City Auditor - City Recorder - Council Ordinance - 177014 Electric Lightwave franchise fees escrow agreement

Agreement made, effective as of November _____________, 2002, among the City of Portland, of 1120 SW Fifth Avenue, Portland, Multnomah County, Oregon 97204, referred to as “City,” Electric Lightwave, Inc., of 4400 NE 77^th Avenue, Vancouver, Clark County, Washington 97662, referred to as “ELI,” and U.S. Bank, N.A. referred to as “Escrow Agent.”

A. ELI and City have entered into a franchise agreement that allows ELI to utilize City streets for a fee.

B. ELI believes the franchise fees charged by the City may be illegal under the Federal Telecommunications Act. The City believes that ELI's position is without merit.

C. ELI has paid City less than the full amount of the fees due under the terms of the franchise.

D. The City has notified ELI that City considers ELI’s franchise fee payments an underpayment under the franchise. ELI disputes this determination.

E. The franchise calls for the disputed amount to be placed in escrow pending final resolution of the dispute.

In consideration of the covenants made to each other as set forth in this agreement, the parties agree to take the following action:

ELI will deposit all disputed franchise fees in an escrow account with Escrow Agent. With the execution of this agreement, ELI has deposited $1,797,830 in an escrow account with Escrow Agent, the receipt of which is acknowledged.

City and ELI agree that ELI will deposit the disputed franchise fees in escrow on a quarterly basis coinciding with the due date of franchise fee payments to the City. ELI’s franchise fees are due 45 days after the end of each calendar quarter, or May 15th, August 14th, November 14th and February 14th.

ELI, City and Escrow Agent agree that Escrow Agent shall disburse the money deposited with it under this agreement in accordance with a final judgment entered in the suit determining debtor’s and creditor’s legal entitlement to such funds or pursuant to a mutual settlement. Any judgment will not be considered final until any appellate review sought by either or both of the parties with respect to their legal entitlement to such funds has terminated.

Escrow Agent is hereby directed to invest all funds deposited in the escrow account in one month US Treasury Bills unless otherwise directed. All residual funds resulting from round-lott purchases (typically less than $1,000.00) should be placed in an interest bearing demand account insured by the Federal Deposit Insurance Corporation or a US Treasury collateralized flex repo account. Escrowed funds should fully collateralized by US Treasury securities and/or insured by the Federal Deposit Insurance Corporation at all times. All account deposits and withdrawals are performed by U. S. Bank, N.A. ELI and City shall provide Escrow Agent with a W-9 or W-8 IRS tax form prior to the disbursement of interest and Escrow Agent will file the appropriate 1099 or other required forms pursuant to Federal and Oregon laws. A statement of citizenship will be provided if requested by Escrow Agent. Escrow Agent shall not be responsible for maximizing the yield on the Proceeds. Escrow Agent shall not be liable for losses, penalties or charges incurred upon any sale or purchase of any such investment.

ELI, City and Escrow Agent agree that interest earned on the deposited monies under this agreement shall be disbursed to the same parties, at the same time, and in the same proportion as the principal. Disbursement shall in no way constitute or be considered a waiver by the City to any other claims the City may have to penalties, late payment interest, recomputation expenses, etc.

ELI and City acknowledge that regulations of the Comptroller of the Currency grant ELI and City the right to receive brokerage confirmations of the security transactions as they occur. ELI and City specifically waive compliance with 12CFR12 and herein notify Agent that no brokerage confirmations need be sent relating to investment transactions as they occur. Escrow Agent will send monthly statements of all account activity to City and ELI.

A. It is agreed that Escrow Agent is not a party to and shall not be bound by any agreements between City and ELI, except to the extent of express directions set forth in a mutual settlement between the City and ELI directing the release of the escrowed funds, which written direction shall be delivered to Escrow Agent in the manner specified in Section Twelve hereof.

B. Escrow Agent shall only act as a depository and shall not be required to take notice of any default or breach of warranty in any note or under any contract between the parties unless notified in writing.

C. Escrow Agent shall be liable only for its own willful misconduct or gross negligence.

D. ELI shall pay Escrow Agent fees for its services as set forth on Schedule I attached hereto and incorporated herein, which shall be subject to increase upon notice sent to ELI. Escrow Agent shall also be reimbursed for its reasonable costs and expenses incurred on behalf of ELI and City. In the event that the conditions of this Agreement are not promptly fulfilled, or if Escrow Agent renders any service not provided for in this Agreement, or if the parties request a substantial modification of its terms, or if any controversy arises, or if Escrow Agent is made a party to, or intervenes in, any litigation pertaining to this escrow or its subject matter, Escrow Agent shall be reasonably compensated for such extraordinary services and reimbursed for all costs, attorney’s fees, including allocated costs of in-house counsel, and expenses occasioned by such default, delay, controversy or litigation and Escrow Agent shall have the right to retain all documents and/or other things of value at any time held by Escrow Agent in this escrow until such compensation, fees, costs, and expenses are paid. ELI and City and their respective successors and assigns agree jointly and severally to indemnify and hold Escrow Agent harmless against any and all losses, claims, damages, liabilities, and expenses, including reasonable costs of investigation, counsel fees, including allocated costs of in-house counsel and disbursements that may be imposed on Escrow Agent or incurred by Escrow Agent in connection with the performance of it’s duties under this Agreement, including but not limited to any litigation arising from this Agreement or involving it’s subject matter. Escrow Agent shall have a first lien on the property and papers held under this Agreement for such compensation and expenses.

A. In the event of any disagreement between any of the parties resulting in adverse demands being made in connection with this deposit in escrow, Escrow Agent shall be entitled, at its option, to refuse to comply with any such claim or demand so long as the disagreement continues. In so doing, Escrow Agent shall not become liable to any person for its failure or refusal to comply with such conflicting or adverse claims until the rights of the claimants have been finally adjudicated or the differences adjusted between the parties, and until Escrow Agent is notified of such action in a writing signed by all parties interested.

B. If the differences between the parties have not been adjusted and Escrow Agent so notified within a period of one hundred eighty (180) days following receipt of notice by Escrow Agent, Escrow Agent may interplead the funds on deposit in escrow in a court of proper jurisdiction. Escrow Agent shall then be fully discharged and released from all further liability or responsibility under the terms hereof.

This agreement shall constitute the entire agreement between the parties with respect to the escrow account. Any prior understanding or representation of any kind regarding the escrow account preceding the date of this agreement shall not be binding upon any party except to the extent incorporated in this agreement

Any modification of this agreement or additional obligation assumed by any party in connection with this agreement shall be binding only if evidenced in writing and signed by a duly authorized representative of each party.

It is agreed that this agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Oregon. Any litigation by the parties must be brought in either Multnomah County Circuit Court for the State of Oregon, or the Portland, Oregon Division of the Federal District Court.

The invalidity of any portion of this agreement shall not be deemed to affect the validity of any other provision. In the event that any provision of this agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision.

The titles to the paragraphs of this agreement are solely for the convenience of the parties and shall not be used to explain, modify, simplify, or aid in the interpretation of the provisions of this agreement.

Any notice provided for or concerning this agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth below, or such address as they may provide by notice to all other parties:

If to the City: Office of Cable Communications and Franchise Management City of Portland, Oregon

This agreement shall bind and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties.

Each party to this agreement has caused it to be executed as ____________________ on the date indicated below. This agreement shall be effective as of the date of execution by the last party below.

01010

Acceptance Fee

The acceptance fee includes the administrative review of documents, initial set-up of the account, and other reasonably required services up to and including the closing. This is a one-time fee, payable at closing. Includes fees and expenses, if any, of legal counsel (except for the fees associated with rendering a standard legal opinion).

$1,000.00

04460

Escrow Agent

Annual administration fee for performance of the routine duties of the escrow agent associated with the management of the account. Administration fees are payable in advance.

$1,000.00

Reimbursement of expenses associated with the performance of our duties, including but not limited to publications, legal counsel after the initial close, travel expenses and filing fees.

At Cost

Extraordinary services are duties or responsibilities of an unusual nature, including termination, but not provided for in the governing documents or otherwise set forth in this schedule. A reasonable charge will be assessed based on the nature of the service and the responsibility involved. At our option, these charges will be billed at a flat fee or at our hourly rate then in effect.

Account approval is subject to review and qualification. Fees are subject to change at our discretion and upon written notice. Fees paid in advance will not be prorated. The fees set forth above and any subsequent modifications thereof are part of your agreement. Finalization of the transaction constitutes agreement to the above fee schedule, including agreement to any subsequent changes upon proper written notice. In the event your transaction is not finalized, any related out-of-pocket expenses will be billed to you directly. Absent your written instructions to sweep or otherwise invest, all sums in your account will remain uninvested and no accrued interest or other compensation will be credited to the account. Payment of fees constitutes acceptance of the terms and conditions set forth.