after giving such notice. Franchisee shall also be required to give its then current Subscribers not less than ninety (90) days prior written notice of its intent to cease Cable Service operations. 13.8 The City specifically does not by any provision of this Franchise, waive any immunity or limitation of liability under state or federal law, including but not limited to, section 635 A of the Communications Act. 14. MISCELLANEOUS PROVISIONS 14.1 Franchise Grant: Franchisee shall pay the City Ten Thousand Dollars ($10,000.00) (the "Franchise Grant"). The Franchise Grant shall be payable thirty (30) days from the Effective Date, which may be used for any lawful purpose. The City agrees to require competitively similar obligations from other Cable Operators upon the future grant or renewal of a franchise agreement for the provision of Cable Service. To the extent permitted by federal law, Franchisee shall be allowed to recover this amount from Subscribers and may line -item or otherwise pass -through this amount to Subscribers. The reference to the line item shall accurately describe its purpose. 14.2 Equal Employment Opportunity: Franchisee shall comply with all applicable federal and state laws affording nondiscrimination in employment to all individuals regardless of their race, color, religion, age, sex, national origin, sexual orientation or physical disability. 14.3 Actions of Parties: In any action by the City or Franchisee that is mandated or permitted under the ternnis hereof, such party shall act in a reasonable, expeditious, and timely manner. Furthermore, in any instance where approval or consent is required under the terms hereof, such approval or consent shall not be unreasonably withheld, delayed or conditioned. 14.4 Binding Acceptance: This Agreement shall bind and benefit the parties hereto and their respective successors and assigns, and the promises and obligations herein shall survive the expiration date hereof. Seattle-3435598.2 0010932-00119 23 14.5 Preemption: In the event that federal or state law, rules, or regulations preempt a provision or limit the enforceability of a provision of this Agreement, the provision shall be read to be preempted to the extent, and for the time, but only to the extent and for the time, required by law. In the event such federal or state law, rule or regulation is subsequently repealed, rescinded, amended or otherwise changed so that the provision hereof that had been preempted is no longer preempted, such provision shall thereupon return to full force and effect, and shall thereafter be binding on the parties hereto, without the requirement of farther action on the part of the City or Franchisee. 14.6 Force Majeure: Franchisee shall not be held in default under, or in noncompliance with, the provisions of the Franchise, nor suffer any enforcement or liquidated damages relating to noncompliance or default, where such noncompliance or alleged defaults occurred or were caused by a Force Majeure. 14.7 Good Faith Error: Furthermore, the parties hereby agree that it is not the City's intention to subject Franchisee to liquidated damages, forfeitures or revocation of the Franchise for violations of the Franchise where the violation was a good faith error that resulted in no or minimal negative impact on Subscribers. 14.8 Notices: Unless otherwise expressly stated herein, notices required under the Franchise shall be deemed effective three (3) days after having been deposited by first class, postage prepaid, registered or certified mail, return receipt requested or one (1) day after having been deposited with any nationally recognized overnight courier for next day delivery, and addressed to the addressees below. Each party may change its designee by providing written notice to the other party. 14.8.1 Notices to Franchisee shall be mailed to: Verizon Northwest Inc. Attn: Tim McCallion, President 112 Lakeview Canyon Road, CA501 GA Thousand Oaks, CA 91362 with a copy to: Mr. Jack H. White Senior Vice President & General Counsel - Verizon Telecom One Verizon Way Room VC43E010 Basking Ridge, NJ 07920-1097 Notices to the City shall be mailed to: City of Edmonds Attn: Mayor 121 51h Avenue North Edmonds, WA 98020 Seattle-34355982 0010932-00119 24 14.9 Entire Agreement: This Franchise and the Exhibits hereto constitute the entire agreement between Franchisee and the City, and supersede all prior or contemporaneous agreements, representations or understandings (whether written or oral) of the parties regarding the subject matter hereof. Any ordinances or parts of ordinances relating to cable service that conflict with the provisions of this Agreement are superseded by this Agreement. 14.10 Amendments: Amendments to this Franchise shall be mutually agreed to in writing by the parties. No amendment will take effect if it will impair the security set forth in Section 13, unless otherwise agreed by the parties. 14.11 Captions: The captions and headings of articles and sections throughout this Agreement are intended solely to facilitate reading and reference to the sections and provisions of this Agreement. Such captions shall not affect the meaning or interpretation of this Agreement. 14.12 Severability: if any section, sentence, paragraph, term, or provision hereof is determined to be illegal, invalid, or unconstitutional, by any court of competent jurisdiction or by any state or federal regulatory authority having jurisdiction thereof, such determination shall have no effect on the validity of any other section, sentence, paragraph, term or provision hereof, all of which will remain in full force and effect for the term of the Franchise. 14.13 Recitals: The recitals set forth in this Agreement are incorporated into the body of this Agreement as if they had been originally set forth herein. 14.14 FTTP Network Transfer Prohibition: Under no circumstance including, without limitation, upon expiration, revocation, termination, denial of renewal of the Franchise or any other action to forbid or disallow Franchisee from providing Cable Services, shall Franchisee or its assignees be required to sell any right, title, interest, use or control of any portion of Franchisee's FTTP Network including, without limitation, the Cable System and any capacity used for Cable Service or otherwise, to the City or any third party. Franchisee shall not be required to remove the FTTP Network or to relocate the FTTP Network or any portion thereof as a result of revocation, expiration, termination, denial of renewal or any other action to forbid or disallow Franchisee from providing Cable Services. 14.15 No Joint Venture: Nothing herein shall be deemed to create a joint venture or principal -agent relationship between the parties, and neither party is authorized to nor shall either party act toward third persons or the public in any manner that would indicate any such relationship with the other. 14.16 Independent Review: The City and Franchisee each acknowledge that they have received independent legal advice in entering into this Agreement. In the event that a dispute arises over the meaning or application of any term(s) of this Agreement, such term(s) shall not be construed by the reference to any doctrine calling for ambiguities to be construed against the drafter of the Agreement. 14.17 Venue: The venue for any dispute related to this Franchise shall be in the United States District Court for the Western District of Washington in Seattle, provided it has subject Seattle-3435598.2 0010932-00119 25 matter jurisdiction; if no jurisdiction exists, then venue shall be in the Superior Court for King County. 14.18 Attorneys' Fees: If any action or suit arises between Franchisee and the City for breach of this Franchise, the prevailing party, either the City or Franchisee, as the case may be, shall be entitled to recover all of its reasonable attorneys' fees, costs and expenses in connection therewith along with such other relief as the court deems proper. 14.19 Acceptance: By signing this Agreement, Franchisee accepts and agrees to abide by the Franchise and, to the extent consistent with the Franchise, the terms and conditions of Edmonds Municipal Code Chapter 4.68. Franchisee will timely provide to the City the security specified in Section 13.1 and the insurance certificates specified in Section 10.1. 14.20 Singular and Plural: Except where the context indicates otherwise, words used herein, regardless of the number specifically used, shall be deemed and construed to include any other number, singular or plural as is reasonable in the context. SIGNATURE PAGE FOLLOWS Seattle-3435598.2 0010932-00119 26 AGREED TO THIS DAY OF _ , 2008. CITY OF EDMONDS By: [Name, Title] Verizon Northwest Inc. By: _ Tim McCallion, President EXHIBITS Exhibit A: Initial Service Area Exhibit B: Municipal Locations and Schools to be Provided Free Cable Service Exhibit C: Remittance Form Exhibit D: Customer Service Standards Exhibit E: Performance Bond Seattle-3435598.2 0010932-00119 27 EXHIBIT A INITIAL SERVICE AREA Seattle-3435598.2 0010932-00119 28 EXHIBIT B MUNICIPAL LOCATIONS AND SCHOOLS TO BE PROVIDED FREE CABLE SERVICE Existing Buildings: City Hall -Mayor 121 5th Avenue N, Edmonds, WA City Administration 121 5th Avenue N, Edmonds, WA City Meeting Room 121 5th Avenue N, Edmonds, WA Fire Department 121 5th Avenue N, Edmonds, WA Finance Department 121 5th Avenue N, Edmonds, WA City Park Maintenance Building 600 3rd Ave, Edmonds, WA Edmonds Historical Museum 118 5th Avenue N, Edmonds, WA Edmonds Library 650 Main Street, Edmonds, WA Fire Station #16 8429 196th Street SW, Edmonds, WA Fire Station #17 275 6th Avenue N, Edmonds, WA Fire Station #20 23009 88th Avenue W, Edmonds, WA Frances Anderson Center 700 Main Street, Edmonds, WA Meadowdale Clubhouse 6801 Meadowdale Road, Edmonds WA Seattle-3435598.2 0010932-00119 29 Old Public Works 200 Dayton Street, Edmonds, WA Handicapped Access Area — City Council Chamber 250 5th Avenue N, Edmonds, WA City Council Chambers 250 5th Avenue N, Edmonds, WA Police Department 250 5th Avenue N, Edmonds, WA Organization/EG Origination Site 250 5th Avenue N, Edmonds, WA Public Works 7110 210th Street SW, Edmonds, WA Senior Center 220 Railroad Avenue, Edmonds, WA Wade James Theatre 950 Main Street, Edmonds, WA Edmonds Performing Arts Center 410 Fourth Avenue N, Edmonds, WA Yost Pool 9535 Bowdoin Way, Edmonds, WA Scriber Lake High School 23200 100th Avenue W, Edmonds, WA Sherwood Elementary School 22901 106th Avenue W, Edmonds, WA Edmonds Elementary School 1215 Olympic Avenue, Edmonds, WA Chase Lake Community School 21603 84th Avenue W, Edmonds, WA Boys & Girls Club 310 6th Avenue N, Edmonds, WA Seattle-3435598.2 0010932-00119 30 Edmonds-Woodway High School 7600 212th Street SW, Edmonds, WA Seaview Elementary School 8426 188th Street SW, Edmonds, WA Maplewood K-8 8500 200th Street SW, Edmonds, WA Woodway Elementary School 9521 240th Street SW, Edmonds, WA Westgate Elementary 9601 220th Street SW, Edmonds, WA Olympic View Water & Sewer District 23725 Edmonds Way, Edmonds, WA Port of Edmonds Administration Offices 336 Admiral Way, Edmonds, WA Edmonds Memorial Cemetery 820 15th SW, Edmonds, WA Edmonds School District 15619 561h Avenue W, Edmonds, WA Edmonds School District #15 (Meadowdale) 6505 1681h Street SW, Edmonds, WA Edmonds School District #15 61h Avenue N, Edmonds, WA Madrona School 9300 236th Street, Edmonds, WA In the event that an existing building listed above is demolished and rebuilt in the same or different location in the Service Area, Franchisee will provide, subject to the terms and conditions set forth in Section 3.3, one service outlet activated for Basic Service so long as all other Cable Operators in the Franchise Area provide service at such location. Future Buildings: Franchisee will provide, subject to the terms and conditions set forth in Section 3.3 of this Franchise, one service outlet active for Basic Service at up to five (5) future public buildings in the Service Area so long as all other Cable Operators in the Franchise Area provide service to at least the same number of future locations. Seattle-3435598.2 0010932-00119 31 EXHIBIT C REMITTANCE FORM Franchise Fee Schedule/Report (Quarter and Year) City of XXXY Verizon - fGTE Washington Franchise Fee Rate: 5.00% Month 1 Month Z Month 3 Quarter Total Monthly Recurring Cable $0.00 $0.00 $0.00 $0.00 Service Charges (e.g. Basic, Enhanced Basic, Premium and Equipment Rental Usage Based Charges $0.00 $0.00 $0.00 $0.00 (e.g. PayPer View, Installation) Advertising $0.00 $0.00 $0.00 $0.00 Home Shopping $0.00 $0.00 $0.00 $0.00 Late Payment $0.00 $0.00 $0.00 $0.00 Other Misc. (Leased $0.00 $0.00 $0.00 $0.00 Access & Other Misc.) Franchise Fee Billed $0.00 $0.00 $0.00 $0.00 PEG Fee Billed $0.00 $0.00 $0.00 $0.00 Less: Bad Debt Total Receipts Subject to $0.00 $0.00 $0.00 $0.00 Franchise Fee Calculation Franchise Fee Due $0.00 $0.00 $0.00 $0.00 Verizon Northwest Inc. is hereby requesting that this information be treated as confidential and proprietary commercial trade secret information and financial statements and not disclosed in accordance with section XXXX and the Cable Television Franchise Agreement granted to Verizon Northwest Inc. This information is not otherwise readily ascertainable or publicly available by proper means by other persons from another source in the same configuration as provided herein, would cause substantial harm to competitive position of Verizon in the highly competitive video marketplace if disclosed, is intended to be proprietary confidential business information and is treated by Verizon as such. Seattle-34355982 0010932-00119 32 EXHIBIT D CUSTOMER SERVICE STANDARDS These standards shall, starting six (6) months after the Service Date, apply to Franchisee to the extent it is providing Cable Services over the Cable System in the Franchise area. For the first six (6) months after the Service Date, Franchisee shall use best efforts to comply with the Customer Service Standards provided herein; it being agreed, however, that the City will not impose liquidated damages during this first six (6) month period if Franchisee using best efforts fails to meet the Customer Service Standards. SECTION 1: DEFINITIONS A. Normal Operating Conditions: Those service conditions which are within the control of Franchisee, as defined under 47 C.F.R. § 76.309(c)(4)(ii). Those conditions which are not within the control of Franchisee include, but are not limited to, natural disasters, civil disturbances, power outages, telephone network outages that are not within the control of the Franchisee, and severe or unusual weather conditions. Those conditions which are ordinarily within the control of Franchisee include, but are not limited to, special promotions, pay -per -view events, rate increases, regular peak or seasonal demand periods, and maintenance or rebuild of the Cable System. B. Respond: The start of Franchisee's investigation of a Service Interruption by receiving a Subscriber call, and opening a trouble ticket, and begin working, if required. C. Service Call: The action taken by Franchisee to correct a Service Interruption the effect of which is limited to an individual Subscriber. D. Service Interruption: The loss of picture or sound on one or more cable channels. E. Significant Outage: A significant outage of the Cable Service shall mean any Service Interruption lasting at least four (4) continuous hours that affects at least ten percent (10%) of the Subscribers in the Service Area. F. Standard Installation: Installations where the Subscriber is within one hundred fifty (150) feet of trunk or feeder lines. SECTION 2: TELEPHONE AVAILABILITY A. Franchisee shall maintain a toll -free number to receive all calls and inquiries from Subscribers in the Franchise Area and/or residents regarding Cable Service. Franchisee representatives trained and qualified to answer questions related to Cable Service in the Service Area must be available to receive reports of Service Interruptions twenty-four (24) hours a day, seven (7) days a week, all other inquiries at least forty-five (45) hours per week. Franchisee representatives shall identify themselves by name when answering this number. B. Franchisee's telephone numbers shall be listed, with appropriate description (e.g. administration, customer service, billing, repair, etc.), in the directory published by the local Seattle-3435598.2 0010932-00119 33 telephone company or companies serving the Service Area, beginning with the next publication cycle after acceptance of this Franchise by Franchisee. C. Franchisee may use an Automated Response Unit ("ARU") or a Voice Response Unit C VRU") to distribute calls. If a foreign language routing option is provided, and the Subscriber does not enter an option, the menu will default to the first tier menu of English options. After the first tier menu (not including a foreign language rollout) has run through three times, if customers do not select any option, the ARU or VRU will forward the call to a queue for a live representative. Franchisee may reasonably substitute this requirement with another method of handling calls from customers who do not have touch-tone telephones. D. Under Normal Operating Conditions, calls received by the Franchisee shall be answered within thirty (30) seconds. The Franchisee shall meet this standard for ninety percent (90%) of the calls it receives at call centers receiving calls from Subscribers, as measured on a cumulative quarterly calendar basis. Measurement of this standard shall include all calls received by the Franchisee at all call centers receiving calls from Subscribers, whether they are answered by a live representative, by an automated attendant, or abandoned after thirty (30) seconds of call waiting. if the call needs to be transferred, transfer time shall not exceed thirty (30) seconds- E. Under Normal Operating Conditions, callers to the Franchisee shall receive a busy signal no more than three (3%) percent of the time during any calendar quarter. F. Upon request from the City, but in no event more than once a quarter, forty-five (45) days following the end of each quarter, the Franchisee shall report to the City the following for all call centers receiving calls from Subscribers except for temporary telephone numbers set up for national promotions: (1) Percentage of calls answered within thirty (30) seconds as set forth in Section 2.1); and (2) Percentage of time customers received a busy signal when calling the Franchisee's service center as set forth in Section 2.E. Subject to consumer privacy requirements, underlying activity will be made available to the City for review upon reasonable request. G. At the Franchisee's option, the measurements and reporting above may be changed from calendar quarters to billing or accounting quarters one time during the term of this Agreement. Franchisee shall notify the City of such a change not less than thirty (30) days in advance. SECTION 3: INSTALLATIONS AND SERVICE APPOINTMENTS A. All installations will be in accordance with FCC rules, including but not limited to, appropriate grounding, connection of equipment to ensure reception of Cable Service, and the Seattle-3435598.2 0010932-00119 34 provision of required consumer information and literature to adequately inform the Subscriber in the utilization of Franchisee -supplied equipment and Cable Service. B. The Standard Installation shall be performed within seven (7) business days after an order is placed if the Optical Network Terminal ("ONT") is already installed on the customer's premises. The Standard Installation shall be performed within fourteen (14) business days where there is no ONT at the time of service order. Franchisee shall meet this standard for ninety-five percent (95%) of the Standard Installations it performs, as measured on a calendar quarter basis, excluding those requested by the customer outside of these time periods. C. The Franchisee shall provide the City with a report upon request from the City, but in no event more than once a quarter, noting the percentage of Standard Installations completed within the time periods provided in Section 3.13. Subject to consumer privacy requirements, underlying activity will be made available to the City for review upon reasonable request. D. At Franchisee's option, the measurements and reporting above may be changed from calendar quarters to billing or accounting quarters one time during the term of this Agreement. Franchisee shall notify the City of such a change not less than thirty (30) days in advance. E. Franchisee will offer Subscribers "appointment window" alternatives for arrival to perform installations, Service Calls and other activities of a maximum four (4) hours scheduled time block during appropriate daylight available hours, usually beginning at 8:00 AM unless it is deemed appropriate to begin earlier by location exception. At Franchisee's discretion, Franchisee may offer Subscribers appointment arrival times other than these four (4) hour time blocks, if agreeable to the Subscriber. These hour restrictions do not apply to weekends. (1) Franchisee may not cancel an appointment window with a customer after the close of business on the business day prior to the scheduled appointment. (2) If Franchisee's representative is running late for an appointment with a customer and will not be able to keep the appointment as scheduled, the customer will be contacted. The appointment will be rescheduled, as necessary, at a time which is convenient for the customer. F. Franchisee must provide for the pick up or drop off of equipment free of charge in one of the following manners: (i) by having a Franchisee representative going to the Subscriber's residence, (ii) by using a mailer, or (iii) by establishing a local business office within the Franchise Area. If requested by a mobility -limited customer, the Franchisee shall arrange for pickup and/or replacement of converters or other Franchisee equipment at Subscriber's address or by a satisfactory equivalent. Seattle-3435598.2 0010932-00119 35 SECTION 4: SERVICE INTERRUPTIONS AND OUTAGES A. Franchisee shall promptly notify the City of any Significant Outage of the Cable Service. B. Franchisee shall exercise commercially reasonable efforts to limit any Significant Outage for the purpose of maintaining, repairing, or constructing the Cable System. Except in an emergency or other situation necessitating a more expedited or alternative notification procedure, Franchisee may schedule a Significant Outage for a period of more than four (4) hours during any twenty-four (24) hour period only after the City and each affected Subscriber in the Service Area have been given fifteen (15) days prior notice of the proposed Significant Outage. Notwithstanding the foregoing, Franchisee may perform modifications, repairs and upgrades to the System between 12:01 a.m. and 6 a.m. which may interrupt service, and this Section's notice obligations respecting such possible interruptions will be satisfied by notice provided to Subscribers upon installation and in the annual Subscriber notice. C. Franchisee representatives who are capable of responding to Service Interruptions must be available to Respond twenty-four (24) hours a day, seven (7) days a week. D. Under Normal Operating Conditions, Franchisee must Respond to a call from a Subscriber regarding a Service Interruption or other service problems within the following time frames: (1) Within twenty-four (24) hours, including weekends, of receiving Subscriber calls about Service Interruptions in the Service Area. (2) Franchisee must begin actions to correct all other Cable Service problems the next business day after notification by the Subscriber or the City of a Cable Service problem. E. Under Normal Operating Conditions, Franchisee shall complete Service Calls within seventy-two (72) hours of the time Franchisee commences to Respond to the Service Interruption, not including weekends and situations where the Subscriber is not reasonably available for a Service Call to correct the Service Interruption within the seventy-two (72) hour period. F. Franchisee shall meet the standard in Section E of this Section for ninety percent (90%) of the Service Calls it completes, as measured on a quarterly basis. G. Franchisee shall provide the City with a report upon request from the City, but in no event more than once a quarter, forty-five (45) days following the end of each calendar quarter, noting the percentage of Service Calls completed within the seventy-two (72) hour period not including Service Calls where the Subscriber was reasonably unavailable for a Service Call within the seventy-two (72) hour period as set forth in this Section. Subject to consumer privacy requirements, underlying activity will be made available to the City for review upon reasonable request. At the Franchisee's option, the above measurements and reporting may be changed from calendar quarters to billing or accounting quarters one time during the term of this Agreement. Franchisee shall notify the City of such a change at least thirty (30) days in advance of any implementation. Seattle-3435598,2 0010932-00119 36 H. Under Normal Operating Conditions, Franchisee shall provide a credit upon Subscriber request when all Channels received by that Subscriber are out of service for a period of four (4) consecutive hours or more. The credit shall equal, at a minimum, a proportionate amount of the affected Subscriber(s) current monthly bill. In order to qualify for the credit, the Subscriber must promptly report the problem and allow Franchisee to verify the problem if requested by Franchisee. If Subscriber availability is required for repair, a credit will not be provided for such time, if any, that the Subscriber is not reasonably available. I. Under Normal Operating Conditions, if a Significant Outage affects all Video Programming Cable Services for more than twenty-four (24) consecutive hours, Franchisee shall issue an automatic credit to the affected Subscribers in the amount equal to their monthly recurring charges for the proportionate time the Cable Service was out, or a credit to the affected Subscribers in the amount equal to the charge for the basic plus enhanced basic level of service for the proportionate time the Cable Service was out, whichever is technically feasible or, if both are technically feasible, as determined by Franchisee provided such determination is non- discriminatory. Such credit shall be reflected on Subscriber billing statements within the next available billing cycle following the outage. J. With respect to service issues concerning Cable Services provided to the City facilities, Franchisee shall Respond to all inquiries from the City within four (4) hours and shall commence necessary repairs within twenty-four (24) hours under Normal Operating Conditions and shall diligently pursue to completion. If such repairs cannot be completed within twenty- four (24) hours, Franchisee shall notify the City in writing as to the reason(s) for the delay and provide an estimated time of repair. SECTION 5: CUSTOMER COMPLAINTS REFERRED BY THE CITY Under Normal Operating Conditions, Franchisee shall begin investigating Subscriber complaints referred by the City within seventy-two (72) hours. Franchisee shall notify the City of those matters that necessitate an excess of five (5) business days to resolve, but Franchisee must make all necessary efforts to resolve those complaints within ten (10) business days of the initial complaint. The City may require Franchisee to provide reasonable documentation to substantiate the request for additional time to resolve the problem. Franchisee shall inform the City in writing, which may be by an electronic mail message, of how and when referred complaints have been resolved within a reasonable time after resolution. For purposes of this Section, "resolve" means that Franchisee shall perform those actions, which, in the normal course of business, are necessary to (a) investigate the Customer's complaint; (b) advise the Customer of the results of that investigation; and (c) implement and complete steps to bring resolution to the matter in question. SECTION 6: BILLING A. Subscriber bills must be itemized to describe Cable Services purchased by Subscribers and related equipment charges. Bills will comply with applicable federal and state laws, and shall clearly delineate activity during the billing period, including optional charges, rebates, credits, and aggregate late charges. Franchisee shall, without limitation as to additional line items, be allowed to itemize as separate line items, Franchise fees, taxes and/or other 'Seattle-34355982 0010932-00119 37 governmental -imposed fees. Franchisee shall maintain records of the date and place of mailing of bills. B. Every Subscriber with a current account balance sending payment directly to Franchisee shall be given at least twenty (20) days from the date statements are mailed to the Subscriber until the payment due date. C. A specific due date shall be listed on the bill of every Subscriber whose account is current. Delinquent accounts may receive a bill which lists the due date as upon receipt; however, the current portion of that bill shall not be considered past due except in accordance with Section 6.B. above. D_ Any Subscriber who, in good faith, disputes all or part of any bill shall have the option of withholding the disputed amount without disconnect or late fee being assessed until the dispute is resolved, provided that: (1) The Subscriber pays all undisputed charges; (2) The Subscriber provides notification of the dispute to Franchisee within five (5) days prior to the due date; and (3) The Subscriber cooperates in determining the accuracy and/or appropriateness of the charges in dispute. (4) It shall be within Franchisee's sole discretion to determine when the dispute has been resolved. E. Under Normal Operating Conditions, Franchisee shall initiate investigation and resolution of all billing complaints received from Subscribers within five (5) business days of receipt of the complaint. Final resolution shall not be unreasonably delayed. F. Franchisee shall provide a telephone number and address clearly and prominently on the bill for Subscribers to contact Franchisee. G. Franchisee shall forward a copy of any rate -related or customer service -related billing inserts or other mailings related to Cable Service, but not promotional materials, sent to Subscribers, to the City. H. Franchisee shall provide all Subscribers with the option of paying for Cable Service by check or an automatic payment option where the amount of the bill is automatically deducted from a checking account designated by the Subscriber. Franchisee may in the future, at its discretion, permit payment by using a major credit card on a preauthorized basis. Based on credit history, at the option of Franchisee, the payment alternative may be limited. Seattle-3435598.2 0010932-00119 38 SECTION 7: DEPOSITS REFUNDS AND CREDITS A. Franchisee may require refundable deposits from Subscribers 1) with a poor credit or poor payment history, 2) who refuse to provide credit history information to Franchisee, or 3) who rent Subscriber equipment from Franchisee, so long as such deposits are applied on a non- discriminatory basis. The deposit Franchisee may charge Subscribers with poor credit or poor payment history or who refuse to provide credit information may not exceed an amount equal to an average Subscriber's monthly charge multiplied by six (6). The maximum deposit Franchisee may charge for Subscriber equipment is the cost of the equipment which Franchisee would need to purchase to replace the equipment rented to the Subscriber. B. Franchisee shall refund or credit the Subscriber for the amount of the deposit collected for equipment, which is unrelated to poor credit or poor payment history, after one year and provided the Subscriber has demonstrated good payment history during this period. Franchisee shall pay interest on deposits if required by law. C. Under Normal Operating Conditions, refund checks will be issued within the next available billing cycle following the resolution of the event giving rise to the refund, (e.g. equipment return and final bill payment). D. Credits for Cable Service will be issued no later than the Subscriber's next available billing cycle, following the determination that a credit is warranted, and the credit is approved and processed. Such approval and processing shall not be unreasonably delayed. E. Bills shall be considered paid when appropriate payment is received by Franchisee or its authorized agent. Appropriate time considerations shall be included in Franchisee's collection procedures to assure that payments due have been received before late notices or termination notices are sent. SECTION 8: RATES, FEES AND CHARGES A. Franchisee shall not, except to the extent expressly permitted by law, impose any fee or charge for Service Calls to a Subscriber's premises to perform any repair or maintenance work related to Franchisee equipment necessary to receive Cable Service, except where such problem is caused by a negligent or wrongful act of the Subscriber (including, but not limited to a situation in which the Subscriber reconnects Franchisee equipment incorrectly) or by the failure of the Subscriber to take reasonable precautions to protect Franchisee's equipment (for example, a dog chew). B. Franchisee shall provide reasonable notice to Subscribers of the possible assessment of a late fee on bills or by separate notice. C. All of Franchisee's rates and charges shall comply with applicable federal and state law. Franchisee shall maintain a complete current schedule of rates and charges for Cable Services on file with the City throughout the term of this Franchise. Seattle-34355982 0010932-00119 39 SECTION 9: DISCONNECTION /DENIAL OF SERVICE A: Franchisee shall not terminate Cable Service for nonpayment of a delinquent account unless Franchisee mails a notice of the' delinquency and impending termination prior to the proposed final termination. The notice shall be mailed to the Subscriber to whom the Cable Service is billed. The notice of delinquency and impending termination may be part of a billing statement. B. Cable Service terminated in error must be restored without charge within twenty- four (24) hours of notice. If a Subscriber was billed for the period during which Cable Service was terminated in error, a credit shall be issued to the Subscriber if the Service Interruption was reported by the Subscriber. C. Nothing in these standards shall limit the right of Franchisee to deny Cable Service for non-payment of previously provided Cable Services, refusal to pay any required deposit, theft of Cable Service, damage to Franchisee's equipment, abusive and/or threatening behavior toward Franchisee's employees or representatives, or refusal to provide credit history information or refusal to allow Franchisee to validate the identity, credit history and credit worthiness via an external credit agency. D. Charges for cable service will be discontinued at the time of the requested termination of service by the Subscriber, except equipment charges may by applied until equipment has been returned. No period of notice prior to requested termination of service can be required of Subscribers by Franchisee. No charge shall be imposed upon the Subscriber for or related to total disconnection of Cable Service or for any Cable Service delivered after the effective date of the disconnect request, unless there is a delay in returning Franchisee equipment or early termination charges apply pursuant to the Subscriber's service contract. If the Subscriber fails to specify an effective date for disconnection, the Subscriber shall not be responsible for Cable Services received after the day following the date the disconnect request is received by Franchisee. For purposes of this Section, the term "disconnect" shall include Subscribers who elect to cease receiving Cable Service from Franchisee. SECTION 10: COMMUNICATIONS WITH SUBSCRIBERS A. Each employee of the Franchisee who routinely comes into contact with members of the public at their places of residence must wear a picture identification card clearly indicating his or her employment with the Franchisee. The photograph on the identification card shall prominently show the employee's name and/or identification number. Such employee shall prominently display such identification card and shall show it to all such members of the public. Each employee of any contractor or subcontractor of the Franchisee who routinely comes into contact with members of the public at their places of residence must wear a picture identification card clearly indicating his or her name, the name of such contractor or subcontractor and the name of the Franchisee. B. All contact with a Subscriber or potential Subscriber by a Person representing Franchisee shall be conducted in a courteous manner. Seattle-34355982 0010932-001 19 40 C. Franchisee shall send annual notices to all Subscribers informing them that any complaints or inquiries not satisfactorily handled by Franchisee may be referred to the City. A copy of the annual notice required under this Section 10:C will be given to the City at least fifteen (15) days prior to distribution to Subscribers. D. All notices identified in this Section shall be by either: (1) A separate document included with a billing statement or included on the portion of the monthly bill that is to be retained by the Subscriber; or (2) A separate electronic notification. E. Franchisee shall provide reasonable notice to Subscribers and the City of any pricing changes or additional changes (excluding sales discounts, new products or offers) and, subject to the forgoing, any changes in Cable Services, including channel line-ups. Such notice must be given to Subscribers a minimum of thirty (30) days in advance of such changes if within the control of Franchisee. Franchisee shall provide a copy of the notice to the City including how and where the notice was given to Subscribers. F. Upon request by any Subscriber, Franchisee shall make available a parental control or lockout device to enable a Subscriber to control access to both the audio and video portions of any or all Channels. Franchisee shall inform its Subscribers of the availability of the lockout device at the time of their initial subscription and periodically thereafter. G. Franchisee shall provide information to all Subscribers about each of the following items at the time of installation of Cable Services, annually to all Subscribers, at any time upon request, and, subject to Section 10.E., at least thirty (30) days prior to making significant changes in the information required by this Section if within the control of Franchisee: (1) Products and Cable Service offered; (2) Prices and options for Cable Services and condition of subscription to Cable Services. Prices shall include those for Cable Service options, equipment rentals, program guides, installation, downgrades, late fees and other fees charged by Franchisee related to Cable Service; (3) Installation and maintenance policies including, when applicable, information regarding the Subscriber's in -home wiring rights during the period Cable Service is being provided; (4) Channel positions of Cable Services offered on the Cable System; (5) Complaint procedures, including the name, address, and telephone number of the City, but with a notice advising the Subscriber to initially contact Franchisee about all complaints and questions; (6) Procedures for requesting Cable Service credit; Seattle-3435598.2 0010932-00119 41 (7) The availability of a parental control device; (8) Franchisee practices and procedures for protecting against invasion of privacy; and (9) The address and telephone number of Franchisee's office to which complaints may be reported. A copy of notices required in this Section 10.G. will be given to the City at least fifteen (15) days prior to distribution to Subscribers if the reason for notice is due to a change that is within the control of Franchisee and as soon as possible if not within the control of Franchisee. H. Notices of changes in rates shall indicate the Cable Service new rates and old rates, if applicable. I. Notices of changes of Cable Services and/or Channel locations shall include a description of the new Cable Service, the specific channel location, and the hours of operation of the Cable Service if the Cable Service is only offered on a part-time basis. In addition, should the Channel location, hours of operation, or existence of other Cable Services be affected by the introduction of a new Cable Service, such information must be included in the notice. J. Every notice of termination of Cable Service shall include the following information: (1) The name and address of the Subscriber whose account is delinquent; (2) The amount of the delinquency for all services billed; (3) The date by which payment is required in order to avoid termination of Cable Service; and (4) The telephone number for Franchisee where the Subscriber can receive additional information about their account and discuss the pending termination. K. Franchisee will comply with privacy rights of Subscribers in accordance with applicable federal and state law, including 47 U.S.C. §551. Seattle-3435598.2 0010932-001 19 42 EXHIBIT E PERFORMANCE BOND Bond No. KNOW ALL MEN BY THESE PRESENTS. That (name & address) (hereinafter called the Principal), and (name and address) (hereinafter called the Surety), a corporation duly organized under the laws of the State of (state), are held and firmly bound unto (name & address) (hereinafter called the Obligee), in the full and just sum of Dollars (S the payment of which sum, well and truly to be made, the said Principal and Surety bind themselves, their heirs, administrators, executors, and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal and Obligee have entered into a Franchise Agreement dated which is hereby referred to and made a part hereof. WHEREAS, said Principal is required to perform certain obligations under said Agreement. WHEREAS, the Obligee has agreed to accept this bond as security against default by Principal of performance of its obligations under said Agreement during the time period this bond is in effect. NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH that if the Principal shall perform its obligations under said Agreement, then this obligation shall be void, otherwise to remain in full force and effect, unless otherwise terminated, cancelled or expired as hereinafter provided. PROVIDED HOWEVER, that this bond is executed subject to the following express provisions and conditions: In the event of default by the Principal, Obligee shall deliver to Surety a written statement of the details of such default within 30 days after the Obligee shall learn of the same, such notice to be delivered by certified mail to address of said Surety as stated herein. This Bond shall be effective , 20_, and shall remain in full force and effect thereafter for a period of one year and will automatically extend for additional one year periods from the expiry date hereof, or any future expiration date, unless the Surety provides to the Obligee not less than sixty (60) days advance written notice of its intent not to renew this Bond or unless the Bond is earlier canceled pursuant to the following. This Bond may be canceled at any time upon sixty (60) days advance written notice from the Surety to the Obligee. Bond No. Seattle-3435598.2 0010932-00119 43 Neither cancellation, termination nor refusal by Surety to extend this bond, nor inability of Principal to file a replacement bond or replacement security for its obligations under said Agreement, shall constitute a loss to the Obligee recoverable under this bond. No claim, action, suit or proceeding shall be instituted against this bond unless same be brought or instituted and process served within one year after termination or cancellation of this bond. No right of action shall accrue on this bond for the use of any person, corporation or entity other than the Obligee named herein or the heirs, executors, administrators or successors of the Obligee. The aggregate liability of the surety is limited to the penal sum stated herein regardless of the number of years this bond remains in force or the amount or number of claims brought against this bond. This bond is and shall be construed to be strictly one of suretyship only. If any conflict or inconsistency exists between the Surety's obligations as described in this bond and as may be described in any underlying agreement, permit, document or contract to which this bond is related, then the terms of this bond shall supersede and prevail in all respects. This bond shall not bind the Surety unless it is accepted by the Obligee by signing below. IN WITNESS WHEREOF, the above bounded Principal and Surety have hereunto signed and sealed this bond effective this day of , 2008. Principal Surety Accepted by Obligee: LOS= (Signature & date above - Print Name, Title below) Attorney -in -Fact Seattle-34355982 0010932-00119 44 le)(L 3to1�3 AM-1687 4. Second Reading: Ordinance Granting A Nonexclusive Franchise To Verizon Northwest Inc. Edmonds City Council Meeting Date: Sub inky; De a tmen Review Committee: Action: 07/29/2008 Stephen Clifton Community Services Time: 10 Minutes Tyne: Action Information $� j ect itIe Second Reading: An ordinance of the City of Edmonds, Washington granting a nonexclusive franchise to Verizon Northwest, Inc. to construct, maintain, operate and repair a cable system to provide cable services in, across, over, along, under, upon, through and below the public rights -of -way of the City of Edmonds; providing for severability and establishing an effective date. Recommends ' n fro Mao ads f 1. Approve Ordinance # and adopt the proposed Cable Franchise Agreement between the City of Edmonds and Verizon Northwest Inc.; and 2. Authorize the Mayor to execute the proposed Franchise Agreement on behalf of the City. Previous Council Action On February 26, 2008, the City Council directed the City Attorney to continue with a schedule which outlined possible "Next Steps" regarding negotiations with Verizon. On March 25, 2008, the City Council authorized Mayor Haakenson to sign an Interlocal Agreement Consortium For Negotiation of Cable Television Franchising, in addition to preparing and executing a Consultant Agreement with River Oaks. On July 22, 2008, the City Council conducted a first reading and public hearing related to the proposed Cable Franchise Agreement between the City of Edmonds and Verizon Northwest Inc. Narrative Verizon Northwest Inc. ("Verizon") seeks to provide cable television service, utilizing a Fiber to the Premise Telecommunications Network to City of Edmonds ("City") residents, businesses and institutions in competition with the existing cable television operator serving the City. In order to do so, Verizon and the City must first execute a cable franchise agreement. As such, Verizon has requested, from the City, a franchise to operate and provide cable television service within incorporated areas of the City. Attachments Link: Exhibit 1 - Ordinance Link: Exhibit 2 - Franchise Agreement rm Routin State Route Seq Inbox . Approved By Date Status 1 City Clerk Sandy Chase 07/24/2008 10:10 AM APRV 2 Mayor Gary Haakenson 07/24/2008 11:16 AM APRV 3 Final Approval Sandy Chase 07/24/2008 01:30 PM APRV Form Started By: Stephen Clifton Started On: 07/23/2008 05:22 PM Final Approval Date: 07/24/2008 0006.080052 ERZ 7/17/2008 ORDINANCE NO. AN ORDINANCE OF THE CITY OF EDMONDS, WASHINGTON GRANTING A NONEXCLUSIVE FRANCHISE TO VERIZON NORTHWEST, INC. TO CONSTRUCT, MAINTAIN, OPERATE AND REPAIR A CABLE SYSTEM TO PROVIDE CABLE SERVICES IN, ACROSS, OVER, ALONG, UNDER, UPON, THROUGH AND BELOW THE PUBLIC RIGHTS -OF -WAY OF THE CITY OF EDMONDS; PROVIDING FOR SEVERABILITY AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City of Edmonds (the "City") has negotiated a Franchise Agreement with Verizon Northwest, Inc. ("Verizon"), granting Verizon a franchise, authority, right and privilege for a period of fifteen (15) years to construct, maintain, operate and repair a cable system in the City, as set forth in the Franchise Agreement attached hereto, labeled Exhibit A and hereby incorporated by reference; and WHEREAS, Verizon has requested that the City grant it a new franchise for the provision of cable television services within the City; and WHEREAS, pursuant to RCW 35A.11.030 and 47 U.S.C. § 541(a)(1), the City has the power, among other things, to grant franchises; and WHEREAS, the City has analyzed and considered the technical ability, financial condition, legal qualifications, and general character of Verizon, warrants that all other conditions resulting from the grant of this Franchise have been considered by the City, and has determined that it is in the best interest of the City and its residents to grant a cable Franchise to Verizon; and WHEREAS, Verizon and the City have agreed to be bound by the conditions hereinafter set forth; NOW, THEREFORE, {ERZ699840.DOC-12/00006.080052/} I THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Franchise Granted. Pursuant to RCW 35A.47.040, the City of Edmonds hereby grants a nonexclusive franchise to Verizon Northwest, Inc. according to the terms and conditions set forth on Exhibit A attached hereto and incorporated herein by this reference as if set forth in full. Subject to the provisions therein, the term of the franchise shall be for a period of fifteen (15) years from the effective date of the franchise, as defined in Exhibit A, and shall grant Verizon the right, privilege and authority to construct, maintain, operate, and repair a cable system to provide cable services in, on, across, over, along, under, upon, through and below the public rights -of -way of the City of Edmonds, all as provided in Exhibit A. Section 2. Deadline for Acce tance. The franchise granted by Section 1 of this ordinance shall be void and of no effect unless Verizon files with the City Clerk written acceptance of the franchise and all of its terms and conditions within thirty (30) days after the Effective Date of this ordinance and in a form satisfactory to the City Attorney. Section 3. Severability. If any section, sentence, clause or phrase of this ordinance should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity of any other section, sentence, clause or phrase of this ordinance. Section 4. Effective Date. Pursuant to RCW 35A.47.040, this ordinance has been passed at least five days after its first introduction and by a majority of the whole membership of the City Council at a regular meeting. This ordinance, being the exercise of a power specifically delegated to the City's legislative body, is not subject to referendum, and shall take effect five (5) days after passage and publication of an approved summary consisting of the title. IERZ699840.DOC;2/00006.080052/} 2 APPROVED: MAYOR GARY HAAKENSON ATTEST/AUTHENTICATED: CITY CLERK, SANDRA S. CHASE APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: W. SCOTT SNYDER FILED WITH THE CITY CLERK: PASSED BY THE CITY COUNCIL: PUBLISHED: EFFECTIVE DATE: ORDINANCE NO. {ERZ699840.DOC;2/00006.080052/} 3 SUMMARY OF ORDINANCE NO. of the City of Edmonds, Washington On the day of .. 2008, the City Council of the City of Edmonds, passed Ordinance No. A summary of the content of said ordinance, consisting of the title, provides as follows: AN ORDINANCE OF THE CITY OF EDMONDS, WASHINGTON GRANTING A NONEXCLUSIVE FRANCHISE TO VERIZON NORTHWEST, INC. TO CONSTRUCT, MAINTAIN, OPERATE AND REPAIR A CABLE SYSTEM TO PROVIDE CABLE SERVICES IN, ACROSS, OVER, ALONG, UNDER, UPON, THROUGH AND BELOW THE PUBLIC RIGHTS -OF -WAY OF THE CITY OF EDMONDS; PROVIDING FOR SEVERABILITY AND ESTABLISHING AN EFFECTIVE DATE. The full text of this Ordinance will be mailed upon request. DATED this day of , 2008. CITY CLERK, SANDRA S. CHASE {ERZ699840.DOC;2/00006.080052/) 4 THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, DO ORDAIN AS FOLLOWS: _Section 1. Franchise Granted. Pursuant to RCW 35A.47.040, the City of Edmonds hereby grants a nonexclusive franchise to Verizon Northwest, Inc. according to the terms and conditions set forth on Exhibit A attached hereto and incorporated herein by this reference as if set forth in full. Subject to the provisions therein, the term of the franchise shall be for a period of fifteen (15) years from the effective date of the franchise, as defined in Exhibit A, and shall grant Verizon the right, privilege and authority to construct, maintain, operate, and repair a cable system to provide cable services in, on, across, over, along, under, upon, through and below the public rights -of -way of the City of Edmonds, all as provided in Exhibit A. Section 2. Deadline for Acee tance. The franchise granted by Section 1 of this ordinance shall be void and of no effect unless Verizon files with the City Clerk written acceptance of the franchise and all of its terms and conditions within thirty (30) days after the Effective Date of this ordinance and in a form satisfactory to the City Attorney. Section 3. Severabilit . If any section, sentence, clause or phrase of this ordinance should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity of any other section, sentence, clause or phrase of this ordinance. Section 4. Effective Date. Pursuant to RCW 35A.47.040, this ordinance has been passed at least five days after its first introduction and by a majority of the'whole membership of the City Council at a regular meeting. This ordinance, being the exercise of a power specifically delegated to the City's legislative body, is not subject to referendum, and shall take effect five (5) days after passage and publication of an approved summary consisting of the title. {ERZ699840.DOC;2/00006.080052/} 2 ATTEST/AUTHENTICATED: CITY CLERK, SANDRA S. CHASE APPROVED AS TO FORM: OFFICE OF °I' Q ` 'Y ATTORNEY: BY W. SCOTT SNYDER FILED WITH THE CITY CLERK: PASSED BY THE CITY COUNCIL PUBLISHED: EFFECTIVE DATE: ORDINANCE NO. 3693 APPROVED: /ZA MAY R 4GY HAAKENSON 07/18/2008 07/29/2008 08/03/2008 08/08/2008 {ERZ699840.DOC;2/00006.080052/} 3 SUMMARY OF ORDINANCE NO.3693 of the City of Edmonds, Washington On the 29th day of July, 2008, the City Council of the City of Edmonds, passed Ordinance No. 3693. A summary of the content of said ordinance, consisting of the title, provides as follows: AN ORDINANCE OF THE CITY OF EDMONDS, WASHINGTON GRANTING A NONEXCLUSIVE FRANCHISE TO VERIZON NORTHWEST, INC. TO CONSTRUCT, MAINTAIN, OPERATE AND REPAIR A CABLE SYSTEM TO PROVIDE CABLE SERVICES IN, ACROSS, OVER, ALONG, UNDER, UPON, THROUGH AND BELOW THE PUBLIC RIGHTS -OF -WAY OF THE CITY OF EDMONDS; PROVIDING FOR SEVERABILITY AND ESTABLISHING AN EFFECTIVE DATE. The full text of this Ordinance will be mailed upon request. DATED this 30th day of July, 2008. CITY CLERK, SANDRA S. CHASE {ERZ699840.DOC;2/00006.080052/} 4 Affidavit of.Publicatlon STATE OF WASHINGTON, COUNTY OF SNOHOMISH S.S. The undersigned, being first duly sworn an oath deposes and says that she is Principal Clerk of daily and published in the City of Evcrett, County Of SUMMARY OF THE HERALD, a newspaper printed Snohomish, and State of Washington; that said newspaper is a newspaper of gcnaral ORDINANCE NO.36ss tho city State; that said newspaper has been approved as a legal of of circulation in said County and Edmonds. Washington On the Mh day of July, newspaper by order of the Superior Court of Snohomish County and that the notice 1oB, 1he.Crty.Councli of the fly of Edmonds. passed df- nance No. 3M. A summa- of the content of sold ordt. ince, consisting of the title. Summa of prdina ice No. 3493 milks as follows: N ORDINANCE OF THE tTY_or _DM )NDS, WA Verizon NW, Inc Franchise GABiE 5Y5fEM rD PRO- VIDE CABLE SERVICES IN, p P P Pe proper a printed copy of which is hereunto attached, was ublished in said news a r ro er and not on the to l4awing days an ACROSS, OVEFL.ALONG: UNDER, UPON, THROUGH In supplement form, in the regular and entire edition of said paper AND BELOW THE PUBLIC' RIGHTS -OF -WAY OF THE times, namely: CITY OF EDMONDS; PRO= DES. August 03, 2008 s(EVNERABILiTY AND TABUSHtNG AN EFFEC- TIVE DATE The full 16A of this Ordi- oanca will he mailed upon reqq�ast. €?ATED Mis 30th day of. ' July, 200a.ER1S and that said newspaper was regularly distributed to its subscribers during all of said period. CITY Cl, SANDRA S. CHASE Pul%ahed: August S. 20M Principal Clerk ECEI []ED vz0tlUU Subscribed and sworn to before me this 4th y 0Q MG. �A day of August, 2008 EDMONDS CITY CLERK. at E erct nohum'ssh Notary Public in an or t State of ►,�, , a ' It,, County. ' N.N 0+H►1� ++IilI rt Ai htri`r, '.L) Account Name: City of Edmonds Account Number. 1014f. : [; Charoijmbur. 0001604568 iyr. •bU �4\ ; 0 �j 4<off; tilll'�DF fA 'A`�` 111111�� CABLE FRANCHISE AGREEMENT BETWEEN THE CITY OF EDMONDS, WASHINGTON AND VERIZON NORTHWEST INC. 2008 Seattle-3435598.2 0010932-00119 TABLE OF CONTENTS ARTICLE PAGE 1. DEFINITIONS...................................................................................................................2 2. GRANT OF AUTHORITY; LIMITS AND RESERVATIONS ....................................... 7 3. PROVISION OF CABLE SERVICE................................................................................ 9 4. SYSTEM OPERATION.................................................................................................. 11 5. SYSTEM FACILITIES................................................................................................... 11 6. EG SERVICES................................................................................................................ 12 7. FRANCHISE FEES......................................................................................................... 14 8. CUSTOMER SERVICE.................................................................................................. 16 9. REPORTS AND RECORDS ..... ........................................................ .............................. 16 10. INSURANCE AND INDEMNIFICATION.................................................................... 17 11. TRANSFER OF FRANCHISE........................................................................................ 19 12. RENEWAL OF FRANCHISE......................................................................................... 20 13. ENFORCEMENT AND TERMINATION OF FRANCHISE ........................................ 20 14. MISCELLANEOUS PROVISIONS................................................................................ 23 EXHIBIT A INITIAL SERVICE AREA.................................................................................. 28 EXHIBIT B MUNICIPAL LOCATIONS AND SCHOOLS TO BE PROVIDED FREE CABLESERVICE................................................................................................. 29 EXHIBIT C REMITTANCE FORM......................................................................................... 32 EXHIBIT D CUSTOMER SERVICE STANDARDS.............................................................. 33 EXHIBIT E PERFORMANCE BOND..................................................................................... 43 Seattle-3435598.2 0010932-00119 11 THIS CABLE FRANCHISE AGREEMENT (the "Franchise" or "Agreement") is entered into by and between the City of Edmonds, a duly organized City under the applicable laws of the State of Washington (the "City") and Verizon Northwest Inc., a corporation duly organized under the applicable laws of the State of Washington (the "Franchisee"). WHEREAS, the City wishes to grant Franchisee a nonexclusive franchise to construct, install, maintain, extend and operate a cable communications system in the Franchise Area as designated in this Franchise; WHEREAS, the City is a "franchising authority" in accordance with Title VI of the Communications Act (see 47 U.S.C. § 522(10)) and is authorized to grant one or more nonexclusive cable franchises pursuant to Washington State law and federal law; WHEREAS, Franchisee is in the process of installing a Fiber to the Premise Telecommunications Network (the "FTTP Network") in the Franchise Area for the transmission of Non -Cable Services pursuant to authority granted by the state of Washington; WHEREAS, Franchisee intends to construct, install, maintain, and extend the FTTP Network pursuant to Title II of the Communications Act (see 47 U.S.C. § 201 et seq.), and has requested a cable franchise from the City to operate a Cable System over, under, and along the Public Rights -of -Way within the City's jurisdiction, in accordance with Title VI of the Communications Act (see 47 U.S.C. § 521 et seq.); WHEREAS, the FTTP Network will occupy the Public Rights -of -Way within the City, and Franchisee desires to use portions of the FTTP Network once installed to provide Cable Services (as hereinafter defined) in the Franchise Area; WHEREAS, the City has identified the future cable -related needs and interests of the City and its community, has considered the financial, technical and legal qualifications of Franchisee, and has determined that Franchisee's plans for its Cable System are adequate, in a full public proceeding affording due process to all parties; WHEREAS, the City desires to protect and manage the Public Rights -of -Way, require high standards of customer service, receive financial compensation relating to Franchisee's use of the Public Rights -of -Way as provided by federal law, obtain educational and governmental channels, establish certain reporting and record access requirements, and provide for the future cable -related needs of its residents; WHEREAS, the City has found Franchisee to be financially, technically, and legally qualified to operate the Cable System; WHEREAS, the City has determined that the grant of a nonexclusive franchise to Franchisee is consistent with the public interest; and WHEREAS, the City and Franchisee have reached agreement on the terms and conditions set forth herein and the parties have agreed to be bound by those terms and conditions. Seattle-3435598.2 0010932-00119 1 NOW, THEREFORE, in consideration of the City's grant of a franchise to Franchisee, Franchisee's promise to provide Cable Service to residents of the Franchise Area of the City pursuant to and consistent with the Communications Act (as hereinafter defined), pursuant to the terms and conditions set forth herein, the promises and undertakings herein, and other good and valuable consideration, the receipt and the adequacy of which are hereby acknowledged, THE PARTIES DO HEREBY AGREE AS FOLLOWS: 1. DEFINITIONS Except as otherwise provided herein, the definitions and word usages set forth in the Communications Act (as hereinafter defined) are incorporated herein and shall apply in this Agreement. In addition, the following definitions shall apply: 1.1 Access Channel: A video Channel, which Franchisee shall make available to the City without charge for non-commercial Educational or Governmental use for the transmission of video programming as directed by the City. 1.1.1 Educational Access Channel: An Access Channel available for the use solely of the local schools (schools shall include any educational institution, public or private, but excluding home schools) in the Franchise Area. 1.1.2 Government Access Channel: An Access Channel available for the use solely of the City. 1.1.3 EG: Educational and Governmental. 1.2 Additional Service Area: Shall mean any such portion of the Service Area added pursuant to Section 3.1.3 of this Agreement. 1.3 Affiliate: Any Person who, directly or indirectly, owns or controls, is owned or controlled by, or is under common ownership or control with Franchisee. 1.4 Basic Service: Any service tier, which includes the retransmission of local television broadcast signals as well as the EG Channels required by this Franchise. 1.5 Cable Operator: Shall be defined herein as it is defined under section 602 of the Communications Act, 47 U.S.C. § 522(5), but does not include direct broadcast satellite providers. 1.6 Cable Service or Cable Services: Shall be defined herein as it is defined under section 602 of the Communications Act, 47 U.S.C. § 522(6). 1.7 Cable System or System: Shall be defined herein as it is defined under Section 602 of the Communications Act, 47 U.S.C. § 522(7), meaning, "a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, but such term does not include (A) a facility that Seattle-3435598.2 0010932-00119 2 serves only to retransmit the television signals of 1 or more television broadcast stations; (B) a facility that serves subscribers without using any public right-of-way; (C) a facility of a common carrier which is subject, in whole or in part, to the provisions of title 11 of this Act, except that such facility shall be considered a cable system (other than for purposes of section 621(c)) to the extent such facility is used in the transmission of video programming directly to subscribers, unless the extent of such use is solely to provide interactive on -demand services; (D) an open video system that complies with section 653 of this title; or (E) any facilities of any electric utility used solely for operating its electric utility systems." The Cable System shall be limited to the optical spectrum wavelength(s), bandwidth or future technological capacity that is used for the transmission of Cable Services directly to Subscribers within the Franchise/Service Area and shall not include the tangible network facilities of a common carrier subject, in whole or in part, to Title II of the Communications Act or of an Information Services provider. 1.8 Channel: Shall be defined herein as it is defined under section 602 of the Communications Act, 47 U.S.C. § 522(4). thereof. 1.9 City: The City of Edmonds or the lawful successor, transferee, or assignee 1.10 Communications Act: The Communications Act of 1934, as amended by, among other things, the Cable Communications Policy Act of 1984, the Cable Consumer Protection and Competition Act of 1992, and the Telecommunications Act of 1996, as it may be further amended from time to time. 1.11 Control: The ability to exercise de facto or de jure control over day-to-day policies and operations or the management of Franchisee's affairs. 1.12 FCC: The United States Federal Communications Commission or successor governmental entity thereto. 1.13 Fiber to the Premise Telecommunications Network ("FTTP Network'): The Franchisee's network that transmits Non -Cable Services pursuant to the authority granted under the laws of the state of Washington and under Title II of the Communications Act (which Non - Cable Services are not subject to Title VI of the Communications Act), and that supports the Cable System. 1.14 Force Majeure: Force Majeure is an event or events reasonably beyond the ability of Franchisee to anticipate and control, such as: (a) severe or unusual weather conditions, fire, flood, or other acts of God, strikes, labor disturbances, lockouts, war or act of war (whether an actual declaration of war is made or not), insurrection, riots or act of a public enemy; (b) actions or inactions of any government instrumentality or public utility including condemnation, accidents for which Franchisee is not primarily responsible or work delays caused by waiting for other utility providers to service or monitor utility poles to which Franchisee's FTTP Network is attached, and unavailability of materials and/or qualified labor to perform the work necessary, and Seattle-3435598.2 0010932-00119 3 (c) telephone network outages only when such outages are outside the control of Franchisee. 1.15 Franchise Area: The incorporated area (entire existing territorial limits) of the City and such additional areas as may be included in the corporate (territorial) limits of the City during the term of this Franchise. 1.16 Franchisee: Verizon Northwest Inc., and its lawful and permitted successors, assigns and transferees. 1.17 Gross Revenue: All revenue, as determined in accordance with generally accepted accounting principles, which is derived by Franchisee and/or its Affiliates from the operation of the Cable System to provide Cable Service in the Service Area. Gross Revenue shall include but may not be limited to the following items so long as all other Cable Operators in the Service Area include the same in Gross Revenues for purposes of calculating franchise fees: (a) fees charged for Basic Service; (b) fees charged to Subscribers for any service tier other than Basic Service; (c) fees charged for premium Channel(s), e.g. HBO, Cinemax, or Showtime; (d) fees charged to Subscribers for any optional, per -channel, or per -program services; (e) charges for installation, additional outlets, relocation, disconnection, reconnection, and change -in-service fees for video or audio programming; (f) fees for downgrading any level of Cable Service programming; (g) fees for service calls; (h) fees for leasing of Channels; (i) rental of customer equipment, including converters (e.g. set top boxes, high definition converters, and digital video recorders) and remote control devices; 0) advertising revenue as set forth herein; (k) revenue from the sale or lease of access Channel(s) or Channel capacity; (1) revenue from the sale or rental of Subscriber lists; (m) revenues or commissions received from the carnage of home shopping channels; (n) fees for any and all music services that are deemed to be a Cable Service over a Cable System; Seattle-3435598.2 0010932-00119 4 (o) revenue from the sale of program guides; (p) late payment fees; (q) forgone revenue that Franchisee chooses not to receive in exchange for trades, barters, services, or other items of value; (r) revenue from NSF check charges; (s) revenue received from programmers as payment for programming content cablecast on the Cable System; and (t) Franchise Fees hereunder. Advertising commissions paid to independent third parties shall not be deducted from advertising revenue included in Gross Revenue. Advertising revenue is based upon the ratio of the number of Subscribers as of the last day of the period for which Gross Revenue is being calculated to the number of Franchisee's Subscribers within all areas covered by the particular advertising source as of the last day of such period, e.g., Franchisee sells two ads: Ad "A" is broadcast nationwide; Ad `B" is broadcast only within Washington. Franchisee has one hundred (100) Subscribers in the Franchise Area, five hundred (500) Subscribers in Washington, and one thousand (1,000) Subscribers nationwide. Gross Revenue as to the City from Ad "A" is ten percent (10%) of Franchisee's revenue therefrom. Gross Revenue as to the City from Ad "B" is twenty percent (20%) of Franchisee's revenue therefrom. Notwithstanding the foregoing, Gross Revenue shall not include: 1.17.1 Revenues received by any Affiliate or other Person in exchange for supplying goods or services used by Franchisee to provide Cable Service over the Cable System; 1.17.2 Bad debts written off by Franchisee in the normal course of its business, provided, however, that bad debt recoveries shall be included in Gross Revenue during the period collected; 1.17.3 Refunds, rebates or discounts made to Subscribers or other third parties; 1.17.4 Any revenues classified, in whole or in part, as Non -Cable Services revenue under federal or state law including, without limitation, revenue received from Telecommunications Services; revenue received from Information Services, including, without limitation, Internet Access service, electronic mail service, electronic bulletin board service, or similar online computer services; and any other revenues attributed by Franchisee to Non -Cable Services in accordance with FCC or state public utility regulatory commission rules, regulations, standards or orders, provided that if any such services are Cable Services at any future time pursuant to applicable law, revenues derived from such services shall be included in Gross Revenues; 1.17.5 Payments by Subscribers for merchandise purchased from any home shopping channel offered as part of the Cable Services; provided, however, that commissions or Seattle-3435598.2 0010932-00119 5 other compensation paid to Franchisee by such home shopping channel for the promotion or exhibition of products or services shall be included in Gross Revenue; 1-17.6 Revenues from the sale of Cable Services on the Cable System to a reseller, when the reseller pays the cable Franchise fees on the resale of Cable Services; 1.17.7 Any tax of general applicability imposed upon Franchisee or upon Subscribers by a city, state, federal or any other governmental entity and required to be collected by Franchisee and remitted to the taxing entity (including, but not limited to, sales/use tax, gross receipts tax, excise tax, utility users tax, public service tax, communication taxes and non -cable franchise fees), provided however, as set forth in Section 1.17(t), Franchise Fees under this Agreement are included in Gross Revenues; 1.17.8 Any foregone revenue which Franchisee chooses not to receive in exchange for its provision of free or reduced cost cable or other communications services to any Person, including without limitation, employees of Franchisee and public institutions or other institutions designated in the Franchise; provided, however, that such foregone revenue which Franchisee chooses not to receive in exchange for trades, barters, services or other items of value shall be included in Gross Revenue; 1.17.9 Sales of capital assets or sales of surplus equipment; 1.17.10 Reimbursement by programmers of marketing costs incurred by Franchisee for the introduction of new programming pursuant to a written marketing agreements; 1.17.11 Directory or Internet advertising revenue including, but not limited to, yellow page, white page, banner advertisement and electronic publishing; 1.17.12 Any fees or charges collected from Subscribers or other third parties for EG Grant. 1.18 Information Services: Shall be defined herein as it is defined under Title I, Section 3 of the Communications Act, 47 U.S.C. §153(20). 1.19 Initial Service Area: The portion of the Franchise Area as outlined in Exhibit A. 1.20 Internet Access: Dial -up or broadband access service that enables Subscribers to access the Internet. 1.21 Non -Cable Services: Any service that does not constitute the provision of Video Programming directly to multiple Subscribers in the Franchise Area including, but not limited to, Information Services and Telecommunications Services. 1.22 Normal Operating Conditions: Those service conditions which are within the control of the Franchisee. Those conditions which are not within the control of the Franchisee include, but are not limited to, natural disasters, civil disturbances, power outages, telephone network outages (to the extent such outages are on non-Verizon networks or caused by Force Majeure), and severe or unusual weather conditions. Those conditions which are ordinarily Seattle-34355982 0010932-00119 6 within the control of the Franchisee include, but are not limited to, special promotions, pay -per - view events, rate increases, regular peak or seasonal demand periods, and maintenance or rebuild of the Cable System. See 47 C.F.R. § 76.309(c)(4)(11). 1.23 Person: An individual, partnership, association, joint stock company, trust, corporation, or governmental entity. 1.24 Public Rights -of -Way: The surface and the area across, in, over, along, upon and below the surface of the public streets, roads, bridges, sidewalks, lanes, courts, ways, alleys, and boulevards, including, public utility easements and public lands and waterways (to the extent the City has authority to grant the use of such waterways) used as Public Rights -of -Way, as the same now or may thereafter exist, which are under the jurisdiction or control of the City. Public Rights -of -Way do not include the airwaves above a right-of-way with regard to cellular or other nonwire communications or broadcast services, nor do Public Rights -of -Way include real property owned in fee by the City unless such property is a public right-of-way. 1.25 Service Area: All portions of the Franchise Area where Cable Service is being offered, including the Initial Service Area and any Additional Service areas. 1.26 Service Date: The date that the Franchisee first provides Cable Service on a commercial basis directly to multiple Subscribers in the Franchise Area. The Franchisee shall memorialize the Service Date by notifying the City in writing of the same, which notification shall become a part of this Franchise. 1.27 Service Interruption: The loss of picture or sound on one or more cable channels. 1.28 Subscriber: A Person who lawfully receives Cable Service over the Cable System with Franchisee's express permission. 1.29 Telecommunications Facilities: Franchisee's existing Telecommunications Services and Information Services facilities and its FTTP Network facilities. 1.30 Telecommunications Services: Shall be defined herein as it is defined under Section 3 of the Communications Act, 47 U.S.C. § 153(46). 1.31 Title II: Title II of the Communications Act. 1.32 Title VI: Title VI of the Communications Act. 1.33 Video Programming: Shall be defined herein as it is defined under Section 602 of the Communications Act, 47 U.S.C. § 522(20). 2. GRANT OF AUTHORITY• LIMITS AND RESERVATIONS 2.1 Grant of Authority: Subject to the terms and conditions of this Agreement and the Communications Act, the City hereby grants the Franchisee the right to own, construct, operate and maintain a Cable System along the Public Rights -of -Way within the Franchise Area, in order Seattle-3435598.2 0010932-00119 7 to provide Cable Service. No privilege or power of eminent domain is bestowed by this grant; nor is such a privilege or power bestowed by this Agreement. 2.2 City's Regulatory Authority: The parties recognize that Franchisee's FTTP Network is being constructed and will be operated and maintained as an upgrade to and/or extension of its existing Telecommunications Facilities for the provision of Non -Cable Services. The jurisdiction of the City over such Telecommunications Facilities is also governed by federal and state law, and the City shall not assert jurisdiction over Franchisee's FTTP Network in contravention of those laws. Therefore, as provided in Section 621 of the Communications Act, 47 U.S.C. § 541, the City's regulatory authority under Title VI of the Communications Act is not applicable to the construction, installation, maintenance, or operation of Franchisee's FTTP Network to the extent the FTTP Network is constructed, installed, maintained, or operated for the purpose of upgrading and/or extending Verizon's existing Telecommunications Facilities for the provision of Non -Cable Services. Nothing in this Agreement shall affect the City's authority, if any, to adopt and enforce lawful regulations with respect to Franchisee's Telecommunications Facilities in the Public Rights -of -Way. 2.3 Term: This Franchise shall become effective on August_, 2008 (the "Effective Date"). The Term of this Franchise shall be fifteen (15) years from the Effective Date unless the Franchise is earlier revoked as provided herein. 2.4 Grant Not Exclusive: The Franchise and the rights granted herein to use and occupy the Public Rights -of -Way to provide Cable Services shall not be exclusive, and the City reserves the right to grant other franchises for similar uses or for other uses of the Public Rights - of -Way, or any portions thereof, to any Person, or to make any such use themselves, at any time during the term of this Franchise. Any such rights which are granted shall not adversely impact the authority as granted under this Franchise. 2.5 Franchise Subject to Federal and State Law: Notwithstanding any provision to the contrary herein, this Franchise is subject to and shall be governed by all applicable provisions of federal law and state law as they may be amended, including but not limited to the Communications Act and any applicable rules, regulations, and orders of the FCC, as amended. 2.6 No Waiver: 2.6.1 The failure of the City on one or more occasions to exercise a right or to require compliance or performance under this Franchise, the Communications Act or any other applicable state or federal law shall not be deemed to constitute a waiver of such right or a waiver of compliance or performance by the City nor to excuse Franchisee from complying or performing, unless such right or such compliance or performance has been specifically waived in writing. 2.6.2 The failure of Franchisee on one or more occasions to exercise a right under this Franchise or applicable law, or to require performance under this Franchise, shall not be deemed to constitute a waiver of such right or of performance of this Agreement, nor shall it excuse the City from performance, unless such right or performance has been specifically waived in writing. Seattle-3435598.2 0010932-00119 8 2.7 Construction of Agreement: 2.7.1 The provisions of this Franchise shall be liberally construed to effect their obj ectives. 2.7.2 Nothing herein shall be construed to limit the scope or applicability of Section 625 of the Communications Act, 47 U.S.C. § 545. 2.8 Police Powers: In executing this Franchise Agreement, the Franchisee acknowledges that its rights hereunder are subject to the lawful police powers of the City. Franchisee agrees to comply with all lawful and applicable general laws and ordinances enacted by the City pursuant to such power. Nothing in the Franchise shall be construed to prohibit the reasonable, necessary and lawful exercise of the City's police powers. However, if the reasonable, necessary and lawful exercise of the City's police power results in any material alteration of the terms and conditions of this Franchise, then the parties shall modify this Franchise to the mutual satisfaction of both parties to ameliorate the negative effects on the Franchisee of the material alteration. Any modifications shall be in writing and signed by both parties. If the parties cannot reach agreement on the above -referenced modification to the Franchise, the parties agree to submit the matter to mediation. The matter submitted to mediation shall be limited to what effect, if any, the City's exercise of police powers has on the terms of the Franchise. In the event mediation does not result in an agreement, then the Franchisee may terminate this Agreement without further obligation to the City or, at Franchisee's option, the parties agree to submit the matter to binding arbitration in accordance with the commercial arbitration rules of the American Arbitration Association (but not necessarily administered by the American Arbitration Association) or as otherwise mutually agreed by the parties. The matter submitted to arbitration shall be limited to what effect, if any, the City's exercise of police powers has on the terms of the Franchise. Nothing in this provision shall require the City to pay for the relocation of Telecommunications Facilities. Such matters are outside the scope of this provision and both parties reserve their rights with respect to such matters. 2.9 Termination of Telecommunications Services. Notwithstanding any other provision of this Agreement, if Franchisee ceases to provide Telecommunications Services over the FTTP Network at any time during the Term and is not otherwise authorized to occupy the Public Rights -of -Way in the Franchise Area, the City may regulate the FTTP Network as a cable system to the extent permitted by Title VI. 3. PROVISION OF CABLE SERVICE 3.1 Service Area: 3.1.1 Initial Service Area: Franchisee shall offer Cable Service to significant numbers of Subscribers in residential areas of the Initial Service Area and may make Cable Service available to businesses in the Initial Service Area, within twelve (12) months of the Service Date of this Franchise, and shall offer Cable Service to all residential areas in the Initial Service Area within thirty-six (36) months of the Service Date of the Franchise, except: (A) for periods of Force Majeure; (B) for periods of delay caused by the City; (C) for periods of delay Seattle-3435598.2 0010932-00119 9 resulting from Franchisee's inability to obtain authority to access rights -of -way in the Service Area; (D) in areas where developments or buildings are subject to claimed exclusive arrangements with other providers; (E) in areas, developments or buildings where Franchisee cannot access under reasonable terms and conditions after good faith negotiation, as determined by Franchisee; and (F) in developments or buildings that Franchisee is unable to provide Cable Service for technical reasons or which require non-standard facilities which are not available on a commercially reasonable basis; and (G) in areas where the occupied residential household density does not meet the density requirements set forth in Section 3.1.2. 3.1.2 Density Requirement: Franchisee shall make Cable Services available to residential dwelling units in all areas of the Service Area where the average density is equal to or greater than thirty (30) residential dwelling units per mile, as measured in strand footage from the nearest technically feasible point on the active FTTP Network trunk or feeder line. Should, through new construction, an area within the Initial Service Area meet the density requirements after the time stated for providing Cable Service as set forth in Sections 3.1.1 and 3.1.2 respectively, Franchisee shall provide Cable Service to such area within twelve (12) months of receiving notice from the City that the density requirements have been met. 3.1.3 Additional Service Areas: Except for the Initial Service Area Franchisee shall not be required to extend its Cable System or to provide Cable Services to any other areas within the Franchise Area during the term of this Franchise or any Renewals thereof except as set forth in this Section 3.1.3. The parties agree that if any land is annexed by the City during the term of this Agreement, such annexed areas shall become part of the Franchise Area and Franchisee shall be required to extend Cable Service within a reasonable time to such annexed area (subject to the exceptions in Section 3.1.1 above), provided that such annexed area: (a) is contiguous to the City, (b) is within Franchisee's Title II service territory, and (c) is served by the video -enabled FTTP Network. If Franchisee intends to serve Additional Service Areas within the Franchise Area, Franchisee shall notify the City in writing of such Additional Service Area at least ten (10) days prior to providing Cable Services in such areas. 3.2 Availability of Cable Service: Franchisee shall make Cable Service available to all residential dwelling units and may make Cable Service available to businesses within the Service Area in conformance with Section 3.1 and Franchisee shall not discriminate between or among any individuals in the availability of Cable Service. Franchisee shall not deny access to Cable Services to any group of potential residential Subscribers because of the income of the residents of the local area in which the group resides. In the areas in which Franchisee shall provide Cable Service, Franchisee shall be required to connect, at Franchisee's expense, other than a standard installation charge, all residential dwelling units that are within one hundred fifty (150) feet of trunk or feeder lines not otherwise already served by Franchisee's FTTP Network. Franchisee shall be allowed to recover, from a Subscriber that requests such connection, actual costs incurred for residential dwelling unit connections that exceed one hundred fifty (150) feet and actual costs incurred to connect any non-residential Subscriber. 3.3 Complimentary Cable Service to Public Buildings: Subject to Section 3.1, Franchisee shall provide without charge within the Service Area, one service outlet (unless otherwise specified in Exhibit B) activated for Basic Service to each public school, police and fire station, public library, government offices, and other buildings used for government Seattle-3435598.2 0010932-00119 10 administration as may be designated by the City, and also required of other cable operators in the Service Area, as provided in Exhibit B; provided, however, that if it is necessary to extend Franchisee's trunk or feeder lines more than one hundred fifty (150) feet solely to provide service to any such school or public building, the City or other appropriate entity shall have the option either of paying Franchisee's direct costs for such extension in excess of one hundred fifty (150) feet, or of releasing Franchisee from the obligation to provide service to such building. Furthermore, Franchisee shall be permitted to recover, from any school or other public building owner entitled to free service, the direct cost of installing, when requested to do so, more than one outlet or concealed inside wiring, or a service outlet requiring more than one hundred fifty (150) feet of drop cable; provided, however, that Franchisee shall charge for the provision of Basic Service to the additional service outlets once installed. Cable Service may not be resold or otherwise used in contravention of Franchisee's rights with third parties respecting programming. Equipment provided by Franchisee, if any, shall be replaced at retail rates if lost, stolen, or damaged due to the negligence or other wrongful acts of the City. 4. SYSTEM OPERATION As provided in Section 2.2, the parties recognize that Franchisee's FTTP Network is being constructed and will be operated and maintained as an upgrade to and/or extension of its existing Telecommunications Facilities. The jurisdiction of the City over such Telecommunications Facilities is restricted by federal and state law, and the City does not and will not assert jurisdiction over Franchisee's FTTP Network in contravention of those limitations. 5. SYSTEM FACILITIES 5.1 Technical Requirement: Franchisee shall operate, maintain, construct and extend the Cable System so as to provide high quality signals and reliable delivery of Casale Services for all cable programming services. The Cable System shall meet or exceed any and all applicable technical performance standards of the FCC, the National Electrical Safety Code, the National Electrical Code and any other applicable federal law and the laws of the State of Washington to the extent not in conflict with federal law and regulations. 5.2 System Characteristics: Franchisee's Cable System shall meet or exceed the following requirements: 5.2.1 The System shall be designed with an initial digital carrier passband between fifty (50) and eight hundred sixty (860) MHz. 5.2.2 The System shall be designed, constructed and maintained to be an active two-way plant for subscriber interaction, if any, required for selection or use of Cable Service. 5.3 Interconnection: The Franchisee shall design its Cable System so that it may be interconnected with other cable systems in the Franchise Area. Interconnection of systems may be made by direct cable connection, microwave link, satellite, or other appropriate methods. Seattle-3435598.2 0010932-00119 11 5.4 Emergency Alert System: Franchisee shall comply with the Emergency Alert System ("EAS") requirements of the FCC and state law in order that emergency messages may be distributed over the System in video and audio formats as required by state and federal law. 6. EG SERVICES 6.1 Access Channels: 6.1.1 In order to ensure availability of educational and government programming, Franchisee shall provide, without charge to the City, on the Basic Service Tier one (1) dedicated Government Access Channel and one (1) shared Educational and Government Access Channel, and Franchisee shall reserve on its Basic Service Tier for the City's future use one (1) additional dedicated Channel for Educational Access and one (1) additional dedicated Channel for Government Access (the "Reserve Channels") (collectively, "Access Channels"). 6.1.2 The parties agree that Franchisee shall retain the right to utilize all such Access Channels, in its sole discretion, during the term of this Franchise until such time that Franchisee activates the City's Access Channels pursuant to Section 6.1 and/or if the City ceases to use the Access Channels during the Term of this Agreement. The City shall comply with applicable law regarding the use of EG Channels. Franchisee shall only be required to provide the Reserve Channels so long as the other Cable Operators in the Franchise Area are also providing similar channels. 6.1.3 Upon the signing of this Agreement, the City hereby notifies Franchisee of its intent to provide programming to be carried on the Government and Educational Access Channels; such notification shall constitute authorization to the Franchisee to transmit such programming within and outside of the City. 6.1.4 The City may activate a Reserve Channel during the Term by providing the Franchisee with written notice of the need for additional Access Channel capacity at least one hundred eighty (180) days prior to the date it intends to activate a Reserve Channel, demonstrated by a programming schedule for EG programming on the existing Government or shared Educational and Government Access Channels, as applicable, consisting of at least six (6) hours per day, which programming for purposes of this calculation shall not include repeat programming generated per day or character -generated programming. Such written notice shall authorize the Franchisee to transmit the Reserve Channel within and outside of the City. 6.1.5 The Franchisee specifically reserves the right to make or change channel assignments in its sole discretion and shall provide notice of such changes as set forth in the Customer Service Standards, Exhibit D, Sections 10.E and 10.G.4. The Access Channels shall be used for community programming related to Educational and/or Governmental activities. The City shall have complete control over the content, scheduling, and administration of the Access Channels and may delegate such functions, or a portion of such functions, to an appropriate designee upon written notice from the City to Franchisee. The Franchisee shall not exercise any editorial control over Access Channel programming. 6.1.6 The City shall provide and ensure suitable video and audio signals for the Access Channels at the Public Safety Building (250 5th Avenue North, Edmonds, WA 98020) Seattle-3435598.2 0010932-00119 12 for the Government Access Channel and at the Edmonds Community College (20000 681h Ave. West, Lynnwood, WA 98036) for the shared Educational and Government Access Channel; and subject to written notification pursuant to Section 6.1.4, the City shall provide and ensure suitable video and audio signals for the Reserve Channels at a single mutually agreeable location (all together, the "EG Origination Sites"). The Franchisee's obligations under this Section 6.1, including its obligation to provide, upstream equipment, lines and facilities necessary to transmit those video and audio signals, shall be subject to the provision by the City, to the extent applicable and without charge to the Franchisee, of: (1) access to the EG Channel Origination Site facility; (2) access to any required EG equipment within the EG Channel Origination Site facility and suitable required space, environmental conditions, electrical power supply, access, and pathways within the EG Channel Origination Site facility; (3) video and audio signals in a mutually agreed upon format suitable for EG Access Channel programming; (4) any third -party consent that may be necessary to transmit EG signals (including, without limitation, any consent that may be required with respect to third - party facilities, including the facilities of the incumbent cable provider, used to transmit EG content to the EG Channel Origination Site from auxiliary locations); and (5) any other cooperation and access to facilities as are reasonably necessary for the Franchisee to fulfill the obligations stated herein. To the extent suitable video and audio signals are provided to Franchisee and the foregoing conditions in Section 6.1 are met, Franchisee shall, within one hundred eighty (180) days of written notice or provision of suitable video and audio signals, whichever is later, provide, install, and maintain in good working order the equipment necessary for transmitting the EG signal to Subscribers. 6.2 EG Grant: 6.2.1 Franchisee shall provide a grant to the City, or its designee (as evidenced by appropriate notice by the City), to be used in support of the production of local EG programming (the "EG Grant"). Such grant shall be used by the City for EG access equipment, including, but not limited to, studio and portable production equipment, editing equipment and program playback equipment, or for renovation or construction of EG access facilities. 6.2.2 If during the Term of this Franchise, all other Cable Operator(s) in the Franchise Area begin to provide an EG Grant on a per subscriber per month basis, Franchisee agrees to match the EG Grant in the amount of up to $0.35 per Subscriber, per month. Subsequently, such amount can be modified as determined by the City Council no more than once each year and the EG Grant shall be no greater than $1.00, per Subscriber, per month, and shall be the same amount required of all other Cable Operators in the Franchise Area. Franchisee's obligation under this Section 6.2.2. is contingent upon all other Cable Operators making the same grant payment on a per Subscriber, per month basis. The City shall give Seattle-3435598.2 0010932-00119 13 Franchisee sixty (60) days prior written notice before changing the amount of the EG Grant under this Section. The EG Grant payment, shall be delivered to the City concurrent with the Franchise Fee payment. 6.2.3 The Franchisee shall provide to the City an initial EG Grant in the amount of Ten Thousand Dollars ($10,000) within ninety (90) days of the Effective Date. Such amount is competitively equitable to the grant made by the incumbent Cable Operator to the City. 6.2.4 The City shall provide Franchisee with a complete accounting annually of the distribution of funds granted pursuant to this Section 6.2. 6.3 The City shall require all local producers and users of any of the EG facilities or Channels to agree in writing to authorize Franchisee to transmit programming consistent with this Agreement and to defend and hold harmless Franchisee and the City, from and against any and all liability or other injury, including the reasonable cost of defending claims or litigation, arising from or in connection with claims for failure to comply with applicable federal laws, rules, regulations or other requirements of local, state or federal authorities; for claims of libel, slander, invasion of privacy, or the infringement of common law or statutory copyright; for unauthorized use of any trademark, trade name or service mark; for breach of contractual or other obligations owed to third parties by the producer or user; and for any other injury or damage in law or equity, which result from the use of a EG facility or Channel. The City shall establish rules and regulations for use of EG facilities, consistent with, and as required by, 47 U.S.C. § 531. 6.4 To the extent permitted by federal law, the Franchisee shall be allowed to recover the costs of an EG Grant or any other costs arising from the provision of EG services from Subscribers and to include such costs as a separately billed line item on each Subscriber's bill. 7. FRANCHISE FEES 7.1 Payment to City: Franchisee shall pay to the City a Franchise fee of five percent (5%) of annual Gross Revenue ("Franchise Fee"). In accordance with Title VI of the Communications Act, the twelve-month (12) period applicable under the Franchise for the computation of the Franchise Fee shall be a calendar year. Such payments shall be made no later than forty-five (45) days following the end of each calendar quarter. Franchisee shall be allowed to submit or correct any payments that were inadvertently omitted, and shall be refunded any payments that were incorrectly submitted, in connection with the quarterly Franchise Fee remittances within ninety (90) days following the close of the calendar year for which such payments were applicable. 7.2 Supporting Information: Each Franchise Fee payment shall be accompanied by a brief report that is verified by a financial manager of Franchisee showing the basis for the computation, substantially similar to that set forth in Exhibit D. No later than forty-five (45) days after the end of each calendar year, Franchisee shall furnish to the City an annual summary of Franchise Fee calculations. Seattle-3435598.2 0010932-00119 14 7.3 Limitation on Franchise Fee Actions: The parties agree that the period of limitation for recovery of any Franchise Fee payable hereunder shall be four (4) years from the date on which payment by Franchisee is due. 7.4 Interest Charge on Late Payments: Late payments for any (i) Franchise Fees due pursuant to Section 7, (ii) EG Grant due pursuant to Section 6, (iii) Franchise Grant due pursuant to Section 14, and (iv) liquidated damages due pursuant to Section 13 shall be subject to the interest at the then -current rate set forth in RCW 19.52.020, which as of the date of execution of this Agreement is twelve percent (12%) per annum from the due date to the date that such payment is made. 7.5 No Release: The City's acceptance of payment shall not be construed as an agreement that the amount paid was correct, nor shall acceptance be construed as a release of any claim which the City may have for additional sums due under provisions of this Section 7. 7.6 No Limitation on Taxing Authority: Nothing in this Franchise shall be construed to limit any authority of the City to impose any tax, fee, or assessment of general applicability. Nothing in this Franchise is intended to preclude Franchisee from exercising any right it may have to challenge the lawfulness of any tax, fee, or assessment imposed by the City or any state or federal agency or authority, or intended to waive any rights the Franchisee may have under 47 U.S.C. § 542. 7.7 EG Grant and Franchise Grant Not Franchise Fees: Franchisee agrees that the EG Grant and Franchise Grant set forth in Sections 6 and 14 respectively, shall in no way modify or otherwise affect Franchisee's obligation to pay Franchise Fees to the City. Franchisee agrees that although the sum of Franchise Fees and the EG Grant and Franchise Grant may total more than five percent (5%) of Franchisee's Gross Revenues in any twelve-month (12) period, the additional commitments are not to be offset or otherwise credited in any way against any Franchise Fee payments under this Franchise. 7.8 Audits: 7.8.1 The parties shall make every effort to informally consult and resolve any questions or issues regarding Franchise Fee or EG Grant payments and nothing herein shall be construed to preclude such informal consultations or review of Franchisee's books. The City may audit or conduct a Franchise Fee review of Franchisee's books and records no more than once every three (3) years during the Term, provided that the City shall require all other Cable Operators in the Franchise Area to be subject to competitively equitable audit requirements in any renewal or initial granting of such franchises after the Effective Date. 7.8.2 All records reasonably necessary for any such audit shall be made available by Franchisee to the City within thirty (30) days of the City's request. 7.8.3 Each party shall bear its own costs of an audit; provided, however, that if the results of any audit indicate that Franchisee underpaid the Franchise Fees by five percent (5%) or more, then Franchisee shall pay the reasonable, documented, out-of-pocket costs of the audit up to Fifteen Thousand Dollars ($15,000). Seattle-3435598.2 0010932-00119 15 7.8.4 If the results of an audit indicate an overpayment of Franchise Fees, the parties agree that any undisputed overpayment shall be offset against future payments if applicable, within forty-five (45) days. If the results of an audit indicate an underpayment of Franchise Fees, the parties agree that any undisputed underpayment shall be paid within forty- five (45) days along with interest as set forth in Section 7.4. 7.8.5 Any audit shall be conducted by an independent third party. Any entity employed by the City that performs the audit or Franchise Fee review shall not be permitted to be compensated on a success based formula, e.g. payment based on an underpayment of fees, if any. 7.9 Bundled Services: If Cable Services subject to the Franchise Fee required under this Article 7 are provided to Subscribers in conjunction with Non -Cable Services, the Franchise Fee shall be applied only to the value of the Cable Services, as reflected on the books and records of Franchisee in accordance with applicable federal or state laws, rules, and regulations, or Washington Utilities and Trade Commission regulations, standards or orders. Franchisee shall not allocate revenue between Cable Services and Non -Cable Services with the purpose of evading or substantially reducing the Franchisee's Franchise Fee obligations to the City. 7.10 Alternative Fees: In the event that Franchise Fees are prohibited by any law or regulation, Franchisee agrees to pay any substitute fee or amount allowed by law up to a maximum amount of five percent (5%) of Gross Revenues, so long as the substitute fee is imposed on all other Cable Operators in the Franchise Area and Franchisee is given thirty (30) days notice of the substitute fee by the City. 8. CUSTOMER SERVICE Customer Service Requirements are set forth in Exhibit D, which shall be binding unless amended by written consent of the parties. 9. REPORTS AND RECORDS 9.1 Open Books and Records: Upon reasonable written notice to the Franchisee and with no less than thirty (30) business days written notice to the Franchisee, the City shall have the right to inspect Franchisee's books and records pertaining to Franchisee's provision of Cable Service in the Franchise Area at any time during normal business hours (those hours during which most similar businesses in the community are open to serve customers) and on a nondisruptive basis, at a mutually agreed upon location in the Franchisee's Title lI territory in Washington, as are reasonably necessary to ensure compliance with the terms of this Franchise. Such notice shall specifically reference the section of the Franchise which is under review, so that Franchisee may organize the necessary books and records for appropriate access by the City. Franchisee shall not be required to maintain any books and records for Franchise compliance purposes longer than six (6) years, provided that if, as a result of reviewing Franchisee's records, the City identifies specific records and requests that such records be retained beyond the six -year (6) period, Franchisee shall retain those records for an additional twelve (12) months. Notwithstanding anything to the contrary set forth herein, Franchisee shall not be required to disclose information that it reasonably deems to be proprietary or confidential in nature, nor Seattle-3435598.2 0010932-00119 16 disclose any of its or an Affiliate's books and records not relating to the provision of Cable Service in the Service Area. The City shall treat any information disclosed by Franchisee as confidential and only disclose it to employees, representatives, and agents thereof that have a need to know, or in order to enforce the provisions hereof, unless otherwise required by law whereupon the City will notify Franchisee pursuant to Section 9.2. Franchisee shall not be required to provide Subscriber information in violation of section 631 of the Communications Act, 47 U.S.C. § 551. 9.2 Public Disclosure: If, in the course of enforcing this Franchise or for any other reason, the City believes it must disclose any Franchisee confidential information pursuant to Washington law, the City shall provide reasonable advance notice of such disclosure so that Franchisee can take appropriate steps to protect its interests. 9.3 Records Required: Franchisee shall at all times maintain: 9.3.1 Records of all written complaints for a period of three (3) years after receipt by Franchisee. The term "complaint" as used herein refers to complaints about any aspect of the Cable System or Franchisee's cable operations, including, without limitation, complaints about employee courtesy. Complaints recorded will not be limited to complaints requiring an employee service call; 9.3.2 Records of outages for a period of three (3) years after occurrence, indicating date, duration, area, and the number of Subscribers affected, type of outage, and cause; 9.3.3 Records of service calls for repair and maintenance for a period of three (3) years after resolution by Franchisee, indicating the date and time service was required, the date of acknowledgment and date and time service was scheduled (if it was scheduled), and the date and time service was provided, and (if different) the date and time the problem was resolved; 9.3.4 Records of installation/reconnection and requests for service extension for a period of three (3) years after the request was fulfilled by Franchisee, indicating the date of request, date of acknowledgment, and the date and time service was extended; and 9.3.5 A map showing the area of coverage for the provisioning of Cable Services and estimated timetable to commence providing Cable Service. 10. INSURANCE AND INDEMNIFICATION 10.1 Insurance: 10.1.1 Franchisee shall maintain in full force and effect, at its own cost and expense, during the Franchise Term, the following insurance coverage: 10.1.1.1 Commercial General Liability Insurance in the amount of two million dollars ($2,000,000) combined single limit for property damage and bodily injury. Such Seattle-34355982 0010932-00119 17 insurance shall cover the construction, operation and maintenance of the Cable System and the conduct of Franchisee's Cable Service business in the City. 10.1.1.2 Automobile Liability Insurance in the amount of two million dollars ($2,000,000) combined single limit for bodily injury and property damage. 10.1.1.3 Workers' Compensation Insurance meeting all legal requirements of the state of Washington. 10.1.1.4 Employers' Liability Insurance in the following amounts: (A) Bodily Injury by Accident: $100,000; and (B) Bodily Injury by Disease: $100,000 employee limit; and (C) Bodily Injury by Disease: $2,000,000 policy limit. 10.1.1.5 Umbrella or excess liability insurance in the amount of three million dollars ($3,000,000). 10.1.2 The City shall be included as an additional insured under each of the insurance policies required in this Article 10 except Worker's Compensation and Employer's Liability Insurance. Franchisee shall provide to the City a copy of the blanket additional insured endorsements for General and Auto liability, or similar documentation demonstrating compliance. Receipt by the City of any certificate showing less coverage than required is not a waiver of Franchisee's obligations to fulfill the requirements. 10.1.3 Each of the required insurance policies shall be with insurers qualified to do business in the State of Washington with an A.M. Best Financial Strength rating of A- or better. 10.1.4 Franchisee shall not cancel any required insurance policy without obtaining alternative insurance in conformance with this Agreement. In the event that the insurance company cancels the policy, Franchisee will work diligently to obtain replacement insurance so there is no gap in coverage. 10.1.5 Franchisee shall deliver to the City Certificates of Insurance showing evidence of the required coverage within thirty (30) days following the Effective Date of this Agreement. 10.1.6 The limits required above may be satisfied with a combination of primary and excess coverage. 10.2 Indemnification: 10.2.1 Franchisee agrees to indemnify, save and hold harmless, and defend the City, its elected officials, officers, agents, boards and employees, from and against any liability, damages or claims, settlements approved by Franchisee pursuant to Section 10.2.2 or judgments, arising out of, or resulting from, the Franchisee's activities pursuant to this Franchise, provided that the City shall give Franchisee written notice of its obligation to indemnify the City within ten (10) days of receipt of a claim or action pursuant to this Section, (or up to thirty (30) days as long as such notice causes no prejudice to the Franchisee). Notwithstanding the foregoing, Seattle-3435598.2 0010932-00119 18 Franchisee shall not indemnify the City, for any damages, liability or claims resulting from the willful misconduct, negligence, or breach of obligation of the City, its officers, agents, employees, attorneys, consultants, or independent contractors, for which the City is legally responsible, or for any activity or function conducted by any Person other than Franchisee in connection with EG Access or EAS. 10.2.2 With respect to Franchisee's indemnity obligations set forth in Section 1 d.2.1, Franchisee shall provide the defense of any claims or actions brought against the City by selecting counsel of Franchisee's choice to defend the claim, subject to the consent of the City, which shall not unreasonably be withheld. Nothing herein shall be deemed to prevent the City from cooperating with the Franchisee and participating in the defense of any litigation by its own counsel at its own cost and expense, provided however, that after consultation with the City, Franchisee shall have the right to defend, settle or compromise any claim or action arising hereunder, and Franchisee shall have the authority to decide the appropriateness and the amount of any such settlement. In the event that the terms of any such proposed settlement includes the release of the City, and the third party is willing to accept the settlement, but the City does not consent to the terms of any such settlement or compromise, Franchisee shall not settle the claim or action but its obligation to indemnify the City shall in no event exceed the amount of such settlement. 11. TRANSFER OF FRANCHISE 11.1 Transfer of the Franchise means: 11.1.1 Any transaction in which: 11.1.1.1 an ownership or other interest in Franchisee, the Franchise or the Cable System is transferred, directly or indirectly, from one Person or group of Persons to another Person or group of Persons, so that Control of Franchisee is transferred; or 11.1.1.2 the rights held by Franchisee under the Franchise are transferred or assigned to another Person or group of Persons. 11.1.2 However, notwithstanding Sections 11.1.1.1 and 11.1.1.2 above, a Transfer of the Franchise shall not include transfer of an ownership or other interest in Franchisee to the parent of Franchisee or to another Affiliate of Franchisee; transfer of an interest in the Franchise or the rights held by the Franchisee under the Franchise to the parent of Franchisee or to another Affiliate of Franchisee; any action which is the result of a merger of the parent of the Franchisee; or any action which is the result of a merger of another Affiliate of the Franchisee. 11.2 Subject to section 617 of the Communications Act, 47 U.S.C. § 537, no Transfer of the Franchise shall occur without the prior written consent of the City, provided that such consent shall not be unreasonably withheld, delayed or conditioned so long as the transferee assumes the obligations of the Franchisee hereunder. No such consent shall be required, however, for a transfer in trust, by mortgage, by other hypothecation, by assignment of any rights, title, or interest of the Franchisee in the Franchise or Cable System in order to secure indebtedness, or otherwise for transactions otherwise excluded under Section 11.1.2 above. Seattle-3435598.2 0010932-00119 19 12. RENEWAL OF FRANCHISE 12.1 The City and Franchisee agree that any proceedings undertaken by the City that relate to the renewal of this Franchise shall be governed by and comply with the provisions of section 626 of the Communications Act, 47 U.S.C. § 546. 12.2 In addition to the procedures set forth in said section 626 of the Communications Act, the City shall notify Franchisee of all of its assessments regarding the identity of future cable -related community needs and interests, as well as the past performance of Franchisee under the then -current Franchise term. The City further agrees that such assessments shall be provided to Franchisee promptly so that Franchisee has adequate time to submit a proposal under 47 U.S.C. § 546 and pursue renewal of the Franchise prior to expiration of its term. 12.3 Notwithstanding anything to the contrary set forth herein, Franchisee and the City agree that at any time during the term of the then current Franchise, while affording the public appropriate notice and opportunity to comment, the City and Franchisee may agree to undertake and finalize informal negotiations regarding renewal of the then current Franchise and the City may grant a renewal thereof. 12.4 Franchisee and the City consider the terms set forth in this Article 12 to be consistent with the express provisions of 47 U.S.C. § 546. 13. ENFORCEMENT AND TERMINATION OF FRANCHISE 13.1 Security: Within thirty (30) days following the Effective Date of this Agreement, Franchisee shall provide to the City security for the faithful performance by Franchisee of all material provisions of this Agreement, provided that the City shall require all other Cable Operators in the Franchise Area to provide competitively equitable security in any renewal or initial granting of such franchises after the Effective Date. Franchisee shall maintain the Security at Twenty -Five Thousand Dollars ($25,000) throughout the term of this Agreement. The form of the security may, at Franchisee's option, be a performance bond, letter of credit, cash deposit, cashier's check or any other security acceptable to the City (the "Security"). Nothing in this security provision is intended to impair or alter any Title 11 security fund rights. 13.1.1 If the Franchisee posts a performance bond, it shall be substantially in the form of Exhibit E. 13.1.2 In the event the Security provided pursuant to the Agreement is not renewed, is cancelled, is terminated or is otherwise impaired, Franchisee shall provide new security pursuant to this Article within sixty (60) days of notice. 13.1.3 Neither cancellation, nor termination nor refusal by surety to extend the bond, nor inability of Franchisee to file a replacement bond or replacement security for its obligations, shall constitute a loss to the City recoverable under the bond. 13.2 Liquidated Damages: Seattle-3435598.2 0010932-00119 20 13.2.1 In the event the City determines that Franchisee has breached this Agreement, after following the procedures in Sections 13.3 and 13.4, the City may assess the following as liquidated damages, provided that the City shall require all other Cable Operators in the Franchise Area to be subject to competitively equitable liquidated damages in any renewal or initial granting of such franchises after the Effective Date: 13.2.1.1 Two hundred fifty dollars ($250) per day for failure to provide EG Access Channels as set forth herein; 13.2.1.2 One hundred fifty dollars ($150) per day for material breach of the customer service standards set forth in Exhibit D; 13.2.1.3 One hundred dollars ($100) per day for failure to provide reports as required by the Franchise; or 13.2.1.4 Up to two hundred fifty dollars ($250) per day for any other material breaches or defaults of this Agreement. 13.2.2 Franchisee shall pay any liquidated damages assessed by the City within thirty (30) days after they are assessed. Liquidated damages shall accrue starting on the first date of the occurrence of the noncompliance. if liquidated damages are not paid within the thirty (30) day period, the City may proceed against the Security. Total liquidated damages shall not exceed Twenty -Five Thousand Dollars ($25,000) in any twelve-month (12) period. 13.2.3 Assessment of liquidated damages shall not constitute a waiver by the City of any other right or remedy it may have under this Franchise or applicable law except as set forth in this Agreement, including without limitation its right to recover from Franchisee such additional damages, losses, costs and expenses, as may have been suffered or incurred by the City by reason of or arising out of such breach of this Franchise. Notwithstanding the foregoing, if the City elects to assess liquidated damages pursuant to this Section, such election shall constitute the City's exclusive remedy for the violation for which the liquidated damages were assessed for a period of sixty (60) days. Thereafter, the remedies provided for in this Agreement are cumulative and not exclusive; the exercise of one remedy shall not prevent the exercise of another remedy, or the exercise of any rights of the City at law or equity, provided that the cumulative remedies may not be disproportionate to the magnitude and severity of the breach for which they are imposed. 13.2.4 Subject to Sections 13.3 and 13.4, and subject to the assessment of any liquidated damages pursuant to Section 13.2, the City may elect to pursue other legal and equitable remedies at any time during the term of this Franchise. 13.3 Notice of Violation: In the event the City believes that Franchisee has not complied with the terms of the Franchise, failed to perform any obligation under this Agreement or has failed to perform in a timely manner, the City shall informally discuss the matter with Franchisee. If these discussions do not lead to resolution of the problem within twenty (20) days, the City shall notify Franchisee in writing, stating with reasonable specificity the nature of the alleged violation (the "Noncompliance Notice"). Seattle-3435598.2 0010932-00119 21 13.4 Franchisee's Right to Cure or Respond.- Franchisee shall have thirty (30) days from receipt of the Noncompliance Notice to: (i) respond to the City, if Franchisee contests (in whole or in part) the assertion of noncompliance; (ii) cure such noncompliance; or (iii) in the event that, by its nature, such noncompliance cannot be cured within such thirty (30) day period, initiate reasonable steps to remedy such noncompliance and notify the City of the steps being taken and the date by which cure is projected to be completed. Upon cure of any noncompliance, the City shall provide written confirmation that such cure has been effected. 13.5 Remedies: Subject to applicable federal and state law, in the event the City, after the procedures set forth in Sections 13.3 and 13.4, determines that Franchisee is in default of any material provision of this Franchise, the City may take the following actions: 13.5.1 Seek specific performance of any provision, which reasonably lends itself to such remedy, as an alternative to damages; 13.5.2 Seek liquidated damages as set forth herein; 13.5.3 Commence an action at law for monetary damages or seek other equitable relief, 13.5.4 In the case of a substantial material default of the Franchise, seek to revoke the Franchise in accordance with Section 13.6. 13.6 Revocation: 13.6.1 As set forth in this Section 13.6, the City may seek to revoke this Franchise in the event of a substantial material default of this Franchise. Should the City seek to revoke this Franchise after following the procedures set forth in Sections 13.3 and 13.4, the City shall give written notice to Franchisee of such intent to revoke this Franchise. This notice of intent to revoke is in addition to the Notice of Noncompliance pursuant to Section 13.3. The notice shall set forth with reasonable specificity the reasons for revocation. The Franchisee shall have thirty (30) days to object in writing and to state its reasons for such objection. In the event the City has not received a satisfactory response from Franchisee, it may then seek termination of the Franchise at a public hearing. The City shall notify the Franchisee in writing of the time and place of the public hearing at least thirty (30) days prior to the public hearing. 13.6.2 At the revocation hearing, Franchisee shall be provided a fair opportunity for full participation, including the right to be represented by legal counsel, to introduce relevant evidence, to compel the testimony of persons as permitted by law, and to question and/or cross examine witnesses. The revocation hearing shall be a public hearing at which members of the public may testify under oath. A complete verbatim record shall be made of the revocation hearing by a court reporter. The costs of such court reporter shall be shared equally by the parties. 13.6.3 Following the public hearing, Franchisee may submit its proposed written findings and conclusions within twenty (20) days of the close of the public hearing. Thereafter, the City shall determine: (i) whether an event of default has occurred; (ii) whether such event of default should be excused; and (iii) whether such event of default has been cured or will be cured Seattle-3435598.2 0010932-00119 22 by the Franchisee; and (iv) whether to revoke the Franchise based on the information presented, or, where applicable, grant additional time to the Franchisee to effect any cure. If the City determines that the Franchise shall be revoked, the City shall promptly provide Franchisee with a written decision setting forth its reasoning. Franchisee may appeal such determination of the City to an appropriate court within thirty (30) days of notice of the City's decision. 13.6.4 The City may, at its sole discretion, take any lawful action which it deems appropriate to enforce the City's rights under the Franchise in lieu of revocation of the Franchise. 13.7 Franchisee Termination: Franchisee shall have the right to terminate this Franchise and all obligations hereunder within ninety (90) days after the third anniversary of the Service Date of this Franchise, if at the end of such three (3) year period Franchisee does not then in good faith believe it has achieved a commercially reasonable level of Subscriber penetration on its Cable System. Franchisee may consider subscriber penetration levels outside the Franchise Area but within the Puget Sound metropolitan area in this determination. Notice to terminate under this Section 13.7 shall be given to the City in writing, with such termination to take effect no sooner than one hundred and twenty (120) days after giving such notice. Franchisee shall also be required to give its then current Subscribers not less than ninety (90) days prior written notice of its intent to cease Cable Service operations. 13.8 The City specifically does not by any provision of this Franchise, waive any immunity or limitation of liability under state or federal law, including but not limited to, section 63 5 A of the Communications Act. 14. MISCELLANEOUS PROVISIONS 14.1 Franchise Grant: Franchisee shall pay the City Ten Thousand Dollars ($10,000.00) (the "Franchise Grant"). The Franchise Grant shall be payable thirty (30) days from the Effective Date, which may be used for any lawful purpose. The City agrees to require competitively similar obligations from other Cable Operators upon the future grant or renewal of a franchise agreement for the provision of Cable Service. To the extent permitted by federal law, Franchisee shall be allowed to recover this amount from Subscribers and may line -item or otherwise pass -through this amount to Subscribers. The reference to the line item shall accurately describe its purpose. 14.2 Equal Employment Opportunity: Franchisee shall comply with all applicable federal and state laws affording nondiscrimination in employment to all individuals regardless of their race, color, religion, age, sex, national origin, sexual orientation or physical disability. 14.3 Actions of Parties: In any action by the City or Franchisee that is mandated or permitted under the terms hereof, such party shall act in a reasonable, expeditious, and timely manner. Furthermore, in any instance where approval or consent is required under the terms hereof, such approval or consent shall not be unreasonably withheld, delayed or conditioned. 14.4 Binding Acceptance: This Agreement shall bind and benefit the parties hereto and their respective successors and assigns, and the promises and obligations herein shall survive the expiration date hereof. Seattle-3435598.2 0010932-00119 23 14.5 Preemption: In the event that federal or state law, rules, or regulations preempt a provision or limit the enforceability of a provision of this Agreement, the provision shall be read to be preempted to the extent, and for the time, but only to the extent and for the time, required by law. In the event such federal or state law, rule or regulation is subsequently repealed, rescinded, amended or otherwise changed so that the provision hereof that had been preempted is no longer preempted, such provision shall thereupon return to full force and effect, and shall thereafter be binding on the parties hereto, without the requirement of further action on the part of the City or Franchisee. 14.6 Force Majeure: Franchisee shall not be held in default under, or in noncompliance with, the provisions of the Franchise, nor suffer any enforcement or liquidated damages relating to noncompliance or default, where such noncompliance or alleged defaults occurred or were caused by a Force Majeure. 14.7 Good Faith Error: Furthermore, the parties hereby agree that it is not the City's intention to subject Franchisee to liquidated damages, forfeitures or revocation of the Franchise for violations of the Franchise where the violation was a good faith error that resulted in no or minimal negative impact on Subscribers. 14.8 Notices: Unless otherwise expressly stated herein, notices required under the Franchise shall be deemed effective three (3) days after having been deposited by first class, postage prepaid, registered or certified mail, return receipt requested or one (1) day after having been deposited with any nationally recognized overnight courier for next day delivery, and addressed to the addressees below. Each party may change its designee by providing written notice to the other party. 14.8.1 Notices to Franchisee shall be mailed to: Verizon Northwest Inc. Attn: Tim McCallion, President 112 Lakeview Canyon Road, CA501 GA Thousand Oaks, CA 91362 with a copy to: Mr. Jack H. White Senior Vice President & General Counsel - Verizon Telecom One Verizon Way Room VC43EO10 Basking Ridge, NJ 07920-1097 Notices to the City shall be mailed to: City of Edmonds Attn: Mayor 121 5th Avenue North Edmonds, WA 98020 Seattle-3435598.2 0010932-00119 24 14.9 Entire Agreement: This Franchise and the Exhibits hereto constitute the entire agreement between Franchisee and the City, and supersede all prior or contemporaneous agreements, representations or understandings (whether written or oral) of the parties regarding the subject matter hereof. Any ordinances or parts of ordinances relating to cable service that conflict with the provisions of this Agreement are superseded by this Agreement. 14.10 Amendments: Amendments to this Franchise shall be mutually agreed to in writing by the parties. No amendment will take effect if it will impair the security set forth in Section 13, unless otherwise agreed by the parties. 14.11 Captions: The captions and headings of articles and sections throughout this Agreement are intended solely to facilitate reading and reference to the sections and provisions of this Agreement. Such captions shall not affect the meaning or interpretation of this Agreement. 14.12 Severability: If any section, sentence, paragraph, term, or provision hereof is determined to be illegal, invalid, or unconstitutional, by any court of competent jurisdiction or by any state or federal regulatory authority having jurisdiction thereof, such determination shall have no effect on the validity of any other section, sentence, paragraph, term or provision hereof, all of which will remain in full force and effect for the term of the Franchise. 14.13 Recitals: The recitals set forth in this Agreement are incorporated into the body of this Agreement as if they had been originally set forth herein. 14.14 FTTP Network Transfer Prohibition: Under no circumstance including, without limitation, upon expiration, revocation, termination, denial of renewal of the Franchise or any other action to forbid or disallow Franchisee from providing Cable Services, shall Franchisee or its assignees be required to sell any right, title, interest, use or control of any portion of Franchisee's FTTP Network including, without limitation, the Cable System and any capacity used for Cable Service or otherwise, to the City or any third party. Franchisee shall not be required to remove the FTTP Network or to relocate the FTTP Network or any portion thereof as a result of revocation, expiration, termination, denial of renewal or any other action to forbid or disallow Franchisee from providing Cable Services. 14.15 No Joint Venture: Nothing herein shall be deemed to create a joint venture or principal -agent relationship between the parties, and neither party is authorized to nor shall either party act toward third persons or the public in any manner that would indicate any such relationship with the other. 14.16 Independent Review: The City and Franchisee each acknowledge that they have received independent legal advice in entering into this Agreement. In the event that a dispute arises over the meaning or application of any term(s) of this Agreement, such term(s) shall not be construed by the reference to any doctrine calling for ambiguities to be construed against the drafter of the Agreement. 14.17 Venue: The venue for any dispute related to this Franchise shall be in the United States District Court for the Western District of Washington in Seattle, provided it has subject Seattle-3435598.2 0010932-00119 25 matter jurisdiction; if no jurisdiction exists, then venue shall be in the Superior Court for King County. 14.18 Attorneys' Fees: If any action or suit arises between Franchisee and the City for breach of this Franchise, the prevailing party, either the City or Franchisee, as the case may be, shall be entitled to recover all of its reasonable attorneys' fees, costs and expenses in connection therewith along with such other relief as the court deems proper. 14.19 Acceptance: By signing this Agreement, Franchisee accepts and agrees to abide by the Franchise and, to the extent consistent with the Franchise, the terms and conditions of Edmonds Municipal Code Chapter 4.68. Franchisee will timely provide to the City the security specified in Section 13.1 and the insurance certificates specified in Section 10A. 14.20 Singular and Plural: Except where the context indicates otherwise, words used herein, regardless of the number specifically used, shall be deemed and construed to include any other number, singular or plural as is reasonable in the context. SIGNATURE PAGE FOLLOWS Seattle-3435598.2 0010932-00119 26 AGREED TO THIS 5iw DAY OFA4 U.S+ , 2008. CITY OF EDMONDS Lo Verizon Northwest Inc. By: / 'lGv[. Tim N �allion, President EXHIBITS Exhibit A: Initial Service Area FD AP DVED AM Date Exhibit B: Municipal Locations and Schools to be Provided Free Cable Service Exhibit C: Remittance Form Exhibit D: Customer Service Standards Exhibit E: Performance Bond Seattle-3435598.2 0010932-00119 27 EXHIBIT A INITIAL SERVICE AREA f }—FkIIXER-LE 1558� _� Service Area Map +g City of Edmonds, WA $ ISsrH �I �serH' IL I 56r1t [Ts7rH .�525i trsorH , g -•••I TH 1• 4, 793 J i 16>;TH 1FE7H . say"-1WiH 1O 4y h 1 a G T-A 20111 i' .20a Y yp• .,•F -1 - ✓ .: i�_$ i w . � 6EL $k8< � � soli � � �. �t �� er :p'� � . r1nY,QA,�i � '� (6�1��i i Y1iTH� ��' y•* rjY � tt yy l SPR CE' 8O ! xi_¢" y 't15SN _�•y ;Li m iiWe y I1sTH �,'GC X/ },,, i �71aTH $-tH-- -x 216TH 21a7H �0 2567 5¢ LFR QOuPeaN Ingial Semie Rees VmFum YHC Coolers Nor) - ven70n Areas Seattle-3435598.2 0010932-00119 28 EXHIBIT B MUNICIPAL LOCATIONS AND SCHOOLS TO BE PROVIDED FREE CABLE SERVICE Existing Buildings: City Hall -Mayor 121 5th Avenue N, Edmonds, WA City Administration 121 5th Avenue N, Edmonds, WA City Meeting Room 121 5th Avenue N, Edmonds, WA Fire Department 121 5th Avenue N, Edmonds, WA Finance Department 121 5th Avenue N, Edmonds, WA City Park Maintenance Building 600 3rd Ave, Edmonds, WA Edmonds Historical Museum 118 5th Avenue N, Edmonds, WA Edmonds Library 650 Main Street, Edmonds, WA Fire Station #16 8429 196th Street SW, Edmonds, WA Fire Station #17 275 6th Avenue N, Edmonds, WA Fire Station #20 23009 88th Avenue W, Edmonds, WA Frances Anderson Center 700 Main Street, Edmonds, WA Meadowdale Clubhouse 6801 Meadowdale Road, Edmonds WA Seattle-3435598.2 0010932-00119 29 Old Public Works 200 Dayton Street, Edmonds, WA Handicapped Access Area — City Council Chamber 250 5th Avenue N, Edmonds, WA City Council Chambers 250 5th Avenue N, Edmonds, WA Police Department 250 5th Avenue N, Edmonds, WA Organization/EG Origination Site 250 5th Avenue N, Edmonds, WA Public Works 7110 210th Street SW, Edmonds, WA Senior Center 220 Railroad Avenue, Edmonds, WA Wade James Theatre 950 Main Street, Edmonds, WA Edmonds Performing Arts Center 410 Fourth Avenue N, Edmonds, WA Yost Pool 9535 Bowdoin Way, Edmonds, WA Scriber Lake High School 23200 100th Avenue W, Edmonds, WA Sherwood Elementary School 22901 106th Avenue W, Edmonds, WA Edmonds Elementary School 1215 Olympic Avenue, Edmonds, WA Chase Lake Community School 21603 84th Avenue W, Edmonds, WA Boys & Girls Club 310 6th Avenue N, Edmonds, WA Seattle-34355982 0010932-00119 30 Edmonds-Woodway High School 7600 212th Street SW, Edmonds, WA Seaview Elementary School 8426 188th Street SW, Edmonds, WA Maplewood K-8 8500 200th Street SW, Edmonds, WA Woodway Elementary School 9521 240th Street SW, Edmonds, WA Westgate Elementary 9601 220th Street SW, Edmonds, WA Olympic View Water & Sewer District 23725 Edmonds Way, Edmonds, WA Port of Edmonds Administration Offices 336 Admiral Way, Edmonds, WA Edmonds Memorial Cemetery 820 15th SW, Edmonds, WA Edmonds School District 15619 56th Avenue W, Edmonds, WA Edmonds School District #15 (Meadowdale) 6505 168th Street SW, Edmonds, WA Edmonds School District #15 6th Avenue N, Edmonds, WA Madrona School 9300 236th Street, Edmonds, WA In the event that an existing building listed above is demolished and rebuilt in the same or different location in the Service Area, Franchisee will provide, subject to the terms and conditions set forth in Section 3.3, one service outlet activated for Basic Service so long as all other Cable Operators in the Franchise Area provide service at such location. Future Buildings: Franchisee will provide, subject to the terms and conditions set forth in Section 3.3 of this Franchise, one service outlet active for Basic Service at up to five (5) future public buildings in the Service Area so long as all other Cable Operators in the Franchise Area provide service to at least the same number of future locations. Seattle-3435598.2 0010932-00119 31 EXHIBIT C RENUTTANCE FORM Franchise Fee Schedule/Report (Quarter and x"ear) City of XxXY Verizon - fGTE Washington Franchise Fee Rate: 5.00% Month 1 Month 2 Month 3 Total Monthly Recurring Cable $0.00 $0.00 $0.00 $0.00 Service Charges (e.g. Basic, Enhanced Basic, Premium and Equipment Rental Usage Based Charges $0.00 $0.00 $0.00 $0.00 (e.g. PayPer View, Installation Advertising $0.00 $0.00 $0.00 $0.00 Home Shopping $0.00 $0.00 $0.00 $0.00 Late Payment $0.00 $0.00 $0.00 $0.00 Other Misc. (Leased $0.00 $0.00 $0.00 $0.00 Access & Other Misc.) Franchise Fee Billed $0.00 $0.00 $0.00 $0.00 PEG Fee Billed $0.00 $0.00 $0.00 $0.00 Less: Bad Debt Total Receipts Subject to $0.00 $0.00 $0.00 $0.00 Franchise Fee Calculation Franchise Fee Due $0.00 $0.00 $0.00 $0.00 Verizon Northwest Inc. is hereby requesting that this information be treated as confidential and proprietary commercial trade secret information and financial statements and not disclosed in accordance with section XXXX and the Cable Television Franchise Agreement granted to Verizon Northwest Inc. This information is not otherwise readily ascertainable or publicly available by proper means by other persons from another source in the same configuration as provided herein, would cause substantial harm to competitive position of Verizon in the highly competitive video marketplace if disclosed, is intended to be proprietary confidential business information and is treated by Verizon as such. Seattle-3435598.2 0010932-00119 32 EXHIBIT D CUSTOMER SERVICE STANDARDS These standards shall, starting six (6) months after the Service Date, apply to Franchisee to the extent it is providing Cable Services over the Cable System in the Franchise area. For the first six (6) months after the Service Date, Franchisee shall use best efforts to comply with the Customer Service Standards provided herein; it being agreed, however, that the City will not impose liquidated damages during this first six (6) month period if Franchisee using best efforts fails to meet the Customer Service Standards. SECTION 1: DEFINITIONS A. Normal Operating Conditions: Those service conditions which are within the control of Franchisee, as defined under 47 C.F.R. § 76.309(c)(4)(ii). Those conditions which are not within the control of Franchisee include, but are not limited to, natural disasters, civil disturbances, power outages, telephone network outages that are not within the control of the Franchisee, and severe or unusual weather conditions. Those conditions which are ordinarily within the control of Franchisee include, but are not limited to, special promotions, pay -per -view events, rate increases, regular peak or seasonal demand periods, and maintenance or rebuild of the Cable System. B. Respond: The start of Franchisee's investigation of a Service Interruption by receiving a Subscriber call, and opening a trouble ticket, and begin working, if required. C. Service Call: The action taken by Franchisee to correct a Service Interruption the effect of which is limited to an individual Subscriber. D. Service Interruption: The loss of picture or sound on one or more cable channels. E. Significant Outage: A significant outage of the Cable Service shall mean any Service Interruption lasting at least four (4) continuous hours that affects at least ten percent (10%) of the Subscribers in the Service Area. F. Standard Installation: Installations where the Subscriber is within one hundred fifty (150) feet of trunk or feeder lines. SECTION 2: TELEPHONE AVAILABILITY A. Franchisee shall maintain a toll -free number to receive all calls and inquiries from Subscribers in the Franchise Area and/or residents regarding Cable Service. Franchisee representatives trained and qualified to answer questions related to Cable Service in the Service Area must be available to receive reports of Service Interruptions twenty-four (24) hours a day, seven (7) days a week, all other inquiries at least forty-five (45) hours per week. Franchisee representatives shall identify themselves by name when answering this number. B. Franchisee's telephone numbers shall be listed, with appropriate description (e.g. administration, customer service, billing, repair, etc.), in the directory published by the local Seattle-3435598.2 0010932-00119 33 telephone company or companies serving the Service Area, beginning with the next publication cycle after acceptance of this Franchise by Franchisee. C. Franchisee may use an Automated Response Unit ("ARU") or a Voice Response Unit ("VRU") to distribute calls. If a foreign language routing option is provided, and the Subscriber does not enter an option, the menu will default to the first tier menu of English options. After the first tier menu (not including a foreign language rollout) has run through three times, if customers do not select any option, the ARU or VRU will forward the call to a queue for a live representative. Franchisee may reasonably substitute this requirement with another method of handling calls from customers who do not have touch-tone telephones. D. Under Normal Operating Conditions, calls received by the Franchisee shall be answered within thirty (30) seconds. The Franchisee shall meet this standard for ninety percent (90%) of the calls it receives at call centers receiving calls from Subscribers, as measured on a cumulative quarterly calendar basis. Measurement of this standard shall include all calls received by the Franchisee at all call centers receiving calls from Subscribers, whether they are answered by a live representative, by an automated attendant, or abandoned after thirty (30) seconds of call waiting. If the call needs to be transferred, transfer time shall not exceed thirty (30) seconds. E. Under Normal Operating Conditions, callers to the Franchisee shall receive a busy signal no more than three (3%) percent of the time during any calendar quarter. F. Upon request from the City, but in no event more than once a quarter, forty-five (45) days following the end of each quarter, the Franchisee shall report to the City the following for all call centers receiving calls from Subscribers except for temporary telephone numbers set up for national promotions: (1) Percentage of calls answered within thirty (30) seconds as set forth in Section 2.1); and (2) Percentage of time customers received a busy signal when calling the Franchisee's service center as set forth in Section 2.E. Subject to consumer privacy requirements, underlying activity will be made available to the City for review upon reasonable request. G. At the Franchisee's option, the measurements and reporting above may be changed from calendar quarters to billing or accounting quarters one time during the term of this Agreement. Franchisee shall notify the City of such a change not less than thirty (30) days in advance. SECTION 3: INSTALLATIONS AND SERVICE APPOINTMENTS A. All installations will be in accordance with FCC rules, including but not limited to, appropriate grounding, connection of equipment to ensure reception of Cable Service, and the Seattle-3435598.2 0010932-00119 34 provision of required consumer information and literature to adequately inform the Subscriber in the utilization of Franchisee -supplied equipment and Cable Service. B. The Standard Installation shall be performed within seven (7) business days after an order is placed if the Optical Network Terminal ("ONT") is already installed on the customer's premises. The Standard Installation shall be performed within fourteen (14) business days where there is no ONT at the time of service order. Franchisee shall meet this standard for ninety-five percent (95%) of the Standard Installations it performs, as measured on a calendar quarter basis, excluding those requested by the customer outside of these time periods. C. The Franchisee shall provide the City with a report upon request from the City, but in no event more than once a quarter, noting the percentage of Standard Installations completed within the time periods provided in Section 3.B. Subject to consumer privacy requirements, underlying activity will be made available to the City for review upon reasonable request. D. At Franchisee's option, the measurements and reporting above may be changed from calendar quarters to billing or accounting quarters one time during the term of this Agreement. Franchisee shall notify the City of such a change not less than thirty (30) days in advance. E. Franchisee will offer Subscribers "appointment window" alternatives for arrival to perform installations, Service Calls and other activities of a maximum four (4) hours scheduled time block during appropriate daylight available hours, usually beginning at 8:00 AM unless it is deemed appropriate to begin earlier by location exception. At Franchisee's discretion, Franchisee may offer Subscribers appointment arrival times other than these four (4) hour time blocks, if agreeable to the Subscriber. These hour restrictions do not apply to weekends. (1) Franchisee may not cancel an appointment window with a customer after the close of business on the business day prior to the scheduled appointment. (2) If Franchisee's representative is running late for an appointment with a customer and will not be able to keep the appointment as scheduled, the customer will be contacted. The appointment will be rescheduled, as necessary, at a time which is convenient for the customer. F. Franchisee must provide for the pick up or drop off of equipment free of charge in one of the following manners: (i) by having a Franchisee representative going to the Subscriber's residence, (ii) by using a mailer, or (iii) by establishing a local business office within the Franchise Area. If requested by a mobility -limited customer, the Franchisee shall arrange for pickup and/or replacement of converters or other Franchisee equipment at Subscriber's address or by a satisfactory equivalent. Seattle-3435598.2 0010932-00119 35 SECTION 4: SERVICE INTERRUPTIONS AND OUTAGES A. Franchisee shall promptly notify the City of any Significant Outage of the Cable Service. B. Franchisee shall exercise commercially reasonable efforts to limit any Significant Outage for the purpose of maintaining, repairing, or constructing the Cable System. Except in an emergency or other situation necessitating a more expedited or alternative notification procedure, Franchisee may schedule a Significant Outage for a period of more than four (4) hours during any twenty-four (24) hour period only after the City and each affected Subscriber in the Service Area have been given fifteen (15) days prior notice of the proposed Significant Outage. Notwithstanding the foregoing, Franchisee may perform modifications, repairs and upgrades to the System between 12:01 a.m. and 6 a.m. which may interrupt service, and this Section's notice obligations respecting such possible interruptions will be satisfied by notice provided to Subscribers upon installation and in the annual Subscriber notice. C. Franchisee representatives who are capable of responding to Service Interruptions must be available to Respond twenty-four (24) hours a day, seven (7) days a week. D. Under Normal Operating Conditions, Franchisee must Respond to a call from a Subscriber regarding a Service Interruption or other service problems within the following time frames: (1) Within twenty-four (24) hours, including weekends, of receiving Subscriber calls about Service Interruptions in the Service Area. (2) Franchisee must begin actions to correct all other Cable Service problems the next business day after notification by the Subscriber or the City of a Cable Service problem. E. Under Normal Operating Conditions, Franchisee shall complete Service Calls within seventy-two (72) hours of the time Franchisee commences to Respond to the Service Interruption, not including weekends and situations where the Subscriber is not reasonably available for a Service Call to correct the Service Interruption within the seventy-two (72) hour period. F. Franchisee shall meet the standard in Section E of this Section for ninety percent (90%) of the Service Calls it completes, as measured on a quarterly basis. G. Franchisee shall provide the City with a report upon request from the City, but in no event more than once a quarter, forty-five (45) days following the end of each calendar quarter, noting the percentage of Service Calls completed within the seventy-two (72) hour period not including Service Calls where the Subscriber was reasonably unavailable for a Service Call within the seventy-two (72) hour period as set forth in this Section. Subject to consumer privacy requirements, underlying activity will be made available to the City for review upon reasonable request. At the Franchisee's option, the above measurements and reporting may be changed from calendar quarters to billing or accounting quarters one time during the term of this Agreement. Franchisee shall notify the City of such a change at least thirty (30) days in advance of any implementation. Seattle-3435598.2 0010932-00119 36 H. Under Normal Operating Conditions, Franchisee shall provide a credit upon Subscriber request when all Channels received by that Subscriber are out of service for a period of four (4) consecutive hours or more. The credit shall equal, at a minimum, a proportionate amount of the affected Subscriber(s) current monthly bill. In order to qualify for the credit, the Subscriber must promptly report the problem and allow Franchisee to verify the problem if requested by Franchisee. If Subscriber availability is required for repair, a credit will not be provided for such time, if any, that the Subscriber is not reasonably available. I. Under Normal Operating Conditions, if a Significant Outage affects all Video Programming Cable Services for more than twenty-four (24) consecutive hours, Franchisee shall issue an automatic credit to the affected Subscribers in the amount equal to their monthly recurring charges for the proportionate time the Cable Service was out, or a credit to the affected Subscribers in the amount equal to the charge for the basic plus enhanced basic level of service for the proportionate time the Cable Service was out, whichever is technically feasible or, if both are technically feasible, as determined by Franchisee provided such determination is non- discriminatory. Such credit shall be reflected on Subscriber billing statements within the next available billing cycle following the outage. J. With respect to service issues concerning Cable Services provided to the City facilities, Franchisee shall Respond to all inquiries from the City within four (4) hours and shall commence necessary repairs within twenty-four (24) hours under Normal Operating Conditions and shall diligently pursue to completion. If such repairs cannot be completed within twenty- four (24) hours, Franchisee shall notify the City in writing as to the reason(s) for the delay and provide an estimated time of repair. SECTION 5: CUSTOMER COMPLAINTS REFERRED BY THE CITY Under Normal Operating Conditions, Franchisee shall begin investigating Subscriber complaints referred by the City within seventy-two (72) hours. Franchisee shall notify the City of those matters that necessitate an excess of five (5) business days to resolve, but Franchisee must make all necessary efforts to resolve those complaints within ten (10) business days of the initial complaint. The City may require Franchisee to provide reasonable documentation to substantiate the request for additional time to resolve the problem. Franchisee shall inform the City in writing, which may be by an electronic mail message, of how and when referred complaints have been resolved within a reasonable time after resolution. For purposes of this Section, "resolve" means that Franchisee shall perform those actions, which, in the normal course of business, are necessary to (a) investigate the Customer's complaint; (b) advise the Customer of the results of that investigation; and (c) implement and complete steps to bring resolution to the matter in question. SECTION 6: BILLING A. Subscriber bills must be itemized to describe Cable Services purchased by Subscribers and related equipment charges. Bills will comply with applicable federal and state laws, and shall clearly delineate activity during the billing period, including optional charges, rebates, credits, and aggregate late charges. Franchisee shall, without limitation as to additional line items, be allowed to itemize as separate line items, Franchise fees, taxes and/or other Seattle-3435598.2 0010932-00119 37 governmental -imposed fees. Franchisee shall maintain records of the date and place of mailing of bills. B. Every Subscriber with a current account balance sending payment directly to Franchisee shall be given at least twenty (20) days from the date statements are mailed to the Subscriber until the payment due date. C. A specific due date shall be listed on the bill of every Subscriber whose account is current. Delinquent accounts may receive a bill which lists the due date as upon receipt; however, the current portion of that bill shall not be considered past due except in accordance with Section 6.13. above. D. Any Subscriber who, in good faith, disputes all or part of any bill shall have the option of withholding the disputed amount without disconnect or late fee being assessed until the dispute is resolved, provided that: (1) The Subscriber pays all undisputed charges; (2) The Subscriber provides notification of the dispute to Franchisee within five (5) days prior to the due date; and (3) The Subscriber cooperates in determining the accuracy and/or appropriateness of the charges in dispute. (4) It shall be within Franchisee's sole discretion to determine when the dispute has been resolved. E. Under Normal Operating Conditions, Franchisee shall initiate investigation and resolution of all billing complaints received from Subscribers within five (5) business days of receipt of the complaint. Final resolution shall not be unreasonably delayed. F. Franchisee shall provide a telephone number and address clearly and prominently on the bill for Subscribers to contact Franchisee. G. Franchisee shall forward a copy of any rate -related or customer service -related billing inserts or other mailings related to Cable Service, but not promotional materials, sent to Subscribers, to the City. H. Franchisee shall provide all Subscribers with the option of paying for Cable Service by check or an automatic payment option where the amount of the bill is automatically deducted from a checking account designated by the Subscriber. Franchisee may in the future, at its discretion, permit payment by using a major credit card on a preauthorized basis. Based on credit history, at the option of Franchisee, the payment alternative may be limited. Seattle-3435598.2 0010932-00119 38 SECTION 7: DEPOSITS, REFUNDS AND CREDITS A. Franchisee may require refundable deposits from Subscribers 1) with a poor credit or poor payment history, 2) who refuse to provide credit history information to Franchisee, or 3) who rent Subscriber equipment from Franchisee, so long as such deposits are applied on a non- discriminatory basis. The deposit Franchisee may charge Subscribers with poor credit or poor payment history or who refuse to provide credit information may not exceed an amount equal to an average Subscriber's monthly charge multiplied by six (6). The maximum deposit Franchisee may charge for Subscriber equipment is the cost of the equipment which Franchisee would need to purchase to replace the equipment rented to the Subscriber. B. Franchisee shall refund or credit the Subscriber for the amount of the deposit collected for equipment, which is unrelated to poor credit or poor payment history, after one year and provided the Subscriber has demonstrated good payment history during this period. Franchisee shall pay interest on deposits if required by law. C. Under Normal Operating Conditions, refund checks will be issued within the next available billing cycle following the resolution of the event giving rise to the refund, (e.g. equipment return and final bill payment). D. Credits for Cable Service will be issued no later than the Subscriber's next available billing cycle, following the determination that a credit is warranted, and the credit is approved and processed. Such approval and processing shall not be unreasonably delayed. E. Bills shall be considered paid when appropriate payment is received by Franchisee or its authorized agent. Appropriate time considerations shall be included in Franchisee's collection procedures to assure that payments due have been received before late notices or termination notices are sent. SECTION 8: RATES, FEES AND CHARGES A. Franchisee shall not, except to the extent expressly permitted by law, impose any fee or charge for Service Calls to a Subscriber's premises to perform any repair or maintenance work related to Franchisee equipment necessary to receive Cable Service, except where such problem is caused by a negligent or wrongful act of the Subscriber (including, but not limited to a situation in which the Subscriber reconnects Franchisee equipment incorrectly) or by the failure of the Subscriber to take reasonable precautions to protect Franchisee's equipment (for example, a dog chew). B. Franchisee shall provide reasonable notice to Subscribers of the possible assessment of a late fee on bills or by separate notice. C. All of Franchisee's rates and charges shall comply with applicable federal and state law. Franchisee shall maintain a complete current schedule of rates and charges for Cable Services on file with the City throughout the term of this Franchise. Seattle-3435598.2 0010932-00119 39 SECTION 9: DISCONNECTION /DENIAL OF SERVICE A. Franchisee shall not terminate Cable Service for nonpayment of a delinquent account unless Franchisee mails a notice of the delinquency and impending termination prior to the proposed final termination. The notice shall be mailed to the Subscriber to whom the Cable Service is billed. The notice of delinquency and impending termination may be part of a billing statement. B. Cable Service terminated in error must be restored without charge within twenty- four (24) hours of notice. If a Subscriber was billed for the period during which Cable Service was terminated in error, a credit shall be issued to the Subscriber if the Service Interruption was reported by the Subscriber. C. Nothing in these standards shall limit the right of Franchisee to deny Cable Service for non-payment of previously provided Cable Services, refusal to pay any required deposit, theft of Cable Service, damage to Franchisee's equipment, abusive and/or threatening behavior toward Franchisee's employees or representatives, or refusal to provide credit history information or refusal to allow Franchisee to validate the identity, credit history and credit worthiness via an external credit agency. D. Charges for cable service will be discontinued at the time of the requested termination of service by the Subscriber, except equipment charges may by applied until equipment has been returned. No period of notice prior to requested termination of service can be required of Subscribers by Franchisee. No charge shall be imposed upon the Subscriber for or related to total disconnection of Cable Service or for any Cable Service delivered after the effective date of the disconnect request, unless there is a delay in returning Franchisee equipment or early termination charges apply pursuant to the Subscriber's service contract. If the Subscriber fails to specify an effective date for disconnection, the Subscriber shall not be responsible for Cable Services received after the day following the date the disconnect request is received by Franchisee. For purposes of this Section, the term "disconnect" shall include Subscribers who elect to cease receiving Cable Service from Franchisee. SECTION 10: COMMUNICATIONS WITH SUBSCRIBERS A. Each employee of the Franchisee who routinely comes into contact with members of the public at their places of residence must wear a picture identification card clearly indicating his or her employment with the Franchisee. The photograph on the identification card shall prominently show the employee's name and/or identification number. Such employee shall prominently display such identification card and shall show it to all such members of the public. Each employee of any contractor or subcontractor of the Franchisee who routinely comes into contact with members of the public at their places of residence must wear a picture identification card clearly indicating his or her name, the name of such contractor or subcontractor and the name of the Franchisee. B. All contact with a Subscriber or potential Subscriber by a Person representing Franchisee shall be conducted in a courteous manner. Seattle-3435598.2 0010932-00119 40 C. Franchisee shall send annual notices to all Subscribers informing them that any complaints or inquiries not satisfactorily handled by Franchisee may be referred to the City. A copy of the annual notice required under this Section 10.0 will be given to the City at least fifteen (15) days prior to distribution to Subscribers. D. All notices identified in this Section shall be by either: (1) A separate document included with a billing statement or included on the portion of the monthly bill that is to be retained by the Subscriber; or (2) A separate electronic notification. E. Franchisee shall provide reasonable notice to Subscribers and the City of any pricing changes or additional changes (excluding sales discounts, new products or offers) and, subject to the forgoing, any changes in Cable Services, including channel line-ups. Such notice must be given to Subscribers a minimum of thirty (30) days in advance of such changes if within the control of Franchisee. Franchisee shall provide a copy of the notice to the City including how and where the notice was given to Subscribers. F. Upon request by any Subscriber, Franchisee shall make available a parental control or lockout device to enable a Subscriber to control access to both the audio and video portions of any or all Channels. Franchisee shall inform its Subscribers of the availability of the lockout device at the time of their initial subscription and periodically thereafter. G. Franchisee shall provide information to all Subscribers about each of the following items at the time of installation of Cable Services, annually to all Subscribers, at any time upon request, and, subject to Section 10.E., at least thirty (30) days prior to making significant changes in the information required by this Section if within the control of Franchisee: (1) Products and Cable Service offered; (2) Prices and options for Cable Services and condition of subscription to Cable Services. Prices shall include those for Cable Service options, equipment rentals, program guides, installation, downgrades, late fees and other fees charged by Franchisee related to Cable Service; (3) Installation and maintenance policies including, when applicable, information regarding the Subscriber's in -home wiring rights during the period Cable Service is being provided; (4) Channel positions of Cable Services offered on the Cable System; (5) Complaint procedures, including the name, address, and telephone number of the City, but with a notice advising the Subscriber to initially contact Franchisee about all complaints and questions; (6) Procedures for requesting Cable Service credit; Seattle-3435598.2 0010932-00119 41 (7) The availability of a parental control device; (8) Franchisee practices and procedures for protecting against invasion of privacy; and (9) The address and telephone number of Franchisee's office to which complaints may be reported. A copy of notices required in this Section 10.G. will be given to the City at least fifteen (15) days prior to distribution to Subscribers if the reason for notice is due to a change that is within the control of Franchisee and as soon as possible if not within the control of Franchisee. H. Notices of changes in rates shall indicate the Cable Service new rates and old rates, if applicable. I. Notices of changes of Cable Services and/or Channel locations shall include a description of the new Cable Service, the specific channel location, and the hours of operation of the Cable Service if the Cable Service is only offered on a part-time basis. In addition, should the Channel location, hours of operation, or existence of other Cable Services be affected by the introduction of a new Cable Service, such information must be included in the notice. J. Every notice of termination of Cable Service shall include the following information: (1) The name and address of the Subscriber whose account is delinquent; (2) The amount of the delinquency for all services billed; (3) The date by which payment is required in order to avoid termination of Cable Service; and (4) The telephone number for Franchisee where the Subscriber can receive additional information about their account and discuss the pending termination. K. Franchisee will comply with privacy rights of Subscribers in accordance with applicable federal and state law, including 47 U.S.C. §551. Seattle-3435598.2 0010932-00119 42 EXHIBIT E PERFORMANCE BOND Bond No. KNOW ALL MEN BY THESE PRESENTS: That (name & address) (hereinafter called the Principal), and (name and address) (hereinafter called the Surety), a corporation duly organized under the laws of the State of (state),- are held and firmly bound unto (name & address) (hereinafter called the Obligee), in the full and just sum of Dollars ($ ), the payment of which sum, well and truly to be made, the said Principal and Surety bind themselves, their heirs, administrators, executors, and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal and Obligee have entered into a Franchise Agreement dated which is hereby referred to and made a part hereof. WHEREAS, said Principal is required to perform certain obligations under said Agreement. WHEREAS, the Obligee has agreed to accept this bond as security against default by Principal of performance of its obligations under said Agreement during the time period this bond is in effect. NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH that if the Principal shall perform its obligations under said Agreement, then this obligation shall be void, otherwise to remain in full force and effect, unless otherwise terminated, cancelled or expired as hereinafter provided. PROVIDED HOWEVER, that this bond is executed subject to the following express provisions and conditions: In the event of default by the Principal, Obligee shall deliver to Surety a written statement of the details of such default within 30 days after the Obligee shall learn of the same, such notice to be delivered by certified mail to address of said Surety as stated herein. This Bond shall be effective 20, and shall remain in full force and effect thereafter for a period of one year and will automatically extend for additional one year periods from the expiry date hereof, or any future expiration date, unless the Surety provides to the Obligee not less than sixty (60) days advance written notice of its intent not to renew this Bond or unless the Bond is earlier canceled pursuant to the following. This Bond may be canceled at any time upon sixty (60) days advance written notice from the Surety to the Obligee. Bond No. Seattle-3435598.2 0010932-00119 43 Neither cancellation, termination nor refusal by Surety to extend this bond, nor inability of Principal to file a replacement bond or replacement security for its obligations under said Agreement, shall constitute a loss to the Obligee recoverable under this bond. No claim, action, suit or proceeding shall be instituted against this bond unless same be brought or instituted and process served within one year after termination or cancellation of this bond. No right of action shall accrue on this bond for the use of any person, corporation or entity other than the Obligee named herein or the heirs, executors, administrators or successors of the Obligee. The aggregate liability of the surety is limited to the penal sum stated herein regardless of the number of years this bond remains in force or the amount or number of claims brought against this bond. This bond is and shall be construed to be strictly one of suretyship only. If any conflict or inconsistency exists between the Surety's obligations as described in this bond and as may be described in any underlying agreement, permit, document or contract to which this bond is related, then the terms of this bond shall supersede and prevail in all respects. This bond shall not bind the Surety unless it is accepted by the Obligee by signing below. IN WITNESS WHEREOF, the above bounded Principal and Surety have hereunto signed and sealed this bond effective this day of , 2008. Principal Surety LO-A IM Accepted by Obligee: _ (Signature & date above - Print Name, Title below) , Attorney -in -Fact Seattle-34355982 0010932-00119 44 STATE OF WASHINGTON, COUNTY OF SNOHOMISH SUMMARY OF ORDINANCE NO. 3693 of the City of Edmonds, Washington On the 29th. day of July, 2008, the City Council of the City of Edmonds, passed Or- dinance No. 3693. A summa- ry of the content of said ardl.. nsnco, earrslsilng of the title, rdes as loifows: ORDINANCE OF THE CITY OF EDMONDS. WA- SHINGTON GRANTING A NONEXCLUSIVE FRAN- CHISE TO VERIZON NORTHWEST, INC. TO CONSTRUCT, MAINTAIN, OPERATE AND REPAIR A CABLE SYSTEM TO PRO- VIDE CABLE SERVICES IN, ACROSS, OVER_ ALONG, UNDER, UPON, THRGVGH AND BELOW THE PUBLIC' RIGHTS -OF -WAY OF THE CITY OF EDMONDS; PRO- VIDING FOR SEVERASILITY AND ES- TABLISHING AN FFFEC• THE DATE - The lull text of INs Ordi- nance will be mailed upon rcquesL DATED [his 30Ih day of My, 2008. C ITY C LERK SANDiiA S. CHASE Published: August 3.2008. RECEIVED AUG 112008 EDMONDS CITY CLERK Account Name: City of Edmonds Affidavit of Publication S.S. The undersigned, being first duly sworn on oath deposes and says that she is Principal Clerk of THE HERALD, a daily newspaper printed and published in the City of Everett, County of Snohomish, and State of Washington; that said newspaper is a newspaper of general circulation in said County and State; that said newspaper has been approved as a legal newspaper by order of the Superior Court of Snohomish County and that the notice Summary of Ordinance No. 3693 Verizon NW. Inc Franchise a printed copy of which is hereunto attached, was published in said newspaper proper and not in supplement form, in the regular and entire edition of said paper on the following days and times, namely: August 03, 2008 and that said newspaper was regularly distributed to its subscribers during all of said period. Subscribed and sworn to before me this day of August, 2008 4th Notary Public in an ar th State of1�Qsi1 vr�, Irk at E�ei County. Account Number. 1014 i0111 I OF ASNk 0001604568 ORDINANCE NO.3763 AN ORDINANCE OF THE CITY OF EDMONDS, WASHINGTON, APPROVING TRANSFER OF CONTROL OF THE FRANCHISEE (VERIZON NORTHWEST INC.) FROM VERIZON COMMUNICATIONS INC. TO FRONTIER COMMUNICATIONS CORPORATION WITH CONDITIONS AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City of Edmonds has granted a cable television franchise ("Franchise") to Verizon Northwest Inc. ("Franchisee") which is an indirect wholly owned subsidiary of Verizon Communications Inc. ("Verizon"); and WHEREAS, Verizon has entered into an agreement with Frontier Communications Corporation ("Frontier") to effectuate a transfer of control of Franchisee from Verizon to Frontier ("Transfer"); and WHEREAS, upon completion of the Transfer, Franchisee will become an indirect wholly owned subsidiary of Frontier and, as a result, control of the Franchisee will be transferred from Verizon to Frontier; and WHEREAS, following the Transfer, Franchisee will continue to hold and be responsible for the performance of the Franchise; and WHEREAS, Franchisee has requested that the City consent to the Transfer and, in accordance with the requirements of the Franchise and federal law, Verizon has filed an FCC Form 394 together with Exhibits and related materials (all hereinafter collectively the "Application") with the City; and WHEREAS, to evaluate Franchisee's request, the City has participated in a Consortium of jurisdictions including Snohomish County, the cities of Bothell, Edmonds, { ERZ746656. DOC;3\ 13060.080001 \ )I Everett, Kenmore, Marysville, Mountlake Terrace, Mukilteo, Woodinville and the Town of Woodway (the "Consortium"); and WHEREAS, the City and the Consortium examined the legal, financial and technical qualifications of Frontier in order to consider and act upon the Transfer request and considered the comments of interested parties; and WHEREAS, the City has relied upon the Application and supplemental written information provided by Frontier and Verizon; and WHEREAS, on November 17, 2009, the City Council held a public meeting to review the Transfer request; and WHEREAS, the City is willing to consent to the Transfer, subject to the closing of the Transfer between Verizon and Frontier and the appropriate approvals by the Washington State Utilities and Transportation Commission and federal regulatory entities; and WHEREAS, Franchisee has agreed to continue to unconditionally accept the terms of the existing Franchise and to comply with any other agreements existing between the Franchisee and the City; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON DO ORDAIN AS FOLLOWS: Section 1. The City hereby consents to the Transfer in accordance with the terms of applicable law, subject to and contingent upon the following conditions: a. In all respects and without exception, Franchisee agrees to continue to abide by all terms of the existing Franchise and acknowledges that the transfer of control will not affect, diminish, impair or supersede the binding nature of the Franchise and any other valid ordinances, resolutions, and agreements applicable to the operation of the cable {ERZ746656.DOC;3\13060.080001\ }2 system in the City and Franchisee shall continue to meet its obligations under the Franchise. Franchisee agrees that subject to the Franchise, that Franchisee shall comply with all lawful and applicable provisions related to cable service of Edmonds Municipal Code Chapter 4.69 as amended, and all related applicable federal and state laws, and lawful orders, contracts, agreements, commitments, side letters, Franchise amendments and regulatory actions. b. The City's consent to the transfer of control shall not be construed to constitute a waiver or release of any rights the City may have now or in the future under federal, state or local law, the Franchise, or any separate written agreements with the Franchisee. Franchisee shall remain responsible for any and all Franchise requirements (including but not limited to payment of Franchise fees and other amounts due under the Franchise, and indemnification of the City as provided in the Franchise) and non-compliance issues under the Franchise or any obligation that may now exist or may later be discovered to have existed during the term of the Franchise, even if prior to the closing of this Transfer. C. The Transfer between Frontier and Verizon shall be substantially and materially consistent with the Application and the supplemental information provided by Frontier and Verizon through the request for information process undertaken by the City and the Consortium. Section 2. In the event that the Transfer which is the subject of this ordinance does not close for any reason; or in the event approval is not granted by the Washington State Utilities and Transportation Commission and appropriate federal regulatory entities, or in the event that the Transfer closes on terms substantially or materially different from the terms described in the Application and supplemental written information provided by Frontier and Verizon that is relied upon by the City; or Franchisee does not accept each and every condition {ERZ746656.DOC;3\13060.080001\ }3 of the transfer of control required of it as set forth in this ordinance; then the consent provided for herein shall be null and void, and the City shall be deemed to have disapproved the transfer of control under the Franchise and federal law, and all remedies under the Franchise and applicable laws shall be available to the City. In the event the Transfer does not close before January 2012, Verizon and Frontier will provide notice of that event to the City and an update on the reasons for such a delay in closing or notice of the termination of the Transfer. Section 3. By consenting to the transfer of control, the City does not waive or release any rights of the City in and to the streets as provided by state law and the Edmonds Municipal Code, nor does the City waive or release any claim or issue of non-compliance it may have, known or unknown, now or in the future, against the Franchisee or any successor in interest to the Franchisee. Section 4. The City shall not amend, revoke or otherwise alter this Ordinance without providing reasonable prior notice to the Franchisee. Section 5. If any section, sentence, clause or phrase of this ordinance shall be held to be invalid or unconstitutional by ,a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of any other section, sentence, clause or phrase of this ordinance. Section 6. This ordinance shall take effect and be fully in force five (5) days after publication of the attached approved summary thereof consisting of the title. {ERZ746656.DOC;3\13060.080001\ }4 2009. 2009, PASSED by the Council of the City of Edmonds this 17th day of November, APPROVED by the Mayor of the City of Edmonds this 18th day of November, CITY OF EDMONDS M YOR RY AAKENSON ATTEST/AUTHENTICATED CITY CLERK SANDRA S. CHASE APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: FILED WITH THE CITY CLERK: 11/13/2009 PUBLISHED: 11/22/2009 EFFECTIVE DATE: 11/27/2009 ORDINANCE NO. 3763 {ERZ746656.DOC;3\13060,080001\ 15 SUMMARY OF ORDINANCE NO.3763 of the City of Edmonds, Washington On the 17th day of November, 2009, the City Council of the City of Edmonds, Washington, approved Ordinance No. 3763, the main points of which are summarized by its title as follows: AN ORDINANCE OF THE CITY OF EDMONDS, WASHINGTON, APPROVING TRANSFER OF CONTROL OF THE FRANCHISEE (VERIZON NORTHWEST INC.) FROM VERIZON COMMUNICATIONS INC. TO FRONTIER COMMUNICATIONS CORPORATION WITH CONDITIONS AND ESTABLISHING AN EFFECTIVE DATE. The full text of this ordinance will be mailed upon request. APPROVED by the City Council at their meeting of November 17, 2009. AITER&N�DkA S. CHASE (ERZ746656,DOC;3\ 13060.080001 \ )6 Affidavit of Publication STATE OF WASHINGTON, COUNTY OF SNOHOMISH } S.S. y� The undersigned, being first duly swom on oath deposes and says that she is Principal Clerk of THE HERALD, a daily newspaper printed and published in the City of Everett, County of Snohomish, and State of Washington; that said newspaper is a newspaper of general circulation in said County and State; that said newspaper has been approved as a legal SUMMARY OF On INAt.PL:B NO. S7G} newspaper by order of the Superior Court of Snohomish County and that the notice owe Clenifs. WnshklgEarr On the f 7th day of November. ton. the City Council of the City 0 Edmonds, Waghlregtoo, approved Ordinance No. 3763,, the rnaln points ns tw11c3h ase summenaed by tts Ulle as follows: Summary of Ordinance NO. 3763 AN ORDfNANC£ dF THE CITY CF EDmoNDS, WASHING- -- - TON, APPROVING TRANSFER of CONTROL OF THE Fsu+fvcrns> __ [vEH>zgr� „r+aArrf+r sT. IrcG? I?! Transfer of Control NICATRWS5 CCFiPORATION WFTH CONDITIONS AND - --- ESTABi.ISHtNG AN EFFECTIVE DATE. The full textof this ord-inance will be mallod upon requenl- APPROVED by the Clty Council at their mauling of November -- -. 17. 2009. CITY CLERK SANDRA S. CHASE Published: November 22, zoos. - a printed copy of which is hereunto attached, was published in said newspaper proper and not in supplement form, in the regular and entire edition of said paper on the following days and times, namely_ November 22, 2009 and that said newspaper was rcgt4iy d is (Abut to its subscribers during all of said period. Suhscr and sworn to before me this 23rd RECEI , EED day of November, c DEC 0 3 2009 ,.. Notary Public in and t State 1d t 1dffi i9t Eve Snohomish ��t EDMONDS Gri CLERK County,�J?: pf�� ,rfffr+ `{ ll Account Name: City of Edmonds Account Number. 1044B �7f A >�yN, Q z5ow4umbe, 0001675805 31i;.'Nk' •;,`tti.