Loading...
Ordinance 81-486op (Official Publication) CITY OF HOPKINS Hennepin County, Minnesota ORDINANCE NO. 81 -486 AN ORDINANCE, INCLUDING ADDENDUM WITH EXHIBITS, GRANTING A FRANCHISE TO MINNESOTA CABLESYSTEMS SOUTHWEST, A MINNESOTA LIMITED PARTNERSHIP, TO OPERATE AND MAINTAIN A CABLE COMMUNICATION SYSTEM IN THE CITY; SETTING FORTH CONDITIONS ACCOMPANYING THE GRANT OF FRANCHISE; PROVIDING FOR REGULATION, AND USE OF THE SYSTEM; AND PRESCRIBING PENALTIES FOR THE VIOLATION OF ITS PROVISIONS The City Council of the City of Hopkins ordains: STATEMENT OF INTENT AND PURPOSE The City intends, by the adoption of this Franchise, to bring about the development of a Communications System, and the continued operation of it. Such a development can contribute significantly to the communication needs and desires of many. Further, the City may achieve better utilization and improvement of its public services. Past studies, participated in by City, have led the way for organizing a means of procuring and securing a Cable Communica- tions System deemed best suited to the City, in the judgment of the Council. This has resulted in the preparation and adoption of this Franchise. FINDINGS In the review of Grantee's proposal and application and as a result of public hearings, the City Council makes the following findings: A. The Grantee's technical ability, financial condition, legal qualifications, and character were considered and approved in a full public proceeding after due notice and reasonable opportunity to be heard; B. Grantee's plans for constructing and operating the System were considered and found adequate and feasible in a full public proceeding after due notice and reasonable opportu- nity to be heard; C. The Franchise granted to Grantee by City complies with the existing applicable Minnesota Statutes and regulations and Franchise standards of Board; and D. The Franchise granted to Grantee is nonexclusive. 2 ARTICLE I. SHORT TITLE AND DEFINITIONS SECTION 1. SHORT TITLE This Ordinance shall be known and cited as the Cable Commun- ications Ordinance. SECTION 2. DEFINITIONS For the purpose of the Franchise, the following terms, phrases, words and their derivations shall have the meaning 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 number include the plural number. The words "shall" and "will" are mandatory and "may" is permissive. Words not defined shall be given their common and ordinary meaning. A: "Basic Service" means all subscriber services provided by Grantee including the delivery of broadcast signals, covered by the regular monthly charge paid by all subscribers, ex- cluding optional services for which a separate charge is made. B. "Board" means the Minnesota Cable Communications Board. C. "City" means City of Hopkins, a municipal corporation, in the State of Minnesota. D. "Class IV Channel" means a signaling path provided by a System to transmit signals of any type from a subscriber terminal to another point in System. E. "Connection" means the attachment of the drop to the first radio or television set of the subscriber. F. "Converter" means an electronic device, which converts sig- nals to a frequency not susceptible to interference within the television receiver of a subscriber, and by an appropri- ate channel selector also permits a subscriber to view all basic subscriber signals included in the basic service delivered at designated converter dial locations. G. "Council" means the governing body of City. H. "Drop" shall mean. the cable that connects the subscriber terminal to the nearest feeder cable of the cable. I. "FCC" shall mean the Federal Communications Commission and any legally appointed, designated or elected agent or suc- cessor. J. "Grantee" is Minnesota Cablesystems Southwest, a Minnesota Limited Partnership, its agents or employees. K. "Gross Revenues" shall mean all revenue derived directly or indirectly by Grantee, its affiliates, subsidiaries, parent, and any person in which Grantee has a financial interest of five percent (5 or more from or in connection with the operation of the System, including but not limited to, basic subscriber service monthly fees, pay cable fees, installa- tion and reconnection fees', leased channel fees, converter rentals, studio rental, production equipment and personnel fees, and advertising revenues. The term does not include any taxes on services furnished by Grantee and imposed di- rectly upon any subscriber or user by the State, City or other governmental unit and collected by Grantee on behalf of said governmental unit. 4 L. "Installation" means the connection of the System from feed- er cable to the point of connection. M. "Lockout Device" is an optional mechanical or electrical accessory to a subscriber's terminal which inhibits the viewing of a certain channel or channels provided by way of cable communications system. "Offering of Grantee" or "Offering" document dated December 5, 1980, Grantee" and signed by Grantee and on file with the City Clerk. O. "Public Property" is any real property owned by City other than a street. "Scrambler /Descrambler" refers N. P. installed to the cable communications system's headend equipment and subscriber terminal used to isolate pay cable and other ancillary service channels from basic service which is accomplished by electronically distorting the sig- nal prior to its transmission through the cable communica- tions system and reconstituting the singal at each autho- rized location for subsequent display. "Sidewalk" is the portion of a street delineated for pedes- trian travel. R. "Street" shall mean the surface of and the space above and below any public street, road, highway, freeway, lane, path, public way, alley, court, sidewalk, boulevard, parkway, drive or any easement or right -of -way now or hereafter held Q. 5 shall mean that certain entitled "Offering of City, ti which document is respectively to the equipment .0 by City which shall, within its proper use and meaning in the sole opinion of City, entitle Grantee to the use thereof for the purpose of installing or transmitting over poles, wires, cables, conductors, ducts, conduits, vaults, man- holes, amplifiers, appliances, attachments and other prop- erty as may be ordinarily necessary and pertinent to a System. S. "SWSCC" shall mean the Southwest Suburban CATV Study Commis- sion. T. "Subscriber" means any person or entity who subscribes to a service provided by Grantee by means of or in connection with the System regardless of whether a fee is paid for such service. U. "System" means a system of antennas, cables, wires, lines, towers, waveguides or other conductors, converters, equip- ment or facilities, designed and constructed for the purpose of producing, receiving, transmitting, amplifying and dis- tributing, audio, video and other forms of electronic or electrical signals, located in City. Said definition shall not include any system wholly internal to one or more multi- ple unit dwellings under common ownership, control or man- agement, and does not use City streets or other public property. In any event, system as defined herein shall not be inconsistent with the definition as set out in the rules of the Board. 6 ARTICLE II. GRANT OF AUTHORITY AND GENERAL PROVISIONS SECTION 1. GRANT OF FRANCHISE AND ACCEPTANCE City hereby grants to Grantee, a nonexclusive franchise sub- ject to all of the terms and conditions as herein provided: A. Grantee shall accept this Franchise in the following manner, and not later than the time set out in Article XIV, Section 2: (1) This Franchise will be properly executed and ack- nowledged by Grantee and delivered to City. (2) At the same time as delivery of the executed Fran- chise, Grantee shall deposit with City its nonre- fundable acceptance fee in the sum of $20,000.00, for the purpose of defraying the costs and expen- ses of developing this Franchise and for the en- forcement and administration costs to be incurred until other Franchise fees may be realized. If such costs to City exceed the sum of $20,000.00, City may charge such excess costs to Grantee and Grantee shall pay them on demand by City. (3) All security deposits, Letters of Credit, insur- ance contracts, acceptances, bonds, attorneys' opinions, organizational and creation documents and guarantees required of Grantee by this Fran- chise, shall be delivered with the executed Fran- chise and in accordance therewith. 7 SECTION 2. AUTHORITY GRANTED A. City grants to Grantee the permission to use streets for erecting, constructing, operating and maintaining the Sys- tem. Other rights necessary for the System on other public or private property must be obtained by Grantee, but City shall have no obligation to give or grant or assist in ob- taining the same. B. Grantee shall construct and maintain the System,so as not to interfere with other uses of streets. Grantee shall make use of existing poles and other facilities available to Grantee. C. Notwithstanding the above grant to use streets, no street shall be used by Grantee if City in its sole opinion deter- mines that such use is inconsistent with the terms, condi- tions or provisions by which such street was created or dedicated, or presently used. SECTION 3. AGREEMENT A. Grantee agrees to be bound by all the terms and conditions of this Franchise. B. The Grantee also agrees to provide all services specifically set forth in, and to comply with all provisions of, its Offering to provide a System within the boundaries of City. Further, failure of Grantee to provide a System as described in its Offering, at City's option, shall be a violation of the provisions of this Franchise. In the event of conflicts or discrepancies between the Offering of Grantee and the provisions of this Franchise, the provisions which provide 8 J+. the greatest benefit to City, in the opinion of the Council, shall prevail. SECTION 4. FRANCHISE TERM This Franchise shall commence upon acceptance by Grantee and shall expire 15 years from date of acceptance. SECTION 5. AREA This Franchise is granted for City as it exists from time to time during the term of this Franchise. SECTION 6. POLICE POWERS A. Grantee's rights are subject to the police power of City to adopt and enforce ordinances necessary to the health, safety and welfare of the public. B. Any conflict between the provisions of this Franchise and any other present or future lawful exercise of police powers of City shall be resolved in favor of City. SECTION 7. USE OF GRANTEE FACILITIES City shall have the right to install and maintain, free of charge, upon the poles and within the underground pipes and con- duits of Grantee any wires and fixtures desired by City. Grantee waives any claim against City arising from City's exercise of these rights. SECTION 8. WRITTEN NOTICE All notices, reports or demands required to be given in writing under this Franchise shall be deemed to be given when delivered personally to any officer of Grantee or City's Adminis- trator of this Franchise or 48 hours after it is deposited in the 9 United States mail in a sealed envelope, with registered or certified mail postage prepaid thereon, addressed to the party to which notice is being given, as follows: If to City: 1010 South First Street Hopkins, Minnesota 55343 If to Grantee: 4344 IDS Center Minneapolis, Minnesota 55402 Such addresses may be changed by either party upon notice to the other party given as provided in this section. SECTION 9. RIGHTS OF INDIVIDUALS A. No signals, including signals of a Class IV Channel, shall be transmitted from a subscriber terminal except as required to provide a service authorized by this Franchise and the subscriber. Grantee and any other person shall neither ini- tiate nor use any procedure or device for procuring or storing information or data from a subscriber's terminals or terminal by any means, without the prior authorization of the affected subscriber which shall not have been obtained from the subscriber as a condition of service. The request for such authorization shall be contained in a separate doc- ument and identify the purpose for which the data or infor- mation is being gathered or stored. After the first year of the authorization's initial signing, Grantee shall, for each year said authorization is in effect without revocation, mail a notice to each authorizing subscriber informing him or her of his right to revoke said authorization. The authorization shall be revocable at any time by the 10 subscriber without penalty of any kind whatsoever. A sepa- rate authorization shall be required for each type or clas- sification of data or information sought from a subscriber terminal. B. Grantee shall not, without the written authorization of the affected subscriber, provide to anyone data identifying or designating any subscriber. Any data authorized shall be made available upon request by and without charge to the authorizing subscriber in understandable fashion, including specification of the purpose for which the information is being gathered and to whom and for what fee the information is to be sold. C. Grantee shall not tap or monitor, arrange for the tapping or monitoring, or permit any other person to tap or monitor, any cable, line, signal input device, or subscriber outlet or receiver for any purpose whatsoever, without the prior written authorization of the affected subscriber as required by paragraph A of this section. D. Nothing herein contained shall prohibit Grantee from verify- ing System operation and the transmission of signals to an affected subscriber or from monitoring for the purpose of billing. SECTION 10. CERTIFICATE OF CONFIRMATION 411 Grantee shall abide by the then current rules and regula- tions of Board regarding the application, approval, and renewal of a Certificate of Confirmation. Failure of Grantee to obtain a Certificate of Confirmation or a renewal thereof shall result in 11 automatic termination of this Franchise, and this Franchise shall cease to be of any force or effect. However, Grantee may operate 41 1 the System while the Board is considering an application for renewal of the Certificate of Confirmation. 12 ARTICLE III. DESIGN OF SYSTEM SECTION 1. CHANNEL CAPACITY SUBSCRIBER NETWORK Grantee shall initially activate and thereafter maintain a subscriber network having at least a forward capacity of 54 video channels, plus the FM audio band, and a reverse capacity of four video channels. The design will provide for a self- contained bidirectional network in each City forming part of this System. The System will be programmed from a central point, but the con- figuration will accommodate the practical isolation of City, allowing for the distribution of unique programming to it. The System shall be capable of increasing its channel capacity as technology permits and needs arise. SECTION 2. PICTURE QUALITY AND TECHNICAL REQUIREMENTS A. The System will produce a picture upon each subscriber's television screen in black and white or color, depending upon whether color is being telecast and provided the sub- scriber's television set is capable of producing a color picture, that is undistorted and free from ghost images, without material degradation of color fidelity. The System shall produce a sound that is undistorted on any receiver of a subscriber. Grantee, at its expense, shall install and maintain the System so as not to interfere with any sub- scriber's receipt of local broadcast stations. B. The System shall transmit or distribute signals to all tele- vision and receivers of all subscribers without caus- ing crossmodulation in the cables or interfering with other 13 electrical or electronic systems or the reception of other television or radio receivers. C. Grantee shall construct and maintain a System that at least meets minimum technical standards now or hereafter promul- gated by the FCC relating to cable communications systems; provided, however, that in no event shall the technical standards required to be met by Grantee be less stringent than the FCC standards in effect at the time of the adoption of the Ordinance, nor shall Grantee be required to meet minimum FCC technical standards which apply solely to cable communications systems for which franchises are granted sub- sequent to the acceptance of this Franchise. D. The System shall be installed and remain capable of using all band equipment and of passing the entire VHF bands, mid -band, super -bands and FM band up to 402 MHz. E. The System shall be designed for and operated on a 24 hours a day continuous operation basis. F. Grantee shall specify the procedure for initially and subse- quently testing the technical capacity of the System and agrees to have City select a consultant to review and per form such testing procedure. The results of any tests required by the FCC shall be filed within ten days of the conduct of such tests with the City and the Board. Other representatives of City may be present during testing. The tests may be done annually at such times as is determined by City, with notice to Grantee. All expenses for all such tests shall be paid by Grantee. 14 SECTION 3. TWO -WAY CAPACITY Grantee shall initially activate and thereafter maintain a two -way capable System (audio, video and data impulse). This will include fully interactive service capability provided by a centralized computer system and customized subscriber home termi- nals, backed up by full standby powering throughout the System. SECTION 4. FACILITIES The Grantee shall construct, maintain and continue to pro- vide all facilities and equipment set forth in the Offering including, but not limited to, the headend, hubs, distribution system, studios, equipment and other facilities. Grantee's plan, as set forth in the Offering, for implementing the construction, utilization and maintenance of these facilities, including its plans for accommodating future growth and changing needs and desires, shall be fully and timely performed. SECTION 5. SPECIAL CHANNEL AND ACCESS REQUIREMENTS A. Grantee will carry broadcast stations in accordance with FCC rules as from time to time revised. B. No converter will be required for the seven channels of the Universal Service Tier. Converters may be required for the Family Service Tier and for the Full Service and Interactive Tiers. A charge for lease or purchase from Grantee may be made by Grantee, or a subscriber may lease or purchase a converter from any other source. For premium services Grantee may require the use of a Grantee converter or descrambler. 15 C. Channel 12 shall be an emergency channel operated by City. D. Grantee will provide an audio /visual emergency alert over- ride system that will permit the initial interruption by City of all audio (including FM) and video programming. E. Grantee shall provide at least seven channels for access use (including one for each of the following uses: public, government, leased, educational, regional). All residential subscribers who receive all or any part of the total ser- vices offered on the System shall also receive all of said seven access channels at no additional charge. These channels shall be activated upon System activation and thereafter maintained. Grantee shall establish rules and regulations prior to System activation for the use of access channels which shall be approved by City before implemen- tation and thereafter shall not be altered or amended without approval of City. In preparing such rules: (1) Grantee shall provide an equal opportunity for use of access services. (2) Grantee will consider needs assessments prepared by City. (3) Grantee shall develop a plan to allocate to City a reasonable use and fair schedule of channel time, use of equipment and facilities so that it can receive programming unique to its needs. (4) Grantee will comply, at a minimum, with the requirements of City and the Board now or here- after adopted or determined by City or the Board 16 regarding access channels. Such requirements of the Board are hereby made a part of this ordinance and include the following: (a) Grantee shall, to the extent of the System's available channel capacity, provide to each of its subscribers who receive all or any part of the total services offered on the System, recep- tion on at least one specially designat- ed noncommercial public access channel available for use by the general public on a first come, nondiscriminatory basis; at least one specially designated access channel for use by local educa- tional authorities; at least one speci- ally designated access channel available for local government use; and at least one specially designated access channel available for lease on a first come, nondiscriminatory basis by commercial and noncommercial users (hereinafter the "access channels Subscribers re- ceiving only alarm system services or only data transmission services for computer operated functions shall be exempt from this requirement. The VHF spectrum shall be used for at least one 17 of the specially designated noncommer- cial public access channels required. No charges shall be made for channel time or playback of prerecorded programming on at least one of the specially designated noncommercial public access channels. However, per- sonnel, equipment and production costs may be assessed for live studio presen- tations exceeding five minutes in length. Charges for such production costs and any fees for use of other pub- lic access channels shall be consistent with the goal of affording the public a low cost means of television access. Access facilities-, equipment and /or cha- nnel time will be made available to the general public, any group or individual resident in City for the production and /or cablecasting of noncommercial programming free of charge on a first come, nondiscriminatory basis. (b) Whenever any of the access channels are in use during 80 percent of the weekdays (Monday- Friday), for 80 percent of the time during any consecutive three hour period for six weeks running, and there 18 is demand for use of an additional chan- nel for the same purpose, Grantee shall then have six months in which to provide a new specially designated access chan- nel for the same purpose at no addition- al cost to subscribers. (c) The rules and regulations established by the Grantee and approved by City govern- ing the access channels shall be filed with the Board within 90 days after any such channels are put into use. (d) Subscribers receiving programs on one or more special service channels without also receiving the regular subscriber services may receive only one specially designated composite access channel com- posed of the programming on access chan- nels. Subscribers receiving only alarm system services or only data transmis- sion services for computer operated functions shall not be included in this requirement. (5) The Grantee shall comply, at a minimum, with the requirements of City and Board, now or hereafter adopted by City or Board regarding public use of its equipment, including the following: 19 (a) Grantee shall make readily available for public use at least minimal equipment necessary for the production of program- ming and playback of prerecorded pro- grams for the specially designated noncommercial public access channel. The Grantee shall also make readily available upon need being shown, the minimum equipment necessary to make it possible to record programs at remote locations with battery operated portable equipment. (b) Need within the meaning of this para- graph shall be determined in the sole discretion of City or by subscriber petition. Said petition must contain the signatures of at least 10 percent of the subscribers of System, but in no case more than 500 nor fewer than 100 signatures. SECTION 6. INSTITUTIONAL NETWORK The System shall include at a minimum a separate institu- tional telecommunications network, interconnected with the subscriber network, of eight sections with a combined trans- mission capacity of 472 channels, with full two -way capability. Said network shall be offered, activated, expanded, marketed and developed at a minimum in full compliance with the Offering. 20 Need for the provision of institutional service shall be deter- mined in the sole, discretion of City. SECTION 7. SERVICE TO PUBLIC BUILDINGS AND EDUCATIONAL INSTITU- TIONS Grantee provide, at a minimum, subscriber and institu- tional network service to all publicly owned buildings, in City (City Hall, police department, fire department, schools, libra- ries, etc.), all educational institutions in City, and all buildings now or hereafter wholly or partially owned or leased for governmental use by any state, federal or local government in City, or owned or leased by school districts or educational institutions in City, all as set out in the Offering. Need for either or both of such network services as referred to in the Offering shall be determined in the sole discretion of City. SECTION 8. INTERCONNECTION Grantee will comply with all present and future rules, regu- lations and orders of the Board regarding interconnection of sys- tems, and will cooperate with any agencies or utilities involved with interconnection. At such times as interconnection is required, Grantee shall accomplish this without additional charge to subscribers. System shall be initially constructed so that other systems now or hereafter constructed in any area adjacent to System may be interconnected with System without delay. SECTION 9. NARROWCASTING Grantee shall provide separate programming capability to City on each of the access channels on the Universal Service Tier. 21 SECTION 10. COMPUTER SERVICES Grantee shall construct System y tem to accommodate interactive data communications with a total network transmission time of less than one -tenth (1 /10) of a second. SECTION 11. REGIONAL CHANNEL The standard VHF Channel 6 is hereby designated for uniform regional channel usage. However, until the regional channel becomes operational, Grantee may utilize the standard VHF Channel 6 as it deems appropriate. Use of time on the regional channel shall be made available without charge. 22 1 ARTICLE IV. SERVICES AND PROGRAMMING, SUBSCRIBER CONTRACTS, COMPLAINTS SECTION 1. SERVICES AND PROGRAMMING A. Services and Programming. The programming and services shall be structured in three tiers, all of which will be programmed at the time of System'activation, providing, at a minimum, the programming and services set forth in the Offering. Programming and services as designated in the Offering shall be changed by Grantee only upon prior written approval of City. The three tiers are as follows: (1) The Universal Service Tier. The Universal Service Tier shall be provided as a public service without charge after installation, permitting free view of seven access channels. A subscriber may lease or buy a con- verter, permitting a total service of 13 channels. (2) The Family Service Tier. The Family Service Tier shall incorporate the Universal Service Tier with 14 pro- grammed video channels, a total of 21 channels of service combining access and local broadcasting with local origination. In addition, this tier shall pro- vide a community information service and offer two premium services, a family- oriented mini pay -TV service and a comprehensive FM radio service. (3) The Full Service Tier. The Full Service Tier shall provide 54 channels which increases the Family Service Tier by incorporating distant stations, several 23 ry. satellite -fed services, additional local origination channels, additional premium channels and several cus- tomized alpha- numeric services. Included in this tier shall be a sub -tier called "expanded service" which shall have the same channel capacity and shall include a converter and an interactive unit. B. Locally originated programming. Grantee shall provide at a minimum 23 locally programmed channels. C. Community Access and Programming. (1) Grantee shall, at a minimum, comply with the community access and programming plan of the Offering. (2) Grantee shall provide upon system activation a commu- nity access and programming staff of at least 22 per- sons, provided, however, that City recognizes said staff as well as the entire community access and pro- gramming plan of the Offering encompasses all of the systems of the Cities then a party to a Joint Powers Agreement relating to System (referred to herein as the "joint system (3) The community access and programming staff shall: (a) Identify community access needs; (b) Train and consult with interested residents of City in the use of the access equipment; and (c) Promote the availability and uses of community access. (4) Access facilities and equipment shall be provided at a minimum as set forth in the Offering. 24 (5) Modulators shall be provided at 20 locations throughout the joint system in addition to those which shall be provided to educational institutions. Further, there shall be a mobile production unit and portable video recorders as set forth in the Offering, all of which shall be available upon System activation. (6) Grantee shall cooperate in the development of an access nonprofit corporation if determined to be needed by City. (7) Grantee shall establish a citizen advisory board from City to provide community advice and recommendations to Grantee relative to the community access and program- ming of System. D. Interactive Services. System shall be fully activated to receive inter- active services. Interactive services shall at a minimum be provided, as designated in the Offering. Grantee warrants, represents and guarantees that no invasion of privacy can occur in connection with any aspects of the services provided by System. SECTION 2. INTERRUPTION OF SERVICE AND COMPLAINTS. A. Whenever it is necessary to shut off or interrupt service, Grantee shall do so during periods of minimum use of the System. Unless such interruption is unforeseen and imme- diately necessary, Grantee shall give reasonable notice thereof to subscribers. All costs incurred in repairing 25 System and handling complaints shall be paid by Grantee, and if service is interrupted or discontinued for more than 48 hours, subscribers shall be credited pro rata for such inter- ruption. The cause for any such interruption shall be removed and service restored as promptly as reasonably possible. B. Grantee shall maintain an office in the Minneapolis /St. Paul metropolitan area which shall be open during all usual busi- ness hours, have a listed local telephone, and be so opera ted that complaints and requests for repairs or adjustments may be received at any time, 7 days per week. (1) Notice of this information shall be provided to all new subscribers at time of subscription and to existing subscribers annually. (2) Grantee shall not engage in the sale of television sets or provide other television repair service, but in the event such service is required, shall promptly notify subscriber of that need for service. (3) All complaints by City, subscribers, or other persons regarding the quality of service, equipment malfunc- tion, billing disputes, and any other matters relative to the System, shall be investigated and responded to by a service representative at the location of the complaint by Grantee within 24 hours. If reasonably possible, Grantee shall rectify the cause of all valid complaints. If a complaint is not rectified within three days, the complainant may then file the complaint with City. 26 (4) City and Grantee shall prepare and maintain a record of all complaints made to them.. If at any time after the filing of a complaint with City, City determines, in its sole discretion, that the complaint represents a violation of this Franchise, any law, ordinance or regulation, or represents a failure in the performance of Grantee pursuant to this Franchise, City may, in addition to any other remedy available to it, issue written notice specifying the nature of the complaint and ordering Grantee to appear at the next regularly scheduled Council meeting. At said Council meeting, Grantee shall explain its failure to rectify the complaint and show cause why the Council should not institute default proceedings. Failure by Grantee to appear may result, at the sole discretion of City, in the termination of this Franchise. 27 411 CONSTRUCTION, INITIAL SERVICE AREA L INE EXTENSION AND CONSTRUCTION STANDARDS ARTICLE V. SECTION 1. INITIAL SERVICE AREA A. Engineering and design shall be completed within one year after date of granting of this ,Franchise and a significant amount of construction, in the opinion of City, shall be completed within one year after Grantee's receipt of all necessary governmental permits, licenses, certificates and authorizations. B. Grantee shall provide service to all residences now or here- after within the initial service area as such area is iden- tified on the map attached hereto as Exhibit A and made a part hereof. C. Construction maps and schedules, included as a part of Exhibit A are also hereby made a part of this Franchise. All construction within the initial service area will be completed according to Exhibit A within eighteen months [the "construction period after the date of issuance of the Certificate of Confirmation by the Board. D. The energized trunk cable shall be extended throughout the initial service area within eighteen months after the date of issuance of the Certificate of Confirmation by the Board. All persons and entities along the route of the energized trunk cable who desire them will have individual drops installed and activated within the same eighteen -month period. 28 E. Grantee shall give residents 30 days' advance notice of the commencement of construction affecting their property, which notice shall fully explain how the work will be carried out. F. The requirements of paragraphs A, B, C and D may be waived by City only upon the occurrence of unforeseen events or acts of God, but in no event shall the construction period be greater than five years from commencement of construc- tion. SECTION 2. LINE EXTENSION POLICY Grantee's extension of service to those areas not included in the initial service area shall be done pursuant to the follow- ing requirements: A. Residences located outside the initial service area will be provided service upon acceptance of a quote from Grantee. The quote shall not exceed the cost to Grantee, calculated on a time and material basis, of extending the cable and necessary cable equipment to service the residence. B. Any nonresidential user requesting service will be provided service upon acceptance of a quote from Grantee. The quote shall not exceed the cost to Grantee, calculated on a time and material basis, of extending the cable and necessary cable equipment to service said user. SECTION 3. CONSTRUCTION TIMETABLE A. Within 60 days after the granting of Franchise, Grantee shall apply for all necessary permits, licenses, certifi- cates and authorizations which are required in the conduct of its business, including, but not limited to, any joint use attachment agreements, microwave carrier licenses, 29 or any other permits, licenses and authorizations to be granted by duly constituted regulatory agencies having jurisdiction over the operation of cable communication sys- tems, or their associated microwave transmission facilities. If after one year from the commencement of Franchise term, Grantee has not received the permits, licenses, certificates and authorizations described in this paragraph, City may terminate this Franchise without regard to fault for delay in obtaining such permits, licenses, certificates and authorizations. B. Within 90 days after obtaining all necessary permits, licenses, certificates and authorizations, Grantee shall give written notice thereof to City and commence construc- tion and installation of System. C. Any delays in the construction timetable or commencement of construction shall result in penalties as provided in this Franchise, and continued delays may result in the termina- tion of this Franchise and all rights and privileges of Grantee hereunder. (1) Grantee shall promptly notify City of all delays known or anticipated in the construction of System. (2) City may extend the time for beginning construc- tion or may extend the construction timetable in the event Grantee, acting in good faith, experien- ces delays by reason of circumstances beyond its control. 30 SECTION 4. CONSTRUCTION STANDARDS A. Grantee shall not open or disturb the surface of any streets or public property without first obtaining a permit from City for which permit City may impose a reasonable fee to be paid by Grantee. The lines, conduits, cables and other property placed in the streets and public property pursuant to such permit shall be located in such part of the street or public property as shall be determined by City. Grantee shall, upon completion of any work requiring the opening of any streets or public property, restore the same, including the pavement and its grounds to as good a condition as for- merly and in a manner and quality approved by City, and shall exercise reasonable care to maintain the same there- after in good condition. Such, work shall be performed with diligence and due care, and if Grantee shall fail to perform the work promptly, to remove all dirt and rubbish and to put the street or public property back into the condition required hereby, City shall have the right to put the streets or public property back into good condition at the expense of Grantee. Grantee shall, upon demand, pay to City the cost of such work done or performed, together with an additional sum as liquidated damages to be determined by City. B. All wires, conduits, cable and other property and facilities of Grantee shall be so located, constructed, installed and maintained as not to endanger or unnecessarily interfere with the usual and customary trade, traffic and travel upon, 31 or other use of, the streets and public property of City. Grantee shall keep and maintain all of its property in good condition, order and repair so that the same shall not men- ace or endanger the life or property of any person. City shall have the right to inspect and examine at all reason- able times and upon reasonable notice the property owned or used, in part or in whole, by Grantee. Grantee shall keep accurate maps and records.of all of its wires, conduits, cables and other property and facilities located, construc- ted and maintained in the City. Further, Grantee shall, without charge, furnish copies of such maps and records from time to time as requested by City. C. All wires, conduits, cables and other property and facili- ties of Grantee, shall be constructed and installed in an orderly and workmanline manner. All wires, conduits and cables shall be installed, where possible, parallel with electric and telephone lines. Multiple cable configurations shall be arranged in parallel and bundled with due respect for engineering considerations. D. Grantee shall at all times comply with all applicable laws, ordinances, rules, regulations and codes, federal, state and local. In any event, the installation, operation or mainte- nance of System shall not endanger of interfere with the safety of persons or property in the City. E. Whenever City shall undertake any public improvement which affects Grantee's equipment or facilities, City shall, with due regard to reasonable working conditions and with reason- 32 able notice, direct Grantee to remove its wires, conduits, cables and other property located in streets or public prop- erty. Grantee shall relocate or protect its wires, con- duits, cables and other property at its own expense. F. Grantee's plans for constructing its System, and the con- struction of the System, shall be in accordance with its Offering. However, Grantee shall comply with the following minimum requirements: (1) Grantee shall construct underground in any area where another line, either electrical or tele- phone, has been installed underground. (2) Grantee shall change from aerial to underground, at its own expense, in any area where another line is hereafter changed from aerial to underground. (3) Grantee shall change from aerial to underground, without cost to City, whenever requested by City, which request can be made for a certain area or areas or for the entire System. (4) To enable Grantee reasonable opportunity to change its wiring from aerial to underground, and also to allow it to pre -wire all new subdivisions or new development areas, City shall provide Grantee with written notice of the following, but in no event shall city have any liability for failure to pro- vide notice of the following: (a) Any changes of which City has knowledge, or which City may order, regarding a 33 change from aerial to underground of any line (telephone or electrical) within its boundaries. (b) Any underground trenching that may be pending. (c) New subdivisions and development. All of such subdividers or developers shall be notified of the Franchise and the System. (d) All Franchise changes affecting the wir- ing of the System. SECTION 5. CONDITIONS ON USE A'. Grantee shall not place poles or other fixtures where the same will interfere.with any gas, electric or telephone fix- ture, water hydrant or main. B. Grantee, at the request of any person holding a building moving permit and with not less than five days advance notice, shall temporarily remove, raise or lower its wires, conduits and cables. The expense of such temporary removal, raising or lowering of wires, conduits and cables shall be paid by person requesting the same, and Grantee shall have the authority to require such payment in advance. C. Grantee shall have the authority, to the extent the City has authority to grant the same, to trim trees upon or overhang- ing any street or public property so as to prevent the bran- ches of such trees from coming in contact with the wires, conduits and cables of Grantee. All trimming shall be done 34 under the supervision and direction of City and at the ex- pense of Grantee. D. Nothing contained in this Franchise shall relieve any person from liability arising out of the failure to exercise reas- onable care to avoid injuring the Grantee's facilities while performing any work connected with grading, regrading or changing the line of any street or public place or with the construction or reconstruction of any sewer or water system. 35 ARTICLE VI. SYSTEM OPERATIONS SECTION 1. INFORMATION AVAILABILITY A. Throughout the term of this Franchise, Grantee shall main- tain books and records in accordance with normal and accep- ted bookkeeping and accounting practices for the Cable Communications industry, and allow for inspection and copy- ing of them at reasonable times at its designated office. The books and records to be maintained by Grantee shall include the following: (1) A record of all requests for service; (2) A record of all subscriber or other complaints, and the action taken; (3) A file of all subscriber contracts; (4) Grantee policies, procedures and company rules; and (5) Financial records. B. City shall give Grantee at least 24 hours notice before making inspections of any books or records of Grantee. C. Grantee shall file with City, at the time of its annual pay- ment of the franchise fee, as described in this Franchise, the following: (1) A financial statement prepared by an independent certified public accountant showing, in such de- tail as acceptable to City, the gross revenues of Grantee for the preceding fiscal year. 36 (2) Current list of names and addresses of each offi- cer and director and other management personnel, and if a corporation, each shareholder having stock ownership of three (3 percent or more, and if a partnership, all general partners, and if a general partner is a corporation, the foregoing information shall be given as to the corporate general partner. (3) A copy of each document filed with all federal, state and local agencies during the preceding fis- cal year not previously filed with City (each of these filings shall be provided at the time the filing is made). (4) A statement of its current billing practices. (5) A current copy of its rules. (6) A current copy of its subscriber service contract. D. City, its agents and representatives shall have authority to arrange for and conduct an audit of and copy the books and records of Grantee. Grantee shall first be given five days notice of the audit request, the description of and purpose for the audit, and description, to the best of City's ability, of the books, records and documents it wants to review. SECTION 2. SERVICE CONTRACT A. Grantee shall receive approval from City of the form and content of the service contract to be used by Grantee prior 37 to entering into any such service contracts with subscrib- ers, and the Grantee shall make no changes in the approved service contract without prior written approval of City. The service contract shall include, at a minimum, a schedule of all rates and charges, description of services, instruc- tions on the use of the system, billing and collection prac- tices. B. The service contract shall further contain a statement as follows: Grantee shall not, as to rates, charges, service facilities, rules, regulations or in any other respect, make or grant any preference or advantage to any person, nor subject any person to any pre- judice or disadvantage, provided, that nothing in this Franchise shall be deemed to prohibit the establishment of special contracts or rates for heads of houehold who are 62 years of age or older or homebound persons, or for non profit charitable organizations, bulk rate discounts for multiple dwellings, or for promotional or other marketing activities. C. Grantee shall have authority to promulgate such rules, regu- lations, terms and conditions governing the conduct of its business as shall be reasonably necessary to enable Grantee to exercise its rights and perform its obligations under this Franchise and to assure an uninterrupted service to 38 each and all of its subscribers; provided, such rules, reg- ulations, terms and conditions shall not be in conflict with the provisions of the Franchise, ordinances of City, and laws of the State of Minnesota or the United States. D. Each subscriber shall be provided with instructions on fil- ing complaints or otherwise obtaining information or assist- ance from Grantee. E. All items described in this section shall be provided to each new subscriber at the time a contract is entered or service begun, and to all existing subscribers not less than once each year. F. The term of a subscriber contract shall not be for more than 12 months duration unless after 12 months the contract may be terminated by the subscriber at his option at any time, with no penalty to subscriber. SECTION 3. SUBSCRIBER PRACTICES A. There shall be no charge for disconnection of any installa- tion or outlet. If any subscriber fails to pay a properly due monthly subscriber fee, or any other properly due fee or charge, Grantee may disconnect the subscriber's service out- let, provided, however, that such disconnection shall not be effected until after the later of (i) 60 days after the due date of said delinquent fee or charge or (ii) ten days after delivery to subscriber of written notice of the intent to disconnect. If a subscriber pays before expiration of the later of (i) or (ii), Grantee shall not disconnect. After disconnection, upon payment in full of the delinquent fee or 39 charge and the payment of a reconnection charge, Grantee shall promptly reinstate the subscriber's cable service. B. Refunds to subscribers shall be made or determined in the following manner: (1) If Grantee fails, upon request by a subscriber, to provide any service then being offered, Grantee shall promptly refund all deposits or advance charges paid for the service in question by said subscriber. This provision does not alter Grant- ee's responsibility to subscribers under any sepa- rate contractual agreement or relieve Grantee of any other liability. (2) If any subscriber terminates any monthly service because of failure of Franchise to render the ser- vice in accordance with Franchise, Grantee shall refund to such subscriber the proportionate share of the charges paid by the subscriber for the ser- vices not received. This provision does not re- lieve Grantee of liability established in other provisions of this Franchise. C. If any subscriber terminates any monthly service prior to the end of a prepaid period, a proportionate amount of any prepaid subscriber service fee, using the number of days as a basis, shall be refunded to the subscriber by Grantee. D. Continued failure by Grantee to provide services required by this Franchise may, in the discretion of City, be cause for imposition of a penalty or termination of this Franchise. 40 4. SECTION 4. FRANCHISE FEE, RATES, CHARGES, CHANGES IN FEES AND PROCEDURES A. Full Regulatory Power Reserved. (1) All rates and charges shall be subject to regula- tion by City, in a manner to be provided by Coun- cil. In the absence of any City action taken to exercise rate regulation, Grantee shall be subject to the rate regulation provisions provided for herein, and of the State or its agencies that may from time to time be applicable. (2) In addition to the power to regulate rates and charges, City hereby reserves the right to adopt regulations governing Grantee's collection of advance charges and deposits, installation and reconnection charges, policies and procedures, disconnection charges, policies and procedures, and the availability of refunds. (3) Cost for installing any part of the System will be a factor in the rate only if such cost was incurred within City. (4) The territory for rates applicable to System shall be City and all Cities then parties to a joint powers agreement relating to the System. B. Franchise Fee. (1) Throughout the term of this Franchise, Grantee will pay to City, within 60 days after the end of 41 each fiscal year of Grantee, an annual fee of five (5 percent of all gross revenues. No payment will be allowed of any fee that is different from five (5 percent, other than the filing fee and payment required of the successful applicant as established to recover the costs of franchising. Grantee agrees to support any waiver required by the FCC for the established franchise fee. The annual fee may be subject to renegotiation at such time as federal or state authorities no longer regulate the amount of the fee, but in no event shall the renegotiated fee be less than five percent (5 (2) Payment will be made to City with an itemization of the gross revenues derived from the services in City. C. Rates and Other Charges. (1) Rates and charges charged by Grantee for monthly service and installation and other charges here- under shall be uniform, fair and reasonable and designed to meet all necessary costs of service, including a fair rate of return on the original cost, less depreciation, of the properties devoted to such service (without regard to any subsequent sale or transfer price or cost of such proper- ties). (2) For two years after commencement of construction of System, or until completion of all construction 42 required by Article V, Section 1 of this Fran- chise, whichever is longer as determined by City, the maximum rates shall be the specific rates of Grantee as included in Exhibit B, attached hereto and made a part of this Franchise and known as Grantee Schedule of Rates. (3) Service requests for maintenance or repair of Grantee's property shall be performed at no .charge to a subscriber. If such maintenance or repair is required as a result of damage caused by subscrib- er, Grantee may charge as a maximum its direct costs for material and labor for service calls to subscribers' homes. (4) Rates for services not initially included in Exhibit B shall be established only by amendment of this Franchise. D. Rate Changes. (1) No rate change shall be approved that would result in different rates or charges for service to simi- larly situated subscribers in the rate territory, in the sole opinion of City. (2) No rate or charge change will be approved unless all of the standards for review have been consi- dered and evaluated and determinations have been made, all pursuant to this Franchise. (3) The standards for reviewing a proposed rate change will include at least the following: 43 (a) The ability of the Grantee to render System services and to derive a reason- able profit therefrom under the existing rate schedule and proposed rate sched- ule; (b) The revenues and profits derived from System services; (c) Tax benefits received by Grantee, its partners or shareholders, as the result of their investment in the System; (d) Cash flow derived from System services; (e) The efficiency of Grantee; (f) The quality of the service offered by Grantee; (g) The original cost of the System, less depreciation; (h) A fair rate of return with respect to investments having similar risks to that of providing cable communication servi- ces; (i) The extent to which Grantee has adhered to the terms of this Franchise; (j) Fairness to residents and subscribers; (k) Capital expenditures by Grantee in pro- viding updated technology and service to subscribers; 44 (1) The extent to which Grantee has then pro- vided service to schools, hospitals, libraries, publicly owned or leased buildings and similar institutions within City; (m) Such other factors as City may deem rel- evant. The procedures to be followed in changing a rate or charge shall include at least the following: (a) An application for a rate change will be submitted to City and a copy filed with the Board. (b) The application shall be supported by statistical and other proof indicating that the existing rate or charge is inadequate and unreasonable and that the proposed increases are required to enable Grantee to render service to ful- fill its obligations under this Fran- chise and 'to derive a reasonable profit therefrom. (c) The application shall include current information and financial information with at least the following: 1. Balance sheet; 2. Income statement; 3. Statement of sources and ap- plications of funds; 4. Detailed supporting schedules of expenses, income, assets and other items as may be re- quired by City; 5. Statement of current and pro- jected subscribers; 6. A current list of rates and charges of Grantee applicable to systems owned or operated by its parent corporation or other subsidiaries or affili- ates of its parent corporation at other locations; 7. A current list of rates and charges for other systems in the seven county Metropolitan area; 8. Cash flow derived from System services ment of 9. Statement ceived by ners result of System. since the commence this Franchise; and of tax benefits re- Grantee, its part- or shareholders, their investment in 46 as a (d) City will notify Grantee and Board and schedule a public hearing on the request within two weeks from the date of receipt of the application and the deter- mination by City of its completeness. Grantee will notify the public through providing notice for one week, each day between 7:00 p.m. and 9:00 p.m. on two channels of the date, place and time of the hearing. City will publish notice ten days prior to hearing in its official newspaper. (e) After closing the public hearing, City will have 31 days within which to make its determination. Any approved change in rates or charges shall become effective upon the date determined by City. (f) If City fails to approve the requested change or rates or charges within the 31 day period, Grantee may appeal pursuant to the then applicable procedures of the Board. (g) City may utilize a rate consultant to advise it on proposed rate changes and to assist it in maintaining uniform 47 rates within the rate territory. A rate consultant may be any person who has sufficient background and experience, in the sole opinion of City, to properly evaluate and analyze rates and charges. (h) All costs for the review of an applica- tion for a rate or charge change shall be paid by Grantee upon demand of City. The costs shall include, but not be lim- ited to, attorneys' fees, and the reas- onable value of services (as determined by City) rendered by City or any city employees, agents or representatives of City. (i) Any time limit may be waived only if City and Grantee consent. E. Periodic Reviews and Renegotiation. The field of cable communications is a relatively new and rapidly changing one which shall no doubt see many regu- latory, technical, financial, marketing and legal changes during the term of the Franchise period. Therefore, in order to provide for a maximum degree of flexibility in this Franchise, and to help achieve a continued advanced and mod- ern system, the following renegotiation provisions will apply: (1) City reserves the right to adopt rules and regula- tions controlling the procedures and subjects for 48 periodic reviews and renegotiation. In the absence of any City action taken to exercise these rights, Grantee shall be subject to at least the procedures and subjects described in this section. (2) City may require, at its sole discretion, System performance evaluation sessions at any time during the term of this Franchise or as required by fed- eral or state law. Such evaluation sessions shall be conducted by City within 30 days of the third, fifth and tenth anniversary dates of the effective date of acceptance of this Franchise by Grantee. (3) All evaluation sessions shall be open to the pub- lic and notice of sessions published in the same way as a legal notice. Grantee shall notify its subscribers of all evaluation sessions by announcement on at least two channels of the System between the hours of 7:00 p.m. and 9:00 p.m. for five consecutive days preceding each ses- sion. (4) Topics which may be discussed at any evaluation session may include, but not be limited to, ser- vice rate structures; franchise fee; penalties, free or discounted services; application of new technologies; system performance; services provid- ed; programming offered; community access; local origination; customer complaints; privacy; amend- ments to this Ordinance; judicial, Board and FCC 49 rulings; line extension policies; and Grantee or City rules. (5) During a review and evaluation by City, Grantee shall fully cooperate with City and shall provide without cost such information and documents as City may request to reasonably perform the service. (6) If at any time during its review, City determines that reasonable evidence exists of inadequate Sys- tem performance, it may require Grantee to perform tests and analyses directed toward such suspected inadequacies at the Grantee's own expense. Grant- ee shall fully cooperate with City in performing such testing and shall prepare results and a re- port, if requested, within 30 days after notice. The report prepared by Grantee shall include at least: (a) A description of the problem in System performance which precipitated the spe- cial tests. (b) What System component was tested. (c) The equipment used and procedures employed in testing. (d) The method, if any, by which such System performance problem was resolved. (e) Any other information pertinent to said tests and analyses which may be required 50 by City, or determined when the test is performed. City may require that tests be supervised at Grantee's expense by a consultant designated by City. The consultant shall sign all records of special tests and forward. to City such records with a report interpreting the results of the tests and recommending actions to be taken. (7) As a result of a periodic review or evaluation session, City may require Grantee to modify the System or to provide additional services. Grantee will comply with any such requirement of the City unless, in the sole opinion of City, technology does not permit it, or Grantee establishes to the satisfaction of City that the cost would prohibit the implementation of the modification or the ad- ditional services. SECTION 5. FRANCHISE RENEWAL A. Grantee may apply for renewal of this Franchise not earlier than 18 months prior to the expiration of this Franchise on forms provided by City. The renegotiation period shall commence not less than 12 months before the expiration of the Franchise Term. B. Grantee may be approved, and this Franchise or modifi- cation to it may be renewed or extended, by City in accordance with the then existing rules of the FCC, the 51 Board, the City and all other applicable laws, ordi- nances, rules or regulations. C. Nothing in this Franchise shall be construed to require renewal or extension of this Franchise. D. City shall conduct an investigation and evaluation of the Grantee and the System and the renewal proposal. This investigation and evaluation shall be completed by City within six months after receipt of the application and determination by City of its completeness. E. Renewal of this Franchise may not be for more than 15 years, unless otherwise permitted by federal or state law. 52 ARTICLE VII. (Reserved) 53 ARTICLE VIII. INDEMNIFICATION, INSURANCE, LETTER OF CREDIT AND BOND SECTION 1. GENERAL A. All rights of City pursuant to indemnification, insurance, letter of credit or bond, as provided for by this Franchise, are in addition to all other rights the City may have under this Franchise or any other ordinance, rule, regulation or law. B. The exercise or failure to exercise by City of any rights pursuant to any section of this Franchise shall not affect in any way the right of City to subsequently exercise any such rights or any other right of City under this Franchise or any other ordinance, rule, regulation or law. SECTION 2. INDEMNIFICATION AND INSURANCE A. Grantee shall fully indemnify, defend and hold harmless, City, its officers, boards, commissions, elected officials, agents and employees against any and all costs, damage, expense, claims, suits, actions, liability and judgments for damages, including but not limited to, expenses for legal fees, whether suit be brought or not, and disbursements and liabilities incurred by City in connection with: (1) Damage to persons or property, in any way arising out of or through the acts or omissions of Grantee or City, their respective servants, officials, agents or employees or to which Grantee's or City's negligence or that of their respective ser- 54 vants, agents, officials or employees shall in any way contribute; (2) Arising out of any claim for invasion of the right of privacy, for defamation of any person, firm or corporation, or the violation or infringement of any copyright, trademark, trade name, service mark or patent, or of any other right of any person, firm or corporation, except claims because of City's own programming; and (3) Arising out of Grantee's failure to comply with the provisions of this Franchise, any federal, state or local law, ordinance or regulation appli- cable to Grantee or the System. (4) Any and all claims which Grantee may now or here- after have or claim to have against City, its ser- vants, agents, employees or officials, due to or arising out of damage to any of Grantee's property or equipment, including, without limitation, resulting or consequential loss of income, injury to reputation, or any other resulting or conse- quential damages of any kind, caused by or resulting from acts or omissions of City or any of 411 its servants, agents, employees or officials. B. If suit be brought or threatened against City, either inde- pendently or jointly with Grantee, or with any other person or "municipality, Grantee, upon notice given by City, shall defend City at the cost of Grantee, and if final judgment is obtained against City, either independently or jointly with r 55 Grantee, or any other defendants, Grantee shall indemnify City and pay such judgment with all costs and satisfy and discharge the same. C. City reserves the right to cooperate with Grantee and parti- cipate in the defense of any litigation either through inter- vention or otherwise. Grantee. shall pay upon receipt of written demand from City, all expenses incurred by City in defending itself with regard to any matters in this section. These expenses shall include, but not be limited to, attor- neys' fees, and the reasonable value of services (as deter- mined by City), rendered by City or any employees, agents or representatives of City. SECTION 3. INSURANCE A. Grantee shall maintain liability insurance covering its obli- gations of indemnification provided for in or as a result of 56 the exercise of this Franchise covering both the City and Grantee and shall maintain said insurance during the entire term of this Franchise in the minimum amount of: (1) $500,000 for property damage to any one person; (2) $2,000,000 for property damage in any one act or occurrence; (3) $1,000,000 for personal injury to any one person; and (4) $2,000,000 for personal injury in any one act or occurrence. B. Such insurance shall be with a company acceptable to City and shall otherwise be in form and substance acceptable to City. Such insurance policy with written evidence of pay- ment of required premiums shall be filed and maintained with City during the term of the Franchise. The above minimum amounts shall be changed from time to time by Grantee as requested by City. Grantee shall immediately give notice to City of any threatened or pending litigation affecting this insurance. C. Neither the provisions of this section nor any damages re- covered by City shall be construed to, or shall, limit the liability of Grantee. D. No recovery by City of any sum by reason of the Letter of Credit or Bond required in this Franchise shall be any limi- tation upon the liability of Grantee to City under the terms of this section, except that the sum so received by City from such Letter of Credit or Bond shall be deducted from a recovery under this section, if for the same act or occur- rence. E. All insurance policies maintained pursuant to this Franchise shall contain the following endorsement: It is hereby understood and agreed that this in- surance policy may not be cancelled nor the inten- tion not to renew be stated until 60 days after receipt to City, by registered mail, of written notice of such intention to cancel or not to renew. 57 SECTION 4. LETTER OF CREDIT A. At the time of acceptance of this Franchise, Grantee shall deliver to City an irrevocable and unconditional Letter of Credit, in form and substance acceptable to City, from a National or State bank approved by City, in the amount of $50,000. B. The Letter of Credit shall provide that funds will be paid to City, upon written demand of City, and in an amount sole- ly determined by City in payment for penalties charged pur- suant to paragraph C of this section, in payment for any monies owned by Grantee pursuant to its obligations under this Franchise, or in payment for any damage incurred as a result of any acts or omissions by Grantee pursuant to this Franchise. C.. In addition to recovery of any monies owed by Grantee to City or damages to City as a of any acts or omissions by Grantee pursuant to the Franchise, City in its sole dis- cretion may charge to and collect from the Letter of Credit the following penalties: (1) For failure to complete System construction in accor- dance with Grantee's initial service area plan, unless City approves the delay, the penalty shall be Two Hundred D011ars ($200.00) per day for each day, or part thereof, such failure occurs or con- tinues. (2) For failure to provide data, documents, reports or information or to cooperate with City during an 58 application process or System review, the penalty shall be Fifty Dollars ($50.00) per day for each day, or part thereof, such failure occurs or con- tinues. (3) For failure to comply with any of the provisions of this Franchise for which a penalty is not other- wise specifically provided pursuant to this Para- graph C, the penalty shall be Fifty Dollars ($50.00) per day for each day, or part thereof, such failure occurs or continues. (4) For failure to test, analyze and report on the performance of the System following a request by City, the penalty shall be Fifty Dollars ($50.00) per day for each day, or part thereof, such fail- ure occurs or continues. (5) For failure by Grantee to modify the System or to provide additional services within 45 days after required by City following a periodic review or renegotiation session the penalty shall be Two Hundred Dollars ($200.00) per day for each day, or part thereof, such failure occurs or continues. (6) Forty -five days following notice from City of a failure of Grantee to comply with construction, operation or maintenance standards, the penalty shall be Two Hundred Dollars ($200.00) per day for each day, or part thereof, such failure occurs or continues. 59 (7) For failure to provide the services Grantee has proposed, including but not limited to the imple- mentation and the utilization of the access chan- nels and the making available for use of the equipment and other facilities to City, the penal- ty shall be One Hundred Dollars ($100.00) per day for each day, or part thereof, such failure occurs or continues. (8) Each violation of any provision of this Franchise shall be considered a separate violation for which a separate penalty can be imposed. D. Exclusive of the contractual penalties set out above in this section, a violation of any provision of this Franchise is a misdemeanor. E. Whenever City finds that Grantee has violated one or more terms, conditions or provisions of this Franchise, a written notice shall be given to Grantee informing it of such viola- tion. At any time after three days following notice, City may draw from the Letter of Credit all penalties and other monies due City. F. Whenever a penalty has been assessed, Grantee may, within ten days of notice, notify City that there is a dispute as to whether a violation or failure has, in fact, occurred. Such notice by Grantee to City shall specify with particu- larity the matters disputed by Grantee. 60 (1) City shall hear Grantee's dispute at the next reg- ularly scheduled Council meeting. City shall sup- plement the Council decision with written findings of fact. (2) Upon a determination by City that no violation has taken place, City shall refund to Grantee without interest all monies drawn from the Letter of Cred- it by reason of the alleged violation, less all costs and attorneys' fees incurred by City as a result of Grantee's appeal. G. If said Letter of Credit or any subsequent Letter of Credit delivered pursuant hereto expires prior to 15 months after the expiration of the term of this Franchise, it shall be renewed or replaced during the term of this Franchise to provide that it will not expire earlier than 15 months after the expiration of this Franchise. The renewed or replaced Letter of Credit shall be on the same form and with a bank authorized herein and for the full amount stated in para- graph A of this section. H. If City draws upon the Letter of Credit, or any subsequent Letter of Credit delivered pursuant hereto, in whole or in part, Grantee shall replace the same within three days and shall deliver to City a like replacement Letter of Credit for the full amount stated in Paragraph A of this section as a substitution of the previous Letter of Credit. I. If any Letter of Credit is not so replaced, City may draw on said Letter of Credit for the whole amount thereof and hold 61 the proceeds, without interest, and use the proceeds to pay Costs incurred by City in performing and paying for any or all of the obligations, duties and responsibilities of Grantee under this Franchise that are not performed or paid for by'Grantee pursuant hereto, including attorneys' fees incurred by the City in so performing and paying. The fail- ure to so replace any Letter of Credit may also, at the option of City, be deemed a default by Grantee under this Franchise. The drawing on the Letter of Credit by City, and use of the money so obtained for payment or performance of the obligations, duties and responsibilities of Grantee which are in default, shall not be a waiver or release of such default. J. The collection by City of any damages, monies or penalties from the Letter of Credit shall not affect any other right or remedy available to City, nor shall any act, or failure to act, by City pursuant to the Letter of Credit, be deemed a waiver of any right of City pursuant to this Franchise or otherwise. SECTION 5. BONDS A. At the commencement of this Franchise, and at all times thereafter until Grantee has liquidated all of its obliga- tions with City, Grantee shall maintain with City a bond in the sum of Three Hundred Thousand Dollars ($300,000.00) in such form and with such sureties as shall be acceptable to City, conditioned upon the faithful performance of Grantee of this Franchise and the acceptance hereof given by Grantee 62 and upon the further condition that in the event Grantee shall fail to comply with any law, ordinance or regulation, there shall be recoverable jointly and severally from the principal and surety of the bond, any damages or losses suffered by City as a result, including the full amount of any compensation, indemnification or cost of removal of any property of Grantee, including a reasonable allowance for attorneys' fees and costs (with interest at two (2 percent in excess of the then prime rate), up to the full amount of the bond, and which bond shall further guarantee payment by Grantee of all claims and liens against City or any public property, and taxes due to City, which arise by reason of the construction, operation, maintenance or use of the System. B. The rights reserved by City with respect to the bond are in addition to all other rights the City may have under this Franchise or any other law. C. City may, in its sole discretion, reduce the amount of the bond. 63 ARTICLE IX. DEFAULT SECTION 1. NOTICE AND DEFAULT A. City shall give written notice of default to Grantee if City, in its sole discretion, determines that Grantee has: (1) Violated any provision of. this Franchise or the acceptance hereof, or any rule, order, regulation or determination of the City, state or federal government, not in conflict with this Franchise; 64 (2) Attempted to evade any provision of this Franchise or the acceptance hereof; (3) Practiced any fraud or deceit upon City or sub- scribers; (4) Made a material misrepresentation of fact in the application for or negotiation of the Franchise; or (5) Incurred a 12 month or more delay in the con- struction schedule. B. If Grantee fails to cure such default within 30 days after the giving of such notice (or if such default is of such a character as to require more than 30 days within which to cure the same, and Grantee fails to commence to cure the same within said 30 day period and thereafter fails to use reasonable diligence, in City's sole opinion, to cure such default as soon as possible), then, and in any event, such default shall be a substantial breach and City, at its option, may elect to either cure the default or terminate this Franchise as follows: 6 (1) City may cure any default for the account at at the cost and expense of Grantee and all sums so expended by City, including attorneys' fees incurred in curing such default, whether suit be brought or not, with interest thereon at a rate per annum two (2 percent in excess of the then prime rate, shall be paid be Grantee to City, upon demand, and failure to so pay upon demand likewise may be deemed by City to be a default under this Franchise. (2) City may place the issue of revocation and termi- nation of the Franchise before the Council at a regular meeting of the City Council. If City decides there is cause or reason to terminate, the following procedure shall be followed: (a) City shall provide Grantee with a writ- ten notice of the reason or cause for proposed termination and shall allow Grantee a minimum of 30 days subsequent to receipt of the notice in which to correct the default. (b) Grantee shall be provided with an oppor- tunity to be heard at a public hearing prior to any decision to terminate this Franchise. (c) In the event that City determines to terminate this Franchise, the Grantee 65 shall have a period of 30 days, beginning the day next following written notice to Grantee of such decision, within which to file an appeal with the Board, pursuant to the then applicable statutes and procedures of the Board. During such 30 day period and until the Board determines the appeal, if an appeal is taken, the Franchise shall remain in full force and effect, unless the term thereof sooner expires. (d) If Board approves of the action of City, the Franchise shall terminate immedi- ately. If Board disapproves of the action of City, the Franchise shall remain in full force and effect for the full term hereof unless sooner termi- nated in accordance with the provisions hereof, or applicable law or rules of Board. SECTION 2. CROSS DEFAULT A. If Grantee should be in. default under any of the terms or provisions of a franchise, or acceptance thereof, of another city (then a party to a Joint Powers Agreement relating to the System), at City's option, to be exercised by notice to Grantee given at any time while such default exists, such default may be deemed by City a default by Grantee under this Franchise. 66 B. This section, or any other section or provision of this Franchise, shall not be deemed to incorporate into this Franchise by reference any other franchises. 67 ARTICLE X. FORECLOSURE, RECEIVERSHIP AND ABANDONMENT SECTION 1. FORECLOSURE Upon the foreclosure or other judicial sale of all or a part of the System, or upon the termination of any lease covering all or part of the System, Grantee shall notify City of such fact and such notification shall be treated as a notification that a change in control of Grantee has taken place, and the provisions of this Franchise governing the consent to transfer or change in ownership shall apply without regard to how such transfer or change in ownership occurred. SECTION 2. RECEIVERSHIP City shall have the right to cancel this Franchise 120 days after the appointment of a receiver or trustee to take over and conduct the business of Grantee, whether in receivership, reorganization, bankruptcy or other action or proceeding, unless such receivership or trusteeship shall have been vacated prior to the expiration of said 120 days, or unless: (a) Within 120 days after his election or appointment, such receiver or trustee shall have fully complied with all the provisions of this Franchise and remedied all defaults hereunder; and (b) Such receiver or trustee, within said 120 days, shall have executed an agreement with City, duly approved by the Court having jurisdiction in the premises, whereby 68 such receiver or trustee assumes and agrees to be bound by each -and every provision of this Franchise. SECTION 3. ABANDONMENT Grantee may not abandon any portion of System without having given not less than three months prior notice to City and Board. Further, Grantee may not abandon any portion of System without compensating City for damages resulting from the abandonment. The amount of damages resulting from abandonment and due City shall be determined in the sole discretion of City. An abandon- ment of any portion of the System as determined in the sole dis- cretion of City shall be a cause for termination of this Franchise by City. 69 ARTICLE XI. PURCHASE OF SYSTEM SECTION 1. GENERAL A. If at any time Grantee receives a bona fide purchase offer for the System which Grantee is willing to accept, a com- plete copy of such offer shall promptly be given to City and City shall have the right to purchase the System according to the terms of that offer. City shall exercise such right by submitting to Grantee, within six months after City's actual receipt of the bona fide offer, notice that City desires to purchase the System pursuant to said offer. If City does not exercise such right the System may be sold, but only on the terms submitted to City. If any changes are made in the purchase offer given to City, such purchase offer, as so changed, shall again be given to City and City shall have six months from actual receipt by City of the offer, as changed, within which to exercise its right to purchase the System pursuant to the offer, as changed, all as above provided. If City does not exercise its right- to purchase the System pursuant to any offer given to City pur- suant to this paragraph, and the System is not sold to the buyer and on the terms set out in the offer given to City, then the right of City to purchase the System shall con- tinue, and all subsequent purchase offers shall be given to City pursuant to this paragraph. Also, the City's right to purchase pursuant to this paragraph shall survive every sale to a buyer and shall continue and be binding upon every buyer of the System. 70 B. Upon forfeiture, revocation or termination of this Fran- chise, or at the normal expiration of the Franchise term, City shall have the right to purchase the System. Such right shall be exercised upon written notice to Grantee given within six months after the occurrence of any such event. SECTION 2. PROCEDURES In the event City elects to exercise its right to purchase the System as provided in Section 1B of this Article, the follow- ing shall then apply: A. City and Grantee shall negotiate all terms and conditions of the purchase of the System. B. If City and Grantee cannot agree upon the terms and condi- tions of the purchase, City shall have the right to proceed to arbitration. Arbitration shall commence and proceed according to applicable Minnesota law except as follows: (1) The parties shall, within 15 days of City's deci- sion to proceed to arbitration, appoint one arbi- trator each who is experienced and knowledgeable in the purchase and valuation of business property. Arbitrators shall each agree upon the selection of a third arbitrator, similarly quali- fied, within 15 days after appointment of the second arbitrator. (2) Within 30 days after appointment of all arbitra- tors and upon ten days written notice to parties, 71 the arbitrators shall commence a hearing on the terms and conditions of the purchase in dispute. (3) The hearing shall be recorded and may be trans- cribed at the request of either party. All hear- ing proceedings, debates and deliberations shall be open to the public and at such times and places as contained in the notice or as thereafter pub- licly stated in the order to adjourn. (4) The arbitration panel shall be required to deter- mine the purchase price of the System according to the standards established in paragraph C below. (5) At the close of the hearings and within 30 days, the arbitrators shall prepare written findings and make a written decision agreed upon by a majority of the arbitrators which shall be served by mail upon City and Grantee. (6) The decision of a majority of the arbitrators shall be binding upon both parties except that City may, in its sole discretion and without any penalty or cost to City of any kind, withdraw its offer to purchase within 90 days of receipt of the final decision of a majority of the arbitrators. (7) Either party may seek judicial relief to the ex- tent authorized under Minnesota Statutes, M.S.A. §572.09 and §572.19 as the sme may be amended, and, in addition, under the following circum- stances: 72 (a) A party fails to select an arbitrator; (b) The arbitrators fail to select a third arbitrator; (c) One or more arbitrator is unqualified; (d) Designated time limits have been ex- ceeded; (e) The arbitrators have not proceeded expe- ditiously; or (f) Based upon the record the arbitrators abused their discretion. (8) In the event a Court of competent jurisdiction determines the arbitrators have abused their dis- cretion, it may order the arbitration procedure repeated and issue findings, orders and direc- tions, with costs of suit to be awarded to the prevailing party. (9) Cost of arbitration shall be borne equally. C. The purchase price of the System to be paid by City shall be the cost less depreciation (as shown on the books and rec- ords of Grantee) or market value, whichever is less. Good- will shall not be included in the purchase price of the System. D. Grantee expressly waives its rights, if any, to relocation costs that might otherwise be provided by law. E. The date of valuation shall be no earlier than the day fol- lowing the date of revocation, forfeiture, expiration or termination of this Franchise and no later than the date City makes a written offer for the System. 73 ARTICLE XII. MISCELLANEOUS SECTION 1. TRANSFER OF OWNERSHIP OR CONTROL A. This Franchise shall not be assigned or transferred, either in whole or in part, or leased, sublet or mortgaged in any manner, nor shall title thereto, either legal or equitable or any right, interest or property therein, pass to or vest in any person without the prior written consent of City, which consent shall not be unreasonably withheld. Further, Grantee shall not sell or transfer any stock or ownership interest so as to create a new controlling interest except with the consent of City, which consent shall not be unrea- sonably withheld. The transfers described in this paragraph shall, in the sole discretion of City, be considered sale or transfer of Franchise within the meaning and intent in the following paragraph. B. Any sale or transfer of Franchise, including a sale or transfer by means of a fundamental corporate change, requires the written approval of City. Any sale or transfer of Franchise shall be subject to the provisions of Board rules prohibiting certain ownership. The parties to the sale or transfer of Franchise shall make a written request to City for its consent. City shall reply in writing within 30 days of actual receipt of the request and shall indicate its approval of the request or its determination that a pub- lic hearing is necessary. City shall conduct a public hear- ing on the request within 30 days of such determination if 74 it determines that a sale or transfer of Franchise may adversely affect the Grantee's subscribers. C. Unless otherwise already provided for by local law, notice of any such hearing shall be given 14 days prior to the hearing by publishing notice thereof once in a newspaper of general circulation in the City. The notice shall contain the .date, time and place of the hearing and shall briefly state the substance of the action to be considered by City. Within 30 days after the public hearing, City shall approve or deny in writing the sale or transfer request. D. Any sale or transfer of Franchise, including a sale or transfer by means of a fundamental corporate change, requires notification to the Board by City. The notifica- tion shall be accompanied by the written certification of the transferee that it meets all of the requirements estab- lished by City for original Grantee including but not limited to technical ability and financial stability. City shall cause to be sent to the Board a copy of all public documents related to sale or transfer of the Franchise. E. The parties to the sale or transfer of only this Franchise, without the inclusion of the System in which at least sub- stantial construction has commenced, shall be required to establish to the sole satisfaction of City that the sale or transfer of only this Franchise is in the public interest. F. For purposes of this section, fundamental corporate change means the sale or transfer of a controlling interest in the stock of a corporation or the sale or transfer of all or a 75 majority of a corporation's assets, merger (including a par- ent and its subsidiary corporation), consolidation or crea- tion of a subsidiary corporation. For the purposes of this Section, fundamental partnership change means the sale or transfer of all or a majority of a partnership's assets, change of a general partn in a limited partnership, change from a limited to a general partnership, incorporation of a partnership, or change in the control of a partnership. G. The word "control as used herein, is not limited to major stockholders, but includes actual working control in what- ever manner exercised. As a minimum, "control as used herein, means a legal or beneficial interest (even though actual working control does not exist) of at least five (5 percent or more. Every change, transfer or acquisition of control of Grantee shall make the Franchise subject to can- cellation unless and until City shall have consented in writing thereto, which consent shall not be unreasonably withheld. For the purpose of determining whether it shall consent to such change, transfer or acquisition of control, City may inquire into the qualifications of the prospectice controlling party, and Grantee shall assist City in any such inquiry and pay all costs incurred by City in so inquiring, including City staff time at a value determined by City. H. In the absence of extraordinary circumstances, City will not approve any transfer or assignment of the Franchise prior to substantial completion of construction of System, as deter- mined solely by City. 76 I. In no event shall a transfer or assignment of ownership or control be approved without tranferee becoming a signator to this Franchise. J. Any transferee shall be subordinate to any right, title or interest of City. SECTION 2. REMOVAL AFTER TERMINATION. OR REVOCATION A. At the expiration of the term for which this Franchise is granted, or upon its revocation or termination, as provided for herein, City shall have the right to require Grantee to remove, at Grantee's expense, all or any portion of the Sys- tem from all streets and public property within City. In so removing the System, Grantee shall refill and compact at its own expense any excavation that shall be made by it and shall leave all streets and public property in as good a condition as that prevailing prior to Grantee's removal of the System, and without affecting, altering or disturbing in any way electric, telephone or other utility cables, wires or attachments. City shall have the right to inspect and 77 approve the conditicn of such streets and public property after removal. The Letter of Credit, Bonds, Insurance, In- demnity and Penalty provisions of this Franchise shall re- main in full force and effect during the entire term of removal. B. If, in the sole discretion of City, Grantee has failed to commence removal of System, or such part thereof as was des- ignated by City, within 30 days after written notice of City's demand for removal is given, or if Grantee has failed to complete" such removal within one year after written notice of City's demand for removal is given, City shall have the right to exercise one of the following options: (1) Declare all right, title and interest to the Sys- tem to be in City with all rights of ownership including, but not limited to, the right to oper- ate the System or transfer the System to another for operation by it. (2) Declare the System abandoned and cause the System or such part thereof, as City shall designate, to be removed at no cost to City. The cost of said removal shall be recoverable from the Letter of Credit, Bonds, Insurance, Indemnification and Pen- alties provided for in this Franchise, or from Grantee directly as a liquidated damage. C. Any portion of the System not designated by City for removal shall belong to and become the property of City without payment to Grantee and Grantee shall execute and deliver such documents, as City shall request, in form and substance acceptable to City, to evidence such ownership by City. SECTION 3. WORK PERFORMED BY OTHERS A. Grantee shall give notice to City specifying the names and addresses of any other entity, other than Grantee, which performs services pursuant to this Franchise, provided, however, that all provisions of this Fran- chise remain the responsibility of Grantee. 78 B. All provisions of this Franchise shall apply to any subcontractor or others performing any work or services pursuant to the provisions of this Franchise. SECTION 4. INTEREST RATE For purposes of this Franchise, prime rate shall mean the interest charged from time to time by the First National Bank of Minneapolis for 90 day unsecured loans to commercial borrowers of the highest credit rating. SECTION 5. GENERAL PROVISION ON RIGHTS AND REMEDIES A. All rights and remedies given to City by this Franchise shall be in addition to and cumulative with any and all other rights or remedies, existing or implied, now or hereafter available to City at law or in equity, and such rights and remedies shall not be exclusive, but each and every right and remedy specifically given by this Franchise or otherwise existing or given may be exercised from time to time and as often and in such order as may be deemed expedient by City, and the exer- cise of one or more rights or remedies shall not be deemed a waiver of the right to exercise at the same time or thereafter any other right or remedy. No delay or omission of City in the exercise of any right or remedy shall impair any such right or remedy, nor shall any such delay or omission be construed to be a waiver of or acquiescence to any default. The exercise of any such right or remedy by City shall not release Grantee from its obligations, or any liability, under this Franchise. 79 B. In addition to all other remedies granted or available to City, City shall be entitled to the restraint by injunction of the violation, or attempted or threatened violation, by Grantee of any terms or provisions of this Franchise, or to a decree compelling performance by Grantee of any term or provision of this Franchise. SECTION 6. APPLICABLE LAWS AND COURT DECISIONS: SEVERABILITY A. Grantee and City shall, at all times, comply with all laws, ordinances and regulations of federal, state and City government relating to System and this Franchise. B. If any law, ordinance or regulation shall require or permit Grantee to perform any service or shall prohibit Grantee from performing any service which may be in conflict with the terms of this Franchise, then as soon as possible fol- lowing knowledge thereof, Grantee shall notify City of the point of conflict believed to exist between such law, ordi- nance or regulation. C. If City determines that a material provision of this Fran- chise is affected by such law, ordinance or regulation, City shall have the right to amend, modify, alter or repeal any of the provisions of this Franchise to such reasonable ex- tent as may be necessary to carry out the intent and purpose of this Franchise, and Grantee hereby agrees to such amend- ment, modification, alteration or repeal of this Franchise. D. To the extent any provision of the Offering or rules of Board are not specifically set out in this Franchise or not 80 validly incorporated herein by reference, City from time to time may amend this Franchise to include such provision effective as of the date of commencement of the Franchise term or any such rule effective as of the date of commence- ment of the Franchise term or adoption of the rule, which- ever is later. Grantee, by acceptance of this Franchise, consents to and agrees to be bound by any such amendments. E. City reserves the right to revoke this Franchise and any right or privilege of Grantee hereunder without incurring any obligation or liability to Grantee if any provision of this Franchise shall be finally adjudged by a court of law invalid or unenforceable, and if City further finds that such provision constitutes at that time a consideration material to the continuance of the Franchise herein granted. F. If any term, condition or provision of this Franchise or the application thereof to any person or circumstance shall, to any extent, be held to be invalid or unenforceable, the re- mainder hereof and the application of such term, condition and provision to persons or circumstances other than those as to whom it shall be held invalid or unenforceable shall not be affected thereby, and this Franchise and all the terms, provisions and conditions hereof shall, in all other respects, continue to be effective and to be complied with. SECTION 7. GRANTEE WILL NOT CONTEST VALIDITY OF FRANCHISE Grantee agrees that it will not, at any time, set up against City in any claim or proceeding, any condition or term of this Franchise as unreasonable, arbitrary, void or that City had no 81 power or authority to make such term or condition, but shall be required to accept the validity of the terms and conditions of this Franchise in their entirety. SECTION 8. INTERPRETATION BY CITY OF FRANCHISE In case of any dispute or question as to the meaning, inter- pretation or application of any term, provision or condition of this Franchise, the Council of City in its sole discretion shall resolve such dispute or question. 82 ARTICLE XIII. ADMINISTRATION AND ADVISORY BODY SECTION 1. ADMINISTRATOR The City Manager or the City Manager's designee shall be responsible for the continuing administration of this Franchise. The administrator may be changed by City from time to time by written notice given to Grantee. SECTION 2. ADVISORY BODY City may appoint an advisory body to monitor the performance of Grantee in executing the provisions of this Franchise. The advisory body shall perform all functions required of it by the Council and applicable laws, ordinances, rules and regulations. SECTION 3. DELEGATION OF AUTHORITY BY CITY A. City reserves the right to delegate and redelegate from time to time any of its rights or obligations under this Fran chise to any body or organization. B. Any delegation by City shall be effective upon written notice by City to Grantee of such delegation. C. Upon receipt of notice by Grantee of City's delegation, Grantee shall be bound by all terms and conditions of the delegation not in conflict with this Franchise. D. Any such delegation, revocation or redelegation, no matter how often made, shall not be deemed an amendment to this Franchise or require any consent of Grantee. 83 ARTICLE XIV. JOINT SYSTEM, ACCEPTANCE, INCORPORATION OF OFFERING, EXHIBITS, PUBLICATION SECTION 1. OTHER FRANCHISES A. The System intended for City, may be part of a joint system that serves the cities of Eden Prairie, Edina, Hopkins, Min- netonka and Richfield, Minnesota. B. Grantee will, in good faith, apply for and accept, if offered to it, a franchise (similar franchise) from each of the other cities on all the same terms and conditions herein provided, except provisions omitted as inapplicable. C. Notwithstanding any other provision of this Franchise, if less than all of the other of said cities offer a similar franchise to Grantee, which is accepted by Grantee, Grantee or City may cancel this Franchise and all of their obliga- tions hereunder by written notice given to the other not later than 30 days after all the other of said cities shall have formally acted upon their respective franchise ordi- nances; provided, that if Grantee elects to cancel this Franchise pursuant hereto, it must also cancel all other franchises granted to it by the other of said cities effective simultaneously SECTION 2. TIME OF ACCEPTANCE; GUARANTEE; INCORPORATION OF 41/ OFFERING, EXHIBITS A. Grantee shall have 30 days from the last date of adoption of a similar franchise by all of the cities listed in Section IA of this Article, to accept this Franchise in 84 form and substance acceptable to City. However, in no event will acceptance occur later than 90 days after the adoption of this Franchise, unless the time for acceptance is extended by City. Such acceptance by Grantee shall be deemed the grant of this franchise for all purposes. B. Upon acceptance of this Franchise, Grantee shall be bound by all the terms and conditions contained herein. Grantee shall provide all services and offerings specifically set forth in the Offering to provide cable communication service within City and other cities included in or a part of a joint system; and, by its acceptance of this Franchise, Grantee specifically agrees that the Offering of Grantee, including all promises, offers, representations and induce- ments contained therein, is specifically incorporated by reference and made part of this Franchise. The failure to refer to the Offering in any specific provisions of this Franchise shall not be a limitation on the obligation of Grantee to fully comply with the Offering. Grantee further acknowledges that all promises, offers, representations and inducements contained in the Offering of Grantee were freely and voluntarily made to City by Grantee. C. The Offering shall be permanently kept and filed in the Office of the City Clerk and the originals or reproductions thereof shall be available for inspection by the public during normal business hours. Also, the Grantee may summa- rize the Offering in a manner acceptable to City or repro- duce the entire Offering, and shall have either at the following locations in the following quantities:. 85 (1) Office of the City Clerk 1 copy; (2) Administrator designated in this Franchise 1 copy; (3) Public libraries 1 copy each; (4) Office of the City Attorney 1 copy; (5) Hennepin County Law Library 1 copy; (6) Local office of Grantee 1 copy; (7) Office of any School District in City 1 copy. D. In the event of conflicts or discrepancies between any part of the Offering and the provisions of this Franchise or between any part of the summary made by Grantee and the Offering, those provisions which provide the greatest bene- fit to City, in the opinion of the Council, shall prevail. E. Grantee shall have continuing responsibility for this Fran- chise, and if Grantee be a subsidiary or wholly owned cor- porate entity of a parent corporation, performance of this Franchise shall be secured by guarantees of the parent cor- poration in form and substance acceptable to City, which shall be delivered at time of, and as part of, acceptance of this Franchise. F. With its acceptance, Grantee also shall deliver to City an opinion from its legal counsel, acceptable to City, stating that this Franchise has been duly accepted by Grantee, that the guarantees have been duly executed and delivered, that this Franchise and the guarantees are enforceable against Grantee and the guarantors in accordance with their respec- tive terns, and which opinion shall otherwise be in form and substance acceptable to City. 86 G. With its acceptance, Grantee also shall deliver to City true and correct copies of documents creating Grantee and eviden- cing the power and authority referred to in the opinion of Grantee's counsel, certified as of a then current date by public office holders to the extent possible and otherwise by an officer of Grantee. H. Each exhibit is a part of this Franchise and each is specif- ically incorporated herein by reference. The exhibits are as follows: Exhibit A Map of Construction by Area, Including Time Schedule. Exhibit B Rate Schedule 87 Passed and adopted this day of 1981. 411 ATTEST: CITY OF HOPKINS By By City Manager Mayor By 1 City Attorney This Franchise is accepted, and we agree to be bound by all its terms and conditions. MINNESOTA CABLESYSTEMS SOUTHWEST A Minnesota Limited Partnership By: Minnesota Cablesystems, Inc., a Minnesota Corporation Its General Partner By Its By Its I. A. TIER 1 TIER 2 TIER 3 SUBSCRIBER NETWORK Basic Rates. 1. TIERS Universal Service. Converter not re- quired for this service Family Service. Subscriber owns converter Subscriber rents converter from Grantee Full service. Subscriber owns converter Subscriber rents converter from Grantee EXHIBIT B GRANTEE SCHEDULE OF RATES Standard 150 Ft. Aerial Installation (First Outlet) 19.95 19.95 19.95 19.95 19.95 TIER 3 Expanded Service. (Expanded)(Included converter and unit) 19.95 Seniors Monthly Homebound Free Free 3.95 3.36 Various Various 5.95 5.06 *Various *Various 10.95 9.31 2. Rates will remain constant for two years after com- mencement of construction of System or until completion of all construction required by Article V, Section 1 of this Franchise, whichever is longer as determined by City. 3. Subscribers will have the option of renting various types of converters as follows: Grantee Converter Rate Schedule Initial Monthly Description Rate 1. Block Converter 1.00 2. OAK L -35 1.50 3. Scientific Atlanta 6700 -set-up converter 2.50 Descrambler option 3.00 remote control option 4.00 -addressable feature 5.00 (not initially available) The rental rate shall be added to the appropriate base rate shown in the table above if the subscriber rents the converter from Grantee. Subscribers may choose to rent or buy converters from sources other than the Grantee, however, a Grantee converter or descrambler will be necessary for premium services. 4. The standard installation rate will include the installation of 150 feet or less of aerial cable drop to each subscriber dwelling within the initial service area. Aerial installations within the initial service area in excess of 150 feet will be charged at cost on a time and material basis. Underground installations will be charged at cost on a time and material basis. Free standard installation on TIERS 2 and 3 will be provided within the first 30 days of energizing newly com- pleted construction areas in the initial service area. 5. For dwelling units located within the initial service area but in areas where the density is lower than 40 homes per street mile, Grantee retains the right to assess the following additional installation charges pursuant to the following con- ditions: -2- a. There will be no free installation period. b. Grantee will make special financial ar- rangements to allow subscribers to pay the installation charges over time as part of the monthly billing at the pre- vailing terms on consumer loans. c. The rates quoted are based on currently projected costs of construction. Should the cost of construction be less than anticipated, installation charges will be lowered accordingly. 6. Senior Citizen and Homebound discounts of 15% will be offered on standard installation and monthly service of TIERS 2 and 3. The discount is available to all dwelling units where the head of the household is a senior, 62 years of age or older, or homebound. B. Extra Outlets. TIER 1 Converter not required TIER 2 Density /Mile Additional Cost Per Installation 30 to 39 20 to 29 1 to 19 Subscriber owns converter Subscriber rents converter from Grantee -3 40.00 60.00 80.00 *Installation (At time of initial Installation) 10.00 each 10.00 each 10.00 each Monthly Free $1.95 each *Various TIER 3 Subscriber owns converter 10.00 each $3.95 each Subscriber rents converter from Grantee 10.00 each *Various *Each outlet installed after the initial installation will be $14.95 each. *Same Converter rental option as provided for under Section IA of this Exhibit B. C. Reconnection. Charges for reconnection of existing installations shall be $14.95 for each reconnection regardless of the number. of outlets. D. Commercial Rates For Subscriber Network Services. These rates will be subject to negotiation and will depend on the number of outlets required and the type of services selec- ted. A typical commercial rate for department store requesting 10 outlets on TIER 3 with no converters and no premium pay would be: Installation (at cost on a time and material basis) Monthly Rate 1st outlet $15.00 2nd outlet $10.00 3rd outlet 5.00 Additional outlets 4.00 E. FM Rates. FM service is included in the rate structures for TIER 2 and TIER 3. F. Multiple Dwelling Rates. 1. Rates will be negotiated depending on the type of service requested and the number of dwelling units served. Discounts are generally negotiated for Tiers 1, 2, and 3, and subscribers have the option to pay individually for premium ser- vices. 2. Typical Percentage Discounts for Tier 3 Service Low Rise (Fewer than four stories with no elevator) e Fewer than 25 units 5% More than 25 units 10% High Rise 30 to 49 units 10% 50 to 99 units 15% 100 to 199 units 20% 200 units upwards 25% 3. If the multiple dwelling is occupied by only senior citizens or homebound persons or both, both the multiple dwelling discount and the seniors and homebound discount will apply to the monthly basic cable rate. G. Miscellaneous Provisions Regarding Converters. 1. No deposit 'will be charged on the rental of Grantee converters. Grantee, however, reserves the right to institute a converter deposit if excessive loss or damage to the converter units is experienced. 2. The various monthly converter rental rates include the replacement and /or repair of defective units. 3. Subscribers renting Grantee converters will have the option to buy them at a price based on the type of converter and length of time the converter has been rented. H. Premium Services. 1. Premium service rates shall be as follows: MONTHLY Home Theater Network 3.95 Home Box Office 7.50 CINEMAX 7.50 The Movie Channel 7.50 Showtime 7.50 Premiere 7.50 -.5- 2. A $1.00 per month discount will be offered to subscrib- ers taking two or more premium services other than Home Theater Network at any one time. 3. Lockout devices will be available free of charge. 4. Installation for premium services shall be free with the initial installation of Tier 2 or 3 service. Thereafter, any number of premium services added at the same time shall be added at a maximum cost of $14.95. 5. Pay-per-view service shall be charged on the basis of the event chosen. The range of charges is expected to be in the order of $2.00 to $5.00 per event. 41Ik II. SERVICES TO GOVERNMENT AND EDUCATION FACILITIES (INCLUDING LIBRARIES) A. Installation Fees: 1. One cable outlet (per facility) Free 2. More than one outlet (per facility) At cost of time and materials B. There shall be no monthly charge for Tier 1, 2, or 3. III. RATES FOR HOME SECURITY STATUS MONITORING Installation Monthly A. Single: fire alarm, medic alert, or security alert button Double: any two services Triple: all three services 49.95 maximum 99.95 maximum 119.95 maximum 4.95 maximum 5.95 maximum 6.45 maximum Intrusion sensor system of Grantee or other provider variable 4.95 up depending on depending on options taken options taken and provider and provider of system of system B. This rate schedule is exclusive of other third party charges that may be levied by emergency agencies or city licensing. C. Promotional Discounts. Rates in this Exhibit B are maximum rates. Grantee may allow special discounts during promotional or other marketing activities. Iv. INSTITUTIONAL NETWORK 411 A. Installation. Grantee's installation charge will be based upon the cost of material and labor. Grantee will provide an installation quote free of charge on request of any potential institutional network subscriber. Grantee may waive the installation charge. Institutional subscribers must supply any conduits, race- ways, trenches or other passages necessary to permit installation of cable from the distribution line to the location(s) of the terminal equipment. B. Institutional Network Rates. 1. Institutional rates depend upon the use (video or data channel), the number of points involved in the communication, whether the communication is one-way or two -way, and whether the use is full -time (24 hours a day, 365 days a year) or only part time (on an hourly basis). Packet data rates are calculated on a -7.. use basis per 1,000 packets of data. One packet is 80 characters or less. 2. Rates for transmission capacity do not include the costs of terminal equipment modulators, modems, and demodulators. 3. The institutional subscriber may be charged $20 per month. For this charge Grantee shall provide communications security system equipment installed on the subscriber's premises by Grantee. Such equipment may include addressable taps, trans- mitter and filters or converter as required and the special channels from 300 to 402 MHz. 4. Rates are as follows: TYPE OF SERVICE a. For Video (6MHZ Channels, used full -time twenty -four hours a day) (1) One point to one other point on network (2) One point to one other point on network and return (3) One point to all other points on network (4) One point to all other points on network and return b. For Video (6MHZ) Channels, used part -time (1) From one point to one other point on network (2) From one point to one other point on network and return (3) From one point to all other points on network (4) From one point to all other points on network and return (5) Special Teleconference Yearly Rate for one hour per business day allow access to RATE $435 /month max. $865 /month max. $3,000 /month max. $6,000 /month max. $7.50 /hour max. $15.00 /hour max. $50.00/hour max. $110.00/hour max. $1,800.00 /year ma c. For data channel full -time (0.25MHz) (1) From one point to one other point on network (2) From one point to one other point on network and return (3) From one point to all other points on network (4) From one point to all other points on network and return d. For data channel, full -time (0.50MHz) (1) From one point to one other point on network (2) From one point to one other point on network and return (3) From one point to all other points on network (4) From one point to all other points on network and return e. For data channel, full -time (1.00 MHz) (1) From one point to one other point on network (2) From one point to one other point on network and return (3) From one point to all other points on network (4) From one point to all other points on network and return For data channel, full -time (2.00MHz) From one point to one other point on network From one point to one other point on network and return From one point to all other points on network From one point to all other points on network and return (4) $36 /month max. $56 /month max. $232 /month max. $366 /month max. $52 /month max. $100 /month max. $355 /month max. $596 /month max. $87 /month max. $168 /month max. $614 /month max. $1,050 /month max $157 /month max. $308 /month max. $1,132 /month max $1,960 /month max do g. Packet Switching Data Network (1) Data transmission charge $1.00/1000 packe (2) Connection to Packet Network $100 (3) Cable Access Processor lease $25 /month *To calculate the rate for FM video channels, multiply the 6MHz rate by 2.3. *Data channels may be used for analog signal transmission such as audio. MOTION ADOPTION OF CABLE TELEVISION FRANCHISE ORDINANCE I move that the ordinance as presented to this Council granting a cable television franchise in this City to Minnesota Cablesystems Southwest, a Minnesota Limited Partnership, and the Findings set out in that ordinance, be adopted and published. I further move that the Mayor and Manager be authorized, for and on behalf of the City, to sign and deliver the fran- chise, and all other documents to be signed and delivered by the City in connection with the franchise.