Winston-Salem Franchise



FRANCHISE AGREEMENT

BETWEEN

THE CITY OF WINSTON-SALEM, NORTH CAROLINA

AND

SUMMIT CABLE SERVICES OF FORSYTH COUNTY DOING BUSINESS AS:

TIME WARNER CABLE

[March 3, 2000]

DRAFT

TABLE OF CONTENTS

PAGE

SECTION 1. DEFINITIONS 2

SECTION 2. GRANT OF FRANCHISE 2

2.1 Grant. 2

2.2 Right of City to Issue and Renew Franchise 3

2.3 Effective Date of Grant 3

2.4 Term 3

2.5 Written Notice 3

2.6 Franchise Not Exclusive 4

2.7 Conflict with Cable Ordinance and Reservation of Rights 4

2.8 Compliance 4

2.9 Binding Contract 4

2.10 Customer Service Standards 54

SECTION 3. GENERAL REQUIREMENTS 5

3.1 Annual Franchise Fee 5

A. Compensation 5

3.2 Recovery of Processing Costs and Expenses 6

3.3 Liability Insurance 76

3.4 Indemnification 8

3.5 Grantee’s Insurance 9

3.6 Workers’ Compensation Insurance 9

3.7 Security Fund and Performance Bond 9

3.8 Procedure for Remedying Franchise Violations 10

3.9 Compliance with Applicable Laws and Ordinances 11

SECTION 4. SYSTEM CAPABILITIES 11

4.1 Cable System Build/Rebuild 11

4.2 Performance Review: Performance Monitoring 13

4.3 Franchise Modification 13

4.4 State of the Art Review 1415

4.5 Grantee Cooperation 1415

4.6 Periodic Evaluation, Review and Modification 1415

4.7 Emergency Alert Capability 1516

4.8 Hearing and Sight Impaired Capabilities 1516

4.9 Standby Power 1516

4.10 Parental Control Lock 1516

4.11 Status Monitoring 1516

4.12 Technical Standards 1517

4.13 HDTV/ATV Conversion 1517

4.14 Right of Inspection 1617

SECTION 5. SERVICES AND PROGRAMMING 1617

5.1 Programming 1617

A. Broad Programming Categories 1617

B. Deletion or Reduction of Programming Categories 1618

5.2 Leased Commercial Access 1718

5.3 Periodic Subscriber Survey 1718

SECTION 6. SUPPORT FOR LOCAL CABLE RELATED NEEDS 1718

6.1 Institutional Network 1718

6.2 Public, Educational and Governmental Access 1718

A. Access Channels Error! Bookmark not defined.19

B. Remote Origination Error! Bookmark not defined.19

C. Additional Access Channels Error! Bookmark not defined.19

D. Unused Channels Error! Bookmark not defined.19

E. Interconnection Error! Bookmark not defined.19

F. Community Access Corporation or Error! Bookmark not defined.19

G. Grantee Support for Local Programming Error! Bookmark not defined.20

H. Access Channel Designations Error! Bookmark not defined.21

I. Public, Educational and Governmental Access Rules and Procedures Error! Bookmark not defined.21

J. Assistance with Soliciting Contributions Error! Bookmark not defined.21

K. Ad Avail Grants Error! Bookmark not defined.21

L.Technical Quality Error! Bookmark not defined.21

M. Proof of Performance Testing Error! Bookmark not defined.21

N. Change in Technology Error! Bookmark not defined.21

6.3 Drops To Public Buildings 21

6.4 School and Library Cable Modems 1822

6.5 Non-Discriminatory Access to Cable Model Platform 1822

6.6 Use of Grantee's Facilities 1822

SECTION 7. REGULATION 1923

7.1 Franchise Regulation 1923

7.2 Force Majeure 1923

EXHIBIT A: Grantee Ownership Information

EXHIBIT B: Franchise Fee Payment Worksheet

EXHIBIT C: Service to Public Building

EXHIBIT D: Customer Service and Consumer Protection Standards

FRANCHISE AGREEMENT

SECTION 1. DEFINITIONS

For the purpose of this Franchise, the terms, phrases, words, abbreviations and their derivations shall have the meaning given in the Master Cable Services Regulatory Ordinance (hereinafter referred to as "Master Ordinance"), unless specifically stated otherwise in this Franchise Agreement the definitions in the Master Ordinance are made part of this Franchise as if fully set forth herein.

SECTION 2. GRANT OF FRANCHISEOF FRANCHISE

2.1 Grant.

The Cable Television Franchise with Falcon Video Communications, LP, d.b.a. Charter Communications (“Charter” or “Grantee”), is hereby granted, subject to the terms and conditions of Ordinance 01-01-003 Cable Services Regulatory Ordinance (hereinafter also referred to as the “Master Ordinance”), and this Franchise (hereinafter also referred to as the “Franchise”). The grant provides Grantee authority, right and privilege, to construct, reconstruct, operate and maintain a cable television System within the Streets and public Right-Of-Ways in the incorporated areas of the Town of Nags Head, North Carolina, as it is now or may in the future be constituted.

2.2 Right of Town to Issue and Renew Franchise.

Grantee acknowledges and accepts the right of Town to issue and/or renew a Franchise and Grantee agrees that it shall not now or at any time hereafter challenge any lawful exercise of this right in any local, State or federal court.

2.3 Effective Date of Grant.

The grant shall be effective upon adoption of an Ordinance by the Board. The grant is further contingent upon the filing by Grantee with the Town Clerk of the executed Franchise and the required performance bond and insurance certificates, and the payment of all sums owed to the Town, except that if the filing of the performance bond or any such insurance certificate does not occur within thirty (30) days after the effective date of the Ordinance approving this Franchise and any extension of time hereunder, the Town may declare this grant nullgrant null and void.

2.4 Franchise Term and .Renewal.

(a) This Franchise shall take effect and be in full force from and after the final passage hereof, subject to acceptance by the Grantee as provided by the Master Ordinance and the same shall continue in full force and effect for a period of fifteen (15) years beginning with the date of adoption of this Franchise.

(b) Subject to the provisions of this Section, the parties may amend this Franchise so as to require the Grantee to upgrade the Cable System to incorporate the State of the Art (the "State of the Art Option"). For the purposes of this Franchise the term "State of the Art" means equipment that is readily available with reasonable delivery schedules from two or more sources of supply; has the capability to perform the intended functions demonstrated within communities with similar characteristics (including, but not necessarily limited to population, density, customer penetration, etc.) under actual operating conditions for purposes other than test or experimentation; and can be implemented by the Grantee in an economically feasible manner taking into account economic waste (i.e., early retirement of assets) with the likelihood of generating a reasonable return on the Grantee's investment when measured over the then remaining term of the franchise. The term "State of the Art" does not include equipment or facilities associated with governmental access.

(1) The Town may not initiate the State of the Art Option at any time when the Grantee is subject to effective competition as defined from time to time by federal law

(2) In order to initiate the State Of the Art Option, the Town shall first commence a review of the Cable System. A review may not commence prior to the seventh (7th) or after the twelfth (12th) anniversary of the acceptance date.

a. The review described in the above paragraph (2) shall, at a minimum, take into account the following:

1. Characteristics of the existing Cable System.

2. The State of the Art.

3 The additional benefits provided to customers by the State of the Art.

4. The marketplace demand for the State of the Art taking into account any associated rate increase.

5. Extension of the term of the existing Franchise to provide cost recovery for any capital improvements associated with upgrade required by a state-of-the-art decision.

6. Cost associated with the review.

7. Any additional factors deemed relevant by the Town or the

Grantee.

b. If, after conducting such a review, the Town determines that the exercise of the State of the Art option may be warranted, the Town shall hold a public hearing to enable the general public and the Grantee to comment and present additional evidence.

(3) If, following such hearing, the Town determines that the exercise of the State of the Art Option is warranted the parties may amend this Franchise accordingly. If, however, the Grantee is not willing to agree to an amendment of this Franchise, the Grantee may, within sixty (60) days after the Town's decision, use all available means to appeal the Town’s decision.

(4) Should Federal Law change, causing significant and necessary modifications of this Franchise, the Town and the Grantee agree to negotiate necessary changes as an amendment to this Franchise.

(5) Any renewal of this Franchise shall be done in accordance with applicable state and federal law.

2.5 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 the Person designated below, or when five (5) days have elapsed after it is deposited in United States mail in a sealed envelope, with registered or certified mail, postage prepaid thereon, or on the next business day if sent by express mail or overnight courier addressed to the party to which notice is being given, as follows:

If to Town: Town Manager

PO Box 99

5401 Croatan Highway

Nags Head, NC 27959

If to Grantee: General Manager

Charter Communications

2400 S. Virginia Nags Head Trail

Nags Head, NC 27959

Vice President Government Relations

Charter Communications

12444 Powerscourt Drive

St. Louis, MO 63131

Either party may change such addresses upon notice to the other party.

2.6 Frase nonexclusive.Franchise Non Exclusive

This Franchise shall not be construed as any limitation upon the right of City, through its proper offices, and in accordance with applicable law, to grant to other Persons or corporations rights, privileges or authority similar to or different from the rights, privileges and authority herein set forth, in the same or other Streets and public ways or public places or other places the Grantee is entitled to occupy by this Franchise Agreement, permit or otherwise. This Franchise Agreement shall not be construed as any limitation upon the right of the City to grant to other persons, rights, privileges, or authorities equivalent to the rights, privileges, and authorities herein set forth, in the same or other streets, alleys, or other Public Ways or Public Places. The City specifically reserves the right to grant at any time during the term of the Franchise Agreement or renewal thereof, if any, such additional franchises for a cable television system as it deems appropriate, provided, however, that such additional franchise(s), so granted, shall be on a non-discriminatory and competitively neutral basis, to the extent allowed by lawThe Franchise granted herein is non-exclusive. The Grantor specifically reserves the right to grant, at any time, one or more additional franchises for a System in accordance with State and federal law; provided, however, no such future franchise shall be granted on terms or conditions more favorable or less burdensome than those contained herein. In the event a future franchise is granted on terms or conditions more favorable or less burdensome than those contained herein, then this Franchise shall be deemed amended as of the effective date of the future franchise to incorporate the more favorable or less burdensome term(s) or condition(s) herein.

The Franchise granted herein is non-exclusive. The Town specifically reserves the right to grant, at any time, one or more additional franchises for a Cable Television System in accordance with state and federal law and the Master Ordinance.

2.7 Conflict with Cable Ordinance and Reservation of Rights.

The provisions of the Master Ordinance, are hereby incorporated herein by reference as if set out in full, and form part of the terms and conditions of this Franchise Agreement. In the event of any conflict between the terms and conditions of this Franchise Agreement and the provisions of the Master Ordinance, and other generally applicable regulatory ordinances of the City, such ordinances shall control, except as may be specifically provided in this Franchise Agreement or where such ordinances materially alter Grantee’s rights or obligations hereunder. City and Grantee reserve all rights that they may possess under the law unless expressly waived herein.

2.8 Compliance.

(a) Grantee has examined all of the provisions of the Master Ordinance and accepts and agrees to all of the provisions of that Ordinance, as it exists as of the effective date of the Grantee’s Franchise Agreement and any supplementary specifications as to construction, operation, or maintenance of the System which the Town may include in the Franchise Agreement. Grantee recognizes the right of the Town to adopt such additional regulations of general applicability, as it shall find necessary in the exercise of its police power.

2.10 Customer Service Standards.

Grantee will comply with the customer service and consumer protection provisions set forth in the Master Ordinance and Exhibit D to this Franchise, including the requirement that the Grantee maintain a customer service office within the City, which shall include a place where Subscribers may pay their bills, pick-up and return converter boxes and comparable items and receive information on the Grantee and its services.

(b) In addition to any rights specifically reserved to Grantor by the Master Ordinance or this Agreement, Grantor reserves to itself every right and power that is required to be reserved by a provision of any other ordinance or under any other Franchise.

(c) In accordance with Section 10.3.35, the Grantee shall notify the Town of its business hours.

SECTION 3. GENERAL REQUIREMENTS

3.1 Annual Franchise Fee.

A. Compensation.

The Town has opted to not require the payment of a franchise fee for the term of the Franchise.

Such Franchise Fee shall be considered separate and distinct from any non-discriminatory Right-of-Way Fees assessed against a Grantee or its affiliates for its use of the City's Rights-of-Way for the provision of telecommunications services pursuant to the terms of the federal Telecommunications Act of 1996, or other applicable law.

(2) Payments due the City under this Section shall be computed quarterly, for the preceding quarter of each year during the term of this Franchise. Each quarterly payment shall be due and payable no later than forty-five (45) days after the end of the preceding month. Each payment shall be accompanied by a brief report showing the basis for the computation and other relevant facts and information, and a "Franchise Fee Payment Worksheet," attached as Exhibit B, which shall accurately reflect the sources of all cable service revenues derived from the operation of the system within the City. Such statement shall be signed by an officer of the Grantee.

(3) Grantee will deliver to the City Manager, not later than 45 days after the last day of each City Grantee’s fiscal year during the term of this Franchise (or portion thereof in the event of any prior termination for any reason), a statement signed by a duly authorized officer of Grantee with respect to the entire prior fiscal year, setting forth the same information as is required to be submitted by Grantee in accordance with the Payment Worksheet, Exhibit B. Upon the City Manager’s request, such annual statements shall be certified by a certified public accountant, at no additional cost to the City.

B. No acceptance of any payment shall be construed as an accord that the amount paid is in fact the correct amount, nor shall such acceptance of payment be construed as a release of any claim Grantor may have for further sums payable under the provisions of this Ordinance or a Franchise Agreement. All amounts paid shall be subject to audit and recomputation by Grantor or its designee at any time during any calendar year (but no more than once per calendar year) upon twenty (20) calendar days notice, including information on the specific documents requested to be reviewed. Grantor’s audit rights shall expire 3 years after any payments are made in accordance with this agreement. Audits shall be at the expense of the Grantee if the additional amount due is greater than two percent ten percent (2%) (10%)of the amount paid. Any additional undisputed amount due to the City as a result of the audit shall be paid within sixty (60) days following written notice to the Grantee by the City which notice shall include a copy of the audit report.

C. In the event that any Franchise payment or recomputed amount is not made on or before the dates specified herein, Grantee shall pay as additional compensation an interest charge, computed from such due date, at the annual rate equal to the commercial prime interest rate of the City’s primary depository bank plus 3% during the period that such unpaid amount is owed.

D. In the event that the maximum allowable Franchise Fee under applicable law is increased or decreased from 5% of Gross Revenues, the City reserves the right to increase the applicable Franchise Fee under this Agreement pursuant to an Ordinance establishing the new rate and allowing reasonable notice to the Grantee for administration of the change. Similarly, the Grantee may within 60 days notice decrease the franchise fee to the amount permitted.

3.2 Recovery of Processing Costs and Expenses.

A. During the term of this Franchise, if the Grantee initiates a request for approval regarding the transfer of this Franchise or change in control of the Grantee, the Grantee shall reimburse the City for all reasonable out-of-pocket costs, including attorneys’ and consultants’ fees and costs, incurred by the City as part of City’s review and processing of Grantee’s request. Payments of such costs and expenses shall not be deemed to be “Franchise Fees” within the meaning of Section 622 of the Cable Act (47 U.S.C. § 542), and such payments shall not be deemed to be: (i) “payments in kind” or any involuntary payments chargeable against the compensation to be paid to the City by Grantee pursuant to Section 3.1 hereof.

B. To aid in the analysis and resolution of any future disputed matters relative to this Franchise Agreement or Master Ordinance, the City and Grantee may, by mutual agreement (both as to whether to hire and whom to hire), employ the services of technical, financial or legal consultants, as mediators. All reasonable fees of the consultants incurred by the City and/or the Grantee in this regard shall be born by the Grantee shall be borne by both parties.

3.2 Liability Insurance.

A. Upon the effective date of this Franchise, the Grantee shall, at its sole expense, take out and maintain during the life of this Franchise, including any extensions or renewals, public liability insurance with a company licensed to do business in the State of North Carolina with a rating by Best of not less than “A” that shall protect the Grantee, the Town, and the Town’s officials, officers, employees and agents from claims which may arise from operations under this Franchise, whether such operations are by the Grantee, its officials, officers, directors, employees and agents, or any subcontractors of Grantee. This liability insurance shall include, but shall not be limited to, protection against claims arising from bodily and personal injury and damage to property, resulting from all Grantee operations, products, services or use of automobiles, or construction equipment. The Town shall be named as an additional insured on all policies.

B. At a minimum, the Grantee shall maintain the following general liability insurance:

1) $2,000,000 for property damage per occurrence;

2) $2,000,000 for property damage aggregate;

3) $4,000,000 for personal bodily injury or death to any one person; and

4) $5,000,000 bodily injury or death aggregate per single accident or occurrence.

C. Such general liability insurance must include, at a minimum, coverage for all of the following: comprehensive form, premises, operations, explosion and collapse hazard, underground hazard, products/completed operations hazard, contractual insurance, broad form property damage, and personal injury.

D. Automobile Liability Insurance. Grantee shall maintain throughout the term of the Franchise, automobile liability insurance for owned, non-owned, or rented vehicles used by Grantee, its agents, officials, or employees in the minimum amount of:

1) $1,000,000 for bodily injury and consequent death per occurrence;

2) $1,000,000 for bodily injury and consequent death to any one person.

3) $500,000 for property damage per occurrence.

E. The Grantee shall furnish to the Town, certificates of insurance, approved by the Town, for all types of insurance required under this Section. Failure to furnish said certificates of insurance in a timely manner shall constitute a material violation of this Agreement.

F. Any insurance policy or certificate thereof obtained by the Grantee in compliance with this Section shall be filed and maintained with the Town Clerk or his/her designee during the term of the Franchise, and may be changed from time to time to reflect changing liability limits and/or to compensate for inflation. Grantee shall immediately advise the Town of any litigation that may develop that would affect this insurance.

G. Neither the provisions of this Section nor any damages recovered by the Town hereunder, shall be construed to or limit the liability of the Grantee under this Franchise issued hereunder or for damages.

H. All insurance policies maintained pursuant to this shall contain the following, or a comparable, endorsement:

“It is hereby understood and agreed that this insurance policy may not be canceled by the insurance company nor the intention not to renew be stated by the insurance company until thirty (30) days after receipt by the Town, by certified mail, of a written notice of such intention to cancel or not to renew.”

I. All contractual liability insurance policies maintained pursuant to this Agreement shall include the following hold harmless clause:

“Falcon Video Communications, LP, d.b.a. Charter Communications agrees to indemnify, save harmless and defend the Town of Nags Head, its officials, agents, servants, and employees, and each of them against and hold it and them harmless from any and all lawsuits, claims, demands, liabilities, losses and expenses, including court costs and reasonable attorney’s fees, for or on account of any injury to any person, or any death at any time resulting from such injury, or any damage to any property, which may arise or which may be alleged to have arisen out of or in connection with the work covered by the Franchise and performed or caused to be performed. The foregoing indemnity shall apply except if such injury, death or damage is caused by the negligence or other fault of the Town, its agents, servants, or employees, or any other person indemnified hereunder.”

3.3 Indemnification.

A. Except as otherwise provided herein, Grantee shall indemnify, hold harmless, release and defend Town, its officers, agents and employees from and against any and all lawsuits, claims, actions, demands, damages, disability, losses, expenses including reasonable attorney’s fees and other defense costs or liabilities of any nature that may be asserted by any Person or entity, including Grantee, from any cause whatsoever, including excepting the extent of Grantor's concurrent negligence, arising out of or in any way connected with the operations, expressly authorized herein, the exercise of the Franchise pursuant to this Franchise, and/or the activities of Grantee, its subcontractor, employees and agents hereunder. Grantee shall be solely responsible and save Town harmless from all matters relative to payment of Grantee’s employees.

B. This indemnification obligation is not limited in any way by a limitation of the amount or type of damages or compensation payable by or for Grantee under Workers’ Compensation, disability or other employee benefit acts, acceptance of insurance certificates required under this Franchise, or the terms, applicability or limitations of any insurance held by Grantee.

C. Town does not, and shall not, waive any rights against Grantee which it may have by reason of this indemnification, because of the acceptance by Town, or the deposit with Town by Grantee, of any of the insurance policies described in this Franchise.

D. This indemnification by Grantee shall apply to all damages and claims for damages of any kind suffered by reason of any of the operations referred to in this Section, regardless of whether or not such insurance policies shall have been determined to be applicable to any such damages or claims for damages.

E. Grantee shall not be required to indemnify Town for damages arising solely from the negligence or malfeasance of the Town or its officials, Councils, commissions, agents, or employees.

F. Grantee shall immediately notify the Town Manager of any and all claims raised against the Grantee or Grantee and Town jointly, and shall provide the Town with a copy of the same.

G. Grantee shall indemnify, defend and hold harmless the Town, its officers, agents and employees against any and all claims or challenges brought against the Town with respect to the validity of the terms and conditions of this Franchise grant.

3.4 Grantee’s Insurance.

Grantee shall not commence or continue any Cable System work or permit any subcontractor to commence or continue work until both shall have obtained or caused to be obtained all insurance required under this Section 3. Said insurance shall be maintained in full force and effect until the completion of construction, and approval thereof by the Town.

3.5 Performance Bond.

A. Upon or before the effective date of this Agreement, Grantee shall obtain and maintain during the entire term of this Agreement, including any extensions or renewals thereof, at its own cost and expense, a corporate surety performance bond that shall be filed with the Town in the amount of fifteen thousand dollars ($15,000.00) for the faithful performance by it of all the provisions of this Franchise and the Master Ordinance, as well as its compliance with all generally applicable orders, permits and directions of the Town, and the payment by Grantee of any claim, liens and generally applicable taxes due the Town which arise by reason of the construction, operation or maintenance of the Cable System

B. The Performance Bond may be drawn on by Town for those purposes specified in the Master Ordinance.

C. D. Commencing in the ___ year of the Franchise, Grantee shall maintain a Five Hundred Thousand Dollar ($500,000.00) performance bond until the System Upgrade provided for in Section 4.1 herein is completed, at which time that portion of the performance bond shall be released. The residual portion of the security fund shall be maintained at a level of one hundred thousand dollars ($100,000.00) throughout the term of this Franchise.

ENothing herein shall be deemed a waiver of the normal permit and bonding requirements made of all contractors working within the Town’s Rights-of-Way.

EF. Maintenance of the requisite Performance Bond shall not in any way limit the liability of the Grantee for any failure to fully perform its obligations under this Franchise.

F. The Grantee shall replenish the performance bond to the original amount not later than thirty (30) days after notification that the Town has drawn upon said performance bond.

4.1 Cable System Upgrade

A. Grantee shall design and construct an upgraded hybrid fiber optic-coaxial Cable System with State of the Art capabilities which shall be substantially completed by ____. Service shall be provided throughout the City in accordance with the density requirements of the Master Ordinance, and activated to provide Services according to a construction plan and schedule developed by the Grantee and approved by provided to the City. For purposes of this Agreement, "substantially completed" shall mean service to all residential areas within the City having a density of twenty (20)fifteen (15) residential homes per aerial mile as measured from Grantee’s existing distribution system. In constructing and activating its upgraded Cable System the Grantee shall not discriminate between different areas of the City on the basis of race, creed, religion or income level.

B. In order to ensure that the construction of the Cable System described in paragraph A will be performed as promised, the parties agree to establish a process that includes: a review of the system design plan; testing of the actual design as part of the earliest phase of construction; preventative testing of system components before and after installation to ensure that performance is adequate; and time lines for performance.

C. The proposed Cable System design plan will specify at least the following elements:

1) Design type, trunk and feeder design, and number and general location of hubs;

2) Typical trunk and distribution system cable, fiber and equipment to be used;

3) Projected number of channels and channel capability for both standard six (6) MHz bandwidth channels and digital channels that will be activated upon completion of each construction area of the Cable System and a description of the future activation requirements. At least 200 MHz of which shall be allocated to digital distribution.

4) Voice, video, and data two-way capability and activation requirements.

5) Standby power for the System including the headend;

6) Longest amplifier cascade in the Cable System (number of amplifiers, number of miles, type of cable/fiber);

7) Construction schedule, including proposed dates for commencement and completion of construction by locations; and

8) Extension of service to new areas having 15 homes per mile or more and any costs associated with extension.

9) Grantee shall provide the City with "as built" maps and information for all aerial and underground facilities in an agreed upon electronic format within 90 days of the completion of such construction.

D. The Grantee shall provide the City with written progress reports on the status of the Cable System construction and Subscriber activation on a quarterly basis, beginning with the first month of construction.

E. The Grantee and City recognize that the Cable System capabilities are a material part of the consideration given by the Grantee in return for the issuance of this Franchise, and that the City would have established different requirements in the absence of such enforceable requirements. If Section 4.1.A-D is not fully enforceable, and if the Grantee does not meet the requirements of Section 4.1.A-D in reliance upon such unenforceability, the City may, pursuant to the procedures for revocation either:

1) Terminate the Franchise; or

2) If Grantee fails to meet the target date for the upgrade requirement and bandwidth capacities herein described the then existing CPST Subscribers to the Cable System as to which such commitment has not been met will be entitled to refunds (in the form of prospective bill credits) of the increases (net inflation and external cost adjustments) in CPST rates taken since March 1, 1995, plus interest at 1.5% per year and a liquidated damages penalty of 15% of such refund amount.

Provided that both of these enforceability remedies will terminate six months after the date the Cable System upgrade is completed and available to substantially all of the Subscribers throughout the City. Such time limitation on the remedies shall not apply with respect to any specific claim of non-compliance raised prior to the end of the six-month period referenced above if the Grantee claims that the provision with which it is alleged to have failed to comply is unenforceable.

4.7 Emergency Alert Capability.

Consistent with the FCC's Emergency Alert System rules, within twelve (12) months of the effective date of this Franchise, Grantee shall provide the System capability to transmit an emergency alert signal to all participating Subscribers, in the form of a video override capability to permit City to interrupt and cablecast a video message on all programmed channels simultaneously in the event of disaster or public emergency.

4.8 Hearing and Sight Impaired Capabilities

Grantee will make audio descriptive service and closed captioning capabilities available to the extent required by state and federal law.

4.9 Standby Power.

Within twelve (12) months of the effective date of this Franchise, Grantee shall provide standby power generating capacity capable of providing at least twelve (12) hours of emergency supply at the cable communications System control center hubs. For nodes, two hours with emergency power supply. Grantee shall maintain standby power System supplies throughout the major trunk cable networks capable of providing emergency power within the standard limits of commercially available power supply units.

4.10 Parental Control Lock.

Upon request, Grantee shall provide Subscribers a parental control locking device or digital code that permits inhibiting the video and audio portions of any channels offered by Grantee. Such device shall be provided at a reasonable charge unless otherwise required under applicable federal law. The Grantee may in all instances impose a reasonable security deposit requirement for the use of such devices.

4.11 Status Monitoring.

Grantee shall provide an automatic status monitoring System, or a functional equivalent, when the Cable System has been activated for interactive service provided that such status monitoring is technically and economically feasible.

4.12 Technical Standards.

City shall have the right to enforce the Federal Communications Commission (FCC) Rules and Regulations, Part 76, Subpart K (Technical Standards), as may be amended from time to time, to the extent permitted by applicable law. Upon request the Grantee shall furnish the City Manager a copy of its annual proof of performance filing with the FCC. If the FCC no longer establishes technical standards, this Franchise shall control and the then-current FCC standards shall, at a minimum, be made part of this Franchise and enforceable by the City.

4.13 HDTV/ATV Conversion.

Conversion to High Definition Television/Advanced Television (HDTC/ATV) formats shall occur in accordance with applicable law. The Grantee shall provide channel capacity on the Cable System to allow cablecasting of programming in both HDTV/ATV and analog NTSC for a reasonable period of transition. Channel capacity on the Cable System for Public, Educational and Governmental (PEG) programming shall be made available during the transition period commensurate with programmer's production use of HDTV/ATV. The Grantee shall participate in funding an upgrade of PEG facilities to HDTV/ATV as required under Section 6.2

4.14 Right of Inspection.

City shall have the right to inspect all construction, reconstruction or installation work performed by Grantee under the provisions of the Franchise and other pertinent provisions of law, to ensure Grantee’s compliance and to protect the public health, safety and welfare of City’s citizens. Grantee shall have the right to be present at such inspection.

SECTION 4. PROGRAMMING AND SERVICES.

4.1 Subject to availability from programmers on reasonable terms and conditions and consistent with Grantee’s business plans, Grantee shall provide or enable the provision of at least the following broad categories of Programming, unless otherwise required by state or federal law:

(1) Educational programming;

(2) News & information;

(3) Sports;

(4) General entertainment (including movies);

(5) Children/family-oriented;

(6) Arts; culture and performing arts;

(7) Science/documentary;

(8) Weather information;

(9) Programming addressed to diverse ethnic and minority interests in the Town;

(10) National, state and local government affairs;

11. (11) Educational access programming;

12. (12) Governmental access programming;

Audio programming (including local radio signals);

12) Program channel guide

13) Two-way interactive programming

Internet access; and

Interior design/landscape programming (e.g., Home and Garden)

B. Deletion or Reduction of Programming Categories.

(1) Grantee shall not delete or change the mix, level, or quality of programming and services, or so limit as to effectively delete any broad category of Programming identified in Section 5.1.A and within its control without complying with the modification procedures required under federal law, including notice requirements.

(2) In the event of a modification proceeding under federal law, the mix, level, and quality of services provided by the Grantee on the effective date of this Franchise shall be deemed the mix and quality of services required under this Franchise throughout its term.

5.3 Periodic Subscriber Survey.

A. Every two years from effective date of this Franchise Agreement, the Grantee shall if requested by City fund a telephone Subscriber survey to be conducted by the City, the results of which shall be shared with the Grantee. Each survey shall be conducted in good faith so as to present reasonably reliable and competitively neutral measures of Subscriber satisfaction with:

1) Signal quality;

2) Response to Subscriber complaints;

3) Billing practices;

4) Program services; and

5) Installation practices.

As a part of each annual report, Grantee shall report in writing to the City the steps it is taking to implement the findings of the most recently conducted survey, such as correcting problems and expanding services.

4.2. Emergency Procedures. Grantee agrees to provide space on the cable system and related equipment necessary to connect the Government Channel to the main cable system with access from the Dare County Emergency Operations Center. The County is responsible for the equipment inside the EOC for connection to the cable outlet and subsequent transmission of the County/Town programming. The intent is that the Grantee will provide receivers, transmitters, demodulators and services necessary to provide an alternate site for the Government Channel during emergency conditions or at times deemed appropriate by the Emergency Operations Committee. The County may provide duplicate equipment at the EOC or move the equipment from the County Administrative building, at the direction of the Emergency Operations Committee, to the Emergency Operations Center in order to provide continuous Government programming

4.3. Drops to Public Buildings. In accordance with Section 10.5.3 of the Master Ordinance, the public buildings listed at Exhibit A will receive, without charge, basic cable service. Buildings not identified at Exhibit A may be included by Town’s notice to Grantee of the building and location. Town shall be provided a drop within one hundred and twenty (120) days after receipt of notice.

4.4. In accordance with Section 10. 7.11 of the Master Ordinance the Town Monitoring Site will be located at the Town Administration offices at Municipal Complex 5401 Croatan Highway.

4.5. In accordance with Section 10. 7.8 of the Master Ordinance, results of customer satisfaction surveys conducted by the Grantee will be provided to the Town within sixty (60) days, after compilation of the results.

SECTION 5. SUPPORT FOR LOCAL CABLE RELATED NEEDS

5.1 Network Services. In accordance with Sections 10.3.31; 10.3.32; and 10.6.1 of the Master Ordinance, the Grantee agrees to provide a fiber connection between the Municipal Complex at 5401 Croatan Highway and public buildings within the corporate limits of the Town. Grantee will provide connection to the demarcation point in each building at no cost. The Grantee will provide a construction plan, to the Town, within sixty (60) days of a request by the Town to connect a particular building and will outline the timeline for construction. Any connection in place on the effective date of the Agreement will be considered in compliance with this section of the Agreement. Monthly service fees will be negotiated within a separate agreement and will be at the most favored rates. Said separate agreement will be coterminous with the franchise agreement. Maintenance of the fiber will be the responsibility of the Grantee and at no cost to the Town, unless the Town cuts the cable. Should the Town cut the cable, the Town will be responsible for the cost to repair the cut.

5.2 Governmental Access.

A. In accordance with Section 611 of the Cable Act (47 U.S.C. Section 531), the Grantee agrees to provide one channel for Government Access.

B. Grantee’s upgraded system shall, at a minimum permit the County representative to transmit programming via upstream signal to Grantee’s headend and then to downstream on the Government Access Channel. The design of the cable system, and the equipment installed by the Grantee, shall enable the switching and routing of these signals from upstream to downstream transmission to be accomplished remotely via computer and modem by the County representative. Grantee agrees to provide this direct link at no cost to the County, no pass through to subscribers and costs will be treated as franchise related costs for rate computation.

C. Oversight of the Government Access Channel shall be the responsibility of the Committee composed of participants pursuant to the “Shared Used Agreement Between the Towns of Nags Head, Manteo and Kill Devil Hills and the County of Dare Regarding the Government Cable Television Access Channel.”

5.3. Education Access.

A. In accordance with Section 611 of the Cable Act (47 U.S.C. Section 531), the Grantee agrees to provide one channel for Education Access.

B. Grantee’s upgraded system shall, at a minimum permit the Manteo High School to transmit programming via upstream signal to Grantee’s headend and then to downstream on Grantee’s Education Access Channel. The design of the cable system, and the equipment installed by the Grantee, shall enable the switching and routing of these signals from upstream to downstream transmission. Grantee agrees to grant the County Schools $10,000 for acquisition of equipment designed for production of video programming and related production. Grantee agrees to provide this direct link and grant at no cost to the County/Towns, no pass through to subscribers and costs may be treated as franchise related costs for rate computation. Grantee will pay to the County Schools $5,000 upon execution of this Franchise and $5,000 on the first anniversary of this Franchise (this section only applies to the Dare County Franchise and is placed in this Franchise for information only).

C. Oversight of the Education Access Channel shall be the responsibility of the County Superintendent of Schools or his designee.

5.4. Upgrade of System and System Capabilities.

A. System Design for Upgrade. The Grantee shall upgrade the system as required to meet the requirements of Sections 10.5.1 and 10.5.5 of the Master Ordinance. The upgraded system bandwidth design will be 850 megahertz, with two-way transmission capability, and 100% standby powering of the facilities. The cable design infrastructure shall incorporate a fiber/coaxial cable design. All materials will be of the highest level of quality by common industry standards. The technical performance of the system will meet or exceed FCC requirements as described in Cable Television System Subpart K of Part 76 of Title 47 of the Code of Federal Regulations.

B. Construction Plan and Schedule. The upgrade of the system, within the Town of Nags Head shall be completed by the Grantee no later than two (2) years from the effective date of this renewal. The Grantee will provide the Town with updates of the upgrade progress on a quarterly basis.

C. Upgrade for Government Access and Education Access. The capacity for Government and Education Access required as part of the cable system upgrade under the terms of this Franchise shall be installed and activated within one year of the adoption of this Franchise.

D. Changes to Upgrade Plan. Nothing herein shall prevent Grantee from making changes or additions to the construction plan during the upgrade that are technically warranted and do not affect Grantee’s compliance with its obligations under the terms of this Franchise.

E. In accordance with Section 10.8.1 Right-of-Way Construction, of the Master Ordinance the Grantee shall notify the Town of any construction in the Town’s Public –Rights-of-Way excepting normal installations.

SECTION 6. FORCE MAJEURE.

In accordance with the Master Ordinance, in the event Grantee’s performance of any of the terms, conditions, obligations or requirements of this Franchise or Master Ordinance is prevented or impaired due to any cause beyond its reasonable control or not reasonably foreseeable, such inability to perform shall be deemed to be excused and no penalties or sanctions shall be imposed as a result thereof, provided Grantee has notified Town in writing within thirty (30) days of its discovery of the occurrence of such an event, and provided such notice is reasonable under such circumstances. In the event said notice is not given, then the delay permitted under this Section shall be thirty (30) days from the date of discovery of the event causing said delay. Such causes beyond Grantee’s reasonable control or not reasonably foreseeable shall include, but shall not be limited to, acts of God, civil emergencies and labor unrest or strikes, untimely delivery of equipment, inability of Grantee to obtain, without cost, access to an individual’s property, and inability of Grantee to secure all necessary permits to utilize utility poles and conduit so long as Grantee made all reasonable efforts to ensure that required equipment, parts, components, personnel and proprietary activity was ordered, hired, paid for, scheduled, checked, approved and/or facilitated.

IN WITNESS WHEREOF, Town and Grantee have executed this Franchise on July 11, 2001 after having read and adopted the Agreement at two regularly scheduled meetings of June 6, 2001 and July 11, 2001.

TOWN OF NAGS HEAD, NORTH CAROLINA

By:______________________________

Date:____________________________

ATTEST:

, Town Clerk

(SEAL)

FOR FALCON VIDEO COMMUNICATIONS, LP, d.b.a. CHARTER:

By:

(Corporate Seal)

Date:

STATE OF )

) §§.

TOWN OF )

The foregoing instrument was acknowledged before me on ___________, 2001___, by ___________________, the _____________ of __________, on behalf of FALCON VIDEO COMMUNICATIONS, LP, d.b.a. Charter Communications.

Notary Public

EXHIBIT A

PUBLIC BUILDINGS

Municipal Complex

5401 Croatan Highway

Water Plant

2110 Pond Ave.

Public Works

2200 Lark Ave.

Old Outer Banks Medical Center Building

425 Health Center Drive

Nags Head FD # 16

5314 S. Croatan Highway

Nags Head, NC

Nags Head FD #20

3716 Croatan Highway

Nags Head, NC

Note: Buildings not identified on above list may be included by Town’s notice to Grantee of the building and location. Town shall be provided a drop within one hundred and twenty (120) days after receipt of notice.

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