iprovo agreement

INTEROFFICE MEMORANDUM

TO: PROVO MUNICIPAL COUNCIL

FROM: DAN FOLLETT, JOHN BORGET, KEVIN GARLICK, BRIAN JONES, ROBERT WEST, GARY DODGE, AARON LEACH, ROB LECKIE

SUBJECT: FIBER NETWORK IN PROVO

DATE: 2/29/2012

CC: MAYOR JOHN CURTIS, WAYNE PARKER

Provo Municipal Council, Attached for review and approval by the Municipal Council are the following agreements related to the Fiber Network in Provo:

SETTLEMENT AGREEMENT GENERAL ASSIGNMENT, BILL OF SALE AND REPRESENTATIONS PROVO NETWORK OPERATING AND LEASE AGREEMENT

While these agreements are substantially complete, some attachments and updates will be added prior to the Council Study Meeting on March 6, 2012. SETTLEMENT AGREEMENT In lieu of foreclosure, the Settlement Agreement transfers the fiber network assets from Veracity Networks, LLC (Veracity) to the City. The City is also releasing and canceling the promissory note payable to the City. This will result in the City owning the fiber network. Taking ownership of the fiber network is a prerequisite to the City leasing, running, selling or otherwise utilizing the fiber network in Provo. GENERAL ASSIGNMENT, BILL OF SALE AND REPRESENTATIONS The General Assignment and Bill of Sale defines and transfers the specific fiber network assets and rights related to the fiber network to the City. The Representations section of the document represent and warrant the status of the network assets including disclosures related to the title, working order, liens, pending litigation and other matters related to the network.

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These documents support the transfer of the fiber network assets from Veracity to the City. PROVO NETWORK OPERATING AND LEASE AGREEMENT The Provo Network Operating and Lease Agreement outlines the terms and conditions of how Veracity will operate and maintain the network, perform necessary repairs and improvements, promote and protect the network’s customer base, actively market network services to subscribers and provide high quality retail network services. Subject to Municipal Council approval, the City and Veracity have been operating under the terms of this agreement since January 1, 2012. The basic terms are as follows:

The effective date of the agreement is January 1, 2012 (subject to Council approval). The term of the agreement is 14 months (February 28, 2013). Provo may terminate the agreement at any time with 90 days written notice. The agreement may be extended by mutual agreement of both parties. The base monthly transfer payment to the City from Veracity is $95,000 per month. The City will receive $23 per month for all residential customers added to the

network. The City will receive 4 percent per month of commercial and MDU connection costs

paid by Provo for new and existing customers. The City will receive 90 percent of all monthly gateway fees or other amounts

charged to a network subscriber for portal or set-top boxes purchased by the City. The City will receive any amounts charged directly to customers for installs or

upgrades. The City will receive $6,667 per month for rent on the Network Operations Center

facility which is owned by the City. All customer payments will be deposited in a lockbox until sufficient funds have

accumulated to cover the current month’s payment to the City plus a $120,000 security deposit. The security deposit can never drop below $120,000; however, the City may draw upon this amount if Veracity fails to make timely payments.

The City controls and is responsible for most of the cost of capital improvements to the network.

The City is responsible for the cost of new service connections to the network. Veracity is responsible for operation, maintenance and repair of the network. Veracity is responsible for customer billing. Veracity is responsible for customer support. Veracity is required to market network services. Veracity must meet all network standards as defined by the agreement and

coordinate any changes to the standards with the City. The City is responsible for establishing performance standards. See Exhibit C.

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Network product and service pricing may not be adjusted without the City’s prior approval.

Customer service standards have been outlined in detail in Exhibit C. The customer service standards may not be changed or altered without the City’s advance approval.

In addition to the existing customer base that will be transferred back to the City, all new customers acquired during the term of this agreement will belong to the City.

The agreement allows Veracity to service non-city owned Veracity customers following the notice of termination of this agreement for a period of 12 months. Veracity must be in compliance with all terms of this agreement.

The City has reserved the right to market the network and related services, add customers to the network, retail or wholesale network services, adjust product offerings, change pricing, establish or change network technical or customer service standards at any time.

The City and Provo School District will continue to receive network services at no additional charge consistent with historical levels of service.

Veracity is responsible for providing insurance for the network. Upon termination of the agreement the City may be required to reimburse Veracity a

pro-rated portion of their actual realized costs for commissions and installations if certain requirements have been met including a signed 24 month customer agreement.

VISION 2030 SUPPORT The actions proposed in this memorandum support objective 5.2.1 of Vision 2030: Ensure a technological infrastructure that can support and sustain individual, educational and business demands. The infrastructure should enable the access and use of the best proven technology tools. This proposal also furthers objective 14.2.1: Develop models of balancing government revenues and expenditures so that government budgets are sustainable over the long term.

SUMMARY The Provo City Fiber Network Team carefully considered a number of relevant factors when they negotiated and drafted the Provo Network Operating and Lease Agreement. The team considered and attempted to minimize the financial impact to the residents and taxpayers while balancing the need to ensure a quality network product and customer experience. The team also worked diligently to ensure the City received a functional working network, with improvements or upgrades where applicable, back from Veracity. The Team focused on drafting an agreement that would work for both parties as well as allow the City to improve the network and the overall customer experience throughout the term of the agreement. Since Veracity is in default, the City is currently operating without a signed agreement. In good faith, Veracity has been making the $95,000 monthly payment plus the $6,667 NOC

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rent payment since January 1, 2012 as proposed in this agreement. The Provo City Fiber Network Team recommends the Municipal Council reviews and approves this agreement as soon as reasonably possible. We look forward to discussing these documents with the Municipal Council. Provo Fiber Network Team

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SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is made and entered into effective as of the 1st day of January, 2012, by and among Provo City Corporation, a Utah municipal corporation (“Provo”) and Veracity Networks, LLC, a Delaware limited liability company (“Veracity”), Veracity Communications, Inc., a Utah corporation (“VCI”), Broadweave Networks of Provo, LLC, a Utah limited liability company (“Broadweave”), and Broadweave Networks, Inc., a Utah corporation (“BNI”) (each individually a “Party” and collectively, “Parties”).

RECITALS

A. Provo entered into an Asset Purchase Agreement dated May 5, 2008, with Broadweave, wherein Broadweave agreed to purchase and Provo agreed to sell substantially all of the assets relating to the fiber-to-the-premises communication network known as the iProvo network (“System”). B. In connection with the sale and purchase of the System, Provo and Broadweave executed and delivered various documents and agreements including: a senior secured promissory note in the amount of $38,850,000 (“Note”); a senior secured promissory note for certain headend facilities in the amount of $1,750,000 (“Headend Note”); a deed of trust, assignment of contracts and receivables, security agreement and financing statement (“Security Agreement”); a surety agreement (“Surety Agreement”); a corporate guarantee by BNI (“Guarantee”); a lease of the network operations center building (“Lease”); a license agreement (“License Agreement”); a services agreement (“Services Agreement”); and a joint facilities agreement (“Joint Facilities Agreement”). All of the foregoing documents and agreements, including the Asset Purchase Agreement and the documents and exhibits referenced in all such agreements, are referred to herein collectively as the “Original Transaction Agreements. ” Provo, Broadweave and BNI closed on the Original Transaction Agreements on or about August 29, 2008. C. On or about November 18, 2009, Broadweave and VCI entered into a joint venture, pursuant to which Veracity was formed and the Broadweave membership interests were contributed to Veracity.

D. In connection with the Veracity transaction, on or about November 18, 2009, (i) Provo, Broadweave and BNI entered into that certain Forbearance Agreement (“Forbearance Agreement”), Notices and Acknowledgments Agreement (“Notices Agreement”), and First Amendment to Surety Agreement (as amended, “Amended Surety Agreement”); (ii) Broadweave, BNI and Veracity entered into that certain Assignment and Assumption of Rights and Obligations under Guarantee and Other Transaction Documents (“Assignment”); and (iii) Broadweave and BNI entered into that certain First Amendment to Note (as amended, “Amended Note”). All of the foregoing agreements and documents, including the Original Transaction Documents, as amended, are referred to herein collectively as the “Transaction Agreements”). Capitalized terms used and not defined herein shall have the meanings ascribed to them in any referenced Transaction Agreements. Pursuant to the Assignment, Veracity assumed all of BNI’s covenants, duties and obligations under the Transaction Agreements.

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E. On or about July 12, 2011, an Uncured Event of Default occurred under the Security Agreement, as provided in Section B.6.b. of the Amended Surety Agreement, when the remaining obligation of the Providers to pay the Support Amount became equal to or less than $ 1,665,033.30, giving Provo the right to foreclose on and repossess the System and other assets secured by the Security Agreement.

F. In lieu of foreclosure, Provo and Veracity desire to resolve all claims, disputes and

issues between or among them relating to the Uncured Event of Default under the Security Agreement, the Transaction Agreements, the System, or otherwise by transferring back to Provo all System assets secured by the Security Agreement in exchange for termination of the Amended Note and the releases set forth below, all upon the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the promises and covenants set forth herein and for other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, the Parties hereby release, promise, represent and agree as follows:

1. Transfer of System Assets. At Closing, Veracity shall duly execute and deliver to Provo an Assignment and Bill of Sale (“Bill of Sale”), in the form attached hereto as Exhibit A, to effect a transfer, conveyance and assignment to Provo of all assets associated with the System and secured by the Security Agreement (“System Assets”). Veracity shall execute and deliver to Provo such other and further agreements and instruments of conveyance, assignment or transfer as may reasonably be requested by Provo at any time in order to vest in Provo good and valid title in and to all System Assets.

2. Network Operating and Lease Agreement. The Parties shall execute and deliver at the Closing of this Agreement the Provo Network Operating and Lease Agreement attached hereto as Exhibit ___.

3. Releases. Subject to compliance with the obligations expressly set forth in this Agreement and the documents attached as Exhibits to this Agreement, the Parties, each for itself and for each of its owners, officers, executives, council members, employees, agents, agencies, departments, affiliates, predecessors, successors and assigns, hereby fully and completely releases and discharges the other Party and its owners, officers, executives, council members, employees, agents, agencies, departments, affiliates, predecessors, successors and assigns from any and all claims, liens, demands, causes of action, controversies, offsets, obligations, losses, warranties, design deficiencies, damages, fines, and liabilities of every kind and character whatsoever that relate to or arise out of the Transaction Agreements or the System. Without limiting the generality of the foregoing releases, the Parties stipulate and agree that in exchange for the transfer of System Assets set forth above, the Amended Note is hereby canceled, and the Amended Surety Agreement, Guarantee and other Transaction Agreements are hereby terminated. The Parties further agree, at the request and expense of a requesting Party, to perform such proper additional acts, and to execute such additional documents, as a requesting Party may reasonably request, to effectuate the foregoing releases, including, without limitation, physical cancelation of the

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Amended Note and recording of a release of the Security Agreement with the Utah County recorder and the Utah Division of Corporations and Commercial Code.

4. No Reliance. Each Party represents and warrants that: (i) in executing this

Agreement, it is not relying on any inducements, promises or representation of the other Party, any agent of the other Party or any other person, other than as set forth specifically in this Agreement; (ii) this Agreement contains the entire agreement among the Parties; (iii) each Party has had full and ample opportunity to consult, and has consulted, with independent legal counsel with respect to the impacts and advisability of executing this Agreement; (iv) each Party has made such investigation of the facts and law pertaining to this Agreement and all matters pertaining hereto, as such Party deems necessary; (v) each Party has read and understands all of the terms and provisions of this Agreement and the consequences of signing this Agreement; and (vi) each Party signs this Agreement voluntarily and of its own free will, without coercion or duress, intending to be legally bound.

5. Miscellaneous. Each Party shall bear its own fees, costs and expenses associated

with this Agreement and the Exhibits attached hereto. 6. Authority. Each person who executes this Agreement on behalf of a Party hereby

represents and warrants that he/she has full authorization and authority to execute this Agreement on behalf of and to bind such Party.

In consideration of the foregoing, and for good and valuable consideration, Provo and Veracity have signed and executed this Agreement as of the date first above written.

[Signature Page Follows]

DATED this ___ day of ____________, 2012.

PROVO CITY CORPORATION By: ______________________________________ Mayor John Curtis ATTEST: __________________________________________ Provo City Recorder APPROVED AS TO FORM: __________________________________________ Provo City Attorney

VERACITY NETWORKS, LLC

By: ______________________________________ Name: _______________________ Title: _______________________

VERACITY COMMUNICATIONS, INC. By: ______________________________________

Name: _______________________ Title: _______________________ BROADWEAVE NETWORKS OF PROVO, LLC

By: ______________________________________ Name: _______________________ Title: _______________________ BROADWEAVE NETWORKS, INC.

By: ______________________________________ Name: _______________________ Title: _______________________

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GENERAL ASSIGNMENT, BILL OF SALE AND REPRESENTATIONS THIS GENERAL ASSIGNMENT, BILL OF SALE AND REPRESENTATIONS

(“Assignment”) is executed effective as of the 1st day of January, 2012, by Veracity Networks, LLC, a Delaware limited liability company (“Veracity” or “Seller”), Veracity Communications, Inc., a Utah corporation (“VCI”), Broadweave Networks of Provo, LLC, a Utah limited liability company (“Broadweave”), and Broadweave Networks, Inc., a Utah corporation (“BNI”), to and in favor of Provo City Corporation, a Utah municipal corporation (“Provo” or “Purchaser”) (each individually a “Party” and collectively, “Parties”).

WHEREAS, the Parties have entered into a Settlement Agreement of even date herewith

pursuant to which, among other things, Veracity agreed to execute and deliver to Provo an Assignment and Bill of Sale to effect a transfer, conveyance and assignment to Provo of assets associated with the System and secured by the Security Agreement.

WHEREAS, as contemplated by the Settlement Agreement, Seller intends by this

General Assignment to transfer to Purchaser all of the assets consisting of or relating to the Fiber-to-the-Premises communications network owned by Seller located within the boundaries of Provo, Utah, and commonly known as the Provo Network (the “System”), including all of Seller’s business and operations relating to the System (the “Business”).

NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby transfer, agree and represent as follows:

A. TRANSFER OF SYSTEM ASSETS.

Veracity hereby sells, transfers, assigns, conveys and warrants to Provo all assets associated with the System and the Business (other than the Excluded Assets (“Excluded Assets”) specifically listed on Schedule “1” attached hereto), including all real and personal property rights, intellectual property rights, equipment, permits, receivables and other rights and assets comprising, used in connection with or associated with the System (collectively, the “System Assets”). The System Assets include, but are not necessarily limited to, all of following:

1. All equipment, headend facilities, fiber-optic cabling, computers, tools, supplies, furniture, and other tangible personal property and assets of the Seller the comprise or are used in connection with the Business or the System (collectively, the “Equipment”). A list of the Equipment believed by the parties to be relatively complete as of the date hereof is reflected on Schedule “2” attached hereto;

2. All accounts, notes, deposits, pre-payments and other receivables relating to the System or the Business that are owned by or owed to Seller on the Closing Date (collectively, the “Receivables”). A list of the Receivables believed by the parties to be relatively complete as of the date hereof is reflected on Schedule “3” attached hereto;

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3. All rights of Seller under any agreements, contracts, commitments, instruments, leases, licenses, franchises, permits, authorizations, or other arrangements relating to the System or the Business, including customer or subscriber contracts or arrangements (collectively, the “Contracts”). A list of the Contracts believed by the parties to be relatively complete as of the date hereof is reflected on Schedule “4” attached hereto;

4. All software, technology and other intellectual property rights owned, held or licensed by Seller and used in the operation of the Business or embodied in any of the System Assets, including more than 16,000 IP Addresses in the range 69.169.128.0/18 (collectively, the “IP Rights”). A list of the IP Rights believed by the parties to be relatively complete as of the date hereof is reflected on Schedule “5” attached hereto;

5. All supplies and inventories of Seller relating to the System or the Business (collectively, the “Inventory”). A list of the Inventory believed by the parties to be relatively complete as of the date hereof is reflected on Schedule “6” attached hereto;

6. All leases, easements and other estates, right, title and interests relating to the Business or the System (collectively, the “Leases and Real Property Interests”). A list of the Leases and Real Property Interests believed by the parties to be relatively complete as of the date hereof is reflected on Schedule “7” attached hereto;

7. All government permits, authorizations and licenses relating to the Business or the System (collectively, the “Permits”). A list of the Permits believed by the parties to be relatively complete as of the date hereof is reflected on Schedule “8” attached hereto;

8. All office furniture and equipment used in connection with the Network, including all furniture and equipment sold by Provo to Seller’s predecessor in interest or any replacements for the same of comparable or better value.

9. All goodwill and going concern value specifically associated with the Business;

10. All rights of Seller with respect to any restrictions on competition and obligations regarding confidentiality, non-disclosure or limited use imposed on third parties relating to the Business, if any, to the extent transferrable;

11. All books, records, files, data and other materials specifically relating to and used in connection with the Business or in connection with the System Assets including, but not limited to, books of account, mailing lists, marketing materials, product orders, business plans, sales records, research data, business development materials, policy manuals, price lists, general financial, accounting and credit records, ledgers, files, invoices, customers and suppliers’ lists, technical documents, manuals, management software tools, databases, computer tapes and other data, drawings, notebooks, specifications, creative materials, advertising and promotional materials, marketing materials, studies, reports, equipment repair, maintenance or service records, in each case whether written or electronically stored or otherwise recorded and, to the extent legally possible, whether or not subject to confidentiality obligations;

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12. Maps, surveys, copies of title assurances or title insurance policies, and engineering or architectural plans, specifications or drawings, and copies of all environmental impact, wetlands and similar surveys, approvals and similar information relating to the System or the System Assets;

13. Passwords, business practices, trade secrets and other oral information, if any, disclosed to or requested by the Purchaser prior to Closing which are relevant to the operation of the Business; and

14. All defenses, claims, deposits, prepayments, refunds, causes of action, rights of recovery, rights of set off and rights of recoupment relating to any right, property or asset included in the System Assets, or against any party under the Contracts, to the extent the same relate to the Business after the date hereof.

B. REPRESENTATIONS.

Except as specifically disclosed in the disclosure schedule attached hereto as Schedule “9”, to the best of its knowledge, information and belief, after conducting reasonable due diligence, each of Veracity, VCI, Broadweave and BNI hereby represents and warrants to Purchaser, jointly and severally, as of the Effective Date and as of the date of execution of this Assignment, that:

1. Assets. All System Assets used or needed for the operation of the Business are

listed on Schedules “2” through “8” to this Assignment. 2. Contracts. All leases and other contracts (“Contracts”) between Seller and any

third party relating to the operating of the System (“Business”) or the System Assets are identified on the listed on Schedule “4”. Copies of all Contracts have been delivered to Purchaser. Each Contract is in full force and effect, and no party obligated to Seller pursuant to any such Contract is in default thereunder. Seller has not breached, violated, or defaulted or received notice of any breach, violation, or default of any Contract. Seller has obtained all necessary consents, waivers and approvals of parties to any Contract as are required thereunder in connection with the Closing, or for any such Contract to remain in full force and effect without adverse limitation, modification or alteration after the Closing. Seller has the right to assign and transfer to Purchaser all of Seller’s rights in and under the Contracts without incurring, or causing Purchaser to incur, any obligation to any third party, including any royalty obligations. Following the Closing, Purchaser will be permitted to exercise all of the rights Seller had under the Contracts without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which Seller would otherwise be required to pay pursuant to the terms of such Contracts had the transactions contemplated by this Assignment not occurred. Any oral executory contracts relating to the Business shall be terminated or assigned to Purchaser at Closing, at Purchaser’s discretion.

3. Consents. No consent, waiver, approval, order or authorization of, or registration, declaration or filing with any court, administrative agency or commission or other

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federal, state, county, local or foreign governmental authority, instrumentality, agency or commission (each, a “Governmental Entity”) or any third party, including a party to any agreement with Seller (so as not to trigger any Conflict), is required by or with respect to Seller in connection with the execution and delivery of this Assignment or the consummation of the transactions contemplated hereby, other than as have been obtained.

4. Restrictions on Business Activities. There is no agreement (not to compete or

otherwise), commitment, judgment, injunction, order or decree to which Seller is a party relating to the Business or the System Assets or otherwise binding upon Seller, the Business or the System Assets which has or may have the effect of prohibiting or impairing the transactions contemplated by this Assignment, any business practice involved in operating the Business, or impairing any of the System Assets. Seller has not entered into any agreement under which Purchaser’s continued operation of the Business after Closing would be restricted or which places any restrictions upon Seller with respect to selling, licensing or otherwise distributing any of the System Assets to or providing services to, customers or potential customers or any class of customers, in any geographic area, during any period of time or in any segment of the market, other than as specified in this Assignment.

5. Title to Properties; Absence of Liens. Seller has and is transferring to Purchaser

good and marketable title to, ownership of or valid leasehold or other right, title or interests in, all of the System Assets, free and clear of any and all security interest, pledge, mortgage, lien, charge, easement, encroachment, lease, license, option, purchase right, other rights of third parties, adverse claim of ownership or use, restrictions on transfer (including, without limitation, a right of first refusal or offer or other similar right), restrictions on use or other material limitations, defect of title, or other encumbrance (“Liens”). With respect to any cable, utility, access or other easements, servitudes, leaseholds or property interests located on or directly serving the System and owned or used by Seller in connection with the Business: (1) Seller either has the contractual right to use or is the exclusive or nonexclusive legal and beneficial owner of the respective easement and leasehold established thereunder; (2) such leaseholds, easements, servitudes and the rights and interests of Seller thereunder are in full force and effect; and (3) no defaults by Seller exist thereunder and no events or conditions exist which, with or without notice or lapse of time or both, would constitute a default by Seller thereunder or result in a termination. The easements, rights-of-way, surface leases, fee interests and licenses on which or under which the System is located (other than work sites adjacent to or near the System as to which public and/or private ingress and egress rights adequate for their present use exist) in combination with each other form a contiguous and continuous right of way for the System from its point(s) of origin to point of termination. Seller has delivered to Purchaser available surveys and legal descriptions of all easements needed for the System reasonably sufficient for Purchaser to confirm that the Contracts together with the System Assets to be conveyed to Purchaser grant Purchaser requisite access to operate the Business as of Closing. Purchaser shall be able to use the System Assets and exercise, and enjoy the benefits of, all rights, in substantially the same manner as Seller prior to the Closing, without infringing the rights of any third party. The transactions contemplated hereby will not in and of themselves result in (i) any modification in the term of any lease, easement, license or access right, (ii) any increase in any amounts due under any lease, easement, license or access right, (iii) the elimination or modification of any

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applicable renewal option or (iv) any modification in any requirements relating to any applicable security deposit, assuming Purchaser provides suitable replacements for any and all security deposits or letters of credit in the current amount of said security deposits or letters of credit. No System Asset is subject to any proceeding or outstanding decree, order, judgment, agreement or stipulation that materially restricts the use, transfer or licensing thereof or may affect the validity, use or enforceability of the System Assets. Schedule “7” to this Assignment reflects a complete and correct list of all real property in which Seller holds any leasehold interest relating to the System, including the date of the lease, sublease, license or other occupancy agreement constituting a particular leasehold interest (each, a “Lease”), and the date of any amendments and supplements thereto, as well as the names of the parties thereto, a brief description of the premises demised thereby (e.g., the entire building or land and building or specified portions of a building), the square footage thereof, the expiration date of the Lease and the extent of any unexercised renewal options thereunder. A true and complete copy of each Lease has been delivered to Purchaser. Each Lease is in full force and effect and neither Seller nor any of the other parties to such Lease has received or given any notice of default thereunder which was not cured within the applicable grace period and, to the knowledge of Seller, no event has occurred which, with the giving of notice or the passage of time, or both, would constitute a material default under any Real Property Lease. Seller enjoys peaceful and undisturbed possession under all such leases and no person other than the Seller is in possession of any portion of the System that is necessary for, or could interfere with, the operation of the Business as of Closing. All facilities, structures, equipment and infrastructure related to the System Assets and the operation of the Business and utilized by Seller (x) have received all Governmental Entity approvals required for operation of the System as of Closing and (y) have been operated and maintained in substantial compliance with all applicable governmental requirements.

6. Sufficiency; Working Order. The System Assets include all assets, properties and rights (other than those relating to Seller’s employees and legal existence and governance) necessary to operate the Business in the manner conducted immediately prior to the Closing. All System Assets that are tangible personal property are (i) in good working order and good condition and (ii) adequate for the purposes for which they are currently being used or held for use, (iii) will be in full and good working order according to the same industry standard performance guidelines that shall apply to Purchaser immediately after Closing, (iv) reasonably meet industry standard performance and quality-of-service (QOS) benchmarks for voice, video, and data services, and (v) operate generally as advertised, represented and marketed by Seller. Seller is not aware of any material and enforceable breach by its current service providers of the terms of their network lease agreements in relation to marketing of available services.

7. Intellectual Property. All intellectual property rights owned by Seller associated

with the System or the Business (“IP Rights”) are identified on Schedule “5,” are fully transferable, alienable or licensable by Purchaser without restriction and without payment of any kind to any third party. To the extent that any IP Rights is subject to any third party rights or restrictions: (i) Seller has a written agreement with such third party or parties with respect thereto, pursuant to which Seller has obtained the right to use such technology and intellectual property rights by valid assignment or otherwise and (ii) the transfers and licenses from Seller to Purchaser hereunder do not violate or cause any adverse consequences under such third party

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agreements. Seller has not transferred ownership of, or granted any conflicting license of or right to use, or authorized the retention of any conflicting rights to use, any IP Rights to any other Person. The IP Rights constitute all of the intellectual property rights related to, used in, necessary to, or that would be infringed by, the current use of the System or the System Assets. The operation of the Business by Seller and use of the System Assets as of and after Closing have not and will not: (x) infringe or misappropriate the intellectual property rights of any Person, or (y) violate the rights of any Person (including rights to privacy or publicity). Seller has not received notice from any Person claiming that Business or the System Assets infringe or misappropriate the intellectual property rights of any person or constitute unfair competition or trade practices under the laws of any jurisdiction (nor does Seller have knowledge of any basis therefor). Seller has taken reasonable steps to protect Seller’s rights in confidential information and trade secrets of Seller associated with or related to the System Assets. To the knowledge of Seller, after reasonable inquiry, all software included in the System Assets are free of all (A) time bombs, disabling features, drop dead devices or other software routines designed to disable computer software automatically with the passage of time; (B) viruses, Trojan horses, back-door, worms or other software routine or hardware component designed to permit unauthorized access, disable or erase or otherwise harm software, hardware or data; or perform any other such harmful actions; and (C) other malicious code or data. All software included in the System Assets will substantially conform to, and perform in accordance with, relevant specifications and documentations.

8. Litigation. There is no action, suit, claim, proceeding or investigation of any nature pending or, to the knowledge of Seller, threatened relating to the Business or the System Assets (or the use thereof by Seller), and Seller does not know and has no reasonable basis for knowing of any of the same, that could affect the Business or the System Assets after Closing. There are no judgments, orders, decrees, citations, fines or penalties heretofore assessed against Seller that could affect the Business or the System Assets after Closing.

9. Tax Matters. Seller shall be solely responsible for all taxes and withholding, if

any, relating to the Business or the System Asserts through the Closing Date. There is no tax deficiency outstanding, assessed or proposed against Seller that could affect the System Assets or the Business and Seller has not executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any such tax. To the extent relevant to the System Assets or the Business, no audit or other examination of any tax return of Seller is currently in progress, nor has Seller been notified of any request for such an audit or other examination. Seller does not have and knows of no basis for the assertion of any claim or liability for delinquent or unpaid taxes for which Purchaser would become liable as a result of the transactions contemplated by this Assignment. There are (and immediately following the Closing there will be) no Liens on the System Assets relating to or attributable to taxes. Seller knows of no basis for the assertion of any claim relating or attributable to taxes which, if adversely determined, would result in any Lien on the System Assets.

10. Power of Attorney. There are no outstanding powers of attorney executed on behalf of Seller in respect of the System Assets or which would affect the Business, except as granted to Purchaser hereunder.

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11. Compliance with Laws. Seller has complied with, is not in violation of, and has

not received any notices of violation with respect to, any foreign, federal, state or local statute, law or regulation with respect to the conduct or operation of the Business or Seller’s use of System Assets that could affect the Business or the System Assets after Closing. Seller has in effect all federal, state and local, domestic and foreign governmental consents, approvals, orders, authorizations, certificates, filings, notices, permits, concessions, franchises, licenses and rights (collectively “Permits”) required for it to own, lease or operate the System Assets and to carry on the Business, and to the knowledge of Seller, there has occurred no violation of, or default (with or without notice or lapse of time, or both) under, any such Permit that could affect the Business or the System Assets after Closing. There is no event which could reasonably be expected to result in the revocation, cancellation, non-renewal or adverse modification of any such Permit and the Acquisition, in and of itself, and the other transactions contemplated by this Assignment (alone or in combination with any other event) will not cause the revocation, cancelation, non-renewal or adverse modification of any such Permit in a manner that could affect the Business or the System Assets after Closing.

12. Bulk Transfer Laws. Seller is not aware of any current or past creditors of Seller to whom any law, rule or regulation requires the delivery of notice or from whom any form of consent is required in conjunction with undertaking the transactions contemplated by this Assignment.

13. Environmental Matters. Seller is in compliance with all Environmental Laws (as

defined below) in relation to the Business and the System Assets, and has not received any (i) communication alleging that Seller is in violation of, or may have liability under, any Environmental Law or (ii) currently outstanding written request by any Governmental Entity for information pursuant to any Environmental Law in relation to the Business and the System Assets. To Seller’s knowledge, there are no past or present events, conditions, circumstances, activities, practices, incidents, actions or plans that could reasonably be expected to form the basis of an Environmental Claim (as defined below) against Seller in relation to the Business and the System Assets and Seller has not retained or assumed, either contractually or by operation of law, any liabilities or obligations that could reasonably be expected to form the basis of such claim, including by way of Release (as defined below) of any Hazardous Material (as defined below). To Seller’s knowledge, there are no underground or aboveground storage tanks or known or suspected asbestos-containing materials on, at, under or about any of the Real Property, nor, to the knowledge of Seller, were there any underground storage tanks on, at, under or about any such real property in the past. For all purposes of this Assignment, (i) “Environmental Claims” means any and all administrative, regulatory or judicial actions, suits, orders, demands, directives, claims, Liens, investigations, proceedings or written or oral notices of noncompliance or violation by or from any person alleging (A) liability of any kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resource damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from the presence or Release of, or exposure to, any Hazardous Material at any location, or (B) the failure to comply with any

8

Environmental Law; (ii) “Environmental Law” means any law or order issued, promulgated or entered into by or with any Governmental Entity relating to pollution, the environment, natural resources, human health and safety or the protection of endangered or threatened species; (iii) “Hazardous Materials” means any petroleum or petroleum products, radioactive materials or wastes, asbestos in any form, polychlorinated biphenyls and any other chemical, material, substance or waste that is prohibited, limited or regulated under any Environmental Law; and (iv) “Release” means any actual or threatened release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within any building, structure, facility or fixture.

14. Financial Statements. Schedule “10” contains the following: (a) unaudited

balance sheet relating to the Business as of three days prior to the Closing Date (the “Closing Date Balance Sheet”) and (b) unaudited statements of income for the Business for (i) the period ended ____________, and (ii) the interim period ended ___________. The materials included in Schedule “10” hereto are sometimes collectively referred to herein as the “Financial Statements.” The Financial Statements were prepared from the books and records kept by the Seller for the Business and were prepared in accordance with applicable provisions of the governmental accounting standards board (“GASB”) and U.S. generally accepted accounting principles (“GAAP”) consistently applied (except with respect to interim statements) and fairly present the financial position of the Business as of their respective dates and for the periods related thereto. The statements of income included in the Financial Statements do not contain any material items of special or non-recurring income or other income not earned in the ordinary course of business except as expressly specified on Schedule “10.” All amounts billed to any of the customers and clients of the Business reflected on the Financial Statements and Schedule “10” are for Business activities and not for any other business.

15. No Undisclosed Liabilities. Seller has no liability, indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or otherwise that is related to the Business and that is required to be reflected in financial statements in accordance with applicable provisions of GASB and GAAP (a “Liability”) that is not reflected in the Financial Statements, and there is no reasonable basis for any present or future action, suit or proceeding, hearing, investigation, charge, complaint or demand against Seller relating to the Business that would give rise to any Liability, which individually or in the aggregate, (i) has not been reflected in the Closing Date Balance Sheet, or (ii) has not arisen in the ordinary course of Seller’s business since the date of the Closing Date Balance Sheet consistent with past practices, to the extent it could have a material adverse effect on the Business or the Acquired Assets after Closing.

16. Absence of Changes. Since the date of the Closing Date Balance Sheet to the

Closing Date, there has not been, occurred or arisen with respect to the System Assets or the Business any: (i) adverse change in the financial condition, results of operations, assets, liabilities, or prospects of the Business or prospects of Seller, or any occurrence, circumstance or combination thereof, which reasonably could be expected to result in any such change; or (ii) transaction relating to or involving the Business except in the ordinary course of business as conducted on that date and consistent with past practices.

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17. Accounts Receivable. Schedule “3” contains a true, correct and complete list of

all receivables of the Business as of Closing (“Receivables”). The Receivables are: (i) validly existing, (ii) enforceable by Seller in accordance with the terms of the instruments or documents creating them, and (iii) owned by Seller free and clear of all Liens. The Receivables represent monies due for, and have arisen solely out of, bona fide performance of services and other business transactions in the ordinary course of business. There are no refunds, discounts or other adjustments payable with respect to any such Receivable, and there are no defenses, rights of set-off, counterclaims, assignments, restrictions, conditions or Liens enforceable by third parties on or affecting the Receivables.

18. Brokers’ or Finders’ Fees. Seller has not incurred, nor will it incur, directly or

indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Assignment or any transaction contemplated hereby.

19. Representations Complete. None of the representations or warranties made by

Seller herein or in any Schedule hereto contains or will contain at the Closing, any untrue statement of a material fact, or omits or will omit at the Closing to state any material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which made, not misleading.

20. Suppliers. Schedule “11” sets forth a complete and accurate list of all suppliers of

significant materials or services to Seller in the Business. There exists no actual or threatened termination, cancellation, or limitation of, or any modification or change in, the business relationship of Seller with any supplier or group of suppliers listed in Schedule “11.”

21. Complete Copies of Materials. Seller has delivered or made available true and

complete copies of each existing document that has been requested by Purchaser. 22. Fiber Warranty.

(a) Definitions. As used in this Section the following terms shall have the

following meanings:

(i) “Emergency Condition” shall mean a breach of the Fiber Performance Warranty which must be repaired immediately in order to remedy substantial impairment to the use and enjoyment of the System by one or more end-use customers.

(ii) “Fiber Performance Warranty” shall mean Seller’s warranty that the distribution fiber optic cable plant present in the System at the time of Closing will not, when used in the normal course of business, experience any reduction of signal strength or light power greater than 9.5 dB.

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(iii) “Fiber Warranty Period” shall mean the period beginning on the Closing Date and ending two (2) years thereafter.

(iv) “Notice of Warranty Claim” shall mean a written claim signed by an officer of Purchaser specifying in detail the nature of any claimed breach of the Fiber Performance Warranty which is delivered to Seller during the Fiber Warranty Period.

(v) “Remedial Plan” shall mean Seller’s plan for remedying any breach of the Fiber Performance Warranty. Seller shall have the option to remedy any breach of the Fiber Performance Warranty or to retain others to remedy such breach.

(vi) “Seller’s Response” shall mean a written response to a Notice of Warranty Claim signed by an officer of Seller identifying those portions of the Notice of Warranty Claim accepted by Seller and those portions disputed by Seller, and detailing Seller’s Remedial Plan.

(b) Warranty. Seller hereby extends to Purchaser the Fiber Performance Warranty for the Fiber Warranty Period.

(c) Procedures. A Notice of Warranty Claim delivered to Seller during the Fiber Warranty Period shall be resolved in the following manner:

(i) Purchaser shall deliver a Notice of Warranty Claim to Seller;

(ii) As soon as reasonably practicable, and in all events within fifteen (15) business days after Seller’s receipt of a Notice of Warranty Claim, Seller shall deliver Seller’s Response to Purchaser;

(iii) Seller shall use commercially reasonable efforts to remedy any breach of the Fiber Performance Warranty as quickly as practicable under the circumstances, and in all events within forty-five (45) days after receipt of a Notice of Warranty Claim, unless the required remediation is of a nature that cannot reasonably be completed within such time frame, despite good faith efforts;

(iv) In the event of a claimed Emergency Condition, the Notice of Warranty Claim or Seller’s Response shall be given as soon as practicable under the circumstances and may be in the form of an oral or written description with as much detail as practicable and Seller shall use commercially reasonable efforts to remedy such Emergency Condition as soon as possible. If Seller is unable or unwilling to promptly provide a Seller’s Response or to remedy an Emergency Condition, Purchaser may perform emergency repairs to remedy the Emergency Condition and Seller shall be responsible for the reasonable costs incurred in completing such repairs.

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(v) Purchaser shall provide reasonable access and assistance to Seller in order to facilitate Seller’s remediation efforts;

(vi) Seller and Purchaser shall attempt through good faith negotiations to resolve any disputes regarding any Notice of Warranty Claim or remediation efforts;

(vii) If the parties are unable to resolve any disputes, either party may pursue any available remedies.


12

DATED effective as of the date first above written. VERACITY NETWORKS, LLC

By: ______________________________________

Name: _______________________ Title: _______________________

VERACITY COMMUNICATIONS, INC. By: ______________________________________

Name: _______________________ Title: _______________________ BROADWEAVE NETWORKS OF PROVO, LLC

By: ______________________________________

Name: _______________________ Title: _______________________ BROADWEAVE NETWORKS, INC.

By: ______________________________________

Name: _______________________ Title: _______________________

Schedule “1”

[Excluded Assets]

Schedule “2”

[Equipment]

Schedule “3”

[Receivables]

Schedule “4”

[Contracts]

Schedule “5”

[IP Rights]

Schedule ”6”

[Inventory]

Schedule “7”

[Leases and Real Property Interests]

Schedule “8”

[Permits]

Schedule “9”

[Disclosure Schedule]

Schedule “10”

[Financial Statements]

Schedule “11”

[Suppliers]

PROVO NETWORK AGREEMENT DRAFT 2-23-12

PROVO NETWORK OPERATING AND LEASE AGREEMENT

Between

PROVO CITY, A MUNICIPAL CORPORATION

and

VERACITY NETWORKS, LLC

Effective as of January 1, 2012

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TABLE OF CONTENTS

Recitals ............................................................................................................................................1

Article I Definitions .........................................................................................................................1

Article II Description and Term of Agreement ...............................................................................4

Article III Network .........................................................................................................................6

Article IV Compensation; Payments ...............................................................................................6

Article V Network Operations ........................................................................................................8

Article VI Marketing .....................................................................................................................11

Article VII Customer Service ........................................................................................................11

Article VIII Representations and Warranties .................................................................................12

Article IX Covenants .....................................................................................................................14

Article X Assignment and Transfer ...............................................................................................16

Article XI Responsibility and Liability..........................................................................................16

Article XII Force Majeure .............................................................................................................18

Article XIII Breach; Termination; Continuity ..............................................................................19

Article XIV Miscellaneous ...........................................................................................................20

List of Exhibits:

Exhibit A – Lockbox Agreement

Exhibit B – Net City Payment; Adjustments

Exhibit C – Service Level Agreement; SLA Payments; Reporting

Exhibit D – Retail Services; Services to Provo

Exhibit E – Pre-Existing Veracity Accounts within Provo City

Exhibit F – NOC Lease

ii

Exhibit G – Network Manager Responsibilities; Reimbursable Expenditures; Replacement Customer Equipment; Insurance Claims; New Service Connections

Exhibit H – Insurance Requirements

Exhibit I – Disclosures as to Condition of Network

Exhibit J – Reimbursement of Certain Costs Upon Termination

PROVO NETWORK AGREEMENT Page 1 of 23

PROVO NETWORK OPERATING AND LEASE AGREEMENT THIS PROVO NETWORK OPERATING AND LEASE AGREEMENT (“Agreement”)

is made and entered into effective as of the 1ST day of January, 2012, by and between Provo City, a municipal corporation of the State of Utah. (“Provo”) and Veracity Networks, LLC, a Delaware limited liability company (“Network Manager” or “Veracity”) (Provo and Veracity each a “Party” and, collectively, the “Parties”).

R E C I T A L S:

A. Provo constructed the Provo Network to provide its residents and businesses with convenient, quality and competitively priced access to high speed, broadband fiber optic services, including voice, video and high speed data transmission and Internet access. The Provo Network increases competitive access to a variety of media services through high performance fiber optic connections to the homes and businesses of Provo residents.

B. After constructing the Provo Network, Provo sold the Network to Broadweave Networks of Provo, LLC (“Broadweave”). Ownership of Broadweave was later acquired by Veracity. Following the occurrence of a default under the operative agreements, Provo and Veracity have entered into a Settlement Agreement under which, among other things, Veracity will cause Broadweave to re-convey the Network to Provo but will continue to manage, operate and provide retail service to Subscribers on the Network, as well as to certain other Veracity Customers, as specified herein.

C. This Agreement memorializes the terms and conditions pursuant to which Network Manager will operate and maintain the network, perform necessary repairs and improvements, promote and protect the Network’s customer base, actively market Network Services to Subscribers and provide high quality Retail Services.

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained in this Agreement, Provo and Network Manager mutually agree as follows:

ARTICLE I DEFINITIONS

Unless the context clearly indicates otherwise, capitalized terms used in this Agreement shall have the meanings set forth below or elsewhere in this Agreement:

“Agreement” means this Agreement and any Exhibits referenced herein.

“Effective Date” means January 1, 2012.


“GRAMA” means the Government Records Access and Management Act, Provo City Code § 3.13.010 et seq., as amended, together with any amendments that occur after the Effective Date.

“Lockbox” means an arrangement formed among the parties and a local financial institution selected by Provo to collect all payments paid by Subscribers for Retail Services and all payments paid by any other customers of Network Manager, and to transfer to Provo the Total City Payment and all other amounts due to Provo hereunder each Month, with remaining funds in excess of the Total City Payment and the Lockbox Retainer to be made available to Network Manager each month. The Lockbox Agreement is attached hereto as Exhibit “A.”

“Lockbox Retainer” means an amount of cash to be left or deposited in a Lockbox

account by Network Manager each month equal to the lesser of $120,000 or the Total City Payment for the prior Month, in accordance with Section 4.7.

“Month” means a calendar month. “Net Transfer Payment” means the net payment to be paid by Network Manager to Provo

each Month under this agreement for transfer fees net of compensation for services by Network Manager hereunder, as determined under Exhibit “B,” beginning with the Month in which the Effective Date occurs and continuing through the Month following the Month in which termination of this Agreement occurs. The Net Transfer Payment shall be $95,000 per Month, adjusted as specified in Exhibit “B.”

“Network” or “Provo Network” means and includes, without limitation, all cables, collocation space, conduits, inner ducts, inside wiring, manholes, nodes, optical fiber strands, patch panels, splices, switches, transmitters, junctions, terminals, internal power sources, portals, battery backups, fault alarm systems, structures, shelters, poles or pole line attachments, and equipment similar to any of the above, IP addresses 69.169.128.0/18 (16,000+ IP addresses), Subscriber agreements, business and operations support systems, and all other property owned, leased or used by Provo, directly or indirectly, in connection with Provo’s telecommunications system used to provide Retail Services, as any or all of the same may be updated, supplemented, replaced or expanded, from time to time.

“Network Manager” shall mean Veracity Networks, LLC, a Delaware limited liability company.

“Network Services” shall mean all management, operation and other services to be provided by Network Manager under this Agreement.

“Network Service Specifications” shall mean specifications and requirements appropriate

or necessary for the Network to function properly and deliver high-quality voice, video and data services to Subscribers, including but not limited to the Service Level Agreement specified in Exhibit “C.”


“OSS/BSS Functions” shall mean operational support systems and business support systems which include, but are not limited to, customer management, billing and customer provisioning.

“Provo” or “Provo City” shall mean The City of Provo, Utah, a municipal corporation

and a political subdivision of the State of Utah. “Provo Equipment Responsibility” shall mean (a) the failure of equipment, hardware,

structures, improvements or components of the Network, assuming the accuracy of Network Manager’s representation as to the condition of the Network in Section 8.2(i) and operation and maintenance of the Network by Network Manager in the manner required by this Agreement, or (b) a failure or unreasonable delay by Provo in approving reasonable and prudent capital improvements needed on the Network, as timely requested by Network Manager pursuant to Section 5.5.

“Provo Telecommunications Manager” shall mean the person appointed by Provo to

interface and meet regularly with Network Manager under this Agreement. “Retail Services” means retail telecommunication services to be offered by Network

Manager to end-use Subscribers over the Network, including but not limited to video services, voice services, data services and colocation services, as more particularly described in Exhibit “D.”

“RFC Standards” means current industry standards as adopted by the International Organization for Standardization or the American National Standards Institute, or as issued by the Internet Engineering Task Force.

“Service Level Agreement” or “SLA” means the level of services to be provided by Network Manager under this Agreement for the Network and to Subscribers, as specified in Exhibit “C.”

“Service Metric” means a specified unit or measure of performance of service under the SLA.

“SLA Payment” means the specified payment to be paid by Network Manager to a Subscriber for any failure of Network Manager to meet or satisfy any Service Metric as specified in the Service Level Agreement.

“Subscriber” means any residential, multi-dwelling unit, commercial, educational, institutional or other current or potential retail consumer of any Retail Services on the Network delivered within the Provo City boundaries, except for Veracity Pre-Existing Accounts. All contracts or agreements with Subscribers for Retail Services shall be and remain the sole property of Provo.

“Total City Payment” for any Month means the Net Transfer Payment for that Month

plus all rent and utility payments owed to Provo for that Month under the Network Operations


Center lease agreement referenced in Section 5.2, plus any other amounts owed by Network Manager to Provo under this Agreement.

“Veracity Pre-Existing Accounts” means each specific retail broadband service being

provided By Veracity to a retail customer within Provo City boundaries as of the effective date of the Forbearance Agreement among Provo, Broadweave and BNI dated November 18, 2009, and that is still being provided as of the Effective Date, as specified on Exhibit “E” hereto, but only if, to the extent and for so long as any such retail broadband service has been and continues to be continually provided to such customer by Veracity.

ARTICLE II DESCRIPTION AND TERM OF AGREEMENT

2.1 Network Deployment. Provo has deployed a citywide Network. Any undertaking to install additional fiber optic lines or new systems or equipment associated with the Network shall be at the sole discretion and cost of Provo.

2.2 Network Manager Services. Network Manager shall operate and manage the Network for Provo as specified in this Agreement, shall utilize the Network to provide Retail Services to Subscribers, shall provide OSS/BSS Functions, and shall provide such other services and functions as described in this Agreement. Nothing in this Agreement shall preclude Network Manager from providing services to customers outside of Provo City boundaries. Nothing in this Agreement shall preclude Provo from marketing and providing (i) wholesale telecommunication services to any person or entity, or (ii) Retail Services to any potential Subscriber who is not a customer on the Network as of the Effective Date. Any use of the Network for services provided to customers other than Subscribers shall be pursuant to terms, conditions and payments to which the parties agree. Network Manager may not provide any broadband or similar services to any Subscribers after the date of this agreement using facilities other than the Provo Network. Network Manager shall also provide Retail Services and other services for and to Provo, as described in Exhibit “D.” Network Manager shall continue to collect and remit to Provo or other appropriate entity all applicable taxes and franchise fees.

2.3 Temporary Pending City Council Approval. This Agreement is subject to approval by the Provo City Municipal Council. This Agreement shall be in effect on a month-to-month basis only from the Effective Date until this Agreement and a mutually-acceptable Settlement Agreement between the parties are executed, approved and ratified by formal resolution of the Provo City Municipal Council.

2.4 Term of Agreement. Unless sooner terminated pursuant to the terms of this Agreement, upon approval of this Agreement by the Provo City Municipal Council, this Agreement shall have an initial term of fourteen (14) months from the Effective Date. The term of this Agreement may be extended thereafter by mutual agreement. Provo may terminate this agreement at any time by providing ninety (90) days’ advance written notice of termination to Network Manager.


2.5 Payments and Option Upon Expiration or Termination. Upon the expiration or other termination of this Agreement for any reason other than a default by Network Manager in the performance of any of its material obligations hereunder:

(a) Provo shall reimburse Network Manager for certain commission, wiring and provisioning costs, as specified in Exhibit J.

(b) Provo shall reimburse Network Manager $________ per month for a portion of the maintenance payment paid by Network Manager for the Brocade equipment currently used in connection with the Network (“Brocade Equipment”) under the _____________________ dated ____________________ (“Brocade Maintenance Agreement”) for so long as, and to the extent such payment corresponds to, services that continue to be provided by such equipment to the Network and Subscribers through the remaining term of the current Brocade Maintenance Agreement, and Provo shall be entitled to continue to use such equipment for any such month for which reimbursement is paid by Provo.

(c) For a period of twelve (12) months after (i) expiration of the Term of this Agreement or (ii) the date that a notice of termination of this Agreement is sent by Provo to Network Manager under Section 2.4, as applicable, so long as Network Manager is not in default of any of its obligations under this Agreement, Provo shall, itself or through a designee, continue to provide, and Network Manager shall continue to purchase, wholesale transport services on the Network in order to provide continued Retail Services to the Veracity Accounts. Such wholesale services shall be provided to Veracity at reasonable wholesale rates to be determined by Provo after considering relative bandwidth speeds, rates for comparable services that Veracity Networks could obtain from other wholesale providers, and any written quotations for comparable services that may be obtained by Veracity from third party providers and timely provided to Provo.

2.6 Lease Agreements. Network Manager shall be solely responsible for all amounts due under any lease or rental agreements entered into by or for Network Manager relating to all equipment used in connection with or required for the continued operation of the Network, and shall ensure that clear title to all such equipment, including leased equipment, is promptly transferred to and will remain available for use by Provo or its designees in operating the Network. Network Manager hereby agrees to indemnify and hold Provo harmless from and against any liabilities or obligations stemming out of or relating to any lease agreement or any other agreements involving or relating to any such equipment, other than as specified in Section 2.5(b), above. Without limiting the generality of the foregoing:

(a) Brocade Equipment. By no later than the date of expiration or other termination of this Agreement for any reason, Network Manager shall have paid all amounts owing under the _____________________ dated ____________________ (“Brocade Equipment Lease”), shall have purchased the Brocade equipment covered by such lease or comparable replacement equipment approved in advance by Provo, and shall have transferred title to the Brocade Equipment to Provo, free and clear of any lien or encumbrance of any type.


(b) Set Top Box Equipment. By no later than the date of expiration or other termination of this Agreement for any reason, Network Manager shall have paid all amounts owing under the _____________________ dated ____________________ (“Set Top Box Lease Agreement(s)”), shall have purchased the set top boxes (“Set Top Boxes) covered by the Set Top Box Lease Agreement(s) or comparable replacement equipment approved in advance by Provo, and shall have transferred title to the Set Top Boxes to Provo, free and clear of any lien or encumbrance of any type.

ARTICLE III NETWORK

3.1 Network Design. Provo, at its cost and expense, shall be solely responsible for the design of any changes, improvements or expansion of the Network.

3.2 Ownership of Network. Provo shall own all structures, improvements, and components of or used in connection with the Network. This Agreement shall not confer onto Network Manager any ownership interest in the Network or any of its related facilities, equipment, easements or rights-of-way, customers, IP address range 69.169.128.0/18 (16,000+ IP addresses), Subscribers, or any other property or rights of Provo.

3.3 Interoperability Requirements. Network Manager and Provo agree to cooperate in good faith to ensure quality delivery of Retail Services to Subscribers, including selection and testing of hardware, products, services, middleware, and software. If any component of the Network does not work properly, the parties will, at a minimum, utilize and comply with RFC Standards. Network Manager will be responsible to ensure that all Network hardware, products, services, middleware, and software meet RFC Standards. Equipment required for continued RFC compliance will be purchased by Provo in accordance with Section 5.5. Prior to the delivery of new releases, software patches, remedies, or fixes, Network Manager shall, with notice to and cooperation from Provo, conduct appropriate tests and interoperability scenarios and implement a pre-production Network test environment to test vendors’ new releases and updates prior to deployment in the Network. Any new equipment or changes to equipment that will interface or integrate with the Network must meet all RFC Standards. Network Manager agrees to make its products and/or software available for testing in third party vendor/manufacturers labs at no charge, and use its best efforts to modify applicable products/software to achieve interoperability with third party products and software.

ARTICLE IV COMPENSATION; PAYMENTS

4.1 Net Transfer Payment; Total City Payment. By no later than the fifteenth (15th) day of each Month, Network Manager shall notify Provo of the amount of the Net Transfer Payment for the following Month as determined in accordance with Exhibit “B,” along with documentation showing and supporting the calculation. At any time on or after the first (1st) day of each Month during the term of this Agreement, Provo may withdraw funds from the Lockbox in the amount of the entire Total City Payment for that Month. If, by the twentieth (20th) day of any Month, insufficient funds have been paid or transferred into the Lockbox to cover the entire


Total City Payment plus the Lockbox Retainer for that Month, Provo shall notify Network Manager of the same, and Network Manager shall deposit into the Lockbox or pay to Provo the entire deficiency within three (3) business days after written notice was provided to Network Manager. If Network Manager fails to make any payment required hereunder when due following notice as set forth above, interest on the unpaid balance will accrue at the rate of one and one-half percent (1.5%) per month until the entire unpaid principal balance and all accrued interest have been paid in full.

4.2 Network Manager Compensation. In consideration of the services to be provided by Network Manager hereunder, Network Manager may withdraw all money remaining in the Lockbox in excess of the Lockbox Retainer each Month after Provo has withdrawn and received the Total City Payment for that Month.

4.3 Dispute over Calculation. In the event Provo determines that any calculation of a Net Transfer Payment or Total City Payment is incorrect or inadequately supported, Provo may request and Network Manager shall provide any additional information required by Provo. If Provo disputes any calculation, it shall calculate the correct amount and notify Network Manager of the same, along with supporting information for the calculation, and may withdraw funds from the Lockbox to reflect the correct Total City Payment. The parties shall cooperate in good faith to resolve any disputes over a payment calculation. If the parties cannot resolve a dispute within sixty (60) days, either party may request an audit by an independent company or person to be selected by Provo. The cost of the audit shall be borne by the party whose calculation was incorrect, or equally by both parties if neither calculation was correct.

4.4 Provo Payments Not Contingent. Provo’s right to withdraw the Total City Payment from the Lockbox, and Network Manager’s obligation to pay any Lockbox deficiency, are not contingent upon payment by, or receipt by Network Manager of payments for Retail Services provided to, any Subscribers. Network Manager is responsible for collection and accounts receivable, and the non-collection of the same shall not affect or create liability for Provo, nor relieve Network Manager of any of its obligations under this Agreement.

4.5 Credit Against Total City Payment. Provo shall grant Network Manager a reasonable credit against the next Total City Payment to the extent Network Manager demonstrates to Provo’s reasonable satisfaction that Network Manager has been unable to collect from Subscribers at least the amount of the Total City Payment for a month as a direct result of Provo Equipment Responsibility. Such credit shall not duplicate any amounts credited to Network Manager under Section 5.3. Network Manager shall submit a request to Provo for such credit within thirty (30) days after the end of the affected month, along with all documentation supporting the request. Provo shall review the request within thirty (30) days and notify Network Manager of the amount and extent of any credit granted, along with an explanation of the same.

4.6 Taxes and Fees. Network Manager shall be solely responsible for the collection and remittance of all applicable federal, state and local taxes and fees, including franchise fees, income taxes, sales taxes, Utah telecommunications taxes, privilege taxes, universal service fees or other taxes or fees. To the extent any other or additional taxes or fees are determined at any


time to be due, whether pursuant to audit or otherwise, Network Manager shall promptly pay all such amounts and shall indemnify the City against any liability relating to the same.

4.7 Lockbox Retainer. To ensure receipt by Provo of the Total City Payment each Month and to secure the performance of all of Network Manager’s obligations under this Agreement, Network Manager shall provide Provo with a cash deposit in the amount of the Lockbox Retainer. Provo may at any time withdraw or receive any or all of the Lockbox Retainer and apply such amount against any amounts due hereunder or any damages or liabilities incurred by Provo as a result of any default by Network Manager hereunder. Network Manager shall restore any portion of the Lockbox Retainer so applied by Provo within five (5) calendar days of notice from Provo.

ARTICLE V NETWORK OPERATIONS

5.1 Network Operations. Network Manager shall, at its cost and expense, manage the day-to-day operations of the Network, including managing the telecommunications platform and the functionalities available over the Network.

5.2 Lease of Network Operations Center. Network Manager shall provide primary management and control for the Network from Provo’s Network Operations Center located at 744 North 300 West, Provo, Utah. Network Manager shall lease the Network Operations Center from Provo for the term of this Agreement under the terms and conditions specified in Exhibit “F”.

5.3 Service Metrics; SLA Payment. Network Manager shall perform its Network management and Retail Service obligations hereunder, including service turn-ups and service deployment, in accordance with the Service Level Agreement standards specified in Exhibit “C.” For any failure of Network Manager to meet any Service Metric specified in Exhibit “C,” Network Manager shall credit or refund to the affected Subscriber the SLA Payment associated with any such failure as specified in Exhibit “C.” Provo shall grant Network Manager a credit against the next Total City Payment in the amount of an SLA Payment paid by Network Manager to a Subscriber in a prior month to the extent Network Manager demonstrates to Provo’s reasonable satisfaction that the SLA Payment was directly caused by Provo Equipment Responsibility. Network Manager shall submit a request to Provo for such credit within thirty (30) days after the end of the affected month, along with all documentation supporting the request. Provo shall review the request within thirty (30) days and notify Network Manager of the amount and extent of any credit granted, along with an explanation of the same.

5.4 Maintenance Responsibilities. Network Manager shall be responsible for operation, maintenance and repair of the Network. Network Manager shall at all times maintain the Network in good working order and repair, in a safe condition, and in conformity with the Network Service Specifications and all applicable laws and regulations. Operation and maintenance of the Network shall be at Network Manager’s sole cost and expense, except for Reimbursable Expenditures and Replacement Customer Equipment as specified in Section 5.5 and Exhibit “G.”


5.5 Capital Improvements. Network Manager shall timely request Provo approval, and provide adequate support, for any reasonable and prudent capital improvements needed on the Network. Provo shall be responsible for the cost of New Service Connections, Reimbursable Expenditures and Replacement Customer Equipment for the Network approved in advance by Provo, as specified in and in accordance with the policies and procedures set forth in Exhibit “G.” Repairs and replacements of equipment and the handling of any insurance claims for damaged equipment shall be as specified in Exhibit “G.”

5.6 Ownership of Network Components. All capital improvements, spares, and equipment repairs, replacements and additions to or for, and all materials, supplies, tools and other assets of all types required for or used in connection with, the Network shall be and remain at all times the sole property of Provo, whether or not Network Manager pays for, or is entitled to reimbursement of any expenses associated with, the same under this Agreement.

5.7 Customer Service. Network Manager shall provide customer service, including maintaining a call center at the network operations center in Provo to accept calls from Subscribers and to resolve customer service inquiries involving repair, maintenance or other operational services with the Network, at a level at least equivalent to that provided on the Network prior to the Effective Date, or as reasonably directed by Provo. In all instances, Network Manager shall comply with the customer service requirements in the Service Level Agreement. Network Manager shall have adequate personnel and resources available to address and rectify Subscriber service inquiries. Network Manager shall establish procedures for preparing and tracking trouble reports and escalating resolution of inquiries.

5.8 Repair. Network Manager shall restore damaged or malfunctioning portions of the Network in accordance with the Service Level Agreement. Network Manager acknowledges the importance of uninterrupted operation of the Network and shall arrive at repair sites with necessary personnel, equipment, and materials and restore Network services in accordance with the Service Level Agreement. To the extent any damage is caused by any other person(s), whether involving Retail Services or Network services, Network Manager shall promptly notify Provo of the same and shall takes steps as directed by Provo to recover costs and damages from the responsible person(s).

5.9 Subscriber Connections. Network Manager shall provide all Network Services necessary to connect Subscribers to the Network. Provo will be responsible for capital costs associated with approved new Subscriber drops and installation as specified in Exhibit “G.” Network Manager shall obtain signed connection orders and service agreements from all new Subscribers using forms approved in advance by Provo. Approved Subscriber forms may be changed from time to time by Provo; Network Manager shall use only the forms most recently approved by Provo. Network Manager shall provide copies of all signed Subscriber orders and agreements to Provo with its monthly reports pursuant to Section 14 of Exhibit C.

5.10 In-Home Wiring. The Network Manager may offer a separate agreement for in-home wiring to provide a more convenient installation experience for the Subscriber. In-home wiring shall be performed in a manner consistent with industry standards, all applicable codes and customer requests. Provo may from time to time establish minimum standards and


guidelines for in-home wiring. Provo may elect, in its sole discretion, to perform, manage or hire others to perform in-home wiring services for Subscribers.

5.11 Licenses and Permits. To the greatest extent practicable, Network Manager shall maintain in good standing and, when possible, improve, all current licenses, permits and agreements associated with or required for continued provision of Retail Services to Subscribers. Network Manager shall be responsible to pay all amounts due under all such licenses, permits and agreements in a timely fashion. Any changes to any applicable licenses, permits or agreements in existence as of the Effective Date must be approved in writing by Provo in advance. Copies of all licenses, permits and agreements as of the Effective Date, and any proposed changes to the same, shall be promptly provided to Provo.

5.11 OSS/BSS Interface. Network Manager shall be responsible for implementing Network OSS/BSS to ensure smooth operation of the Network. Network Manager shall propose and document specific proposed process flows, supporting systems, and specific points of the four main OSS/BSS categories (detailed below) for Provo’s approval. Network Manager shall document and propose appropriate changes and refinements to all requisite processes, procedures, systems and reporting, and shall provide Provo with a monthly operational report for the Provo Network in a format and showing data as directed by Provo. The currently approved reporting requirements are specified in Exhibit “C.” Provo retains the right to audit all systems as they are implemented in operations for verification of the reports provided. The four main OSS/BSS operations categories are as follows:

(a) Provisioning Operations – Provisioning Operations represents all OSS/BSS processes and procedures required for accurate and efficient initiation, modification, and/or termination of Subscriber services, including but not limited to provisioning of new Subscribers, activation of service for new Subscribers, moves/adds/changes for Subscribers, creation and modification of Retail Services catalogues, disconnection of Subscribers, and deactivation of Subscribers.

(b) Network Systems Operations – Systems Operations represents all OSS/BSS processes and procedures required for accurate and efficient Network systems performance maintenance, including but not limited to Network monitoring, Network diagnostics, troubleshooting of identified problems, system upgrades, equipment and software maintenance, Network predictive and planning capabilities, and Network reporting.

(c) Billing Systems Operations – Billing Systems Operations represents all OSS/BSS processes and procedures required for accurate and efficient billing for wholesale and retail services, including but not limited to accounting, Subscriber billing, long-distance telephony billing, VOD/PPV billing, broadcast video content billing mediation, billing for dynamic data services, general billing mediation, reporting, billing reconciliation, and billing dispute resolution.

(d) Customer Support Operations – Customer Support Operations represents all OSS/BSS processes and procedures required for accurate and efficient


Subscriber support services, including but not limited to technical support, after hours customer support, emergency system support, trouble ticketing and tracking capability, emergency escalation procedure, call center systems, customer and technical support reporting, and customer satisfaction measurement and reporting.

ARTICLE VI MARKETING

6.1 Marketing Efforts. Consistent with the requirements of this Agreement, and in an effort to acquire new Subscribers and to maintain good business relationships with Subscribers, Network Manager shall market Retail Services and the Network at a level at least equivalent to that performed by the Network Provider prior to the Effective Date. Provo may also advertise or market the existence of the Network and availability of Services. Network Manager shall not make any material changes from the approved marketing plan without Provo’s advance written approval, which approval shall not be unreasonably withheld or delayed. Either party may use the other party’s name in advertisements to disclose and identify the availability of Retail Services on the Network. Any other advertisement or press release using the other party’s name or logo shall be approved by such other party prior to publication, which approval shall not be unreasonably withheld or delayed.

6.2 Network Service Claims. Neither Provo nor Network Manager shall make any representations or statements regarding Retail Services or the Network that are inaccurate or inconsistent with representations and statements made in this Agreement.

6.3 Corporate Citizenship. Network Manager agrees to participate in the local community through reasonable corporate donations of time, money, or other resources to foster good local community relations.

6.4 Coordination with Provo’s Telecommunications Manager. The Network Manager shall regularly meet in person and by phone or other electronic means with the Provo Telecommunications Manager as needed or reasonably requested to provide an accounting of and explain Network Manager’s services and performance hereunder, provide reports and discuss other relevant matters.

6.5 Service Offerings. Network Manager shall offer Retail Services to all potential Subscribers wherever access to the Network is reasonably available, consistent with marketing and cost reimbursement plans specified in Exhibits “C” and “G.”

ARTICLE VII CUSTOMER SERVICE

Customer Service Program. Network Manager shall meet customer service requirements that ensure the highest level of customer service and satisfaction and that are approved in advance by Provo. The currently approved customer service requirements include those specified in “Exhibit “C”. Customer service requirements may be changed only with Provo’s advance approval.


ARTICLE VIII REPRESENTATIONS AND WARRANTIES

8.1 Representations and Warranties of Provo. Provo represents and warrants to Network Manager as follows:

(a) Authority. Provo is a municipal corporation of the State of Utah, and possesses all requisite power and authority to enter into and to perform in accordance with the terms, covenants, and conditions contained in this Agreement.

(b) Restrictions. The execution and delivery by Provo of this Agreement and any instrument or document required by this Agreement, and the consummation of the transactions contemplated by this Agreement, will not violate any restriction contained in Provo’s organizational documents, or any statute, ordinance, law, order, ruling, certificate or license, regulation, bond, judgment or demand of any court, regulatory agency, or other tribunal to which Provo is subject.

(c) Binding Obligation. This Agreement, when duly executed by Provo, shall constitute a valid, legal, and binding obligation of Provo, and shall be enforceable in accordance with its terms. The individual executing this Agreement on behalf of Provo has been duly authorized to sign this Agreement.

(d) Compliance with Government Requirements. To the best of its knowledge, Provo has not violated any rule, order, or regulation issued by any government authority with respect to any license, permit, or franchise which may materially and adversely affect Provo’s right or ability to execute and perform in accordance with the terms of this Agreement.

(e) Proceedings. No litigation or government proceeding is pending or threatened which might adversely affect this Agreement, the transactions contemplated by this Agreement, or Provo’s rights under, or ability to perform pursuant to the terms of, this Agreement.

(f) Financing Restrictions. This Agreement does not violate any terms, covenants, conditions, or restrictions in any mortgages, bonds, and other indentures of Provo.

(g) Resources and Capacity. Provo possesses and shall at all times maintain during the term of this Agreement sufficient financial, managerial, and technical capacity and resources to perform its obligations under the terms of this Agreement.

8.2 Representations and Warranties of Network Manager. Network Manager represents and warrants to Provo as follows:

(a) Authority. Network Manager is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Utah, and


possesses all requisite power and authority to enter into and to perform in accordance with the terms, covenants, and conditions contained in this Agreement.

(b) Restrictions. The execution and delivery by Network Manager of this Agreement and any instrument or document required by this Agreement, and the consummation of the transactions contemplated by this Agreement, will not violate any restriction contained in Network Manager’s organizational documents, or any statute, ordinance, law, order, ruling, certificate or license, regulation, judgment or demand of any court, regulatory agency or other tribunal to which Network Manager is subject.

(c) Binding Obligation. This Agreement, when duly executed by Network Manager, shall constitute a valid, legal, and binding obligation of Network Manager, and shall be enforceable in accordance with its terms. The individual executing this Agreement on behalf of Network Manager has been duly authorized to sign this Agreement.

(d) Resources and Capacity. Network Manager possesses and shall at all times maintain during the term of this Agreement sufficient financial, managerial, and technical capacity and resources to perform its obligations under the terms of this Agreement.

(e) Compliance with Government Requirements. To the best of its knowledge, Network Manager has not violated any rule, order, or regulation issued by any government authority with respect to any license, permit, or franchise which may materially and adversely affect Network Manager’s right or ability to execute and perform in accordance with the terms of this Agreement. Network Manager promises and agrees that it has or will timely obtain all necessary and required federal, state, and local permits, licenses, and franchises.

(f) Proceedings. No litigation or government proceeding is pending or threatened which might adversely affect this Agreement, the transactions contemplated by this Agreement, or Network Manager’s rights under or ability to perform pursuant to the terms of this Agreement.

(g) Financing Restrictions. This Agreement does not violate any terms, covenants, conditions, or restrictions in any mortgages, bonds or other indentures of Network Manager.

(h) No Outstanding Judgments or Liens. Network Manager has no outstanding judgments or liens filed against it that would materially and/or adversely affect Network Manager’s right or ability to execute and perform in accordance with the terms of this Agreement.

(i) Condition of Network. Except as specifically disclosed in the disclosure schedule attached hereto as Exhibit “I”, as of the Effective Date and the date of execution of this Agreement by Network Manager, all aspects and components of the Network are in good and proper working order and condition, meet RFC Standards, have been well operated and maintained, and are fit and adequate for the purposes for which they are


being used or held for use, all in accordance with general and reasonable industry standards.

8.3 Disclaimer of Warranties. Except as expressly stated in this Agreement, neither Provo nor Network Manager makes any warranties regarding the Network, express or implied, including, but not limited to, any implied warranties of merchantability or fitness for a particular purpose.

ARTICLE IX COVENANTS

9.1 Conduct of Business. Network Manager shall manage and support the Network in accordance with the Network Service Specifications required by this Agreement, will safely operate the Network, and will use its best efforts to comply in all material respects with applicable laws, regulations, and government orders applicable to the Network and its operation. Network Manager shall comply in all material respects with all applicable laws, regulations, and government orders applicable to use of the Network to provide Retail Services.

9.2 GRAMA Compliance. Under GRAMA, certain information in this Agreement may be open for public inspection. If Network Manager desires to have any information protected from public disclosure, Network Manager may request such treatment by providing a “written claim of business confidentiality and a concise statement of reasons supporting the claim of business confidentiality” with the proposal under GRAMA Section 3.13.308. Provo cannot guarantee that any requested information will be held confidential, but Provo will maintain confidentiality of all information properly classified as “protected” to the greatest extent permitted by Utah law and Provo ordinances.

9.3 Provo Confidential Information. Provo has designated all commercial and technical information pertaining to the Network and this Agreement, including Network information submitted by Provo to Network Manager, as confidential trade secrets, commercially sensitive information, or information relating to general security or public safety. Disclosure of any such information can be reasonably expected to result in unfair injury to Provo. Network Manager promises not to disclose any information pertaining to the Network, Network operations, Network Service Specifications, or the terms, covenants and conditions of the Agreement, without Provo’s prior written authorization.

9.4 Privacy of Customer Information. Network Manager and Provo both agree to comply with all applicable federal, state, and local laws, regulations and ordinances regarding the protection and use of customer information.

9.5 Electronic Surveillance in Support of Law Enforcement. The parties acknowledge that Network Manager and Provo may from time to time be required to provide a Law Enforcement Agency (“LEA”) with the capability to conduct electronic surveillance on Subscribers. Both parties agree to provide access to any necessary elements of the Network required to comply with any federal, state and local electronic surveillance requirements. The implementation and provision of any required electronic surveillance with respect to Subscribers


shall be Network Manager’s sole responsibility and shall be implemented by Network Manager’s employees or agents, unless otherwise required by law. Network Manager shall propose for Provo’s reasonable approval methods and procedures to set forth the roles, responsibilities, methods, and procedures of the Parties for handling security and electronic surveillance issues related to Subscribers. If Network Manager receives a court order that requires the assistance of Provo to capture or monitor on-net activity, and recognizing the non-disclosure obligations that may be contained therein, Network Manager shall advise the issuing authority that Provo’s assistance is required and the issuing authority shall direct and serve the court order upon Provo. If either Provo or Network Manager receives an initial inquiry from an LEA, prior to the issuance of a court order, which will require the assistance of the other party to capture or monitor on-net activity, that Party shall request the LEA to name and serve both Provo and Network Manager.

9.6 Quality of Service Standards. In addition to requirements in this Agreement, Network Manager shall comply with all applicable federal, state, and local laws, regulations and ordinances regarding quality of service standards for all of its Retail Services.

9.7 Damage or Destruction. In the event any Segment of the Network is damaged or destroyed, either Party with knowledge of the same shall give immediate notice to the other party. Provo and Network Manager shall cooperate with each other to reroute or substitute services delivered by means of the affected portion of the Network to allow for continued and uninterrupted service to customers. Repairs to or replacements of any portion of the Network and handling of insurance claims shall be handled as specified in Exhibit “G.”

9.8 Government Approvals. Each party has obtained all necessary government approvals to enter into and perform its obligations under this Agreement, and shall comply with all applicable rules and regulations of the Utah Public Service Commission, the Federal Communications Commission and any other laws or regulations. Either party shall furnish copies of all such approvals to the other party upon request.

9.9 Insurance. At all times during the term of this Agreement, Network Manager shall, at its own cost and expense, procure and maintain workers compensation, commercial general liability and property damage insurance as specified in Exhibit “H.” The general liability and property damage insurance shall name Provo as the primary insured. Network Manager shall also procure and maintain any other insurance as may be required by law. Network Manager shall require its contractors, subcontractors and agents to maintain adequate insurance coverage to cover the types and degree of risk posed by the work performed by such parties. Network Manager shall furnish to Provo Certificates of Insurance verifying all required insurance and confirming that Provo will receive at least thirty (30) days prior written notice of any material change in, cancellation of, or non-renewal of any such insurance.

9.10 Regulatory Reporting Requirements. Each party will provide the other with all information and documents, within such party’s control, as necessary to permit either party to comply with any applicable regulatory reporting requirements.


9.11 Access to Information; Audit Rights. Network Manager shall at all times promptly provide to Provo any books, records, data and information requested by Provo relating to the Network or Network Manager’s activities relating to the Network. Provo may at any time perform or retain someone to perform an audit of Network Manager’s books and records relating to the Network or Network Manager’s performance hereunder. Provo may at any time review, measure or audit Network Manager’s performance under or compliance with this Agreement, and may contact any Subscribers for any such purposes.

ARTICLE X ASSIGNMENT AND TRANSFER

Assignment or Transfer of Ownership by Network Manager. Network Manager may not assign its interest in this Agreement or transfer or permit the transfer of any ownership interest in Network Manager without the prior written approval of Provo. Any assignment of Network Manager’s interest hereunder or transfer of ownership interests in Network Manager in violation of this section shall be an event of default and shall give Provo the right to immediately terminate this Agreement.

ARTICLE XI RESPONSIBILITY AND LIABILITY

11.1 Responsibility. Each Party shall be solely responsible for any damage, claim, demand, lawsuit, action or liability of any kind for injury to or death of persons, including, but not limited to, Subscribers, employees of Network Manager or Provo, and damage or destruction of property including but not limited to property of Subscribers, Network Manager or Provo, to the extent caused by or arising out of: (a) negligent or willful acts or omissions of a Party, its agents, officers, directors, employees or contractors; (b) the performance by a Party of its obligations and rights given herein; and (c) the performance or failure to perform by a Party of any of its obligations under this Agreement. Each Party’s obligations pursuant to this Section 11.1 shall not extend to damages, claims, demands, lawsuits or actions for liability to the extent attributable to the negligence or actions of the other Party, its directors, officers, employees, contractors, successors or assigns.

11.2 No Consequential Damages; Direct Damages.

(a) NOTWITHSTANDING ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY, NEITHER PROVO, NETWORK MANAGER NOR THEIR RESPECTIVE AGENTS, EMPLOYEES, CONTRACTORS OR SUBCONTRACTORS SHALL BE LIABLE TO THE OTHER FOR INCIDENTAL, CONSEQUENTIAL, RELIANCE, SPECIAL, PUNITIVE OR INDIRECT DAMAGES ARISING OUT OF THIS TRANSACTION WHETHER BY REASON OF CONTRACT, INDEMNITY, STRICT LIABILITY, NEGLIGENCE, BREACH OF WARRANTY OR FROM BREACH OF THIS AGREEMENT, AND REGARDLESS OF WHETHER THE PARTIES KNEW OF THE POSSIBILITY THAT SUCH DAMAGES COULD RESULT. EACH PARTY HEREBY RELEASES THE OTHER PARTY FROM ANY SUCH CLAIMS OR DAMAGES.


(b) NOTHING CONTAINED IN THIS SECTION 11.2 SHALL LIMIT PROVO’S OR NETWORK MANAGER’S LIABILITY TO THE OTHER FOR WILLFUL OR INTENTIONAL MISCONDUCT (INCLUDING GROSS NEGLIGENCE); NOR SHALL ANYTHING CONTAINED IN THIS SECTION 11.2 LIMIT ANY OBLIGATION SPECIFIED IN THIS AGREEMENT. THIS LIMITATION ON DAMAGES SHALL APPLY TO ALL SUBSCRIBERS AND A HIGHLIGHTED COPY OF THIS LIMITATION ON DAMAGES SHALL BE PRINTED IN EVERY CONNECTION SERVICE ORDER AND OTHER AGREEMENT WITH SUBSCRIBER. SERVICE TO ANY SUBSCRIBER IS CONDITIONED UPON SUBSCRIBER’S AGREEMENT TO THIS LIMITATION ON DAMAGES.

(c) In the event of a breach of this Agreement that is not timely cured pursuant to Section 13.2, and subject to the obligations in this Agreement, the Parties shall be liable to each other only for any direct damages.

11.3 Waiver of Subrogation. Each of Provo and Network Manager hereby releases and waives all right of recovery against the other or anyone claiming through or under each of them by way of subrogation or otherwise to the extent of payments from property insurance policies required by Section 9.9 of this Agreement.

11.4 Defense of Claims. Either Party shall give the other prompt written notice of any asserted claims or actions arising out of or relating to this Agreement, shall cooperate with the other in the defense of any such claims or actions, and shall not settle any such claims or actions for which the other Party may be liable without the reasonable consent of the other.

11.5 Third Party Claims. Except as set forth in Sections 5.3 and 14.2, nothing in this Agreement shall be construed to create rights in, or duties or liabilities to, or any standard of care with reference to, or to grant remedies to, any person or entity not a party to this Agreement. Network Manager’s franchise obligations and the Subscriber agreements shall not vest any third-party with any rights or claims against Provo.

11.6 Survival. The obligations of the parties under this Article XI shall survive the expiration or earlier termination of this Agreement.

11.7 Limitation of Provo Liability. Network Manager shall have sole responsibility for the provision of Retail Services to Subscribers. Provo shall in no way be deemed to guarantee the adequacy of Network Manager’s Retail Services for any Subscriber’s needs or requirements.

11.8 Applicability of Liability Limitations. The waivers and disclaimers of liability, releases from liability, exclusive remedy provisions, and (except as expressly stated to the contrary therein) liability provisions expressed throughout this Agreement shall apply even in the event of the fault, negligence (in whole or in part), strict liability, or breach of contract of the party released or whose liability is waived, disclaimed, limited, apportioned or fixed by such exclusive remedy provision, or who is indemnified or held harmless, and shall extend to their respective affiliates and its and their respective partners, directors, officers, employees and


agents. Such provisions shall continue in full force and effect notwithstanding the completion, termination, suspension, cancellation or rescission of this Agreement, or termination of the rights and privileges granted by this Agreement. No officer, director, employee, agent or other individual representative of either Provo or Network Manager shall be personally responsible for any liability arising under this Agreement.

ARTICLE XII FORCE MAJEURE

12.1 Excuse of Performance. Neither Provo nor Network Manager shall be liable or responsible for a delay or failure in performing or carrying out any of its obligations other than obligations to make payments under this Agreement, to the extent caused by Force Majeure (as defined below).

12.2 Definition. The term “Force Majeure” as used in this Agreement shall mean any cause beyond the reasonable control of Provo or Network Manager, as applicable, or beyond the reasonable control of any of their respective contractors, subcontractors, suppliers or vendors, including without limitation:

(a) Acts of God. Acts of God, including, but not necessarily limited to, lightning, earthquakes, adverse weather of greater duration or intensity than normally expected for the area and time of year, fires, explosions, floods, other natural catastrophes, sabotage, utility outages, terrorist acts, acts of a public enemy, acts of government or regulatory agencies, wars, blockades, embargoes, insurrections, riots or civil disturbances;

(b) Labor Disputes. Labor disputes, including, but not necessarily limited to, strikes, work slowdowns, work stoppages or labor disruptions, labor or material shortages, or delays or disruptions of transportation;

(c) Court Orders. Orders and judgments of any federal, state or local court, administrative agency or governmental body;

(d) Change in Law. The adoption of or change in any federal, state or local laws, rules, regulations, ordinances, permits or licenses, or changes in the interpretation of such laws, rules, regulations, ordinances, permits or licenses, by a court or public agency having appropriate jurisdiction after the Effective Date; or

(e) Government Approvals. Any suspension, termination, interruption, denial or failure to issue or renew by any government authority or other party having approval rights or any approval required or necessary hereunder for the operation of the Network or for either party to perform its obligations hereunder, except when such suspension, termination, interruption, denial or failure to issue or renew results from the negligence or failure to act of the party claiming the occurrence of an event of Force Majeure.

12.3 Continuance after Force Majeure Event. If either Provo or Network Manager cannot fulfill any of its obligations under this Agreement by reason of Force Majeure, such party shall promptly notify the other and shall exercise due diligence to remove such inability with all


reasonable dispatch; provided, that nothing contained in this Section 12.3 shall be construed as requiring Provo or Network Manager to settle any strike, work stoppage or other labor dispute in which it may be involved, or to accept any permit, certificate, license or other approval on terms deemed unacceptable to such party, or to enter into any contract or other undertaking on terms which the party deems to be unduly burdensome or costly. In the event that the nature or duration of the Force Majeure event is such that either party is irreparably harmed to the extent that both parties agree that the affected party is unable to perform its obligations under this Agreement, then the affected party shall be excused from further performance under this Agreement, subject to the terms of Sections 13.3 and 13.4.

ARTICLE XIII BREACH; TERMINATION; CONTINUITY

13.1 Termination Events. The occurrence of any of the following events constitutes an event of default that may result in termination of this Agreement, at the sole discretion of the terminating party, subject to the provisions of this Article 13:

(a) Breach or Default. A material breach of any of the terms, covenants and conditions of this Agreement by either Provo or Network Manager.

(b) Failure to Respond. The failure of Network Manager to respond in a reasonable amount of time to any written request from Provo.

(c) Inability to Meet Ongoing Obligations. Network Manager’s inability to meet its ongoing obligations to Provo and/or other third party providers of goods and services.

(d) Change in Law. A change in any federal, state or local law, regulation or rule, or the issuance of an Order by the Federal Communication Commission, that materially impacts ownership, operation or use of the Network.

13.2 Right to Cure. Upon the occurrence of an event of default under Section 13.1, the non-defaulting party shall give written notice of the event of default to the defaulting party. The defaulting party shall be given a reasonable time to cure any breach or default as follows:

(a) In the case of a monetary default, the defaulting party shall have five (5) calendar days after receipt of the written notice of default in which to cure.

(b) In the case of a nonmonetary default, the defaulting party shall have fifteen (15) business days after receipt of the written notice of default in which to effect a cure. If the nonmonetary default cannot reasonably be corrected within such period, the defaulting party shall have an additional reasonable amount of time in which to cure, provided the defaulting party promptly commences corrective action and thereafter diligently prosecutes the corrective action to completion. If the defaulting party does not timely cure the breach or default within the time periods specified above, the non-defaulting party may elect to terminate this Agreement by providing written notice of termination to the defaulting party.


13.3 Provo’s Rights Upon Cessation of Service by Network Manager. Provo and Network Manager both agree that quality and continuity of service to all Subscribers is vital to the value of the Network. Upon any breach or cessation of Network Manager’s performance of any of its material obligations hereunder for any reason, Provo may immediately commence operating the Network, make arrangements for Network Manager to resume operating the Network, retain others to operate the Network, contact Subscribers, contact and hire employees of Network Manager, and take such other actions as may reasonably be necessary to ensure quality and continuity of service to all Subscribers. Each Party agrees to cooperate in good faith to ensure continuity of service to Subscribers.

13.4 Continuity of Retail Services. Provo and Network Manager both agree that continuity of Retail Services to Subscribers is vital to operation and maintenance of the Network. Provo and Network Manager agree that any failure by Network Manager to provide reliable Retail Services as contemplated by this Agreement would jeopardize the Parties’ ability to satisfactorily perform their obligations under this Agreement, and would be detrimental to the health, safety and welfare of Subscribers. Therefore, both parties agree to use their best efforts to avoid any lengthy disruption and/or the termination of Retail Services to any Subscribers. If Network Manager cannot or does not continue to provide the quality and type of Retail Services contemplated by this Agreement, the parties agree to cooperate in good faith to ensure continuity of Retail Services to all Subscribers. Notwithstanding anything to the contrary herein, if Network Manager, whether voluntarily or involuntarily, is unable or unwilling to provide Retail Services as contemplated by this Agreement, Provo shall have the right to immediately designate others to provide such services. In such event, the Parties shall cooperate in good faith to permit Network Manager to resume operation of the Network if (i) Network Manager’s inability to perform its obligations contemplated by this Agreement was not material and is not likely to continue for a substantial duration, or (ii) Network Manager’s inability to perform its obligations was caused by Provo Equipment Responsibility. Provo may apply any security provided by Network Manager, directly contact Subscribers, and take such other reasonable actions as may be necessary to prevent and minimize service disruptions to Subscribers as a result of any failure by Network Manager to provide Retail Services as contemplated herein.

ARTICLE XIV MISCELLANEOUS

14.1 Amendments. Neither this Agreement nor any provisions hereof may be changed, waived, discharged or terminated orally and may only be modified or amended by an instrument in writing, signed by both Provo and Network Manager.

14.2 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of Provo, Network Manager and any permitted successors and assigns.

14.3 Waivers. The failure by Provo or Network Manager at any time or times hereafter to require strict performance by the other of any of the undertakings, agreements or covenants contained in this Agreement shall not waive, affect or diminish any right of Provo or Network Manager hereunder to demand strict compliance and performance therewith. None of the undertakings, agreements or covenants of Provo and Network Manager under this Agreement


shall be deemed to have been waived unless such waiver is evidenced by an instrument in writing signed by the party to be charged specifying such waiver.

14.4 Notices. Unless otherwise specifically provided in this Agreement, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, served by electronic means, or delivered by courier or United States certified mail, and shall be deemed to have been given when delivered in person or by courier service, upon receipt of an electronic transmission, or five (5) days after deposit in the United States mail, with postage prepaid and properly addressed, as follows:

If to Provo, to: Provo City Division Director - Finance 351 West Center Street Provo, Utah 84603 Telephone: (801) 852-6503 Email: [email protected]

With a copy to: Provo City Attorney 351 West Center Street Provo, Utah 84601 Facsimile No. (801) 852-6150 Telephone (801) 852-6141 Email: [email protected]

If to Network Manager, to:

___________________________ ___________________________ ___________________________ Facsimile No.________________ Telephone __________________ Email: ____________________ With a copy to:

___________________________ ___________________________ ___________________________ Facsimile No. ________________ Telephone __________________ Email: _____________________

Any such information may be changed by notice to the other party given in the same manner as above provided.


14.5 Severability. If any term or provision of this Agreement is, to any extent, determined by a court of competent jurisdiction to be void, voidable or unenforceable, such void, voidable or unenforceable term or provision shall not affect any other term or provision of this Agreement.

14.6 Interpretation. Whenever the context shall require, the plural shall include the singular, the whole shall include any part thereof, and any gender shall include other genders. The article, section and paragraph headings contained in this Agreement are for purposes of reference only and shall not limit, expand or otherwise affect the construction of any provisions hereof. All references in this Agreement to articles, sections and paragraphs, unless expressly noted otherwise, are to articles, sections and paragraphs contained in this Agreement. Unless the context requires otherwise, references in this Agreement to a “party” shall be to either Provo or Network Manager, as applicable, and references to “parties” shall be to both Provo and Network Manager.

14.7 Independent Contractor Status. Provo and Network Manager reserve no control whatsoever over the employment, discharge, compensation of or services rendered by the employees or contractors of each other. Nothing in this Agreement shall be construed as inconsistent with the foregoing independent status and relationship or as creating or implying a partnership or joint venture between Provo and Network Manager.

14.8 Governing Law and Choice of Forum. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Utah. Jurisdiction for any disputes arising out of this Agreement and any litigation relating thereto shall be brought exclusively in the state or federal courts of Utah. The Parties agree to waive their right to jury trial with respect to actions brought under this Agreement.

14.9 Commissions. No brokerage, finders, or other fee, commission or compensation shall be paid by Provo or Network Manager in connection with the transaction contemplated by this Agreement. Provo and Network Manager shall indemnify and hold each other harmless (including attorney fees and costs) from and against any and all claims for brokerage and finder’s fees or commissions which may be asserted against the other based on the actions or omissions of the indemnifying party.

14.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, shall be deemed an original, but all such counterparts taken together shall constitute only one instrument.

14.11 Costs. Except as otherwise set forth in this Agreement, Provo and Network Manager shall each be responsible for its own costs, including legal fees, incurred in negotiating, finalizing and performance of this Agreement.

14.12 Entire Agreement. This Agreement contains the only agreement between the Parties relating to the subject matter hereof; no other agreements, verbal or written, between the Parties exist with respect to such subject matter.


14.13 Franchise Requirements. Any terms and conditions in this Agreement are intended to be compatible with and in addition to any requirements in any Franchise Agreement, Provo City ordinance and any other applicable federal, state, or local requirement. If there are any conflicts among these requirements, the more stringent requirements are to be applied to the Network Manager.

(Signature page to follow)


DATED effective as of the date first above written.

PROVO CITY CORPORATION By: ______________________________________ Mayor John Curtis

ATTEST: __________________________________________ Provo City Recorder APPROVED AS TO FORM: __________________________________________ Provo City Attorney NETWORK MANAGER By: ______________________________________

Name: ___________________________

Title: ___________________________

ATTEST:

__________________________________________

Name: ___________________________

Title: ___________________________

EXHIBIT A PROVO NETWORK AGREEMENT

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Exhibit A

Lockbox Agreement

This Lockbox Agreement (“Agreement”) is made and entered effective as of the ___ day of ___________, 2012, by and among Provo City, a municipal corporation of the State of Utah (“Provo”), Veracity Networks, LLC, a Delaware limited liability company (“Veracity”), and Central Bank, a _______ corporation.

1. Veracity has authorized and directed Central Bank to establish two Accounts with Central Bank to be governed by the terms of this Agreement:

a. Account number 51154656 (“General Account”); and b. Account number 52415072 (“Lockbox Account”).

2. Veracity directs and authorizes Central Bank to put a hold on all amounts

currently in or hereafter deposited or moved into the Lockbox Account, such that funds in the Lockbox Account will not be paid to or made available for use or withdrawal by Veracity (“Hold”). Amounts in the Lockbox Account shall be paid or made available only to Provo, upon receipt by Central Bank of an electronic or written notice from Provo (“Notice”) of an amount owed by Veracity to Provo under any agreement between Provo and Veracity (“Veracity/Provo Agreement”). No funds in the Lockbox Account shall be paid or made available at any time to Veracity under any circumstances, except upon receipt by Central Bank of advance written directions to the contrary from the Mayor of Provo.

3. Veracity agrees to maintain at all times in the Lockbox Account a

minimum balance of at least $120,000, or such other minimum amount as may be specified by Provo from time to time by Notice to Veracity and Central Bank (“Minimum Balance”). All or any portion of the funds in the Lockbox Account shall be paid or made available to Provo upon receipt by Central Bank of Notice from Provo of (i) a Veracity payment obligation under a Veracity/Provo Agreement; or (ii) a default under any of Veracity’s material obligations to Provo under a Veracity/Provo Agreement. 4. Veracity directs and authorizes Central Bank to use the Lockbox Account as a pass through account for all of Veracity’s payment obligations to Provo under any Veracity/Provo Agreement. Veracity shall cause all payments paid to or for the benefit of Veracity by all Veracity customers, including all Subscribers on the Provo Network and all other Veracity customers, including Sienna Hills and Traverse Mountain customers and retail and wholesale colocation customers, to be paid or deposited into the General Account. Provo shall provide Notice to Central Bank and Veracity as soon as practicable of (i) the total payment owed by Veracity to Provo under a Veracity/Provo Agreement for any given month (“Monthly Payment”); (ii) the Minimum Balance for such month; and (iii) any additional amounts necessary to cover the Minimum Balance for that month (“Minimum Balance Addition”). The amount of the Monthly Payment plus any Minimum Balance Addition for a month shall be the “Total Transfer Obligation” for that month.


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5. Veracity directs and authorizes Central Bank on the fifth (5th) day of each

month to transfer the Total Transfer Obligation for that month from the General Account into the Lockbox Account.

6. At any time on or after the fifth day of each month, Provo may withdraw

or effect an ACH transfer of the entire Monthly Payment for that month as specified in the Notice from Provo from the Lockbox Account into an account designated by Provo.

7. If the balance remaining in the Lockbox Account at any time is less than the Minimum Balance specified in the Notice from Provo for that month, (i) Veracity shall owe Provo an additional payment of One Thousand Five Hundred Dollars ($1,500.00) (the “Deficiency Penalty”); and (ii) Veracity directs and authorizes Central Bank to place an immediate Hold on the General Account in the amount by which the Minimum Balance for that month exceeds the balance in the Lockbox Account plus the Deficiency Penalty (“Minimum Balance Deficiency”). As soon as the General Account holds sufficient funds to cover the Minimum Balance Deficiency, the Minimum Balance Deficiency shall immediately be transferred to the Lockbox Account, the Deficiency Penalty shall be made available for immediate payment to or withdrawal by Provo, and the Hold on the General Account shall be released for the remainder of that month. 8. Any notice required or contemplated hereunder may be given electronically to the relevant email addresses specified below, or by mail to the relevant mailing addresses specified below: Provo City 351 West Center Street Provo, Utah 84601 Email: [email protected]

Veracity Networks, LLC 379 North University Avenue, Suite 301 Provo, Utah 84601 Email: _____________________ Central Bank ____________________ Provo, Utah 84601 Email: _____________________

9. Neither this Agreement, nor any authorizations or directions specified herein, may be amended, changed, withdrawn or revoked at any time or in any manner, without the advance written approval of all of the parties to this Agreement.

10. No agreements or representations other than as specified herein are

expressed or implied by this Agreement. Central Bank makes no representation that any


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amount of funds will be available in either the General Account or the Lockbox Account, other than amounts placed or to be left on Hold as specified above. DATED effective as of the date first above written.

(Signature page to follow)


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PROVO CITY CORPORATION

By: ______________________________________ Mayor John Curtis

ATTEST: __________________________________________ Provo City Recorder APPROVED AS TO FORM: __________________________________________ Provo City Attorney VERACITY NETWORKS, LLC By: ______________________________________

Name: _______________________

Title: _______________________

CENTRAL BANK By: ______________________________________

Name: _______________________

Title: _______________________

EXHIBIT B PROVO NETWORK AGREEMENT

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Exhibit B

Net Transfer Payment; Adjustments Purpose

The Network Transfer Payment represents the transfer payment to be paid by Network Manager to Provo each Month for Network Manager’s lease and use of the Network, net of compensation to Network Manager for operating and maintaining the Network under this Agreement.

Calculation of Net Transfer Payment

1. The initial Net Transfer Payment is $95,000

2. It is expected that, during the term of this Agreement, there will be changes in the number of Subscribers due to new customers and disconnecting customers. Network Manager shall use its best efforts to manage Subscriber levels properly and respond timely to customer requests and concerns. A reduction in the number of Subscribers will not change the Net Transfer Payment.

3. For each Subscriber added to the Network after the Effective Date, the Net Transfer Payment will be increased the following month by the applicable amount specified in the table below:

4. For purposes of this Exhibit B, “Provo Connection Costs” shall mean all amounts

paid or reimbursed by Provo for the connection of any new Subscriber. Such costs, which must be approved in advance by Provo, may include costs for service drops, fiber connections, in-house wiring, portals, set top boxes and/or a portion of core equipment as needed.

New Service Type: Monthly Addition to Net Transfer Payment:

Residential $23 Commercial 4% of Provo Connection Costs

MDU 4% of Provo Connection Costs

Special Services/Products As determined and approved by Provo in advance

Portal and Set Top Box All “Gateway Fees” or other amounts charged to a Subscriber for portal or set top box rental, minus a monthly administrative fee of 10% of such charges

EXHIBIT B PROVO NETWORK AGREEMENT

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5. For any Subscriber for which Provo pays any repair or replacement costs for

Replacement Customer Equipment (i.e., a portals or SFP), the Net Transfer Payment will be increased the following month by the amount of all “Gateway Fees” or other rental amounts charged to the Subscriber, minus a monthly administrative fee of 10% of such charges.

6. Network Manager shall promptly pay or credit to Provo all amounts collected by Network Manager from any Subscribers for any Reimbursable Expenditures, New Replacement Customer Equipment, New Service Connections or any other costs for which Provo is responsible under the Agreement.

EXHIBIT C PROVO NETWORK AGREEMENT

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Exhibit C Service Level Agreement; SLA Payments; Reporting

A. Purpose The purpose of this Service Level Agreement (SLA) is to define the standards, procedures, terms and conditions for Network Manager’s operation of the Network and provision of Retail Services to Subscribers. The Subscriber base is a critical asset to the Network and to Provo, and Network Manager must provide superior customer service and Retail Services to satisfy the needs of the Subscribers and retain them as customers of the Network. Failure by Network Manager to adhere to any of the standards, terms and conditions specified herein will result in a financial non-performance credit to affected Subscribers as described below. B. Customer Service Standards The Network Manager shall continue to provide customer service support to residential and businesses of Provo. 1. Definitions: The following definitions and definitions supplied elsewhere in this

Exhibit C are supplemental to the definitions specified elsewhere in this Agreement:

a. CSR (Customer Service Representative): The person(s) working for or under the direction of the Network Manager responsible for Calls with an actual or potential customer (Subscriber), including but not limited to phone representatives, sales personnel and technicians that visit the home or place of business or otherwise contact a Subscriber.

b. Call(s): Any actual or attempted communication from or conversation or contact with a Subscriber, including but not limited to inbound, outbound, online chat, email communication and in-person discussions.

c. Call Type: The proper classification for a Call, which may include but not be limited to support, billing, and sales.

d. DID (Direct Inward Dialing): The telephone number from which an incoming Call originated.

2. Standards

a. The CSR will exhibit courtesy, respect, honesty and professionalism in all Calls.

b. The CSR will listen to any requests or questions from a Subscriber, ask for clarification if necessary, and provide complete, knowledgeable, accurate, precise information regarding the inquiry or issue and create a ticket documenting the information provided by the Subscriber and the CSR, and the resolution of issue(s).


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c. The CSR will make reasonable efforts to provide information to the Subscriber and escalate a Subscriber’s concern in a timely manner as requested or appropriate.

3. Call Metrics

a. The Network Manager will keep detailed records of all Calls made by or to Subscribers for support, sales, service, installation or other purposes.

b. The Network Manager must prepare and provide to the Provo Telecommunications Manager regular customer service reports that specify at least the following information:

i. Number of Calls made, including Call Type, length, type, purpose, ticket number, time before answer, time on hold, number dialed, DID, disconnect reason, identify of CSR who answered call and, if possible, where the Call was transferred during the Call.

ii. Number of un-answered Calls, including time and DID of each unanswered Call.

iii. The Call recording, to be provided in a digital format.

4. Operations

a. The Network Manager will maintain a team of CSRs sufficient to properly and timely deal with all Calls that are made and received.

b. A CSR will answer a Call within five (5) minutes during regular hours.

c. The Network Manager will maintain and require CSRs to use scripts where possible that are approved in advance by the Provo Telecommunications Manager.

d. The Network Manager will maintain regular hours support Monday through Saturday, 07:00 AM through 19:00 PM.

e. The Network Manager will have on-call after-hours support for emergency support and to satisfy the time requirements of this SLA.

f. The Network Manager will utilize a call escalation procedure approved in advance by the Provo Telecommunications Manager that will include personnel from all aspects of the business.

g. The Network Manager will meet with the Provo Telecommunications Manager on a regular basis for review of all CSR requirements and compliance. Anyone listed in the escalation procedure document may be


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required to meet with the Provo Telecommunications Manager upon request.

5. Ticketing

a. All Calls between a CSR and a Subscriber will be logged in a ticket.

b. Each ticket should specify at least the following information: why it was created, Call Type, customer impacts, urgency, status, time created, identity of CSR who created it, and resolution.

6. Customer Credits and Notifications

a. Provo may, but is not required, to evaluate, audit and enforce compliance with any Customer Service Standards specified in this Section B. The Provo Telecommunications Manager may, by notice to Network Manager, require Network Manager to provide a bill credit to any Subscriber of up to $5 per incident for any material violation of any Customer Service Standard, as determined in the discretion of the Provo Telecommunications Manager.

b. A CSR will promptly contact a Subscriber to inform the Subscriber of any credit(s) due to the Subscriber under this SLA, and the reason for such credit(s).

7. Customer Contact

a. Provo reserves the right to contact any Subscribers, participate in or listen to recordings of Calls and audit any aspect of the CSR process.

C. Technical Network Performance Standards and Credits 1. Definitions. The following definitions and definitions supplied elsewhere in this

Exhibit C are supplemental to the definitions specified elsewhere in this Agreement: Jitter: The relative variation in delay between consecutive serial packets. Samples are taken 500 milliseconds apart, and consecutive samples are compared for variation in delay. Point of Presence (POP): Physical locations on the Network that include the Network electronic equipment. These are typically subscriber demarcation points (Gateway), but may also be neighborhood network nodes or the head-end.

2. Network Latency and Jitter Standards

2.1 Network Latency Standard


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The intent of the Network Latency Standard is to limit the Latency Achievement Quotient (LAQ), as defined below, to 1.5 or less (the equivalent of average latency equaling 50 milliseconds or less) in a given month. Average Round-Trip Latency is defined as the measured average time required for round-trip packet transfers between POP’s on the Network during the given month. The measurement of the LAQ is subject to Section 10 (Exceptions) of this SLA. LAQ will be measured by dividing the Average Round-Trip Latency on the Network for a calendar month by the 50 milliseconds latency standard. LAQ Calculation:

Actual Average Round-Trip Latency between POP’s on the Network for Month 50 Milliseconds

(Example: 300 ms Actual Average Round-Trip Latency for Month = 300/50 or

LAQ of 6) The LAQ will be one of the factors in calculating any credits due to Subscribers. (See section 8.2) 2.2 Network Jitter Standard The Network Jitter Standard (NJS) must remain below 64 milliseconds. Any higher NJS will be one of the factors in calculating any credits due to Subscribers. (See section 8.2)

3. Network IP Data Packet Delivery Standard

The Network IP Packet Delivery Standard is to maintain the Packet Delivery Achievement Percentage (PDAP), as defined below, to ninety-nine point eight percent (99.8%) or greater in a given month. Average Packet Loss, with respect to a given month, is defined as the average percentage of IP data packets transmitted from any given source to any given destination across the Network during said month that are not successfully delivered as measured. The measurement of the PDAP is subject to Section 10 (Exceptions) of this SLA. PDAP calculation:

100% -Average Percentage of Packets Lost for any given source and destination for the month

The PDAP will be one of the factors in calculating any credits due the Subscribers. (See section 8.3)

4. Network Service Availability Standard


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The goal of the Network Service Availability Standard (NSA or network up-time) is for all network circuits to be available one hundred percent (100%) of the time. The NSA standard is ninety-nine point eight percent (99.8%) of the total service time in a given month. NSA will be measured by tracking the number of minutes the Network is not available and dividing by the total number of minutes in the given service month. The NSA standard measurement is subject to Section 10 (Exceptions) of this SLA. NSA Calculation: 100% - Number of minutes the Network is not available in Month for a Given Subscriber/ Total number of service minutes in Month.

The NSA achievement percentage will be one of the factors in calculating any credits due the Subscribers (see Section 8.1).

5. The Stated Bandwidth Standard

The Stated Bandwidth (SB) (standard applies only to the IP bandwidth delivery on the Network between the Gateway and the Internet-edge router. No guarantee for end-to-end bandwidth including the Internet is implied. There are many factors on the Internet and destination website that will impact measurable bandwidth, including but are not limited to, Subscriber hardware, computers, routers, switches, memory systems and configurations. The Network Manager must provide the SB to the Subscribers at least 95% of the time during the month. An SB percentage less than the standard will be one of the factors in calculating any credits due the Subscribers (see Section 8.4).

6. Claims of damage or business loss to Subscribers

Provo will not be responsible for any damages that Network Manager, any Subscribers and/or the business of any Subscribers may suffer. Provo makes NO WARRANTEES OF ANY KIND, EXPRESSED OR IMPLIED, except as expressly set forth in this Agreement. Provo DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. This includes loss of data resulting from delays, non-deliveries, wrong deliveries, and any and all service interruptions, whether due to Provo’s negligence or Network Manager’s errors or omissions. Any and all information obtained via Network services (public and/or private) is at the Subscriber’s or Network Manager’s own risk. Any and all access to other networks via the Network must be in compliance with all policies and rules of those networks. This applies to any other network to which the Network is attached.

7. Measurement Methodology of the SLA


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The Network Manager will periodically (on average every 5 minutes) measure performance at selected points of presence (POPs) throughout the Network using software and hardware components capable of measuring IP traffic and responses. Not every POP may be covered by such measurements and such components may not measure the exact condition on any path traversed by data packets. Such components provide measurements across the Network, but not other networks to which the Network may connect. Provo reserves the right to periodically change the measurement points and methodologies by providing notice to Network Manager. Measurements will be made available to Provo when monitoring systems are in place and data is available. Provo reserves the right to periodically inspect the measuring tools and devices to ensure quality control. Metrics measured will include packet throughput latency, availability, dropped packets, aberrant packets (errors, runts, etc.), and other statistics selected by Provo. Network metrics are considered confidential and access by third parties to the same shall not be allowed.

8. Subscriber Credits

8.1 Availability Credit If the Network Service Availability (NSA) achievement percentage falls below 99.8% within a given month for a given Subscriber (approximately 86 minutes of no network availability), the Network Manager will credit the Subscriber a percentage specified in the following table of the retail fee paid by such subscriber for the affected service. In no case shall the credit offered by the Network Manager be greater than 100% of the Subscriber’s retail fee.

NSA achievement percentage

Credit to Subscriber

98 to 99.79% 5% 96 to 97.99% 10% 94 to 95.99% 15% 92 to 93.99% 25% 88 to 91.99% 50% Below 88% 100%

Due to the fact that measurements will not take place universally throughout the Network, reasonable, subjective analyses may be required to determine the NSA achievement percentage for a Subscriber. Such analysis may include, but not be limited to, the following factors: unscheduled network maintenance or upgrades, unanticipated performance affecting changes to network configuration, problems with higher level IP network services such as IP multicast or IP quality of service,


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etc. The Network Manager will provide a good-faith analysis upon any reasonable request from Provo to determine the actual (or best estimate) of NSA achievement percentage for a subscriber, along with the basis for such calculations. 8.2 Latency and Jitter Credits If the Latency Achievement Quotient (LAQ) exceeds 1.5 in any given month or the Network Jitter Standard (NJS) exceeds 64 milliseconds, affected Subscribers are entitled to a credit. The credit for Subscribers will be equal 5% to of the associated retail fees. The credit will apply to any affected Subscribers served by the portion of the Network experiencing the substandard LAQ or NJS for the given month. 8.3 Packet Delivery Credit If the Packet Delivery Achievement Percentage (PDAP) on the Network fails to meet the Packet Delivery Standard (99.8%) in any given month, an affected Subscriber will be entitled to a credit. The Network Manager will credit the Subscriber a percentage specified in the following table of the retail fee for the affected service. In no case shall the credit offered by the Network Manager be greater than 100% of the Subscriber’s retail fee.

PDAP Credit to Subscriber 98 to 99.79% 5% 96 to 97.9% 10% 94 to 95.9% 15% 92 to 93.9% 25% 88 to 91.9% 50% Below 88% 100%

8.4 Stated Bandwidth Credit The Network Manager must provide the Stated Bandwidth (SB) to the Subscribers at least 95% of the time during the month. The Network Manager will credit an affected Subscriber a percentage specified in the following table of the retail fee for the affected service. In no case shall the credit offered by the Network Manager be greater than 100% of the Subscriber’s retail fee.

SB percentage Credit to Subscriber 90 to 94.9% 5% 60 to 89.9% 25% Below 60% 100%

9. Exclusive Remedy for Subscribers


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The credits described in this SLA shall be the sole financial remedy available to Subscribers relating to any service performance issues on the Network.

10. Exceptions

A Subscriber shall not be entitled to any credits under this SLA in connection with any failure or deficiency of the Network caused by:

a) Circumstances beyond Network Manager’s reasonable control, including,

without limitation, acts of any governmental body, war, insurrection, sabotage, embargo, fire, flood, weather, solar disturbances, strike, or other labor disturbance, interruption of or delay in transportation, unavailability of or interruption or delay in telecommunications or third party services, failure of third party software or inability to obtain raw materials, supplies, or power used in or equipment needed for provision of the SLA;

b) Normal Scheduled Maintenance, subject to the following conditions and requirements: i) Normal Scheduled Maintenance, involving upgrades of hardware

or software or upgrades to increase capacity that may temporarily degrade the quality of service, including possible outages, may be undertaken only as follows: A) Between the hours of 00:00 A.M. to 06:00 A.M. local time,

Tuesday and Friday. For the purposes of this SLA “Local Time” refers to the local time in the time zone in which an affected service is located.

B) Notification of normal scheduled maintenance, including but not limited to service(s) and Subscriber(s) to be affected, and rollback procedures, must be given to and approved by the Provo Telecommunications Manager at least one week before normal maintenance is to be performed.

C) After the approved normal scheduled maintenance is performed, Network Manager will provide to the Provo Telecommunication Manager within two (2) business days a written report of the state of the maintenance.

ii) Urgent Maintenance, involving efforts to correct network conditions that are likely to cause a material Service outage and that require immediate action, and which may degrade the quality of the Service, including possible outages, does not constitute an exception; affected Subscribers will be entitled to service credits for service degradation or outages experienced as a result of urgent maintenance as set forth in this SLA. A) Network Manager may perform urgent maintenance at any

time deemed necessary, and will provide notice of urgent maintenance to the Subscriber(s) and the Provo


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Telecommunications Manager as soon as is commercially practical under the circumstances.

B) After urgent maintenance is performed by Network Manager, it will provide to the Provo Telecommunications Manager a written report of such maintenance, including but not limited to why the urgent maintenance was necessary, Subscriber(s) that were affected, how the issues were resolved, equipment involved, and what procedures will be changed or adopted to prevent similar events from occurring again.

(c) Failure of access circuits to the Network, except to the extent such failure was caused by negligence or actions of Network Manager or its agents or contractors;

(d) DNS (Domain Name Server) issues outside the reasonable control of Network Manager;

(e) Unauthorized, unlawful or inappropriate use by the affected Subscriber of the Network or Network Services;

(f) Interruption of service(s) for which the start of service date has not yet commenced;

(g) Interruption caused by the negligence, error or omission of the affected Subscriber or other(s) authorized by the affected Subscriber;

(h) Interruptions due to power failure at a Subscriber premise; (i) Interruptions during any period in which the Network Manager or its

agents are not afforded access to the premise where the Subscriber’s equipment is located, provided such access is reasonably necessary to avoid a degradation of service or to restore service;

(j) Interruption during any period that Customer elects not to release the Network Manager or its agents for testing and or repair, and continues to use the impaired service;

(k) Interruption resulting from a Network Manager disconnect for cause; (l) Interruptions due to improper or inaccurate network specifications

provided by the affected Subscriber; (m) Interruptions resulting from a service provider or carrier other than

Network Manager that provides service to the Subscriber through the Network; or

(n) Network Manager’s inability to deliver service by the Customer commit due date if caused by Customer or other causes not within Network Manager’s control.

11. Customer Termination Rights.

A Subscriber may terminate a service or product that fails to meet the relevant SLA Service Metric (“Affected Service”) without penalty or early termination charges if, in any single calendar month: (a) Network Downtime exists for at least sixty (60) hours in the aggregate; or (b) any single event entitling Customer to Availability Credit(s) under Section 8.1 exists for a period of at least thirty six


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(36) consecutive hours. The affected Subscriber shall provide written notice of termination to Network Manager no later than the last day of the month after the month in which the outages occurred; otherwise, the Subscriber waives its right to terminate. When Network Manager receives a timely written notice of termination, such termination will be effective as of the date specified by the Subscriber and, if requested, after the Affected Service has been transferred to another service provider.

12. Remedies

Each type of service with a unique outage is treated as a discrete event; therefore, the credits specified in the SLA shall be given for each separate outage as to each type of service. The number of minutes of separate service outages will not be accumulated to determine the percentage credit. In order to request Subscriber Credits, a Subscriber or the Provo Telecommunications Manager must request a credit from Network Manager no later than five (5) business days following the month after the month in which the relevant SLA Service Metric was not met. Failure to request a service credit as specified herein will forfeit a Subscriber’s right to receive such credit. A credit will be applied only to the month in which the event giving rise to the credit occurred. SLA credits issued in any one calendar month may not exceed the monthly recurring charges (MRC) for the Affected Service. A Subscriber may not deduct or set-off a service credit from an invoice, but must, in all cases, wait for the Network Manager to reflect the service credit on an invoice. Network Manager must provide the credit to the Customer within thirty (30) days of its receipt of a request for a credit.

13. Credit and Payment Procedures

Subscriber credits will be calculated based on the standards listed in Sections 2 through 5 of this SLA. The amount of Subscriber credits to be awarded will be determined based on Section 8 of this SLA. The standard that produces the highest credit within a service type will be awarded to the Subscriber. The credits are not cumulative within a standard or service type. Any credit issued to a Subscriber should be evidenced by an appropriate trouble ticket and resolution document, which will be provided to Provo. The Network Manager will provide monthly electronic reports detailing the performance of the Network relative to the SLA Standards. This report must include all calculations outlined in this SLA, noting variances to the defined SLA Standards. All exceptions (as specified in Section 10 of the SLA) used in making calculations will be explicitly noted with attendant explanations.

Credits due to a Subscriber will be reflected in consolidated monthly reports and will be paid or credited to Subscribers as soon as practicable.

14. Network Manager Response


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The Network Manager will mobilize staff within a maximum of thirty (30) minutes of notification of any multiple customer outage or any Network failure. The Network Manager will maintain spares for any significant network equipment that may result in an outage if non-functioning. The cost of spares may be subject to reimbursement by Provo under Sections B or E of Exhibit G. The Network Manager will maintain on-call staff for outage remediation. The on-call personnel will be proficient in trouble-shooting, diagnostics, and remediation of service-affecting Network problems.

15. General

Provo may at any time review, measure or audit Network Manager’s compliance with this SLA, and contact any Subscribers for such purpose. Provo reserves the right to change or modify this SLA from time to time, upon advance written notice to Network Manager. Network Manager shall promptly conform Subscriber forms, information, agreements and internet content to the requirements of this SLA, and shall promptly provide Provo with copies of such conformed forms, information, agreements and content.

16. Reporting The following reports will be provided by Network Manager to Provo on a monthly basis no later than thirty (30) days after the end of each Month. Network Manager will develop and propose for Provo’s approval reasonable reporting formats.

Monthly Subscriber Summary Report. This report will include the overall activity of Subscribers on the Network in a detail format. It will also include the number of accounts connected, disconnected, change of services and service calls, as well as a breakdown of Subscriber totals by service types, levels and pricing. Among other things, the report must include sufficient detail for Provo to readily (i) identify, track and amortize all capital expenditures; (ii) calculate all appropriate adjustments to the Net Transfer Payment under Exhibit B, (iii) calculate New Connection Payments, Replacement Customer Equipment and Reimbursable Expenditures subject to possible reimbursement by Provo under Exhibit G; (iv) determine Costs subject to possible reimbursement by Provo under Exhibit J; and (v) evaluate all outages that occurred on the Network to any Subscriber, including the time, status, resolution, and credits awarded or not awarded, and why.

Monthly Service Call Report. This report will include the number of service calls responded to, by Subscriber, and which calls were resolved during the reporting period. This report will also include the average time service calls remained open and the longest open time on every category of service call during the reporting period.


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Monthly SLA Report. This report will include all of the SLA general network measurements compiled and summarized with a listing by Subscriber of any credits issued during the month

Marketing Activity Report. This report will include all marketing activities during

the reporting period, the amount of money spent on each activity, and a brief analysis of the outcomes of the marketing efforts.

Annual audited financial statements to be provided by April 30 of each year.

Monthly interim income statements showing revenues and expenses for the Network, as well as for all of Veracity’s operations.

Monthly detail capital expenditure report.

Monthly detail of all CSR Calls.

Personnel information, including the name and address of each of Network

Manager’s employees.

Provo may require additional reasonable reports from time to time upon advance written notice to Network Manager. Provo will allow at least thirty (30) days for the Network Manager to prepare a new report.

In the event Network Manager fails without the advance written consent of Provo to provide any report required under this Agreement within thirty (30) days after its due date, Network Manager shall pay to Provo Ten Thousand Dollars ($10,000) per month or portion of any month until the required report has been provided in full.

EXHIBIT D PROVO NETWORK AGREEMENT

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Exhibit D

Retail Services; Services to Provo Purpose The purpose of this portion of Exhibit D is to specify the Retail Services to be provided by Network Manager to Subscribers. The Subscriber base is a critical asset to the Network and to Provo, and Network Manager must provide competitive Retail Services to satisfy the needs of Subscribers and retain them as customers of the Network. The telecommunications industry changes quickly and is extremely competitive, both from a pricing perspective and from a product perspective, and the parties must work closely to meet the changing demands of Subscribers in order to sustain the value of the Network. Retail Services

1. Network Manager agrees to offer and provide all Retail Services offered to Subscribers on the Network prior to the Effective Date, absent advance approval from Provo to change any such Retail Services. Network Manager may not provide any Retail Services other than those described herein without Provo’s advance written approval.

2. The Network Manager must offer and provide retail Internet, Transparent LAN Services

(TLS), Video and VoIP services to commercial, MDU and residential customers.

3. The products and pricing to be offered to commercial customers will depend on many factors, including the location, size and product requirements of the Subscribers.

4. The following table represents a list of the primary Retail Services offered by Network

Manager as of the Effective Date, and which will continue to be offered and provided absent prior written approval from Provo:

Residential Services

Data Speed Services

Data Transfer

Phone Services

Video Services

Other Fees and Services

30/30 Internet 200 GB Local Phone Basic Portal

50/50 Internet 300 GB Unlimited LD Expanded HD STB

80/80 Internet 400 GB Premier HD PVR STB

100/100 Internet 500 GB HBO TLS

600 GB Cinemax IAD

700 GB Encore Switch

800 GB Showtime

900 GB

1 TB


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Commercial Services

Data Speed

Data Transfer

Phone Service

Video Service

Other Fees and Services

5/5 Mbps 150 GB Local Phone Bulk Digital Video Portal

10/10 Mbps 200 GB LD Phone Bulk Analog Video HD STB

20/20 Mbps 300 GB LD Minutes HD PVR STB

30/30 Mbps 500 GB TLS

40/40 Mbps 1 TB IAD

50/50 Mbps Clear Channel Switch

60/60 Mbps

70/70 Mbps

80/80 Mbps

90/90 Mbps

100/100 Mbps

5. In addition, certain special products and services offered to Subscribers as of the

Effective Date will remain available and priced in accordance with the relevant Subscriber agreements, including the following. Any changes to such agreements must be approved in advance by Provo.

Special Services

1 Gbps Clear Channel

Pricing

1. The standard pricing for Retail Services and equipment rental offered by Network Manager as of the Effective Date shall be maintained after the Effective Date. Such prices shall not be changed without Provo’s advance written approval.

2. The parties recognize and agree that flexibility in Retail Services to be offered and in

pricing of Retail Services is necessary to meet the changing needs of Subscribers and to respond to competitive pressures.

3. The Network Manager shall continually monitor, evaluate and propose timely, appropriate and reasonable pricing structures in order to remain competitive, cover operating costs, recognize a reasonable profit and maintain customer loyalty. Pricing proposals shall reflect Subscriber requirements for speed, products and specialized network connections.

4. The Provo Telecommunications Manager shall approve all commercial order changes.


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5. Any additions, deletions or changes to the types of services and the pricing of retail products will require the written approval of Provo. The Network Manager shall submit to Provo for advance written approval all proposed changes in services, products or pricing and any supporting reasons for the said change. Pricing proposals submitted by the Network Manager will be promptly reviewed and approved, rejected or modified by Provo. Network Manager will changes services and prices as directed by Provo.

Services to be Provided to Provo

Purpose The purpose of this portion of Exhibit D is to specify the services that Network Manager will continue to provide to Provo.

Services to be Provided

1. Network Manager shall continue to provide connectivity and IP services to Provo and the Provo School District consistent with the services provided to Provo and the Provo School District as of the Effective Date. All such IP services shall be provided without additional charge; the value of such services has been taken into account in setting the Net Transfer Payment. No changes to such services and products may be made without the prior written approval of Provo.

2. New or different services or products requested by Provo may result in additional costs to

Network Manager. Network Manager shall provide any other or additional services requested by Provo for the amount of any incremental costs incurred by Network Manager in providing the same.

EXHIBIT E PROVO NETWORK AGREEMENT

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Exhibit E

Pre-Existing Veracity Accounts within Provo City

[To be Added]

EXHIBIT F PROVO NETWORK AGREEMENT

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Exhibit F

NETWORK OPERATION CENTER LEASE AGREEMENT

This Network Operation Center Lease Agreement (“Lease”), effective as of January 1, 2012, is made by and between PROVO CITY (“Landlord”), a Utah municipal corporation, and VERACITY NETWORKS LLC (“Tenant”), a Utah limited liability company.

NOW, THEREFORE, in consideration of the covenants, representations, warranties and mutual agreements hereinafter set forth, the parties hereto agree as follows: 1. LEASE 1.1 Landlord does hereby lease to Tenant and Tenant hereby leases from Landlord that certain building and other equipment and personal property described on Appendix “1” attached hereto (hereinafter called the “Premises”), known as the network operations center and warehouse. This Lease is subject to the terms, covenants, and conditions set forth herein. 1.2 Delivery; Condition. Tenant is leasing the Premises “as is” and it shall be the responsibility of Tenant to make necessary improvements, if any, to facilitate its intended use. Landlord shall not be required to make any improvements to the Premises. Further, Landlord shall not provide Tenant with any allowance or funds for any Tenant improvements 2. TERMS AND EXTENSIONS 2.1 Term. The “Term” of this Lease shall be from January 1, 2012, until the term of the Network Operating and Lease Agreement (“Network Agreement”) of even date herewith between the parties expires in accordance with Section 2.3 of the Network Agreement. 3. BASE RENT. 3.1 Obligation to pay. The Base Rent shall be $6,666.67 per month ($80,000 per year). Tenant agrees to pay the Base Rent for its use and occupancy of the Premises, commencing on the Commencement Date and continuing throughout the Term of this Lease, payable in advance on the first day of each calendar month through the Lockbox arrangement described in the Network Agreement and Exhibit A to the Network Agreement. It is understood and agreed by the parties hereto that that Base Rent is a flat amount that is not calculated or based upon the actual, measured or stated square footage of the Premises or the Building.


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4. NET LEASE. 4.1 Tenant to Bear Costs. It is the intent of both parties hereto that the Base Rent shall be absolutely net to Landlord throughout the Term and, except for the items mentioned below, that all costs, expenses and obligations of every kind relating to the Premises which may arise or become due during the Term shall be paid by Tenant and that Landlord shall be indemnified by Tenant against such costs, expenses and obligations; provided, however, that, notwithstanding anything to the contrary in this Lease, Tenant shall not be responsible to pay any portion of any expense that Landlord accounts on Landlord’s regular accounting as a capital improvement or capital expense. 4.2 Taxes. 4.2.1 Tenant shall pay its proportionate share of all real estate taxes levied or assessed by lawful taxing authorities against the land, buildings or improvements comprising the Premises. 4.2.2 As used herein, “Real Estate Taxes” shall mean all real estate or rental taxes, assessments, ordinary or extraordinary, foreseen or unforeseen, which may be levied on, assessed against, or charged with respect to the ownership of, or other equivalent interest in: (i) land, and (ii) buildings, structures, and other improvements situated on such land. 4.2.3 Tenant shall pay all Real Estate Taxes, if any, for the current tax year when due upon thirty (30) day notice from Landlord. A tax bill submitted by Landlord to Tenant shall be conclusive evidence of the amount of taxes assessed or levied, as well as the items taxed. 4.2.4 Tenant shall also be solely responsible for and shall pay before delinquency all municipal, county, state or federal taxes assessed during the Term against any personal property of any kind, owned by or placed in, upon or around the Premises by Tenant, including, without limitation, leasehold improvements, trade fixtures, inventory, equipment, machinery, furniture and furnishings. 4.3 Utilities. Tenant shall activate and use the utilities under accounts in Tenant’s name. Tenant agrees that it will not install any equipment which will exceed or overload the capacity of any utility facilities and that if any equipment installed by Tenant shall require additional utility facilities; the same shall be installed at Tenant's expense in accordance with plans and specifications to be approved in writing by Landlord. 4.4 Insurance. Tenant shall maintain insurance of the type and in the amounts described on Exhibit H to the Network Agreement. Before taking possession of the Premises, Tenant shall provide Landlord with a certificate of insurance evidencing that such policies are in place and shall provide a current certificate of insurance annually thereafter. The proceeds of such insurance in case of loss of, or damage to, the Premises shall be paid to Landlord, and the


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applicable portions thereof shall be applied on account of the obligations of Landlord to repair and/or rebuild the Premises. Any proceeds of Premises insurance not required for such purpose shall be the sole property of the Landlord. 5. PERMITTED USE. It is understood that Tenant shall use the Premises solely for the purpose of conducting its Business, which includes, among other things, operating a fiber-optic communication system and delivering communication products and services including, but not limited to, voice, video, data, and home security services over the system (the “Tenant’s Business”), and any related activities which are typically carried on in such a business. 6. USES PROHIBITED. Tenant shall not do or permit anything to be done in or about the Premises nor bring or keep anything therein which is not within the permitted use of the Premises which will in any way increase the existing rate of or affect any fire or other insurance upon the building in which the Premises are located or any of its contents, or cause a cancellation of any insurance policy covering said building or any part thereof or any of its contents. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the buildings in which the Premises are located or injure or annoy them or use or allow the Premises to be used for any improper, unlawful or objectionable purpose; nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or allow to be committed any waste in or upon the Premises. 7. COMPLIANCE WITH LAW. Tenant shall not use the Premises, or permit anything to be done in or about the Premises, which will in any way conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar bodies not or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises, excluding structural changes not related to or affected by Tenant's improvements or acts. 8. HAZARDOUS SUBSTANCES AND TOXIC WASTE. As used herein, the term “hazardous material” is defined as any hazardous or toxic substance, material or waste which now is or becomes regulated or restricted by any local, governmental authority, the State of Utah, or the United States Government. Tenant agrees to obey all laws and regulations concerning such hazardous materials and agrees to indemnify and hold Landlord harmless from and against all loss, claims, damages, suits (including reasonable attorneys' fees and costs) in connection with any hazardous material Tenant, its agents, employees, sublesees, concessionaires or others shall bring upon or release in the Premises. In the event Tenant, in the normal course of operation of its business deals with the substances which may be consider hazardous material as defined herein, Tenant shall be solely responsible for the proper use and disposal of such hazardous materials in accordance with all applicable laws, and Tenant hereby agrees to


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indemnify Landlord with respect to the use and disposal of such hazardous materials (both during and after the Term) and shall provide Landlord with sufficient evidence of its compliance with the foregoing. 9. ALTERATIONS AND ADDITIONS. Tenant shall not make or allow to be made any alterations, additions or improvement to or of the Premises or any part thereof without first obtaining the written consent of Landlord, and such consent shall not be unreasonably withheld when such alterations, additions or improvements are consistent with a business which is typical of the Tenant’s Business type. Approved alterations, additions or improvements to or of said Premises shall at once become a part of the realty and belong to the Landlord and shall be surrendered with the Premises. 10. REPAIRS. Tenant shall, at Tenant's sole cost and expense, keep the Premises and every part thereof in a condition that meets or exceeds the condition of the Premises upon commencement of the Term of this Lease, normal wear and tear excepted, and repair, maintain, or replace, without limitation, any storefront, doors, window casements, glazing, and all plumbing, utility, and electrical systems, and shall be responsible for lawn maintenance and snow removal, except Tenant shall not be responsible for structural or foundational issues requiring repair. Tenant shall, upon the expiration or earlier termination of this Lease hereof, surrender the Premises to the Landlord in a condition that meets or exceeds the condition of the Premises at the commencement of the Term of this Lease, ordinary wear and tear and damage from causes beyond the reasonable control of Tenant excepted, and additionally, upon such surrender, all plumbing, utility, electrical and HVAC systems in the Premises at that time shall be in a condition that meets or exceeds the condition of the Premises at the commencement of the Term of this Lease, normal wear and tear excepted. Any damage to adjacent premises caused by Tenant's use of the Premises shall be repaired at the sole cost and expense of Tenant. 11. LIENS. Tenant shall keep the Premises free from any liens arising out of any work performed or materials furnished on or to the Premises, federal or state taxes, or obligations incurred by or on behalf of Tenant. 12. ASSIGNMENT AND SUBLETTING. Tenant shall not either voluntarily, or by operation of law, assign, transfer, or encumber this Lease or any interest therein and shall not sublet the Premises or any part thereof, or any right or privilege appurtenant thereto, or allow any other person (the employees, agents, servants, and invitees of Tenant excepted) to occupy or use the Premises, or any portion thereof, without first obtaining the written consent of Landlord, which consent shall not be unreasonably withheld. Consent to one assignment, subletting, occupation or use by any other person shall not be deemed to be consent to any subsequent assignment, subletting, occupation or use by any other person. Consent to any such assignment or subletting shall in no way relieve Tenant of any liability under this Lease. Any such assignment or subletting without such consent shall be void and shall, at the option of the Landlord, constitute a default under the terms of this Lease. Tenant shall have the right to provide collocation and telecommunications hosting services, lease or rent to third-parties collocation or


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telecommunications hosting space within the Premises, and to enter into any agreements necessary for the provision of such services and space, but only for so long as this Lease remains in effect. 13. HOLD HARMLESS. Tenant shall indemnify and hold harmless Landlord against and from any and all claims arising from Tenant's use of the Premises or from the conduct of its business or from any activity, work, or other things done permitted or suffered by the Tenant in or about the Premises, and shall further indemnify and hold harmless Landlord against any and all claims arising from and breach or default in the performance or any obligation on Tenant's part to be performed under the terms of this Lease, or arising from any act or negligence of the Tenant, or any officer, agent, employee, guest, or invitee of Tenant, and from all costs, attorney's fees, and liabilities incurred in or about the defense of any such claim or any action or proceeding brought against Landlord by reason of such claim. Tenant, upon notice from Landlord, shall defend the same at Tenant's expense by counsel reasonable satisfactory to Landlord. Tenant, as a material part of the consideration to Landlord, hereby agrees to insure against, and assumes all risk of, damage to property or injury to persons in, upon or about the Premises, and Tenant hereby waives all claims in respect thereof against Landlord. Tenant shall give prompt notice to Landlord in case of any injury, casualty or accidents on or in the Premises. 14. SUBROGATION. Landlord and Tenant hereby mutually waive their respective rights of recovery against each other for any loss to the extent covered by fire, extended coverage and other property insurance policies existing for the benefit of the respective parties. 15. HOLDING OVER. If Tenant remains in possession of the Premises or any part thereof after the expiration of the term hereto with the express written consent of Landlord, such occupancy shall be a tenancy from month to month. 16. ENTRY BY LANDLORD. Upon twenty-four hour advance notice to Tenant, Landlord reserves, and shall at any and all times have the right, to enter the Premises to inspect the same, to show the Premises to prospective purchasers or tenants, to post notices of non-responsibility, to repair the Premises and any portion of the building of which the Premises are a part that Landlord may deem necessary or desirable, without abatement of Rent. Notwithstanding the foregoing, Landlord shall have the right, without prior notice to Tenant, to use any and all means which Landlord may deem proper to open any doors in an emergency, in order to obtain entry to the Premises without liability to Tenant except for any failure to exercise due care for Tenant's property, and any entry to the Premises obtained by Landlord by any of said means, or otherwise, shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or detainer of, the Premises, or an eviction of Tenant from the Premises of any portion thereof. Landlord agrees to treat and protect any proprietary information gained from any inspection as confidential information. 17. TENANT'S DEFAULT. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant:


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17.1 The vacating or abandonment of the Premises by Tenant. 17.2 The failure by Tenant to make any payment of Rent or any other payment required by Tenant hereunder, as and when due. 17.3 The failure by Tenant to keep current the policies of insurance required by Section 4.4. 17.4 The failure by Tenant to remove any tax or other liens within ninety (90) days. 17.5 The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be performed by the Tenant, other than described in Section 17.1 – 17.4 above, where such failure shall continue for a period of forty-five (45) days after written notice thereof is given by Landlord to Tenant; provided however, that if the nature of Tenant's default is such that more than forty-five (45) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant promptly commences such cure and thereafter diligently prosecutes such cure to completion. 17.6 The filing by or against Tenant of a petition to have Tenant adjudged a bankrupt, or a petition for reorganization or arrangement under any law relating to bankruptcy. 17.7 The failure of Tenant to timely cure any default under the Network Agreement. 18. LANDLORD'S REMEDIES. Upon the occurrence of any of the events set forth in Section 17, Landlord shall have the option to take any or all of the following actions, without further notice or demand of any kind to Tenant, or to any guarantor of this Lease, or to any other person: 18.1 Landlord may immediately reenter and remove all persons and property from the Premises, storing such property in a public place, warehouse, or elsewhere at the cost and risk of the Tenant, all without service of notice or resort to legal process (unless required by law) and without being deemed guilty of, or liable in, trespass, forcible entry or in damages resulting from such reentry and removal. No such reentry or taking possession of the Premises by Landlord shall be construed as an election on its part to terminate this Lease unless a written notice of such intention is given by Landlord to Tenant. All property of Tenant which is stored by Landlord pursuant hereto may be redeemed by Tenant within sixty (60) days after Landlord takes possession thereof upon payment to Landlord of all amounts due hereunder and of all cost incurred by Landlord in moving and storing such property. 19.2 Landlord may terminate this Lease immediately upon Tenant’s failure to cure within the cure periods described in Section 17. In the event of such termination, Tenant agrees to immediately surrender possession of the Premises. Such termination shall not relieve Tenant


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of any obligations hereunder which has accrued prior to the date of such termination and in addition to such accrued Rent and other obligations, Landlord may recover from Tenant all damages it has incurred by reason of Tenant's breach, including the cost of recovering the Premises and reasonable attorney's fees. 19.3 These remedies given to Landlord shall be cumulative and shall be in addition and supplemental to all other rights or remedies which Landlord may have at equity or under the laws then in force. 20. DEFAULT BY LANDLORD. Subject to the provisions in this Lease, Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord; provided, however, that if the nature of Landlord's obligation is such that more that thirty days are required for performance, then Landlord shall not be in default if Landlord commenced performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. 21. RECONSTRUCTION. In the event the Premises are damaged by fire or any other peril, Landlord may elect to repair the same, in which case this Lease shall remain in full force and effect, except that Tenant shall be entitled to a proportionate reduction in Rent based upon the extent to which the damage and making of such repairs shall reasonably interfere with the business carried on by the Tenant in the Premises. If Landlord does not take reasonable action to repair such damage, Tenant shall have the option to terminate this Lease effective thirty (30) days after Landlord receives a written notice of termination from Tenant. Landlord shall not be responsible for any damage by fire or other cause, or to make any repairs or replacements of, any leasehold improvements, fixtures, or personal property of Tenant. 22. SIGNS. The Tenant may affix and maintain only such signs, names, and descriptive materials as shall have first received the written approval of Landlord as to type, size, color, location, copy nature and display qualities. Anything to the contrary in this Lease notwithstanding, Tenant shall not affix any sign to the roof. The design prepared by Tenant and approved in writing by Landlord must be in accordance with any sign criteria governed by any applicable city or country laws, regulations and ordinances. Any signs erected on the Premises by Tenant shall be removed, and all damage corrected, by Tenant upon termination of this Lease. 23. BROKERS. Tenant warrants to Landlord that no brokerage fees or commissions are due as a result of this Lease arising by virtue of Tenant's actual or claimed agreements or obligations and agrees to indemnify and hold Landlord harmless from and against any and all claims, liabilities and expense (including reasonable attorney's fees) imposed upon, asserted or incurred against the Landlord as a consequence of any breach of this representation.


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24. GENERAL PROVISIONS. 24.1 Joint Obligation. If there be more than one Tenant that has been approved by the Landlord, the obligations hereunder imposed shall be joint and several. 24.2 Time. Time is of the essence under this Lease and each and all of its provisions in which performance is a factor. 24.3 Successors and Assigns. The covenants and conditions herein contained, subject to the limitations and restrictions as to assignment, apply to the heirs, successors, executors, administrators and assigns of the parties hereto. 24.4 Quiet Possession. Upon Tenant paying the Rent reserved hereunder and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire Term, subject to all the provisions of this Lease and excluding acts of God, including, but not necessarily limited to, lightning, earthquakes, fires, explosions, floods, other natural catastrophes, sabotage, utility outages, terrorist acts, acts of a public enemy, acts of government or regulatory agencies, wars, blockades, embargoes, insurrections, riots or civil disturbances. 24.5 Late Charges. If Tenant fails to pay Rent or other sums due hereunder when due, such overdue rent shall bear interest at the rate of one and one-half percent (1.5%) per month until paid. 24.6 Prior Agreements. This Lease contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no prior agreements or understanding pertaining to any such matters shall be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. 24.7 Choice of Law. This Lease shall be governed by the laws of the State of Utah without regard to conflicts of law principles that would require the application of any other law. 24.8 Attorneys' Fees. In the event of any action or proceeding brought by either party against the other under this Lease, the prevailing party shall be entitled to recover for the fees of its attorneys in such action or proceeding, including costs and fees incurred in appeal or in bankruptcy court, in such amount as the court may adjudge reasonable as attorneys' fees. In addition, should it be necessary for Landlord to employ legal counsel to enforce any of the provisions herein contained, Tenant agrees to pay all attorneys' fees and court costs reasonable incurred.


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24.9 Notices. Any notices under this Lease shall be given in writing by registered or certified mail, postage prepaid, return receipt requested and addressed as follows: To Landlord: Provo City Corporation Provo City Mayor’s Office 351 West Center St. Provo, Utah 84601 Attention: Mayor With a copy to: City Attorney Provo City Corporation Provo City Attorney’s Office 351 West Center Street Provo, Utah 84063 To Tenant: Veracity Networks, LLC 744 N. 300 W. Provo, Utah 84601 Attn: Drew Peterson or to such other addresses as may hereafter be designated in writing by the respective parties hereto. The time of rendition or giving of notice shall be deemed to be the time when the same is actually received or delivery is attempted by certified or registered mail. 24.11 Authority of Tenant and Landlord. Each individual executing this Lease on behalf of the parties represents and warrants that such individual is duly authorized to execute and deliver this Lease in accordance with the bylaws or other governing documents, and that this Lease is binding upon said party.



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IN WITNESS HEREOF, this Network Operations Center Lease Agreement has been executed by the parties hereto as of the date first above written.

Landlord:

PROVO CITY CORPORATION

By: John R Curtis It’s Mayor

Tenant:

VERACITY NETWORKS LLC

By: Veracity Networks, Inc., its managing member

By: Drew Peterson It’s CEO


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APPENDIX “1” TO NETWORK OPERATION CENTER LEASE AGREEMENT DESCRIPTION OF THE LEASED PREMISES

(a) All buildings and structures (the “Buildings”) constructed on that certain land (the “Property”) located at 744 North 300 West, Provo, Utah, as described in the attached plot plan; (b) All leasehold improvements located at or on the Property or the Buildings, including, but not limited to, the specific parking spaces indicated on the attached plot plan. Additional parking spaces may be included within this Lease, upon advance written agreement of the parties as to additional rent to be paid; (c) All trade fixtures that are physically attached to the Buildings, including, but not limited to, racks and shelving; provided, however, that all computer, fiber optic, wiring and other communications equipment shall not be considered “trade fixtures” for purposes of this paragraph; (d) All furnishings located in the Buildings; provided, however, that all computer, fiber optic, wiring and other communications equipment shall not be considered “furnishings” for purposes of this paragraph; and (e) All heating, cooling, electrical, plumbing, mechanical, fire sprinkler, and all other equipment and systems of the Buildings, including, but not limited to, building electrical backup systems; provided, however, that all computer, fiber optic, wiring and other communications equipment shall not be considered “other equipment and systems of the Buildings” for purposes of this paragraph.


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Attachment to Appendix “1” to Network Operation Center Lease Agreement

Plot Plan

[To be attached]

EXHIBIT G PROVO NETWORK AGREEMENT

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Exhibit G

Network Manager Responsibilities; Reimbursable Expenditures; Replacement Customer Equipment; Insurance Claims; New Service Connections

Purpose

The parties recognize that the Network must be operated and maintained in good working order to retain Subscribers and preserve the value of the Network. The purpose of this Exhibit G is to define the roles, financial obligations, duties and responsibilities of the parties in connection with new Subscriber hook-ups, and maintenance, repair and replacement of the Network. Any disputes as to any such issues will be resolved upon the completion of any necessary work in order to ensure that the system continues operating properly and providing Retail Services to Subscribers.

Section A. Responsibilities of Network Manager

1. Network Manager will meet with the Provo Telecommunications Manager as required or requested to plan for the capital needs of the Network, and to review invoicing, payments and pricing issues, to consider budget requirements, and make necessary assignments and adjustments to address maintenance and support of the Network.

2. Network Manager will be responsible for prudent operation, maintenance and repair of all aspects of the Network according to general reasonable industry standards for similar networks. Network Manager’s obligations include:

a. Supervising, monitoring and controlling Network devices; b. Replacing and repairing equipment and fiber failures; c. Troubleshooting, diagnosing and investigating operating problems and serving the

needs of Subscribers; d. Maintaining video antennas and satellite farms in good working order; and e. Performing testing of the Network to prevent major failures or preventable

interruptions to the Network.

3. Costs incurred in connection with operation, maintenance and repair of the Network shall be borne solely by Network Manager, subject to reimbursement for Reimbursable Expenditures as described in Section B, below, and for New Service Connections as described in Section E, below.

4. If there is a failure of a critical device or a major interruption of service, Network Manager shall immediately investigate and determine the cause and necessary repairs to correct the problem or outage. Network Manager shall diligently remedy the situation and make all needed repairs. To the extent the remedy will require Reimbursable Expenditures or Replacement Customer Equipment that may be the responsibility of


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Provo under Section B, below, Network Manager must give immediate notice to Provo and follow instructions provided by Provo. Exhibit “C” provides required response times.

5. Network Manager shall, at its expense, provide all skills and labor necessary for all

appropriate maintenance, repairs or replacements of Network components. Provo will be responsible for reimbursement of out-of-pocket costs for Reimbursable Expenditures and Replacement Customer Equipment as specified in Section B, below, and for New Service Connections as specified in Section E, below. Network Manager shall prepare and retain change control documents and roll-back procedures in case an upgrade or repair does not work properly. Network Manager will assist and use its best efforts to resolve matters in an expeditious and cost effective manner, which may include use of third party consultants or maintenance firms.

6. Network Manager shall prepare and submit for Provo’s approval equipment renewal and

replacement proposals based on a predictive and preventive maintenance plan. All reasonable efforts shall be made to identify and resolve potential problems before a catastrophic event takes place.

7. Network Manager shall maintain a skilled and professional staff to handle its maintenance duties. Network Manager will have the appropriate staff and skill able to respond to emergencies and accidents within thirty (30) minutes. Network Manager shall maintain reasonable and industry standard equipment spares and inventory, including spare equipment for new customer installations. Provo will be responsible for out-of-pocket cost for equipment spares and inventory as specified in Section B, below.

8. Network Manager shall oversee repairs of any work to any equipment covered by warranty or paid by third party suppliers. Veracity’s cost of overseeing such repairs and work will be borne by Veracity. Any exceptions must be approved in advance by Provo.

9. Network Manager shall be responsible for all inside wiring for new Subscriber hook-ups. Network Manager shall provide one inside wiring connection per retail service to the Subscriber at no cost to the Subscriber and in accordance with the terms of the Subscriber agreement, and subject to reimbursement from Provo as specified in Section E, below. Network Manager may charge reasonable extra charges for wall fishes and special inside home wiring, which charges must be competitive with others in the wiring business. Provo may elect, in its sole discretion, to perform, manage or hire others to perform in-home wiring services.

10. If a Subscriber with existing fiber and equipment in the premises requests Retail Services, Network Manager shall connect the new Subscriber without any cost to Provo or the Subscriber.


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11. Network Manager shall suggest pricing and cost estimates for new service connections

for commercial and MDUs for Provo’s advance approval. Network Manager shall also provide cost estimates to Provo upon request for fiber extensions, equipment replacements, Replacement Customer Equipment and Reimbursable Expenditures.

Section B. Reimbursable Expenditures; Replacement Customer Equipment

1. Provo will be responsible to reimburse Network Manager for Reimbursable Expenditures and Replacement Customer Equipment as specified in this Section B.

2. Provo will be responsible to reimburse Network Manager for out-of-pocket costs incurred in purchasing capital improvements for the Network, including conduit, roadwork and pulls, equipment repair and replacement, and new fiber and equipment, only to the extent (i) such costs are properly categorized as capital expenditures in accordance with generally accepted accounting principles (GAAP) and government accounting standards (GAS) and (ii) such costs exceed $1,000 for any discrete item or project (“Reimbursable Expenditures”).

3. Provo will be responsible to reimburse Network Manager for out-of-pocket costs incurred

in purchasing network portals and small form factor pluggable optics (SFPs) required to replace defective equipment for existing Subscribers (“Replacement Customer Equipment”) to the extent and as approved in advance by Provo.

4. Reimbursable Expenditures and Replacement Customer Equipment must be approved in advance by Provo.

5. Provo will be responsible for determining, planning, directing and paying for extensions

of the Network, including fiber extensions into newly annexed areas of Provo.

6. Network Manager must obtain Provo’s prior written approval prior to adding any potential Subscriber or changing services to a Subscriber that may result in systemic impacts to the Network, such as a Subscriber that could create system demands requiring capital improvements to the Network beyond standard portals and equipment.

7. Provo may elect, in its sole discretion, to perform, manage or hire others to perform any Network maintenance, capital improvements or other work that may involve Reimbursable Expenditures or Replacement Customer Equipment. For such purposes, Network Manager shall promptly provide Provo with detailed cost information upon request, including bids, invoices and any other requested records.


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8. Network Manager shall promptly pay or credit to Provo all amounts collected by Network Manager from any Subscribers for any Reimbursable Expenditures, New Replacement Customer Equipment or any other costs for which Provo is responsible under the Agreement.

Section C. Disputes

1. If Network Manager disputes responsibility for any costs incurred in operating, maintaining and repairing the Network, Network Manager shall submit, explain and support its dispute to Provo for consideration. Provo will timely review the dispute in good faith.

2. If the parties are unable to resolve any disputes through good-faith negotiations, either party may pursue any rights or remedies available to it.

Section D. Insurance Claims

1. In the event of an accident or incident involving a third party or damage to person or property involving any aspect of the Network, Network Manager shall immediately provide notice of the same to Provo and any applicable insurance provider. Provo shall immediate investigate the matter, assess the situation, and provide instructions and guidance to Network Manager.

2. Network Manager shall perform any assignment or restoration work as directed by Provo in the restoration of the system. Costs of restoration shall be borne by the responsible party in accordance with this Agreement.

Section E. New Service Connections

1. Provo shall reimburse Network Manager the following amounts for each new service connection installed by Network Manager for a new Subscriber on the Network after the Effective Date, which amounts are intended to cover the average costs of a new service connection, including conduit, drop, fiber, set-top box and portal kit:

Residential *

Type Description Rate **

Underground, with conduit

Labor - Materials -

$ ________ $ ________


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Overhead Labor - Materials -

$ ________ $ ________

Underground, without conduit

Labor - Materials -

$ ________ $ ________

* The standard Residential Portal Kit will include:

100 Mbps Portal 3 usable 100 mbps ports 2 small form -factor pluggable optics (SFP) Enclosure For Subscribers also contracting for telephone service, the standard Residential Portal Kit will also include: 2 line analog telephone adapter (ATA) / integrated access devise (IAD) Two Y connectors Battery

** The reimbursement rates specified above assume an average drop length of 150 feet. If the average drop length varies significantly from 150 feet in a 3-month period, Network Manager and Provo will negotiate in good faith to reach agreement on appropriate adjustments to the installation reimbursement rates.

Commercial *

Type Description Rate **

Overhead Labor - Materials -

$ ________ $ ________

Underground Labor - Materials -

$ ________ $ ________

* The standard Commercial Portal Kit will include:

100 Mbps Portal


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3 usable 100 mbps port 2 small form -factor pluggable optics (SFP) Enclosure

For Subscribers also contracting for telephone service, the standard Commercial Portal Kit will also include: 2 line analog telephone adapter (ATA) / integrated access devise (IAD) Two Y connectors Battery Battery

** The reimbursement rates specified above assume an average drop length of 365 feet. If the average drop length varies significantly from 365 feet in a 3-month period, Network Manager and Provo will negotiate in good faith to reach agreement on appropriate adjustments to the installation reimbursement rates.

2. If a customer pays all or any portion of its installation costs, all such payments shall be

paid or credited to Provo to offset reimbursable installation costs specified above. 3. If a customer’s needs require different equipment than the standard equipment specified

above, Network Manager will provide Provo with the cost of the requested equipment for advance approval before the equipment is installed.

4. The reimbursement rates specified above may be adjusted from time to time to reflect

updated costs, with the advance approval of Provo. 5. Provo may elect, in its sole discretion, to change any equipment, equipment types,

equipment specifications, components, or installation procedures to be used in New Service Connections or otherwise, subject to any appropriate adjustments in the reimbursement rates specified in this Section E.

6. Provo may elect, in its sole discretion, to acquire and supply any or all components of

conduit, drop, fiber, set-top box or portal kits for New Customer Installations, and may purchase, perform, manage or hire others to purchase, perform or manage equipment, installations and any other aspect of New Customer Connections on the Network. For such purposes, Network Manager shall promptly provide Provo with detailed cost information upon request, including bids, invoices and other requested records.

EXHIBIT I PROVO NETWORK AGREEMENT

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Exhibit H

Insurance Requirements

Insurer(s) Providing Coverage – All Insurers must have an AM Best rating of A- or better, with a minimum financial size of VIII. Insured –Network Manager shall be listed as the Insured on the Certificate of Insurance. Additional Insured – Provo shall be listed as an additional insured on the Certificate of Insurance Coverage Requirements – Each specific project or event will have different coverage requirements, based upon the operations of the Insured. General Liability – The ‘Commercial General Liability’ box must be checked, as well as the ‘Occur’ – Occurrence box and the Additional Insured box on all Certificates of Insurance. Limits should be as follows: $1,000,000 limit for each occurrence and personal & advertising injury, $2,000,000 limit for general aggregate and products – completed operations aggregate.

Endorsements – The following endorsements are also required that grant additional insured status:

1. CG 20 10 (Or Equivalent) – Provides additional insured status for all operations, except Products – Completed operations.

2. CG 20 37 (Or Equivalent) – Provides additional insured status for Products –

Completed operations. 3. Railroads – If working being performed within 50’ of railroad right-of-way, railroad

exclusion must be removed. 4. Policy Aggregate Limits of Insurance Per Project (Endorsement ensures General Liability limits shall not become impeded by a loss or claim at another project site or operation of the lessee.) 5. Waiver of Subrogation - In favor of Certificate Holder (Provo) 6. Additional Insured – Primary and Noncontributory

Automobile Liability – ‘Any Auto’ box must be checked, as well as the additional insured box. Provide Waiver of Subrogation in favor of Certificate Holder. Coverage shall apply on a primary / non-contributory basis for Certificate Holder.

EXHIBIT I PROVO NETWORK AGREEMENT

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Endorsements

1. CA 99 48 03 06 (Or Equivalent) – Pollution Liability for Covered Autos.

2. Additional Insured – Primary and Noncontributory 3. Waiver of Subrogation - In favor of Certificate Holder

Umbrella / Excess Liability –Limits required are: $10,000,000 Occurrence / $10,000,000 Aggregate, and shall apply excess of General Liability, Automobile Liability and Employers Liability. Workers’ Compensation – ‘WC-Statutory Limits’ box must be checked, as well as Employers Liability limits must be set at $1,000,000. Provide Waiver of Subrogation in favor of Certificate Holder. Technology Errors & Omissions - $1,000,000 Occurrence / $1,000,000 Aggregate Additional Insured –Written contract must be in place, Certificates must state ‘additional insured per written contract’ Commercial Property Insurance – Shall be written on a special form commercial property insurance policy, with the building valued at no less than replacement cost by Marshal, Swift & Boeckh or similar valuation methodology. This policy shall also include coverage against Mechanical Breakdown or Equipment Breakdown by Boiler & Machinery endorsement. This policy shall include the following minimum supplemental limits of insurance:

1. Earthquake - $1,000,000 2. Flood - $1,000,000

Special Property Insurance – Shall provide a limit of no less than $5,000,000, insuring against damage to Fiber infrastructure above, on or below ground. This policy shall also include the following minimum supplemental limits of insurance:

1. Earthquake - $1,000,000 2. Flood - $1,000,000

EXHIBIT J PROVO NETWORK AGREEMENT

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Exhibit I

Disclosures as to Condition of Network

[To be Added]

EXHIBIT K PROVO NETWORK AGREEMENT

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Exhibit J

Reimbursement of Certain Costs Upon Termination

1. Upon the expiration or other termination of the Agreement for any reason other than a default by Network Manager in the performance of any of its material obligations, for each new Subscriber added to the Network after the Effective Date with a contract approved by Provo and a commitment of at least two years, Provo shall reimburse Network Manager up to the following amounts, to the extent demonstrated by Network Manager to Provo’s reasonable satisfaction to have actually been incurred by and not reimbursed to Network Manager, for each such new Subscriber, less 1/24th of such amount for each full or partial month that has elapsed from the date of installation of new facilities for such new Subscriber until the date of expiration or termination of this Agreement:

(a) Triple-play residential Subscriber:

Commission: $110 In home wiring: $137 Provisioning: $ 19

Maximum: $266 (b) Double-play Internet/Video residential Subscriber:

Commission: $ 99 In home wiring: $137 Provisioning: $ 19

Maximum: $255 (c) Double-play Internet/Phone residential Subscriber:


Maximum: $221 (d) Single-play Internet residential Subscriber:


Maximum: $174

EXHIBIT K PROVO NETWORK AGREEMENT

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(e) Commercial and Multi-Dwelling Unit (MDU) Subscribers: Commission, wiring and provisioning costs as approved by Provo in advance

(f) An amount negotiated by the Parties in advance for any other new Subscriber.

2. The reimbursement levels specified in Section 1, above, may be adjusted by mutual agreement of the Parties in connection with approval by Provo of material changes to Network Manager’s marketing plans.

3. For purposes of this Exhibit J, “Monthly Recurring Revenue” means the contractually committed recurring monthly base fee for data, phone and/or video services to be provided to the Subscriber, as specified in the customer service agreement at the time of execution. No taxes, equipment rental charges or other fees or charges will be included in Monthly Recurring Revenue.