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HomeMy WebLinkAbout03 - Cox Communications Franchise AgreementAgenda Item No. 3 June 27, 2006 CITY OF NEWPORT BEACH MEMORANDUM TO: Mayor Webb and Members of the City Council FROM: Dave Kiff, Assistant City Manager DATE: June 27, 2006 RE: Item #3 -- Franchise Agreement with Cox Communications Please use this document as the proposed Franchise Agreement between Cox Communications and the City. The version in your staff report needs to be replaced with this version. I will be happy to outline the differences between the two on Tuesday'- I don't believe them to be significant. Dave City Hall • 3300 Newport Boulevard • Post Office Box 1768 • Newport Beach, California 92659 -1768 0 FRANCHISE TO PROVIDE CABLE TELEVISION SERVICES BETWEEN THE CITY OF NEWPORT BEACH, CALIFORNIA AND COX COM, INCORPORATED THIS AGREEMENT AND FRANCHISE (the "Franchise ") is made and entered into this day of 2006, by and between Cox Com, Incorporated, a Delaware corporation dba Cox Communications Orange County (hereinafter "Cox ") and the City of Newport Beach, California ( "City "). 1. Authority. This Franchise has been granted and approved pursuant to the provisions of Title 5, Business Licenses and Regulations, Chapter 5.44, Cable Communications Franchise, of the Municipal Code of the City of Newport Beach ( "NBMC "). This Franchise is in the form of a nonexclusive franchise, contract and agreement. 2. Definitions. All terms used in this Franchise Agreement shall be as defined herein and in Title 5, Business Licenses and Regulations, Chapter 5.44, Cable Communications Franchise, of the NBMC. The provisions of the NBMC and the wordings, specifications, and requirements in this Franchise shall constitute the terms of a franchise as authorized in the NBMC in the form of an agreement to permit use of the public rights —of -way and to provide the cable television services by Cox. Words, terms, or phrases not defined in the NBMC or herein shall first have the meaning as defined in the Cable Act, and then the special meanings or connotations used in any industry, business, trade, or profession where they commonly carry such special meanings. If those special meanings are not common, they will have the standard definitions as set forth in commonly used and accepted dictionaries of the English language. 3. Scope of Franchise. A. Cox is authorized and obligated to construct, reconstruct, and operate the System within the public streets and rights -of -way. This authority includes the privilege to use Cox's cable television system in the Service Area, as defined in Section 14 below, (hereinafter the "System ") to provide Cable Service to customers in the Service Area located in all residential dwellings, commercial structures and industrial structures. B. This Franchise Agreement solely and exclusively creates, defines, and limits the legal rights and obligations between City and Cox and does not; in any way, obligate City to take any action, actions or refrain from taking any action, or actions, to or in relation to any third party. 5 Cox -CNB Franchise Agreement Page 2 4. Payments. Regular Percentage Franchise Fee. From and after the Effective Date, Cox shall pay a Franchise Fee, in quarterly installments, in a sum equal to five percent (5 %) of the Gross Annual Revenue. The Franchise Fee shall be paid to the City within forty-five (45) days after the close of the calendar quarter. In the event the Effective Date, as defined in Section 18 below, does not occur on the first day of a calendar quarter, then Cox shall pay the Franchise Fee for the fractional quarter based on a per diem basis within forty - frve (45) days after the close of the fractional calendar quarter. Cox expressly acknowledges and agrees that: A. Except for the payments expressly required by this Section 4, none of the payments or contributions made by, or the services, equipment, facilities, support, resources, or other activities required to be provided or performed by Cox pursuant to this Agreement are franchise fees chargeable against the compensable payments to be paid to City by Cox pursuant to this Section 4; and B. As applicable, except for the compensation payments expressly required by this Section, each of the payments or contributions made by, or the services, equipment, facilities, support, resources, or other activities to be provided by Cox, are voluntary and are not "franchise fees" within the meaning of the Cable Act (47 U.S.C. §542.(g)(2)); and C. The compensation payments due from Cox to City pursuant to this Section shall take precedence over all other payments, contributions, services, equipment, facilities, support, resources, or other activities to be paid or supplied by Cox pursuant to this Franchise; and D. The compensation and other payments to be made pursuant to this Franchise Agreement shall not be deemed to be in the nature of a tax, and shall be in addition to any and all taxes of general applicability or other fees or charges which Cox or any Affiliated Person shall be required to pay to the City or to any state or federal agency or authority, all of which shall be separate and distinct obligations of Cox and Affiliated Persons; and E. Neither Cox nor any Affiliated Person shall have or make any claim for any deduction or other credit of all or any part of the amount of the compensation or other payments to be made pursuant to this Franchise from or against any city or other governmental taxes of general applicability (including any such tax, fee, or assessment imposed on both utilities and cable operators or their services but not including a tax, fee, or assessment which is unduly discriminatory against cable operators or cable subscribers or income taxes) or other fees or charges which Cox or any Affiliated Person is required to pay to City or other governmental agency; and F. Neither Cox nor any Affiliated Person shall apply or seek to apply all or any part of the amount of the compensation or other payments to be made pursuant to this 4 Cox -CNB Franchise Agreement Page 3 Franchise as a deduction or other credit from or against any City or other government taxes of general applicability (other than income taxes) or other fees or charges, each of which shall be deemed to be separate and distinct obligations of Cox and Affiliated Persons; and G. Neither Cox nor any Affiliated Person shall apply or seek to apply all or any part of the amount of any City or other government taxes or other fees or charges of general applicability (including any such tax, fee, or assessment imposed on both utilities and cable operators or their services) as a deduction or other credit from or against any of the compensation or other payments to be made pursuant to this Franchise, each of which shall be deemed to be separate and distinct obligations of Cox and Affiliated Persons; and H. City acknowledges that, during the term of this Agreement, Cox may offer to its subscribers, at a discounted rate, a bundled or combined package of certain cable services that are subject to the franchise fee referenced above in Section 4, and other services that are not subject to that fee. With regard to such bundled or combined services, the following provisions are applicable: During the term of this Agreement, if Cox offers to individual subscribers cable services subject to the franchise fee that are bundled or combined with non -cable services that are not subject to the franchise fee, then the revenue from those bundled or combined services must be allocated on the basis of proportionality, as follows: 1. The percentage that the price for all bundled services is discounted from the established retail rates for the individual services, as those rates are advertised by Cox in its marketing materials or published rate cards, will be prorated across all services in the bundled package, subject to the adjustment referenced below in Section 4(H)(2). Cox shall provide the City with the all requested information regarding the charge for each individual service for any bundled package within ten (10) days of the City requesting this information. 2. The revenue derived by Cox from services that are subject to mandatory tariff rates imposed by the California Public Utilities Commission, or any similar governmental rate - setting authority, will be deducted from the aggregate revenue to determine the revenue that is subject to the franchise fee. By way of example, Cox may offer a bundle of voice, video, and data services for a flat fee of $75, where the aggregate retail rate of those services when purchased on an individual basis would equal $100. If there is no service in that bundled package subject to a mandated tariff rate, Cox would apply a 25 percent discount to each individual service. Thus, if the established retail rate for video service was then $50, Cox would recognize revenue in the amount of $37.50 and would pay a franchise fee on that amount. J Cox -CNB Franchise Agreement Page 4 3. Cox will not structure the pricing of any bundled or combined services so as to intentionally or unreasonably cause a reduction in the Gross Annual Revenue against which franchise the City may impose fees or other proportionately derived taxes, surcharges, or fees. 4. If City reasonably determines that Cox has unlawfully, inequitably, or contrary to Section 4(H) allocated Gross Annual Revenue between video services and non -video services in calculating franchise fee payments, then the parties will meet upon advance notice from the City to discuss the allocation methodology. If the parties cannot resolve the dispute within a reasonable period of time, then the parties will submit the matter to a mutually agreeable third party for non - binding mediation. The parties will share the cost of the mediation equally. If the mediation is not successful, or if the parties cannot mutually agree upon a mediator, then either party may file an action in a court of competent jurisdiction or pursue any other remedies available under the law or this Agreement. I. If any franchise payment or recomputed amount is not made on or before the dates specified above in Section 4, Cox shall pay as additional compensation the greater of the following: An interest charge, computed from the applicable due date, at an annual rate equal to the prevailing commercial prime interest rate in effect upon the due date, plus three percent (3 %). 2. In addition to any late payment made pursuant to this section, if a payment is late by sixty (60) days or more, Cox shall pay a sum of money equal to five percent (5 %) of the amount due in order to defray reasonable additional documented and itemized expenses and costs incurred by City as a result of such delinquent payment. 3. No acceptance of any payment shall be construed as a release of, or an accord, or satisfaction of, any claim that the City might have for further or additional sums payable under the terms of this Franchise, or for any other performance by Cox of an obligation hereunder. 4. Payments of compensation made by a Cox to the City pursuant to the provisions of this Franchise are in addition to, and exclusive of, any and all authorized taxes, business license fees, and other fees, levies, or assessments now in effect, or subsequently adopted in accordance with state and federal law. 5. Letter of Credit. A. Pursuant to Section 5.44.060(B)(1)(a) of the NBMC, within thirty (30) days of the Effective Date of this Franchise, Cox shall post an irrevocable standby Letter of Credit in the amount of ($17.25 per current subscriber but not less than One 11 Cox -CNB Franchise Agreement Page 5 Hundred Thousand Dollars ($100,000). The Letter of Credit provider shall have, at a minimum, a credit rating of A issued by Moody's or Standard & Poor's. The letter of credit shall incorporate wording approved by City enabling City to draw such sums from time to time as the City may find necessary to satisfy any material default of Cox or to meet any payment due City under or in connection with the NBMC or this Franchise, upon ten (10) days' written notice to the Letter of Credit provider. The Letter of Credit shall provide in substance that, upon written notice by City of a material default or failure to make a payment due to City under or in connection with the NBMC or this Franchise, City may draw upon the Letter of Credit without any offset, contingencies or conditions of any kind. This Letter of Credit shall provide that it may not be revoked or amended without City's prior written approval. Cox shall obtain prior approval by the City of the wording of the Letter of Credit, the form of the Letter of Credit, and the Letter of Credit provider. Such approval shall not be unreasonably withheld. B. The Letter of Credit requirement may, in the unilateral discretion of the City, be increased by up to three times its original amount if there is an assignment, transfer, and/or change of control of the Franchise and/or the Cox. C. The Letter of Credit required by this Section satisfies the financial security requirements of this Franchise Agreement and is in lieu of a Security Fund or Faithful Performance Bond pursuant to Section 5.44.060(B)(1)(a) of the NBMC. 6. Insurance. Within ten (10) days of the Effective Date of this Franchise, Cox, at its sole cost and expense, for the full term of this contract (and any extension thereof), shall obtain and maintain at minimum all of the following insurance coverage: A. Types of insurance and Minimum Limits. The coverages required herein may be satisfied by any combination of specific liability and excess liability policies. 1. Workers' Compensation and Employers Liability Insurance in conformance with the laws of the State of California (not required if Cox has no employees). 2. Cox's vehicles, including owned, non -owned (e.g., owned by Cox's employees and used in the course and scope of employment), leased or hired vehicles, shall each be covered with Automobile Liability insurance in the minimum amount of two million dollars ($2,000,000) combined single limit per accident for bodily injury and property damage. 3. Cox shall obtain and maintain comprehensive or commercial General Liability Insurance coverage in the aggregate annual amount of two million five hundred thousand dollars ($2,500,000) combined single limit, including bodily injury, personal injury, and broad form property damage. Such insurance coverage shall include, without limitation: 7 Cox -CNB Franchise Agreement Page 6 a. Contractual liability coverage adequate to meet Cox's indemnification obligations under this Contract; and b. A cross - liability clause. C. Cox shall obtain and maintain Slander /Libel/Defamation Liability Insurance in the aggregate annual amount of one million dollars ($1,000,000). B. All required Automobile Liability insurance and Comprehensive or Commercial General Liability Insurance shall contain the following endorsement as a part of each policy: "The City of Newport Beach is hereby added as an additional insured as respects the operations of the named insured pursuant to cable television franchise as granted by the City and said insurance shall specifically cover the acts and omissions of Cox and the acts and omissions of its employees, agents and subcontractors in the performance of work hereunder." C. Within thirty (30) days from Effective Date of this Franchise, Cox shall furnish proof to City that a satisfactory insurance policy for all insurance required by this Franchise so that the City can ensure that the insurance is in place. The insurance policies for vehicles shall be in effect prior to usage and the City may, from time to time, reasonably increase the required amount of said insurance so long as said increased coverage is reasonably available at reasonable prices. D. The insurance required of Cox pursuant to this Franchise shall be primary and no insurance held by City shall be called upon to contribute to a loss under this coverage. E. All insurance policies shall provide that in the event of material change, reduction, or cancellation or non - renewal by the insurance carrier for any reason, not less than thirty (30) days written notice will be given to City by registered mail of such intent to cancel, materially change, reduce or not renew the coverage. An authorized agent of such insurance carrier shall provide to City, on such schedule as is requested by City, a certification that all insurance premiums have been paid and all coverages are in force. If for any reason Cox fails to obtain or keep any of such insurance in force, City may (but shall not be required to) obtain such insurance, in which event Cox shall promptly reimburse City its premium cost therefore plus interest at the City's portfolio rate until paid. F. All insurance shall be contracted through companies licensed to do business in California. G. Any deductible or self - insured retentions must be declared to and approved by City. At the option of City, insurer shall reduce or eliminate such deductible or self- insured retention as respects City, its officials, officers, employees and Cox -CNB Franchise Agreement Page 7 agents, or Cox shall procure a bond guaranteeing payment of losses and related investigations, claims, administration and defense expenses. 7. Defense and Satisfaction of Claims. A. Cox shall, at the sole cost and expense of Cox, upon demand by City, defend City, its officers, boards, commissions or employees, in any and all suits, actions, or other legal proceedings, whether judicial, quasi judicial, administrative, or otherwise arising out of the negligent or willful acts or omissions of Cox, its employees, subcontractors and agents. Where Cox is required to provide legal services to City under this paragraph, and chooses to utilize joint counsel, the parties shall make a good faith effort to cooperate and agree upon litigation strategy and implementation thereof. In the event that Cox's litigation strategy or choice of legal counsel create a conflict of interest, or result in inadequate representation to protect the City's interests and separate counsel is necessary for the representation of City, City may obtain separate legal counsel chosen by City at Cox's cost and expense provided, however, that if City obtains separate legal counsel as set forth above, Cox is only obligated to pay an hourly amount for legal services which does not exceed one hundred percent (100 %) of the highest hourly rate that City has paid for legal services within the twenty -four (24) month period prior to obtaining legal services as provided in this paragraph. City shall submit to Cox on a regular basis, statements for attorney's fees which shall be paid to City within sixty (60) days of Cox's receipt of said statement. B. Cox shall cause to be paid and satisfied any judgment, decree, or order rendered, made, or issued against Cox, City, its officers, boards, commissions, or employees, and hold City harmless therefrom, arising out of Cox's negligent or willful acts or omissions in connection with the construction, operation, maintenance, or other activities in relation to Cox's cable television system including, but not limited to, damages arising out of copyright infringement, defamation, personal and property liability; and antitrust liability, whether or not said damages are compensatory or punitive, provided, however, Cox shall not be required pursuant to this paragraph to hold City harmless for actions relating to programming decisions outside of Cox's control. Such indemnity shall exist and continue without reference to the amount of any bond, policy of insurance, deposit, undertaking, or other assurance; provided, however, City may not enter into any compromise or settlement which imposes any obligation on Cox without Cox's consent, which consent shall not be unreasonably withheld, and Cox shall not make or enter into any compromise or settlement of any claim, demand, causes of action, suit, or other proceedings which settlement involves anything other than the payment of money by Cox without contribution by City, without first obtaining the written consent of City, which consent shall not be unreasonably withheld. C. The indemnification provided pursuant to paragraphs 7(A) and 7(B) above shall apply to all damages and claims for damages of any kind suffered by reason of any of the aforesaid operations referred to in those paragraphs, regardless of q Cox -CNB Franchise Agreement Page 8 whether or not City has prepared, supplied, or approved the plans and /or specifications for the operation or regardless of whether or not any insurance policies shall have been determined to be applicable to any of such damages or claims for damages. 8. Liquidated Damages and Other Remedies. A. Damages for Violation of Technical Standards, Customer Service Standards and Other Violations. In addition to, and without limiting the damages for delays as specified in Section 4 of this Franchise, City may impose any of the other liquidated damages described below for the violations and in the amounts described below: 1. Technical Standards violations. If more than ten percent (10 %) of the locations tested pursuant to FCC regulations fail to meet the FCC technical standards, City may impose liquidated damages in an amount equal to two hundred dollars ($200) per day, if Cox does not cure the violation in accordance with Section 8(B)(1) below. 2. Customer Service Violations. If Cox violates, in any material way, any of the customer service standards specified in the NBMC or this Franchise, City may impose liquidated damages in the amount of two hundred dollars ($200) per violation per day if Cox does not cure the violation in accordance with Section 8(B)(1) below. 3. Other Violations. For all violations and breaches specified in the Franchise or the NBMC, the City may impose liquidated damages in the amount of two hundred dollars ($200) per day if Cox does not cure the violation in accordance with Section 8(B)(1) below. 4. Reduction of Damages and Letter of Credit. If City does not impose any damages on Cox for delays in violation of technical standards, violation of customer service standards or for other violations in the four (4) year period which shall commence on the date which is sixty (60) days from the Effective Date of this Franchise, after such four (4) year period, the penalties contained in Sections 8(A)(1) and 8(A)(2) above shall be reduced to one hundred fifty dollars ($150) per day per violation, and the letter of credit contained in Section 5 above shall be reduced to seventy -five percent (75 %) of the original amount thereof, provided however, that the original, penalties and the original amount of tO Cox -CNB Franchise Agreement Page 9 the letter of credit, as increased as allowed herein upon transfer, assignment or change of control, shall be immediately reinstated if (a) City imposes two (2) penalties on Cox in any twelve (12) month period, and/or (b) if Cox assigns, sells, leases or otherwise transfers this Franchise or control of the System. This entire paragraph shall immediately cease to have any force or effect if City imposes a penalty or penalties on Cox within the four (4) year period which commences sixty (60) days from the Effective Date of this Franchise Agreement. B. Payment of Damages. 1. Cure. In the event that City has reason to believe that Cox has failed to comply with any material provision of this Franchise or the NBMC and therefore . desires to impose damages on Cox as stipulated above and/or in the NBMC, City shall notify Cox in writing of the provision or provisions which City believes may be in default as well as the applicable cure period. Cox shall, upon receipt of said Notice: a. Cure the alleged violation within the cure period provided by the NBMC, or if no cure period is provided, within five (5) working days of said notice. In the event that Cox does not correct said violation within the applicable cure period, said liquidated damages may be imposed from the date of original violation; or b. Respond to City in writing during the cure period contesting City's assertion of violation and providing such information or documentation as may be necessary to support Cox's position and/or request an extension of the cure period. The decision to extend the cure period shall be within the sole discretion of the City. 2. Appeal and Payment. In the event Cox fails to respond to said notice of violation, or to cure the violation within the applicable cure period, or provide an explanation for failure to cure acceptable to City, City or its designee shall schedule a hearing no sooner than ten (10) days after written notice to Cox of the expiration of the cure period and the scheduling of said hearing. Cox shall be provided an opportunity to be heard at such hearing, including the right to present evidence, cross - examine witnesses, and be represented by counsel. Within thirty (30) days after said hearing, City shall determine whether or not Cox is in violation and submit written findings of facts supporting such determination. The hearing described above may be conducted, at City's selection, either before the City Council or before an administrative officer or commission selected by the City Council. In the kl Cox -CNB Franchise Agreement Page 10 event that said hearing is not held before the City Council, Cox shall possess the right to appeal said determination to the City Council within ten (10) days of issuance of the statement of decision and findings of fact. The City Council shall decide said appeal pursuant to a hearing at which Cox has an opportunity to be heard and the right to present evidence, examine witnesses and be represented by Counsel. Cox shall have the right to appeal the City Council's decision to a court of competent jurisdiction within ninety (90) days of any final decision by the City Council. In the event a court orders repayment of said liquidated damages from City to Cox, interest on such amounts shall be included at the rate paid by the Local Agency Investment Fund to the City for City Investments. City's All liquidated damages shall be due and owing thirty (30) days after the final decision by either the City Council or the hearing officer in the event of no appeal to the City Council. The aforesaid assessment may be levied directly against the letter of credit and collected by City thirty (30) days from date said damages are due and owing. Such assessment shall not constitute a waiver by City of any other right or remedy it may have under the Franchise or under applicable law including, without limitation, its right to recover from Cox such additional damages, losses, costs and expenses, including reasonable attorneys' fees, as may have been suffered or incurred by City by reason of or arising out of such breach of the Franchise. Nothing in this paragraph is intended to waive, modify or otherwise affect Cox's rights under the NBMC, this Franchise, or any applicable law, except for the specific procedures expressly provided herein, including without limitation the right to judicial review of the legal rights and obligations of the parties with respect to each other, Cox's right to challenge the decision of City under applicable legal standards, and any issue of performance or breach by either party to this Franchise. C. Validity of Liquidated Damages. The parties acknowledge that it would be impractical or extremely difficult to fix actual damages in the case of Cox's default, and that the amount of damages specified above is a reasonable and complete estimate of City's damages. Cox recognizes that Cox's prompt development and offering of cable television service for which penalties can be imposed is of critical importance to City. City: (Initials) IQ M6 (Initials) PAr Cox -CNB Franchise Agreement Page 11 D. Sole Financial Remedy. No financial penalties will be applied pursuant to Ordinance or other similar document for the same offenses to which the liquidated damages apply. 9. Cox Support for Development of Technology and Prograimning. Cox shall provide the following support for the purpose of technology development and implementing non - commercial public, benefit uses of the Cable System. The provision of the support items listed herein shall be considered as binding commitments of Cox within the terms of this Franchise, and if not provided, shall subject Cox to applicable remedies and penalties for violations of the Franchise. Cox shall provide the following support: A. Channel Capacity Requirements. Cox Support for Public, Educational or Government Access "PEG Access ": 1. Cox shall designate three (3) channels for the exclusive use of the City ( "PEG channels "). The PEG channels shall be under the exclusive management and editorial control of the City and shall not be shared with other cities. The City may designate a representative, such as a non - profit entity, to use and administer to said channels, with all of the attendant rights and obligations provided to the City hereunder. In the event Cox is required by federal law, regulations, or otherwise to change the channel number of a PEG channel, Cox shall provide thirty (30) days advance notice to the City and its customers. Should Cox desire to change the channel number of a PEG channel that is in use by a PEG user within the criteria set forth in Section 9(A)(2)for any other reason, Cox shall provide the City with the reason for change at least ninety (90) days prior to the proposed change, advertise the change to customers on its website, in at least three (3) bill messages prior to the change, and in a television spot announcement that Cox shall carry on its system for at least six weeks prior to the change. Cox shall also reimburse the City for its actual costs for reprinting any materials such as program guides or other promotional materials occasioned by the change in an amount not to exceed $7,500.00 for its costs of remarketing the channel. 2. Cox shall make available additional PEG channels designated for use exclusively by the City pursuant to the following criteria: a. The initial governmental channels must be in use and programmed with non - commercial PEG programming, of which no more than ten (10) hours can be character generated programming, during at least 80% of the weekdays for at least 80% of the time during any consecutive 6 -hour period for ten (10) consecutive weeks. 15 Cox -CNB Franchise Agreement Page 12 b. The initial public and educational channel must be in use and programmed with non- commercial and at least 50% locally produced programming, of which no more than ten (10) hours per week can be character - generated programming during at least 80% of the weekdays for at least 80% of the time during any consecutive 6 -hour period for ten (10) consecutive weeks. C. No more than 33 -1/3% of the aggregate hours utilized for PEG programming during such ten week period can represent repeat programming. d. Any additional PEG channel shall be made available within 180 days following the City's written request and verification of compliance with each of the foregoing conditions. e. Whenever such additional PEG channels but not the original three PEG channels, are programmed for less than ten (10) hours per day for six (6) days per week for a continuous period of not less than twelve (12) consecutive weeks, the City may permit Cox to utilize unused chatmel capacity on that channel under the following conditions: (i) Any request from Cox to use any fallow capacity designated for PEG Access must be submitted in writing to the City. (ii) The City shall approve the request from Cox to use fallow channel capacity if it finds that: (i) the utilization of the channel is as represented; (ii) Cox has not acted in violation of any of the provisions of the Franchise regarding utilization of the channel; and (iii) there are no special circumstances which would justify the denial or delay of implementation of the use of the channel. After approval, Cox may continue to utilize the channel for any other purposes it so chooses, consistent with the Franchise, until it is required to be designated for PEG purposes pursuant to the provisions hereof. (iii) Unless Cox receives written notice within one hundred and twenty (120) days that the City disapproves Cox's request, the City's approval shall be deemed granted. f. The maximum number of access channels which may be required under this Franchise shall be five (5), subject to the City's right to exchange channels, as set forth herein. On six months notice to Cox, City may exchange each analog PEG channel for four (4) 4 Cox -CNB Franchise Agreement Page 13 digitally compressed channels upon satisfaction of the following conditions: (i) Cox provides digitally compressed channels which offer at least as many services as are available by analog channels on the system; and (ii) Digital decompression terminal devices are installed in the homes of a least 50% of Cox's subscribers, and are used to receive Cox's services; and (iii) City provides six (6) months notice to Cox. (iv) City provides written waiver of any state or federal laws pertaining to requirements for the placement of such channels. As used in this section, a "digitally compressed channel" shall mean a data stream capable of delivering video programming on a basis comparable to the delivery of other digitally compressed video programming. 3. The City shall have sole responsibility for the administration and programming of the Governmental channel(s) provided by Cox, including without limitation, the carriage of programming on the channel(s) to include trafficking of tapes and playback and the establishment and administration of all rules, regulations and procedures pertaining to the use and scheduling of the programming presented over the channel(s). The channel(s) shall be used for noncommercial, public, governmental or educational programming. In relation to the public access channel(s), Cox shall continue its current practices of providing studio facilities, equipment, trafficking of tapes, playback, for public access users in a quality and quantity generally consistent with that provided over the past franchise tern. 4. City and Company acknowledge that there are certain logistic and technical issues that remain unresolved as of the Effective Date due to the fact that two separate cable companies provide cable service in the City of Newport Beach and the City Hall main operation for PEG Channel(s) resides in the cable service area of another cable service provider. Company agrees to work in good faith to resolve any logistic and technical issues to ensure seamless quality and continuity of PEG channel(s) access by the City's citizens including but not limited to: (i) Allowing physical playout equipment and signal to remain at Company's Rancho Santa Margarita facility or arranging for transfer of decks and racks in the City Hall area at a mutually agreeable location; ■ Cox -CNB Franchise Agreement Page 14 (ii) Ensuring that signal transmission/reception mutual exchange across cable service boundaries is accomplished; and (iii) Ensuring continuation of transmission/reception across the two cable system. B. A Grant in the amount of sixty dollars ($60.00) per Basic Service Tier subscriber ( "BST") of Cox in the City as of the Effective Date ( "Threshold Subscribers ") shall be paid by Cox to be utilized for any capital or non - capital purposes (the "Initial Grant "). Said Initial Grant shall be paid by Cox within thirty (30) days of the Effective Date of this Agreement. C. On January 1, 2010, the City shall provide Cox with a list of newly constructed residential units which have been constructed in the City subsequent to the Effective Date, if any, (the "Construction List"). Within thirty (30) days of receipt of the Construction List, Cox shall determine and report in writing to the City the number of newly constructed units which are BST Subscribers as of that date (the "New Construction Subscriber List "). Cox shall also report to the City the number of BST Subscribers contained in the City other than those subscribers set forth on the New Construction Subscriber List (the "Continuing Subscribers "). Within ten (10) days thereafter, Cox shall pay to the City an additional grant (the "Additional Grant ") equal to the number of New Construction Subscribers, less the difference between Threshold Subscribers and Continuing Subscribers times $30.00 per subscriber. D. City and Cox agree that said Initial Grant and Additional Grant are neither franchise fees nor offsettable against franchise fees, irrespective of how they are expended, for the purposes of the Cable Act. City shall waive normal permit fees, but not inspection fees, for residential dwelling units, constructed subsequent to the Effective Date in new subdivisions where Cox installs its cable television plant in otherwise open trenches along with other utilities at the time of new subdivision construction. Other than the waiver of normal permit fees as provided above, Cox will comply with all other City requirements. E. In the event any dedication to PEG Programming required by this Franchise is deemed by a legislative body, administrative body, or court of competent jurisdiction to constitute a payment which must or may be offset against the franchise fee, City hereby reserves the right, but is not required to do so, to terminate said program and/or requirement so as to provide the maximum allowable franchise fee. Cox shall not offset any charge, of any kind, against a franchise fee or other payment due City without prior written consent of City. Nothing in this Franchise is intended, and shall be so construed, to confer any third party beneficiary rights on any party(s), and no rights are created by this Agreement other than rights in City and Cox. 10 Cox -CNB Franchise Agreement Page 15 10. Governmental and Institutional Drop Policy; Provision of Live Local Insertion Locations. A. Drops to City Facilities. Within one hundred eighty (180) days of written notice provided by the City, Cox shall provide, without charge, up to four (4) cable drops, as determined by City, for all levels and all tiers of Cable Service per building, excluding premiums and pay - per -view, a cable modem drop, and cable modem service (residential speed of up to 3 mbs) per drop for those buildings, institutions and facilities on Exhibit "A ", plus those buildings, institutions and facilities which are constructed subsequent to the Effective Date of this Franchise Agreement, as designated by City in writing. Except for a City Hall which shall be served irrespective of distance if it is located in the Service Area, existing or future, which Cox shall construct at its sole expense, drops to all buildings, institutions and facilities which are constructed subsequent to the Effective Date of this Franchise Agreement shall be limited to 250 feet from the closest point to Cox's distribution system. In the event that requested drops exceed said distance, Cox shall determine the incremental cost beyond said distance and the City shall pay such incremental costs to Cox upon completion of construction. Cox shall not impose programming or other charges for any additional outlets within said buildings. Installation and maintenance of interior wiring of said building(s) beyond the four (4) drops per building shall be the responsibility of the building owner, provided that if Cox is requested to install such wiring, it will do so within a reasonable time at its actual cost of labor and materials. B. Live Insertion Locations. Within one hundred eighty (180) days of written notice provided by the City, Cox shall provide live insertion points at the locations set forth on Exhibit `B" by way of fiber connection so that the City can insert and transmit audio, video, and digital programming from said site to Cox's headend for retransmission over one or more of the PEG Channels specified in Section 9(A) (collectively, the "Return Feeds "). The Return Feeds shall be constructed pursuant to technical standards mutually agreed upon by Cox and the City (the "Design Specifications "). The City shall possess no obligation to insert programming upon the Governmental Channel pursuant to Section 9(A)(3) until such time as the Return Feeds are constructed and activated pursuant to the Design Specifications. Within one hundred and twenty (120) days of the completion and activation of the Return Feed, any playback of local government programming or insertion of audio, data or other information on the Government Access channel shall be the sole responsibility of the City. 11. Services and Broad Categories of Video Programming. Cox should provide, at a minimum, the following broad categories of services and video programming: local broadcast, public affairs, satellite services, news, sports, cultural, foreign language programming, general entertainment, and children's. If any listed broad 61 Cox -CNB Franchise Agreement Page 16 category of service or video programming shall become unavailable, or is commercially, impractical, or cannot be provided under existing FCC regulations, Cox should provide substitute programming of the same category if reasonably available. City may request Cox to cooperate with City in developing and distributing a printed PEG channel guide at City's cost. Said printed guide shall be of a reasonable weight and size and could include, but is not limited to, a printed guide distributed through the bills, via direct mail, or included in local newspaper or Cox's printed guide, all at City's cost, if any, but shall not include advertising. If City requests Cox to distribute a printed guide through the bills, Cox shall comply so long as City produces said guide at its own cost for production and insertion and provides Cox sufficient advance notice and there is room for said guide in Cox's billing envelopes, and said guide does not take the place of other inserts desired by Cox. City shall have complete responsibility for the content of any information included in said guide: The payments by City referred to in this Section shall be limited to reimbursing Cox's actual incremental cost of providing and distributing the guide. 12. Minimum System Design and Capacity Requirements. A. Channel Capacity. The cable television system shall be constructed with hybrid fiber coax ( "HFC ") architecture and engineered to deliver signals at forward frequencies up to and including a minimum bandwidth of seven hundred and fifty (750) megahertz (MHz) on the Residential Network. The System will be engineered to allow simultaneous downstream delivery of no less than one hundred ten (110) analog video channels and shall be constructed pursuant to the specifications and routing described herein. B. Interactive Capacity and Services. The cable television system shall be two -way activated in all of the distribution plant. C. Minimum Design Criteria. In addition to the requirements of Section 12(A) -(B) above, minimum system construction requirements shall be as follows: Cox shall at all times maintain equipment capable of providing standby power for the entirety of the cable system for a minimum of two hours. Emergency Override System. a. Cox shall provide, install, activate, and maintain an emergency override system which includes audio override on all analog channels of Cox's system and character generated message capabilities on a designated channel, receivable only within the City. City shall be able to activate, provide audio programming, and terminate such emergency audio override via dial -up or 1t 13. 14. Cox -CNB Franchise Agreement Page 17 dedicated telephone control upon system upgrade. City shall use the audio override and character generated system only in emergency situations, as declared by the City Council or the City Manager when there is threat to the public welfare, health or safety. b. In addition to subsection (a) above, and in accordance with the provisions of FCC Rules and Regulations Part 11, Subpart D, Section 11.5(h)(1), and as such provisions may from time to time be amended, Cox shall install and maintain an Emergency Alert System (EAS). As allowed by FCC Order FCC 97 -338, Paragraph 33, Cox shall transmit all national, state, and local activations of the Federal EAS, utilizing the four -part message protocol specified in FCC Rules and Regulations Part 11, Subpart B, or successor protocols. This shall include such local and state -wide situations as may be designated to be an emergency by the Local Primary (LP), the State Primary (SP) and/or other authorities identified and defined within FCC Rules and Regulations, Part 11 or the Local and State Plans provided for under those rules. 3. Cox shall provide subscribers, upon request, with a parental control locking device or digital code or other means that permits inhibiting the viewing of parental designated channels. 4. All new underground trunk and distribution cables shall be in conduit. 5. Minimum Technical Standards for Forward (Downstream) and Reverse (Upstream) Directions. The minimum technical standards shall be those adopted by the FCC from time to time. To the extent that no FCC standards exist, the standards shall be those FCC technical standards in effect on the Effective Date, or, if none, those established by City. Universal Service. Cox shall design, construct and maintain the cable television system in such a manner as to pass by every existing single or multiple - family dwelling unit in the City and shall make the system available on an identical basis to all single or multiple family dwelling units constructed during the term of this Franchise. For new construction in residential, and industrial areas, Cox shall make the system available at the, same time as. the units, residential, or otherwise, are constructed. Nothing herein shall preclude Cox from providing service to multi - family dwellings and other residential developments on a discounted bulk- billing basis. System Extension Policies. Description of Service Area(s). Cox -CNB Franchise Agreement Page 18 A. The service area shall constitute that portion of the City set forth on Exhibit "C" (the "Service Area"). B. All subscribers, residential, or otherwise, within one hundred twenty -five (125) feet from the closest public right -of -way or easement, shall be provided service for the standard installation fee. Subscribers located beyond one hundred twenty- five (125) feet from the closest public right -of -way or easement will be connected upon the payment of Cox's time and materials for that portion of the installation which exceeds one hundred twenty -five (125) feet. 15. Provision of Service. Unless the subscriber requests otherwise, Cox shall deliver initial service within seven (7) business days after receipt of a subscriber order so long as the subscriber is within the existing Service Area. Service additions or deletions shall be made within twenty -four (24) hours of a subscriber request, unless additional terminal equipment is required, in which case Cox shall make such service change within seven (7) calendar days. Cox shall provide all subscribers, prior to the initiation of cable service and thereafter, with the ability to subscribe to only Basic Service. 16. Technical Standards Testing. A. Cox's cable television system shall be periodically tested by Cox, at Cox's sole expense, at the times, and pursuant to the procedures, described in the then applicable rules and regulations of the FCC or, if no such rules and regulations exist, in the manner prescribed in rules and regulations in effect on the Effective Date. B. Reimbursement of City Expenses. City shall bear all costs associated with its attendance, either directly or through an independent consultant, in the initial testing but not retesting procedure described herein except as provided below: 1. Upon written request by the City and based on a pattern of customer complaints to the City regarding system performance, Cox shall measure and report to City the number of service complaints, which related to customer dissatisfaction with the quality of the picture excluding partial or tonal system outages. The number of said complaints over a twelve (12) month period shall be divided by twelve (12) and constitute the "base year average monthly subscriber complaints" for the purposes of this paragraph. 2. At the conclusion of said twelve (12) month period, Cox shall calculate and report to City monthly the number of subscriber complaints relating to the quality of the picture ( "Monthly Subscriber Complaints "). Said information shall be provided to City within fifteen (15) working days of the last day of each calendar month. 2D Cox -CNB Franchise Agreement Page 19 3. So long as Monthly Subscriber Complaints, as defined herein, remain within twenty percent (20 %) of the base year average monthly subscriber complaints, as defined herein, City shall bear all costs relating to its participation in the technical standards testing process defined herein. However, if, for any given two (2) consecutive months or any three (3) nonconsecutive months in any six (6) month period, said Monthly Subscriber Complaints increase more than twenty percent (20 %) over the base year average Monthly Subscriber Complaints, Cox shall reimburse City for City's actual and reasonable cost of supervising and /or participating in the technical standards testing for a three (3) quarter period commencing upon the occurrence of the contingency(ies) provided herein if the unsupervised periodic testing, as defined herein, indicates that Cox's system during said period is operating in conformance with the technical performance standards provided by Section 12 hereof, Cox shall reimburse City for any and all costs incurred by it in monitoring Cox's technical standards testing for twelve (12) months subsequent to a determination by City that liquidated damages pursuant in Section 10(3)(1) may be imposed. 4. Subscriber Complaint Log. Cox shall maintain a written or computerized record of subscriber complaints, including: loss of signal requiring a field visit, non - receipt of programming or services ordered, billing disputes, missed appointments, unsatisfactory performance of maintenance, malfunctioning signal traps on blocked channels, and unresolved or chronic technical problems. Said record shall indicate: a. Date and time of Subscriber complaints; b. Street name of complainant; C. Nature of complaint; d. Cox's action(s) to resolve complaint; and e. Date(s) and time(s) actions(s) taken. Said record shall be kept at Cox's local office for a period of two (2) years. A copy of said Subscriber complaint record shall be submitted by Cox to City within ten (10) working days following receipt of a written request by City. 5. To the extent that Cox maintains and provides Subscriber complaint information consistent with the above requirements, it shall be deemed to have maintained and provided sufficient Subscriber complaint information as required by this paragraph. PA Cox -CNB Franchise Agreement Page 20 17. Equipment in Rights of Way. A. Design and construction requirements, permit and other fees, public and customers notifications, requirements for public communication, and other oversight requirements by City imposed on Cox shall be consistent to the extent legally permissible and technically feasible, with those requirements imposed upon other users of the public rights -of -way and easements within the City. B. The Cable System shall be constructed or installed in the City only after the express written approval of the City and only at such locations and in such manner, design, and size as shall be approved by the City. In granting such approvals, the City shall exercise reasonable discretion in accordance with applicable law. Upon Cox's written request, City staff shall meet and confer with Cox in order to develop a process for expediting City processing and approval of proposed Cable System installation of multiple "like- kind" facilities. C. The Cable System shall be placed underground or where all other utilities are located in all areas which are subject to the provisions of the NBMC unless otherwise approved by the City Engineer. Such approval shall not unreasonably be withheld. D. All construction or maintenance work shall be conducted in a good and workmanlike manner consistent with industry standards. Installation of new facilities shall occur, whenever practical, concurrent with the installation of subdivision public improvements. E. Upon its receipt of reasonable advance notice, not to be less than five (5) business days, Cox shall, at its own expense, protect, support, temporarily disconnect, relocate in the Public Way, or remove from the Public Way, any property of Cox when lawfully required by City by reason of traffic conditions, public safety, street abandonment, freeway and street construction, change or establishment of street grade, installation of sewers, drains, gas or water pipes, or any other type of structures or improvements by the Franchising Authority; but, the Cox shall in all cases have the right of abandonment of its property. 18. Franchise Term. The term of this franchise shall commence upon its approval by the City Council (the "Effective Date "), and shall expire on April 1, 2011. At Cox's written election filed with the City no later than January 1, 2010, Cox may extend the Initial Term by seven (7) additional years so that the Franchise will expire on April 1, 2018. 19. Most Favored Nations Review. A. At any time and at City's request, Cox shall provide information on any Cable Services not being provided in the City which are being provided on an operational basis in systems operated by Cox, or any affiliate thereof in the States of California, Arizona and Nevada (the "Comparison Systems "). For purposes of N Cox -CNB Franchise Agreement Page 21 this section, "operational basis" means that Cox has offered a Cable Service to all Subscribers in the Comparison Systems for at least six (6) months, but does not include Cable Services that are offered on a trial or test basis to a limited number of subscribers. B. If Cox is providing Cable Services on an operational basis in any Comparison Systems, City may require Cox, and Cox shall comply, to provide said Cable Service(s) within one (1) year of the City's written request, and to upgrade its Cable System, if necessary, to provide said Cable Service. Further, City shall reasonably consider not requiring such service based upon information supplied by Cox but, after considering said information, may still require the provision of these Cable Services. C. After the Effective Date of the Franchise, if Cox, or any affiliate, parent, or subsidiary thereof, enters into any renewal, franchise extension, of a franchise or a new franchise to provide cable television service to any city located within Orange County or the County of Orange itself, within thirty (30) days thereof, Cox shall provide to the City a copy of the Other Franchise. D. In the event that the City concludes that the Other Franchise contains terms, conditions or provisions regarding Public, Educational or Government access (the "PEG Access Provision "), including, without limitation, the financial support thereof) or Cable System Technology (i.e., channel capacity, services offered, etc.) (hereinafter the, "Technology Provision "), as originally contained therein or as modified that are more favorable than those contained in the Franchise, when considering the Franchise and its requirements as a whole, then the City may, at its sole discretion, require Cox to provide the more favorable PEG Access Provision and the more favorable Technology Provision, or either of them; provided, however, (1) the City must notify Cox in writing of its election to require Cox to provide the more favorable provision within one hundred eighty (180) days of the City's receipt of the Other Franchise or the City shall be deemed to have irrevocably declined to impose such requirement; and (2) any requirement imposed pursuant to this paragraph of the Franchise to incorporate the more favorable PEG Access Provision and the Technology Provision, or either of them, shall also include, upon Cox's identification and request, the imposition of any and all other terms or conditions in the Other Franchise which are more favorable to Cox than those contained in the Franchise when considering the Franchise and its requirements as a whole, (by way of example, if the Other Franchise contains a franchise fee less than the franchise fee in the Franchise or has a term longer than the term of the Franchise, then the Franchise shall be modified to include such more favorable terms to the City at the same time that the Franchise is modified to include the more favorable PEG Access Provision or the more favorable Technology Provision). E. Cox shall provide the same Cable Services to customers in the City as it provides to customers in communities served off the same headend as of the date of this Agreement. In the event Cox deploys new or different Cable Services as a result I Cox -CNB Franchise Agreement Page 22 of a Cable System upgrade in one or more of the communities served off the same headend as of the date of this Agreement, then Cox shall deploy those new or different services within 24 months to customers in the City provided however Cox may request an extension for good cause and the City may or may not in its discretion consent to the extension. 20. Construction Responsibility. Cox shall be responsible for the acts and omissions of its contractors, subcontractors and employees. Only authorized employees and/or agents of Cox shall apply for and be issued all necessary permits and building authorizations. Cox shall designate to City a construction manager who is an employee of Cox to be contacted regarding all cable construction issues. 21. Compliance with Construction Standards. Cox shall not construct any portion of its cable television system in City streets and rights -of -way without obtaining all necessary City building permits and paying in addition to, the franchise fee, all then applicable fees to the extent legally and practically feasible to be required of all users of the public rights -of -way and public utility easements and shall only construct said system in accordance with City standards for methods of construction in public rights -of -way. 22. Compliance with all Laws and City Orders and the NBMC. A. Cox shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Cox shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements. B. Cox shall promptly comply with all lawful City orders, resolutions and the NBMC related to Cox's operation of the System, including all lawful rate orders. Failure to so comply shall be considered a breach of this Franchise and shall subject Cox to (1) all liquidated damages contained in this Franchise and the NBMC, and (2) all other actions, remedies and penalties available to City as a result of such. failure to comply. 23. City may require, at its option, that performance audits of the System be conducted every two (2) years by an independent technical consultant selected and employed by City at its sole expense to verify that the System complies with all technical standards and other specifications of the Franchise. 24. Franchise Construction. This Franchise shall be construed according to the internal laws of the State of California and all federal laws of the United States. Any action brought relating thereto must be brought exclusively in the state or federal courts located in Orange County, California. I Cox -CNB Franchise Agreement Page 23 25. Notices. Any notice required to be given by this Agreement shall be presumed given five (5) days after deposit in the United States mail, properly addressed by certified mail and return receipt requested, as follows: To City: City Manager City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92663 With a COPY to: City Attorney City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92663 To Cox: Cox Com, Inc. Cox Communications Orange County 29947 Avenida de las Banderas Rancho Santa Margarita, CA 92688 Attn: Vice President, Government Affairs With a COPY to: Cox Com, Inc. Attn: Director, Government Affairs 1400 Lake Hearn Drive Atlanta, GA 30319 26. Pass- Through of Expenses. Cox will not separate out, line itemize, or surcharge the cost of the Initial Grants and the Additional Grants described in Section 9 or any other cost related to this Agreement (except the franchise fee) as a line item on City customer's cable bills. Additionally, Cox shall not impose rates and charges on subscribers which are higher for like -kind services or of packages of services than those imposed upon subscribers in any of the cities of Mission Viejo, Laguna Hills, Tustin, Rancho Santa Margarita, and Aliso Viejo. 27. Possessory Interest. By accepting this Franchise, Cox acknowledges that notice is and was hereby given to Cox pursuant to California Revenue and Taxation Code Section 107.6 that use or occupancy of any public property pursuant to the authorization herein set forth may create a possessory interest which may be subject to the payment of property taxes levied upon such interest. Cox shall be solely liable for, and shall pay and discharge prior to delinquency, any and all possessory interest taxes or other taxes levied against Cox's right to possession, occupancy or use of any public property pursuant to any right of possession, occupancy or use created by this Franchise. Cox shall not be barred from challenging such try on any amounts assessed pursuant thereto. I Cox -CNB Franchise Agreement Page 24 28. Rates. City may, without amendment of this Franchise, regulate Cox's rates, charges, and prices to the maximum extent permitted by law. 29. Force Majeure. In the event Cox's performance of any of the terms, conditions, obligations or requirements of this Franchise is prevented or impaired due to any cause beyond its reasonable control and 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. Such causes beyond Cox's reasonable control and not reasonably foreseeable shall include, but not be limited to, any acts of God, civil emergencies, labor unrest, strikes, inability to obtain access to an individual's property and any inability of Cox to secureall necessary permissions or permits to utilize necessary poles or conduits so long as Cox utilizes due diligence to timely obtain said permissions or permits. 30. Meet and Confer. Prior to exercising any rights of audit or inspection upon Cox pursuant to Section 5.44.130 of the NBMC, City and Cox shall reasonably attempt to meet and confer to achieve voluntary compliance. 31. Interpretation. The terms of this Franchise shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Franchise or any other rule of construction which might otherwise apply. _ In recognition of the obligations stated in this Agreement, the parties have executed this Agreement on the date indicated above. ATTEST: LaVonne Harkless, City Clerk APPROVED AS TO FORM: COX COM, INC. Its: CITY OF NEWPORT BEACH William M. Marticorena, Special Counsel Its: Cox -CNB Franchise Agreement Page 25 EXHIBIT A Drops to City Public Buildings, Institutions and Facilities 1. Central Library — 1000 Avocado Avenue 2. Police Department — 870 Santa Barbara Drive 3. Fire Station 3 — 868 Santa Barbara Drive 4. Fire Station 5 /Corona del Mar Library -410 & 420 Marigold Avenue 5. Fire Station 8 — 6502 Ridge Park Road 6. Big Canyon Reservoir— 3300 Pacific View Drive 7. Oasis Senior Center — 800 Marguerite Avenue 8. Grant Howald Park/Community Youth Center - 3000 Fifth Avenue 9. Newport Coast Community Center — NPCoast Drive & San Joaquin Rd 10. Between the Police Facility and Newport Coast Fire Station 11. Andersen Elementary —1900 Port Seabourne Way Al Cox -CNB Franchise Agreement Page 26 EXHIBIT B Live Local Insertion Locations 1. Police Department Emergency Operations Center 2. Central Library Friends Meeting Room 3. Oasis Senior Center Community Meeting Room 4. Newport Coast Community Center Meeting Room a$ Cox-CNB Franchise Agreement Page 27 EXHIBIT C Cox Service Area Cable Proeider 111.1F11 �A CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 3 June 27, 2006 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Managers Office Dave Kiff, Assistant City Manager 949/644 -3002 or dkiff @city.newport- beach.ca.us SUBJECT: CABLE TELEVISION: ORDINANCE 2006- ADOPTING A FRANCHISE AGREEMENT WITH COX COMMUNICATIONS ISSUE: Should the City enact an ordinance that adopts a new Franchise Agreement with Cox Communications? RECOMMENDATION: 1. Introduce Ordinance No. 2006 - relating to the adoption of a Cable Communications Franchise Agreement with Cox Communications; 2. Pass to second reading on July 11, 2006. DISCUSSION: As far back as 1966, the City of Newport Beach has had a Cable TV Ordinance and separate "franchise agreements" with two cable providers. Today, those providers are Cox Communications and Adelphia (see service areas on map below). The agreements have been extended several times: ADELPHIA FRANCHISE AGREEMENT • Agreement adopted December 1966 -15 -year term (to 1981). • Amended December 1970 -term reset again to 15 years (to 1986). • Amended April 1986 -term extended by five years (to 1991) • Amended October 1991 -term extended to January 27, 2002. • Amended December 11, 2001 -- term extended to January 27, 2003. • Amended January 27, 2003 -- term extended to January 27, 2004 (now on holdover status) COX FRANCHISE AGREEMENT Agreement adopted December 1966 -15 -year term (to 1981). Cox Communications Franchise and Ordinance June 27, 2006 Page 2 • Amended November 1981 -term extended for 10 years (to 1991). • Amended October 1991 -term extended to January 27, 2002 • Amended December 11, 2001 -- term extended to January 27, 2003. • Amended January 27, 2003 -- tear extended to January 27, 2004 (now on holdover status). ('able TV Franchise Areas \ .' cE" $' ('iq' of TJre'Fr rt lw+.ai. / \ i �/� i `.✓ \ $ 656,558 f 266,671 $ 923,229 [71 jIn,,v.,- a1 $ 722,714 $ 280,602 $ 1,003,316 - -2001 $ 705,709 $ 395,824 $ 1,101,533 - -2002 $ 714,762 $ 394,732 $ 1,109,494 - -2003 $ 640,330 $ 470,404 $ 1,110,734 - -2004 $ 766,343 � 494,411 a � v v � ✓ t �: $ 411,480 $ ,nv , $ 813,494 Al.la.lpe a i v. c" J ?tISN -2fiF # of homes passed in Franchise Area x 31,123 13,900 x45,023 # of cable N subscribers 16,978 10,100 27,078 % of homes passed that subscribe to cable 55% 73% 60% x -- 1999 (Calendar Year) $ 656,558 $ 266,671 $ 923,229 - -2000 $ 722,714 $ 280,602 $ 1,003,316 - -2001 $ 705,709 $ 395,824 $ 1,101,533 - -2002 $ 714,762 $ 394,732 $ 1,109,494 - -2003 $ 640,330 $ 470,404 $ 1,110,734 - -2004 $ 766,343 $ 494,411 $ 1,260,753 -- 2005 (to date, includes 4th Q'04) $ 411,480 $ 402,014 $ 813,494 Cox Communications Franchise and Ordinance June 27, 2006 Page 3 In May of 2004, the City adopted a new Cable Communications Franchises Ordinance (Chapter 5.44 of the NBMC). Since that time, the staff team (Bill Marticorena of Rutan and Tucker, Assistant City Attorney Aaron Harp (as well as City Attorney Robin Clauson), Assistant City Manager Dave Kiff, and PIO Marilee Jackson) has worked to negotiate two new franchise agreements (which mirror each other) with Cox and Adelphia. Adelphia's bankruptcy filing and subsequent sale of Adelphia assets to Time Warner greatly complicated our discussions. Preparing for the franchise renewals, the City Council worked with us to amend or wholly re- vamp three different ordinances (Public Right -of -Way, Cable Communications Franchises, and Wireless Telecommunications) to lay a framework for the Agreements and for the overall industry's work in the area. Those tasks are complete. Generally, the negotiations with both Cox and Adelphia/Time Warner have centered around template agreements - 95% of the template is a fairly standard version of the agreements that Mr. Marticorena's clients (cities and counties) have adopted in recent years. The remaining 5% of the discussions have centered around: • How many channels will be dedicated for PEG -- now and in the future (in case our community programming grows). • How much money might be forthcoming for a one -time capital grant to enable us to install one -time projects like cameras in City Hall, a computer editing bay, and more. • How many remote City facilities will be hooked up with a network (called the "Institutional" or "I -Net" we talk about). • How much will the companies provide on an ongoing basis per subscriber to support community programming. Not surprisingly, areawide research shows that Cox and Adelphia have given a variety of capital grants, a variety of sums per subscriber, and different ]-Net services to different municipalities. The City has been fairly aggressive in stressing that we know what other cities have received and that we expect similar treatment by our cable providers. Additional Background. In the 1960s, when the City of Newport Beach entered into two separate franchise agreements with companies that provide cable television service, cities across the nation had a significant amount of say in cable companies' operations, including: • Rates and rate increases; • Customer service standards; and • Channel selections and placement Cities were able to dictate these aspects of cable companies' operations because the cable companies used the public right -of -way to lay the cable "plant" (plant includes coaxial cable, boxes in the rights -of -way, connections to homes, etc). Federal law has changed significantly since the City adopted its franchise agreements - and both Federal and State law will continue to affect us in the years to come. The changes, in part, took away almost all of cities' regulatory abilities relating to cable and moved them to the Cox Communications Franchise and Ordinance June 27, 2006 Page 4 Federal Communications Commission (FCC or www.fcc.gov). Today, several different laws, ordinances, and agreements direct our decisions about cable television. The Effect of Changes in Law. It's important to remind the Council and Newport Beach residents that: FCC regulates rates, not cities. The FCC alone has the power to regulate rates and channel selections, with the lone exception of rate regulation on the basic service tier of channels (typically Channels 2 -13 and PEG channels). Cities can only regulate basic tier rate increases if fully certified by the FCC to do so. Cable customers should note that cable companies rarely, if ever, raise the rates on this tier - much more frequent are rate increases on the larger (and unregulated) broadcast basic tier(Channels 14 -65 and up). Other tiers are generally unregulated. In March 1999, the FCC (generally) deemed many cable systems subject to "effectivE� competition" from satellite dish services and removed almost all rate regulation from cable TV. Cable TV in Newport is not literally a monopoly. Cities like Newport Beach have non- exclusive franchise agreements. Any cable provider can come into the city limits, negotiate a franchise agreement, lay new cable, and compete directly with either Cox or Adelphia. Similarly, Cox can attempt to compete directly with Adelphia and vice - versa. But doing so requires significant investment in new cable infrastructure, because each cable company owns the cable in the ground (and on poles). Very few companies anywhere in the nation "overbuild" other systems. Denial of renewal is extremely difficult and expensive. Cities cannot typically deny a cable provider an opportunity to renew an existing franchise agreement. Internet services are unregulated. Courts have ruled that the provision of Internet service over cable is not a cable - related service and therefore not subject to municipal regulation. Newport Beach can do very little to help cable customers interact with their Internet Service Providers (ISPs). Many more changes are expected. Legislation in both Sacramento and Washington propose "statewide" franchises for telephone and cable providers - these may supercede local agencies' franchise abilities and some or all franchise revenue. A note about the City Charter. The City Charters section on franchises (Article XIII) requires the City Council to adopt franchises via ordinance and to hold a public hearing prior to granting a franchise. It limits all franchise terms to 25 years or less if a determinate term is stated. The Article allows indeterminate terms but specifies that the City may end the franchise and possess the franchisee's property if the franchisee is out of compliance with the franchise agreement (Section 1302). Franchise Discussions. Since at least Fall 2000, the City has retained Mr. Marticorena to assist us in our telecommunications work. Mr. Marticorena has extensive experience in all phases of franchise renewals and ordinance amendments. Additionally, upon recommendation of the Telecom Committee, we hired Sue Buske of the Buske Group to conduct a statistically valid Cable Needs Assessment (CNA) to determine the community's desires and concerns regarding cable TV (for more information about the Assessment itself, see the Agenda Item from April 8, 2003 whereby the City Council formally accepted the Assessment). Given the problems with Adelphia (and generally no one there with whom to negotiate), we used the Assessment and the Statement of Minimum Goals to work with Cox on a new Franchise Cox Communications Franchise and Ordinance June 27, 2006 Page 5 Agreement. A Franchise Agreement is separate and distinct from a new Cable Communications Ordinance as follows: • The Ordinance reflects the regulatory environment and practices that any cable provider must follow while doing business in the City. The Agreement(s) reflects specific permission to a specific company to use the public right -of -way to operate a cable system. Included in the permission are negotiated terms by the company and the City as to adequate compensation paid to the City and its residents for the use of the right -of -way. Adequate compensation may include the 5% franchise fee, dedication of equipment, dedication of specific channels and support for Public, Educational, and Government (PEG) services, and more. The Proposed Franchise Agreement with Cox. The attached Franchise Agreement - which, as noted, must be adopted by Ordinance - has the following key provisions: TERM: Until April 1, 2011 -with an option to extend to April 1, 2018 FRANCHISE FEE: 5% LETTER OF CREDIT:$17.25 per subscriber BANDWIDTH At least 750 Mhz LOCAL OFFICE: Within 20 miles PEG SUPPORT: Initial grant of $60 /subscriber (roughly $660,000); and Additional grant of $30 /new subscriber over 2006's numbers in 2010. No ongoing PEG support PEG CHANNELS: Three immediately, up to 2 more if needed. OTHER: Drops provided to City facilities in Cox service area Undergrounding required Subscriber Complaint Log kept Technical Service standards met Assurance that changes to State or Federal law will not impact Capital Grant or Franchise Fee payments for the duration of the Franchise Term. More This tentative agreement with Cox compares to the negotiated settlement with Adelphia -Time Warner, via a proposed Memorandum of Understanding (MOU). The MOU twould be binding on Time Warner for ten years (until December 31, 2016) and includes the following benefits from Time Warner for the City and its residents: For support of Public, Educational, and Government (PEG) programming, an Ongoing PEG Grant of $0.50 per subscriber per month (roughly $120,000 per year). Importantly, Cox asserts that Cox will not and has not agreed to ongoing PEG support - instead, Cox offers limited one -time capital grants (thus the higher number at $60 /sub than the below $28 /sub offered by the Time Warner MOU; An Initial PEG Access Grant of $28.00 per subscriber (roughly $476,000 on a one -time basis); and Maintenance of current 5% franchise fee. The MOU also directs that the City and Time Warner negotiate a new Franchise Agreement with the goal of completing the Agreement by December 31, 2006. Cox Communications Franchise and Ordinance June 27, 2006 Page 6 Staff agrees with the proposed terms of the Cox Franchise Agreement and recommends that the Council approve the Cox FA by ordinance as required by the City Charter. Committee Action: This item came to Council before staff had the opportunity to convene the Media & Communications Committee, but we have discussed the recommended actions with the Council Members who serve on the Committee. Public Notice: This agenda item may be noticed according to the Brown Act (72 hours in advance of the public meeting at which the City Council considers the item). Submitted by —Dave Kiff cy Assistant City Manager Attachments: Ordinance No. 2006 - Draft Franchise Agreement with Cox Cox Communications Franchise and Ordinance June 27, 2006 Page 7 ORDINANCE NO. 2006 - AN ORDINANCE OF THE CITY OF NEWPORT BEACH GRANTING TO COXCOM, INCORPORATED, A NONEXCLUSIVE FRANCHISE TO CONSTRUCT, MAINTAIN AND OPERATE A CABLE COMMUNICATIONS SYSTEM WITHIN THE CITY OF NEWPORT BEACH The City Council of the City of Newport Beach does ordain as follows: SECTION 1. Definitions. Wherever in this ordinance the following words or phrases are used, they shall have the respective meanings assigned to them in the following definitions; and words or phrases not defined in this section which are defined in any franchise document shall have the same meaning in this ordinance assigned to them in such franchise document, unless the context in which they are used shall clearly indicate a different meaning: (a) "City" shall mean the City of Newport Beach in its present incorporated form or in any later recognized, consolidated, enlarged or reincorporated form. (b) "Council' shall mean the present governing body or the City, or any future board constituting the legislative body of the City. (c) "Person" shall mean any individual, firm, partnership, association, corporation, company or organization of any kind. (d) "Cox" shall mean CoxCom, Incorporated, a Delaware Corporation, doing business as Cox Communications Orange County, its employees, agents, successors and assigns. (e) "Subscribers" shall mean any person or entity receiving for any purpose the Cable Service of Cox herein. (f) "Franchise Area" shall mean the territory within the City throughout which Cox shall be authorized to construct, maintain and operate its system which is depicted on Exhibit A, which is incorporated herein by this reference, and shall include any enlargements thereof and additions thereto approved by the City in writing. (g) "Franchise Documents" shall mean and shall include all of the following: (1) Article XIII of the Charter of the City of Newport Beach. VA Cox Communications Franchise and Ordinance June 27, 2006 Page 8 (2) Chapter 5.44 of Title 5 of the Newport Beach Municipal Code as the same now exists or as it may hereafter be amended. (3) Any and all rules and regulations governing the operation of Cable Systems within the City of Newport Beach which are adopted by the City Council. (4) The written acceptance of a Cable Communications Franchise filed with the City by Cox. (5) The Franchise Agreement approved by the Office of the City Attorney executed by the City and Cox. (i) "Street" shall mean the surface of and the space above and below any public street, road, highway, freeway, lane, path, alley, court, sidewalk, parkway, or right of way whether or net improved, now or hereafter existing as such throughout the City. SECTION 2. Grant of Franchise. There is hereby granted to Cox by the City a nonexclusive franchise to construct, erect, operate and maintain, in, upon, along, across, above, over and under the public streets, alleys, public ways and public places, now or in the future dedicated for public use in the City, poles, wires, cables, underground conduits, manholes and other television conductors, appurtenances and fixtures necessary or convenient for the maintenance and operation in the City of a Cable System to transmit television and FM radio signals, within the franchise area depicted on Exhibit A. The Cable System herein franchised shall be used and operated solely and exclusively for the purposes expressly authorized by ordinance of the City of Newport Beach and no other purposes whatsoever. SECTION 3. Nonexclusive Grant. The right to use and occupy said streets, alleys, public ways and places for the purposes herein set forth shall not bes exclusive, and the City reserves the right to grant a similar use of said streets, alleys, public ways and places to any person at any time during the term of this franchise. SECTION 4. Term of Franchise. The initial term of this franchise shall commence upon its approval by the Council (the "Effective Date "), and shall expire on April 1, 2011, provided that Cox has filed written notice of acceptance and executed the franchise agreement in accordance with the requirement of Section 9 of this ordinance ('Initial Term "). At Cox's written election filed with the City no later than January 1, 2010, Cox may extend the Initial Term by seven 3 Cox Communications Franchise and Ordinance June 27, 2006 Page 9 (7) additional years so that the franchise will expire on April 1, 2018. SECTION 5. Inclusion of Franchise Documents. All of the franchise documents applicable to this franchise are hereby incorporated by reference and made a part of this ordinance. By acceptance of this franchise, Cox agrees to be bound by all of the terms, provisions and conditions contained in said franchise documents. SECTION 6. Right of City to Adopt Additional Rules and Regulations. The right is hereby reserved to the City to adopt, in addition to the provisions contained in this ordinance and in any other applicable ordinances and resolutions, such additional regulations as it shall determine to be necessary or convenient in the exercise of the police power. SECTION 7. Prohibited Activities of Cox. Cox shall be prohibited from directly or indirectly doing any of the following: (a) Engaging in the business of selling at retail, leasing, renting, repairing or servicing of television sets, radios or other receiving apparatus, or any part or component thereof. (b) Providing any repair service to its subscribers, for a fee or otherwise which extends beyond the connection of its service and the determination by Cox of the quality of its signal to its subscribers. (c) Soliciting, referring, or causing or permitting the solicitation or referral of any subscriber to any specific named persons firms or corporations engaged in any business which Cox is prohibited from engaging in by the provisions hereof. SECTION 8. Transfer of Franchise. This franchise shall not be sold, transferred, assigned, leased or otherwise disposed of in whole or in part by voluntary or involuntary sale, merger, consolidation, or otherwise, without the prior consent of the Council expressed by resolution, and then upon such terms and conditions as the Council may prescribe. No sale, transfer or assignment shall be effective until the vendee, assignee or lessee has filed in the Office of the City Clerk an instrument, duly executed and approved as to form and content by the City Attorney, reciting the fact of such transfers sale, assignment or lease, accepting the terms of the franchise, and agreeing to perform all the conditions thereof, including any additional conditions required by the Council. SECTION 9. Acceptance of Franchise. M Cox Communications Franchise and Ordinance June 27, 2006 Page 10 This franchise shall not become effective for any purpose unless and until the franchise agreement is executed by Cox and the City and written acceptance of the franchise shall have been filed with the City Clerk. The franchise agreement and written acceptance of the franchise shall be in form and substance as shall be prescribed by the City Attorney and shall be and operate as an acceptance of each and every term, condition and limitation contained herein, or otherwise specified by ordinance or resolution of the City Council. An executed franchise agreement and written acceptance of the franchise shall be filed by Cox not later than 12:01 P.M. of the fifteenth (15th) day next following the date of the adoption by the Council of this ordinance; and, in default of the filing of an executed franchise agreement and written acceptance of the franchise as herein required, Cox shall be deemed to have rejected and repudiated the same; and thereafter, the acceptance by Cox of the franchise shall not be received by the City Clerk and the City shall not execute the franchise agreement, and such Cox shall have no rights, remedies, or redress in the premises, unless and until the City Council shall, by resolution, determine that such written acceptance of the franchise be received and filed and that the franchise agreement be executed by the City, and then upon such terms and conditions as the Council may impose. SECTION 10. Annual Franchise Fee. Cox shall pay annually to the City during the life of this franchise for the privilege of operating a Cable System under this franchise the franchise fees and other payments set forth in the franchise agreement. SECTION 11: If any section, subsection, sentence, clause or phrase of this ordinance is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this ordinance. The Council hereby declares that it would have passed this ordinance, and each section, subsection, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses and phrases be declared unconstitutional. SECTION 12: The Mayor shall sign and the City Clerk shall attest to the passage of this ordinance. The City Clerk shall cause the same to be published once in the official newspaper of the City, and it shall be effective thirty (30) days after its adoption; provided, however, that the franchise hereby granted shall not become effective unless and until Cox files written acceptance thereof and executes and delivers the franchise agreement in the manner specified in Section 9 of this ordinance and delivers to the City all bonds and insurance policies required to be furnished in accordance with the requirements of Chapter 5.44 of the Newport Beach Municipal Code and /or the franchise agreement. SECTION 13: This ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach, held on the 27`h day of June, 2006, and adopted on the day of 2006, by the following vote, to wit: 10 Cox Communications Franchise and Ordinance June 27, 2006 Page 11 AYES, COUNCILMEMBERS NOES, COUNCILMEMBERS ABSENT COUNCILMEMBE MA ATTEST: CITY CLERK CABLE SYSTEM FRANCHISE AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND COXCOM INCORPORATED 13 TABLE OF CONTENTS SECTION 1 GRANT OF FRANCHISE N 1.1 Authority 2 1.2 Franchise Term 2 1.3 Scope of Franchise 2 1.4 Conflict with Municipal Code 2 1.5 Definitions 3 SECTION 2 GENERAL REQUIREMENTS 3 2.1 Governing Requirements 3 2.2 Franchise Fee 3 2.3 Letter of Credit 8 2.4 Insurance 10 2.5 Defense and Satisfaction of Claims 14 2.6 Franchise Violations/Liquidated Damages and Other Remedies 16 SECTION 3 SERVICE AREA AND LINE EXTENSION POLICY 20 3.1 Franchise and Service Area 20 3.2 System Extension Policy 21 3.3 Provision of Service 21 3.4 Commercial Areas 22 SECTION 4 SYSTEM CONSTRUCTION 22 4.1 Emergency Override System for Analog and Digital Cable 22 4.2 Standby Power 22 4.3 Parental Control Lock 23 4.4 Status Monitoring 23 4.5 Technical Standards 23 SECTIONS SERVICES AND PROGRAMMING 23 5.1 Services and Broad Categories of Video Programming 23 5.2 Minimum System Design and Capacity Requirements 24 5.3 Local Office 26 5.4 Services for the Disabled 26 SECTION 6 LOCAL CABLE ACCESS AND COX SUPPORT 27 6.1 Company Support for PEG Ac --ess 27 6.2 Governmental and Institutional Drop Policy; Provision of Live Local Insertion Locations 32 6.3 Compliance with Federal Law 34 SECTION 7 MISCELLANEOUS 34 7.1 Rate Regulation 34 7.2 Reporting Requirements 34 7.3 Technical Standards Testing 36 7.4 "Most Favored Nations' Review 37 7.5 Restrictions against Transfers 39 �0 7.6 Use of the Public Right -of -Way 39 7.7 Construction Responsibility 40 7.8 Compliance with Construction Standards 41 7.9 Compliance with all Laws, City Orders and the Code 41 7.10 Choice of Law 41 7.11 Notices 42 7.12 Successors and Assigns 42 7.13 Separability 42 7.14 Possessory Interest 43 7.15 Meet and Confer 43 7.16 Rights Cumulative 43 7.17 No Waiver 43 7.18 Declaration of Invalidity 44 7.19 Time of the Essence; Maintenance of Records 44 7.20 Force Majeure 45 7.21 Interpretation 45 7.22 Exhibits 45 EXHIBITS A. Service Area Map B. Drops to Public Buildings, Institutions and Facilities C. Live Local Insertion Locations IS AGREEMENT This FRANCHISE Agreement (the "Franchise" or "Agreement ") is made and entered into this day of July, 2006 at Newport Beach, California, by and between the City of Newport Beach, a municipal corporation of the State of California ( "City'), and CoxCom, Inc. ( "Company "). RECITALS City is a municipal corporation duly organized and validly existing under the taws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of the City of Newport Beach. A. Company is incorporated under the laws of the State of Delaware and provides cable television services in cities throughout the State of California. B. Section 1300 et seq. of the Newport Beach City Charter authorizes the City to enter into franchise agreements for cable television services. C. In 2004, the City adopted Ordinance No. 2004 -8, which enacted Section 5.44 of the Newport Beach Municipal Code ( "Code "), outlining the duties and obligations for operating a cable television franchise in the City. D. Pursuant to this Agreement, City desires to authorize Company to provide non - exclusive cable services within the City. E. The City Council has determined that the grant of a non - exclusive franchise to Company to provide cable services is in the public interest. NOW THEREFORE, the City of Newport Beach hereby grants to Company a non - exclusive Franchise to operate a cable communications system to provide cable services in the City of Newport Beach in accordance with the provisions of Chapter 5.44 1 iI,, of the Code, subject to the terms and conditions set forth in this Agreement. SECTION 1 GRANT OF FRANCHISE 1.1 Authority This non - exclusive Franchise has been granted and approved pursuant to the provisions of the Charter of the City and Chapter 5.44, as amended, of the Code. This Franchise is in the form of a non - exclusive franchise, contract and agreement. 1.2 Franchise Term The term of this Franchise shall commence upon its approval by the City Council (the "Effective Date "), and shall expire on April 1, 2011. At Company's written election filed with the City no later than January 1, 2010, Company may extend the initial term by seven (7) additional years so that the Franchise will expire on April 1, 2018. 1.3 Scope of Franchise A. Company is authorized and obligated to construct, reconstruct, maintain and operate the System within the public streets and rights -of -way. This authority includes the privilege to use Company's cable television system in the Service Area, defined in Section 3.1 below, (hereinafter the "System ") to provide Cable Service to subscribers in the Service Area located in all residential dwellings, commercial structures, and industrial structures. B. This Franchise solely and exclusively creates, defines, and limits the legal rights and obligations between City and Company and does not, in any way, obligate the City to take any action, actions or refrain from taking any action, or actions, to or in relation to any third party. 1.4 Conflict with Municipal Code The provisions of Chapter 5.44 of the Code are hereby incorporated by reference as if set out in full, and form part of the terms and conditions of this Agreement. In the h event of a direct and clear conflict between the terms and conditions of this Agreement and the provisions of Chapter 5.44, this Agreement shall prevail. 1.5 Definitions The definitions contained in Chapter 5.44 of the Code are incorporated by reference as if fully set forth in this Agreement. Words, terms, or phrases not defined herein or in Chapter 5.44 of the Code shall first have the meaning as defined in the Cable Act, and then the special meanings or connotations used in any industry, business, trade, or profession where they commonly carry such special meanings. If those special meanings are not common, they will have the standard definitions as set forth in commonly used and accepted dictionaries of the English language. SECTION 2 GENERAL REQUIREMENTS 2.1 Governing Requirements Company shall comply with all requirements of this Agreement, Chapter 5.44 of the Code and all applicable local, state and federal laws, statutes, ordinances, rules, regulations, and orders. 2.2 Franchise Fee A. Company shall pay to City an annual Franchise Fee of five percent (5 %) of Gross Annual Revenues, as that term is defined in Section 5.44.020 of the Code. If federal or state law permits an annual Franchise Fee of greater than five (5 %), the City shall be entitled to the maximum fee allowable by law. B. If federal or state law permits the Company to provide non -video Telecommunications Services to Subscribers (such as telephone communications) or other non -Cable System services through the facilities of the Cable System, and the City has the authority to collect either a Franchise Fee or an in- lieu -of- franchise fee payment on such services, then the Company shall pay a fee for revenues derived from 3 I such services at the rate established in an ordinance and /or resolution adopted by the City Council. C. Payments due the City shall be computed quarterly, and shall be paid within forty -five calendar (45) days after the close of each calendar quarter. The payment shall be accompanied by a report showing the basis for the computation and such other facts as may be required by the City to determine the accuracy of the payment. In the event the Effective Date does not occur on the first day of a calendar quarter, then Company shall pay the franchise fee for the fractional quarter based on a per diem basis, within forty -five (45) calendar days after the close the fractional calendar quarter. A final annual reconciliation, and payment if any, shall be delivered to City by Company within ninety calendar (90) days after the end of each calendar year. D. If any Franchise Fee payment or recomputed amount is not made on or before the dates specified above in Section 2.2 (C), Company shall pay as additional compensation the greater of the following: 1. An interest charge, computed from the applicable due date, at an annual rate equal to the prevailing commercial prime interest rate in effect upon the due date, plus three percent (3 %). 2. In addition to the interest charge on any late payment, if a payment is late by sixty (60) days or more, Company shall pay a sum of money equal to five percent (5 %) of the amount due in order to defray reasonable additional documented and itemized expenses and costs incurred by City as a result of such delinquent payment. E. No acceptance of any payment shall be construed as a release of, or an accord, or satisfaction of, any claim that the City might have for further or additional sums payable under the terms of this Franchise, or for any other performance 4 IU by Company of an obligation hereunder. All amounts shall be subject to audit at the times and in the manner authorized by Section 5.44.130 of the Code. F. Payments of compensation made by Company to the City under this Agreement are in addition to, and exclusive of, any and all authorized taxes, business license fees, and other fees, levies, or assessments now in effect or subsequently adopted in accordance with state and federal law. G. Except for the compensation payments expressly required by this Section, each of the payments or contributions made by, or the services, equipment, facilities, support, resources, or other activities required to be provided or performed by Company pursuant to this Agreement, are voluntary and are not "franchise fees" within the meaning of the Cable Act (47 U.S.C. §542.(g)(2)). H. The compensation payments due from Company to City pursuant to this Section shall take precedence over all other payments, contributions, services, equipment, facilities, support, resources, or other activities to be paid or supplied by Company pursuant to this Franchise. I, The compensation and other payments to be made pursuant to this Franchise Agreement shall not be deemed to be in the nature of a tax, and shall be in addition to any and all taxes of general applicability or other fees or charges which Company or any Affiliated Person shall be required to pay to City or to any state or federal agency or authority, all of which shall be separate and distinct obligations of Company and Affiliated Persons. J. Neither Company nor any Affiliated Person shall have or make any claim for any deduction or other credit of all or any part of the amount of the compensation or other payments to be made pursuant to this Franchise from or against any City or other governmental taxes of general applicability (including any such tax, fee, 5 I or assessment imposed on both utilities and cable operators or their services but not including a tax, fee, or assessment which is unduly discriminatory against cable operators or cable subscribers or income taxes) or other fees or charges which Company or any Affiliated Person is required to pay to City or other governmental agency. K. Neither Company nor any Affiliated Person shall apply or seek to apply all or any part of the amount of the compensation or other payments to be made pursuant to this Franchise as a deduction or other credit from or against any City or other government taxes of general applicability (other than income taxes) or other fees or charges, each of which shall be deemed to be separate and distinct obligations of Company and Affiliated Persons. L. Neither Company nor any Affiliated Person shall apply or seek to apply all or any part of the amount of any City or other government taxes or other fees or charges of general applicability (including any such tax, fee, or assessment imposed on both utilities and cable operators or their services) as a deduction or other credit from or against any of the compensation or other payments to be made pursuant to this Franchise, each of which shall be deemed to be separate and distinct obligations of Company and Affiliated Persons. M. City acknowledges that, during the term of this Agreement, Company may offer to its subscribers, at a discounted rate, a bundled or combined package of certain cable services that are subject to the franchise fee referenced above, and other services that are not subject to the franchise fee. With regard to such bundled or combined services, the following provisions are applicable: During the term of this Agreement, if Company offers to individual subscribers cable services subject to the franchise fee that are bundled or combined with non -cable services that are not subject to the franchise fee, then the revenue from those bundled or combined services 3 91i must be allocated on the basis of proportionality, as follows: 1. The percentage that the price for all bundled services is discounted from the established retail rates for the individual services, as those rates are advertised by Company in its marketing materials or published rate cards, will be prorated across all services in the bundled package, subject to the adjustment referenced below in Section 2.2(M)(2). By way of example, Company may offer a bundle of voice, video, and data services for a flat fee of Seventy -Five Dollars ($75.00), where the aggregate retail rate of those services when purchased on an individual basis would equal One Hundred Dollars ($100.00). If there is no service in that bundled package subject to a mandated tariff rate, Company would apply a twenty -five percent (25 %) discount to each individual service. Thus, if the established retail rate for video service was then Fifty Dollars ($50.00), Company would recognize revenue in the amount of Thirty -Seven Dollars and Fifty Cents ($37.50) and would pay a franchise fee on that amount. Company shall provide the City with any and all requested information and documents regarding the charge for each individual service for any bundled package within ten (10) days of the City requesting this information and documents. 2. The revenue derived by Company from cable services that are subject to mandatory tariff rates imposed by the California Public Utilities Commission, or any similar governmental rate - setting authority, will be deducted from the aggregate revenue to determine the revenue that is subject to the franchise fee. 3. Company will not structure the pricing of any bundled or combined services so as to intentionally or unreasonably cause a reduction in the Gross Annual Revenue against which franchise the City may impose fees or other proportionately derived taxes, surcharges, or fees. 7 �ry 4. If City reasonably determines that Company has unlawfully, inequitably, or contrary to Section 2.2(M) allocated Gross Annual Revenue between video services and non -video services so as to reduce its franchise fee payment obligations, then the parties will meet within fifteen (15) calendar days, upon advance notice from the City, to discuss the allocation methodology. If the parties cannot resolve the dispute within a reasonable period of time, then the parties will submit the matter to a mutually agreeable third party for non - binding mediation. The parties will share the cost of the mediation equally. If the mediation is not successful, or if the parties cannot mutually agree upon a mediator, then either party may file an action in a court of competent jurisdiction in the County of Orange or pursue any other remedies available under the law or this Agreement. 2.3 Letter of Credit A. Within thirty (30) days of the Effective Date of this Agreement, Company shall post an irrevocable standby Letter of Credit to provide City with a security fund (hereinafter "Letter of Credit") as security for the faithful performance by Company of all material provisions of this Agreement, in accordance with Section 5.44.060.6(1)(a) of the Code. B. The Letter of Credit shall be in the amount of Seventeen Dollars and Twenty -Five Cents ($17.25) per current Subscriber, but not less than One Hundred Thousand Dollars ($100,000.00). C. The Letter of Credit provider shall have and maintain, at a minimum, a credit rating of A issued by Moody's or Standard & Poor's. The letter of credit shall incorporate wording approved by the City Attorney enabling City to draw such sums from time to time as City may find necessary to satisfy any material default of Company or to meet any payment due City under or in connection with the Code or P this Franchise, upon ten (10) days' written notice to the Letter of Credit provider. The Letter of Credit shall provide in substance that, upon written notice by City of a material default or failure to make a payment due to City under or in connection with the Code or this Franchise, City may draw upon the Letter of Credit without any offset, contingencies or conditions of any kind. This Letter of Credit shall provide that it may not be revoked or amended without City's prior written approval. Company shall obtain prior approval by the City Attorney of the wording of the Letter of Credit, the form of the Letter of Credit, and the Letter of Credit provider. Such approval shall not be unreasonably withheld. D. The Letter of Credit requirement may, in the unilateral discretion of City, be increased by up to three (3} times its original amount if there is an assignment, transfer, and /or Change of Control of the Franchise and /or the Company. E. The Letter of Credit may be assessed by City for those purposes specified in this Agreement and in Section 5.44 of the Code, in accordance with the procedures set forth herein or in Section 5.44.060.8.1 of the Code. F. The rights reserved to the City with respect to the letter of Credit are in addition to all other rights of the City, and no action, proceeding or exercise of any right with respect to such Letter of Credit shall affect any other right the City may have. G. The Letter of Credit required by this Section satisfies the financial security requirements of this Franchise Agreement and is in lieu of a Security Fund required pursuant to Sections 5.44.060(B)(1)(a) and 13.20.130(A) of the Code; however, this satisfaction of security requirements does not apply to any rebuild, upgrade, and other substantial construction, for which additional requirements may be imposed by the City. Nothing herein shall be deemed a waiver of the normal permit and bonding requirements made of all contractors working within the City's rights -of -way. Before performing such work, Company shall comply with Chapter 13.20 of the Code. E 'A 2.4 Insurance Company shall obtain, provide and maintain at its own expense during the duration of the Franchise, a policy or policies of liability insurance of the types and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Company shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by the City's Risk Manager. Current certification of insurance shall be kept on file with City's at all times during the term of the Franchise. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company authorized by the Insurance Commissioner to transact the business of insurance in the State of California, with an assigned policyholders' Rating of A (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. 1. Workers' Compensation Coverage. Company shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for its employees in accordance with the laws of the State of California. In addition, Company shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar 10 •, sd days (10 calendar days written notice of non - payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Company. 2. Automobile Liability Coverage. Company shall maintain automobile insurance coverage covering bodily injury and property damage for all activities of Company arising out of or in connection with work to be performed under this Franchise, including coverage for any owned, hired, non -owned owned (e.g., owned by Company's employees and /or subcontractors and used in the course and scope of employment), or rented vehicles, in an amount not less than two million dollars ($2,000,000), combined single limit for each occurrence. 3. General Liabili Company shall obtain and maintain General Liability Insurance in an amount not less than two million five hundred thousand dollars ($2,500,000) per occurrence for bodily personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this Franchise or the general aggregate limit shall be twice the required occurrence limit. This limit shall increase to three million dollars ($3,000,000) in year ten (10) of the Franchise. Such insurance coverage shall include, without limitation: a. Contractual liability coverage adequate to meet Company's indemnification obligations under this Contract; and b. A cross- liability clause. 4. Slander/Libel/Defamation Liability. Company shall obtain and maintain Slander /Libel /Defamation Liability Insurance in the aggregate annual amount of one million dollars ($1,000,000) with City of Newport Beach as additional insured. ooh E. Endorsements. With the exception of workers' compensation insurance coverage, each insurance policy shall be endorsed with the following specific language: 1. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Company. 2. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Company's operations under this Franchise. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. 3. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. 4. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. 5. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. F. Proof of Insurance. Within thirty (30) calendar days from the Effective Date of this Franchise, Company shall furnish proof to City that satisfactory insurance policies for all insurance required by this Franchise are in place. The insurance policies for vehicles shall be in effect prior to usage. City may, from time to time, reasonably increase the required amount of insurance. ]2 dO G. Notice of Change in Coverage. All insurance policies shall provide that in the event of material change!, reduction, or cancellation or non - renewal by the insurance carrier for any reason, not less than thirty (30) calendar days written notice will be given to City by registered mail of such intent to cancel, materially change, reduce or not renew the coverage. An authorized agent of such insurance carrier shall provide to City, on such schedule as is requested by City, a certification that all insurance premiums have been paid and all coverage is in force. If for any reason Company fails to obtain or keep any of such insurance in force, City may (but shall not be required to) obtain such insurance, in which event Company shall promptly reimburse City its premium cost therefore plus interest at City's portfolio rate until paid. H. Timely Notice of Claims. Company shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Company's performance under this Franchise. I. Deductibles /Self- Insured Retentions. Any deductibles or self- insured retentions must be declared to and approved by City. At the option of City, Company shall reduce or eliminate such deductibles or self- insured retention as respects City, its officials, officers, employees and agents, or Company shall procure a bond guaranteeing payment of losses and related investigations, claims administration and defense expenses. J. Indemnification for Insurance Coverage. Company hereby indemnifies City for any damage resulting to it from failure of either City or any subcontractor to take out and maintain such insurance. 13 ;) �6 K. Insurance Requirements under Chapter 13.20 (Public- Rights -of- Wav)_ Provision of the insurance as required herein shall be deemed to satisfy the insurance requirements required for permitting work in the City's public right -of -way under Chapter 13.20 of the Code, provided that all insurance policies provide coverage for such work. This subsection does not apply, however, to any rebuild, upgrade, or other substantial construction in the public right of way, for which the City may impose additional requirements. 2.5 Defense and Satisfaction of Claims A. Company shall, at its sole cost and expense, upon demand by City, defend City, its officers, boards, commissions, employees and /or agents, in any and all suits, actions, or other legal proceedings, whether judicial, quasi judicial, administrative, or otherwise arising out of the negligent or willful acts or omissions of Company, its employees, contractors, subcontractors and agents. Where Company is required to provide legal services to City under this paragraph, and chooses to utilize joint counsel, the parties shall make a good faith effort to cooperate and agree upon litigation strategy and implementation thereof. In the event that Company's litigation strategy or choice of legal counsel create a conflict of interest, or result in inadequate representation to protect City's interests and separate counsel is necessary for the representation of City, City may obtain separate legal counsel chosen by City at Company's cost and expense; provided, however, that if City obtains separate legal counsel as set forth above, Company is only obligated to pay an hourly amount for legal services which does not exceed one hundred percent (100 %) of the highest hourly rate that City has paid for legal services within the twenty -four (24) month period prior to obtaining legal services as provided in this paragraph. City shall submit statements for attorneys' fees to 14 2� Company on a regular basis, which shall be paid to City within sixty (60) calendar days of Company's receipt of said statement. B. Company shall cause to be paid and satisfied any judgment, decree, or order rendered, made, or issued against Company, City, its officers, boards, commissions, employees or agents, and hold City harmless there from, arising out of the negligent or willful acts or omissions of Company, its employees, contractors, subcontractors, agents, or representatives, in connection with the construction, operation, maintenance, repair, or other activities in relation to Company's cable system including, but not limited to, damages arising out of copyright infringement, defamation, personal injury and property damage liability, and antitrust liability, whether or not said damages are compensatory or punitive, provided, however, Company shall not be required pursuant to this paragraph to hold City harmless for actions relating to programming decisions outside of Company's control or City's use of the PEG Channels required herein. Such indemnity shall exist and continue without reference to the amount of any bond, policy of ins Trance, deposit, undertaking, or other assurance; provided, however, City may not enter into any compromise or settlement which imposes any obligation on Company without Company's consent, which consent shall not be unreasonably withheld, and Company shall not make or enter into any compromise or settlement of any claim, demand, causes of action, suit, or other proceedings which settlement involves anything other than the payment of money by Company without contribution by City, without first obtaining the written consent of City, which consent shall not be unreasonably withheld. C. The indemnification provided pursuant to paragraphs 2.5(A) and 2.5(B) above shall apply to all damages and claims for damages of any kind suffered by reason of any of the aforesaid operations referred to in those paragraphs, regardless of 15 3D whether or not City has prepared, supplied, or approved the plans and /or specifications for the operation or regardless of whether or not any insurance policies shall have been determined to be applicable to any of such damages or claims for damages. 2.6 Franchise Violations /Liquidated Damages and Other Remedies In addition to, and without limiting the damages for delays as specified in Section 2.2 of this Franchise, City may impose liquidated damages as described below for the following violations and in the amounts described below, along with compliance, interest, and other financial remedies set forth in this Franchise or the Ordinance. 1. Technical Standards Violations. If more than ten percent (10 %) of the locations tested pursuant to FCC standards fail to meet the FCC technical standards, City may impose liquidated damages in an amount equal to Two Hundred Dollars ($200.00) per day, measured from the first day non - compliance is detected and continuing until the day FCC standards have been satisfied at each and every re- tested location, if Company does not cure the violation in accordance with Section 2.6(6)(1) below. 2. Customer Service Violations. If Company violates, in any material way, any of the customer service standards specified in the Code or this Franchise, City may impose liquidated damages in the amount of Two Hundred Dollars ($200.00) per violation per day, measured from the date Company first received written notice of the violation, if Company does not cure the violation in accordance with Section 2.6(6)(1) below. 3. Other Violations. For all violations and breaches specified in this Franchise Agreement or the Code, City may impose liquidated damages in the amount of Two Hundred Dollars 16 31 ($200.00) per day per violation, measured from the date Company first received written notice of the violation, if Company does not cure the violation in accordance with Section 2.6(6)(1) below. 4. Reduction of Damages and Security Fund /Letter of Credit. If City does not impose any liquidated damages on Company pursuant to this Section or Section 2.2 within four (4) years after the Effective Date, after such four (4) year period, the penalties contained in Sections 2.6(B)(1)(2)(3) above shall be reduced to one hundred and fifty dollars ($150) per day per violation. In addition, the Letter of Credit Required pursuant to Section 2.3 above shall be reduced to seventy -five percent (75 %) of the original amount. However, the original penalties and the original amount of the Letter of Credit (as increased as allowed herein upon transfer, assignment or change of control), shall be immediately reinstated if: (a) City imposes two (2) penalties on Company in any twelve (12) month period, and /or (b) if Company assigns, sells, leases or otherwise transfers this Franchise or control of the System. This entire paragraph shall immediately cease to have any force or effect if City imposes a penalty or penalties on Company within the four (4) year period that commences on the Effective Date of this Franchise. B. Payment of Dariages. 1. Cure. In the event City has reason to believe that Company has failed to comply with any material provision of this Franchise or the Code and therefore desires to impose liquidated damages on Company as stipulated in Section 2.6 and in Section 5.44 of the Code, the City Manager, or his designee, shall notify Company in writing of the provision or provisions that City believes may be in default as well as the applicable cure period. Company shall, upon receipt of said Notice: 17 R2 a. Cure the alleged violation within the cure period that is provided by the Code or if no cure period is provided, within five (5) working days of said notice. In the event that Company does not correct the violation within the applicable cure period, liquidated damages may be imposed from the applicable time set forth in Section 2.6(A); or b. Respond to the City in writing during the cure period contesting City's assertion of violation and providing such information or documentation as may be necessary to support Company's position and /or request an extension of the cure period. The decision to extend the cure period shall be within the sole discretion of the City. 2. Appeal and Payment. a. In the event Company fails to respond to the notice of violation, or to cure the violation within the applicable cure period, as may be extended in the sole discretion of the City, or provide an explanation for failure to cure acceptable to City, the City or its designee shall schedule a hearing no sooner than ten (10) working days after written notice to Company of the expiration of the cure period and the scheduling of the hearing. Company shall be provided an opportunity to be heard at such hearing, including the right to present evidence, cross - examine witnesses, and be represented by counsel. Within thirty (30) calendar days after such hearing, City shall determine whether or not Company is in violation and submit written findings of facts supporting such determination. b. The hearing described above may be conducted, at City's selection, either before the City Council or before an administrative officer or commission selected by the City Council. In the event that such hearing is not held before the City Council, Company shall possess the right to appeal to the City Council IV I3 within ten (10) working days of issuance of the statement of decision and findings of fact. The City Council shall decide such appeal pursuant to a hearing at which Company has an opportunity to be heard and the right to present evidence, examine witnesses and be represented by counsel. Company shall have the right to appeal City Council's decision to a court of competent jurisdiction within ninety (90) calendar days of any final decision by the City Council. In the event a court orders repayment of any liquidated damages imposed by City to Company, interest on such amounts shall be included at the rate paid by the Local Agency Investment Fund to the City for City Investments. C. All liquidated damages shall be due and owing thirty (30) calendar days after the final decision by either City Council or the hearing officer, in the event Company does not appeal to the City Council. Any liquidated damages assessed may be levied directly against the Letter of Credit and collected by the City thirty (30) calendar days from the date such damages are due. Assessment of liquidated damages shall not constitute a waiver by City of any other right or remedy it may have under the Franchise or under applicable law including, without limitation, its right to recover additional damages, losses, costs and expenses, including reasonable attorneys' fees, the City may have siffered or incurred by reason of Company's breach of this Agreement. Nothing in this paragraph is intended to waive, modify or otherwise affect Company's rights under the Code, this Franchise, or any applicable law, except for the specific procedures expressly provided herein. No financial penalties will be applied pursuant to the Code, ordinance or other similar document for the same offenses which liquidated damages apply. 19 3q C. Validity of Liquidated Damages. The parties acknowledge that it would be impractical or extremely difficult to fix actual damages in the case of Company's default, and that the amount of liquidated damages specified above is a reasonable and complete estimate of City's damages. Company recognizes that Company's prompt development and offering of cable television service for which penalties can be imposed is of critical importance to the City. City: (Initials) D. Removal of Property. Company: (Initials) The City's right to require Company to remove its equipment and /or portions of its System as provided in Section 5.44 of the Code shall apply only if the Franchise is revoked, otherwise terminated prior to its expiration, or expires based upon a final and no longer appealable decision of the City not to renew the Franchise pursuant to the formal renewal provisions of the Cable Communications Policy Act of 1984, as amended (the "Cable Act "). SECTION 3 SERVICE AREA AND LINE EXTENSION POLICY 3.1 Franchise and Service Area Company shall design, construct and maintain the Cable System in such a manner to pass by every single or multiple -unit dwelling unit in the service area set forth on Exhibit A, including any and all territory immediately adjoining this area as may be annexed thereto, during the term of this Agreement ( "Service Area "). Company shall offer the full range of Cable Services to all residents of the Service Area and shall make the Cable System available on an identical basis to all dwelling units constructed during 20 35 the term of this Franchise. For new construction in residential, and industrial areas, Company shall make the system available at the, same time as the units, residential, or otherwise, are constructed. Nothing herein shall preclude Company from providing service to multi - family dwellings and other residential developments on a non- discriminatory, discounted, bulk - billing basis. 3.2 System Extension Policy All Subscribers within one hundred twenty -five (125) feet from the closest public right -of -way or easement, above ground or underground, shall be provided service for the standard installation fee. Subscribers located beyond one hundred twenty -five (125) feet from the closest public right -of -way or easement will be connected upon the payment of Company's fair and reasonable charges for time and materials for that portion of the installation which exceeds one hundred twenty -five (125) feet. Fair and reasonable charges shall be equal to the Company's actual cost of time and materials for the incremental portion of the installation beyond the footage limitation established above. 3.3 Provision of Service Unless the Subscriber requests otherwise, Company shall deliver initial service within seven (7) business days afler receipt of a Subscriber order so long as the Subscriber is within the existing Service Area. Service additions or deletions shall be made within twenty -four (24) hours of a Subscriber's written or verbal request, unless additional terminal equipment is required, in which case the Company shall make such service change within seven (7) business days. The Company shall provide all Subscribers, prior to the initiation of cable service and thereafter, with the ability to subscribe to only Basic Service, which shall include local PEG channels. Failure to comply with this provision shall result in the assessment of liquidated damages as set 21 o,ir forth in Section 2.6(A)(2) for non - compliance, incurred daily until Subscriber requests are completed. 3.4 Commercial Areas For areas of the City that are primarily commercial, the Company shall install appropriate conduit at any time that open utility trenches are available and the Company has received at least thirty (30) calendar days advance notice of the availability of the trenches. Residences in primarily commercial areas shall be provided with Cable Service upon request, at an installation fee equal to Company's actual costs of time and materials. SECTION 4 SYSTEM CONSTRUCTION 4.1 Emergency Override System for Analog and Digital Cable Company shall provide, install, activate, and maintain an emergency override system which includes audio override on all analog channels of Company's system and character generated message capabilities on designated PEG Channels, receivable only within the City area. The City shall be able to activate, provide audio programming, and terminate such emergency audio override on City designated channels via dial -up or dedicated telephone control upon system upgrade. City shall use the audio override and character generated system only in emergency situations, as declared by the City Council or the City Manager when there is a threat to the public welfare, health or safety. 4.2 Standby Power Upon the Effective Date of this Agreement, Company shall provide standby power generating capacity at the Cable System control center and at all hubs capable of providing at least two (2) hours of emergency supply. Company shall maintain standby power system supplies throughout the major trunk cable networks capable of providing 22 emergency power within the standard limits of commercially available power supply units. 4.3 Parental Control Lock Company shall provide Subscribers, upon request, with a parental control locking device or digital code or other means that prevents the distribution of the video and audio portions of channels as designated by the Subscriber. 4.4 Status Monitoring Company 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 to Company's satisfaction. 4.5 Technical Standards The Federal Communications Commission (FCC) Rules and Regulations, Part 76, Subpart K (Technical Standards), as amended from time to time, shall apply, to the extent permitted by applicable law. SECTION 5 SERVICES AND PROGRAMMING 5.1 Services and Broad Categories of Video Programming The Company should provide, at a minimum, the following broad categories of services and video programming: local broadcast, public affairs, satellite services, news, sports, cultural, foreign language programming (to be cleared by Company as to the appropriateness of subject matter and content), general entertainment, and children's programming. If any listed broad category of service or video programming shall become unavailable, or is commercially impractical, or cannot be provided under existing FCC regulations, Company should provide substitute programming of the same category if reasonably available. City may request Company to cooperate with City in 23 2� developing and distributing a printed PEG channel guide at City's cost. Said printed guide shall be of a reasonable weight and size and could include, but is not limited to, a printed guide distributed through the bills, via direct mail, or included in local newspaper or Company's printed guide, all at City's cost, if any, but shall not include advertising. If City requests Company to distribute a printed guide through the bills, Company shall comply so long as City produces said guide at its own cost for production and insertion and provides Company sufficient advance notice and there is room for said guide in Company's billing envelopes, and said guide does not take the place of other inserts desired by Company. City shall have complete responsibility for the content of any information included in said guide: The payments by City referred to in this Section shall be limited to reimbursing Company Company's actual incremental cost of providing and distributing the guide. 5.2 Minimum System Design and Capacity Requirements A. Minimum Design Criteria/ Channel Capacity. 1. Company shall operate a state -of- the -art Cable System designed to meet the needs of Newport Beach residents for the foreseeable future. 2. The Cable System shall be constructed with hybrid fiber coaxial ( "HFC ") architecture and engineered to deliver signals at forward frequencies up to and including a minimum bandwidth of Seven Hundred and Fifty (750) megahertz (MHz) on the Residential Network. 3. The System will be engineered to allow simultaneous downstream delivery of no less than one hundred ten (110) analog video channels delivered via fiber to node with each node serving no more than 500 households and shall be constructed pursuant to the specifications and routing described herein. 24 Rq B. Interactive Capacity and Services. The cable television systern shall be two -way activated throughout the distribution plant. The two -way capability will allow for high -speed Internet service and "impulse" ordering of pay - per -view services, as well as accommodating telephony and video -on- demand services in the future. C. System Construction Requirements. In addition to the requirements of Sections 5.2(A) and 5.2(B) above, minimum system construction requirements shall be as follows: 1. Each analog video Channel requires Six Megahertz (6 MHz). However, through the use of digital Channels, Company has the ability of using existing technology to provide eight (8) to ten (10) video Channels in the same Six Megahertz (6 MHz) spectrum. 2. Company's Cable System standard shall use a "node plus four (4)" architecture, with a goal of no more than four (4) amplifiers used between the fiber node and homes. This design takes the fiber deeper into the Cable System so fewer homes are sharing the same fiber, resulting in more capacity to meet the individual needs of customers. Each node shall be designed to serve no more than Five Hundred (500) homes. 3. All nodes shall have standby power rated to provide a minimum of two (2) hours of operation in the event of a commercial power disruption. The headend will have standby power capable of providing two (2) hours of power in the event of a commercial power interruption. The Cable System forward (to Subscribers) bandwidth shall be a minimum of Fifty -Four to Eight Hundred Sixty Two Megahertz (54- 862 MHz). The reverse bandwidth (from Subscribers to Company) shall be a minimum of Five to Thirty Megahertz (5 -30 MHz). 25 4D 4. Company shall provide a list of Node Locations and the number of homes served by each node. conduit. 5. All underground trunk and distribution cables shall be in 6. The minimum technical standards for forward (downstream) and reverse (upstream) directions shall be those adopted by the FCC from time to time. To the extent that no FCC technical standards exist, the standards shall be those FCC technical standards in effect on the Effective Date, or, if none, those established by the City. 5.3 Local Office Company shall maintain a local office located within twenty (20) miles of the City's boundary. This office may not be closed without the City Council's prior written consent. 5.4 Services for the Disabled Company shall provide the maximum services and equipment available for persons with disabilities as reasonably practical. Information regarding the facilities, equipment and ongoing services for disabled persons shall be kept updated and the Company shall promptly submit to the City Manager's Office notification of any deletions or additions to such information. Company shall also comply with FCC rules regarding closed- captioning and shall offer, at no charge to subscribers or the City, closed - captioned programming on all channels providing such options. The Company shall also maintain TDD (or equivalent) equipment at the Company's local office that will allow such Subscribers to contact the Company for any reason related to the System. 26 a� SECTION 6 LOCAL CABLE ACCESS AND COX SUPPORT 6.1 Company Support for PEG Access Company shall provide the following support for programming, technology development, and implementation of non - commercial Public, Educational, and Governmental ( "PEG') access within the Franchise Area. Provision of the items listed herein shall be considered binding commitments of Company within the terms of this Franchise, and if not provided, shall subject Company to applicable remedies and penalties for violations of the Franchise. Company shall provide the following: A. Channel Capacity Requirements. Company Support for Public, Educational or Government Access "PEG Access ": 1. Company shall designate three (3) initial channels for the exclusive use of the City which number can be increased in accordance with Section 6.1(A)(2). The PEG channels shall be under the exclusive management and editorial control of the City and shall not be shared with other cities. The City may designate a representative, such as a non - profit entity, to use and administer said channels, with all of the attendant rights and obligations provided to the City hereunder. In the event Company is required by federal law, regulations, or otherwise to change the channel number of a PEG channel, Company shall provide thirty (30) calendar days advance notice to the City and its customers. Should Company desire to change the channel number of a PEG channel that is in use by a PEG user within the criteria set forth in Section 6.1(A)(2) for any other reason, Company shall provide the City with the reason for change at least ninety (90) calendar days prior to the proposed change, advertise the change to customers on its website, in at least three (3) bill messages prior to the change, and in a television spot announcement that Company shall carry on its system for at least six (6) weeks prior to the change. Company shall also reimburse the City for 27 4ti its actual costs for reprinting any materials such as program guides or other promotional materials occasioned by the change in an amount not to exceed Seven Thousand Five Hundred Dollars ($7,500.00) for its costs of remarketing the channel. 2. Company shall make available additional PEG channels designated for use exclusively by the City pursuant to the following criteria: a. The initial government channel must be in use and programmed with non - commercial PEG programming, of which no more than ten (10) hours can be character generated programming, during at least eighty percent (80 %) of the weekdays for at least eighty percent (80 %) of the time during any consecutive six (6) hour period for ten (10) consecutive weeks. b. The initial public and /or educational channels must be in use and programmed with non - commercial and at least fifty percent (50 %) locally produced programming, of which no more than ten (10) hours per week can be character - generated programming during at least eighty percent (80 %) of the weekdays for at least eighty percent (80 %) of the time during any consecutive six (6) hour period for ten (10) consecutive weeks. C. No more than thirty -three and a third percent (33- 1/3 %) of the aggregate hours utilized for PEG programming during such ten (10) week period can represent repeat programming. d. Any additional PEG channel shall be made available within one hundred and eighty (180) calendar days following the City's written request and verification of compliance with each of the foregoing conditions. e. Whenever such additional PEG channels but not the original three (3) PEG channels, are programmed for less than ten (10) hours per day for six (6) days per week for a continuous period of not less than twelve (12) FM a3 consecutive weeks, the City may permit Company to utilize unused channel capacity on that channel under the following conditions: (i) Any request from Company to use any fallow capacity designated for PEG Access must be submitted in writing to the City. (ii) The City shall approve the request from Company to use fallow channel capacity if it finds that: (1) the utilization of the channel is as represented; (2) Company has not acted in violation of any of the provisions of the Franchise regarding utilization of the channel; and (3) there are no special circumstances which would justify the denial or delay of implementation of the use of the channel. After approval, Company may continue to utilize the channel for any other purposes it so chooses, consistent with the Franchise, until it is required to be designated for PEG purposes pursuant to the provisions hereof. (iii) Unless Company receives written notice within one hundred and twenty (120) calandar days that the City disapproves Company's request, the City's approval shall be deemed granted. f. The maximum number of access channels which may be required under this Franchise shall be five (5), subject to the City's right to exchange channels, as set forth herein. On six (6) months notice to Company, City may exchange each analog PEG channel for four (4) digitally compressed channels upon satisfaction of the following conditions: (i) Company provides digitally compressed channels which offer at least as many services as are available by analog channels on the system; and (ii) Digital decompression terminal devices are installed in the homes of a least fifty percent (50 %) of Company's subscribers, and are 9 1 used to receive Company's services; and Company. (iii) City provides six (6) months notice to (iv) City provides written waiver of any state or federal laws pertaining to requirements for the placement of such channels. As used in this section, a "digitally compressed channel" shall mean a data stream capable of delivering video programming on a basis comparable to the delivery of other digitally compressed video programming. 3. The City shall have sole responsibility for the administration and programming of the educational and government channel(s) provided by Company including without limitation, the carriage of programming on the channel(s) to include trafficking of tapes and playback and the establishment and administration of all rules, regulations and procedures pertaining to the use and scheduling of the programming presented over the channel(s). The channel(s) shall be used for noncommercial, governmental or educational programming. In relation to the public access channel(s), Company shall continue its current practices of providing studio facilities, equipment, trafficking of tapes, playback, for public access users in a quality and quantity generally consistent with that provided over the past franchise term. 4. Company agrees that it will work with the City in good faith and will assist the City utilize the Company's existing relationships with educational institutions to provide programming on PEG channels. 5. City and Company acknowledge that there are certain logistic and technical issues that remain unresolved as of the Effective Date due to the fact that two separate cable companies provide cable service in the City of Newport Beach and the City Hall main operation for educational and government channel(s) resides in the cable service area of another cable service provider. Company agrees to work in good faith to resolve any logistic and technical issues to ensure seamless quality and continuity of educational and governmental channel(s) access by the City's citizens including but not limited to: (a) Allowing physical playout equipment and signal to remain at Company's Rancho Santa Margarita facility or arranging for transfer of decks and racks in the City Hall area at a mutually agreeable location; (b) Ensuring that signal transmission /reception mutual exchange across cable service boundaries is accomplished; and, (c) Ensuring continuation of transmission /reception across the two cable system. B. A Grant in the amount of sixty dollars ($60.00) per Basic Service Tier subscriber ( "BST ") of Company in the City as of the Effective Date ( "Threshold Subscribers ") shall be paid by Company to be utilized for any capital or non - capital purposes (the "Initial Grant "). Said Initial Grant shall be paid by Company within thirty (30) calendar days of the Effective Date of this Agreement. C. On January 1, 2010, the City shall provide Company with a list of newly constructed residential units which have been constructed in the City subsequent to the Effective Date, if any, (the "Construction List "). Within thirty (30) calendar days of receipt of the Construction List, Company shall determine and report in writing to the City the number of newly constructed units which are BST Subscribers as of that date (the "New Construction Subscriber List "). Company shall also report to the City the number of BST Subscribers contained in the City other than those subscribers set forth on the New Construction Subscriber List (the "Continuing Subscribers "). Within ten (10) days thereafter, Company shall pay to the City an additional grant (the "Additional 31 Grant ") equal to the number of New Construction Subscribers, less the difference between Threshold Subscribers and Continuing Subscribers times $30.00 per Subscriber. D. City and Company agree that said Initial Grant and Additional Grant are neither franchise fees nor off - settable against franchise fees, irrespective of how they are expended, for the purposes of the Cable Act. City shall waive normal permit fees, but not inspection fees, for residential dwelling units, constructed subsequent to the Effective Date in new subdivisions where Company installs its cable television plant in otherwise open trenches along with other utilities at the time of new subdivision construction. Other than the waiver of normal permit fees as provided above, Company will comply with all other City requirements. E. In the event any dedication to PEG Programming required by this Franchise is deemed by a legislative body, administrative body, or court of competent jurisdiction to constitute a payment which must or may be offset against the franchise fee, City hereby reserves the right, but is not required to do so, to terminate said program and /or requirement so as to provide the maximum allowable franchise fee. Company shall not offset any charge, of any kind, against a franchise fee or other payment due City without prior written consent of City. Nothing in this Franchise is intended, and shall be so construed, to confer any third party beneficiary rights on any party(s), and no rights are created by this Agreement other than rights in City and Company. 6.2 Governmental and Institutional Drop Policy; Provision of Live Local Insertion Locations. A. Drops to City Facilities. Within one hundred eighty (180) calendar days of written notice provided by the 32 A-) City, Company shall provide, without charge, up to four (4) cable drops, as determined by City, for all levels and all tiers of Cable Service per building, excluding premiums and pay - per -view, a cable modem drop, and cable modem service (residential speed of up to 3 mbs) per drop for those buildings, institutions and facilities on Exhibit B, plus those buildings, institutions and facilities which are constructed subsequent to the Effective Date of this Franchise Agreement, as designated by City in writing. Except for a City Hall which shall be served irrespective of distance if it is located in the Service Area, existing or future, which Company shall construct at its sole expense, drops to all buildings, institutions and facilities which are constructed subsequent to the Effective Date of this Franchise Agreement shall be limited to two hundred (250) feet from the closest point to Company's distribution system. In the event that requested drops exceed said distance, Company shall determine the incremental cost beyond said distance and the City shall pay such incremental costs to Company upon completion of construction. Company shall not impose programming or other charges for any additional outlets within said buildings. Installation and maintenance of interior wiring of said building(s) beyond the four (4) drops per building shall be the responsibility of the building owner, provided that if Company is requested to install such wiring, it will do so within a reasonable time at its actual cost of labor and materials. B. Live Insertion Locations. Within one hundred eighty (180) calendar days of written notice provided by the City, Company shall provide live insertion points at the locations set forth on Exhibit C by way of fiber connection so that the City can insert and transmit audio, video, and digital programming from said site to Company's headend for retransmission over one or more of the PEG Channels specifed in Section 6.1 (collectively, the 'Return Feeds "). The Return Feeds shall be constructed pursuant to technical standards mutually agreed 33 AV.. upon by Company and the City (the "Design Specifications "). The City shall possess no obligation to insert programming upon the Governmental Channel pursuant to Section 6.1 until such time as the Return Feeds are constructed and activated pursuant to the Design Specifications. Within one hundred and twenty (120) calendar days of the completion and activation of the Return Feed, any playback of local government programming or insertion of audio, data or other information on the PEG channel(s) shall be the sole responsibility of the City. 6.3 Compliance with Federal Law In accepting this Franchise, the Company agrees that the commitments indicated in Sections 6.1 and 6.2 above are voluntarily entered into and shall not be charged against any Franchise Fees due the City during the term of the Franchise. The Company agrees to meet all of the commitments of Section 6.1 and 6.2 above, through the term of the Franchise. SECTION 7 MISCELLANEOUS 7.1 Rate Regulation Company will not separate out, line itemize, or surcharge the cost of the Initial Grants and the Additional Grants described in Section 9 or any other cost related to this Agreement (except the franchise fee) as a line item on City customer's cable bills. Additionally, Company shall not impose rates and charges on subscribers which are higher for like -kind services or of packages of services than those imposed upon subscribers in any of the cities of Mission Viejo, Laguna Hills, Tustin, Rancho Santa Margarita, and Aliso Viejo. 7.2 Reporting Requirements A. Subscriber Complaint Record. Company shall maintain a written or computerized record of Subscriber complaints, including: loss of signal requiring a field 34 visit, non - receipt of programming or services ordered, billing disputes, missed appointments, unsatisfactory performance of maintenance, malfunctioning signal traps on blocked channels, and unresolved or chronic technical problems. Such record shall also include the following information: 1. Date and time of the Subscriber complaints; 2. Account number of complainant; 3. Nature of the complaint; 4. Action(s) laken to resolve each complaint; and, 5. Dates, time(s) and specific actions(s) taken. This record shall be kept at Company's local office for a period of two (2) years. A monthly subscriber complaint record containing the information set forth above and the total number of complaints for the month shall be submitted by Company to the City within ten (10) working days following the end of each month ( "Monthly Subscriber Complaints Report "). The number of total complaints over the first year of this Franchise shall be divided by twelve (12) and constitute the "base year average monthly subscriber complaints ". To the extent that the Company maintains and provides Subscriber complaint information consistent with the above requirements, it shall be deemed to have maintained and provided sufficient Subscriber complaint information as required by this paragraph. B. Technical Statistics Report. Company shall also maintain a written or computerized record of technical statistics including: headend outages planned or unplanned, system related outages planned or unplanned, drops added or disconnected, converter boxes distributed or returned, total truck rolls including no fault found, no access to premises, referred to other, beginning monthly subs, total monthly 35 5G connects and disconnects and ending monthly subs ( "Technical Statistics Report"), Company shall submit the Technical Statistics Report to the City within ten (10) working days following the end of each month, upon City's written request. 7.3 Technical Standards Testing A. Company's Cable System shall be tested biannually and at any time the Monthly Subscriber Complaints Report, as defined above, provides that the monthly subscriber complaints exceeds twenty percent (20 %) of the base year average for any given two (2) consecutive months or any three (3) nonconsecutive months in any six (6) month period. Company shall bear the sole cost and expense of all testing required by this Section and all testing shall be conducted pursuant to the procedures, described in the then - applicable rules and regulations of the FCC or, if no such rules and regulations exist, in the manner prescribed in the rules and regulations in effect on the Effective Date. B. City shall have the right to participate in Company's testing and to verify that the Cable System complies with all technical standards, including but not limited to, signal strength, and other specifications of this Franchise. Upon completion of testing, the Company and City shall meet to review the performance of the Cable System. Any reports, the records of performance audits and tests, and any opinion survey reports may be utilized as the basis for review. In addition, any Subscriber may submit complaints prior to or during the review meetings, either orally or in writing, and these shall also be considered. Within thirty (30) days after the conclusion of the review meetings, City shall issue findings with respect to the adequacy of System performance and quality of service. If areas of non - compliance are found, City may direct Company to correct the non - compliance within a reasonable period of time. If material non- compliance is determined to exist or if the City's participation in the testing or retesting We was based on Monthly Subscriber Complaints, Company shall reimburse City for the costs of its participation in Company's testing or retesting. 7.4 "Most Favored Nations" Review A. At any time during the term of this Agreement, City may request, and Company shall provide, information on any Cable Services not being provided in the City, which are being provided on an operational basis in systems operated by the Company, or any affiliate thereof, in the states of California, Arizona and Nevada (the "Comparison Systems "). For purposes of this section, "operational basis" means that Company has offered a Cable Service to all Subscribers in the Comparison Systems for at least six (6) months. The term "operational basis" does not include Cable Services that are offered on a trial or test basis to a limited number of subscribers. Upon City request, Company shall promptly provide City with a copy of the Franchise Agreement(s) governing all Comparison Systems (hereinafter the "Other Franchise ") B. If Company is providing Cable Services on an operational basis in any Comparison Systems, the City may require Company to provide said Cable Service(s) within one (1) year of City's written request, and to upgrade its Cable System, if necessary, to provide such Cable Service. C. After the Effecl:ive Date of the Franchise, if Company, or any affiliate, parent, or subsidiary thereof, enters into any renewal, franchise extension, of a franchise or a new franchise to provide cable television service to any city located within Orange County or the County of Orange itself, within thirty (30) calendar days thereof, Company shall provide to the City a copy of the Other Franchise. D. In the event that City concludes that the Other Franchise contains terms, conditions or provisions regarding Public, Educational or Government access ( "PEG Access ") (the "PEG Access Provision "), including, without limitation, the financial 37 l support thereof or Cable System Technology (i.e., channel capacity, services offered, etc.) (hereinafter the "Technology Provision ") that are more favorable than those contained in this Franchise Agreement, then City may, at its sole discretion, require Company to provide the more favorable PEG Access Provision and the more favorable Technology Provision, or either of them; provided, however, that: (1) the City must notify Company in writing of its election to require Company to provide the more favorable provision within one hundred eighty (180) calendar days of City's receipt of the Other Franchise or City shall be deemed to have irrevocably declined to impose such requirement; and (2) any requirement imposed pursuant to this paragraph of the Franchise to incorporate the more favorable PEG Access Provision and the Technology Provision, or either of them, shall also include, upon Company's identification and request, the imposition of any and all other terms or conditions in the Other Franchise which are more favorable to Company than those contained in this Franchise (by way of example, if the Other Franchise contains a franchise fee less than the franchise fee in this Franchise or has a term longer than the term of this Franchise, then the Franchise shall be modified to include such more favorable terms at the same time that the Franchise is modified to include the more favorable PEG Access Provision or the more favorable Technology Provision). E. Company shall provide the same Cable Services to its customers in the City as it provides to customers in communities served off the same headend, as of the date of this Agreement. In the event the Company deploys new or different Cable Services as a result of a Cable System upgrade in one or more of the communities served off the same headend as of the date of this Agreement, then the Company shall deploy those new or different services within six (6) months to its customers in the City; provided, however, that the Company may request an extension for good cause and the 9M 53 City may or may not in its discretion consent to the extension. 7.5 Restrictions Against Transfers A. Unless prohibited by federal law, neither the Franchise nor any rights or obligations of the Company in or pursuant to the Franchise, or the system shall be transferred in part or as a whole, by assignment, trust, mortgage, lease, sublease, pledge or other hypothecation, and shall not be sold, transferred, leased, assigned, or disposed of in part of as a whole, either by forced sale, merger, consolidation, or otherwise, nor shall title thereto, either legal or equitable, or any right or interest therein, pass to or vest in any person, nor shall a transfer of control of the Company or the system occur, either by act of the Company, by operation of law or otherwise, in each case without the prior written consent of the City, which consent shall not be unreasonably withheld, and which shall be expressed by resolution and then only under the conditions as may be therein prescribed. B. Company shall reimburse City for the City's reasonable processing and review expenses in connection with a transfer of the Franchise or a change in Control of the Franchise, including without limitation, the cost of administrative review, financial, legal, and technical evaluation of the proposed transferee, notice and publication costs, and document preparation expenses up to a maximum of Thirty -Five Thousand Dollars ($35,000.00). 7.6 Use of the Public Right-of-Way A. Design and construction requirements, permit and other fees, public and customers' notifications, requirements for public communication, and other oversight requirements by City imposed on Company shall be consistent, to the extent legally permissible and technically feasible, with those ongoing requirements imposed upon other users of the public rights -of -way and easements within the City. 39 B. The Cable System shall be constructed or installed in City only after the express written approval of City and only at such locations and in such manner, design, and size as shall be approved by City. In granting such approvals, the City shall exercise reasonable discretion in accordance with applicable law. Upon Company's written request, City staff shall meet and confer with Company in order to develop a process for expediting City processing and approval of proposed Cable System installation of multiple "like- kind" facilities. C. The Cable System shall be placed underground or in areas where other utilities are located underground unless otherwise approved by the City Engineer. Such approval shall not be unreasonably withheld. D. All construction or maintenance work shall be conducted in a good and workmanlike manner consistent with industry standards. Installation of new facilities shall occur, whenever practical, concurrent with the installation of subdivision public improvements. E. Upon its receipt of reasonable advance notice, but in any event not less than five (5) business days, the Company shall, at its own expense, protect, support, temporarily disconnect, relocate in the Public Way, or remove from the Public Way, any of its property when lawfully required by City by reason of traffic conditions, public safety, street abandonment, freeway and street construction, change or establishment of street grade, installation of sewers, drains, gas or water pipes, or any other type of structures or improvements by the City; but, the Company shall in all cases have the right of abandonment of its property. 7.7 Construction Responsibility The Company shall be responsible for the acts and omissions of its contractors, H(I i subcontractors and employees. Only authorized employees of the Company shall apply for and be issued necessary permits and building authorizations. Company shall designate a construction manager, who the City may contact regarding all cable construction issues. 7.8 Compliance with Construction Standards Company shall not construct any portion of its cable television system in City streets and rights -of -way without obtaining all necessary permits and paying, in addition to the franchise fee, all then applicable fees required. Company must also comply with City standards for construction in the public right -of -way. 7.9 Compliance with all Laws, City Orders and the Code A. Company shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Company shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements. B. Company shall promptly comply with all lawful City orders, resolutions and the Code related to Company's operation of the System, including all lawful rate orders. Failure to do so shall be considered a breach of this Franchise and shall subject Company to: (1) all liquidated damages contained in this Franchise and the Code; and (2) all other actions, remedies and penalties available to City as a result of such failure to comply. 7.10 Choice of Law This Franchise shall be construed according to the internal laws of the State of California and all federal laws of the United States. Any action brought relating thereto must be brought exclusively in the state or federal courts located in or for Orange Mi County, California. 7.11 Notices Any notice required to be given by this Agreement shall be presumed given five (5) calendar days after deposit in the United States mail, properly addressed by certified mail and return receipt requested, as follows: To City: City Manager City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92663 With a COPY to: City Attorney City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92663 To Company: CoxCom, Inc. Cox Communications, Orange County 29947 Avenida de las Banderas Rancho Santa Margarita, CA 92688 Attn: Vice President, Government Affairs With a COPY to: CoxCom, Inc. Attw Director, Government Affairs 1400 Lake Hearn Drive Atlanta, GA 30319 7.12 Successors and Assigns All provisions of this Agreement shall apply to any lawful successors and assigns. 7.13 Separability If any provision of this Agreement or the application of such provision to any circumstance is rendered unconstitutional or otherwise invalid by any law, ordinance, regulation or court of competent jurisdiction, the remainder of this Agreement or the 42 r �! application of the provision to other circumstances, shall not be affected thereby. 7.14 Possessory Interest By accepting this Franchise, the Company acknowledges that notice is and was hereby given to Company pursuant to California Revenue and Taxation Code Section 107.6 that use or occupancy of any public property pursuant to the authorization herein may create a possessory interest which may be subject to the payment of property taxes levied upon such interest. Company shall be solely liable for, and shall pay and discharge prior to delinquency, any and all possessory interest taxes or other taxes levied against Company's right to possession, occupancy or use of any public property pursuant to any right of possession, occupancy or use created by this Franchise. Company shall not be barred from challenging such try on any amounts assessed pursuant thereto. 7.15 Meet and Confer Prior to exercising any rights of enforcement against Company pursuant to Section 5.44 of the Code or this Agreement, the City and Company shall reasonably attempt to meet and confer to achieve voluntary compliance. 7.16 Rights Cumulative The rights and remedies of the parties pursuant to this Franchise are cumulative, except as otherwise provided in this Franchise, and shall be in addition to and not in derogation of any other rights or remedies which the parties may have with respect to the subject matter of this Franchise. 7.17 No Waiver A waiver of any right or remedy by a party at any one time shall not affect the exercise of said right or remedy or any other right or other remedy by such party at any other time. The failure of the City to take any action in the event of a material breach by 43 J� the Company shall not be construed or otherwise be deemed to constitute a waiver of the right of the City to take such action at any other time in the event that said material breach has not been cured, or with respect to any other material breach by the Company. 7.18 Declaration of Invalidity In the event that, after the Effective Date of this Franchise, any court, agency, commission, legislative body, or other authority of competent jurisdiction: (A) declares that this Franchise is invalid, in whole or in part; or (B) requires the Company either to: (1) perform any act which is inconsistent with any provision of this Franchise or (2) cease performing any act required by any provision of this Franchise, City shall reasonably determine whether said declaration or requirement has a material and adverse effect on this Franchise. When the Company intends to exercise its rights pursuant to such declaration or requirement, the Company shall so notify the City Manager's Office of said declaration or requirement. If the City determines that said declaration or requirement does have a material and adverse effect on this Franchise, then Company shall then enter into good faith negotiations with the City to amend this Franchise to eliminate any inconsistency or conflict between said declaration or requirement and the provisions of this Franchise and to meet the original intent of the parties as the circumstances warrant. 7.19 Time of the Essence; Maintenance of Records In determining whether Company has substantially complied with the Franchise, the City and Company agree that time is of the essence. As a result, the Company's failure to complete construction, extend service, seek approval of transfers, or provide information in a timely manner constitute substantial breaches of material terms of the Franchise. Maintenance of records and provision of reports in accordance with the 44 j1 Franchise is also an essential part of this Franchise Agreement. 7.20 Force Majeure The force majeure provisions of Section 5.44.140.1. of the Newport Beach Municipal Code shall apply. 7.21 Interpretation The terms of this Franchise shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Franchise or any other rule of construction that might otherwise apply. 7.22 Exhibits Exhibits "A" through "C" are art integral part of this Agreement and these Exhibits are incorporated herein by reference. All references to this Agreement shall include all Exhibits. [SIGNATURES ON FOLLOWING PAGE] 51 .„ In recognition of the obligations stated in this Franchise, the parties have executed this Franchise on the date indicated above. APPROVED AS TO FORM AND CONTENT: Robin Clauson, City Attorney For the City of Newport Beach ATTEST: By: LaVonne Harkless, City Clerk CITY OF NEWPORT BEACH A Municipal Corporation By: Don Webb, Mayor for the City of Newport Beach CONSULTANT: In (Corporate Officer) Title: Print Name: 0 (Financial Officer) Title: Print Name: EXHIBITS A. Service Area Map B. Drops to Public Buildings, Institutions and Facilities C. Live Local Insertion Locations ER ;J\ EXHIBIT A COMPANY SERVICE AREA (SEE ATTACHED CITY MAP) 47 �2 1. 2. 3. 4. 5. 6. 7. 8. 9. iC EXHIBIT B Drops to City Public Buildings, Institutions and Facilities Cox Area Central Library — 1000 Avocado Avenue Police Department — 870 Santa Barbara Drive Fire Station 3 — 868 Santa Barbara Drive Fire Station 5 /Corona del Mar Library — 410 & 420 Marigold Avenue Fire Station 8 — 6502 Ridge Park Road Big Canyon Reservoir — 3300 Pacific View Drive Oasis Senior Center — 800 Marguerite Avenue Grant Howald Park/Community Youth Center - 3000 Fifth Avenue Newport Coast Community Center — NPCoast Drive & San Joaquin Rd Andersen Elementary — 1900 Port Seabourne Way EXHIBIT C Live Local Insertion Locations Cox Area 1. Police Department Emergency Operations Center 2. Central Library Friends Meeting Room 3. Oasis Senior Center Community Meeting Room 4. Newport Coast Community Center Meeting Room c. tf`f'