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2484ORDINANCE NO. 2484 AN ORDINANCE OF THE LAKE OSWEGO CITY COUNCIL GRANTING A NONEXCLUSIVE TELECOMMUNICATIONS FRANCHISE TO VERIZON NORTHWEST INC. THE CITY OF LAKE OSWEGO ORDAINS AS FOLLOWS: Section 1. Purpose. The purpose of this agreement is to determine terms and conditions upon which Verizon Northwest, Inc. may be permitted to occupy the streets, highways or other public property within the City, pursuant to the power of the City of Lake Oswego under its Home Rule Charter and Oregon Revised Statutes Chapter 221, except as to matters regulated by state or federal authorities. Section 2. Parties. The parties to this agreement are the City of Lake Oswego, an Oregon municipal corporation, sometimes referred to herein as "the City" and Verizon Northwest Inc., a Washington corporation qualified to do business in the State of Oregon, sometimes referred to herein as "Grantee." All rights and privileges granted under this agreement to Grantee shall inure to its successors and assigns. Section 3: Grantee's Right to Occupy Public Right -of -Way. Subject to the other terms and conditions set forth in this document, and subject to any applicable ordinances and regulations of the City, including but not limited to ordinances and regulations regarding development, tree pruning or removal, erosion control and excavation in the public right-of-way, the City hereby grants to Grantee the right privilege and non-exclusive franchise to occupy the streets, highways, alleys, avenues, thoroughfares and public highways (referred to herein as the "right-of-way") as may come within the jurisdiction of the City during the term of this agreement, for the purpose of construction, use, operation and maintenance of a system to provide telecommunication services within the City of Lake Oswego. This grant includes the right to place, erect, lay, and maintain poles, cables, wires and equipment customarily associated with telecommunications systems. In locations where aerial or above ground utility facilities (including aerial cable supports) exist as of the effective date of this Franchise, Grantee shall be allowed to overbuild, upgrade, maintain, replace or add to its existing aerial facilities and supporting structures, unless the City requires, in the course of permitting property development or redevelopment, or otherwise pursuant to applicable law or regulations, that all such facilities be located underground. The City in its sole discretion may require that Grantee's and other similar utility facilities be placed or converted to underground in the course of construction of public works or Page 1 of 9 — Ordinance No. 2484 in the course of private property development or redevelopment. The City in its sole discretion may delay an otherwise required conversion to underground until a later time to allow for economies of scale. If the rules of the Oregon Public Utility Commission or other applicable rules allow the grantee to charge the costs of conversion to customers located within the City's boundaries, the City may direct the Grantee to collect those costs from only a portion of such customers. The Grantee may require a deposit against its anticipated cost to convert its facilities to underground, including its costs to guy any adjacent overhead facilities, from a third party, other than a public urban renewal agency, who carries on the development or redevelopment of property that requires the conversion to underground if that third party would otherwise be responsible for the costs of conversion. When the City directs the Grantee to convert the Grantee's facilities from overhead to underground the City also shall (1) require removal and conversion to underground of all existing overhead telecommunications and electric distribution facilities (of less than 12 Kv capacity) in the affected area; and (2) authorize the Grantee to discontinue its overhead service on completion of the underground facilities. In areas where Grantee does not currently have or use existing facilities located on aerial or above ground utility facilities, such equipment must be laid underground unless the City specifically and expressly permits wires or cables to be strung upon poles or other fixtures above ground. Grantee shall be allowed to place above ground, in locations approved by the City, its fiber distribution hubs, cross connect/digital subscriber line boxes and other cabinet type facilities that are normally placed above ground. Section 4. Pre -Construction Approval. Prior to the commencement of any construction, extension or relocation of any of Grantee's facilities upon, over, under or across any right-of-way within the City, the Grantee shall advise the City's Department of Public Works in writing of the proposed location and shall obtain from the City Engineer written approval prior to commencement of such work. Not less than 48 hours prior to commencement of any work that might affect City utilities, Grantee shall give notice to the City's Maintenance Department through the Oregon one -call system for purposes of utility location. The location of all such facilities shall be at places approved in advance by the City. Grantee shall not be required to obtain prior approval for 1.) Customer service connections/drops, repairs or maintenance that does not require cutting or breaking of the roadway, curb or sidewalk and 2.) Routine maintenance or repair of above ground Equipment, and the installation of new replacement cables or wires on existing aerial facilities, when the installation, maintenance or repair will not impact vehicular, traffic by closing or blocking a lane of vehicular travel. Section 5: Work within Right -of -Way. Subject to the provisions of this agreement and applicable regulations of the City, it shall be lawful for Grantee to make all needful and Page 2 of 9 — Ordinance No. 2484 necessary excavations in the right -of way. Any and all work within the right-of-way shall be done in compliance with the applicable rules, regulations, ordinances and orders of the City then in effect. However, by entering this Agreement Grantee is not waiving its right to challenge or otherwise dispute the legality, validity, or enforceability of any changes to City ordinances, resolutions, rules or orders enacted after the effective date of this ordinance. To the extent practicable, City will participate in discussions initiated by Grantee related to issues identified by Grantee regarding proposed changes to City rules, regulation, ordinances and orders. Except in an emergency causing prior notice and approval to be impossible, Grantee shall obtain from the City Engineer written approval of any excavation within the traveled portion of any right-of-way. Grantee shall have the right to appeal to the City Council any condition imposed under this section that it reasonably believes to be contrary to law or applicable City rules or regulations, or to be hazardous, unreasonable or unduly expensive under the circumstances. Grantee shall furnish City with record drawings showing Grantee's facilities within the public right of way and on and under public property and public places in a format acceptable to City within 60 days after such work is complete. While it is not anticipated that the furnishing of record drawings would require disclosure of sensitive proprietary information of Grantee, in the event that such sensitive proprietary information is nevertheless included and Grantee requests confidentiality of such information, and provided that the City determines that such information should reasonably be considered confidential and that the public interest would suffer by disclosure, and provided further that such information is not otherwise required by law to be disclosed, the City will maintain confidentiality of such sensitive proprietary information to the extent permitted under Oregon Public Records Law including, without limitation, ORS 192.502(4). Grantee shall perform all work within the right of way according to all federal, state and local requirements and in conformance with industry practice for workplace and public safety. Grantee shall allow the City access to and the right to inspect any of the Grantee's work within the right-of-way or on public property or other public places and shall insure against the risk of personal in jury that may be incurred by any City agent or employee in the course of that person's access to and inspection of such work that is not caused by the negligence or willful misconduct of such employee. Section 6: Restoration of Right -of -Way. Whenever Grantee, or anyone on Grantee's behalf, disturbs any right-of-way, Grantee shall properly and promptly restore the affected portion of the right-of-way to a condition equal to that which existed prior to the disturbance and in accordance with the right-of-way construction standards then in effect and on file at the City as soon as practicable without unnecessary delay, and failing to do so, City shall have the right to fix a reasonable time within which such repairs and restorations shall be completed and upon failure of such repairs and restoration being made by Grantee, City may cause such repairs to be made at the expense of Grantee, after having provided Grantee, its successors or assigns, with written notice and a reasonable opportunity to cure. Section 7: City Improvements. Nothing in this ordinance shall be construed in any way to prevent the proper authorities of the City from sewering, grading, paving, Page 3 of 9 — Ordinance No. 2484 repairing, altering, maintaining constructing or improving any right-of-way in or upon which facilities of Grantee may have been placed, but all such work or improvements shall be done, if possible, so as to prevent or minimize impairment of the free use of said facilities by Grantee. If avoidance of obstructions or impaired use of Grantee's facilities cannot be done without additional costs to the City, the Grantee shall compensate the City for any additional costs to undertake such work. City shall provide Grantee with such notice and opportunity to discuss such costs and alternatives as is reasonable and practicable under the circumstances prior to undertaking any such work in which Grantee is responsible for compensating the City for additional costs. If City vacates, alters or closes any right-of-way for the use of an entity other than the City or an urban renewal agency, the City shall, to the extent that, in the City's sole determination, the vacation is not for the purpose of achieving a re-routing of existing right of way for the benefit of the general public, and also to the extent that, in the City's sole determination, it is feasible to do so, reserve any easements reasonably necessary to accommodate the Grantee's existing facilities. Section 8: Temporary Relocation or Rearrangement of Grantee's Facilities. Whenever it becomes necessary to temporarily rearrange, remove, lower or raise any facilities of Grantee for the passage of buildings, machinery or other objects, Grantee shall temporarily rearrange, remove, lower or raise its facilities as the necessities of the case require; provided, however, that the person or persons desiring to move any such buildings, machinery or other objects shall pay the entire actual cost to Grantee of changing, altering, moving, removing or replacing its facilities so as to permit such passage, and shall deposit in advance with Grantee a sum equal to such cost as estimated by Grantee and shall pay all damages and claims of any kind whatsoever, direct or consequential, caused directly or indirectly by the changing, altering, moving, removing or replacing of said facilities, except as may be occasioned through the sole negligence of Grantee. Grantee shall be given not less than fourteen (14) business days written notice by the party desiring to move such building or other objects. Said notice shall detail the route of movement of such building or other objects over and along the streets, alleys, avenues, thoroughfares and public highways and shall bear the approval of the City. Such moving shall be with as much haste as possible and shall not be unnecessarily delayed or cause Grantee unnecessary expense or waste of time. Temporary rearrangement, removal lowering or raising of Grantee's facilities required by the City for a public purpose shall be accomplished by Grantee without charge in the same manner as permanent relocations described in Section 9 of this agreement. Section 9. Public Relocation. The City, by its properly constituted authorities, shall have the right to cause the Grantee to move (aerial to aerial or underground to underground, unless the City requires undergrounding pursuant to applicable law or regulations), the location of any pole, wire, cable, appliance, conductor, conduit, or any other plant or facility located in the right of way whenever the relocation thereof shall be for public necessity, and the expense thereof shall be paid by the Grantee. This section shall not be construed, however, as removing any authority Grantee may otherwise have under Page 4 of 9 — Ordinance No. 2484 applicable law or regulations to charge the expense of such relocation to a third party. Public necessity is deemed to include, without limitation, relocations required by a public urban renewal agency. The manner of removal or replacement shall be as directed by the City so that it shall not interfere with the public work of the City. Public necessity shall be deemed to be whenever any facility of Grantee interferes with construction of any public improvement located in a right-of-way or any publicly -owned place. If the publicly -owned place is owned by an entity other than the City or a public urban renewal agency, and that other entity is subject to laws or regulations that require it to reimburse Grantee for the relocation, nothing herein shall be construed as prohibiting Grantee from requiring such reimbursement. Whenever relocation is required by reason of a public improvement that the City requires a third party other than a public urban renewal agency to construct at the third party's expense as a condition of a development permit, the third party shall bear the cost of the relocation. The City will engage in such discussions with Grantee are practicable under the circumstances related to alternative methods of relocation. Section 10. City Occupancy of Grantee's Poles and Innerduct. Where space is available, as determined by Grantee, the City shall be permitted to occupy Grantee's poles and underground innerduct for traffic signal interconnection circuits in accordance with the terms and conditions of Grantee's standard joint use pole and conduit agreement. All such wires shall be placed on the poles or in conduits so as not to interfere with communication service and shall not carry currents or voltage dangerous to telephone plant or telephone users and all installations, maintenance and repairs shall be subject to the rules, regulations and supervision of the Grantee. City agrees that Grantee in no way guarantees the operation of any facilities utilizing any equipment supplied by the City or facilities over which Grantee does not have full and complete control. City agrees to transfer their facilities, at the City's cost, to new poles placed by Grantee within 30 days of notification. Section 11. Franchise Not Exclusive. The franchise granted herein by the City of Lake Oswego to the Grantee is nonexclusive. Section 12: Compensation. In total consideration of the City's grant of this franchise, Grantee shall pay to the City compensation calculated as a minimum of 4.3 percent, and a maximum of seven (7) percent of the gross revenues derived from exchange access services as defined in ORS 401.710, less net uncollectables, from such revenues that are earned within the boundaries of the City. Revenue from exchange access services shall include any and all such revenue from local exchange access that Grantee provides as part of a bundled or packaged or high speed or other service To the extent that Grantee does not separately account for local exchange access revenues that are provided as part of a bundled package, Grantee shall include as local exchange access revenues an amount equal to the separately tariffed rate for local exchange access, as filed with the Oregon Public Utility Commission. The City, in its sole discretion, shall determine from time to time, but not more than once during a 12 month time period, the percentage of revenue payable as the compensation and shall give Grantee 90 days' written notice of any change in the percentage to be remitted to Page 5 of 9 — Ordinance No. 2484 the City. Payment of the required compensation will be accepted also in payment of any permit, maintenance, inspection fees or fees to recover the cities cost of locating city facilities or similar charges for street openings, installations, and construction within the right of way. Grantee shall pay the required compensation in monthly installments, with payment for each calendar month due by the last day of the following month. Grantee shall furnish to the City with each payment a written statement showing the gross revenue received by Grantee for the period covered by the payment. Section 13. Acceptance of Payment Not a Waiver. Acceptance by the City of any payment due from Grantee under this agreement shall not be deemed to be a waiver by the City of any other obligation of Grantee under this franchise agreement. Acceptance by the City of any payments shall not bar the City from establishing at a later time, within five years following the payment, that the amount tendered was incorrect and collecting any balance due to the City as a result of any incorrect tender by the Grantee. Section14. Grantee's Records. Grantee shall keep accurate record books of account for the purpose of determining the amounts due to the City under the provisions of this agreement. Such books of account shall be open to inspection by the City, its attorney or other authorized agent at any time during Grantee's business hours. The City may audit said books of account from time to time. Written notice of any audit review or other claim shall be provided within five years after the payment has been remitted by Grantee to the City. Should such an audit reveal that payments tendered by Grantee to the City are less than the amounts due under the terms of this agreement, Grantee shall promptly remit the amounts due Grantor. Grantee shall maintain current maps showing the location of its facilities, fixtures, appliances and structures within the streets, highways or other public property of the City. The City shall be allowed to inspect said maps at any time during Grantee's normal business hours. If requested by City, Grantee shall furnish, without charge and within a reasonable time, maps relating to specified areas of the City. While it is not anticipated that the furnishing of maps would require disclosure of sensitive proprietary information of Grantee, in the event that such sensitive proprietary information is nevertheless included and Grantee requests confidentiality of such information, and provided that the City determines that such information should reasonably be considered confidential and that the public interest would suffer by disclosure, and provided further that such information is not otherwise required by law to be disclosed, the City will maintain confidentiality of such sensitive proprietary information to the extent permitted under Oregon Public Records Law including, without limitation, ORS 192.502(4). Section 15. Indemnification. (A) Grantee hereby agrees and covenants to indemnify, defend and hold the City, its officers, agents and employees, harmless from any claim for injury, damage, loss, liability, cost or expense, including court and appeal costs and attorney fees or expenses, arising from any casualty or accident to person or property by reason of any construction, excavation or any other act done under this Franchise, by or for Grantee, its agents or employees, or by reason of any neglect or omission of Grantee to keep its facilities in a safe condition, but not if arising out of or by reason of any negligence or willful misconduct Page 6 of 9 — Ordinance No. 2484 by the City, its officers, agents or employees. The City shall provide Grantee with prompt notice of any such claim which Grantee shall defend with counsel of its own choosing and no settlement or compromise of any such claim will be done by the City without the prior written approval of Grantee. Grantee and its agents, contractors and others shall consult and cooperate with the City while conducting its defense of the City. (B) Grantee also hereby agrees to indemnify the City for any damages, claims, additional costs or expenses assessed against or payable by the City arising out of or resulting, directly, or indirectly, from Grantee's failure to remove, adjust or relocate all or any portion facilities in a timely manner pursuant to Sections 7, 8 and 9 of this agreement, unless Grantee's failure arises 1. directly from the City's or its agents or contractors negligence or willful misconduct, 2. as a result of other utilities not timely removing, adjusting or relocating its facilities necessary to accommodate Grantee's removal, adjustment or relocation or 3. from the negligent or willful misconduct of another user of the right-of-way. Section 16 Insurance. (A) The Grantee shall maintain commercial general liability that protects the Grantee and the City, as well as the City's officers, agents, and employees, from the claims referred to in Section 15. The insurance shall provide limits of not less $1 million combined single limit covering all claims per occurrence, plus costs of defense. The insurance shall be without prejudice to coverage otherwise existing and shall name as additional insureds the City and its officers, agents, and employees. Notwithstanding the naming of additional insureds, the insurance shall protect each insured in the same manner as though a separate policy had been issued to each, but nothing in this Section 16 (A) shall operate to increase the insurer's liability as set forth elsewhere in the policy beyond the amount or amounts for which the insurer would have been liable if only one person or interest had been named as insured. The coverage must apply as to claims between insureds on the policy. The insurance shall provide that the insurer shall endeavor to provide thirty (30) days prior written notice of intention to non -renew, cancellation or material adverse change to City Manager, except that ten (10) notice for non-payment of premium shall apply. If the insurance is canceled or materially altered within the term of this Franchise, Grantee shall provide a replacement policy with the same terms. Grantee shall maintain continuous uninterrupted coverage, in the terms and amounts required, upon and after the effective date of this franchise. (B) The Grantee shall maintain on file with the City Recorder an ACORD certificate of insurance or equivalent certifying the coverage required above. The certificate of insurance shall be reviewed and approved as to form by the City Attorney. (C) In the alternative to providing a certificate of insurance to the City, certifying liability insurance coverage as required in this Section, Grantee may provide the City with a statement regarding its self-insurance. Grantee's self-insurance shall provide at least the same amount and scope of coverage for the Grantee and the City, its officers, agents and employees, as otherwise required under this Section. The adequacy of such self- insurance shall be subject to the City Attorney's review and approval. Upon Grantee's election to provide self-insurance coverage under this Section 16 (C), any failure by the Grantee to maintain adequate self-insurance shall be cause for termination of this Franchise under Section 17. Page 7 of 9 — Ordinance No. 2484 Section17. Breach of Franchise. City may declare a breach of this Franchise for Grantee's default in any material term or condition if Grantee has not cured the alleged default as soon as practicable and, except for an event of default that constitutes an unreasonable risk of personal injury or property damage, no later than 90 days after the date of City's written notice of the default. In the event of Grantee's breach for a default that Grantee does not cure within the time allowed, City shall have every remedy available to it in law and equity for such default, including, without limitation, the additional remedies as provided in Section 21 of this agreement. Section18. Duration. The rights, privileges and franchise hereby granted shall continue and be in full force for a period of fifteen (15) years from the date of passage of this ordinance. However, this ordinance shall be inoperative unless it is accepted in writing by the Grantee within thirty (30) days after the date of its passage. Section 19. Conditions on Assignment. The franchise granted in this ordinance shall be binding upon and inure to the benefit of the successors, legal representatives and assigns of the Company. Company may sell, transfer or otherwise assign this Franchise provided that no such transfer, sale or assignment of this franchise shall be binding on City unless and until City has notice of same in writing, until the transferee in writing has accepted the terms and conditions of this Franchise and until the transferee has submitted proof satisfactory to city of the liability insurance coverage required by this franchise and has submitted bonds or other guarantees that any work begun by Company and then in progress under the terms of a City permit shall be performed by the transferee to City's standards. Section 20. Remedies. All remedies and penalties provided under this agreement, the common law, the statutes of this State, the statutes of the United States and the ordinances and regulations of the City, are cumulative and the enforcement or recovery of one is not a bar to the enforcement or recovery of any other remedy or penalty. The remedies and penalties contained in this agreement are not exclusive, and the City reserves the right to enforce and to avail itself of any and all remedies available at law or in equity. Failure to enforce any right accruing to or available to City whether arising under this agreement or otherwise, shall not be construed as a waiver of a breach of any term, condition or obligation imposed upon Grantee by this agreement or a violation of any requirement of law imposed upon Grantee and available in favor of City. A specific waiver of any particular breach of any term, condition or obligation imposed upon the Grantee by or pursuant to this agreement shall not be a waiver of any other, subsequent or future breach of the same or of any other term, condition, or obligation or as a waiver of the term, condition or obligation itself. Section 21. Additional Remedies. In addition to any rights available at law or in equity, including, without limitation, any rights set out elsewhere in this Franchise agreement, as well as its rights under the City Code, the City reserves the right at its sole option to suspend issuance of any permits and/or approvals to Grantee until the Grantee corrects or otherwise remedies the violation. Page 8 of 9 — Ordinance No. 2484 Section 22. Acceptance. This Ordinance shall, if accepted by Grantee, take effect and be in force 30 days from and after its passage and approval. Said Grantee shall, within 30 days of the passage and approval of this Ordinance, file with the Recorder of the City of Lake Oswego its written acceptance of all the terms and conditions of the Ordinance. Section 23. Severability. The provisions of this ordinance are severable. If any portion of this ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portions of this Ordinance. Enacted at the regular meeting of the City Council of the City of Lake Oswego held on 1a day of Apri 1 , 2007. AYES: Mayor Hammerstad, McPeak, Turchi, Hennagin,Jordan NOES: none ABSTAIN: Groznik EXCUSED: Johnson Judi Hamm stad, Mayor Dated: L? -U% ATTEST: ` Robyn C ristie, City Recorder APPROVED AS TO FORM: David Powell City Attorney Page 9 of 9 — Ordinance No. 2484 WRITTEN ACCEPTANCE OF ORDINANCE No. 2484 CITY OF LAKE OSWEGO, OREGON TO THE MAYOR AND COUNCIL OF THE CITY OF LAKE OSWEGO: WHEREAS, on the 17th day of April, 2007, the Council of the City of Lake Oswego, Oregon, passed Ordinance No. 2484 entitled: AN ORDINANCE OF THE LAKE OSWEGO CITY COUNCIL GRANTING A NONEXCLUSIVE TELECOMMUNICATIONS FRANCHISE TO VERIZON NORTHWEST INC. WHEREAS, said ordinance was duly signed and approved on April 1812007, by the Mayor of said City, and attested by the City Recorder: WHEREAS, said ordinance was granted upon the condition that the said grantee shall, within 30 days of the passage and approval of said ordinance, file with the Recorder of the City of Lake Oswego its written acceptance of all the terms and conditions of said ordinance: NOW, THEREFORE, Verizon Northwest Inc. does hereby accept Ordinance No. 2484 and all the terms and conditions of said ordinance. IN WITNESS WHEREOF, Verizon Northwest Inc. has caused this acceptance to be duly executed A121IJ, , 2007. CITY OF LAKE OSWEGO '24� Robyn ClAtie City Recorder Received on -5' PO 7 APPROVED AS TO FORM: :�R� David Powell, City Attorney Date: S — -7— D7 VERIZON NORTHWEST INC. Title: REVIEWED AND APP VED BY LEG SEL Date L/ /Pr7 /20 07 0r-{- a48y CABLE FRANCHISE AGREEMENT between CITY OF LAKE OSWEGO VERIZON NORTHWEST INC. Effective May 25, 2007 TABLE OF CONTENTS ARTICLE PAGE 1. DEFINITIONS...................................................................................................................2 2. GRANT OF AUTHORITY; LIMITS AND RESERVATIONS ....................................... 9 3. PROVISION OF CABLE SERVICE.............................................................................. 12 4. SYSTEM OPERATION.................................................................................................. 14 5. SYSTEM FACILITIES................................................................................................... 14 6. PEG SERVICES.............................................................................................................. 15 7. FRANCHISE FEES......................................................................................................... 19 8. CUSTOMER SERVICE.................................................................................................. 21 9. REPORTS AND RECORDS........................................................................................... 21 10. INSURANCE AND INDEMNIFICATION.................................................................... 23 11. TRANSFER OF FRANCHISE........................................................................................ 25 12. RENEWAL OF FRANCHISE......................................................................................... 26 13. ENFORCEMENT AND TERMINATION OF FRANCHISE ........................................ 26 14. MISCELLANEOUS PROVISIONS................................................................................ 29 EXHIBIT A - INITIAL SERVICE AREA/FRANCHISE AREA .................................. 34 EXHIBIT B - ORIGINATION POINTS......................................................................... 37 EXHIBIT C - QUARTERLY FRANCHISE FEE REMITTANCE FORM ................... 38 EXHIBIT D - CUSTOMER SERVICE STANDARDS ................................................. 39 EXHIBIT E - FRANCHISEE PARENT AS OF JANUARY 24, 2007 .......................... 49 EXHIBIT F - QUARTERLY CUSTOMER SERVICE STANDARDS PERFORMANCE REPORT............................................................................................ 50 MACCNERIZON FINAL MAY 2007 1 THIS CABLE FRANCHISE AGREEMENT (the "Franchise" or "Agreement") is entered into by and between the Metropolitan Area Communications Commission (the "Commission"), Member Jurisdictions, and Verizon Northwest Inc., a corporation duly organized under the applicable laws of the State of Washington (the "Franchisee"). WHEREAS, Grantor and Member Jurisdictions wish 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, Grantor and Member Jurisdictions are "franchising authorities" in accordance with Title VI of the Communications Act (see 47 U.S.C. §522(10)) and are authorized to grant one or more nonexclusive cable franchises; WHEREAS, Franchisee is in the process of installing a Fiber to the Premise Telecommunications Network ("FTTP Network") in the Franchise Area for the transmission of Non -Cable Services pursuant to authority granted by the State of Oregon; WHEREAS, the FTTP Network will occupy the Public Rights -of -Way within the jurisdictional boundaries of the Commission's Member Jurisdictions, and Franchisee desires to use portions of the FTTP Network once installed to provide Cable Services (as hereinafter defined) in the Franchise Area; WHEREAS, Grantor has identified the future cable -related needs and interests of the Commission, its Member Jurisdictions and their citizens, 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, Grantor and Member Jurisdictions have found Franchisee to be financially, technically and legally qualified to operate the Cable System; WHEREAS, Grantor and Member Jurisdictions have determined that the grant of a nonexclusive franchise to Franchisee is consistent with the public interest; and WHEREAS, Grantor 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. NOW, THEREFORE, in consideration of Grantor and Member Jurisdictions' grant of a franchise to Franchisee, Franchisee's promise to provide Cable Service to residents of the Franchise Area 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 SIGNATORIES DO HEREBY AGREE AS FOLLOWS: 1. DEFINITIONS Except as otherwise provided herein the following definitions shall apply: MACC/VERIZON FINAL MAY 2007 2 1. 1. Access Channel: A video channel, which Franchisee shall make available to Grantor without charge for non-commercial public, educational, or governmental use for the transmission of video programming as directed by Grantor. 1.2. Additional Service Area: Shall mean any such portion of the Service Area added pursuant to Section 3. l .2 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: Shall be defined herein as it is defined under Section 602 of the Communications Act, 47 U.S.C. § 522, which currently states, "any service tier which includes the retransmission of local television broadcast signals." 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), which currently states, "any person or group of persons (A) who provides cable service over a cable system and directly or through one or more affiliates owns a significant interest in such cable system, or (B) who otherwise controls or is responsible for, through any arrangement, the management and operation of such a cable system." 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), which currently states, "the one-way transmission to subscribers of (1) video programming, or (ii) other programming service, and subscriber interaction, if any, which is required for the selection or use of such video programming or other programming service." 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), which currently states, "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 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 the Communications Act, except that such facility shall be considered a cable system (other than for purposes of section 621(c)) to the extent that 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." Subject to Section 2.10, 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 lI of the Communications Act or of an Information Services provider. MACC/VGRIZON FINAL MAY 2007 3 1.8. Channel: Shall be defined herein as it is defined under Section 602 of the Communications Act, 47 U.S.C. § 522(4), which currently states, "a portion of the electromagnetic frequency spectrum which is used in a cable system and which is capable of delivering a television channel (as television channel is defined by the Commission by regulation)." 1.9. Commission: The Metropolitan Area Communications Commission, its officers, agents and employees, and, for purposes of this Agreement, its affected Member Jurisdictions which are the Oregon cities of Beaverton, Cornelius, Durham, Forest Grove, Hillsboro, King City, Lake Oswego, Rivergrove, Tigard, and Tualatin, together with Washington County. The Commission was created and exercises its powers pursuant to an Intergovernmental Cooperation Agreement, as authorized by state law (particularly ORS Chapter 190) and the laws, charters, and other authority of the individual member units of local government who are members of the Commission. The powers of the Commission have been delegated to it by its members and although it may exercise those powers as an entity, it remains a composite of its members. 1.10. Communications Act: The Communications Act of 1934, as amended. 1.11. Control: The ability to exercise de facto or de jure control over day-to- day policies and operations or the management of corporate affairs. 1.12. Days: Calendar days unless otherwise noted. 1.13. Designated Access Provider: The entity or entities designated by the Grantor to manage or co -manage the Public, Education, and Government Access Channels and facilities. The Grantor may be a Designated Access Provider. 1.14. Educational Access Channel: An Access Channel available solely for the use of the local public schools in the Franchise Area and other higher level educational institutions in the Franchise Area. 1.15. Effective Date: The effective date of this Agreement shall be upon the Grantor's written certification of approval of all its Member Jurisdictions and Franchisee's unconditional written acceptance of this Agreement. if either event fails to occur, this Agreement shall be null and void, and any and all rights of Franchisee to own or operate a Cable System within the Franchise Area under this Agreement shall be of no force or effect. 1.16. FCC: The United States Federal Communications Commission, or successor governmental entity thereto. 1.17. Force Majeure: An event or events reasonably beyond the ability of Franchisee to anticipate and control. This includes, but is not limited to, severe or unusual weather conditions, strikes, labor disturbances, lockouts, war or act of war (whether an actual declaration of war is made or not), insurrection, riots, act of public enemy, actions or inactions of any government instrumentality or public utility including condemnation, accidents for which Franchisee is not primarily responsible, fire, flood, or other acts of God, or documented work delays caused by waiting for utility providers to service or monitor utility poles to which MACC/VGRIZON FINAL MAY 2007 4 Franchisee's FTTP Network is attached, and documented unavailability of materials and/or qualified labor to perform the work necessary to the extent that such unavailability of materials or labor was reasonably beyond the ability of Franchisee to foresee or control. 1.18. Franchise Area: Those portions of the unincorporated area of Washington County and the incorporated areas (entire existing territorial limits) of Beaverton, Cornelius, Durham, Forest Grove, Hillsboro, King City, Lake Oswego, Rivergrove, Tigard, and Tualatin as shown in Exhibit A, and such additional areas as may be included in the corporate (territorial) limits of Member Jurisdictions during the term of this Agreement or are added pursuant to Section 3.1.2. 1.19. Franchisee: Verizon Northwest Inc., and its lawful and permitted successors, assigns, and transferees. 1.20. Government Access Channel: An Access Channel available solely for the use of Grantor and other local governmental entities located in the Franchise Area. 1.21. Grantor: The Metropolitan Area Communications Commission (MACC) created in 1980 which is the local franchising authority for the Oregon cities of Beaverton, Cornelius, Durham, Forest Grove, Hillsboro, King City, Lake Oswego, Rivergrove, Tigard, and Tualatin, and Washington County, or the lawful successor, transferee, or assignee thereof. 1.22. Gross Revenue: All revenue, including any and all cash, credits, property, or consideration of any kind, as determined in accordance with generally accepted accounting principles which is earned or derived by Franchisee and/or its Affiliates received from Franchisee's provision of Cable Service over the Cable System in the Franchise Area. Gross Revenue shall be reported to Grantor using the "accrual method" of accounting. Gross Revenue shall include the following items so long as all other cable providers 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; (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; MACCNERIZON FINAL MAY 2007 5 (m) 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; (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. 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 Oregon. Franchisee has 100 Subscribers in the Franchise Area, 500 Subscribers in Oregon, and 1,000 Subscribers nationwide. Gross Revenue as to the Grantor from Ad "A" is 10% of Franchisee's revenue therefrom. Gross Revenue as to the Grantor from Ad "B" is 20% of Franchisee's revenue therefrom. Gross Revenue shall not include: 1.22.1. Revenues received by any Affiliate or other Person from Franchisee in exchange for supplying goods or services used by Franchisee to provide Cable Service over the Cable System in the Franchise Area; 1.22.2. 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; 1.22.3. Refunds, rebates, or discounts made to Subscribers or other third parties; 1.22.4. 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; Information Services, including without limitation Internet Access services; charges made to the public for commercial or cable television that is used for two-way communication; and any other revenues attributed to Non -Cable Services in accordance with applicable federal and state laws or regulations; 1.22.5. Any revenue of Franchisee or any Person that is received directly from the sale of merchandise through any Cable Service distributed over the Cable System, notwithstanding that portion of such revenue that represents or can be attributed to a Subscriber fee or a payment for the use of the Cable System for the sale of such merchandise, which portion shall be included in Gross Revenue; MACCNERIZON FINAL MAY 2007 1.22.6. The sale of Cable Services on the Cable System for resale in which the purchaser is required to collect cable franchise fees from purchaser's customer; 1.22.7. The imputed value of the provision of Cable Services to customers on a complimentary basis including, without limitation, the provision of Cable Services to public buildings as required or permitted herein; 1.22.8. 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, gross receipts tax, excise tax, utility users tax, public service tax, communication taxes, and non -cable franchise fees and revenue); 1.22.9. Any forgone revenue that 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 Agreement; provided, however, that such forgone revenue that Franchisee chooses not to receive in exchange for trades, barters, services, or other items of value in place of cash consideration shall be included in Gross Revenue; 1.22.10. Sales of capital assets or sales of surplus equipment; 1.22.11. Reimbursement by programmers of marketing costs incurred by Franchisee for the introduction of new programming pursuant to a written marketing agreement; or 1.22.12. Directory or Internet advertising revenue including, but not limited to, yellow page, white page, banner advertisement, and electronic publishing. 1.23. Information Services: Shall be defined herein as it is defined under Section 3 of the Communications Act, 47 U.S.C. §153(20), which currently states, "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service." 1.24. Initial Service Area: The area depicted as the Initial Service Area in Exhibit A. 1.25. Internet Access: Dial-up or broadband access service that enables Subscribers to access the Internet. 1.26. Member .Jurisdictions: Washington County and the member cities of the Commission that are within the Initial Service Area, specifically the cities of Beaverton, Cornelius, Durham, Forest Grove, Hillsboro, King City, Lake Oswego, Rivergrove, Tigard, and Tualatin. MACC/VERiZON FINAL MAY 2007 7 1.27. 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 consistent with FCC rules and orders by courts of competent jurisdiction following all appeals. 1.28. Normal Business Hours: Those hours during which most similar businesses in the Franchise Area are open to serve customers. In all cases, "normal business hours" must include some evening hours at least one night per week and/or some weekend hours. 1.29. Origination Points: Locations from which PEG programming is delivered to the PEG Access Headend for transmission as set forth in Exhibit B. 1.30. PEG: Public, educational, and governmental. 1.31. Person: An individual, partnership, association, joint stock company, trust, corporation, or governmental entity. 1.32. Public Access Channel: An Access Channel available solely for use by the residents and others in the Franchise Area, as authorized by Grantor. 1.33. Public Communications Network ("PCN') / Institutional Network: The separate communications network provided by Comcast Inc. or its successor in interest, designed principally for the provision of non -entertainment, interactive services to schools, public agencies, or other non-profit agencies for use in connection with the ongoing operations of such institutions. Services provided may include video, audio, and data to PCN subscribers on an individual application, private channel basis. This may include, but is not limited to, two-way video, audio, or digital signals among institutions. 1.34. 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 used as Public Rights -of -Way, as the same now or may thereafter exist, which are under the jurisdiction or control of the Member Jurisdictions, to the full extent of the Member Jurisdictions' right, title, interest, and/or authority to grant a franchise to occupy and use such streets and easements for Telecommunications Facilities and Cable Service. Public Rights -of - Way shall also include any easement granted or owned by the Grantor or Member Jurisdictions and acquired, established, dedicated or devoted for public utility purposes. 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. 1.35. School: Any educational institution, public or private, registered by the State of Oregon pursuant to ORS 345.505-.525, excluding home schools, including but not limited to primary and secondary schools, colleges and universities. 1.36. Service Area: All portions of the Franchise Area where Cable Service is being offered, including the Initial Service Area and any Additional Service Areas. MACCNERIZON FINAL MAY 2007 8 1.37. Service Date: The date that Franchisee first provides Cable Service on a commercial basis directly to more than one Subscriber in the Franchise Area. Franchisee shall memorialize the Service Date by notifying Grantor in writing of the same, which notification shall become a part of this Franchise. 1.38. Subscriber: A Person who lawfully receives Cable Service over the Cable System with Franchisee's express permission. 1.39. Telecommunications Facilities: Franchisee's existing Telecommunications Services and Information Services facilities and its FTTP Network facilities. 1.40. Telecommunication Services: Shall be defined herein as it is defined under Section 3 of the Communications Act, 47 U.S.C. § 153(46), which currently states, "the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used." 1.41. Title II: Title II of the Communications Act. 1.42. Title VP Title VI of the Communications Act. 1.43. Video Programming: Shall be defined herein as it is defined under Section 602 of the Communications Act, 47 U.S.C. § 522(20), which currently states, "programming provided by, or generally considered comparable to programming provided by, a television broadcast station." 2. GRANT OF AUTHORITY; LIMITS AND RESERVATIONS 2.1. Grant of Authority: Subject to the terms and conditions of this Agreement, Grantor and Member Jurisdictions hereby grant Franchisee the right to own, construct, operate and maintain a Cable System along the Public Rights -of -Way within the Franchise Area in order 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. 2.1.1. This Agreement is intended to convey limited rights and interests only as to those streets and Public Rights -of -Way in which the Member Jurisdictions have an actual interest. It is not a warranty of title or interest in any Public Right -of -Way, it does not provide the Franchisee any interest in any particular location within the Public Right -of -Way, and it does not confer rights other than as expressly provided in the grant hereof. Except as set forth in this Agreement, this Agreement does not deprive Grantor or Member Jurisdictions of any powers, rights, or privileges they now have or may acquire in the future under applicable law, to use, perform work on, or regulate the use and control of the Member Jurisdictions' streets covered by this Agreement, including without limitation, the right to perform work on their roadways, Public Rights -of -Way, or appurtenant drainage facilities, including constructing, altering, paving, widening, grading or excavating thereof. 2.1.2. This Agreement authorizes Franchisee to engage in providing Cable Service. Nothing herein shall be interpreted to prevent Grantor or Franchisee from challenging the lawfulness or enforceability of any provisions of applicable law. MACCNLRIZON FINAL MAY 2007 9 2.1.3. To the extent Franchisee uses other parties (whether or not affiliated) to fulfill its obligations hereunder, Franchisee will insure such parties comply with the terms and conditions of this Agreement. 2.2. Regulatory Authority Over the FTTP Network: 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. Jurisdiction over such Telecommunications Facilities is governed by federal and state law, and Grantor and Member Jurisdictions do not and will 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, Grantor and Member Jurisdictions' 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 Grantor or Member Jurisdictions' authority, if any, to adopt and enforce lawful regulations with respect to the Public Rights -of -Way, subject to 2.9 below. 2.3. Term: The term of this Agreement and all rights, privileges, obligations, and restrictions pertaining thereto shall be from the Effective Date of this Agreement through the fifteenth (15`h) anniversary thereof, unless extended or terminated sooner as hereinafter provided. 2.4. Grant Not Exclusive: This Agreement shall be nonexclusive, and is subject to all prior rights, interests, agreements, permits, easements or licenses granted by Grantor or Member Jurisdictions to any Person to use any street, right-of-way, easements not otherwise restricted, or property for any purpose whatsoever, including the right of the Member Jurisdictions to use same for any purpose they deem fit, including the same or similar purposes allowed Franchisee hereunder. Member Jurisdictions may, at any time, grant authorization to use the Public Rights -of -Way for any purpose not incompatible with Franchisee's authority under this Agreement, and for such additional franchises for cable systems as the Grantor deems appropriate. Any such rights which are granted shall not adversely impact the authority as granted under this Agreement and shall not interfere with existing facilities of the Cable System or Franchisee's FTTP Network. 2.5. Effect of Acceptance: By accepting the Agreement, the Franchisee: (1) acknowledges and accepts the Grantor's and Member Jurisdiction's legal right to issue the Agreement; (2) acknowledges and accepts the Grantor's legal right to enforce the Agreement on behalf of its Member Jurisdictions; (3) agrees that it will not oppose the Grantor intervening or other participation in any proceeding affecting Cable Service over the Cable System in the Franchise Area; (4) accepts and agrees to comply with each and every provision of this Agreement; and (5) agrees that the Agreement was granted pursuant to processes and procedures consistent with applicable law, and that it will not raise any claim to the contrary. 2.6. Franchise Subject to Federal Law: Notwithstanding any provision to the contrary herein, this Franchise and its exhibits are subject to and shall be governed by all MACC/VERIZON FINAL MAY 2007 10 applicable provisions of federal law and regulation as they may be amended, including but not limited to the Communications Act. 2.7. No Waiver: 2.7.1. The failure of Grantor on one or more occasions to exercise a right or to require compliance or performance under this Franchise or any other applicable law shall not be deemed to constitute a waiver of such right or a waiver of compliance or performance by Grantor, nor to excuse Franchisee from complying or performing, unless such right or such compliance or performance has been specifically waived in writing. 2.7.2. 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 Grantor from performance, unless such right or performance has been specifically waived in writing. 2.8. Construction of Agreement: 2.8.1. The provisions of this Franchise shall be liberally construed to effectuate their objectives. 2.8.2. Nothing herein shall be construed to limit the scope or applicability of Section 625 Communications Act, 47 U.S.C. § 545. 2.8.3. Notwithstanding any provision to the contrary herein, this Franchise is subject to and shall be governed by all applicable provisions of federal and state law as they may be amended, including but not limited to the Communications Act. Should any change to state and federal law after the Effective Date have the lawful effect of materially altering the terms and conditions of this Franchise to the detriment of one or more parties, then the parties shall modify this Franchise to ameliorate such adverse effects on, and preserve the affected benefits of, the Franchisee and/or the Grantor to the extent possible which is not inconsistent with the change in law. If the parties cannot reach agreement on the above - referenced modification to the Franchise, then, at Franchisee or Grantor's option, the parties agree to submit the matter to mediation. In the event mediation does not result in an agreement, then, at Franchisee or Grantor's option, the parties agree to submit the matter to non-binding arbitration in accordance with the commercial arbitration rules of the American Arbitration Association. The non-binding arbitration and mediation shall take place in the Franchise Area, unless the parties' representatives agree otherwise. In any negotiations, mediation, and arbitration under this provision, the parties will be guided by the purpose as set forth below. In reviewing the claims of the parties, the mediators and arbitrators shall be guided by the purpose of the parties in submitting the matter for guidance. The parties agree that their purpose is to modify the Franchise so as to preserve intact, to the greatest extent possible, the benefits that each party has bargained for in entering into this Agreement and ameliorate the adverse effects of the change in law in a manner not inconsistent with the change in law. Should the parties not reach agreement, including not mutually agreeing to accept the guidance of the mediator or arbitrator, this Section 2.8.3 shall have no further force or effect. To the extent permitted by law, MACCNERIZON FINAL MAY 2007 11 if there is a change in federal law or state law that permits Franchisee to opt out of or terminate this Agreement, then Franchisee agrees not to exercise such option. 2.9. Police Powers: In executing this Franchise Agreement, the Franchisee acknowledges that its rights hereunder are subject to the lawful police powers of Grantor or Member Jurisdictions to adopt and enforce general ordinances necessary to the safety and welfare of the public and Franchisee agrees to comply with all lawful and applicable general laws and ordinances enacted by Grantor or Member Jurisdictions pursuant to such power. Nothing in this Agreement shall be construed to prohibit the reasonable, necessary, and lawful exercise of Grantor or Member Jurisdictions' police powers. However, if the reasonable, necessary and lawful exercise of Grantor or Member Jurisdictions' police power results in any material alteration of the terms and conditions of this Franchise, then the parties shall modify this Franchise to the satisfaction of all parties to ameliorate the negative effects on Franchisee of the material alteration. If the parties cannot reach agreement on the above -referenced modification to the Franchise, then Franchisee may terminate this Agreement without further obligation to Grantor or Member Jurisdictions 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. 2.10. 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, Grantor 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 four (4) years of the Service Date of the Franchise, except: (A) for periods of Force Majeure; (B) for periods of delay caused by Grantor or Member Jurisdictions; (C) for periods of delay 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 developments or buildings that 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 requirement set forth in Subsection 3.1.1.1. 3.1.1.1. 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 ten (10) occupied residential dwelling units per quarter mile as MACC/VERIZON FINAL MAY 2007 12 measured in strand footage from the nearest technically feasible point on the active FTTP Network trunk or feeder line. Should new construction in an area within the Initial Service Area meet the density requirements after the time stated for providing Cable Service as set forth in Subsection 3.1.1, Franchisee shall provide Cable Service to such area within ninety (90) days of the date that the Franchisee's Franchise Service Manager is notified of a request from a potential Subscriber and verification that the density requirement is satisfied. Franchisee has an ongoing obligation to notify Grantor of any changes to the name and contact information for the Franchise Service Manager. 3.1.2. Additional Service Areas: Aside from 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. If Franchisee desires to add Additional Service Areas within the unincorporated areas of Washington County or the territorial limits of the Member Jurisdictions, Franchisee shall notify Grantor in writing and provide a map of such Additional Service Area at least thirty (30) days prior to providing Cable Services to such Additional Service Area which shall then become part of the Franchise Area. Notwithstanding the foregoing, the parties acknowledge that the addition of the cities of Banks, Gaston, or North Plains as an Additional Service Area shall be subject to reasonable approval by Grantor and the affected jurisdiction. Franchisee shall meet with Grantor at least once every two years, beginning with the Effective Date, to discuss whether technology and development warrant extending the service area to include Banks, Gaston, North Plains and additional areas within Member Jurisdiction boundaries not included in the Initial Service Area. As a result of each of these meetings, Franchisee will either (a) negotiate in good faith an amendment to the Agreement to expand service to one or more of these areas, if an amendment is necessary, or (b) explain why, in Franchisee's sole discretion, expansion of service is not yet justified. Franchisee shall not be required to disclose confidential information in conjunction with these discussions. 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. 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 twenty-five (125) 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 twenty-five (125) feet and actual costs incurred to connect any non- residential dwelling unit Subscriber. 3.3. Cable Service to Public Buildings: Subject to 3.1, Franchisee shall provide, without charge within the Service Area, one service outlet activated for Basic Service to each unserved (by any cable operator) fire station, School, police station, and public library as may be designated by Grantor; provided, however, that if it is necessary to extend Franchisee's trunk or feeder lines more than one hundred twenty-five (125) feet solely to provide service to any such School or public building, Grantor shall have the option either of paying Franchisee's direct costs for such extension in excess of one hundred twenty-five (125) feet, or of releasing MACC/VERIZON F1NAL MAY 2007 13 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 twenty-five (125) feet of drop cable; provided, however, that Franchisee shall not 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. No more than 150 complimentary service outlets shall be required to be served under this provision. In addition, Franchisee shall provide without charge one service outlet activated for Enhanced Basic Service and one set-top box as necessary to receive digital signals to each of the following locations: the Commission's offices and the Commission's PEG Access Headend. 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 Grantor or Member Jurisdictions over such Telecommunications Facilities is restricted by federal and state law, and neither Grantor nor the Member Jurisdictions asserts jurisdiction over Franchisee's FTTP Network in contravention of those limitations. 5. SYSTEM FACILITIES 5.1. System Characteristics: The Cable System must conform to or exceed all applicable FCC technical performance standards, as amended from time to time. Franchisee's Cable System shall substantially conform in all material respects to applicable sections of the following standards and regulations to the extent such standards and regulations remain in effect and are consistent with accepted industry standards. 5.1.1. The System shall be designed with an initial analog and digital carrier passband of between 50 MHz and 860 MHz. The System shall be capable of analog, standard digital, HDTV, VOD, as well as other future services. 5.1.2. The System shall have a modern design, when built, utilizing an architecture that will permit additional improvements necessary for high quality and reliable service throughout the Franchise Term. 5.1.3. The System shall have protection against outages due to power failures, so that back-up power is available at a minimum for at least twenty-four (24) hours at each headend, and conforming to industry standards, but in no event rated for less than four (4) hours, at each power supply site. 5.1.4. All work authorized and required hereunder shall be done in a safe, thorough and workman -like manner. The Franchisee must comply with all safety requirements, rules, and practices and employ all necessary devices as required by applicable law during construction, operation and repair of its Cable System. By way of illustration and not limitation, MACCNERIZON FINAL MAY 2007 14 the Franchisee must comply with the National Electrical Code, National Electric Safety Code, and Occupational Safety and Health Administration (OSHA) Standards. 5.2. Inspection of Facilities: The Grantor may inspect upon request any of Franchisee's facilities and equipment to confirm performance under this Agreement upon at least twenty-four (24) hours notice. In all instances, a qualified representative of Franchisee must be available to accompany the tour to insure that no privacy requirements are violated. 5.3. Emergency Alert System: 5.3.1. Franchisee shall comply with the Emergency Alert System ("EAS") requirements of the FCC in order that emergency messages may be distributed over the System. 5.3.2. In the event of a state or local civil emergency, the EAS shall be activated by equipment or other acceptable means as set forth in the State and Local EAS Plans. Member Jurisdictions shall permit only appropriately trained and authorized Persons to activate the EAS equipment through the EAS Local Primary Stations (LP 1 or LP2) and remotely override the audio and video on all channels on the Cable System.. Each Member Jurisdiction shall take reasonable precautions to prevent any inappropriate use of the EAS or Cable System, or any loss or damage to the Cable System, and, except to the extent prohibited by law, shall hold harmless and defend Franchisee, its employees, officers and assigns from and against any claims arising out of use of the EAS by that Member Jurisdiction, including but not limited to, reasonable attorneys' fees and costs. 6. PEG SERVICES 6.1. PEG Access Channels: 6.1.1. All PEG Access Channels provided for herein shall be administered by the Grantor or its designee. Grantor or its designee shall establish rules and regulations for use of PEG facilities consistent with, and as required by, 47 U.S.C. §531. Franchisee shall cooperate with Grantor or its designee in the use of the Cable System for the provision of PEG Access Channels. 6.1.2. In order to ensure universal availability of public, educational and government programming, Franchisee shall provide Grantor, within thirty (30) days of the Service Date of this Agreement, six (6) dedicated Public, Educational, and Government Access Channels ("PEG Access Channels"). All PEG Access Channels will be on the Basic Service Tier and will be fully accessible to Subscribers, consistent with FCC regulations. Franchisee shall ensure that the signal quality for all PEG Access Channels is in compliance with all applicable FCC technical standards. Franchisee will use equipment and procedures that will minimize the degradation of signals that do not originate with the Franchisee. Franchisee shall provide regular and routine maintenance and repair/replacement of transmission equipment it supplies necessary to carry a quality signal on the PEG Access Channels and from the Origination Points provided for herein. MACCNERIZON FINAL MAY 2007 15 6.1.3. Within ten (10) days after the Effective Date of this Agreement, Grantor shall inform Franchisee of the general nature of the programming to be carried on the initial PEG Access Channels set aside by Franchisee. Grantor and Member Jurisdictions authorize Franchisee to transmit such programming within and outside the Franchise Area. Franchisee shall assign the PEG Access Channels on its channel line-up as set forth in the notice from Grantor to the extent such channel assignments do not interfere with Franchisee's existing or planned channel line-up. If Grantor later changes the programming carried on a PEG Access Channel(s), Grantor shall provide Franchisee with at least ninety (90) days notice of the change(s). 6.1.3.1. If a PEG Access Channel provided under this Article is not being utilized by Grantor, Franchisee may utilize such PEG Channel, in its sole discretion, until such time as Grantor elects to utilize the PEG Access Channel for its intended purpose. 6.1.3.2. Grantor shall require all local producers and users of any of the PEG facilities or Channels to agree to authorize Franchisee to transmit programming consistent with this agreement in writing and to defend and hold harmless Franchisee and Grantor 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 owing 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 PEG facility or PEG Access Channel. 6.1.4. If all of Franchisee's video programming is delivered in a digital format, then, Franchisee shall reserve six (6) additional PEG Access Channels, for a total of twelve (12) PEG Access Channels. Franchisee shall activate the reserved PEG Access Channels following a written request from Grantor when the following criteria have been met for each additional PEG Access Channel: 6.1.4.1. Grantor must have a documented need for additional programming capacity that cannot be fulfilled by existing PEG Access Channels; 6.1.4.2. the existing PEG Access Channels must be utilized for PEG programming within the Franchise Area as follows: 6.1.4.2.1. Public Access Channels: During any eight (8) consecutive weeks, the Public Access Channel is in use for Locally Produced, Locally Scheduled Original Programming 80% of the time, seven (7) days per week, for any consecutive five (5) hour block during the hours from noon to midnight; or 6.1.4.2.2. Educational Access Channels: During any eight (8) consecutive weeks, the Educational Access Channel is in use for Locally Scheduled Original Programming 80% of the time, five (5) days per week, Monday through Friday, for any consecutive five (5) hour block during the hours from 6:00 a.m. to 11:00 p.m.; or MACC/VER]ZON FINAL MAY 2007 16 6.1.4.2.3. Governmental Access Channels: During any eight (8) consecutive weeks, the Governmental Access Channel is in use for Locally Scheduled Original Programming 80% of the time, five (5) days per week, Monday through Friday, for any consecutive five (5) hour block during the hours from 6:00 a.m. to 11:00 p.m.; 6.1.4.3. all cable providers within the Franchise Area similarly provide such additional PEG Access Channels; and 6.1.4.4. as long as the signal source location is the PEG Access Headend, any additional PEG Access Channel shall be made available within one hundred twenty (120) days following Grantor's request (which shall constitute Grantor's authorization to transmit the PEG Access Channel within and outside the Franchise Area) and verification of compliance with each of the foregoing conditions. If the signal source location is not the PEG Access Headend, the timing of the availability and other conditions will be by mutual agreement of Grantor and Franchisee. In no event shall the origination point be located outside the Franchise Area. 6.1.5. For the purpose of Section 6.1.4: 6.1.5.1. "Locally Produced" means programming produced in Clackamas, Multnomah, or Washington Counties, or the Vancouver/Clark County, Washington metropolitan area; and 6.1.5.2. "Original Programming" means Programming in its initial cablecast on the Cable System or in its first or second repeat; and 6.1.5.3. "Locally Scheduled" means that the scheduling, selection and or playback of Original Programming on a per -program basis is determined in consultation with, or pursuant to the operating procedures of, the Designated Access Provider or, with respect to programming received from an Interconnection, the provider transmitting the programming over the Interconnection. However, carriage on any PEG Access Channel of all or a substantial portion of any non -local programming which duplicates programming otherwise carried by Grantee as a part of its Basic or expanded Basic Cable Services shall not be considered "Locally Scheduled." 6.2. Connection of PEG Access Headend: 6.2.1. Grantor shall provide suitable video signals for the PEG Access Channels to Franchisee at Grantor's PEG Access Headend located at 11375 SW Center Street, Suite B, Beaverton, Oregon 97005. Upon receipt of a suitable video signal, Franchisee shall provide, install, and maintain in good working order the equipment necessary for transmitting the PEG signal to the channel aggregation site for further processing for distribution to Subscribers. Franchisee's obligation with respect to such upstream transmission equipment and facilities shall be subject to the availability, without charge to Franchisee, of suitable required space, environmental conditions, electrical power supply, access, pathway within the facility, and other facilities and such cooperation of Grantor as is reasonably necessary for Franchisee to fulfill such obligations. MACC/VERIZON FINAL MAY 2007 17 6.2.2. Grantor shall have the right to relocate the PEG Access Headend one time during the term of this Franchise as follows: Grantor may relocate the PEG Access Headend to a new location within the Service Area and within five hundred (500) feet of one of Franchisee's active, video -enabled FTTP trunk or feeder lines; provided that Grantor shall provide to Franchisee at the new location: (1) suitable required space, environmental conditions, electrical power supply, access, pathway within the facility, and other facilities and cooperation of Grantor as is reasonably necessary; (2) access to such space at least ninety (90) days prior to anticipated use of the new PEG Access Headend; and (3) reimbursement of up to Fifteen Thousand Dollars ($15,000) for costs associated with the relocation of the equipment necessary for transmitting the PEG signal. 6.3. Origination Points: To facilitate the Grantor's transmission of live video/audio and other PEG programming from certain remote sites, the Franchisee, at its own expense, will provide and maintain fiber connections and the related analog to digital (ADC) transmission/receive equipment necessary between the Grantor's PEG Access Headend and the Origination Points listed in Exhibit B of this Agreement. Grantor agrees it will not use these fiber connections for other purposes. 6.4. PEG/PCN Grant: 6.4.1. Franchisee shall provide an annual grant (the "PEG/PCN Grant") to Grantor to be used in support of the production of local PEG programming and in support of the PCN. Such grant shall be used by Grantor for capital costs for public, educational, or governmental access facilities, including, but not limited to, studio and portable production equipment, editing equipment and program playback equipment, or for renovation or construction of PEG access facilities, and to support the capital and operating needs of PCN users. 6.4.2. The PEG/PCN Grant provided by Franchisee hereunder shall be the sum of $1.00, per month, per Subscriber in the Service Area to Franchisee's Basic Service Tier. Franchisee shall deliver the PEG/PCN Grant payment, along with a brief summary of the Subscriber information upon which it is based, to Grantor concurrent with the Franchise fee payment. Calculation of the PEG/PCN Grant will commence with the first calendar quarter during which Franchisee obtains its first Subscriber in the Service Area. Franchisee may retain up to twenty-five percent (25%) of PEG/PCN Grant payments until the full amount of the Incidental Payment required in Section 14.5 of this Agreement is recovered. 6.4.3. Grantor shall provide Franchisee with a complete accounting annually of the distribution of funds granted pursuant to this Section. 6.4.4. To the extent permitted by federal law, the Franchisee shall be allowed to recover the costs of the PEG/PCN Grant or any other costs arising from the provision of PEG and PCN services from Subscribers and to include such costs as a separately billed line item on each Subscriber's bill. Without limiting the forgoing, if allowed under state and federal laws, Franchisee may externalize, line -item, or otherwise pass-through these costs to Subscribers. MACCNERIZON FINAL MAY 2007 18 7. FRANCHISE FEES 7.1. Payment to the Grantor: Franchisee shall pay to the Grantor a Franchise fee of five percent (5%) of annual Gross Revenue. In accordance with Title VI of the Communications Act, the twelve (12) month 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 incorrectly 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. In the event any law or valid rule or regulation applicable to this Franchise limits Franchise fees below the five percent (5%) of annual Gross Revenues required herein, Franchisee agrees to and shall pay the maximum permissible amount and, if such law or valid rule or regulation is later repealed or amended to allow a higher permissible amount, then the Franchisee shall pay the higher amount up to the maximum allowable by law, not to exceed five percent (5%) during all affected time periods. 7.2. Supporting Information: Each Franchise fee payment shall be accompanied by a written report prepared by a representative of Franchisee showing the basis for the computation in the form attached hereto as Exhibit C. Grantor shall have the right to reasonably request further supporting documentation and information for each Franchise fee payment, subject to the confidentiality provisions in this Agreement; provided that Franchisee shall not be required to develop or create reports that are not a part of its normal business procedures and reporting or that have been defined specifically within this Agreement. 7.3. Acceptance of Payments: Subject to Section 7.4 below, no acceptance of any payment shall be construed as an accord by Grantor that the amount paid is, in fact, the correct amount, nor shall any acceptance of payments be construed as a release of any claim Grantor may have for further or additional sums payable or for the performance of any other obligation of Franchisee. 7.4. Audit of Franchise Fee Payments: 7.4.1. Grantor, or its designee, may conduct an audit or other inquiry in relation to payments made by Franchisee no more than once every two (2) years during the Term. As a part of the audit process, Grantor or Grantor's designee may inspect Franchisee's books of accounts relative to Grantor at any time during regular business hours and after thirty (30) calendar days prior written notice. 7.4.2. All records deemed by Grantor or Grantor's designee to be reasonably necessary for such audit, which shall include, but not be limited to, all records subject to inspection by Grantor pursuant to Section 9.2 herein, shall be made available by Franchisee in a mutually agreeable format and location. Franchisee agrees to give its full cooperation in any audit and shall provide responses to inquiries within thirty (30) calendar days of a written request. Franchisee may provide such responses within a reasonable time after the expiration of the response period above so long as Franchisee makes a good faith effort to procure any such tardy response. MACCNERIZON FINAL MAY 2007 19 7.4.2.1. During any audit period when Franchisee has less than 10,000 Subscribers, if the results of any audit indicate that Franchisee (i) paid the correct Franchise fee, (ii) overpaid the Franchise fee and is entitled to a refund or credit, or (iii) underpaid the Franchise fee by five percent (5%) or less, then Grantor shall pay the costs of the audit. If the results of the audit indicate Franchisee underpaid the Franchise fee by more than five percent (5%) during the audit period, then Franchisee shall pay the reasonable, documented, third -party costs of the audit up to Ten Thousand Dollars ($10,000) per audit. 7.4.2.2. During any period when Franchisee has 10,000 or more Subscribers, if the results of any audit indicate that Franchisee (i) paid the correct Franchise fee, (ii) overpaid the Franchise fee and is entitled to a refund or credit, or (iii) underpaid the Franchise fee by three percent (3%) or less, then Grantor shall pay the costs of the audit. If the results of the audit indicate Franchisee underpaid the Franchise fee by more than three percent (3%) during the audit period, then Franchisee shall pay the reasonable, documented, third -party costs of the audit up to Fifteen Thousand Dollars ($15,000) per audit. 7.4.2.3. Grantor agrees that any audit shall be performed in good faith. If any audit discloses an underpayment of the Franchise fee of any amount, Franchisee shall pay Grantor the amount of the underpayment, together with interest as provided in Section 7.7 below. Any auditor employed by Grantor shall not be compensated on a success based formula, e.g., payment based on a percentage on underpayment, if any. 7.5. Limitation on Franchise Fee Actions: The period of limitation for recovery of any Franchise fee payable hereunder shall be three (3) years from the date on which payment by Franchisee is due. 7.6. Bundled Services: In the case of a Cable Service that is bundled or integrated functionally with other services, capabilities, or applications, the portion of Franchisee's revenue attributable to such other services, capabilities, or applications shall be included in Gross Revenue unless Franchisee's books and records that are kept in the regular course of business identify the revenue as being attributable to the other services, capabilities or applications. 7.7. Annual Franchise Fee Report: Franchisee shall, no later than one hundred twenty (120) days after the end of each calendar year, furnish to Grantor an annual summary of Franchise fee calculations, substantially in the form attached hereto as Exhibit C but showing annual rather than quarterly amounts. 7.8. Interest on Late Payments: In the event that a Franchise fee payment or other sum is not received by Grantor on or before the due date, or is underpaid, Franchisee shall pay in addition to the payment, or sum due, interest from the due date at a rate equal to the statutory interest rate on judgments in the State of Oregon. 7.9. Payment on Termination: If this Agreement terminates for any reason, Franchisee shall file with Grantor within ninety (90) calendar days of the date of the termination, a financial statement showing the Gross Revenues received by the Franchisee since the end of the previous calendar quarter for which Franchise fees were paid. If, within sixty (60) days of MACCVERIZON FINAL MAY 2007 20 providing such financial statement, Franchisee has not satisfied all remaining financial obligations to Grantor, Grantor reserves the right to satisfy any remaining financial obligations of the Franchisee to Grantor by utilizing the funds available in the Letter of Credit provided by the Franchisee under Section 13.6 of this Agreement. 7.10. Costs of Publication: Franchisee shall pay the reasonable cost of newspaper notices and publication pertaining to this Agreement, and any amendments thereto, including changes in control or transfers of ownership, as such notice or publication is reasonably required by Grantor under applicable law. 8. CUSTOMER SERVICE 8.1. Customer Service Requirements are set forth in Exhibit D, which shall be binding unless amended by written consent of the parties. 8.2. If, at any time during the term of this Franchise, "Effective Competition," as defined by the Communications Act, as the term may be reasonably applied to Franchisee, ceases to exist in the Service Area, Grantor and Franchisee agree to enter into good faith negotiations to determine if there is a need for additional customer service requirements. Grantor and Franchisee shall enter into such negotiations within forty-five (45) days following a request for negotiations by Franchisee after the cessation of "Effective Competition" as described above. 9. REPORTS AND RECORDS 9.1. Open Books and Records: Upon reasonable written notice to Franchisee and with no less than thirty (30) days written notice to Franchisee, Grantor 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 weekday business hours and on a nondisruptive basis at a mutually agreed location within Franchisee's Title Il service territory in Oregon and Washington, as are reasonably necessary to ensure compliance with the terms of this Franchise. Such notice shall specifically reference the section or subsection of the Franchise which is under review, so that Franchisee may organize the necessary books and records for appropriate access by Grantor. Franchisee shall not be required to maintain any books and records for Franchise compliance purposes longer than three (3) years. Franchisee shall not be required to provide Subscriber information in violation of Section 631 of the Communications Act, 47 U.S.C. §551. If any books, records, maps, plans or other requested documents are too voluminous, not available locally in the Franchisee's Title II service territory in Oregon and Washington, or for security reasons cannot be copied and moved, then the Franchisee may request that the inspection take place at a location mutually agreed to by Grantor and the Franchisee, provided that the Franchisee must pay all travel expenses incurred by Grantor in inspecting those documents or having the documents inspected by its designee, above those that would have been incurred had the documents been produced in Franchisee's Title II service territory in the Portland metropolitan area. 9.2. Proprietary Books and Records: If. the Franchisee believes that the requested information is confidential and proprietary, the Franchisee must provide the following documentation to Grantor: (i) specific identification of the information; and (ii) statement MACCNERIZON FINAL MAY 2007 21 attesting to the reason(s) Franchisee believes the information is confidential. The Grantor shall take reasonable steps to protect the proprietary and confidential nature of any books, records, Service Area maps, plans, or other documents requested by Grantor that are provided pursuant to this Agreement to the extent they are designated as such by the Franchisee, consistent with the Oregon Public Records Law. Should Grantor be required under state law to disclose information derived from Franchisee's books and records, Grantor agrees that it shall provide Franchisee with reasonable notice and an opportunity to seek appropriate protective orders prior to disclosing such information. Notwithstanding anything to the contrary set forth herein, Franchisee shall not be required to disclose any of its or an Affiliate's books and records not relating to the provision of Cable Service in the Service Area, or any confidential information relating to such Cable Service where the Grantor and Member Jurisdictions cannot lawfully protect the confidentiality of the information. 9.3. Records Required: Franchisee shall 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 public file showing the area of coverage for the provisioning of Cable Services and estimated timetable to commence providing Cable Service. 9.4. Additional Requests: The Grantor shall have the right to request in writing such information as is appropriate and reasonable to determine whether Franchisee is in compliance with applicable Customer Service Standards, as referenced in Exhibit D. Franchisee shall provide Grantor with such information in such format as Franchisee customarily prepares reports. Franchisee shall fully cooperate with Grantor and shall provide such information and documents as necessary and reasonable for the Grantor to evaluate compliance, subject to Section 9.6. 9.5. Copies of Federal and State Documents: Franchisee shall submit to the Grantor a list, or copies of actual documents, of all pleadings, applications, notifications, MACC/VEMON FINAL MAY 2007 22 communications and documents of any kind, submitted by Franchisee or its parent corporations or Affiliates to any federal, state or local courts, regulatory agencies or other government bodies if such documents specifically relate to the operations of Franchisee's Cable System within the Franchise Area. Franchisee shall submit such list or documents to the Grantor no later than thirty (30) days after filing, mailing or publication thereof. Franchisee shall not claim confidential, privileged or proprietary rights to such documents unless under federal, state, or local law such documents have been determined to be confidential by a court of competent jurisdiction, or a federal or state agency or a request for confidential treatment is pending. To the extent allowed by law, any such confidential material determined to be exempt from public disclosure shall be retained in confidence by the Grantor and its duly authorized agents and shall not be made available for public inspection. 9.6. Report Expense: All reports and records required under this or any other Section shall be furnished, without cost, to Grantor. Franchisee shall not be required to develop or create reports that are not a part of its normal business procedures and reporting or that have not been defined specifically within this Section 9 in order to meet the requirements of this Section 9. 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 Three Million Dollars ($3,000,000) combined single limit for property damage and bodily injury; one million dollar ($1,000,000) limit for broadcaster's liability. Such insurance shall cover the construction, operation and maintenance of the Cable System, and the conduct of Franchisee's Cable Service business in the Franchise Area. 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 coverage. 10.1.1.3. Workers' Compensation Insurance meeting all legal requirements of the State of Oregon. 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; $2,000,000 policy limit. 10.1.2. Grantor and Member Jurisdictions shall be designated as additional insureds under each of the insurance policies required in this Article 10 except Worker's Compensation and Employer's Liability Insurance. 10.1.3. Franchisee shall not cancel any required insurance policy without obtaining alternative insurance in conformance with this Agreement. MACCNERIZON FINAL MAY 2007 23 a 10.1.4. Each of the required insurance policies shall be with sureties qualified to do business in the State of Oregon, with an A- or better rating for financial condition and financial performance by Best's Key Rating Guide, Property/Casualty Edition. 10.1.5. Upon written request, Franchisee shall deliver to Grantor Certificates of Insurance showing evidence of the required coverage. 10.2. Indemnification: 10.2.1. Franchisee agrees to indemnify, save and hold harmless, and defend Grantor, its officers, agents, boards and employees, from and against any liability for damages or claims resulting from tangible property damage or bodily injury (including accidental death), to the extent proximately caused by Franchisee's negligent construction, operation, or maintenance of its Cable System, provided that Grantor shall give Franchisee written notice of its obligation to indemnify Grantor within ten (10) days of receipt of a claim or action pursuant to this subsection. Notwithstanding the foregoing, Franchisee shall not indemnify Grantor for any damages, liability or claims resulting from the willful misconduct or negligence of Grantor, its officers, agents, employees, attorneys, consultants, independent contractors or third parties or for any activity or function conducted by any Person other than Franchisee in connection with PEG Access Channels, use of the PCN, or EAS, or the distribution of any Cable Service over the Cable System. 10.2.2. With respect to Franchisee's indemnity obligations set forth in Subsection 10.2.1, Franchisee shall provide the defense of any claims brought against Grantor by selecting counsel of Franchisee's choice to defend the claim, subject to the consent of Grantor, which shall not unreasonably be withheld. Nothing herein shall be deemed to prevent Grantor from cooperating with 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 Grantor, 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 settlement does not include the release of Grantor and Grantor 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 Grantor shall in no event exceed the amount of such settlement. 10.2.3. Grantor shall hold Franchisee harmless and shall be responsible for damages, liability or claims resulting from willful misconduct or negligence of Grantor. 10.2.4. Grantor shall be responsible for its own acts of willful misconduct or negligence, or breach of obligation committed by Grantor for which Grantor is legally responsible, subject to any and all defenses and limitations of liability provided by law. Franchisee shall not be required to indemnify Grantor for acts of Grantor which constitute willful misconduct or negligence, on the part of Grantor, its officers, employees, agents, attorneys, consultants, independent contractors or third parties. MACC/VERIZON FINAL MAY 2007 24 11. TRANSFER OF FRANCHISE 11.1. Subject to Section 617 of the Communications Act, 47 U.S.C. § 537, no "Transfer of the Franchise" shall occur without the prior consent of Member Jurisdictions, provided that such consent shall not be unreasonably withheld, delayed or conditioned. 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 Franchisee in the Franchise or Cable System in order to secure indebtedness, or otherwise excluded under this Article 11. 11.2. A "Transfer of the Franchise" shall mean any transaction in which: 11.2.1. an ownership or other interest in Franchisee 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 11.2.2. the rights held by Franchisee under the Franchise are transferred or assigned to another Person or group of Persons. However, notwithstanding Subsections 11.2.1 and 11.2.2, 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 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 Franchisee; or any action which is the result of a merger of another Affiliate of Franchisee. The parent of Franchisee is shown in Exhibit E. 11.3. Franchisee shall make a written request ("Request") to Grantor and Member Jurisdictions for approval of any Transfer of the Franchise and furnish all information required by law and/or reasonably requested by Grantor and Member Jurisdictions in respect to its consideration of a proposed Transfer of the Franchise. Member Jurisdictions shall render a final written decision on the Request within one hundred twenty (120) days of the Request, provided it has received all requested information. Subject to the foregoing, if the Member Jurisdictions fail to render a written decision on the Request within one hundred twenty (120) days, the Request shall be deemed granted unless Franchisee and Member Jurisdictions agree to an extension of time. 11.4. In reviewing a Request related to a Transfer of the Franchise, Grantor and Member Jurisdictions may inquire into the legal, technical and financial qualifications of the prospective transferee, and Franchisee shall assist Grantor and Member Jurisdictions in so inquiring. Member Jurisdictions may condition said Transfer of the Franchise upon such terms and conditions as they deem reasonably appropriate, provided, however, any such terms and conditions so attached shall be related to the legal, technical, and financial qualifications of the prospective or transferee and to the resolution of outstanding and unresolved issues of Franchisee's noncompliance with the terms and conditions of this Agreement. MACCNERIZON FINAL MAY 2007 25 11.5. The consent or approval of Member Jurisdictions to any Request by the Franchisee shall not constitute a waiver or release of any rights of Member Jurisdictions, and any transferee shall be expressly subordinate to the terms and conditions of this Agreement. 11.6. Notwithstanding the foregoing, the parties agree that the Member Jurisdictions' consent and/or approval to any transfer or assignment of any rights, title, or interest of Franchisee to any Person shall not be required where Verizon Northwest Inc. or its lawful successor which is not a third party transferee remains the Franchisee following any such transfer or assignment. 12. RENEWAL OF FRANCHISE 12.1. The parties agree that any proceedings undertaken by Grantor and Member Jurisdictions 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, Grantor agrees to 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. Grantor further agrees that such assessments shall be provided to Franchisee promptly so that Franchisee has adequate time to submit a proposal under Section 626 and complete renewal of the Franchise prior to expiration of its term. 13. ENFORCEMENT AND TERMINATION OF FRANCHISE 13.1. Notice of Violation: In the event Grantor believes that Franchisee has failed to perform any obligation under this Agreement or has failed to perform in a timely manner, Grantor shall informally discuss the matter with Franchisee. If these discussions do not lead to resolution of the problem, Grantor shall notify Franchisee in writing, stating with reasonable specificity the nature of the alleged violation. 13.2. Franchisee's Right to Cure or Respond: Franchisee shall have thirty (30) days from receipt of the written notice described in Section 13.1 to: (i) respond to Grantor, contesting (in whole or in part) Grantor's assertion that a violation has occurred, and requesting a hearing in accordance with subsection 13.3 below; (ii) cure the violation; or (iii) notify Grantor that Franchisee cannot cure the violation within the thirty (30) days, and notify the Grantor in writing of what steps Franchisee shall take to cure the violation including Franchisee's projected completion date for such cure. The procedures provided in Section 13.4 shall be utilized to impose any fines. The date of violation will be the date of the event and not the date Franchisee receives notice of the violation provided, however, that if Grantor has actual knowledge of the violation and fails to give the Franchisee the notice called for herein, then the date of the violation shall be no earlier than ten (10) business days before the Grantor gives Franchisee the notice of the violation. 13.2.1. In the event that the Franchisee notifies the Grantor that it cannot cure the violation within the thirty (30) day cure period, Grantor shall, within thirty (30) days of Grantor's receipt of such notice, set a hearing. MACC/VERIZON FINAL MAY 2007 26 13.2.2. In the event that the Franchisee fails to cure the violation within the thirty (30) day basic cure period, or within an extended cure period approved by the Grantor pursuant to subsection 13.2(iii), the Grantor shall set a hearing to determine what fines, if any, shall be applied. 13.2.3. In the event that the Franchisee contests the Grantor's assertion that a violation has occurred, and requests a hearing in accordance with subsection 13.2(1) above, the Grantor shall set a hearing within sixty (60) days of the Grantor's receipt of the hearing request to determine whether the violation has occurred, and if a violation is found, what fines shall be applied. 13.3. Public Hearing: In the case of any hearing pursuant to section 13.2 above, Grantor shall provide reasonable notice to Franchisee of the hearing in writing. At the hearing Franchisee shall be provided an opportunity to be heard, to examine Grantor's witnesses, and to present evidence in its defense. The Grantor may also hear any other person interested in the subject, and may provide additional hearing procedures as Grantor deems appropriate. 13.3.1. If, after the hearing, Grantor determines that a violation exists, Grantor may use one of the following remedies: 13.3.1.1. Order Franchisee to correct or remedy the violation within a reasonable time frame as Grantor shall determine; 13.3.1.2. Establish the amount of fine set forth in Section 13.5, taking into consideration the criteria provided for in subsection 13.4 of this Agreement as appropriate in Grantor's discretion; or 13.3.1.3. Pursue any other legal or equitable remedy available under this Agreement or any applicable law; or 13.3.1.4. In the case of a substantial material default of a material provision of the Franchise, seek to revoke the Franchise in accordance with Section 13.7. 13.4. Reduction of Fines: The fines set forth in Section 13.5 of this Agreement may be reduced at the discretion of the Grantor, taking into consideration the nature, circumstances, extent and gravity of the violation as reflected by one or more of the following factors: requirements; 13.4.1. Whether the violation was unintentional; 13.4.2. The nature of the harm which resulted; 13.4.3. Whether there is a history of prior violations of the same or other 13.4.4. Whether there is a history of overall compliance, and/or; MACCNERIZON FINAL MAY 2007 27 13.4.5. Whether the violation was voluntarily disclosed, admitted or cured. 13.5. Fine Schedule: 13.5.1. For violating telephone answering standards set forth in Exhibit D, Section 2.1) for a quarterly measurement period, unless the violation has been cured, fines shall be as set forth below. A cure is defined as meeting the telephone answering standards for two consecutive quarterly measurement periods. Quarterly Telephone Answer Time Fines 1S' Violation 2nd Violation 3rd Violation Quarterly Fine $ 2,000* $ 4,000" $ 6,000* * If after forty-two (42) months, no fines have been assessed for violations of call answer time standards, these fines shall be reduced by fifty percent (50%). 13.5.2. For all other violations of this Agreement, the fine shall be $250 per day. 13.5.3. Total fines shall not exceed Twenty -Five Thousand Dollars ($25,000) in any twelve-month period. 13.5.4. If Grantor elects to assess a fine pursuant to this Section, such election shall constitute Grantor's exclusive remedy for the violation for which the fine was 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 Grantor 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. 13.6. Letter of Credit: Franchisee shall provide a letter of credit in the amount of Twenty Thousand Dollars ($20,000) as security for the faithful performance by Franchisee of all material provisions of this Agreement. 13.7. Revocation: Should Grantor seek to revoke the Franchise after following the procedures set forth in Sections 13.1 through 13.5 above, Grantor shall give written notice to Franchisee of its intent. The notice shall set forth the exact nature of the noncompliance. Franchisee shall have ninety (90) days from such notice to object in writing and to state its reasons for such objection. In the event Grantor has not received a satisfactory response from Franchisee, it may then seek termination of the Franchise at a public hearing. Grantor shall cause to be served upon Franchisee, at least thirty (30) days prior to such public hearing, a written notice specifying the time and place of such hearing and stating its intent to revoke the Franchise. MACGVERIZON FINAL MAY 2007 28 13.7. 1. At the designated 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 require the production of evidence, to compel the relevant testimony of the officials, agents, employees or consultants of Grantor, to compel the testimony of other persons as permitted by law, and to question and/or cross examine witnesses. A complete verbatim record and transcript shall be made of such hearing. 13.7.2. Following the public hearing, Franchisee shall be provided up to thirty (30) days to submit its proposed findings and conclusions in writing and thereafter Grantor shall determine (i) whether an event of default has occurred; (ii) whether such event of default is excusable; and (iii) whether such event of default has been cured or will be cured by Franchisee. Grantor shall also determine whether to revoke the Franchise based on the information presented, or, where applicable, grant additional time to Franchisee to effect any cure. If Grantor determines that the Franchise shall be revoked, Grantor shall promptly provide Franchisee with a written decision setting forth its reasoning. Franchisee may appeal such determination of Grantor to an appropriate court, which shall have the power to review the decision of Grantor de novo. Franchisee shall be entitled to such relief as the court finds appropriate. Such appeal must be taken within sixty (60) days of Franchisee's receipt of the determination of the Grantor. 13.7.3. Grantor may, at its sole discretion, take any lawful action which it deems appropriate to enforce Grantor's rights under the Franchise in lieu of revocation of the Franchise. 13.8. Limitation on Grantor Liability: The parties agree that the limitation of Grantor liability set forth in 47 U.S.C. §555a is applicable to this Agreement. 13.9. Franchisee Termination: Franchisee shall have the right to terminate this Franchise and all obligations hereunder within ninety (90) days after the end of four (4) years from the Service Date of this Franchise, if at the end of such four (4) 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 in this determination. Notice to terminate under this Section 13.9 shall be given to the Grantor 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. 14. MISCELLANEOUS PROVISIONS 14.1. Actions of Parties: In any action by Grantor 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. 14.2. Binding Acceptance: This Agreement shall bind and benefit the parties hereto and their respective heirs, beneficiaries, administrators, executors, receivers, trustees, MACCNERIZON FINAL MAY 2007 29 successors and assigns, and the promises and obligations herein shall survive the expiration date hereof. 14.3. 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 Grantor. 14.4. Force Majeure: Franchisee shall not be held in default under, or in noncompliance with, the provisions of the Franchise, nor suffer any enforcement or penalty relating to noncompliance or default, where such noncompliance or alleged defaults occurred or were caused by a Force Majeure. 14.4.1. Furthermore, the parties hereby agree that it is not the Grantor's intention to subject Franchisee to penalties, fines, 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, or where strict performance would result in practical difficulties and hardship being placed upon Franchisee which outweigh the benefit to be derived by Grantor and/or Subscribers. 14.5. Incidental Payment: The Franchisee shall pay the Grantor an Incidental Payment of $149,600 as set forth below as a condition of the Franchise granted by this Agreement. The Incidental Payment will be made to Grantor in four annual payment installments as follows: Commencing on the Service Date, and on the same date in the three (3) following years, the Franchisee shall provide the amounts shown below to the Grantor as an advance of a portion of the Annual PEG/PCN Grant required in Section 6.4 of the Agreement. Incidental Pavment Schedule Year 1 $17,600 Year 2 $35,200 Year 3 $44,000 Year 4 $52,800 These payments shall not be regarded as franchise fees, nor payments in lieu of franchise fees, nor as an offset against franchise fees, and they shall be used by Grantor at the Grantor's sole discretion consistent with applicable law. To recover the Incidental Payment, the Franchisee may retain up to twenty-five percent (25%) of the $1.00 per month collected from Subscribers under Section 6.4 of this Agreement until such time as the total amount of $149,600 is recovered. Once the total amount of the Incidental Payment is recovered, the Franchisee shall pay the Grantor the full $1.00 per month, per Subscriber PEG/PCN Grant. The Grantor may assure the accuracy of these payments by inspecting Franchisee's records under Section 9 of this Agreement or by an audit under Section 7.4 of this Agreement. MACCNERIZON FINAL MAY 2007 30 14.6. Notices: Unless otherwise expressly stated herein, notices required under the Franchise shall be mailed first class, postage prepaid, to the addressees below. Each party may change its designee by providing written notice to the other party. 14.6.1. 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 14.6.2. Notices to the Grantor shall be mailed to: Mr. Bruce Crest, MACC Administrator Metropolitan Area Communications Commission 1815 NW 1691h Place, Suite 6020 Beaverton, OR 97006-4886 14.7. Entire Agreement: This Franchise and the Exhibits hereto constitute the entire agreement between Franchisee and Grantor, and it supersedes all prior or contemporaneous agreements, representations or understanding of the parties regarding the subject matter hereof. Any ordinances or parts of ordinances that conflict with the provisions of this Agreement are superseded by this Agreement. 14.8. Amendments: Amendments to this Franchise shall be mutually agreed to in writing by the parties. 14.9. 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. 14.10. Severability: If any section, subsection, 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, subsection, sentence, paragraph, term or provision hereof, all of which will remain in full force and effect for the term of the Franchise. MACCVERIZON FINAL MAY 2007 31 14.11. 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. 14.12. Modification: This Franchise shall not be modified except by written instrument executed by both parties. 14.13. 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 Grantor 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. This provision is not intended to contravene leased access requirements under Title VI or PEG requirements set out in this Agreement. 14.14. Independent Legal Advice: Grantor 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. 14.15. Grantor Authority: Grantor represents and warrants that it is authorized to enter into this Agreement on behalf of its Member Jurisdictions pursuant an Intergovernmental Cooperation Agreement originating in 1980 and in effect in its current form since February 13, 2003, and that the party signing below is authorized to execute this Agreement on behalf of the Member Jurisdictions following certification that the governing bodies of each of the affected Member Jurisdictions have approved this Agreement as required by Section 4.E of the Intergovernmental Cooperation Agreement. 14.16. Franchisee Authority: Franchisee represents and warrants that it is authorized to enter into this Agreement and that the party signing below is authorized to execute this Agreement. MACC/VERIZON FINAL MAY 2007 32 AGREED TO THIS o2 S DAY OF , 2007. METROPOLITAN AREA COMMUNICATIONS COMMISSION By: Administrator VERIZON NORTHWEST INC. FO AP MOVED Atto Date By: [Title] EXHIBITS Exhibit A: Initial Service Area/Franchise Area Exhibit B: Origination Points Exhibit C: Quarterly Franchise Fee Remittance Form Exhibit D: Customer Service Standards Exhibit E: Franchise Parent Structure as of January 24, 2007 Exhibit F: Quarterly Customer Service Standards Performance Report MACCNERIZON FINAL MAY 2007 33 EXHIBIT A - INITIAL SERVICE AREA/FRANCHISE AREA MACCNERIZON FINAL MAY 2007 34 -�boll 'Inn Se / ze OaO_0 jj Q t );-W-- 0�3 �- �z� Pie Ld SO MACCNERIZON FINAL MAY 2007 35 Rol' QW?o o 4 W�. 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MACC/VERIZON FINAL MAY 2007 36 EXHIBIT B ORIGINATION POINTS Alternate City Council "Live" Meeting Sites: Beaverton Library, 12375 SW 5th St., Beaverton, Oregon 97005 Tigard Librarx, 13500 SW Hall Blvd., Tigard, Oregon 97223 Area Emergency Management Centers: Tualatin Valley Fire & Rescue (TVF&R) Administration, EMC, 20665 SW Blanton St., Aloha, Oregon 97007 WCCCA Emergency Management Center, EMC 17911 NW Evergreen Parkway, Beaverton, Oregon 97006 Washington County EMC, Washington County Sheriff's Office, 215 SW Adams Ave., Hillsboro, Oregon 97123 MACCNERIZON FINAL MAY 2007 37 EXHIBIT C QUARTERLY FRANCHISE FEE REMITTANCE FORM MACC FRANCHISE FEE SCHEDULE/REPORT For the Quarter Ending 1 Monthly Recurring Cable Service Charges (e.g., Basic, Enhanced Basic, Premium and Equipment Rental) 2 Usage Based Charges (e.g., Pay Per View, Installation) 3 Other Misc. (e.g., Late Charges, Advertising, Leased Access) 4 Franchise Fees Collected Less: 1 Sales Tax Collected 2 Uncollectibles Total Receipts Subject to Franchise Fee Calculation Franchise Fee Rate 5% Franchise Fee Due Monthly PEG Grant Collection Quarterly PEG Grant Remission Month 1 Month 2 Month 3 Quarter Franchise Fee MACCNERIZON FINAL MAY 2007 38 I] EXHIBIT D CUSTOMER SERVICE STANDARDS These standards shall apply to Franchisee to the extent it is providing Cable Services over the Cable System in the Franchise area. However, for the first three (3) months after the Service Date, Franchisee shall not be required to provide reports under this Agreement and, for the first six (6) months after the Service Date, Grantor will not impose fines if Franchisee fails to meet the customer service standards set forth in this Agreement. This Section sets forth the minimum customer service standards that the Franchisee must satisfy. 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, 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 twenty five (125) 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, and such representatives shall be available to receive all other inquiries at least forty-five (45) hours per week including at least one night per week and/or some weekend hours. Franchisee representatives shall identify themselves by name when answering this number. MACCNERIZON FINAL MAY 2007 39 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 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 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. Forty-five (45) days following the end of each quarter, the Franchisee shall report to Grantor, using the form shown in Exhibit F, 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 Subsection 2.1); and (2) Percentage of time customers received a busy signal when calling the Franchisee's service center as set forth in Subsection 2.E. 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 Grantor 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 MACCNERIZON FINAL MAY 2007 40 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 the placement of the Optical Network Terminal ("ONT") on the customer's premises or within seven (7) business days after an order is placed if the ONT is already installed on the customer's premises. 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 the seven (7) day period. C. Franchisee shall provide Grantor with a report forty-five (45) days following the end of the quarter, noting the percentage of Standard Installations completed within the seven (7) day period, excluding those requested outside of the seven (7) day period by the Subscriber. Subject to consumer privacy requirements, underlying activity will be made available to Grantor 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 Grantor 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. (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. MACGVERIZON FINAL MAY 2007 41 SECTION 4: SERVICE INTERRUPTIONS AND OUTAGES A. Franchisee shall promptly notify Grantor 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 Grantor 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 Grantor 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 Subsection E. of this Section for ninety percent (90%) of the Service Calls it completes, as measured on a quarterly basis. G. Franchisee shall provide Grantor with a report within 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 Grantor 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 MACC/VERIZON FINAL MAY 2007 42 quarters one time during the term of this Agreement. The Franchisee shall notify the Grantor of such a change at least thirty (30) days in advance. H. At Franchisee's option, the above measurements may be changed for calendar quarters to billing or accounting quarters one time during the term of this Agreement. Franchisee shall notify Grantor of such a change at least thirty (30) day in advance. I. Under Normal Operating Conditions, Franchisee shall provide a credit upon Subscriber request when all Channels received by that Subscriber experience the loss of picture or sound 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. J. 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. SECTION 5: CUSTOMER COMPLAINTS REFERRED BY GRANTOR Under Normal Operating Conditions, Franchisee shall begin investigating Subscriber complaints referred by Grantor within twenty-four (24) hours. Franchisee shall notify Grantor of those matters that require more than seventy-two (72) hours to resolve, but Franchisee must make all necessary efforts to resolve those complaints within ten (10) business days of the initial complaint. Grantor may require Franchisee to provide reasonable documentation to substantiate the request for additional time to resolve the problem. Franchisee shall inform Grantor 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 investigate the Customer's complaint and advise the Customer of the results of that investigation. SECTION 6: BILLING A. Subscriber bills must be itemized to describe Cable Services purchased by Subscribers and related equipment charges. Bills 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, MACCNERIZON FINAL MAY 2007 43 Franchise fees, taxes and/or other 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 Subsection 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 Grantor. 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. I. Franchisee shall provide Grantor with a sample Cable Services bill, and shall provide an updated sample bill at least 30 days before any material change is sent to Subscribers. MACCNERIZON FINAL MAY 2007 44 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 other 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. Such late fees are subject to ORS 646.649. C. All of Franchisee's rates and charges shall comply with applicable law. Franchisee shall maintain a complete current schedule of rates and charges for Cable Services on file with the Grantor throughout the term of this Franchise. MACC/VERIZON FINAL MAY 2007 45 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 subsection, the term "disconnect" shall include Subscribers who elect to cease receiving Cable Service from Franchisee and to receive Cable Service or other multi -channel video service from another Person or entity. SECTION 10: COMMUNICATIONS WITH SUBSCRIBERS A. All Franchisee personnel, contractors and subcontractors contacting Subscribers or potential Subscribers outside the office of Franchisee shall wear a clearly visible identification card bearing their name and photograph. Franchisee shall make reasonable effort to account for all identification cards at all times. In addition, all Franchisee representatives shall wear appropriate clothing while working at a Subscriber's premises. Every service vehicle of Franchisee and its contractors or subcontractors shall be clearly identified as such to the public. Specifically, Franchisee vehicles shall have Franchisee's logo plainly visible. The vehicles of those contractors and subcontractors working for Franchisee shall have the contractor's / subcontractor's name plus markings (such as a magnetic door sign) indicating they are under contract to Franchisee. MACCNERIZON FINAL MAY 2007 46 B. All contact with a Subscriber or potential Subscriber by a Person representing Franchisee shall be conducted in a courteous manner. 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 Grantor. A copy of the annual notice required under this Subsection 10.0 will be given to Grantor at least fifteen (15) days prior to distribution to Subscribers. D. Franchisee shall provide the name, mailing address, and phone number of Grantor on all Cable Service bills in accordance with 47 C.F.R. §76.952(a). E. 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. F. Franchisee shall provide reasonable notice to Subscribers and Grantor 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. If the change is not within Franchisee's control, Franchisee shall provide an explanation to Grantor of the reason and expected length of delay. Franchisee shall provide a copy of the notice to Grantor including how and where the notice was given to Subscribers. 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 Subsection 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; MACGVERIZON FINAL MAY 2007 47 (5) Complaint procedures, including the name, address, and telephone number of Grantor, but with a notice advising the Subscriber to initially contact Franchisee about all complaints and questions; (6) Procedures for requesting Cable Service credit; (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 Subsection 10.F. will be given to Grantor 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 with 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 federal, state, and local law, including 47 U.S.C. §551. MACCNERIZON FINAL MAY 2007 48 EXHIBIT E FRANCHISEE PARENT STRUCTURE AS OF JANUARY 24, 2007 Verizon Northwest parent: GTE Corporation 100% GTE Corporation Parents: Verizon Communications Inc. 92.88% NYNEX Corporation 5.93% (which is 100% owned by Verizon Communications Inc.) 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