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HomeMy WebLinkAboutAgenda Packet 07/30/2002 UTILITY ADVISORY COMMITTEE PUBLIC WGRKB CONFERENCE I~DDM ~=:PEClAL ~vl FETING PORT ANGELESy WA gE~362 dULY 30, 2002 AGENDA I. F~-ALL TO ORDER II. I:~ C) LL r. ALL III. APPROVAL OF MINUTEB FOR .lULY 23, 2002 IV. DISCUSSION ITEMS A. PUD FIBER OPTI0 DISCUSSION (VERBAL) B. CAPACITY PROVISIONING INSTITUTIONAL NETWORK ¢::ERVIOES AGREEMENT C. NORTHLAND {~ABLE WIDE AREA NETWORK USE AGREEMENT D. P-APAE:ITY PROVISIONING MA~iTER PERMIT E, PUD RIGHT-nF-WAY AND E:ONNECTIONS PERMIT AMENDMENT V. NEXT MEETING AUGUST ~ 3 VI. ADJOURNMENT UTILITY ADVISORY COMMITTEE SPECIAL MEETING Port Angeles, Washington July 23, 2002 I. Call to Order: ~ Chairman Bentley called the meeting to order at 3:00 p.m. IL Roll Call: Members Present: Chairman Bentley, Councilman Williams, Councilman Campbell, Councilmember Erickson, Dean Reed Members Absent: Councilmember Rogers Staff Present: Mike Quinn (3:35), Craig Knutson, Glenn Cutler, Yvonne Ziomkowski, Scott McLain, Gary Kenworthy, Tim Smith, Scott Collins, Cate Rinehart Others Present: Brian Gawley - Peninsula Daily News III. Approval of Minutes: Chairman Bentley asked if there were any additions or corrections to the meeting minutes of July 9, 2002. Dean Reed noted a minor typo. Council member Erickson moved to approve the minutes. Councilman Campbell seconded the motion, which carried unanimously. Councilman Williams abstained due to absence at the previous meeting. IV. Discussion Items: A. Storrnwater Glenn Cutler, Director of Public Works and Utilities, gave an overview of the proposed ordinance revisions, compliance dates, current and proposed budgets, financial impacts of stormwater fees, and preliminary projections for revenues and impacts with breakdowns for $3.00, $3.50, $6.00 and $8.00 monthly charges. A discussion followed with minor corrections made to the ordinance. Some concern was raised regarding the private rate reduction and single family/duplex property versus single family/multi family in respect to word usage to be in compliance with the building code. Staff indicated all variables could not be covered and that the presentation reflected a reasonable start with the ability to make formal adjustments every three years. Staff was directed to pursue the $3.00 monthly fee with a $30.00 cap, revise the ordinance as discussed, evoke a property lien for those properties without utilities who are in violation with non-compliance, combine the Current Stormwater Utility Budget and Proposed Stormwater Utility Budget charts for future presentation, and include with the final information to Council thc Chamber of Commerce letter showing support. The Stormwater issue will appear on the August 13, 2002 agenda. UTILITY ADVISORY COMMITTEE July 23, 2002 Staff was commended for the excellent feedback to the committee and response to the concerns of the community. Members acknowledged the extensive research and coordinated efforts to provide the well defined issues as introduced. Information only. No action taken. Glenn Cutler, Director of Public Work and Utilities, announced a C/a/lam County Stormwater meeting August 7, 2002 from 6:30 p.m. to 9:30 p.m. in the County Commissioners Room to discuss agency impacts and the consequences of refusing to comply. This meeting is open to the public. V. Next Meeting: Special Meeting - July 30 - 2 p.m. Northland Cable Wide Area Network (WAN) Use Agreement Capacity Provisioning Institutional Network Services Agreement Capacity Provisioning Master Permit PUD Presentation On Fiber Business Plan Regular Meeting -August 13 - 3 p.m. VI. Adjournment: The meeting adjourned at 4:35 p.m. Allen Bentley, Chairman Cate Rinehart, Administrative Assistant 7/25/02 N:kPWKS\LIGH25CONS\CA TE\july23meet. wpd 2 WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: JULY 30, 2002 TO: UTILITY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager RE: Proposed Institutional Network Services Agreement Summary: At the direction o£the Utility Advisory Committee (UAC) and City Council on the institutional network (I-Net) fast-track concepts and approach, an I-Net Services Agreement has been negotiated with Capacity Provisioning, Inc. (C.P.I.) to activate the I-Net dark fiber backbone and nodes provided under the Fiber Optic Wide Area Network (WAN) Use Agreement and Cable Television Franchise Ordinance No. 3116 with Northland Cable Television. Recommendation: Subject to a favorable recommendation on the proposed Fiber Optic WAN Use Agreement and Telecommunications Master Permit (separate staff reports), forward a favorable recommendation to the City Council to approve the proposed Institutional Network Services Agreement with Capacity Provisioning, Inc. Background/Analysis: On May 14, 2002, Staff provided a presentation to the UAC on I-Net activation and site drop alternatives. At the direction of the UAC, Staff began to develop a fast- track concept and approach to compress the I-Net completion schedule. On June 4, 2002, in lieu of a standard competitive bidding process that would not have been able to meet the desired fast- track schedule, the management oversight committee directed staff to pursue an I-Net activation agreement with C.P.I., a local service provider, who has been actively soliciting this opportunity over the last year. On June 11, 2002, the UAC authorized staffto proceed with the fast-track concepts and approach. On June 17, 2002, the City Council approved consulting services in support of the fast-track concepts and approach and construction of the I-Net. On July 9, 2002, the UAC received an update on the progress of the negotiation with C.P.I. On June 19, 2002, a meeting was held with C.P.I. and a core group of potential 1-Net users to review C.P.I.'s qualifications and proposed Foundry I-Net node equipment. Another meeting with potential I-Net users was held on June 26, 2002 to review a draft I-Net Service Agreement prior to a negotiation with C.P.I. On July 2, 2002, Staffheld another meeting with potential I- Net users to review the revised draft Agreement. A total of six negotiation sessions were held from June 28~h through July 19, 2002. A total of three management oversight committee meetings to provide guidance to staff were held during the negotiation period. On July 8, 2002, the management oversight committee determined that the City's negotiation position for base charges should include consideration for promoting economic development. Proposed I-Net Services Agreement Page 2 July 30, 2002 Agreement summary The I-Net Services Agreement will provide fiber optic connections to the City, institutions that enter into an interlocal agreement with the City, and businesses within the City limits. As part of the proposed Agreement, C.P.I. would construct approximately 13 miles of fiber optic site drop infrastructure to provide wide area networking services to 35 municipal facilities and install Foundry Networks Big Iron 4000 equipment in 3 of the 7 I-Net node enclosures. A non- recurring base service charge was negotiated in exchange for a right to use City site drops without any further charges. The City Attorney has not yet completed the final legal review of the proposed Agreement. Please refer to Attachment A for a summary of the main sections of the proposed Agreement. A summary of the milestones and schedule is included as Attachment B. There are numerous benefits to proceeding with the I-Net fast-track plan and schedule. C.P.I. benefits include ease of market entry, reduced investment requirements, and the City as an anchor customer. Northland benefits include new dark fiber lease revenue, I-Net construction combined with their network upgrade, and satisfaction of certain franchise requirements. Clallam County PUD benefits include a wholesale services revenue opportunity to C.P.I. with minimum capital investment, satisfaction of PUD/City common customer needs, and improved physical network redundancy if an amendment is completed to their right-of-way license. Institutions and businesses will benefit from the availability of broadband and advanced services, another service provider alternative, and below market rates for services due to a low cost backbone infrastructure. The I-Net will support and promote economic diversification of the community in the areas of telecommunications and advanced technology. Assuming the fast-track is successful, the I-Net would help achieve the City's economic development goals and objectives much earlier than the April 2004 scheduled availability date. Beyond the economic development benefits, City benefits include a reduced need for overbuilding of fiber optic infrastructure, eliminating the need for City development of a fiber optic infrastructure, and satisfaction of the City's business plan goals. The I-Net will be a modem municipal wide area network that will be fully compatible with the HTE software and hardware implementation that's currently underway. Proposed capital costs There are two cost components of the I-Net including capital and operating expenses. As part of the Community Telecommunications Action Plan, Staff estimated the capital cost of the fiber optic backbone would be $1,500,000, which did not include any costs for last mile infrastructure, network equipment or local area network (LAN) costs within municipal facilities. As part of the fast-track plan and approach, Staff estimated the cost of the I-Net, including last mile infrastructure and network equipment was in the range of $830,000 to $980,000. The estimate also did not include ongoing network operation, maintenance and management, LAN costs and services. Proposed I-Net Services Agreement Page 3 July 30, 2002 The City's negotiated cost for the proposed I-Net Services Agreement and the Fiber Optic WAN Use Agreement for the backbone, last mile infrastructure, network equipment, and LAN costs is $893,100, which is in line with the targeted fast-track estimate. A summary of the individual and combined costs under the proposed I-Net Services Agreement and the WAN Use Agreement is included in Attachment C. An estimated $377,550 expense (for integral and non-separable excess network capacity) would be incurred by the City as part of the $893,100 capital cost which would be recovered by the City from C.P.I. in the form of monthly I-Net excess capacity charges. The expense for excess capacity includes necessary general benefit facilities in order to serve the City, institutions and businesses. The I-Net excess capacity charge will provide revenue to repay the City light fund for the cost of the increased capacity over the network's fifteen year service life. Proposed operating costs The City operating expenses for wide area networking service charges within the City, including network operation and management under the I-Net Services Agreement, is $6,523 per month including public utility tax. All capital and operating expenses related to the 1-Net will be budgeted out of the light fund and -costs will be recovered by allocation to the City's general, equipment services, solid waste, and water/waste water funds. As part of the 2003 proposed budget, the monthly cost allocation to the general fund will be $1,720, equipment services fund $41, solid waste fund $374, water/waste water fund $1,011, and light fund $3,377. Future Internet access and voice over Internet protocol (VolP) expenses under the Agreement, if approved, will be paid out of the light fund and additional costs will be allocated to other funds. The cost allocation will provide revenue to repay the City light fund for a share of the capital and operating expenses over the network's fifteen year service life. Cost comparison and potential avoided costs C.P.I.'s base charges to the City and its regular commercial charges to other institutions and businesses under the I-Net Services Agreement (for 100 Mbps fast Ethernet wide area networking services within the City) are dramatically below average retail charges. Although 100 Mbps service is approximately 66 times faster than T-1 service (1.5 Mbps) it will only cost the City 5% more than T-1 service (not taking into consideration a reduction to City charges due to the excess capacity charges). The regular commercial charges available to institutions and businesses are over 30% less than the average cost ofT-1 service. A summary of the monthly recurring charges and non-recurring charges proposed by C.P.I. compared to average retail charges, based on a survey recently completed by Metropolitan Communications Consultant's, is provided on the following page. Proposed I-Net Services Agreement Page 4 July 30, 2002 Proposed C.P.I. Monthly Recurring Charges Service Base Charge to City~ Regular Commercial Charge Average Retail Charge 1.5 Mbps N/A $330 100 Mbps $345 $220 $4,250 Proposed C.P.I. Non-Recurring Charges Service Base Charge to City Regular Commercial Charge Average Retail Charge 1.5 Mbps N/A $530 100 Mbps $600 $600 $2,335 ~The City Base Charge will be reduced by the excess capacity charge. Current City telecommunications expenses Based on the month of May 2002, the City's estimated annual cost for local and long-distance phone services and Lntemet access is $117,040 (paging and wireless services not included). Due to an increasing need for broadband Internet access, an increase to at least 1 Mbps should be considered by October 1,2002 under the I-Net Services Agreement. Prior to consideration of Vol]? phone services, an evaluation of the City's current local phone service costs and potential avoided costs will need to be completed. Although more difficult to quantify, the I-Net will provide opportunities for productivity and efficiency improvements in existing operations. An estimate of the City's current telecommunications expenses is presented below. Telecommunications Service Estimated Annual Expense AT&T (long distance) $1,200 Department of Information Services Scan (long distance) $9,600 Internet Access $4,150 City/County PBX Service Agreement $17,700 Qwest (trunk lines) $43,000 Qwest (local service) $41,670 Totals $117,040 Attachment A Summary of the proposed Institutional Network Services Agreement Main sections Section summary The term of the agreement would be seven years unless extended by the City for a maximum term often years. A City required technical upgrade may increase the maximum term to fifteen years. The Fiber Optic WAN Special Use Agreement would be assigned to Capacity Provisioning, except that Provisions the City will be responsible for payments to Northland. A due diligence 3s'2 period is needed to provide time for Capacity Provisioning to secure financing, a surety bond, enter into a technical support agreement with the equipment manufacturer, prepare plans and specifications for the City's site drops, and undergo background checks. C.P.I. will provide the City fully functional services for wide area Services and Site networking within the City, within the County, and Internet access. A Drops total of 35 City facilities will be connected via fiber optic site drops to I- Net nodes. C.P.I. will be responsible for I-Net operation, maintenance 3q3 and management. Furthermore, C.P.I. will be responsible for marketing, billing and all other retail services under the Agreement. Non-recurring base service charge: $310,000 Non-recurring base charge contingency: $31,000 Non-recurring connection base charge: $600/Facility Local area network installation services charge: NTE $60,000 C.P.I. Charges ........................................................................... fi4 Wide area networking within City service charge: $6,523/Month Wide area networking within County service charge: TBD by 1/1/2003 Monthly Intemet access base service charge: TBD by 10/1/2002 Monthly voice over Internet-protocol service charge: TBD by 10/1/2003 Local area network services charge (as needed): $80/Hour Non-recurring connection base charge: $600/Facility Wide area networking within City service charge: $165/Month Regular ........................................................................... Commercial Excess capacity charge (payable to the City): $55/Month Charges Wide area networking with County service charge: TBD by 1/1/2003 Monthly Internet access base service charge: TBD by 10/1/2002 Monthly voice over Internet-protocol service charge: TBD by 10/1/2003 Attachment A Continuation Summary of the proposed Institutional Network Services Agreement Main sections Section summary City Charges to __C_i_t_y_I_-_N__et_e_x_c__e_ss~c_a.p__a_ci_t_y__c_h__ar_g_e_:_ ....................... _$_5_5__/~___o_n_t__l~____o_rt_ C.P.I. Public utility tax: 5.5% of C.P.I. gross revenues C.P.I. personnel with access to node equipment and network operation and management software will be subject to a background check. The Network Security network security for the virtual local area network (VLAN) that will be a common/shared network shall comply with industry standards. The City 3~2 and 3~6 would coordinate and pay for additional security measures if necessary, such as a virtual private network (VPN), with C.P.I. to ensure compatibility with the VLAN. Risk management features of the Agreement include City termination of the Agreement if C.P.I. fails to comply with the due diligence Risk management requirements or upon a breach of the Agreement by C.P.I. Additional risk & Miscellaneous management features include City payment of the non-recurring base Provisions charge upon the availability of services, a City first fight of refusal to ~5 acquire the I-Net node equipment, customer premise equipment and site drops under certain conditions. The City can also file an equipment lien to secure its payment. Furthermore, the City can impose and collect liquidated damages if C.P.I. fails to comply with the Agreement. Exhibit 6.1 incorporates the Fiber Optic WAN Use Agreement into the I- Net Services Agreement. Exhibit 6.2 establishes the I-Net services expedited schedule Exhibit 6.3 specifies the City site locations that will be served and service requirements. Exhibits Exhibit 6.4 includes the network service level requirements that C.P.I. fi6 shall maintain. Exhibit 6.5 provides the service charges for the City and regular commercial customers. Exhibit 6.6 incorporates an interlocal agreement for acquisition of I-Net services that would be available to extend the privileges of the Agreement to institutional agencies without a separate negotiation. Attachment B I-Net Services Agreement Milestones and Schedule Milestone Completion Date Agreement approval 8/6/2002 Due diligence 8/16/2002 City approval of site drop construction permit application 8/23/2002 Northland construction and node intemonnection~ 10/7/2002 Northland fiber link and node testing~ 10/14/2002 Site drop construction completion 10/14/2002 Equipment installed 10/14/2002 Network testing 10/28/2002 Service Availability 11/4/2002 Local area network installation completion 12/20/2002 Imerconnection for services outside of City limits 1/1/2003 Service charges for Internet access services available 10/1/2002 Service charges for Vol]? Services Available 10/1/2003 ~Completed under Fiber Optic Wide Area Network Use Agreement Attachment C Summary of I-Net Services Agreement, WAN Use Agreement, Franchise Costs and Revenues Non-recurring base service charge: $310,000 Non-recurring base charge contingency $31,000 Non-recurring cormection base charge (35 ~ $600): $23,000 Local area network installation services charge: $60,000 General fund $1,720/month City Charges Equipment services fund $41/month under I-Net Service charge for wide area Solid waste fund $374/month Services networking within City Water/waste water fund $1,011/month Agreement (operating expense): Light fund $3,377/month Total $6,523/Month Wide area networking within County service charge: To be determined Monthly Intemet access base service charge: To be determined Monthly voice over Internet-protocol service charge: To be determined Local area network services charge ($80/Hour): To be determined I-Net early payment: $220,000 City Charges Fast-track project management fee: $37,000 under Fiber ........................................................................... Optic Wide Area Additional I-Net node enclosures charge: $17,000 Network Use Agreement .F_ i_b__ef_l~_~___a_n_d__n_o_d_e__c_o_n_ti_n_g_e_n__c_y'_. ................................ _$_2_7_25_0__0_. Service charges (until 4/27/2004): $36,600 City Charges under Franchise Remaining I-Net payment $130,000 rota City ............................................. Charges Monthly service charges~ (operating expenses): $6,523 Public utility tax revenue to general fund: 5.5% of C.P.I. gross revenues City Revenues _ E__x_c_e_ss__c_a_p_a_c_ _tz c_ r_e_v_y_n2 e_ ?_ d_ :_ ............ /_P_2_n_2j_m__°_n_t_h_. Inter-fund cost allocation revenue to $3,146 per month Light fund ~Utility taxes included. 2A port is equivalent to 100 Mbps fast Ethernet wide area networking Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 INSTITUTIONAL NETWORK SERVICES AGREEMENT BETWEEN THE CITY OF PORT ANGELES AND CAPACITY PROVISIONING, INC. PURPOSE RECITALS 1. DEFINITIONS 2. SPECIAL PROVISIONS 2.1 Agreement is Non-Exclusive 2.2 Occupation License Required 2.3 Master Permit Required 2.4 Agreement Term 2.5 Cooperative Service Acquisition Agreements 2.6 WAN Agreement Assignment and Payments 2.7 Due Diligence 2.8 Surety Bond 2.9 Certification 2.10 Intercortnections for Service Outside City Limits 2.11 Internet Access Services 2.12 Voice over Internet-Protocol (VoIP) Services 2.13 Local Area Network (LAN) Services 2.14 Background Checks 3. SERVICES AND SITE DROPS 3.1 City Service Locations 3.2 Additional City Sites 3.3 Services Provided to the City 3.4 Service Levels 3.5 Site Drop Ownership and Maintenance 3.6 City Site Drop Route Plans, Procedure and Schedule 3.7 Non-City Site Drops 4. SERVICE CHARGES AND PAYMENT 4.1 C.P.I. Base Service Charges 4.2 City I-Net Excess Capacity Charge 4.3 City Public Utility Tax 4.4 City Pole Attachment Charge Credit 4.5 Invoicing and Payment 5. MISCELLANEOUS PROVISIONS 5.1 Notices 5.2 Confidentiality 5.3 Reports 5.4 Indemnification/Hold Harmless 5.5 Assignment 5.6 Survival 5.7 Violations and Remedies 5.8 Termination 5.9 City Right to Purchase 5.10 I-Net Node Equipment Lien 5.11 Force Majeure 5.12 Severability page 1 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 5.13 Entire Agreement 5.14 Attorney's Fees 6. EXHIBITS 6.1 Fiber Optic WAN Use Agreement 6.2 I-Net Services Expedited Schedule 6.3 City Site Locations and Services Requirements 6.4 Service Levels 6.5 Service Charges 6.6 Interlocal Agreement for Acquisition of Institutional Network Services page 2 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 INSTITUTIONAL NET~VORK SERVICES AGREEMENT BETWEEN THE CITY OF PORT ANGELES AND CAPACITY PROVISIONING, INC. PURPOSE THIS INSTITUTIONAL NETWORK SERVICES AGREEMENT (the "Agreement") between the City of Port Angeles, a Washington municipal corporation, hereinafter the "City", and Capacity Provisioning Inc., a subchapter S Washington corporation, hereinafter "C.P.I." is to: (1) Effect the assignment by the City to C.P.I. of the City's Fiber Optic WAN Use Agreement ("WAN Agreement") with Northland Cable Television, Inc. ("Northland") dated , and attached hereto as Exhibit 6.1. (2) Set forth the terms and conditions for provision by C.P.I. of Institutional Network Services consisting of wide area networking, broadband Internet access, voice over Internet protocol local area network and other broadband telecommunications services ("I-Net Services") for non-commercial use by the City, and RECITALS WHEREAS the City is desirous of expediting I-Net Services for its own use as well as for other public institutions and businesses in Port Angeles in advance of the scheduled deadline of February 27, 2004, at which time a dark fiber institutional network ("I-Net") for use by the City and service providers will be completed by Northland, and I4/HEREAS the City is in the process of implementing an integrated software and related hardware system for municipal business purposes that will rely upon local area networks within City facilities and the I-Net for current and future applications that require broadband communications capability between City facilities, and WHEREAS, the City and Northland have entered into a WAN Agreement to permit use of existing excess Northland infrastructure as a means of expediting I-Net services while the City I-Net is being constructed, and WHEREAS, Section 25 of the WAN Agreement permits the assignment by the City of said WAN Agreement, and the City agrees to assignment of said WAN Agreement to C.P.I., and W2-1EREAS, the City is desirous of receiving I-Net Services, and C.P.I. is desirous of providing said I-Net Services and represents that it can do so in accordance with the City's expedited schedule attached hereto as Exhibit 6.2, and WHEREAS, C.P.I. represents that it is in full compliance with the laws of the State of Washington and/or other applicable requirements to provide said I-Net services, and WHEREAS, C.P.I. represents that it has the adequate background, experience, certifications, ability, and the technical, financial and legal resources available to perform the requirements of this Agreement, and has submitted its qualifications and those of its I-Net node equipment vendor to the City and the City's I-Net Technical Advisory Committee, and WHEREAS, the City and its I-Net Technical Advisory Committee have reviewed C.P.I.'s submittals and are satisfied that C.P.I. and its I-Net node equipment vendor are qualified to provide said I-Net services in accordance with the terms and conditions of this Agreement, and WHEREAS, C.P.I. is a local Port Angeles business, recently incorporated in 2001, has invested in approximately 10 miles of fiber optic cable within the City and an additional 10 miles are currently under construction, and the City in accordance with its fiber optic business plan goals, is striving to minimize the duplication of telecommunications infrastructure and accomplish its economic development goals to page 3 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 support and promote diversification of the community in the areas of telecommunications and advanced technology; NOW, THEREFORE, in consideration of the above representations and the terms, conditions, covenants and agreements set forth below, the parties hereto agree as follows: 1. DEFINITIONS Words and terms shall be given their ordinary and usual meanings. The meanings shall be applicable to the singular, plural, masculine, feminine and neuter of the words and terms. Where used in this Agreement, the words and terms set forth in Section 11.14.020 of Chapter 11.14 of the Port Angeles Municipal Code (PAMC), Telecommunications Facilities within Rights-of-Way shall be applicable to the same terms as used in this Agreement, except as modified herein. Where used in this Agreement, the words and terms set forth in the Cable Television Franchise Ordinance No. 3116, shall be applicable to the same terms used in this Agreement, except as modified herein. 2. SPECIAL PROVISIONS 2.1 Agreement is Non-Exclusive This is a non-exclusive Agreement for the purpose of providing retail telecommunications services within the City, excluding cable television services consistent with the Cable Television Franchise Ordinance No. 3116, by utilizing the I-Net backbone and nodes. Any other substantially similar I-Net services agreement entered into by the City shall be on a competitively neutral basis, taking into account without limitation C.P.I.'s obligations under this Agreement. 2.2 Occupation License Required From and after the effective date of this Agreement and throughout the Term of this Agreement, C.P.I. shall obtain an occupation license from the City pursuant to Chapter 5.80 PAMC, Licensing and Taxation. C.P.I.'s telecommunications services gross revenues, including all charges within Exhibit 6.5, shall be subject to a public utility tax, also in accordance with Chapter 5.80 PAMC, Licensing and Taxation. Telecommunications services gross revenues do not include the provision of Internet service as defined in the revised code of Washington (RCW) 82.04.297, in accordance with 5.80 PAMC. C.P.I. shall pay any additional federal, state, local and City taxes as may be levied, imposed or due from carriers, operators, providers, their customers or subscribers, or on account of the lease, sale, delivery or transmission of telecommunications services. 2.3 Master Permit Required Prior to construction of any telecommunications facilities in, under, over or across any rights-of-way of the City to provide telecommunications service, C.P.I. shall first obtain a Master Permit from the City pursuant to Chapter 11.14 PAMC, Telecommunications Facilities within Rights-of-Way. C.P.I. shall not allow other wholesale or retail service providers to provide telecommunications services under this Agreement until such service providers have received all requisite licenses, certificates and authorizations from the City, Federal Communications Commission, the Washington Utilities and Transportation Commission, or any other federal or state agency having jurisdiction. 2.4 Agreement Term This Agreement shall commence as of the date of the execution of this Agreement and shall continue for seven (7) years (the Initial Term); provided, however, the City at its own discretion may, on or before 30 days prior to the expiration of the Agreement, grant annual one (1) year extensions of this page 4 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 Agreement, to extend the total term up to a maximum of ten (10) years (the Extended Term), subject however to the governing terms of the City/Northland WAN Agreement, Cable Television Franchise Ordinance No. 3116 and the same terms and conditions as set forth herein (other than Exhibit 6.5 schedule 2 and 3 pricing which may be negotiated by the parties). Upon commencement of the Extended Term, if any, the City agrees to pay the base monthly service charge shown in Exhibit 6.5 Schedule 1.A. for wide area networking and site drop services to City facilities included in Exhibit 6.3 schedules 1 and 2 for a total number of equivalent 100 Mbps Ethernet ports equal to eighteen (18). During the Extended Term, if any, the City, institutions, and businesses shall be provided at least thirty days advance notice of any changes to Exhibit 6.5 schedules 2 and 3. C.P.I. shall complete and return Exhibit 6.5 to the City, institutions, and businesses to satisfy the advance notice requirement. The Term of this Agreement may exceed the Initial and Extended Terms if the I-Net node equipment and/or customer premise equipment is upgraded to match current technology. The City and C.P.I. shall mutually agree upon the upgrade implementation schedule and an amendment to Section 2.4, Exhibit 6.5., and other terms and conditions of this Agreement. Upon completion and written City acceptance of such upgrade, the Term of this Agreement shall be increased by a minimum of five years. 2.5 Interlocal Agreement for Acquisition of Institutional Network Services C.P.I. agrees to allow the City to enter into Interlocal Agreements with other governmental and public institutions, pursuant to RCW 39.34, to extend the privileges, terms and conditions of this Agreement made with C.P.I. to the extent permitted by law, to institutions entering into such Interlocal Agreements with the City, and attached hereto as Exhibit 6.6. 2.6 WAN Use Agreement Assignment and Payments The City and Northland have entered into a WAN Agreement dated , and attached hereto as Exhibit 6.1. In the WAN Agreement, Northland has granted to the City or its assigned entity an exclusive right to activate and use certain portions of Northland's fiber optic infrastructure, to establish a fiber optic wide area network ("Fiber Link"), including Nodes, for use in providing retail telecommunications services to public institutions and businesses including home offices but not to the general public. The City, as sublessor, agrees to assign all of its right, license and interest in its WAN Agreement with Northland to C.P.I., as sub lessee, for C.P.I.'s use in providing retail telecommunications services to the City, public institutions and businesses including home offices but not to the general public consistent with Chapter 11.14 PAMC, Telecommunications Facilities within Rights-of-Way and the Cable Television Franchise Ordinance No. 3116. C.P.I. hereby assumes all obligations of the WAN Agreement, except as provided in this Section, and agrees to perform and discharge those obligations in accordance with its terms and conditions. C.P.I. agrees to indemnify the City against any losses, claims, damages or liabilities to which either or both parties may become subject to or which arise out of, or in connection with, the WAN Agreement. The City shall be responsible for and timely pay to Northland the I-Net payment required by Section 3.1 and the monthly payments required by Sections 3.2 and 3.3 of the assigned WAN Agreement. Upon the completion of the I-Net under the Cable Television Franchise Ordinance No. 3116, which is anticipated no later than February 27, 2004, C.P.I. shall interconnect the I-Net fibers to I-Net node equipment for City and institutional use and shall have continuing City consent to use the I-Net nodes and up to twelve (12) I-Net fibers. To the extent the I-Net will be utilized by businesses after February 27, 2004, as the City's assignee and in accordance with the Fiber Optic WAN Agreement, C.P.L shall be provided the first right of refusal to use two (2) of Northland's reserve fibers under the Cable Television Franchise Ordinance No. 3116 for commercial use subject to a charge to be paid by C.P.I. and contractual restrictions by Northland based on competitive market conditions. page 5 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 2.7 Due Diligence On or before August 12, 2002, C.P.I. shall provide the City a list of names, addresses, and social security numbers for C.P.I. personnel that will be permitted to have access to I-Net node equipment and network operation and management software. Such C.P.I. personnel shall be subject to a background check in accordance with Section 2.14. On or before August 16, 2002, C.P.I. shall submit evidence that: (1) It has the financial resources to fulfill its obligations under this Agreement and shall file contemporaneously with the execution of I-Net node equipment loan agreements, ff any, a Uniform Commercial Code U.C.C.-1 Financing Statement with the Washington State Department of Licensing. (2) It has obtained a surety bond, if required, in accordance with Section 2.8. (3) It has entered into an agreement, including technical support, with an I-Net node equipment manufacturer and that the service levels described in Exhibit 6.4 will be met. (4) The City site drop route plans in accordance with Section 3.6 have been submitted to the City. 2.8 Surety Bond In accordance with Section 2.7, C.P.I. shall provide a surety bond with a surety company approved by the City, in an amount equal to the cost of the I-Net node equipment and customer premise equipment financed during the Initial Term of this Agreement, to secure C.P.I.'s performance of its obhgations and faithful adherence to all requirements of this Agreement. The bond shall contain the following endorsement: "It is hereby understood and agreed that this bond may not be canceled by the surety nor any intention not to renew be exercised by the surety until thirty (30) days after receipt by the City, by certified mail, of written notice of such intention to cancel or not The rights reserved to the City with respect to the bond are in addition to all other rights of the City, whether reserved by this Agreement or authorized by law; and no action, proceeding or exercise of a right with respect to such bond shall affect the City's rights to demand full and faithful performance under this Agreement or limit C.P.I.'s liability for damages. 2.9 Certification C.P.I. certifies that the I-Net node equipment, customer premise equipment, and all work and materials furnished under this Agreement shall comply with the service level standards described in Exhibit 6.4 attached and accepted industry standards. 2.10 Interconnections for Service Outside City Limits C.P.I. shall make arrangements with the Clallam County PUD No. 1, and/or Northland, and/or Qwest to interconnect the C.P.I. network to provide wide area networking service with the PUD, Northland, and/or Qwest no later than January 1, 2003. Such arrangement shall seamlessly provide wide area networking within both the City limits and Clallam County service areas, to the extent comparable wide area networking services within the Clallam County service area is available and commercially reasonable. C.P.I. shall complete and return Exhibit 6.5 Schedule 3 to the City no ]ater than January 1, 2003. In addition, C.P.I. shall provide a detailed description of the network security to be provided by such interconnection which shall be considered confidential in accordance with Section 5.2. The City shall not incur any charges until the City provides notice in writing to C.P.I. agreeing to pay the wide area networking service charges within Exhibit 6.5 Schedule 3. 2.11 Intemet Access Services page 6 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 C.P.I. shall make arrangements with a qualified service provider and commercial monthly charges shall be established for broadband Internet access services within the City limits. C.P.I. shall complete and return Exhibit 6.5 Schedule 1.E. and provide a schedule for regular commercial Internet access service charges to the City no later than October 1, 2002 to satisfy this requirement. C.P.I. charges to the City for Internet access shall be in addition to the charges included in Exhibit 6.5 schedule 1 for wide area networking. The City shall not incur any charges until the City provides notice in wriffng to C.P.I. agreeing to pay the broadband Internet access charges. 2.12 Voice over Internet-Protocol (VoIP) Services Upon written City request, C.P.I. shall establish a City base charge for fully scalable VolP services including a suite of enhanced phone features for murfcipal facilities. Within ninety days of the City's written request, C.P.I. shall complete and return Exhibit 6.5 Schedules 1.D. to the City to satisfy this requirement. The City and C.P.I. shall mutually agree upon the VolP implementation schedule. Upon completion and written City acceptance of such implementation, the City shall begin to incur a monthly base charge for VoIP services. The City shall not incur any charges until the City provides notice in writing to C.P.I. agreeing to pay VoIP service charges. Upon written City request, C.P.I. shall also establish a commercial monthly charge for VoIP services for institutions and businesses. 2.13 Local Area Network (LAN) Services Upon written City request which shall be provided in writing, C.P.I. shall provide one hundred (100) hours of LAN services at no charge for services requested by the City including, but not limited to, LAN plans and specifications, security, and I.P. re-addressing pla~ming and implementation. C.P.I. shall obtain written City approval of LAN plans and specifications and the I.P. re-addressing plan. The implementation schedule for the I.P. re-addressing plan shall be mutually agreed upon in advance of performing services and shall occur outside of normal City business hours. Upon written City approval of the LAN plans and specifications and cost schedule in accordance with Exhibit 6.2, C.P.I. shall provide LAN materials, hardware, and installation services for municipal facilities. Upon written City acceptance of the LAN installation services, the City agrees to pay for the LAN services in an amount not to exceed the cost schedule, actual cost of LAN materials, hardware, and installation services, or $60,000.00, whichever is the least amount. Upon written City request, C.P.I. shall provide additional LAN services for a charge, including but not limited to plans and specifications, training, network operation, network management, security and demand maintenance support for the City's LANs within municipal facilities. LAN demand maintenance services shall be available twenty-four hours a day, seven days a week. During normal operation conditions, C.P.I. shall respond to all demand maintenance services requests within two hours and make necessary repairs to the extent feasible to restore services within four hours of notification Monday through Sunday, 6 a.m. to 10 p.m. The charge for additional LAN services shall be in accordance with Exhibit 6.5 Schedule 1.D. Upon written City request, C.P.I. shall also provide LAN materials, hardware, and installation services for municipal facilities. The charges for LAN materials, hardware and installation services shall be mutually agreed upon prior to commencing work. 2.14 Background Checks C.P.I. personnel and any of C.P.l.'s subcontractor personnel that are permitted to have access to I- Net node equipment and network operation and management software during the term of this Agreement may be subject to a background check that shall be completed and approved by the City in its sole discretion which shall be considered confidential in accordance with Section 5.2. The information that may be included in a background check includes, but is not limited to, driving records, vehicle registration, credit records, criminal records, social security number, education records, professional certifications, State licensing records, court records, workers' compensation, bankruptcy, character references, neighbor interviews, medical records, property ownership, employment verification, and military service records. page 7 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 3. SERVICES AND SITE DROPS 3.1 City Service Locations C.P.I. will provide I-Net Services at the City site locations listed in Exhibit 6.3. C.P.I. shall be responsible for all costs to provide fully functional I-Net Services, which have been included in its charges in Section 4 and within Exhibit 6.5. C.P.I. will provide limited universal availability of services to additional City, institutions, and business site locations within the City. Limited universal availability of services within the City shall include expansion of C.P.I. I-Net node equipment within three (3) nodes that may be required to provide more than seventy-two (72) Ethernet ports. Limited universal availability of services within the City shall also include a standard overhead facility site drop from a site location that is within 1,500 lineal feet of the nearest I-Net node or 1,500 lineal feet of C.P.I. owned infrastructure. For any site locations not included in Exhibit 6.3 that require overhead facilities beyond 1,500 lineal feet or underground drops, C.P.I. may charge the City, institutions, and businesses for the actual cost for any such additional overhead facilities or underground drop installation. 3.2 Additional City Sites Additional City sites may be added during the term of this Agreement and all additional drops shall be governed by the same terms and conditions specified in this Agreement. The cost for additional site drops to City facilities not included in Exhibit 6.3 schedules 1 and 2 shall be in accordance with Exhibit 6.5 schedule 2.A. 3.3 Services Provided to the City C.P.I. shall provide wide area networking I-Net Services to the City in accordance with the service requirements contained in Exhibit 6.3. At no additional charge to the City, C.P.I. shall provide the I-Net node equipment, expansions to I-Net node equipment capacity as required, and I-Net operation, maintenance and management services required to meet its obligations to the City under this Agreement. C.P.I. shall also be responsible for marketing, billing and all other retail services necessary to provide regular commercial services under this Agreement. 3.4 Service Levels C.P.I. shall provide I-Net Services to the City and institutions and regular commercial services to businesses in accordance with the service levels contained in Exhibit 6.4 attached. 3.5 Site Drop Ownership and Maintenance All site drops, whether to City or non-City sites, shall be owned and maintained by C.P.I. unless otherwise agreed upon. Upon termination or expiration of this Agreement, C.P.I. agrees that all site drops will be "open access," available to other service providers who may use the drops to provide services. However, upon termination of this Agreement, use of non-City site drops by other service providers shall be subject to competitive, industry standard access charges. 3.6 City Site Drop Route Plans, Procedure and Schedule. C.P.I. shall provide fiber drops, consisting of a minimum of two (2) single mode fibers to each City site to be served as listed in Exhibit 6.3 schedules 1 and 2. Each site drop connection shall be terminated within fifty (50) feet of entering the applicable building using a City provided path at a mutually agreed upon point of demarcation in a C.P.I. standard termination panel, mounted on a City furnished backboard. C.P.I. shall prepare a site drop route plan from the applicable I-Net node to each City site to be served and detailed site plans for written City approval and permitting purposes in accordance with the I- Net Services Expedited Schedule (Exhibit 6.2), and as follows: page 8 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 (1) In preparing the pIans and specifications, C.P.I. and the City agree to coordinate closely to ensure that the project requirements are met expeditiously. (2) C.P.I.'s plans and specifications shall be in sufficient detail to permit identification, correlation, verification and understanding of the components of C.P.I.'s plans and specifications. (3) The City will/eview the plans and specifications and shall provide written approval. (4) If revisions are required by the City, the plans shall be resubmitted by C.P.I. to the City and the City shall provide written approval. (5) In no event shall the City have any liability for any expenses C.P.I. incurs in preparation of such plans and specifications. (6) Ail site drop fibers and other C.P.I. provided fibers necessary to provide the services described in this Agreement shall be labeled at termination points to readily enable identification and ownership. (7) The site drops, I-Net node equipment, and customer premise equipment, including ail splicing and testing, shall be fully complete, and operational in accordance with the I-Net Services Expedited Schedule (Exhibit 6.2). The City shall promptly conduct a final inspection to verify completion. (8) C.P.I. shall deliver as-builts of the site drops to City facilities showing identification and labeling of fibers. 3.7 Non-City Site Drops. Non-City site drops shall consist of a minimum of two (2) single mode fibers. C.P.I. shall construct such drops, subject to the requesting party's acceptance of an interlocal agreement for acquisition of I-Net services in accordance with Section 2.5 or execution of an agreement with C.P.I.. Payment for non-City site drops shall be incorporated with and as part of the maximum monthly service charges per Exhibit 6.5 Schedule 2.A. The minimum term for non-City site drop charges shall be consistent with the Initial Term of this Agreement, unless otherwise approved by C.P.I.. Each site drop connection shall be terminated within fifty (50) feet of entering the applicable building using a customer provided path at a point of demarcation mutually agreed upon by C.P.I. and the customer in a C.P.1. standard termination panel, mounted on a customer furnished backboard. 4. SERVICE CHARGES AND PAYMENT 4.1 C.P.I. Base Service Charges Upon the availability of services in accordance with Exhibit 6.2 the City agrees to pay a non- recurring base service charge in the amount of $310,000.00, which includes $140,000.00 for I-Net node equipment and $170,000.00 for City site drops. C.P.I. shall be responsible for all costs to provide fully functional I-Net node equipment and City site drops, which have been included in the non-recurring base service charge. In addition, the City has established a contingency for expenses that are approved by the City in an amount not to exceed ten percent (10%) of the non-recurring base service charge in the amount of $31,000. The City's payment for its site drops shall entitle it to exclusive, irrevocable use of the site drops without any further ongoing charges during the Initial Term and Extended Term, if any, continuing beyond termination, cancellation or expiration of this Agreement, as provided in Section 5.6, Survival. However, in the event the City continues its use of the site drops beyond termination, cancellation or expiration of this Agreement, the City shall pay a pro-rata share of C.P.I.'s maintenance charges for City site drops. Upon the availability of services in accordance with Exhibit 6.2 continuing throughout the Initial Term of this Agreement the City agrees to pay the base monthly service charge shown in Exhibit 6.5 schedule 1.A. for wide area networking and site drop services to City facilities within the City included in Exhibit 6.3 schedule 1 and 2 for a total number of eighteen (18) equivalent 100 Mbps Ethernet ports. City pump stations and electrical substations shall utilize three (3) equivalent 100 Mbps Ethernet ports of the eighteen (18) equivalent 100 Mbps Ethernet ports. The City agrees to pay the non-recurring connection page 9 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 charge shown in Exhibit 6.5 Schedule 1.B. for a C.P.I. standard termination panel and customer premise equipment installed at each City site. Upon written City request and acceptance of C.P.I. LAN services, the City agrees to pay the LAN charges shown in Exhibit 6.5 Schedule 1.C. The regular commercial monthly service charges shown in Exhibit 6.5 schedules 2 and 3 shall be available to additional City facilities, institutions, and businesses including home offices not included in Exhibit 6.3 schedules 1 and 2. The City base service charge and monthly service charges shall not be available to institutions or businesses. During the Initial Term, if mutually agreed upon, Exhibit 6.5 may be amended if more than three (3) I-Net nodes are required to have I-Net node equipment or an expansion to C.P.I.'s I-Net node equipment within three (3) I-Net nodes is required by the City. Charges shown in Exhibit 6.5 do not include any required local area network equipment expenses within facilities beyond the C.P.I. standard termination panel and customer premise equipment. C.P.I.'s customer count will be calculated and expressed as the total number of equivalent 100 Mbps Ethernet ports. The service charges within Exhibit 6.5 schedules I and 2 for wide area networking within the City shall be in effect throughout the Initial Term of this Agreement 4.2 City I-Net Excess Capacity Charge C.P.I. shall be responsible for and timely pay the City an I-Net excess capacity charge in accordance with Exhibit 6.5 schedule 2.B. to be added to all payments to be paid by C.P.I. to the City. The I-Net excess capacity charge shall be collected from all institutions and businesses, excluding the City. 4.3 City Public Utility Tax The monthly service charges shown in Exhibit 6.5 do not include any City public utility taxes. Utility taxes shall be collected from all institutions and businesses, including the City in accordance with Section 2.2. 4.4 City Pole Attachment Charge Credit C.P.I. shall be responsible for and timely pay the City pole attachment charges in accordance with the Master Permit required in Section 2.3 and Chapter 13.14 of the PAMC. On or about July 1st of each year, C.P.I. shall determine the total number of its pole contacts on City-owned poles as of the preceding day. C.P.I. may request a credit against the annual charges payable to the City for the total number of C.P.I. pole contacts for site drop infrastructure made under this Agreement that are for the sole purpose of serving the City. The credit request shall be accompanied by a C.P.I. network route map that identifies all C.P.I. contacts on City-owned poles, all C.P.I. contacts on City-owned poles made under this Agreement that are for the sole purpose of serving the City, and all customer locations receiving C.P.I.'s services. 4.5 Invoicing and Payment C.P.I. charges will be invoiced to the City monthly (12 invoice periods per year). City payment is due within 30 Days of receipt of invoice. Thereafter, interest of 1.5% per month will be charged on the balance due. C.P.I. payment of City public utility taxes and I-Net excess capacity charges shall be paid to the City monthly. C.P.I. payment is due within 30 Days of the end of the preceding calendar month. Each payment shall show the certified customer count and gross revenue subject to utility tax in accordance with this Agreement. 5. MISCELLANEOUS PROVISIONS 5.1 Notices All notices required to be in writing hereunder shall be deemed given when personally delivered, or if mailed by certified or registered mail, three (3) days following deposit in the United States mail, page 10 Final Draft I-Ne! Services Agreement Under Legal Review July 26, 2002 postage prepaid, or if via telecopy or facsimile, when received, or if sent by courier service providing evidence of delivery, when actually delivered by such service. Ail notices from C.P.I. to the City pursuant to this Agreement shall be directed to the City Manager at City Hall, 321 East Fifth Street, P.O. Box 1150, Port Angeles, WA 99362-0217, or to such officer as designated by the City Manager. All notices from the City to C.P.I. pursuant to this Agreement shall be directed to Mr. Bill Roberds, President, at C.P.I. Provisioning, Inc., 54 West Misty Lane, Port Angeles, WA 98362. 5.2 Confidentiality City and C.P.I. will strictly comply with the Federal Privacy of Customer Information Act (47 U.S.C. § 221). The City will maintain confidentiality of any and all information provided or made available by C.P.I. to the extent permitted by law when C.P.I. has notified the City of the confidential nature of the information. C.P.I. shall maintain confidentiality of all information about the City's LANs, network irrformation and data under this Agreement. C.P.I. will maintain confidentiality of any and all additional information provided or made available by the City to the extent permitted by law when the City has notified C.P.I. of the confidential nature of the information. 5.3 Reports C.P.I. shall report to the City such information relating to this Agreement as the City may reasonably require to demonstrate C.P.I.'s compliance with the terms and conditions of this Agreement and shall comply with the City's reasonable determination of forms for reports, the time for reports, the frequency with which any reports are to be made, and if reports are to be certified. 5.4 Indemnification/Hold Harmless. C.P.I. shall defend, indemnify and hold harmless the City, its officers, officials, employees, and volunteers harmless from any and all claims, injuries, damages, losses or suits, including attorney fees, arising or issuing out of or in connection with this Agreement or the WAN Agreement, except as may be caused by the sole negligence or willful conduct on the part of the City. 5.5 Assignment. C.P.I. shall not assign or transfer any right, title or interest under the terms of this Agreement or the WAN Agreement without the prior written approval of the City, such approval shall not be unreasonably withheld or delayed. 5.6 Survival. The provisions covering site drops, service charges and payment, and indemnification/hold harmless shall survive termination, cancellation or expiration of this Agreement. 5.7 Violations and Remedies If the City has reason to believe that C.P.I. is in violation of this Agreement, after informal and cooperative efforts have failed after t~o (2) meetings or ten (10) business days, whichever occurred first, the City shall notify C.P.I. in writing of the violation setting forth the nature of such violation. Within thirty (30) days of C.P.I. receipt of such notice, or such longer period specified by the City, C.P.I. shall respond in writing that the violation has been cured, provide a cure plan or schedule that reasonably satisfies the City, provide explanations in refutation or excuse with documentation to support that an alleged violation did not occur, refute the City's denial of C.P.I.'s cure plan, or refute the City's denial of an additional time period to complete the cure plan. page 11 Final Draft I-Net Services Agreement Under Legal Review Ju~y 26, 2002 The City shall act on the C.P.I.'s cure plan, if any, within thirty (30) days of City receipt of such plan. The City shall provide written acceptance or denial of C.P.I.'s cure plan, which acceptance shall not be unreasonably withheld or delayed. C.P.I. shall be allowed thirty (30) days to cure violations after written City acceptance of C.P.I.'s cure plan is received. If the nature of the violation is such that it cannot be fully cured within 30 days due to circumstances not under C.P.I.'s commercially reasonable control, the period of time in which C.P.I. must cure the violation shall be extended by the City in writing for such additional time reasonably necessary to complete the cure, provided that (1) C.P.I. shall have promptly commenced to cure, and (2) C.P.I. is diligently pursuing its efforts to cure in the City's reasonable judgment. If the violation has not been cured within the time allowed under this section, then C.P.I. shall be liable for liquidated damages for the following violations: (1) Failure to promptly comply with Section 2:$100.00 per day; provided, however, in no event shall the aggregate amount for all such violations exceed $2,500.00 per year. (2) Failure to comply with Section 3:$100.00 per day; provided, however, in no event shall the aggregate amount for all such violations exceed $2,500.00 per year. (3) Failure to comply with Section 4:$100.00 per day; provided, however, in no event shall the aggregate amount for all such violations exceed $2,500.00 per year. (4) Failure to with Section 5:$100.00 per day; provided, however, in no event shall the aggregate amount for all such violations exceed $2,500.00 per year. (5) Failure to comply with Section 6:$100.00 per day; provided, however, in no event shall the aggregate amount for all such violations exceed $ 2,500.00 per year C.P.I. agrees that each of the foregoing failures shall result in injuries to the City, institutions and businesses, the compensation for which would be difficult to ascertain and to prove. Accordingly CP.I. agrees that the foregoing amounts are liquidated damages, not a penalty or forfeiture. If C.P.I. fails to make full and complete liquidated damage payments as required by this Agreement within ten (10) business days after receipt of written notice from the City, then the City may immediately take steps to deduct without further notice to C.P.I. the amount thereof from the service charges and payment due to C.P.I. in accordance with this Agreement. Liquidated damages shall accrue from whichever applies among the following: (1) thirty (30) days after City notice if no cure plan is submitted; (2) on the date of City denial of the C.P.I. 's cure plan; or (3) the date of the City accepted cure plan completion date. 5.8 Termination The City reserves the right to terminate this Agreement if C.P.I. fails to comply with the due diligence requirements in accordance with Section 2.7. Each party reserves the right to terminate this Agreement at any time upon breach by the other party of a material term or condition of this Agreement; provided that the non-breaching party has first given 60 days written notice specifying in reasonable detail the alleged breach or failure of compliance and demanding the cure of the breach. If said breach or failure to comply cannot reasonably be cured in 60 days, and the breaching party shall proceed promptly to cure the same, the time for curing such failure to comply shall be extended for such period of time as may be reasonably necessary to complete such cure. In the event of termination of this Agreement, City payment of the service charges to C.P.I. specified in Section 4 shall no longer be required. 5.9 City Right to Purchase The parties recognize that the City has received adequate consideration for the charges paid to C.P.I. to receive services under this Agreement. Nonetheless, to the extent permitted by law, in the event C.P.I. is not capable of performing its obligations under this Agreement, or the Agreement is terminated or page 12 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 otherwise expires or is not renewed, the City shall have the right of first refusal to acquire the I-Net node equipment, customer premise equipment and site drops owned by C.P.I., in the event it is to be sold, transferred, liquidated, or assigned, at fair market value less the City's aggregate payment of base service charges for a period of sixty (60) days following the date of termination, expiration or non renewal of the Agreement. 5.10 I-Net Node Equipment Lien The City reserves the right to file an equipment lien in the amount of $140,000.00 to secure its payment of the non-recurring base service charge for I-Net node equipment specified in Section 4.1 of this Agreement. 5.11 Force Majeure The term "Force Majeure" shall mean delays due to Northland's failure to comply with section 1.6 of the WAN Agreement on or before October 14, 2002, acts of God, war, civil disturbances, fire, unavoidable casualty, construction delays due to weather, failure of supplier(s), or other similar causes beyond the control of C.P.I. The time within which C.P.I. shall be required to perform any act under the Agreement shall be extended by a period of time equal to the number of days performance is delayed due to a Force Majeure. C.P.I. shall not be subject to any penalty hereunder because of acts or failure to act due to Force Majeure. 5.12 Severability Whenever possible, each provision of this Agreement will be interpreted to be effective and valid under applicable law. If any provision is found to be invalid, illegal or unenforceable, then such provision or portion thereof will be modified to the extent necessary to render it legal, valid and enforceable and have the intent and economic effect as close as possible to the invalid, illegal and unenforceable provision. If it is not possible to modify the provision to render it legal, valid and enforceable, then the provision will be severed from the rest of tliis Agreement and ignored. The invalidity, illegality or unenforceability of any provision will not affect the validity, legality or enforceability of any other provision of this Agreement, which will remain valid and binding. 5.13 Entire Agreement This Agreement and its Exhibit(s) represent the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior oral negotiations and agreements. 5.14 Attorney's Fees. If any suit or other action is instituted in connection with any controversy arising under this Agreement, the prevailing party shall be entitled to recover all of its costs and expenses including such sum as the Court may judge reasonable for attorney's fees, including fees upon appeal of any judgment or ruling. page 13 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 AGREED TO BETWEEN THE PARTIES on the last date written below. CAPACITY PROVISIONING, INC. By: Its: Date CITY OF PORT ANGELES By: Its: Date ATTEST: APPROVED AS TO FORM: City Clerk City Attorney EXHIBITS 6.1 Fiber Optic WAN Use Agreement 6.2 I-Net Services Expedited Schedule 6.3 City Site Locations and Service Requirements 6.4 Service Levels 6.5 Service Charges 6.6 Interlocal Agreement for Acquisition of I-Net Services page 14 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 EXHIBIT 6.1 FIBER OPTIC WAN USE AGREEMENT To be inserted page15 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 EXHIBIT 6.2 I-NET SERVICES EXPEDITED SCHEDULE SITE DROP CONSTRUCTION Site plans for City approval and permitting due 8/16/02 City revisions or approval 8/23/02 If revisions required, date due 8/30/02 Revisions approved by City 9/6/02 Construction complete 10/14/02 I-NET NODE EQUIPMENT AND CUSTOMER PREMISE EQUIPMENT Equipment installed 10/14/02 Network testing 10/28/02 Services available 11/4/02 LAN SERVICES LAN plans and specifications for City approval 11/15/02 City revisions or approval 11/22/02 If revisions required, date due 11/27/02 Revisions approved by City 12/2/02 LAN installation complete 12/20/02 page 16 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 EXHIBIT 6.3 CITY SITE LOCATIONS AND SERVICE REQUIREMENTS 1. CITY SITE LOCATIONS AND SERVICE REQUIREMENTS Service Requirement .'ity Municipal Facilities Data7 gbps Site Description 5 1OO 1OOO 8 Node City Hall 321 E 5th Street 1 8 PA Police Department 1 8 Dispatch 911 1 166 Vem Burton Community Center 1 10 Fire Station 102 E 5th St 1 69 Senior Center 328 E 7th St 1 72 Carnegie Library 205 S Lincoln St 1 73 Fine ^r~s Center 1203 E Lauridsen 1 75 William Shore Pool 225 E 5th St 1 86 Parks Haintenance 16th St F St 1 87 Cemetery-Office 3127 W 18th St 1 55 Node Corp Yard 1703 S B St 1 57 Wastewater Treatment Plant 1509 Columbia 1 56 Light Ops 240W Front 1 54 Landfill 3501 W 18th 1 29 Pump Station #1 5th St & N St 1 30 Node Pump Station #7 W 19th St 1 31 Pump Station #10 1829.5 W 12thst 1 32 Pump Station #3 Harine & Hill 1 33 Pump Station #8 H St & 14th 1 34 Pump Station #4 313 r'4arine Drive 1 35 Pump Station #2 ~/2 Alley & Cherry 1 36 Pump Station #5 219 E 2nd St 1 37 Pump Station #9 Del Guzzi Dr. 1 38 Pump Station #6 933 Church St 1 2. CITY SITE LOCATIONS AND SERVICES COVERED BY THIS AGREEMENT Service Requirement City Municipal Facilities Datat Mbps Site Description § 1OO 1OOO 39 Peabody Substation 2803 S Peabody 1 40 Race Substation 1 41 Albert Substation 1 42 Laurel Substation 110 E 14~h St 1 43 Washington Substation 224 S Washington St 1 44 College Substation ~ 306 E Park St 1 45 Valley Substation 206 S Valley St 1 46 A Street Substation 1616 A St 1 47 F Street Substation 1604 S F St 1 48 I Street Substation 1538 W 7th St 1 page 1 ? Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 EXHIBIT 6.4 SERVICE LEVELS 1. Network Equipment All network equipment shall be standards compliant, non-proprietary technology, able to transport standards based interface types such as Ethernet/IP, ATM, and SONET. The equipment shall be scalable to meet future network expansion needs and shall be interoperable with other standards based networks, specifically that of the Clallam County PUD No. 1, and/or Northland, and/or Qwest. The network shall be capable of enabling cooperative use by related networks. 2. System Availability C.P.I. shall provide demand maintenance twenty-four hours a day, seven days a week and shall maintain the site drops from the nodes to the points of demarcation at all times. In emergency conditions, such as a natural emergency resulting from a windstorm, C.P.I. will perform emergency repair work on the fiber and field equipment. During an emergency, all fibers and field equipment at a given damage location shall be repaired concurrently without preference to function. During normal operating conditions, customer circuits will be up and operating satisfactorily at least 99.9%, as measured over each billing period, not including scheduled maintenance time, (this requirement does not apply to routine maintenance outages that are scheduled in advance by C.P~I. and approved by the City). During normal operation conditions, C.P.I. shall respond to all outage reports within two hours and make necessary repairs to the extent feasible to restore service within four hours of notification Monday through Sunday, 6 a.m. to 10 p.m. Under normal operating conditions, C.P.I. shall respond to degradation reports within twenty-four hours. 3. Reliability Recovery due to a logical network break in the I-Net backbone under a ring configuration should not be greater than 12 microseconds under worst case conditions, with detection and rerouting typically occurring in approximately 300 microseconds. Recovery due to a physical network break shall be coordinated with Northland, who is required by Section 8.7.1 of its Cable Television Franchise Ordinance No. 3116 to restore City I-Net breaks within four (4) hours of outage notification. 4. Network Security C.P.I. shall provide protection against denial of service attacks with wire-speed extended access control lists, secure shell, secure copy, simple network management protocol version 3, and authentication with AAA, RADIUS and TACACS+. C.P.I. shall provide a dynamic virtual local area network (VLAN) that permits simplified network address administration with logical assignment of users to virtual communities based on port, protocol, or subnet that minimizes broadcast traffic and ensures network security. C.P.I. shall also provide private VLANs that allow increased I.P. addressing flexibility by portioning port-based VLANs for security while sharing a common router port. The VLAN shall allow C.P.I. to segment users requiring access to sensitive information into separate VLANs from the rest of the general user community regardless of physicaI location. Upon written City request, C.P.I. shall assist the City at a charge consistent with Exhibit 6.5 schedule 1 .C. to determine compatibility of any virtual private network (VPN) hardware and software including but not limited to firewalls, Internet security devices, encryption equipment and software, VPN servers, and VPN software, that may be provided by the City at the cost of the City. 5. Network Latency The I-Net network latency will average no greater than 3 milliseconds between directly connected switches at Layer 2 only, during standard operating conditions. page 18 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 6. Packet Loss Packet Loss across the I-Net backbone shall be 0.3% or less. If Packet Loss across the I-Net backbone exceeds 0.3% during a calendar month, C.P.I. will issue a credit to the City equal to one day's worth of the base charge paid by City for such month. This provision will take effect the first full calendar month after City's first use of the C.P.I. Backbone. 7. Monitoring and Network Optimization C.P.I. will periodically monitor and optimize the I-Net backbone. Monitoring shall be done between the furthest nodes using software and hardware components capable of accurately measuring traffic and responses at such nodes. The City acknowledges that such measurements may not measure the exact path traversed by the City's packets, and that such measurements constitute measurements across the I-Net backbone but not other networks to which the City may connect. C.P.I. shall provide the City with an initial baseline monitoring report upon completion of its network and annual reports thereafter upon request by the City. 8. Problem Reporting and Escalation Procedure The City shall first troubleshoot network problems to determine that the problem is a C.P.I. network problem prior to contacting the C.P.I. Network Operations Center (NOC). A work order (trouble ticket) will be created based on the trouble call, and the C.P.I. troubleshooting process and time clock will begin. C.P.I. will provide a problem reporting and escalation procedure to the City, and provide the City with progress and status information on trouble calls. The City should receive an initial callback regarding the status of the problem within thirty (30) minutes of the initial trouble report. C.P.I. will attempt to resolve most problems within 1 hour of the problem report initially being logged and a trouble ticket being generated. The NOC will notify the City regarding the status of the reported problem, and the estimated time to repair completion. If, after 1 additional hour, the problem has not been resolved (within the parameters of the C.P.I. escalation procedure), the City may contact C.P.I. to escalate the problem priority. At this point, C.P.I. will assess the situation, escalate the trouble ticket's priority as necessary, and provide a best estimate of time to complete the repair. If a C.P.I. technician is required to visit a City site to repair or troubleshoot a problem, the City may be charged for this service. There will be no charge if the problem necessitating the visit is due to a failure of C.P.I.'s equipment or network that was not the result of City activity, or is caused by C.P.I. In all other situations, the City will be charged for repair or troubleshoot visits to City sites. The charge for this service will be in accordance with Exhibit 6.5 schedule 1.C., including travel time, with a minimum 1 hour charge. This charge will be added to the monthly invoice. 9. New Service For Sites already receiving C.P.I. service, C.P.1. will add new services requiring only a software change within ten (10) Days from the receipt of a written request for the additional service from the City and C.P.I. engineering approval of the change. Services requiring hardware changes will be scheduled with the City. For locations not receiving C.P.I. service, C.P.I. will add service to a new site where minimal facilities engineering and provisioning tasks are required within thirty (30) Days from receipt of a written request for the service from the City. When more than minimal facilities engineering and provisioning tasks are required, the installation of service will be scheduled with the City. page 19 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 10. Changes All requests for additions or changes to City sites shall be in writing. A connectivity change request form will be available from C.P.I. and on-line at the C.P.I. Web Site as well. The change request will be evaluated to assess engineering issues, and to determine whether the change is a no-cost change or is an additional cost item under this Agreement. If it is an additional cost item, it shall be approved in writing by the City and the cost will be added to the invoice to the City. C.P.I. will provision new service within ten (10) Days of receipt of a signed change request order and C.P.I. engineering approval of the change. 11. I-Net Node Equipment Vendor Technical Support C.P.I. shall obtain and maintain through the term of the Agreement and any extensions thereof, the support services of its I-Net node equipment vendor at a minimum level of 7x24 technical support availability and 24 hour parts replacement response time. page 20 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 EXHIBIT 6.5 SERVICE CHARGES 1. C.P.I. BASE CHARGES~ Wide Area Networking (Within the City) Data Mbps = 100 A. C.P.I. base charge per Ethernet Port per facility per month $345.00 including site drops during Initial Term for Exhibit 6.3 schedule 1 City sites B. C.P.I. non-recurring connection base charge $600.00 C. C.P.I. Local Area Network Services Charge per hour. $80.00 D. C.P.I. VoIP Services Charge per month per desk phone (charge to $ be provided upon request) Data Data Data E. Additional C.P.I. base charge per month for broadband Internet Mbps = 1 Mbps = 2 Mbps access (charges to be provided by October 1, 2002) $ $ $ 2. REGULAR COMMERCIAL SERVICE CHARGES YVITHIN THE CITY~ Wide Area Networking (Within the City) Data Mbps = 100 A. C.P.I. Maximum Charge per Ethernet Port per site location per $165.00 month including standard overhead facility site drop B. City Excess Capacity Charge per Ethernet Port per month $55.00 C. C.P.I. non-recurring connection charge $600.00 D. C.P.I. VoIP Services Charge (charge to be provided upon request) $ ~Utility Taxes not included. page 21 Final Draft I-Net Services Agreement Under Legal Review July 26, 2002 EXHIBIT 6.5 SERVICE CHARGES 3. WIDE AREA NETWORKING SERVICE ADDITIONAL CHARGES1 Wide Area Networking (Within the City and Clallam County service areas) Data Mbps = 100 A. Additional charge per Ethernet Port per month, including $ standard overhead facility site drops charge within the Clallam County service area (charge to be provided January 1, 2003) B. Additional charge per Ethernet Port per month, excluding $ standard overhead facility site drop charge within Clallam County service area (charge to be provided January 1, 2003) lUtility Taxes not included. page 22 Final Draft bNet Services Agreement Under Legal Review July 26, 2002 EXHIBIT 6.6 INTERLOCAL AGREEMENT FOR ACQUISITION OF INSTITUTIONAL NETW'ORK SERVICES Pursuant to chapter 39.34 of the Revised Code of Washington and other provisions of the law, , hereinafter caged OTHER PARTY, and the following political subdivision of the state of Washington, THE CITY OF PORT ANGELES, hereinafter called CITY, hereby agree to cooperatively obtain services according to the following terms and conditions: 1. The City, has negotiated an institutional network services agreement with Capacity Provisioning, Inc. (VENDOR) for the purchase of telecommunications services which is attached hereto as Exhibit A, and agrees to extend the privileges of said negotiation to the OTHER PARTY to the extent permitted by law, and agreed upon by the CITY and OTHER PARTY hereto, and the VENDOR. 2. This Agreement is limited to services under the City's institutional network services agreement with the VENDOR. 3. The CITY and the OTHER PARTY accept responsibility for compliance with all laws and any additional or varying laws and regulations governing its acquisition of services. Acquisition of services by the OTHER PARTY shall be effected by a purchase order directed to the VENDOR. 4. The CITY accepts no responsibility for the performance of any purchasing contract by the VENDOR, and accepts no responsibility for payinent of services by the OTHER PARTY to the VENDOR. 5. Either the CITY or the OTHER PARTY may contract independently for the acquisition of services, with or without notice to each other. 6. This Agreement is for services necessary for the operation of the CITY and the OTHER PARTY. 7. This Agreement shall remain in force until canceled by the CITY or the OTHER PARTY, which cancellation may be effected with or without notice to each other. CITY OF PORT ANGELES, WA , WA Authorized Name Authorized Name Title Title Date Date page 23 p01 TANGEI ES WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: JULY 30, 2002 TO: UTIL1TY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager RE: Proposed Fiber Optic Wide Area Network Use Agreement Summary: At the direction of the Utility Advisory Committee (UAC) and City Council on the institutional network (I-Net) fast-track concepts and approach, a Fiber Optic Wide Area Network (WAN) Use Agreement has been negotiated with Northland Cable Television to enable early activation of the I-Net dark fiber backbone and nodes. As part of the proposed Agreement, construction of fiber optic infrastructure is required and an option to include an additional 12 dark fibers throughout the I-Net is recommended. Recommendation: Subject to a favorable recommendation on the proposed I-Net Services Agreement (separate staff report), forward a favorable recommendation to the City Council to approve the proposed Fiber Optic Wide Area Network Use Agreement with Northland Cable Television. Background/Analysis: On May 14, 2002, Staff provided an information only presentation to the UAC on I-Net activation and site drop alternatives. At the direction of the UAC, Staffbegan to develop a fast-track concept and approach to compress the I-Net completion schedule, which is anticipated no later than April 27, 2004. The UAC's desire to compress the I-Net schedule is consistent with feedback received from potential I-Net users and service providers. On June 11, 2002, the UAC authorized staff to proceed with the fast-track concepts and approach. On June 17, 2002, the City Council approved consulting services in support of the fast-track concepts and approach and construction of the I-Net. On June 24, 2002, the UAC provided guidance to staff on the final draft Fiber Optic WAN Use Agreement. On July 9, 2002, the UAC postponed action on the Fiber Optic WAN Use Agreement until the Z-Net Services Agreement negotiation is completed with Capacity Provisioning, Inc. The proposed Fiber Optic WAN Use Agreement includes City lease of two (2) existing dark fibers and construction of fiber optic infrastructure necessary to reach plarmed I-Net node locations. As part of the fast-track, partial City payment for the I-Net will need to be made earlier than that required by the Cable Television Franchise Agreement No. 3116 (franchise). The City would assign the Agreement to Capacity Provisioning, Inc. who would install equipment in the I-Net node enclosures, construct site drops from the I-Net nodes to the City and potential I-Net and business users, and provide telecommunications services (excluding Cable Television services). Proposed Fiber Optic WAN Use Agreement Page 2 July 30, 2002 As part of the proposed Agreement, construction of about 4 miles of fiber optic infrastructure is required and an option under the franchise to include an additional 12 dark fibers is recommended throughout the I-Net for an additional cost of $100,000. Earlier this year, Council approved an option to include an additional 12 dark fibers in a section of the I-Net that extends from 16th and C Streets to 16th and I Streets. The remaining additional dark fiber expense is a wise investment that will delay node equipment and fiber splicing expenses over the I-Net's anticipated minimum fifteen year service life. The aggressive fast-track approach will take about four months to complete before services under the proposed I-Net Services Agreement (separate Staffreport) are available. Approval of the proposed Agreement with Northland is a critical element of the fast-track concept and approach. Please refer to Attachment A for a summary of the main sections of the proposed Agreement. A summary of the milestones and schedule under the Agreement is provided below. Fiber Optic WAN Use Agreement Milestones and Schedule Agreement approval 8/6/2002 Construction and node interconnection 10/7/2002 Testing 10/14/200 The City Attorney has not yet completed the final legal review of the proposed Agreement. Attackment A Summary of the proposed Fiber Optic Wide Area Network Use Agreement Main sections Section summary Northland is responsible for design, construction and testing of the fiber optic link and nodes. The City must approve the plans and specifications Design and prior to construction. The City must approve construction and testing construction prior to payment toward its cost of the I-Net. Due to the construction of ~l fiber infrastructure as part of this Agreement, a decision under the franchise to include 24 fibers throughout the I-Net is recommended which will increase the City's cost of the I-Net by $100,000. Grant of licenseThe City would be granted an exclusive and assignable license to use the ~2 fiber link and I-Net nodes. .......................................... _$3_g9_,9_0_0_. . e__n_t_f_e_e_'._ ........................................ $_3_7__,0__0_0_. . _A_ _d _dj t _ip_n_ ~a 1_ _I - _N~eJ_ _n_o_d_e_s_ _c_h_a_r_g_e_: .................................. _$_1_82_0_0)_. .F_jb__e_r_l_i_~__a_n_d_~n_o_d__e_c_o_n_ t_i.n_se~n__c_y_'.- ............................... _$_2_7_,S__0.0_. Compensation _ k h_l y_ l c_ e_c_h_ _ar_ g e_ s_ _ku_n_tJ D_2_ /_3_ y_ g 9 9 D5 ............... _$_ L_9_ p 9_n_t_h_ . The City would pay its share of the I-Net and node costs earlier than that agreed upon as part of the franchise. Term of The term of the agreement would be until April 27, 2004 which is the date that the I-Net is anticipated to be fully complete, capable of operation, and agreement accepted by the City. Upon mutual consent, the agreement may be ~4 extended, Ownership Northland would own the Fiber Link and nodes provided under the 3~8 agreement which is consistent with the franchise. City payment shall not be made until the fiber link and nodes has been completed, tested and approved. Either party reserves the right to terminate the agreement upon breach of the other party. After the I-Net is constructed, the City will be given the first right of refusal to use two of Risk management Northland's reserve fibers under the franchise for commercial services. In & termination the event the I-Net is not constructed in accordance with the franchise, the 3~10 City will have a fight to use the Fiber Link and nodes through May 31, 2017 for commercial and non-commercial services. The City can also terminate the agreement if it discontinues use of the Fiber Link and Nodes. FIBER OPTIC WAN USE AGREEMENT This Fiber Optic Wide Area Network or WAN Use Agreement ("Agreement") is made this day of ,2002, by and between NORTHLAND CABLE TELEVISION, INC., a Washington corporation ("Northland") and the CITY OF PORT ANGELES, a municipality governed under the laws of the State of Washington ("City"). Background Northland is the cable television operator serving the City of Port Angeles, Clallam County, Washington, and nearby areas. The City desires to acquire an exclusive right to activate and use a certain portion of the dark fiber optic filaments (which have been or will be constructed by Northland) to establish a fiber optic wide area network (the portion of such dark fiber optic filaments set aside for the exclusive use of the City being the "Fiber Link") for use in providing telecommunications services to public institutions and businesses but not to the general public. The City's exclusive right to activate and use a certain portion of the dark fiber optic filaments includes: use of two existing dark fiber optic filaments that are within Northland's cable sheath that varies in size from four to one hundred and fourty four dark fiber filaments, that each are approximately five miles in length; use of two dark fiber optic filaments that will be constructed by Northland that are within Northland's cable sheath containing a total of thirty six dark fiber filaments, that each are approximately four miles in length; and partial use of the space within seven nodes for electronic equipment to activate the network. The City or its assigned entity may use the Fiber Link and nodes for non-commercial and commercial purposes other than Cable Services as defined by the Cable Television Franchise Ordinance No. 3116. By entering into this Agreement, Northland has not fully satisfied Section 8 - Institutional Network, of Cable Television Franchise Ordinance No. 3116. Agreements Northland and the City hereby agree as follows: 1. Design and Construction of the Fiber Link. 1.1 Northland shall construct a node-to-node wide area network using dark fiber optic transmission filaments to connect the nodes identified on Exhibits A and C. Northland shall have no responsibility to construct any portion of the Fiber Link from the nodes to any public institutions or businesses. Northland shall have no responsibility to activate any of the dark fibers constituting the Fiber Link. 1.2 Design and Performance Characteristics. Design services for the Fiber Link have been and shall be performed by Northland and by qualified engineers and other professionals selected by Northland in its sole and absolute discretion. The specific design, including but not limited to the specific dark fibers designated for the City's exclusive use, and Page 1 performance characteristics of the Fiber Link are set forth on Exhibits A and C. The drawings, designs, blueprints and other documents annexed to this Agreement or otherwise provided or furnished to the City in connection with the subject matter of this Agreement are copyrighted materials containing proprietary and confidential material owned by Northland and shall not become the property of nor be used or disclosed by the City, or any person or entity employed by or affiliated with the City, whether or not the Fiber Link is completed, except with the prior whiten consent of Northland, which consent may be withheld in Northland's sole and absolute discretion when legally required to be disclosed pursuant to Chapter 42.17 RCW. Submission or distribution of the drawings, designs, blueprints, specifications and other documents annexed to this Agreement or otherwise furnished to the City in connection with the subject matter of this Agreement to meet regulatory requirements or for other purposes necessary or convenient to the construction of the Fiber Link shall not be construed as publication, disclosure or use in derogation of Northland's c6mmon law copyright or other reserved rights. 1.3 Construction Activities. The construction of the Fiber Link and nodes shall be performed by Northland and/or by qualified construction contractors and suppliers selected by Northland in its sole and absolute discretion; provided, however, Northland shall have no responsibility to perform or have performed any construction-related activities from the nodes to buildings or within the buildings or any appurtenances thereto. The City shall be responsible for all construction-related activities from the nodes to buildings and within the buildings or any appurtenances thereto, including but not limited to the installation of any conduit described on Exhibit A. Construction specifications not otherwise set forth on Exhibit A shall be governed by the requirements set forth in either the latest edition of the National Electric Safety Code or the local electrical regulations, whichever is more stringent. 1.4 Construction Permits and Other Authorizations. Commencing on the mutual execution of this Agreement and the City's prepayment specified at Section 3.2, Northland shall use its commercially reasonable efforts to obtain all necessary permits, licenses or similar grants of authority to construct the Fiber Link and nodes. Northland shall submit plans and specifications on or before July 30, 2002 for City approval in accordance with Cable Television Franchise Ordinance No. 3116. The City shall cooperate and use its commercially reasonable efforts to assist Northland in filing the appropriate documentation required to obtain any permits, licenses or similar grants of authority needed to construct the Fiber Link and nodes. 1.5 Completion of Construction. Northland shall use its commercially reasonable efforts to complete the construction of the Fiber Link and nodes on or before October 7, 2002, alter obtaining all necessary permits, licenses or similar grants of authority to construct the Fiber Link and nodes. The City shall promptly conduct a final inspection to verify completion of construction. 1.6 Testin~ of Completed Fiber Link and Nodes. Upon Northland's completion of the construction of the Fiber Link and nodes, Northland shall, on or before October 14, 2002, in accordance with the testing procedures set forth on Exhibit B, test or have tested the Fiber Link and Nodes to demonstrate that the Fiber Link performs in accordance with the specifications set forth in Exhibit A or as otherwise agreed by the parties. Upon City Page 2 verification of completion of construction and testing by Northland, the City will issue formal written acceptance of the Fiber Link and nodes, which acceptance shall not be unreasonably withheld or delayed, and make payment in accordance with Subsection 3.1(2). 1.7 City Exercise of Institutional Network Fiber Option. In accordance with subsection 8.1.2.(1) of Cable Television Franchise Ordinance No. 3116, the City exercises its option to include a minimum of 24 single-mode fibers in the institutional network backbone. 2. Grant of License. Northland hereby grants the City an exclusive, assignable license to use the Fiber Link and nodes, as identified in Exhibits A and C, during the Initial Term and the Extended Term, if any, of this Agreement. Nothing herein shall be deemed or construed to prevent Northland from entering into similar agreements with other parties with respect to the use of fiber optic filaments and nodes or other distribution facilities that are not the subject of this Agreement. The City may sublease, or otherwise allow use of the License under this Agreement to Capacity Provisioning, Inc. or to any other person or entity provided that no assignment, sublease or grant of any rights to any third party by the City hereunder shall release the City from any of its duties or obligations under this Agreement. In the event that the City subleases, or otherwise allows use of the License under this Agreement, the City's assigned entity may, if so designated by the City, serve as a single point-of-contact to Northland for all activities relating to this Agreement. 3. Compensation. As partial consideration for Northland's performance hereunder, the City shall make the following payments to Northland: 3.1 Institutional Network Payment. As provided in Subsection 1.6, the City shall reimburse to Northland costs not to exceed $183,333.00 to construct and interconnect the Fiber Link and nodes in exchange for the City's right of use under this Agreement and in addition, the City will pay Northland a project management fee not to exceed $36,667.00 or 20% of cost. The total payment of $220,000.00 shall be deducted from the City's cost of the Institutional Network as specified in subsection 8.11 of Cable Television Franchise Ordinance No. 3116. Furthermore, as added incentive to accelerate the completion of this phase of the Institutional Network the City agrees to pay Northland an additional project management fee of $55,000.00. In no event shall payments under this agreement exceed $275,000.00. In addition, the City has established a contingency for expenses that are approved by the City in an amount not to exceed ten percent (10%) of the total Fiber Link and node costs. Any payment for contingent expenses shall be deducted from the City's cost of the Institutional Network as specified in subsection 8.11 of Cable Television Franchise Ordinance No. 3116. The City's cost to construct and interconnect the Fiber Link and nodes shall be verified by the City and payments shall be made by the City within fourteen (14) days of Grantee's request for payment as follows: ~ Page 3 (1) Payments including reimbursements of costs and pro rata project management fees, less five percent (5%) retainage required by RCW 60.28.010 upon City receipt of Grantee's request for payment containing all appropriate and complete invoices. (2) Final payment representing release of five percent (5%) retainage following formal City acceptance of the "Initial Proof of Performance" described in subsection 1.6 herein, upon City's receipt of Grantee's request for payment containing all appropriate and complete invoices. 3.2 Monthly Payments. Commencing with the acceptance of the Initial Proof of Performance as set forth in subsection 1.6 herein, the city shall prepay to Northland a prorated amount of one thousand four hundred Dollars ($1,400.00) (equal to seven hundred Dollars and no Cents ($700.00), for each terminated fiber, with a total of two (2) total fibers to be provided), if any for the first month, and the full amount of one thousand four hundred Dollars (1,400.00) per month, through December 31, 2002. Commencing January 1, 2003 through December 31, 2003 the City shall pay to Northland the monthly sum of nineteen hundred Dollars ($1,900.00) (equal to nine hundred and fifty Dollars ($950.00) for each terminated fiber, with a total of two (2) total fibers to be provided). Commencing January 1, 2004 through the last month of the Initial Term of this Agreement, the City shall pay to Northland the monthly sum of two thousand four hundred Dollars ($2,400.00) (equal to one thousand two hundred Dollars ($1,200.00) for each terminated fiber, with a total of two (2) total fibers to be provided). Commencing with the commencement of the Extended Term (defined below), if any, and continuing each month during the Extended Term, if any, the City shall pay to Northland the monthly sum equal to the amount negotiated by the parties. Except for the institutional network payment and the prepayment, which shall be paid by the City as specified in Subsection 3.1 and 3.2 respectively, the City shall pay to Northland the above-stated amount, in advance, on or before the fifteenth (15th) day of each month during the Initial Term and the Extended Term, if any, of this Agreement. The City shall mail or otherwise deliver its monthly payments to Northland at the address specified in Section 26 or to such other address as Northland may specify in writing. Any mnounts not paid as set forth above shall be subject to a late payment charge of ten pement (10%) of the amount then owing. The City's payment of monthly payments shall be contingent on Northland's performance of its obligations under this Agreement. 3.3 Excess Costs and Fees. The monthly payments described in Section 3.2 do not include any sales taxes, use taxes, rental taxes, gross receipt taxes, federal, state or local regulatory assessment fees, federal, state or local excise taxes, or any other taxes, fees, assessments, charges or levies which may be imposed by federal, state or local governments, or agencies thereof, with respect to this Agreement or the subject matter thereof (collectively, the "Taxes"). In the event that Northland, as a direct or indirect consequence of the exclusive use of the Fiber Link granted to the City as contemplated by this Agreement, incurs (i) Taxes, or (ii) any costs, fees or expenses associated with utility pole attachment or utility conduit use, which are in excess of the charges paid by Northland prior to the date of this Agreement and which are attributable to the Fiber Link or any services provided thereon, or, in the event that future legislative and/or regulatory proceedings affect Northland's obligations pursuant to this Page 4 Agreement, such costs will be passed on to the City and shall, in Northland's discretion, be added to the monthly payment provided in Section 3.2 upon written notice to the City or shall be paid by the City within 30 days of Northland's billing therefore. In accordance with Cable Television Franchise Ordinance No. 3116, franchise fees shall not be imposed upon or collected from Northland by the City as a result or consequence of this Agreement. 4. Term of Agreement. This Agreement shall commence as of the date first written above and shall continue until April 27, 2004 (the "Initial Term"); provided, however, the City may, on or before February 1, 2004 request an extension to this Agreement. Upon Northland's approval of the City's extension request (the "Extended Term'), the parties will be bound to the same terms and conditions as set forth herein (other than the pricing which may be negotiated by the parties subject to the terms hereof). Upon completion of the institutional network in accordance with the Cable Television Franchise Ordinance No. 3116, on or before February 27, 2004, Northland shall give the City or to any other person or entity assigned by the City the first right of refusal to use two (2) of Northland's reserve fibers, which are not otherwise subject to the City's or its assignee's exclusive use, pursuant to the Cable Television Franchise Ordinance No. 3116 and this Agreement, for commercial purposes other than Cable Services. In the event that Northland fails to complete the institutional network in accordance with Cable Television Franchise Ordinance No. 3116 by February 27, 2004, at the City's option, which shall be provided to Northland in writing no later than February 27, 2004 and annually thereafter through May 31, 2017, Northland shall continue to be bound to the same terms and conditions as set forth herein (other than the pricing which may be negotiated by the parties subject to the terms hereof). To the extent the Fiber Link and Node infrastructure provided under this Agreement is still in use and needed by the City beyond May 31, 2017, continued use of the Fiber Link and Node infrastructure under the same terms and conditions as set forth herein (other than the pricing which may be negotiated by the parties subject to the terms hereof) shall be allowed. 5. Representations and Warranties. The following representations, warranties and covenants are material inducements for the parties to enter into this Agreement. 5.1 The City and its assigned entity shall not use the Fiber Link in violation of any applicable federal, state or local law, regulation, ordinance, franchise, or in violation of any applicable court order. The City and its assigned entity shall not use the Fiber Link in violation of Cable Television Franchise Ordinance No. 3116. 5.2. None of the facilities of the City or its users or anyone acting on its behalf or pursuant to its authority shall interfere with the operational integrity of Northland's television cable system. 5.3 Northland is a corporation in good standing and has the corporate power and authority to enter into and perform this Agreement. Northland shall maintain the Fiber Link Page 5 and Nodes, which shall be fully capable of operation, beginning from the date the City formally accepts the Fiber Link and Nodes and continuing through the term of this Agreement. 5.4 The City is a Washington municipality and has the power and authority to enter into and perform this Agreement. 5.5 The City or its assigned entity may use the Fiber Link and nodes for non- commercial and commercial purposes other than Cable Services as defined by the Cable Television Franchise Ordinance No. 3116. 5.6 Northland shall warrant the Fiber Link and Nodes for a period of one year following formal City acceptance and be responsible to promptly correct, at its own expense, all defects and errors in materials and/or construction that may arise during the warranty period. 6. Indemnification. 6.1 In addition to its indemnification obligations found elsewhere in this Agreement, the City and its assigned entity, if any, shall jointly and severally, defend, indemrfify, protect and hold Northland and its officers, directors and employees harmless from and against any and all claims, demands, actions, judgments, costs (including without limitation reasonable attorneys' and experts' fees), losses, expenses and liabilities of every kind or nature whatsoever which may arise in connection with or result, directly or indirectly, from (i) the City's use of the Fiber Link, (ii) the management or conduct of the City's activities, or (iii) any breach of or default in the terms, conditions, restrictions, representations, warranties or covenants agreed to or made by the City contained in this Agreement. 6.2 Northland shall defend, indemnify, protect and hold the City, its successors, assigns, officers, employees and elected officials harmless from and against any and all claims, demands, actions, judgments, costs (including without limitation reasonable attorneys' and experts' fees), losses, expenses and liabilities of every kind or nature whatsoever which may arise in connection with or result, directly or indirectly, from any breach of or default in the terms, conditions, restrictions, representations, warranties or covenants agreed to or made by Northland contained in this Agreement. 7. Node Access. 7.1 Northland shall provide to the City or its assigned entity access to the nodes for the purpose of connecting site drops, testing and inspection. The City or its assigned entity shall comply with Northland's node access policies and procedures. 7.2 The City and its assigned entity shall provide to Northland reasonable access to any of their facilities for the purpose of testing, inspection and maintenance of the Fiber Link. Page 6 8. Ownership of the F/O Filaments and Nodes; Taxes. Subject only to the limited rights granted hereunder to the City, all of the fiber optic filaments and nodes in Northland's cable system, including without limitation that portion that constitutes the Fiber Link, shall be owned by Northland and shall not be merged or otherwise annexed to any real or personal property connected thereto. The City and its assigned entity shall have no right to pledge, mortgage or otherwise permit a security interest or lien to attach to the Fiber Link or any part of Northland's cable television system. The City and its assigned entity shall indemnify, defend, and hold Northland harmless from and against any and all claims, demands and costs (including reasonable attorney fees) liabilities, cause of action or judgments arising out of or in any way related to any security interest, lien, encumbrance or legal process against the Fiber Link arising from any action or omission of the City or its assigned entity or asserted by any creditor of the City, or otherwise arising out of the use granted to the City or assigned entity hereunder. Each party shall be responsible for all property taxes imposed on its property. 9. Insurance. Northland and the City each agree that they will obtain and maintain sufficient insurance coverage, or self-insurance, to adequately protect their respective interest in the Fiber Link. 10. Early Termination of this Agreement. 10.1 Each party reserves the right to terminate this Agreement at any time upon breach by the other party of a material term or condition of this Agreement; provided that the non-breaching party has first given 60 days written notice specifying in reasonable detail the alleged breach or failure of compliance and demanding the cure of the breach. If said breach or failure to comply cannot reasonably be cured in 60 days, and the breaching party shall proceed promptly to cure the same with due diligence, the time for curing such failure to comply shall be extended for such period of time as may be reasonably necessary to complete such cure. 10.2 Without limiting the foregoing, Northland may terminate this Agreement at any time on 60 days prior written notice to the City if any of the following events have occurred: 10.2.1 Northland's pole attachment and/or conduit use rights are terminated or expire and are not renewed, or become subject to conditions or restrictions such that continuation of this Agreement or the City's continued ownership or use of the Fiber Link as contemplated herein would be in violation of such conditions or restrictions. 10.2.2 Northland's franchises to provide cable television service or any easements, rights-of-way or other similar authorizations are terminated or expire and are not renewed, or become subject to conditions or restrictions such that continuation of this Agreement or the City's continued use of the Fiber Link and nodes would be in violation of such conditions or restrictions. Page 7 10.2.3 The City or its assigned entity uses the Fiber Link in violation of Cable Television Ordinance No. 3116, any applicable federal, state or local law, statute, regulation, ordinance, code or other legal requirement. 10.2.4 The City or its assigned entity uses the Fiber Link in violation of any applicable final order of any court or regulatory authority of competent jurisdiction. 10.2.5 Nothing in Sections 10.2.3 or 10.2.4 shall be deemed to prevent the City from appealing the validity of any such legal requirement or order. If appeals procedures permit, the City shall have the right to seek a stay in the enforcement of the legal requirement or order and to continue to use the Fiber Link during the appeals process. 10.3 Without limiting the foregoing, the City may terminate this Agreement after December 31, 2002 upon 60 days prior written notice to Northland if any of the following events have occurred: 10.3.1 The City or its assigned entity discontinues the use of the Fiber Link and nodes. 10.3.2 The City's assigned entity discontinues payment of the sublease to the City. 10.4 In the event of termination of this Agreement in accordance with this Section 10 after completion of construction in accordance with Subsection 1.5 or expiration of this Agreement, the monthly fee specified at Section 3.2 shall terminate, but no portion of the Institutional Network Payment or prepayment specified at Section 3 shall be refunded. 11. Limitation of Liability; Disclaimer of Representations and Warranties. 11.1 NORTHLAND SHALL NOT BE RESPONSIBLE OR LIABLE IN ANY WAY FOR THE CONTENT OF THE DATA OR FOR THE LOSS OF ANY DATA CARRIED OR TRANSMITTED OVER THE FIBER LINK OR FROM ANY INTERRUPTION OF SERVICE, INCLUDING BUT NOT LIMITED TO ANY DOWNTIME OF THE CITY'S OR ITS ASSIGNED ENT1TY'S OPERATIONS, NOR SHALL NORTHLAND BE RESPONSIBLE OR LIABLE IN ANY WAY FOR ANY CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR SPECIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, LOST REVENUES, LOST INCOME OR LOST COST SAVINGS) INCURRED BY THE CITY OR ITS ASSIGNED ENTITY AS A RESULT OF ANY INTERRUPTION OF SERVICE OR BREACH OR PARTIAL BREACH OF THIS AGREEMENT OR ARISING OUT OF ANY ACT OR OMISSION BY NORTHLAND OR ITS AFFILIATES, SUCCESSORS AND ASSIGNS, OR ITS OR TItEIR EMPLOYEES, SERVANTS AND/OR AGENTS OR OTHERWISE ARISING UNDER THIS AGREEMENT. THE FOREGOING SHALL APPLY EVEN IF NORTHLAND HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH DAMAGES. P~e8 11.2 EXCEPT AS EXPRESSLY SET FORTH HEREIN, NORTHLAND HEREBY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED. 12. Electrical Power. The City shall provide electric service within the City, and Northland shall directly pay as and when due, all charges, taxes, levies and assessments for electric service and all electrical power used in connection with the nodes within the Fiber Link. 13. Maintenance and Repair of the Fiber Link. Subject only to Force Majeure Events, Northland will perform maintenance and repair of the Fiber Link in accordance with the standards set forth on Exhibit A, or as otherwise mutually agreed in writing, throughout the Initial Term and the Extended Term, if any, of this Agreement; provided, however, the City shall promptly remit payment to Northland, within 30 days of Northland's billing therefore, at Northland's then-existing applicable rates for materials (including, among other things, fiber and fiber splices) and labor (including any applicable overtime), for maintenance or repair resulting fi.om the City's, its assigned entitys', its employees', and agents' negligence or intentional misconduct orr repair resulting fi.om any Catastrophic Break. As used herein, a "Catastrophic Break" shall be any cut in the Fiber Link, however caused or severe, resulting in a disruption of service within the Fiber Link. The City shall provide written notice to Northland of any operational problems with the Fiber Link and will cooperate with Northland to effect any needed repairs. 14. Force Maieure. No party to this Agreement shall be considered in default in the performance of any of its obligations hereunder to the extent that the performance of such obligations, except the payment of money, is prevented or delayed by any cause beyond the reasonable control of the affected party, including, but not limited to, acts of God, acts of a public enemy, terrorists, war, riots, epidemics, earthquakes, fires, storms, hurricanes, blizzards, and other inclement weather, washouts, sinkholes, civic disturbances, explosions, strikes, lockouts, union jurisdictional disputes, inability to obtain or maintain permits or rights-of-way, inability after reasonable effort in the exercise of due diligence to obtain parts or materials or equipment, actions of utilities (not to be construed to include the parties), and any other cause (except inability to make monetary payments or obtain financing) not within the reasonable control of the parties (any such event being hereinafter referred to a "Force Majeure Event"). Each party to this Agreement shall give notice promptly to the other of the nature and extent of any event of Force Majeure Event claimed to delay or prevent its performance under this Agreement. 15. SeverabiliW. The invalidity under applicable law of any provision of this Agreement shall not affect the validity of any other provision of this Agreement, and in the event that any provision hereof is determined to be invalid or otherwise illegal, this Agreement shall remain effective and shall be construed in accordance with its terms as if the invalid or illegal provision were not contained herein. t6. Waiver. No modification, amendment or waiver of or with respect to any provision of this Agreement, nor consent by either party to the breach of or departure fi.om any o£the terms and Page 9 conditions hereof, shall in any event be effective or binding against such party unless it shall be in writing and signed by such party, and then such waiver or consent shall be effective only in the specific instance and for the particular purpose for which given. Neither any failure nor delay by either party in exemising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any future or further exercise thereof or the exemise of any other right, power or privilege. 17. Captions and Headings. The captions and headings are inserted in this Agreement for convenience only, and shall in no event be deemed to define, limit, or describe the scope or intent of this Agreement, or of any provision hereof, nor in any way affect the interpretation of this Agreement. 18. No Inference Against Author. No provision of this Agreement shall be interpreted against any party because such party or its legal representative drafted such provision. 19. Legal Expenses. If any proceeding is brought by either party to enfome or interpret any term or provision of this Agreement, the substantially prevailing party in such proceeding shall be entitled to recover, in addition to all other relief as set forth in this Agreement, such party's reasonable attorneys' and experts' fees and expenses. 20. Exhibits. Each of the Exhibits listed below shall be incorporated into and shall for all purposes be deemed a part of this Agreement: Exhibit A -- Design and Performance Characteristics Exhibit B -- Testing Procedure Exhibit C -- Node Location Map. Any of such Exhibits may be later amended or revised by the mutual consent of the parties and such Exhibit, as so amended or revised, shall be incorporated into and shall for all purposes be deemed a part of this Agreement. 21. Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one instrument. 22. Survival of Representations and Obligations. Sections 3.1, 6, and 11 shall survive termination or expiration of this Agreement, together with any accrued but unpaid payment obligations which arose prior to such termination or expiration. 23. Further Assurances. At any time and from time to time, upon the request of one party, the other party shall execute, deliver and acknowledge or cause to be executed, delivered and acknowledged, such further agreements, documents, and instruments and to do such other acts and things as the requesting party may reasonably request in order to fully effect the intent of this Agreement. Page 10 24. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous written or oral agreements and representations between the parties with respect thereto. 25. Relationship of the Parties. Nothing herein shall be deemed or construed to create or constitute a partnership, joint venture or agency relationship between the parties, and neither party is authorized to hold itself out or to act toward third parties or the public in any manner that would indicate the existence of any such relationship with the other. 26. Assignment. This Agreement, license, and the rights and obligations of the City hereunder may be assigned to Capacity Provisioning, Inc. or to any other person or entity provided, however, that prior to any such assignment by the City, the City shall provide Northland with an assignment and assumption agreement, executed by the City and the potential assignee, whereby the potential assignee agrees to assume all of the obligations of the City herein, as of the date of such assignment. Northland shall have the right to assign and delegate this Agreement and its rights and obligations hereunder, in whole or in part, from time to time for any purpose; provided, however, that prior to any sale by Northland of the Fiber Link and nodes, Northland shall provide the City with an assignment and assumption agreement, executed by Northland and the potential buyer of the Fiber Link and nodes, whereby Northland agrees to assign all of its rights herein and such potential buyer of the Fiber Link and nodes agrees to assume all of the obligations herein, as of closing date of any such sale. 27. Notices. All notices required to be in writing hereunder shall be deemed given when personally delivered, or if mailed by certified or registered mail, three (3) days following deposit in the United States mail, postage prepaid, or if via telecopy or facsimile, when received, or if sent by courier service providing evidence of delivery, when actually delivered by such service, and sent to the following: If to the City: City of Port Angeles P.O Box 1150 Port Angeles, WA Glenn Cutler, P.E. Phone: (360) 417-4800 Facsimile: (360) 417-4709 If to Northland: Northland Cable Television, Inc. 1201 Third Avenue, Suite 3600 Seattle, WA 98101 Attention: Legal Department Phone: (206) 621-1351 Facsimile: (206) 623-9015 with a copy to: Northland Cable Television 725 East First Street Port Angeles, WA 98362 Attn.: System Manager Phone: (360) 452-8466 Page 11 Fax: (360) 457-5901Either party may change its designated address for notification by sending notice of such change in the manner provided above. IN WITNESS WHEREOF, the authorized representatives of the parties have executed this Agreement as of the date first set forth above. THE CITY NORTHLAND CITY OF PORT ANGELES NORTHLAND CABLE TELEVISION, INC. By By Richard I. Clark, Executive Vice President Its Page 12 EXHIBIT A This is Exhibit A to that certain Fiber Optic WAN Use Agreement made on the __ day of , 2002 (the "Agreement"), by and between NORTHLAND CABLE TELEVISION, INC., a Washington corporation (herein "Northland") and the CITY OF PORT ANGELES, a municipality governed under the laws of the State of Washington (herein, the "City"). Design and Performance Characteristics 1. Fiber [ink Description - The Fiber Link will be designed and constructed as a wide area network connecting nodes by the following number of dark fibers. Any changes to node locations shall be mutually agreed upon in writing, and such changes shall satisfy the node location provisions of the Cable Television Franchise Ordinance No. 3116. Northland shall be responsible for obtaining all required easements to construct nodes. · Two (2) single mode dark fibers originating at the Clallam County Public Utility District Intertie node, identified in Exhibit C; · Two (2) single mode dark fibers originating at the Clallam County Public Utility District Intertie node, to the Washington Street Substation node, identified in Exhibit C; Two (2) single mode dark fibers originating at the Clallam County Public Utility District Intertie node, to a splice case located at 3rd and Penn Streets, identified in Exhibit C; · Two (2) single mode dark fibers originating at the Washington Street Substation node, to the City Hall node, identified in Exhibit C; · Two (2) single mode dark fibers originating at the City Hall node, to the Valley Substation node, identified in Exhibit C; · Two (2) single mode dark fibers originating at the Washington Street Substation node, to the Laurel Substation node, identified in Exhibit C; · Two (2) single mode dark fibers originating at the Laurel Substation node, to the Corp Yard node, identified in Exhibit C; · Two (2) single mode dark fibers originating at the Corp Yard node, to the 16th and I Street node, identified in Exhibit C; 1. The demarcation points will be each node, unless an alternate demamation point is mutually agreed to in advance of construction. Unless a different connector type is agreed to in advance, each fiber filament will terminate in a bulkhead cabinet using a SC/APC type connector. 2. Optical Fiber Description - The fiber optic filaments per manufacturer's specification will be matched clad type with a typical field mode diameter of 8.8 - 9.6 gm at a wavelength of 1310 nm and 10.5 ± 1.0 gm at a wavelength of 1550 nm. The maximum attenuation of the fiber cable will be 0.35 dB/kin at 1310 nm and 0.25 dB/km at 1550 nm. Page 13 3. System Design - A design of the Fiber Link system will be provided to the City prior to construction. Included in the package will be proposed route drawings, cable storage locations, splice point locations and fiber splice matrix. Additionally, for each of the fiber paths calculated lengths fibers and path losses at 1310 and 1550 nm wavelengths will be illustrated. 4. System Construction - The Fiber Link construction will follow good construction and engineering practices as generally described in the Aerial Cable Placement and Buried and Underground Cable Placement sections of the Society of Cable Telecommunications Engineers (SCTE) "Recommended Practices for Optical Fiber Construction and Testing" handbook. Page 14 EXHIBIT B This is Exhibit B to that certain Fiber Optic WAN Use Agreement made on the __ day of ., 2002 (the "Agreement"), by and between NORTHLAND CABLE TELEVISION, INC., a Washington corporation (herein "Northland") and the CITY OF PORT ANGELES, a municipality governed under the laws of the State of Washington (herein, the "City"). Testing Procedure Fiber Link Field Testing - Testing of the Fiber Link will be done in two phases during the Fiber Link construction: 1. Pre-installation - All dark fiber filaments will be tested at the time of material delivery for proper quality, quantity, and reliability, including but not limited to length, attenuation, and discontinuities. 2. Alter Node Installation and Splicing (Final Acceptance) - All dark fiber filaments will be tested after node installation and splicing for proper quality, quantity, and reliability, including but not limited to total path length, end-to-end attenuation, discontinuities, and splice loss. Testing will be done using procedures described in Sections 10.1 through 10.4 of the 1996 edition of Society of Cable Telecommunications Engineers' ("SCTE") "Recommended Practices for Optical Fiber Construction and Testing" handbook. A copy of the SCTE handbook is available at Northland's local business office. All test results will be documented for future reference. Page 15 EXHIBIT C ' Pump Station #7 I-Net Node included in Cable Television ~' Franchise / Ordinance No. ~' 3116 relocated to 16th and I Library Node included in Cable Port of Port Angeles Television Franchise Node included in Ordinance No. 3116 Cable Television related to Laurel ~' " Franchise Ordinance Substation -- [ No. 3116 related to Valley Substation Page 16 pORTANGELES WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: JULY 30, 2002 TO: UTILITY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager RE: Proposed Capacity Provisioning Telecommunications Master Permit Summary: As part of the proposed Institutional Network (I-Net) Services Agreement (separate Staff report) Capacity Provisioning, Inc. will construct site drops from the l-Net nodes to businesses and public institutions within the City, and provide retail telecommunications services. To enable such activities, as a housekeeping matter, a master permit is required by the City's telecommunications ordinance. Recommendation: Subject to a favorable recommendation on the proposed I-Net Services Agreement (separate staff report), forward a favorable recommendation to City Council to approve the telecommunications master permit with Capacity Provisioning, Inc. Background/Analysis: On June 18, 2001, City Council adopted a Telecommunications, Pole Attachment, and Wireless Telecommunications Tower and Facilities ordinance along with updates to the existing Fees, General Provisions, Public Utility Tax, Construction or Excavation Work Within Right-of-Way, and Right-of-Way Use ordinances. In accordance with the Telecommunications ordinance, entities must obtain City consent prior to construction of telecommunications facilities and use of municipal rights-of-way. On September 4, 2001, Capacity Provisioning, Inc. accepted a telecommunications right-of-way license that enabled construction of a private telecommunications infrastructure within the City. The primary purpose of Capacity Provisioning's telecommunications infrastructure was for the use of the Port Angeles School District. The right-of-way license enabled construction of telecommunications facilities at specific locations within the City but not throughout the City. The proposed telecommunications master permit would allow Capacity Provisioning to construct fiber optic infrastructure from I-Net nodes to reach public institutions and business end users. Capacity Provisioning has also requested municipal consent to provide retail telecommunications services to public institutions and business end users within the City. City approval of the master permit is subject to approval of the proposed I-Net Services Agreement. The City Attorney has not yet completed the final legal review of the proposed master permit. MASTER PERMIT This Agreement is entered into this day of ., 2002 between the City of Port Angeles (hereinafter "City") granting municipal consent to Capacity Provisioning, Inc. (hereinafter "Grantee"), in the form of a master permit for the purpose of constructing, maintaining, operating and using a telecommunications system in public streets, alleys and rights-of-way in the City of Port Angeles to provide private telecommunications services and telecommunications services to public institutions and business end users within the City; providing for general and administrative provisions; providing fees and compensation for the privileges conferred under this right-of-way license; providing conditions; providing for enforcement of master permit provisions; and providing for written acceptance of the terms of this master permit. WHEREAS, the City of Port Angeles, pursuant to federal law, state statutes, and local ordinances, is authorized to consent to one or more non-exclusive master permits to construct, operate, and maintain a telecommunications system in the public rights-of-way within the municipal boundaries of the City as designated in Exhibit "A" ("City Area"); and WHEREAS, the Grantee has entered into an institutional network service agreement with the City and has requested municipal consent from the City to construct a telecommunications system and has submitted a written application for this master permit, which application is attached hereto as Exhibit "B"; and WHEREAS, the telecommunications system includes facilities comprised of conduit, lines, fiber or unlit dark fiber located in the right-of-way that are used to provide private telecommunications services and telecommunications services for hire, sale or resale to public institutions and business end users within the City; and. WHEREAS, the Grantee has requested municipal consent from the City to construct, purchase, acquire, develop, finance, lease, license, handle, provide, add to, or contract for additional facilities to reach and interconnect with the institutional network nodes as provided by the Cable Communications Franchise No. 3116 and the Fiber Optic Wide Area Network Use Agreement; and Page 1 of 8 WHEREAS, the Grantee shall comply with the City institutional network service agreement; and WHEREAS, nothing within this master permit shall be construed to authorize the Grantee or a lessee to make interconnections within the City or connections with end users within the City not authorized by this Agreement; and WHEREAS, nothing within this master permit shall be construed to authorize the Grantee or a lessee to provide cable television services for hire, sale or resale within the City until Grantee or lessee has received all requisite licenses, certificates and authorizations from the City. WHEREAS, nothing within this master permit shall be construed to authorize the Grantee or a lessee to provide telecommunications services or cable television services for hire, sale or resale to the general public within the City until Grantee or lessee has registered and received all requisite licenses, certificates and authorizations from the Federal Communications Commission, the Washington Utilities and Transportation Commission, or any other federal or state agency having jurisdiction; and WHEREAS, as applicable, the definitions of all words not defined herein shall be as used in the Revised Code of Washington and the following chapters of the Port Angeles Municipal Code: Chapter 11.14 Telecommunications, Chapter 3.70 Revenues and Fees, Chapter 5.04 Licensing, Chapter 5.80 Taxation, Chapter 11.08 Construction or Excavation Work Within Rights-of-Way, Chapter 11.12 Right-of-Way Use, Chapter 13.14 Pole Attachments, and Chapter 17.52 Wireless Telecommunications Towers and Facilities, which are incorporated herein for all purposes; 1N CONSIDERATION of the above representations and the agreements set forth herein, the parties hereby agree as follows: Section 1 - Scope Of City Consent. The City herby consents to authorize the Grantee, for a period of five (5) years from and after the effective date of this Agreement (the "Term"), the non-exclusive right to construct, use, operate, own and maintain a telecommunication system in, on, under and over the public rights-of-way, as described in Exhibit "B", subject to applicable law and specifically Chapter 11.14 PAMC, hereafter referred to as the Telecommunications Ordinance. The Grantee may obtain up to one (1) automatic extension of the term of this Agreement for an additional five (5) year period, not to exceed a maximum term of ten (10) years, if the Grantee is in substantial compliance with the material terms and Page 2 of 8 conditions of this Agreement as affirmatively determined by the Public Works and Utilities Director's written report to the City Council. Section 2 - Authority Not Exclusive. The consent conferred in Section I is not exclusive, pursuant to the Telecommunication Ordinance. The Grantee shall respect the rights and property of the City and other authorized users of the public rights-of-way. Section 3 - Fees And Compensation. From and after the effective date of this Agreement and throughout the Term of this Agreement, the Grantee shall pay the City all taxes, fees and compensation pursuant to the Telecommunications Ordinance and the Institutional Network Services Agreement. From and after the effective date of this Agreement and throughout the Term of this Agreement, Grantee's telecommunications services gross revenues shall be subject to a public utility tax in accordance with 5.80, Licensing and Taxation, PAMC. Section 4 - Occupation License Required. From and after the effective date of this Agreement and throughout the Term of this Agreement, the Grantee shall obtain an occupation license from the City pursuant to Chapter 5.80, Licensing and Taxation, PAMC. Section 5 - Construction and Operation of the Telecommunication System. in constructing and operating its telecommunication system, the Grantee shall comply with all applicable requirements of the following Chapters of the Port Angeles Municipal Code: Chapter 11.14 Telecommunications, Chapter 3.70 Revenues and Fees, Chapter 5.04 Licensing, Chapter 5.80 Taxation, Chapter 11.08 Construction or Excavation Work Within Rights-of-Way, Chapter 11.12 Right-of-Way Use, Chapter 13.14 Pole Attachments, and Chapter 17.52 Wireless Telecommunication Towers and Facilities. In addition, the Grantee shall comply with the following: 5.1 Permits Required. Grantee shall not construct, reconstruct, or relocate the telecommunication system (or parts thereof) within the public rights-of-way or on City property unless authority has been obtained in accordance with the Telecommunications Ordinance or other applicable City approvals. 5.2 Plan Review. Grantee shall not commence construction unless and until all maps and other documents are provided to the City, in accordance with Chapter 11.14 Telecommunications, Chapter 5.04 Licensing, Chapter 5.80 Taxation, Chapter 11.08 Construction or Excavation Work Within Rights-of-Way, Chapter 11.12 Right-of-Way Use, and Chapter 13.14 Pole Attachments. 5.3 Scheduling. The Grantee shall provide the City advance notice before beginning construction or installation, pursuant to the Telecommunications Ordinance. Page 3 of 8 5.4 Commencement of Construction. Construction of the facilities contemplated by this right-of-way license shall commence no later than one year after the effective date of this right-of-way license; provided that such time limit shall not apply to delays caused by acts of God, strikes, eminent domain litigation, or other occurrences over which the Grantee has no control. 5.5 Construction Standards. Grantee shall comply with construction standards in accordance with Section 11.14.040 of the Telecommunications Ordinance. In addition, any employee, contractor, vendor or agent assigned to work on the installation, maintenance, or repair of system equipment must be properly licensed under the laws of the State of Washington and the City of Port Angeles. 5.6 Inspections. The Grantee shall permit the City to conduct inspections of construction or installation to ensure compliance with the Telecommunications Ordinance. 5.7 Restoration of Property. At its own cost and expense, Grantee shall within ten (10) calendar days restore property on public or private lands disturbed by Grantee's activities, pursuant to the Telecommunications Ordinance. 5.8 Removal or Relocation of Facilities. The Grantee shall remove or relocate facilities as required by the Telecommunications Ordinance. 5.9 Installations on City Property and Private Property. No cable line, wire, amplifier, converter, or other piece of equipment owned by the Grantee shall be installed by the Grantee on any City property or private property without first securing the written permission of the City or a grant of authority as required under this Agreement or written permission of the property owner and/or lawful occupant of any property involved. 5.10 City Use of Grantee's Facilities. In consideration of the rights and privileges hereby granted, the City shall have, and Grantee hereby grants to the City, the right and privilege to suspend and maintain wires and necessaIy control boxes on poles placed by the Grantee in the streets, and other places aforesaid, or if such wires are placed underground, to place and maintain in the pipes or conduits of the Grantee, if space therein is available, wires which City may require for telecommunications, electrical, water, wastewater, fire, police, or emergency services. All such wires must be placed on the poles or in conduits so as not to interfere with communications service and shall not carry currents or voltage dangerous to Grantee's plant or Grantee's users, and all installations, maintenance and repairs shall be subject to the rules, regulations and supervision of the Grantee. City agrees in consideration of establishing this service and furnishing such facilities, to hold Grantee harmless from all claims and or liability for damage, ~vhich may arise out of operating these wires and control boxes. Further, where such facilities have been installed or maintained by the City and not solely by Grantee, the City agrees to hold the Grantee harmless from all Page 4 of 8 liability from any claims or damages that may arise out of the negligent installation, maintenance, use or operation by the City of these facilities. 5.11 Books and Records. The Grantee shall keep books and records as required by the Telecommunications Ordinance and in accordance with generally accepted accounting principles. 5.12 Underground Utilities. The Grantee shall subscribe to the One Call Locator Service and comply with all regulations of Chapter 19.122 RCW for its telecommunications system within the City. 5.13 Institutional Network Services Agreement. As a condition of maintaining municipal consent under this Master Permit, the Grantee shall comply with the Institutional Network Services Agreement. The City shall have the right to terminate this Master Permit if Grantee fails to comply with the Institutional Network Services Agreement. Section 6 - Tree Trimming. Upon ten (10) days' written notice provided to the Director, except in an emergency of imminent danger to persons or property, the Grantee may trim trees or other vegetation owned by the City or encroaching upon the public right-of-way to prevent branches or leaves from touching or otherwise interfering with its wires. All trimming or pruning within environmentally sensitive areas shall be subject to applicable requirements of Chapter 15.20 PAMC Environmentally Sensitive Areas Protection. All trimming or pruning shall be at the sole cost of the Grantee. The Grantee may contract for said trimming or pruning services with any person approved by the City prior to the rendering of said services. Section 7 - Repons. The Grantee shall make available to the City such information or repons, as required by the Telecommunications Ordinance. The Grantee shall allow the City to inspect any of the Grantee's facilities and equipment with sufficient notice as to not disrupt the operations of the Grantee. Section 8 - Indemnity And Insurance. The Grantee shall comply with applicable sections of the Telecommunication Ordinance governing indemnity and insurance. Section 9 - Grantee Default And Remedies. If Grantee fails to comply with or is in violation of this Agreement or the Telecommunication Ordinance, Grantee will be subject to termination and remedies as provided for in PAMC 11.14.050. Section 10 - Compliance With Laws; Severabilit¥. Page 5 of 8 Notwithstanding any other provisions of this Agreement to the contrary, the Grantee shall at ail times comply with all applicable police powers and regulations of the City and all administrative agencies thereof. 10.1 If any provision of this Agreement or any related ordinance is held by any court or by any federal, state, or local agency of competent jurisdiction to be invalid as conflicting with any federal, state or local law, rule or regulation now or hereafter in effect, or is held by such court or agency to be modified in any way in order to conform to the requirements of any such law, rule or regulation, said provision shall be considered as a separate, distinct and independent part of this Agreement, and such holding shall not affect the validity and enforceability of all other provisions hereof or thereof. In the event that such law, rule or regulation is subsequently repealed, rescinded, amended or otherwise changed, so that the provision hereof or thereof which had been held invalid or modified is no longer in conflict with the law, rules and regulations then in effect, said provision shall thereupon return to full force and effect and shall thereafter be binding on the parties hereto, provided that the City shall give the Grantee sixty (60) days written notice of such change before requiring compliance with said provision. 10.2 If the City determines that a material provision of this Agreement is affected by such action of a court of the federal, state or local government, the City and Grantee shall have the right to modify any of the provision hereof or in such related ordinances to such reasonable extent as may be necessary to carry out the full intent and purpose of this Agreement. Section 11 - Taxes, Permit And Other Fees. Nothing contained in this Agreement shall be construed to exempt the Grantee from any tax levy, permit fee or assessment, including but not limited to application, inspection, pole attachment, excavation impact, or tree trimming fees, which are or may be hereafter lawfully imposed on all entities engaged in the same business as the Grantee, or as are generally applicable in the City or State. Section 12 - Sale Or Transfer. With respect to the sale or transfer of the Grantee's franchise or telecommunication system, the Grantee shall comply with appropriate sections of the Telecommunications Ordinance. The City shall have the right of first refusal to acquire the telecommunications system owned by the Grantee, in the event of any transfer, assignment or sale, at fair market value for a period of sixty (60) days following service of notice to the City in accordance with this agreement. Section 13 - Service Of Notice. All notices required or permitted to be given to either party by the other party under any provisions of this Agreement shall be in writing and shall be deemed served as follows: (a) When delivered by hand or by Federal Express or similar service to that party's address set forth below during normal hours; or Page 6 of 8 (b) When mailed to any other person designated by that party in writing herein to receive such notice, via certified mail, return receipt requested. 12.1 Notice shall be given to the following: (a) If to the City: Glenn Cutler, Public Works and Utilities Director P.O. Box 1150, Port Angeles, WA 98362-0217 (b) If to Grantee: Bill Roberds, President 54 Misty Lane, Port Angeles, WA 98362 Section 14 - Force Maieure. Any delay, preemption, or other failure to perform caused by factor beyond either party's reasonable control, such as an act of God, unauthorized labor dispute, non-delivery by non-affiliated suppliers, war, riot, technical breakdown, or government administrative or judicial order or regulation, shall not result in a default of the Agreement. Each party shall exercise its reasonable efforts to cure any such delays and cause thereof, and performance under the terms of this Agreement shall be excused for the period of time during which such factor continues. Section 15 - Construction And Jurisdiction. In the event of any conflict between this Agreement and the Telecommunications Ordinance, the terms of the Telecommunications Ordinance shall prevail and control. This Agreement is made and performed in Clallam County, Washington, and it shall be construed in accordance with the laws in the State of Washington and the City of Port Angeles. Any lawsuit under this Agreement shall be brought in Clallam County, Washington. Section 16 - Repeal of Prior Agreement. Upon the effective date of this Agreement, the Right-Of-Way License Agreement entered into on September 24, 2001 is hereby repealed and is no longer in force and effect. Section 17 - Execution. This Agreement shall take effect upon execution by the following duly authorized representatives of the parties. City of Port Angeles: By: Glenn Cutler, Pubic Works and Utilities Director Attest: Page 7 of 8 Becky J. Upton, City Clerk Approved as to form: Craig D. Knutson, City Attorney Grantee: by: by: C:~ARR~TE[.EC. OM~ROWAG REE M ENTCAPACITYP~OVISIONING DOC Page 8 of 8 pORTANGELES WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: JULY 30, 2002 To: UT1LITY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager RE: Proposed Clallam County PUD Right-of-Way License Amendment Summary: An amendment to the right-of-way license with the Clallam County Public Utility District No. 1 (District) was anticipated to provide an interconnection of District fiber optic infrastructure to the institutional network (I-Net). An amendment is no longer necessary because the District will provide an interconnection outside of the City limits which is within the District's legal authority. Recommendation: No action required. Background/Analysis: On September 11, 2001, the District accepted a fight-of-way license that enabled construction of telecommnnications infrastructure within the City for the District's own use. The license enabled construction of telecommunications facilities along a specific route within the City but not throughout the City. The license did not authorize the District to provide wholesale or retail telecommunications services or connect their infrastructure to any end users within the City. The District has limited legal authority to provide services and interconnections outside of their service area. The City is not within the District's service area. As part of the l-Net fast-track plan and schedule, an interconnection of the District's infrastructure at their headquarters facility to the I-Net is anticipated which does not require an amendment to their license since their headquarters facility is located outside of the City limits. The interconnection would allow wholesale wide are networking (within the City and District service areas) and broadband Interact services to be provided. The intercormection will be made under the City's I-Net Services Agreement with Capacity Provisioning, Inc. and the Fiber Optic WAN Use Agreement with Northland Cable Television, Inc. The interconnection would allow the District to provide wholesale telecommunications services, using Capacity Provisioning as the City's assigned retailer, to public institutions and business end users within the City. The District will not charge for the intercormection to the I-Net. The interconnection will provide a sizeable wholesale telecommunications service opportunity for the District. In the event the City or Capacity Provisioning, Inc. requires rack space within the District's telecommunications hut at its headquarters facility, charges would be incurred. I:\STAFFREPORT$~UDROWLicenseAmendment I ~pd page I Agendz Brief background Fast-track plans and approach Z-Net Services Agreement Summary WAN Agreement Summary Master Permit Summary Cable Television Franchise Amendment Recommendations (~uestions and Answers Metropolitan Communications Consultants 7/30/02 page 2 City Fiber Optic Backbone Business Plan Economic Development Goals , Facilitate a City-wide infrastructure project with the greatest potential for economic development success · Respond to the needs of the business community , Foster telecommunications competition via open access and private sector development · Prevent development of excessive redundant infrastructure Metropolitan Communications Consultants 7/30/02 page 3 Fast-Track Plan And Approach Plan and approach direction ' UAC meetings (6/11/02, 6/24/02, 7/30/02) . City Council meeting (6/:1.7/02) · Management oversight meetings (6/27/02, 7/8/02, 7/25/02) Fast-Track Plan And Approach Stakeholder Involvement . Service provider & potential user involvement (5/23/02, 5/29/02, 6/7/02) . Z-Net technical committee meetings (6/12/02, 6/19/02, 6/26/02, 7/3/02) Metropolitan Communications Consultants 7~30~02 page 4 Fast-Track Plan And Approach Agreement negotiation · Northland WAN Use Agreement · Capacity Provisioning Z-Net Services Agreement · Capacity Provisioning Master Permit Agreement Institution Metropolitan Communications Consultants 7/30/02 page 5 I-Net Services WAN Use ~ Master Permit Agreement I 4-Legged Stool Institutions & Businesses Capacity Northland Provisioning Cable Metropolitan Communications Consultants 7/30/02 page 6 Northland Team ~ Pete Grigorieff, Regional I~lanager - Mike Sturgeon~ Senior Technician/Designer . Cable Resources, Network Design/Drafting . Diversified Northwest, Contractor · Northwest Landworks, Testing Capacity Provisioning Team ~ Bill Roberds, president . Bob 3ensen, vice president . Craig 3ohnson, network engineer - Foundry Networks, Bryan Boretsky = Kriln Consulting, 3eremy Noetzelman Metropolitan Communications Consultants 7~30/02 page 7 Cables within a building=Local Area Network Outdoor Cables from building to I-Net node=Site Drops Outdoor Cables=Wide Area Network LAN SITE DRO~PS~__,_.___~f-~ SITE DROPS LAN Metropolitan Communications Consultants 7/30/02 page 8 Foundry Company Overview Founded: June, 1996 · Revenue Shipments: May, 1997 · Total Customers: 4,000+ · Total Employees: 600 Record-setting IPO: Raised $143,000,000 Corporate Awards C-~ass S~ars ~0 - Forbes (Nov [il~ ~ 2000 FOIIBES 5.oes ~RGEST Best Customer Service - Web Hosting ~.~?'-~!!~"~ ~ Magazine  Standard 100 - Most Influential Companies ~ Forbes 500 - Top U.S. Companies Top Technology IPO of 1999 PCWEEK Top 10 Companies to Watch in '99 THESTANDARD ~ ......................... 15 Companies to Watch Metropolitan Communications Consultants 7130102 page 9 Worldwide Sales Footprint Asia-Pacific U_~S Hong Kong San Jose Tokyo Boston Chicago Denver Herndon (VA) Irvine (CA) ~ New York ~ World Wide Sales Presence · Foundry Sales ~' Foundry Centers of Excellence ill over 48 Countries IronView Network Management · Extensive management capabilities for all Foundry products, including Layer 2/3 switches, Intemet Routers, and Web switches · SNMP and Java-based open architecture enables platform independence and interoperability · Supports major server platforms including NT 4.0,Windows 2000,Solaris, and HP/UX · Modular software architecture allows for seamless expansion · Auto device discovery and device inventory · Built-in high-value application suite, including Metropolitan Communications Consultants 7/30/02 page 10 IronShield Security Services Support for 4000 wire- · DoS Protection - towards speed Access Control Lists, and through a Foundry both Standard and product Extended · Secure Shell and Secure · Support for the following Copy; with the following Element Security Systems: encryption methods: - TACACS/TACACS+ - Arcfour - RADIUS - IDEA - AAA (Authentication, - Blowfish Authorization, and - DES (56-bit) and Triple DES Accounting) (168-bit) - Usemame/Password Special Provisions · Non-exclusive, term - WAN Use Agreement assignment · Due diligence Services and Site Drops · Wide area networking, open access, interconnections ~ Znternet access, LAN services, VoZP · O&M&M, retail functions Metropolitan Communications Consultants 7/30/02 page 11 City Charges to Capacity Provisioning · Excess capacity charge · Public utility tax circe Cost Recovery Capital costs Excess capacity charge Cost allocation Metropolitan Communications Consultants 7/30/02 page 12 City Cost Recovery (including interest) [] Excess Capacity [] $281,772 Charges  · $486,108 · Light fund 21 %  36% · Other · $566,280 City funds 43% Ch~rBes to the City Non-recurring base service charge Contingency Connection charge LAN installation charge WAN service charge within City WAN service charge within County Internet access service charge VoIP service charge Metropolitan Communications Consultants 7~30~02 page 13 Wide Area Network within City T-~ Non-recurring charges :~00 I~lbps C.P,I, Retail ~.,5 Nbps Average Retail $600 per facility $530 per facility VLAN connection charge prov sion ng Monthly recurring charges $165 charge per facility Last mile within Port last mile (maximum) Angeles included Charges per VLAN $330 ~ncluded $55 per port excess capacity charge $220 total charge $330 total charge (taxes not included) (taxes not included) City Non-recurring charges 100 Mbps C.P.Z. Retail 100 Mbps Average Retail $600 per facility $2~33S per facility VLAN connection charge provis oning City t~onthiy recurrirtg charges Last mile within Port Last mile within Port J Angeles included Angeles included $345 Charges per VLAN $4,250 Charges per VLAN included included $345 total charge $4,250 total charge (taxes not included) (taxes not included) Metropolitan Communications Consultants 7/30/02 page 14 Regular commercial charges Connection charge Excess capacity charge WAN service charge within City WAN service charge within County Internet access service charge VoIP service charge Wide Area Network ~,"~' Non-recurrino~ charges C.P.:[. Retail 100 Mbps Average Retail $600 per facility $2,335 per facility VLAN connection charge provisioning Monthly recurrin~ charges $Z65 charge per facility Last mile within Port last mile (maximum) Angeles included Charges per VLAN $4,250 per VLAN included $55 per port excess capacity charge $220 total charge $4,250 total charge (taxes not included) (taxes not included) Metropolitan Communications Consultants 7/30/02 page 15 Wide Area Network within County Non-recurring charges C.P.T. Retail Clallam PUD Wholesale $600 per facility $500 per facility VLAN connection charge provisioning $75 connection fee Monthly recurring charges $:[65 charge per facility Last mile within Port last mile (maximum) Angeles not included Charges per VLAN 2 x $100 per port per included VLAN $55 per port excess 2 X $45 base charge capacity charge (may change to $30) $220 total charge $290 total charge (taxes (taxes not included) and last mile not included) Network Security , Background checks ~ Industry standards , Additional measures Metropolitan Communications Consultants 7/30/02 page 16 Risk I~anagement · Due diligence · City payment upon availability - First right of refusal · Equipment lien · Liquidated damages · Breach/termination Exhibits - WAN Use Agreement ~ Schedule · City sites . Service level requirements ~ Service charges ~ Interlocal agreement Metropolitan Communications Consultants 7/30/02 page 17 Fssl:-Track Schedule Agreement approval (revised) 8/6/2002 Due diligence 8/16/02 Site drop plans & specs approval 8/23/02 Backbone & node construction 10/7/02 Backbone & node testing Site drop completion 10/$.4/02 Equipment installed $.0/3.4/02 Network testing 10/28/02 Service availability Zl/4/02 Utility Advisory Committee Fiber OPtic WAN Use Agreementl Metropolitan Communications Consultants 7~30/02 page 18 Agreement Summary , Design and Construction · Grant of License · Compensation · Term of Agreement · Ownership · Risk Management & Termination , Schedule Design and Construction , Plans and specifications · 6 Outdoor Nodes (3 relocations below) 16 & ! Streets versus P.S. #7 Node Valley substation versus Port Node Laurel substation versus Library Node · 24 fiber option · School District needs · Construction and testing acceptance Metropolitan Communications Consultants 7/30/02 page 19 Fast-Track Additional Fiber Option Metropolitan Communications Consultants 7/30/02 page 20 Intentionaliy left blank Metropolitan Communications Consultants 7/30/02 page 21 Grant of License · Assignable to Capacity Provisioning Term of Agreement · April 27~ 2004 · Extension request · Pricing Compensation . Service prepayment ~ Ramped monthly service payment · Revision , Project Management fee · Heat/AC/Battery Backup · Z-Net early payment · Fast-track fee Metropolitan Communications Consultants 7/30/02 page 22 Ownership · Fiber Link and Nodes · Consistent with Franchise Risk Management & Termination · Upon breach by either party . Termination conditions · I-Net constructed/not constructed F~st-Track Schedule Agreement approval (revised) 8/6/2002 Due diligence 8/16/02 Site drop plans & specs approval 8/23/02 Backbone & node construction 10/7/02 Backbone & node testing 10/14/02 Site drop completion 10/14/02 Equipment installed 10/14/02 Network testing 10/28/02 Service availability 11/4/02 Metropolitan Communications Consultants 7/30102 page 23 Utility Advisory ,ittee: , · Agreement Summary - Housekeeping ~ Institutions and businesses ~ Retail services Metropolitan Communications Consultants 7/30/02 page 24 Utility Advisory Cable Agreement Summ~ry ~ Housekeeping , Additional Z2 fiber option ~ Reference to WAN Use Agreement . Clallam PUD network interconnection , Z-Net node relocation Metroporitan Communications Consultants 7/30/02 page 25 Utility Advisory Northland Capacity Provisioning Foundry Networks Kriln Consulting Metropolitan Communications Consultants 7/30/02 page 26 Recommendation Summary · Proposed Z-Net Services Agreement · Proposed WAN Use Agreementt incorporating revised Section 3.1 costs · Master Permit · Cable Television Franchise amendment · Additional legal changes may be necessary Metropolitan Communications Consultants 7/30/02 July 30, 2002 Proposed Revision Utility Advisory Committee CABLE TELEVISION FRANCHISE ORDINANCE NO. 3116 AMENDMENT #1 8.1 Provision of Institutional Network 8.1.1 As a condition of this Franchise, Grantee shall furnish to the City on a cost plus a twenty percent (20%) project management fee, a dark fiber Institutional Network (I-Net) backbone including in addition 12 single mode reserve fibers capable of bi-directional delivery of broadband communications services as identified in Exhibit "C", as described herein, within eighteen (18) months after City approval of the Grantee's I-Net plans and specifications as provided for in Subsection 8.6.1. Thc I-Net fibers and reserve fibers shall bc located in the same sheath, wherever practicable. Thc cost of thc fiber backbone construction will bc shared as set forth in Subsection 8.11. The Fiber Optic Wide Area Network Use Agreement shall not satisfy the l-Net requirements of this Section 8.11.2 The City's cost-share for the 1-Net backbone and site drops shall be verified by the City. Payments shall commence by the City no earlier than the date the C ty approves the Grantee's I-Net plans and specifications. ':n~ ?P_ayments shall be made by the City within thirty (30) days of Grantee's request for payment as follows: (1) M thly ~ c. ......... · l~o/~ ~,~; .... on payments ........ v .......~,~J .........~ ..... :~,~ ~.,, r~t~ur r,a'~o^~c~ upon City acceptance and approval of Grantee's request for payment containing all appropriate and complete invoices. (2) Fi · , ........ ~ro/~ hal payment ........ ) ...... ~ ....cf c,,,~ ), ....... ~-, ,~< ~+~:· ~,,~,..,~ ..... thirty (30) days following formal City acceptance, which shall occur within 60 days of the City's receipt of Grantee's request for payment containing all appropriate and complete invoices. 8.6 Institutional Network Plans~ Specifications, Cost Proposal and Construction 8.6.1 Backbone Route Plan and Cost Proposal. The Grantee's fiber optic backbone route plan including node locations is identified in Exhibits "B" and "C". The Grantee shall provide a network interconnection at site 130 identified in Exhibits "B" and "C". The cost to the City for the installation and construction of the I- Net fiber optic backbone, including single mode fiber optic strands, shall be as provided in Subsection 8.11. The Grantee shall be responsible for the installation and construction of the 12 single mode reserve fibers within the I-Net fiber optic backbone, including 12 single mode fiber optic strands. The Grantee shall submit plans and specifications within sixty (60) days of the Effective Date of this Franchise for City approval. The I-Net backbone and reserve fibers, including all splicing and testing, shall be fully complete, tested, and capable of operation within 18 months after the effective date of the City's approval of the Grantee's I-Net plans and specifications. The City shall promptly conduct a final inspection to verify completion. Upon verification of completion by the City and delivery by Grantee to the City of as-builts and a complete set of City approved fiber test results, the City will issue formal acceptance of the I-Net backbone and reserve fibers, which acceptance shall not be unreasonably withheld or delayed. 8.1.2 Fiber Optic Infrastructure. The I-Net transmission infrastructure shall physically consist of: (1) A minimum of 42-24 single mode fibers in the backbone in accordance with Exhibit C (2) Seven (7)Six (6) fiber node locations and one (1) network interconnection along the I-Net backbone as identified in Exhibits "B" and "C". 8.11 I-Net Cost. 8.11.1 The cost to the City for the installation and construction of the I-Net backbone shall be the incremental cost as defined in Subsection 8.12.1, plus a twenty percent (20%) project management fee and shall not exceed $250350,000.00, in accordance with Subsection 8.6.1. ~r,~.~ r,:~. ha .......... ,:c.~ ,~,~ ~.,~,~; ..... '~: ....... ee .....h ....; ...... a ............................................. baclcbo ...... al ....... .............. * C ..... i ~.11 ,.~ ...... ~ ~ra aaa aa hi h i 1 de thia ....... a ................................ ~ .... , ...... ,w c ncu sa eenpercent (13 ~) contingency for expenses that ~e approved by the City M~ager, which approval shall not be u~easonably wit~eld, in accord~ce with Subsection 8.6.1. The Grantee shall be responsible for the cost of 12 single mode rese~e fibers in accord~ce with this Subsection. The cost to the City for the installation and construction of the I-Net site drops shall not exceed the Gr~tee's cost proposal approved in accnrd~ce with Subsection 8.6.2. There shall be no charge by the Gr~tee to the City or to ~y other anthohzed user for the use of the I-Net, except maintenance ch~ges as provided in Subsection 8.9. Exhibit B - Grantee Furnished Connections To Community Facilities CATV drops I-Net Drops Map City Municipal 1D Facilities Address initial future initial future Node City Hall (includes sites 8. below) 321 E 5th Street 1 1 I 4 8. PA Police Deparlment 1 mcl 8. Dispatch 911 1 incl Veto Burton 166 Community Center 308 E 4th Street 1 1 10. Fire Station 102 E 5th St 1 1 69. Senior Center 328 E 7th St 1 1 72. Carnegie Library 205 S Lincoln St 1 1 73. Fine Arts Center 1203 E Lautidsen 1 1 75. William Shore Pool 225 E 5th St I 1 [ 1 86. Parks Maintenance 16th St F St 1 87. Cemetep/-Office 3127 W 18th St 1 1 65. Civic Field 307 S Race St I 1 Lincoln Park 70. Fairgrounds I 1 71. Veterans Memorial 215 S Lincoln St 1 1 76. CrownPark 1901 W 4th St 1 1 77. Erickson Park 302 S Race St 1 1 78. Lion's Park 600 Whidbey 1 1 79. Rains Park 915 E 8th St 1 1 80. Shane Park 613 S G St 1 1 82. Harbor View Park Ediz Hook 1 1 83. Wolvertun Park A/B 11/10 Alley 1 1 85. Brax Track 1521 W Lauridsen 1 1 132. Volunteer Park 16th and L 1 1 City & State CATV drops I-Net Drops Map (WSDOT) Traffic ID Signals Address initial future initial future Node 92. T1 Front St LaurelSt n/a 1 93. T2 I st St Laurel St n/a 1 94. T3 Front St Oak St n/a 1 95. T4 1 st St Oak St n/a 1 96. T5 8th St Race St ~a 1 97. T6 5th St Race St n/a 1 Lauridsen 98. T7 Blvd Race St n/a 1 99. T8 5th St PeabodySt n/a 1 100. T9 8th St Race St n/a 1 101. T10 8th St Cherry St n/a 1 102. T11 (WSDOT) 8th St Lincoln St n/a 1 City & State CATV drops 1-Net Drops Map (WSDOT) Traffic ID Signals continuation Address in/rial future initial future Node 103. T12 (WSDOT) 5th St Lincoln St fda 1 104. T13 (WSDOT) 1st St Lincoln St rda 1 105. T14 (WSDOT) Front St Lincoln St n/a 1 106. T15 (WSDOT) 1st St Peabody St n/a 1 107. T16 (WSDOT) Front St Race St n/a 1 108. TI7 (WSDOT) 1st St Race St n/a 1 109. T18 (WSDOT) Front St Ennis St n/a 1 110. T19 (WSDOT) 1st St Ennis St n/a 1 Golf Course 111. T20 (WSDOT) Hwy 101 Rd n/a 1 112. T21 (WSDOT) Hwy 101 Del Guzzi Dr n/a 1 Tumwater 113. ! T22 (WSDOT) Marine Dr Route n/a 1 114. T23 (WSDOT) 14th St Lincoln St n/a 1 Map City Utility Systems CATV drops I-Net Drops ID Facilities Address initial future initial future Node 54. Landfill 3501 W 18th I 1 55. Corp Yard 1703 S B St 1 1 1 56. Light Ops 240 W Front 1 1 Wastewater Treatment 57. Plant 1509 Columbia 1 1 11. Ranney Well Elwha River n/a 1 12. E St. Reservoir 1016 S E St n/a I 13. Jones St. Reservoir 1200 E 9th St n/a 1 Black Diamond 14. Reservoir Black Diamond Rd n/a 1 Peabody Heights 15. Reservoir 600 Viewcrest n/a 1 16. Mill Creek Reservoir 600 Viewcrest n/a 1 17. Spruce Booster Station 1000 Spruce St n/a 1 18. Scrivner Pump 300 E Scrivner n/a 1 Mill Creek Pump 19. Station 600 Viewcrest n/a 1 McDougal Booster 20. Pump 3500 McDougal n/a 1 21. Jones St. Pump Station 1200 E 9th St n/a 1 Jones St. Emergency 22. Pump Station 1200 E 9th St n/a 1 23. Water St. Pump Station Water St n/a 1 29. Pump Station #1 5th St & N St n/a 1 30. Pump Station #7 W 19th St n/a 1 ~- 30.1 Fairgrounds Parking 16th St & I St 1 31. Pump Station#10 1829.5 W 12thst n/a 1 32. Pump Station #3 Marine & Hill n/a I CATV drops I-Net Drops Map City Utility Systems 1D Facilities continuation Address imtial future initial future Node 33. Ptunp Station #8 H St & 14th n/a 1 34. Pump Station g4 313 Marine Drive n/a 1 35. Pump Station #2 1/2 Alley & ! Cherry n/a 1 36. Pump Station #5 219 E 2nd St n/a 1 37. Pump Station #9 Del Guzzi Dr. n/a 1 38. Pump Station #6 933 Church St tva 1 39. Peabody Substation 2803 S Peabody fda 1 40. Race Substation n/a 1 41. Albert Substation n/a 1 42. Laurel Substation 110 E 14th St n/a 1 I 1 43. Washington Substation 224 S Washington fda 1 1 44. College Substation 1306 E Park St n/a 1 45. Valley Substation 206 S Valley St n/a I I 1 46. A Street Substation 1616 S A St n/a 1 47. F Street Substation 1604 S F St n/a 1 48. I Street Substation 1538 W 7th St n/a 1 49. CSO PS 1 5th St & N St n/a 1 Railroad 50. CSO RR/Oak Ave & Oak St n/a 1 Railroad 51. CSO RR/Laurel Ave & Laurel St n/a 1 52. CSO Lincoln Lincoln & 2nd St n/a 1 53. CSO Francis Francis St & Caroline St n/a 1 Elwha Emergency S Milwaukie 88. Valve 2700 Dr n/a 1 89. PUD Intertie Baker St. n/a 1 90. PUD Intertie Monroe St. n/a 11 , Map CATV drops I-Net Drops ID Clallam County Address initial future initial future Node County Courthouse 9. (includes sites below) 223 E 4th St 1 1 Health And Human 9. Services 1 9. Sheriff 1 126. Fairgrounds 1608 W 18th St I 1 127. Juvenile Services 1912 W 18th 1 1 W Lauridsen 128. Maintenance Shops 1033 Blvd I 1 Child Support 129. Enforcement 421 E 5th Ave 1 1 163. Hospice 540 E 8th St 1 1 Drag Task Force (site 56 56) 240 W Front 1 CATV drops I-Net Drops Map Port Angeles - ID Educational Address initial future initial future Node 1. Jefferson School 218 E 12th St I 1 Laufidsen 4. Peninsula College 1502 Blvd I 1 5. Monroe School 102 Monroe Rd 1 1 Roosevelt Middle 1 6. School 106 Monroe Rd 1 59. Hamilton School 1822 W 7th St 1 1 North Olympic Library 66. System 2210 S Peabody St I 1 [ 4 160. Marine Lab 315 N Lincoln St 1 1 162. Bus Garage 639 Monroe Rd I 1 2. P.A. High School 304 E Park Ave 1 1 S Washington 3. Franklin School 2505 St I 1 60. Stevens Middle School 1139 W 14th St I 1 151. The Choice 924 W 9th St 1 1 153. Central Services 216 E 4th St 1 1 154. Dry Creek School 25 Rife Rd 1 1 167. Fairview 166 Lake Farm Rd 1 1 Map CATV drops I-Net Drops ID Health Care Address initial future initial future Node Olympic Memorial 7. Hospital 1005 Georgiana St 1 1 Olympic Medical 156. Center 920 Caroline St 1 1 Olympic Medical 168. Center - MRI 1102 E Front St 1 PCMH - Children's 157. Center 1004 W 16thSt I 1 PCMH - Second Slxeet 158. House 138 W 2nd St 1 1 PCMH - Horizon 159. Center 205 E 5thSt 1 1 Olympic Medical 164. Center 939 Carolina 1 1 169. Virginia Mason 433 E 8thSt 1 170. Virginia Mason 813 E 8th St 1 171. Virginia Mason 912 Caroline St 1 172. Virginia Mason 923 Georgiana St 1 CATV drops l-Net Drops Map ID Port of Port Angeles Address initial future initial future Node 61. PortOfPA 338 W 1st St 1 1 I 4 W Lauridsen 62. Port Of PA 2138 Blvd 1 1 Boat Haven 115. PABH 832 Drive 1 1 E Railroad ll6. Port Of PA ll5 Ave 1 1 ll7. Port Of PA 112 S Valley St 1 1 118. Marine Terminal 202 N Cedar St 1 1 120. Port Of PA 2007 S O St 1 1 W Lauridsen 121. Port Of PA 1901 Blvd 1 1 W Lauridsen 122. Port Of PA 2203 Blvd 1 1 Fairchild International 123. Airport 1 1 124. Industrial Park East 1 1 125. Industrial Park West I 1 173. Port Of PA 1301 Marine Drive 1 CATV drops I-Net Drops Map ID Regional Address imtial furore initial future Node 130. Clallam CountyPUD. 2431 E Hwy 101 1 1 W Lauridsen 131. Clallam Transit 830 Blvd 1 1 133. Clallam County PUD. 1936 W 18th St I 1 134. Housing Authority 2603 S Francis St I 1 North Olympic Youth 135. Centers 535 E 1st St 1 1 Lower Elwha Klallam E 1 st St Suite 136. Tribe 1026 2 1 1 CATV drops I-Net Drops Map ID State of Washington Address initial future initial future Node Children & Family Services (includes site 137. below) 201 W 1st St 1 1 Community Services 137. Office 201 W 1st St 1 incl Juvenile Rehabilitation W 1st St, Suite 138. (includes sites below) 228 V I 1 : Dept. of Community 138. i Corrections 228 W 1st St 1 incl Drivers License 138. Exam/ningOffice 228 W 1st St 1 incl CATV drops I-Net Drops Map State of Washington ID continuation Address initial future initial future Node Developmental W 1st St, Suite 138. Disabilities 228 F 1 incl Home & Commumty 139. Services 235 WIst St 1 1 E 1st St, Suite 140. Dept. of Revenue 734 B 1 1 Vocational E 1 st St, Suite 141. Rehabilitation 1026 2 I 1 Dept. of Revenue and 142. L&I 1601 EFront St I 1 Dept. of Highway 143. Maintenance 1707 S C St 1 1 CATV drops I-Net Drops Map ID U,S, Government Address initial future initial future Node 64. Olympic National Park 600 E Park 1 1 Social Security Admin. 144. (includes site below) 138 W 1st St I 1 Olympic Coast National Marine 144. Sanctuary 138 W 1st St 1 Natural Resources E 3rd St, 145. Conservation Service 113 Room2B 1 1 146. PostalService 424 E 1st St 1 1 Navy Recruiting 147. Station 721 E 1st St 1 1 Marines Recruiting 148. Station 701 EFront St 1 1 Army Recruiting 149. Station 703 E Front St I 1 Air Force Recruiting S.Critchfield 150. Station 1520 Rd 1 1 161. BPA PA Substation 1400 E Park Ave. n/a 1 Exhibit C - Northland Fiber Upgrade Plan and Node Areas Pump Station #7 I-Net Node included in Cable Television Franchise Ordinance No. 3116 relocated to 16th and I Library Node included in Cable Port of Port Television Angeles Node Franchise in Cable Ordinance No. 3116 relocated to - [ Franchise Laurel Substation Ordinance No. % 3116 relocated to ~, ~ Substation City Hall Node included in Cable Television Franchise Ordinance No. 3116 relocated to William Shore Memorial Pool July 30, 2002 Proposed Revision Utility Advisory Committee FIBER OPTIC WAN USE AGREEMENT 3. Compensation. As partial consideration for Northland's p~rformance hereunder, the City shall make the following payments to Northland: 3.1 Institutional Network Payment. As provided in Subsection 1.6, the City shall reimburse to Northland costs not to exceed $-1S2,22~208,000.00 to construct and interconnect the Fiber Link and nodes in exchange for the City's fight of use under this Agreement and in addition, the City will pay Northland a project management fee not to exceed $2,5,~5737,000.00 or 20% of cost. The total payment of $229,990245,000.00 shall be deducted tSom the City's cost of the Institutional Network as specified in subacct;,cn Subsection 8.11 of Cable Television Franchise Ordinance No. 3116. Furthermore, as added incentive to accelerate the completion of this phase of the Institutional Network the City agrees to pay Northland an additional project management fee of $55,000.00. In no event shall payments under this agreement exceed $275300,000.00. Page 4 METROPOLITAN COMMUNICATIONS _ CONSULTANTS July 29, 2002 Mr. Larry Dunbar Power Resources Manager The City of Port Angeles 321 East Fifth Street Port Angeles, WA 98362-0217 Re: Northland Fiber Optic WAN Use Agreement-MCC review and recommendation Dear Larry: In response to your request, I have reviewed the final draft of the Fiber Optic WAN Use Agreement, dated 7/26/02 between North]and Cable Television, Inc. and the City of Port Angeles. Particular features negotiated and contained in the Agreement include: 1. Exercise of the City's option to add 12 dark fibers throughout the I-Net at a cost of $100,000. This was previously recommended and concurred in by the City to provide desired reserve capacity in the regular I-Net and can be taken advantage of now to reach planned node locations in the fast track service area. The cost therefore represents a previously planned on expenditure and is not a new cost resulting from the fast track project. 2. Advance payment of already agreed upon regular f-Net costs in the amount of $220,000. Again, this expenditure is a previously planned on item, and in our opinion early payment is an acceptable term of the negotiated WAN Use Agreement. 3. New capital compensation to Northland resulting from the Agreement is comprised of charges for additional I-Net nodes and a project management fee, both of which we find to be reasonable. The addition of a 10% contingency item is customary m-xd prudent. 4. Monthly recurring dark fiber lease charges ranging from $1,400 initially to $2,400 in the last 4 months of the Agreement term are consistent with industry pricing. 5. The Agreement contains risk management and termination provisions to protect the City, wi'rich in our opinion, are adequate. We recotranend approval of the Agreement by the City Utility Advisory Committee and the City Council. Very truly yours, METROPOLITAN COMMUNICATIONS CONSULTANTS, LtC Richard C. T. Li, P.E. President _~__~ METROPOLITAN COMMUNICATIONS CONSULTANTS July 29, 2002 Mr. Larry Dunbar Power Resources Manager The City of Port Angeles 321 East Fifth Street Port Angeles, WA 98362-0217 Re: Capacity Provisioning I-Net Services Agreement --MCC review and recommendation Dear Larry: In response to your request, I have reviewed the final draft of the I-Net Services Agreement, dated 7/25/02 between Capacity Provisioning, Inc. and the City of Port Angeles. The background of this Agreement is the City's desire to expedite services to the community in advance of the negotiated deadlines in the renewed Northland Cable Franchise and the direction given to staff to work with Capacity Provisioning, Inc., a local provider actively soliciting the opportunity. In our opinion, the terms and conditions contained in the final draft represent reasonable trade-offs and an acceptable City position based on the direction given to you and the telecommunications and economic development goals of the City. We recommend approval of the Agreement by the City Utility Advisory Committee and the City Council. Very truly yours, METROPOI,ITAN COMMUNICATIONS CONSULTANTS, LI.C Richard C. T. Li, P.E. President