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AG 08-032 I I RETURN 10: CITY OF FEDERAL WAY LAW DEPARTMENT REQUEST FOR CONTRACT PREPARATION/DOCUMENT REVIEW/SIGNATURE ROUTING SLIP 1. 2. 4. 5. 6. ORIGINATING DEPT./DIY, ~ S ORIGINATING STAFF PERSON: e~\ TYPE OF DOCUMENT REQUESTED (CHECK ONE) o PROFESSIONAL SERVICE AGREEMENT o MAINTENANCE/LABOR AGREEMENT o PUBLIC WORKS CONTRACT o SMALL PUBLIC WORKS CONTRACT (LESS THAN $200,000) o PURCHASE AGREEMENT) (MATERIALS, SUPPLIES, EQUIPMENT) o REAL ESTATE DOCUMENT PROJECT NAME: NAME OF CONTRACTOR:~~ ADDRESS: SIGNATURE NAME: ~ r\ EXT: 3. DATE REQ. BY: o SECURITY DOCUMENT (E.G. AGREEMENT & PERFIMAIN BOND; ASSIGNMENT OF FUNDS IN LIEU OF BOND) o CONTRACTOR SELECTION DOCUMENT (E.G., RFB, RFP, RFQ) . ..., "L o CONTRACT AMENDMENT AG#: 08' . 0:::>(7 o CDBG '" OTHER ~-\-\\erne.rtt ~t Co.-b\e CDmrnLLVt\~~ TELEPHONE TITLE 7. ATTACH ALL EXHIBITS AND CHECK BOXES 0 SCOPE OF SERVICES 0 ALL EXHIBITS REFERENCED IN DOCUMENT o INSURANCE CERTIFICATE 0 DOCUMENT AUTHORIZING SIGNATURE 8, TERM: COMMENCEMENT DATE: COMPLETION DATE: 9, TOTAL COMPENSATION $ (INCLUDE EXPENSES AND SALES TAX, IF ANY) (IF CALCULATED ON HOURLY LABOR CHARGE - ATTACH SCHEDULES OF EMPLOYEES TITLES AND HOLIDAY RATES) REIMBURSABLE EXPENSE: 0 YES 0 NO IF YES, MAXIMUM DOLLAR AMOUNT: $ IS SALES TAX OWED 0 YES 0 NO IF YES, $ PAID BY: 0 CONTRACTOR 0 CITY o PURCHASING: PLEASE CHARGE TO: 10. 11. CONTRACT REVIEW o PROJECT MANAGER o DIRECTOR o RISK MANAGEMENT (IF APPLICABLE) )l'LA W CONTRACT SIGNATURE ROUTING l1'LA W DEPARTMENT "KCITY MANAGER P. CITY CLERK o SIGN COPY BACK TO ORGINATING DEPT. o ASSIGNED AG# 0%. 03 (t INITIAL/DATE APPROVED INITIAL/DATE APPROVED fM2 - d.1~~foe;- - see. COM~..rt'5 - ().e do,/\' t INITIAL/DATE APPROVED 1fi~J?~~ ~~ tA.. 13'1 0 ~ INITIAL/DATE APPROVED COMMENTS ~ I I 1A53 S~'Y'l~^d 0r~ 6 r~c,A~ ~ /cJ~'11J.f5:,., C(f(~L.+1l' ~ Cl~' ro.....""cI I ()tn~~ (C4r)(; J Af7pr"~,,,L h~ C,v/?~4:7 3/A.(~~ 02/08 ( ~Yl[ i J - c(CfI'f-7() -h FEI'~ - ~ s1'v7c.c;<,. SETTLEMENT AGREEMENT This Settlement Agreement is entered into this (pfA-- day of March, 2008, by and between the City of Federal Way, Washington ("City"), Comcast Cable Communications, LLC, Comcast ofPuget Sound, Inc. and Comcast of Washington IV, Inc. (collectively, "Comcast" or the "Company"). The City and Comcast are collectively referred to herein as the "Parties." Recitals WHEREAS, the City is certified as a rate regulation authority pursuant to rules of the Federal Communications Commission (hereinafter "FCC"); and WHEREAS, Comcast's predecessor filed with the City a "pre-approval" FCC Form 1235 with the City on or about March 1, 1999, purporting to set forth and justify a $1.16 network upgrade add-on to recover the costs of a network upgrade that was completed in June 1999 for the areas of the City served by the "E" headend formerly owned and operated by Tele-Communications, Inc. (the "Preliminary FCC Form 1235"); and WHEREAS, the $1.16 network upgrade add-on is based on projected cost data; and WHEREAS, Comcast has not filed a final FCC Form 1235 with the City that includes actual network upgrade cost data; and WHEREAS, Comcast could attempt to add the $1.16 network upgrade add-on to the basic service rate each month through the year 2014; and WHEREAS, Comcast filed with the City an FCC Form 1240 on or about April 1, 2007, purporting to set forth and justify the rate it could charge to subscribers for basic service programming in areas of the City served by the "E" head end formerly owned and operated by Tele-Communications, Inc. (hereinafter the "2007 FCC Form 1240-E"); and WHEREAS, Comcast filed with the City an FCC Form 1240 on or about April 1, 2007, purporting to set forth and justify the rate it could charge to subscribers for basic service programming in areas of the City served by the "F" headend formerly owned and operated by Viacom (hereinafter the "2007 FCC Form 1240-F"); and WHEREAS, the City retained Warren O'Hearn to review the Preliminary FCC Form 1235; and WHEREAS, the City retained Front Range Consulting, Inc. ("FRC") to review the 2007 FCC Form 1240-E and the 2007 FCC Form 1240-F; and WHEREAS, Warren 0 'Hearn transmitted a data request to Comcast on September 12,2007, soliciting information concerning the Preliminary FCC Form 1235; and WHEREAS, by letter dated September 26, 2007, Comcast informed the City that it would not be providing the requested data based on its interpretation of FCC rules; and WHEREAS, FRC has identified certain disputed issues concerning the 2007 FCC Form 1240-E and the 2007 FCC Form 1240-F, including (but not necessarily limited to) Comcast's treatment of FCC regulatory fees and the City's B&O tax; and WHEREAS, Comcast has proposed to resolve the outstanding issues identified by FRC, to eliminate the Preliminary FCC Form 1235 and to consolidate the 2007 FCC Form 1240-E and the 2007 FCC Form 1240-F as part of an overall settlement summarized in a February 11,2008, letter from Comcast's outside regulatory attorney, Steven 1. Horvitz of Davis Wright Tremaine, LLP, to the City (the "Settlement Letter"), which letter is attached to this Settlement Agreement; and WHEREAS, the City believes it is in the public interest to avoid the delay, uncertainty and costs associated with the continued review of the Preliminary FCC Form 1235, the 2007 FCC Form 1240-E and the 2007 FCC Form 1240-F, and any subsequent litigation before the FCC. NOW, THEREFORE, in consideration of premises, promises, undertakings and mutual covenants of the Parties and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree to the terms below: Agreement FCC Form 1235 1. The Preliminary FCC Form 1235 and its calculated $1.16 network upgrade add- on shall be eliminated at the time Comcast files its April 2008 rate forms. The Company agrees that it is barred from filing any additional FCC Forms 1235 addressing costs incurred with respect to the network upgrade identified in the Preliminary FCC Form 1235. Comcast also agrees that it shall at no time in the future charge the network upgrade add-on set forth in the Preliminary FCC Form 1235. The City hereby releases Comcast from any and all refund liability arising out of the Preliminary FCC Form 1235. 2. Comcast shall at no time file an FCC Form 1235 for the areas of the City served by the "F" headend for any network upgrade completed prior to the effective date of this Settlement Agreement. The Company has represented to the City that no network upgrades are currently pending for the "F" headend area. 2 FCC Forms 1240 3. The Parties agree that for all prospective FCC Form 1240 rate filings (i.e., those FCC Forms 1240 filed beginning in April 2008), Comcast shall combine the subscribers in the City served by the "E" headend with the subscribers in the City served by the "F" head end for purposes of calculating basic service rates. The 2007 FCC Form 1240-E shall be eliminated at the time Comcast files its April 2008 rate forms with the City, and no additional FCC Forms 1240 for the "E" headend area shall be filed by Comcast at any time or be considered by the City. Both Comcast and the City agree that, beginning in April 2008, Comcast's FCC Form 1240 filings for the "F" headend area will encompass all subscribers in the City, both retroactively and prospectively. 4. Comcast will maintain its current basic service rate of$14.37, exclusive of franchise fees but inclusive of FCC regulatory fees, no later than June 30, 2008. 5. The Company shall reduce its basic service rate to a rate no higher than $14.00 (excluding franchise fees but including the FCC regulatory fee) by July 1, 2008. Comcast may subsequently adjust such rate consistent with applicable law. 6. Comcast shall file the FCC Form 1240 attached to the Settlement Letter with the City on or about April 1, 2008, for the rate period beginning July 1,2008, and ending June 30, 2009 (the "2008 FCC Form 1240"). The 2008 FCC Form 1240 is hereby incorporated into and made a part of this Settlement Agreement. The City agrees to accept the 2008 FCC Form 1240 "as is" without further review, provided Comcast complies fully with all material terms, obligations and calculations set forth in this Settlement Agreement. In the event Comcast fails to comply with any material term, obligation or calculation in this Settlement Agreement, the City reserves all of its rights and remedies with respect to the 2008 FCC Form 1240 and prior rate filings. 7. The first month included in the future true-up period of the next FCC Form 1240 filed with the City (i.e., the first Form 1240 filed after the 2008 FCC Form 1240) will be July 1,2008. 8. Subject to applicable FCC regulations binding on the City and then in effect, Worksheet 7, External Costs for the True-up and Projected Period, Lines 708 and 718, Commission Regulatory Fees for Period, shall be completed so as to include the actual FCC regulatory fees paid for the applicable true-up period and Comcast's best estimate of its projected payment for the applicable projected period in the 2008 FCC Form 1240 and in all subsequent FCC Forms 1240. The Parties agree that the FCC regulatory fee was not included in Worksheet 7 of prior FCC Forms 1240. 3 9. The City accepts that B&O tax is not part of Com cast's FCC Form 1240 rate calculations and will not seek any further rate adjustment, refund or reduction regarding any B&O tax in any future rate filing. 10. The City agrees that this Settlement Agreement satisfies and resolves any and all rate issues regarding all service rate filings submitted by Comcast to the City prior to the effective date hereof. V oluntarv Payment 11. Comcast will voluntarily contribute $7,500 to the City as part of the settlement of outstanding issues identified herein. This voluntary contribution shall be paid directly to the City within fifteen (15) calendar days of the effective date of this Settlement Agreement. The $7,500 voluntary contribution will not be considered or otherwise defined as a franchise fee for any purpose under federal, state and local laws, regulations, orders and decisions, and will not be offset against or deducted from any franchise fee payments to the City or any financial or in-kind support furnished to the City pursuant to applicable franchise documents and/or local ordinances. In addition, the $7,500 voluntary contribution shall not be deemed to be a franchise-related cost or a franchise obligation that may be passed through to subscribers by Comcast or itemized on subscriber bills. Failure to make timely payment of the full $7,500 voluntary contribution shall constitute a material violation of this Settlement Agreement. General Terms and Conditions 12. Neither Comcast nor any of its affiliates or subsidiaries will take any action to challenge any provision of this Settlement Agreement as contrary to or unenforceable under applicable laws or regulations, nor will they participate with any other person or entity in any such challenge. If and when any provision of this Settlement Agreement is found to be unenforceable in a final judicial or administrative proceeding, the Parties shall enter into good-faith negotiations with the intent of reaching an agreement that would place the City and subscribers substantially in the same position as if this Settlement Agreement was fully enforceable. If the foregoing negotiations do not result in agreement between the Parties, the City may, in its sole discretion, terminate this Settlement Agreement and invoke all rights, remedies, claims and defenses it may have under applicable laws and regulations. 13. Any material violation of this Settlement Agreement by Comcast shall be deemed a violation of the City's franchise documents and may subject Comcast to penalties, damages, and any other remedies the City may have under applicable laws, ordinances, agreements, regulations, orders and decisions. This Settlement Agreement, however, shall be considered separate and distinct from the City's franchise documents. Nothing in this Settlement Agreement amends or alters the City's franchise documents or any requirements therein and all 4 provisions of the franchise documents shall remain in force and effect in accordance with their terms and applicable law. IfComcast materially breaches this Settlement Agreement, this Settlement Agreement may be terminated by the City, at its sole discretion, in which case the City will be deemed to retain all of its rights, powers, remedies, claims and defenses, to the maximum extent permitted by applicable laws and regulations and the terms of this Settlement Agreement. 14. The Parties agree that this Settlement Agreement does not constitute an admission of error on the part of either party and shall not be deemed to be an admission of any such error by either party in any judicial or administrative proceeding. Except as explicitly provided in this Settlement Agreement, the City is not waiving any rights, remedies, claims, causes of action, defenses and arguments it may have under applicable laws, ordinances, regulations, orders and decisions. 15. This Settlement Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, and their successors in interest, assigns, personal representatives and heirs. 16. This Settlement Agreement is freely and voluntarily entered into by the Parties, without any duress or coercion, and after each party has consulted with its counsel. Each party hereto has carefully and completely read all of the terms and provisions of this Settlement Agreement. 17. This Settlement Agreement constitutes the entire agreement of the parties with respect to the settlement of the issues addressed herein. No statements, promises or inducements inconsistent with this Settlement Agreement made by any party shall be binding, unless in writing and executed by the Parties. This Settlement Agreement may only be modified by written amendments hereto signed by all Parties. 18. This Settlement Agreement shall be governed by and construed in accordance with the laws of the State of Washington. Comcast agrees that any and all disputes concerning this Settlement Agreement will be venued exclusively in the State of Washington. 19. Each signatory to this Settlement Agreement represents that he or she has the authority to enter into this Settlement Agreement. 20. The Parties agree that this Settlement Agreement may be executed in multiple counterparts, each of which when so executed shall be deemed to be an original copy, and all of which together shall constitute one agreement binding the Parties, notwithstanding that all Parties shall.not have signed the same counterpart. 5 21. This Settlement Agreement is not intended to, and shall not be construed to, grant any rights to or vest any rights in third parties, unless expressly provided herein. 22. In the event of a conflict between this Settlement Agreement and the Settlement Letter, this Settlement Agreement shall prevail. 23. This Settlement Agreement shall be effective on the date first set forth above. COMCAST CABLE COMMUNICATIONS, LLC By: Its: COM CAST OF WASHINGTON IV, INC. By: Its: COMCAST OF PUGET SOUND, INC. By: Its: 6 . 7ltAf;r ~ CITY OF FEDERAL wAf, WASHINGTON By:_N~\ fJf>~*S I G\~ ~ Its: Attest: 7 LAWYERS [Ii Davis Wright Tremaine LLP ANCHORAGE BELLEVUE LOS ANGELES NEW YORK PORTLAND SAN FRANCISCO SEATTLE SHANGHAI WASHINCTON, D.C. STEVEN J. HORVITZ. DIRECT (202) 913.4228 stave: horvi tz@dwt.c:om SUITE 200 TEL (202) 973-4200 1919 PENNSYLVANIA AVENUE, N.W. FAX (202) 973-4499 WASHINGTON, D.C. 20006-3402 www.dwt.com February 11, 2008 :.t. Stephen 1. Guzzetta,Esq. Bradley & Guzzetta, LLC 444 Cedar Street Suite 950 St. Paul, Minnesota 55101 .::.:. , :~ Richard D. Treich Front Range Consulting 4152 Bell Mountain Drive 'Cast1e Rock, CO 80104 Re: Federal Way/Comcast Settlement Dear Steve and Dick: I am writing on behalf of Comcast Cable Communications, LLC, and its affiliates, Comcast ofPuget Sound, Inc. and Comcast of Washington IV, Inc. (collectively, "Corncast" or the "Company') to propose the resolution of issues identified during the pending review of Comcast's rate filings for Federal Way, Washington ("Federal Way" or the "City"). Corncast believes that the following proposal provides a unique opportunity to minimize the substantial administrative burdens, costs, uncertainty, and delay otherwise associated with the rate review process. " '.'~ PROPOSED TERMS OF COMCAST/ FEDERAL WAY AGREEMENT: 1. The parties agree that for all prospective rate filings, Comcast will combine the subscribers in the current "E" headend with the subscribers in the current "F" headend and will utilize only the "F" headend rate filings to calculate regulated rates and charges for subscribers in the City. The current "E" headend rate filings will be eliminated along with the applicable FCC Form 1235 for the "E" headend and no additionallE" filings will be submitted. or considered. Comcast and the City will treat Corncast's rate filings for the "F'! headend as encompassing all Federal Way subscribers, both retroactively and prospectively. Comcast will not file a Form 1235 for the "F" headend for any upgrade completed prior to the effective date of this settlement. WDC7I7416vlOlOI080-000001 , . ~~ ;:;:~:::::7: :'..N:: .~..;.::~;:::~~:.!: ~.::'::~;;:;'.~ ;;': ~:.-;'~.;.~~!-~; :y: <.~:~. :;:.; ::,: .~-;'7;.:':' :~:;::. !,;.:.:'.,:,;::~:':-;~':'::;:-;::~:':.y.~\ ;:"'~::'~'~.~;;':l:-i.~::Z!J~~.:r~:~~t~';!'i'~i!~:; ::( \: ~',-::i'~;;.' \~;~:;:;::'i'~(~~~;':':~;;:;:'1;.:!~~(~..T.v~'F~i:-::Y~W.~>::'I~C~~'::C~1:;t~:: ~ ':::;:~':'-i:::'w;:.'; ;~.":i..'~~:;~"':'i! ,:'''~~,!C.,j;~:,.:.~~-..:.r;::;r;::':l~'''!"~ \"'S~ ,,,:".:::;::;.~'~,:",' -;.~~. ~":.~ ~:;:, ': Stephen J. Guzzetta, Esq. Richard D. Treich February 11, 2008 Page 2 Ii i" 2. Comcast will maintain its current Basic Service Rate of$14.37 (including the FCC regulatory fees) no later than June 30, 2008. 3. Corncast will reduce its Basic Service Rate to a rate no higher than $14.00 (including the FCC regulatory fees) by July 1, Z008. 4. Comcast's FCC Form 1240 for 2008 (completed in a manner acceptable and agreed to by Corncast and the City) is attached~ This attached Form will be filed officially with , the City on or about April 1, 2008. ;" 5. The first month included in the future true-up period of the next filed FCC Form , 1240 (i.e., the first Form 1240 filed after ,the 2008 FCC Form 1240) will be July 1, 2008. 6. Subject to applicable FCC regulations, Worksheet 7, External Costs for the True- Up and Projected Period, Line 708 and 718, Commission Regulatory Fees for Period, will be completed, in all subsequent Form 1240 filings with the City, so as to include the actual FCC Regulatory fees paid and Comcast's best estimate of its projected payment, which the parties. .agree were not previously included within Comcast's Form 1240. F j, i. 7. The City will accept that B&O tax is not part of Com cast's Form 1Z40 rate calculation and will not seek any further rate adjustinent, refund, or reduction regarding this issue in any future rate filing. 8. The City will accept this resolution as satisfying and resolving any and all rate issues regarding all service rate filings preyiously submitted by Comcast. 9. Corncast will contribute $7,500 to the City. This voluntary contribution Will not be considered or otherwise defined as a franchise fee for any purpose under federal, state and . local laws, regulations, orders and decisions, and will not be o.ffset against or deducted f!om any franchise fee payments to the City or any financial or in-kind support furnished to the City pursuant to applicable franchise documents and/or local ordinances. In addition, the $7,500 voluntary contribution shall not be deemed to be a franchise-related cost or a franchise obligation that may be passed through to subscribers by Comcast or itemized on subscriber bills. ." ., :',. i,I i> '. !" WDC 717416vl OlOlO8().(JOOOOl Stephen J. Guzzetta, Esq. Richard D. Treich February 11, 2008 Page 3 lm The foregoing terms are subject to the approval of City. Very truly yours, i:f. 1" r~ ~:. , . ~ t ( woe 717416vl 0101080-000001 1\ . . ~ :;:\T;~:~;,~.-".-';:i':<':~::':;':""';i-:':-.":"=ll;''';'''':\''.''"li=-::':':~'C:::;'''''~;>',:-;;.:;~'~~:r.-::r."~:~;;;:::~:~:'7'::-:';.""'~,:~:':"''''.''i'<(~;::,,,,,,,,'.'','''':'.-I;'''.:l;":..:(:';:...:::.::':.:-::;:,.";'~::'-"~~":"!':"'-:;:"l"r.-,~""":-t.""W."''''?4'l.:-O'':'',,,,,,,,;',;....;.....,..'r.'!'_~..."T"):':,"\",':~,';'~.":":-~r:~~~~....~..'"':;"t,~.:c:~I".:.'O\....':'\"(.,.....-:;l....~...,.,~'l,..._,.~-.....-...._-~'l;: Federal Communications Commission Washington, DC 20554 Approved by OMB 3060-0685 FCC FORM 1240 UPDATING MAXIMUM PERMITTED RATES FOR REGULATED CABLE SERVICES Cable Operator: Name of Cable Operator COM CAST OF PUGET SOUND INC Mailing Address of Cable Operator 2316S.STATEST City I ~tate I~IP Code TACOMA WA 98405 1. Does this filing involve a single franchise authority and a single community unit? If yes, complete the franchise authority information below and enter I the QSsociated CUID number here:' SEE ATTACHMENT YES X NO YES NO X 2. Does this filing involve a single franchise authority but multiple community units? If yes, enter the associated CUlOs below and complete the franchise authority information at the bottom of this page: I i: 3. Does this filing involve multiple franchise authorities? If yes, attach a separate sheet for each franchise authority and include the foUowing franchise authority information with its associated CUID(s): Franchise Authority Information: Name of Local Franchising Authority SEE ATTACHED Mailing AddIess of Local Franchising Authority City State ' \ZIP Code Telephone number Fax Number 4. For what purpose is this Form 1240 being filed? Please put an "X" in the appropriate box. a. Original Form 1240 for Basic Tier b. Amended Form 1240 for Basic Tier c. Original Form 1240 for CPS Tier d. Amended Form 1240 for CPS Tier ~ TO 0710112008 I 0613012009 (mmfyy) TO 12/0112006 I 11/3012007 (mmfyy) ; '. 5. Indicate the one year time period for which you are setting rates (the Projected Period). 6. Indicate the time period for which you are performing a true-up. 7. Status of Previous Filing of FCC Form 1240 (enter an "x" in the appropriate box) YES NO X X (mmlddlyy) NO a. Is this the first FCC Form 1240 filed in any jurisdiction? b. Has an FCC Form 1240 been ffied previously with the FCC? If yes, enter the date of the most recent filing: I c. Has an FCC Form 1240 been filed previously with the Franchising Authority? I If yes, enter the date of the most recent filing: I YES X 04/0112007 (mmlddlyy) W A-H4863_2K8RWB.xls WORKING COPY - FOR SETTLEMENT AGREEMENT FCC Form 1240 July 1996 Federal Communications Commission Washington, DC 20554 8. Status of Previous Filing of FCC Form 1210 (enter an "x" in the appropriate box) YES a. Has an FCC Form 1210 been previously filed with the FCC? If yes, enter the date of the most recent filing: I b. Has an FCC Form 1210 been previously filed with the Franchising Authority? If yes, enter the date of the most recent filing: I 9. Status of FCC Form 1200 Filing (enter an "x" in the appropriate box) YES X 11122/1995 YES a. Has an FCC Form 1200 been previously filed with the FCC? If yes, enter the date filed: I YES X If yes, enter the date filed; I 08/15/1994 10. Cable Programming Services Complaint Status (enter an "x" in the appropriate box) b. Has an FCC Form 1200 been previously filed with the Franchising Authority? YES a. Is this form being filed in response to an FCC Form 329 complaint? If yes, enter the date of tlte complaint: I YES X 11. Is FCC Form 1205 Being Included With This Filing? 12. Selection of "Going Forward" Channel Addition Methodology (enter an "x" in the appropriate box) DCheck here if you are using the original rules [MARKUP METIlOD]. . IKJCheck here if you are using the new. alternative rules [CAPS METHOD]. If using the CAPS METIlOD, have you elected to revise recovery for channels added during the period May 15, 1994 to Dec. 31. 1994? 13. Headend Upgrade Methodology .NOTE: Operators must certify to the Commission the;r eUgibiUty to use this upgrade methodology.and allach an equipment list and depreclalion schedule. DCheck here if you are a qualifying small system using the streamlined headend upgrade methodology. YES Part I: Preliminary Information Module A: Maximum Permitted Rate From Previous Filin a b Basic Tier Z Approved by OMB 3060-0685 NO X (mmlddlyy) NO (mmlddlyy) NO X (mmlddlyy) NO (mmlddIyy) NO X (mmlddlyy) NO NO X Line Description Current Maximum Permitted Rate s 13.9300 Module B: Subscribersbi Line BI B2 B3 a BasIc b TierZ c Tier 3 22,211 21.819 Module C: InDation Information Line CI C2 C3 C4 CS 1.0000 1.0000 1.0100 1.0000 1.0103 W A-H4863_2K8RWB.xIs WORKING COPY - FOR SETTLEMENT AGREEMENT d Tier 4 e Tier S FCC Form 1240 July 1996 Federal Communications Commission Washington. DC 20554 Approved by OMB 3060-06&5 Module D: Calculating the Base Rate a b c d e Line Line Description Basic TierZ Tier 3 Tier 4 Tier S D1 Current Headend UDl!Tllde Sel!ment - D2 Current External Costs See.ment 0,9415 OJ Current Caps Method Segment - 04 Current Markuo Method SeJmlent - D5 Current Channel Movement and Deletion Segment - D6 Current True-Up Sel!11lent - D7 Current Inflation Segment + 05 - D8 Base Rate [A1-DI-D2-D3-D4-0S-06-D71 12.9885 Part ll: True-Up Period Module E: Timin Information Line LiDe Description EI What Type of True-Up Is Being Performed? (Answer "I", "2". or "3". See Instructions for a c1escri tion of these If""', 0 to Module L If "Z", answer EZ and EJ. If "3", answer EZ, E3 E4, and E5. E2 Number of Months in the True-Up Period r E3 Number of Months between the end ofTrue-U Period I and the end of the most recent Projected Period E4 Number of Months in True-Up Period 2 Eligible for Interest E5 Number of Months True-U Period 21neli 'ble for Interest .) 2 12 7 o o a b c d e Line Line Descriptioll Basic Tier 2 Tier 3 Tier 4 TierS F1 CaDS Method Segment For True-Up Period 1 [Wks 2] - F2 Markup Method Seement For True-Up Period 1 (Wks 31 - F3 Chan Mvmnt Deletn Segment For True-VI> Period 1 [Wks' 4/5] - F4 Truc-UoPeriod 1 Rate Eligible For fnflation [D8+FI+F2+F3] - FS Inflation Segment for True-Uo Period 1 [(F4*C3)-F4] - F6 Headend UOl!Tade Segment For True-Up Period I [Wks 61 - F7 External Costs Segment For True-Uo Period I [Wks 7] - F8 True-Un Segment For True-Up Period 1 - F9 Max Perm Rale for True-Uo Period 1 rF4+F5+f6+F7+F81 - Module F: Maximum Permitted Rate For True-Up Period 1 a b c d e Line Line Description Basic Tier 2 Tier 3 Tier 4 TierS Gl CaDs Method Sel!1tlent For Tnie-Un Period 2 [Wks2] - 02 Markuo Method Segment For True-Uo Period 2 [Wks 3] - 03 Chan Mvrnnt Deletn Segment For True-Uo Period 2 [Wks' 4/5] - I G4 TU Period 2 Rate Eligible For Inflation [D8+FS+OI +02+031 - 05 Inflation Segment for True-Un Period 2 [(G4*C4)-04] - 06 Headend UOJmlde Segment For True-UI> Period 2 IWks 61 - 07 External Costs Segment For True-UI> Period 2 [Wks 7J - 08 True-Up Segment For True-Un Period 2 - 09 Max Perm Rate for True-Uo Period 2 [G4+OS+06+07+08t - Module G: Maximum Permitted Rate For True-Up Period 2 WA-H4863_2K8RWB.xls WORKING COpy - FOR SETTLEMENT AGREEMENT FCC Form 1240 July 1996 Federal Communications Commission Washington. DC 20554 Approved by OMB 3060-0685 . b c d e Line Line Description Basic TierZ Tier 3 Tier 4 TierS Adlustment For True-UD Period 1 HI Revenue From Period I . H2 Revenue From Max Permitted Rate for Period I - H3 True-Up Period I Adiustment [H2-HI J - H4 Interest on Period I Adjustment - Adjustment For True-Up Period 2 H5 Revenue From Period 2 Eli8ible for Interest - H6 Revenue From Max Penn Rate for Period 2 Eligible For Interest . H7 Period 2 Adjustment Eligible For Interest [H6-HSl - H8 Interest Dn Period 2 Adj ustment (See instructions for fonnuls) - H9 Revenue From Period 2 lneliaible for Interest - HlO Revenue From Max Penn Rate for Period 2 Ineligible for Interest - HIl Period 2 Adjustment Ineli2ible For Interest [HI0-H91 - Total True-Up AdllUlment HI2 Previous Remaininl! True-Up Adjustment - HI3 Total True-Up Adjustment [H3+H4+H7+H8+HII+HI2-08J - HI4 Amount of True-Up Claimed For This Proj""ted Period - HI5 Remaininll Truc-Up Adiustment rHIJ-HI41 . Module H: True-Up Adjustment Calculation a b c d e Une Line Description Basic TierZ Tier 3 Tier 4 Tier S II Caps Method Segment For Pro' ected Period [Wks 2J - I2 Markuo Method Segment For Proiected Period [Wks 3] - 13 Chan Mvmnt Deletn Segment For Projccted Pcriod rWks 4/51 ' - 14 Proi. Period Rate Eligible For Inflation [D8+F5+G5+Il +12+D] 12,9885 15 Inflation Segment for Projected Period r(14.C5}I4J 0,1338 16 Headend Upgrade Segment For Projected Period (Wks 6J - 17 External Costs Sel!ment For Proj ected Period [Wks 71 0,9455 18 True-Up Segment For Projected Period - 19 Max Permitted Rate for Proiected,Period [14+15+16+17+18] 14,0678 no Ooerator Selected Rate For Projected Period $ 14.00 Part III: Projected Period Module I: New Maximum Permitted Rate Note: The marimum permitted ratefiguros do not take into accollnt any refilM liability you may have. IfYOII have previously been ordered by the Commission or your local franchising aUlhority to make reJllnds, you are not relieved a/your obligalion to make .,uch refund, even iflhe permilted rate is higher than the conte.ted rate or your CIIrrenf rate. Certification Statement WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE ANDIOR IMPRISONMENT (U.S. CODE TITLE 18, SECTION 1001). AND/OR FORFEITURE (U.S, CODE, TITLE 47, SECTION 503). I certify that the statements made in this form are true and correct to the best ofmv knowled2e and belief. and are made in 200d faith. Signature I~e WORKING COpy - FOR SETTLEMENT AGREEMENT 04/0112008 Name and Title of Person Completing this Form: Telephone number I:ax Number (720) 267-2263 (720) 267-2715 WA-H4863_2K8RWB.xls WORKING COpy - FOR SETTLEMENT AGREEMENT FCC Form 1240 July 1996 Federal Communications Commission Washington, DC 20554 Approved By OMB 3060-0685 Worksheet 7 - External Costs Projected Period For instructions, see Appendix A of Instructions For FCC Form 1240 Line Line Descri tiOD a Basic b Tier 2 Period 1 True-Up Period Projected Period X 12 c d e Tier 3 Tier 4 Tier 5 Question I. For which time period are you filling out this worksheet? [Put an .X. in the appropriate box,] Question 2. How long is the first period, in months, for which rates are being set with this worksheet? Question 3. How long is the second period, in months, for which rates are being set with this worksheet? External Costs Eligible for Markup Cost of Programming For Channels Added Prior 701 to 5/15194 or After 5/15194 Vsing Markup Method 181,154.6418 For Period 702 Retransmission Consent Fees For Period 703 Copyright Fees For Period 33,539.3982 704 External Costs Eligible For 7.5% Markup 214,694.0400 70S Marked Up External Costs 230,796.0930 External Costs Not Eligible for Markup 706 Cable Specific Taxes For Period - 707 Franchise Related Costs For Period - 708 Commission Regulatory Fees For Period 16,768,5000 709 Total External Costs For Period 247,564.5930 710 Monthly, per-Subscriber External Costs For 0,9455 Period J :". WA-H4863_2K8RWB.xIs Microsoft Excel 5,0 Version WORKING COpy - FOR SETTLEMENT AGREEMENT FCC Form 1240 July 1996 SETTLEMENT AGREEMENT Settlement Agree~ent is entered into(plk.. day of March, 2008, by and betw the City of Federal Way, Washington ("City>>), . . , Comeast ofPuget Sound, Inc. and Comeast of Washington IV, Inc. (collectively, "Comeast" or the "Company"). The City and Comeast are collectively referred to herein as the "Parties." Recitals WHBREAS, the City is certified as a rate regulation authority pursuant to rules of the Federal Communications Commission (hereinafter "FCC"); and WHEREAS, Comcasf s predecessor filed witb the City a "pre-approval" FCC Form 1235 with the City on or about March 1, 1999, putpo.mng to set forth and justify a $1,16 network upgrade add-on to recover the costs of a network upgrade that was completed in June 1999 for the areas of the City served by the "'BOt headend formerly owned and operated by Tele-Commumeations, Inc. (the "Preliminary FCC Form 1235"); and WHEREAS, the $1.16 network upgrade add-on is based on projected cost data; and WHEREAS, Comeast has not filed a final FCCFoun 1235 with the City that includes acmal network upgrade cost data; and WHEREAS, Comcast could attempt to add th.e $1.16 network upgrade add-on to the basic service rate each month through the year 2014; and WHEREAS, Comcast filed with the City an FCC Form 1240 on or about Aprill, 2007, purporting to set forth and justify the rate it could charge to subscribers . for basic service programming in areas of the City served by the "B" headend fonnerlyowned and operated by Tele-Communications, Inc. (hereinafter the "2007 FCC Form 124o-B"); and WHEREAS, Comcast filed with the City an FCC Form 1240 on or aoout Aprill, 2007, purporting to set forth and justify the rate it could charge to subscribers for basic service programming in areas of the City served by the "F' headend formerly owned and operated by Viacom (hereinafter the "2007 FCC Form 124o-F");and . WHEREAS, the City retained Warren O'Hearn to review the Preliminary FCC Form 1235; and WHEREAS, the City retained Front Range Consulting, Inc. ("FRC") to review the 2007 FCC Form 124o-E and the 2007 FCC Form 1240.F; and WHEREAS, Wan-en O'Hearn transmitted a data request to Comcast on September 12, 2007, soliciting information concerning the Preliminary FCC Form 1235; and WHEREAS, by letter dated September 26,2007, Corncast informed the City that it would not be providing the requested data based on its interpretation of FCC rules; and WHEREAS, FRC has identified certain disputed issues concerning the 2007 FCC Form I240-E and the 2007 FCC Form I240-F, including (but not necessarily limited to) Comcast's treatment of FCC regulatory fees and the City's B&O tax; and WHEREAS, Comcast has proposed to resolve the outstanding issues identified by FRC, to eliminate the Preliminary FCC Form 1235 and to consolidate the 2007 FCC Form I240-E and the 2007 FCC Form 1240-F as part of an overall settlement summarized in a February 11, 2008, letter from Comcast's outside regulatory attorney. Steven J. Horvitz of Davis Wright Tremaine. LLP, to the City (the "Settlement Letter"). which letter is attached to this Settlement Agreement; and WHEREAS, the City believes it is in the public interest to avoid the delay, uncertainty and costs associated with the continued review of the Preliminary FCC Form 1235, the 2007 FCC Form 1240-E and the 2007 FCC Form l240-F, and any subsequent litigation before the FCC. NOW, THEREFORE, in consideration of premises, promises, undertakings and mutual covenants of the Parties and other good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree to the terms below: Agreement FCC Form 1235 1. The Preliminary FCC Form 1235 and its calculated $1.16 network upgrade add- on shall be eliminated at the time Corncast files its April 2008 rate forms. The Company agrees that it is ban-ed from filing any additional FCC FOlms 1235 addressing costs incurred with respect to the network upgrade identified in the Preliminary FCC Form 1235. Comcast also agrees that it shall at no time in the future charge the network upgrade add-on set forth in the Preliminary FCC Form 1235. The City hereby releases Comcast from any and all refund liability arising out of the Preliminary FCC Form 1235. 2, Comcast shall at no time file' an FCC Form 1235 for the areas ofthe City served by the "F" headend for any network upgrade completed prior to the effective date of this Settlement Agreement. The Company has represented to the City that no network upgrades are currently pending for the "F" headend area. 2 FCC Forms 1240 3. The Parties agree that for all prospective FCC FOlm 1240 rate filings (i.e., those FCC Forms 1240 filed beginning in API;l 2008), Comcast shall combine the subscribers in the City served by the "E" headend with the subscribers in the City served by the "F" headend for purposes of calculating basic service rates. The 2007 FCC FOlm 1 240-E shall be eliminated at the time Corneast files its April 2008 rate forms with the City, and no additional FCC Forms 1240 for the OlE" headend area shall be filed by Comcast at any time or be considered by the City. Both Comeast and the City agree that, beginning in Apri12008, Comcast's FCC Form 1240 filings for the "F" headend area will encompass all subscribers in the City, both retroactively and prospectively. 4. Comcast will maintain its current basic service rate of $14.37, exclusive of franchise fees but inclusive of FCC regulatory fees, no later than June 30, 2008. 5. The Company shall reduce its basic service rate to a rate no higher than $14.00 (excluding franchise fees but including the FCC regulatory fee) by July 1,2008. Corncast may subsequently adjust such rate consistent with applicable law. 6, Corncast shall file the FCC Form 1240 attached to the Settlement Letter with the City on or about ApI;II, 2008, for the rate period beginning July 1,2008, and ending June 30, 2009 (the "2008 FCC Form 1240"). The 2008 FCC Form 1240 is hereby incorporated into and made a part of this Settlement Agreement. The City agrees to accept the 2008 FCC Form 1240 "as is" without further review, provided Comcast complies fully with all material terms, obligations and calculations set forth in this Settlement Agreement. In the event Comcast fails to comply with any material term, obligation or calculation in this Settlement Agreement, the City reserves all of its rights and remedies with respect to the 2008 FCC POlm 1240 and prior rate filings. 7. The first month included in the future nue-up period of the next FCC Form 1240 filed with the City (i,e., the first Form 1240 filed after the 2008 FCC Form 1240) will be July 1,2008. 8. Subject to applicable FCC regulations binding on the City and then in effect, Worksheet 7, External Costs for the True-up and Projected Period, Lines 708 and 718, Commission Regulatory Fees for Period, shall be completed so as to include the actual FCC regulatory fees paid for the applicable true-up period and Comcast's best estimate of its projected payment for the applicable projected period in the 2008 FCC Form 1240 and in all subsequent FCC Forms 1240. The Parties agree that the FCC regulatory fee was not included in Worksheet 7 of prior FCC Forms 1240. 3 9. The City accepts that B&O tax is not palt of Com cast's FCC Form 1240 rate calculations and will not seek any further rate adjustment, refund or reduction regarding any B&O tax in any future rate filing. 10, The City agrees that this Settlement Agreement satisfies and resolves any and all rate issues regarding all service rate filings submitted by Comcast to the City prior to the effective date hereof. Voluntary Payment 11. Comcast will voluntarily contribute $7,500 to the City as part of the settlement of outstanding issues identified herein. This voluntary contribution shall be paid directly to the City within fifteen (15) calendar days of the effective date of this Settlement Agreement. The $7,500 voluntary contribution will not be considered or otherwise defined as a franchise fee for any purpose under federal, state and local laws, regulations, orders and decisions, and will not be offset against or deducted from any franchise fee payments to the City or any financial or in-kiJ1d support furnished to the City pursuant to applicable franchise documents and/or local ordinances. In addition, the $7,500 voluntary contribution shall not be deemed to be a franchise-related cost or a franchise obligation that may be passed through to subscribers by Corneast or itemized on subscriber bills. Failure to make timely payment of the full $7,500 voluntary contribution shall constitute a material violation of this Settlement Agreement. General Telms and Conditions 12. Neither Comcast nor any of its affiliates or subsidiaries will take any action to challenge any provision of this Settlement Agreement as contrary to or unenforceable under applicable laws or regulations, nor will they participate with any other person or entity in any such challenge. If and when any provision of this Settlement Agreement is found to be unenforceable in a final judicial or administrative proceeding, the Parties shall enter into good-faith negotiations with the intent of reaching an agreement that would place the City and subscribers substantially in the same position as if this Settlement Agreement was fully enforceable, Ifthe foregoing negotiations do not result in agreement between the Parties, the City may, in its sole discretion, terminate this Settlement Agreement and invoke all rights, remedies, claims and defenses it may have under applicable laws and regulations, 13. Any material violation of this Settlement Agreement by Comcast shall be deemed a violation ofthe City's franchise documents and may subject Comcast to penalties, damages, and any other remedies the City may have under applicable laws, ordinances, agreements, regulations, orders and decisions. This Settlement Agreement, however, shall be considered separate and distinct from the City's franchise documents. Nothing in this Settlement Agreement amends or alters the City's franchise documents or any requirements therein and all 4 provisions of the franchise documents shall remain in force and effect in accordance with their terms and applicable law. If Comeast materially breaches this Settlement Agreement, this Settlement Agreement may be terminated by the City, at its sole discretion, in which case the City will be deemed to retain all of its rights, powers, remedies, claims and defenses, to the maximum extent permitted by applicable laws and regulations and the terms of this Settlement Agreement. 14. The Parties agree that this Settlement Agreement does not constitute an admission of error on the part of either party and shall not be deemed to be an admission of any such elTor by either party in any judicial or administrative proceeding. Except as explicitly provided in this Settlement Agreement, the City is not waiving any rights, remedies, claims, causes of action, defenses and arguments it may have under applicable laws, ordinances, regulations, orders and decisions. 15, This Settlement Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, and their successors in interest, assigns, personal representatives and heirs. 16. This Settlement Agreement is freely and voluntarily entered into by the Parties, without any duress or coercion, and after each party has consulted with its counsel. Each party hereto has ,carefully and completely read all of the terms and provisions of this Settlement Agreement. 17. This Settlement Agreement constitutes the entire agreement of the parties with respect to the settlement of the issues addressed herein, No statements, promises or inducements inconsistent with this Settlement Agreement made by any party shall be binding, unless in writing and executed by the Parties. This Settlement Agreement may only be modified by written amendments hereto signed by all Parties. 18. This Settlement Agreement shall be govemed by and construed in accordance with the laws of the State of Washington, Comeast agrees that any and all disputes concerning this Settlement Agreement will be venued exclusively in the State of Washington. 19. Each signatory to this Settlement Agreement represents that he or she has the authority to enter into this Settlement Agreement. 20, The Parties agree that this Settlement Agreement may be executed in multiple counterparts, each of which when so executed shall be deemed to be an original copy, and all of which together shall constitute one agreement binding the Parties, notwithstanding that all Parties shall not have signed the same counterpart. 5 21. This Settlement Agreement is not intended t01 and shall not be construed to, grant any rights to or vest any rights in third parties, unless expressly provided herein. 22. In the event of a conflict between this Settlement Agreement and the Settlement Letter, this Settlement Agreement shall prevail. 23, This Settlement Agreement shall be effective on the date first set forth above. , , COMCAST OF WASHINGTON IV, INC. ~~z eonard J .Roz.. - Its: Senior Vice President COMCAST OF PUGET SOUND, INC. ~~L Its: Senior Vice President ,. i, .' :^} ~ . " 1 , I' I' .' I I ! .. i 6 I,; ! l"!.t , . 71P<t j} v:&a3/ CITY OF FEDERAL t~, WASHINGTON By:_NQ~\ ~PA?-*S (G~ M~ Its: Attest: P/~@JIJlA ~ J r- 7