HomeMy WebLinkAboutMINUTES - 11062001 - D.5 (2) I
BEFORE THE BOARD OF SUPERVISORS
OF THE COUNTY OF CONTRA COSTA
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In the Matter of the Appeal of i DECLARATION OF PATRICK BURKE
IN SUPPORT OF COUNTY STAFF.
SEREN INNOVATIONS, INC. REPORT AND RECOMMENDATIO34--.
November 6, 2001
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I, Patricia Burke, declare as follows:
1. I am employed by the County of Contra Costa. My title and position is Cable
TV Administrator, and have held that position at all times mentioned herein. My
responsibilities include administration of cable television franchises in the unincorporated
area of the County as well as supervision of Contra Costa Television operations.
2. In July and September 1999, the Cities of Concord and Walnut Creek entered
cable television franchise agreements with Seren Innovations, Inc. ("Seren"). Since late
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1999, the Cities of Clayton and Pleasant Hill, the Town of Danville, and the County
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("Communities") have been jointly negotiating with Seren on a cable franchise, including
the joint engagement of the law firm of Miller& Van Eaton ("MVE") to represent them.
The Communities, together with other cities, including the Cities of Concord and Walnut
Creek, are currently in the process of jointly negotiating a cable franchise with AT&T.
3. I work closely with representatives of Concord and Walnut Creek on cable TV
and related issues. As of this date, Concord and Walnut Creek representatives expect to
receive franchise fees on cable internet revenue, as agreed in their franchise agreements
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with Seren, and do not construe recent court cases as affecting this right.
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4. Attached hereto and incorporated herein by this reference are true and correct
copies of:
Exhibit A: August 31i, 2001 letter from Seren (Pete Glass) to Patricia
Burke;
Exhibit B: September 7, 2000 letter from MVE to Seren;
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Exhibit C: October 6, 2000 letter from MVE to Seren;
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Exhibit D: Seren/Walnut Creek Franchise.
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5. I have reviewed the Staff Report and Recommendation to the Board regarding
Seren's Appeal. I am familiar with all factual representations in the report. To the best of
my knowledge, all factual representations in the report are true.
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I declare under penalty of perjury under the laws of the State of California the
foregoing is true and correct. Executed on /' /,J00j at Martinez,California.
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Patricia Burke
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EXHIBIT A
seren innov'Aions; inc
Corporate Headquarters
15 South 5th Street
August 31 2000 Surte 500
g + Minneapolis.MN 55402
Main 800-550-6238
VIA OVERNIGHT MAIL Fax , 612-395-3501
www.seren.com
Patricia Burke www.astound.net
Cable TV Administrator
Contra Costa County
10 Douglas Drive, Suite 210
Martinez, CA 94553-4079 i
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Dear Ms. Burke:
I understand our negotiations with the county are nearly complete. As a result, I would
like to clarify the outstanding issues in the cable franchise negotiations so that we may
proceed in the most expeditious manner possible towards the award of a cable television
franchise.
Form Agreement: At our last negotiation session of August 3, 2000, we concluded
negotiations on the boiler plate franchise agreement. Attached is a list of minor revisions
to the boilerplate provisions of the agreement.
Business Issues: According to our notes, the business terms specific to Contra Costa
County are as follows:
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- the number of PEG access channels;
- the lump sum PEG access capital payment;
- the number of City I-Net sites, no additional payment for unused sites;
- an office which will be"convenient to subscribers in the County".
Internet: With regard to the outstanding issue of franchise fees on Internet services,
Seren remains committed to the position, as expressly stated by the Ninth Circuit Court
of Appeals, that Internet services do not constitute cable services [AT&T v. City or
Portland, et.al., 216 F.3d 871 (9,h Cir., June 22, 2000)]. As a result, Internet services fall
outside the jurisdiction of the City's franchising authority and are not subject to the City's
regulation through the imposition'of franchise fees. To impose such fees would violate
federal public policy that prohibits franchising authorities from regulating cable
broadband Internet access. I mention this because, as you know, Matt Ames Esq. (of
Miller& VanEaton) has proposed that Seren sign a proposed "Addendum Agreement for
Provision of Non-Cable Communications Services Via Cable System."
This Addendum would impose a 5% fee on all gross revenues derived from Internet and
other non-cable communications services and imposes on non-cable services virtually all
of the obligations contained in the'Franchise Agreement. Based on the Ninth Circuit's
decision in Portland, this appears to be an impermissible attempt to regulate Intemet
services as if they were cable services. `
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EXHIBIT A
14(121K.1
rll�bySeren
Innovations
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By extension of Seren's position, we will no longer consider any attorney fees regarding
Internet services to be a part of this negotiation and will not pay any such fees.
We are all aware that telecommunication technologies are evolving more rapidly than
many of our institutions (including the law) can keep pace. However, Seren believes the
Addendum (or any other attempt by the County to collect what is basically a cable
franchise fee on Internet services) violates the holding of the Portland decision and runs
contrary to the federal "hands off' policy with regard to the Internet.
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Seren is eager to bring to the County state-of-the-art cable and non-cable services, and, in
doing so,to bring to the community the advantage of true competition in both of these
markets. The motivation to do so and Seren's ability to do-so are each, in large part,
dependent on the tremendous local and national support of the Internet as a free, open,
competitive and'evolving medium. Preservation of this support will ultimately benefit
both the County and Seren. We urge the County to examine this issue and to focus on the
long term advantages to its citizens if the Internet is allowed to remain free and open.
As we indicated at the.August P meeting, we would very much like to conclude our
negotiations and we stand ready io sign the cable franchise agreement as soon as
possible. (As you can see from the attached list, there is little, if anything remaining to be
addressed, but for the Internet issue.) If we cannot quickly resolve the Internet issue, we
do intend to contact the County's elected officials as early as next week to discuss this
matter. We urge you to inform your Board of Supervisors as needed.
Please feel free to contact me. We look forward to providing the residents and businesses
of Contra Costa County with a choice for telecommunications services.
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Sincerely,
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Pete Glass
V.P. and General Counsel
Cc: Patty Friesen
Keith Wietecki i
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Revisions to Franchise Agreement:
I. In Section I.T. (page 6) the reference to "Operator Innovations, Inc." should be
changed to "Seren Innovations,(,Inc."
2. Sections impacted by Internet issue: I.G.; I.H.; I.O.4.; I.O.6;
3. Section IIIA. (page 10): (delete the last 2 sentences, as this merger has already
occurred.
4. Section IV.A.8 (page 13): Insert period at the end of the third sentence.
5. Section IV.D.1 (page 16).: Per the agreement reached at our August 3`d meeting,
the inserted reference should include the word, "actual", to read: "...the City shall obtain
reimbursement for restoration, reasonable inspection, and directly applicable actual
administrative costs from the Operator."
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6. Section IV.D.2 (page 16)x: The language of the last sentence was to match that of
Section IV.D.1. (page 15), to reald, "Construction plans must be approved by the
appropriate City department, in accordance with City permitting procedures."
7. Section IV.D.3 (page 16)1; The last sentence must refer to the Operator's own
facilities, to wit:: "In the event the Operator's facilities must be relocated, Operator shall
do so at its own expense."
8. Section IV.E. (page 20): In the second full paragraph, second sentence, the word
"operator" should be capitalized.
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9. Section VI.A.4. (page 32)1 In the fourth sentence, insert the words, "by the City",
to read: "These sites shall be desiIgnated by the City prior to completion of the design of
the institutional network." I
10. Section VI.E.L(page 36): As drafted by Seren, this concept of a level playing
field allowed for more"players" than just the Operator and the Incumbent Operator. We
want this language reinserted. In the event that another overbuilder enters the market, it
would be as unfair for the"new player" to have an advantage over Seren as it would be
for the Incumbent to have an advantage.
l 1. Section VIII.C. (page 40): The citation reference should read: "an annual sum
equal to the then applicable Household Income Limitation requirement for Universal
Lifeline Telephone Service, as established by the Moore Universal Telephone Service
Act (Section 871, et.seq. of the California Public Utilities Code) and the regulations and
General Orders promulgated by the Public Utilities Commission of the State of California
in accordance therewith."
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M I L L E R & V A N E A T O N
P. L. I,. C.
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M.ArI'IIEWC.AMES 1155 CONNLC"1'ICUTAVENUE, N.W. WILLIAM L. LOWERY
KENNI:HI A. BRUNE1TIt SUITE 1000 WILLIAM R. MALONE
FRF[WRICK E. ELLROD 111 WASHINGTON, D.C. 20036-4306 NICIIOLAS 1'. MILLER
MARCI L. FRISCIIKORW I TELEPIIONE(202)785-0600 JOSEPII VAN EATON
Mi..I SI JKO R. HERRERAt FAX(202) 785-1234
`Admitted to Practice in
Virginia Only MILLER& VAN EATON,L.L.P.
S' y � 44 MONTGOMERY STREET OF COUNSEL:
tAdmitted to Practice in SUITE 3085 JAMES R. HOBSON
California Only JOIIN F. NOBLE
SAN FRANCISCO,CALIFORNIA 941044804
TELEPHONE(415)477-3650
Incorporating the Practice of I FAX(415)398-2208
Miller& Holbrooke
W W W.MILLERVANEATON.COM
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Nov 12000
COUNTY COUNSEL
MARTINEZ.CALW-, __ -._....
September 7, 2000 WNIN COSIA (; ;t;;•;;
RECEIVED
BY FEDERAL EXPRESS �
Mr. Pete Glass
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Vice President and General Counsel � - •• •�..._...____
G .: ,`: �
Seren Innovations, Inc. , F
15 South 51h Street
Suite 500
Mli-Lneapolis, Minnesota 55402
Dear Mr. Glass:
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I write in response to your letters of August 31, 2000, to Pat Burke, Laura Hoffineister,
Elizabeth Hudson and Debra Margolis regarding the status of Seren's franchise negotiations with
Contra Costa County, the Cities of Clayton and Pleasant Hill, and theTown of Danville. Your
letters address three sets of issues: proposed revisions to the draft documents; business terms for
each proposed franchise; and the treatment of Internet service. I will leave the first two issues to
later correspondence or discussions, because there is little point in addressing them until we
resolve the Internet issue.
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Your letters correctly state that we have proposed that Seren enter into a separate
agreement with each jurisdiction, which we have denominated an "Addendum Agreement for
Provision of Non-Cable Communications Services Via Cable System." Your letters also
correctly state that the addendum would require Seren to pay a 5% franchise fee on gross
revenues derived from Internet and other non-cable communications services, as well as
requiring Seren to meet most of the requirements of(lie proposed cable franchises. You then
state that "Internet services fall outside the jurisdiction of the City's franchising authority and are
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EXHIBIT B
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MILLER& VAN EATON, P.L..L.C.
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not subject to the City's regulation (through the imposition of franchise fees,"citing as your
authority AT&T v. City of Portland; 216 F.3d 871 (9"' Cir. 2000).
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Your reliance on Portland is misplaced. While it is true that Portland held that the term
"cable service" as used in the federal Cable Act does not encompass Internet service, the case
says nothing about the scope of local franchising authority. You must understand that local
governments do not receive their franchising authority over cable television or any other service
under federal law. They receive that authority under state law; the Cable Act merely chooses to
rely on the franchising concept as a means of granting the right to build and operate a cable
system. Congress recognized that the local franchise was a convenient means of ensuring that
local governments received compensation for the use of their rights-of-way by cable operators,
as well as a mechanism for controlling the activities of those operators in the rights-of-way.
Franchising long antedates the cable television industry. In fact, in many states, local
governments have the authority to franchise not only cable operators, but telephone companies
and other telecommunications providers as well. Therefore, merely because the Portland court
held that Internet service is not a cable service does not mean that the City of Portland cannot
grant franchises for the installation of facilities used to provide Internet service. For the same
reason, the Portland case alone does'not—and cannot — tell us whether local governments in
California can require franchises for,the installation of facilities used to provide Internet service.
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California happens to be one of the states that limit local franchising authority in certain
respects; the trouble for Seren is that,the scope of that limitation is unclear. In principle, under
their home rule powers California municipalities have the power to grant franchises for the use
of public property, unless state law specifically restricts that authority. California has done so,
but only with respect to "telephone lines" installed by a"telephone corporation." As you know,
California Public Utilities Code Section 7901 provides that "[t]elegraph or telephone
corporations may construct lines of telegraph or telephone lines along and upon any public road
or highway . . ." California Public Utilities Code Section 7901.1 preserves local authority over
the time, place, and manner of construction, but the courts have held that Section 7901 itself
prohibits a local government from requiring compensation for the use of its rights-of-way by a
telephone corporation.
The terms "telephone line" and "telephone corporation"are not defined in Section 7901.
Both terms are defined elsewhere in the California Code, but those definitions do not apply to
Section 7901. I am sure that you understand that those terms could be construed in various
ways. Given the important technological differences between traditional telephone service and
Internet service and further given that the Internet not only did not exist but was inconceivable at
the time Section 7901 was enacted, we believe that the facilities needed to deliver Internet
services are not telephone lines. Neither the California Public Utilities Commission nor the
courts have ruled on that issue. Consequently, until the California legislature amends the law or
the courts or the PUC address the issue, the most that can be said is that it is an open legal issue.
In fact, our view is that since the law is silent, California local governments are presumed to
have the authority to franchise not only cable systems, but telecommunications facilities that are
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not subject to Section 7901. Furthermore, the system Seren wishes to provide is not merely a
cable system. It is not only capable of providing other services, but it is designed to provide
other services. Therefore, it cannot be said that the proposed system is merely a cable system.
Our proposed addendum is intended to apply only to non-cable services that fall outside
the scope of Section 7901, whatever those may be. The addendum specifically provides that if
the law is clarified to exclude Internet service or any other service, then Seren would not be
required to pay a franchise fee. Seren is perfectly free to seek the necessary clarification. All my
clients seek to do is to protect their rights by not making unnecessary concessions regarding their
authority or the state of the law. In 'addition, although the draft does not currently provide for it,
the communities are prepared to discuss revising the addendum to state that if they do not require
the incumbent cable operator to pay'on comparable revenues upon renewal of the incumbent's
franchises, they will relieve Seren of that obligation. This would also apply to any other new
operators who might be granted franchises.t
In addition, I must take issue,with your statement that"federal public policy . . . prohibits
franchising authorities from regulating cable broadband Internet access." Neither Congress nor
the FCC have taken any step that prohibits local governments from franchising Internet facilities
if they have the necessary authority tinder state law. In the wake of the Portland decision, the
FCC announced that it would conduct a proceeding to examine the issue of"open access" to
cable modem platforms — but it is by no means clear that this proceeding will address, much less
resolve, the question of local franchising authority over Internet facilities. That proceeding is
intended primarily to address whether cable operators who provide Internet service are subject to
common carrier obligations as a result of Portland. This is a very different issue.
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The proper treatment of Internet revenues is vitally important to my clients. Local rights-
of-way are held in trust for the people, and local governments have an obligation to their
residents and taxpayers to ensure that, they are managed properly. The current franchising
system assures that local governments will receive some measure of compensation for the use of
their property and retain the ability to. provide for the maintenance and repair of the streets. We
believe that the added value to Seren resulting from the ability to provide Internet service in
addition to cable service justifies the payment of a franchise fee on Internet service.
Furthermore, as you note in your letter, telecommunications technology is evolving .very rapidly,
and we do not know what the future will bring. It is very possible that.in the near future Internet
service will render cable service obsolete by allowing.any number of video providers to make
streaming video available over the Internet. In that case, demand for traditional cable service
might fall to the point that Seren would no longer provide it; by the same token, my clients
would then receive no compensation for the use of their property. At the very least, the growth
of Internet services may lead to a sharp reduction in revenues from cable service. In either case,
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Please note that Danville, Pleasant Hill,and,Contra Costa County are prepared to proceed on this basis. Laura
Floffineister has asked me to advise you that (lie City of Clayton is not currently prepared to grant Seren a franchise
that would allow it provide Internet services without an unconditional agreement regarding Internet revenues.
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MILLER& VAN EATON, P.1'.L.C.
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it would be foolhardy under these circumstances for the County, the Cities, and the 'Gown to
grant Seren franchises for cable service without addressing the Internet issue.
Indeed, for that reason;the discussion and resolution of the Internet issue is an integral
part of the cable franchise negotiations. Consequently, my clients believe that in refusing to pay
all costs arising out of Seren's decision to apply for a cable franchise, Seren has reneged on its
original commitment. They have asked to me to inform you that the grant of any franchise will
be contingent on reimbursement of all fees and costs reasonably related to that franchise,
including the resolution of the.lnterriet issue.
Finally, my clients have asked me to request that Seren and Seren's outside counsel either
direct future correspondence to me, or copy me on correspondence, as appropriate. As your
letters indicate, we are very close to agreement on everything except the Internet issue, and
keeping me informed will expedite matters.
Please let me know if you have any questions. Let me assure you that Contra Costa
County, Clayton, Danville and Pleasant Hill are eager for Seren to begin providing services to
their residents. We believe we can proceed very quickly to accommodate Seren's desire to
commence construction work shortly„ provided that the key concerns of both sides are properly
addressed.
Very truly yours,
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Miller & Van Eaton, P.L.L.C.
By
4Matthew . Ames
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M I L L E R & VA N E A T O N
P. L. L. C.
MATTHEW C.AMES 1155 CONNECTICUT AVENUE,N.W. WILLIAM L.LOWERY
KENNETH A. BRUNETTIt i SUITE 1000 WILLIAM R.MALONE
FREDERICK E.ELLROD III WASHINGTON,D.C.20036-4306 NICHOLAS P.MILLER
MARCI L.FRISCHKORN* TELEPHONE(202)785-0600 JOSEPH VAN EATON
MITSUKO R. HERRERAt FAX(202)785-1234
*Admitted to Practice in
Virginia Only MILLER&VAN EATON,L.L.P. OF COUNSEL:
tAdmitted to Practice in 44 MONTGOMERY STREET JAMES R. HOBSON
California Only SUITE 3085 JOHN F.NOBLE
SAN FRANCISCO,CALIFORNIA 941044804
Incorporating the Practice of TELEPHONE(415)477-3650
Miller&Holbrooke FAX(415)398-2208
j W W W.M ILLERV ANEATON.COM
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October 6, 2000
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BY TELECOPIER AND FIRST-C,LASS MAIL
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Debra E. Keller, Esq.
Shapiro Buchman Provine Patton LLP
1333 N. California Boulevard
Suite 350
Walnut Creek, California 94596
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Dear Debra:
As you know, in recent weeks'there has been a fair amount of correspondence between
Seren Innovations, Inc. ("Seren") and;Contra Costa County, the Cities of Clayton and Pleasant
Hill and the Town of Danville(the"Communities"). The Communities have not responded to all
of the correspondence received from Seren,partly because some issues have been overtaken by
events, and partly because we do not think detailed responses would necessarily be productive.
A recurring theme in Seren's letters, however, has been the subject of delay in the franchise
negotiations. This issue was raised in Pete Glass's letter to me of September 14, 2000, as well as
in Keith Wietecki's letter to various elected officials of September 19, 2000. The Communities
take issue with any assertion that they,are responsible for any delay in the process to date, and I
have been asked to address Seren's complaint by reviewing the chronology of events so far.'
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As an aside, I must mention that I was somewhat surprised by Mr.Glass's letter to me of September 21, 2000,
regarding the transfer of the Ponderosa franchise. Rather than take the time for a detailed rebuttal,I would just like
to note that by the time that letter was sent Seren had received a draft resolution taking a significantly different
approach. In any event,as you know,subsequent events have superseded both the draft resolution.in question and
Mr.Glass's letter. The County looks forward to Seren's response to my letter of October 3,2000,regarding that
matter.
EXHIBIT C
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As I understand it, Seren subimitted its applications at different times in the four
communities, ranging between mid-June and mid-September, 1999. There are questions about
whether those applications were complete under the provisions of local ordinances,but for the
sake of argument we will assume they were complete as submitted. It is important to note,
however, that at the time the applications were submitted, Seren was in the early stages of
negotiations with Walnut Creek and Concord, and made no effort to pursue the applications at
the time. Nor did Seren propose specific franchise terms to the Communities.
The Concord and Walnut Creek franchises were approved in late July 1999 and late
September 1999, respectively. Some time in October, the Communities were approached by
Cress Gackle of Seren, and a joint meeting of the Communities with Seren was held on
November 19, 1999, to begin negotiations, approximately five months after the applications were
submitted. At the meeting, Seren proposed that the franchise agreements be based on the Walnut
Creek agreement. The Communities,agreed in principle,but noted that they would each need to
review the document, and it was likely that changes would be needed to meet local right-of-way
management procedures, as well as insurance and bonding requirements. The Communities also
informed Seren that this procedure might take some time, as a number of staff members would
need to see it in each case. It was also understood that adjustments to the public, educational and
governmental ("PFG") access contribution and the institutional network ("I-Net')would be
made on some sort of pro rata basis. Finally, it was understood that the Communities were going
to try to negotiate together as much as possible. Seren did not indicate that there was any
urgency, and did not ask about setting a date for another meeting. The Communities had the
sense that Seren had its hands full with Concord and Walnut Creek.
At the request of the Communities, my firm immediately began work on an analysis of
the Walnut Creek agreement, which was provided to the Communities in early December. We
discussed the issues raised by the analysis in mid-December. That conversation raised several
questions about the applications, and on December 23, 1999, I sent Cress Gackle two letters
requesting additional information from Seren regarding its finances and the terms of the
proposed franchises. During this period, the Communities were conducting their internal review
of the Walnut Creek franchise agreement.
In late January, I received a letter from Cress Gackle dated January 24, 2000, responding
to our information requests, which I briefly discussed with Cress on January 28.
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After reviewing the additional,information, the Communities completed their internal
reviews and gave me their comments on the Walnut Creek agreement. During this period, as far
as we can determine, neither the Communities nor I were contacted by Seren. Our firm prepared
a draft incorporating their comments in early March, and I met with the Communities on
March 22, 2000. After that meeting, I'immediately contacted Cress Gackle to schedule another
meeting with Seren. We spoke on March 24, and I proposed various dates in April. The earliest
Cress was available was April 12, andia meeting was scheduled for that day; because of the
difficulty of coordinating so many schedules, we ultimately rescheduled the meeting for April
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19. On March 31, 2000, I sent Cress a draft agreement incorporating the changes requested by
the Communities. Those changes lalrgely dealt with right-of-way management issues and were
relatively minor in nature. The draft)also contained blank spaces for dealing with the PEG and
I-Net issues. i
The purpose of the April 19 meeting was to review the changes proposed in the draft and,
if time allowed, to discuss each community's individual proposals regarding PEG access and the
I-Net. .Unfortunately, we spent more time than anticipated going over the right-of-way
management and administrative provisions in the draft, and time did not allow us to complete all
of the individual meetings. Pleasant Hill and Clayton discussed their PEG and I-Net plans with
Seren that afternoon, and Cress Gackle said he would review them and respond later. We did not
set a date for another meeting, nor did Seren request such a meeting.
On May 10, 2000, you sent me a letter proposing changes to the document we had
reviewed at the April 19 meeting, and stating that because the communities were deviating from
the Walnut Creek document in a number of respects, Seren felt that it was justified in making
additional changes of its own. Your letter did not address the PEG and I-Net issues, however.
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On May 18, 2000, Danville and the County met with Seren representatives in your office
to discuss their individual issues. Again, Cress indicated that he would consider their proposals
and would get back to us.
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On May 24, I sent the Communities a revised draft, incorporating some of your requested
changes, and noting open issues for discussion. On July 6, I met with the Communities to get
their comments on the revised draft.
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During the period of approximately May, June and July, 2000, Seren representatives met
with staff in Pleasant Hill, Clayton and Danville to discuss local right-of-way.management
procedures. The only contact with the County during that period was the delivery of a revised
map of Seren's proposed service area;
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On or about July 12 I received an urgent message from Cress Gackle, insisting that I
contact him as soon as possible. He also asked that I e-mail the current draft to you,which I did,
with the proviso that the Communities had not yet approved all of my changes, so the language
in that version should not be considered binding. I rearranged my schedule and on the afternoon
of July 12, I spoke with Cress and you about a number of the outstanding issues raised in the
draft.
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On July 27, 2000, I received a irevised draft of the agreement from you, proposing a
number of changes, including a"level playing field"provision regarding the I-Net, and removing
any obligation to pay franchise fees on Internet services. Rather than wait until our next meeting
to raise the issue, on July 28, 2000, I prepared and sent you a draft of an Addendum intended to
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deal with the issue of the Communities authority to require franchises for facilities designed to
provide non-cable services that are not subject to California Government Code Section 7901.
On August 3, 2000, we met in Pleasant Hill and agreed on language dealing with nearly
all of the outstanding right-of-way management and related issues. We did not agree, however,
on how to deal with Internet revenues or the level playing field, nor did we discuss the specific
PEG and I-Net provisions for the individual communities. We did not set a date for another
meeting, but it was understood that we would move as quickly as possible because Seren wanted
to complete the process.
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On August 9, 2000, I sent you a revised draft reflecting the prior week's discussions. On
August 11, I sent you a draft of a letter regarding Seren's commitment to pay certain costs, also
in accordance with the same discussions.
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On at least two occasions in the following weeks I called your office to follow up. On
each occasion, I left a voice mail message seeking to confirm that you had received the
documents and asking you to call me back. My calls were not returned. On August 31, 2000,
however, each of the Communities received a letter rejecting their position regarding Internet
revenues, proposing minor revisions to the draft agreement and specific I-Net and PEG terms,
and refusing to pay any of the Communities' attorneys' fees related to the Internet revenue issue.
This was the first written response from Seren on the specific PEG and I-Net needs of the
individual communities. Mr. Glass expressed the willingness to sign the franchise agreement as
soon as possible, but did not propose a date for another meeting or offer any suggestion as to the
procedure for completing the negotiations. As you know, I responded to Mr. Glass on behalf of
the Communities on September 7, 2000. It was in his reply to me of September 14, 2000, that he
first complained of delay on the part of the Communities. Five days later Mr. Wietecki's letter
went out.
The foregoing chronology describes a fairly typical negotiation process. Both sides made
efforts to advance the negotiations atia reasonable pace,but all the people involved are busy and
as you know it can be difficult to coordinate that many schedules. The chronology does not,
however, support Seren's claim that there has been unreasonable delay, at least on the part of the
Communities. There is a fairly consistent pattern of meetings, followed by document
preparation, followed by periods of waiting. Seren has not consistently indicated any urgency on
its part. Even this summer, when they Communities and I responded very quickly to a request for
a meeting in early August and immediately turned the documents around, we received no
response from Seren until Pete Glass'is letter arrived three weeks later.
The Communities understand,Seren's desire to proceed quickly at this point, and they are
prepared to accommodate reasonable requests from Seren. The Communities are also committed
to continuing to negotiate in good faith. We hope, however, that Seren understands the
importance of the outstanding issues to the Communities. Local government officials are
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MILLER& VAN EATON, P.L.L.C.
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charged with protecting the interests Ilof their residents and taxpayers, and take their
responsibilities very seriously.
In particular, the Communities feel very strongly that they have the authority to franchise
facilities used to provide non-cable services that are not subject to Section 7901. We understand
Seren's reluctance to agree to pay franchise fees for such facilities in the face of uncertainty
regarding competition and possible changes in the law. Nevertheless, we will need to reach a
mutually acceptable resolution of that point as well as the other outstanding issues.
In conclusion, we understand ithat to follow up on our discussions of last week on the
treatment of Internet revenues and the I-Net level playing field, Seren is preparing a proposal for
the Communities. We look forward to hearing from you, and to moving forward promptly to
conclude agreements with each community.
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Very truly yours,
Miller & Van Eaton, P.L.L.C.
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Matthew C. Ames
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cc: Patricia Burke
Rob Ewing
Lillian Fujii
Laura Hoffineister
Elizabeth Hudson
Debra Margolis
`:9916•.01`A4CA00649.D0C;2
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EXHIBIT D
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CABLE'FRANCHISE AGREEMENT
BETWEEN THE CITY OF WALNUT CREED CALIFORNIA
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AND SEREN INNOVATIONS,INC.
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September 21, 1999
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CITY OF WALNUT CREEK, CALIFORNIA
Page
I. DEFINITIONS.......................................................................................................2
A. Access Channel..:.............................................................
B. Affiliate..............:.............................................................................................%......2
C. Applicable Law.......................................................................................................2
D. Basic Cable Service................................................................................................2
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E. Cable Act.......... ...............................................................................................2
F. Cable Ordinance.'....................................................................................................2
G. Cable Service.....:I....................................................................................................3
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H. Cable System or System.........................................................................................3
I. Channel...............'....................................................................................................3
JDwelling Unit.... ..................................................................................................3
K. Financial Interest ...................................... .........................................................3
L. Franchise.............!.................................:..................................................................4
M. Franchise Agreement or Agreement.......................................................................4
N. Franchise Area........................................................................................................4
O. Gross Revenues...:....................................................................................................4
P. Incumbent Operator................................................................................................ 5
Q. Installation............................................................................................................... 5
R. Institutional Network or I-Net ................................................................................ 5
S. Interconnect..............:....................................................:.........................................6
T. Operator..................................................................................................................6
U. Person...................'..................................................................................................6
V. Public Facility..........................................................................................................6
W. Public Rights-of-Way.............................................................................................6
X. Section.....................................................................................................................6
Y. Service Interruption................................................................................................6
Z. Service Tier.............................................................................................................6
AA. State......................'..................................................................................................6
BB. Subscriber...............................................................................................................6
CC. Transfer.................:.................................................................................................6
R. GRANT OF AUTHORITY; LINIITS AND RESERVATIONS.......................7
A. Grant of Authority.:.................................................................................................7
B. Area Served............I.................................................................................................7
C. Term......................:................................................................................................. 7
.D. Grant Not Exclusive..................:...................................... ...............7.
. ........................
E. Franchise Agreement Subject to Other Laws.........................................................8
F. Franchise Agreement Subject to Exercise of Police Powers..................................8
G. Approval and Effective Date..................................................................................8
H. Effect of Acceptance...............................................................................................9
I. No Waiver:...............................................................................................................9
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J. Limitation on Liability.......................................................................................... 10
K. Incorporation by'Reference.........................................:......................................... 10
M. TRANSFERS.. ..............................................................................:..................... 10
A. City Council Approval Required.......................................................................... 10
B. Determination by City............................................................... ........................ 11
C. Transferee's Agreement........................................................................................ 12
D. Approval Does Not Constitute Waiver................................................................. 12
E. City's Processing Costs ........................................................................................ 12
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IV. CONSTRUCTION AND MAINTENANCE..................................................... 12
A. Construction Standards:........................................................................................ 12
B. Undergrounding:................................................................................................... 14
C. Compliance with Construction Codes and Permitting Requirements................... 15
D. Conditions on Use of the Public Rights-of-Way.................................................. 15
E. System Architectural Design Review Process...................................................... 18
F. Construction Segments......................................................................................... 18
G. Construction-Manual............................................................................................. 19
H. Post-Construction'Design Modifications..............................................................20
I. System OperationTest..........................................................................................20
J. Construction Deadlines.........................................................................................20
K. Periodic Progress Reporting .................................................................................21
L. System Tests and Inspections:..............................................................................21
M. Publicizing Proposed Construction Work.............................................................22
NRight of Inspection................................................................................................22
O. System Maintenance:............................................................................................22
P. Standard Connections.........................................:.................................................23
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V. SYSTEM FACILITIES,EQUIPMENT AND SERVICES.............................23
A. System Requirements............................................................................................23
B. System Characteristics..........................................................................................24
C. Periodic Review:....................................................................................................25
D. Equipment Compatibility:.....................................................................................26
E. Types of Service..!................................................................................................27
F. Offices.................. ................................................................................................27
G. Leased Access Channels.......................................................................................27
H. Interconnection: .... ................................................................................................28
I. Customer Service Monitoring......................... .................28
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J. Emergency Alert System............................................. ........28
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K. Home Wiring........................................................................................................28
L. Uses of System:..................................................................................................... 28
M. Parental Control Lock...........................................................................................29
N. Open Platform for Internet Services.....................................................................29
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O. No Limitation of Streaming Video.......................................................................29
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VI. CHANNELS AND FACILITIES FOR PUBLIC, EDUCATIONAL AND
GOVERNMENTAL USE...................................:...............................................29
A. Access Channels........Ca........a........ay.....e.....s..................................................................29
B. Periodic PEG Access pitl Pmnt ........................................... ....................32
C. Lump Sum PEG Access Capital Payment............................................................32
D. Cable Service to Certain Facilities:.......................................................................33
E. Institutional Network(I-Net)..............................................:.................................34
F. Compliance with Federal Law...............................................................:..............36
G. Additional Payments,Contributions,Support Not Franchise Fees...................... 36
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VII. FRANCHISE FEE..............................................................................................36
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A. Payment to the City................................................................................................36
B. Computation........:.....................................................................................:...........37
C. Supporting Information..........................................................................................37
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D. No Accord or Satisfaction.....................................................................................37
E. Interest...................................................................................................................37
F No Limitation on Taxing Authority:..................................................................... 38
VIII. RATE REGULATION....................................................................................... 38
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A. All Rights Reserved:............................................................................................. 38
B. Geographic Uniformity.........................................................................................38
C. Senior Citizen Discount........................................................................................38
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IX. INSURANCE,SURETY,AND INDEMNIFICATION...................................39
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A. Insurance Required...............................................................................................39
B. Minimum Scope of Insurance...............................................................................39
C. Minimum Limits of Insurance...........................................................:..................39 .
D. Deductibles and Self-Insured Retentions..............................................................40
E. Other Insurance Provisions...................................................................................40
F. Acceptability of Insurers.......................................................................................41
G. Verification of Coverage.......................................................................................41
H. Failure Constitutes Material Violation: ..................................... ....41
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I. Indemnification:......................................................................................................41
J. No Limit of Liability: ......................................................................... ..............42
X. PERFORMANCE.GUARANTEES AND REMEDIES..................................42
A. Performance Bond: .,........................................................ ..............42
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B. Security Fund:........................................... .........................................................43
C. Rights Cumulative.' .............................................................................................44
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D. Letter of Credit Procedures...................................................................................44
E. Failure Constitutes Material Violation..................................................................45
F. Remedies..........:.....................:..............................................................................45
G. Liquidated Damages.............................................................................................45
H. Shortening,Revocation,or Termination of Franchise:.........................................47
XI. REPORTING AND REVIEW...........................................................................48
A. Records Required and the City's Right to Inspect................................................48
B: Annual Reports.:...................................................................................................49
C. Reports available for inspection.............::'............................................................49
D. Operator's Expense...............................................................................................49
XII. RIGHT TO PURCHASE....................................................................................49
A. The City's Right to Purchase System...................................................................49
B. Purchase by the City Upon Expiration or Revocation...........................................49
C. Abandonment or Removal of Equipment........................
D. Extended Operation and Continuity of Service.................................................... 51
XIII. MISCELLANEOUS PROVISIONS ................................................... 51
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A. Conflict with and Amendment of Ordinance........................................................ 51
B. No Discrimination................................................................................................. 51
C. Unbundling.........:................................................................................................. 51
D. Receivership and Foreclosure............................................................................... 51
E. Franchise Renewal..................................................................... ....... 52
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F. Severability.........:................................................................................................. 52
G. Preemption..........:,.....................................................:........................................... 53
H. Compliance With Federal and State Laws............................................................53
I. Force Majeure...... ................................................................................................53
J. Notices
K. Time of Essence; Maintenance of Records of Essence........................................ 54
L. Captions and References:....................................................................................... 54
M. Rights Reserved to;the City.................................................................................. 54
N. Operator Bears Its Own Costs............................................................:.................. 55
O. City Bears Its Own Costs...................................................................................... 55
P. Entire Agreement..;............................................................................................... 55
Q. Adequacy and Sufficiency of Consideration........................................................ 55
R. Possessory Interest Taxation................................................................................. 55
S. Representations and Warranties of the Operator's Signatories.............:.............. 55
T. Jurisdiction of California Courts and Waiver of Diversity Jurisdiction............... 56
U. Rights of Individuals..........:.................................................................................. 56
V. Ownership of the Operator................:................................................................... 58
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CABLE TELEVISION FRANCHISE AGREEMENT
BETWEEN THE CITY OF WALNUT CREEK,CALIFORNIA
AND SEREN INNOVATIONS,INC.
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THIS CABLE FRANCHISE AGREEMENT(the "Franchise Agreement') is entered into
by and between the City of Walnut Creek, California ("City'); and Seren Innovations, Inc., a
Minnesota corporation("Operator').
WHEREAS, Operator has applied to the City for a nonexclusive fianchise to construct,
install,maintain and operate a cable.communications system in the City; and
WHEREAS, the construction, installation, maintenance and operation of such a system
involves the occupation of and placement of private commercial facilities in.the Public Rights-
of-Way within the City; and
WHEREAS, the City has considered the financial, technical and legal qualifications of
Operator, and has determined whether Operator's plans for constructing, operating and
maintaining its Cable System are adequate, in a full public proceeding affording due process to
all parties; and
WHEREAS, the City has relied on Operator's representations regarding its financial,
technical and legal qualifications and its plans for constructing, operating, and maintaining its
Cable System, and has considered the information that Operator has presented to it; and
WHEREAS, based on Operator's representations and information, and in response to its
request for a cable television franchise, the City Council has determined that, subject to the
provisions of Chapter 7 of Title 6 of,the Walnut Creek Municipal Code, as amended, known as
the Walnut Creek Cable Television Ordinance (the "Cable Ordinance" or"Ordinance"), and the
terms and conditions set forth herein, the grant of a nonexclusive franchise on the terms and
conditions herein and subject to applicable law, is consistent with the public interest; and
WHEREAS, the City and Operator have reached agreement on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the City's grant of the Operator's franchise;
Operator's promise to provide Cable Service to residents of the City pursuant to and consistent
with the Cable Ordinance; 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:
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I. DEFINITIONS
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For the purpose of this Agreement, the following terms, phrases, words and their
derivations shall have the meaning given herein. 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. All capitalized terms used in the definition of any other term
shall have their meaning as otherwise defined in this Section. The words "shall and "will' are
mandatory and "may" is permissive. Words not defined shall be given their common and
ordinary meaning.
A. Access Channel: Any Channel on the Cable System set aside under this Agreement
for public, educational or governmental use.
B. Affiliate: Any subsidiary,of the Operator, any parent of the Operator, any Person in
which the Operator has a Financial Interest of thirty percent(30%) or more, and any Person who
is directly or indirectly under common control with the Operator, including, but not limited to,
any Person which has a Financial Interest of thirty percent (30%) or more in the Operator and
any Person in which a Person, also having a Financial Interest of thirty percent(30%) or more in
the Operator, has a Financial Interest of thirty percent (30%) or more, provided that the
foregoing shall not include any Person who is an electric company and who is not involved in the
operation or management of the Cable System other than as a shareholder.
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C. Applicable Law: Any law, statute, charter, ordinance, rule, regulation, code, license,
certificate, franchise, permit, writ, ruling, award, executive order, directive, requirement,
injunction (whether temporary, preliminary or permanent), judgment, decree or other order
issued, executed, entered or deemed applicable to the City by any Governmental Authority.
D. Basic Cable Service: Any Service Tier which includes the retransmission of local
television broadcast signals. Basic C61e Service as defined herein shall not be inconsistent with
47 U.S.C. 543(b)(7).
E. Cable Act: The Cable Communications Policy Act of 1984, Pub. L. No'. 98-549, 98
Stat. 2779 (1984) (codified at 47 U.S.C. 521-611(1982 & Supp. V 1987)) as amended by the
Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385 and
the Telecommunications Act of 1996; Pub. L No. 104-458 and as the same may, from time to
time,be amended.
F. Cable Ordinance: The City of Walnut Creek Cable Ordinance, as it may be amended
from time to time.
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G. Cable Service: (1)' The one-way transmission to Subscribers of (i) video
programming, or(ii) other programming service; and (2) Subscriber interaction, if any, which is
required for the selection or use of,such video programming or other programming service. The
parties agree that any internet access or internet service provided over the Cable System
("Internet Services) is, as of the Effective Date, included in this definition. However, if any(i)
subsequent enactment of Federal Ilor State statutory law, (ii) final Federal Communications
Commission order or regulation which is not in the process of being challenged in court, or(iii)
judicial decision of a State or Federal appellate court, which is applicable to the City, determines
that such Internet Services are not�a Cable Service and is retroactive in application, then such
Internet Services shall be excluded from this definition, provided however, if such enactment,
order or decision does not state whether it is retroactive, then either party may seek a judicial
determination as to the retroactive applicability of the same.
H. Cable.System or System: The facility proposed to be built by the Operator, which
shall consist of a set of closed transrhission paths and associated signal generation,reception, and
control equipment that is designed to provide Cable Service which includes video programming,
and which is provided to multiple subscribers within the City,but such term does not include(A)
a facility that serves only to retransmit the television signals of 1 or more television broadcast
stations; (B) a facility that serves Subscribers without using-any public right-of-way; (C) a
facility of a common carrier which is subject, in whole or in part, to the.provisions of 47 U.S.C.
§§ 201-226, except that such facilityl shall be considered a Cable System.(other than for purposes
of 47 U.S.C. § 541(c)) to the extent such facility is used in the transmission of video
programming directly to Subscribers, unless the extent of such use is solely to provide
interaction or on-demand services under federal law; (D) an open video system that complies
with 47 U.S.C. § 573; or (E) any facilities of any electric utility used solely for operating its
electric utility system.
I. Channel: A six Megaheitz (NlHz) frequency band, which is.suitable for carrying
either one standard video signal, a number of audio, digital or other non-video signals or some
combination of such signals.
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J. Dwelling Unit: Residential living units as distinguished from temporary lodging
facilities such as hotel and motel rooms and dormitories, and including single family residential
units and individual apartments, condominium units, mobile homes within mobile home parks,
and other multiple family residential units.
K. Financial Interest: lncludes without limitation:
1. Any form of equity ownership interest, which is either (a) direct or (b) indirect
through another form of Person;
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2. Any form of contingent or optional ownership interest;
3. Any contract in which the Operator or any Affiliate thereof is to receive a
percentage of the gross revenues and/or a.percentage of the net income of the other party to the
transaction by reason of the activities encompassed by said contract;
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4. Any debt relationship in which the Operator as debtor borrows funds at a rate
more advantageous than that generally available to similarly situated entities of similar
creditworthiness;
5. Any debt relationship in which the Operator as creditor receives a rate of interest
exceeding that which would otherwise be paid by a similarly situated debtor of similar
creditworthiness;
6. Any option or warrant to purchase the stock or other equity interest in any Person
which is related to a Person which generates revenues arising from or attributable to the
operation of the Cable System; and
7. Any debt relationship which has conversion privileges to a form of equity of the
nature described in the preceding subsection.
L. Franchise: The franchise granted pursuant to this Agreement.
M. Franchise Agreement orAgreement: This contract and any amendments, exhibits or
appendices hereto.
N. Franchise Area: The territorial confines of the City, and any areas annexed thereto
during the term of the Franchise.
O. Gross Revenues: All revenue derived directly or indirectly by the Operator, or any
Affiliate of the Operator, arising from or attributable to, the operation of the Cable System to
provide Cable Service. Gross Revenues shall include,but shall not be limited to:
1. Revenue from (i) payments for service, equipment, late fees, franchise fees and
other charges, including without limitation all payments directly or indirectly from Subscribers;
(ii) advertising carried on the Cable System or in subscriber bills; and(iii)programmers or others
relating to transmissions carried on the Cable System, including but not limited to payments to
carry programming and home shopping revenues.
2. All revenue directly or indirectly attributable to the Operator which is received by
any Affiliate,whether or not such revenue is actually received by the Operator.
3. Revenue which is not actually received by the Operator or an Affiliate thereof
reflecting the value of services bartered or exchanged for non-monetary consideration.
4. Revenues derived from the provision by the Operator or any Affiliate thereof of
Internet access, cable modems and/or,other Internet-related services, including without limitation
bandwidth leased to unaffiliated Internet service providers. Notwithstanding the foregoing, if
any(i)subsequent enactment of Federal or State statutory law,(ii) final Federal Communications
Commission order or regulation which is not in the process of being challenged in court, or(iii)
judicial decision of a State or Federal'appellate court,which is applicable to the City, determines
either that Internet Services are not a Cable Service or that the revenues specified in this
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subsection (4) should not be included in the definition of Gross Revenues and is retroactive in
application, then such revenues shall be excluded from Gross Revenues, provided however, if
such enactment, order or decision does not state whether it is retroactive, then either party may
seek a judicial determination as ,to the retroactive applicability of the same. Further,
notwithstanding Applicable Law, the revenues specified in this subsection (4) shall immediately
be excluded from Gross Revenues in the event and to the extent that the City permits such
revenues to be excluded from the calculation of Gross Revenues for Franchise Fee purposes by.
any other cable operator which is operating a cable system in the City.
5. Revenue from any activity, product or service which generates revenue of any
type whatsoever and which is offered to users by means of the Cable System, to the extent such
revenue arises from or is attributable to the operation of the Cable System to provide Cable
Service.
6. Revenue from any activity, product or service in the production or provision of
which any of the assets of the Cable System, including without limitation cable, computers,
servers, production facilities and administrative facilities, are utilized, unless such revenue is
expressly excluded from Gross Revenues by Applicable Law.
Gross Revenues shall not include (i) the amount of any tax, fee or other assessment imposed by
law upon Subscribers or others which the Operator is obligated to collect and pass on in full to
the applicable taxing authority nor '(ii) the amount of-Periodic Access Capital Payments as
defined herein. A fianchise fee is not,such a tax, fee or other assessment. Moreover, revenues of
both the Operator and any Affiliate which represent a transfer of funds between them shall be
counted only once for purposes of determining Gross Revenues. Refunds-of revenues previously
received and accounted which are paid to Subscribers shall reduce Gross Revenues by the
amount of the refunds received during the reporting period in which such refunds are.made.
P. Incumbent Operator: Either of UACC Midwest, Inc., or Televents, Inc., or such
successors or affiliates thereof that are parties to any renewal of the existing franchises.
Q. Installation: The connection of the System from the tap to the point of connectivity to
a Subscriber's terminal for the provision of Cable Service.
R. Institutional Network or I-Net: A communications system, whether physically
integrated with a cable system or not,that is constructed,operated or maintained by the Operator,
whose transmissions are principally available to persons other than cable television subscribers
(i.e. government agencies and affiliated non-profits, and educational institutions). The
Institutional Network includes all equipment required to make the capacity available including
but not limited to fiber,coaxial cable, switching,patching, electronic transmitting, receiving, and
signal conversion necessary for effective use of the I-Net..
S. Interconnect: The provision by the Operator of technical, engineering, physical,
financial, and all other necessary components to accomplish, complete, and adequately maintain
a physical linking of the Operator's Cable System and Cable Services or any designated Channel
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or signal pathway thereof, with any other designated cable system or programmer so that Cable
Services of technically adequate quality may be sent to and received from such other systems.
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T. Operator. Seren Innovations, Inc., a Minnesota corporation, and its lawful and
permitted successors,assigns,and transferees.
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U. Person: Any individual or any association, firm, general partnership, limited
partnership,joint stock company, joint venture, trust, corporation, limited liability company or
other legally recognized entity,private or public,whether for-profit or not-for-profit.
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V. Public Facility: A fire station, public educational facility, police station, public
library,and City department or agency within the Franchise Area which is listed on Exhibit 1.
W. Public Rights-of-Way: The surface of and the space above and below and from right-
of-way line to right-of-way line in each of the following which have been dedicated to the public
or are hereafter dedicated to the public and maintained under public authority or by others and
located within the City limits: streets, roadways, highways, avenues, paths, lanes, alleys,
sidewalks, boulevards, easements, rights-of-way, and similar public property and areas that the
City shall permit to be included within the definition of Street from time to time.
X. Section: Any Section, subsection or provision of this Agreement.
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Y. Service Interruption: The loss of picture or sound on one or more Cable Channels for
more than sixty(60) seconds.
Z. Service Tier: A categoryl4Cable Service or other services provided by the Operator
and for which a separate rate is charged by the Operator.
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AA. State: The State of California.
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BB. Subscriber: Any Person who or which lawfully elects to become a recipient of Cable
Service provided by the Operator by,means of or in connection with the Cable System whether
or not a fee is paid for such service.
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CC. Transfer: Any transaction in which(i) an ownership or other interest in the Operator,
its Cable System, or any Person that pis an operator of the Cable System is transferred from one
Person or group of Persons to another Person or group of Persons so that control of the Operator
is transferred; or (ii) the Franchise or the rights and obligations held by the Operator under the
Franchise are transferred or assigned to another Person or group of Persons. The term."control,"
as used in this definition, means working control, in whatever manner exercised. By way of
illustration,and not limitation,the addition,deletion or other change of any general partner of the
Operator, or a cable operator of the Cable System is such a change of control. For purposes of
this Section, an initial public offering bf the Operator's common stock pursuant to a Registration
Statement filed with the United States Securities and Exchange Commission on Form S-1 shall
not be deemed a "change of controW.' provided that this exception shall not apply if any one
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Person shall directly acquire thirty percent (30%) or more of the outstanding stock of the
Operator directly through such an offering.
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H. GRANT OF AUTHORITY; LUM TS AND RESERVATIONS
A. Grant of Authority: Subject to the terms and conditions of this Agreement and the
Cable Ordinance, the City hereby grants the Operator the right to own, install, construct,
reconstruct, operate, maintain, dismantle, test, upgrade, repair, use and remove a Cable System .
along, under, over, above, through for across or in any manner connected with the Public Rights-
of-Way within the Franchise Area, for the sole purpose of providing Cable Service. This
Franchise shall grant no authority for the Operator to use the City's Public Rights-of-Way for any
purposes other than the provision of Cable Service, except to the extent other services may be
provided pursuant to section VI(E). No reference herein to a Public Right-of-Way shall be .
deemed to be a representation or guarantee by the City that its interest or other right to control
the use.of such property is sufficient to permit the Operator's use for specific purposes, and the
Operator shall be deemed to gain only those rights to use that are within the City's power to
convey. No privilege or power of eminent domain is bestowed by this grant or by this
Agreement.
B. Area Served:
1. The Franchise is grarited for the Franchise Area defined herein.
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The Operator shall extend its Cable System to provide service to any residence in the City upon
request, in accordance with the terms of the Cable Ordinance and this Agreement.
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2. The Operator shall design, construct and maintain the Cable Television System to
pass every Dwelling Unit in the Franchise Area, provided that the Operator may apply to the
City for a low-density exception for any specific mile of street within the Service Area, which
has less than thirty-six (36) Dwelling Units fronting thereupon, measured from the closest point
of connectivity to.the Operator's System, provided that the Operator's Cable System shall be
designed to reach the maximum possible number of Dwelling Units and to minimize the
existence of any low-density exception with the City. The Operator shall be responsible for
providing sufficient information tol the City to establish the existence of the low-density
exception and to establish that the System's architecture is such as to minimize the occurrence of
such low density exceptions. The Operator shall bear the burden of proof as to both elements.
C. Term: The Franchise and this Franchise Agreement shall extend for a term of fifteen
years, commencing on the date accepted below by the Operator, unless the Franchise is earlier
revoked or its term shortened as provided herein or in the Cable Ordinance, or unless the
Franchise is renewed or extended by mutual agreement.
D. Grant Not Exclusive: The Franchise granted under this Agreement shall be
nonexclusive. The City specifically, reserves the right to grant, at any time, such additional
Franchises for a Cable System or any component thereof, as it deems appropriate, subject to
Applicable Law. The City also specifically reserves the right to operate a municipal Cable
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System, or any portion thereof, pursuant to Applicable Law and shall not be required to grant a
Franchise to the'City for the operation of a municipal Cable System unless specifically required
by Applicable Law.
E. Franchise Agreement Subject to Other Laws: This Franchise Agreement is subject to
and shall be governed by all applicable provisions of federal,state, and local law.
F. Franchise Agreement Subject to Exercise of Police Powers: All rights and privileges
granted herein are subject to the constitutional police powers of the City and its rights under
Applicable Law to exercise its governmental powers to their full extent and to regulate the
Operator and the construction, operation and maintenance of the Operator's Cable System,
including,but not limited to, the right to adopt and enforce additional ordinances and regulations
as the City shall find necessary in the exercise of its police powers, the right to adopt and enforce
applicable zoning, building, permitting and safety ordinances and regulations, the right to adopt
and enforce ordinances and regulations relating to equal employment opportunities, and-the right
to adopt and enforce ordinances and regulations containing right-of-way, telecommunications,
utility and cable television consumer protection and service standards, and rate regulation
provisions. The Operator expressly;acknowledges that the City has begun proceedings related to
the renewal of the Incumbent Operator's franchise, and that in the course of those proceedings,
the City may choose to amend the Cable Ordinance.
G. Approval and Effective Date: The grant of the Franchise provided for in this
Agreement shall be effective on the date stated on the signature page (the "Effective Date"),
provided that, 'prior to or upon the date of the City's approval of and authorization of execution
of this Agreement, the Operator shall theretofore have fully executed this Agreement and
submitted to the City all required submissions required hereby, including without limitation, the
Security Fund and insurance certificates provided for in this Agreement.
H. Effect of Acceptance: By accepting the Franchise'and executing this Franchise
Agreement,the Operator:
1. accepts and agrees to comply with each provision of the Cable Ordinance and
this Agreement;
2. acknowledges and accepts the City's legal right to grant the Franchise, to enter
this Franchise Agreement, and to enact and enforce ordinances and regulations related to the
Franchise;
3. agrees that the Franchise was granted pursuant to processes and procedures
consistent with Applicable Law, and that it shall not raise any claim to'the contrary, or allege in
any claim or proceeding by the Operator against the City that any provision, condition or term of
the Cable Ordinance or this Agreement at the time of the acceptance of the Franchise was
unreasonable or arbitrary, or that at the time of the acceptance of the Franchise any such
provision, condition or term was void or that the City had no power or authority to make or
enforce any such provision, condition'or term;
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4. agrees that the City retains the absolute right to terminate this Agreement in
accordance with Section X(H) for any material violation by the Operator of any substantive
provision of the Cable Ordinance or any term or condition hereof, which violation has not (i)
been substantially corrected by Operator within sixty days of receiving written notice from the
City of such violation,or(ii)in the case of a violation which reasonably requires more than sixty
days to correct, Operator has undertaken substantive corrective action within sixty days of
receiving written notice from the City of such violation and subsequently completes any
necessary corrective action in a timely manner.
5. agrees that it will not oppose intervention by the City in any proceeding affecting
the Operator's Cable System within Ithe Franchise Area; and
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6. agrees that, as further provided in Section VI, the costs to the Operator
associated with the provision of support for public, educational and governmental access and the
Institutional Network as expressly, described in this Franchise Agreement do not constitute
franchise fee payments within the meaning of 47 U.S.C. § 542, and fall within one or more of the
exceptions to 47 U.S.C. § 542.
I. No Waiver.
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1. The failure of the City on one or more occasions to exercise a right or to require
compliance or performance under this Franchise Agreement, the Cable Ordinance, or any other
applicable law shall not be deemed to constitute a waiver of such right or a waiver of compliance
or performance by the City, nor to excuse the Operator from complying or performing, unless
such right or such compliance or performance has been specifically waived in writing.
2. Waiver of a breach of this Agreement shall not be a waiver of any other breach,
whether similar to or different from that waived. Neither the granting of the Franchise, nor any
provision herein, nor any action by the City hereunder shall constitute a waiver of or a bar to the
exercise of any governmental right or power of the City, including without limitation of the right
of eminent domain.
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J. Limitation on Liability: In any court proceeding involving any claim against the City
or other governmental entity, or any,official, member, employee, or agent of the City, arising
from the regulation of Cable Service',or from a decision of approval or disapproval with respect
to a grant, renewal, transfer, or amendment of the Franchise, any relief; to the extent such relief
is required by any other provision of federal, state, or local law, shall be limited to injunctive
relief and declaratory relief. The Operator shall not apply for any waivers, exceptions, or
declaratory rulings from the FCC or'lany other federal or state regulatory agency affecting the
System or the Franchise without written notice to the City
K. Incorporation by Reference: Subject to Section XIII(A), the Cable Ordinance shall
be incorporated in and made a part of this Agreement as if fully set forth herein.
III. TRANSFERS
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A. City Council Approval Required: No Transfer shall occur unless prior application is
made by the Operator to the City', and the City Council's prior written consent is obtained,
pursuant to this Agreement and the Cable Ordinance, and only then upon such terms and
conditions as the City Council deems necessary and proper. This shall not be deemed to be a
waiver of any right of Operator to challenge any such condition imposed by the City. Any such
Transfer without the prior written consent of the City Council shall be considered to impair the
City's assurance of due performance, and shall be invalid. The granting of approval for a
Transfer in one instance shall not'render unnecessary approval of any subsequent Transfer.
Notwithstanding anything contained in this Agreement, the City acknowledges that, as of the
Effective Date, Northern States Power, (NSP), sole shareholder of Operator;'is in the process of
merging with New Century Energies (NCE). Said merger and any reconfiguration or renaming
of NSP or NCE and/or establishment of intermediate entities (between NSP and Operator)
resulting therefrom, shall not require'the City's approval or consent.
1. Application.
(a) The Operator shall promptly notify the City Manager of any proposed
Transfer. If any Transfer should take place without prior notice to the City Manager, the
Operator shall promptly notify the City that such a Transfer has occurred. At least one hundred-
twenty (120) calendar days prior to the contemplated effective date of a Transfer, the Operator
shall submit to the City Manager' an application for approval of the Transfer. Such an
application shall provide complete information on the proposed.transaction, including details of
the legal, financial, technical, and other qualifications of the new controlling entity or transferee,
and on the potential impact of the Transfer on Subscriber rates and service. At a minimum, the
following information shall be included in the application, provided that, the Operator is not
required to duplicate information that it submits to the City Manager to comply with its
obligations under federal or State law
i. all information and forms required under federal law or the equivalent of
such forms if no longer required by federal law;
ii. all information required by the Ordinance;
iii. any contracts or other documents that relate to the proposed transaction,
and all documents, schedules,exhibits,or the like referred to therein;
iv. any shareholder reports or filings with the Securities and Exchange
Commission that discuss the transaction;
V. other information necessary to provide a complete and. accurate
understanding of the financial position of the Cable System before and after the proposed
Transfer;
vi. complete information regarding any potential impact of the Transfer on
Subscriber rates and service; and
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vii. a brief sumImary of the proposed controlling entity's or transferee's plans
for at least the next five (5) years regarding line extension, plant and equipment upgrades,
channel capacity, expansion or elimination of services, and any other changes affecting or
enhancing the performance of the Cable System. The City shall notify Operator of any
insufficiency in the information provided within thirty (30) days.after receipt thereof. The
failure of the City to so notify Operator of such insufficiency shall result in the information being
deemed complete and adequate. For the purposes of determining whether it shall consent to a
Transfer, the City or its agents may inquire into all qualifications of the prospective controlling
entity or transferee and such other matters as the City may deem necessary to determine whether
the Transfer is in the public interest.and should be approved, denied, or conditioned as provided
under the Ordinance. The Operator and any prospective controlling entities or.transferees shall
assist the City in any such inquiry in any reasonable manner, and if they fail to do so, the request
for approval of the Transfer may be denied.
B. Determination by City. �In making a determination as to whether to grant, deny, or
grant subject to conditions, an application for a Transfer, the City may consider, without
limitation, the legal, financial, and technical qualifications.of the proposed controlling entity or
transferee to operate the Cable System; the proposed purchase price and consideration to be paid
for the Franchise; any potential effects of the Transfer on Subscriber rates or services; whether
the Operator is in compliance with this Agreement and the Ordinance, and, if not, the proposed
controlling entity transferee's commitment to cure such noncompliance; whether the proposed
controlling entity or transferee owns'or controls any other Cable System in the City, and whether
operation by such Person may eliminate or reduce competition in the delivery of Cable Service
in the City; and whether operation by the proposed controlling entity or transferee or approval of.
the Transfer would adversely affect Subscribers, the public, or the City's interest under this
Agreement,the Ordinance,or other Applicable Law.
C. Transferee's Agreement:' No application for a Transfer of the Franchise shall be
granted unless the proposed controlling entity or transferee agrees in writing that it will abide by
and accept all terms of this Agreement and the Cable Ordinance and that it will assume the
obligations, liabilities, and responsibility for all acts and omissions, known and unknown, of the
previous Operator under this Agreement and the Ordinance, for all purposes, including renewal.
D. Approval Does Not Constitute Waiver: Approval by the City Council of a Transfer
does not constitute a waiver or release of any of the rights of the City under this Agreement or
the Cable Ordinance,whether arising before or after the date of the Transfer.
E. City's Processing Costs: 'If the Operator initiates a request for approval regarding a
Transfer, the Operator shall reimburse the City for all reasonable out-of-pocket costs, including
attorneys' and consultants' fees and costs, incurred by the City in connection with the City's
review and processing of the Operator 's request. Nothing in the foregoing shall entitle the
Operator to have any role in the selection of the City's consultants and, in order to protect the
attorney-client and work product privileges, the City may delete from billings for attorneys and
consultants retained by attorneys any detailed description of services performed. Payments.of
such costs and expenses shall not be deemed to be"franchise fees" within the meaning of Section
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622 of the Cable Act (47 U.S.C. §542), and such payments shall not be deemed to be (i)
"payments in kind" or any involuntary payments chargeable against the Franchise Fee to be paid
to the City by the Operator pursuant to this Agreement or (ii) part of the Franchise Fees to be
paid to the City by the Operator ptirsuant to this Agreement to the extent required by Applicable
Law.
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IV. CONSTRUCTION AND MAINTENANCE
A.. Construction Standards.-
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1. The construction, operation, maintenance, and repair of the System shall be in
accordance in all material respects with all applicable sections of the Occupational Safety and
Health Act of 1970, as amended;the National Electrical Safety Code and National Electric Code;
Obstruction Marking and Lighting, AC 70/7460 i.e., Federal Aviation Administration;
Construction, Marking and Lighting of Antenna Structures, Federal Communications
Commission Rules Part 17; the Cable Ordinance; Applicant's Construction Procedures Manual;
and other applicable federal, state, or local laws and regulations, all as hereafter may be amended
or adopted. In the event of a conflict among codes and standards, accepted cable industry
practices shall control (except insofar as such practices, if followed, would result in a Cable
System that could not meet express (requirements of federal, state or local law, or in instances in
which such practices are expressly preempted by other standards). Consistent with the
foregoing, the City may ensure that work continues to be performed in an orderly and
workmanlike manner, reflecting any changes that may occur over the Franchise term.
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2. To the extent permitted by Applicable Law, the City reserves the right to.adopt
and impose such technical and other standards as it may deem necessary or appropriate, after
notice to Operator and opportunity for Operator to participate. It is-acknowledged, however, that
.47 C.F.R. 76.605 currently preempts City authority.
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:3. All installation of electronic equipment shall be of a .permanent nature, using
durable components.
4. Without limiting the foregoing, antennae and their supporting structures (towers)
shall be designed in accordance with the Uniform Building Code as amended, and shall be
painted, lighted, erected, and maintained in accordance with all applicable rules and regulations
of the Federal Aviation Administration and all other applicable federal, state or local laws, codes,
and regulations, all as hereafter may be amended or adopted.
5. The Operator shall maintain all wires, conduits, cables, and other real and
personal property and facilities comprising Operator's Cable System in good condition, order
and repair. Consistent with subsection IV(a)(1) above, all safety practices required by law shall
be used during construction, maintenance, and repair of Operator's Cable System. The Operator
shall at all times employ ordinary care and shall install and maintain in use commonly accepted
methods and devices for preventing failures and accidents.
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6. In the event of a failure by the Operator to complete any work required for the
protection or restoration of the Public Rights-of-Way, or any other work required by City law or
ordinance, within the time specified by and to the reasonable satisfaction of the City, the City,
following notice and an opportunity to cure, may cause such work to be done, and the City shall
submit an itemized list of such costs to Operator as well as any materials reasonably requested by
Operator to verify such costs. Following the Operator's receipt of such itemized list and
supporting materials,the Operator shall reimburse the City the costs thereof within thirty days, or
the City may recover such costs through the letter of credit provided by Operator.
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• 7. In the event of an emergency, or where the Operator's Cable System creates or is
contributing to an imminent danger to health, safety, or property, or an unauthorized use of
property, the Operator shall remove or relocate any or all parts of Operator's Cable System at
the request of the City. If the Operator fails to comply with the City'.s request, the City may
remove or relocate any or all parts of the Operator's Cable System upon reasonable notice to
Operator. If Operator's compliance with the City's request pursuant to this subsection results
in the breach of any of Operator's obligations under this Agreement, and Operator has so
notified the City before complying with the City's request, Operator shall not be liable for its
failure to satisfy such obligations.
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• 8. Any and all Public Rights-of-Way, public property, or private property that is
disturbed or damaged during the construction, repair, replacement, relocation, operation,
maintenance, or construction of a System shall be repaired, replaced and restored, in a good
workmanlike, timely manner, to'substantially the same condition as immediately prior to the
disturbance (including appropriate landscape restoration). All repairs, replacements and
restoration shall be undertaken within no more than thirty (30) days after the damage is
incurred, and shall be completed as soon as reasonably possible thereafter. The Operator
shall guarantee and maintain such repairs, replacements and restoration for at least one year
against defective materials or workmanship.
• 9. Any contractor or subcontractor used for work or construction, installation,
operation, maintenance, or repairpf System equipment must be properly licensed under laws
of the State of California and all applicable local ordinances, where applicable, and each
contractor or subcontractor shall llhave the same obligations with respect to its work as the
Operator would have if the work were performed by the Operator. The Operator will take
reasonable measures to require that contractors, subcontractors and all employees who will
perform work for it are trained and experienced. The Operator shall be responsible for
ensuring that the work of contractors and subcontractors is performed consistent with this
Agreement and Applicable Law, shall be fully 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.
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• 10. The City does not guarantee the accuracy of any maps showing the horizontal or
vertical location of existing substructures.
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B. Undergrounding:
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1. In those areas of the City where transmission or distribution facilities of all the
public utilities providing telephone and electric power service are underground, the Operator
likewise shall construct, operate and maintain its transmission and distribution facilities therein
underground. In those areas of the City where transmission or distribution facilities of all the
public utilities providing telephone and electric power service are aerial, the Operator shall
likewise construct, operate and maintain its transmission and distribution facilities therein on an
aerial basis,unless otherwise agreed to by the City.
2. In those areas of the City where the Operator's cables are located on the above-
ground transmission or distribution. facilities of the public utility providing telephone or electric
power service, and in the event that the facilities of both such public utilities subsequently-are
placed underground, the Operator shall similarly and simultaneously construct, operate and
maintain its transmission and distribution facilities underground,at the Operator's cost.
3. In those areas of the City where transmission or distribution facilities of the Cable
System are other than aerial (and therefore not pole-mounted), all passive electronic facilities, 4f J
including without limitation all tap pedestals, shall be undergroun provided that where the
Operator demonstrates to the reasonable satisfaction of the City that, by reason of peculiar
underground conditions in a given ;area of the City, the passive electronic facilities cannot be
feasibly maintained in below-ground structures, the Operator may then place such passive
electronic facilities in above-ground,enclosures. However, the City specifically reserves all of its
rights to approve, in accordance with this Agreement, all above-ground and/or underground
locations for all such equipment subject to Applicable Law. The Operator shall, at installation
and throughout the term of the Franchise, install and maintain all mitigation measures required in
the Mitigated Negative Declaration dated September 1, 1999 related to the Cable System adopted
by the City for all such above-ground equipment installations.
C. Compliance with Construction Codes and Permitting Requirements:
1. The Operator shall obtain all necessary permits from the City before commencing
any construction, repair, upgrade or extension of the System, including the opening or
disturbance of any Public Rights-of-'Way, on private or public property within the City. The
Operator shall adhere to all state and local laws and building and zoning codes currently or
hereafter applicable to construction,operation,or maintenance of the System in the City and give
due consideration at all times to the aesthetics of the property.
2. The City shall, at all times,have the right to inspect all construction or installation
work performed pursuant to the provisions of the Franchise and to make such tests at its own
expense as it shall find necessary to, ensure compliance with the terms of the Franchise and
applicable provisions of local, state- and federal law in such a manner so as to minimize
disruption of service to Subscribers.
D. Conditions on Use of the Public Rights-of--Way:
1. Any and all Public Rights-0f--Way or public property or private property, which
are disturbed or damaged during the construction, repair, replacement, relocation, operation, or
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reconstruction of the System shall,be promptly and fully restored by the Operator, at its expense,
to a condition as good as that prevailing prior to the Operators work, in accordance with the
City's normal restoration procedures and standards regarding Public Rights-0f--Way and other
public property In so doing, the Operator shall comply with all directions of the City Engineer,
including without limitation direction to utilize directional boring in lieu of trenching.
Moreover, the Operator shall use''its best efforts to reduce, through coordination with the City
Engineer, its trench cuts of the Public Rights-of-Way by coordinating such intrusions with other
users, franchisees, licensees and occupants of the Streets so as to minimize the trench cuts and
resulting pavement degradations in the Public Rights-of-Way. It is a violation of this Franchise
for the Operator to leave cable unburied on the ground for more than the shortest, temporary
period.required to bury-it and, in no event, overnight. If the Operator shall fail to promptly
perform the restoration required herein after written notice and an opportunity to cure, the City
shall have the right to put the Public Rights-of-Way, public, or private property back into a
condition as good as that prevailing prior to the Operator 's work and the City shall obtain
reimbursement for such restoration from the Operator. The City may deduct the Operator's
payment due from the Security Fund, if it shall remain unpaid fifteen(15) days after presentation
for payment. Nothing contained in this Agreement shall excuse or relieve the Operator from
compliance with any street cut ordinance of general application which the City should hereafter
enact.
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2. Nothing in this Franchise shall be construed to prevent the City from constructing,
maintaining, repairing or relocating sanitary sewers and/or storm drains; grading, paving,
maintaining, repairing, relocating and/or altering any Public Rights-of-Way; constructing, laying
down, repairing, maintaining or relocating any water mains; or constructing, maintaining,
relocating, or repairing any sidewalk or other public work.
3. All System transmission and distribution structures, lines and equipment erected
by the Operator within the City shall be located so as not to unreasonably .obstruct or
unnecessarily interfere with the usual and customary use of the Public Rights-of-Way, and to
cause minimum interference with the rights of property owners who abut any of the Public
Rights-of-Way, and not to unreasonably interfere with existing public utility installations. The
Operator shall finish to and file with City Engineer the maps, plats, and permanent records of
the location and character of all facilities constructed, including underground facilities, and the
Operator shall file with the City updates of such maps, plats and permanent records annually if
changes have been made in the System.
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4. If at any time during the period of this Franchise the City shall alter,or change the
grade or location of any Public Rights-of-Way, the Operator shall at,its own expense, upon
notice by the City, remove and relocate its poles, wires, cables, conduits, manholes and other
fixtures of the System, and in each instance comply with the standards and specifications of the
City.
5. The Operator shall not place poles, conduits,or other fixtures of the System above
or below ground where the same will unreasonably interfere with any gas, electric, telephone,
water or other utility fixtures. All the Operator's poles, conduits, or other fixtures placed in any
Public Rights-of-Way shall be so placed as to comply with all requirements of the City.
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6. The Operator shal4 on request of any Person holding a moving permit issued by
the City, temporarily move its wires or fixtures to permit the moving of buildings with the
expense of such temporary removal to be paid by the Person requesting the same, and the
Operator shall be given not less than ten (10) business days advance notice to arrange for such
temporary changes.
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7. The Operator shall ;cooperate with and participate fully in Underground Service
Alert (USA) and other reputable underground facility locating services to insure that damage
and/or interference with other underground facilities occupants is minimized.
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8. If(i) the Operator should in the course of the construction and/or reconstruction
of the System elect to place underground cable plant in the public utility easement on private
property where there was, at the'I time of the Operator 's election, space available for the
installation of such plant within the public roadway, and (ii) the Operator should fail, neglect or
refuse to take pre-construction photography (or videography) of the condition of any private
property upon which underground construction is to occur,the Operator shall have the burden of
proof as to the condition of the private property prior to the initiation of such construction in any
subsequent complaint resolution, arbitration or judicial procedure between the Operator and the
private property owner. If the Operator enters private property for the purposes of construction
Where there is no dedicated public easement, the Operator shall first secure the private property
owner's written consent.
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9. Notwithstanding any'other term, condition or provision hereof, no trench cut or
portion thereof by the Operator in any Public Rights-of-Way shall remain open and unfilled for
more than three (3) business days from the date of its initial opening. The Operator shall be
subject to the imposition of liquidated damages pursuant hereto for each additional day that any
such trench or portion thereof shall remain open beyond the aforesaid three (3) business day
limit. For purposes of this section, ",open" shall mean and include any degree of refilling and/or
restoration of the trench short of the final restoration of the pavement to its original grade.
Moreover,the Operator shall, at the close of each day, suitably cover, by plate or other means
acceptable to the City, (i) any unfilled trench or portion thereof; and (ii) any open trench which
traverses a driveway or other means of ingress and egress for any property owner in such a
fashion as to allow full use of the driveway or other means of ingress and egress by the property
owner during periods of non-construction. Each failure by the Operator to cover any such trench
shall be a separate event of default which shall be separately.subject to the liquidated damages
provisions of this Agreement.
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10. Notwithstanding the approval and/or acceptance by the City of the construction
by the Operator in the Public Rights-of-Ways, including without limitation the repair and/or
restoration of trench cuts, as of the completion of the Operator's construction or..any phase
thereof, the City may re-inspect any such construction by the Operator("Re-inspection') within
twenty-four(24) months after the completion of all construction by the Operator (as established
by the Notice of Completion for the last Construction Segment Area) and the Operator shall, as a
condition of this Franchise,repair and restore to such standards as the City may then specify, any
deficiencies and/or degradations noted by the City in the Re-inspection. Any such repairs and/or
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restorations by the Operator pursuant to such a Re-inspection shall be subject to a further Re-
inspection within twenty-four(24)months from the completion thereof.
11. The Operator shall, at installation and throughout the term of the Franchise,install
and maintain all mitigation measures required in the Mitigated Negative Declaration adopted by
the City pursuant to the California Environmental Quality Act, which are hereby incorporated by
reference as fully as if set forth herein. Each failure to install and/or maintain such a mitigation
measure specified in-the Mitigated Negative Declaration shall.be a separate event of default
which shall, in addition to all other available remedies, be separately subject to the liquidated
damages provisions of this Agreement.
12. Except in cases of emergency or responses to unplanned system failures where it
is impractical to do so, prior to entering onto private property to construct, operate or repair its
Cable System(unless the repair or construction can be performed from the Public Rights-of-Way
without disrupting private property), the Operator shall give the Person residing on or using the
property adequate notice, not less than twenty-four (24) hours nor more than seventy-two (72)
hours in advance, that it intends to 'work on the property, a description of the work it intends to
perform and a name and telephone number the Person can call to protest or seek modification of
the work. Failure of the Operator to,give the timely and adequate notice as described above-shall
cause the burden of proof, in any subsequent legal action for damage by the Operator to the
private property, to shift to the Operator as to all matters before the court. Work shall be done in
a manner that causes the least interference with the rights and reasonable convenience of
property owners, residents and users and that complies with Applicable Law. In such case,
subject to the exception for timely'I notice, the notice shall be given to the Person residing or
using the property as soon as possible.
13. When in the course of aerial construction, it is necessary to replace an existing
pole and the Operator desires to utilize a temporary second pole without simultaneously
removing the original pole (hereinafter "Temporary Duplicative Pole Method") in order to
maintain the pace of construction, the Operator shall make application to the City to use the
Temporary Duplicative Pole Method. The Temporary Duplicative Pole Method shall not be
utilized without the prior written approval of the City. In determining whether or not to grant its
approval for the use of the Temporary Duplicative Pole Method, the City may consider, among
other things, the degree of delay which will be incurred if the Duplicative Pole Method is not
utilized, the Operator's diligence and foresight theretofore in pursing the processing of make
ready work and the timely construction of the System, and the Operator's timely completion (or
lack thereof) of the relocation of facilities on previously approved Temporary Duplicative Pole
Method permits. If the City shall approve the use of the Temporary Duplicative Pole Method in a
given instance, the Operator shall deposit with the City one and one-half(1'h) times the City's
estimate of the cost to complete the ielocation of facilities to the new pole and remove the old
pole and shall agree in writing to complete the relocation of all facilities to the new pole and the
removal of the old pole within four (4) months from the date of the City's approval of the
Temporary Duplicative Pole Method permit. Each failure to complete the relocation of facilities
within the time specified shall be a separate event of default which shall, in addition to all other
remedies,be separately subject to the liquidated damages provisions of this Agreement.
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14. The City shall have the option to lay its own. conduit or place other public
improvements that do not incur significant cost, delay or redesign by Operator, including without
limitation wiring for traffic signals, streetlights, etc. in the Operator's open trenches during the
initial construction and during any future rebuilds or repairs.
15. The City shall have the right, at no charge(but at no additional cost to Operator),
to install or maintain any wires and fixtures desired by the City upon the poles and within the
underground pipes and conduits of the Operator that are located in the same Public Rights-of-
Way. If the City desires to utilize the Operator's facilities, the City and the Operator shall enter
into a mutually acceptable separate agreement for the provision thereof. Any such agreement
shall, contain terms and conditions other than rate provisions that are no more favorable nor less
burdensome than the terms and conditions made available by the Operator to any other Person.
The.Operator may deny use of its facilities if the City's proposed installation or maintenance is
not technically feasible, exceeds available space, would delay Operator's construction schedule
such that liquidated damages would be payable as a result, would cause a violation of this
Agreement,or otherwise interferes 'with the existing or future operations of the Operator.
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E. System Architectural Design Review Process: Prior to submitting the initial
Application for a Notice to Proceed, the Operator shall deliver to the City a System design plan,
which shall include the following elements:
1. All hub sites and node map;
2. "Sell sheet"level description of equipment at hubs, and nodes;
3. System level trunking maps to illustrate the architecture of the system.
The City's review shall not operate to excuse any non-performance under this Agreement, the
Ordinance or other Applicable Law. The City may review the design plan and submit comments
to the Operator within thirty (30) days of the date it was submitted by the Operator. The
Operator shall take any such comments into account in implementing its construction plan.
F. Construction Segments:
The Operator shall construct the Cable System in a series of reasonably contiguous
areas of the City,to be defined by the Operator in its application for a Notice to Proceed for each
such area(such an area hereinafter a "Construction Segment Area' or"CSA"). Subject to such
exceptions as may be approved by the City, in its sole discretion, each CSA shall be adjacent to
and contiguous with a prior approved CSA. The Operator shall not construct any Cable System
facilities within a Construction Segment Area until the Operator has secured a Notice to Proceed
for that CSA from the City. The Operator's Application for a Notice to Proceed shall be
accompanied by evidence that the Operator has obtained all of the permits and approvals
necessary to fully complete construction of the Cable System within that Construction Segment
Area from (1) the City, (2) other applicable Governmental Authorities and(3)pole owners (as to
aerial construction). The Operator shall obtain approval for the siting of all pedestals and similar
structures prior to installation of any such structure or construction of any facilities serving or
served by such a structure. Approval for such siting shall be obtained in accordance with the
usual procedures governing such structures, and nothing in this Agreement or the Cable
Ordinance shall be deemed to waive any such procedures. Upon proof to the reasonable
satisfaction of the City that all such authorizations reasonably necessary to the completion of the
Cable System within an otherwise'approved Construction Segment Area have been issued,
including any authorizations related',to the siting of pedestals and similar structures, the City
shall issue a Notice to Proceed to the Operator with respect.to that Construction Segment Area.
The Operator shall not undertake any construction or encroachment within the public right of
way prior to receipt of the Notice to Proceed applicable to the area of construction. Nothing
contained in this section shall be deemed to prevent the Operator commencing construction of its
head-end facility on its own property at any time, provided that it is otherwise in compliance
with Applicable Law. The parties may agree to a different process for phasing construction.
G. Construction Manual: Operator has submitted to City a System construction manual,
and plan for notifying area residents of the system construction work process. City shall have a
right to review and approve or disapprove the plan and manuals by October 1, 1999.
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H. Post-Construction Design Modifications: At least ninety (90) days prior to the date
of any construction on the System,,which construction is initiated after completion of the System
and which is intended to implement any modifications to the design of the System, the Operator
shall deliver to the City a detailed description of the proposed design modifications. The
description shall include any of the information required by subsection 6(e), relevant to an
understanding of the proposed modification. The City may review the plan and, within thirty
(30) days of the date the plan is made available for City review, submit comments to the
Operator.
I. System Operation Test:' The Operator shall comply with the following procedures as
it completes construction of plant:
1. The City shall be added to the notice list and shall be kept up-to-date regarding
progressive activation of the System and testing of the same.
2. Successful completion of the first semi-annual FCC.proof-of-performance test for
a portion of the System shall constitute.the final acceptance test for that portion. The Operator
shall notify the City of the date at least ten(10) days in advance, in writing or by e-mail to City's
franchise administrator, that it will conduct such a test. City shall have the right to have a
designated observer present during each test. The Operator shall send a copy of the written
results of each test to City promptly upon completion of each test. If the tested portion of the
System passes the performance test, that portion shall be deemed accepted by the City. If the
tested portion does not pass, the Operator shall take all steps necessary to meet the applicable
standards and the affected portion shall be retested.
3. Final acceptance of the entire System shall take effect when (i) all nodes as set
forth in the system architectural design plan approved by the City pursuant to Section V(C) have
been constructed, activated, and accepted pursuant to paragraph (1) above; and (ii) at least 80%
of the entire System, as measured by the number of nodes, has passed the first semi-annual FCC
proof-of-performance test.
J. Construction Deadlines: The Operator shall commence construction in the City
within six months of the Effective Date, and shall complete construction within the first CSA
within 120 days thereafter. Failure to meet either of these requirements shall be deemed material
defaults under this Agreement and,shall be grounds for. revocation of the Franchise; or the
exercise of any other remedy available under this Agreement or the Ordinance. The Cable
System shall be completed within each Construction Segment Area within'orie hundred twenty
(120) calendar days from the issuance of the Notice to Proceed for that Construction Segment
Area pursuant to this Agreement. Moreover, in any event, the Cable System shall be completed
and operational throughout the City within twenty-four (24) months from the Effective Date of
this Agreement.
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K. Periodic Progress Reporting-
1.
eporting1. Following the commencement of construction of the System or any similar major
construction, the Operator shall meet with the City at least every three (3) months until the
construction is completed,and provide an update on the progress of the construction according to
the Operator's general plan, unless the City waives such meeting. Upon request, the Operator
shall provide detailed written reports to the City on the Operator's progress in construction,
within ten(10)business days of the request.
2. Public Notification Prior to the beginning of any System construction, and
periodically during each phase, the',Operator shall inform the public and its Subscribers about the
progress of the construction areas where construction crews will be working and any expected
temporary interruptions to existing services which may occur.
3. Delays in the System Construction. The Operator shall not be excused from the
timely performance of its obligation to begin and complete any system construction within the
times specified herein,except for any'Force Majeure"situation, as described herein.
4. Consequences of Delays. Absent a showing of excusable delay pursuant to this
Agreement, should the Operator be unable to demonstrate the commencement or timely
completion of the System Construction by the times specified herein, or be unable to reasonably
justify any delays, then the Operator shall be in violation of a material provision of this Franchise
Agreement and the City may, in its sole discretion, either grant the Operator an extension of time
to complete such construction or' implement any enforcement measures specified in this
Agreement or the Ordinance, including but not limited to revocation of the Franchise. In the
event of excusable delay pursuant to this Agreement, the time for completion shall be extended
by the period of such delay.
L. System Tests and Inspections:
1. The Operator shall peiform all tests necessary to demonstrate compliance with the
requirements of the Franchise and the technical standards of the FCC set forth in Part 76, Subpart
K (Technical Standards) of the FCC's rules, 47 C.F.R. § 76.601 et seq., including without
limitation performance tests, technical standards, signal leakage performance criteria and cable
television system monitoring. In the event that the FCC's technical performance standards are
repealed or are no longer applicable to the Operator's Cable System, such standards shall remain
in force and effect until the City and the Operator agree to new standards.
2. The Operator shall conduct tests as follows:
a. proof of performance tests on the System at least once every six months or as
required by FCC rules, whichever is more often, except as federal law otherwise limits the
Operator's obligation; and
b. special proof of performance tests when Subscriber complaints indicate tests
are warranted.
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3. A written report of test results shall be filed with the City within seven(7) days of
the test. In addition, the Operator'shall retain written reports of the results of any tests required
by the FCC,and such reports shall be submitted to the City within seven( )days of a request.
4. If any test indicates that any part or component of the System fails to meet
applicable requirements, the Operator, without requirement of additional notice or request from
City, shall take corrective action, retest the locations and advise the City of the action taken and
results achieved.
M. Publicizing Proposed Construction Work: The Operator shall notify the general public
prior to commencing any proposed construction that will significantly disturb or disrupt public
property or Public Rights-of-Way, or have the potential to present a danger or affect the safety of
the public generally. Where possible,the Operator shall publicize proposed construction work at
least one week prior to commencement of that work by notifying those residents and others in
the immediate vicinity of where work is to be done and most likely to be affected by the work in
at least one of the following ways: by telephone, in person, by mail, by distribution of door
hangers or flyers to residences, by publication in local newspapers, or in any other manner
reasonably calculated to provide adequate notice. Notice to affected Persons must include the
name and local telephone number',of an Operator representative who is qualified to answer
questions concerning proposed construction. In addition, before entering onto any Person's
property for proposed non-emergency construction work in connection with Operator's Cable
System, the Operator shall contact the property owner or (in the case of residential property, the
resident) at least two days in advance,when possible.
N. Right of Inspection: The City shall have the right to inspect all construction,
reconstruction or installation work performed by the Operator under the provisions of this
Agreement and Applicable Law, to .ensure the Operator's compliance and to protect the health,
safety and welfare of the City s citizens. All work performed by the Operator shall be fully
subject to the general ordinances of the City and, in case of conflict between such general
ordinances and this Agreement,the general ordinances shall prevail.
O. System Maintenance:
1. The Operator shall, when practicable, schedule and conduct maintenance on
Operator's Cable System so that interruption of service is minimized and occurs during periods
of minimum Subscriber use of Operator's Cable System. The Operator shall provide reasonable
prior notice to Subscribers and the City before interrupting service for planned maintenance or
construction,except where such interruption is expected to be one hour or less in duration. Such
notice shall be provided by methods',reasonably calculated to give Subscribers actual notice of
the planned interruption.
2. Maintenance of the System shall be performed in accordance with the technical
performance and operating standards established by FCC rules and regulations.
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P. Standard Connections: If the aerial or underground connection for service to a
Subscriber's location (sometimes Imown as a"drop') requires no more than a one hundred fifty
(150') foot extension drop measured from the nearest Street (whether or not the Operator has
elected to place its Cable System in that Street), the Operator shall provide the connection to its
service at no charge for the initial one hundred fifty (150') feet other than the Operator's
standard installation fee.
V. SYSTEM FACILITIES,EQUIPMENT AND SERVICES
A. System Requirements. The Operator's Cable System generally shall meet or exceed the
following requirements:
1. Compliance With FCC Rules.
a. The System shall conform to or exceed all applicable FCC technical
performance standards, as amended from time to time, including, without.limitation, those set
forth in 47 C.F.R. § 76.601 and other applicable standards established by the City pursuant to
Section 4(a)(2) above.
b. The System shall,have personnel, facilities and equipment sufficient to cure
violations of FCC technical standards and to ensure that Operator's Cable System remains in
compliance with the standards specified in Section 0.
c. The System shall have such facilities and equipment as necessary to maintain,
operate, and evaluate Operator's Cable System to comply with FCC technical standards, as such
standards may be amended from time to time.
2. Continuous 24-Hour Operation. The System shall be designed to be capable of
continuous twenty-four-hour daily operation in accordance with FCC standards except as caused
by a force majeure condition.
3. No Interference. The System shall be operated in such a manner as to comply
with all applicable FCC requirements regarding (i) consumer electronic equipment and (ii)
interference with the reception of off-the-air signals by a Subscriber.
4. No Deterioration to Access Signals. The System shall be so constructed and
operated that each PEG Channel shall be delivered over the System with transmission quality the
same as or better than the transmission quality of any other Channel on Basic Cable Service.
5. Industry-Accepted Equipment.ment. The System shall use equipment ment enerall used in
high-quality, reliable, modem systems of similar design. Facilities and equipment shall be used
at the headend to allow the Operator to transmit or cablecast signals in substantially the form
received, without substantial alteration or deterioration. For example, the System shall include
components so that a signal received at the headend in color may be received by a Subscriber in
color,a stereo signal in stereo.
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6. Program Security. The System shall include equipment so that any pay-per-view
programming can only be activated by the positive action of a subscriber using, for example, a
private identification number or other individual selection procedure.
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7. Handicapped Servi Ice. The Operator shall comply with all requirements of
applicable law, including but not limited to the Americans with Disabilities Act. Operator shall
comply with FCC rules on transmission of closed captioning for the hearing-impaired.
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8. Safety. The System's facilities and equipment shall be designed, built and
operated in such a manner as to protect the safety of Operator's Cable System workers and the
public.
9. Sufficient Staff and(Equipment. The System shall have sufficient trucks, tools,
testing equipment, monitoring devices and other equipment and facilities and trained and skilled
personnel required to enable the, Operator to substantially comply with Applicable Law,
including applicable customer service requirements and including requirements for responding to
system outages.
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B. System Characteristics. The Operator shall complete construction of a System in the
Franchise Area in accordance with the following minimum standards:
1. The System shall have a minimum activated bandwidth of at least 860 MHz, shall
be capable of delivering at least 1341 analog Channels, and shall provide the equivalent of at least
87 analog Channels of programming upon activation. The System shall strictly conform, at a
minimum, to the system described in Operator's franchise application dated February 10, 1999.
2. The bandwidth specifications in Section V(B)(1) refer to the engineering
bandwidth of the system and do not limit what sorts of signals (e.g., analog or digital) the
Operator carries on any part of that bandwidth.
3. The System shall utilize a fiber-optic wire trunk and distribution design("fiber-to-
the-neighborhood"). Node size shall not exceed 500 homes per node. -The System shall be
designed and constructed to enable later segmentation to fewer homes per node as demand
warrants.
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4. The distribution plant,shall have no more than six active components in a cascade.
5. The Operator shall provide standby power generating capacity at the headend and
at all hubs. The Operator shall maintain standby power capable of at least 24 hours duration at
the headend, at least four(4)hours duration for all system hubs, and at least 2 hours to each node
and the distribution plant, with automatic response systems to alert the system headend when
conventional power is interrupted. .The Operator shall maintain sufficient portable generators to
be deployed to a hub site in the event that the power disruption is expected to last more than four
hours.
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6. The Operator shall activate two-way capability throughout the system. The
Operator shall activate all electronics for two-way operation, sweep and balance the reverse path
of the system, and verify operation of the plant using procedures in NCTA Recommended
Practices for Measurement on Cable Television Systems, as supplemented in October 1997, to
the 1993 revised 2d edition.
7. As part of the System, the Operator shall offer every Subscriber, the opportunity
to lease equipment that utilizes wireless remote controls, and that allow Subscribers to view a
program on one channel while taping a program on another channel.
8. The entire System shall be technically capable of transmitting NTSC analog,
compressed digital, and HDTV tansmissions. The Operator shall comply with all FCC
regulations regarding carriage of HDTV.
9. The Operator shall make Internet access available to all Subscribers at the same
time as other services are provided'over the Cable System to any Subscriber. Both upstream and
downstream Internet access shall be�provided over the Cable System(not via telephone lines).
10. The Operator's construction plan shall insure that the System is extended to all
parts of the City without regard to income level.
C. Periodic Review. CrrY and OPERATOR acknowledge and agree that the field of cable
television is rapidly changing which may see other regulatory, technical, and legal changes
during the term of this Agreement. Therefore, in order to provide for the maximum degree of
flexibility in this Agreement, and to help achieve a continued, advanced and modem Cable
System, the following evaluation provisions will apply:
1. The Cn Y reserves the right to adopt reasonable rules and regulations controlling
the procedures as set forth below and the subjects for evaluation sessions to the extent consistent
with Applicable Law. In the absence of any CrrY action taken to exercise these rights, OPERATOR
shall be subject to the procedures and the subjects described in this Agreement.
2. The CrrY may require, in its sole discretion, that OPERATOR participate in
evaluation sessions with CrrY at any time and from time to time during the term of this
Agreement; provided, however, there shall not be more than four (4) evaluation sessions, with
one(1) each occurring during years 3,' 6, 9 and 12 of the Agreement.
3. Topics which may be; discussed at any evaluation session include, but are not
limited to, rates, channel capacity; the System performance, programming, PEG access,
municipal uses of the System, Subscriber complaints,judicial rulings, FCC rulings and any other
topics CM or OPERATOR may deem relevant.
4. During an evaluation session, OPERATOR shall fully cooperate with CrrY and shall
provide without cost such nonproprietary information and documents as CrrY may reasonably
request to perform the evaluation.
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5. If at any time during its evaluation, C= determines that reasonable evidence
exists of inadequate System performance, CrrY may require OPERATOR to perform tests and
analyses directed toward such suspected inadequacies at OPERnTOR's expense. OPERATOR Shall
fully cooperate with CrrY in per-,forming such testing and any report prepared by OPERATOR
shall include at least:
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a. a description of the alleged problem in the System performance which
precipitated the special tests;
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b. the System component tested;
c. the equipment used and procedures employed in testing;
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d. the method, if any, by which the System performance problem was resolved;
and
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e. any other information pertinent to said tests and analyses which may be
reasonably required by CITY,or deteIrmined when the test is performed.
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6. If after receiving OPERAToWs report, CrrY determines that reasonable evidence
still exists of inadequate System performance, CrrY may enlist an independent engineer to
perform tests and analyses directed toward such suspected inadequacies. The costs of such
engineer shall be chargeable against the Security Fund.
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7. As a result of an evaluation session, CrrY or OPERATOR may determine that an
amendment in the terms of this Agreement may be required, that the requirements of the.System
or this Agreement should be updated, changed or revised, and/or that additional services should
be provided by OPERATOR (collectively a "Proposed Modification'). If the Proposed
Modification is consistent with the terms of this Agreement, the needs of OPERATOR and CrrY
and existing state-of-the-art technology, including what is provided by OPERATOR in other
Systems owned, operated or managed by it; or its parent company, OPERATOR and CrrY will, in
good faith, review the terms of the Proposed Modification and consider amending this
Agreement accordingly. Nothing herein shall be construed as requiring either OPERATOR or CrrY
to agree to any Proposed Modification.
D. Equipment Compatibility:,
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1. The Operator shall comply with all FCC regulations regarding scrambling or
'other encryption of signals, Subscriber premises equipment, equipment compatibility, and
facilities and equipment that permit Subscribers to fully utilize the capabilities of consumer
electronic equipment while receiving cable service. FCC regulations governing compatibility
with consumer electronics equipment, as they may be amended from time to time, including but
not limited to 47 C.F.R, §§ 76.629 and 76.630, are incorporated herein by reference. The City
shall have authority, consistent withllapplicable law, to adopt enforcement regulations to ensure
that the Operator complies with these,FCC regulations.
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2. Upon request by aSubscriber or the City, *the Operator will provide accurate_
information regarding equipment compatibility and the availability of universal remote controls
and other compatible equipment(a;list of which, specifying brands and models, shall be provided
to any Subscriber upon request).
3. As part of normal installations, without additional cost, the Operator will include
full connection of all consumer equipment in use at the time-of the installation, including
connections permitting multiple signal reception (e.g., allowing two different Channels to be
received, consistent with FCC regulations, so as to display picture-in-picture or allow a
Subscriber to view one Channel 'while recording another). The Operator shall make such
connections after installation upon a subscriber's request, at a price consistent with any Appli-
cable Law.
E. Types of Service: Should the Operator desire to change the selection of programs or
services offered on any of its tiers, it shall maintain the mix, quality and level of services
provided over the System. Any change in programs or services offered shall comply with all
lawful conditions and procedures contained in this Agreement and.in Applicable Law. The
Operator shall provide thirty(30)days' advance written notice to Subscribers and the City of any
change in channel assignment or in'the video programming service provided over any channel,
unless this requirement is waived by the City or by operation of federal or state law, or due to
events beyond the reasonable control of the Operator.
F. Offices. The Operator shall maintain an office at a convenient location within the
City. The office shall be open at least from 9:00a m. - 6:00 p.m. five days a week, and from 9:00
a.m. - 5:00 p.m. on Saturdays to allow Subscribers to request service, pay bills, and conduct
other business. Notwithstanding the foregoing, no sooner than five (5) years after opening its
office within the City,the Operator may request that City approve the relocation of its office to a
convenient location outside the City' City shall approve the relocation promptly unless it finds
that the relocation would be unreasonably inconvenient to subscribers within the City.
G. Leased Access Channels: The Operator shall provide leased access channels as
required by federal law.
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H. Interconnection:
1. Operator shall design its System so that it may be two-way interconnected with
any or all other cable television systems in the area Interconnection of systems may be made by
direct cable connection, microwave link,satellite or other appropriate methods.
2. Operator may interconnect its system with other Cable Systems upon its- own
initiative,or upon request of the City Council to interconnect. If so ordered, Operator shall begin
good faith negotiations concerning interconnection with the other affected system or systems. If
so ordered, Operator shall interconnect with any adjacent Cable System which is controlled by
the Operator or its Affiliate.
3. All signals to be interconnected will comply with FCC technical standards for all.
classes of signals and will result in no more than a de minimus level of distortion.
4. The Operator shall cooperate with any interconnection corporation, regional
interconnection authority, state or federal regulatory agency which may be hereafter established
for the purpose of regulating, facilitating, financing or otherwise providing for the
interconnection of.communications systems within and beyond the boundaries of the City. To
facilitate interconnection with other adjacent systems which are owned or controlled by the
Operator or any Affiliate thereof ("Adjacent Related Systems'), the Operator shall place all
comparable Access channels on the System and on Adjacent Related Systems on channels
having the same numerical designations.
I. Customer Service Monitoring. The Operator shall install and maintain status
monitoring equipment and keep such records as required to enable the City to determine whether
the Operator is complying with all telephone answering standards required by applicable
customer service regulations, as amended from time to time.
J. Emergency Alert System: The Operator shall comply with the requirements of 47
C.F.R. Part 11, as amended. The Cable System shall be designed and constructed to permit the
City to simultaneously override audio and video signals and broadcast emergency messages on
all Channels on the System. The City shall have the capability to initiate emergency messages
from City Hall, or such other place as the Administrator of Emergency Services may designate.
The Operator shall assist and cooperate with the City in periodic testing of the emergency alert
system.
K. Home Wiring. Operator shall comply with all applicable FCC requirements,
including any notice requirements,with respect to home wiring and home run wiring.
L. Uses of System: Operator shall notify the City of all active uses of the Operator's
Cable System as promptly as possible after the institution of such uses.
M. Parental Control Lock: The Operator shall provide, at no charge, to Subscribers,
upon request, a parental control locking device or digital code that permits inhibiting the video
and audio portions of any Channels offered by the Operator.
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N. Open Platform for Internet Services: The Operator agrees to comply with all
requirements of Applicable Law with respect to nondiscriminatory access to the Operator's cable
modem platform for providers of internet service.
O. No Limitation of Streaming video: Unless expressly mandated by Applicable Law,
the Operator shall place no restriction upon the downstream streaming of video programming
over its internet access service.
VI. CHANNELS AND FACII;TTIES FOR PUBLIC,EDUCATIONAL AND GOVERN-
MENTAL USE
A. Access Channels:
1. The.parties acknowledge that the franchise granted by the City to the Incumbent
Operator expires on February 18, 2001, and that the City is in the process of ascertaining cable-
related community needs and interests pursuant to 47 U.S.C. § 546. Those needs and interests,
including requirements for channel'capacity for public, educational and governmental use, will
be reflected in the terms of any Renewal Franchise. The parties agree that if such a Renewal
Franchise is granted, the Operator shall provide, beginning on the effective date of the Renewal
Franchise, the same number of analog Access Channels as is required of the Incumbent Operator
under the Renewal Franchise. Beguming immediately upon commencement of Cable Service to
the first Subscriber in the City, the Operator shall provide two analog Access Channels for
public, educational and governmental use. One channel shall be used, to the extent Operator has
access to the same, for the live broadcast of City Council meetings and, by obtaining and
replaying videotapes, providing similar bulletin boards or through the Incumbent Operator's
system, the other programming currently carried on Channel 6 of the Incumbent Operator's
System. The other channel shall be used to carry CCTV, the government access channel for
Contra Costa County as soon as Operator's Cable System has direct access to the same. In
addition, the Operator shall make available up to two additional analog Access Channels within
thirty(30)days of a written request from the City. The additional Access Channels shall be used
for public, educational or governmental access programming, the allocation thereof to be at the
sole discretion of the City. Any entity that manages an Access Channel may use that capacity to
provide one or more channels of service.
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2. Additionally the parties agree that if such a Renewal Franchise is granted, the
Operator shall provide, beginning on the effective date of the Renewal Franchise, the same
amount of digital PEG Access capicity as is required of the Incumbent Operator under the
Renewal Franchise. Beginning immediately upon commencement of Cable Service to the fust
Subscriber in the City, and subject to subsection (3) below, the Operator shall provide digital
capacity in an amount equal to theamount needed to transmit four (4) video channels, with
accompanying audio, that are in digital format and capable of producing sound and picture of
NTSC quality, based on the compression technology then in use in the Cable System. Any use
of such digital capacity shall be compatible with the technology, including without limitation the
compression technology, used by Operator in the Cable System. The City and the Operator shall
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work together to implement technical solutions that make the most efficient use of this capacity .
Further, if the Operator offers subscribers a radio or music service delivered over the Cable
System, the Operator shall include in such service, if reasonably feasible, a non-profit public
radio station designated by City which is either operated by City or by a non-profit organization
within Contra Costa County.
3. Any of the foregoing analog or digital PEG capacity, the control of which has not
been transferred to City or a Designated Access Provider, may be utilized by the Operator for
any purpose unless and until it is so transferred. Four analog PEG channels shall be provided in
the manner specified in Section 6(a)(1). Additional PEG capacity up to the maximum specified
in Section 6(a)(1) (as to analog) and (2) (as to digital) shall be provided as follows: Prior to
requesting additional PEG capacity, City shall, in its sole discretion, determine that such
additional PEG capacity can reasonably be used for PEG purposes. In making this
determination, City shall consider the extent to which existing PEG capacity is being utilized, the
community need for additional PEG programming, the resources and capabilities of the City or
the applicable Designated Access Provider needed to produce additional PEG programming and .
the impact on the Operator and its Subscribers. Upon making this determination, City shall-
deliver written notice to the Operator indicating the amount and type of capacity needed and the
date upon which the capacity should be provided. If the Operator has capacity of the specified
amount and type which it is not actively using, it shall provide the capacity by the specified date.
If the Operator does not have such,unused capacity, it may defer providing such capacity until
the earlier of(i) the date such capacity becomes available or(ii) twelve(12) months after receipt
of the notice from City. The Operator may defer providing the capacity in the foregoing manner r
only if it delivers a written notice to the City within fourteen(14) days after receipt of the City's .a(
notice. No third party shall have any independent right under this section to obtain additional
PEG capacity, and City shall have the exclusive right to obtain additional PEG capacity for itself
or a Designated Access Provider pursuant to this section.
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4. The Operator shall provide dedicated, bidirectional fiber optic links between the
headend and(i) City Hall; and two (2) other sites designated by the City in order to deliver PEG
access programming to the headend. These links shall be completed as soon as practical after
construction of the System commences. The Operator shall be responsible for providing all
equipment at the origination sites necessary to transport the video programming from those
origination sites to Operator's headend. The Operator shall place the PEG access signals on their
designated channels at the headend 11 Each of the Access Channels provided under this Section,
both initially and after the effective date of any franchise issued as a result of renewal
proceedings for the renewal of the Incumbent Operator's franchise ("the Renewal Franchise"),
shall, to the extent possible, carry PEG video programming which corresponds to one of the
Access Channels provided over the Incumbent Operator's system. Operator shall make all
reasonable good faith efforts to connect with the Incumbent Operator's system as necessary to
deliver all PEG programming made available by the Incumbent Operator as of the Effective
Date. "
S. The Operator shall provide any analog Access Channels on the Basic Service Tier
throughout the life of this Franchise'and the balance of any PEG access capacity, on the lowest
tier or level of such capacity offered'to Subscribers. If channels or capacity on the Cable System
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are displayed through a menu system, Access Channels or capacity, shall be displayed in the
same manner as other channels or capacity. Access Channels and programming shall be in
channel positions that are contiguous with, and not separated by scrambled channels from, the
other channels located on the Basic Cable Service tier.
6. Each analog Access Channel shall be transmitted on the System in standard 6
MHz, unscrambled NTSC format, so that every Subscriber can receive and display the PEG
signals using the same converters and signal equipment that is used for other Basic Service
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7. The Operator shall not change the channel assignments for the Access Channels,
without the prior written approval of the City Manager. The foregoing is not intended to waive
or contravene any Applicable Law, now or hereafter in effect.
8. Any educational Access Channel shall be for the noncommercial use of the
educational community of the City. The City or its designee may adopt reasonable rules
regarding the use of any such Channel.
9. Any governmental Access Channel shall be for the noncommercial 'use of the
City. The City or its designee may adopt reasonable rules regarding the use of any such
Channel.
10. Any public Access Channel shall be for the noncommercial use of the public.
The City or its designee may adopt reasonable rules regarding the use of any such channels.
11. The City may, but;need not, designate one or more PEG access providers
C'Designated Access Providers"), including itself, to control and manage the use of any or all
Access facilities and/or resources under this Franchise for a period of time or at the pleasure of
the City. To the extent of such designation by the City, as between the Designated Access
Provider and the Operator, the Designated Access Provider shall have sole and exclusive
responsibility for operating and managing such access facilities and/or resources. The Operator
shall cooperate with Designated Access Providers in the use of the Cable System and access
facilities and/or resources for the provision of PEG Access. The Operator shall enter into such
operating agreements with Designated Access Providers as may be necessary to facilitate and
coordinate the,provision of PEG access, provided that such operating agreements may not be
inconsistent with this Franchise nor with such designation by the City.
• 12. If the City has not designated a Designated Access Provider, and the City elects
not to manage an Access facility itself, the City may request that the Operator assume that
role, subject to negotiation of the terms under which the Operator shall do so. If the City so
requests, the Operator shall, at a minimum, provide the Community Programming and
Access Facilities and Support i specified on pages 27-28 of the Operator's Franchise
Application dated February 9, 1999.
0 13. Nothing contained in this Agreement shall be construed to prevent the CrrY
and/or any Designated Access 'Provider from entering into underwriting or advertising
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agreements with for-profit ventures to provide support for PEG access programming to the
extent allowed by Applicable Law. No sums derived by the Cn Y and/or any Designated
Access Provider from such underwriting activities or advertising shall be construed to
diminish or otherwise offset PEG access payments due from under this Franchise. The City
and/or any Designated Accessi Provider may carry non-commercial programming that is
generated by entities other thanthe City and/or any Designated Access Provider. The City
agrees to use or permit the use of the Access facilities for PEG-use only.
B. Periodic PEG Access Capital Payments;. In addition to and apart from the Franchise
Fee paid by the Operator for the use and occupancy of the Public Rights-of-Way and in addition
to and apart from the Lump Sum PEG Access Capital Payment as defined below to be paid by
the Operator, the Operator shall pay to the City a sum equal to three percent (31/o) of its Gross
Revenues as PEG Access Capital Payments ("Periodic PEG Access Capital Payments'),
provided, however, that (i) for the first twelve months after the date of first activation of Cable
Service to a residential Subscriber ("Activation Date'), the periodic PEG Access Capital
Payments shall not be required;{ii)'for the second twelve (12) months after the Activation Date,
the Periodic PEG Access Capital Payments shall equal one percent(1%) of Gross Revenues; and
(iii) for the third twelve(12) months after the Activation Date, the Periodic PEG Access Capital
Payments shall equal two percent (2%) of Gross Revenues. If the Incumbent Operator's
fianchise is renewed at any time prior to the end of the third year of the Franchise term, the
Operator shall immediately begin.!paying the .full three percent payment, effective. on the
effective date of the Renewal Franchise. The Periodic PEG Access Capital Payments shall be
paid quarterly at the same time and pursuant to the same calculations and rules as the calculation
and payment of Franchise Fees. Thte Periodic PEG.Access Capital Payments designated hereby
shall be under the direction and control of the City, and may be used for PEG access and
institutional network purposes, including PEG access equipment (including, but not limited to,
studio and portable production equipment, editing equipment and program playback equipment),
institutional network equipment (including, but not limited to, network equipment, electronic
transmission equipment and end user interface equipment) or for renovation or construction of
PEG access or I-Net facilities. The ICity shall exercise its sole discretion as to the allocation of
such resources among and within the public, educational and governmental functions, including
without limitation the I-Net. The City may, at any time, upon ninety (90) days' notice to
Operator, reduce the percentage of Gross Revenues constituting the Periodic PEG Access Capital
Payments.
C. Lump Sum PEG Access Capital Payment: In addition to and apart from the Franchise
Fee paid by the Operator for the usel and occupancy of the Public Rights-of-Way and in addition
to and apart from the Periodic PEG Access Capital Payment as defined above to be paid by the
Operator,the Operator shall pay to the City eighteen (18) months after the Effective Date hereof
the sum of(i) One Hundred Sixty lbousand Dollars ($160,000). In addition, for each of the
twenty-seven I-Net sites that City chooses not to designate to be connected to the I-Net pursuant
to Section VI(E) below up to a total.of four (4) such sites, the Operator shall pay the additional
sum of FORTY THOUSAND DOLLARS ($40,000.00) eighteen(18)months after the Effective
Date. The sum of all of the foregoing payments (the "Lump Sum PEG Access Capital
Payment') shall be for the purpose of capital costs incurred in or associated with the PEG
Facilities, including without limitation a regional studio, a Walnut Creek studio, and/or the I-Net,
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as distinct from payments for, or in support of the operational use of such Facilities, such as
salaries and training. The parties)have arrived at the amount of this Lump Sum PEG Access
Capital Payment after consideration of a variety of factors, including without limitation, the
population of the City, the term of this Agreement and a rough approximation of the present
value of a studio. Nothing in the foregoing is intended to imply that the City has any particular
expectation that the Incumbent Operator or any other cable operators that may enter into
franchise agreements with the City will provide or agree to provide any contributions and/or
resources for PEG Access Capital Payments
D. Cable Service to Certain)Facilities:
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1. The Operator shall, without charge, install one activated connection to each
facility listed on Exhibit 1 under the following subheadings: City Facilities, Walnut Creek
Libraries, Fire Stations and Public Schools. The Operator shall provide Basic Cable Service and
the cable programming services tier, and any equipment necessary to receive and decode such
service, free of charge to each of the foregoing facilities. Subject to Applicable Law, Operator
also.shall, without charge, provide I Internet access service to the locations listed on Exhibit 1
under the subheading City Facilities, with a connection at each such City-designated location to
enable City employees Internet access. The Operator shall provide one dynamically assigned IP
address to each such location and shall allow the City to transfer any existing City-controlled IP
addresses to the Operator's System At its option, City may choose to have such Internet access
provided to some or all of such locations by Operator over the I-Net(to the extent such facilities
are connected to the I-Net pursuant to subsection (e) below) or over the City's Local Area
Network or Wide Area Network. If City chooses the foregoing option, the Operator shall
provide one (1) ten (10) MBPS connection to either City Hall or the Dean Lesher Regional
Center for the Arts, as specified by City.
2. Upon the request of the City, the Operator shall provide the Ygnacio Valley
Library and the Downtown Library with a total of forty(40) cable modems (or their equivalent),
equal in speed and capacity to the fastest and largest capacity offered by the Operator to any
basic residential Subscriber, and Internet connection subscriptions, both at no charge to the
libraries. The Operator shall also supply necessary interior cabling and equipment to connect
said service to the libraries' local area network(not to individual computers). The Operator shall
.provide said cable modems (or their equivalent) and the Internet access service on or before the
latest of (i) March 31, 2000; (ii) the date of completion of the CSA in which the library is
located, or (iii) such later date as the City may designate. The Operator shall be permitted to
advertise and promote its Cable System, including the distribution of promotional coupons, to
the extent that such activities are consistent with the then-applicable rules of the libraries relating
to such promotional activities by other underwriters of the libraries.
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E. Institutional Network(Met):
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1. The Operator shall, concurrent with the building of the main subscriber network,
construct an Institutional Network (I-Net) dedicated for the City, public agency, educational and
non-profit use consisting of twelve (12) optical fibers. The I-Net shall be a bidirectional, fully
fiber-optic network designed and constructed with single mode fiber, in a design so that each
Public Facility can originate and receive fully interactive video, data and voice signals. The I-
Net shall be completed within twenty-four(24)months of the Effective Date. The Operator shall
assure in the design and construction of its system that the aforementioned optical fiber
capability will be provided on all of the Operator's fiber backbone routes. The dedicated fibers
shall connect all the Public Facilities (nodes) listed on Exhibit 1, up to a maximum of twenty-
seven (27) locations, and allow a protected connection to assure that I-Net communications can
move upstream and downstream in, out, and through each node. The City shall designate by
October 1, 1999, which of the foregoing locations, up to the maximum of twenty-seven (27),
shall be connected. The parties shall meet as soon as possible for the purpose of discussing the
specific design of the I-Net. The I-Net shall be designed and constructed in compliance with the
IEEE 802.3u standard for 100 megabit systems. The I-Net shall also be reasonably designed in
such a manner as to permit a future migration to a 1,000 megabit system at no cost to the
Operator and at City's sole expense. The parties shall reasonably agree upon the design as soon
as possible and no later than ninety (90) days after the Effective Date of this Agreement. The
optical fiber capability will be available to the City and "its designated agencies for I-Net
purposes pursuant to terms and conditions described in this Section. The I-Net shall be reserved
for the sole use of the City and its designated agencies. Upon request the Operator shall extend
similar capacity on the I-Net to any City building, or the City designated agency building,
located within the Franchise area, which is constructed, acquired or leased by the City or its
designated agency during the term!of the Franchise, up to a maximum of one (1) such site per
year. If such one additional site or any other future sites that the City may desire to be connected
to the I-Net has not already been passed by the existing I-Net fiber, then the cost of providing
such service to such additional location shall be bome by the City, such cost not to exceed
Operator's out-of-pocket expenses(plus ten percent (10%). Notwithstanding the foregoing, for
each additional$40,000 Lump Sum PEG Access Capital Payment that City receives as a result of
not designating an I-Net site pursuant to subsection (c) above, City shall not be entitled to
designate an additional I-Net'site during one (1) subsequent year. For example, if City initially
only designates 24 I-Net sites and the Operator makes a corresponding Lump Sum PEG Access
Capital Payment of$40,000 for each of the 3 undesignated sites, City shall not be entitled to
designate additional i-Net sites during the first three years after the Effective Date.
2. During initial construction the Operator shall construct optical fiber nodes within
each building listed in Exhibit 1 as!specified by the City, or its designated agency(not to exceed
27 sites). The cost of extending fiber from the Operator's backbone into each building shall be
borne by the Operator. The Operator shall install at the Operator's expense in each of the 27
designated facilities listed in Exhibit 1 the necessary equipment to activate a 100 megabit
Ethernet system with routers and equipment racks necessary to make the system operable at
each location. The parties shall meet in good faith to determine the specific equipment to be
provided, with the understanding that the equipment shall be of reasonable quality typical in the
industry for similar applications and reasonably available to the Operator through its vendors.
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The Operator shall Interconnect the facilities and hardware specified within this Section into an
operational network to assure that I-Net communications can move upstream and downstream in,
out, and through each node. Uponlacceptance of the I-Net by the City, all nodal equipment shall
be owned by the City, or its designated agency, and the City or designated agency shall be
responsible for its maintenance and,if necessary, its replacement.
3. Upon completion of I-Net construction, the Operator shall provide; for the
purposes described below, all equipment necessary to satisfactorily conduct and provide the City
with proof of performance measurements pursuant to this Section. After acceptance of the.proof
of performance by the City, the Operator shall be responsible for maintaining the I-Net facilities
(including the optical fiber lines and any equipment necessary to operate those lines outside of
City facilities, and not including the nodal equipment or any other facilities which are not
provided by the Operator pursuant to this Agreement)to the same extent and in the same manner
as it maintains its comparable facilities in the Subscriber network. The Operator shall provide
reasonable technical support and consultation to the City or its designated agency regarding the
development and use of the I-Net.
4. The Operator shall begin restoration of service for all Service Outages, whether
reported to Operator by the City or independently identified by Operator, within two hours of
notice or discovery of the Service Outage during normal business hours,-four hours otherwise.
The term "Service Outage" shall mean any condition or damage of or to the physical fiber optic
network affecting the I-Net plant ithat precludes or substantially impairs the transmission of
information on the I-Net or a portion thereof. Permanent repairs shall be completed within three
business days. Upon identification of a Service Outage, Operator shall, within such response
time, have qualified personnel on site to investigate the outage, assess the cause and commence
necessary repairs. To the extent that necessary repairs resulting in restoration of connectivity on
the I-Net can be immediately accomplished, Operator shall effect such repairs in connection with
its investigation of the cause of the Service Outage. To the extent that repairs cannot be
immediately effected, Operator shall , within the response time, inform the City of the apparent
cause of the Service Outage, the anticipated time for restoration of connectivity and, in cases
where the City-bears the cost of maintenance, the estimated cost of restoration connectivity.
5. The use of the I-Net shall be free of charge to the City and its designated
agencies.The CrrY will determine which agencies may utilize the I-Net.
6. The parties acknowledge that the agreement regarding usage of the I-Net is
subject to all local, state, and federal law. The City agrees to indemnify and hold harmless the
Operator from and against any and all claims, damages, liabilities, costs and expenses, including
reasonable attorney's fees and costs directly and solely related to the material under the City's
control carried on the I-Net, including but not limited to, copyright infringement, libel, slander,
defamation, patent,'trademark, or invasion of privacy claims. Based on the City's control of the
I-Net, City waives all claims, damages, liabilities, costs and expenses related to the material
carried on the I-Net, as against Operator, and as to all functionality of the nodal equipment, from
and after the expiration of the manufacturer's warranty applicable to the same.
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F. Compliance with Federal Law: The Operator and the.City agree that the Periodic
PEG Access Capital Payments and the Lump Sum PEG Access Capital Payment referenced in
this Agreement will not be deemed to be "franchise fees" within the meaning of Section 622 of
the Cable Act(47 U.S.C. §542), and such obligations shall not be deemed to be(i) "payments in
kind" or any involuntary payments chargeable against the Franchise Fees to be paid to the City
by the Operator pursuant to this Agreement or (ii) part of the Franchise Fees to be paid to the
City by the Operator pursuant to this Agreement.
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G. Additional Payments, Contributions, Support Not Franchise Fees:
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1. The Operator acknowledges and agrees that the payments or contributions to be
made by, or the Services, equipment, facilities, support, resources or other activities to be
provided or performed by the Operator pursuant to Section 6 of this Agreement, or otherwise in
connection with the construction, operation, maintenance or upgrade of the System shall not be
franchise fees chargeable against the Franchise Fees payable by the Operator to the City pursuant
to this Agreement.
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2. The Operator acknowledges and agrees that each of the payments and
contributions to be made by, or the Services, equipment, facilities, support, resources or other
activities to be provided or performed by the Operator pursuant to Section 6 of this Agreement
are within the exclusions from the term "franchise fee" set forth in Section 622 of the Cable Act
(47 U.S.C. §542).
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3. The Operator acknowledges and agrees that the Franchise Fees payable by the
Operator to the City pursuant to this Agreement shall take precedence over all other payments,
contributions, Services, equipment,ifacilities, support, resources or other activities to be provided
or performed by the Operator pursuant to this Agreement.
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4. The Operator shall not apply or seek to apply all or any part of the Franchise Fees
to be made by the Operator to the City pursuant to this Agreement as a deduction from or credit
or offset against any taxes, fees or assessments of general applicability levied or imposed by the
City or any other Governmental Authority(including any such tax, fee or assessment imposed on
both utilities and cable operators or their services, but not including a tax, fee or assessment
which is unduly discriminating against cable operators or cable Subscribers).
VII. FRANCHISE FEE
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A. Payment to the City: I i consideration of the grant of the Franchise provided for
herein and the Operator's use and occupation of the Public Rights-of-Way, the Operator shall, at
all times during the term of this Agreement,pay to the City a Franchise Fee of five percent(5%)
of the Operator's annual Gross Revenues. The Franchise Fee shall be payable quarterly within
thirty(30)days of the expiration of each of the Operator's fiscal quarters. Each payment shall be
accompanied by a report in sucli form as the City may reasonably request showing the
computation of the Franchise Fee for the preceding quarter and such other relevant facts as may
be reasonably required by the City, including the completion of a Franchise Fee Payment
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Worksheet in a form specified by the City. Nothing herein shall be construed to prohibit the
Operator from itemization of the Franchise Fee on Subscriber bills to the extent required by 47
U.S.C. 542(c) and 47 C.F.R 76.985.
B. Computation: In the event that the Operator shall, during the term of the Franchise,
bundle, tie or combine Cable Services (which are subject to the Franchise Fee) with non-Cable
Services (which are not subject to the Franchise Fee), the combined revenue therefrom shall first
be allocated to Cable Services to the full extent which would have been charged by the Operator
if the Subscriber had received only the Cable Services. In no event shall the amount allocated to
Cable Services under the foregoing,calculation exceed (i) the total amount of combined revenue
actually received by the Operator or (ii) the net revenues derived when mandatory tariff rates
imposed by a Governmental-Authority for components of the combined service are deducted
from the combined revenue.
C. Supporting Information: The City, on an annual basis, shall be furnished a statement
within ninety (90) days of the close'of the calendar year, certified by anofficer of the Operator
reflecting the -total amounts of Gross Revenues and all payments, and computations of the
Franchise Fee for the previous calendar year. Upon ten (10) business days prior written notice,
the City shall have the right to conduct an independent audit of the Operator's records. If such
audit indicates a Franchise Fee underpayment of two percent (21/6) or more, the Operator shall
assume all reasonable costs of such pan audit and shall remit to the City all applicable Franchise
Fees due and payable together with,a late payment fee equal to interest thereon at the lesser-of
the maximum rate permitted by.Applicable Law or 18%per annum.
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D. No Accord or Satisfaction: Except as otherwise provided by law, no acceptance of
any payment by the City shall be construed as a release or as an accord and satisfaction of any
claim the City may have for further or additional sums payable as a Franchise Fee under this
Agreement or any Franchise Agreement or for the performance of any other obligation of the
Operator.
E. Interest: In the event that any Franchise Fee payment or recomputed amount is not
made on or before the dates specified in this Agreement, the Operator shall pay as additional
compensation only a late payment fee computed from such due date, at an annual rate equal to
the lesser of the maximum rate permitted by Applicable Law or 18% per annum during the
period for which payment was due.
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F. No Limitation on Taxing;Authority:
1. Nothing in this Agreement shall be construed to limit any authority of the City to
impose any tax, fee, or assessment of general applicability.
2. The Franchise fee payments required by this section shall be in addition to any
and all taxes of a general nature or other fees or charges which the Operator shall be required to
pay to the City or to any state or federal agency or authority, as required herein or by law, all of
which shall be separate and distinctIobligations of the Operator. The Operator shall not have or
make any claim for any deduction or other credit of all or any part of the amount of said
Franchise Fee payments from or against any of said City taxes or other fees or charges which the
Operator is required to pay to the City, except as required by law or expressly provided in this
Agreement. The Operator shall not)apply nor seek to apply all or any part of the amount of said
Franchise Fee payments as a deduction or other credit from or against any of said City taxes or
other fees or charges, each of which shall be deemed to be separate and distinct obligations of
Operator. Nor shall the Operator apply or seek to apply all or any part of the amount of any of
said taxes or other fees or charges) as a deduction or other credit from or against any of its
Franchise Fee obligations, each of which shall be deemed to be separate and distinct obligations
of the Operator. The Operator mays designate a Franchise Fee and/or amounts representing the
Periodic PEG Access Payments required hereunder as a separate.item in any bill to a Subscriber
of the Operator's Cable System,but shall not designate or characterize it as a tax.
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VIII. RATE REGULATION
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A. All Rights Reserved: The City reserves all of its rights to regulate the Operator's rates
to the maximum extent permitted by Applicable Law.
B. Geographic Uniformity: The Operator's residential rates throughout the Franchise
Area shall be uniform, except as provided in Section 8(c).
C. Senior Citizen Discount: Throughout the term of this Franchise and any extension or
renewal thereof the Operator shall offer to qualified Subscribers a thirty(30%) percent discount
("Senior Rate Discount') on all fees and rates necessary to receive Basic Cable Service. The
discount shall be offered to all Subscribers meeting all of the following criteria: (1) sixty-five
(65) years of age or older, (2) personally responsible for the payment of the cable charge to the
Subscriber's residential living quarters and is directly billed by the Operator for Cable Services,
and (3) the Subscriber certifies to the(Operator that the aggregate gross income of all the persons
who share the Subscribers residential living quarters on a permanent basis does not exceed an
annual sum equal to the then-established"very low income" figures adjusted for household size,
as established by the United States Department of Housing and Urban Development for the
Oakland PMSA. The discount shall be prospective from the date of the application of the
Subscriber for such discount. The Operator shall notify all Subscribers concurrently with an rate
promotion or package of the existence and level of the Senior Rate Discount. In no event shall
such notification occur less than once every twelve (12) months and the notification of the
existence and level of the.Senior Rate Discount shall be at least as prominent (in terms of font
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size, placement, etc) as the most prominent advisement by the Operator to Subscribers of any
other rates or charges (promotional or regular) during the preceding twelve (12) months. No
single household shall receive more than one such Senior Rate Discount at any one time.
DL INSURANCE,SURETY,AND INDENINIFICATION
A. Insurance Required: The Operator shall obtain, and by its acceptance of the
Franchise specifically agrees that it will maintain, throughout the entire length of the Franchise
period, at its own cost and expense'and keep in force and effect the following insurance covering
the Operator, and by additional insured provision, the City. Coverage must be placed with an
insurance company/companies authorized to do business in the State of California and
evidenced by a certificate of insurance and/or copies of the insurance policies. Operator's
insurance shall be primary.
B. Minimum Scope of Insurance: Coverage shall be at least as broad as:
1. Insurance Services Office number GL0002 (Ed. 1/73) covering Comprehensive
General Liability and Insurance Services Office form number GL 0404 covering Broad Form
Comprehensive General Liability; 'or Insurance Services Office Commercial General Liability
coverage ("occurrence" form CG 0001). The policy must include coverage for Contractual
Liability, Premises and-Operations, Independent Contractors, Broad Form Property Damage,
Personal Injury, and Products and Completed Operations. The policy must also include coverage
for the explosion, collapse and underground hazard.
2. Insurance Services Office form number CA 0001 (Ed. 1/78) covering Automobile
Liability,code 1 "any auto" and endorsement CA 0025.
3. Workers' Compensatibn insurance as required by the Labor Code of the State of
California and Employers Liability insurance.
4. If Operator should engage in programming origination of any kind, including
production of advertising, Operator shall obtain Broadcasters' Liability Coverage, covering
errors and omissions and negligent acts and other operations of the Operator, committed during
the term of the Franchise period with the City. Operator shall provide a one-year discovery
period under this policy.
C. Minimum Limits of Insurance: Operator shall maintain policy limits of no less than:
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1. General Liability: $1,000,000 combined single limit per occurrence for bodily
injury, personal injury and property damage. If Commercial General Liability Insurance or other
form with a general aggregate limit is used, either the general aggregate limit shall apply
separately to this projectllocation of the general aggregate limit shall be twice the required
occurrence limit.
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2. Automobile Liability: $1,000,000 combined single limit per accident for bodily
injury-and property damage.
3. Worker's Compensation and Employers Liability: Worker's compensation limits
as required by the Labor Code and Employers Liability limits of$1,000,000 per accident.
4. Broadcasters' One million dollars ($1,000,000) per claim if required pursuant to
subsection 9(b)(D)above.
The City may review these amounts no more than once a year and may require reasonable
adjustments to them consistent with the public interest, any increases not to exceed. the
Consumer Price Index for the San Francisco-Oakland-San Jose Metropolitan Area for the period
since the prior review, or the Effective Date, as applicable.
D. Deductibles and Self-Insured Retentions: Any deductibles or self-insured retentions
must be declared to and approved by the City. At the option of the City, either. the insurer shall
reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers,
officials, employees and volunteers;or the Operator shall procure a bond guaranteeing payment
of losses and related investigations, claim administration and defense expenses.
E. Other Insurance Provisions: The policies shall contain,or be endorsed to contain,the
following provisions:
1. General Liability and'Automobile Liability Coverages.
a. The City, its officers, officials, employees, agents and volunteers are to be
covered as insured as respects: liability arising out of activities performed by or on.behalf of the
Operator; products and completed operations of the Operator, ; premises owned, occupied or
used by the Operator, or automobiles owned, leased, hired or borrowed by the Operator. The
coverage shall contain no special limitations on the scope of protection afforded to the City, its
officers, officials, employees, agents or volunteers acting within the performance of the official
duties of the position and not resulting from malfeasance in office, willful neglect of duty or bad
faith.
b. The Operator's insurance coverage shall be primary insurance as respects the
City, its officers, officials, employees and volunteers. Any insurance or self-insurance
maintained by the City, its officers, officials, employees, agents or volunteers shall be excess of
the Operator's insurance and shall not contribute with it.
c. Any failure to comply with reporting provisions of the policies shall not affect
coverage provided to the City, its officers,officials, employees, agents or volunteers.
d. The Operator's insurance shall apply separately to each insured against whom
claim is made or suit is brought,except with respect to the limits of the insurers liability.
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1. Worker's Compensation and Employers Liability Coverage. The insurer shall
agree to waive all rights of subrogation against the City, its officers, officials, employees and
volunteers for losses arising from work performed by the Operator for the City.
2. All Coverages. Each insurance policy required by this clause shall be endorsed to
state that coverage shall not be suspended, voided, cancelled by either party, reduced in coverage
or in limits except after thirty (30) days' prior written notice by certified mail, return receipt
requested,has been given to the City.
F. Acceptability of Insurers: Insurance is to be placed with insurers with a Best's rating
of no less than ANU.
G. Verification of Coverage: The Operator shall furnish the City with certificates of
insurance and with original endorsements effecting coverage required by this clause. The
certificates and endorsements for each insurance policy are to be signed by a person authorized
by that insurer to bind coverage on its behalf. All certificates and endorsements are to be
received and approved by the City before work commences. The City reserves the right to
require complete certified copies of all required insurance policies, at any time.
H. Failure Constitutes Material Violation: Failure to comply with the insurance
requirements set forth in this Section shall constitute a material violation of the Franchise.
I. Indemnification:
1. The Operator shall indemnify, defend and hold the City, its officers, boards,
commissions, agents and employees (collectively the "Indemnified Parties") harmless from and
against any and all lawsuits, claims, causes. of action, actions, liability, demands, damages,
judgments, settlements, losses, expenses (including reasonable attorneys' fees) and costs that any
of the Indemnified Parties acting within the performance of the official duties of the position and
not resulting from malfeasance in office, willful neglect of duty or bad faith, may at any time
suffer, sustain or incur arising out of, based upon or in any way connected with the grant of a
Franchise to the Operator, the operation of the Operator's System and/or the acts and/or
omissions of the Operator or its agents or employees, whether or not pursuant to the Franchise.
This indemnity shall apply, without limitation, to any action or cause of action for invasion of
privacy, defamation, antitrust, errors and omissions, fire, violation or infringement of any
copyright, trademark, trade names, service mark, patent, or any other right of any Person by the
Operator, but shall exclude any claim or action arising out of the sole negligence or willful
misconduct of the Indemnified Parties or related to any City programming or other Access
programming for which the Operator is not legally responsible. An Indemnified Party shall
promptly submit a written request to'the Operator of any claim or legal proceeding which gives
rise to the Operator's indemnification obligations under this Section. An Indemnified Party shall
be offered the opportunity to participate in the defense, compromise, settlement or other
resolution or disposition of any claim or proceeding. The Indemnified Party shall fully cooperate
with the Operator regarding any such matter.
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2. Specifically, the Operator shall fully indemnify, defend, and hold harmless the
City, and, in their capacity as such, the officers, agents, and employees thereof, from and against
any and all claims, suits, actions, liability, and judgments for damages or otherwise subject to 47
U.S.C. § 558, arising out of or alleged to arise out of the installation, construction, operation, or
maintenance of the System, including but not limited to any claim against the Operator 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, except to the extent such loss, damage, cost or expense
is due to the sole negligence or willful misconduct of the City or its employees or agents, or
arising from City programming or other Access programming for which Operator is not legally
responsible.
3. The indemnification obligations of the Operator set forth in this Agreement are
not limited in any way by the amount or type of damages or compensation payable by or for the
Operator under Workers' Compensation, disability or other employee benefit acts, acceptance of
insurance certificates required under this Agreement or the terms, applicability or limitations of
any insurance held by the Operator.
4. The City does not and shall not, waive any rights against the Operator which it
may have by reason of the indemnification provided for in this Agreement, because of the
acceptance by the City, or the deposit with the City by the Operator, of any of the insurance
policies described in this Agreement and regardless of whether or not such insurance policies
shall have been determined to be applicable to any such damages or claims for damages.
5. The Operator's and the City's indemnification obligations under this Agreement
shall survive the expiration, cancellation or termination of this Agreement.
I No Limit of Liability: Neither the provisions of this Section nor any damages
recovered by the City shall be construed to limit the liability of the Operator for damages under
the Franchise.
X. PERFORMANCE GUARANTEES AND REMEDIES
A. Performance Bond:
1. The Operator shall obtain and at all times maintain during the entire term of.this
Franchise, and any extension(s)thereof, a performance bond in favor of the City in the amount of
$400,000 to ensure the Operator's satisfactory performance of construction and other work in the
Public Rights-of-Way, including, buts not limited to, the construction required by this Agreement.
The City may agree to accept a letter of credit in a form acceptable to the City in lieu of a
Performance Bond.
2. In the event the Operator fails, after ten (10) business days' written notice and
opportunity to cure from the City, to.complete any System construction, upgrade or other work
in the Public Rights-of-Way in a safe, timely, and competent manner, in accordance with the
provisions of this Agreement and the Cable Ordinance, there shall be recoverable, jointly and
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severally from the principal and the surety of the bond, any damages or loss suffered by the City
as a result, including the full amount of any compensation, indemnification, or cost of removal or
abandonment of any property of the Operator, or the cost of completing or repairing the System
rebuild, construction, upgrade, or,other work in the Public Rights-of-Way, plus a reasonable
allowance for attorneys' fees, up to the full amount of the bond. The bond shall expressly
include all of the foregoing provisions. The City may also recover against the bond any amount
recoverable against the security fund required under this Agreement,where such amount exceeds
that available under the security fund. Within thirty(30) days of being notified that any amount
has been withdrawn from the performance bond, the Operator shall restore the performance bond
to the amount specified in paragraph(a).
3. Issuance of Bond. All performance bonds required by this Certificate or the City
Code shall be in a form acceptable to the City and shall be issued by a surety-with an A-1 or
better rating of insurance in Best's Key Rating Guide, Property/Casualty Edition; shall be subject
to the approval of the City; and shall contain the following endorsement:
"This bond may not be canceled, or allowed to
lapse, until sixty (60) days after receipt by the City, by
certified mail, return receipt requested, of a written notice
from the issuer of the bond of intent to cancel or not to
renew."
4. Release of Bond. Ninety(90) days after acceptance by the City of construction of
the System, the Operator may submit to the City a written request to release the performance
bond. The City shall then authorize-the Operator and the surety,in writing, to release and cancel
the performance bond, provided that all outstanding claims of the City have been resolved to the
City's satisfaction.
5. Forfeiture. The total amount of any bond shall be forfeited in favor of the City in
the event that this Agreement is revoked pursuant to Section 10(h) of this Agreement, and the
performance bond shall so state.
B. Security Fund:
1. The Operator shall file and maintain with the City an irrevocable letter of credit
from a financial institution licensed to do business in California in the amount of $50,000 to
ensure the Operator's faithful performance of its obligations. The form and content of the letter
of credii shall be approved by the City.
2. The Operator and its surety shall be jointly and severally liable under the terms of
the letter of credit.
3. There shall be recoverable by the City from the letter of credit any and all fines,
penalties, and liquidated damages due to the City and any and all damages, losses, costs, and
expenses suffered or incurred by the City resulting from the failure of the Operator to
faithfully comply with the material provisions of this Agreement, the Cable Ordinance, and
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Applicable Law; comply with all orders, permits and directives of any City agency or body
having jurisdiction over its acts or defaults; pay fees due to the City; or pay any claims or
liens due the City. Such losses, costs and expenses shall include but not be limited to
reasonable attorney's fees.
• 4. The letter of credit shall provide for thirty (30) days' prior written notice to the
City of any intention on the part of the Operator to cancel, fail to renew, or otherwise
materially alter its terms.
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• 5. The letter of credit shall be released only upon expiration or nonrenewal of the
Franchise or upon the replacement of the letter of credit within the time specified herein.
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C. Rights Cumulative. The rights reserved to the City herein are in addition to all other
rights of the City, whether reserved herein or authorized by Applicable Law, and no action, .
proceeding,or exercise of a right with respect to the letter of credit or performance bond required by
this Agreement will affect any other right the City may have. Neither the filing of a letter of credit
or performance bond with the City, nor the receipt of any damages recovered by the City
thereunder,shall be construed to excuse faithful performance by the Operator or limit the liability of
the Operator under the terms of its Franchise for damages, either to the full amount of the letter of
credit,the performance bond,or otherwise.
D. Letter of Credit Procedures: The following procedures shall apply to drawing on the
letter of credit:
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1. If the Operator fails to make timely payment to the City of any amount due under
this Agreement or Applicable Law, 'or fails to compensate the City within ten(10) business 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 Operator in connection with this
Agreement or its enforcement, or fails, after ten (10) business days' written notice, to comply
with any provision of this Agreement or the Cable Ordinance that the City determines can be
remedied by an expenditure against the letter of credit, including,without limitation, payment of
liquidated damages, the City Manager, upon five (5) business days notice to Operator, may
withdraw the amount thereof,with interest and any penalties, from the letter of credit.
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2. Within three(3) days sof a withdrawal from 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 Operator.
3. If at the time of a withdrawal from 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 Operator to the City until it is
paid.
4. No later than thirty (30) days after mailing.of notification to the Operator by
certified mail, return receipt requested, of a withdrawal under the letter of credit, the Operator
shall restore the letter of credit to the;total amount specified herein.
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5. Upon termination of the Franchise under conditions other than those stipulating
forfeiture of the letter of credit, thelbalance then remaining in the letter of credit shall be returned
to the Operator within forty-five (45) days of such termination, provided that there is then no
outstanding default on the part of the Operator.
E. Failure Constitutes Material Violation: Failure to maintain or restore the letter of
credit or the performance bond shall constitute a material violation of this Agreement.
F. Remedies: In addition to any other remedies available at law or equity, the City may
apply any one or a combination of the following remedies in the event the Operator violates, and
fails to cure after notice and expiration of the applicable cure period, the Cable Ordinance, this
Franchise Agreement,or applicable state or federal law:
1. Apply any remedy provided for in this Agreement.
2. Revoke the Franchise or shorten the terra pursuant to the procedures specified in
this Agreement.
3. Impose penalties available under the Cable Ordinance or other applicable state
and local laws for violation of City ordinances.
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4. In addition to or instead of any other remedy, seek legal or equitable relief from
any-court of competent jurisdiction. ,
G. Liquidated Damages: Because the Operator's failure to comply with provisions of the
Ordinance and this Franchise Agreement will result in injury to the City, and because it will be
difficult to estimate the extent of such injury, the City and the Operator agree to the following
liquidated damages to be effective during the term of the Ordinance for the following violations
of the Franchise and of this Agreement, which represent both parties' best estimate of the
damages resulting from the specified violation. Such damages shall not be a substitute for actual
performance by the Operator of a financial payment, but shall be in addition to any such actual
performance. Any liquidated damages remedy shall be cumulative and in addition to any other
remedies the City may have underthis Agreement or Applicable-Law, other than monetary
damages. The City Manager, or designee, shall have the authority to waive or reduce the
liquidated damage amounts herein for good cause.
1. For failure to submit any required plans indicating expected dates of installation
of various parts of the System: $200/day for each day after Operator's receipt of notice that the
violation continues; i
2. For failure to commence operations or to substantially complete construction in
accordance with the requirements.of this Franchise Agreement: $1,500/day for each day after
Operator's receipt of notice that the violation continues;
3. For transferring the Franchise without approval: $2,000/day for each violation for
each day after Operator's receipt of notice that the violation continues;
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4. For failure to comply with requirements for educational and governmental use of
the System: $200/day for each violation for each day after Operator's receipt of notice that the
violation continues;
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5. For failure to supply; information, reports, or filings lawfully required under this
Franchise Agreement or Applicablel Law or by the City: $300/day for each day after Operator's
receipt of notice that the violation continues;
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6. For violation of customer service standards: $200 per violation after Operator's
receipt of notice that the violation continues;
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7. For rate regulation viblations specified under the Cable Ordinance, City orders or
resolutions, or other Applicable Law, for each day than the same violation-occurs and continues:
$200 per day;
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8. For failure, except in'the case of force majeure, of the System to perform in the
event of a public emergency or vital information situation: $2,500 per day;
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9. For failure to render payment for reimbursement of any Franchise expenses, but
excluding any failure to pay Franchise fees (for which the imposition of interest shall be the sole
remedy) or liquidated damages: $100 per day after Operator's receipt of notice that the failure
has occurred and is continuing;
10. For failure to file, obtain or'maintain the required Security Fund in a timely
fashion: $100 per day after Operator's receipt of notice that the failure has occurred and is
continuing;
11. For failure to restore damaged property: $100 per day after Operator's receipt of
notice that the failure has occurred and is continuing, in addition to the cost of the restoration and
any other penalties or fees as required elsewhere herein or in the Ordinance;
12. For violation of technical standards established by the FCC: $100 per day after
Operator's receipt of notice that the failure has occurred and is continuing;
13. For any other violations of this Agreement, the Ordinance, or other Applicable
Law: $100/day for each day after Operator's receipt of notice that the violation continues.
In all events, the City shall deliver to Operator notice of the asserted violation or failure and
Operator shall have the right to dispute the asserted occurrence of such failure or violation.
H. Shortening, Revocation,.or Termination of Franchise:
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1.. Upon completion of the term of the Franchise granted under this Agreement, if a
new,.extended, or renewed Franchise is not granted to the Operator by the City, the Operator's
right to occupy the Public Rights-of-Way shall terminate, subject to Applicable Law.
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2. The City shall havelthe right to revoke the Franchise, or to shorten the term of the
Franchise to a term not less than thirty-six (36) months from the date Operator receives written
notice from the City of the City's decision to act pursuant to this Agreement concerning the
City's shortening action, for the Operator's material violation of this Agreement.
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3. To invoke the provisions of this Section, the City shall give the Operator written
notice of the default in its performance. If within sixty(60) calendar days following such written
notice from the City to the Operator, or such other period as the Operator and the City shall
agree, the Operator has not taken corrective action to the satisfaction of the City, the City may
give written notice to the Operator of its intent to revoke or shorten the Franchise, stating its
reasons; provided that no opportunity to cure shall be provided where the Operator is shown to
have defrauded or attempted to defraud the City or its Subscribers in connection with this
Agreement or Cable Service in any way that has a material adverse effect on Operator's
provision of Cable Services pursuant to this Agreement.
4. Prior to shortening the term of or revoking the Franchise, the City.shall hold a
public hearing, on thirty (30) calendar days' notice, at which time the Operator and the public
shall be given an opportunity to be heard. Following the public hearing, the City may determine
whether to revoke or shorten the term of the Franchise based on the information presented at the
hearing, and other information of I record, or, where applicable, grant additional time to the
Operator to effect any cure. If the City determines to shorten the Franchise term or revoke the
Franchise, it shall issue a written decision setting forth the reasons for its decision. A copy of
such decision shall be transmitted to.the Operator.
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5. If the City revokes'' the Franchise, or if for any other reason the Operator
abandons, terminates, or fails to operate or maintain service to its Subscribers, the following
procedures and rights are effective:
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M. REPORTING AND REVIEW
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A. Records Required and the City's Right to Inspect:
1. The Operator shall at all times maintain and upon request provide to the City:
a. A full and complete set of plans,records and "as-built" maps showing the location
of the Cable System installed or in, use in the City, exclusive of Subscriber service drops and
equipment provided in Subscribers' homes. To the extent technically and economically feasible,
the Operator shall also make records and maps available to the City in electronic format
compatible with the.City's computer'system.
b. If requested by the City, a summary of service calls, identifying the number,
general nature and disposition of such calls, on a monthly basis. A summary of such service
calls shall be submitted to the City within thirty (30) days following its request in a form
reasonably acceptable to the City.
2. Upon reasonable notice, and during the hours of 9:00 a.m. to 5:00 p.m., Monday
through Friday, the Operator shall permit examination by any duly authorized representative of
the City, of all Cable System property and facilities, together with any appurtenant property and
facilities of the Operator situated within or without the City, and all records relating to the
Franchise, provided they are necessary to enable the City to carry out its regulatory
responsibilities under Applicable Law and this Agreement. The Operator shall have the right to
be present at any such examination.
3. The City or its designees shall also have the right to inspect and copy (at City's
expense), upon twenty-four(24) hours written notice, at any time during the hours of 9:00 am.
to 5:00 p.m., Monday through Friday, at the Operator's local office, all books, records, maps,
plans, financial statements, service (complaint logs, performance test results, and records of
request for service of the Operator. To the extent not inconsistent with Applicable Law, the
Operator shall have the right to designate confidential, proprietary, trade secret and privileged
information and the City shall thereupon treat such information as privileged from disclosure
under the California Public Records Act. The City shall provide the Operator with reasonable
advance notice of any request by a third party for disclosure of information designated by the
Operator as confidential, proprietary, trade secret or privileged. To the extent that any
information regarding the local Cable System is maintained, either separately or cumulatively
with information concerning other Cable Systems or operations, by the Operator or an Affiliate,
the Operator shall make copies of such records available for inspection and auditing at the local
office within seven days after receipt of a written request by the City.
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4. Copies of all petitions, applications, communications and reports submitted by the
Operator or on behalf of the Operator to the Federal Communications Commission,.Securities
and Exchange Commission, or ani other Governmental Authority having jurisdiction with
respect to any matters affecting the Cable System authorized pursuant to this Agreement and any
Franchise shall be submitted upon request to the City. Copies of responses from the
Governmental Authority to the Operator shall likewise be furnished upon request to the City.
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B. Annual Reports:
1. The Operator shall within ninety (90) days of each calendar year end, submit a
written end of the year report to the City with respect to the preceding calendar year containing
the following information:
a. A summary of the previous year's (or in the case of the initial reporting year,
the initial year's) activities in development of the Cable System, including but not limited to
Cable Services commenced or discontinued during the reporting year;
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b. A list of the Operator's officers, members of its board of directors, and other
principals of the Operator, and
c. A list of stockholders or other equity investors holding thirty (30) percent
(30%) or more of the voting interest in the Operator.
C. Reports available for inspection: All reports required under this Agreement, except
those required by law to be kept confidential and any confidential, proprietary, trade secret
and/or privileged information, shall'be available for public inspection in the Operator's offices
during the hours of 9:00 a.m. to 5:001p.m.,Monday through Friday.
D. Operators Expense: All�reports and records required under this Agreement shall be
furnished at the sole expense of the Operator, except as otherwise provided in this Agreement.
XQ. RIGHT TO PURCHASE
A. The City's Right to Purchase System: Except for a sale, transfer, or other conveyance
by the Operator to an Affiliate, the.City shall have a right of first refusal to purchase the Cable
System in the event the Operator receives a bona fide offer which has been accepted by the
Operator, subject to the City's rights under this Agreement. The price to be paid by the City
shall be the amount provided for in the bona fide offer, including the same terms and conditions
as the bona fide offer. The City shall notify the Operator of its decision to purchase within the
forty-five (45) days of the City's receipt from the Operator of a copy of the written bona fide
offer and such other relevant and pertinent information as the City shall deem reasonably
appropriate. The City's failure to I respond within said 45-day period shall be deemed to
constitute the City's election not to purchase the Cable System.
B. Purchase by the City Upon Expiration or Revocation: Upon the expiration, cancel-
lation, revocation or termination of the Franchise granted by this Agreement for which the City
has lawfully denied renewal under Applicable Law, the City shall have the right to purchase the
entire Cable System, in accordance with Applicable Law, upon the payment to the Operator of
the then-existing fair market value of the Cable System determined on the basis of generally
accepted appraisal principles(exclusive of any value attributable to the Franchise itself).
C. Abandonment or Removal of Equipment:
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1. The Operator shall not abandon any portion of its Cable System without giving at
least three (3) months prior written notice to the City. The Operator shall not abandon any
portion of the Cable System without compensating the City for any damages resulting to the City
from the abandonment.
2. The City, upon such terms as the City may reasonably impose, may give the
Operator permission to abandon, without removing, any System facility or equipment laid,
directly constructed, operated or maintained in, on, under or over the Franchise Area. Unless
such permission is granted or unless otherwise provided in this Agreement, the Operator shall
remove all abandoned facilities ands equipment upon receipt of written notice from, the City and
shall restore any affected street to its former state at the time such facilities and equipment were
installed, so as not to impair its usefidness. In removing its plant, structures and equipment, the
Operator shall refill, at its own expense, any excavation made by or on behalf of the Operator
and shall leave all Streets and other'public ways and places in as good condition (per the City's
standard procedures for the same) as that prevailing prior to such removal without materially.
interfering with any electrical or telephone cable or other utility wires,poles or attachments. The
City shall have the right to inspect and approve the condition of the Streets, public ways, public
places, cables, wires, attachments and poles prior to and after removal according to the City's
usual standards and procedures. The liability, indemnity and insurance provisions of this
Agreement and any Security Fund provided for in this Agreement shall continue in full force and
effect during the period of removal and until full compliance by the Operator with the terms and
conditions of this Section.
3. Upon abandonment of any Franchise property in place, the Operator, if required
by the City, shall submit to the City a bill of sale and/or other an instrument, reasonably
.satisfactory in form and content to the City, transferring to the City the ownership of the Cable
System property abandoned.
4. At the expiration of the term for which the Franchise is granted, or upon its earlier
revocation or termination, as provided for in this Agreement in any such case without renewal,
extension or transfer, the City shall have the right to require the Operator to remove, at its own
expense, all above-ground portions of the Cable System from all Streets and public ways within
the City within a reasonable period'of time, which shall.not be less than one hundred eighty
(180) days, except to the extent the Operator is authorized or utilizing the System pursuant to
Applicable Law.
5. Notwithstanding anything to the contrary set forth in this Agreement,the Operator
may,with the consent of the City, abandon any underground Franchise property in place so long
as it does not materially interfere with the use of the Street or public rights-of-way in which such
property is located or with the use thereof by any public utility or other cable operator.
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D. Extended Operation and Continuity of Service: Upon the expiration, revocation or
termination of the Franchise,the Operator shall, upon request of the City, continue to operate the
Cable System for a period of time not to exceed six (6) months from the date of such expiration,
revocation or termination under the terms and conditions of this Agreement and the Franchise
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and to provide the regular Subscriber service and any and all of the services that may be
provided at that time.
XIII. NUSCELLANEOUS PROVISIONS
A. Conflict with and Amendment of Ordinance: All of the terms, conditions, and
provisions of the Franchise shall be deemed to be embodied in the Ordinance and this
Agreement, and, in the event of any conflict, the express terms of the Ordinance, as amended,
shall prevail over conflicting or inconsistent provisions in the Agreement, provided that the
Ordinance shall not, without Operator's consent, alter the terms of Sections I; H(B); H(C); IV(n;
V(B); V(C);V(F); VI(A) -VI(G);VII(A);X(A);X(B)or X(G).
-B. No Discrimination: In the offering of its services, the Operator shall not discriminate
between offerees, including without limitation in the use of discounts (except as otherwise
expressly provided herein) and/or free or promotional packages based upon income levels and/or
area of residence within the City.
C. Unbundling. In the event that the Operator shall, during the term of the Franchise,
bundle or combine Cable Services with non-Cable Services, it shall also offer all such Cable
Services separately without the necessity of purchasing non-Cable Services.
D. Receivership and Foreclosure:
1. The Franchise granted hereunder shall at the option of the City, cease and
terminate one hundred twenty (120) days after appointment of a receiver or receivers, or trustee
or trustees, to take over and conduct the business of the Operator, whether in a receivership,
reorganization, bankruptcy or other action or proceeding, unless such receivership or trusteeship
shall have been vacated prior to the expiration of said one hundred twenty(120) days, or unless:
(1) such receivers or trustees shall' have, within one hundred twenty (120) days after their
election or appointment, fully complied with all the terms and provisions of this Agreement and
the Franchise granted pursuant hereto, and the receivers or trustees within said one hundred
twenty(120) days shall have remedied all the defaults and violations under the Franchise and/or
this Agreement or provided a plan�for the remedy of such defaults and violations which is
satisfactory to CrrY, and (2) such receivers or trustees shall, within said one hundred twenty
(120)days, execute an agreement duly approved by the court having jurisdiction in the premises,
whereby such receivers or trustees assume and agree to be bound by each and every term,
provision and limitation of the Franchise and this Agreement.
2. In the case of a foreclosure or other judicial sale of the.Franchise property or any
material part thereof, the City may give notice of termination of any Franchise granted pursuant
to this Agreement upon the Operator and the successful bidder at such sale, in which the event
the Franchise granted and all rights sand privileges of the Operator hereunder shall cease and
terminate thirty (30) days after such notice has been given, unless (1) the City shall have
approved the transfer of the Franchise in accordance with the provisions of the Franchise and this
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Agreement; and (2) such successful bidder shall have covenanted and agreed with the City to
assume and be bound by all terms and conditions of the Franchise.
E. Franchise Renewal: Franchise renewal, if any there should be, shall be in accordance
with Applicable Law and the Cable Ordinance. The City and the Operator, by mutual consent,
may enter into renewal negotiations at any time during the term of the Franchise. To the extent
consistent with Applicable Law and the Ordinance, a reasonable non-refundable renewal
application fee in an amount established by the City may be required to accompany any renewal
application to the extent consistent with Applicable Law,provided that (1) the amount of such a
fee shall be reasonably related to the City's cost incurred in handling the renewal request and
negotiations and(2) the same fee shall be applicable to all similarly-situated franchises,provided
that the Operator shall not be required to elect whether or not to renew the Franchise prior to a
date which is more than thirty-six (36) months prior to the expiration date of the Franchise
granted hereunder.
F. Severability: If any provision of this Agreement is held by any Governmental
Authority of competent jurisdiction; 'to be invalid or unenforceable as conflicting with any
Applicable Law now or hereafter in' effect, or is held by such Governmental Authority to be
modified in any way in order to conform to the requirements of any such Applicable Law, such
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 such Applicable Law is subsequently repealed, rescinded, amended or otherwise
changed, so that the provision hereof which had been held invalid or modified is no longer in
conflict with such law, said provision shall thereupon return to full force and effect and shall
thereafter be binding on the City and the Operator, provided that the City shall give the Operator
thirty(30)days written notice of such,change before requiring compliance with said provision or
such longer period of time as may be reasonably required for the Operator to comply with such
provision. If the terms of this Agreement are materially altered due to changes in Applicable
Law, then the parties shall negotiate in good faith to reconstitute this Agreement in a form that,
to the maximum extent possible, is consistent with the original intent of Operator and the City
and preserves the benefits bargained for by each party. Operator shall have no liability for any
violation or non-compliance of any such invalid, unenforceable, repealed, amended or rescinded
law or provision during any period of invalidity, unenforceability, repeal, amendment or
rescission of the subject law.
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G. Preemption: In the event that federal or state laws, rules or regulations preempt a
provision or limit the enforceability of a provision of this Agreement, then, subject to the City's
right under subsection (M), 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 federal or state 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,provided that if reasonably necessary, Operator
shall have a minimum-of sixty (60), days in which to comply with the previously preempted
provision.
H. Compliance With Federal land State Laws: Both parties shall, at all times during the
term of this Franchise Agreement, including any extensions thereof, comply with all applicable
federal,state,and local laws and regulations.
I. Force Majeure: In the event the Operator's performance of any of the terms,
conditions or obligations required by this Agreement or a Franchise granted hereunder is
prevented by an unforeseeable cause or event not within the Operator's reasonable control, such
inability to perform shall be deemed excused for the period of such inability and no penalties or
sanctions shall be imposed as a result thereof provided the Operator has notified the City in
writing within ten(10)business days of its discovery of the occurrence of such an event.
The Operator shall not be excused from any violation of the terms, provisions and conditions of
this Franchise,except for causes which are beyond the reasonable control of the Operator. In the
event of any such force majeure occurrence, Operator shall perform to the maximum extent
possible. Except as otherwise provided above, violations caused exclusively by acts or
omissions by the City or its officers, agents or employees shall constitute an excuse and
justification for failure of the Operator to comply with the terms, provisions and conditions of
this Franchise,precluding a determination that the Operator is in breach. However, violations as
a result of such exclusive causes shall not be deemed to excuse the Operator from other unrelated
violations, shield the Operator from a,determination that it is in breach for such other unrelated
violations,or bar any relief for damages or otherwise as a result of such other unrelated breach.
Examples of circumstances beyond the control of the Operator which will excuse the Operator
from violation and being in breach of the terms, provisions and conditions of this Franchise,
when such violations are caused thereby, include the following: strikes, acts of public enemies;
orders by military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes;
fires; floods; civil disturbances; explosions; partial or entire failure of utilities; delays in
obtaining inspection by the City inspectors of more than one (1) business day (provided that the
request for such inspection shall have been given by the Operator in a commercially reasonable
manner within regular business hours of the City) and Acts of God.
J. Notices: All notices, reports or demands required or permitted to be given under this
Agreement shall be in writing and shall be deemed to be given when delivered personally to the
party designated below, or when delivered by the United States mail in a sealed envelope, with
registered or certified mail, postage prepaid thereon, or delivered by express mail or nationally
53
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recognized overnight air courier addressed to the party to which notice, report or demand is
being given, as follows:
If to the City: CrrY Manager
CITY OF WALNUT CREEK
1660 N. Main Street
Walnut Creek, CA 94596
If to the Operator: SEREN INNOVATIONS,INC.
Attention: President/CEO
,15 South Fifth Street
Suite 500
Minneapolis,MN 55402
Such addresses may be changed by either party upon notice to the other party given as
provided in this Section.
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K. Time of Essence: In determining whether a party has substantially complied with this
Franchise Agreement,the parties agree that time is of the essence.
L Captions and References:
1. 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 , r interpretation of this Agreement.
2. When any provision of the Cable Ordinance is expressly mentioned herein, such
reference shall not be construed to limit the applicability of any other provision of the Cable
Ordinance or City law that may also govern the particular matter in question.
M. Rights Reserved to the DO:
1. In addition to any rights specifically reserved to the City by this Agreement, the
City reserves to itself every right and power which is required to be reserved by a provision of
any ordinance or under the Franchise.,
2. The City shall have the right to waive any provision of the Franchise to be
performed by Operator, except those 1 required by Applicable Law, if the City, in its reasonable
opinion, determines (1) that it is in the public interest to do so, and (2) that the enforcement of
such provision will impose an undue hardship on the Operator or the Subscribers. Waiver of any
provision in one instance shall not be deemed a waiver of such provision subsequent to such
instance nor be deemed a waiver of any other provision of the Franchise unless the statement so
recites.
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3. Notwithstanding any other provision in this Agreement, nothing in this
Agreement shall preclude the City from exercising its police powers to enact, amend or
supplement any law or regulation governing cable communications within the City.
N. Operator Bears Its Own Costs: Unless otherwise expressly provided in this
Agreement, all acts that the Operator is required to perform must be performed at the Operator's
own expense.
O. City Bears Its Own Costs: Unless otherwise expressly provided in this Agreement,
all acts that the City is required to perform must be performed at the City's own expense.
P. Entire Agreement: This Agreement embodies the entire understanding and agreement
of the City and the Operator with respect to the subject matter hereof and merges and supersedes
all prior representations, agreements, and understandings, whether oral or written, between the
City and the Operator with respect to the subject matter hereof including, without limitation, any
and all written or oral statement or representations by any official, employee, agent, attorney,
consultant,or independent contractor,of the City or the Operator.
Q• Ad Adequacy and Su�icien �oj Consideration: The parties hereto expressly declare and
agree that adequate and sufficient consideration has been provided for each and every promise,
covenant,commitment and undertaldng contained in this Agreement.
R. Possessory Interest Taxation: The City hereby declares, pursuant to California
Revenue&Taxation Code section 107.6, that as a result of this Agreement, a possessory interest
subject to property taxation may be created and any such property interest may be subject to
property taxation if it is created. They Operator, as the party in whom the possessory interest will
be vested, may be subject to the payment of property taxes levied upon such an interest.
S. Representations and Warranties of the Operator's Signatories: Each of the Persons
executing this Agreement on behalf of the Operator do affirmatively represent and warrant as
follows:
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1. That this Agreement and the resulting contract constitute a valid and binding
obligation, as to each and every term thereof, enforceable against the Operator in accordance
with the terms thereof;
2. That the execution and delivery of this Agreement has been duly authorized and
approved by the Board of Directors of the Operator,
3. That the persons who have executed this Agreement on behalf of the Operator are
duly authorized to do so by all necessary action; and
4. That the execution andl'delivery of this Agreement does not violate any provision
of the by-laws and/or Articles of Incorporation of the Operator's corporation.
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T. Jurisdiction of California Courts and Waiver of Diversity Jurisdiction' This
Agreement shall be governed by and construed in accordance with the laws of the State of
California without regard to its conflicts of laws rules or principles. In the event that suit is
brought by any party, the parties agree that trial of such action shall be vested exclusively in the
state courts of California, County of Contra Costa, or, in the event of a"federal question" in the
United States District Court for the Northern District of California. Moreover, the Operator
expressly consents to service of process pursuant to California Code of Civil Procedure Section
416.10 at the office of Operator's registered agent for service of process as to any action arising
under or purporting to rise under this Agreement and the Operator expressly declares and agrees
that, for the purpose of any action arising under this Agreement and for no other purpose, its
principal place of business shall be deemed to be within the State of California,.and that it shall
not assert otherwise in connection with any claim of"diversity of citizenship" under 28 U.S.C.
Section 1441(b).
U. Rights of Individuals:
1. The Operator shall not deny Cable Service, deny access, or otherwise discriminate
against Subscribers, Channel users, or general citizens on the basis of race, color, religion,
disability, national origin, age, gender or sexual preference. The Operator shall comply at all
times with all other Applicable Law,'relating to nondiscrimination.
2. The Operator shall adhere to the applicable equal employment opportunity
requirements of Applicable Law, as now written or as amended from time to time.
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3. Neither the Operator, nor any Person, agency, or entity shall, without the
Subscriber's consent, tap or arrange for the tapping of any cable; line, signal input device, or
Subscriber outlet or receiver for any purpose except routine maintenance of the System,
detection of unauthorized service, polling with audience participating, or audience viewing
surveys to support advertising reseaich regarding viewers where individual viewing behavior
cannot be identified.
4. In the conduct of providing its Cable Services, the Operator shall take reasonable
steps to prevent the invasion of a Subscriber's or general citizen's right of privacy or other.
personal rights through the use of the System as such rights are delineated or defined by
Applicable Law. The Operator shall not, without lawful court order or other applicable valid
legal authority, utilize the System's interactive two-way equipment or capability for unauthorized
personal surveillance of any Subscriber or general citizen.
5. No signals of a Class IV Channel may be transmitted from a Subscriber terminal
for purposes of monitoring individual viewing patterns or practices without the express written
permission of a Subscriber. The request for permission must be contained in a separate
document with a prominent statement that the Subscriber is authorizing the permission in full
knowledge of its provisions. The written permission must be for a limited period of time not to
exceed one year,which is renewable at the option of the Subscriber. No penalty may be invoked
for a Subscriber's failure to provide or renew the authorization. The authorization is revocable at
56
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• II •
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any time by the Subscriber without penalty of any kind. The permission must be required for
each type or classification or Class N Channel cable communications activity planned.
a. No information or data obtained by monitoring transmission of a signal from a
Subscriber terminal including but not limited to the lists of the names and addresses of the
Subscribers or lists that identify the viewing habits of Subscribers may be sold or otherwise
made available to any Person other than to the Operator and its employees for internal business
use, or to the Subscriber who is the subject of that information, unless the Operator has received
specific written authorization from the Subscriber to make the data available.
I
b. Written permission from the Subscriber must not be required for conducting
System wide or individually addressed electronic sweeps for the purpose of verifying System
integrity or monitoring for the purpose of billing. Confidentiality of this information is subject to
the provisions of this Agreement. I
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6. In the offering of its services, the Operator shall not discriminate between
offerees, including without limitation in the use of discounts (except as otherwise expressly
provided herein) and/or free or promotional packages based upon income levels and/or area of
residence within the City.
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V. Ownership of the Operator: The Operator represents to the City that the names-Of the
shareholders,partners,members or
II
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other equity owners of the Operator and of any of the shareholders, partners, members and/or
other equity owners of the Operator 'as of the date of this Agreement are as set forth in Exhibit 2
hereto.
AGREED TO THIS DAY OF , 1999.
CITY OF WALNUT CREEK SEREN INNOVATIONS,INC.,
a Minnesota corporation
ity Manager
Title: �F-121Fs#oEN T -( C ED
APPROVED AS TO FORM:
6�jN-1
Assistant City Attorney ■
CAROLE A WAU ACE
.
9.N0WYPU8UC—MINMffAY Comm EWMS Jan.31 2000
58
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