SECTION 4 . - Compensation to the City.

(a) Level 3 is solely responsible for the payment of all lawful franchise and permit fees in connection with Level 3's performance under this Agreement.

(b)

In consideration of this Franchise Agreement, Level 3 agrees to remit to the City a franchise fee of five percent (5%) of Gross Revenues ("Franchise Fee"). As defined in Wichita City Code 3.93.040, "gross receipts" means all revenues received directly or indirectly by a franchisee or its affiliates for communications services that either originate or terminate within the corporate limits of the city, and all revenue derived from the use of facilities. If a telecommunications local exchange service provider offers additional services of a wholly local nature which if in existence on or before July 1, 2002, would have been included with the definition of gross receipts, such services shall be included from the date of the offering of such services in the City. Such gross receipts means only those receipts collected from within the corporate boundaries of the City and which are derived from the following: (1) recurring local exchange service revenues from businesses and residences which includes basic telephone exchange service, touch tone, optional calling features and measured local calls; (2) recurring local exchange access line services for pay phone lines provided by a telecommunications local exchange service provider to all pay phone service providers; (3) local directory assistance (411); (4) line status verification/busy interrupt; (5) local operator assistance; (6) nonrecurring local exchange service revenue, which shall include customer service charges for installation of lines, reconnection of service and charge for duplicate bills.. All other revenues, including, but not limited to, revenues from extended area service, the sale or lease of unbundled network elements, nonregulated services, carrier and end user access, long distance or interexchange services, wireless telecommunications services, lines providing only data service without voice services processed by a telecommunications local exchange service provider, private line service arrangements, internet, broadband and all other services not wholly local in nature are exclude from gross receipts. Additionally, "gross receipts" shall not include revenues from cable services subject to a cable services franchise, or bad or uncollected debt and late charges, and any federal, state or local taxes or franchise fees separately stated on a customer's bill, provided, that a franchisee shall include uncollected debt in gross receipts at the time it is actually collected.

(c)

The franchise fee is compensation for the use of the right of way and shall in no way be deemed a tax of any kind. The franchise fee is in addition to, and not in lieu of, the City's Telecommunications Service Occupation Tax under Wichita City Code section 3.90.020. Level 3 will receive credit toward total franchise fee payment pursuant to Wichita City Code section 3.93.350 for occupation tax paid.

(d)

In accordance with section 3.93.310 of the Wichita City Code, each franchise fee payment shall be accompanied by a statement showing the manner in which the franchise fee was calculated. The franchise fee payment should also specify occupation tax credit as identified in section 4(c) above.

(e)

The franchise fee shall be due on a quarterly basis. The first payment shall be due on the first day of the month following the date on Page 1 of this Franchise Agreement, without the City being responsible for submitting an invoice. Any franchise fee not postmarked or delivered by the due date shall accrue interest from the due date until received, at the applicable statutory interest rate, as defined in K.S.A. 16-201.