HomeMy WebLinkAbout10 Broadband A enda Item #
III 111� i � 1
Memorandum
To: Board of Directors
From: Alan Harry, Director of Telecommunications Services
Date: February 26, 2004
Subject: Broadband Business Implementation; Consideration of Service Agreement for
broadband content with Eagle Broadband
Summary
In order to provide Broadband services over a FTTU (Fiber to the User) network the District
must choose the way in which content(Video/Data) is received.
Various means exist, the most reliable are to either construct a headend (receive and
transmission facility) and purchase services directly from the content providers, or, purchase
content on a wholesale basis from an integrated communications service provider.
History
At your first meeting in November '03 you voted to purchase content on a wholesale basis,
entered into a binding Letter of Intent with Eagle Broadband, and directed staff to negotiate a
Service Agreement with Eagle for the wholesale provision of video and data services.
New Information
Over the past several months, staff has met with Eagle preparing the attached Service
Agreement for the purchase of video and data content. This document is one of the most
important Broadband Agreements the District will enter into. As such, throughout the
process District Staff has enlisted the assistance of Aggregate Networks (Rick Kaufman and
Laurence Lewis) and District General Counsel Steve Gross to ensure that the Agreement
met all legal requirements and followed the financial assumptions used in our Broadband
Business Case.
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f
As you review the Agreement you can see that the roles of Eagle and the District have been
very well delineated. Services being purchased and their associated costs have been
discussed in detail within Exhibit B. Numerous service level standards that must be
consistently met by both Eagle and the District have been defined. It is also important to
note that the District may, from time to time, alter / renegotiate the video and data services
received from Eagle. The ability to make changes is an important aspect of the Agreement
in that content such as video and data are ever changing, thus requiring some fluidity.
As an example, as drafted the Agreement shows the District purchasing specific channels at
specific costs for both the Basic and Expanded Channel Line-Ups. As of this writing these
line-ups and charges are appropriate, however, at the time the District launches video
services one or more of these channels may no longer be available, or their cost may be
such that they must be placed in a different service tier.
The term of this Agreement is for three years. This term has been chosen upon the
recommendation of Bond Counsel, and is in line with the requirements of a tax-exempt
lending.
Due to the capital intensive work that must be undertaken by Eagle, including the
construction of a video headend facility, the Agreement grants Eagle exclusivity for the
provision of video and data services for a period of eighteen months after the completion of
the District's Fiber Network. Staff will evaluate any and all new players in this space at the
end of the eighteen month period, and make recommendations to the Board if a change in
service providers is warranted.
A very important provision within the Service Agreement is that of the District's remedy in the
event that Eagle was to default. As shown in Section 7.3.a.3, 'The District may purchase
Eagle's head-end facility at its fair market value as determined by an independent third party
auditor." Thus, if Eagle were to default, causing the District concern that video and data
services might be interrupted, the District would be able to take over the head-end facility
and continue such services seamlessly.
Lastly, please note that this Agreement is predicated on the District successfully obtaining
the funding necessary to complete the build out of the Fiber Network.
In addition to the Service Level Agreement, staff has attached recent information on Eagle
Broadband, its management, and their recent accomplishments.
Recommendation
It is recommended that the Board approve the attached Service Agreement with Eagle
Broadband.
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DISTRICT WILL INDEMNIFY, DEFEND AND HOLD HARMLESS EAGLE, ITS PARENT,
SUBSIDI_ARIES AND AFFILIATED COMPANIES, AND THEIR EMPLOYEES,
SUBCONTRACTORS AND INSURERS FROM AND AGAINST ANY CLAIM, DEMAND, CAUSE
OF ACTION, LOSS, EXPENSE, AWARD, JUDGMENT OR LIABILITY DIRECTLY ARISING OUT
OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF DISTRICT OR ITS AGENTS.
SERVANTS, EMPLOYEES OR CONTRACTORS, OTHER THAN EAGLE OR ITS AGENTS,
SERVANTS, EMPLOYEES OR CONTRACTORS. DISTRICT'S INDEMNITY AND AGREEMENT
TO DEFEND AND HOLD DISTRICT HARMLESS SET FORTH IN THIS PARAGRAPH 6.3 SHALL
EXTEND TO AND INCLUDE, WITHOUT LIMITATION, ANY AND ALL CLAIMS BY ANY
CUSTOMER WHICH MAY ARISE FROM ANY MATERIAL DEFECT IN THE FIBER NETWORK,
INCLUDING THE OUTSIDE PLANT. THIS INDEMNIFICATION SHALL SURVIVE ANY
TERMINATION OF THIS AGREEMENT FOR A TERM OF ONE (1) YEAR. IN THE EVENT
DISTRICT EXERCISES ITS OPTION TO PURCHASE THE HEADEND FACILITY PURSUANT TO
PARAGRAPH 7.3(a)(3) HEREIN, DISTRICT'S INDEMNITY AND AGREEMENT TO DEFEND
AND HOLD DISTRICT HARMLESS SET FORTH IN THIS PARAGRAPH 7.3 SHALL EXTEND TO
AND INCLUDE, WITHOUT LIMITATION, ANY AND ALL CLAIMS BY ANY CUSTOMER
WHICH MAY ARISE FROM ANY MATERIAL DEFECT IN THE PROVISION OF SERVICES,
INCLUDING THE OUTSIDE PLANT, THIS INDEMNIFICATION SHALL SURVIVE ANY
TERMINATION OF THIS AGREEMENT FOR A TERM OF ONE(1)YEAR.
Eagle and District are each responsible to third parties to the extent of their own negligence.
Notwithstanding any of the indemnities and liabilities specifically referred to above, neither Eagle nor
District shall be liable to the other with respect to any special, indirect, consequential loss including, but
not limited to, loss of anticipated profit, loss of anticipated revenue, or loss of use of money, arising or
alleged to arise out of or either Eagle's or District's failure to properly carry out its obligations hereunder
or due to omissions or negligence, in whole or in any part, of the party at fault, its subcontractors or
vendors in any part, of parry at fault, its subcontractors or vendors or strict liability, and regardless of
whether pre-existing the execution of the Agreement.
ARTICLE 7
Term, Default, Further Assurances, Remedies and Termination
7.1 Term. The term of this Agreement will commence on the Effective Date and will continue for
three (3) years, unless terminated on an earlier date under other provisions of this Agreement or by
written agreement of Eagle and District, after which time it shall automatically renew for additional
terms of three (3) years unless either Party notifies the other Party in writing no less than one hundred
eighty 080) before the end of any term that it will not renew this Agreement.
7.2 Default. Each of the following shall be deemed to be an event of default under this Agreement.
a. The failure by Eagle or the District to perform or observe any term, covenant, agreement or
condition of this Agreement and such failure continues for a period of thirty (30) days after written
notice thereof from the other Party (provided that if such failure cannot be cured within such thirty (30)
day period, this period will be extended if the Party commences to cure such failure within such thirty
(30) day period and proceeds diligently thereafter to effect such cure) shall constitute and event of
default under this Agreement.
b. An event of a Party's Bankruptcy, defined as any proceeding under bankruptcy, creditor
protection or a similar law which is commenced by or against a Party or when a receiver is appointed.
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exxIsIT.a ? - 2 -:
[Map of the District's FIBER SYSTEM]
t
EXHIBIT B-1
Description of Services
1.1 High Speed Internet:
Residential and Commercial Internet connectivity delivered via a dedicated fiber connection utilizing the
District's Fiber Network and Long Haul Fiber route back to Reno and Eagle's Headend
facility/equipment. Eagle shall maintain sufficient bandwidth to the Internet to provide a minimum
bandwidth for each customer of L5 mbps symmetrically. The Customer may have the option to have a
DHCP(Dynamic Host Configuration Protocol)which is included in the standard basic package or a Static
IP address assigned. The static IP address is at an added cost.
1.2 Internet Service Packages include the following:
• Residential Internet Access(1.5 mbps symmetrical)
• Basic Business 1.5 mbps(1.5 mbps symmetrical)
• Commercial Business Internet L5mbps symmetrical
• Commercial Business Internet 3.0mbps
• Commercial Business Internet 6.Ombps
• Commercial Business Internet 10 Mb/s
• Dedicated IP Address
1.3 Residential E-Mail Services&Web Hosting:
The following is a summary of the e-mail services included within the Internet Service Packages provided
by Eagle to the District:
• Five email accounts per standard residential Internet connection-no extra charge
• Integrated real time virus protection software will monitor inbound and outbound email server
traffic for email related viruses
• An Intrusion Detection System Server located at the Eagle Head-end Facility will monitor
inbound and outbound traffic for viruses,worms,and unauthorized intrusions
• A web based interface is available for Customers to view email from anywhere via a web browser
• Redundant email servers
• Servers can be administered locally and/or remotely
The following is a summary of Residential Web Storage and Web Hosting services:
• The basic residential Internet account will include up to I Omb of web storage
• This storage will be under the District's assigned domain name
• A customer cannot use his/her own Domain Name Provisioning these accounts will be controlled
by Eagle Broadband Services
1.4 Business E-Mail Services& Web Hosting:
The following is a summary of the virtual business email services Eagle shall provide to the District:
• Eagle's Domain Name Servers will host Customer's registered Domain Name
• The virtual email service will be tiered starting with 25 up to 100 individual users:larger
customers can be serviced upon request.
• The Customer,via a web browser,can perform administration of the email accounts remotely.
• Integrated real time virus protection software will monitor inbound and outbound email server
traffic for email related viruses
• An Intrusion Detection System Server located at the Reno Head-end Facility will monitor
inbound and outbound traffic for viruses,worms,and unauthorized intrusions
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r
The following is a summary of Business Web Storage and Web Hosting services:
• This service will be tiered starting with 200mb up to 500mb of web storage;larger customers can
be serviced upon request
• The customers registered Domain Name will be hosted on Eagles DNS servers
• Provisioning these accounts will be controlled by Eagle Broadband Services
• Servers can be administered locally and/or remotely
1.5 Video Services
Table B-1 depicts the Channel line-up and the associated packages available at the Effective Date of this
Agreement, excluding premium packages. This table may change from time to time based on channel
availability, customer demand, and cost. The channel line-up may be reviewed and negotiated between
the District and Eagle every six months.
1.6 Video Service Packages Include:
• Basic Service
• Expanded Service
• Premium Services
• Pay-Per-View Services
• DMX Music Channels
• Video On-Demand
• Business Cable(News,Weather,Music)
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Table B-1 Channel Line-up
1-5�TUQMV
2� KVIE(P&Sw 63 WGN 1101 la>z Vocal gland 30I Home Box Office
3 _ KCRA(NBC) 64 MTV_ 1102 Honest Hits 302 HBO(East
4 KQCA(WB58) 65 MBC i'103 Modern Count 303 HBOPlus
51 Tntckee Tahoe Channei6 66 VH -j104 Alternative 304 HBO Si ..whe
6' _ KTXL(1.,40) =671 GAC ii105 Adult Contem±orery 3051 HBOFamil
7 1 KOLO{ABC) 68 r Spike TV 106 1 ite Ciassiwl 306_ HBO Famil Eaar
t8 _KM AX f31UPN) 69 Comedu Cen Wl 107 Rock n'Roll Oldies 107 HBO Comed
?9 KXN(ABC) `70 s E! ry08 Classic Rock 308 HBO Zone
I70 KRXI(Fox 114 71 E!emle 109 Urban Beat 309 HBO Latino
11 Local On inntlon-Gout III Cristo Aduh Comer, 311 Gnemax
12 KOVR(CBS ]Il Ra 312 Cinemax East
I13 Leased Access k'smd Se,}{•axy -3,.7r,i 112 Jazz 313 More Max
14 CNBC 201 ESPNews 113 Blues 314 More Max East
'IS MSNBC 202 ESPNCIassocS ons 114 Rey ae 315 Action Max
i16 _ Fox News 203 FoxSpecs World It- Gospel _ 316 Thriller Max
20 17 CNN _ 4 Outdoor Channel 116 Trends 317 5 Star M.
i 18 CNN FN 205. G.If Channel ';117 Svm h... 318 W N1ax
19 Headline News 206 Histo Channel 118 Coffeehouse Rock 319 Outer Max
30 eloombere -207 History beern itional 119 Dance
21 (SPAN 3208. A&E Bio,ra by 120 Rev.Dance 322 Showtime
22 CSPAA7 209. Coco IV L 121 Album Rock 323 Showtime Fast
23 Animal Planes 210 BBC America 722 RO's Hit, 324 Showtime Tao
24 Broove - 211 Inchnenonal Channel 123 70V tics 325 Showtime Too East
25 TLC 212 S apish 124 CluesicR&B 326 Showtime Showcase
26 Weather Channel 213 Discove Home rind Leisure 125 Hard Rock 327 chowtlme Showcase East
27 Travel Chnnnel 214 Discover Health 126 Solt Hits 328 Showtime Extreme
28 HGTV 215 Discove Wins 127 Golden Oldies 329 Showtiem Extreme East
.29 Fred Network 216 Discover,Civiiizanon 128 Rockin'Count. 330 Showtime Be vnd
30 Siena Colic e1 RU( Diecove Times 129 Acid Jna 331 Showtime Be and East
31 Siena Colle e2 -2181 The Health Network 130 Snood,Jau 332 Showtime Next
32 GSPN 219, Tecb TV 131 Bi eand/Swing 333 Showtime Wrote.
133 ESPN3 220 Game she, - 132 New e -334 Showtme Famil Zone
134 Fox S arts Ba. Area 221 TV Land ! 133 Holida /Ha "in s 336 The Movie Channel
35 Football Network 222 So. Net IN Great Standards 337 The Movie Channel Enst
36 Ontdoor Life 223 Hzlimerk 135 Christen C.ntem 338 The Movie Channel am
37 S onsman Channel 224 The Science Channel 136 Children's 339 The Movie Channel xon East
38 SPEED 225 National Ge.gin hoc 340 Flix
39 Univision 226 Distance Kids 341 Sovdanee
40 (S ankh 227I Noy in
41 Disney Channel 12281, Nick Games and ours NC6p #r„ ."r 7'w./. 345 STARZ
42 Gfcurne 2291 Tnmer Classic Movies 1 CNBC 346 STARZ East
143 WE 230 Lifetime Movie Network -i 2 MSNBC 347 STARZ2
44 Nickelodeon 231 Independent Film Channel 3 Tax Sens 348 STARZ3
45 Varsio, 232 Ovation 4 C NNN 349 STARZ Choun.
A6 ABC Famil 233 Ims
itial Life 5 CNNFN 350 $TAAZ Famil
4t Toni Broadcast Network 234ife 6 Headline News 352 Encore
48 The Word Network 235m 7 Bioomber 353 Encore East
d4 EWTN 236 8 CSPANI 354 Encore Action
50. Shot,NBC 237- MTV 9 CSPAN-1 355 Enc.re Action Eaat
51 VC 238` 10 ESPN 356 Encore Love Stories
52 HSN 239c Rack it DMX-Modern Count tv 357 Encore Mysteries
S3 Cannon Nero,, 240nt 12 DMX-Hottest bits 358 Encote True Stories
54 Turin Diane, 241rt 13 DMX-AdnitContem ornry 359 Encore True Stories East
55 A&E 242 , 14 DIMS-Llte Classical 360 Encore Westerns
56 AMC 243 BET on Jazz 115 EMS-80Sties 361 EncoreWAMi
.57 Bravo n16 DMX-70'sHits
58 FX 17 DMX-Golden Oldies 364 Urb.X
LIEE
18 DMX-Holiday/Ha enins 365 Hot
19 DMX-Great Standards 3" The Hot Network
367 3" S ice2
369 Pla bo
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1.7 Customer Support Services
Eagle shall provide the stated Customer Support Services to the District:
Basic Customer Service Representatives
• Service Provisioning of Customers after hours and weekends.
• Service scheduling and dispatch after hours and weekends.
• Service order processing after hours and weekend.
• Create,package,and mail bills to Customer Monthly.
• Support the District IN OSS/BSS Training(includes: sales,customer service,billing,data input
&management)
Technical Support Services for Internet and Video Related Problems
• Level I phone support for the District customers during business hours
• Customer Support per Call-After hours&Tech. Support
1.8 Infrastructure Support Services(Monitoring and Management)
L8A Infrastructure Device Monitoring
The following is a summary of the infrastructure Device Monitoring related services:
• Devices included in Monitoring:
o Server class computers
o Routers
o Switches
o Last Mile Gateways
o Last Mile Cores
o Manageable Hubs
o Customer Premise Equipment(CPE)
• Monitor equipment for:
o Up/Down status
o Network events
o Exceeding thresholds as mutually defined
• Problem detection/isolation
• Remote problem resolution when applicable
• Escalation—Contact predetermined EAGLE and/or the District resources)for notification of
events requiring intervention
• Dispatch field technicians on site when applicable
U8B Infrastructure Device Management:
Device management is the proactive maintenance of equipment based on Manufacturer's
hardware&software updates,network history,lessons learned,etc. The following is a summary
of the Infrastructure Device Monitoring related services:
• Devices included in Monitoring:
o Server class computers
o Routers
o Switches
o Last Mile Gateways
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o Last Mile Cores
o Manageable Nubs
o Customer Premise Equipment(CPE)
• Proactive Device Management—
., Proactively adjust device settings
• Proactively update device configurations to optimize performance and increase
overall device availability.
• Recommend replacement equipment when end of life or capacity utilization is reached.
• Device Alarm Management—
* Proactively reset alarm thresholds
o Proactively update alarm monitoring software
• Escalation—Contact predetermined Eagle and/or the District resource(s)for notification of
events requiring intervention.
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EXHIBIT B-2
Service Level Statements
2.1 General
The various Internet Access packages have different availability service levels. The following table
identifies those levels:
eraoe Desra pt an ttvaJaglt t Service
i..eyel '
Residential Internet Access 1.5 mbps 99%
symmetrical
Basic Business 1.5 mbps 1.5 mbP s9
( .9%
symmetrical
Commercial Business Internet 1_5mbps
symmetrical
Commercial Business Internet 3.Omb s 99.99%
Commercial Business Internet 6.Omb s 99.99%
Commercial Business Internet 10 mb s 99.99%
If Eagle fails to meet the Internet Connectivity Availability Guarantee during any given calendar month,
District's account will be credited.Eagle will calculate the"Network Unavailability"in a calendar month
and supply District with report by the tenth day of the following month."Network Unavailability"
consists of the number of minutes that the High Speed Internet Connectivity is not available.For purposes
of this Availability Service Level,"unavailable"or"unavailability"means the duration of a break in
transmission measured from the first of ten(10)consecutive severely erred seconds("SESs")on the
particular Service until the first of ten(10)consecutive non-SESs. An SES is a second with a bit error
ratio of greater than or equal to I in 1000. Credits will not be made for Network Unavailability that:(a)
continue for one hour or less which Customer and/or District fails to report to Eagle within 10 days from
the date of the occurrence;(b)or caused by District's Fiber Network maintenance,defect,or damage
thereto;(c)or caused by any Customer-ordered telephone company circuits which affects fiber network;
(d)or caused by Customer's applications,equipment,or facilities;(e)or caused by acts or omissions of
Customer,or any use or user of the service authorized by Customer;or,(f)or caused by reasons of Force
Majeure(as defined in the Service Agreement),(g)or caused by planned outages by the District and/or
Eagle for maintenance purposes(Customers will be notified at least 24 hours prior to the outage—typical
outages will be planned for early morning,hours such as from 3:00am to 5:00am PST).
If Eagle fails to meet this Availability Guarantee,the District's account shall be credited a portion of the
Monthly Recurring Charge(MRC)according to the following tables for each package:
Residential Internet Access(1.5 mbps symmetrical)—99%
0-5 minutes No Credit
5:01 minutes—6 hours No Credit
6:01 -12 hours 3%of the MRC
12:01-18 hours 6.5rl of the MRC
18:01-24 hours 13%of the MRC
24:01 to 4B hours 20%of the MRC
Each additional 24 hours 20% additional of the MRC up to
100%@ 5 days
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•Basic Business Internet Access 1.5 Mb(.Minimum SLA support)-99%
-
0-5 minutes No Credit
501 minutes-6 hours No Credit _
6:01-12 hours 3°l of the MRC
12:01-18 hours 6.5%of the MRC
18:01-24 hours 13%of the MRC
24:01 to 48 hours 20%of the MRC
Each additional 24 hours 20% additional of the MRC up to
1001 @ 5 days
Standard Business Internet Access 1.5mbps symmetrical-99.9%
rain, `: 5 �tt��"rZRNMWKW
0 5minutes No Credit
5:01 minutes-6 hours � 3%of the MRC
6:01-12hours ___ 6.5°l of the MRC
12:01--188 hours 10%of the:MRC
18:01^-24 hours 18%of the MRC
Over 24 hours 25%of the MRC .
Each additional 24-hours 25% additional of the MRC up to
100%@ 4 days
Business Internet3.Ombps,6.Ombps,& I0mbps-99.99%
0-5-minutes �;To Cretlft
:01 minutes rs 3 hours 6 5%. of he RC M 3
.41 '6 Hours 13°!of the MRC
6:01-12 hours 18.5%of they MRC
12A1-::18 hours _25%of the MRC
18:01-:24 hours 49 afthe MRC
OverT4l hours '. 70%of the MRC
24:01 48 hours 90%of the MRC
Over 48 100%of the MRC
2.2 Video Services-Service Levelf Statement
Standard for Services- At a minimum,the Eagle's Head-end Facility will operate such that no visible
artifacts in video quality can be depicted as it relates to litter,latency,macro blocking,and flicker. The
channel change time,shut]be no greater than 2.5 seconds.These service levels will be measured at the
Core Switch locatedtn the District's Distribution Center. In addition Eagle shalt
+ %Manage Head-end Facility equipment ticsoinces.ia order to provide services for a mimmum of 200
Channels
-.Maintain the IR video network equipment located-n Eagle's Head-end Facility in order to provide
for a 99.9%delivery success
• Operate and maintain the Distribution Center video equipment in order to provide 99.9%delivery
success.
•.. Maintain Broadcast TV satellite communications systems for 99.9%down link delivery capability.
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3.3 Video Availability
If Eagle fails to meet the Video Service Availability Guarantee during any given calendar month,
District's account will be credited.Eaelewill calculate the"Video unavailability" in a calendar month
and supply District with report by the tenth day of the following month."Video Unavailability"consists
of the number of minutes that any of the Video Packages are not viewable.For purposes of this
Availability Service Level,"unavailable"or"unavailability-"means the duration of a break in
transmission measured from the first of thirty(30)consecutive seconds that 20 percent of the video
channels are not viewable. Viewable means that the entire video stream has been disrupted by a blank
screen,severely fuzzy screen,frozen picture,severe hesitations,or lack of any recognizable features. The
video unavailability will be measured at the Distribution Center Facility. Credits will not be made for
Video Unavailability that:(a)continues for one hour or less which Customer and/oT District fails to report
to Eagle within 10 days from the date of the occurrence;(b)or caused by District's Fiber Network
maintenance,defect,or damage thereto;(c)or caused by Customer's applications,equipment,or facilities;
(d)or caused by acts or omissions of Customer,or any use or user of the service authorized by Customer;
or,(e)or caused by reasons of Force Majeure(as defined in the Service Agreement),(f)or caused by
planned outages by the District and/or Eagle for maintenance purposes(Customers will be notified at
least 24 hours prior to the outage—typical outages will be planned for early morning hours,such as from
3*00am to 5:00am PST),(g)or caused by any channel outages or corrupted video caused by the individual
Broadcaster's source feed,change in programming(deletion of channels either temporary or permanent).
If Eagle fails to meet this Availability Guarantee,the District's account shall be credited a portion of the
Monthly Recurring Charge(MRC)according to the following tables for each package:
Residential Video Access—99.9%
'putattoed of Service Uiiavat. laG1NIY":`;�gCaivel�,'r , .� .-,'�.. x tc>,
0-6 hours No Credits
6:01—12 hours 3%of the MRC
12:01—18 hours 6.5%of the MRC
18:01—24 hours 13%of the MRC
24:01 to 48 hours 20%of the MRC
Each additional 24 hours 20% additional of the MRC up to
100%@ 5days
Business Video Access—99.9%
0—6 hours No Credit
6:01—12 hours 3%of the MRC
12:01—18 hours 6.5%of the MRC _
18:01—24 hours 13%of the MRC
24:01 to 48 hours 20%of the MRC
Each additional 24 hours 20% additional of the MRC up to
100%@ 5days
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2.4 Infrastructure Support Services—Service Level Statement
2.5 Device Monitoring
1. All Devices under this Agreement will be remotely monitored 24 hours,7 days per week,365 days
per year, ("24x7x365")99%of the time. Devices that WILL NO'r count against this metric include:
Devices administratively taken down;
New devices determined not to be in operation/production:
- Device not connected to the infrastructure.
2. Critical alarms will be responded to within 10 minutes of the initial alarm condition 99%of the time.
a. Eagle Responsibilities:
L Continuous Monitoring
- EAGLE will poll specified devices 24 x 7 x 365 at an interval not to exceed 10 minutes to
ensure availability.
2. Event Escalation—Critical Alerts
- Events defined as CRITICAL will be responded to within 10 minutes of the time stamp of
the event as recorded in the EAGLE monitoring tools. Response time will be recorded in an
EAGLE trouble ticket,email,or other electronic means where the time stamp is system
generated.
- Events will be escalated for resolution upon the receipt of alarms defined as CRITICAL.
- Following initial notification of event,EAGLE will track the event until resolution.
- Ticket will be closed upon resolution or the District's approval to permanently unmanage the
offending device.
- Eagle Will establish initial thresholds. Modifications to threshold setting will be jointly
agreed upon through change management.
3. Reporting
Eagle will provide the District with secure access to the Eagle internet site in order to view reports
and real time ticket data. Access will be made available within 30 days of the Effective Date of
this Agreement.
b. The District Responsibilities:
1. Continuous Monitoring
- Provide IP address and community string of each device that is to be monitored.
2. Management Setup
- Appropriate access rights will be given to Eagle for each of the devices in order to allow Eagle
to effectively manage the devices.
- Concur on events and thresholds to be monitored, Eagle will provide an initial list of events and
recommended threshold settings.
- Provide secure physical access to the devices and adhere to the Eagle Change Management
process.
3. Event Escalation—Critical Alerts
- Provide points of contact for trouble escalation.
- Define alert notification processes and procedures,including escalation procedures for the
District
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- Communicate with Eagle any changes to the network that would affect the delivery of Service at
least 24 hours in advance of change.
- Provide the system and network capacity required to support the Services. If Eagle notifies the
District that any network device has reached critical utilization levels and that additional capacity
is required to perform the Services it is the District's responsibility to provide the additional
capacity or relieve Eagle from any affected Service Levels until such additional capacity is
installed.
Be responsible fin all on-site costs associated with providing network hardware,server software
and network connectivity-required to provide the Services-
4. Reporting
- Request changes to reporting structure through submission of a Program Change Request(PCR).
2.6 Infrastructure Device Management SLA
1. All Devices under this Agreement will be kept at the latest appropriate revision levels and
engineering change levels required by the manufacturer.
2. Eagle notifies the District that any network device has reached critical utilization levels and that
additional capacity is required to perform the Services.
Eagle Responsibilities:
1. Continuous Monitoring
- Manufacturers specifications for software updates and hardware engineering changes.
2.Management Setup of Devices
- Eagle will work with the District to ensure that any required management functions are installed
and configured properly.
- Eagle will establish initial device events to monitor. Modifications to event list will be jointly
agreed upon through a Project Change Request.
- Threshold settings will be setup intially across all servers in the the District environment.
Settings will be active upon completion of management agent installation.
3. Event Escalation—Critical Alerts
- Eagle will establish initial thresholds. Modifications to threshold setting will be jointly agreed
upon through change management.
4. Reporting
- Eagle will provide the District with secure access to the Eagle internet site in order to view
reports and real time ticket data. Access will be made available within 30 days of the Effective
Date of this Agreement.
2.7 Customer Support Services—Service Level Statement
1. Maintain an `Average Time to Answer'of less than 60 seconds per calendar month. The values for
this metric will be extracted from the Eagle PBX. The PBX clock will begin when the initial
recorded greeting is presented,and stop when a call center agent answers the call.
2. Maintain an`Average Time to Return Voice Mail Messages'of less than 60 minutes per calendar
month. Only calls placed to the number dedicated to the District and have left a recorded messages
will be counted towards this metric. It will be measured from the time stamp of the recorded message
(generated by the Eagle voice mail system),to the first ring of the return call. These values will be
manually entered into the Eagle ticketing system.
3. Maintain a`Call Abandon Rate of less than S%per calendar month. The values for this metric will
be extracted from the Eagle PBX. Only calls placed to the hotline number dedicated to the District
and have been in the queue for at least 60 seconds will be counted towards this metric.
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4. Escalate issues to local technical support for defined CRITICAL issues.
5. Generate trouble tickets for all valid calls.
6. Provide feedback to the District petiodieally regarding assessment of end user capabilities and
Customer handbook documentation recommendations.
a. Eagle Responsibilities:
I. Provide a TOLL FREE number dedicated to the District into the Eagle PBX(HOTLINE).
2. Provide PBX capacity and qualified personnel sufficient to handle up to 500 calls per month.
3. Provide qualified and trained personnel to respond to calls placed to the District customer line
24/7/365. Eagle holidays will be staffed with a weekend schedule_
4. Respond to calls presented to the District hotline within the parameters of the Service Levels defined.
5. Document each call presented to the District hotline with a minimum of the following information:
• Customer Name,Address& Phone(s)
• Date&Time
• Nature of the problem
• Actions Taken
• Resolution
6. Provide statistical reports monthly via secure Internet access.
7. Service Provisioning
8. Service scheduling and dispatch
9. Service order processing
Response Time Service Level
The Response Time Service Level for Eagle is as set forth below. This Response Time Service Level is
measured from the time Eagle's CSR receives and logs Customer's request with all of the necessary
information requested by Eagle Customer Service, until an Eagle technician first calls Customer in
response to the request. In the event Eagle does not meet the following Response Time Service Level,the
District will be entitled to a service credit equal to the charges for one(1)day of the MRC for the affected
Customer(with a maximum of a one(1)day credit for all instances of delay in a day,with a total monthly
maximum credit of seven(7)days).
Residential Internet Access 240 4 hours
].5 mb s s metrical
? s.Business 15.mbps 247. 4hours _.-- iceWled%Best Effort
Minimum SLA sit art
Business Internet 1.5mbps 240 1 hour
symmetrical
m t ercod Business 240 30 minutes
Internet 3.Omb s
Gommercunl Business 24x7 30minutes
Internet 6.0mb s
,_tonimi ea1 Business 24x7 30minutes
Internet 10 maps
12
Call Success Rate Service Level. The Call Success Rate Service Level for Customer Service is 90%*.
The Call Success Rate is measured by Eagle as a monthly average calculated based on the number of
phone sessions established against the total sessions attempted. A phone session is established when the
CSR picks up an incoming Customer call. In the event Eagle does not meet the CSR Service Level for
reasons other than an Excused Outage,Customer will be entitled to a service credit off of the MRC for the
affected Service as set forth in the following table:
`'s'#i11 iiccesslate th �Fsr
88 to 89.99% 2.5%of the MRC
85 to 8799% 5%of the MRC
80 to 8A.99% 7.5%of the MRC
<79.99% 10%oftheMRC
b. The District Responsibilities:
1. Establish and distribute a Customer Relation Protocol briefing to all the District and Eagle employees
to:
• Introduce Eagle
• Explain the Remote Customer Support&Help Desk concept
• Provide the HOTLINE number
• Instruct on proper use of the HOTLINE
• Set Expectations
2. Participate in periodic Customer Satisfaction and Quality Control initiatives initiated by Eagle
13
EXHIBIT B-3
Compensation
3.1 Internet Services
Description TDPUD Cost per
month per
subscriber
Data only-Residential(1.5 mbps) $26.50I
Basic Business Internet 1.5 mbps $26,501
(Standard Business Internet 1.5mbps $124.041
�1.5 mbps(Minimum SSA support) $26.50
Commercial Business Internet 3.Ombps $239.201
Commercial-Business Internet 6.0mbps $479,201
!Commercial Business Internet 10 mbps $799.20
Business Security $33.37'
(Additional email accounts over initial 5 $1.00
Dedicated IP Address $2.00
Virtual Business Email 25 Users $9.95
(Virtual Business Email 50 Users $19.95!
iVirtual Business Email 100 Users $39.95;
Business Web Hosting 200mb $19.951
Business Web Hosting 350mb $39.95!
Business Web Hosting SOOmb $99.95�
3.2 Video Services
Description TDPUD Cost per month per
subscriber
Basic(includes DMX music and PPV) $19.80
Expanded Basic $33.45
Deluxe(Expanded Basic plus all Premiums) $73.78
HBO The Works(7 HBO channels) $10,13
Starz Super Pack(includes Encore) $11,49
Showtime Unlimited(includes The Movie Channel,Flix,and
Sundance) $11,09
Cinemax MAX Pack $7.62
PPV Movies "See Revenue Share Below
Video On Demand(moviesimonths/sub) $4,19
Adult(60i40 split with studio) $6.71
Business Cable(Small Business i Music) 'Excludes Bars and
Restaurants $6,31
Send Bills to Customer Monthl $3.00
14
**PPV Movie Revenue Share: The`licensing fee"or amount to be paid to the licensing entity may vary
slightly depending on several factors such as the studio that produced the movie,movie title,and age of
the movie. Typically,the licensing entity will be entitled to 60%of the retail price at which the movie is
offered. The remaining 40%will be shared as follows:
• 65%toEagle
• 35%to the District
If the total licensing fees for a given month is less than$300.00,the District shall remit to Eagle,
concurrently with the licensing fees for such month,an amount sufficient to cause the aggregate amount
paid to Eagle for such month to equal S300.00-
3.3 Other Services:
i
OSS/BSS Training(includes:sales,customer
service, billing,data input&management) $1,000.00 per day/per person on-site plus expenses!
i
One time OSS/BSS set-up charge $17,0001
Customer Support per Call-After hours&
Tech.Support $1.00
Customer Support Monthly Fee-Beginning
when ACTIVE(1st customer) $2,000.00
3.4 Infrastructure Support Costs
The monthly cost of optional device monitoring and management. The components of this billing
commitment are as follows:
Quantity of Infrastructure E ui ment 1 1-50 51-100 101-150 151-200 201-250 250&above
I
Monitoring cost per device(Ineludes CPE)* $3.50 $3.12 $2.74 $2.36 S1.99 $1.99
$17.20
Device Management* $79.50 $41.12 28.07 2136 $17.32
I
Number of Calls er month _
-District Network Support Services-
Available 24X7 (Level 11 Engineering j S3500.00
Su ort 5)000.00 $1,000.00 S1 .00 $2950.00 $3,394.00
*The District will identify which devices to be monitored anNcr managed.
**This cost does not include engineering or technician onsite services for maintenance of the District's
Fiber Network.
***Level 11 Engineering Call Support for District Network-Eagle will charge a flat rate of
$1000.00 per month for up to 30 calls per month-Available 24X7. Any additional calls will be billed at
$40.00 per call.
15
EXHIBIT C
Equipment to be sin ed to District and Terms
1. PRODUCT
Products listed below are examples of what is available as of2,124/04 and are for illustrative
purposes only.
Set top boxes—Electronic Equipment used by the Customer for tP broadcast video and video-on-
demand capabilities and services.
UNIT TOTAL
OTY DESCRIPTION COST AMOUNT I
Eagle Media Pro,Rev.2.1
No Hard Drive,400 MHz CPU,Network boot,Minerva/Linux OS
MPEG 2&4,3D graphics,dual NIC,128 meg RAM IR Remote Control l
Composite,S Video&RF outputs
500 1 $325.00� $162,500,OO1
1,000 $315.00 $315,000.00
2,000 j $290.00 $580,000.001j
I 1
Eagle Media Pro Thin Client
No Hard Drive,Network boot,minimal graphics and browsing, j
Minerva/Linux OS,minimal RAM,MPEG 2&4
IR Remote Control
Composite,S Video&RF outputs j
500 $185.00 $92,500.00
1,000 $165.00 $165,000.00I
2,000 ( $150.00 $300,000.001
Amino-AmiNET103
No Hard Drive.MIPs PowerPC,Flash memory,Network boot
Minerva/Linux OS.MPEG2 video decode, HTML and JavaScript Interfaces,
IR Remote Control r
Composite output
500 $175.00 $87,500.0
1000 0I$160.00 $160,000.00
2000 1 $160.00 $320,000.00
Amino•AmiNET 110
No Hard Drive,MIPs PowerPC,Flash memory,Network boat
Minerva/Linux OS,MPEG2 video decode,
HTML and JavaScript Interfaces,IR Remote Control j
Composite,S Video&RF outputs
500 $190,00 $95,000.00
1000 $175.00 $175,000.001
2000 $175.00 $350,000,00
I
Prices,license fees,or discounts contained herein are subject to change.
2. TAXES.
The prices and license fees herein are exclusive of all excise, sales, use, value-added,
and other taxes and duties imposed by any governmental authority, federal, state,municipal or
local, united States or foreign, except for taxes based on Eagle's net income. Eagle shall
16
determine the amount of taxes applicable to each Order for which it is responsible and increase
the amount invoiced to District by the applicable taxes. Upon providing Eagle an appropriate
teacher's certificate, District shall be relieved of responsibility for the payment of any tax from
which it is, by virtue of such reseller certificate, exempted from paying, whether invoiced by
Eagle or not.
3. PAYMENT AND CREDIT TERMS.
All payments to be made by District shall be due within thirty(30)days of the receipt by
District of a proper invoice. Eagle shall issue invoices to Eagle upon delivery of the Products by
the common carrier to District, either at a designated District facility or at such other place as
may be designated by District.All payments due hereunder shall be payable upon receipt,without
right of set-off or deduction of damages, at Eagle's address set forth in this Agreement. District
shall pay interest at the rate of one and one half percent(1.5%) per month or the maximum rate
permitted by law,whichever less, on all amounts not paid within thirty(30)days from the invoice
date.
A proper invoice shall include the following information:an invoice number assigned by
Eagle, date of invoice; the address to which payment to Eagle is to be remitted: the quantity of
Product(s) delivered; the Products) part number(s); applicable unit prices; extended prices
(quantities multiplied by unit prices); Total Invoice Amount (the sum of all extended prices
contained in the invoice);the date(s)of shipment for each Product ordered.
4. ORDERS.
To purchase the Product and obtain a license to use the Software resident thereon.the
combination of which comprise the Products, District shall place a written order (hereinafter
"Order") with Eagle. Such Order shall include the following information: date of Order; the
quantity of Product(s) ordered; the Product part number(s); applicable unit prices; extended
prices(quantities multiplied by unit prices);Total Order Amount(the sum of all extended prices
contained in the Order); Delivery Date for each Product ordered; name(s) and telephone
numbers) of the receiver(s) intended by District to accept delivery; name(s) and telephone
numbers)of District's designated carrier;manner of shipment directed by District;address(s)to
which Eagle is directed to deliver the Product(s); notice as to the taxable nature of the sale;
resale certificate number,if any:and signature of District's Authorized Representative.
5. SECURITY INTERESTS AND LIENS
a) District hereby grants Eagle a security interest and Tien in the Product together with and including
all substitutes and replacements for, accessions, attachments, and other additions to, and tools, parts and
equipment used in connection with the above property ("Collateral"). The security interest and hen are
given to secure all liabilities of District to Eagle now existing or hereafter incurred,matured or unmatured,
direct or contingent,and any renewals and extensions thereof and substitutions therefore.
b) Upon request of Eagle, District shall execute any security agreement, chattel mortgage, Uniform
Commercial Code("UCC") financing statement and/or notice of liens pertaining to the Product that Eagle
may require.
c) Any security interest and/or liens granted Eagle by District hereunder shall be in addition to,and not
in lieu of, any other security interest and lien Eagle may have against District at law or equity, including
without limitation,any statutory or constitutional security interest or lien.
d) Any security interest or lien granted pursuant to this paragraph shall be subordinate to any
security interest or lien granted by the District to finance Fiber Network.
17
Amino-AmihET1 10
y K g
Horne Cornpany Products ' Partners Markets i Support Press Contacts
To accelerate the deployment of IPTV and video on
demand services, Amino has developed a low-cost,
incredibly small Ethernet Set Top Box for use in
networked environments.
The AmiNET110 joins the family of Amino Digital Set-
top Box solutions and provides a low cost solution that
" . is targeted specifically for worldwide markets and
g p Y
W
where a very flexible product is required.
A tJSB interface is provided to support such
functionality as games controllers.
With an Ethernet input and flexible audio/ video output,
together with S/P-DIF and an RF Modulator output, the
. High performance 350 MIPs PowerPC STB provides an elegant and powerful means of
. Flexible memory options to suit requirements. delivering sophisticated interactive digital television
. Upgradeable Flash memory based software option including multicast and on demand video along with
. Interface to 10/100BaseT Ethernet Internet aCC@S5.
. MPEG2 video decode with picture in graphics
technology and alpha blending
. VoD (RTSP video session control)with HTML and Various memory options are available, depending on
Javascript Interfaces the complexity of the software to be supported. For
. Multicast(IGMP)with HTML, and JavaScript Interfaces
. MPEG1 &2 MP@ML at up to 8 Mbps minimum cost. the STB can boot its environment over
. Linux Operating System the network, or additional NAND Flash memory can be
. HTML 4 Browser fitted to enable it to boot from internal resources.
. Support a variety of content protection& rights
management systems
. IR Remote Control (IR Keyboard option) The embedded Web Browser with Amino's JMACX
. TV Output with Macrovision protection option HTML and JavaScript extensions provides the primary
. Flexible audio and video output: Composite, Stereo
audio, 4:3 and 16:9 formats. user interface and the support required to control a
Full CE and FCC approvals sophisticated video-on-demand and IF multicast
system, with full 'trick-play' functionality and picture-in-
graphics. Other Middlewares available include those
from Minerva, Myrio and Alcatel.
Encased in a small, low-cost housing, the STB plugs
into the back of a TV Set using the supplied Mini-DIN
s to Phono Composite, RGB or S-Video and audio cable,
Ir or via the RF output. Other connections are an S/P-DIF
l " digital audio output, an RJ45 Ethernet socket and
power input to a small plug-top power supply.
Low power consumption (3 Watts) means cool running
http://www.aminoeom.coMproducts/amine[I I O.htmi p of 2)2/?UYLOOA 5'03:00 AM
Amin-AmiNEi 110 ................. ..........
and high reliability.
O ,r,.- ,
hap:/lwww.aminocom mm/products/aminetI I(fhtm1(2 of 2)2/20/2004 5:03:00 AM }
RCA STB Brochure
19
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56K Internal Modem s
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Serial Port
t — Parallel Port s
r
— Game Port
— 16-bit Audio �i.
— Ext. Stereo Audio Access v „
— NTSC or PAL Composite Video Output
— NTSC or PAL S-Video Output
} —SVGA Output
—Two USB Ports
kI
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Weight: 7 Ibs z ril
—Wireless Keyboard1 ii��
—Windows T'�Operatrng SZs I
EXHIBIT D
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (the "Agreement") is made as of the day March,
2004 by and between EAGLE BROADBAND, INC ("Eagle") and Truckee Donner
Public Utility District("Truckee") (all of the foregoing referred to individually as 'Party"
or collectively as the "Parties"),
WHEREAS, the Parties are currently exploring a transaction (the "Transaction")relating
to the purchase and sale of broadband services.
WHEREAS, in order to evaluate the Transaction, the Parties have requested and will
request of each other, and the Parties have provided and will provide to each other,
certain non-public, confidential or proprietary information, which may include existing
agreements with third parties(the "Information"),
THEREFORE, in consideration of the receipt by the Parties from each other of such
Information for their mutual benefit in connection with the Transaction, the Parties
hereby agree:
I. The Information will be used solely in connection with the Transaction.
2. Regardless of whether the Transaction is consummated, during the period for
which the obligations set forth in this Agreement are in effect, the Parties will
keep such Information confidential.
3. The Parties will safeguard the Information against disclosure by employing the
same means to protect the Information as it uses to protect its own non-public,
confidential or proprietary information; provided, however, that if a Party
providing the Information requests that the receiving Party employ specific
measures against disclosure(e.g., restrictions on copying), the receiving Party will
agree to be bound by such measures by accepting the Information, provided that
the Party delivering the Information makes such request in writing on or before
the date the Information is provided and identifies with specificity the Information
that is to be subject to such specific measures.
4. No receiving Party shall itself, or permit its employees, consultants or agents at
any time to, use, reveal, report, publish, transfer or otherwise disclose to any
person, corporation or other entity any of the Information without the prior
written consent of the Party providing the Information, except a receiving Party
may distribute the Information, subject to any specific measures directed against
disclosure in Paragraph 3, to responsible board members, officers, employees,
affiliates, subsidiaries, agents and consultants of the receiving Party and those of
its affiliates who have a need for such Information for purposes of evaluating the
Transaction, provided that any disclosure by such board members, officers,
affiliates, subsidiaries, employees, agents or consultants in violation of the
provisions of this Agreement shall be a breach of this Agreement by the recipient
Party.
5. Upon request by the Party providing Information, the Party receiving the
Information shall promptly return such Information and all copies or other
reproductions thereof, and all letters, notes and reports thereof, and all other
21
materials, derived from the Information which are in the receiving Party's control.
The receiving Party agrees to represent in writing to the Party providing the
Information that it has complied with the provisions of this paragraph.
6. No Party providing Information shall be deemed to have made any representation
or warranty in connection with such Information.
7. In the event that any Party receiving the Information becomes legally compelled
(by deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process) to disclose any of the Information, the legally
compelled Party shall give the other Party providing the Information with prompt
prior written notice of such requirement so that the providing Party may seek a
protective order or other appropriate remedy and/or waive compliance with the
terms of this Agreement. In the event that such protective order or other remedy
is not obtained, or that the providing Party waives compliance with the terms
hereof, the Party legally compelled to disclose the Information agrees to provide
only that limited portion of the Information that it is advised by written opinion of
counsel is legally required and to exercise reasonable efforts to obtain assurance
that confidential treatment will be accorded such Information.
8. The term 'Information" does not include any information which (i) at the time of
disclosure or thereafter is generally available to the public (other than as a result
of a disclosure by any Party in violation of this Agreement), (it) was available to
any Party on a non-confidential basis from a source other than the Party hereto
providing the Information,provided that such source is not and was not known by
the receiving Party to be bound by a confidentiality agreement that protected the
Information (iii) has been independently acquired or developed by any Party
without violating any of its obligations under this Agreement, or, (iv) that is
required to be disclosed pursuant to applicable law.
9. This Agreement shall be interpreted, governed and construed under the laws of
the State of California as if it were executed and to be performed wholly within
the State of California without regard to its conflict of laws principles.
10. The Parties agree that in the event of a breach of this Agreement, the Party
providing the Information shall be entitled to equitable relief,including injunction
and specific performance, in addition to all other remedies available at law or
equity.
11. The Parties'obligations under this Agreement will expire two (2) years from the
date hereof.
12, This Agreement may be executed in counterparts, and each counterpart shall for
all purposes be an original, and all such counterparts shall together constitute one
and the same Agreement.
22
13. This Agreement shall in no way be construed to (i) preclude in any way either
Party from pursuing any business opportunities; (it) establish any relationship
between the parties with respect to such business opportunities; or(iii) establish
any relationship between the parties with respect to the Transactions that is the
subject of this Agreement.
14. This Agreement (i) may only be amended by both Parties in writing, and (ii)
represents the entire understanding of the Parties with respect to the matters that
are the subject hereof.
IN WITNESS WHEREOF, the Parties have duly executed this Confidentiality
Agreement as of the date first above written.
EAGLE BROADBAND,INC
("Eagle")
By:
Name:
Title:
Dated:
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
("Truckee")
By:
Name:
Title:
Dated:
23
Exhibit E—Eagle Equipment List
The following table includes Eagle's current list of equipment and materials that will be located in the
Reno Head-end Facilty and some located in the Distribution Center. This inventory list shall be updated
every year as the system is constructed and as it expands.
Description Qt
Minerva VC8000 Chassis 8
Full D-1 Encoder Blade for VCBK 45
iDemultiplexer Blade for VCBK 22
GigE NIC for VCBK 8
Minerva Middleware Server 4
iTV Mgr Admin Laptop/PC 1
iTV Mgr Middleware Deployment License 1
Oracle 9i License 4
Standard Comm.Analog IRD w/Videocipher Decrypt 22
iStandard Comm.Analog IRD 8
Motorola Multi-channel IRD 26
Motorola Single Channel IRD 5
Wegener Single Channel IRD 2
VideoTek Off-Air Demodulator 13
SA PowerVu Multi-channel IRD 5
SA PowerVu Single Channel IRD 8
Simulsat 5 Satellite Dish w/LNB Array&accessories 1
Off-Air Antenna Array 1
Video Diagnostics Equipment 1
Equipment Rack 72"(4 post,45 RU) 11
Rack Mount Cable Mgmt 9
APC SmartUPS 2200RM XL NET 11
Misc. Rack Accessories(shelves,brackets,etc...) 1
Misc.Cables,connectors,adapters 1
Extreme Black Diamond 6808(Configured for Eagle Video Headland) 1
Fortinet 3600 Intrusion Detection System 1
Cisco 7200 Router with DS-3 Blade 1
DNS Servers with Linux OS 2
Web Server with RAID or Detached Network Storage 1
DHCP Server Windows 2000 3
(mail Mail Servers Windows 2000 With Imail Unlimited User License 2
Radius Authentication Server with Lions OS 1
Port Master PM-3 Dial-up Access server 1
24
Exhibit F,—Operations ueletea;c
-- � --
1.0 Personnel Requirements:The following lists of personnel are anticipated to be required by both
Parties to initially implement and operate the Fiber Network
District:
General Manager 0.3
elecom Manager t0
SR 1 0
CSR 2 0
IT Monitoring,SIA,NOC Mgr, 0,5
Administration-(split with PUD yr.1) 01
Field technician- t0
T Manager 0,5
Marketing Ativertising Sales(Split IP r 1 0.5
Ea le:
Field Tech 1 due I
Field Tech 2 0,00
Field Tech 3 0.00
Lead Field Tech 4 1,00
OC CSR 1 - 1.00
OC CSR 2 0,00
Billing Clerk/CSR 1,00
Dispatcher 0.00
lead End Video Technician 1.00
etwork Engineer 0.00
Network Engineer II 1.00
Senior Network Engineer _ 0.00
Senior Video Engineer 0.50
Content Aggregator Coordinator N100
alesman I
Salesman It
ro Ct Manger/GM
2.0 Operational Support Provided by Eagle:
Eagle Head-end Facility Personnel shall support all video equipment installed within the Eagle Head-end
Facility and District's Distribution Center including the satellite dishes/receivers. IP
encoders/encapsulators,core switches,ISP related switches and/or routers,and any monitoring equipment
used for the system.
25
3.0 Hours of Support
Staff may be scheduled to accommodate specific project times,on call basis,however general hours are a;
follows:
• Eagle Truckee Office hours are 8:00 a.m.to 5:00 p.m.Monday—Friday Pacific Time.
• Eagle Truckee Engineers are on duty 8:00 a.m.to 5:00 p.m.Monday—Friday Eagle Truckee Video
Technicians are on duty 8:00 a.m.to 5:00 a.m.Monday—Friday Pacific Time.
• Houston based Network Operation Center staffis on duty 24/7. These hours are maintained 365 days
a year.
26
f
Eahibit,t:. - Deleted:/ ...... _._
Contract Service Rates
1.0 Standard Hourly Rates
The following table identifies the standard hourly rates for work performed by Eagle for the
District,at the District's written request,that is not within the scope of this Agreement. These
labor rates can be used to support the District's requirements for design and/or fieldwork for
special projects,such as Anchor Tennant in-house network design,video conferencing system
design,distant learning program development,and maintenance of the District's Fiber Network.
Description Rate
IFteld Tech i 4600
leld Tech 2 55.00
Field Tech 3 65.00
Lead Field Tech 4 70.00
ead End Video Technician j 75.00
,Network Engineer I 85.00
etwork Engineer II 110.00
enior Network Engineer 125.00
enior Video Engineer - 140.50
!project MangedGM 140A0
27
SERVICE AGREEMENT
Between
TRUCKEE DONNER
PUBLIC UTILITY DISTRICT
And
EAGLE BROADBAND, INC.
i
SERVICE AGREEMENT
This Service Agreement ("Agreement") is entered into on the Effective Date, as defined below,
between Truckee Donner Public Utility District (hereinafter referred to as the "District"), a California
public utility district organized and operated pursuant to California Law, and Eagle Broadband. Inc., a
Texas corporation ("Eagle").
Recitals:
A. District is public utility district that provides electric and water service in and around
Truckee, California (hereinafter referred to as "Community"), and will build a fiber network ("Fiber
Network") located within the Community. The District's service territory and the Fiber Network are
more fully described on Exhibit A.
B. Eagle, by and through its subsidiaries and affiliates has experience, in planning,
developing, installing, operating, and maintaining a system of providing combinations of voice, video,
data, and security monitoring services, and billing services, described on Exhibit B ("Services") to
customers, and has proposed to provide Services to the District for the benefit of the customers of the
District.
C. District desires to provide residential and business customers in the Community with the
Services.
D. District desires for Eagle to provide the technological expertise, goods and services that
District requires implementing the deployment of Services through the District's Fiber Network.
E. District is willing, to the extent permitted by applicable law, to provide Eagle with the
right to exclusively supply specific equipment as defined in Exhibit C, which may change from time to
time through the use of addendums to this Agreement, and to exclusively provide and promote the
Services through the Fiber Network within the Community, as provided in paragraph 3.9 of this
Agreement.
F. This Service Agreement is predicated on the District successfully obtaining the funding
necessary to complete the build out of the Fiber Network. In the event the funding cannot be obtained
within ninety (90) days from the Effective Date of this Agreement, the Agreement shall become null
and void, unless otherwise extended by mutual written consent of the Parties.
Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, including the agreements set forth below, Eagle and District agree as follows:
ARTICLE 1
Definitions
1. Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms
and phrases will have the meanings set out below, when used in this Agreement:
1.1 A La Carte Services. The Services that can be individually selected by and sold to a Customer
within Community by the District, as described on Exhibit B.
1.2 Agreement. This Service Agreement between Eagle and District.
2
1.3 Basic Bundled Services. The basic Video and Internet Access service package to be purchased
by the District and offered by the District the District's Customers within Community, as described on
Exhibit B, which may change from time to time through the use of addendums to this Agreement.
1.4 Cable. The fiber optic cable, which enables the District to obtain the Services from EAGLE and
to provide the Services within Community.
1.5 Video Services. Channel video, as described on Exhibit B, including access to local broadcast
channels, that would be available with a television antenna, but excluding premium movie channels and
pay-per-view services.
1.6 Community. The service boundaries of the District, which include the territorial limits of the
Town of Truckee, California and the portions of Nevada County and Placer County California where the
District provides services, as more fully described in Exhibit A, which may change from time to time
through the use of addendums to this Agreement.
1.7 Confidential Information. Confidential or proprietary information, whether written or oral, that
is clearly identified as confidential and is disclosed by one Party to this Agreement to the other pursuant
to and in accordance with the Confidentiality Agreement between District and Eagle attached as Exhibit
D or any supplement thereto.
1.8 Customers. Any person, entity or governmental entity that purchases or receives Services from
the District.
1.9 Default. Default is defined in paragraph 7.2 of this Agreement.
1.10 Distribution Center. The District's facility that houses the majority of the District's fiber
distribution equipment, which is currently located at 11570 Donner Pass Road, Truckee, CA. The
District's long haul fiber is terminated into a Core switch at this facility and also houses much of the
Distribution equipment and houses some of Eagle's VOD equipment. The District may relocate its
Distribution Center at its discretion.
1.11 District. Truckee Donner Public Utility District, a California public utility district organized and
operated pursuant to the California Public Utilities Code, Section 15501, and following, which provides
electric and water service in the Truckee area.
1.12 District Fixtures. The buildings constructed by the District's Broadband Unit, and its fiber,
conduit, cable and wiring in the ground and/or aerial, and personal property which are fixtures or
otherwise non-removable. This does not include any of the District's water and/or electric
fixtures/infrastructure, including but not limited to the District's power/utility poles
1.13 Eagle. Eagle Broadband, Inc., a Texas corporation, and its subsidiaries, successors and assigns
as permitted under Article 9.2 of this Agreement.
1.14 Eagle Equipment. Any equipment and otherwise removable equipment which is maintained by
Eagle and/or its affiliates and which is located in the Head-end facilities located in Reno and the
District's Distribution Center and Node buildings. The term Eagle Equipment shall include all
documentation supplied by the manufacturer related to the installation, configuration, and operation of
the equipment.
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1.15 Effective Date. The date upon which this Agreement has been executed by both Eagle and
District.
1.16 Fiber Network. The Cable and all other facilities and infrastructure to be installed, operated and
maintained by District for the purpose of providing Services to Customers within Community, including
but not limited to the Outside Plant,
1.17 Force Majeure. Acts of God; strikes, lockouts, or other industrial disturbances; acts of the
public enemy; orders of any kind of the government of the United States, the State of California, any
court or agency of competent jurisdiction or any civil or military authority; insurrection; riots; epidemics;
landslides; lightning; earthquake; fires; hurricanes; storms; flood; washouts; droughts; arrests; restraints
of government and people; civil disturbances; vandalism; explosions, breakage or accidents to
machinery, pipelines or canals; impracticality, accident, strike or other labor disputes, delays of suppliers,
contractors or carriers; shortages of material; or inability on the part of a Parry to perform due to any other
causes not reasonably within the control of the party claiming such inability.
1.18 Head-end Facility. The central office facility located in Reno, Nevada that contains the signal
processing equipment and all electronics necessary for Eagle to provide the Services. This includes any
equipment located at 200 S. Virginia& 220 Gardner St, Reno Nevada or other Reno based location.
1.19 Long Haul Fiber. The District's four strands of fiber routed between Reno, located at 200 S.
Virginia and 11570 Donner Pass Rd, Truckee, California and equipment needed to light the fiber and
provide circuits for the services identified in Exhibit B.
1.20 NOC. The Network Operating Center ("NOC") is Eagle's facility located at 101 Courageous
Drive, League City, TX. This includes all equipment needed to remotely monitor the District's fiber
network and Eagle's Head-end Facility in Reno Nevada.
1.21 Outside Plant. Any equipment and/or fiber cable, which is used to distribute services to individual
homes, businesses, equipment sites, or government buildings, which is located outside the District's
facility located at 11570 Donner Pass Road, Truckee, CA. This includes the node buildings and all
associated equipment, fiber backbone, Distribution equipment, and ancillary equipment. The Outside
Plant is owned, operated and maintained by District.
1.22 Parties. District and Eagle
1.23 Party. District or Eagle
1.24 Services. The Digital Services, more fully described on Exhibit B, to be provided by Eagle to
the District and then by the District to its Customers within Community and the billing services to be
provided by Eagle to the District under this Agreement, according to the schedule of services attached as
Exhibit B.
1.25 System. This includes the entire Fiber Network, Distribution Center and Eagle's Head-end
Facility.
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ARTICLE 2
Eagle's General Obligations
2.1 Services. Eagle shall provide the District with the Services described on the attached Exhibit B,
which describes the number of channels, and Internet connectivity levels to be offered by Eagle to the
District and the monthly charges for such Services, at the District's Distribution Center located at 200 S.
Virgina, Street, Reno, Nevada in accordance with the terms and conditions set forth in this Agreement.
In addition, Eagle will operate the OSSBSS software and will provide, ISP technical service, after
hours' customer service, and billing services for all Customers. In the event the District does not obtain
the necessary funding for it to complete the build-out of the Fiber Network within ninety (90) days from
the Effective Date, this Agreement shall become null and void, unless otherwise extended by mutual
written consent of the Parties.
Services. Eagle shall be responsible, at its sole cost and expense, for the following.
a. Provide Services to the District pursuant to Exhibit B;
b. Provide the IP Head-end equipment;
c, Aggregate 200+ IP broadcast channels as depicted in Exhibit B;
d. Provide video on demand content(movies)similar to that available at retail rental stores;
e. Provide software for the TV user interface and channel guide (EPG);
f. Provide local service including at least one head-end technician, and one sales
representative to sell services;
g. Provide Billing software and service with interface for District as well as Eagle.
2.2 Network Monitoring Services. Eagle shall provide District with network monitoring services on
a twenty-four (24) hour, seven (7) days per week, three hundred sixty-five (365) days per year basis
during the term of this Agreement. Such network monitoring services shall be provided to District at
competitive market rates as described in Exhibit B-3, attached hereto and made a part hereof. Each
service shall meet a minimum service level as more fully described in the Service Level Statements
(SLS) attached to this Agreement as Exhibit`13-2".
2.3 Consulting Services. From time to time Eagle shall render general advice to District regarding
designing, developing, installing, operating, and maintaining the Fiber Network and Outside Plant that
provides combinations of voice, video and data services, and other services. In the cases where specific
scopes of work are defined by the District and/or Eagle that require efforts beyond what is considered
general advice, Eagle and the District may enter into consulting contracts that are negotiated outside the
scope of this Service Agreement, such as in-house LAN design for anchor tenants, designing video
recording studio for high school, enhancing SCADA systems, etc. Exhibit I depicts Eagle's standard
rates for these types of services, which rates may be subject to change.
2.4 District's Set-top Box Purchase. Eagle shall supply the District, at favorable prices, set top
boxes which are fully compatible with District's network infrastructure, and which shall be used by the
Customer for IP broadcast video and video on demand capabilities and services. Examples of the set top
boxes currently known to be compatible with District's Network as described in Exhibit C, which list is
for illustrative purposes only. Eagle and the District may review the pricing schedule every six (6)
months to ensure prices and availability of each set top box being provided to District. Eagle shall
maintain operational control of the set top box in order to retain the video content contracts that allow for
IP video delivery. The set top box controls the access to video content and ensures proper security of the
video thus preventing piracy of the content.
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. ........... ................. .....
2.5 FA VORABLEPRICING. District acknowledges and agrees that,pursuant to the terms hereof,
Eagle has provided the District favorable pricing for the Services in return for and in reliance upon the
District's agreement to purchase Services exclusively from Eagle during the term of the Agreement.
District agrees that Eagle will be the exclusive supplier of Services and set top boxes for the District
during the term of this Agreement.
In the event that Eagle sells the Services and/or set top boxes to any of its customers at a price less than
that charged District, District shall thereafter be charged the lower price. If Eagle sells Services and/or
set top boxes to any of its customers at a price less than that charged District for which an order has been
placed by District, but against which Services or set top boxes have yet to be performed or shipped,
respectively, by Eagle in satisfaction of that order, Eagle shall re-price the order using the lower price
and DISTRICT shall be invoiced accordingly.
2.6 Eagle Equipment. Eagle shall own, free and clear of any liens and encumbrances, all Head-end
Facilities, except the long haul optical transmission equipment.
2.7 HIGH QUALITY TECHNOLOGY. District acknowledges and agrees that,pursuant to the
terms hereof. Eagle shall provide the District technology that meets or exceeds that standard of
technology that is available for the same or similar Services in return for and in reliance upon District's
agreement to purchase Services exclusively from Eagle during the term of this Agreement. District
agrees that Eagle will be the exclusive supplier of District for Services during the term of this
Agreement.
In the event that Eagle sells the same or similar Services to any of its customers at a technological quality
or grade that exceeds the standard provided to the District in accordance with this Agreement, District
shall thereafter have the option to request that Eagle upgrade the Services provided to District, and
District shall be responsible for the cost and expense of such upgrade if such upgrade exceeds the cost of
regular maintenance.
2.8 Changes in Services. The Services provided by Eagle may be reviewed by the District and
Eagle on a quarterly basis. No change may be made that would reduce the quantity or quality of the
Services provided in Community, or that would result in the Services failing to meet or exceed the
Service Levels.
2.9 Status as Independent Contractor. Eagle will be an independent contractor in providing the
Services under this Agreement, and neither Eagle nor its employees or contractors will be considered to
be an agent, servant or representative of District. Eagle will have no authority to execute any agreement
on behalf of, or to assume, create or incur any liability or obligation upon District or Community. No
employee, subcontractor or independent contractor of Eagle will be subject to the control or direction of
District.
2.10 Permits and Approvals. Eagle will be solely responsible for obtaining and maintaining in effect,
at all times during the term of this Agreement, all permits, approvals, authorizations, licenses, contracts
and programming contents agreements necessary for Eagle to provide the Services to the District and
which will permit the District to provide the services to Customers within Community, except for any
regulatory approvals needed by the District from the Town of Truckee, California, Nevada County,
California, Placer County California and the Nevada County Local Agency Formation Commission. The
District will be solely responsible for collecting and remitting any applicable sales or use taxes relating
to the Services.
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2.11 Standard.for Services. Eagle will, at all times during the term of this Agreement, maintain the
Services provided to the District at a technological level commensurate with the design and operational
specifications adopted by the District for voice, video, and data services. At a minimum, the Eagle's
Head-end Facility will operate such that no visible artifacts in video quality can be depicted as it relates
to jitter, latency, blocking, channel change times no greater than 2.5 seconds, and flicker measured at the
set top box, as described in Exhibit C, located at each Customer's premises.
2.12 Other Approvals. District agrees to provide Eagle with any necessary security passes or similar
authorizations required to enable Eagle personnel to enter Community and to install, operate and
maintain the System as contemplated by this Agreement.
2.13 Personnel. Eagle will be responsible for hiring and compensating all personnel necessary to
carry out Eagle's obligations under this Agreement. Exhibit H "Operations" sets forth the initial
personnel needed to implement and operate the Fiber Network.
2.14 Assistance. Eagle will assist the District in acquiring Long Haul fiber equipment to minimize
the cost of the deployment.
ARTICLE
District's General Obligations
3.1 Construction of Fiber Network. District agrees to purchase Services exclusively from Eagle
during the term of and in accordance with the terms and conditions of this Agreement. District, at its
sole cost and expense, shall construct the Fiber Network capable of supporting video and data, up to
1000 businesses and 10000 single-family homes within the Community. In the event the District does
not obtain the necessary funding for it to complete the build-out of the Fiber Network within ninety (90)
days from the Effective Date, this Agreement shall become null and void, unless otherwise extended by
mutual written consent of the Parties. Such Fiber Network shall include but not be limited to the
following:
a. Distribution equipment and customer premise equipment (CPE) interface equipment capable of
delivering 200 channels of IP multicast video including HDTV, voice services, security monitoring, and
Internet access simultaneously;
b. Fiber cable connections in quality, as well as capacity, that are capable of delivering 200
channels of IP multicast video including HDTV, voice services, security monitoring, and Internet access
simultaneously;
C. Long Haul bandwidth,using the District's fiber, at no charge to Eagle from the District's
Distribution Center to 200 S. Virginia Street,Reno, Nevada. The minimum amount of bandwidth shall
be determined mutually by Eagle and the District and is estimated to be equivalent to an OC192 circuit.
Eagle will assist the District in acquiring Long Haul fiber equipment to minimize the cost of the
deployment.
3.2 Ownership of Fiber Network. District shall own the Fiber Network and be responsible for the
following,at District's sole cost and expense:
a. Completion of the Fiber Network build-out to all homes and businesses within the Community
over an estimated 12 to 18 month period following commencement of construction;
b. Fiber Network equipment using an all Internet Protocol—based technology;
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C. Installation of IP set top boxes (to be supplied exclusively through Eagle pursuant to this
Agreement) at District's and/or Customer's sole cost and expense;
d. In-home structured wiring at the cost of the District and/or Customer;
C. Providing Eagle real estate space for two desks for on site technicians(on the second floor)
within District's Distribution Center, which currently located at 11570 Donner Pass Road, Truckee,
California. In addition, suitable space shall be provided at the District's Distribution Center,for up to 3
19"racks.
3.3 The Fiber Network. At District's sole cost and expense, the Fiber Network shall include
adequate back-up power supplies to ensure continuous operation for a minimum of eight(8) hours in the
event of a power outage.
3.4 Commencement. District agrees: (a) to commence the construction and installation of the Fiber
Network upon receipt of financing for the System (b) to cause the Fiber Network within the District's
Electric service area to become fully operational within an estimated 18 month period from the Effective
Date. It is understood that these dates are considered approximate and that the Fiber Network will be
completed in a phased manner and Eagle's services will be implemented in a phased manner. Note: The
phased Services and milestone dates will be defined when the District's construction bid is awarded.
Eagle shall evaluate the Fiber Network pursuant to Eagle's standard testing procedure and the Fiber
Network shall be deemed "completed" at the time Eagle delivers to District Eagle's written verification
at the various stages of completion.
3.5 Permits and Approvals. District will be solely responsible for obtaining and maintaining in
effect, at all times during the term of this Agreement, all permits, franchises, approvals and
authorizations necessary for District to install, operate and maintain the Fiber Network.
3.6 Utilities. District will be solely responsible for all equipment, tools, utilities and services
necessary for the proper installation, construction, operation, and maintenance of the Fiber Network.
3.7 Personnel. District will be responsible for hiring and compensating all personnel necessary to
carry out District's obligations under this Agreement. Exhibit IT "Operations" sets forth the initial
personnel needed to implement and operate the Fiber Network.
3.8 Standard for Services. District will, at all times during the term of this Agreement, maintain the
Fiber Network provided within Community at a technological level commensurate with the design and
operational specifications set forth by Distribution Equipment Manufacturers specifications voice,video,
and data services. At a minimum, Fiber Network, Distribution Center and Outside Plant shall operate
such that no visible artifacts in video quality can be depicted as it relates to jitter, latency, blocking,
channel changes times no greater than 2.5 seconds, and flicker measured at the set top box, as described
in Exhibit C,located at each Customer's premises.
3.9 Grant of Exclusivity. For 18 months after the completion of the Fiber Network(as deemed by
Eagle pursuant to paragraph 3.4), District agrees not to enter into an agreement with any other person or
entity for the provisioning of any of the Services for which Eagle is providing pursuant to this
Agreement and pursuant to the Compensation Schedule outlined in Exhibit E,unless otherwise mutually
agreed in writing by District and Eagle.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF EAGLE. Eagle hereby represents and
warrants to District on the date hereof and at and as of Closing, except as set forth in the SEC Documents
specifically referenced herein,the following:
Organization. Eagle is a corporation duly organized, validly existing and in good standing
under the laws of the State of Texas. Eagle is duly qualified as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a material adverse effect on the
Company.
Legality. Eagle has the full legal right, requisite corporate power and authority to enter into this
Agreement and to perform the transactions contemplated hereby.
Non-contravention. The execution and delivery of this Agreement, does not and will not
conflict with or result in a breach by Eagle of any of the terms or provisions of, or constitute a
default under, the Articles of Incorporation or By-laws of Eagle, and will not conflict with, result
in the breach or violation of, or constitute, either by itself or upon notice or the passage of time
or both, a default under any indenture, mortgage, deed of trust or other agreement or instrument
to which Eagle is a parry or by which it or any of its properties or assets are bound, or any
existing applicable law, rule, or regulation or any applicable decree, judgment or order of any
court or United States federal or state regulatory body, administrative agency, or any other
governmental body having jurisdiction over Eagle or any of its properties or assets, which is
likely to result in a material adverse effect.
Approvals. No authorization, approval, consent or other order of any court, governmental body,
regulatory agency, self-regulatory organization, stock exchange or market or the stockholders of
Eagle is required to be obtained by Eagle for the execution, delivery or performance of this
Agreement.
Compliance. Eagle has all franchises, permits, licenses, affiliation agreements with cable
television programming networks, retransmission agreements, transport agreements, and any
similar authority necessary for the conduct of its business, as now conducted, except where the
failure to have such franchise, permits, licenses, affiliation agreements with cable television
programming networks, retransmission agreements, transport agreements or authority would not
have a material adverse effect. Eagle is not in default in any respect under any of such
franchises,permits, licenses, affiliation agreements with cable television programming networks,
retransmission agreements, transport agreements or similar authority. Eagle has not been
advised, nor has reason to believe that it is not conducting its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is conducting its business,
including, without limitation, all applicable local, state and federal environmental laws and
regulations; except where failure to be so in compliance would not have a material adverse
effect.
Insurance. Eagle maintains property and casualty, general liability, personal injury and other
similar types of insurance with financially sound and reputable insurers that is adequate to
protect Eagle against theft, damage, destruction, acts of vandalism and all other risks customarily
insured against by similarly situated companies, consistent with industry standards and Eagle's
historical claims experience. Eagle has not received notice from, and has no knowledge of any
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threat by, any insurer (that has issued any insurance policy to Eagle) that such insurer intends to
deny coverage under or cancel, discontinue or not renew any insurance policy covering Eagle,
presently in force.
4.2 REPRESENTATIONS AND WARRANTIES OF DISTRICT. District hereby represents and
warrants to Eagle that:
Authorization. District has full power and authority to enter into this Agreement, and such
Agreement constitutes its valid and legally binding obligation, enforceable in accordance with its
terms.
Non-contravention. The execution and delivery of this Agreement, does not and will not
conflict with or result in a breach by District of any of the terms or provisions of, or constitute a
default under, the Articles of Incorporation or By-laws of District, and will not conflict with,
result in the breach or violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any indenture, mortgage, deed of trust or other agreement or
instrument to which District is a party or by which it or any of its properties or assets are bound,
or any existing applicable law, rule, or regulation or any applicable decree,judgment or order of
any court or United States federal or state regulatory body, administrative agency, or any other
governmental body having jurisdiction over District or any of its properties or assets, which is
likely to result in a material adverse effect.
Compliance. District has all franchises, permits, licenses and any similar authority necessary
for the conduct of its business, as now conducted, except where the failure to have such
franchise, permits, licenses or authority would not have a material adverse effect. District is not
in default in any respect under any of such franchises, permits, licenses or similar authority.
District has not been advised, nor has reason to believe that it is not conducting its business in
compliance with all applicable laws, rules and regulations of the jurisdictions in which it is
conducting its business, including, without limitation, all applicable local, state and federal
environmental laws and regulations; except where failure to be so in compliance would not have
a material adverse effect.
Insurance. District maintains property and casualty, general liability,personal injury and other
similar types of insurance with financially sound and reputable insurers that is adequate to
protect District against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against by similarly situated companies, consistent with industry standards
and District's historical claims experience. District has not received notice from, and has no
knowledge of any threat by, any insurer (that has issued any insurance policy to District) that
such insurer intends to deny coverage under or cancel, discontinue or not renew any insurance
policy covering District, presently in force.
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ARTICLE 5
Compensation
5.1 Fees and Charges. As compensation for the Services to be provided to the District, Eagle will
be entitled to charge and collect from District the amounts set forth on Exhibit B-3. Eagle will be solely
responsible for billing for the Services. Eagle and District may review its fees and charges and propose
adjustments on quarterly basis from the date Eagle commences to provide at least one active Service
except for charges prior to activation of such service required for testing and evaluating the Fiber
Network; however, Eagle and District must maintain the price schedule for the Services at a price level
that is competitive with the Industry Standard.
ARTICLE 6
Other Agreements
6.1 Confidentiality.
Any Confidential Information transmitted by one party hereto ("Disclosing Party') to the other
party ("Receiving Party") will be retained by the Receiving Party as confidential, and will be subject to
the terms of the Confidentiality Agreement between District and Eagle attached as Exhibit D. In the
event of a breach or threatened breach by the Receiving Party, or any other person or entity receiving
Confidential Information by or through the Receiving Party, of the provisions of this section, the
Disclosing Party may, in addition to any other available remedies, pursue an injunction restraining the
Receiving Party from disclosing, in whole or in part, any Confidential Information.
6.2 Inventions and Reservation of Rights . Except as otherwise agreed in this Agreement, Eagle
will have the exclusive, free and irrevocable right to use, disclose and practice, without restriction, any
and all inventions, ideas and improvements made by Eagle or its agents,affiliates and employees relating
to or in association with the Services provided hereunder. Likewise, except as otherwise agreed in this
Agreement, District will have the exclusive, free and irrevocable right to use, disclose and practice,
without restriction, any and all inventions, ideas and improvements made by District or its agents,
affiliates and employees relating to or in association with the Fiber Network provided hereunder.
6.3 Indemnity.
EAGLE WILL INDEMNIFY, DEFEND AND HOLD HARMLESS DISTRICT AND ITS
EMPLOYEES, CONTRACTORS AND INSURERS (THE "DISTRICT ENTITIES") FROM ALL
CLAIMS, DEMANDS, LOSSES, EXPENSES, CAUSES OF ACTION, INDEMNITY OBLIGATIONS,
JUDGMENTS AND LIABILITIES, INCLUDING REASONABLE FEES OF DISTRICT'S LEGAL
COUNSEL (COLLECTIVELY, "LOSSES") ARISING OUT OF, RELATED TO, OCCASIONED BY
OR IN CONNECTION WITH ANY GROSS NEGLIGENCE OR WILLFUL ACT OR OMISSION OF
EAGLE OR ITS AFFILIATES, AGENTS, SERVANTS, EMPLOYEES AND CONTRACTORS, OR
THE PERFORMANCE OR FAILURE TO PERFORM EAGLE'S OBLIGATIONS UNDER THIS
AGREEMENT. EAGLE'S INDEMNITY AND AGREEMENT TO DEFEND AND HOLD DISTRICT
HARMLESS SET FORTH IN THIS PARAGRAPH 6.3 SHALL EXTEND TO AND INCLUDE,
WITHOUT LIMITATION, ANY AND ALL CLAIMS BY ANY CUSTOMER WHICH MAY ARISE
FROM ANY DEFAULT BY EAGLE IN THE PROVISION OF SERVICES. THIS
INDEMNIFICATION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT FOR A
TERM OF ONE (1) YEAR.
I1
DISTRICT WILL INDEMNIFY, DEFEND AND HOLD HARMLESS EAGLE, ITS PARENT,
SUBSIDIARIES AND AFFILIATED COMPANIES, AND THEIR EMPLOYEES,
SUBCONTRACTORS AND INSURERS FROM AND AGAINST ANY CLAIM, DEMAND, CAUSE
OF ACTION, LOSS, EXPENSE, AWARD, JUDGMENT OR LIABILITY DIRECTLY ARISING OUT
OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF DISTRICT OR ITS AGENTS,
SERVANTS, EMPLOYEES OR CONTRACTORS, OTHER THAN EAGLE OR ITS AGENTS,
SERVANTS, EMPLOYEES OR CONTRACTORS. DISTRICT'S INDEMNITY AND AGREEMENT
TO DEFEND AND HOLD DISTRICT HARMLESS SET FORTH IN THIS PARAGRAPH 6.3 SHALL
EXTEND TO AND INCLUDE, WITHOUT LIMITATION, ANY AND ALL CLAIMS BY ANY
CUSTOMER WHICH MAY ARISE FROM ANY MATERIAL DEFECT IN THE FIBER NETWORK,
INCLUDING THE OUTSIDE PLANT. THIS INDEMNIFICATION SHALL SURVIVE ANY
TERMINATION OF THIS AGREEMENT FOR A TERM OF ONE (1) YEAR. IN THE EVENT
DISTRICT EXERCISES ITS OPTION TO PURCHASE THE HEADEND FACILITY PURSUANT TO
PARAGRAPH 7.3(a)(3) HEREIN, DISTRICT'S INDEMNITY AND AGREEMENT TO DEFEND
AND HOLD DISTRICT HARMLESS SET FORTH IN THIS PARAGRAPH 7.3 SHALL EXTEND TO
AND INCLUDE, WITHOUT LIMITATION, ANY AND ALL CLAIMS BY ANY CUSTOMER
WHICH MAY ARISE FROM ANY MATERIAL DEFECT IN THE PROVISION OF SERVICES,
INCLUDING THE OUTSIDE PLANT, THIS INDEMNIFICATION SHALL SURVIVE ANY
TERMINATION OF THIS AGREEMENT FOR A TERM OF ONE (1) YEAR.
Eagle and District are each responsible to third parties to the extent of their own negligence.
Notwithstanding any of the indemnities and liabilities specifically referred to above, neither Eagle nor
District shall be liable the other with respect to any special, indirect, consequential loss including, but not
limited to, loss of anticipated profit, loss of anticipated revenue, or loss of use of money, arising or
alleged to arise out of or either Eagle's or District's failure to properly carry out its obligations hereunder
or due to omissions or negligence, in whole or in any part, of the party at fault, its subcontractors or
vendors in any part, of party at fault, its subcontractors or vendors or strict liability, and regardless of
whether pre-existing the execution of the Agreement.
ARTICLE 7
Term,Default,Further Assurances,Remedies and Termination
7.1 Terua. The term of this Agreement will commence on the Effective Date and will continue for
three (3) years, unless terminated on an earlier date under other provisions of this Agreement or by
written agreement of Eagle and District, after which time it shall automatically renew for additional
terms of three (3) years unless either Party notifies the other Party in writing no less than one hundred
eighty (80)before the end of any term that it will not renew this Agreement.
7.2 Default, Each of the following shall be deemed to be an event of default under this Agreement.
a. The failure by Eagle or the District to perform or observe any term, covenant, agreement or
condition of this Agreement and such failure continues for a period of thirty (30) days after written
notice thereof from the other Party (provided that if such failure cannot be cured within such thirty (30)
day period, this period will be extended if the Party commences to cure such failure within such thirty
(30) day period and proceeds diligently thereafter to effect such cure) shall constitute and event of
default under this Agreement.
b. An event of a Party's Bankruptcy, defined as any proceeding under bankruptcy, creditor
protection or a similar law which is commenced by or against a Party or when a receiver is appointed.
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............................
7.3 Remedies.
a. District's Remedies. In the event that Eagle defaults under this Agreement, the District shall
have the following remedies:
1. The District may terminate this Agreement.
2. The District may perform, on behalf and at the expense of Eagle, any obligation of Eagle
under this Agreement which Eagle has failed to perform and of which the District shall have given Eagle
notice,the cost of which performance by the District shall be payable by Eagle to the District upon
demand.
3. The District may exercise an option to purchase Eagle's Head-end Facility at the book
value, which book value shall be determined in accordance with generally accepted accounting
principles, consistently applied by an independent third party to be mutually agreed upon by the Parties.
If District and Eagle cannot agree on third party to determine book value of the Eagle's Head-end
Facility, then District and Eagle shall each appoint a person or company qualified to determine the value
of such Head-end Facility who is not affiliated in any way with either District or Eagle. The two persons
appointed by District and Eagle shall appoint a third person to determine the book value of Eagle's Head-
end Facility. The option granted to the District herein includes the option to purchase the real property
where the Head-end Facility is located, if such property is owned by Eagle, or the option to have the
lease or other occupancy rights for the Head-end Facility assigned to the District.
If the District exercises its option to acquire Eagle's Head-end Facility and real estate,
lease or other occupancy rights as provided herein, then the closing of such purchase shall occur within
fifteen (15) days of the determination of value as provided herein. Eagle will assign, transfer, and
convey the Eagle Head-end Facility and the real estate or assignment of lease or other occupancy rights
to the District free and clear of any and all liens, claims, and encumbrances.
During the period of time between the date of receipt by Eagle of the District's notice of
its intention to exercise the option granted to it herein and the date of the closing, the District shall have
the option to take over possession, control, operation and maintenance of the Head-end Facility. During
such time, the indemnity provisions set forth in this Agreement shall continue to be in effect.
The option granted to District herein may be enforced by specific performance.
4. District may pursue other remedies available to District at law or in equity.
b. Eagle's Remedies. In the event that the District defaults under this Agreement, Eagle shall have
the following remedies:
1. Eagle may terminate this Agreement.
2. Eagle may perform,on behalf and at the expense of the District, any obligation of the
District under this Agreement which the District has failed to perform and of which Eagle shall have
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given the District notice,the cost of which performance by Eagle shall be payable by the District to
Eagle upon demand.
1 Eagle may pursue all remedies available to Eagle at law or in equity.
C. All rights and remedies of the Parties set forth in this Agreement shall be cumulative, and none
shall exclude any other right or remedy,now or hereafter allowed by or available under any statute,
ordinance, rule of court, or the common law, either at law or in equity, or both.
d. If either Party defaults, the prevailing Party in the dispute(as determined by a court of competent
jurisdiction or, as the case may be, an arbitrator) will be entitled to recover its reasonable attorney's fees
and costs of court from the non-prevailing Party.
7.4 Further Assurances. If either Party reasonably determines that any further instruments,
representation of assurance of payment, or performance, or any other things are necessary or desirable to
carry out the terms of this Agreement, the other Party will execute and deliver all such instruments and
assurances and do all such things as the first Party reasonably deems necessary or desirable to carry out
the terms of this Agreement.
7.5 Termination. This Agreement may be terminated as follows:
a. Upon the mutual written consent of both Parties.
b. Upon written notice by either Party to the other Party in accordance with the terms of this
Agreement.
C. Upon the effective date of any order, decree, ruling or action of any court of competent
jurisdiction, or any governmental body, regulatory or administrative agency or commission having
appropriate jurisdiction, restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become final and
non-appealable.
d. Termination under this paragraph will not affect payment obligations incurred under this
Agreement performed prior to the effective date of termination, and for any costs incurred in accordance
with this Agreement, including without limitation commitments to purchase products or services from
third parties that were pre-approved by District and entered into by Eagle in the course of performance
hereunder prior to the effective date of termination.
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ARTICLE 8
Miscellaneous Provisions
8.1 Notice . Any notice given under this Agreement must be in writing and may be given: (i) by
depositing it in the United States mail, certified, with return receipt requested, addressed to the Party to
be notified and with all charges prepaid; or (ii) by depositing it with Federal Express or another service
guaranteeing "next day delivery", addressed to the party to be notified and with all charges prepaid; (iii)
by personally delivering it to the Party, or any agent of the Party listed in this Agreement, or (iv) by
facsimile with confirming copy sent by one of the other described methods of notice set forth above.
Notice by United States mail will be effective on the earlier of the date of receipt or seven (7) business
days after the date of mailing. Notice given in any other manner will be effective only when received.
For purposes of notice, the addresses of the Parties will, until changed as provided below, be as follows:
Eagle: Eagle Broadband, Inc.
101 Courageous Drive
League City, Texas 77573
Attn: Dave Weisman, CEO
Telecopier: (281) 538-5370
With Required Copy to: Eagle Broadband, Inc.
101 Courageous Drive
League City, Texas 77573
Attn: Celia Figueroa, General Counsel
Telecopier: (281) 538-5370
If to District: Truckee Donner Public Utility District
PO Box 309
Truckee, California 96160
Attn: General Manager
Phone: (530) 587-3896
Telecopier: (530) 587-1189
With Required Copy to: Truckee Donner Public Utility District
PO Box 309
Truckee, California 96160
Attn: Director of Telecommunications
Phone: (530) 587-3896
Telecopier: (530) 587-1189
The Parties may change their respective addresses to any other address within the United States of
America by giving at least 5 days written notice to the other Party.
8.2 Severability. If any provision of this Agreement is illegal,invalid, or unenforceable,under
present or future laws, it is the intention of the Parties that the remainder of this Agreement not be
affected, and, in lieu of each illegal,invalid, or unenforceable provision, that a provision be added to this
Agreement which is legal, valid, and enforceable and is as similar in terms to the illegal, invalid or
enforceable provision as is possible.
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8.3 Waiver. Any failure by a Party to insist upon strict performance by the other Party of any
material provision of this Agreement will not be deemed a waiver thereof or of any other provision, and
such party may at any time thereafter insist upon strict performance of any and all of the provisions of
this Agreement.
8.4 No partnership. Nothing in this Agreement is intended or will be construed to create a
partnership or joint venture between Eagle and District or to render either of the Parties liable or
responsible for the debts or obligations of the other,including, but not limited to, interest, taxes, losses or
any other liability.
8.5 Force Majeure. If,by reason of force majeure, either Party may be rendered unable, in whole or
in part, to carry out its obligations under this Agreement, the Party whose performance is so affected
must give notice and the full particulars of such force majeure to the other Party within a reasonable time
after the occurrence of the event or cause relied on,the obligation of the Party giving such notice, so far
as it is affected by such force majeure, will be suspended during the continuance of the inability then
claimed but for no longer period and such Party will endeavor to remove or overcome such inability with
all reasonable dispatch.
8.6 Applicable Law. The interpretation, performance, enforcement and validity of this Agreement
are governed by the laws of the State of California.
8.7 Assignment. Neither Parry may assign this Agreement, or its rights and obligations hereunder,
without the prior,written consent of the other Party, except that Eagle may,following at least fifteen(15)
days written notice to District, (i) assign this Agreement to its wholly-owned subsidiary and
(ii) subcontract the performance of the Services, or portions thereof, to any of Eagle' subsidiaries or
affiliates without consent from District; however, no such assignment may impair the quality of the
Services hereunder,nor will any assignment operate to relieve Eagle from its obligations hereunder.
8.8 DISPUTE RESOLUTION
8.8.1 Negotiation. Eagle and District agree to first enter into negotiations to resolve any controversy,
claim or dispute ("dispute") arising under or relating to this Agreement. The Parties agree to negotiate in
good faith to reach a mutually agreeable resolution of such dispute within a reasonable period of time,
not to exceed forty (40) business days in total. If the Parties are unable to reach a mutually agreeable
resolution within ten (10) business days after the dispute first arises, each of the Parties shall promptly
designate a senior officer of its management to meet at a mutually agreeable time and place to resolve
the dispute. In the event the senior officers of the Parties are unable to resolve the dispute within a
period of thirty (30) business days after the dispute is referred to them, then Eagle and District agree to
resolve the dispute by binding and final arbitration by a single, mutually agreed-upon arbitrator in
accordance with the Commercial Arbitration Rules of the American Arbitration Association then in
effect.
8.8.2 Arbitration. BINDING ARBITRATION. (a) In the event Eagle or District shall be default
hereunder or be in dispute of this Agreement, then the non-defaulting Party shall have the obligation of
seeking binding arbitration upon written notification to the defaulting Party of the exercise this obligation.
In the event Eagle or District shall exercise this obligation, then the following terms and conditions shall
operate to be the sole and exclusive remedy for resolving said dispute:
Any default by Eagle or District hereunder shall be settled by arbitration in accordance with the
Commercial Arbitration Association Rules of the American Arbitration Association, and judgment upon the
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award rendered by the Arbitrator shall be binding on the Parties. The Parties hereto agree, in the event of a
dispute with Eagle or District, either Party shall send a letter to the American Arbitration Association office
located closest to Truckee, California, containing the following language and signed by at least the Party
alleging the dispute(hereinafter"Demand for Submission"):
The Parties hereby agree to submit to arbitration under the Commercial Arbitration Rules of the American
Arbitration Association the following controversy: The Parties further agree that the above controversy be
submitted to one (1) Arbitrator mutually selected by the Parties from a roster of qualified arbitrators
provided by the American Arbitration Association in accordance with the arbitration provisions of this
Agreement. The Parties further agree to faithfully observe this Arbitration Agreement, to abide by a vote of
the Arbitrator in deciding the controversy, and to recognize that the judgment granted by a vote of the
Arbitrator shall be binding on the losing Parry;
(a) The forum for all the Parties for the arbitration hearing shall be Truckee, California;
(b) The selection of choice of law to be applied by the Arbitrator to judge the claims of the Parties,
including the choice of law to be applied in both procedural and substantive law questions, are the laws of
the State of California;
(e) All costs and expenses charged by the Arbitrator and the American Arbitration Association shall be
apportioned by the Arbitrator;
(d) Other rules governing selection of the Arbitrator and administration rules,not in conflict with the
provisions set forth herein, shall be according to the American Arbitration Association Rules;
The selection of the arbitration center to administer the Arbitration shall be the American Arbitration Center
located closest to Truckee,California.
8.9 Entire Agreement. This Agreement and related agreements contains the entire agreement of the
Parties, and amends any prior agreements, oral or written, between the Parties regarding the subject
matter of this Agreement. This Agreement can be amended only by written agreement signed by the
Parties. This Agreement amends all other agreements between the Parties concerning the subject matter.
8.10 Exhibits, Headings, Construction and Counterparts. All exhibits referred to in or attached to
this Agreement are incorporated into and made a part of this Agreement for all purposes. The paragraph
headings contained in this Agreement are for convenience only and do not enlarge or limit the scope or
meaning of the paragraphs. Wherever appropriate, words of the masculine gender may include the
feminine or neuter, and the singular may include the plural, and vice-versa. The Parties acknowledge
that each of them have been actively and equally involved in the negotiation of this Agreement.
Accordingly, the rule of construction that any ambiguities are to be resolved against the drafting Party
will not be employed in interpreting this Agreement or any exhibits hereto. This Agreement may be
executed in any number of counterparts, each of which will be deemed to be an original, and all of which
will together constitute the same instrument. This Agreement will become effective only when one or
more counterparts, individually or taken together, bear the signatures of all of the parties.
8.11 Authority for Execution. Eagle certifies, represents, and warrants that the execution of this
Agreement is duly authorized in conformity with its articles of incorporation and bylaws. District
certifies, represents, and warrants that the execution of this Agreement is duly authorized in conformity
with the articles of incorporation and bylaws or partnership agreement of each entity executing on behalf
of District.
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812 Exhibits. The following exhibits are attached to this Agreement, and made a part hereof for all
purposes:
Exhibit A: Map of District's Fiber System
Exhibit B: Detailed Description of Services and SLS
Exhibit C: Product Examples & Supply Agreement
Exhibit D: Confidentiality Agreement
Exhibit E: Eagle Equipment List
Exhibit F: Operations
Exhibit G: Standard Contract Rates
EXECUPED this day of , 2004.
EAGLE BROADBAND,INC.
By:
Name:
Title:
TRUCKEE DONNER
PUBLIC UTILITY DISTRICT
By:
Name:
Title:
f
i
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