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ORD 1987-11TOWN OF TROPHY CLUB, TEXAS ORDINANCE NO. 0 87-11 AN ORDINANCE OF THE TOWN OF TROPHY CLUB, TEXAS GRANTING TO PLANNED CABLE SYSTEMS CORPORATION A FRANCHISE TO CONSTRUCT, OWN, OPERATE AND MAINTAIN A CABLE TELEVISION SYSTEM WITHIN THE TOWN OF TROPHY CLUB, TEXAS; SETTING FORTH THE TERRITORIAL AREA ENCOMPASSED BY THIS FRANCHISE; ESTABLISHING LIABILITY AND PROVIDING FOR INDEMNIFICATION; ESTABLISHING OPERATIONAL STANDARDS AND STANDARDS OF SERVICE; ESTABLISHING CONDITIONS OF STREET OCCUPANCY; PROVIDING FOR PAYMENT OF A FRANCHISE FEE TO THE TOWN; PROVIDING FOR PERIODIC REVIEW AND AMENDMENTS; PRESCRIBING THE TERMS, CONDITIONS, OBLIGATIONS AND LIMITATIONS UNDER WHICH THIS FRANCHISE SHALL BE EXERCISED; PROVIDING A SEVERABILITY CLAUSE. WHEREAS, the Town of Trophy Club, Texas (the "Town") has been heretofore duly incorporated pursuant to the laws of the State of Texas; and WHEREAS, the Planned Cable Systems Corporation ("Planned Cable") was, prior to the incorporation of the Town, providing cable television services to that area now comprising the corporate limits of the Town and is currently providing such services; and WHEREAS, because of Planned Cable's historic position in providing cable television service to the citizens of the Town, the Town Council desires to award this franchise to Planned Cable and finds that such award is in the best interest of the health, safety and welfare of the citizens of the Town. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF TROPHY CLUB, TEXAS: SECTION 1. That the above and foregoing preamble is incorporated herein as if copied herein in its entirety. SECTION 2. DEFINITIONS. For the purposes of this ordinance the following terms, phrases, words, abbreviations, and their derivations shall have the same meanings given herein. When not inconsistent with the context, words used in the present tense include the future; words in the plural number include the singular number, and words in the singular include the plural. The word "shall" is always mandatory and not merely permissive. 1. "Affiliate", when used in relation to any person, means another person who owns or controls, is owned or controlled by, or is under common ownership or control with, such person. 2. "Basic cable service" means any service tier which includes the retransmission of local television broadcast signals. 3. 'Broadcast" means the over -the -air transmission of electro -magnetic audio or video signals. 4. Cable channel' or "channel" means a portion of the electromagnetic frequency spectrum which is used in a cable system and which is capable of delivering a television channel (as television channel is defined by the Federal Communications Commission. 5. "Cable operator" means any person or group of persons (a) who provides cable service over a cable system and directly or through one or more affiliates owns a significant interest in such cable system, or (b) who otherwise controls or is responsible for, through any arrangement, the management and operation of such a cable system. 6. "Cable service" means (a) the one-way transmission to subscribers of (i) video programming, or (ii) other programming service, and (b) subscriber interaction, if any, which is required for the selection of such video programming or other programming device. 7. "CATV' or "CATV system" shall mean a cable system as hereinafter defined. 8. "Cable system" means a facility, consisting of a set of closed transmission 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 a community, but such term does not include (a) a facility that services only to retransmit the television signals of 1 or more television broadcast stations; (b) a facility that serves only subscribers in 1 or more multiple unit dwellings under common ownership, control, or management, unless such facility or facilities uses any public right-of-way. 9. "Cable Television Service" shall mean the delivery by the Grantee to television receivers, or any other suitable type of audio -video communication receivers, to all subscribers in the Town of all broadcast signals allowed by the FCC to be carried over the CATV system, all FM radio stations carried on the system, local origination channels, educational access channels, public access channels, government access channels, leased access channels, pay television channels, and other services at the option of the company. 10. "Cablecast" shall mean to transmit over a cable television system. 11. "Channel" shall mean a band of frequencies six megahertz in width in the electromagnetic spectrum. 12. "Converter" shall mean an electronic device capable of converting electronic signals to other than their original frequencies so as to eliminate interferences within television receivers of subscribers. 0049] -2- 13. "Dwelling unit" shall mean a room or suite of rooms, in a building or portion thereof, used for living purposes by one family. 14. "Educational Authorities" shall mean those public or private school districts within the Town of Trophy Club, and/or those colleges and universities within the Town of Trophy Club, whether operating independently or in unison in relation to the transmission or reception of programming through the CATV system. 15. "FCC" shall mean the Federal Communications Commission. 16. "Federal Agency" means any agency of the United States, including the FCC. 17. "Franchise" shall mean the authorization granted by this ordinance to construct, operate, and maintain a CATV system in the Town of Trophy Club. 18. "Franchising authority" means any governmental entity empowered by Federal, State, or local law to grant a franchise. 19. "Full Service" shall mean the level of service received by a CATV system subscriber for an additional charge over the Basic Service charge and which will allow for the capability to receive all services being offered by the Grantee with the exception of pay television services or limited access services. 20. "Grantor" shall mean the Town of Trophy Club. 21. "Grantee" shall mean Planned Cable Communications, Inc., the party to which a franchise by this ordinance is granted, and includes its lawful successors and assigns. 22. "Gross Net Annual Revenues" shall mean all revenues received by the Grantee, its affiliates or subsidiaries from and in connection with the operation of a cable television system as authorized by this franchise. For the purposes of this section, this term shall include, but not be limited except as provided herein, to installation fees, subscriber fees, charges for lease of channels, revenue from advertising, and revenue from pay television. The term shall not include the franchise fee described in Section 16 hereof, nor any taxes on services furnished by the Grantee which is imposed directly on any subscriber or user by any city, state or other governmental unit and collected by the Grantee for such governmental unit, and shall not include direct charges made by affiliate companies (e.g. HBO, WGN, Showtime) to the subscriber and passed through without any financial benefit to the Grantee. 23. "Grade B contour" means the field strength of a television broadcast station computed in accordance with regulations promulgated by the FCC. 24. "Other programming service" means information that a cable operator makes available to all subscribers generally. 25. "Pay Television" shall mean the delivery over the CATV system of video and audio signals in intelligible form to subscribers for a fee or charge over 0049] -3- and above the charge for basic or full services, on a per program, per channel, or other subscription basis. 26. "Person" means an individual, partnership, association, joint stock company, trust, corporation, or governmental entity or any other entity recognized in law. 27. "Premium Service" shall mean the same as pay television. 28. "Public, educational, or governmental access facilities" means: (A) Channel capacity designated for public, educational, or governmental use; and (B) Facilities and equipment for the use of such channel capacity. 29. "State" means any State, or political subdivision, or agency thereof. 30. "Service tier" means a category of cable service or other services provided V a cable operator and for which a separate rate is charged by the cable operator. 31. "Subscriber" shall mean a recipient of services which are delivered over the CATV system. 32. "Street" shall mean the surface of and the space above and below any public street, road, highway, freeway, lane, path, alley, public way or place or other easement now. or hereafter held by the Town and shall include other easements or rights of way as shall be now held or hereafter held by the Town and its Grantee to the use thereof for the purposes of installing or transmitting cable television system transmissions over poles, wires, cables, conductors, ducts, conduits, vaults, manholes, amplifiers, appliances, attachments, and other property as may be ordinarily necessary and pertinent to a cable television system. 33. "Town" shall mean the Town of Trophy Club, Texas. 34. "Town Council" shall mean the governing body of the Town of Trophy Club. 35. "Video programming" means programming provided by, or generally considered comparable to programming provided by, a television broadcast station. SECTION 3. GRANTING CLAUSE. (a) There is hereby granted by the Town to Planned Cable Systems Corporation, its successors and assigns, hereinafter referred to as Grantee, the right and privilege to construct, erect, operate, and maintain in, upon, along, across, above, over, and under the streets, and all extensions thereof, and additions thereto in the Town, poles, wires, cables underground conduits, manholes, and other Cablevision conductors fixtures necessary for the maintenance, operation, and 0044] -4- distribution to television and radio signals to and from subscribers and/or users; provided, however, no overhead wires or cables shall be installed where the Town has required underground installation of other wire or cable service. (b) The right to use and occupy said streets for the purposes herein set forth shall not be exclusive, and the Town reserves the right to grant a similar use of said streets to any person at any time during the period of the franchise. SECTION 4. FRANCHISE TERM The franchise term and the rights, privilege, and authority hereby granted shall tape effect and be in force from and after its date of passage, as provided by law, and shall continue in force and effect for a term of fifteen (15) years; provided, however, that within sixty (60) days after the date of the final passage of this franchise ordinance, the Grantee shall file with the Town Secretary its unconditional acceptance of the terms of this ordinance and promise to comply and abide by all its provisions, terms, and conditions. Such acceptance and promise shall be in writing duly executed and sworn to, by and on behalf of the Grantee before a notary public or other officer authorized by law to administer oaths. In the event that such instrument as aforesaid shall not be filed within the time required, this ordinance and the rights, privileges, and franchise as hereby granted shall ipso facto be, and become, terminated, null and void. SECTION 5. RENEWAL. Renewal of this franchise shall be conducted according to the regulations as set out in the Section 626 of the Cable Communications Act of 1984, and any amendments thereto. SECTION 6. TRANSFER OF FRANCHISE. (a) The franchise granted under this ordinance may not be assigned, transferred, sold or disposed of, in whole or in part, by voluntary sale, merger, consolidation or otherwise or by force or involuntary sale, except upon written notice to and prior approval, expressed by resolution of the Town Council. As a condition to such approval by the Town, the assignee or other successor to Grantee shall file with the Town Secretary its unconditional acceptance of the terms of this ordinance and promise to comply with and abide by all its provisions, terms, and conditions. Such acceptance and promise shall be in writing duly executed and sworn to, by and on behalf of the assignee or successor to Grantee before a notary public or other officer authorized by law to administer oaths. In the event that such instrument as aforesaid shall not be filed within thirty (30) days of the notice to the Town of the said assigmmnent, transfer, sale or disposal, this ordinance and the rights, privileges, and franchise as hereby granted shall ipso facto be, and become, terminated, null and void. (b) Nothing in this Section shall be deemed to prohibit the assignment, mortgage, or pledge of the franchise, system or any part thereof for financing purposes. SECTION 7. FRANCHISE TERRITORY AND LINE EXTENSION POLICY. (a) This franchise shall be for all areas of the Town of Trophy Club presently served by Grantee and all other areas of the Town, including any area OD43J -5- henceforth added thereto. Grantee shall provide service to all potential subscribers within the above mentioned service area within 12 months of the passage of this franchise or within twelve (12) months of the date area is added to the Town by annexation or otherwise. (b) Failure to provide service availability to the areas defined in Section 7(a) above within the designated 12 month period shall be considered a material breach of the franchise and subject Grantee to the penalties enumerated hereinafter, except for delays caused by acts of God, national emergencies, strikes or delays caused by the Town, its agencies, or other utilities. SECTION 8. USE OF STREETS. (a) The Grantee shall have the right to use the streets of the Town for the construction, operation, and maintenance of a cable system as prescribed, regulated, and limited by provisions of this ordinance, and by State, local, and Federal law, both present and future. (b) All transmission and distribution structures, lines, and equipment placed, installed or erected by the Grantee within the Town shall be so located as to cause minimum interference with the proper use of streets, and to cause minimum interference with the rights and reasonable convenience of property owners who join any of the said streets. (c) In case of disturbance of any street or paved area the Grantee shall, at its own cost and expense and in a manner approved by the Town Council, replace, and restore such street and/or paved area in as good a condition as before the work involving such disturbance was done. Provided, however, that any and all distribution structures, lines or equipment shall be placed, installed or erected by boring or tunnelling under the Town streets or other public rights -o£ --way so as not to disturb any street or paved area. (d) If at any time during the period of the franchise the Town shall lawfully elect to alter or change the grade of any street or construct any other public works, the Grantee, upon reasonable notice by the Town Council, shall remove, relay, and relocate its poles, wires, cables, underground conduits, manholes, and other fixtures at its own expense. In the event the Grantee, after thirty (30) days written notice from the Town, fails or refuses to act, the Town shall have the power to remove or abate the same at the expense of the Grantee, all without compensation or liability for damages from the Town to Grantee; provided, however, that Grantee shall not be required to act as set forth herein where prohibited from doing so by acts of God, national emergencies or by the Town. (e) All cables, wires, and other like facilities of Grantee shall be placed underground. (f) The Grantee shall, prior to the construction of any portion of the transmission and/or distribution plant of the cable television system, submit detailed plans and specifications of the distribution system to the Town Council for review and approval. No construction shall start until such plans have been approved. 4Q49J -6- SECTION 9. CONFORMANCE TO CERTAIN STANDARDS. (a) Methods of construction, installation, and maintenance of the cable television system shall comply with the National Electrical Safety Code 1975 (ANSI CI -75) to the extent that such Code is consistent with local law affecting the construction, installation, and maintenance of electric supply and communications lines. To the extent that such Code is inconsistent with other provisions of this franchise or with local laws, the latter shall govern. (b) Grantee shall at all times comply with the following as they exist at the time the Grantee is engaging in an activity covered hereby: 1. National Electrical Code of the National Fire Protection Association. 2. Requirements of the Town in regard to various electrical wiring necessary to the operation of Town functions including, but not limited to, traffic control signalization, street lighting, fire lines, and communications lines. (c) Radio frequency leakage shall be checked at reception locations for emergency radio services to prove no interference signal combinations are possible. Stray radiation shall be measured adjacent to any proposed aeronautical navigation radio sites to prove no interference to airborne navigation reception in the normal flight patterns. FCC rules and regulations shall govern. (d) Grantee shall install all necessary trunk, feeder cable or conduit in new subdivisions contiguous to its franchise service area contemporaneously with the provision of electric service to said subdivisions consistent with good construction practices and applicable Town building, fire and electrical codes. Where feeder cable conduit is not necessary, Grantee shall, where possible, install all feeder cables contemporaneously with the provision of electric service consistent with good construction practices and applicable Town building, fire and electrical codes. (e) The Grantee shall continue, throughout the term of the franchise, to maintain the technical standards and quality of service set forth in this ordinance. Should the Council find, by resolution, that the Grantee has failed to maintain these technical standards and quality of service, and should it, by resolution, specifically enumerate reasonable improvements to be made, the Grantee shall make such improvements. Failure to make such improvements within a reasonable time following such resolution shall constitute a breach of a condition for which the remedy of cancellation is applicable. Continuing failure to make such improvements during any subsequent period shall constitute a breach of a condition for which the remedy of cancellation is applicable. This provision shall not be applicable to the failure to maintain technical standards and quality of service where such failure is caused by acts of God, national emergencies or delays caused by the Town. SECTION 10. SYSTEM DESIGN CRITERIA. (a) The cable television system installed in the Town of Trophy Club shall have the capacity of transmitting no less than 3G channels of video services or its equivalent of video, audio, or other combination of electronic signals. oa49j -7- (b) Within (6) months of the date of the acceptance of this franchise by the Grantee, Grantee shall file with the Town Secretary a full, detailed statement which shall be incorporated by reference to this franchise ordinance as Exhibit "A" and which shall contain the following information. 1. The location of the cable television systems headend facilities, local origination studio facilities, if any, receiving and transmitting station for the sending or receiving of programming by way of satellite, and central business office. (c) The Grantee agrees and affirms that the statement of programming services on each channel of the 36 channels or its equivalent of video, audio or other combinations of electronic signals, which is incorporated as Exhibit "B" and adopted by reference, shall constitute the initial level of programming to be available to all subscribers who shall agree to purchase basic, full and/or premium services of the Grantee. Such programming may be changed by Grantee subject to providing an equivalent amount of programming for each level of service. Failure to provide as a minimum the service or its equivalent set out on Exhibit "B" shall constitute a breach of the franchise agreement. (d) Access channels: The Grantee will provide an access channel for the primary use of the Town of Trophy Club. In addition, another access channel shall be provided for public, educational, and other governmental use. Whenever the Public Educational Government access channel is being utilized 80% of the time between 9 a.m. and 11 p.m. on a weekly basis, the Grantee will provide additional access channels, not to exceed, in the aggregate, four channels. (e) The access channels delineated herein shall be made available to the authorized government, non-profit civic and non-commercial users at no cost; provided however, that the Grantee shall be authorized to charge non -access users, including candidates for political office, for the use of its local origination studio facilities and/or technical personnel a fee of which shall be no greater than its actual cost to providing such services and/or personnel. (f) The Grantee shall be allowed to utilize the channels designated as access except Grantor's government access channel for such other purposes as it may deem appropriate at all times the users are not utilizing these channels. (g) Control over the content of the programming transmitted over the access channels by the Grantee shall be limited to that level which is authorized by the FCC or other law during the length of the franchise term. (h) The Grantor shall develop all rules governing access channel utilization (not including the educational access channel). U) The Grantee and Town hereby agree that educational authorities shall be given sufficient time to formulate rules governing scheduling of programming of those access channel dedicated for use by the educational community, and that such rules, when formulated, shall be utilized by the Grantee and all parties involved. Such rules shall be subject to Town approval. In the event of a scheduling conflict, Grantee shall have the right to seek amendment to the educational access rule. 0049] M 0) The Grantee shall provide each public, educational, or government entity, upon request, all electronic devices, which the Grantee has available, necessary for access programming on the access channels at no cost. (k) Grantee shall undertake any and all construction and installation necessary to keep current with the latest developments in the state of the art CATV. (1) Emergency Use of Facilities. In the case of any emergency or disaster, the Grantee shall, upon request of the Mayor of the Town, make available its facilities to the Town for emergency use during the emergency or disaster period. SECTION 11. INSTALLATION AND MAINTENANCE AT SERVICE CONNECTIONS IN PUBLIC BUILDINGS. (a) The Grantee shall provide one service connection in each of the following locations: 1. Each room or office of all governmental owned or operated buildings or facilities within the franchise territory as may be now or hereinafter designated by the Town Council. 2. Each room or office of all public or parochial schools, colleges, or university buildings, as may be now or hereinafter designated by the chief administrative officer, or his agent, of each school, college or university within the franchise territory. (b) No charge will be made by the Grantee for the installation, disconnection (when requested), reconnections (when requested), monthly services, and/or maintenance of equipment on any service connection authorized by subsection (a) above. A converter to provide the capability of receiving all services except "Pay Television" shall be provided to each location at no cost. SECTION 12. ANNUAL REPORTS. (a) Grantee shall file annually with the office of the Town Secretary no later than One Hundred Twenty (120) Days after the end of Grantee's fiscal year a written report, in a form directed by the Town Council, which shall include the following: (1) A summary of the previous year activities and development of this system, including, but not limited to, services begun or dropped, and subscribers' gain or loss. (2) A copy of the financial report applicable to the CATV System servicing the Town of Trophy Club, including the income statement applicable to its operation during the preceding twelve (12) month period, a balance sheet and a statement of its properties devoted to CATV Systems operations, by categories, giving its investment on such properties on the basis of original costs, less applicable depreciation. 0049] -9- (3) A current statement of costs of construction by component categories. (4) A summary of complaints, identifying the number and nature of the complaints and the disposition. (5) A list of all partners, officers and members of the board of the Grantee in the parent corporation, if any. SECTION 13. SYSTEM TECHNICAL STANDARDS. (a) Grantee shall construct, install, operate and maintain its system in a manner consistent with this franchise ordinance, all laws, ordinances, construction standards, governmental requirements, and FCC technical standards or FCC recommendations and the specifications set forth in FCC rules and regulations, 47 CFR, sections 76.601 through 76.617, as may now exist or may be hereinafter be amended, which standards are hereby incorporated by reference herein. In addition, Grantee shall provide the Town, upon request, with a written report concerning the results of Grantee's annual proof of performance tests conducted pursuant to FCC standards, requirements or recommendations. (b) The Grantee shall provide a system which overall is of a quality in excess of the requirements or recommendations of the FCC. For video signals, the signal delivered to the subscriber's television receiver shall be interference free and shall at a minimum meet all FCC technical standards or recommendations. The following distribution system performance specifications will be met by Grantee (without HRC enhancement). Compliance with performance specifications shall be determined from measurements, tests and on-site observations applied to the worst case for the respective subscriber and institutional loops; e.g. signal received by farthest subscriber, including distribution system and largest super trunk effect, measured at subscriber's television or radio receiver. Signal -to noise ratio of 46 dB at the interference of any signal received off air or via microwave from a local broadcast, or for any signal received via satellite. Carrier -to -noise ratio of 44 dB, in a 4 MHz bandwidth, between interface and any subscriber's receiver. Cross -modulation ratio of 52 dB at any subscriber's receiver. Minimum signal level of 3 dBmV and maximum signal level of 20 dBmV at any subscriber's receiver. (c) In addition to the technical standards set forth in above, Grantee at all times shall maintain a signal that is not substandard on any channel(s). If the Town determines, based upon a study by a cable television expert, that the signal is intermittently substandard or has constant interference, the Town shall provide written notice of the same to Grantee. Grantee, within ten (10) days of the date of such notice, shall have the right to respond to the determination by the Town. If Grantee fails to respond in writing to the Town within the said time period, Grantee 0049] -10- shall thereafter have five (5) working days during which to correct the signal problems. In the event Grantee does respond to the Town's determination, the Town Council shall hold a hearing on the same within ten (10) days of the date of the filing of Grantee's written response. A determination made by the Town Council at the hearing shall be final. If after the hearing, the decision of the Town Council is that the signal is intermittently substandard or has constant interference, Grantee shall have five (5) working days during which to correct the substandard signal. Failure to correct the substandard signal within the time period prescribed by this paragraph shall constitute cause for termination of this franchise by the Town. (d) These are the minimum specifications to be maintained throughout the term of the Franchise. However, should improvements in technology cause these performance standards to become outdated, then these standards shall be updated, amended, or otherwise revised, to reflect changed conditions, improved technology, or the state of the art. (e) The Grantee further agrees to provide the following in the construction, operation, and maintenance of the cable television system: 1. The cable television system shall be continuously operational on a 24 hour a day basis. 2. The cable television system shall be designed and operated so as to avoid causing interference with reception of off -the -air signals by non --subscribers to the system. 3. The cable television system shall be so designed, installed and operated so as to assure the delivery to all subscribers of standard color and monochrome signals on the FCC designated Class I television channels without noticeable picture degradation or visible evidence of color distortion or other forms of interference directly attributable to the performance of the cable television system. SECTION 14. RATES AND CHARGES FOR SERVICE. Rates and charges for service may be regulated by. the Town to the extent allowed under the Cable Communication Act of 1984 (Sec. 623) and regulations promulgated thereunder. If the law or regulations are amended, the Town reserves the right to regulate the rates and charges for service to the fullest extent allowed under the amended regulations. SECTION 15. FRANCHISE FEE. (a) Annual Franchise Payment. For the reason that the streets, sidewalks and easements to be used by Grantee in the operation of its system within the boundaries of the Town are valuable public properties acquired and maintained by the Town at great expense to its taxpayers, and that the grant to the Grantee of the use of said streets, sidewalks and easements is a valuable property right without which the Grantee would be required to invest substantial capital in right-of-way costs and acquisitions, and because the Town will incur costs and expenses in 00493 -11- regulating and supervising the franchise, the Grantee shall pay annually to the Town a sum equal to three percent (3%) of the gross net annual revenues of the cable television system within the Town limits (the "franchise fee"). Such payment shall be in addition to, and shall not be construed as payment in lieu of, personal or real property taxes, building permit fees or other government assessments or charges levied by the Town. Said annual payment shall be due and payable to the Town in accordance with the following: (i) Grantee shall pay to the Town on or before July 15, 1987 a sum equal to three percent (3%) of the gross net annual revenues of the cable television system within the Town limits, which sum shall be based on the 12 month period beginning July 1, 1986 and ending June 30, 1987. (ii) Thereafter, Grantee shall pay to the Town the franchise fee imposed herein beginning on or before January 15, 1988 and on January 15 of each year thereafter while this franchise is in effect. The franchise fee due and payable to the Town on or before January 15, 1988 shall be based on the 6 month period beginning July 1, 1987 and ending December 31, 1987. The franchise fee due on January 15 of each calendar year thereafter shall be based on the immediately preceding calendar year. (b) The payment due to the Town as required in subsection (a) above shall be computed and due as outlined above. The Grantee shall file with the Town, within 15 days after the expiration of the Grantee's fiscal year, a financial statement approved and signed by a certified public accountant clearly showing the gross revenues received by the Grantee from the cable system in the Town limits during the said fiscal year. Payment of the franchise fee shall be payable to the Town at the time such statement is filed. (c) The Town shall have the right to inspect the Grantee's income records, the right of audit and the recomputation of any amounts determined to be payable under this ordinance, provided however, that such audit shall take place within twelve (12) months following the close of each of the Grantee's fiscal years. Any additional amount due the Town as a result of the audit shall be paid within thirty (30) days following written notice to the Grantee by the Town, which notice shall include a copy of the audit report. The cost of said audit shall be borne by the Grantee if it is properly determined that the Grantee's annual payment to the Town for the preceding year is increased thereby by more than five percent (5%). (d) In the event that any franchise payment or recomputed amount is not made on or before the applicable dates heretofore specified, interest shall be charged from such due date at the annual rate of ten percent (10%). (e) No acceptance of any payment by the Town shall be construed as a release or as an accord and satisfaction of any claim the Town may have for further or additional sums payable as a franchise fee under this ordinance or for the performance of any other obligation of the Grantee. 0049) -12- TION. SECTION 16. ACCOUNTING PROCEDURES, LIABILITY & INDEMNIFICA- - ,... _.., (a) Method of Accounting. The Grantee shall maintain its books and a system of accounts in accordance with methods of accounting applicable to the cable television industry. (b) Liability and Indemnification. (1) The Grantee shall indemnify and hold the Town harmless from any and all loss sustained by the Town on account of any suit, judgment, execution, claim or demand whatsoever against the Town resulting from the Grantee's construction, operation, or maintenance of the cable system. (2) The Grantee shall pay and, by its acceptance of this franchise the Grantee agrees that it will pay, all expenses incurred by the Town in defending itself with regard to all damages and penalties outlined in subsection (1) above. These expenses shall include all out-of-pocket expenses, including but not limited to attorney fees, and shall also include the reasonable value of any services rendered by the Town Attorney or his assistants or any Town employee. (3) The Grantee shall carry throughout the length of term of this franchise personal and property damage liability insurance with responsible insurance companies qualified to do business in the State of Texas, which insurance shall carry the Town as a co-insured party. The amounts of such insurance to be carried for liability due to property damage shall be $300,000 for property damage to any one person; $500,000 for property damage in any one accident; $500,000 for personal injury to any one person; and $1,000,000 for personal injury in any one accident. (4) The insurance policy or policies obtained by the Grantee in compliance with this section must be approved by the Town Mayor and, along with written evidence of payment of required premiums, shall be filed and maintained with the Town Secretary during the term of the franchise. SECTION 17. REPORTS AND RECORDS. (a) Copies of all petitions, applications, and communications submitted by the Grantee to the Federal Communications Commission, Securities and Exchange Commission, or any other federal or state regulatory commission or agency having jurisdiction in respect to any matters affecting cable television operations authorized pursuant to the franchise shall be simultaneously submitted to the Town Council upon request. (b) The Grantee shall maintain a local office as described in Section 19(a) hereof for so long as it continues to operate the System or any portion thereof and shall designate such offices as the place where all notices, directions, orders and requests may be served or delivered under this ordinance. The Town Secretary shall be notified of the location of such office or any change thereof. 0048] -13- (c) The Grantee shall keep complete and accurate books of account and records of its business and operations under and in connection with the ordinance and franchise. All such books and records shall be made available at the Grantee's office in the Town. (d) The Town Mayor, upon providing 24 hours notice to the Grantee, shall have access to all books of account and records of the Grantee for the purposes of ascertaining the correctness of any and all reports and shall be given access to all other records upon request. (e) Any false entry in the books of account or records of the Grantee or false statement in the reports to the Town Council as to a material fact, knowingly, by the Grantee shall constitute a breach of a material provision of this ordinance and franchise. SECTION 18. CUSTOMER SERVICE STANDARDS. (a) Office and Phone for Service. The Grantee shall maintain a convenient local office which shall be open during all usual business hours, have a locally listed telephone and be so operated that complaints and requests for repairs or adjustments may be received at any time. In addition, the Grantee shall maintain a convenient method for the receipt of sums due by its subscribers and shall provide for regular billing of accounts. (b) Notification of Service Procedures. The Grantee shall furnish each subscriber at the time service is installed written instructions that clearly set forth procedures for placing a service call, or requesting an adjustment. (c) Service Response Time. The Grantee shall provide 24 hour service response, Monday through Friday, for all complaints and requests for repairs or adjustments received. Provided, however, that on Saturday and Sunday, Grantee shall provide 24-hour response time for all such complaints and requests only if Grantee receives the same from the same geographical area (e.g., a two or three block area). All other complaints and requests received on Saturday or Sunday shall receive a 48-hour response time. (d) Service Interruptions and Notifications. The Grantee shall interrupt system service after 7:00 a.m. and before 1:00 a.m. only with good cause and for the shortest time possible and, except in emergency situations, only after publishing notice of service interrupt. Services may be interrupted between 1:00 a.m. and 7:00 a.m. for routine testing, maintenance and repair, without notification, any night except Friday, Saturday, or Sunday, or the night preceding a holiday. Whenever service is interrupted to any subscriber for any period of time in excess of 24 hours, the subscriber shall receive a rebate of one -thirtieth (1/30th) of his monthly service fee for each day or part thereof between the end of the 24 hours and the time service is restored to proper standards. (e) Complain Records. The Grantee shall maintain a written current record or "log", for the preceding sixty (60) days, listing date and time of customer complaints, identifying the subscriber and describing the nature of the complaints and when and what actions was taken by the Grantee in response thereto; such 0048] -14- record shall be kept at Grantee's local office and shall be available or inspection during regular business hours. Historie records reflecting the operations under this franchise for the period of at least the preceding three (3) years shall be available for inspection during regular business hours at such office upon one business day's notice. (f) When, within any 30 day period, the Grantee receives three (3) or more complaints or requests for service from a subscriber, and such complaints or requests concern the same problem, and where the problem is not one caused by the Grantee or the Cable television CATV system, the Grantee shall be authorized to impose a fee for each additional service call made exceeding two (2) service calls, said fee not to exceed $24.95 per such service call. SECTION 19. PROTECTION OF SUBSCRIBER PRIVACY. (a) Use of Data from Subscriber. The Grantee shall not initiate or use any form, procedure or device for procuring information or data from subscribers' terminal by use of the system, without prior valid authorization from each subscriber, so affected. (b) Subscriber Lists. The Grantee shall not, without prior valid authorization from each subscriber so affected, provide any list designating subscriber's names or addresses to any other party except where required under contract for provision of premium or billing service. (c) Subscriber Transmissions. Grantee shall not permit the installation of any special terminal equipment in any subscriber's premises that will permit transmission from subscriber's premises of two-way services utilizing aural, visual or digital signals without first obtaining written permission of the subscriber. SECTION 20. PENALTY PROVISIONS. (a) Grantee shall be notified in writing of any violation by certified mail, return receipt requested. Grantee shall be allowed seven (7) days from date of receipt of violation notice to correct the violation. Beginning on the eighth (8th) day after receipt of violation notice, the Town shall enforce the terms of the surety bond required by this ordinance. Grantee may appeal any decision of the Town concerning any notice of violation. Appeals shall be in writing and delivered to the Town Secretary within three (3) days of receiving a notice of violation. (b) Appeals shall by heard by the Town Council. Such an appeal shall be decided by the Town Council within ninety (90) days of the notice of appeal. If not acted upon within said ninety (90) days, Grantee shall be relieved of any liability for penalty for said notice. The Town, however, may reinstate a new notice of violation without prejudice. SECTION 21. TERMINATION. (a) The Town, at its option, may terminate this contract by giving written notice of such termination to Grantee upon occurrence of any of the following: no4sj -15- (1) Filing of a voluntary bankruptcy petition by Grantee; (2) Taking of jurisdiction of Grantee or his assets in bankruptcy proceedings by any court, such proceedings not being vacated within 30 days; (3) Taking by execution of Grantee's interest in this contract or of property placed on the premises; or (4) Appointment by any court of a receiver for Grantee, such proceedings not being vacated within 30 days. (b) Notwithstanding any other provision in this ordinance, the Town, acting through the Town Council, shall have the option to cancel and terminate this franchise at any time for failure of the Grantee to comply with any provision or requirement contained herein after 60 days written notice to do so. (c) In addition, the Town may terminate this franchise in accordance with the provisions of the Cable Communications Act of 1984, as amended. (d) At the expiration of the term for which the franchise is granted or upon its termination and cancellation, as provided for herein, the Town shall have the right to require the Grantee to remove at its own expense all portions of the system from all public ways of the Town. Failure to remove the portions of the system as required by the Town Council within the period of time prescribed by the Town Council shall result in a forfeiture by the Grantee of the system property so designated and such property shall immediately thereafter become the property of the Town. SECTION 22. SEVERABILITY PROVISION. If any section, sentence, clause or phrase of the ordinance is held unconstitutional or otherwise invalid, such infirmity shall not affect the validity of the ordinance, and any portions in conflict are hereby repealed. Provided, however, that in the event that the Federal Communications Commission declares any section invalid, then such a section or sections will be renegotiated by the Town and the Grantee. SECTION 23. RIGHTS OF INDIVIDUALS. (a) Grantee shall not deny service, deny access, or otherwise discriminate against subscribers, channel users, or general citizens on the basis of race, color, religion, national origin, or sex. Grantee shall comply at all times with all other applicable federal, state, and Town laws, and all executive and administrative orders relating to nondiscrimination. SECTION 24. PARENTAL LOCK OBSCENITY AND X-RATED MOVIES. (a) Converter -Blocking of Video Signals. Grantee shall provide converters capable of being equipped with a parental lock capable of locking or securing one channel or all channels, or of being tuned so as to block or scramble the video of a channel. Said parental lock or tuning of a channel shall be offered to a 0049] -16- subscriber, on a one time only basis, without any extra or additional charges or fees for the first thirty (30) days after an initial subscription." (b) Temperature Range. Grantee's CATV System shall be capable of operating throughout the air temperature range of 0 to 110 degrees Fahrenheit without degradation of audio or video fidelity. (c) Educational Access Channels. At least two channels shall be reserved for the use of the educational authorities in the Town. Such channels shall be provided free of charge. (d) Public Access Channels. Subject to reasonable rules to be adopted by the Grantee, filed with the Town Secretary and approved by the Town Council, Grantee shall make available at least two channels for the use of the public, one of which shall have nondiscriminatory access without charge on a first come, first serve basis, and the other of which shall be reserved for use by the Town. (e) Standard of Care. Grantee shall at all times employ a high standard of care and shall install, maintain and use approved methods and devices for preventing failures or accidents which are likely to cause damages, injuries or nuisances to the public. (f) No Obscenity. (1) Grantee and all Users of a CATV System shall comply in all respects with all federal, state and local laws regarding obscenity and shall not broadcast any movies, materials or any obscene, indecent or profane language or depiction as outlined in 18 U.S.C. Section 1464 and shall comply with all FCC rulings or declaratory orders relating to obscenity and indecency. (2) If Grantee transmits obscene or indecent programming which it has produced or acquired by sale, lease or otherwise, Grantee's action shall be deemed a material violation hereof and shall subject Grantee to franchise revocation pursuant to this ordinance. SECTION 25. NOTICE. Where the terms of this franchise ordinance require that notice in writing be provided, such notice shall be sent to the following address: Town of Trophy Club Planned Cable System Corporation Town of Trophy Club, Texas, 3501 N. McArthur Blvd. P.O. Box 130 Suite #406 Roanoke, Texas 76262 Irving, Texas 75062 Attention: Town Secretary Attention: William Marks, President SECTION 26. That this ordinance shall be cumulative of all other ordinances of the Town, and shall not repeal any of the provisions of said ordinances except in those instances where provisions of those ordinances are in direct conflict with the oaas,J -17- provisions of this ordinance. Notwithstanding the previous sentence, Ordinance No. 86-27 is hereby expressly repealed. SECTION 27. That this ordinance shall take effect from and after its date of passage as provided by law. PASSED AND APPROVED by the Town Council of the Town of Trophy Club, Texas this the 11 day of May 11987. [SEAL] APPROVED AS TO FORM: torney, Town of Trophy Club, Texas ACCEPTED: PLANNED CABLE SYSTEMS CORPORATION By: William Marks, President Date: 0049J ...18...