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Resolution 1999-85 . . RESOLUTION NO. 99-85 RESOLUTION OF THE CITY OF GILROY APPROVING PROPOSED CABLE SYSTEM CHANGE OF CONTROL FROM FALCON COMMUNICATIONS, L.P. TO CHARTER COMMUNICATIONS HOLDING COMPANY, LLC WHEREAS, Falcons Cable Systems Company II, L.P. ("Falcon"), which is 99% owned by Falcon Cable Communications, LLC ("FCCLLC"), which is 100% owned by Falcon Communications, L. P. ("FCLP" or "Transferor") currently operates in the City under the terms of a cable television franchise agreement (which franchise and all amendments thereto to date are referred herein as the "Franchise"); and WHEREAS, Charter Communications Holding Company, LLC ("Charter") which is held by Charter Communications, Inc. ("CCI") has agreed to purchase the holdings of the parent corporation Falcon Communications, L.P. (FCLP) by way of a Purchase and Contribution Agreement dated May 26, 1999; and WHEREAS, FCLP as Transferor and Charter as Transferee, jointly filed a Federal Communications Commission Form 394 (the "Application") with the City on June 23, 1999 which filing more fully describes the transaction, and which form contains certain promises, representations and warranties by the Transferor and Transferee; and WHEREAS, the City and Transferee and Transferor have negotiated a franchise renewal; and WHEREAS, the City has substantial concems with regard to, among other things the past technical performance of Falcon, FCCLLC, and FCLP and with regard to the quality of service provided to citizens and Franchise compliance while it has held the Franchise; and WHEREAS, the City is willing to approve the Application, but only if the conditions set forth below and in the accompanying Transfer Agreement ("Transfer Agreement") are satisfied; and in reliance on the promises, representations and warranties made by Transferor and Transferee in the Form 394, supporting documents, and the Transfer Agreement; and WHEREAS, FCS, FCCLLC, FCLP, Charter, and CCI are willing to agree to terms and conditions to the terms and conditions contained herein and in the accompanying Transfer Agreement. NOW THEREFORE, BE IT RESOLVED BY THE CITY OF GILROY AS FOLLOWS: SECTION 1. The City hereby approves the transfer request, effective as of the date all of the conditions set forth below are fully satisfied SECTION 2. By November 5, 1999, the Transfer Agreement attached hereto is signed. SECTION 3. All conditions set forth in the Transfer Agreement must be satisfied, in accordance with their terms. SECTION 4. The Proposed Transaction must be completed by December 31, 1999. RESOLUTION NO. 99-85 - 1 - . . SECTION 5. Transferor and Transferee must comply with all promises, representations and warranties made in the Form 394, each of which shall be enforceable by the City against them. SECTION 6. This Resolution is specifically made without a finding or representation that Falcon is in compliance with all the terms and conditions of its franchise, and certain items of noncompliance are addressed within the Transfer Agreement; and SECTION 7. This Resolution is specifically made without a finding or representation that Charter is or is not financially, technically, or legally qualified to hold the franchise. Without limiting the foregoing, this approval of the Application specifically is not a finding or representation that the franchise will be renewed or extended (and this approval shall not create an obligation to renew or extend the franchise); that Charter will be financially, technically, or legally qualified to hold a renewed franchise; or that any other renewal issue that may arise with respect to past performance or future, cable-related needs and interests will be resolved in a manner favorable to the Franchisee. For example, the City is not finding or representing that the amount of money that Charter or its parent corporations propose to devote to the franchise area, or their plans for the franchise are reasonable to meet the community's future, cable- related needs and interests. SECTION 8. This Resolution is not an approval of any other transaction, whether required or allowed by the Application, nor does the approval of the Application in any respect limit the enforceability of any Franchise provision. In the event of a conflict between any provision of any document related to this Application and the Transfer Agreement, this Resolution and the Franchise shall control; Transferor and Transferee shall be required to comply with obligations under the same, notwithstanding the provisions of any other agreement. SECTION 9. If the provisions of this Resolution are not satisfied, or are deemed to be unenforceable, then the request for approval of the Application shall be deemed denied as of this date; and/or the franchise may be revoked. SECTION 10. This Resolution shall become effective on the date of this Resolution. PASSED AND ADOPTED this 1st day of November, 1999 by the following vote: AYES: COUNCILMEMBERS: ARELLANO, GIFFORD, MORALES, ROWLlSON, SPRINGER, SUDOL, GILROY NOES: COUN~LMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE rIE~~\ K. A. Mike Gilroy, Mayor ) ~L~~. Rhonda Pelfin, City Clerk RESOLUTION NO. 99-85 -2- . . TRANSFER AGREEMENT This agreement is made this 0'day ofJh1~'~999, by and between: 1.1.1. City of Gilroy, Califomia, a [charter city/] ("City"); and 1.1.2. Falcon Holding Group, L.P. (FHGLP); and 1.1.3 Falcon Cable Communications, LLC (FCCLLC); and 1.1.4. Falcon Communications, L. P. ("FCLP"); and 1.1.5. Falcon Cable Systems Company II, L.P. ("Falcon" or "Franchisee"); and 1.1.6 Charter Communications, Inc. (CCI); and 1.1.7. Charter Communications Holding Company, LLC ("Charter" or "Transferee"); and 1.1.8 All of the above 1.1.2. - 1.1.7 may be referred to collectively as "the Companies." RECITALS WHEREAS, FCLP has agreed to an acquisition by Charter pursuant to a "Purchase and Contribution Agreement dated May 26, 1999 (the "Proposed Transaction"); and WHEREAS, Falcon, which is 99% owned by FCCLLC, which is 100% owned by FCLP, which is 53% owned by FHGLP and 47% owned by TCI (ATT) , currently operates under the terms of a cable television Franchise Agreement (the "Franchise") granted by the City; and WHEREAS, the City Code provides that prior approval of the City is required before a franchise is sold, transferred or assigned in whole or in part, in any manner, including through a change in control of the person that owns or controls the Franchisee; and WHEREAS, on or about June 23, 1999, Charter and FCLP filed FCC Form 394 pursuant to the 1992 Cable Act and FCC regulations, and have requested that the City approve the application for a transfer of control of the Franchisee from FCLP to Charter (the "Application"); and 1 . . WHEREAS, the City has substantial concerns with regard to, among other things, the past technical performance of Falcon and with regard to the quality of service provided to citizens and franchise compliance while it has held the Franchise; and WHEREAS, the City and Falcon have been engaged in .an extended franct)ise renewal f"t-o e ,,~ a.,.....m.... +- process which has resulted in a negotiated renewal franchise <;:-ReR8wal Franchis~i'J; and WHEREAS, the City is willing to act affirmatively on the Application so long as Charter agrees that it will be bound by all of the provisions, terms, conditions and limitations prescribed "'I"C>~O~ ~U7t in both the current Franchise and the",R R8wal Franchisl:!^(Exhibit A), and all applicable federal, state, and local laws to the maximum extent required by law, and subject to conditions ensuring that the Companies representations are accurate as they may affect (1) the Companies' liability for past acts and omissions, and (2) the financial qualifications of Charter and its parent corporations; and WHEREAS, relying on the representations of the Companies, the City is willing to grant its consent to the Application, as long as the Companies' representations are complete and accurate; and WHEREAS, Falcon and Charter have agreed to abide by the provisions, terms conditions, and limitations prescribed in the current Franchise and the negotiated renewal franchise and all applicable federal, state, and local laws to the maximum extent required by law, and subject to conditions ensuring that Charter's and Falcon's representations are accurate as they may affect (1) the Companies' liability for past acts and omissions, and (2) the financial qualifications of Charter and its parent corporation. NOW, THEREFORE, in consideration of the City's consent to the Application, and subject to the terms and conditions of this Agreement and of the City's Resolution granting conditional consent to the Application, THE PARTIES DO HEREBY AGREE as follows: 1. TRANSFER OF FRANCHISE 1.1. In consideration for the promises and performances of the Companies, as expressed elsewhere in this Transfer Agreement (Agreement), the City hereby consents to the 2 . . transfer of control of its Cable Television Franchise from FCLP to Charter as specified in the Application. 1.2. The City reserves all rights not expressly granted in this Agreement. In particular and without limitation: 1.2.1. Neither this Agreement, nor any other action or omission by the City at or before the execution of this Agreement, shall be construed to grant the City's consent to any future transfer of the Franchise and/or the cable system, and/or change in ownership and/or control of the Franchises and/or the cable system, or to mean that the City's consent to any future transaction is not required, except that Charter may: (a) restructure debt; (b) pledge or grant a security interest to any lender(s) of Charter's assets, including but not limited to, the franchise or interests in Charter, for purposes of securing an indebtedness, and; (c) sell capital stock of Charter, or any of Charter's affiliate companies in a transaction commonly known as an "initial public offering" without obtaining prior consent of the City; provided that Charter represents in writing to the City that any such transaction will not materially affect compliance with the Franchise Documents and that any affiliated Charter entity with an ownership interest in the Franchise shall fully comply with the terms of the Franchise Documents. Without limiting the foregoing, the approval of the Application does not itself authorize or permit Charter to lease or use the cable system to provide services other than cable services, or to install non- cable facilities, without obtaining the authorizations or approvals validly required by the City. 1.2.2. The City waives none of its rights with respect to Falcon's compliance with the terms, conditions, requirements and obligations set forth in the Franchise Documents ("Franchise Documents') which are hereinafter defined as the Franchise currently in force, the City Code as it may be amended from time to time, as well as those Transfer Agreements, Resolutions and Orders necessary to transfer ownership or control since the beginning of the Franchise terms including the City's right to compel Charter to comply with the Franchise Documents. 1.2.3. Falcon and Charter acknowledge and agree that the City is not, by approving the Application, agreeing that any past practice or course of conduct by Falcon, including its direct or indirect parent corporations or predecessors, complied with the Franchise Documents. 3 . . Falcon and Charter agree that the City is not deciding that either of them is financially, legally, or technically qualified to hold the Franchises; and the parties hereto agree that the City may and has property reserved consideration of those issues to any renewal proceeding. 2. ACCEPTANCE OF FRANCHISE OBLIGATIONS 2.1. Compliance with Franchises - Franchisee agrees to fully comply with all of the terms and conditions set forth in the Franchise Documents. Charter agrees that it will not take any action, fail to take any action, or assert any claim or defense inconsistent with those obligations including, by way of example and not limitation, a claim that as a result of the Proposed Transaction, Charter, FCLP, FCCLLP, or Franchisee is relieved of liability for past acts or omissions. To the extent that any provisions of any document associated with the Proposed Transaction or approval of the Proposed Transaction between Charter and Franchisee (including but not limited to financing documents, mortgages and other instruments) conflicts with the Franchise Documents (other than the express provisions of this Agreement), the parties agree they are not approved, and the approval of the Application is subject to the condition that such provisions, if any, shall be of no force or effect with respect to the cable system serving the City. 2.2. Assumption of Obliaations - From and after the Transaction, Charter shall be jointly and severally liable with Franchisee for past acts and omissions of Franchisee and Charter shall be liable for the future acts and omissions of Franchisee or any of its direct and indirect parents and predecessors, known and unknown. Without limiting the foregoing, Charter hereby assumes joint and several liability for, and accepts the consequences of, any such acts and omissions, known and unknown, and assumes liability for any and all of Franchisee's (including its direct and indirect parents and predecessors, known and unknown) previously accrued but unfulfilled obligations to the City under the Franchise Documents, unless and until such obligations are expressly released by mutual agreement. The City's approval of the Application does not in any way release any obligation related to any past actions, omissions, practices, or system operations (including charges to subscribers) of Franchisee (or any of their direct and indirect parents or predecessors) or any obligation arising out of any failure to comply with California or federal law. The City may vindicate its rights by action brought against Franchisee and/or Charter, to the extent consistent with the assumptions of obligations in this paragraph. 2.3. Charter and Falcon acknowledge and agree that the consent to the Application is 4 . . made in reliance upon the representations, documents, and information provided by Charter and Falcon in connection with the Proposed Transaction, all of which are incorporated into this Agreement by this reference. Without limiting the foregoing, the Companies have warranted that the City may rely on the Form 394 submitted to the City in connection with the Proposed Transaction. The Companies represent and warrant that: (1) the Proposed Transaction will not materially adversely affect the costs of the entity holding the Franchise, so that the Franchisee's ability to satisfy the cable-related needs and interests of the City will not be affected; (2) there is nothing in any agreement related to the Proposed Transaction that would prevent or in any way inhibit Franchisee or Charter from agreeing to a renewal franchise, or from settling past compliance issues as proposed by the City. 3. ADDITIONAL CONDITIONS 3.1. In the event the transaction described in the Form 394: (a) does not close; (b) does not close before December 31, 1999; or (c) closes on terms that are in any material respect different from the terms disclosed to the City in writing, then this Agreement and any City consent to the Application shall be void and of no force or effect, and the Application deemed to have been timely denied; provided that nothing herein shall prevent the City, upon a request from Falcon or Charter, from granting an extension beyond December 31, 1999. 3.2. The Companies hereby waive any and all claims that they may have that any denial of the Application that results from this Section 3 fails to satisfy the deadlines established by applicable law including, without limitation, claims based on, arising out of, or relating to 47 USC ~537, as amended, and agree that they shall be deemed to have agreed to an extension of time to act on the Application as required to make any denial effective. 3.3. The Companies represent and warrant that the Proposed Transaction will not result in the City's cable system having responsibility for any additional debt, in any respect that would adversely affect the financial position of Franchisee including any affect on the future cable-related needs and interests of the community. 3.4 CCI and Charter agree that they will not enter into any arrangement which would result in the transfer of ownership or control of the cable system from Charter, or result in a transfer, without obtaining the prior approval of the City if approval is required by the Franchise 5 . . Documents. Further, any transferee or new controlling entity must become a party to the Franchise as required by the Franchise Documents. 3.5 Franchisee and Charter agree to abide by the provisions, terms conditions, and limitations prescribed in the current Franchise. As a condition of the approval of this Transfer Application, the parties to this. Agreement agree to adopt and abide by the provisions, terms, conditions, and limitations prescribed in the negotiated renewal franchise (Exhibit A) and agree that the City has conducted the franchise renewal process consistent with all applicable Federal, state, and local law. 3.6. Upon invoice by the City, Faicon agrees that it shall within 30 days of the invoice reimburse the City for all reasonable, direct, out of pocket costs the City incurred in analyzing and acting upon the Application. The reimbursement amount to be paid by Falcon shall not exceed a total of $15,000 for the Cities of Gilroy, Hollister, and San Juan Bautista. 4. RATES 4.1 The Franchisee and Charter agree that the Proposed Transaction will not result in any increase in the rates for basic cable service and the Franchisee and Charter will not rely upon an increase in debt service or in debt service coverage, if any, that results from the proposed Transaction, to justify an increase in rates for cable services. 4.2 No expenses incurred or amounts expended by the Companies in connection with the Proposed Transaction, including any such expenditures to comply with the terms of this Agreement, may be passed through to subscribers to the system in any form, or itemized on subscriber bills. 5. REPRESENTATIONS AND WARRANTIES 5.1 Each of the Companies hereby represent and warrant that at the time of the execution of this Agreement: (a) they are duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized; (b) the Franchise Documents and, assuming due execution hereof by the other parties hereto, this Agreement constitute legal, valid and binding obligations of such company enforceable in accordance with their terms to the maximum extent required by law, provided it is understood no party waives its right to 6 . . object to any term inconsistent with applicable law; (c) the execution and delivery of, and performance by such company under, this Agreement and the Franchise Documents, where applicable, are within such company's power and authority without the joinder or consent of any other party and have been duly authorized by all requisite corporate or partnership action on the part of such company's partnership agreement, charter, bylaws, and/or other organizational documents; and (d) the execution and delivery of this Agreement does not contravene, result in a breach of, or constitute a default under, any contract or agreement to which any of them is a party or by which any of them or any of their properties may be bound (nor would such execution and delivery constitute such a default with the passage of time or the giving of notice or both), and does not violate or contravene any law, order, decree, rule, regulation or restriction to which any of them is subject. 5.2 The Companies represent and warrant that they are not asserting that the Franchisee or Charter will be permitted to provide services in addition to cable services as a result of the approval of the Application. 5.3 Charter Communications, Inc. agrees that, from and after the consummation of the Proposed Transaction, it will not take any action to cause Charter or the Franchisee to fail to fully comply with all of the lawful terms and conditions set forth in the Franchise Documents and (when executed and delivered) this Agreement. To the extent that any provisions of any document associated with the Proposed Transaction, or any other contract, conflicts with the lawful provisions of the Franchise Documents, this Agreement or applicable federal, state or local laws, the parties agree they are not approved, and the Application is subject to the condition that such provisions, if any, shall be of no force or effect with respect to the System serving the City. 5.4. The Companies acknowledge and agree that the City's consent to the Application is made in reliance upon the representations, documents, and information provided by Charter and FCLP in connection with the Application. The Companies are jointly and severably liable for their representations and warranties; and that the representations and warranties include, without limitation the following: 7 . . 5.4.1. Charter and Franchisee agree to comply with all lawful Federal, State, and local requirements with respect to nondiscriminatory access to Falcon's cable modem platform for providers of Internet access service provided however, that prior to the enactment or enforcement of any such requirement by the City, Franchisee shall be provided with reasonable notice and an opportunity to be heard including the right to present evidence on any findings made or required to be made by the City with respect to such a requirement. Further, Charter agrees that should it or any direct or indirect parent corporation, enter into any agreement with a franchising authority that requires the provision of non-discriminatory access to its cable modem platform for providers of Internet access services, then the same contractual provision will be made available upon the City's request in these Franchises upon equivalent terms and conditions. 5.4.2. Charter agrees that personally identifiable subscriber information as that term is used in 47 USC Section 551 will be used only in accordance with the provisions of the Cable Communications Policy Act of 1984, as amended by the Telecommunications Act of 1996. 5.4.3. Charter agrees that any consolidation of its customer service functions under itself or any parent company will not in any way interfere with Franchisee's compliance with the customer service requirements of the Franchise. 5.4.4. Charter and Franchisee agree that additional transfers of ownership or control of this Franchise would be a disproportionate burden upon the City. Charter agrees, therefore, to guarantee and assume liability for all reasonable costs incurred by the City in analyzing and acting upon any transfer application filed within 36 months of the closure of the Proposed Transaction. 5.4.5. Charter and Falcon agree to indemnify and hold the City harmless against any loss, claim, damage, liability or expense (including, without limitation, reasonable attorneys' fees) proximately caused by any representation or warranty made by that any Company herein which proves to be untrue or inaccurate in any material respect. 8 . . 5.4.6. Charter and Falcon agree that any content enhanced residential Internet service it may provide constitutes a cable service within the meaning of 47 USC Section 522 unless and until the FCC by final order or a court of competent jurisdiction finds that residential Internet access provided over a cable system is not a cable service. Revenues received by Falcon or any other Cable Operator of the Cable System from the provision of content enhanced residential Internet service over the Cable System as a cable service shall be included within gross revenues for the purpose of the franchise fee calculation. 6. MISCELLANEOUS PROVISIONS 6.1. Effective Date: This Agreement shall be effective and binding upon the signatories once it has been signed by all signatories, subject to any conditions contained herein 6.2. Entire Aareement: This Agreement constitutes the entire agreement of the parties with respect to the settlement of the matters addressed herein. No statements, promises or inducements inconsistent with this Agreement made by any party shall be valid or binding, unless in writing and executed by all parties. This Agreement may only be modified by written amendments hereto signed by all parties. 6.3 Breach: A material breach of this Agreement shall be deemed a material breach of the Franchise. 6.4 Bindina Acceptance: This Agreement shall bind and benefit the parties hereto and their respective heirs, beneficiaries, administrators, executors, receivers, trustees, successors and assigns, and the promises and obligations herein shall survive the expiration date hereof. Any purported assignment of this Agreement is void without the express written consent of the signatories. 6.5 Voluntary Aareement: This Agreement is freely and voluntarily given by each party, without any duress or coercion, and after each party has consulted with its counsel. Each party has carefully and completely read all of the terms and provisions of this Agreement. 9 . . 6.6. Severabilitv: If any term, condition, or provision of this Agreement shall, to any extent, be held to be invalid, preempted, or unenforceable, the remainder shall be valid in all other respects and continue to be effective. 6.7. Counterparts: This Agreement may be executed in several counterparts, each of which when so executed shall be deemed to be an original copy, and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all parties shall not have signed the same counterparts. 6.8. Governino Law: This Agreement shall be governed in all respects by the law of the State of California. 6.9. Time of Essence: In determining whether a party has substantially complied with this Agreement, the parties agree that time is of the essence. 6.10. Captions and References: The captions and headings of sections throughout this Agreement are intended solely to facilitate reading and reference to the sections and provisions of this Agreement. Such captions shall not affect the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Transfer Agreement as of the day and year first above written. ATT~: , ~~~L~ City Clerk thereof 10 . . FALCON CABLE SYSTEMS COMPANY II, L.P. a California limited partnership By: Falcon Cable Communications, LLC, a Delaware limited liability company, its general partner By: [Name, Title] FALCON CABLE COMMUNICATIONS, LLC, a Delaware limited liability company By: [Name, Title] FALCON COMMUNICATIONS, L.P., a California limited partnership By: Falcon Holding Group, L.P., a Delaware limited partnership its managing general partner By: Falcon Holding Group, Inc., a California corporation, its general partner By: [Name, Title] FALCON HOLDING GROUP, L.P., a Delaware limited partnership By: Falcon Holding Group, Inc., a California corporation, its general partner By: [Name, Title] 11 . . CHARTER COMMUNICATIONS HOLDING COMPANY, L.L.C. By: Title: CHARTER COMMUNICATIONS, INC. By: Title: ~OVED AS TO FORM: ~(,~(lI~ City Attorney 12 ~ . EXHIBIT A FRANCHISE AGREEMENT City of Gilroy, California . . . TABLE OF CONTENTS SECTION 1. 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 SECTION 2. 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 SECTION 3. 3.1 SECTION 4. 4.1 4.2 SECTION 5. SECTION 6. 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 DEFINITIONS..........................................................................................3 Cable Act................................................................................................. 3 Cable Ordinance..................................................................................... 3 Cable System.......................................................................................... 3 Franchise Aareement or Aareement........................................................ 3 Franchisee............................................................................................... 3 Institutional Network or I-Net ................................................................... 3 Public. Educational or Goyernmental Use. or PEG Use..........................4 School..................................................................................................... 4 Subscriber Network................................................................................. 4 SCOPE OF FRANCHISE; LIMITS AND RESERVATIONS ....................4 Relation to Other Proyisions of Law........................................................4 Term................. ................................................ ...................... ........ ......... 5 Affiliates Must Comply.............. .................................... ... ............... ......... 5 Construction............................................................................................ 5 Franchise Area ...... .................. ................................................................ 6 Effect of Franchise Acceptance ....................................... ...... ............... ..: 6 Relation to Prior Franchise .................... ............................................ ......6 ~i~.....................................................................................................6 Franchisee Bears Its Own Costs.............................................................6 No Recourse ..................... ... ..... ......... ..................................................... 7 Severability........................................................ .............. ........................7 Effect of Chanae in Law.......................................................................... 7 NON-EXCLUSIVE FRANCHISE AND COMPETITON ENCOURAGED. 7 Parity of Franchises...................................................... ... ... ....... ........... ... 7 NO WAiVER............................................................................................8 Course of Dealina...................................................................... ........... ... 8 Breaches......................... ... ..... ....................................................... .........8 AMENDMENT OF AGREEMENT ...........................................................8 FRANCHISE FEE.................................................................................... 8 Payment to City ............................................................ ........................... 8 Not in Lieu of Any Other Assessments. Tax or Fee................................. 8 Payments................................................................................................ 9 Franchise Fee Report.............................................................................. 9 No Accord or Satisfaction ........................................................................9 Ability to Draw on Security Fund ............................................... .............. 9 Payment Records.................................................................................... 9 Holdover Term........ ................................... ........... ................................... 9 . . . TABLE OF CONTENTS (CONTINUED) SECTION 7. 7.1 7.2 7.3 SECTION 8. 8.1 8.2 8.3 8.4 8.5 SECTION 9. CONSTRUCTION PROVISIONS ............................................................ 9 Provision of Service................................................................................. 9 System Construction Schedule .............................................................12 Construction Standards................................... ... ... ........... ... ............... ....13 CONTINUITY OF SERVICE.................................................................. 14 Riahts of Subscribers to Service ...........................................................14 Dutv to Provide Uninterrupted Service ..................................................14 Abandonment........................................................................................ 14 What Is Abandonment ............................................................. ... ...........14 RiQhts Upon Franchise Termination or Forfeiture.................................. 15 LEASED USE........................................................................................15 SECTION 10. SYSTEM, FACILITIES, EQUIPMENT, AND SERVICES ......................15 10.1 System UpQrade..... .................. .................................................. ..... ......15 10.2 PEG Access Center/Headend/lnstitutional Network Link ......................16 10.3 Institutional Network ...................... ........................................................16 10.4 Svstem Desiqn: Equipment Used.......................................................... 19 10.5 System Desiqn: Construction Testinq Requirements ............................20 10.6 Svstem Desiqn: Proof of Performance Tests.........................................20 10.7 Inspection.............................................................................................. 20 10.8 Svstem Desiqn: EmerQency Alert System ............................................. 20 10.9 Interconnections.................................................................................... 20 SECTION 11. SUBSCRIBER NETWORK CHANNELS AND FACILmES FOR PEG USE.. 21 11.1 PEG Channels....................................................................................... 21 11.2 Subscriber Services ..............................................................................26 11.3 No City Control...................................................................................... 26 SECTION 12. OPERATION AND REPORTING ..........................................................26 12.1 Open Books and Records .....................................................................26 12.2 Time for Production .................................... .................. ......................... 26 12.3 Reports Required......................................................... .........................26 12.4 Retention of Records: Relation to Privacy Riqhts..................................27 SECTION 13. CUSTOMER SERVICE STANDARDS .................................................. 27 SECTION 14. RATE REGULATION ............................................................................ 27 14.1 City Authority.............................................. ....... ....................................27 14.2 Rate Uniformity...................................................................................... 27 ii . . TABLE OF CONTENTS (CONTINUED) SECTION 15. SURETY; INDEMNIFICATION..............................................................27 15.1 Indemnification...................................................................................... 27 15.2 No Limit of Liability ................................................................................28 SECTION 16. PERFORMANCE GUARANTEES ........................................................28 16.1 Security Fund .......................... ................. ........................................... 28 16.2 Performance Bond................................................................................. 29 16.3 Material Term .......................... ................... ................... .................. ...... 29 SECTION 17. REMEDIES............................................................................................29 17.1 Remedies............... ......................................... ............................... .......29 17.2 Liauidated Damaaes..... ........................................................ ................. 30 17.3 Procedures Applicable to Liquidated Damaaes..................................... 31 17.4 Reyocation or Termination of Franchise................................................ 31 17.5 Remedies Cumulative ........................................................................... 32 17.6 Relation to Insurance and Indemnity Reauirements.............................. 32 SECTION 18. PERFORMANCE MONITORING ..........................................................32 18.1 Triennial Review.................................................................................... 32 18.2 Franchise Cooperation ..........................................................................32 18.3 Exercise of Authority..............................................................................32 SECTION 19. RIGHTS OF INDIVIDUALS PROTECTED............................................ 33 19.1 General Obliaations............. ......... .............. .................. .........................33 19.2 Respect for Propertv............ ....................................................... .... ....... 33 19.3 Fair Employment ...................................................................................33 SECTION 20. MISCELLANEOUS PROVISIONS........................................................33 20.1 Compliance With Laws.........................................................................33 20.2 Governina Law...... .................. ........................................... ............. ......33 20.3 No Pledainq of City's Credit.................................................................. 33 20.4 Use of City Name or Loao ..................................................................... 33 20.5 Venue.................................................................................................... 33 20.6 Conflict of Interest ................................................................................. 34 20.7 Force Maieure .......................................................................................34 20.8 Notices.................................................................................................. 34 20.9 Calculation of Time................................................................................ 34 20.10 Time of Essence: Maintenance of Records of Essence ........................ 35 20.11 Captions ................................................................................................ 35 20.12 Entire Aqreement...................................................................................35 20.13 Counterparts.......................................................................................... 35 iii . . FRANCHISE AGREEMENT BETWEEN THE CITY OF GILROY, CALIFORNIA AND FALCON CABLE SYSTEMS COMPANY II, L.P., A WHOLLY OWNED SUBSIDARY OF CHARTER COMMUNICATIONS HOLDING COMPANY, LL.C. This Franchise Agreement ("Agreement") dated for purposes of identification, effective as set forth herein, is made and entered into by and among Falcon Cable Systems Company II, L.P. and the City of Gilroy, a California [charter city/municipal corporation] (" City"). WHEREAS, Falcons Cable Systems Company II, L.P. ("Falcon"), which is 99% owned by Falcon Cable Communications, LLC ("FCCLLC"), which is 100% owned by Falcon Communications, L. P. ("FCLP") currently operates in the City under the terms of a cable television franchise agreement; and WHEREAS, Falcon has asked the City to renew the nonexclusive Franchise it holds to provide Cable Service in the City; and WHEREAS, the City has conducted hearings to identify the future cable-related needs and interests of the community; to consider the financial, technical, and legal qualification-s of Falcon; and to determine whether Falcon's plans for constructing and operating its System are adequate; and WHEREAS, the City has relied on Falcon's written representations and has considered all information Falcon has presented to it; and WHEREAS, the City has considered the past performance of Falcon under the prior franchise; and WHEREAS, Charter Communications Holding Company, LLC ("Charter") which is held by Charter Communications, Inc. ("CCI") has agreed to purchase the holdings of Falcon's parent corporation Falcon Communications, L.P. (FCLP) by way of a Purchase and Contribution Agreement dated May 26, 1999; and WHEREAS, FCLP as Transferor and Charter as Transferee, jointly filed a Federal Communications Commission Form 394 (the "Application") with the City on June 23, 1999 which filing more fully describes the transaction, and which form contains certain promises, representations and warranties by the Transferor and Transferee; and WHEREAS, the City has relied on Falcon's representation that the proposed transaction resulting in the change of control of the Franchise to Charter will close within days of the date of execution of this Franchise; and WHEREAS, the City finds Falcon under the new ownership of Charter to be financially, legally, and technically qualified to operate a cable communications system with the City; and 1 . . WHEREAS, Falcon, Charter, and the City have reached agreement on the terms and conditions of a renewed Franchise; and WHEREAS, based on Falcon's representations and information, the City has determined that, subject to the terms and conditions set forth herein and the provisions of Chapter L-l of the City Code, as amended by Ordinance No. r 1 granting Falcon a nonexclusive Franchise is consistent with the public interest; and WHEREAS, Notwithstanding anything to the contrary in the Transfer Agreement and Resolution adopted by the City on November 1, 1999, except for an obligation to pay unpaid or underpaid franchise fees (if any) (including applicable late fees and penalties), which the City may determine are due, after conducting an audit, for the years of 1997, 1998, and 1999, the City does hereby release Charter and Falcon (under Charter's ownership) from any and all known or unknown acts, errors, or omissions arising from Falcon's operation of the cable system serving the City under the prior franchise, prior to the effective date of the Renewal Franchise Agreement; and WHEREAS, on November 1, 1999, with an effective date no later than the actual closing date of the proposed transaction resulting in the change of control of the Franchise to Charter (anticipated date to be no later than December 31, 1999) the City determined to award said nonexclusive Franchise subject to the provisions of Chapter L-l of the City Code, as amended by Ordinance No. r 1 and to the execution by the City and Falcon of this Franchise Agreement. NOW, THEREFORE, in consideration of the City's renewal of Falcon's Franchise; Falcon's promise to provide Cable Service to residents of the City pursuant to Chapter L-l of the City Code, as amended by Ordinance No. r 1 and under the terms and conditions set forth herein; the promises and undertakings herein; and other good and valuable consideration, the receipt and the adequacy of which is hereby acknowledged, THE SIGNATORIES DO HEREBY AGREE AS FOllOWS: 2 . . SECTION 1. DEFINITIONS All words appearing in this agreement which are identical to the words defined in this Section 1 shall have the meanings stated in Section 1. When not inconsistent with the context, words used in the present tense include the future, words in the plural number include the singular number, and words in the singular number include the plural number. The words "shall" and "will" are mandatory and "may" is permissive. Words not defined herein shall be given the meaning set forth in City Ordinance No. [insert # of City's cable ordinance], or if not defined therein, then the meaning set forth in the Cable Communications Policy Act of 1984, 47 U.S.C. Section 521 et sea., as amended, and if not defined therein, shall be given their common and ordinary meaning. References to any City official or City office also refer to any official or office that succeeds to any or all of the responsibilities of the named official, whether by delegation, succession or otherwise. Reference to the City include the City, in its present [incorporated] form or in any later recognized, consolidated, enlarged, [or reincorporated] form. References to laws or "Applicable Laws" shall be interpreted broadly to include federal, state and local laws and regulations adopted pursuant to those laws; resolutions and other local government directions that have the force of law, however nominated. Unless otherwise stated, references to Applicable Laws include laws now in effect, as the same may be amended from time to time, and new laws. In addition, the following definitions shall apply: 1.1. Cable Act. "Cable Acf' means the Cable Communications Policy Act of 1984, 47 U.S.C. S 521 et seq., as amended by the Cable Television Consumer Protection and Competition Act of 1992, and the Telecommunications Act of 1996, and as further amended from time to time. 1.2. Cable Ordinance. "Cable Ordinance" means Chapter U of the City Code as amended from time to time. 1.3. Cable Svstem. "Cable System" is defined as in federal law and City Ordinance No. [insert # of City's cable ordinance], except that as used herein, it specifically refers to the Franchisee's Cable System. A reference to a Cable System includes pedestals, enclosures (such as equipment cabinets), amplifiers, power guards, nodes, cables, fiber optics and other equipment necessary to operate the Cable System. 1.4. Franchise Aareement or Aareement. "Franchise Agreement" or "Agreement" means this contract entered into between the City and Franchisee, and any amendments, exhibits, or appendices hereto, entered into in accordance with the terms of the Cable Ordinance. 1.5. Franchisee. "Franchisee" means Falcon, and its lawful and permitted successors, assigns, and transferees. 1.6. Institutional Network or I-Net. "Institutional Network" or "I-Nef' means fibers, coaxial cables and the electronic devices required to activate the same that are not primarily intended for use in the transmission of video programming to residential Subscribers. 3 . . 1.7 Public. Educational or Governmental Use. or PEG Use. "Public, Educational or Governmental Use," or "PEG Use," and similar formulations of this term shall refer to educational, governmental and public use of capacity on the Cable System. 1.8 School. "School" means any accredited primary school, secondary school, college, and university. 1.9. Subscriber Network. "Subscriber Network" means fibers, coaxial cables and the electronic devices required to activate the same that are primarily used in the transmission of video programming to residential Subscribers. SECTION 2. SCOPE OF FRANCHISE; LIMITS AND RESERVATIONS 2.1. Relation to Other Provisions of Law 2.1.A. Controllinq Document. The Franchise and all rights and privileges granted under it are subject to, and the Franchisee must exercise all rights granted to it in accordance with Applicable Law. This Franchise is a contract, but it is subject to the City's exercise of its police and other regulatory powers. In the case of any conflict between the express terms of this Franchise and the express terms of the Cable Ordinance, this Franchise shall govern. The City reserves all of its rights to subsequently adopt an ordinance pursuant to its police or other regulatory powers. The Franchisee reserves the right to challenge such an ordinance. This Franchise does not confer rights or immunities upon the Franchisee other than an expressly provided herein. 2.1.8 General Ooeratinq Requirement. Subject to the foregoing, Franchisee shall provide the cable Services required hereunder throughout the Franchise Term and any holdover term, and shall make any Cable Service it provides over it's Cable System available to all entities within the City, subject to the line extension provisions herein. It shall be the Franchisee's duty to ensure that the City and the puplic are protected from all risks associated with the construction, operation and maintenance of its Cable System, and in carrying out this duty, Franchisee shall ensure that it at all times maintains in full force adequate insurance, in accordance with the Cable Ordinance, and other required securities. Further, it shall be Franchisee's duty to construct, operate and maintain its system, and to move it when requested to do so (at no cost to the City), at a time and in a manner prescribed by the City (i) to avoid expense to the City; (ii) to ensur~ that the Rights-of-Way are fully accessible to others; (iii) and to restore and replace property damaged as a result of the construction, operation or maintenance of the Cable System, Franchisee shall perform its obligations in accordance with the Cable Ordinance. 2.1.C. Aqreement Subiect to Police Powers. This Agreement and all rights and privileges granted under the Franchise are subject to the City's police and other powers. 4 . . 2.1.D. Franchise Not a Telecommunications Franchise. Nothing in this agreement shall be read to in any respect bar the imposition of similar, different or additional conditions on telecommunications services by Franchisee, because this agreement does not govern telecommunications services by Franchisee including charging fees for use of rights- of-way to provide telecommunications services. 2.1.E Franchise Grants Onlv Limited Riahts. The Franchise shall be interpreted to convey limited rights and interests only as to those City rights-of-way in which the City has an actual interest and only to the extent and for the purpose set out in the Franchise. The grant of the Franchise is not a warranty of title or interest in any right-of-way; it does not provide the Franchisee any interest in any particular location within the right-of- way. The issuance of the Franchise does not deprive the City of any powers, rights or privileges it now has or may later acquire in the future. Except as expressly provided to the contrary in the Franchise Agreement the City may exercise any powers it has or may obtain to regulate the Franchisee or its Cable System. No rights shall pass to the Franchisee by implication. Further, the rights granted to Franchisee are personal in nature; no transfer may occur without the prior consent of the City. Requests for consent shall be considered in accordance with the Cable Ordinance. 2.1.F. Franchise Aareement Not in Lieu of Other Obliaations. The Franchise issued and the franchise fee paid hereunder are not in lieu of any other required permit, authorization, fee, charge or tax, unless expressly stated herein. Without limiting, the foregoing, the City, among other things, does not waive any requirement or the Franchisee's duty to obtain all applicable authorizations (however nominated) and permits, and to comply with the conditions thereof; to comply with zoning laws; or to comply with other codes, ordinances and regulations governing the construction of the Cable System. 2.2. Term. The term of this Franchise Agreement shall run from the date of this Agreement and shall be ten (10) years, plus (at the City's option) any holdover term during which Franchisee continues to operate within the city streets after the expiration or other termination or invalidation of its Franchise. Except that, the Franchisee's obligations to indemnify and insure shall survive the Agreement for a period sufficient to protect the City against covered claims under applicable statutes of limitation. 2.3. Affiliates Must Comolv. Any affiliate or joint venture or partner of the Franchisee involved in the management or operation of the Cable System in the City that would constitute a cable operator of the Cable System is subject to the limitations of, and shall comply with the terms and conditions of the Franchise and this Agreement. The Franchisee shall be fully liable for any act or omission of an affiliate that controls the Franchisee or is responsible in any manner for the management of the Cable System that results in a breach of this Agreement or a violation of the Cable Ordinance, as if the act or omission was the Franchisee's act or omission. I 2.4. Construction. The provisions of this Agreement shall be liberally cpnstrued in favor of the public interest in order to effectuate its purposes. 5 . . 2.5. Franchise Area. The Franchise is issued for the entire present area of the City, and any area annexed thereto during the term of the Franchise. However, the City may limit the Franchise Area if, after being given an opportunity to extend service into a particular area, the Franchisee does not extend service into a particular area. The Franchise may be re- amended to include the restricted area upon a showing that the Franchisee has a timetable for building out that area. 2.6. Effect of Franchise Acceptance. By accepting the Franchise, the Franchisee: 2.6.A. acknowledges and accepts the City's legal right to issue and enforce the Franchise; 2.6.B. accepts and agrees to comply with each and every provision of this Agreement, 2.6.C. agrees that the Franchise was granted pursuant to processes and procedures consistent with Applicable Law and that it will not raise any claims to the contrary; 2.6.D. affirms that it meets all the legal qualifications set forth in Section 4 of the Cable Ordinance and in 47 U.S.C. ~ 533; and 2.6.E. agrees that it will not oppose intervention by the City in any proceeding affecting the enforcement of its rights under this Franchise. 2.7. Relation to Prior Franchise. As of the effective date of this Franchise, the Franchise previously held by the Franchisee is superseded and of no further force and effect. Subject to any applicable statute of limitations, and except as such rights may be expressly released now or in the future by a settlement agreement, nothing in this paragraph shall be deemed to release the Franchisee from any liability arising under the prior Franchise during the time it was in effect. Franchisee shall provide proof satisfactory to the City that it will cqntinue to provide the indemnity required under the prior Franchise, and that it has adequate insurance for injuries to persons or property that may have occurred during the prior Franchise term, subject to any limitations to which the City may have agreed in settlement of claims arising under the prior Franchise. 2.8 Validitv. Except as provided below, both parties waive any claim or defense that any provision of the Cable Ordinance, Franchise or the Franchise Agreement is unenforceable or otherwise invalid or void. Franchisee agrees to be bound by the terms and conditions of the Franchise or Franchise Agreement and the Cable Ordinance, provided, that n9thing in this section shall preclude the Franchisee from challenging the lawfulness of, or the enforcement of the following provisions of the Cable Ordinance: Sections 4.4., 4.6., 13.1.A., and 13.2.A. 2.9. Franchisee Bears Its Own Costs. Unless otherwise expressly provided in this Agreement, all acts that the Franchisee is required to perform under this Agreement or the CFlble Ordinance must be performed at its own expense. 6 . . 2.10. No Recourse. Without limiting such immunities as the City or other Persons may have under Applicable Law, Franchisee shall have no monetary recourse whatsoever against the City or its officials, boards, commissions, agents or employees for any loss, costs, expense or damage arising out of any provision or requirement of the Cable Ordinance or because of the enforcement of the Cable Ordinance or the City's exercise of its authority pursuant to that Ordinance, a Franchise Agreement, or other Applicable Law, unless the same shall be caused by criminal acts or by willful or gross negligence. 2.11. Severabilitv. In the event that a court or agency or legislature of competent jurisdiction acts or declares any non-material provision of this Agreement is unenforceable according to its terms, or otherwise void, said provision shall be considered a separate, distinct, and independent part of this Agreement, and such holding shall not affect the validity and enforceability of all other provisions hereof. In the event that a court or agency or legislature of competent and controlling jurisdiction acts or declares any material provision of this Agreement is unenforceable according to its terms, or is otherwise void, the parties agree to immediately enter into negotiations in good faith to restore the relative burdens and benefits of this Agreement, consistent with Applicable Law. If the parties are unable to agree to a modification to this Agreement within sixty days of the date the decree becomes final, the injured party may at any time hereafter request mediation. If the parties cannot agree ~n a mediator, they shall petition a state court of competent jurisdiction to appoint a mediator. Each party agrees to participate in up to sixteen (16) hours of non-binding mediation before resorting to litigation in a state court of competent jurisdiction. 2.12. Effect of Chanqe in Law. Subject to the non-severability provisions of Section 2.11, the event that state or federal laws, rules, or regulations preempt a provision or limit the enforceability of a provision of this Agreement, then the provision shall be read to be preempted to the extent and for the time, but only to the extent and for the time, required by law. In the event such state or federal law, rule, or regulation is subsequently repealed, rescinded, amended, or otherwise changed, so that the provision hereof that had been preempted is no longer preempted, such provision shall thereupon return to full force and effect and shall thereafter be binding on the parties hereto, without the requirement of further action on the part of the City. SECTION 3. NON-EXCLUSIVE FRANCHISE AND COMPETITON ENCOURAGED 3.1 Paritvof Franchises 3.1.A. This Franchise and the right it grants to use and occupy the Public Rights-of-Way shall not be exclusive and do not explicitly or implicitly preclude the issuance of other franchises to operate Cable Systems or other communications systems within the City, affect the City's right to authorize use of Public Rights-of-Way by other persons to operate Cable Systems or other communications systems or for other purposes as it determines appropriate, or affect the City's right to itself construct, operate or maintain a 7 . . Cable System or other communications system, with or without a Franchise, subject to the Cable Ordinance. 3.1. B. In the event that, after the effective date of this Franchise, the City grants a franchise to another person or persons to use and occupy the public right of way for the purpose of operating a Cable System or other communications system whose service area is comparable in scope to this Franchise, the material terms and conditions of such additional franchise or franchises shall be reasonably comparable to the materials terms and conditions of the Franchise, taking into consideration all of the circumstances in existence at the time such additional franchise or franchise are granted, including without limitation any applicable legal limitations on the City's regulatory authority. SECTION 4. NO WAIVER 4.1. Course of Dealina. No course of dealing between a Franchisee and the City, or any delay on the part of the City or Franchisee in exercising any rights shall operate as a waiver of any such rights, except to the extent expressly waived. 4.2. Breaches. Waiver of a breach of this Agreement is not a waiver of any other breach, whether similar or different from that waived. Neither the granting of the Franchise nor any provision herein shall constitute a waiver or bar to the exercise of any governmental right or power of the City, including without limitation the right of eminent domain. SECTION 5. AMENDMENT OF AGREEMENT The City shall liberally amend this Agreement: (A) upon the application of the Franchisee, when necessary to enable the Franchisee to take advantage of developments in the field of cable communications that, in the City's opinion, will afford the Franchisee an opportunity to serve its customers more efficiently, effectively, and economically; or (B) to reflect any expansion of the scope of the Franchise by mutual agreement. Such amendments shall be subject to such conditions as the City determines are appropriate to protect the public interest. SECTION 6. FRANCHISE FEE 6.1. Pavment to Citv. The Franchisee shall pay the City a franchise fee in an amount equal to five percent (5%) of Gross Revenues; or if the Council so authorizes the maximum fee permitted by federal law, up to a maximum of seven percent (7%). 6.2. Not in Lieu of Any Other Assessments. Tax or Fee. The franchise fee is in addition to all other fees, assessments, taxes or payments that the Franchisee may be required to pay under any federal, state, or local law, subject to any limitations set forth in 47 8 . . U.S.C. S 542. Payments, if any, in support of PEG Access shall be deducted from gross revenues prior to the computation of franchise fees. 6.3. Pavments. Franchise fees shall be paid in accordance with the schedule set forth in the Cable Ordinance, and late payments shall be subject to the additional charges set forth in the Cable Ordinance. The reasonable cost of any audit shall be borne by Franchisee if an audit reveals that, in any payment period audited, underpayment exceeded four percent (4%) of the amount owed. 6.4. Franchise Fee Report. The Franchisee shall file, on a quarterly basis, wilen franchise fee payments are made to the city, a Franchise fee report showing revenue received by category. The Franchise fee report shall be in a form acceptable to the City. 6.5. No Accord or Satisfaction. No acceptance of any payment by the City shall be construed as a release or an accord and satisfaction of any claim the City may have for further or additional sums payable as a franchise fee under the Cable Ordinance or for the performance of any other obligation of the Franchisee. 6.6. Abilitv to Draw on Securitv Fund. The City may draw from the security fund established pursuant to Section 16 of this Agreement, an amount equal to the franchise fees paid by the Franchisee in the previous quarter, should the Franchisee not submit a franchise fee payment by the end of the fifth day after the due dates set forth in Section 10.3. of the Cable Ordinance. 6.7. Payment Records. In accordance with Section 10.7 of the Cable Ordinance as it existed on the date of this Agreement, the City may, from time to time, and upon reasonable advance written notice, inspect and audit any and all books and records reasonably necessary to the determination of wIlether Gross Revenues and franchise fees have been accurately computed. 6.8. Holdover Term. During any holding over after the schedule date for expiration or other termination of the Franchise, without the consent of the City, the Franchisee shall pay to the City the maximum franchise fee consistent with Section 6.1. SECTION 7. CONSTRUCTION PROVISIONS 7.1. Provision of Service. The Franchisee must build the Cable System so that it can extend service to Persons in the City in accordance with this Section 7.1. Franchisee shall, with all due diligence, construct its Cable System to serve previously unserved areas within the City. Construction of the Cable System in those previously unserved areas shall be completed as soon as possible but in no case later than 18 months after the effective date of the franchise. 7.1.A. Line Extension Reauirements 9 . . (1)' Existing Service Area. Within the City boundaries as they existed on January 1, 1999, the Franchisee must upon request provide service to any Person whose residence or place of business is passed by the cable system, for no charge other than the then-prevailing normal installation charge and/or the long drop charge, unless the Franchisee demonstrates to the City's satisfaction that extraordinary circumstances justify a waiver of this requirement. 7.1.8. Annexed and New Service Areas (1) For areas within the City boundaries as they existed on January 1, 1999, which are not currently served by Franchisee and for any areas annexed after January 1, 1999, the Franchisee will extend its trunk and distribution system to serve subscribers requesting service after the date hereof at the then-prevailing normal installation charge and/or the long drop charge unless the Franchisee demonstrates to the City's satisfaction that extraordinary circumstances justify a waiver, where: (a) the subscriber requesting service is located a distance greater than five hundred (500) feet from the nearest existing cable system plant; or (b) the number of residences to be passes is less than the equivalent of twenty (20) residences per mile measured from the nearest existing cable system plant. (2) Cost sharinQ. In the event that the new subscriber requesting service is not located within five hundred (500) feet or within the equivalent of twenty (20) residences per mile o~ the nearest existing cable system plant, the Franchisee will extend its cable system on request based upon the following cost-sharing formula: (a) Total Cost to Construct Extension* = Cost Per Mile Miles of Extension of Extension (b) Total Cost Per Mile of Extension = Franchisee's Share 20 of Cost Per Residential Unit (c) Franchisee's Share of Cost Per = Franchisee's Share Residential Unit Times Number of Total Cost of of Residential Units Passed Extension 10 . . (d) Total Cost to Construct Extension Minus Franchisee's Share of Total Cost of Extension = Total Subscriber's Share (e) Total Subscriber Share Number of Subscribers Requesting Service = Cost Per Subscriber . Total Cost to Construct Extension is defined as the actual turnkey cost to construct the entire extension including electronic, pole make-ready charges, and labor, but not the cost of the Subscriber drop. 7.1. C. Subscriber Drops. The Franchisee shall not assess any additional cost for service drops one hundred fifty (150) feet or less unless the Franchisee demonstrates to the City's satisfaction that extraordinary circumstances justify a higher charge. Where a drop exceeds one hundred fifty (150) feet in length, the Franchisee may charge the subscriber for the difference between the Franchisee's actual costs associated with installing a one hundred fifty (150) foot drop and the Franchisee's actual cost of installing the longer drop. 7.1.0. Underqround Option. In any area where the Franchisee would be entitled to install a drop above-ground, the Franchisee will provide the subscriber the option to have the drop installed underground, but may charge the subscriber the difference between the actual cost of the above-ground installation and the actual cost of the underground installation. 7.1.E. Time for Extension. The Franchisee must extend service to any Person who requests it; (a) within seven (7) days of the request, where service can be provided by activating or installing a drop; (b) within thirty (30) days of the request within the existing City limits as of January 1, 1999, where an extension is required or in any case where an extension of one-half mile or less is required (weather and ground conditions permitting); or (c) within six (6) months for annexed areas where an extension of one-half mile or more is required. ' 7.1.F. Requested School and Public Buildinq Drops. Upon receipt of a written request from the City, the Franchisee shall provide one drop and Basic Cable Service at no charge to a location designated by the appropriate School or Local government official within each school or public building within the City limits. Notwithstanding its location, the Franchisee agrees to provide a free drop and basic service to Gavilan College. In the case of any locations which shall be newly served after the effective d,ate of this agreement, where a required drop exceeds one hundred fifty (150) feet in length, the Franchisee may charge for the difference between the Franchisee's actual costs associated with installing a one hundred fifty (150) foot drop the Franchisee's actual costs of installing the longer drop. The requested connection shall be made by the Franchisee within the timefrqmes set forth in Section 7.1. E. The City or school may install facilities and equipment to transmit the signal to all rooms within the building, provided that the City or school (as applicable) shall be responsible for any internal wiring that it installs. Such wiring shall be installed in full compliance with all applicable federal, state, and local technical and safety rules. If the City or school (as 11 . . applicable) fails to maintain the internal wiring and as a result signal leakage standards under FCC rules are violated, the Franchisee may disconnect its System from the building until the wiring has been repaired. 7.2. Svstem Construction Schedule 7.2.A. Time for Rebuild. Subject to extension for undue hardship and causes beyond the control of the Franchisee, the Franchisee shall complete the rebuild required by this Agreement (including any customer equipment change-outs) no later than twenty-four (24) months after the effective date of the Franchise. The City agrees not to impose liquidated damages pursuant to Section 17.2 of this Franchise until 30 months after the effective date of the Franchise. The City shall grant reasonable extensions of the time to complete rebuild in particular areas of the City if, prior to the scheduled time for completion, the Grantee shows that, notwithstanding its due diligence, it has been unable to extend service to a specified areas because the acts or omissions of a third party (not including the Grantee's subcontractors, agents, or Affiliates) have caused a delay in construction beyond delays reasonably expected during the course of an upgrade or rebuild, and the Grantee proposes a reasonable alternative deadline for extension of service to the area. For purposes of this section, a reasonable delay includes inclement weather that impedes construction or threatens the safety of those involved in the construction, a delay arising from the utility "make-ready" work or pole attachment permit process, a delay in the granting or processing of required permits and licenses by permitting agencies (so long as Franchisee utilizes due diligence to timely make application for said permits or licenses), a delay arising from a private property owner's denial of access to a right-of-way necessary for construction of the cable system, or any act or event the occurrence of which would constitute a force majeure under Section 20.7 herein. No reasonable delay shall be deemed to exist unless the utility owning the pole(s) is out of compliance with PUC rules and the Franchisee has timely filed a complaint with the PUC and obtained a ruling in the Franchisee's favor. 7.2.8. Desian Review: Information to be Provided. Unless the City and Franchisee agree otherwise, not less than sixty (60) days prior to the date construction is scheduled to commence, Franchisee shall provide a system design and construction plan with detailed information regarding the scheduled phase, available for review by the City at the local office of the Franchisee, which shall include at least the following: 7.2.8.(1) design type, trunk and feeder design, and number and location of hubs or nodes; 7.2.8.(2) distribution system-cable, fiber, and equipment to be used; 7.2.8.(3) if applicable to the construction phase, or at time of rebuild, head end design and reception facilities including make and model number of antennae, signal processors, modulators, demodulators, and other equipment to be used; 7.2.8.(4) plans for standby power at head end, and throughout the system; 12 . . 7.2.8.(5) longest amplifier cascade in system (number of amplifiers, number of miles, type of cablelfiber); and 7.2.8.(6) design maps and tree trunk maps for the system. The system design will be shown on maps of industry standard scale using standard symbology, and shall depict all electronic and physical features of the cable plant. 7.2.C. Desian Review. City Examination. The City may review the plan and, within sixty (60) days of the date the plan is made available for City review, submit comments to the Franchisee. Prior to beginning construction, the Franchisee shall meet the City to discuss its final system design plan and construction schedule and explain in detail how it has planned construction to make service available to all Subscribers under the requirements of this Agreement. Following the commencement of construction, the Franchisee shall meet with the City upon the City's request to provide detailed reports on the Franchisee's progress in meeting the System upgrade requirements of this Agreement. The City's review does not excuse any non-compliance under this Agreement, the Cable Ordinance, FCC regulations or other Applicable Law, or prevent the City from taking any other action it is entitled to take under the same. Should the City direct the Franchisee to take an action or refrain from taking an action relative to system design or otherwise delay the Franchisee's construction operation (where the modification or delay was not required or caused by the failure of Franchisee to comply with this Agreement or Applicable Law, or to act timely to obtain necessary approvals and permits), the delay caused by the City will be added to the time for completion of the project. 7.3. Construction Standards. Without limiting Section 2, Franchisee agrees that: 7.3.A. Construction in Accordance with Law and Hiah Industrv Standards. The construction, operation, and repair of the Cable System shall be govemed by the Cable Ordinance, and in all events shall be performed in a manner consistent with the high industry standards and all Applicable Laws. In order to comply with "high industry standards," Franchisee shall comply with the State of Califomia Public Utilities Commission General Orders 95 and 128; and applicant's Construction Procedures Manual. In the event of a conflict among construction standards, the most stringent standard shall apply (except insofar as that standard, if followed, would result in a system that could not meet requirements of Applicable Law). 7.3.8. Use of Property Installed in Riahts-of-WaY. The City shall have the right to install and maintain free of charge upon the poles owned by the Franchisee and in Franchisee's conduit such wires and other fixtures that do not unreasonably interfere with the Cable System operations of the Franchisee or its future plans for use of conduit. 7.3.C. Responsibility for Contractors and Subcontractors. Franchisee shall ensure that any contractor or subcontractor used for work and construction, operation, or repair of Cable System equipment must be properly licensed under laws of the State and all 13 . . applicable local ordinances, and each contractor or subcontractor shall have the same obligations with respect to its work as Franchisee would have under this Agreement and Applicable Law if the work were performed by Franchisee. The Franchisee shall be responsible for ensuring that the work of contractors and subcontractors is performed consistent with this Franchise Agreement and Applicable Law, shall be responsible for all acts or omissions of contractors or subcontractors, shall be responsible for promptly correcting acts or omissions by any contractor or subcontractor, and shall implement a quality control program to ensure that the work is properly performed. This section is not meant to alter tort liability of Franchisee to third parties. Franchisee shall institute a quality control program adequate to ensure that the work performed by its subcontractors complies with the requirements of this Agreement and Applicable Law. SECTION 8. CONTINUITY OF SERVICE 8.1. Riahts of Subscribers to Service. It is the right of each Subscriber in the Franchisee's Franchise area to receive all available Cable Services from the Franchisee as long as the Subscriber's financial and other obligations to the Franchisee are satisfied. 8.2. Dutv to Provide Uninterrupted Service. The Franchisee shall ensure that all Subscribers receive continuous uninterrupted Cable Service except for necessary periods during which service must be temporarily interrupted for purposes of system construction or repair. At the City's request, the Franchisee shall operate its System for a temporary period (the "transition period") following the termination of its Franchise or any transfer as necessary to maintain Cable Service to Subscribers, and shall cooperate with the City to assure an orderly transition from it to another entity. The transition period shall be no longer than the reasonable period required to select another entity and to build a replacement System, and shall not be longer than thirty-six (36) months, unless extended by the City for good cause. During the transition period the Franchisee will continue to be obligated to comply with the terms and conditions of this Agreement and Applicable Laws and regulations. 8.3. Abandonment. If the Franchisee abandons its System during the Franchise term or any transition period, or fails to operate its System in accordance with the terms set forth in Section 8.4. below, the City, at its option, may: (i) declare Franchise forfeited; or (ii) operate the System or designate another entity to operate the System temporarily until the Franchisee agrees to restore and restores continuous Cable Service in compliance with the Franchise and the Cable Ordinance. 8.4. What Is Abandonment. The City shall be entitled to exercise its right under Section 8.5 if: 8.4A The Franchisee fails to provide Cable Service due to an outage affecting a substantial number of channels on the cable system over a substantial portion of the Franchise Area for ninety-six (96) consecutive hours, unless the City authorizes a longer interruption of service or Franchisee fails to take the steps necessary to provide service to subscribers; or 14 . . 8.4.B. The Franchisee, for any period, willfully and without cause refuses to provide Cable Service in accordance with its Franchise over a substantial portion of the Franchise Area. 8.5. Riohts Upon Franchise Termination or Forfeiture. If the City revokes the Franchise, or the Franchise otherwise terminates, the City shall have the following rights, in addition to the rights specified in this Agreement or under Applicable Law 8.5A Removal. The City may require the Franchisee to remove its facilities and equipment at the Franchisee's expense. If the Franchisee fails to do so within a reasonable period of time, the City may have the removal done at the Franchisee's and/or surety's expense. 8.5.B. Purchase. In the event of termination or forfeiture for cause, the City, by resolution, may acquire ownership of the Cable System at an equitable price. 8.5.C. Purchase on Other Termination. In the case of any other termination of the Franchise the City may, as lawfully permitted, by resolution, acquire ownership of the Cable System, at fair market value, with no value assigned to the Franchise itself, under such terms and conditions as are reasonably and customary in the industry. 8.5.0. Nothing in this Agreement shall be construed to grant the City a right of first refusal to acquire ownership of the system. SECTION 9. LEASED USE Franchisee shall provide leased access channels as required under the Cable Act. SECTION 10. SYSTEM, FACILITIES, EQUIPMENT, AND SERVICES 10.1 Svstem Uporade. The Franchisee's Cable System shall be rebuilt within the time specified in this Franchise Agreement so that, at all times thereafter, the System meets or exceeds the following requirements: 10.1A Svstem Capacitv. The System shall have a rating of at least 750 MHz on all active components and at least 1 GHz for all passive components (with the exception of signal splitters which are located within individual residences). The system shall be activated for and carry at least sixty-eight (68) 6-MHz channels downstream to all Subscribers within 30 days of completion of construction, and shall be designed with fiber to the neighborhood node. The City shall allow the Franchisee to build its Cable System to a different design so long as the City determines that system design is functionally equivalent in all respects (including expandability) with the system described above, and otherwise satisfies this Section. 15 . . 10.1. B. Hiah Industrv Standards. At the time Franchisee finalizes its design plans, the System shall be designed in accordance with high industry standards in terms of flexibility to provide new services, reliability, expand ability, and upgradeability. This provision shall be read to require the Franchisee to include in the design, among other things, status monitoring equipment to be located, at minimum, at all equipment locations serving more than 1200 subscribers. The master headend must be designed with adequate space and ventilation to satisfy all the requirements of this agreement. 10.1. C. Two-Wav Activated. The Franchisee shall install and activate the return portion of the Cable System between 5 MHz and 40 MHz. 10.1.0. Closed Captionina. All closed-caption programming retransmitted by the System shall include the closed-caption signal. For hearing impaired customers, the Franchisee shall provide information concerning the cost and availability of equipment to facilitate the reception of all basic services for the hearing impaired. 10.2. PEG Access Center/Headend/lnstitutional Network Link. The Franchisee shall install, replace as necessary, and maintain a dedicated bi-directionallink between the access center which shall be located at Gavilan College (or other location which will require no greater construction costs to install) and the headend. It shall also provide upstream bandwidth for PEG use upon demand from all locations housing facilities of the City, County, school, and educational institutions. The dedicated bi-directional link between the PEG access center and the System headend shall be completed within eighteen (18) months of the effective date of the Franchise, or the date the PEG access center is completed, whichever is later. The dedicated connection shall be designed so that the PEG access center can: (a) send signal to the headend on multiple channels simultaneously; (b) receive signals from other locations on multiple channels simultaneously; (c) remotely route signals originated at the access center or at other locations onto any Access or institutional use channels on the cable system; and (d) otherwise control the signals to allow for smooth breaks, transitions, and insertion of station Ids and other material. The Franchisee may provide the cable system capacity and functionality described in this Section 10.2. through use of the Institutional Network. The Franchisee shall provide plant, headend, and PEG access center equipment necessary to accomplish these functions for PEG access video purposes, including but not limited to laser transmitters, modulators, processors, and switchers. The obligation to provide the equipment and functionality described in this section shall be in addition to all other obligations to provide PEG access or I-Net equipment and facilities contained in this Franchise. 10.3. Institutional Network 10.3.A. I-Net Overview. In conjunction with the system upgrade set forth in Section 10 of this Franchise, the Franchisee shall install, activate and maintain certain capacity on its upgraded Cable System which shall be referred to as the Institutional Network (I-Net). The I-Net shall utilize the fiber portion of the cable system and whatever additional equipment and fiber or coaxial cable is necessary to provide for the Upstream and 16 . . Downstream I-Net capacity requirements of this Franchise. The Institutional Network shall include installed equipment to fully provide for the switching and routing of video signals between the various locations on the institutional network as well as between the I-Net the PEG access channels on the subscriber network. (Those costs associated with the provision of the equipment necessary to provide for the switching between the I-Net and the PEG access channels on the subscriber network shall be provided as part of the fulfillment of the obligation described in Section 10.2 and shall not be considered a part of the I-Net costs or PEG access equipment grant referenced in Section 11.1. E-F). The I-Net shall be designed so as to interconnect all user locations with a central processing point at the PEG access center or other location mutually agreed upon between the City and Franchisee. The Franchisee shall cooperate with the City regarding the design of the I-Net to ensure that all I-Net users maybe effectively served. Furthermore, the Franchisee's cable system serving the Cities of Gilroy, Hollister, and San Juan Bautista are served from a common headend and function as a single cable system. The I-Net to be provided by the Franchisee shall be designed and fully function in such a way as to permit information to flow to, from, and between any designated I-Net location and any other designated I-Net location in any of the three Cities. An I-Net Node/Hub location shall be located at the City Hall in each City. The 1- Net locations in each City shall be connected to the I-Net Node/Hub location in each City. Each of the three I-Net Node/Hub's will be connected to the I-Net Headend described below in Section 10.3.0. below. 10.3.B. Technical Capabilitv and Functionality. The I-Net shall include a minimum of six (6) optical fibers from the I-Net Node/Hub to each I-Net location listed in Attachment A and a minimum of eight (8) optical fibers between the I-Net headend (described in Section 10.3.0. of this Agreement) and each of the three I-Net Node/Hubs (one each in Gilroy, Hollister, and San Juan Bautista) during the term of the Franchise, including any extension of that term. 10.3.C. I-Net Eauipment and Functionality. The Institutional Network shall include all plant and headend equipment required so that the public buildings, educational institutions, and designated locations listed in Attachment A of this I-Net Agreement (collectively called "Public Agencies") will be able to transmit and receive video, data, and voice communications between two (2) or more public buildings (including the PEG access facility referenced in Section 10.2) within all of the areas served by Franchisee's cable system which serves Gilroy, Hollister, and San Juan Bautista either directly or via a Headend. All cable plant and equipment provided or purchased by Franchisee shall remain the property of the Franchisee. The I-Net shall be reserved for the sole use of the City and its designated Public Agencies. Upon request, Franchisee shall extend the I-Net to any Public Agency building located within the Franchise area which is constructed or acquired during the term of the Franchise. Franchisee shall install, operate and maintain I-Net, Headend, and network components to the point of "demarcation" at the Public Agency buildings necessary to provide the activated path between the transmitting and receiving locations. The Franchisee shall provide the interface devices which are necessary for the transmission and reception of video at each I-Net location at no charge to the City or Public Agency. Interface and switching devices necessary for data or voice will be provided by the Public Agency. The Public Agency users of the Institutional Network shall be responsible for the installation, operation 17 . . and maintenance of terminal and interface equipment within the public buildings, except as otherwise provided in this Franchise Section 10.3.C.-10.3.0. 10.3.0. I-Net Headend. The I-Net shall be constructed so as to interconnect all user locations with a central processing point at the PEG access center or other location mutually agreed upon between the City and the Franchisee. The Franchisee shall provide equipment racks for the installation of I-Net related equipment and shall make provision for 24-hour back-up power to its equipment located at the PEG access center which is provided pursuant to Franchise Section 10.2. The Franchisee shall provide and maintain all necessary equipment for processing and switching all uses of the I-Net for video communications whether those uses are in analog or digital form which is expandable and capable of switching transmissions within and between subscriber and institutional networks. 1o.3.E. Additional Equipment Available at Franchisee Costs. Franchisee shall make available to the City and the designated I-Net users for purchase, at Franchisee's cost (plus any applicable taxes and shipping charges), modulators, fiber transmitters/receivers and other similar I-Net user equipment. 1o.3.F. Proof of I-Net Completion. Upon completion of I-Net construction, Franchisee shall provide the City with proof of performance measurements consisting of video and audio measurements which verify that the I-Net is performing according to the requirements of this Franchise at each I-Net site. After acceptance of the proof of performance by the City, the Franchisee shall provide I-Net users with the highest level of service, reliability, repair and maintenance which the Franchisee makes available to any commercial or residential user of the Cable System. 10.3. G. No Cost for Use of I-Net. The use of the I-Net shall be free of charge to all public agencies (e.g., the City, County, educational institutions, the PEG access management entity) located within the City for all video, voice, and data usage. The City will determine which public agencies may utilize the I-Net. 10.3.H. Future I-Net Expansion. If in the future the City or any Public Agency wishes to have the I-Net extended beyond that which is anticipated herein, Franchisee agrees to charge for time and material plus ten percent (10%) of such time and materials for the construction of such additional I-Net plant. Should the City issue a Request for Proposals (RFP) or Request for Qualifications (RFQ) related to I-Net, cable or telecommunications related projects, the City shall, concurrent with the issuance of the RFP or RFQ, send a copy of such RFP or RFQ to the Franchisee and provide the Franchisee with the full opportunity to participate in the bidding process consistent with its rules and regulations on public contracting. 10.3.1. Franchise to Cooperate with Citv. Franchisee agrees to cooperate with the City regarding design of the I-Net to ensure that alii-Net users may be effectively reached and so that the benefits of the I-Net may be realized by the City and its other designated users. The Franchisee shall give the City thirty (30) days notice prior to finishing the preliminary overall system infrastructure design and the design of each phase of the cable 18 . . system, in order to have City's I-Net requirements incorporated in Franchisee's construction design, and shall give the City the opportunity for a final review and submission of any suggested modifications prior to finalizing system design. 10.3.J. I-Net for Noncommercial Uses. The I-Net may be used by the City and such other public agency users as it designates. The parties agree that the I-Net will not be used for commercial purposes nor may excess capacity on the I-Net be leased for private purposes. The I-Net may be linked to any communication network used by the City including but not limited to the public switched network or the Internet. However, the City (or other entity under the City's control) may not use the I-Net provided by the Franchisee to act as the Internet Service Provider for the general public or any commercial establishment. However, this limitation shall not prevent the use of the I-Net for any bona fide public purpose even if such use generates revenues to reimburse the City, or other users designated by the City, for the provision of services. For the purposes of example, but not limitation, a bona fide public purpose which would generate revenues and which would be permitted under this section would include the transmission of educational programming for a fee or the sale of GIS data maintained by the City. 10.3.K. Citv Holds Franchisee Harmless. The City and any Public Agency user of the I-Net agree to indemnify and hold harmless the Franchisee from and against any-and all claims, damages, liabilities, costs and expenses, including reasonable attorney's fees and court costs, directly related to the material under the City or a Public Agency user control carried on the 1- Net, including but not limited to, copyright infringement, libel, slander, defamation, patent, trademark, or invasion of privacy claims. 10.3.L. The Franchisee agrees that any costs associated with the I-Net which may be provided by the Franchisee do not represent an "in-kind payment" by Franchisee or a franchise fee of any kind under FCC rules and regulations. 10.4 Svstem Desian: Eauipment Used. The Franchisee shall use equipment generally used in high-quality, reliable, modern systems of similar design. This obligation shall include the obligation to install equipment to retransmit selected channels in stereo. No later than upon completion of the rebuild, this obligation shall be read to include, but not limited to, providing back-up power supplies capable of providing power to the System in the event of an electrical outage, so that an electrical outage affecting the Cable System will not result in a user being unable to receive signals where that user could have received had the power supplies been available. To comply with this requirement, Franchisee shall provide (A) continuous back-up power supplies at the headend; and (B) at least four-hour back-up power supplies at the fiber nodes. Franchisee shall also provide modulators, antennae, amplifiers, and other electronics that permit and are capable of passing through the signal received at the headend with minimal alteration or deterioration. The obligation to provide back-up power supplies also requires the Franchisee to install equipment that will (A) cut in automatically on failure of commercial utility AC power, (B) revert automatically to commercial power when it is restored, and (C) prevent the standby power source from powering a "dead" utility line. The signal quality on PEG channels from origination point through to Subscribers shall comply with all FCC technical standards which apply to cable systems. 19 . . 10.5. System Desiqn: Construction Testinq Requirements. The Franchisee shall perform acceptance tests on each construction area segment prior to subscriber connection. The tests should demonstrate that the System components are operating as expected. The Franchisee shall have the obligation, without further notice from City, to take corrective action if any segment is not operating as expected. The results of the tests shall be made available to the City Upon request. 10.6. System Desiqn: Proof of Performance Tests. Every six (6) months or if FCC rules establish a testing period, at the time required by the FCC rules, the Franchisee shall perform proof of performance tests designed to demonstrate compliance with the Cable Ordinance, this Agreement, and FCC requirements. The Franchisee shall provide the proof of performance test results promptly to the City upon request. The Franchisee shall provide the City at least ten (10) days' advance written notice when a proof of performance test is scheduled so that the City may have an observer present. 10.7. Inspection. The City shall have the right to inspect the Cable System during and after its construction to ensure compliance with the Cable Ordinance, this Agreement, and applicable provisions of local, state and federal law, and may require the Franchisee to perform additional tests based on the City's investigation of Cable System performance or on Subscriber complaints. This provision is subject to any federal law limitations on the City's authority. 10.8. Svstem Deskin: Emerqencv Alert Svstem. In conjunction with upgrading the Cable System, Franchisee shall include in the Cable System an emergency alert system ("EAS") that complies with the requirements of federal law. To the extent not preempted by Federal Law, the provision of an EAS that would serve the Franchise Area under which the Franchisee shall for analog channels provide to the City the capability to block video and audio and provide a message that directs subscribers in the City to tune to an emergency video and audio channel for instructions. If the Franchisee utilizes mappable analog or video converters, it shall permit the City to utilize any emergency alert capability provided by the converter design. The Franchisee agrees to make available, at cost, audio and/or visual emergency alert accessories for hearing and sight impaired subscribers. 10.9 Interconnections. 10.9.A. Interconnection with Franchisee's SYstems. The Franchisee's cable systems serving the Cities of Gilroy, Hollister, San Juan Bautista, and San Benito County and all of the Franchisee's systems contiguous to those systems are served from a common headend and therefore function as a single cable system. The Franchisee shall take all necessary technical and construction steps to ensure that the communities which are served by that common head end are 100% interconnected throughout the life of this Agreement. The Franchisee shall not be obligated to interconnect the "Aromas" area of unincorporated San Benito County until such time that the Franchisee no longer delivers cable service to that area of the County using microwave technology. 20 . . 10.9.B. Interconnection with Other Svstems Servina the Citv. The Franchisee shall take all necessary technical and construction steps to ensure that the City's cable system is interconnected with all other cable facilities servicing the City. At minimum, the interconnection shall provide interconnection bandwidth for all PEG Access Channels. This bandwidth shall provide the capability to transmit upstream channels and downstream channels in each direction, together with data, telemetry, audio, and other non-video signals. The interconnection shall be capable of receiving and delivering, among other things, PEG Access and Institutional Network programming. The Franchisee shall cooperate with the City in utilizing available interconnect capacity to assist with potential video and data communication applications by local and state public and non-profit organizations, including forward and reverse applications. 10.9.C. Cooperation and Cost SharinQ. The City understands that interconnection requires cooperation and cost sharing from other cable system operators. The City shall make every reasonable effort to assist the Franchisee in achieving the cooperation and cost sharing necessary from other affected cable operators to realize interconnection. Interconnection with other cable operators is subject to and contingent upon an agreement for equal cost sharing of associated costs by each of the cable systems operators being interconnected. Franchisee shall only be required to interconnect with another cable operator providing cable service within the City, or a portion of the City, if-that operator's franchise was granted in accordance with and otherwise satisfies Section 53066.3 of the California Government Code. During the pendency of a dispute in a court of competent jurisdiction over whether the other operator's franchise was granted in accordance with Section 53066.3 of the Government Code, Franchisee's obligation to interconnect shall not be discharged. Franchisee may account for its costs and may charge an allocable portion of those costs to the other operator to the extent that the court determines that the other operator's franchise was not granted consistent with Section 53066.3 of the Government Code. 10.9.0. Timeframe for Completion of Interconnects. The interconnect(s) I\nking the Falcon systems delineated above shall be activated within 18 months of the effectivEl date of the Franchise. All other interconnects shall be completed within one hundred and twenty (120) days written notice by the City to the Franchisee or other date which maybe agreed to between the City, Franchisee, and anx other involved cable operator SECTION 11. SUBSCRIBER NETWORK CHANNELS AND FACILITIES FOR PEG USE 11.1. PEG Channels 11.1.A. PEG Access Channels Capacitv. On the effective date of the Franchise, the franchisee shall provide one (1) downstream channel for PEG Access. Subject to Section 7.2 of this Agreein~nt, no later than twenty four (24) months after the effective date of the Franchise a minifllum of four (4) downstream channels for PEG Access shall be provided. In addition, after ;t~e construction of the cable system is completed or within twenty four (24) months of th~ effective date of this Franchise, whichever is shorter, 21 . . additional downstream channels for PEG Access shall be provided when the channel usage trigger in Section 11.1. B has been achieved. The City shall give the Franchisee at least one hundred twenty (120) days prior notice of required activation of additional Access Channel/spectrum. 11.1.B. PEG Access Channel Triaaer. The Franchisee shall, upon request, provide up to three (3) additional PEG Access Channel(s} [beyond the minimum of four (4) channels] when the channel usage trigger described below has been achieved. An additional public or educational or governmental access channel may be requested if the level of programming on the existing public or educational or governmental access channel(s} meets or exceeds the following: (1) Whenever any of the PEG channels as set forth above are in use during sixty percent (60%) of the time between the hours of 9:00 a.m. and 6:00 p.m. and eighty percent (80%) of the time between the hours of 6:00 p.m. and 10:00 p.m. on weekdays (Monday through Friday) for thirteen (13) consecutive weeks, the Franchisee shall make an additional channel available for the same purpose up to the channel capacity of the Cable System. In calculating the usage percentage to trigger provision of additional PEG Access Channel(s}, a repeated program may only be counted four (4) times after the first run and non-local programming shall not be counted for purposes of trigger the provision of additional PEG Access Channels. (2) For purposes of Section B.(1} above, local programming is defined as: a. Programming produced in the cities of Gilroy, Hollister, San Juan Bautista or San Benito and Santa Clara County; or b. Programming produced or provided by any resident of the cities of Gilroy, Hollister, San Juan Bautista or San Benito and Santa Clara County (or any public or private agency which provides services to residents located in the cities of Gilroy, Hollister, or San Juan Bautista) regardless of where the programming was physically produced. (3) In the event that a channel previously activated under this Section 11.1.B remains unused for more than 180 days, the Franchisee, upon written notice to the City, shall have the right to utilize the unoccupied channel until the City or its designated access management corporation requests use of the channel. 11.1. C. Reauirements Reaardina Rules and Procedures for use of PEG Access Channels. 22 . . (1) The City shall designate an access management organization (hereafter "Access Management Organization"), which shall initially be the "Community Media Access Partnership of South Santa Clara and San Benito County (CMAP)" to manage the use of the PEG Access Channels under the Franchise. (2) The Access Management Organization shall establish and enforce rules for use of the PEG Access Channels (a) to ensure non-discriminatory access to the channels to similarly situated users; and (b) to promote use and viewership of the channels, consistent with the obligation to provide non-discriminatory access to similarly situated users. The City shall be responsible for establishing and enforcing rules for use of the PEG Access Channels during any period such Access Management Organization does not exist. (3) The Franchisee may not exercise any editorial control over the content of programming on the designated PEG Access Channels (except for such programming the Franchisee may produce and cablecast on the same basis as other PEG Access Channel users). (4) The PEG Access Channels shall be available at no charge to users and to the Access Management Organization. (5) When PEG Access Channels are not being used to carry programming provided by other PEG Access users, the Access Management Organization at its sole cost and expense shall have the right to back up Access Programming with other noncommercial PEG programming, consistent with its mission to promote public, educational, and governmental use of the channels. This paragraph shall not limit the Franchisee's rights under 47 U.S.C S 531(d). (6) PEG Access Channels may not be used for the cablecast of a program whose primary purpose is commercial and for profit without the express written permission of the Franchisee. 11.1.D. Support for Access. (1) The City and the Franchisee agree that support of PEG Access is a partnership. (2) It is the intent of the City to utilize a portion of the franchise fees as necessary to support the development of the PEG Access 23 . . Center and Channels. The City also commits to identifying a facility space for a PEG Access Center. 11.1.E. PEG Access Capital Grants for Equipment and Facilities. The Franchisee shall pay to the City, or the Access Management Organization designated by the City, for PEG Access equipment ,and facilities the following amounts: (1) for initial capital equipment and facilities -- $700,000 to be provided to the City or PEG Access Management Organization designated by the City in two payments, the first of which shall be for $500,000 and shall be deposited on the effective date of the Franchise and the second shall be for $200,000 and shall be deposited on the first anniversary of the effective date of the Franchise. (2) for ongoing and replacement PEG capital support - an amount equal to $209,782 per year or 3% of gross revenues per year whichever is less. Such amount to be provided to the City or its designated Access Management Organization through quarterly payments to be made thirty days after the end of each calel'ldar quarter in an amount equal to 25% of the total amount to be provided by Franchisee on an annual basis. Pursuant to Section 11.1.J, the Franchisee may recover costs associated with the provision of PEG access in accordance with applicable FCC rules. Should a subscriber not include in any payment to the Franchisee the portion of such payment which is listed on the billing statement as "community access" the Franchisee will not be required to discontinue service or make the payment on behalf of such subscriber. (3) The City and Franchisee recognize that the PEG support requirements being provided pursuant to this section are provided to satisfy the cable related needs and interests of Gilroy, Hollister, and San Juan Bautista (the "Franchising Authorities") each of which intends to provide for PEG through Community Media Access Corporation of Southern Santa Clara and San Benito Counties. The PEG support obligations provided for in this Section 11.1. E. represents the ongoing support that Franchisee is required to provide to all three communities, cumulatively. 11.1. F. Access Services. The Franchisee shall have a continuing obligation to provide adequate playback, training, outreach, administrative support, and production assistance to PEG Access users, in accordance with community needs as reasonably ascertained by the City in light of the costs thereof. If the Franchisee maintains a valid and binding contract with the Access Management Organization designated by the City to 24 . . manage the access channels, the City agrees that the Franchisee may offset any amount it pays under such contract against the payments required under Section 11.1. E.(2). Nothing in this section requires or shall be deemed to require the Franchisee to make any payment vvhich constitutes a Franchise fee under 47 U.S.C. 9542. 11.1.G. Cable In The Classroom. The Franchisee shall during the term of the Franchise have a continuing obligation to provide free annual subscription to Cable In the Classroom to any accredited primary or secondary school district serving the City. 11.1.H. Promotion. In order to help develop and maintain (a) awareness of the PEG access resources and services, and (b) viewership of the PEG access channels by City cable subscribers, the Franchisee shall, throughout the term of this Agreement, provide the following promotional services to the Access Management Organization, free of any charges: (1) Program schedule information for each PEG access channel shall be listed in all print and electronic program guides provided by the Franchisee to subscribers, in the same manner as the program schedule information for other cable channels is listed. The Franchisee shall provide the Access Management Organization access to third party providers to include PEG access channel listings in their print and electronic program guides provided by Grantee to its subscribers. The Access Management Organization shall be responsible for the timely updating of these listings. Any fees associated with special placement or handling beyond the standard manner of presenting program schedule listings shall be the responsibility of the Access Management Organization. (2) On an annual basis, the Franchisee shall allow the Access Management Organization to submit a billstuffer, created at the Access Management Organization's expense, to be inserted into all customer statements within the Franchisee's cable system in City. All costs for insertion and postage shall be provided by the Franchisee. The Franchisee shall provide access to its vendors so as to afford the Access Management Organization the most affordable printing price for the billstuffers. In consideration of regulatory notification requirements, the Franchisee has final approval on the dates for insertion. 11.1.1 General. The parties agree that any cost to the Franchisee associated with providing Access support pursuant to this Section 11 and any other section of the Franchise, including without limitation the amounts set forth in 11.1.E.-F. and payments made outside this Franchise, if any, are not part of the Franchise fee, and fall within one or more of the exceptions to 47 U.S.C. 9542. 25 . . 11.1.J. Recoverv in Rates. Franchisee may recover costs associated with the provision of PEG access in accordance with applicable FCC rules, including without limitation the amounts set forth in Section 11.1.E.-F. Franchisee may identify the amount that it charges subscribers to recover PEG costs as a line item on the bill identified as "community access costs." 11.2. Subscriber Services For the period beginning thirty (30) days after completion of the cable system construction required by Section 10, through the end of the Franchise (subject to future agreements developed pursuant to Section 18 of this Franchise in light of changes in cable system capacity) Franchisee shall provide a minimum of sixty-eight (68) channels. 11.3 No Citv Control During the term of this Franchise, the City may not prohibit the Franchisee from providing any cable service, or otherwise censor any cable service over the cable system; except that, nothing in this section shall be read to authorize the Franchisee to engage in communications which are prohibited by law. SECTION 12. OPERATION AND REPORTING 12.1. Open Books and Records. Without limiting its obligations under Section 2, Franchisee agrees that it will collect and make available books and records for inspection and copying by the City in accordance with the Cable Ordinance. Franchisee shall be responsible for collecting the information and producing it. 12.2. Time for Production. Books and records shall be produced to the City at City Hall, or such other location as the parties may agree. Notwithstanding any provision of the Cable Ordinance, if Documents are too voluminous or for security reasons cannot be produced at the City Hall or mutually agreeable location within the City, then the Franchisee may produce the material at another central location, provided it also agrees to pay the additional reasonable costs incurred by the City in reviewing the materials. The parties agree that any amounts paid are not a franchise fee within the meaning of 47 U.S.C. ~ 542 and fall within one of the exceptions thereto. 12.3. Reports Reauired. The Franchisee shall file reports and maintain records in accordance with the Cable Ordinance. Copies of existing agreements for use of conduits or other facilities shall be filed with the City upon the effective date of this Agreement, and additional agreements and amendments to agreements shall be filed with the City within sixty (60) days of their execution. The City Manager/Administrator may waive any reporting obligations, if circumstances merit such a waiver. 12.4. Retention of Records: Relation to Privacv Riahts. Franchisee shall. take all steps required, if any. to ensure that it is able to provide the City all information which must 26 . . be provided or may be requested under the Cable Ordinance or this Franchise Agreement, including by providing appropriate Subscriber privacy notices. Nothing in this Section shall be read to require a Franchisee to violate 47 U.S.C. 9551. Franchisee shall be responsible for redacting any data that federal law prevents it from providing to the City. Records shall be kept for at least five (5) years, except that service call logs may be retained for three (3) years, so long as the information contained therein is reflected in other Documents. The City Manager/Administrator may waiver record retention obligations, if circumstances merit such a waiver. SECTION 13. CUSTOMER SERVICE STANDARDS Franchisee shall meet or exceed the customer service standards of the Cable Ordinance, the City's Customer Service Standards Resolutions, and Applicable Law. SECTION 14. RATE REGULATION 14.1, City Authority. The City may, consistent with Applicable Law, regulate Franchisee's rates and charges as provided in the Cable Ordinance and Applicable Law. . 14.2. Rate Uniformity. Pursuant to Cable Ordinance Section 15.1. D, for rates subject to rate regulations by the City, all charges to subscribers and users shall be uniform throughout the franchise area. A written schedule of fees for all services shall be available upon request. The Franchisee hereby agrees to provide each new subscriber with prices and options for programming services and conditions of subscription to programming and other services. SECTION 15. SURETY; INDEMNIFICATION 15.1. Indemnification 15.1.A. Franchisee shall, at its sole cost and expense, fully indemnify, hold harmless, and faithfully defend the City, its officials, I boards, commissions, commissioners, agents, and employees, against any and all claims, suits, causes of action, proceedings, and judgements for damages or equitable relief arising out of the construction, maintenance, or operation of its Cable System; copyright infringements or a failure by the Franchisee to secure consents from the owners, authorized distributors, or franchisees of programs to be delivered by the Cable System; the conduct of the Franchisee's business in the City; or in any way arising out of the Franchisee's enjoyment or exercise of a Franchise granted hereunder, regardless of whether the act or omission complained of is authorized, allowed, or prohibited by Applicable Law or a Franchise Agreement. 15.1.8. Without limiting the foregoing, the Franchisee shall, at its sole cost and expense, fully indemnify, hold harmless and faithfully defend the City, its officials, boards, 27 . . commiSSions, commissioners, agents, and employees, against any and all claims, suits, causes of action, proceedings, and judgements for damages or equitable relief arising out of the construction, maintenance, or operation of its Cable System, including but not limited to any claim against the Franchisee for invasion of the right of privacy, defamation of any Person, firm or corporation, or the violation or infringement of any copyright, trade mark, trade name, service mark, or patent, or of any other right of any Person, firm, or corporation. 15.2. No Limit of Liability. The provisions of this Section 15 shall not be construed to limit the liability of Franchisee for damages. SECTION 16. PERFORMANCE GUARANTEES 16.1. Security Fund. 16.1.A. In satisfaction of the security fund requirements of the Cable Ordinance, section 12.1.A., as the same existed on the effective date of this Agreement, the Franchisee shall provide a letter of credit in the amount of twenty-five thousand dollars ($25,000). The letter of credit may be drawn upon in accordance with the Cable Ordinance as it existed on the effective date of this Agreement. The City may require the Franchisee to increase the amount of the letter of credit once every three years to reflect increases in the U.S. Average of the Consumer Price Index, if inflation from the date of this Agreement has exceeded twenty percent (20%). Thus, treating 1996 as the base year, indexed as one hundred (100), the letter of credit could be increased in the first year where the index reached one hundred and twenty (120), and once every three (3) years after that year. 16.1.8. Franchisee shall provide proof that the letter of credit complies with this Agreement and with all other requirements of the Cable Ordinance. 16.1. C. Franchisee's recourse, in the event Franchisee believes any taking of security funds is improper, shall be through legal action after the security has been drawn upon. If the City's action or taking is found to be improper by any court or agency of competent jurisdiction, Franchisee shall be entitled to a refund of the funds plus interest and/or any other specific performance which such court or agency shall order. 16.1.D. Upon termination of the Franchise, the City shall authorize the Franchisee to terminate the letter of credit within ninety (90) days of Franchise termination, provided that there is then no outstanding obligations secured by the letter of credit; provided that the letter of credit shall be deemed forfeited if the Franchise is revoked or the Cable System is abandoned. 16.1. E. The following procedures shall apply to drawing on the security fund and letter of credit. 16.1.E.(1) If the Franchisee fails to make timely payment to the City of any amount due as a result of a Franchise, fails to make timely payment to the City of any 28 . . amounts due under a Franchise Agreement or Applicable Law, fails to make timely payment to the city of any taxes dues, or fails to compensate the City within ten (10) days of written notification that such compensation is due, for any damages, costs, or expenses the City suffers or incurs by reason of any act or omission of the Franchisee in connection with its Franchise Agreement or the enforcement of its Franchise Agreement after ten (10) days' notice to comply with any provision of the Franchise or Franchise Agreement that the City determines can be remedied by an expenditure of the security, the City may withdraw the amount thereof, with interest and any penalties, from the security fund or from funds available under the letter of credit. 16.1.E.(2) Within three (3) days of a withdrawal from the security fund or under the letter of credit, the City shall mail, by certified mail, return receipt requested, written notification of the amount, date, and purpose of such withdrawal to the Franchisee. 16.1.E.(3) If at the time of a withdrawal from the security fund or under the letter of credit by the City, the amounts available are insufficient to provide the total payment towards which the withdrawal is directed, the balance of such payment shall continue as the obligation of the Franchisee to the City until it is paid. 16.1.E.(4) No later than thirty (30) days after mailing of notificatiEln to the Franchisee by certified mail, return receipt requested, of a withdrawal from the security fund or under the letter of credit, the Franchisee shall deliver to the City for deposit in the security fund an amount equal to the amount so withdrawn and shall restore the letter of credit. Failure to make timely delivery of such amount to the City or to restore the letter of credit shall constitute a material violation of the Franchise. 16.1.E.(5) Upon termination of the Franchise, the balance then remaining in the Security Fund shall be withdrawn by the City and paid to the Franchisee within ninety (90) days of such termination, provided that there is then no outstanding default on the part of the Franchisee, in which case the amount paid may be reduced by the amount of the outstanding default; provided that, the Security Fund shall be deemed forfeited if the Franchise is revoked or the Cable System is abandoned. 16.2. Performance Bond. Franchisee shall obtain and maintain the performance bonds required under Applicable Law. 16.3. Material Term. The required performance bond and letter of credit are material terms of this Agreement. SECTION 17. REMEDIES 17.1. Remedies. In addition to any other remedies available at law or equity, the City may apply anyone or a combination of the following remedies in the event a Franchisee violates this Franchise Agreement or Applicable Law: 29 . . 17.1.A. Revoke the Franchise pursuant to the procedures specified in the Cable Ordinance and Section 17.4 herein. Provided that, any amendments to the Cable Ordinance must provide the same level of due process as is provided under the procedures provided for under the Cable Ordinance as the same existed on the effective date of this Agreement. 17.1.B. In addition to or instead of any other remedy, seek legal or equitable relief for any court of competent jurisdiction. 17.1, C. Obtain liquidated damages as provided herein. 17.2. Liquidated Damaqes 17.2.A. Because the Franchisee's failure to comply with provIsions of its Franchise will result in injury to the City, and because it will be difficult to estimate the extent of such injury, the City and the Franchisee agree to the following liquidated damages for the following violations, which represent both parties' best estimate of the damages resulting from the specified injury. To maintain that estimate, the parties agree that the liquidated damage amounts are in 1995 dollars and shall be increased each year by the increase in the U.S. City Average of the Consumer Price Index, once inflation from the date of. this Agreement has exceeded twenty percent (20%). Thus, treating 1996 as the base year, indexed as one hundred (100), the letter of credit could be increased in the first year where the index reached one hundred and twenty (120), and once every year after that year. 17.2.A.(1) For failure to substantially complete construction in accordance with the Franchise: $500/day for each day the violation continues; 17.2.A.(2) For transferring the Franchise without approval: $500/day for each violation for each day the violation continues; 17.2.A.(3) For failure to comply with requirements for public, educational, and government use of the System: $500/day for each violation for each day the violation continues; 17.2.A.(4) For violation of customer service standards: $500 per violation except that, for violations of applicable customer service standards for which the operator's compliance is not measured in terms of its response to individual customers, $1,250 a month for any period during which it fails to meet applicable performance standards; and 17.2.A.(5) For all other material violations of the Franchise Agreement for which actual damages may not be ascertainable: $500/day for each violation for each day the violation continues. 30 . . 17.3. Procedures.Applicable to Liquidated Damaqes. Before exercising any right of redress available to it under Section 17.2. of this Franchise Agreement, the City shall follow the procedures setforth in this Section 17.3.. 17.3.A. The City shall notify Franchisee in writing of any alleged violation (Violation Notice) of this Franchise or the Enabling Ordinance. The Violation Notice shall: (1) describe the alleged violation; (2) direct the Franchise to cure the alleged violation or show cause why the alleged violation should not be or cannot be cured; and (3) state the time for response. 17.3.B. Within the time period designated for response, the Franchisee shall respond in writing to the City indicating that: (1) the Franchisee intends to contest the Violation Notice, describing all facts relevant to its claim; or (2) the Franchisee has completely cured the violation and providing documentation to the City demonstrating that the violation has been cured; or (3) the Franchisee has begun to correct the violation, but that with all due diligence the violation cannot be cured immediately, and describe in detail steps already taken and the Franchisee's plan and schedule for curing the violation. If the Franchisee has completely cured the violation and provides proof of such cure to the City's satisfaction pursuant to Section 17.2.B.(2) then no liquidated damages shall be assessed so long as the period of violation has been six months or less. 17.3.C. If the Franchisee intends to contest the Violation Notice, or the City finds that the Franchisee may have failed to cure or submit an acceptable plan for curing the default in performance, the City may schedule an administrative hearing where the Franchisee will be asked to show cause why it should not be found in violation of the Franchise. The Franchisee shall be given at least ten (10) days written notice of such a hearing. The notice shall indicate the City's intent to review and the time and place of the hearing. The City shall: (1) provide public notice of the hearing in compliance with state law notice requirements; (2) hear any person interested therein; and (3) provide the Franchisee an opportunity to be heard. 17.3.D. The City shall issue its findings in writing, stating the basis for its findings which shall include the proposed cure plan and timeline for curing the default (if the default can be cured) and penalties or damages, if any, owed. If the City finds that the Franchisee is in violation of the Franchise and has failed to cure the default in performance (or the default cannot be cured), the City may exercise any right it has under this Franchise or Applicable law. Correction is not complete until all damages, if any owed, are paid. 17.3.E. Except where precluded by court order, pending litigation or any appeal to any regulatory body or court having jurisdiction over the Franchisee, the Franchisee shall not be excused from the performance of its obligations under the Franchise or the Ordinance. 17.4. Revocation or Termination of Franchise 17.4.A. In addition to all other rights of the City under this Agreement, the City shall have the right to revoke the Franchise: for the reasons specified in the Cable Ordinance; 31 . . for defrauding or attempting to defraud the City or Subscribers; if the Franchisee abandons the Cable System, or refuses to provide service to the City or any part of the City in accordance with this Franchise; and as otherwise provided herein. 17.4.B. Failure to complete the System upgrade required by Section 10.1. and 10.2. of this Agreement by the required date shall subject the Franchisee to the revocation provision of Cable Ordinance Section 13.2. 17.5. Remedies Cumulative. All remedies under the Cable Ordinance and this Agreement are cumulative unless otherwise expressly stated. The exercise of one remedy shall not foreclose use of another nor shall the exercise of a remedy or the payment of liquid damages or penalties relieve the Franchisee of its obligations to comply with its Franchise. Remedies may be used singly or in combination; in addition, the City may exercise any rights it has at law or equity. Except that, the City is not entitled to recover damages for the same injury under two separate sections where doing so would result in double recovery. 17.6. Relation to Insurance and Indemnity Requirements. Recovery by the City of any amounts under insurance, the construction/performance bond, the letter of credit, or otherwise does not limit the Franchisee's duty to indemnify the City in any way; nor shall such recovery relieve the Franchisee of its obligations under the Franchise, limit the amounts owed to the city, or in any respect prevent the City from exercising any right or remedy it may have. SECTION 18. PERFORMANCE MONITORING 18.1 Triennial Review 18.1.A. During the years which commence on the third and/or sixth anniversaries of the effective date of the Franchise, and every third year thereafter If the Franchise is renewed or extended, the City may commence a review of the Grantee's performance under the Franchise. As part of this review, the City may consider: (1) whether the Franchisee has complied with its obligations under the Franchise and applicable law, (2) whether customer service standards, technical standards, or bond or security fund requirements are adequate or excessive; and (3) other issues as may be raised by the Franchisee, the City, or the public. 18.1. B. The City shall conduct at least one public hearing at a lawfully noticed City Council meeting to provide the Franchisee and the public the opportunity to comment on the Franchisee's performance and other issues considered as part of this review. 18.2. Franchise Cooperation. The Franchisee shall cooperate in the triennial reviews described in this section. 18.3, Exercise of Authority. The City may exercise appropriate regulatory authority under the provisions of this Franchise and Applicable Law, as amended from time to time. 32 . . SECTION 19. RIGHTS OF INDIVIDUALS PROTECTED 19.1. General Oblioations. In addition to complying with all provisions of the Cable Ordinance regarding non-discrimination, privacy, and protection from exposure to indecent or obscene programming, Franchisee agrees that it shall protect against possible abuses of the right of privacy or other human rights of any Subscriber, programmer, or general citizen resulting from any device or signal associated with the Cable System. 19.2. Respect for Property. No cable, line, wire, amplifier, converter, or other piece of equipment owned or controlled by the Franchisee shall be installed by the Franchisee inside a dwelling or other occupied structure without first securing the written permission of the owner of the property involved (except in those cases where the Franchisee is permitted by federal or state law to install such facilities and equipment inside the structure without permission). 19.3. Fair Emplovment. Franchisee shall comply with all equal employment opportunity provisions contained in the Cable Ordinance and Applicable law. Franchisee shall not discriminate against any employee or applicant for employment because of race, color, creed, national origin, sex, age, condition of physical handicap, religion, ethnic background, or marital status in violation of state or federal law. SECTION 20. MISCELLANEOUS PROVISIONS 20.1. Compliance With Laws. The Franchisee shall comply with all applicable federal, state, and local laws and regulations as they become effective, unless otherwise stated herein. 20.2. Governino Law. This Franchise Agreement shall be governed and construed in accordance with the statutes and laws of the State of California. 20.3. No Pledqinq of City's Credit. Under no circumstances shall Franchisee have the authority or power to pledge the credit of City or incur any obligation in the name of City. Franchisee shall save and hold harmless the City, it's City Council, its officers, employees, boards, and commissions for expenses arising out of any unauthorized pledges of City's credit by Franchisee under this Agreement. 20.4. Use of City Name or Loqo. Franchisee shall not use City's name or insignia or distribute exploitative publicity pertaining to the services rendered under this Agreement in any magazine, trade paper, newspaper or other medium without the express written consent of City. 20.5. Venue. In the event that suit shall be brought by either Party, the Parties agree that venue shall be exclusively vested in the state courts of Santa Clara County, or if the Franchise is enforced pursuant to a joint powers agreement to which the City is a party, in 33 . . any County where any member of the joint powers authority is located, or where otherwise appropriate, exclusively in the United States [District Court, Northern District of California, San Jose, California]. 20.6. Conflict of Interest. Franchisee certifies that to the best of its knowledge, no City employee or officer of any public agency has any pecuniary interest in the business of Franchisee and that no person associated with Franchisee has any interest that would conflict in any manner or degree with the performance of this Agreement. Franchisee represents that it presently has no interest and shall not acquire an interest, direct or indirect, which could conflict in any manner or degree with the provisions of California Government Code Section 87100 and following, and certifies that it does not know of any facts which constitute a violation of said provisions. Franchisee will advice City if a conflict arises. 20.7. Force Maieure. The Franchisee shall not be deemed in default with provisions of its Franchise where performance was rendered impossible by war or riots, civil disturbances, floods, or other natural catastrophes beyond the Franchisee's control; the unforeseeable unavailability of labor or materials; or power outages exceeding back-up power supplies; or the acts of third parties over which the Franchisee has no control (not including the Franchisee's subcontractors, agents, or Affiliates). The acts or omissions of Affiliates are not beyond the Franchisee's control, and the knowledge of Affiliates shaH be imputed to Franchisee. The Franchise shall not be revoked or the Franchisee penalized for such noncompliance, provided that the Franchisee takes immediate and diligent steps to bring itself back into compliance and to comply as soon as possible under the circumstances with its Franchise without unduly endangering the health, safety, and integrity of the Franchisee's employees or property, or the health, safety, and integrity of the public, Public Rights-of-Way, public property, or private property, 20.8. Notices. Unless otherwise expressly stated herein, notices required under this Agreement shall be mailed first class, postage prepaid, to the addressees below. Each party may change its designee by providing written notice to the other party, but each party may only designate one entity to receive notice. 20.8.A. Notices to the Franchisee shall be mailed to: [Name and Address] 20.8.B. City Manager, Office of the City Manager [Name and Address] 20.9. Calculation of Time. Unless otherwise indicated, when the performance or doing of any act, duty, matter, or payment is required hereunder, and a period of time or duration for the completion thereof is prescribed and is fixed herein, the time shall be computed so as to exclude the first and include the last day of the prescribed or fixed period of duration/time. 34 . . 20.10. Time of Essence: Maintenance of Records of Essence. In determining whether the Franchisee has substantially complied with its Franchise, the parties agree that time is of the essence to this Agreement. The maintenance of records and provisions of reports in accordance with the Franchise is also of the essence to this Agreement. 20.11. Captions. The captions and headings of this Agreement are for convenience and reference purposes only and shall not affect in any way the meaning and interpretation of any provisions of this Agreement. 20.12. Entire Aareement. This Agreement represents the entire agreement between the parties. 20.13 . Counterparts. This Agreement may be executed in counterparts. 35 . . FALCON CABLE SYSTEMS COMPANY II, L.P. By: A person authorized by the corporation to execute this Agreement Dated: CHARTER COMMUNICATIONS HOLDING COMPANY, LLC By: A person authorized by the corporation to execute this Agreement Dated: CITY OF GILROY, CALIFORNIA, a [charter city/municipal corporation] By: City Administrator Dated: ATTEST: City Clerk APPROVED AS TO FORM Effective Date: City Attorney 36 . . ACCEPTANCE [Name], [Address], hereby accepts unconditionally and agrees to be bound by all the terms and conditions of the Falcon Cable Communications, LLC Franchise dated [DATE] for purposes of identification, as granted by the Gilroy City Council. [Signatures] [Notarization] 37 . . ATTACHMENT A CITY OF GILROY INSTITUTIONAL NETWORK (I-NET) LOCATIONS . LocationIBuilding Name City Hall Police Station Wheeler Community Center Gilroy Libnuy Senior Center Historical Museum Willey Cultural Center Old City Hall Gilroy Youth Center City Yard Chestnut Fire Las Animas Fire Christmas Hill Park - Amphitheater TEEC Building GUSD Office Gilroy High School Glen View Elementary Mt. Madonna High School Rod Kelley School South Valley Junior High Jordan School Luigi Aprea School Eliot School Las Animas School Del Buono School (Future School) South Valley Junior High S~hool Gavi1an College I-NET LOCATIONS . Address 73; I Rosanna Street 7370 Rosanna Street 202 W. Sixth Street 7387 Rosanna Street 7371 Hanna Street 19; Fifth Street 140 Fifth Street 7400 Monterey Sixth/Old Railroad 613 Old Gilroy Street 7070 Chestnut Street 8383 Wren Avenue Miller Avenue Miller Avenue 7810 Arroyo Circle 750 W. Tenth Street EighthlPrincevalle 8;95 Culp Drive 8;95 Culp Drive 7810 Cannel Street 9225 Calle del Rey 470 E 7th Street 84;0 Wren Avenue Comer of Wren 38; rOOF Avenne ;0;; Santa Teresa Blvd . . I, RHONDA PELLIN, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 99-85 is an original resolution, dilly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 1st day of November, 1999, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 3th day of November, 1999, ~.. (J . . /nd'1 1::;;--" J -<- ~ City Clerk of the City of Gilroy (Seal)