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ORD 1986-27TOWN OF TROPHY CLUB, TEXAS ORDINANCE N0. 0 86_27 AN ORDINANCE OF THE TOWN OF TROPHY CLUB, TEXAS GRANTING TO PLANNED CABLE SYSTEMS CORPORATION A FRANCHISE TO CONSTRUCT, OWN, OPERATE AND MAINTAIN A CABLE TELEVISION SYSTEM WITHIN THE TOWN OF TROPHY CLUB, TEXAS; SETTING FORTH THE TERRITORIAL AREA ENCOMPASSED BY THIS FRANCHISE; ESTABLISHING LIABILITY AND PROVIDING FOR INDEMNIFICATION; ESTABLISHING OPERATIONAL STANDARDS AND STANDARDS OF SERVICE; ESTABLISHING CONDITIONS OF STREET OCCUPANCY; PROVIDING FOR PAYMENT OF A FRANCHISE FEE TO THE TOWN; PROVIDING FOR PERIODIC REVIEW AND AMENDMENTS; PRESCRIBING THE TERMS, CONDITIONS, OBLIGATIONS AND LIMITATIONS UNDER WHICH THIS FRANCHISE SHALL BE EXERCISED; PROVIDING A SEVERABILITY CLAUSE. WHEREAS, the Town of Trophy Club, Texas (the "Town") has been heretofore duly incorporated pursuant to the laws of the State of Texas; and WHEREAS, the Planned Cable Systems Corporation ("Planned Cable") was, prior to the incorporation of the Town, providing cable television services to that area now comprising the corporate limits of the Town and is currently providing such services; and WHEREAS, because of Planned Cable's historic position in providing cable television service to the citizens of the Town, the Town Council desires to award this franchise to Planned Cable and finds that such award is in the best interest of the health, safety and welfare of the citizens of the Town. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF TROPHY CLUB, TEXAS: SECTION 1. That the above and foregoing preamble is incorporated herein as if copied herein in its entirety. SECTION 2. DEFINITIONS. For the purposes of this ordinance the following terms, phrases, words, abbreviations, and their derivations shall have the same meanings given herein. When not inconsistent with the content, words used in the present tense include the future; words in the plural number include the singular number, and words in the singular include the plural. The word "shall" is always mandatory and not merely permissive. I. "Affiliate", when used in relation to any person, means another person who owns or controls, is owned or controlled by, or is under common ownership or control with, such person. 2. "Basic cable service" means any service tier which includes the retransmission of local television broadcast signals. 3. "Broadcast" means the over -the -air transmission of eleetro-magnetic audio or video signals. 4. Cable channel" or "channel" means a portion of the electromagnetic frequency spectrum which is used in a cable system and which is capable of delivering a television channel (as television channel is defined by the Federal Communications Commission. b. "Cable operator" means any person or group of persons (a) who Provides cable service over a cable system and directly or through one or more affiliates owns a significant interest in such cable system, or (b) who otherwise controls or is responsible for, through any arrangement, the management and operation of such a cable system. 6. "Cable service" means (a) the one-way transmission to subscribers of (i) video programming, or (ii) other programming service, and (b) subscriber interaction, if any, which is required for the selection of such video programming or other programming device. 7. "CATV" or "CATV system" shall mean a cable system as hereinafter defined. 8. "Cable system" means a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, but such term does not include (a) a facility that services only to retransmit the television signals of 1 or more television broadcast stations; (b) a facility that serves only subscribers in 1 or more multiple unit dwellings under common ownership, control, or management, unless such facility or facilities uses any public right-of-way. 9. "Cable Television Service" shall mean the delivery by the Grantee to television receivers, or any other suitable type of audio -video communication receivers, to all subscribers in the Town of all broadcast signals allowed by the FCC to be carried over the CATV system, all FM radio stations carried on the system, local origination channels, educational access channels, public access channels, government access channels, leased access channels, pay television channels, and other services at the option of the company. 10. "Cablecast" shall mean to transmit over a cable television system. 11. "Channel" shall mean a band of frequencies six megahertz in width in the electromagnetic spectrum. 12. "Converter" shall mean an electronic device capable of converting electronic signals to other than their original frequencies so as to eliminate interferences within television receivers of subscribers. aoa9j -2- 13. "Dwelling unit" shall mean a room or suite of rooms, in a building or portion thereof, used for living purposes by one family. 14. "Educational Authorities" shall mean those public or private school districts within the Town of Trophy Club, and/or those colleges and universities within the Town of Trophy Club, whether operating independently or in unison in relation to the transmission or reception of programming through the CATV system. 15. "FCC" shall mean the Federal Communications Commission. 16. "Federal Agency" means any agency of the United States, including the FCC. 17. "Franchise" shall mean the authorization granted by this ordinance to construct, operate, and maintain a CATV system in the Town of Trophy Club. 16. "Franchising authority" means any governmental entity empowered by Federal, State, or local law to grant a franchise. 19. "Full Service" shall mean the level of service received by a CATV system subscriber for an additional charge over the Basic Service charge and which will allow for the capability to receive all services being offered by the Grantee with the exception of pay television services or limited access services. 20. "Grantor" shall mean the Town of Trophy Club. 21. "Grantee" shall mean Planned Cable Communications, Inc., the party to which a franchise by this ordinance is granted, and includes its lawful successors and assigns. 22. "Gross Annual Revenues" shall mean all revenues received by the Grantee, its affiliates or subsidiaries from and in connection with the operation of a cable television system as authorized by this franchise. For the purposes of this section, this term shall include, but not be limited to, installation fees, subscriber fees, charges for lease of channels, revenue from advertising, and revenue from pay television. The term shall not include any taxes on services furnished by the Grantee which is imposed directly on any subscriber or user by any city, state or other governmental unit and collected by the Grantee for such governmental unit. 23. "Grade B contour" means the field strength of a television broadcast station computed in accordance with regulations promulgated by the FCC. 24. "Other programming service" means information that a cable operator makes available to all subscribers generally. 25. "Pay Television" shall mean the delivery over the CATV system of video and audio signals in intelligible form to subscribers for a fee or charge over and above the charge for basic or full services, on a per program, per channel, or other subscription basis. 0049j q -3- 26. "Person" means an individual, partnership, association, joint stock company, trust, corporation, or governmental entity or any other entity recognized in law. 27. "Premium Service" shall mean the same as pay television. 2$. "Public, educational, or governmental access facilities" means: (A) Channel capacity designated for public, educational, or governmental use; and (B) Facilities and equipment for the use of such channel capacity. 29. "State" means any State, or political subdivision, or agency thereof. 30. "Service tier" means a category of cable service or other services provided by a cable operator and for which a separate rate is charged by the cable operator. H. "Subscriber" shall mean a recipient of services which are delivered over the CATV system. 32. "Street" shall mean the surface of and the space above and below any public street, road, highway, freeway, lane, path, alley, public way or place or other easement now or hereafter held by the Town and shall include other easements or rights of way as shall be now held or hereafter held by the Town and its Grantee to the use thereof for the purposes of installing or transmitting cable television system transmissions over poles, wires, cables, conductors, ducts, conduits, vaults, manholes, amplifiers, appliances, attachments, and other property as may be ordinarily necessary and pertinent to a cable television system. 33. "Town" shall mean the Town of Trophy Club, Texas. Club. 34. "Town Council" shall mean the governing body of the Town of Trophy 35. "Video programming" means programming provided by, or generally considered comparable to programming provided by, a television broadcast station. SECTION 3. GRANTING CLAUSE. (a) There is hereby granted by the Town to Planned Cable Communications, Inc., hereinafter referred to as Grantee, the right and privilege to construct, erect, operate, and maintain in, upon, along, across, above, over, and under the streets, and all extensions thereof, and additions thereto in the Town, poles, wires, cables underground conduits, manholes, and other cablevision conductors fixtures necessary for the maintenance, operation, and distribution to television and radio signals to and from subscribers and/or users; provided, however, no overhead wires or cables may be installed where the Town has required underground installation of other wire or cable service. OO's 9J -4- (b) The right to use and occupy said streets for the purposes herein set forth shall not be exclusive, and the Town reserves the right to grant a similar use of said streets to any person at any time during the period of the franchise. SECTION 4. FRANCHISE TERM. The franchise term and the rights, privilege, and authority hereby granted shall take effect and be in force from and after its date of passage, as provided by law, and shall continue in force and effect for a term of fifteen (15) years; provided, however, that within ten (10) days after the date of the final passage of this franchise ordinance, the Grantee shall file with the Town Secretary its unconditional acceptance of the terms of this ordinance and promise to comply and abide by all its provisions, terms, and conditions. Such acceptance and promise shall be in writing duly executed and sworn to, by and on behalf of the Grantee before a notary public or other officer. authorized by law to administer oaths. In the event that such instrument as aforesaid shall not be filed within the time required, this ordinance and the rights, privileges, and franchise as hereby granted shall ipso facto be, and become, terminated, null, and void. SECTION 5. RENEWAL. Renewal of this franchise shall be conducted according to the regulations as set out in the Section 626 of the Cable Communications Act of 1984, and any amendments thereto. SECTION 6. TRANSFER OF FRANCHISE. (a) The franchise granted under this ordinance shall be a privilege to be held in trust by the Grantee. It shall not be assigned, transferred, sold or disposed of, in whole or in part, by voluntary sale, merger, consolidation or otherwise or by force or involuntary sale, without prior consent of the Town Council expressed by ordinance, and then on only such conditions as may therein be prescribed. The Town is hereby empowered to take legal or equitable action to set aside, annul, revoke cancel the franchise, or the transfer of the franchise, if said transfer is not made according to the procedures established in this ordinance. (b) Any sale, transfer, or assignment shall only be made by a bill of sale or similar document, copies of which shall be filed with the Town Secretary at least forty-five (45) days prior to the proposed date of the sale, transfer, or assignment. The Town Secretary shall notify the Town Council of the receipt of such notice of a proposed sale, transfer, or assignment, and the Town Council shall call a public hearing prior to approving or disapproving such sale, transfer, or assignment. Within 30 days of the date of the public hearing, the Grantee shall notify its subscribers of the hearing by announcement on at least two channels of its system, between the hours of 7:00 P.M. and 10:00 P.M., for 15 consecutive days preceding the date of the public hearing, and in addition shall provide written notice to all subscribers. The Town Council shall not withhold its consent unreasonably; provided, however, that the proposed assignee shall agree to comply with all the provisions of this ordinance and the franchise and must able to provide proof of financial responsibility as determined by the Council. 0049J -5- (c) Nothing in this Section shall be deemed to prohibit the assignment, mortgage, or pledge of the system or any part thereof for financing purposes; provided, however, that such financing purposes shall for the construction, maintenance, or improvement of the CATV system authorized by this franchise. SECTION 7. FRANCHISE TERRITORY AND LINE EXTENSION POLICY. (a) This franchise shall be for all areas of the Town of Trophy Club presently served by Grantee and all other areas of the Town, including any area henceforth added thereto. Grantee shall provide service to all potential subscribers within the above mentioned service area within 12 months of the passage of this franchise. SECTION 8. CONSTRUCTION TIMETABLE. (a) Upon accepting the franchise, Grantee shall, within 60 days, file the documents required to obtain all necessary federal, state and local licenses, permits, and authorizations required for the conduct of its business, and shall submit monthly progress reports to the Town Council on progress in this respect until all such documents are in hand. In the event that the documents necessary to receive the proper licenses and certificates are not filed within the above stated 60 days, the Town Council may declare this ordinance null and void. (b) Failure to provide service availability to the areas defined in Section 7(a) above within the designated 12 month period shall be considered a material breach of the franchise and subject Grantee to the penalties enumerated hereinafter, except for delays caused by acts of God, national emergencies, strikes or delays caused by the Town, its agencies, or other utilities. SECTION 9. USE OF STREETS. (a) The Grantee shall have the right to use the streets of the Town for the construction, operation, and maintenance of a cable system as prescribed, regulated, and limited by provisions of this ordinance, and by State, local, and Federal law, both present and future. (b) All transmission and distribution structures, lines, and equipment placed, installed or erected by the Grantee within the Town shall be so located as to cause minimum interference with the proper use of streets, and to cause minimum interference with the rights and reasonable convenience of property owners who join any of the said streets. (c) In case of disturbance of any street or paved area the Grantee shall, at its own cost and expense and in a manner approved by the Town Council, replace, and restore such street and/or paved area in as good a condition as before the work involving such disturbance was done. (d) If at any time during the period of the franchise the Town shall lawfully elect to alter or change the grade of any street or construct any other public works, the Grantee, upon reasonable notice by the Town Council, shall remove, relay, and relocate its poles, wires, cables, underground conduits, manholes, and other fixtures at its own expense. 0049] -6- (e) All cables, wires, and other like facilities of Grantee shall be placed underground. (f) The Grantee shall, prior to the construction of any portion of the transmission and/or distribution plant of the cable television system, submit detailed plans and specifications of the distribution system to the Town Council or his designated agent for review and approval. No construction shall start until such plans have been approved. SECTION 10. CONFORMANCE TO CERTAIN STANDARDS. (a) Methods of construction, installation, and maintenance of the cable television system shall comply with the National Electrical Safety Code 1975 (ANSI CI -75) to the extent that such Code is consistent with local law affecting the construction, installation, and maintenance of electric supply and communications lines. To the extent that such Code is inconsistent with other provisions of this franchise or with local laws, the latter shall govern. (b) Grantee shall at all times comply with the following as they exist at the time the Grantee is engaging in an activity covered hereby: 1. National Electrical Code of the National Fire Protection Association. 2. Requirements of the Town in regard to various electrical wiring necessary to the operation of Town functions including, but not limited to, traffic control signalization, street lighting, fire lines, and communications lines. (c) Radio frequency leakage shall be checked at reception locations for emergency radio services to prove no interference signal combinations are possible. Stray radiation shall be measured adjacent to any proposed aeronautical navigation radio sites to prove no interference to airborne navigation reception in the normal flight patterns. FCC rules and regulations shall govern. (d) All new cable conduit installed by company shall have multiple cable capacity. (e) Grantee shall install all necessary trunk, feeder cable or conduit in new subdivisions contiguous to its franchise service area contemporaneously with the provision of electric service to said subdivisions consistent with good construction practices and applicable Town building, fire and electrical codes. Where feeder cable conduit is not necessary, Grantee shall install all feeder cables contemporaneously with the provision of electric service consistent with good construction practices and applicable Town building, fire and electrical codes. SECTION 11. SYSTEM DESIGN CRITERIA. (a) The cable television system installed in the Town of Trophy Club shall be initially capable of cablecasting no less than 40 channels of video services or its equivalent of video, audio, or other combination of electronic signals. OO49j -7- (b) Within (6) months of the date of the acceptance of this franchise by the Grantee, Grantee shall file with the Town Secretary a full, detailed statement which shall be incorporated by reference to this franchise ordinance as Exhibit "A" and which shall contain the following information. 1. The location of the cable television systems headend facilities, local origination studio facilities, receiving and transmitting station for the sending or receiving of programming by way of satellite, and central business office. 2. The location of all regional headend microwave transmission and receptionn antenna sites. 3. The location of all designated points within the system wherein electronic signals (video and/or audio) may be transmitted into the system other than the central headend area, and other than schools. 4. A list of lessors of any of the delineated locations which are leased to the Grantee. 5. A description of the general cablecasting equipment to be utilized in the local origination studio facility. 6. A description of any mobile unit or facility to be utilized by the Grantee in the production or transmission of programming. (c) The Grantee agrees and affirms that the statement of programming services on each channel of the 40 channels or its equivalent of video, audio or other combinations of electronic signals, which is incorporated as Exhibit "B" and adopted by reference, shall constitute the initial level of programming to be available to all subscribers who shall agree to purchase basic, full and/or premium services of the Grantee. Such programming may be changed by Grantee subject to providing an equivalent amount of programming for each level of service. Failure to provide as a minimum the service or its equivalent set out on Exhibit "B" shall constitute a breach of the franchise agreement. (d) Access channels: The Grantee will provide an access channel for the primary use of the Town of Trophy Club. In addition, another access channel shall be provided for public, educational, and other governmental use. Whenever the Public Educational Government access channel is being utilized 80% of the time between 9 a.m. and 11 p.m. on a weekly basis, the Grantee will provide additional access channels, not to exceed, in the aggregate, four channels. (e) The access channels delineated herein shall be made available to the authorized government, non-profit civic and non-commercial users at no cost; provided however, that the Grantee shall be authorized to charge non -access users for the use of its local origination studio facilities and/or technical personnel a fee of which shall be no greater than its actual cost to providing such services and/or personnel. 0049] W The Grantee hereby agrees that it shall utilize all its resources to encourage the development and utilization of those channels herein described as access channels. (g) The Grantee shall be allowed to utilize the channels designated as access except Grantor's government access channel for such other purposes as it may deem appropriate at all times the users are not utilizing these channels. (h) Control over the content of the programming transmitted over the access channels y the Grantee shall limited to that level which is authorized by the FCC or other law during the length of the franchise term. (i) The Grantor shall develop all rules governing access channel utilization (not including the educational access channel). (j) The Grantee and Town hereby agree that educational authorities shall be given sufficient time to formulate rules governing scheduling of programming of those access channel dedicated for use by the educational community, and that such rules, when formulated, shall be utilized by the Grantee and all parties involved. Such rules shall be subject to Town approval. In the event of a scheduling conflict, Grantee shall have the right to seek amendment to the educational access rule. (k) The Grantee shall provide each public, educational, or government entity, upon request, all electronic devices necessary for access programming on the access channels at no cost. (1) Grantee shall undertake any and all construction and installation necessary to keep current with the latest developments in the state of the art CATV, whether with respect to increasing channel capacity, developing other new services, instituting more extensive two-way service or otherwise. (m) Emergency Use of Facilities. In the case of any emergency or disaster, the Grantee shall, upon request of the Mayor of the Town, make available its facilities to the Town for emergency use during the emergency or disaster period. SECTION 12. INSTALLATION AND MAINTENANCE AT SERVICE CONNECTIONS IN PUBLIC BUILDINGS. (a) The Grantee shall provide one service connection in each of the following locations: 1. Each room or office of all governmental owned or operated buildings or facilities within the franchise territory as may be now or hereinafter designated by the Town Council. 2. Each room or office of all public or parochial schools, colleges, or university buildings, as may be now or hereinafter designated by the chief administrative officer, or his agent, of each school, college or university within the franchise territory. (b) No charge will be made by the Grantee for the installation, disconnection (when requested), reconnections (when requested), monthly services, and/or maintenance of equipment on any service connection authorized by oo49j -9- subsection (a) above. A converter to provide the capability of receiving all services except "Pay Television" shall be provided to each location at no cost. SECTION 13. PERFORMANCE EVALUATION SESSIONS. (a) The Town, at its discretion, may hold performance evaluation sessions within thirty (30) days of each anniversary date of the Grantee's award of the franchise and as otherwise may be required by Federal and State law. Topics which may be discussed at any Performance Evaluation Session may include, but shall not be limited to, state of the art of cable technology, franchise fee, penalties, free or discounted services, application of new technologies, system performance, services provided, programming offered, customer complaints, privacy, amendments to this ordinance, judicial and FCC rulings, line extension policies, Grantee's ascertainment of community needs and use of the system, and Grantee or Town rules. (b) The Town at its discretion, may hold special monthly meetings with the Manager of Planned Cable Communications, Inc. and the Town Mayor. Topics of the meetings may include, but shall not limited to, system performance, customer complaints, customer service, penalties, community needs and use of the system, Town rules and requirements and line extension policies and procedures. (e) During a performance evaluation session or special monthly meeting the Grantee shall fully cooperate with the Town and shall provide all information and documents requested by the Town. SECTION 14. SYSTEM TECHNICAL STANDARDS. (a) Grantee shall construct, install, operate and maintain its system in a manner consistent with this franchise ordinance, all laws, ordinances, construction standards, governmental requirements, and FCC technical standards or FCC recommendations and the specifications set forth in FCC rules and regulations, 47 CFR, sections 76.601 through 76.617, as may now exist or may be hereinafter be amended, which standards are hereby incorporated by reference herein. In addition, Grantee shall provide the Town, upon request, with a written the results of Grantee's annual proof of performance tests conducted pursuant to FCC or Town standards, requirements or recommendations, or an equivalent test as determined by Town. (b) The Grantee shall provide a system which overall is of a quality in excess of the requirements or recommendations of the FCC. For video signals, the signal delivered to the subscriber's television receiver shall be interference free and shall at a minimum meet all FCC technical standards or recommendations. The following distribution system performance specifications will be met by Grantee (without HRC enhancement). Compliance with performance specifications shall be determined from measurements, tests and on-site observations applied to the worst case for the respective subscriber and institutional loops; e.g. signal received by farthest subscriber, including distribution system and largest super trunk effect, measured at subscriber's television or radio receiver. 0049] -10- Signal -to noise ratio of 46 dB at the interference of any signal received off air or via microwave from a local broadcast, or for any signal received via satellite. Carrier -to -noise ratio of 44 dB, in a 4 MHz bandwidth, between interface and any subscriber's receiver. Cross -modulation ratio of 52 dB at any subscriber's receiver. Minimum signal level of 3 dBmV and maximum signal level of 20 dBmV at any subscriber's receiver. (c) In addition to the technical standards set forth in above, Grantee at all times shall maintain a signal that is not substandard on any channel(s). if the Town determines that the signal is intermittently substandard or has constant interference, then upon written notice Grantee shall have five (5) working days during which to correct or be subject to the penalties set forth in section 22(a) of this ordinance, even though the signal may, at the time of penalty imposition, meet the section 14 standards. (d) These are the minimum specifications to be maintained throughout the term of the Franchise. However, should improvements in technology cause these performance standards to become outdated, then these standards shall be updated, amended, or otherwise revised, to reflect changed conditions, improved technology, or the state of the art. (e) The Grantee further agrees to provide the following in the construction, operation, and maintenance of the cable television system: 1. The cable television system shall be continuously operational on a 24 hour a day basis. 2. The cable television system shall be designed and operated so as to avoid causing interference with reception of off -the -air signals by non -subscribers to the system. 3. The cable television system shall be so designed, installed and operated so as to assure the delivery to all subscribers of standard color and monochrome signals on the FCC designated Class I television channels without noticeable picture degradation or visible evidence of color distortion or other forms of interference directly attributable to the performance of the cable television system. SECTION 15. RATES AND CHARGES FOR SERVICE Rates and charges for service may be regulated by. the Town to the extent allowed under the Cable Communication Act of 1984 (See. 623) and regulations promulgated thereunder. If the law or regulations are amended, the Town reserves the right to regulate the rates and charges for service to the fullest extent allowed under the amended regulations. 0049 -11- SECTION 16. FRANCHISE FEE. (a) Annual Franchise Payment. In consideration of the terms of this franchise, the Grantee shall pay annually to the Town a sum equal to three percent of the gross annual revenues of the cable television system within the Town limits. Such payment shall be in addition to and shall not be construed as payment in lieu of personal or real property taxes, trench fees, building permit fees, or other government assessments or changes levied by the Town. (b) The payment due to the Town as is required in subsection (a) above, shall be computed and due annually, based on Grantee's fiscal year. The Grantee shall file with the Town, within 30 days after the expiration of the Grantee's fiscal year, a financial statement approved and signed by a certified public accountant clearly showing the gross revenues received by the Grantee during the said fiscal year. Payment of the franchise fee shall be payable to the Town at the time such statement is filed. (c) The Town shall have the right to inspect the Grantee's income records, the right of audit and the recomputation of any amounts determined to be payable under this ordinance, provided however, that such audit shall take place within forty eight (48) months following the close of each of the Grantee's fiscal years. Any additional amount due the Town as a result of the audit shall be paid within thirty (30) days following written notice to the Grantee by the Town, which notice shall include a copy of the audit report. The cost of said audit shall be borne by the Grantee if it is properly determined that the Grantee's annual payment to the Town for the preceding year is increased thereby by more than five percent (5%). (d) In the event that any franchise payment or recomputed amount is not made on or before the applicable dates heretofore specified, interest shall be charged from such due date at the annual rate of ten percent (10%). (e) No acceptance of any payment by the Town shall be construed as a release or as an accord and satisfaction of any claim the Town may have for further or additional sums payable as a franchise fee under this ordinance or for the performance of any other obligation of the Grantee. SECTION 17. ACCOUNTING PROCEDURES LIABILITY & INDEMNIFICATION. (a) Method of Accounting. The Grantee shall maintain its books and a system of accounts in accordance with methods of accounting applicable to the cable television industry. (b) Depreciation Reserves. The Grantee shall establish and maintain sufficient depreciation reserves to preserve the integrity of the property used and useful in rendering its services to the public. The depreciation reserves so established may be used only for the replacement, improvement, betterment, and extension of the Town of Trophy Club cable television system. The amount and character of reserves shall be in accordance with current common practices applicable to the cable television industry. 0049] -12- (c) Liabilitv and Indemnification. (1) The Grantee shall indemnify and hold the Town harmless from any and all loss sustained by the Town on account of any suit, judgment, execution, claim or demand whatsoever against the Town resulting from the Grantee's construction, operation, or maintenance of the cable system. (2) The Grantee shall pay and, by its acceptance of this franchise the Grantee agrees that it will pay, all expenses incurred by the Town in defending itself with regard to all damages and penalties outlined in subsection (1) above. These expenses shall include all out-of-pocket expenses, including but not limited to attorney fees, and shall also include the reasonable value of any services rendered by the Town Attorney or his assistants or any Town employee. (3) The Grantee shall carry throughout the length of term of this franchise personal and property damage liability insurance with responsible insurance companies qualified to do business in the State of Texas, which insurance shall carry the Town as a co-insured party. The amounts of such insurance to be carried for liability due to property damage shall be $300,000 for property damage to any one person; $500,000 for property damage in any one accident; $500,000 for personal injury to any one person; and $1,000,000 for personal injury in any one accident. (4) The insurance policy or policies obtained by the Grantee in compliance with this section must be approved by the Town Mayor and, along with written evidence of payment of required premiums, shall be filed and maintained with the Town Secretary during the term of the franchise. SECTION 18. REPORTS AND RECORDS. (a) Copies of all petitions, applications, and communications submitted by the Grantee to the Federal Communications Commission, Securities and Exchange Commission, or any other federal or state regulatory commission or agency having jurisdiction in respect to any matters affecting cable television operations authorized pursuant to the franchise shall be simultaneously submitted to the Town Council upon request. (b) The Grantee shall maintain an office in the Town for so long as it continues to operate the System or any portion thereof and shall designate such offices as the place where all notices, directions, orders and requests may be served or delivered under this ordinance. The Town Secretary shall be notified of the location of such office or any change thereof. (c) The Grantee shall keep complete and accurate books of account and records of its business and operations under and in connection with the ordinance and franchise. All such books and records shall be made available at the Grantee's office in the Town. (d) The Town Mayor shall have access to all books of account and records of the Grantee for the purposes of ascertaining the correctness of any and all reports and shall be given access to all other records upon request. QQ49] -13- (e) Any false entry in the books of account or records of the Grantee or false statement in the reports to the Town Council as to a material fact, knowingly, by the Grantee shall constitute a breach of a material provision of this ordinance and franchise. SECTION 19. CUSTOMER SERVICE STANDARDS. (a) Office and Phone for Service. The Grantee shall maintain an office in the Town which shall be open during all usual business hours, have a locally listed telephone and be so operated that complaints and requests for repairs or adjustments may be received at any time. In addition, the Grantee shall maintain a convenient office in the Town open during normal business hours, for the receipt of sums due by its subscribers and shall provide for regular billing of accounts. (b) Notification of Service Procedures. The Grantee shall furnish each subscriber at the time service is installed written instructions that clearly set forth procedures for placing a service call, or requesting an adjustment. (c) Service Response Time. The Grantee shall provide "same day" service response, seven (7) days a week, for all complaints and requests for repairs or adjustments received prior to 2:00 p.m. each day. In no event shall the response time for calls received subsequent to 2:00 p.m. exceed twenty-four (24) hours. (d) Service Interruptions and Notifications. The Grantee shall interrupt system service after 7:00 a.m. and before 1:00 a.m. only with good cause and for the shortest time possible and, except in emergency situations, only after publishing notice of service interrupt. Services may be interrupted between 1:00 a.m. and 7:00 a.m. for routine testing, maintenance and repair, without notification, any night except Friday, Saturday, or Sunday, or the night preceding a holiday. Whenever service is interrupted to any subscriber for any period of time in excess of 24 hours, the subscriber shall receive a rebate of one --thirtieth (1/30th) of his monthly service fee for each day or part thereof between the end of the 24 hours and the time service is restored to proper standards. (e) Complaint Records. The Grantee shall maintain a written record or "log", listing date and time of customer complaints, identifying the subscriber and describing the nature of the complaints and when and what actions was taken by the Grantee in response thereto; such record shall be kept at Grantee's local office, reflecting the operations to date for a period of at least three (3) years, and shall be available or inspection during regular business hours. SECTION 20. PROTECTION OF SUBSCRIBER PRIVACY. (a) Use of Data from Subscriber. The Grantee shall not initiate or use any form, procedure or device for procuring information or data from subscribers' terminal by use of the system, without prior valid authorization from each subscriber, so affected. (b) Subscriber Lists. The Grantee shall not, without prior valid authorization from each subscriber so affected, provide any list designating 0049] -14- subscriber's names or addresses to any other party except where required under contract for provision of premium service. (c) Subscriber Transmissions. Grantee shall not permit the installation of any special terminal equipment in any subscriber's premises that will permit transmission from subscriber's premises of two-way services utilizing aural, visual or digital signals without first obtaining written permission of the subscriber. SECTION 21. SECURITY FUND. (a) Within thirty (30) days after the acceptance of this franchise, the Grantee shall deposit with the Town Secretary and maintain on deposit throughout the term of the franchise the sum of Twenty -Five Thousand Dollars ($25,000.00) in cash. if the Grantee has made all required payments and shall have complied with all provisions of this ordinance, the Town Secretary shall be authorized to pay to the Grantee any interest earned on the cash deposit required by this Section on or before July 1 of each year in which this franchise is in effect. (b) Within thirty (30) days after notice to it that any amount has been withdrawn from the security fund deposited pursuant to Paragraph (A) of this section, the Grantee shall pay to, or deposit with, the Town Secretary a sum of money sufficient to restore such security fund to the original amount of $25,000. (c) If the Grantee fails to pay to the Town any compensation within the time fixed herein, or, fails after ten (10) days notice to pay to the Town, any taxes due and unpaid; or fails to repay to the Town within such ten (10) days, any damages, costs or expenses which the Town shall be compelled to pay by reason of any act or default of the Grantee in connection with this ordinance or its franchise, or fails after three (3) days notice by the Town Secretary of such failure to comply with any provision of this ordinance or its franchise which the Town Council reasonably determines can be remedied by an expenditure of the security, the Town Secretary may immediately withdraw the amount thereof, with interest and any penalties, from the security fund. Upon such withdrawal, the Town Secretary shall notify the Grantee of the amount and date thereof. (d) The cash deposit shall become the property of the Town in the event that the franchise is terminated prior to its termination date as set out herein. The cash deposit shall be retained by the Town and returned to the Grantee at the expiration of the franchise providing there is then no outstanding default on the part of the Grantee. (e) The rights reserved to the Town with respect to the security fund are in addition to all other rights of the Town, whether reserved by this ordinance or authorized by law, and no action, proceeding or exercise of a right with respect to such security fund shall affect any other right the Town may have. SECTION 22. PENALTY PROVISIONS. (a) For a violation of any of the provisions of this franchise, penalties shall be chargeable to the security fund at the rate of $500 per day for each day of violation; provided, however, that beginning the second year after the effective date 0049) -15- of this franchise, the penalty amount shall increase by ten (10) percent each year, but shall never exceed One Thousand Dollars ($1,000.00) per day per violation. (b) Grantee shall be notified in writing of any violation by certified mail, return receipt requested. Grantee shall be allowed seven (7) days from date of receipt of violation notice to correct the violation. Beginning on the eighth (8th) day after receipt of violation notice, the Town shall withdraw from the security fund (Sec. 21) the amount authorized under Section 22(a) of this franchise. Grantee may appeal any decision of the Town concerning any notice of violation. Appeals shall be in writing and delivered to the Town Secretary within three (3) days of receiving a notice of violation. (c) Appeals shall by heard by the Town Council. Such an appeal shall be decided by the Town Council within ninety (90) days of the notice of appeal. If not acted upon within said ninety (90) days, Grantee shall be relieved of any liability for penalty for said notice. The Town, however, may reinstate a new notice of violation without prejudice. SECTION 23. TERMINATION. (a) The Town, at its option, may terminate this contract by giving written notice of such termination to Grantee upon occurrence of any of the following: (1) Filing of a voluntary bankruptcy petition by Grantee; (2) Taking of jurisdiction of Grantee or his assets in bankruptcy proceedings by any court, such proceedings not being vacated within 30 days; (3) Taking by execution of Grantee's interest in this contract or of property placed on the premises; or (4) Appointment by any court of a receiver for Grantee, such proceedings not being vacated within 30 days. (b) Notwithstanding any other provision in this ordinance, the Town, acting through the Town Council, shall have the option to cancel and terminate this franchise at any time for failure of the Grantee to comply with any provision or requirement contained herein after 60 days written notice to do so. (c) In addition, the Town may terminate this franchise in accordance with the provisions of the Cable Communications Act of 1984. SECTION 24. SEVERABILITY PROVISION. If any section, sentence, clause or phrase of the ordinance is held unconstitutional or otherwise invalid, such infirmity shall not affect the validity of the ordinance, and any portions in conflict are hereby repealed. Provided, however, that in the event that the Federal Communications Commission declares any section invalid, then such a section or sections will be renegotiated by the Town and the Grantee. 00491 -16- SECTION 25. RIGHTS OF INDIVIDUALS. (a) Grantee shall not deny service, deny access, or otherwise discriminate against subscribers, channel users, or general citizens on the basis of race, color, religion, national origin, or sex. Grantee shall comply at all times with all other applicable federal, state, and Town laws, and all executive and administrative orders relating to nondiscrimination. SECTION 26. PARENTAL LOCK OBSCENITY AND X-RATED MOVIES. (a) Converter -Parental Lock; Selection of Signal Number. Grantee shall not offer or locking or securing one channel or all channels. with a parental loch p yconverter annels. Said parental lock shall be offered to a subscriber, on a one time only basis, without any extra or additional charges or fees for the first thirty (30) days after an initial subscription. Further, the channel selector of the converter shall be numbered so that Grantee may carry all relevant over---the-air television signals on the channel number of the station. The Town Council may waive the requirement of this section if it is technically infeasible. (b) Temperature Range. Grantee's CATV System shall be capable of operating throughout the air temperature range of 0 to 110 degrees Fahrenheit without degradation of audio or video fidelity. (c) Educational Access Channels. At least two channels shall be reserved for the use of the educational authorities in the Town. Such channels shall be provided free of charge. (d) Public Access Channels. At least two channels shall be reserved for the use of the public, one of which shall have nondiscriminatory access without charge on a first come, first serve basis, and the other of which shall be reserved for use by the Town. (e) Standard of Care. Grantee shall at all times employ a high standard of care and shall install, maintain and use approved methods and devices for preventing failures or accidents which are likely to cause damages, injuries or nuisances to the public. (f) No Obscenity. (1) Grantee and all Users of a CATV System shall comply in all respects with all federal, state and local laws regarding obscenity and shall not broadcast any movies, materials or any obscene, indecent or profane language or depiction as outlined in 18 U.S.C. Section 1464 and shall comply with all FCC rulings or declaratory orders relating to obscenity and indecency. (2) If Grantee transmits obscene or indecent programming which it has produced or acquired by sale, lease or otherwise, Grantee's action shall be deemed a material violation hereof and shall subject Grantee to franchise revocation pursuant to this ordinance. 0049] -17- (3) No movies that have been rated X or that are unrated but contain material that would cause the movies to be rated X shall be shown by the Grantee. SECTION 27. That this ordinance shall take effect from and after its date of passage as provided by law. PASSED AND APPROVED by the Town Council of the Town of Tronhv Club. [SEAL] APPROVED AS TO FORM: j, Town Attorney, Town of Trophy Club, Texas OQ49j -IB-