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HomeMy Public PortalAboutResolution 02-4139 Franchise Agreement: Altrio Communication Inc.1 1 1 RESOLUTION NO. 02 -4139 A RESOLUTION OF THE CITY COUNCIL OF THE 'CITY OF TEMPLE CITY AWARDING TO ALTRIO COMMUNICATIONS INC. A TEN (10) YEAR NON - EXCLUSIVE FRANCHISE WITH A CONDITIONAL. FIVE YEAR (5) YEAR EXTENSION TO CONSTRUCT,,.OWN, OPERATE AND MAINTAIN AN OPEN VIDEO SYSTEM WITHIN THE CITY OF TEMPLE CITY, CALIFORNIA; SETTING FORTH CONDITIONS ACCOMPANYING THE GRANTING OF SAID FRANCHISE; PROVIDING FOR CITY REGULATION AND USE OF THE OPEN VIDEO SYSTEM; PRESCRIBING PENALTIES FOR VIOLATION OF THE RESOLUTION. WHEREAS, the City is authorized to grant, renew and deny franchises for the installation, operation and maintenance of open video systems and other communications services within the City's boundaries by virtue of federal and state statutes, by the City's police powers, by its authority over its public rights of way and by other city powers and authority; and WHEREAS, the Applicant has sought to provide open video services within the City; and WHEREAS, it is the intention of the City Council by this Resolution to enable such competitive video services consistent with the terms of this Franchise Agreement and consistent with various State and Federal laws; and WHEREAS, the Applicant has proposed a non - exclusive franchise bringing advanced telecommunications services to the residents of Temple City; and WHEREAS, the City has undertaken an extensive review of the state of multichannel video service in the City, including but not limited to a review of cable television and satellite television operators, their record of service, facilities, the present and future cable and video - related needs of the community, and the Applicant's ability to carry out its commitments, and its overall financial, legal and technical qualifications to hold a city franchise; and WHEREAS, the City Council hereby finds that it would serve the public interest to award this franchise subject to the terms and conditions set forth herein and in the Municipal Code. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF TEMPLE CITY AS FOLLOWS: SECTION 1. The City Council does hereby approve a non - exclusive franchise agreement between the City of Temple City and Altrio Communications, Inc. to construct, own, operate, and maintain an open video system within the City of Temple City, California, a copy of said agreement being attached hereto, as an "Exhibit" and by this reference made a part hereof. SECTION 2. The City Council does hereby authorize the City Manager to sign and execute said agreement. SECTION 3. The City Clerk shall certify to the passage and adoption of this resolution and the same shall thereupon take effect and be in force. APPROVED AND ADOPTED on this 17th day of December, 2002. ATTEST: City Clerk U Resolution No. 02 -4139 Page 2 APPROVED AS TO F'° City Attorn I hereby c City Council of the followin ev- ote: that the foregoing resolution, Resolution No. 02 -4139, was duly adopted by the City of Temple City at a regulator meeting held on the 17th day of December 2002, by AYES` Councilman- Souder, Wilson, Vizcarra, Gillanders NO S: Councilman -Zovak SENT: Councilman -None hclaA P. '46--vNku-cl City Clerk l 1 1 1 1 1 "EXHIBIT" TO RESOLUTION NO. 02 -4139 Franchise Agreement between the City of Temple City, a municipal corporation of the State of California, and Altrio Communications Inc. CONTENTS PAGE SECTION 1. Renewal of Franchise 5 SECTION 2. General Requirements 8 SECTION 3. Service Area 19 SECTION 4. System Rebuild 20 SECTION S. Services and Programming 25 SECTION 6. Support for Local Access 26 SECTION 7. Regulation 28 EXHIBITS A Ownership B Surety Guarantee (Sample) C Grantee Commitment to EG Access Facilities and Equipment AGREEMENT This Agreement is made and entered into this 17th day of December 2002, at Temple City, California, by and between the City of Temple City, a municipal corporation of the State of California, and Altrio Communications Inc. RECITALS 1. The City of Temple City, pursuant to Ordinance No. 96 -793 is authorized to grant one or more non - exclusive revocable Franchises to own, operate, construct, maintain and reconstruct an Open Video System within the City. 2. The city, after due evaluation of Altrio Communications Inc. and after public hearings, has determined that it is in the best interests of the city and its residents to award a Franchise with Altrio Communications Inc. NOW, THEREFORE, the City of Temple city (hereinafter the "Grantor ") hereby grants to Altrio Communications Inc. (hereinafter the "Grantee ") an Open Video System Franchise in accordance with the laws of the City of Temple City and this Agreement. Page 2 1 1 SECTION 1 AWARD OF FRANCHISE 1.1 Grant An Open Video System Franchise is hereby awarded to Altrio Communications Inc. whose current ownership is indicated in Exhibit "A ", subject to the terms and conditions of this Agreement. This award extends to Altrio Communications Inc. the Franchise, authority, right and privilege, to construct, reconstruct, own, operate and maintain an Open Video System within the streets and public ways in the City of Temple City as it is now or may in the future be constituted, and also provides the authority to offer to subscribers any Open Video Service or other services that legally may be offered, utilizing the facilities of Grantee's Open Video System. 1.2 Right of Grantor to Issue and Renew Franchise Grantee acknowledges and accepts the present right of Grantor to issue and /or renew a Franchise and Grantee agrees it shall not now or at any time hereafter challenge any lawful exercise of this right in any local, state or Federal court. This is not, however, a waiver of any constitutional or legal right or privilege on the part of the Grantee. 1.3 Effective Date of Award The award shall be effective on the date that both parties have executed this Agreement, provided that said date is no later than thirty (30) days after the date the City Council, by Resolution, approves this Agreement. The award is further contingent upon the filing by Grantee with the City Clerk, of the executed Franchise Agreement the required security fund and insurance certificates except that if the filing of the security fund or any such insurance certificate does not occur within sixty (60) days after the effective date of the Resolution approving this award and any extension of time hereunder, the City Manager may declare this award null and void. 1.4 Duration The term of the award shall be ten (10) years from the effective date hereof, after which time it shall expire and be of no force and effect unless renewed or extended. The Franchise term shall be automatically extended by five (5) years if System construction provided in section 4.1 herein is completed within five (5) years of the effective date of this Agreement, provided that the Grantee notifies the Grantor in writing of the completion, and the Grantor verifies the completion. Renewal and or extension shall be in accordance with applicable law. Page 3 1.5 Conflict with Cable ordinance (a) The provisions of the City of Temple City Cable Television Regulatory Ordinance, Ordinance No.96 -793, to the degree applicable, are hereby incorporated herein by reference as if set out in full, and form part of the terms and conditions of this Agreement. In event of any conflict between the terms and conditions of this Agreement and the provisions of Ordinance No.96 -793, this Agreement shall prevail. (b) Should Ordinance No. 96 -793 be amended, revised, superseded or otherwise changed after the effective date hereof in such way as would materially affect the terms and conditions of this Agreement, said amendment, revision or change shall not apply to this Agreement without Grantee's approval. 1.6 Definitions The definitions contained in Ordinance No.96 -793 are incorporated herein as if fully set forth. Page 4 1 1 1 1 SECTION 2 GENERAL REQUIREMENTS 2.1 Governing Requirements Grantee shall comply with all lawful requirements of this Agreement, Ordinance No.96 -793 and applicable State and Federal law. 2.2 Franchise Fee The Grantee shall pay to the Grantor an annual Franchise Fee of five percent (5 %) of Gross Annual Open Video System Service Revenues received by the Grantee from all operations of the Open Video System in the City of Temple City. If Federal and State law permits the Grantee to provide non -video Telecommunications Services to subscribers (such as data or telephone communications) through the facilities of the Open Video System, and the Grantor has the regulatory authority to collect either a fee or an in- lieu -of- franchise -fee payment on such services, then the fee for revenues derived by the Grantee from such services shall be at the maximum rate permitted by law, not to exceed five percent (5 %) of Gross Annual Telecommunications Service Revenues. All fees shall be payable quarterly, by no later than the first day of the third month following the quarter for which payment is due. 2.3 Recovery of Processing Costs Within sixty (60) days after receipt from Grantor of a written itemization, Grantee shall reimburse Grantor for its reasonable out -of- pocket costs incurred during the Franchise application and award process, not to exceed Fifteen Thousand Dollars ($15,000). 2.4 Payment to Grantor No acceptance of any payment shall be construed as an accord that the amount is.in fact the correct amount, nor shall such acceptance of payment be construed as a release of any claim the Grantor may have for further or additional sums payable under the provision of this Agreement. All amounts shall be subject to audit, as authorized by Section 6363.B of Ordinance No. 96 -793. 2.5 Insurance (a) Grantee shall procure and maintain for the duration of the Franchise insurance against claims for injuries to persons or damages to property which may arise from or in Page 5 connection with the operation of the Franchise by the Grantee, its agents, representatives, employees or subcontractors. (b) Grantee shall maintain limits no less than: 1) General Liability: Two Million Dollars ($2,000,000) 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. 2) Automobile Liability: One Million Dollars ($1,000,000) per accident for bodily injury and property damage. 3) Worker's Compensation insurance as required by the State of California and Employer's Liability Insurance. (c) Any deductibles or self- insured retentions must be declared to and approved by Grantor. At the option of the Grantor, the insurer shall reduce or eliminate such deductibles or self- insured retentions as respects Grantor, its officers, officials, employees and volunteers or the Grantee shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. (d) The general liability and automobile liability policies are to contain all the following provisions: 1) Grantor, its officers, officials, employees, agents and volunteers are to be covered as insured as respects to any liability arising out of activities performed by or on behalf of Grantee; products and completed operations of Grantee; premises owned, occupied or used by Grantee; or automobiles owned, leased, hired or borrowed by Grantee. The coverage shall contain no special limitations on the scope of protection afforded to Grantor, its officers, officials, employees, agents or volunteers, and shall name Grantor as additionally insured. 2) For any claim related to this Agreement, Grantee's insurance coverage shall be primary insurance as respects Grantor, its officers, officials, employees, agents and volunteers. Any insurance or self- insurance maintained by Grantor, its officers, officials, employees, agents or volunteers shall be excess of Grantee's insurance and shall not contribute with it. Page 6 1 1 1 1 3) Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to Grantor, its officers, officials, employees, agents or volunteers. 4) Grantee's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. 5) Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, cancelled by either party, reduced in coverage or in limits except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to Grantor. 6) Insurance shall be placed with insurers which are "admitted" in the State of California and have a current A.M. Best's rating of not less than A: VII, unless otherwise acceptable to the Grantor. 7) Grantee shall furnish the Grantor with original endorsements affecting coverage required by this section. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. The endorsements are to be on forms provided by Grantor. All endorsements are to be received and approved by Grantor before activity commences. (e) Grantor reserves the right to adjust the limit coverage requirements no more often than every three (3) years. Any such adjustment by the grantor will be no greater than the increase in the Los Angeles Metropolitan Area Consumer Price Index (all consumers) for such three (3) year period. (f) Grantee shall submit to Grantor documentation of the required insurance including a certificate of insurance signed by the insurance agent and companies named, as well as all properly executed endorsements. (g) Grantee hereby indemnifies Grantor for any damage resulting to it from failure of either Grantee or any subcontractor to take out and maintain such insurance. 2.6 Indemnification Page 7 (a) Grantee shall indemnify, hold harmless, release and defend Grantor, its officers, employees and agents from and against any and all actions, claims, demands, damages, disability, losses, expenses including attorney's fees and other defense costs or liabilities of any nature that may be asserted by any person or entity including Grantee from any cause whatsoever arising from the activities of Grantee, its subcontractors, employees and agents hereunder. Grantee shall be solely responsible and save Grantor harmless from all matters relative to payment of Grantee's employees including compliance with Social Security, withholding, etc. (b) This indemnification obligation is not limited in any way by a limitation on the amount or type of damages or compensation, disability or other employee benefit acts, acceptance of insurance certificates required under this Agreement, or the terms, applicability or limitations of any insurance held by Grantee. (c) Grantor does not, and shall not, waive any rights against Grantee which it may have by reason of this indemnification, because of the acceptance by Grantor, or the deposit with Grantor by Grantee, of any of the insurance policies described in this section. (d) This indemnification by Grantee shall apply to all damages and claims for damages of any kind suffered by reason of any of the aforesaid operations referred to in this Section, regardless of whether or not such insurance policies shall have been determined to be applicable to any of such damages or claims for damages. (e) Grantee shall not be required to indemnify Grantor for negligence or misconduct on the part of Grantor or its officials, boards, commissions, agents, or employees (hereinafter "such acts "). Grantor shall hold Grantee harmless from any damage resulting from any such acts of the Grantor or its officials, boards, commissions, agents or employees in utilizing any government or educational access channels, equipment, or facilities and for any such acts committed by Grantor in connection with work performed by Grantor and permitted by this Agreement, on or adjacent to the Open Video System. 2.7 Security Fund (a) In accordance with Section 6364 of Ordinance No. 96 -793, within sixty (60) days of the Resolution adopting this Agreement, Grantee shall establish and provide to grantor a Page 8 1 1 1 1 security fund, as security for the faithful performance by Grantee of all material provisions of this Agreement. The security fund shall consist of two (2) parts. The first part shall be a bond, which may be a corporate guarantee and which shall be in the amount of Two Hundred Thousand Dollars ($200,000), and in a form acceptable to the Grantor's City Attorney, and essentially similar to the example provided in Exhibit "B ". The second part shall be in the amount of at least Twenty -Five Thousand Dollars ($25,000) and shall either be in the form of an irrevocable letter of credit, or a cash deposit established in a local bank in an interest - bearing account payable to the order of the Grantor as trustee for Grantee, with all interest distributed to the Grantee. (b) The bond shall be maintained at the Two Hundred Thousand Dollar ($200,000) level until the System construction provided for in Section 4.1 herein is completed, at which time the bond shall be released, provided there are then no outstanding material violations of this Agreement. The cash or letter of credit portion of the security fund shall be maintained at the Twenty -Five Thousand Dollar ($25,000) level throughout the term of this Agreement, provided that at intervals no more often than each three (3) years, Grantor shall have the right to require that this amount be increased to reflect changes in the Los Angeles Metropolitan Area Consumer Price Index during the prior three (3) year period. (c) The security fund may be assessed by Grantor for those purposes specified in Section 6364.B of Ordinance No. 96 -793, in accordance with the procedures of Section 6378 of said Ordinance, provided that Grantee has received written notice and thirty (30) days after receipt of notice to cure any material violations prior to any assessment. As long as the Grantor follows the procedures specified herein and in Ordinance No. 96 -793 for assessing and /or withdrawing funds from said security fund, Grantee shall not initiate litigation or non -City administrative action to prevent or impair Grantor from accessing those funds. Grantee's recourse, in the event Grantee believes any taking of security funds is improper, shall be through legal action after the security has been drawn upon. If the Grantor's action or taking is found to be improper by any court or agency of competent jurisdiction, Grantee shall be entitled to a refund of the funds plus interest and /or any other award which such court or agency shall make. Page 9 (d) 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. 2.8 Procedure for Remedying Franchise Violations (a) The procedure for remedying Franchise violations or breaches shall be consistent with the procedures of Ordinance No. 96 -793. Grantor, by action of the City Manager, or his /her delegate, shall first notify Grantee of the violation in writing by personal delivery or registered or certified mail, and demand correction within a reasonable time, which shall not be less than fifteen (15) days in the case of the failure of the Grantee to pay any sum or other amount due the Grantor under this Agreement or Ordinance No. 96 -793, and thirty (30) days in all other cases. Said notice shall state with specificity the violation(s) alleged to have occurred. If Grantee fails to correct the violation within the time prescribed, or if Grantee fails to commence corrective action within the time prescribed and diligently remedy such violation thereafter, the Grantee shall then be given written notice of not less than twenty (20) days of a public hearing to be held before the Council. Said notice shall specify the violations alleged to have occurred. (b) At the public hearing, the Council shall hear and consider all relevant evidence, and thereafter render findings and its decision. (c) In the event the Council finds that Grantee has corrected the violations or has diligently commenced correction of such violations after notice thereof from Grantor and is diligently proceeding to fully remedy such violation, or that no material violation has occurred, the proceedings shall terminate and no penalty or other sanction shall be imposed. In determining whether a violation is material, Grantor shall take into consideration the reliability of the evidence of the violation, the nature of the violation and the damage (if any), caused to the grantor thereby, whether the violation was chronic, and any justifying or mitigating circumstances and such other matters as the Grantor may deem appropriate. (d) In the event the Council finds that a material violation exists and that Grantee has not corrected the same in a satisfactory manner or has not diligently commenced correction of such violation, the Council may impose liquidated damages, assessable from the security fund, of up to Five Hundred Dollars ($500) per day or per incident, for unexcused violations of the System Page 10 1 1 1 1 construction described herein, and up to One Hundred Dollars ($100) per day or per incident for all other violations, provided that all violations of a similar nature occurring at the same time shall be considered one (1) incident. If the Grantor elects to assess liquidated damages, pursuant to the provisions of this Franchise Agreement, then such election shall constitute Grantor's exclusive remedy for a period of one hundred twenty (120) days. Thereafter, if the Grantee remains in non - compliance with the requirements of the Franchise Agreement, the Grantor may pursue any available remedy. 2.9 Reservation of Rights Grantor and Grantee reserve all rights that they may possess under the law unless expressly waived herein. By entering into this Agreement, neither Grantee nor Grantor waives any rights which it now or may later enjoy under applicable law, and specifically Grantor and Grantee reserve their rights to take full advantage of any changes in law during the term of the Franchise. 2.10 State or Federal Preemption In the event that the State or Federal Government discontinues preemption in any area of Open Video System regulation over which it currently exercises jurisdiction in such manner as to expand rather than limit municipal regulatory authority, Grantor may, if it so elects, adopt rules and regulations in these areas, to the extent permitted in the then applicable law. If such preemption has a material impact upon the term of this Agreement, Grantor and Grantee agree to negotiate in good faith to attempt to restore the mutual considerations provided by this Agreement. 2.11 Abandonment The City Council may, upon written request thereof by the Grantee, approve the abandonment or sale of any property in place by the Grantee under such terms and conditions as the City Council may propose. Upon abandonment of any property, Grantee shall cause to be executed, acknowledged, and delivered to the City such instruments as the City Attorney shall prescribe and approve, transferring and conveying the ownership of such property to the City. Page 11 SECTION 3 SERVICE AREA AND LINE EXTENSION POLICY 3.1 Franchise and Service Area The Grantee's Franchise and Service Areas shall be the entire City of Temple City, including any and all territory as it is annexed thereto, during the term of this Agreement. The Grantee shall offer the full range of residential Open Video System Service to all residents of the City, in accordance with the provisions of Section 3.2 below. 3.2 Line Extension Policy The Grantee shall provide residential Open Video System Service at standard installation charges, provided that the residential unit is within one hundred twenty five (125) feet, for aerial installation, and seventy five (75) feet, for underground installation, from the nearest distribution cable of the Grantee's System. In the event a request is made for service by a resident in an area not meeting such criteria, the Grantee shall make such installation available to the requesting subscriber on a time and materials basis. 3.3 Commercial Areas For areas of the City that are primarily commercial, the Grantee shall install appropriate conduit at any time that open utility trenches are available and the Grantee has received at least ten (10) working days advance notice of the availability of the trenches. Residences in primarily commercial areas shall be provided with Open Video Service upon request, on a time and materials basis. Page 12 1 1 1 SECTION 4 SYSTEM REBUILD 4.1 Construction (a) The Grantee shall construct, as appropriate, an Open Video System to provide a minimum capacity corresponding to an upper operating frequency of seven hundred fifty Megahertz (750 MHz), within eight (8) years of the effective date of this Agreement. Grantee may activate portions of the new plant and offer service in phases, as Grantee may determine. Completion of construction shall be defined as the ability to provide up to eighty (80) channels of video programming, without digital compression, plus at least two - hundred (200) compressed digital video channels to all residential subscribers within the City, as well as satisfactory completion of any permit- specified requirements and the public building connections provided in Section 4.2 below. (b) It is Grantee's present intent to utilize a "fiber optics to the service area" design in which optical fiber delivers signals from its principal headend and hubs to nodes. The nodes shall interface the optical fiber with coaxial cables which distribute signals to subscribers. 4.2 Interactive Connection to Public Buildings (a) As part of the Grantee's construction obligations, the Grantee shall provide interactive links between its fiber optic nodes and "Priority" public buildings, and interactive - capable links to all other public buildings, in accordance with the requirements of Exhibit "C ", attached hereto. An interactive connection is defined as the capability to transmit and receive broadband video, data and voice communications between two (2) or more public buildings, contingent only upon the installation of appropriate terminal and interface equipment in the future, at the transmission and reception public building locations. An interactive -cable connection is defined as a one -way downstream connection, which can be expanded to interactive status by activating the two -way capability between the node and the public building. The public agency users shall be responsible for the installation, operation and maintenance of terminal and interface equipment within the public buildings. The Grantee shall install, operate and maintain all Open Video System and network components outside the public buildings necessary to provide the activated path between the transmitting and receiving locations. (b) Grantor and Grantee agree that any use of the interactive links and the Open Video System network by public agencies to generate revenue or to serve nonpublic entities shall occur only with the prior written consent of Grantee. Page 13 4.3 Future System Modifications (a) To assure that Grantee's Open Video System continues to reflect the general telecommunications industry state -of- the -art throughout the term of the Franchise, Grantor and Grantee agree to utilize local telecommunications Systems in the following Southern California communities served by Grantee as a basis for comparison. The comparison communities (also referred to as the "comparison group ") shall be: (1) Alhambra (5) Arcadia (2) Altadena (6) Pasadena (3) Monrovia (7) San Gabriel (4) Monterey Park (8) Sierra Madre (b) Grantor and Grantee agree that subsequent to the completion of the construction required in Section 4.1 above, but no earlier than five (5) years after the effective date of this Agreement, when four (4) or more of the local telecommunications Systems in the comparison group (also referred to as the "comparison sub - group ") offer programming services which exceed the services provided on Grantee's System by eight (8) services or more, Grantor may require Grantee to provide additional programming services to meet or exceed the average provided by the comparison sub - group. Grantee shall complete any modification required to meet the comparison sub -group average within six (6) months of receipt of the Grantor request. (c) Grantor and Grantee further agree that Grantee will construct a system that is capable of upstream communications at the time of activation. 4.4 Emergency Alert Capability Upon activation of the System provided in Section 4.1 of this Agreement, Grantee shall provide Emergency Alert System capability in full compliance with applicable Federal Communications Commission requirements. 4.5 Standby Power Upon activation the System provided in Section 4.1 of this Agreement, Grantee shall provide standby power generating capacity at least at the Open Video System control center (headend) and at all hubs, capable of providing at least twelve (12) hours of emergency supply. Grantee shall maintain Page 14 1 1 1 standby power system supplies throughout the major trunk cable networks capable of providing emergency power within the standard limits of commercially available power supply units. 4.6 Parental Control Lock Grantee shall provide, for sale or lease, to subscribers, upon request, a parental control locking device or digital code that permits inhibiting the video and audio portions of premium channels. 4.7 Status Monitoring Grantee shall provide an automatic status monitoring system or a functional equivalent when the Open Video System has been activated for interactive service provided that such status monitoring is technically and economically feasible to Grantee's satisfaction. 4.8 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. 4.9 Right of Inspection Grantor shall have the right to inspect all construction, reconstruction or installation work performed subject to the provisions of the Franchise and other pertinent provisions of law, and as part of Grantor's obligation to protect the public health, safety and welfare of its citizens. SECTION 5 SERVICES AND PROGRAMMING 5.1 Services and Programming Grantee shall provide Grantor with a list of program services offered, which list shall be updated each time a change is made. Grantee shall not reduce the number of program services without forty -five (45) days prior written notification to the Grantor and thirty (30) days prior written notification to System subscribers. Page 16 1 1 1 1 1 SECTION 6 SUPPORT FOR LOCAL ACCESS 6.1 EG Access Operating Costs Based on the provisions of the Communications Act of 1934 as amended and future applicable law, Grantor shall determine from time to time the funding level Grantor desires to make available for Educational and Governmental (EG) Access operating costs, and the most appropriate entity or entities to manage EG access operations. 6.2 Grantee Support for EG Access Grantee shall provide the following or equivalent support for EG Access within the Franchise area: (a) Provisions and use of the grant funds and channels designated in Exhibit "C" of this Agreement. (b) Maintenance of Grantee's EG access facilities and channels, and support of EG programming to the extent specified in Exhibit "C" of this Agreement. (c) Provision of free public building installation and basic service to the public buildings listed in Exhibit "C ", and, in addition, provision of interactive capability to and from the Priority locations specified in Exhibit "C ". 6.3 Compliance with Federal Law In accepting this Franchise, the Grantee agrees that the commitments indicated in Section 6.2 above will not be charged against any Franchise Fees due the Grantor during the term of the Franchise. Page 17 SECTION 7 REGULATION 7.1 Franchise Regulation The Franchise awarded under this Agreement shall be subject to regulation by Grantor in accordance with all of the lawful provisions of Ordinance No. 96 -793. 7.2 Force Majeure The force Majeure provisions of Section 6382 of Ordinance No. 96 -793 shall apply. 7.3 Rate Regulation If Grantor is permitted under Federal and /or State law, to regulate the rates charged by Grantee, and if Grantor elects to so regulate, Grantor shall establish reasonable procedures consistent with due process and applicable laws and regulations and follow those procedures before so regulating. 7.4 Service Standards A verified and continuing pattern of noncompliance with the service standards contained in Ordinance No. 96 -793, this Agreement or standards established by any regulatory body having the authority to formulate service standards for open video systems, shall constitute a material breach of this Agreement, entitling Grantor to utilize the provisions set forth in Section 6364 of Ordinance No. 96 -793. follows: sent. 7.5 Notices Notices transmitted by either party to this Agreement to the other party shall be addressed as Grantor: Grantee: City Manager City Hall 9701 Las Tunas Drive Temple City, CA 91780 Chief Executive Officer Altrio Communications Inc. 2702 Media Center Drive Los Angeles, CA 90065 Either party may designate by written notice a different address to which notices shall be Page 18 1 1 1 1 7.6 Successors and Assigns All provisions of this Agreement shall apply to any lawful successors and assigns. 7.7 Severability If any provision of this Agreement or the application of such provision to any circumstance is declared unconstitutional or otherwise invalid by the lawful judgment of any court of competent jurisdiction, the remainder of this Agreement or the application of the provision to other circumstances shall not be affected thereby. 7.8 Choice of Law This Agreement shall be governed by and interpreted under the laws of the State of California. 7.9 No Waiver Grantee shall not be excused from complying with any of the terms and conditions of this Agreement by any failure of the Grantor upon any one (1) or more occasions to insist upon or to seek compliance with any such terms or conditions. IN WITNESS WHEREOF, Grantor and Grantee have executed this Agreement the date and year first above written. APPROVED AS TO FORM: CITY OF TEMPLE CITY By: Date: (SEAL) ATTEST: City Clerk (CORPORATE SEAL) ALTRIO COMMUNICATIONS, Inc. By: Name, Title Date: Page 19 Frontenac Company 24.4% EXHIBIT A OWNERSHIP Altrio Communications, Inc. Ownership Structure Common Stock As of: December 2002 Bessemer Holdings 24.4% Grove Street Advisors (CaIPERS) 3.5% Quantum Industrial & SFM Domestic 13.9% Founders Rozzelle - Liebst - Large 14.5% SSB Capital Partners (Master Fund), LLP 7.0% Employees and Other Investor Entities 5.3% ' RBC Equity Investments, Inc. 7.0% 100% Altrio Communications, LLC 100% Altrio Communications Holdings, Inc. .TM QNE cgNNEEtION, INFINITE POSSIBILITIES, B -1 Page 20 1 1 1 1 EXHIBIT B: SURETY GUARANTEE WHEREAS, the City of Temple City (hereinafter called "Grantor ") under this Franchise Agreement dated the day of , 2002, has granted a Franchise to Altrio Communications, Inc. (hereinafter called "Grantee ") to own, operate, and maintain an open video system (hereinafter called "Franchise "); and WHEREAS , the General Partner of Grantee, has a substantial interest in said Franchise, the conduct of the Grantee, and the Franchise Agreement between Grantor and Grantee establishing Franchise requirements, which Agreement is hereby specifically referred to , incorporated herein and made a part hereof; and WHEREAS, Section 2.7 of said Franchise Agreement requires the Grantee, as Principal, to furnish security issued to cover the faithful performance of certain of the Grantee's obligations under said Franchise, and which security shall be in favor of the Grantor; NOW THEREFORE, subject to the provisions of Section 2.8. Guarantor hereby unconditionally guarantees the due and punctual performance of any and all obligations of Grantee contained in the Franchise Agreement, up to the financial limits provided in Section 2.7. This Guarantee shall, unless terminated, substituted, or cancelled as hereinafter provided, remain in full force and effect B -2 for the period provided by said Franchise. Provided that , upon substitution of another Guarantor reasonably satisfactory to the Grantor, this Guarantee may be terminated, substituted or cancelled upon thirty (30) days prior written notice from the Guarantor to the Grantor and Grantee. Any such notice to be given hereinafter shall be addressed to Grantor, with a copy to Grantee. Such terminations shall not affect liability incurred or accrued under this Guarantee prior to the effective date of such termination or cancellation. No claim, suit or action under this Guarantee by reason of any default of the Grantee shall be brought against Guarantor unless asserted or commenced no later than six (6) months after the effective date of such termination or cancellation of the Guarantee. Page 21 IN WITNESS WHEREOF, the Grantee and Guarantor have hereunto set these hands and seals this day of , 2002. GRANTEE By: Title: GUARANTOR By: Title: Page 22 1 1 1 1 C -1 EXHIBIT C: GRANTEE COMMITMENT TO EG ACCESS FACILITIES AND EQUIPMENT 1. INTERCONNECTION OF PUBLIC BUILDINGS Grantor shall connect, at no installation charge, the buildings listed in Figure 1, to the closest node of the Open Video System, under the following conditions: (a) An activated one -way (downstream) connection and the highest tier of analog service at no installation or monthly charge shall be provided to all the public buildings listed in Figure 1A, no later than completion of the Open Video System Construction. These connections shall be interactive - capable as defined in Section 4.2. (b) Interactive (bi- directional) communications capability, as defined in Section 4.2, shall be provided between all the priority buildings listed in Figure 1 B, no later than the completion of the System construction. (c) Any such connections shall be made only upon request of and with the approval of the City Manager. Grantee shall be responsible for operating and maintaining all network facilities and equipment outside the public buildings necessary to provide the communications path among the Priority public buildings in Figure 1. Page 23 C -2 2. NETWORK USAGE CHARGES (a) Grantee shall not charge any public agency, whose buildings are interconnected in accordance with paragraph 1 above, a network usage charge for traditional EG Access communications originating and terminating at the public facilities listed in Figure 1. (b) Grantee may establish network usage charges for new services offered, including but not limited to local telephone services, access to multimedia or specialized educational programming, and interconnection to external networks. Such charges may be offered at a discount off the charge that Grantee establishes for private- sector users of the same services, but in no case shall the charge be less than Grantee's actual cost. 3. EDUCATIONAL AND GOVERNMENT (EG) ACCESS CHANNELS Upon the effective date of this Agreement, Grantee shall continue to make two (2) video channels available exclusively for EG use. These channels shall be dedicated for the term of the Franchise, provided that Grantee may utilize any portions of these channels during any time when they are not scheduled for EG use. Grantor and Grantee shall establish rules and procedures for such scheduling in accordance with Section 611 of the Communications Act of 1934, as amended. Upon completion of the System construction to no less than Seven Hundred Fifty Megahertz (750 MHz) capacity, Grantor may request and Grantee shall provide one (1) additional channel for EG use. Grantor may not submit such a C -3 request unless both of the EG channels already being utilized each are cable casting at least eighty (80) hours per month of unduplicated video programming on each channel and, further, that additional contemplated EG programming cannot effectively utilize the existing channels during the time they are available. 4. PROVISION OF EG ACCESS EQUIPMENT AND FACILITIES No later than thirty (30) days after the effective date of this Agreement, Grantee shall provide (a) up to $3,000 of computer equipment, audio /video equipment, software, or a lump sum payment to be used for purchasing equipment or software for the Grantor to use in generating Governmental Access text announcements on the System's Government Access Channel. Not earlier than five (5) years after the Page 24 1 1 1 effective date of this Agreement, Grantor may request, and Grantee shall provide and install at no charge, replacement equipment, software, or a lump sum payment for the Grantor's use to generate Governmental Access announcements. (b) No later than ninety (90) days after the effective date of this Agreement, Grantee shall provide a video playback unit in a location within City Hall complex designated by Grantor. Grantee also shall install an upstream link from this location to the Open Video System headend to permit playback to the Government Access Channel. (c) At any time later than twelve (12) months after the effective date of this Agreement, Grantor may request from Grantee an EG Access capital grant, not to C -4 exceed Ten Thousand Dollars ($10,000) per year, for EG Access support as will be required simultaneously of all other franchised multi - channel video operators in the City. Grantee shall provide the requested funds within sixty (60) days of the receipt of a written request. Any capital grant provided shall be utilized for EG Access equipment and facilities, which are defined to include, but not be limited to, data communications terminal and interface equipment as well as video equipment. (d) No earlier than twelve (12) months after the completion of the System construction provided in Section 4.1, and no more often than every two (2) years, Grantor may request an additional capital grant for special EG Access development projects. The cumulative total of all EG capital grants shall not exceed one percent (1 %) of Gross Annual Open Video Service Subscriber Revenues. (e) EG Access capital grants provided in (a) through (d) above shall be assessed in the form of an additional line item identified on subscribers bills. If permitted by applicable law, the Grantor shall not oppose any "pass- through" of these charges.. (f) Any request by Grantor for capital grants for special projects shall be in accordance with an operating plan prepared by Grantor. The operating plan shall contain, as a minimum, the following information: (1) List of intended EG users. (2) Planned type and level of programming for each user. Page 25 C -5 Capital equipment, facilities and estimated costs required to support the intended uses. This shall include a survey of existing publicly -owned equipment that might be available for the intended purposes. (g) User commitments by Grantor or a third party to cover operating expenses and /or support facilities for at least a three (3) year period. The user commitments shall be approved by resolution of the City Council. (h) An evaluation by Grantor that the existing public facilities and equipment are inadequate to meet the needs of the operating plan. (I) An evaluation by Grantor that the special project(s) will have the potential to provide significant public benefits, and could also result in potential Grantee revenues. Based on Grantor's certification that the EG operating plan is reasonable and appropriate to meet EG needs and objectives, Grantee shall consider the grant request in good faith. Grantee shall provide written comment upon the plan and provide recommendations to improve its effectiveness. Grantee's concurrence shall be required in any special project grant request, but if Grantee declines to provide the grant, the Grantee shall provide Grantor with a written explanation of Grantee's reasons. Grantor reserves the right to require Grantee to present its reasons at a public meeting of the Grantor's City Council. C -6 5. COMPETITIVE VIDEO SERVICE PROVIDERS If any Multichannel video service providers serving the City of Temple City shall achieve and maintain in the aggregate, at least twenty -five percent (25 %) of the number of subscribers served by Grantee, and if, further, any competitive providers achieving that percentage are not subject to providing EG Access support, or are subject to providing a lower level of support than Grantee is required to provide under paragraph 4(a) above, then Grantee shall have the right to petition Grantor to reduce its level of support to the which is applicable to the competitive provider(s). 6. EG OPERATIONS Page 26 1 1 1 1 Grantor may negotiate agreements with neighboring jurisdictions served by the same Open Video System, educational institutions, or others to share operating expenses as appropriate. Grantor and Grantee may negotiate an agreement for management of EG facilities, if so desired by the parties. 7. TITLE TO EG EQUIPMENT Grantor shall retain title to all EG equipment provided with funding made available in accordance with paragraph 4 above. 8. RELOCATION OF EG CHANNELS If Grantee relocates any EG Access channel to a different channel number, Grantee shall reimburse Grantor for any out -of- pocket Grantor costs incurred as a C -7 result of the relocation up to $1,000. Grantee shall provide Grantor and all subscribers with at least thirty (30) days written notice of such relocation. 9. PROMOTION OF EG ACCESS Grantee shall allow the Grantor to place bill stuffers in Grantee's subscriber statements at a cost to the Grantor not to exceed. Grantee's cost, not more than twice per year upon the written request of the Grantor and at such times that the placement of such materials would not effect Grantee's cost for the production and mailing of such statements. The Grantor agrees to pay Grantee in advance for the actual cost of such bill stuffers. Grantee shall also make available access information provided by Grantor in subscriber packets at the time of installation and at the counter in the System's business office. Grantee shall also distribute, at no charge to Grantor, through advertising insertion equipment, promotional and awareness commercial spots produced at the Grantor's cost and submitted by the Grantor in a format compatible with such equipment once Grantee has acquired and activated such capability. Grantee shall also include a listing of the known programming to be cablecast on EG Access channels in any program guide of services for the Open Video System. Page 27 C -8 FIGURE 1 LIST OF PUBLIC BUILDINGS TO BE CONNECTED* A. PRIORITY PUBLIC BUILDINGS (1) City City Hall Civic Center Live Oak Park Community Center City Maintenance Yard Other City buildings built or acquired during the term of this franchise (2) L.A. County Sheriff's and Fire Departments (3) School District Temple City High School Oak Avenue Intermediate Cleminson Elementary Cloverly Elementary La Rosa Elementary Longden Elementary B. OTHER PUBLIC BUILDINGS L.A. County Public Library * To be wired as falls within the Line Extension Policy of Section 3.2 or on a time and materials basis. Page 28