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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to _______________
Commission file number: 0-13193
CABLE TV FUND 12-A, LTD.
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(Exact name of registrant as specified in its charter)
Colorado 84-098104
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(State of Organization) (IRS Employer Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
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(Address of principal executive office and Zip Code) (Registrant's telephone
no. including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
Indicate by check mark whether the registrants, (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days:
Yes X No
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Aggregate market value of the voting stock held by non-affiliates of the
registrant: N/A
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ((S)229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. X
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DOCUMENTS INCORPORATED BY REFERENCE: None
(33727)
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Certain information contained in this Form 10-K Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements, other than statements of
historical facts, included in this Form 10-K Report that address activities,
events or developments that the Partnership or the General Partner expects,
believes or anticipates will or may occur in the future are forward-looking
statements. These forward-looking statements are based upon certain assumptions
and are subject to a number of risks and uncertainties. Actual events or
results may differ materially from those discussed in the forward-looking
statements as a result of various factors.
PART I.
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ITEM 1. BUSINESS
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THE PARTNERSHIP. Cable TV Fund 12-A, Ltd. (the "Partnership") is a
Colorado limited partnership that was formed pursuant to the public offering of
limited partnership interests in the Cable TV Fund 12 Limited Partnership
Program (the "Program"), which was sponsored by Jones Intercable, Inc. (the
"General Partner"). Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and
Cable TV Fund 12-D, Ltd. are the other partnerships that were formed pursuant to
the Program. The Partnership was formed for the purpose of acquiring and
operating cable television systems.
The Partnership owns the cable television systems serving areas in and
around Fort Myers, Florida (the "Fort Myers System"), Lake County, Illinois (the
"Lake County System"), and Orland Park and Park Forest, Illinois (the "Orland
Park System"). The Fort Myers System, the Lake County System and the Orland
Park System may hereinafter collectively be referred to as the "Systems."
It is the General Partner's publicly announced policy that it intends
to liquidate its managed limited partnerships, including the Partnership, as
opportunities for sales of partnership cable television systems arise in the
marketplace. In accordance with the General Partner's policy, the Partnership
has entered into an agreement to sell the Fort Myers System to an unaffiliated
cable television system operator, and the Lake County System and the Orland Park
System, along with other Chicago-area systems owned or managed by the General
Partner and its affiliates, are being marketed for sale. There is no assurance
as to the timing or terms of any sales.
PROPOSED DISPOSITION OF CABLE TELEVISION SYSTEM
In March 1998, the Partnership entered into a purchase and sale
agreement to sell the Fort Myers System to an unaffiliated cable television
system operator for a sales price of $110,000,000, subject to customary closing
adjustments. Closing of the sale, which is anticipated to occur in the second
or third quarter of 1998, is subject to several conditions, including necessary
governmental and other third party consents. Upon the consummation of the sale
of the Fort Myers System, the Partnership will repay approximately $9,600,000 of
the balance outstanding on its $22,950,000 term loan, will pay a brokerage fee
to The Jones Group, Ltd., a subsidiary of the General Partner, of $2,750,000,
representing 2.5 percent of the sales price, for acting as a broker in this
transaction, will retain a portion of the proceeds for working capital purposes
and will distribute the remaining sale proceeds of approximately $93,000,000 to
the partners. Pursuant to the terms of the Partnership's limited partnership
agreement, from the net sale proceeds the Partnership first will return to the
limited partners the capital they initially contributed to the Partnership
($52,000,000) and the remainder of the proceeds will be allocated 75 percent to
the limited partners ($30,750,000) and 25 percent to the General Partner
($10,250,000). The total limited partner distribution of $82,750,000 represents
$796 for each $500 limited partnership interest or $1,592 for each $1,000
invested in the Partnership. Because the sale of the Fort Myers System does not
represent a sale of all or substantially all of the Partnership's assets, no
vote of the limited partners of the Partnership is required to approve the sale.
CABLE TELEVISION SERVICES. The Systems offer to subscribers various
types of programming, which include basic service, tier service, premium
service, pay-per-view programs and packages including several of these services
at combined rates.
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Basic cable television service usually consists of signals of all
national television networks broadcast by their local affiliates, various
independent and educational television stations (both VHF and UHF) and certain
signals received from satellites. Basic service also usually includes programs
originated locally by the system, which may consist of music, news, weather
reports, stock market and financial information and live or videotaped programs
of a public service or entertainment nature. FM radio signals are also
frequently distributed to subscribers as part of the basic service.
The Systems offer tier services on an optional basis to its
subscribers. A tier generally includes most of the cable networks such as
Entertainment and Sports Programming Network (ESPN), Cable News Network (CNN),
Turner Network Television (TNT), Family Channel, Discovery and others, and the
cable television operators buy tier programming from these networks. The
Systems also offer a package that includes the basic service channels and the
tier services.
The Systems also offer premium services to subscribers, which consist
of feature films, sporting events and other special features that are presented
without commercial interruption. The cable television operators buy premium
programming from suppliers such as HBO, Showtime, Cinemax, Encore and others at
a cost based on the number of subscribers served by the cable operator. The per
service cost of premium service programming usually is significantly more
expensive than the basic service or tier service programming, and consequently
cable operators price premium service separately when sold to subscribers.
The Systems also offer to subscribers pay-per-view programming. Pay-
per-view is a service that allows subscribers to receive single programs,
frequently consisting of motion pictures that have recently completed their
theatrical exhibitions and major sporting events, and to pay for such service on
a program-by-program basis.
REVENUES. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Systems. At December 31, 1997,
the Systems' monthly basic service rates ranged from $11.24 to $12.77, monthly
basic and tier ("basic plus") service rates ranged from $24.55 to $27.18 and
monthly premium services ranged from $4.48 to $9.95 per premium service. In
addition, the Partnership earns revenues from the Systems' pay-per-view programs
and advertising fees. Related charges may include a nonrecurring installation
fee that ranges from $1.99 to $35.73; however, from time to time the Systems
have followed the common industry practice of reducing or waiving the
installation fee during promotional periods. Commercial subscribers such as
hotels, motels and hospitals are charged a nonrecurring connection fee that
usually covers the cost of installation. Except under the terms of certain
contracts with commercial subscribers and residential apartment and condominium
complexes, the subscribers are free to discontinue the service at any time
without penalty. For the year ended December 31, 1997, of the total fees
received by the Systems, basic service and tier service fees accounted for
approximately 71 percent of total revenues, premium service fees accounted for
approximately 11 percent of total revenues, pay-per-view fees were approximately
2 percent of total revenues, advertising fees were approximately 7 percent of
total revenues and the remaining 9 percent of total revenues came principally
from equipment rentals, installation fees and program guide sales. The
Partnership is dependent upon the timely receipt of service fees to provide for
maintenance and replacement of plant and equipment, current operating expenses
and other costs of the Systems.
FRANCHISES. The Systems are constructed and operated under non-
exclusive, fixed-term franchises or other types of operating authorities
(referred to collectively herein as "franchises") granted by local governmental
authorities. These franchises typically contain many conditions, such as time
limitations on commencement and completion of construction, conditions of
service, including the number of channels, types of programming and the
provision of free service to schools and certain other public institutions, and
the maintenance of insurance and indemnity bonds. The provisions of local
franchises are subject to federal regulation.
The Partnership holds 10 franchises relating to the Systems. These
franchises provide for the payment of fees to the issuing authorities and
generally range from 3 percent to 5 percent of the gross revenues of a cable
television system. The 1984 Cable Act prohibits franchising authorities from
imposing annual franchise fees in
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excess of 5 percent of gross revenues and also permits the cable television
system operator to seek renegotiation and modification of franchise requirements
if warranted by changed circumstances.
The Partnership has never had a franchise revoked. The Partnership is
currently negotiating the renewal of one franchise that is operating under an
extension. The General Partner has no reason to believe that such franchise will
not be renewed in due course. The General Partner recently has experienced
lengthy negotiations with some
franchising authorities for the granting of franchise renewals. Some of the
issues involved in recent renewal negotiations include rate regulation, customer
service standards, cable plant upgrade or replacement and shorter terms of
franchise agreements.
COMPETITION. Cable television systems currently experience
competition from several sources.
Broadcast Television. Cable television systems have traditionally
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competed with broadcast television, which consists of television signals that
the viewer is able to receive directly on his television without charge using an
"off-air" antenna. The extent of such competition is dependent in part upon the
quality and quantity of signals available by such antenna reception as compared
to the services provided by the local cable system. Accordingly, it has
generally been less difficult for cable operators to obtain higher penetration
rates in rural areas where signals available off-air are limited, than in
metropolitan areas where numerous, high quality off-air signals are often
available without the aid of cable television systems.
Traditional Overbuild. Cable television franchises are not exclusive,
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so that more than one cable television system may be built in the same area
(known as an "overbuild"), with potential loss of revenues to the operator of
the original cable television system. The General Partner has experienced
overbuilds in connection with certain systems that it has owned or managed for
limited partnerships, and currently there are overbuilds in certain of the
systems owned or managed by the General Partner but not in the Systems.
Constructing and developing a cable television system is a capital intensive
process, and it is often difficult for a new cable system operator to create a
marketing edge over the existing system. Generally, an overbuilder would be
required to obtain franchises from the local governmental authorities, although
in some instances, the overbuilder could be the local government itself. In any
case, an overbuilder would be required to obtain programming contracts from
entertainment programmers and, in most cases, would have to build a complete
cable system, including headends, trunk lines and drops to individual
subscribers homes, throughout the franchise areas.
DBS. High-powered direct-to-home satellites have made possible the
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wide-scale delivery of programming to individuals throughout the United States
using small roof-top or wall-mounted antennas. Several companies began offering
direct broadcast satellite ("DBS") service over the last few years. Companies
offering DBS service use video compression technology to increase channel
capacity of their systems to 100 or more channels and to provide packages of
movies, satellite network and other program services which are competitive to
those of cable television systems. DBS faces technical and legal obstacles to
offering its customers local broadcast programming, although at least one DBS
provider is now attempting to do so. In addition to emerging high-powered DBS
competition, cable television systems face competition from a major medium-
powered satellite distribution provider and several low-powered providers, whose
service requires use of much larger home satellite dishes. Not all subscribers
terminate cable television service upon acquiring a DBS system. The General
Partner has observed that there are DBS subscribers that also elect to subscribe
to cable television service in order to obtain the greatest variety of
programming on multiple television sets, including local programming not
available through DBS service. The ability of DBS service providers to compete
successfully with the cable television industry will depend on, among other
factors, the ability of DBS providers to overcome certain legal and technical
hurdles and the availability of equipment at reasonable prices.
Telephone and Utilities. Federal cross-ownership restrictions
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historically limited entry by local telephone companies into the cable
television business. The 1996 Telecommunications Act (the "1996 Telecom Act")
eliminated this cross-ownership restriction, making it possible for companies
with considerable resources to overbuild existing cable operators and enter the
business. Several telephone companies have begun seeking cable television
franchises from local governmental authorities and constructing cable television
systems. Ameritech,
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one of the seven regional Bell Operating Companies ("BOCs"), which provides
telephone service in a multi-state region including Illinois, has been the most
active BOC in seeking local cable franchises within its service area. It has
begun cable service in competition with partnerships managed by the General
Partner in Elgin, Glen Ellyn and Naperville, Illinois. The General Partner
cannot predict at this time the extent of telephone company competition that
will emerge. The entry of telephone companies as direct competitors, however, is
likely to continue over the next several years and could adversely affect the
profitability and market value of cable television systems. The entry of
electric utility companies into the cable television business, as now authorized
by the 1996 Telecom Act, could have a similar adverse effect. The local electric
utility in the Washington D.C. area recently announced plans to participate in
RCN, a planned video competitor.
Private Cable. Additional competition is provided by private cable
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television systems, known as Satellite Master Antenna Television (SMATV),
serving multi-unit dwellings such as condominiums, apartment complexes, and
private residential communities. These private cable systems may enter into
exclusive agreements with apartment owners and homeowners associations, which
may preclude operators of franchised systems from serving residents of such
private complexes. Private cable systems that do not cross public rights of way
are free from the federal, state and local regulatory requirements imposed on
franchised cable television operators. In some cases, the Partnership has been
unable to provide cable television service to buildings in which private
operators have secured exclusive contracts to provide video and telephony
services. The Partnership is interested in providing these same services, but
expects that the market to install and provide these services in multi-unit
buildings will continue to be highly competitive.
MMDS. Cable television systems also compete with wireless program
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distribution services such as multichannel, multipoint distribution service
("MMDS") systems, commonly called wireless cable, which are licensed to serve
specific areas. MMDS uses low-power microwave frequencies to transmit
television programming over-the-air to paying subscribers. The MMDS industry is
less capital intensive than the cable television industry, and it is therefore
more practical to construct MMDS systems in areas of lower subscriber
penetration. Wireless cable systems are now in direct competition with cable
television systems in several areas of the country, including the system in Pima
County, Arizona owned by the General Partner. Telephone companies have acquired
or invested in wireless companies, and may use MMDS systems to provide services
within their service areas in lieu of wired delivery systems. Enthusiasm for
MMDS has waned in recent months, however, as Bell Atlantic and NYNEX have
suspended their investment in two major MMDS companies. To date, the
Partnership has not lost a significant number of subscribers, nor a significant
amount of revenue, to MMDS operators competing with the Partnership's Systems.
A series of actions taken by the FCC, however, including reallocating certain
frequencies to the wireless services, are intended to facilitate the development
of wireless cable television systems as an alternative means of distributing
video programming. In addition, Local Multipoint Distribution Services
("LMDS"), could also pose a significant threat to the cable television industry,
if and when it becomes established. The potential impact, however, of LMDS is
difficult to assess due to the newness of the technology and the absence of any
current fully operational LMDS systems.
Cable television systems are also in competition, in various degrees
with other communications and entertainment media, including motion pictures and
home video cassette recorders.
REGULATION AND LEGISLATION
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The operation of cable television systems is extensively regulated by
the FCC, some state governments and most local governments. The new 1996
Telecom Act alters the regulatory structure governing the nation's
telecommunications providers. It removes barriers to competition in both the
cable television market and the local telephone market. Among other things, it
also reduces the scope of cable rate regulation.
The 1996 Telecom Act requires the FCC to undertake a host of
implementing rulemakings, the final outcome of which cannot yet be determined.
Moreover, Congress and the FCC have frequently revisited the subject of cable
regulation. Future legislative and regulatory changes could adversely affect
the Partnership's operations and there has been a recent increase in calls to
maintain or even tighten cable regulation in the absence of widespread effective
competition. This section briefly summarizes key laws and regulations affecting
the
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operation of the Partnership's Systems and does not purport to describe all
present, proposed, or possible laws and regulations affecting the Partnership.
Cable Rate Regulation. The 1992 Cable Act imposed an extensive rate
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regulation regime on the cable television industry. Under that regime, all
cable systems are subject to rate regulation, unless they face "effective
competition" in their local franchise area. Federal law now defines "effective
competition" on a community-specific basis as requiring either low penetration
(less than 30 percent) by the incumbent cable operator, appreciable
penetration (more than 15 percent) by competing multichannel video providers
("MVPs"), or the presence of a competing MVP affiliated with a local telephone
company.
Although the FCC rules control, local government units (commonly
referred to as local franchising authorities or "LFAs") are primarily
responsible for administering the regulation of the lowest level of cable -- the
basic service tier ("BST"), which typically contains local broadcast stations
and public, educational, and government ("PEG") access channels. Before an LFA
begins BST rate regulation, it must certify to the FCC that it will follow
applicable federal rules, and many LFAs have voluntarily declined to exercise
this authority. LFAs also have primary responsibility for regulating cable
equipment rates. Under federal law, charges for various types of cable
equipment must be unbundled from each other and from monthly charges for
programming services. The 1996 Telecom Act allows operators to aggregate costs
for broad categories of equipment across geographic and functional lines. This
change should facilitate the introduction of new technology.
The FCC itself directly administers rate regulation of any cable
programming service tiers ("CPST"), which typically contain satellite-delivered
programming. Under the 1996 Telecom Act, the FCC can regulate CPST rates only
if an LFA first receives at least two rate complaints from local subscribers and
then files a formal complaint with the FCC. When new CPST rate complaints are
filed, the FCC now considers only whether the incremental increase is justified
and will not reduce the previously established CPST rate.
Under the FCC's rate regulations, most cable systems were required to
reduce their BST and CPST rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price cap scheme that allows for the
recovery of inflation and certain increased costs, as well as providing some
incentive for expanding channel carriage. The FCC has modified its rate
adjustment regulations to allow for annual rate increases and to minimize
previous problems associated with regulatory lag. Operators also have the
opportunity of bypassing this "benchmark" regulatory scheme in favor of
traditional "cost-of-service" regulation in cases where the latter methodology
appears favorable. Premium cable services offered on a per-channel or per-
program basis remain unregulated, as do affirmatively marketed packages
consisting entirely of new programming product. Federal law requires that the
BST be offered to all cable subscribers, but limits the ability of operators to
require purchase of any CPST before purchasing premium services offered on a
per-channel or per-program basis.
The 1996 Telecom Act sunsets FCC regulation of CPST rates for all
systems (regardless of size) on March 31, 1999. Certain critics of the cable
television industry have called for a delay in the regulatory sunset and some
have even urged more rigorous rate regulation in the interim, including a limit
on operators passing through to their customers increased programming costs.
The 1996 Telecom Act also relaxes existing uniform rate requirements by
specifying that uniform rate requirements do not apply where the operator faces
"effective competition," and by exempting bulk discounts to multiple dwelling
units, although complaints about predatory pricing still may be made to the FCC.
Cable Entry Into Telecommunications. The 1996 Telecom Act provides
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that no state or local laws or regulations may prohibit or have the effect of
prohibiting any entity from providing any interstate or intrastate
telecommunications service. States are authorized, however, to impose
"competitively neutral" requirements regarding universal service, public safety
and welfare, service quality, and consumer protection. State and local
governments also retain their authority to manage the public rights-of-way and
may require reasonable, competitively neutral compensation for management of the
public rights-of-way when cable operators provide telecommunications service.
The favorable pole attachment rates afforded cable operators under federal law
can be gradually increased by utility companies owning the poles (beginning in
2001) if the operator provides telecommunications service, as well as cable
service, over its plant.
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Cable entry into telecommunications will be affected by the regulatory
landscape now being fashioned by the FCC and state regulators. One critical
component of the 1996 Telecom Act to facilitate the entry of new
telecommunications providers (including cable operators) is the interconnection
obligation imposed on all telecommunications carriers. In July 1997, the Eighth
Circuit Court of Appeals vacated certain aspects of the FCC's initial
interconnection order. That decision is now on appeal to the U.S. Supreme
Court.
Telephone Company Entry Into Cable Television. The 1996 Telecom Act
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allows telephone companies to compete directly with cable operators by repealing
the historic telephone company/cable cross-ownership ban. Local exchange
carriers ("LECs"), including the BOCs, can now compete with cable operators both
inside and outside their telephone service areas. Because of their resources,
LECs could be formidable competitors to traditional cable operators, and certain
LECs have begun offering cable service. As described above, the General Partner
is now witnessing the beginning of LEC competition in a few of its cable
communities.
Under the 1996 Telecom Act, a LEC providing video programming to
subscribers will be regulated as a traditional cable operator (subject to local
franchising and federal regulatory requirements), unless the LEC elects to
provide its programming via an "open video system" ("OVS"). To qualify for OVS
status, the LEC must reserve two-thirds of the system's activated channels for
unaffiliated entities. RCN and affiliates of local power companies recently
have been certified to provide OVS service in areas encompassing the General
Partner's cable systems in suburban Maryland and Virginia. This OVS potential
competition is not yet operational.
Although LECs and cable operators can now expand their offerings
across traditional service boundaries, the general prohibition remains on LEC
buyouts (i.e., any ownership interest exceeding 10 percent) of co-located cable
systems, cable operator buyouts of co-located LEC systems, and joint ventures
between cable operators and LECs in the same market. The 1996 Telecom Act
provides a few limited exceptions to this buyout prohibition, including a
carefully circumscribed "rural exemption." The 1996 Telecom Act also provides
the FCC with the limited authority to grant waivers of the buyout prohibition
(subject to LFA approval).
Electric Utility Entry Into Telecommunications/Cable Television. The
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1996 Telecom Act provides that registered utility holding companies and
subsidiaries may provide telecommunications services (including cable
television) notwithstanding the Public Utilities Holding Company Act. Electric
utilities must establish separate subsidiaries, known as "exempt
telecommunications companies" and must apply to the FCC for operating authority.
Again, because of their resources, electric utilities could be formidable
competitors to traditional cable systems.
Additional Ownership Restrictions. The 1996 Telecom Act eliminates
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statutory restrictions on broadcast/cable cross-ownership (including broadcast
network/cable restrictions), but leaves in place existing FCC regulations
prohibiting local cross-ownership between co-located television stations and
cable systems. The 1996 Telecom Act also eliminates the three year holding
period required under the 1992 Cable Act's "anti-trafficking" provision. The
1996 Telecom Act leaves in place existing restrictions on cable cross-ownership
with SMATV and MMDS facilities, but lifts those restrictions where the cable
operator is subject to effective competition. In January 1995, however, the FCC
adopted regulations which permit cable operators to own and operate SMATV
systems within their franchise area, provided that such operation is consistent
with local cable franchise requirements.
Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a
cable system from devoting more than 40 percent of its activated channel
capacity to the carriage of affiliated national program services. A companion
rule establishing a nationwide ownership cap on any cable operator equal to 30
percent of all domestic cable subscribers has been stayed pending further
judicial review, although the FCC recently expressed an interest in reviewing
and reimposing this limit.
There are no federal restrictions on non-U.S. entities having an
ownership interest in cable television systems or the FCC licenses commonly
employed by such systems. Section 310(b)(4) of the Communications Act does,
however, prohibit foreign ownership of FCC broadcast and telephone licenses,
unless the FCC concludes
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that such foreign ownership is consistent with the public interest. The
investment of BCI Telecom Holding Inc. ("BCI") in the General Partner could,
therefore, adversely affect any plan to acquire FCC broadcast or common carrier
licenses. The Partnership, however, does not currently plan to acquire such
licenses.
Must Carry/Retransmission Consent. The 1992 Cable Act contains
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broadcast signal carriage requirements that allow local commercial television
broadcast stations to elect once every three years between requiring a cable
system to carry the station ("must carry") or negotiating for payments for
granting permission to the cable operator to carry the station ("retransmission
consent"). Less popular stations typically elect "must carry," and more popular
stations typically elect "retransmission consent." Must carry requests can
dilute the appeal of a cable system's programming offerings, and retransmission
consent demands may require substantial payments or other concessions. Either
option has a potentially adverse affect on the Partnership's business.
Additionally, cable systems are required to obtain retransmission consent for
all "distant" commercial television stations (except for satellite-delivered
independent "superstations" such as WGN). The burden associated with "must
carry" may increase substantially if broadcasters proceed with planned
conversion to digital transmission and the FCC determines that cable systems
must carry all analogue and digital broadcasts in their entirety.
Access Channels. LFAs can include franchise provisions requiring
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cable operators to set aside certain channels for public, educational and
governmental access programming. Federal law also requires cable systems to
designate a portion of their channel capacity (up to 15 percent in some cases)
for commercial leased access by unaffiliated third parties. The FCC has adopted
rules regulating the terms, conditions and maximum rates a cable operator may
charge for use of the designated channel capacity, but use of commercial leased
access channels has been relatively limited. The FCC released revised rules in
February 1997 mandating a modest rate reduction. The reduction sparked some
increase in part-time use, but did not make commercial leased access
substantially more attractive to third party programmers. Certain of those
programmers have now appealed the revised rules to the D.C. Court of Appeals.
Should the courts and the FCC ultimately determine that an additional reduction
in access rates is required, cable operators could lose programming control of a
substantial number of cable channels.
Access to Programming. To spur the development of independent cable
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programmers and competition to incumbent cable operators, the 1992 Cable Act
imposed restrictions on the dealings between cable operators and cable
programmers. Of special significance from a competitive business posture, the
1992 Cable Act precludes video programmers affiliated with cable companies from
favoring cable operators over competitors and requires such programmers to sell
their programming to other multichannel video distributors. This provision
limits the ability of vertically integrated cable programmers to offer exclusive
programming arrangements to cable companies. There recently has been increased
interest in further restricting the marketing practices of cable programmers,
including subjecting programmers who are not affiliated with cable operators to
all of the existing program access requirements.
Inside Wiring. The FCC recently determined that an incumbent cable
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operator can be required by the owner of a multiple dwelling unit ("MDU")
complex to remove, abandon or sell the "home run" wiring it initially provided.
In addition, the FCC is reviewing the enforceability of contracts to provide
exclusive video service within a MDU complex. The FCC has proposed abrogating
all such contracts held by incumbent cable operators, but allowing such
contracts when held by new entrants. These changes, and others now being
considered by the FCC, would, if implemented, make it easier for a MDU complex
owner to terminate service from an incumbent cable operator in favor of a new
entrant and leave the already competitive MDU sector even more challenging for
incumbent cable operators.
Other FCC Regulations. In addition to the FCC regulations noted
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above, there are other FCC regulations covering such areas as equal employment
opportunity, subscriber privacy, programming practices (including, among other
things, syndicated program exclusivity, network program nonduplication, local
sports blackouts, indecent programming, lottery programming, political
programming, sponsorship identification, and children's programming
advertisements), registration of cable systems and facilities licensing,
maintenance of various records and public inspection files, frequency usage,
lockbox availability, antenna structure notification, tower marking and
lighting, consumer protection and customer service standards, technical
standards and
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consumer electronics equipment compatibility. Federal requirements governing
Emergency Alert Systems and Closed Captioning adopted in 1997 will impose
additional costs on the operation of cable systems. The FCC is currently
considering whether cable customers must be allowed to purchase cable converters
from third party vendors. If the FCC concludes that such distribution is
required, and does not make appropriate allowances for signal piracy concerns,
it may become more difficult for cable operators to combat theft of service. The
FCC has the authority to enforce its regulations through the imposition of
substantial fines, the issuance of cease and desist orders and/or the imposition
of other administrative sanctions, such as the revocation of FCC licenses needed
to operate certain transmission facilities used in connection with cable
operations.
Internet Access. Many cable operators have begun offering high speed
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internet service to their customers. At this time, there is no signficant
federal or local regulation of this service. However, as internet services
develop, it is possible that new regulations could be imposed.
Copyright. Cable television systems are subject to federal copyright
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licensing covering carriage of television and radio broadcast signals. In
exchange for filing certain reports and contributing a percentage of their
revenues to a federal copyright royalty pool (that varies depending on the size
of the system and the number of distant broadcast television signals carried),
cable operators can obtain blanket permission to retransmit copyrighted material
on broadcast signals. The possible modification or elimination of this
compulsory copyright license is the subject of continuing legislative review and
could adversely affect the Partnership's ability to obtain desired broadcast
programming. In addition, the cable industry pays music licensing fees to BMI
and is negotiating a similar arrangement with ASCAP. Copyright clearances for
nonbroadcast programming services are arranged through private negotiations.
State and Local Regulation. Cable television systems generally are
--------------------------
operated pursuant to nonexclusive franchises granted by a municipality or other
state or local government entity in order to cross public rights-of-way.
Federal law now prohibits franchise authorities from granting exclusive
franchises or from unreasonably refusing to award additional franchises. Cable
franchises generally are granted for fixed terms and in many cases include
monetary penalties for non-compliance and may be terminable if the franchisee
fails to comply with material provisions.
The terms and conditions of franchises vary materially from
jurisdiction to jurisdiction. Each franchise generally contains provisions
governing cable operations, service rates, franchise fees, system construction
and maintenance obligations, system channel capacity, design and technical
performance, customer service standards, and indemnification protections. A
number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. Although LFAs have considerable
discretion in establishing franchise terms, there are certain federal
limitations. For example, LFAs cannot insist on franchise fees exceeding 5
percent of the system's gross revenues, cannot dictate the particular technology
used by the system, and cannot specify video programming other than identifying
broad categories of programming.
Federal law contains renewal procedures designed to protect incumbent
franchisees against arbitrary denials of renewal. Even if a franchise is
renewed, the franchise authority may seek to impose new and more onerous
requirements such as significant upgrades in facilities and services or
increased franchise fees as a condition of renewal. Similarly, if a franchise
authority's consent is required for the purchase or sale of a cable system or
franchise, such authority may attempt to impose more burdensome or onerous
franchise requirements in connection with a request for consent. Historically,
franchises have been renewed for cable operators that have provided satisfactory
services and have complied with the terms of their franchises.
GENERAL. The Partnership's business consists of providing cable
television services to a large number of customers, the loss of any one of which
would have no material effect on the Partnership's business. The Systems have
had some subscribers who later terminated the service. Terminations occur
primarily because people move to another home or to another city. In other
cases, people terminate on a seasonal basis or because they no longer can afford
or are dissatisfied with the service. The amount of past due accounts in the
Systems is not significant.
9
<PAGE>
The Partnership's policy with regard to past due accounts is basically one of
disconnecting service before a past due account becomes material.
The Partnership does not depend to any material extent on the
availability of raw materials; it carries no significant amounts of inventory
and it has no material backlog of customer orders. The Partnership does not have
any employees because all properties are managed by employees of the General
Partner. The General Partner has engaged in research and development activities
relating to the provision of new services but the amount of the Partnership's
funds expended for such research and development has never been material.
Compliance with federal, state and local provisions that have been
enacted or adopted regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment has had no material
effect upon the capital expenditures, earnings or competitive position of the
Partnership.
ITEM 2. PROPERTIES
-------------------
The cable television systems owned by the Partnership are described
below:
<TABLE>
<CAPTION>
SYSTEM ACQUISITION DATE
------ ----------------
<S> <C>
Fort Myers System May 1985
Orland Park System May 1985
Lake County System May 1985
</TABLE>
The following sets forth (i) the monthly basic plus service rates
charged to subscribers and (ii) the number of basic subscribers and pay units
for the Systems. The monthly basic service rates set forth herein represent,
with respect to systems with multiple headends, the basic service rate charged
to the majority of the subscribers within the system. In cable television
systems, basic subscribers can subscribe to more than one pay TV service. Thus,
the total number of pay services subscribed to by basic subscribers are called
pay units. As of December 31, 1997, the Lake County System operated cable plant
passing approximately 28,600 homes, with an approximate 71 percent penetration
rate; the Orland Park System operated cable plant passing approximately 30,900
homes, with an approximate 69 percent penetration rate; and the Fort Myers
System operated cable plant passing approximately 71,400 homes, with an
approximate 55 percent penetration rate. Figures for numbers of subscribers and
homes passed are compiled from the General Partner's records and may be subject
to adjustments.
<TABLE>
<CAPTION>
At December 31,
---------------------------------------------------------------------
Fort Myers System 1997 1996 1995
- ----------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Monthly basic plus service rate $ 25.11 $ 23.51 $ 20.52
Basic subscribers 39,568 38,944 38,306
Pay units 22,864 23,122 23,425
</TABLE>
<TABLE>
<CAPTION>
At December 31,
---------------------------------------------------------------------
Lake County System 1997 1996 1995
- ------------------ --------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Monthly basic plus service rate $ 24.55 $ 23.38 $ 22.52
Basic subscribers 20,417 19,745 18,611
Pay units 11,932 12,122 12,375
</TABLE>
<TABLE>
<CAPTION>
At December 31,
---------------------------------------------------------------------
Orland Park System 1997 1996 1995
- ------------------ --------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Monthly basic plus service rate $ 27.18 $ 25.16 $ 24.01
Basic subscribers 21,532 20,853 19,730
Pay units 14,967 14,887 14,418
</TABLE>
10
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
--------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
None.
PART II.
--------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
-------------------------------------------------
AND RELATED SECURITY HOLDER MATTERS
-----------------------------------
While the Partnership is publicly held, there is no public market for the
limited partnership interests, and it is not expected that a market will develop
in the future. During 1997, partners of the Partnership conducted "limited
tender offers" for interests in the Partnership at prices ranging from $570 to
$640 per interest. As of February 16, 1998, the number of equity security
holders in the Partnership was 6,879.
11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------------------------------
Cable TV Fund 12-A, Ltd. 1997 1996 1995 1994 1993
- ------------------------------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $36,986,475 $34,485,280 $32,080,534 $29,378,010 $28,963,726
Depreciation and Amortization 7,152,481 7,279,700 7,146,711 7,032,177 7,840,193
Operating Income 4,830,338 2,749,310 2,369,663 1,377,680 1,196,824
Net Income (Loss) 3,044,075 988,478 379,266 (492,539) (409,726)
Net Income (Loss) per Limited
Partnership Unit 28.98 9.41 3.61 (4.69) (3.90)
Weighted Average Number of Limited
Partnership Units Outstanding 104,000 104,000 104,000 104,000 104,000
General Partner's Deficit (328,014) (358,455) (368,340) (372,133) (367,208)
Limited Partners' Capital 12,277,344 9,263,710 8,285,117 7,909,644 8,397,258
Total Assets 37,049,738 38,472,570 36,825,106 36,725,141 39,297,990
Debt 23,272,240 27,179,908 26,736,382 26,402,399 29,724,530
General Partner Advances - - 373,311 1,305,933 220,722
</TABLE>
12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------- -----------------------------------------------------------------------
OF OPERATIONS
-------------
CABLE TV FUND 12-A, LTD.
------------------------
The following discussion of the financial condition and results of
operations of Cable TV Fund 12-A, Ltd. (the "Partnership") contains, in addition
to historical information, forward-looking statements that are based upon
certain assumptions and are subject to a number of risks and uncertainties. The
Partnership's actual results may differ significantly from the results predicted
in such forward-looking statements.
FINANCIAL CONDITION
- -------------------
It is the General Partner's publicly announced policy that it intends to
liquidate its managed partnerships, including the Partnership, as opportunities
for sales of partnership cable television systems arise in the marketplace. In
accordance with the General Partner's policy, the Partnership has entered into a
contract to sell the cable television system serving the areas in and around
Fort Myers, Florida (the "Fort Myers System") to an unaffiliated cable
television system operator and the Partnership's remaining systems are being
marketed for sale. The General Partner is continuing to seek opportunities to
sell the Partnership's remaining systems. There is no assurance as to the
timing or terms of any sales.
In March 1998, the Partnership entered into an asset purchase agreement to
sell the Fort Myers System to an unaffiliated cable television system operator
for a sales price of $110,000,000, subject to customary closing adjustments.
Closing of the sale, which is anticipated to occur in the second or third
quarter of 1998, is subject to several conditions, including necessary
governmental and other third party consents. Upon the consummation of the sale
of the Fort Myers System, the Partnership will repay approximately $9,600,000 of
the balance outstanding on its $22,950,000 term loan, will pay a brokerage fee
to The Jones Group, Ltd., a subsidiary of the General Partner, totaling
$2,750,000, representing 2.5 percent of the sales price, for acting as a broker
in this transaction, will retain a portion of the proceeds for working capital
purposes and will distribute the remaining net sale proceeds of approximately
$93,000,000 to the partners. Pursuant to the terms of the Partnership's limited
partnership agreement, from the net sale proceeds the Partnership first will
return to the limited partners the capital they initially contributed to the
Partnership ($52,000,000) and the remainder will be allocated 75 percent to the
limited partners ($30,750,000) and 25 percent to the General Partner
($10,250,000). The total limited partner distribution of $82,750,000 represents
$796 per each $500 limited partnership interest or $1,592 for each $1,000
invested in the Partnership. Because the sale of the Fort Myers System does not
represent a sale of all or substantially all of the Partnership's assets, no
vote of the limited partners of the Partnership is required to approve this
sale.
For the year ended December 31, 1997, the Partnership generated net cash
from operating activities totaling approximately $8,457,493, which is available
to fund capital expenditures and non-operating costs. Capital expenditures
totaled approximately $6,405,819 during 1997. Approximately 34 percent of these
expenditures related to the construction of service drops to subscribers' homes.
Approximately 23 percent of these expenditures related to the construction of
new cable plant associated with new homes passed. The remaining expenditures
were used to maintain the value of the Partnership's systems. Funding for these
expenditures was provided by cash on hand and cash generated from operations.
Budgeted capital expenditures for 1998 are approximately $4,850,000.
Approximately 39 percent of these anticipated expenditures relate to the
construction of service drops to subscribers' homes. Approximately 35 of these
anticipated expenditures relate to the construction of new cable plant
associated with new homes passed. The remaining anticipated expenditures will
be used to maintain the value of the Partnership's systems until they are sold.
Depending upon the timing of the sale of the Fort Myers System, the Partnership
likely will only make the budgeted capital expenditures expected to be made
during the Partnership's continued ownership of the Fort Myers System. Funding
for these expenditures is expected to be provided by cash on hand and cash
generated by operations.
As of December 31, 1997, $22,950,000 was outstanding under the
Partnership's term loan agreement, which is payable in consecutive quarterly
installments through December 31, 2001. A total of $4,050,000 in principal
payments was paid during 1997. These payments were funded from cash on hand and
cash generated from operations. Generally, interest payable on the outstanding
balance is at the Partnership's option of Prime or a fixed rate defined as the
London Interbank Offered Rate plus 1 percent. Principal payments due during
1998 total $4,050,000. The effective interest rates on outstanding obligations
as of December 31, 1997 and 1996 were 6.88 percent and 6.73 percent,
respectively.
13
<PAGE>
The General Partner believes that the Partnership has sufficient sources of
capital from cash on hand and cash generated from operations to meet its
presently anticipated needs provided that the Fort Myers System is sold as
expected in 1998.
Year 2000 Issue
- ---------------
The Year 2000 issue is the result of many computer programs being written
such that they will malfunction when reading a year of "00." This problem could
cause system failure or miscalculations causing disruptions of business
processes.
The General Partner has initiated an assessment of its computer
applications to determine the extent of the problem. Based on this assessment,
the General Partner has determined that the majority of its computer
applications supporting business processes, including accounting and billing,
are designed to handle the Year 2000 appropriately.
The General Partner is currently focusing its efforts on the impact of the
Year 2000 issue on service delivery. The General Partner has established an
internal team to address this issue. The General Partner is identifying and
testing all date-sensitive equipment involved in delivering service to the
Partnership's customers. In addition, the General Partner will assess its
options regarding repair or replacement of affected equipment during this
testing. The General Partner currently has no definitive estimate of the cost or
the extent of the impact, if any, this problem will have on service delivery;
however, the General Partner does not believe that the impact will be material.
The General Partner anticipates completion of its testing in 1998, at which time
it will determine the financial impact on the Partnership.
RESULTS OF OPERATIONS
- ---------------------
1997 compared to 1996
---------------------
Revenues of the Partnership increased $2,501,195, or approximately 7
percent, to $36,986,475 in 1997 from $34,485,280 in 1996. Basic service rate
increases implemented in all of the Partnership's systems accounted for
approximately 59 percent of the increase in revenues. An increase in the number
of basic subscribers accounted for approximately 30 percent of the increase in
revenues. The Partnership added 1,975 basic subscribers in 1997, an increase of
approximately 2 percent. The number of basic subscribers totaled 81,517 at
December 31, 1997, compared to 79,542 at December 31, 1996. No other individual
factor was significant to the increase in revenues.
Operating expenses consist primarily of costs associated with the operation
and administration of the Partnership's cable television systems. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and marketing expenses.
Operating expenses increased $562,075, or approximately 3 percent, to
$21,035,811 in 1997 from $20,473,736 in 1996. This increase was primarily due to
an increase in programming fees. No other individual factor contributed
significantly to the increase in operating expenses. Operating expenses
represented approximately 57 percent of revenues in 1997 compared to
approximately 59 percent of revenues in 1996.
The cable television industry generally measures the performance of a cable
television system in terms of operating cash flow (revenues less operating
expenses). This measure is not intended to be a substitute or improvement upon
the items disclosed on the financial statements, rather it is included because
it is an industry standard. Operating cash flow increased $1,939,120, or
approximately 14 percent, to $15,950,664 in 1997 from $14,011,544 in 1996. This
increase was due to the increase in revenues exceeding the increase in operating
expenses.
Management fees and allocated overhead from the General Partner decreased
$14,689 to $3,967,845 in 1997 from $3,982,534 in 1996. This decrease was
primarily due to a decrease in the amount of expenses allocated from the General
Partner.
Depreciation and amortization expense decreased $127,219, or approximately
2 percent, to $7,152,481 in 1997 from $7,279,700 in 1996. This decrease was due
to the maturation of a portion of the Partnership's depreciable asset base.
14
<PAGE>
Operating income increased $2,081,028, or approximately 76 percent, to
$4,830,338 in 1997 from $2,749,310 in 1996. This increase was due to the
increase in operating cash flow and decrease in depreciation and amortization
expense.
Interest expense increased $52,280, or approximately 3 percent, to
$1,765,957 in 1997 from $1,713,677 in 1996. This increase was primarily due to
higher effective interest rates on interest bearing obligations during 1997.
Net income increased $2,055,597, to $3,044,075 in 1997 from $988,478 in
1996. This increase was due to the factors discussed above.
1996 compared to 1995
---------------------
Revenues of the Partnership increased $2,404,746, or approximately 7
percent, to $34,485,280 in 1996 from $32,080,534 in 1995. An increase in the
number of basic subscribers accounted for approximately 40 percent of the
increase in revenues. The Partnership added 2,895 basic subscribers in 1996, an
increase of approximately 4 percent. The number of basic subscribers totaled
79,542 at December 31, 1996, compared to 76,647 at December 31, 1995. Basic
service rate increases implemented in all of the Partnership's systems accounted
for approximately 34 percent of the increase in revenues. An increase in
advertising sales revenue also contributed to the increase in revenues. No
other individual factor was significant to the increase in revenues.
Operating expenses increased $1,824,805, or approximately 10 percent, to
$20,473,736 in 1996 from $18,648,931 in 1995. This increase was primarily due
to an increase in programming fees which was due, in part, to the increase in
the subscriber base. No other individual factor contributed significantly to
the increase in operating expenses. Operating expenses represented approximately
59 percent of revenues in 1996 compared to approximately 58 percent of revenues
in 1995.
Operating cash flow increased $579,941, or approximately 4 percent, to
$14,011,544 in 1996 from $13,431,603 in 1995. This increase was due to the
increase in revenues exceeding increases in operating expenses.
Management fees and allocated overhead from the General Partner increased
$67,305, or approximately 2 percent, to $3,982,534 in 1996 from $3,915,229 in
1995. This increase was due to an increase in management fees. Management
fees, which are based on a percentage of revenues, increase when revenues
increase.
Depreciation and amortization expense increased $132,989, or approximately
2 percent, to $7,279,700 in 1996 from $7,146,711 in 1995. This increase was due
to additions to the Partnership's depreciable asset base in 1996 and 1995.
Operating income increased $379,647, or approximately 16 percent, to
$2,749,310 in 1996 from $2,369,663 in 1995. This increase was due to the
increase in operating cash flow exceeding the increase in depreciation and
amortization expense.
Interest expense decreased $305,175, or approximately 15 percent, to
$1,713,677 in 1996 from $2,018,852 in 1995. This decrease was due to lower
outstanding balances during the year and lower effective interest rates on
interest bearing obligations.
Net income increased $609,212, to $988,478 in 1996 from $379,266 in 1995.
This increase was due to the factors discussed above.
ITEM 8. FINANCIAL STATEMENTS
- -----------------------------
The audited financial statements of the Partnership for the year ended
December 31, 1997 follow.
15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Partners of Cable TV Fund 12-A, Ltd.:
We have audited the accompanying balance sheets of CABLE TV FUND 12-A, LTD.
(a Colorado limited partnership) as of December 31, 1997 and 1996, and the
related statements of operations, partners' capital (deficit) and cash flows for
each of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the General Partner's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cable TV Fund 12-A, Ltd. as
of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 19, 1998.
16
<PAGE>
CABLE TV FUND 12-A, LTD.
------------------------
(A Limited Partnership)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31,
---------------------------
ASSETS 1997 1996
------ ------------ ------------
<S> <C> <C>
CASH $ 2,047,098 $ 4,034,642
TRADE RECEIVABLES, less allowance for doubtful receivables of
$47,572 and $35,573 at December 31, 1997 and 1996, respectively 1,197,527 685,452
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 86,596,679 80,190,860
Less- accumulated depreciation (54,740,733) (48,417,981)
------------ ------------
31,855,946 31,772,879
Franchise costs and other intangible assets, net of accumulated
amortization of $33,880,137 and $33,337,684 at December 31, 1997
and 1996, respectively 1,277,970 1,688,873
------------ ------------
Total investment in cable television properties 33,133,916 33,461,752
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 671,197 290,724
------------ ------------
Total assets $ 37,049,738 $ 38,472,570
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
17
<PAGE>
CABLE TV FUND 12-A, LTD.
------------------------
(A Limited Partnership)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31,
---------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1997 1996
- ------------------------------------------- ------------ ------------
<S> <C> <C>
LIABILITIES:
Debt $ 23,272,240 $ 27,179,908
Trade accounts payable and accrued liabilities 1,690,998 2,261,358
Subscriber prepayments 137,170 126,049
------------ ------------
Total liabilities 25,100,408 29,567,315
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (329,014) (359,455)
------------ ------------
(328,014) (358,455)
------------ ------------
Limited Partners-
Net contributed capital (104,000 units outstanding at
December 31, 1997 and 1996) 44,619,655 44,619,655
Accumulated deficit (32,342,311) (35,355,945)
------------ ------------
12,277,344 9,263,710
------------ ------------
Total liabilities and partners' capital (deficit) $ 37,049,738 $ 38,472,570
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
18
<PAGE>
CABLE TV FUND 12-A, LTD.
------------------------
(A Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES $36,986,475 $34,485,280 $32,080,534
COSTS AND EXPENSES:
Operating expenses 21,035,811 20,473,736 18,648,931
Management fees and allocated overhead
from General Partner 3,967,845 3,982,534 3,915,229
Depreciation and amortization 7,152,481 7,279,700 7,146,711
----------- ----------- -----------
OPERATING INCOME 4,830,338 2,749,310 2,369,663
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (1,765,957) (1,713,677) (2,018,852)
Other, net (20,306) (47,155) 28,455
----------- ----------- -----------
Total other income (expense), net (1,786,263) (1,760,832) (1,990,397)
----------- ----------- -----------
NET INCOME $ 3,044,075 $ 988,478 $ 379,266
=========== =========== ===========
ALLOCATION OF NET INCOME:
General Partner $ 30,441 $ 9,885 $ 3,793
=========== =========== ===========
Limited Partners $ 3,013,634 $ 978,593 $ 375,473
=========== =========== ===========
NET INCOME PER LIMITED PARTNERSHIP UNIT $28.98 $9.41 $3.61
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 104,000 104,000 104,000
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
19
<PAGE>
CABLE TV FUND 12-A, LTD.
------------------------
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
-----------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (358,455) $ (368,340) $ (372,133)
Net income for year 30,441 9,885 3,793
----------- ---------- ----------
Balance, end of year $ (328,014) $ (358,455) $ (368,340)
=========== ========== ==========
LIMITED PARTNERS:
Balance, beginning of year $ 9,263,710 $8,285,117 $7,909,644
Net income for year 3,013,634 978,593 375,473
----------- ---------- ----------
Balance, end of year $12,277,344 $9,263,710 $8,285,117
=========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
20
<PAGE>
CABLE TV FUND 12-A, LTD.
------------------------
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------
1997 1996 1995
------------ ------------ -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,044,075 $ 988,478 $ 379,266
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 7,152,481 7,279,700 7,146,711
Amortization of interest rate protection contract - - 50,004
Decrease (increase) in trade receivables (512,075) 228,945 (539,580)
Increase in deposits, prepaid expenses and deferred charges (667,749) (107,492) (245,238)
Decrease in General Partner advances - (373,311) (932,622)
Increase (decrease) in trade accounts payable and accrued
liabilities and subscriber prepayments (559,239) 588,771 319,338
----------- ----------- ------------
Net cash provided by operating activities 8,457,493 8,605,091 6,177,879
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (6,405,819) (6,321,698) (5,782,796)
Franchise renewal costs (131,550) - -
----------- ----------- ------------
Net cash used in investing activities (6,537,369) (6,321,698) (5,782,796)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 237,422 2,260,619 28,612,825
Repayment of debt (4,145,090) (1,817,093) (28,278,842)
----------- ----------- ------------
Net cash provided by (used in) financing activities (3,907,668) 443,526 333,983
----------- ----------- ------------
Increase (decrease) in cash (1,987,544) 2,726,919 729,066
Cash, beginning of year 4,034,642 1,307,723 578,657
----------- ----------- ------------
Cash, end of year $ 2,047,098 $ 4,034,642 $ 1,307,723
=========== =========== ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,949,049 $ 1,746,102 $ 1,850,342
=========== =========== ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
21
<PAGE>
CABLE TV FUND 12-A, LTD.
------------------------
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS
------------------------------------
Formation and Business
----------------------
Cable TV Fund 12-A, Ltd. (the "Partnership"), a Colorado limited
partnership, was formed on January 2, 1985, under a public program sponsored by
Jones Intercable, Inc. ("Intercable"). The Partnership was formed to acquire,
construct, develop and operate cable television systems. The Partnership owns
and operates the cable television systems serving areas in and around Fort
Myers, Florida and Lake County, Orland Park and Park Forest, Illinois.
Intercable, a publicly held Colorado corporation, is the "General Partner" and
manages the Partnership. Intercable and its subsidiaries also own and operate
cable television systems. In addition, Intercable manages cable television
systems for other limited partnerships for which it is general partner and,
also, for affiliated entities.
Contributed Capital
-------------------
The capitalization of the Partnership is set forth in the accompanying
statements of partners' capital (deficit). No limited partner is obligated to
make any additional contributions to partnership capital.
The General Partner purchased its interest in the Partnership by
contributing $1,000 to partnership capital.
All profits and losses of the Partnership are allocated 99 percent to the
limited partners and 1 percent to the General Partner, except for income or gain
from the sale or disposition of cable television properties, which will be
allocated to the partners based upon the formula set forth in the Partnership
Agreement, and interest income earned prior to the first acquisition by the
Partnership of a cable television system, which was allocated 100 percent to the
limited partners.
Sale of Cable Television System
-------------------------------
In March 1998, the Partnership entered into an asset purchase agreement to
sell the Fort Myers System to an unaffiliated cable television system operator
for a sales price of $110,000,000, subject to customary closing adjustments.
Closing of the sale, which is anticipated to occur in the second or third
quarter of 1998, is subject to several conditions, including necessary
governmental and other third party consents. Upon the consummation of the sale
of the Fort Myers System, the Partnership will repay approximately $9,600,000 of
the balance outstanding on its $22,950,000 term loan, will pay a brokerage fee
to The Jones Group, Ltd., a subsidiary of the General Partner, totaling
$2,750,000, representing 2.5 percent of the sales price, for acting as a broker
in this transaction, will retain a portion of the proceeds for working capital
purposes and will distribute the remaining net sale proceeds of approximately
$93,000,000 to the partners. Pursuant to the terms of the Partnership's limited
partnership agreement, from the net sale proceeds the Partnership first will
return to the limited partners the capital they initially contributed to the
Partnership ($52,000,000) and the remainder will be allocated 75 percent to the
limited partners ($30,750,000) and 25 percent to the General Partner
($10,250,000). The total limited partner distribution of $82,750,000 represents
$796 per each $500 limited partnership interest or $1,592 for each $1,000
invested in the Partnership. Because the sale of the Fort Myers System does not
represent a sale of all or substantially all of the Partnership's assets, no
vote of the limited partners of the Partnership is required to approve this
sale.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Accounting Records
------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles.
The Partnership's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the General Partner's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities
22
<PAGE>
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property, Plant and Equipment
-----------------------------
Depreciation of property, plant and equipment is provided primarily using
the straight-line method over the following estimated service lives:
<TABLE>
<CAPTION>
<S> <C>
Cable distribution system 5 - 15 years
Equipment and tools 5 - 7 years
Office furniture and equipment 3 - 5 years
Buildings 30 years
Vehicles 3 - 4 years
</TABLE>
Replacements, renewals and improvements are capitalized and maintenance and
repairs are charged to expense as incurred.
Property, plant and equipment and the corresponding accumulated
depreciation are written off as certain assets become fully depreciated and are
no longer in service.
Intangible Assets
-----------------
Costs assigned to franchises are being amortized using the straight-line
method over remaining estimated useful lives ranging from one to three years.
Revenue Recognition
-------------------
Subscriber prepayments are initially deferred and recognized as revenue
when earned.
Reclassification
----------------
Certain prior year amounts have been reclassified to conform to the 1997
presentation.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
----------------------------------------------------
Management Fees, Distribution Ratios and Reimbursements
-------------------------------------------------------
Intercable manages the Partnership and receives a fee for its services
equal to 5 percent of the gross revenues of the Partnership, excluding revenues
from the sale of cable television systems or franchises. Management fees for
the years ended December 31, 1997, 1996 and 1995 were $1,849,324, $1,724,264 and
$1,604,027, respectively.
Any distributions made from cash flow (defined as cash receipts derived
from routine operations, less debt principal and interest payments and cash
expenses) are allocated 99 percent to the limited partners and 1 percent to the
General Partner. Any distributions other than from cash flow, such as from the
sale or refinancing of a system or upon dissolution of the Partnership, will be
made as follows: first, to the limited partners in an amount which, together
with all prior distributions, will equal the amount initially contributed to the
partnership capital by the limited partners; the balance, 75 percent to the
limited partners and 25 percent to Intercable.
The Partnership reimburses Intercable for certain allocated overhead and
administrative expenses. These expenses represent the salaries and related
benefits paid for corporate personnel, rent, data processing services and other
facilities costs. Such personnel provide engineering, marketing,
administrative, accounting, legal and investor relations services to the
Partnership. Such services, and their related costs, are necessary to the
operation of the Partnership and would have been incurred by the Partnership if
it was a stand alone entity. Allocations of personnel costs are based primarily
on actual time spent by employees of Intercable with respect to each partnership
managed. Remaining expenses are allocated based on the pro rata relationship of
the Partnership's revenues to the total revenues of all systems owned or managed
by Intercable and certain of its subsidiaries. Systems owned by Intercable and
all other systems owned by partnerships for which Intercable is the general
partner are also allocated a proportionate share of these expenses. Intercable
believes that
23
<PAGE>
the methodology used in allocating overhead and administrative expenses is
reasonable. Reimbursements by the Partnership to Intercable for allocated
overhead and administrative expenses were $2,118,521, $2,258,270 and $2,311,202
in 1997, 1996 and 1995, respectively.
The Partnership was charged interest during 1997 at an average interest
rate of 7.82 percent on the amounts due Intercable, which approximated
Intercable's weighted average cost of borrowing. Total interest charged to the
Partnership by Intercable was $10,621, $15,139 and $16,426 for the years ended
December 31, 1997, 1996 and 1995, respectively.
Payments to/from Affiliates for Programming Services
----------------------------------------------------
The Partnership receives or has received programming from Superaudio,
Knowledge TV, Inc., Jones Computer Network, Ltd., Great American Country, Inc.
and Product Information Network, all of which are affiliates of Intercable.
Payments to Superaudio totaled $56,338, $51,583 and $45,536 in 1997, 1996
and 1995, respectively. Payments to Knowledge TV, Inc. totaled $62,670, $55,632
and $48,703 in 1997, 1996 and 1995, respectively. Payments to Jones Computer
Network, Ltd., whose service was discontinued in April 1997, totaled $42,153,
$58,889 and $53,101 in 1997, 1996 and 1995, respectively. Payments to Great
American Country, Inc., which initiated service in 1996, totaled $66,264 and
$34,642 in 1997 and 1996, respectively.
The Partnership receives a commission from Product Information Network
based on a percentage of advertising revenue and number of subscribers. Product
Information Network paid commissions to the Partnership totaling $99,103,
$60,794 and $44,608 in 1997, 1996 and 1995, respectively.
(4) PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Property, plant and equipment as of December 31, 1997 and 1996, consisted
of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cable distribution system $ 79,051,311 $ 73,282,202
Equipment and tools 2,706,890 2,330,714
Office furniture and equipment 1,697,992 1,538,832
Buildings 1,627,424 1,627,424
Vehicles 1,088,568 987,194
Land 424,494 424,494
------------ ------------
86,596,679 80,190,860
Less: accumulated depreciation (54,740,733) (48,417,981)
------------ ------------
$ 31,855,946 $ 31,772,879
============ ============
(5) DEBT
----
Debt consists of the following:
December 31,
---------------------------
1997 1996
------------ ------------
Lending institutions-
Term loan $ 22,950,000 $ 27,000,000
Capital lease obligations 322,240 179,908
------------ ------------
$ 23,272,240 $ 27,179,908
============ ============
</TABLE>
24
<PAGE>
As of December 31, 1997, $22,950,000 was outstanding under the
Partnership's term loan agreement, which is payable in consecutive quarterly
installments through December 31, 2001. A total of $4,050,000 in principal
payments was paid during 1997. These payments were funded from cash on hand and
cash generated from operations. Generally, interest payable on the outstanding
balance is at the Partnership's option of Prime or a fixed rate defined as the
London Interbank Offered Rate plus 1 percent. Principal payments due during 1998
total $4,050,000. The effective interest rates on outstanding obligations as of
December 31, 1997 and 1996 were 6.88 percent and 6.73 percent, respectively.
Installments due on all debt principal for each of the five years in the
period ending December 31, 2002 and thereafter are: $4,146,672, $5,496,672,
$6,846,672, $6,782,224, $-0- and $-0-, respectively. At December 31, 1997,
substantially all of the Partnership's property, plant and equipment secured the
above indebtedness.
At December 31, 1997, the carrying amount of the Partnership's long-term
debt did not differ significantly from the estimated fair value of the financial
instruments. The fair value of the Partnership's long-term debt is estimated
based on the discounted amount of future debt service payments using rates of
borrowing for a liability of similar risk.
(6) INCOME TAXES
------------
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to the partners. The federal and state
income tax returns of the Partnership are prepared and filed by Intercable.
The Partnership's tax returns, the qualification of the Partnership as such
for tax purposes, and the amount of distributable partnership income or loss are
subject to examination by federal and state taxing authorities. If such
examinations result in changes with respect to the Partnership's recorded income
or loss, the tax liability of the general and limited partners would likely be
changed accordingly.
Taxable income (loss) reported to the partners is different from that
reported in the statements of operations due to the difference in depreciation
recognized under generally accepted accounting principles and the expense
allowed for tax purposes under the Modified Accelerated Cost Recovery System
(MACRS). There are no other significant differences between taxable income
(loss) and the net income reported in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES
----------- --- -------------
The Partnership rents office and other facilities under various long-term
operating lease arrangements. Rent paid under such lease arrangements totaled
$109,260, $83,191 and $74,376, respectively, for the years ended December 31,
1997, 1996 and 1995. Minimum commitments under operating leases for each of the
five years in the period ended December 31, 2002 and thereafter total $108,443,
$62,581, $12,228, $5,095, $-0- and $-0-, respectively.
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
-----------------------------------------
Supplementary profit and loss information is presented below:
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs $ 327,787 $ 311,696 $ 248,042
========== ========== ==========
Taxes, other than income and payroll taxes $ 453,498 $ 502,687 $ 364,657
========== ========== ==========
Advertising $ 390,116 $ 448,330 $ 520,795
========== ========== ==========
Depreciation of property, plant and equipment $6,569,840 $6,516,632 $6,067,163
========== ========== ==========
Amortization of intangible assets $ 582,641 $ 763,068 $1,079,548
========== ========== ==========
</TABLE>
25
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
---------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
None.
PART III.
---------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
The Partnership itself has no officers or directors. Certain information
concerning the directors and executive officers of the General Partner is set
forth below. Directors of the General Partner serve until the next annual
meeting of the General Partner and until their successors shall be elected and
qualified.
<TABLE>
<S> <C> <C>
Glenn R. Jones 68 Chairman of the Board and Chief Executive Officer
James B. O'Brien 48 President and Director
Ruth E. Warren 48 Group Vice President/Operations
Kevin P. Coyle 46 Group Vice President/Finance
Christopher J. Bowick 42 Group Vice President/Technology
Cheryl M. Sprague 45 Group Vice President/Human Resources
Cynthia A. Winning 46 Group Vice President/Marketing
Elizabeth M. Steele 46 Vice President/General Counsel/Secretary
Larry W. Kaschinske 38 Vice President/Controller
Robert E. Cole 65 Director
William E. Frenzel 69 Director
Josef J. Fridman 52 Director
Donald L. Jacobs 59 Director
Robert Kearney 61 Director
James J. Krejci 56 Director
Raphael M. Solot 64 Director
Howard O. Thrall 50 Director
Siim A. Vanaselja 41 Director
Sanford Zisman 58 Director
Robert B. Zoellick 44 Director
</TABLE>
Mr. Glenn R. Jones has served as Chairman of the Board of Directors and
Chief Executive Officer of the General Partner since its formation in 1970, and
he was President from June 1984 until April 1988. Mr. Jones is the sole
shareholder, President and Chairman of the Board of Directors of Jones
International, Ltd. He is also Chairman of the Board of Directors of the
subsidiaries of the General Partner and of certain other affiliates of the
General Partner. Mr. Jones has been involved in the cable television business in
various capacities since 1961, and he is a member of the Board of Directors and
of the Executive Committee of the National Cable Television Association. In
addition, Mr. Jones is a member of the Board of Education Council of the
National Alliance of Business. Mr. Jones is also a founding member of the James
Madison Council of the Library of Congress. Mr. Jones has been the recipient of
several awards including: the Grand Tam Award in 1989, the highest award from
the Cable Television Administration and Marketing Society; the President's Award
from the Cable Television Public Affairs Association in recognition of Jones
International's educational efforts through Mind Extension University (now
Knowledge TV); the Donald G. McGannon Award for the advancement of minorities
and women in cable from the United Church of Christ Office of Communications;
the STAR Award from American Women in Radio and Television, Inc. for exhibition
of a commitment to the issues and concerns of women in television and radio; the
Cableforce 2000 Accolade awarded by Women in Cable in recognition of the General
Partner's innovative employee programs; the Most Outstanding Corporate
Individual Achievement Award from the International Distance Learning Conference
for his contributions to distance education; the Golden Plate Award from the
American Academy of Achievement for his advances in distance education; the Man
of the Year named by the Denver chapter of the Achievement Rewards for College
Scientists; and in 1994 Mr. Jones was inducted into Broadcasting and Cable's
Hall of Fame.
26
<PAGE>
Mr. James B. O'Brien, the General Partner's President, joined the General
Partner in January 1982. Prior to being elected President and a Director of the
General Partner in December 1989, Mr. O'Brien served as a division manager,
director of operations planning/assistant to the CEO, Fund Vice President and
Group Vice President/Operations. Mr. O'Brien was appointed to the General
Partner's Executive Committee in August 1993. As President, he is responsible
for the day-to-day operations of the cable television systems managed and owned
by the General Partner. Mr. O'Brien is a board member of Cable Labs, Inc., the
research arm of the U.S. cable television industry. He also serves as the
Chairman of the Board of Directors of the Cable Television Administration and
Marketing Association and as a director and a member of the Executive Committee
of the Walter Kaitz Foundation, a foundation that places people of ethnic
minority groups in positions with cable television systems, networks and vendor
companies.
Ms. Ruth E. Warren joined the General Partner in August 1980 and has
served in various operational capacities, including system marketing manager,
director of marketing, assistant division manager, regional vice president and
Fund Vice President, since then. Ms. Warren was elected Group Vice
President/Operations of the General Partner in September 1990.
Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice
President/Financial Services. In September 1985, he was appointed Senior Vice
President/Financial Services. He was elected Treasurer of the General Partner
in August 1987, Vice President/Treasurer in April 1988 and Group Vice
President/Finance and Chief Financial Officer in October 1990.
Mr. Christopher J. Bowick joined the General Partner in September 1991 as
Group Vice President/Technology and Chief Technical Officer. Prior to joining
the General Partner, Mr. Bowick worked for Scientific Atlanta's Transmission
Systems Business Division in various technical management capacities since 1981,
and as Vice President of Engineering since 1989. Mr. Bowick also has served
since 1995 as President of Jones Futurex, Inc., a wholly owned subsidiary of the
General Partner that manufactures and markets data encryption products.
Ms. Cheryl M. Sprague joined the General Partner in November 1997 as
Group Vice President/Human Resources. Prior to November 1997 and since December
1995, Ms. Sprague served as Director, Human Resources for Westmoreland Coal
Company, where she was responsible for human resources management for said
company and three of its subsidiaries. From October 1993 to December 1995, Ms.
Sprague served as President of Peak Executive Resources, where she provided
consulting services in organizational development and human resources to
businesses experiencing organizational transition. From April 1992 to October
1993, Ms. Sprague was Vice President, Human Resources for Penrose-St. Francis
Healthcare System, where she was responsible for management of all human
resources activities. Ms. Sprague serves as an adjunct instructor at Regis
University and has earned the professional designation as a Senior Professional
in Human Resources from the Society for Human Resource Management and its
affiliate, the Human Resources Certification Board. Ms. Sprague is a past
president of the Colorado Human Resource Association and was named by that
association as the Colorado Human Resources Administrator of the Year in 1986.
Ms. Sprague also serves as a director on the Area VI Board for the Society for
Human Resource Management.
Ms. Cynthia A. Winning joined the General Partner as Group Vice
President/Marketing in December 1994. Previous to joining the General Partner,
Ms. Winning served since 1994 as the President of PRS Inc., Denver, Colorado, a
sports and event marketing company. From 1979 to 1981 and from 1986 to 1994,
Ms. Winning served as the Vice President and Director of Marketing for Citicorp
Retail Services, Inc., a provider of private-label credit cards for ten national
retail department store chains. From 1981 to 1986, Ms. Winning was the Director
of Marketing Services for Daniels & Associates cable television operations, as
well as the Western Division Marketing Director for Capital Cities Cable. Ms.
Winning also serves as a board member of Cities in Schools, a dropout
intervention/prevention program.
27
<PAGE>
Ms. Elizabeth M. Steele joined the General Partner in August 1987 as Vice
President/General Counsel and Secretary. From August 1980 until joining the
General Partner, Ms. Steele was an associate and then a partner at the Denver
law firm of Davis, Graham & Stubbs, which serves as counsel to the General
Partner.
Mr. Larry Kaschinske joined the General Partner in 1984 as a staff
accountant in the General Partner's former Wisconsin Division, was promoted to
Assistant Controller in 1990, named Controller in August 1994 and was elected
Vice President/Controller in June 1996.
Mr. Robert E. Cole was appointed a Director of the General Partner in
March 1996. Mr. Cole is currently self-employed as a partner of First Variable
Insurance Marketing and is responsible for marketing to National Association of
Securities Dealers, Inc. firms in northern California, Oregon, Washington and
Alaska. From 1993 to 1995, Mr. Cole was the Director of Marketing for Lamar Life
Insurance Company; from 1992 to 1993, Mr. Cole was Senior Vice President of PMI
Inc., a third party lender serving the special needs of Corporate Owned Life
Insurance (COLI) and from 1988 to 1992, Mr. Cole was the principal and co-
founder of a specialty investment banking firm that provided services to finance
the ownership and growth of emerging companies, productive assets and real
property. Mr. Cole is a Certified Financial Planner and a former United States
Naval Aviator.
Mr. Josef J. Fridman was appointed a Director of the General Partner in
February 1998. Mr. Fridman is currently senior vice-president, law and
corporate secretary of BCE Inc., Canada's largest telecommunications company.
Mr. Fridman joined Bell Canada, a wholly owned subsidiary of BCE Inc., in 1969,
and has held increasingly senior positions with Bell Canada and BCE Inc. since
such time. Mr. Fridman has held his current position since January 1991. Mr.
Fridman's directorships include Telesat Canada, TMI Communications, Inc.,
Telebec Itee, BCI Telecom Holding Inc. and BCE Corporate Services Inc. He is a
member of the Quebec Bar Association, the Canadian, American and International
Bar Associations and the Lord Reading Law Society. Mr. Fridman is a governor of
the Quebec Bar Association.
Mr. William E. Frenzel was appointed a Director of the General Partner in
April 1995. Mr. Frenzel has been a Guest Scholar since 1991 with the Brookings
Institution, a research organization located in Washington D. C. Until his
retirement in January 1991, Mr. Frenzel served for twenty years in the United
States House of Representatives, representing the State of Minnesota, where he
was a member of the House Ways and Means Committee and its Trade Subcommittee,
the Congressional Representative to the General Agreement on Tariffs and Trade
(GATT), the Ranking Minority Member on the House Budget Committee and a member
of the National Economic Commission. Mr. Frenzel also served in the Minnesota
Legislature for eight years. He is a Distinguished Fellow of the Tax
Foundation, Vice Chairman of the Eurasia Foundation, a Board Member of the U.S.-
Japan Foundation, the Close-Up Foundation, Sit Mutual Funds and Chairman of the
Japan-America Society of Washington.
Mr. Donald L. Jacobs was appointed a Director of the General Partner in
April 1995. Mr. Jacobs is a retired executive officer of TRW. Prior to his
retirement, he was Vice President and Deputy Manager of the Space and Defense
Sector; prior to that appointment, he was the Vice President and General Manager
of the Defense Systems Group and prior to his appointment as Group General
Manager, he was President of ESL, Inc., a wholly owned subsidiary of TRW.
During his career, Mr. Jacobs served on several corporate, professional and
civic boards.
Mr. Robert Kearney was appointed a director of the General Partner in
July 1997. Mr. Kearney is a retired executive officer of Bell Canada. Prior to
his retirement in December 1993, Mr. Kearney was the President and Chief
Executive Officer of Bell Canada. He served as Chairman of BCE Canadian Telecom
Group in 1994 and as Deputy Chairman of BCI Management Limited in 1995. During
his career, Mr. Kearney served in a variety of capacities in the Canadian,
American and International Standards organizations, and he has served on several
corporate, professional and civic boards.
Mr. James J. Krejci is President and CEO of Imagelink Technologies, Inc.,
a privately financed company with leading technology in the desktop or personal
computer videoconferencing market. Prior to joining
28
<PAGE>
Imagelink Technologies in July 1996, Mr. Krejci was President of the
International Division of International Gaming Technology, the world's largest
gaming equipment manufacturer, with headquarters in Reno, Nevada. Prior to
joining IGT in May 1994, Mr. Krejci was Group Vice President of Jones
International, Ltd. and was Group Vice President of the General Partner. He also
served as an officer of subsidiaries of Jones International, Ltd. until leaving
the General Partner in May 1994. Mr. Krejci started his career as an electronics
research engineer with the Allen-Bradley Company, then moved to the 3M Company,
General Electric and Becton Dickinson until March 1985 when he joined Jones
International, Ltd. Mr. Krejci has been a director of the General Partner since
August 1987.
Mr. Raphael M. Solot was appointed a Director of the General Partner in
March 1996. Mr. Solot is an attorney and has practiced law for 34 years with an
emphasis on franchise, corporate and partnership law and complex litigation.
Mr. Howard O. Thrall was appointed a Director of the General Partner in
March 1996. Mr. Thrall had previously served as a Director of the General
Partner from December 1988 to December 1994. Mr. Thrall is a management and
international marketing consultant, having active assignments with First
National Net, Inc., LEP Technologies, Cheong Kang Associates (Korea), Aero
Investment Alliance, Inc. and Western Real Estate Partners, among others. From
September 1993 through July 1996, Mr. Thrall served as Vice President of Sales,
Asian Region, for World Airways, Inc. headquartered at the Washington Dulles
International Airport. From 1984 until August 1993, Mr. Thrall was with the
McDonnell Douglas Corporation, where he concluded as a Regional Vice President,
Commercial Marketing with the Douglas Aircraft Company subsidiary.
Mr. Siim A. Vanaselja was appointed a Director of the General Partner in
August 1996. He is the Executive Vice President and Chief Financial Officer of
Bell Canada International Inc. and Vice President of BCI Telecom Holding Inc.
Mr. Vanaselja joined BCE Inc., Canada's largest telecommunications company, in
February 1994 as Assistant Vice-President, International Taxation. In June
1994, he was appointed Assistant Vice-President and Director of Taxation, and in
February 1995, Mr. Vanaselja was appointed Vice-President, Taxation. On August
1, 1996, Mr. Vanaselja was appointed the Executive Vice President and Chief
Financial Officer of Bell Canada International Inc., a subsidiary of BCE Inc.
Prior to joining BCE Inc. and since August 1989, Mr. Vanaselja was a partner in
the Toronto office of KPMG Peat Marwick Thorne. Mr. Vanaselja has been a member
of the Institute of Chartered Accountants of Ontario since 1982 and is a member
of the Canadian Tax Foundation, the Tax Executives Institute and the
International Fiscal Association.
Mr. Sanford Zisman was appointed a director of the General Partner in
June 1996. Mr. Zisman is a principal in the law firm of Zisman & Ingraham, P.C.
of Denver, Colorado and he has practiced law for 32 years, specializing in the
areas of tax, business and estate planning and probate administration. Mr.
Zisman was a member of the Board of Directors of Saint Joseph Hospital, the
largest hospital in Colorado, serving at various times as Chairman of the Board,
Chairman of the Finance Committee and Chairman of the Strategic Planning
Committee. Since 1982, he has also served on the Board of Directors of Maxim
Series Fund, Inc., a subsidiary of Great-West Life Assurance Company.
Mr. Robert B. Zoellick was appointed a Director of the General Partner in
April 1995. Mr. Zoellick is the John M. Olin Professor at the U.S. Naval
Academy for the 1997-1998 term. From 1993 through 1997, he was an Executive
Vice President at Fannie Mae, a federally chartered and stockholder-owned
corporation that is the largest housing finance investor in the United States.
From August 1992 to January 1993, Mr. Zoellick served as Deputy Chief of Staff
of the White House and Assistant to the President. From May 1991 to August
1992, Mr. Zoellick served concurrently as the Under Secretary of State for
Economic and Agricultural Affairs and as Counselor of the Department of State, a
post he assumed in March 1989. From 1985 to 1988, Mr. Zoellick served at the
Department of Treasury in a number of capacities, including Counselor to the
Secretary. Mr. Zoellick currently serves on the boards of Alliance Capital and
Said Holdings.
29
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
The Partnership has no employees; however, various personnel are required
to operate the Systems. Such personnel are employed by the General Partner and,
pursuant to the terms of the limited partnership agreement of the Partnership,
the cost of such employment is charged by the General Partner to the Partnership
as a direct reimbursement item. See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
----------------------------------------------------------------------
As of Febuary 16, 1998, no person or entity owned more than 5 percent of
the limited partnership interests of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
The General Partner and its affiliates engage in certain transactions with
the Partnership. The General Partner believes that the terms of such
transactions are generally as favorable as could be obtained by the Partnership
from unaffiliated parties. This determination has been made by the General
Partner in good faith, but none of the terms were or will be negotiated at
arm's-length and there can be no assurance that the terms of such transactions
have been or will be as favorable as those that could have been obtained by the
Partnership from unaffiliated parties.
TRANSACTIONS WITH THE GENERAL PARTNER
The General Partner charges the Partnership a 5 percent management fee, and
the General Partner is reimbursed for certain allocated overhead and
administrative expenses. These expenses represent the salaries and benefits
paid to corporate personnel, rent, data processing services and other corporate
facilities costs. Such personnel provide engineering, marketing,
administrative, accounting, legal and investor relations services to the
Partnership. Allocations of personnel costs are based primarily on actual time
spent by employees of the General Partner with respect to each partnership
managed. Remaining expenses are allocated based on the pro rata relationship of
the Partnership's revenues to the total revenues of all systems owned or managed
by the General Partner and certain of its subsidiaries. Systems owned by the
General Partner and all other systems owned by partnerships for which Jones
Intercable, Inc. is the general partner are also allocated a proportionate share
of these expenses.
The General Partner from time to time also advances funds to the
Partnership and charges interest on the balance payable. The interest rate
charged approximates the General Partner's weighted average cost of borrowing.
TRANSACTIONS WITH AFFILIATES
Knowledge TV, Inc., a company owned 67 percent by Jones Education Group,
Ltd., 7 percent by Mr. Jones and 26 percent by the General Partner, operates the
television network JEC Knowledge TV. JEC Knowledge TV provides programming
related to computers and technology; business, careers and finance; health and
wellness; and global culture and languages. Knowledge TV, Inc. sells its
programming to the Partnership's Systems.
Jones Computer Network, Ltd., a wholly owned subsidiary of Jones Education
Group, Ltd., a company owned 64 percent by Jones International, Ltd., 16 percent
by the General Partner, 12 percent by BCI and 8 percent by Mr. Jones, operated
the television network Jones Computer Network. This network provided
programming focused primarily on computers and technology. Jones Computer
Network sold its programming to the Partnership's Systems. Jones Computer
Network, Ltd. terminated its programming in April 1997.
30
<PAGE>
The Great American Country network provides country music video programming
to the cable television systems owned by the Partnership. This network, owned
and operated by Great American Country, Inc., a subsidiary of Jones
International Networks, Ltd., an affiliate of the General Partner, commenced
service in 1996 in the Partnership's Systems.
Jones Galactic Radio, Inc. is a subsidiary of Jones International Networks,
Ltd., an affiliate of the General Partner. Superaudio, a joint venture between
Jones Galactic Radio, Inc. and an unaffiliated entity, provides audio
programming to the Partnership's Systems.
The Product Information Network Venture (the "PIN Venture") is a venture
among a subsidiary of Jones International Networks, Ltd., an affiliate of the
General Partner, and two unaffiliated cable system operators. The PIN Venture
operates the Product Information Network ("PIN"), which is a 24-hour network
that airs long-form advertising generally known as "infomercials." The PIN
Venture generally makes incentive payments of approximately 60 percent of its
net advertising revenue to the cable systems that carry its programming. The
Partnership's systems carry PIN for all or part of each day. Revenues received
by the Partnership from the PIN Venture relating to the Partnership's Systems
totaled approximately $99,103 for the year ended December 31, 1997.
The charges to the Partnership for related party transactions are as
follows for the periods indicated:
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------
1997 1996 1995
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Management fees $1,849,324 $1,724,624 $1,604,027
Allocation of expenses 2,118,521 2,258,270 2,311,202
Interest expense 10,621 15,139 16,426
Amount of advances outstanding 0 0 373,311
Highest amount of advances outstanding 90,176 27,647 373,311
Programming fees:
Knowledge TV, Inc. 62,670 55,632 48,703
Jones Computer Network, Ltd. 42,153 58,889 53,101
Great American Country 66,264 34,642 0
Superaudio 56,338 51,583 45,536
</TABLE>
31
<PAGE>
PART IV.
--------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
<C> <C> <S>
(a) 1. See index to financial statements for list of financial statements
and exhibits thereto filed as a part of this report.
3. The following exhibits are filed herewith.
4.1 Limited Partnership Agreement of Cable TV Fund 12-A. (1)
10.1.1 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of Fort
Myers, Florida (Fund 12-A). (1)
10.1.2 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Lee County,
Florida (Fund 12-A). (1)
10.1.3 Renewal of Permit dated 3/4/92 (Fund 12-A). (2)
10.1.4 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Unincorporated portions of Cook County, Illinois (Fund 12-A). (3)
10.1.5 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village of
Grayslake, Illinois (Fund 12-A).
10.1.6 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Unincorporated Area of Lake County, Illinois (Fund 12-A). (1)
10.1.7 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village of
Libertyville, Illinois (Fund 12-A).
10.1.8 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village of
Mundelein, Illinois (Fund 12-A).
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village of
Orland Park, Illinois (Fund 12-A). (5)
10.1.10 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village of
Park Forest, Illinois (Fund 12-A). (5)
10.1.11 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village of
Wauconda, Illinois (Fund 12-A). (1)
10.2.1 Credit Agreement, dated as of January 30, 1995, between Cable TV
Fund 12-A, Ltd. and Toronto Dominion (Texas), Inc., for itself and
as agent for various lenders. (4)
10.3.1 Purchase and Sale Agreement dated March 1998, among Cable TV Fund
12-A, Ltd., Jones Intercable, Inc. and Olympus Communications,
L.P.
27 Financial Data Schedule
__________
</TABLE>
32
<PAGE>
(1) Incorporated by reference from Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1985 (Commission File
No. 0-13193).
(2) Incorporated by reference from Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1992 (Commission File
No. 0-13193).
(3) Incorporated by reference from Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1987 (Commission File Nos.
0-13192, 0-13807, 0-13964 and 0-14206).
(4) Incorporated by reference from Registration's Report on Form 10-K
for the fiscal year ended December 31, 1994.
(5) Incorporated by reference from Registration's Report on Form 10-K
for the fiscal year ended December 31, 1996.
(b) Reports on Form 8-K.
None.
33
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CABLE TV FUND 12-A, LTD.
a Colorado limited partnership
By: Jones Intercable, Inc.
By: /s/ Glenn R. Jones
------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 23, 1997 Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Glenn R. Jones
------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 23, 1997 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 23, 1997 (Principal Financial Officer)
By: /s/ Larry Kaschinske
--------------------
Larry Kaschinske
Vice President/Controller
Dated: March 23, 1997 (Principal Accounting Officer)
By: /s/ James B. O'Brien
--------------------
James B. O'Brien
Dated: March 23, 1997 President and Director
By: /s/ Robert E. Cole
------------------
Robert E. Cole
Dated: March 23, 1997 Director
By: /s/ William E. Frenzel
----------------------
William E. Frenzel
Dated: March 23, 1997 Director
34
<PAGE>
By: ----------------------
Josef J. Fridman
Dated: March 23, 1997 Director
By: ----------------------
Donald L. Jacobs
Dated: March 23, 1997 Director
By: ----------------------
Robert Kearney
Dated: March 23, 1997 Director
By: /s/ James J. Krejci
----------------------
James J. Krejci
Dated: March 23, 1997 Director
By: /s/ Raphael M. Solot
----------------------
Raphael M. Solot
Dated: March 23, 1997 Director
/s/ Howard O. Thrall
By: ----------------------
Howard O. Thrall
Dated: March 23, 1997 Director
By: ----------------------
Siim A. Vanaselja
Dated: March 23, 1997 Director
By: /s/ Sanford Zisman
----------------------
Sanford Zisman
Dated: March 23, 1997 Director
By: /s/ Robert B. Zoellick
----------------------
Robert B. Zoellick
Dated: March 23, 1997 Director
35
<PAGE>
EXHIBIT 10.1.5
CHAPTER 17
VILLAGE OF GRAYSLAKE
CABLE TELEVISION FRANCHISE ORDINANCE
17.01 SHORT TITLE.
This chapter shall be known and may be cited as the "Village of Grayslake
Cable Television Franchise Ordinance."
17.02 DEFINITIONS.
For the purpose of this chapter the following terms, phrases, words, and
their derivations shall have the meaning given herein:
"Additional Service" means any subscriber service provided by the grantee
for which a special charge is made based on program or service content, time, or
spectrum space usage.
"Basic Service" means all subscriber services provided by the Grantee in
one or more service tiers for an established regular monthly fee, which includes
at a minimum the delivery of local broadcast stations, and public, educational
and government access channels. Basic Service does not include optional program
and satellite service tiers, a la carte services, per channel, per program, or
auxiliary services for which a separate charge is made. However, Grantee may
include other satellite signals on the Basic Service tier.
"Board" means the Village Board of Trustees.
"Cable Service" means the one-way transmission to subscribers of video
programming or other programming service and subscriber interaction, if any,
which is required for the selection or use of such programming or other
programming service. This definition does not authorize, and shall not be
construed, interpreted, or applied to authorize, the use of the Cable System for
telephone, data, or voice communication services, which services are not
authorized by this chapter.
"Cable System" or "System" or "Cable Television System" means a system of
antennas, cables, wires, lines, towers, wave guides, or other conductors,
converters, equipment or facilities, designed and constructed for the purpose of
producing, receiving, transmitting, amplifying and distributing, audio, video,
and other forms of electronic, electrical or optical signals, which includes
cable television service and which is located in the Village. The definition
shall not include any such facility that serves or will serve only subscribers
without using Village rights-of-way. The definition of "Cable System" shall not
be construed, interpreted, or applied to authorize telephone, data, or voice
communication services, and no such telephone, data, or voice communication
services are authorized by this chapter. In addition, the definition of "Cable
System" shall not be deemed to circumscribe any valid authority of any
governmental body, including the Village, to regulate the activities of
telephone or telegraph companies, or the provision of any service over the Cable
System that is not a "cable service" as such term is defined herein.
<PAGE>
"Class IV Channel" means a signaling path provided by a cable
communications system to transmit signals of any type from a subscriber terminal
to another point in the cable communications system.
"Complaint" means any complaint regarding service, picture quality, charges
or other matter relating to the cable system made by a customer to the Grantee,
whether in written or oral form.
"Control" or "Controlling Interest" means actual working control or
ownership of a System in whatever manner exercised. A rebuttable presumption of
the existence of control or a controlling interest shall arise from the
beneficial ownership, directly or indirectly, by any Person or Entity (except
underwriters during the period in which they are offering securities to the
public) of 5 percent or more of a Cable System or the Franchise under which the
System is operated. A change in the control or controlling interest of an Entity
which has control or a controlling interest in a Grantee shall constitute a
change in the control or controlling interest of the System under the same
criteria. Control or controlling interest as used herein may be held
simultaneously by more than one Person or group of Persons.
"Converter" means an electronic device which converts signals to a
frequency not susceptible to interference, within the television receiver of a
subscriber, and by an appropriate channel selector also permits a subscriber to
view more than 12 channels delivered by the system at designated converter dial
locations.
"FCC" means the Federal Communications Commission and any legally
appointed, designated or elected agent or successor.
"Grantee" means a person or entity to whom or which a franchise under this
chapter is granted by the Village, along with the lawful successors or assigns
of such person or entity.
"Gross Revenues" means all revenue collected directly or indirectly by the
Grantee, arising from or attributable to the provision of cable service by the
Grantee within the Village including, but not limited to: fees charged
Subscribers for any basic, optional, premium, per-channel or per-program
service; franchise fees; installation and re-connection fees; leased channel
fees; converter rentals and/or sales; program guide revenues; studio or
production equipment rentals; late or administrative fees; upgrade, downgrade or
other change-in-service fees; advertising revenues; revenues from home shopping
and bank-at-home channels; revenues from the sale, exchange, use or cable cast
of any programming developed on the system for community or institutional use;
and any value (at retail price levels) of any non-monetary remuneration received
by Grantee in consideration of the performance of advertising or any other
service of the system; provided, however, that this shall not include any taxes
on services furnished by the Grantee herein imposed directly upon any subscriber
or user by the state, local or other governmental unit and collected by the
Grantee on behalf of the governmental unit.
"Installation" means the connection of the System from feeder cable to
subscribers'terminals.
"May" is permissive.
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<PAGE>
"Monitoring" means observing a communications signal, or the absence of a
signal, where the observer is neither the subscriber nor the programmer, whether
the signal is observed by visual or electronic means, for any purpose
whatsoever; provided monitoring shall not include system-wide, non-individually
addressed sweeps of the system for purposes of verifying system integrity,
controlling return paths transmissions, or billing for pay services.
"Normal Business Hours" means those hours during which similar businesses
in the Village are open to serve customers. In all cases, normal business hours
must include some evening hours at least one night per week, and some weekend
hours.
"Normal Operating Conditions" means those service conditions that are
within the control of the Grantee. Those conditions that are not within the
control of the Grantee are defined in Section 40 of this chapter.
"Person" means any natural person, or any association, firm, partnership,
joint venture, corporation, or other legally recognized entity or organization,
whether for-profit or not-for-profit, but excluding the Village.
"Public Way" means, except where expressly limited by this chapter or a
franchise and, in any event, only to the extent necessary to permit the
installation and maintenance of a Cable System, the surface, the air space above
the surface, and the area below the surface of any public street, highway, lane,
path, alley, sidewalk boulevard, drive, bridge, conduit, tunnel, park, park-way,
waterway, utility easement (as defined in Section 541 of the Cable Act) or other
public right-of-way now or hereafter held by, or dedicated to, the Village in
which the rights and title of the Village are such as to entitle the Village and
the Grantee to the use thereof for the purpose of installing and maintaining the
Grantee's Cable System. No reference in this chapter to "Public Way" shall be
deemed to be a representation or guarantee by the Village that its title or
interest in any property is sufficient to permit its use for such purpose, and a
franchise shall, by the use of such term, be deemed to grant only such rights to
use property in the Village as the Village may have the right and power to grant
in such franchise.
"Shall" is mandatory.
"Service Area" means all areas within the Village corporate limits.
"Service Interruption" or "Outage" means the loss of either picture or
sound or both for any channel for single or multiple subscriber(s).
"Street" means the surface of and all rights-of-way and the space above and
below any public street, road, highway, freeway, lane, path, Public Way or
place, sidewalk, alley, court, boulevard, parkway, drive or easement now or
hereafter held by the Village for the purpose of public travel.
"Subscriber" means any person, firm, Grantee, corporation, or association
lawfully receiving Cable Service provided by a Grantee pursuant to this chapter.
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<PAGE>
"User" means a party utilizing a cable television system channel for
purposes of production or transmission of material to subscribers, as contrasted
with receipt thereof in a subscriber capacity.
"Village" means the Village of Grayslake, Illinois.
"Village Administrator" means the Village Administrator of the Village or
his or her designee.
17.03 RIGHTS AND PRIVILEGES OF GRANTEE.
Any cable television franchise granted by the Village shall grant to the
Grantee the right and privilege to erect, construct, operate, and maintain in,
upon, along, across, above, over, and under the streets now in existence and as
may be created or established during its terms any poles, wires, cable,
underground conduits, manholes, and other television conductors and fixtures
necessary for the maintenance and operation of a Cable System, but only in
strict compliance with the provisions of such franchise and this chapter. Each
such franchise shall include the following terms: (1) a franchise fee not less
than the fee required pursuant to Section 29 of this chapter; (2) performance
security not less than the security required pursuant to Section 14 of this
chapter; (3) a franchise term not longer than the maximum term provided in
Section 6 of this chapter, and (4) specially designated noncommercial channels
for use by local governmental, educational, and public authorities as provided
in Section 35 of this chapter.
17.04 AGREEMENT AND INCORPORATION OF APPLICATION BY REFERENCE.
(a) The execution of a franchise agreement by the Grantee shall be
agreement and acknowledgment of the Grantee to be bound by all the terms and
conditions contained in this chapter.
(b) The Grantee shall provide all services specifically set forth in its
application and shall provide cable television service within the confines of
the Village; and by its acceptance of the franchise, the Grantee specifically
grants and agrees that its application is thereby incorporated by reference and
made a part of the franchise.
17.05 FRANCHISE TERRITORY.
Any franchise is for the current territorial limits of the Village and for
any area henceforth added thereto during the term of the franchise.
17.06 DURATION AND ACCEPTANCE OF FRANCHISE.
Any franchise and the rights, privileges and authority hereby authorized
shall take effect and be in force from and after the signing of a franchise
agreement by the Village, as provided by law, and shall continue in force and
effect for an initial term of no longer than 12 years; provided, however, that
such franchise shall have no force or effect and shall be null and void except
only if the Grantee, within 30 days after the date of Village approval of the
franchise, shall file with the Village its unconditional acceptance of the
franchise and promise to comply with and abide by all
-4-
<PAGE>
of its provisions, terms and conditions and the provisions of this chapter. Such
acceptance and promise shall be in writing duly executed and sworn to, by, or on
behalf of the Grantee before a notary public or other officer authorized by law
to administer oaths. Such franchise shall be non-exclusive and revocable.
17.07 FRANCHISE RENEWAL.
(a) To the extent applicable, current federal procedures and standards
pursuant to 47 U.S.C. (S) 546 shall govern the renewal of any franchise awarded
under this chapter.
(b) In the event that any or all of the applicable provisions of federal
law are repealed or otherwise modified, and to the full extent consistent with
such applicable provisions then in effect, the following section(s) shall apply:
(1) At least 24 months prior to the expiration of the franchise, the
Grantee shall inform the Village in writing of its intent to seek
renewal of the franchise.
(2) The Grantee shall submit a proposal for renewal which
demonstrates:
a. That it has been and continues to be in substantial
compliance with the terms, conditions, and limitations of
this chapter and its franchise;
b. That its system has been installed, constructed, maintained
and operated in accordance with the accepted standards of
the industry, and this chapter and its franchise;
C. That it has the legal, technical, financial, and other
qualifications to provide the services, facilities, and
equipment set forth in its proposal; and
d. That it has made a good faith effort to provide services
and facilities which accommodate the demonstrated needs and
interests of the community as may be reasonably ascertained
by the Village, with public input; and that it has made a
good faith effort to maintain, operate, and extend its
system as the state of the art progresses so as to assure
its Subscribers high quality service, balanced against the
costs of such needs and interests.
(3) The Village shall proceed to determine whether the Grantee has
satisfactorily performed its obligations under the franchise. To
determine satisfactory performance, the Village shall consider
technical developments, performance of the system and the quality
of the operator's service, including signal quality, response to
customer complaints, and billing practices, but without regard to
the mix or quality of cable services or other services provided
over the system. The Village shall also consider the Grantee's
reports made to the Village and to the FCC, and the Village may
require the Grantee to make
-5-
<PAGE>
available specified records, documents, and information for this
purpose, and may inquire specifically whether the Grantee will
supply services sufficient to meet community needs and interests
in light of the costs of such needs and interests. Provision
shall be made for public comment with adequate prior notice of
at least 10 days.
(4) The Village shall then prepare any amendments to this chapter
and the franchise that it believes necessary.
(5) If the Village finds the Grantee's performance satisfactory, and
finds the Grantee's technical, legal, and financial abilities
acceptable, and finds the Grantee's renewal proposal meets the
future cable-related needs of the Village, balanced against the
costs of meeting these needs and interests, a new franchise
shall be granted pursuant to this chapter as amended for a
period to be determined by the Village.
(6) If the Grantee is determined by the Village to have performed
unsatisfactorily, new applicants may be sought and evaluated and
a franchise award shall be made by the Village according to
franchising procedures adopted by the Village.
17.08 FRANCHISE REVIEW AND MODIFICATION.
(a) To the extent applicable, the modification provisions of the Cable
Act, as the same may be amended from time to time, shall govern the procedures
and standards for modification of a franchise. The Grantee may file a request
for modification of a franchise with the Village in accordance with said
modification provisions at any time during the term of the franchise.
(b) To the extent that the modification provisions of the Cable Act, as
the same may be amended from time to time, are repealed or otherwise not
applicable, a franchise may be modified to the extent pen-permitted by
applicable law, according to the standards set forth in Subsection (c) below and
in other applicable provisions of this chapter.
(c) It shall be the policy of the Village to amend a franchise with the
consent of the Grantee when necessary to enable the Grantee to take advantage of
technological advancements that will afford the Grantee an opportunity to more
effectively, efficiently, or economically serve the Subscribers; provided,
however, that this Subsection shall not be construed to require the Village to
adopt any such amendment. Further, the Village may modify or revise the terms of
a franchise at any time if necessary to protect the public health or safety.
17.09 POLICE POWERS.
(a) In accepting a franchise, the Grantee acknowledges that its rights
thereunder are subject to the police power of the Village to adopt and enforce
general ordinances necessary to the safety and welfare of the public; and it
agrees to comply with all applicable general laws and ordinances enacted by the
Village pursuant to such power.
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<PAGE>
(b) Any conflict between the provisions of a franchise and any other
present or future lawful exercise of the Village's police powers shall be
resolved in favor of the latter.
17.10 FRANCHISE REQUIRED.
No cable television system shall be allowed to operate or to occupy or use
any Public Way for system installation and maintenance purposes without a
franchise.
17.11 USE OF GRANTEE FACILITIES.
The Village shall have the right to install and maintain free of charge
upon the poles of the Grantee any wire or pole fixtures that do not unreasonably
interfere with the cable television system operations of the Grantee. The
Village shall indemnify and hold harmless the Grantee from any claim that might
arise due to or as a result of the Village's use.
17.12 INITIAL FRANCHISE COSTS.
Grantee shall pay all costs and charges incidental to the awarding or
enforcing of its initial franchise, including but not limited to:
administrative, engineering, legal and consulting expenses, all costs of
publications of notices prior to any public meeting provided for pursuant to
this chapter, and any costs not covered by application fees incurred by the
Village in its study, preparation of proposal documents, evaluation of all
applications, and examinations of the applicant's qualifications.
17.13 NOTICES.
All notices from the Grantee to the Village pursuant to any franchise
shall be sent to the Office of the Village President, with a copy to the Village
Administrator. The Grantee shall maintain with the Village, throughout the term
of the franchise, an address for service of notices by mail. The Grantee shall
maintain a central office to address any issues relating to operating under this
chapter.
17.14 LETTER OF CREDIT AND CASH SECURITY DEPOSIT.
(a) Within 15 days after the award of an initial franchise, the Grantee
shall deposit with the Village either an irrevocable letter of credit from a
financial institution acceptable to the Village Board of Trustees or a cash
security deposit in the amount of $100,000.00. The form and content of such
letter of credit shall be approved by the Village Attorney. No interest shall be
paid on any cash deposit.
(b) Within 15 days after the award of a renewal franchise, the Grantee
shall deposit with the Village an irrevocable letter of credit from a financial
institution acceptable to the Village Board of Trustees in the amount of
$25,000.00 and a cash security deposit in the amount of $5,000.00. The form and
content of such letter of credit shall be approved by the Village Attorney. No
interest shall be paid on any cash security deposit.
-7-
<PAGE>
(c) The letter of credit and cash security deposit shall be used to ensure
the faithful performance of the Grantee of all provisions of this chapter, and
to ensure compliance with all orders, permits and directions of any agency,
commission, board, department, division, or office of the Village having
jurisdiction over its acts or defaults under this chapter, and to ensure the
payment by the Grantee of any claims, liens, and taxes and penalties assessed
pursuant to Section 47 of this chapter due the Village which arise by reason of
the construction, operation or maintenance of the system.
(d) The letter of credit and cash security deposit shall be maintained at
the amount established herein for the entire term of the franchise, even if
amounts have to be withdrawn pursuant to this chapter. Grantee shall promptly
replace any amounts withdrawn from the letter of credit or security deposit.
(e) If the Grantee fails to pay to the Village any compensation within the
time fixed herein; or fails to pay to the Village any penalties assessed on
taxes due and unpaid; or fails to repay the Village any damages, costs or
expenses which the Village incurs as a result of the Grantee's failure to comply
with all rules, regulations, orders, permits, and other directives of the
Village issued pursuant to a franchise or which the Village is compelled to pay
by reason of any act or default of the Grantee in connection with a franchise;
or fails to properly and adequately restore any public way, public property or
private property disturbed by the Grantee's activities; or fails to pay any
costs incurred by the Village in connection with the award of any franchise or
renewal franchise; or otherwise fails to faithfully perform the duties and
responsibilities of a franchise then the Village may withdraw money from the
letter of credit or cash security fund in accordance with the procedures set
forth in Subsection (f) below.
(f) The Village shall provide Grantee with written notice informing Grantee
that such amounts are due to the Village. The written notice shall describe, in
reasonable detail, the reasons for the assessment. The Grantee shall have 15
days subsequent to receipt of the notice within which to cure every failure
cited by the Village or to notify the village that there is a dispute as to
whether Grantee believes such amounts are due the Village. Such notice by the
Grantee to the Village shall specify with particularity the basis of Grantee's
belief that such monies are not due the Village.
(g) The rights reserved to the Village with respect to the letter of credit
and cash security deposit are in addition to all other rights of the Village,
whether reserved by the franchise or authorized by law, and no action,
proceeding or exercise of a right with respect to such letter of credit and
security deposit shall affect any other right the Village may have.
(h) The letter of credit shall contain the following endorsement: "It is
hereby understood and agreed that this letter of credit may not be canceled by
the issuer bank nor the intention not to renew be stated by the issuer bank
until 45 days after receipt by the Village, by registered mail, of a written
notice of such intention to cancel or not to renew."
(i) Receipt of the 45-day notice by the Village shall be construed as a
default granting the Village the right to immediate payment from the issuer bank
of the entire amount of the letter of credit.
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<PAGE>
(j) The Village, at any time during the term of a franchise, may waive, in
writing, Grantee's requirement to maintain a letter of credit or cash security
deposit.
17.15 CONSTRUCTION BOND.
(a) Prior to being approved for an initial installation of a system, the
Grantee shall file with the Village a construction bond in the amount of not
less than 110 percent of the costs to install the System in the service area
contained in the application or renewal proposal in favor of the Village. This
bond shall be maintained throughout the construction period and until such time
as determined by the Village, unless specified in the franchise agreement.
(b) Prior to being approved for an upgrade of the system that involves
significant excavation or other disturbance of Public Way, the Grantee shall
file with the Village a performance bond in the amount of not less than
$100,000.00. This bond shall be maintained throughout the upgrade period and
until such time as determined by the Village, unless specified in the franchise
agreement.
(c) If the Grantee fails to diligently pursue and complete the construction
required for the installation or upgrade of its cable system, or fails to well
and truly observe, fulfill and perform each term and condition of this chapter
or of the franchise as it relates to construction, installation or upgrade of
the system, then there shall be recoverable jointly and severally, from the
principal and surety of the bond, the cost of completing such construction and
any damages or loss suffered by the Village as a result, including the full
amount of any compensation, indemnification, or cost of removal or abandonment
of any property of the Grantee, plus a reasonable allowance for attorney's fees,
including the Village's legal staff, and costs, up to the full amount of the
bond. This Section shall be an additional remedy for any and all violations
outlined in Subsection 14(e).
(d) The bond shall contain the following endorsement: "It is hereby
understood and agreed that this bond may not be canceled by the surety nor the
intention not to renew be stated by the surety until 45 days after receipt by
the Village, by registered mail, a written notice of such intent to cancel or
not to renew."
(e) Upon receipt of a 45-day notice, this shall be construed as default
granting the Village the right to demand payment on the bond.
(f) The Village, at any time during the term of this chapter, may, in
writing, waive or reduce Grantee's requirement to maintain a performance bond.
17.16 LIABILITY AND INSURANCE.
(a) The Grantee shall maintain and by its acceptance of a franchise
specifically agrees that it will maintain throughout the term of the franchise,
liability insurance insuring the Grantee and the Village and the Village's
officers, boards, commissions, elected and appointed officials, agents, and
employees, in the minimum amounts of-.
(1) $2,000,000.00 for bodily injury or death to each person;
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(2) $3,000,000.00 for bodily injury or death from any one accident;
(3) $3,000,000.00 for property damage from any one accident;
(4) $2,000,000.00 for all other types of liability.
(b) The Grantee shall carry and maintain in its own name automobile
liability insurance with a limit of $2,000,000 for each person and $2,000,000
for each accident for property damage with respect to owned and non-owned
automobiles for the operation of which the Grantee is responsible
(c) The certificate of insurance obtained by the Grantee in compliance
with this Section must be approved by the Village Attorney and such insurance
policy certificate of insurance, along with written evidence of payment of
required premiums, shall be filed and maintained with the Village during the
term of the franchise. The Grantee shall immediately advise the Village Attorney
of any litigation that may develop that would affect this insurance.
(d) Neither the provisions of this Section, nor any damages recovered by
the Village thereunder, shall be construed to or limit the liability of the
Grantee under any franchise issued hereunder or for damages.
(e) Such insurance policies provided for herein shall name the Grantor,
its officers, boards, commissions, agents and employees as additional insured,
and shall be primary to any insurance carried by the Grantor. The insurance
policies required by this Section shall be carried and maintained by the Grantee
throughout the term of the franchise and such other period of time during which
the Grantee operates or is engaged in the removal of its cable system. Each
policy shall contain the following endorsement: "It is hereby understood and
agreed that this insurance policy may not be canceled by the surety nor the
intention not to renew be stated by the surety until 30 days after receipt by
the Village, by registered mail, of written notice of such intention to cancel
or not to renew."
17.17 INDEMNIFICATION.
(a) The Village shall not at any time be liable for injury or damage
occurring to any Person or property from any cause whatsoever arising out of the
construction, maintenance, repair, use, operation, condition or dismantling of
the Grantee's Cable Television System or due to the act or omission of any
Person or entity other than the Village or those Persons or entities for which
the Village is legally liable as a matter of law.
(b) The Grantee shall, at its sole cost and expense, indemnify and hold
harmless the Village, all associated, affiliated, allied and subsidiary entities
of the Village now existing or hereinafter created, and their respective
officers, boards, commissions, employees, agents, attorneys and contractors
(hereinafter referred to as "Indemnitees'~ from and against:
(1) Any and all liabilities, obligations, damages, penalties, claims,
liens, costs, charges, losses and expenses (including, without limitation,
fees and
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expenses of attorneys, expert witnesses and consultants), which may be
imposed upon, incurred by or asserted against the Indemnitees by
reason of any act or omission of the Grantee, its personnel,
employees, agents, contractors or subcontractors, resulting in
personal injury, bodily injury, sickness, disease or death to any
Person or damage to, loss of or destruction of tangible or intangible
property, libel, slander, invasion of privacy and unauthorized use of
any trademark, trade name, copyright, patent, service mark or any
other right of any Person, firm or corporation, which may arise out of
or be in any way connected with the construction, installation,
operation, maintenance, use or condition of the Cable Television
System caused by Grantee, its subcontractors or agents or the
Grantee's failure to comply with any federal, state or local statute,
ordinance or regulation.
(2) Any and all liabilities, obligations, damages, penalties, claims,
liens, costs, charges, losses and expenses (including, without
limitation, fees and expenses of attorneys, expert witnesses and
consultants), which are imposed upon, incurred by or asserted against
the Indemnitees by reason of any claim or lien arising out of work,
labor, materials or supplies provided or supplied to the Grantee, its
contractors or subcontractors, for the installation, construction,
operation or maintenance of the Cable Television System. Upon the
written request of the Village such claim or lien shall be discharged
or bonded within 15 days following such request.
(3) Any and all liabilities, obligations, damages, penalties, claims,
liens, costs, charges, losses and expenses (including, without
limitation, fees and expenses of attorneys, expert witnesses and
consultants), which may be imposed upon, incurred by or asserted
against the Indemnitees by reason of any financing or securities
offering by Grantee or its Affiliates for violations of the common law
or any laws, statutes or regulations of the State of Illinois or of
the United States, including those of the Federal Securities and
Exchange Commission, whether by the Grantee or otherwise; excluding
therefrom, however, claims which are solely based upon and arise
solely out of information supplied by the Village to the Grantee in
writing and included in the offering materials with the express
written approval of the Village prior to the offering.
(c) The Grantee undertakes and assumes for its officers, agents, contractors
and subcontractors and employees all risk of dangerous conditions, if any, on or
about any village-owned or controlled property, including public rights-of-way
and easements, and the Grantee hereby agrees to indemnify and hold harmless the
Indemnitees against and from any claim asserted or liability imposed upon the
Indemnitees for personal injury or property damage to any Person arising out of
the installation, operation, maintenance or condition of the Cable Television
System or the Grantee's failure to comply with any federal, state or local
statute, ordinance or regulation, except for any claim asserted or liability
imposed upon the Indemnitees that arises or is related to willful negligence by
the Indemnitees.
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(d) In the event any action or proceeding shall be brought against the
Indemnitees by reason of any matter for which the Indemnitees are indemnified
hereunder, the Grantee shall, upon notice from any of the Indemnitees, at the
Grantee's sole, cost and expense, resist and defend the same with legal
counsel acceptable to the Village Attorney, provided further, however, that the
Grantee shall not admit liability in any such matter on behalf of the
Indemnitees without the written consent of the Village Attorney or the Village
Attorney's designee.
(e) The Village shall give the Grantee prompt notice of the making of any
written claim or the commencement of any action, suit or other proceeding
covered by the provisions of this Section.
(f) Nothing in this chapter or in any franchise is intended to, or shall be
construed or applied to, express or imply a waiver by the Village of statutory
provisions, privileges or immunities of any kind or nature as set forth in
Illinois Statutes, including the limits of liability of the Village as exists
presently or as may be increased from time to time by the Legislature.
17.18 RIGHTS OF INDIVIDUALS.
(a) The Grantee shall not deny service, deny access, or otherwise
discriminate against subscribers, channel users, or general citizens on the
basis of race, color, religion, national origin, income, gender, marital status,
sexual preference or age. The Grantee shall comply at all times with all other
applicable federal, state and local laws and regulations and all executive and
administrative orders relating to nondiscrimination which are hereby
incorporated and made part of this chapter by reference.
(b) The Grantee shall strictly adhere to the equal employment opportunity
requirements of the Federal Communications Commission and of state and local
governments, and as amended from time to time.
(c) The Grantee shall, at all times, comply with the privacy requirements
of state and federal law.
(d) Grantee shall make cable service available to all residential areas
within the Village, provided that all such permission as may be required from
the owner of the property is reasonably available, and that service can be
provided in accordance with the line extension requirements of Section 21.
Grantee will only be required to provide service to multi-dwelling units so long
as the owner of the facility consents to the following:
(1) To Grantee's providing of the service to units of the facility;
(2) To reasonable conditions and times for installation, maintenance
and inspection of the system on the facility premises;
(3) To reasonable conditions promulgated by Grantee to protect
Grantee's equipment and to encourage widespread use of the system;
and
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(4) To not demand payment from Grantee for permitting Grantee to
provide service to the facility and to not discriminate in rental
charges, or otherwise, between tenants who receive Cable Service
and those who do not.
17.19 PUBLIC NOTICE.
Minimum public notice of any public meeting relating to the franchise shall
follow state statutory requirements and shall be on at least one channel of the
Grantee's System between the hours of 7:00 p.m. and 9:00 p.m., for five
consecutive days prior to the meeting.
17.20 SERVICE AVAILABILITY AND RECORD REQUEST.
The Grantee shall provide cable television service throughout the entire
franchise area pursuant to the provisions of this chapter and the franchise and
shall keep a record for at least three years of all requests for service
received by the Grantee. This record shall be available for public inspection at
the local office of the Grantee during regular office hours.
17.21 SYSTEM CONSTRUCTION.
(a) New construction timetable.
(1) Within two years from the date of the award of an initial
franchise, the Grantee must make cable television service
available to every dwelling unit within the service area.
a. The Grantee must make cable television service available to at
least 20 percent of the dwelling units within the service area
within six months from the date of the award of the franchise.
b. The Grantee must make cable television service available to at
least 50 percent of the dwelling units within the service area
within one year from the date of the award of the franchise.
(2) The Grantee, in its application, may propose a timetable of
construction which will make cable television service available in the
service area sooner than the above minimum requirements, in which case
said schedule will be made part of the franchise agreement, and will
be binding upon the Grantee.
(3) Any delay beyond the terms of this timetable, unless specifically
approved by the Village, will be considered a violation of this
chapter for which the provisions of either Sections 39 or 47 shall
apply, as determined by the Village.
(4) In special circumstances and for good cause shown by the Grantee, the
Village, in the exercise of its sole discretion, may waive 100 percent
completion within the two-year time frame, provided that substantial
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completion is accomplished within the allotted time frame, substantial
completion to be not less than 95 percent. Justification for less than 100
percent must be submitted subject to the approval of the Village.
(b) Line extensions:
(1) In areas of the franchise territory not initially served, a Grantee
shall be required to extend its system pursuant to the following
requirements:
a. No customer shall be refused service arbitrarily. To expedite the
process of extending the Cable System into a new subdivision, the
Village will forward to the Grantee an approved engineering plan
of each project. Subject to the density requirements, the Grantee
shall commence the design and construction process upon receipt
of the final engineering plan. Upon notification from the Village
that the first home in the project has been approved for a
building permit, the Grantee shall have a maximum of three months
to complete the construction/activation process within the
applicable project phase, barring any unforeseen adverse weather
or ground conditions.
b. The Grantee shall extend and make cable television service
available to every dwelling unit in all unserved, developing
areas having at least 25 dwelling units planned per street mile,
as measured from the existing system, and shall extend its system
simultaneously with the installation of utility lines.
c. The Grantee shall extend and make cable television service
available to any isolated resident outside the initial service
area requesting connection at the standard connection charge, if
the connection to the isolated resident would require no more
than a standard 125-foot drop line.
(2) In areas not meeting the requirements for mandatory extension of
service, the Grantee shall provide, upon the request of a potential
subscriber desiring service, an estimate of the Grantee's costs
required to extend service to the subscriber. The Grantee shall then
extend service upon request of the potential subscriber. The Grantee
may require advance payment or assurance of payment satisfactory to
the Grantee. In the event the area subsequently reaches the density
required for mandatory extension, such payments shall be refunded to
the subscriber.
(3) In cases of new construction or property development where utilities
are to be placed underground, all cable system facilities also shall
be placed underground, except as otherwise specifically approved in
advance by the Village. If the Grantee receives notice of such new
construction or property development, including the date on which open
trenching is available for the
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Grantee's work (the "Notice"), then the Grantee shall provide, to
the developer or property owner and to the Village, the
specifications for its trenching and the Grantee shall install
its conduit, pedestals and vaults, and laterals within five
working days after the trenches first become available to the
Grantee for such work. Costs of trenching and easements required
to bring service to the development shall be borne by the
developer or property owner; provided, however, that if the
Grantee fails to install its conduit, pedestals and vaults, and
laterals within said five working days, then the cost of any new
trenching, and easements if necessary, shall be borne by the
Grantee. The Notice may be given to the Grantee at the address
stated in the franchise agreement or to the local general manager
or system engineer of the Grantee. Written or oral notice from
the developer, property owner, or Village shall be sufficient to
qualify as the Notice.
(c) Nothing herein shall be construed to prevent the Grantee from serving
areas of the Village not covered under this Section upon agreement with
developers, property owners, residents, or businesses, provided that all
applicable fees are paid by the Grantee to the Village therefor, including
without limitation the franchise fee provided in this chapter.
(d) A Grantee, in its new or renewal application, may propose a line
extension policy that will result in serving more residents of the Village than
as required above, in which case the Grantee's policy will be incorporated into
the franchise agreement and will be binding on the Grantee.
(e) The violation of this Section shall be considered a violation of this
chapter for which the provisions of either Sections 39 or 47 shall apply, as
determined by the Village.
17.22 CONSTRUCTION AND TECHNICAL STANDARDS.
(a) The Grantee shall construct, install, operate and maintain its system
in a manner consistent with all laws, ordinances, construction standards,
governmental requirements, and FCC technical standards. In addition, the Grantee
shall provide the Village, upon request, a written report of the results of the
Grantee's annual proof of performance tests conducted pursuant to Federal
Communications Commission standards and requirements.
(b) The following additional specifications shall apply:
(1) Construction, installation and maintenance of the cable
television system shall be performed in an orderly and
workmanlike manner. All cables and wires shall be installed,
where possible, parallel with electric and telephone lines.
Multiple cable configurations shall be arranged in parallel and
bundled with due respect for engineering considerations.
(2) The Grantee shall at all times comply with the most recent
version adopted by the Village of:
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a. National Electrical Safety Code (National Bureau of Standards);
b. National Electrical Code (National Bureau of Fire Underwriters);
c. Bell System Code of Pole Line Construction; and
d. Applicable FCC or other federal, state and local regulations.
(3) In any event, the System shall not endanger or interfere with the
safety of persons or property in the franchise area or other areas
where the Grantee may have equipment located.
(4) Any antenna structure used in the system shall comply with
construction, marking, and lighting of antenna structure, required by
the United States Department of Transportation.
(5) All working facilities and conditions used during construction,
installation and maintenance of the System shall comply with the
standards of the Occupational Safety and Health Administration.
(6) The Grantee regularly shall check radio frequency leakage at reception
locations for emergency radio services to prove that no interference
signal combinations are possible. Stray radiation shall be measured
adjacent to any proposed aeronautical navigation radio sites to prove
no interference to airborne navigational reception in the normal
flight patterns. FCC rules and regulations shall govern.
(7) The Grantee shall maintain equipment capable of providing standby
power for head end, transportation and trunk amplifiers for a minimum
of two hours.
(8) In all areas of the Village where the cables, wires and other like
facilities of public utilities are placed underground, all cables,
wires and other like facilities of the Grantee installed after the
effective date of the Grantee's franchise shall be placed underground.
When public utilities relocate their facilities from pole to
underground, the Grantee shall concurrently do so at no expense to the
Village.
(C) Plans & Permits.
(1) Right to review; briefings.
a. The Village shall have the right to review the Grantee's
construction plans and specifications prior to the commencement
of any new construction to assure compliance with the standards
specified in this chapter and to inspect all aspects of Cable
System construction. The
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Village shall not, however, be required to review or approve such
plans and specifications or to make such inspections, and the
Village specifically disclaims such obligation. The Grantee shall
be solely responsible for taking all steps necessary to assure
compliance with such standards and to ensure that the Cable
System is installed in a safe manner and pursuant to the terms
and conditions of this chapter and the franchise agreement.
b. Before beginning new construction of, or on any part of, the
Cable System, the Grantee's chief engineer or designated
individual shall meet with the Village Administrator or
designated individual to explain the Grantee's construction plans
and work program in detail. Similar briefings shall be held from
time to time as deemed necessary by either the Village or the
Grantee until the work is completed.
(2) The Grantee shall, within 90 days after the Effective Date of its
franchise, furnish to the Village complete "as-built" plans of the
Cable System and shall, thereafter, furnish to the Village amendments
to such plans within 45 days after completion of any extension or
modification of the Cable System. If so requested by the Grantee, the
Village shall keep such as-built plans confidential to the extent
allowable by law, and shall show such plans only to those employees,
contractors or Village officials who need to see them as a part of
their responsibilities to the Village, or pursuant to their J.U.L.I.E.
responsibilities.
(3) The Grantee shall obtain permits from the Village before commencing
any new construction of or within the Cable System, with specific
permission being required for the opening or disturbance of any Public
Way within the Village. The permit application shall include a plan
drawn in sufficient detail to demonstrate to the Village that the
Cable System will be constructed in accordance with all applicable
codes and ordinances. Where cable is to be installed on existing
poles, the permit application shall include a drawing showing the
existing poles and additional poles, if requested. Without
characterizing the violation of other provisions of this chapter, the
failure to obtain said permits shall constitute a material violation
of this chapter. The Grantee also, before the commencement of new
construction of, or on any part of, the Cable System, shall become and
remain a member of the J.U.L.I.E. system.
(d) All work involved in the construction, operation, maintenance, repair,
and removal of the Cable System, or any part thereof, shall be performed in a
workmanlike manner using materials of good and durable quality. If, at any
time, it is determined by the Village or any other agency or authority of
competent jurisdiction that any part of the Cable System, including without
limitation any means used to distribute signals over or within the Cable System,
is harmful to the health or safety of any Person, then the Grantee, at its sole
cost and expense, shall promptly correct all such conditions. Any contractor,
subcontractor, or other Person proposed to be employed for the
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installation, maintenance, relocation, or repair of Cable System equipment or
facilities shall be licensed in accordance with applicable laws and shall be
thoroughly experienced in the work for which he or she is retained.
(e) Unless expressly provided otherwise in the Franchise, the Grantee shall
ia all times comply with any and all rules and regulations enacted or to be
enacted by the Village with reference to construction activity in Public Ways.
All poles, wires, conduits, cables, equipment, pipes, appurtenances, structures,
and other facilities of the Cable System shall be installed and located in
compliance with all applicable Village codes and ordinances and the applicable
provisions of the Franchise so as to cause minimum interference with the rights
and reasonable convenience of the general public, all as determined by the
Village in its sole and absolute discretion. Unless the Village shall in writing
waive its right to review plans, no construction or other work relating to such
facilities within the Public Ways of the Village shall be commenced until the
Village shall have approved and issued a permit on the plans, specifications and
methods for such work. Any such permit may be so conditioned or restricted as
deemed necessary by the Village to assure compliance with the Franchise and to
protect the public health and safety. All such facilities shall at all times be
kept and maintained in a safe condition and in good order and repair. The
Grantee shall at all times employ reasonable care and shall install, maintain,
and use commonly accepted methods and devices for preventing failures and
accidents that are likely to cause damage, injuries or nuisances to the general
public. Suitable barricades, flags, lights, flares or other devices shall be
used at such times and places as are required by applicable ordinances and at
such additional times and places as are required for the safety of all members
of the general public. Any such facilities placed in any Public Way by the
Grantee shall be placed and maintained in such a manner as not to interfere with
the usual travel or other existing or projected uses of such Public Way.
(f) Excavation Work and Time Periods.
(1) No excavation on or in any Public Way, public property or
private property in the Village permitted hereunder in
connection with the installation of any Cable System facilities
shall be made more than 24 hours immediately before installation
of such facilities. The Grantee may apply for a waiver in
unusual circumstances.
(2) The Grantee shall notify the Village Administrator at least 72
hours before any excavation on or in any Public Way, public
property or private property so that the Village Administrator
will have the opportunity to inspect such excavation work.
(3) All excavations in lawns or grassy parkways shall be promptly
backfilled, tamped and restored with sod in accordance with the
applicable provisions of this chapter.
(g) Location of Pedestals and Vaults.
(1) Pedestals and Similar Above Ground Appurtenances.
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a. The Village has determined that pedestals and similar aboveground
appurtenances located on a Public Way (other than in an alley or as
provided in Paragraph c below) or on public property will adversely
affect the appearance of the Village and of the property therein and,
accordingly, pursuant to Section 541(a)(2) of the Cable Act, the
Grantee shall not under any circumstances install or locate a pedestal
or any similar above ground appurtenance on any Public Way (other than
in an alley or as provided in Paragraph c below) or on any public
property as a part of any new construction or any relocation or
reinstallation.
b. Pedestals or similar above ground appurtenances may be installed on
private property only with the express, prior written consent and
permission of the affected property owner or his or her authorized
agent, or the duly elected or appointed representative of the affected
property; provided, however, that such pedestals or above ground
appurtenances shall comply with all applicable provisions of the
Grayslake Municipal Code.
c. Notwithstanding Paragraph b above, pedestals or similar above ground
appurtenances may be installed within certain utility easements on
private property without the consent or permission of the affected
property owner provided that (i) the Grantee is lawfully authorized to
use such utility easement pursuant to state or federal law; (ii) no
such pedestal or similar above ground appurtenance may be installed
unless, at the time of the desired installation, there exists within
the utility easement, a similar above ground appurtenance of another
utility company or entity; and (iii) the Grantee's pedestal or similar
above ground appurtenance shall be located as close as is practicable
to said existing above ground appurtenance.
(2) Vaults.
a. The Grantee shall not install underground vaults on any Public Way
after the effective date of this franchise, except in accordance with
and pursuant to the provisions of Paragraph d of this subsection. All
underground vaults shall be flush mounted with the surface of the land
area.
b. The Grantee shall inform the owner of any private property in the
Village where the Grantee contemplates placing a vault on the parkway
immediately adjacent to said private property, that the owner has the
right to elect between the construction and installation of an
underground vault on the owner's private property or on the Public Way
(including, without limitation, the parkway) immediately adjacent to
the owner's property. Said notice shall be in writing, in
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form and substance acceptable to the Village Administrator, and
delivered by certified mail or personal delivery to said owner at
least 30 days immediately before the commencement of construction
on or around the owner's property.
c. If the owner elects to allow construction and installation of an
underground vault on the owner's property, then the owner shall
be required to grant the Grantee and easement, in form reviewed
and approved by the Village Attorney, allowing for such
construction and installation.
d. If the owner (i) elects not to allow construction and
installation of an underground vault on the owner's property; or
(ii) fails to respond to the election notice delivered by the
Grantee pursuant to Paragraph b above within 45 days after the
owner receives the notice; or (iii) refuses to grant the Grantee
the easement pursuant to Paragraph c above within 30 days after
the owner's receipt of an easement document, then the Grantee
shall be entitled to construct and install an underground vault
on the Public Way (including, without limitation, the parkway)
that is immediately adjacent to the owner's property.
17.23 USE OF STREETS.
(a) The Grantee's system, poles, wires and appurtenances shall be located,
erected and maintained so that none of its facilities shall endanger or
interfere with the lives of persons or interfere with the rights or reasonable
convenience of property owners who adjoin any of the streets and Public Ways, or
interfere with any improvements the Village may make, or hinder or obstruct the
free use of the streets, alleys, bridges, easements or public property.
(b) In case of any disturbance of pavement, sidewalk, landscaping, driveway
or other surfacing, the Grantee shall, at its own cost and expense and in a
manner approved by the Village, replace and restore all paving, sidewalk,
driveway, landscaping, or surface of any street or alley disturbed, in at least
as good condition as before the work was commenced and in accordance with
standards for such work set by the Village. If, after 30 days, restoration
measures are not performed to the reasonable satisfaction of the Village, the
Village may undertake remedial restoration activities, such activities to be
performed at the Grantee's cost, with such costs to be chargeable against the
security deposit required of the Grantee in Subsection 14(e) of this chapter.
(c) Erection, removal and common uses of poles:
(1) No poles or other wire-holding structures shall be erected by the
Grantee without prior approval of the Village with regard to location,
height, types, and any other pertinent aspect. However, no location of
any pole or wire-holding structure of the Grantee shall be a vested
interest and such poles or structures shall be removed or modified by
the Grantee at its own expense
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whenever the Village determines that the public convenience would
be enhanced thereby.
(2) Where poles or other wire-holding structures already existing for
use in serving the Village are available for use by the Grantee,
but it does not make arrangements for such use, the Village may
require the Grantee to use such poles and structures if it
determines that the public convenience would be enhanced thereby
and the terms of the use available to the Grantee are just and
reasonable.
(3) Where the Village or a public utility serving the Village desires
to make use of the poles or other wire-holding structures of the
Grantee, but agreement thereof with the Grantee cannot be
reached, the Village may require the Grantee to permit such use
for such consideration and upon such terms as the Village shall
determine to be just and reasonable, if the Village determines
that the use would enhance the public convenience and would not
unduly interfere with the Grantee's operations.
(d) If at any time during the period of the franchisethe Village shall
elect to alter, or change the grade of any street, alley or other Public Ways or
utilities, the Grantee, upon reasonable notice by the Village, shall promptly
remove or relocate as necessary its poles, wires, cables, underground conduits,
manholes and other fixtures at its own expense.
(e) The Grantee shall, on the request of any person holding a building
moving permit issued by the Village, temporarily raise or lower its wires to
permit the moving of buildings. The expense of such temporary removal, raising
or lowering of wires shall be paid by the person requesting the same, and the
Grantee shall have the authority to require such payment in advance. The Grantee
shall be given not less than 48 hours advance notice to arrange for such
temporary wire changes.
(f) The Grantee shall not remove any tree or trim any portion, either
above, at or below ground level, of any tree within any public place without the
prior consent of the Village. The Grantee shall provide notice to any affected
residents at the same time that the Grantee applies to the Village for consent
to perform tree trimming. The Village shall have the right to do the trimming
requested by the Grantee at the cost of the Grantee. Regardless of who performs
the work requested by the Grantee, the Grantee shall be responsible, shall
defend and hold Village harmless from any and all damages to any tree as a
result of trimming, or to the property surrounding any tree, whether such tree
is trimmed or removed.
(g) The Grantee shall not use road cuts for the laying of cable or wires
without the prior approval of the Village.
(h) The right of the Grantee to use and occupy the Public Ways shall not
be exclusive. The Village reserves the right to grant any right or use of such
Public Ways to any Person at any time during the term of the franchise or any
other franchise subsequently granted to any other Person.
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(i) If any public way or portion thereof used by the Grantee shall be
vacated by the Village, or the use thereof discontinued by the Village or the
Grantee, during the term of the franchise, then the Grantee shall forthwith at
its sole cost and expense remove its facilities therefrom unless specifically
permitted to continue to use the same and, on the removal thereof, the Grantee
shall restore, repair, or reconstruct the Public Way area where such removal has
occurred to its original condition as required by the Village. In the event of
any failure, neglect, or refusal by the Grantee, after 30 days written notice
from the Village to repair, improve, or maintain such Public Way, the Village
may, but shall be under no obligation to, conduct such work, or cause it to be
conducted, and the actual cost thereof shall be paid by the Grantee in the time
and manner as directed by the Village. Collection may be made by resort to the
letter of credit or cash security deposit established pursuant to Section 14 of
this chapter, or by court action, or otherwise.
17.24 OPERATIONAL STANDARDS.
(a) The Grantee shall maintain all parts of the system in good condition
throughout the entire franchise period.
(b) Upon the reasonable request for service by any person located within
the franchise territory, the Grantee shall, within 30 days, furnish the
requested service to such person within terms of the line extension policy. A
request for service shall be unreasonable for the purpose of this subsection if
no trunk line installation capable of servicing that person's block has been
installed.
(c) Temporary Service Drops:
(1) The Grantee shall put forth every effort to bury temporary drops
within 10 working days after placement. Any delays for any other
reason than listed will be communicated to the Village. The
following delays will be found understandable and within the
course of doing business: weather, ground conditions, street
bores, system redesign requirements and any other unusual
obstacle, such as obstructive landscaping that is created by the
customer.
(2) Upon request of the Village the Grantee shall provide a monthly
report to the Village on the number of drops pending.
(d) The Grantee shall render efficient service, make repairs promptly, and
interrupt service only for good cause and for the shortest time possible. Such
interruptions, insofar as possible, shall be preceded by notice and shall occur
during periods of minimum system use.
(e) The Grantee shall not allow its cable or other operations to interfere
with television reception of subscribers or persons not served by the Grantee,
nor shall the system interfere with, obstruct or hinder in any manner the
operation of the various utilities serving the residents within the confines of
the Village nor shall other utilities interfere with the Grantee's system.
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17.25 CUSTOMER SERVICE STANDARDS.
(a) Nothing in this chapter shall be construed to prohibit the enforcement
of any federal, state or local law or regulation concerning customer service or
consumer protection that imposes customer service standards or consumer
protection requirements that exceed the customer service standards set out in
this chapter or that address matters not addressed in this chapter.
(b) The Grantee shall maintain a local or toll-free telephone access line
which is available to its subscribers and shall have knowledgeable, qualified
representatives available to respond to customer telephone inquiries 24 hours
per day, seven days per week. Under normal operating conditions, telephone
answer time, including wait time and the time required to transfer the call,
shall not exceed 30 seconds. This standard shall be met no less than 90
percent of the time as measured on a quarterly basis. Under normal operating
conditions, the customer will receive a busy signal less than three percent of
the time.
(c) Customer service centers and bill payment locations will be open for
walk-in customer transactions a minimum of eight hours per day Monday through
Friday, unless there is a need to modify those hours because of the location or
customers served. The Grantee and Village by mutual consent shall establish
supplemental hours on weekdays and weekends as fits the needs of the community.
(d) Under normal operating conditions, each of the following standards will
be met no less than 95 percent of the time as measured on an annual basis.
(1) Standard installations will be performed within seven business
days after an order has been placed. A standard installation is
one that is within 125 feet of the existing system.
(2) Excluding those situations that are beyond its control, the
Grantee will respond to any service interruption promptly and in
no event later than 24 hours from the time of initial
notification. All other regular service requests will be responded
to within 36 hours during the normal work week for that system.
The appointment window alternatives for installations, service
calls and other installation activities will be: "morning" or
"afternoon"; not to exceed a four-hour "window" during normal
business hours for the system, or at a time that is mutually
acceptable. The Grantee shall schedule supplemental hours during
which appointments can be scheduled based on the needs of the
community. If at any time an installer or technician is running
late, an attempt to contact the customer will be made and the
appointment rescheduled as necessary at a time that is convenient
to the customer.
(e) In the event of a Service Interruption, the following standards for
Subscriber credits shall be applied by the Grantee:
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(1) If a Subscriber experiences a Service Interruption totaling four
hours or more on one, two, or three days in any calendar month,
then the Grantee shall provide a credit to that Subscriber equal
to one-thirtieth of one month's total fees paid by that Subscriber
for each day on which such a Service Interruption occurs;
provided, however, that such credit shall not apply to a
Subscriber disconnected because of non-payment or excessive signal
leakage. Such credit shall be provided by the Grantee
automatically upon notice from that Subscriber of such Service
Interruption, regardless of whether that Subscriber requests a
credit.
(2) If a Subscriber experiences a Service Interruption totaling four
hours or more on four or more days in any calendar month, then the
Grantee shall provide a credit to that Subscriber equal to one
month's total fees paid by that Subscriber; provided, however,
that such credit shall not apply to a Subscriber disconnected
because of non-payment or excessive signal leakage. Such credit
shall be provided by the Grantee automatically upon notice from
that Subscriber of the fourth such Service Interruption,
regardless of whether that Subscriber requests a credit.
(f) The Grantee shall provide written information for each of the following
areas at the time of installation and at any future time upon the request of the
customer:
(1) Product and services offered; and
(2) Prices and service options; and
(3) Installation and service policies; and
(4) How to use the cable television services.
(g) Bills will be clear, concise and understandable, with all charges for
cable services itemized.
(h) A Grantee may not impose a late, administrative or other fee on a
customer for nonpayment of a bill until 30 days have elapsed after the end of
the billing cycle which is the subject of the unpaid bill.
(i) Credits will be issued promptly, but no later than the customer's next
billing cycle following the resolution of the request and the return of the
equipment by the Grantee if service has been terminated.
(j) The Grantee shall notify customers a minimum of 30 days in advance of
any rate or channel change.
(k) The Grantee shall maintain and operate its network in accordance with
the rules and regulations incorporated herein and as may be promulgated by state
or federal regulators.
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(l) The Grantee shall continue, through the term of the franchise, to
maintain the technical standards and quality of service set forth in this
chapter and the franchise. Should the Village find, by resolution, that the
Grantee has failed to maintain these technical standards and quality of service,
and should it, by resolution, specifically enumerate improvements to be made,
the Grantee shall make such improvements. Failure to make such improvements
within three months of such resolution will constitute a breach of a condition
for which penalties contained in Section 47 are applicable.
(m) The Grantee shall keep a monthly service log which indicates the
nature of each service complaint received in the last 24 months, the date and
time each complaint was received, the disposition of each complaint, and the
time and date thereof. This log shall be sent to the Village monthly upon
request.
(n) The Grantee shall provide a copy of the Customer Service Standards
included in this Section to every subscriber via a bill insert at least once
every calendar year. The Grantee shall also provide a copy of these Customer
Service Standards to every new customer within 30 days of connection.
17.26 CONTINUITY OF SERVICE MANDATORY.
(a) It shall be the right of all subscribers to continue receiving service
as long as their financial and other obligations to the Grantee are honored. If
the Grantee elects to over build, rebuild, modify or sell the system, or the
Village gives notice of intent to terminate or fails to renew the franchise, the
Grantee shall act so as to ensure that all subscribers receive continuous,
uninterrupted service regardless of the circumstances for a period not to exceed
six months after the franchise has terminated.
(b) If there is a change of franchise, or if a new operator acquires the
system, the Grantee shall cooperate with the Village, new franchisee and
operator in maintaining continuity of service to all subscribers. During such
period, the Grantee shall be entitled to the revenues for any period during
which it operates the system.
(c) If the Grantee fails to operate the system for three consecutive days
without prior approval of the Village or without just cause, the Village may, at
its option, operate the system or designate an operator until such time as the
Grantee restores service under conditions acceptable to the Village or a
permanent operator is selected. If the Village is required to fulfill this
obligation for the Grantee, the Village shall be entitled to all revenues for
any period during which it operates the system and shall be entitled to draw on
the letter of credit and cash security deposit established pursuant to Section
14 of this chapter to recover all of its costs and damages in excess of such
revenues, and, in any event, the Grantee shall be obligated to reimburse the
Village for all costs or damages incurred by the Village resulting from the
Grantee's failure to perform that the Village does not recover from such
revenues or said letter of credit or cash security deposit.
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17.27 COMPLAINT PROCEDURE.
(a) During the term of the franchise and any renewal thereof, the Grantee
shall maintain a central office for the purpose of receiving and resolving all
complaints regarding the quality of service, equipment malfunctions, and similar
matters. The office must be reachable by a local and/or toll-free telephone call
to receive complaints regarding quality of service, equipment functions and
similar matters. The Grantee will make good faith efforts to arrange for one or
more payment locations in a central location where customers can pay bills or
conduct other business activities.
(b) As subscribers are connected or reconnected to the system, the Grantee
shall, by appropriate means such as a card or brochure, furnish information
concerning the procedures for making inquiries or complaints, including the
name, address and local or toll free telephone number of the employee or
employees or agent to whom such inquiries or complaints are to be addressed.
(c) When there have been similar complaints made, or where there exists
other evidence, which, in the judgment of the Village, in consultation with the
Grantee, casts doubt on the reliability or quality of cable service, the Village
shall have the right and authority to require the Grantee to test, analyze and
report on the performance of the system. The Grantee shall fully cooperate with
the Village in performing such testing and shall prepare results and a report,
if requested, within 30 days after notice. Such report shall include the
following information:
(1) The nature of the complaint or problem that precipitated the
special tests; and
(2) The system component(s) tested; and
(3) The equipment used and procedures employed in testing; and
(4) The method, if any, in which such complaint or problem was
resolved; and
(5) Any other information pertinent to the tests and analysis which
may be required.
(d) If, after receiving Grantee's report, and after the Grantee has
completed any corrective action identified in the report, the Village determines
that reasonable evidence still exists of inadequate System Performance, then the
Village may enlist an independent engineer at Grantee's expense to perform tests
and analysis directed toward such suspected failures to meet the requirements of
this chapter. Grantee shall cooperate and permit such testing.
(e) The Village shall require tests, analysis and reports covering specific
subjects and characteristics based on complaints or other evidence only when the
Village has reasonable grounds to believe that the complaints or other evidence
require that tests be performed to protect the public against substandard cable
service.
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17.28 GRANTEE RULES AND REGULATIONS.
The Grantee shall have the authority to promulgate such rules,
regulations, terms, and conditions governing the conduct of its business as
shall be reasonably necessary to enable the Grantee to exercise its rights and
perform its obligations under the franchise, and to assure uninterrupted service
to each and all of its customers; provided, however, that such rules,
regulations, terms and conditions shall not be in conflict with the provisions
hereof or applicable state and federal laws, rules and regulations.
17.29 FRANCHISE FEE.
(a) A Grantee shall pay to the Village a franchise fee of not less than
five percent of the Grantee's gross revenues or such other maximum amount as
allowed by law.
(b) The franchise fee payment shall be in addition to any other tax or
payment owed to the Village by the Grantee and shall not be construed as payment
in lieu of municipal property taxes or other state, county or local taxes.
(c) The franchise fee and any other costs or penalties assessed shall be
payable quarterly on a calendar year basis to the Village within 30 days after
the end of each quarter. The Grantee shall also file a complete and accurate
verified statement of all gross receipts as previously defined within said 30
days.
(d) The Village shall have the right to inspect and copy the Grantee's
income records and the right to audit and to recompute any amounts determined to
be payable under this chapter. Any additional amount due the Village as a result
of an audit shall be paid within 30 days following written notice to the Grantee
by the Village, which notice shall include a copy of the audit report. If any
audit discloses an underpayment of a franchise fee by an amount in excess of
five percent of the applicable fee, then the Grantee shall pay the full cost of
the audit. The Grantee shall maintain books and records of its operations within
and related to the Village and the Grantee's cable system in sufficient detail
to show gross revenue, by service category, consistent with generally accepted
accounting principles. Said books and records shall be retained in accordance
with the Grantee's document retention policies, but in no event less than five
years.
(e) If any franchise payment or re-computed amount, cost or penalty, is
not made on or before the applicable dates heretofore specified, interest shall
be charged daily from such date at an annual rate of 12 percent.
(f) The acceptance by the Village of any franchise fee payment shall not
in any way be construed as an accord that the amount paid is in fact the correct
amount, nor shall such acceptance of any payment be construed as a release of
any claim the Village may have for further or additional sums payable under the
provisions of the franchise. All franchise fee payments shall be subject to
audit and re-computation by the Village in accordance with this Section.
(g) The Grantee shall acknowledge as follows:
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(1) The franchise fee is not a tax; and
(2) The franchise fee shall be in addition to any and all taxes, other
fees or charges that the Grantee or any affiliate shall be
required to pay to the Village or to any state or federal agency
or authority, all of which shall be separate and distinct
obligations of the Grantee and its affiliates; and
(3) Neither the Grantee nor any affiliate shall have or make any claim
for any deduction or other credit of all or any part of the
franchise fee from or against any of said Village taxes or other
fees or charges that the Grantee or any affiliate is required to
pay to the Village except as may be identified and authorized by
federal law; and
(4) Neither the Grantee nor any affiliate shall apply or seek to apply
all or any part of the franchise fee as a deduction or other
credit from or against any of said Village taxes or other fees or
charges, each of which shall be deemed to be separate and distinct
obligations of the Grantee and its affiliates.
(5) Except as authorized by law, if the Grantee or any affiliate
applies or seeks to apply all or any part of the amount of the
franchise fee as a deduction or other credit from or against any
Village tax or other fee or charge, or if the Grantee or any
affiliate applies or seeks to apply all or any part of any such
tax or other fee or charge as a deduction or other credit from or
against the franchise fee, then, in any such event, the Village
may revoke the franchise pursuant to the applicable provisions of
this chapter without any liability to the Grantee or any
affiliate.
(h) The Village may increase the franchise fee if and to the extent that
the maximum allowable franchise fee is increased by the FCC. If the Village
desires to increase the franchise fee in that event, then the Village shall
provide at least 30 days written notice to the Grantee. If, within 30 days
after the Village's notice, the Grantee so requests, the Village shall conduct a
public hearing on the franchise fee increase. The effective date of the proposed
franchise fee increase shall be delayed until the expiration of the 30-day
notice period, if within that period the Grantee does not request a hearing, or
if a hearing is requested, until the conclusion of the public hearing conducted
pursuant to this Subsection.
17.30 TRANSFER OF OWNERSHIP OR CONTROL.
(a) Except as provided in Subsection (f) of this section below, a
franchise shall not be assigned, transferred, pledged, leased, sublet,
hypothecated, or mortgaged, either in whole or in part, in any manner, nor shall
title thereto, either legal or equitable or any right, interest or property
therein, pass to or vest in any person without the prior written approval of the
Village. The Grantee may, however, transfer or assign the franchise to a wholly
owned subsidiary of the Grantee and such subsidiary may transfer or assign the
franchise back to the Grantee without such consent, providing that such
assignment is without any release of liability of the Grantee. Any proposed
assignee must show legal, technical and financial responsibility as determined
by the Village and must agree to
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comply with all provisions of the franchise. The Grantee shall submit a petition
to the Village requesting the Village's approval at least 90 days before the
Grantee takes any action in furtherance of accomplishing any such assignment,
transfer, pledge, lease, sublet, hypothecation, or mortgage, containing or
accompanied by such information as is required in accordance with FCC
regulations and by the Village. The Village shall have 120 days to act upon any
request for approval of any such assignment, transfer, pledge, lease, sublet,
hypothecation, or mortgage. The Village shall be deemed to have consented to a
proposed assignment, transfer, pledge, lease, sublet, hypothecation, or mortgage
if its refusal to consent is not communicated in writing to the Grantee within
120 days following receipt of said petition and receipt of all necessary
information as to the effect of the proposed assignment, transfer, pledge,
lease, sublet, hypothecation, or mortgage upon the public, unless the requesting
party and the Village agree to an extension of time. The Village shall not
unreasonably withhold consent to a proposed transfer.
(b) The Grantee shall promptly notify the Village of any actual or
proposed change in, or transfer of, or acquisition by any other party of,
control of the Grantee. The word "control" as used herein is not limited to
major stockholders but also includes actual working control in whatever manner
exercised. A rebuttable presumption that a transfer of control has occurred
shall arise upon the acquisition or accumulation by any person or group of
persons of five percent of the voting shares of the Grantee. Change, transfer or
acquisition of control of the Grantee without the Village's consent shall make
the franchise subject to cancellation unless and until the Village shall have
consented thereto, which consent shall not be unreasonably withheld. For the
purpose of determining whether it shall consent to such change, transfer or
acquisition of control, the Village may inquire into the qualifications of the
prospective controlling party, and the Grantee shall assist the Village in such
inquiry.
(c) The consent or approval of the Village to any transfer of the Grantee
shall not constitute a waiver or release of the rights of the Village in and to
any Public Way, and any transfer shall by its terms, be expressly subordinate to
the terms and conditions of the franchise.
(d) In the absence of extraordinary circumstances, the Village shall not
be required to approve any transfer or assignment of a new franchise prior to
substantial completion of construction of the proposed system.
(e) In no event shall a transfer of ownership or control be approved
without the successor(s) in interest becoming a signatory to the franchise
agreement.
(f) Nothing in this section shall be deemed to prohibit any assignment,
pledge, lease, sublease, mortgage, or other transfer of all or any part of the
Grantee's cable system, or any right or interest therein, solely for financing
purposes, provided that each such assignment, pledge, lease, sublease, mortgage,
or other transfer shall be subject and subordinate to the rights of the Village
pursuant to this chapter, the franchise agreement, and applicable law.
17.31 AVAILABILITY OF BOOKS AND RECORDS.
(a) The Grantee shall fully cooperate in making available at reasonable
times, and the Village shall have the right to inspect, where reasonably
necessary for the enforcement of the
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franchise, books, records, maps, plans and other like materials of the Grantee
applicable to the cable television system, at any time during normal business
hours; provided where volume and convenience necessitate, the Grantee may
require inspection to take place on the Grantee premises.
(b) The following records and/or reports shall be sent to the Village, but
no more frequently than on a quarterly basis if so mutually agreed upon by the
Grantee and the Village:
(1) a quarterly review and resolution or progress report submitted by
the Grantee to the Village; and
(2) periodic preventive maintenance reports; and
(3) any copies of FCC Form 395-A (or successor form) or any
supplemental forms related to equal opportunity or fair
contracting policies; and
(4) subscriber inquiry/complaint resolution data and the right to
review documentation concerning these inquiries and/or complaints
periodically; and
(5) periodic construction update reports including, where
appropriate, the submission of as-built maps.
17.32 OTHER PETITIONS AND APPLICATIONS.
Upon request, copies of all petitions, applications, communications and
reports submitted by the Grantee to the Federal Communications Commission, to
the Securities and Exchange Commission, or to any other federal or state
regulatory commission or agency having jurisdiction in respect to any matters
affecting cable television operations authorized pursuant to the franchise or
received from such agencies shall be provided to the Village within 10 days of
the Village's request.
17.33 FISCAL REPORTS.
The Grantee shall, annually within 90 days after the close of the
Grantee's fiscal year, prepare in accordance with generally accepted accounting
principles, and submit to the Village, a statement of gross revenues audited by
a certified public accountant and covering the Grantee's operations in and
relating to the Village and the Grantee's cable system as well as such
additional financial statements and records as may be required by the Village.
17.34 REMOVAL OF CABLE SYSTEM.
At the expiration of the term for which the franchise is granted or when
any renewal is denied, or upon its termination as provided herein, the Grantee
shall forthwith, upon notice by the Village, remove at its own expense all
portions of the cable television system designated by the Village from all
streets and public property within the Village. If the Grantee fails to do so,
the Village may perform the work at the Grantee's expense. Upon such notice of
removal, a bond shall
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be furnished by the Grantee in an amount sufficient to cover this expense as
determined by the Village.
17.35 REQUIRED SERVICES AND FACILITIES.
(a) The Grantee shall make available to all subscribers the option to
receive not fewer than 85 channels.
(b) If the Grantee serves the Village pursuant to an agreement only with
the Village and not by agreement negotiated as part of a collective process with
other franchising authorities, then the Grantee shall maintain not fewer than
one specially designated noncommercial channel for the exclusive use of the
Village and other public, educational, and governmental authorities in the
Village. The Grantee shall not make use of any channel reserved for use pursuant
to this Subsection (b).
(c) If the Grantee receives its franchise within the Village pursuant to an
agreement negotiated as part of a collective process among, and the Grantee's
System thus serves, the Village and other franchising authorities including the
Villages of Grayslake, Mundelein, and Wauconda and the County of Lake
(collectively the "Authorities"), then the Grantee shall maintain at least five
channels of its system exclusively available as follows:
(1) At least one specially designated noncommercial channel for use by
all local library authorities within the corporate limits of the
Authorities; and
(2) At least one specially designated noncommercial channel for use by
all local educational authorities within the corporate limits of
the Authorities; and
(3) At least one specially designated noncommercial channel for use by
all local governmental agencies within the corporate limits of the
Authorities; and
(4) At least one specially designated noncommercial channel for use by
all local park and recreation districts, departments, and agencies
within the corporate limits of the Authorities; and
(5) At least one specially designated noncommercial channel for use by
the Authorities as an Interactive Video Bulletin Board.
The Authorities may allocate the use of such channels among the entities listed
above in such manner as the Authorities determine is appropriate.
For any System that serves the Village and other franchising authorities as
described in this Subsection (c) and that has the capacity for any number of
channels greater than 85, the Grantee shall provide, in addition to the channels
otherwise required pursuant to this Subsection (c), two specially designated
noncommercial channels for the exclusive use of the Village and other local
governmental, educational, and public authorities, subject to the conditions set
forth in the next two sentences. Such two additional channels shall be provided
immediately upon notice from the Village
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of sufficient demand therefor. For purposes of this requirement, the phrase
"sufficient demand" shall mean that four of the five specially designated
noncommercial channels otherwise required pursuant to this Subsection (c) are
used for original, noncommercial public, educational, and governmental access
video programming not less than an average of six hours per day, five days each
week, over a period of 45 days.
The Grantee shall not make use of any channel reserved for use pursuant to this
Subsection (c); provided, however, that the Grantee may use the two channels
described in the immediately preceding paragraph but only until receipt of
notice from the Village pursuant to the second sentence of the preceding
paragraph.
(d) Studios and associated production equipment will be located in a
mutually agreed upon site to meet the public's need for public access, and to
accommodate the specially designated channels described in this Paragraph.
Financial and technical support and replacement and maintenance of equipment for
such facilities shall be separately incorporated into the franchise by
agreement.
(e) The Grantee shall incorporate into its cable television system the
capacity to permit the Village, in times of emergency, to override by remote
control the audio, video and/or text of all channels, simultaneously, which the
Grantee may lawfully override. The Grantee shall provide emergency broadcast
capacity pursuant to FCC rules. The Grantee shall cooperate with the Village in
the use and operation of the emergency alert system.
(f) Interconnection.
(1) The Grantee shall, on request by the Village, connect its cable
system within the Village to any cable system that is owned or
operated by the Grantee or any affiliate or subsidiary of the
Grantee in any contiguous municipality.
(2) The Village also may request that the Grantee interconnect its
system with other communication facilities within or contiguous
to the Village. Such interconnection shall be negotiated by the
Village and the Grantee. Upon receiving a request from the
Village to so interconnect, the Grantee shall immediately
initiate negotiations with the other affected system or systems
in order that all costs may be shared equally among cable
companies for both construction and operation of the
interconnection link.
The Grantee may be granted reasonable extensions of time to
interconnect, or the Village shall rescind its request to
interconnect, upon petition by the Grantee to the Village, if the
Grantee has negotiated in good faith and has arrived at impasse
with the operator or franchising authority of the system to be
interconnected, or that the cost of the interconnection would
cause an unreasonable or unacceptable increase in subscriber
rates, or that the interconnection is technically infeasible.
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(3) The Grantee shall cooperate with any interconnection corporation,
regional interconnection authority, municipality, or county,
state, or federal regulatory agency that may be hereafter
established for the purpose of regulating, financing, or otherwise
providing for the interconnection of cable systems beyond the
boundaries of the Village.
(g) The Grantee shall provide such additional services and facilities as
are contained in its application.
17.36 RULES AND REGULATIONS.
(a) In addition to the inherent powers of the Village to regulate and
control any cable television franchise, and those powers expressly reserved by
the Village, or agreed to and provided for herein, the right and power is hereby
reserved by the Village to promulgate such additional regulations as it shall
find necessary in the exercise of its lawful powers and furtherance of the terms
and conditions of the franchise; provided, however, that such rules,
regulations, terms and conditions shall not be in conflict with the provisions
hereof or applicable state and federal laws, rules and regulations.
(b) The Village may also adopt such regulations at the request of Grantee
upon application.
17.37 PERFORMANCE EVALUATION SESSIONS.
(a) The Village and the Grantee may hold scheduled yearly performance
evaluation sessions within 30 days of each anniversary date of the Grantee's
award or renewal of the franchise and as may be required by federal and state
law.
(b) Special evaluation sessions may be held at any time during the term of
the franchise at the request of the Village or the Grantee.
(c) All evaluation sessions shall be open to the public and announced in a
newspaper of general circulation in accordance with legal notice. The Grantee
shall notify its subscribers of all evaluation sessions by announcements on at
least one channel of its system between the hours of 7:00 p.m. and 9:00 p.m. for
five consecutive days preceding each session.
(d) Topics which may be discussed at any scheduled or special evaluation
session may include, but are not limited to: service rate structures; franchise
fee, penalties, free or discounted services; application of new technologies;
system performance; services provided; programming offered; customer complaints;
privacy; amendments to this chapter; judicial and FCC rulings; line extension
policies; and Grantee or Village rules.
(e) Members of the general public may add topics either by working through
the negotiating parties or by presenting a petition. If such a petition bears
the valid signatures of 50 or more residents of the Village, the proposed topic
or topics shall be added to the list of topics to be discussed at the evaluation
session.
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17.38 RATE CHANGE PROCEDURES.
Pursuant to the Cable Television Consumer Protection and Competition Act of
1992, the Village is currently certified to regulate the Basic Service rates
charged by Grantee. Under these rules, the Grantee is required to obtain
approval from the Village for a rate increase for any change to the rates for
Basic Service. Should Federal or State law permit further rate regulation beyond
Basic Service, the Village may assume such rate regulation and adopt appropriate
procedures for such regulation.
17.39 FORFEITURE AND TERMINATION.
(a) In addition to all other rights and powers retained by the Village
under this chapter or otherwise, the Village reserves the right to terminate the
franchise and all rights and privileges of the Grantee hereunder in the event of
a breach of its terms and conditions. A breach by the Grantee shall include, but
shall not be limited to the following:
(1) Violation of any material provision of the franchise or any
material rule, order, regulation or determination of the Village
made pursuant to the franchise; or
(2) Attempt to evade any provision of the franchise or to practice any
fraud or deceit upon the Village or its subscribers or customers;
or
(3) Failure to begin or complete system construction or system
extension as provided under Section 21; or
(4) Failure to provide the services promised in the Grantee's initial
application; or
(5) Failure to restore service after 96 consecutive hours of
interrupted service, except when approval of such interruption is
obtained from the Village; or
(6) Material misrepresentation of fact in the application for or
negotiation of the franchise; or
(7) Failure to pay any fees or other consideration when due pursuant
to the franchise or this chapter.
(b) The Village may make a written demand that the Grantee comply with any
such provision, rule, order or determination under or pursuant to the franchise.
If the violation by the Grantee continues for a period of 30 days following such
written demand without written proof satisfactory to the Village that the
corrective action was initiated immediately and thereafter has been completed or
has been continuously, actively, and expeditiously pursued, the Village may
place the issue of termination of the franchise before the Village Board. The
Village shall cause to be served upon the Grantee, at least 20 days prior to the
date of such meeting, a written notice of intent to request such termination and
the time and place of the meeting.
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(c) The Village Board shall hear and consider the issues and shall hear any
person interested therein and shall determine in its discretion whether any
violation by the Grantee has occurred. The Grantee shall be afforded an
opportunity to be heard at the hearing, including an opportunity to present all
relevant evidence and witnesses and to question witnesses presented against the
Grantee. The Grantee may, at its own expense, make a transcript of any such
hearing.
(d) If the Village Board determines that the violation by the Grantee was
the fault of the Grantee and within its control, then the Board may, by
resolution stating the violation or violations on which the decision is based,
declare that the franchise of the Grantee shall be forfeited and terminated
immediately or within such period as the Board in its sole discretion may fix,
unless there is compliance.
17.40 FORCE MAJEURE.
Whenever a period of time is provided for in the franchise for either the
Village or the Grantee to do or perform any act or obligation, neither party
shall be liable for any delays or inability to perform due to causes beyond the
control of said party such as war, riot, insurrection, rebellion, strike,
lockout, unavoidable casualty or damage to personnel, materials or equipment,
fire, flood, storm, earthquake, tornado, or any act of God; provided, however,
that said time period shall be extended for only the actual amount of time said
party is so delayed. An act or omission shall not be deemed to be "beyond the
Grantee's control" if committed, omitted, or caused by the Grantee, the
Grantee's employees, officers, or agents or a subsidiary, affiliate, or parent
of the Grantee, or by any corporation or other business entity that holds a
controlling interest in the Grantee, whether held directly or indirectly.
Further, the failure of the Grantee to obtain financing or to pay any money due
from it to any Person, including the Village, for whatever reason, shall not be
an act or omission "beyond the Grantee's control." The failure of the Grantee to
obtain necessary permits from applicable governmental or utility agencies shall
be deemed "beyond the Grantee's control" only if the Grantee has made a timely
and complete request and application for said permit and is diligently pursuing
the issuance of said permit.
17.41 FORECLOSURE.
Upon the foreclosure or other judicial sale of all or a substantial part of
the system, or upon the termination of any lease covering all or a substantial
part of the system, the Grantee shall notify the Village of such fact, and such
notification shall be treated as a notification that a change in control of the
Grantee has taken place, and the provisions of the franchise governing the
consent of the Village to such change in control of the Grantee shall apply.
17.42 RECEIVERSHIP.
The Village shall have the right to cancel a franchise 120 days after the
appointment of a receiver, or trustee, to take over and conduct the business of
the Grantee, whether in receivership, reorganization, bankruptcy or other action
or proceeding, unless such receivership or trusteeship shall have been vacated
prior to the expiration of 120 days, or unless:
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<PAGE>
(1) Within 120 days after his/her election or appointment, such receiver
or trustee shall have fully complied with all the provisions of this
chapter and remedied all defaults thereunder; and
(2) Such receiver or trustee, within the 120 days, shall have executed an
agreement, duly approved by the court having jurisdiction in the
premises, whereby such receiver or trustee assumes and agrees to be
bound by each and every provision of this chapter and the franchise
granted to the Grantee.
17.43 COMPLIANCE WITH STATE AND FEDERAL LAWS.
(a) Notwithstanding any other provisions of the franchise to the contrary,
the Grantee shall at all times comply with all laws and regulations of the state
and federal government or any administrative agencies thereof; provided,
however, if any such state or federal law or regulation shall require the
Grantee to perform any service, or shall permit the Grantee to perform any
service, or shall prohibit the Grantee from performing any service, in conflict
with the terms of the franchise or of any law or regulation of the Village, then
as soon as possible following knowledge thereof, the Grantee shall notify the
Village of the point of conflict believed to exist between such regulation or
law and the laws or regulations of the Village or the franchise.
(b) If the Village determines that a material provision of this chapter is
affected by any subsequent action of the state or federal government, the
Village and the Grantee shall negotiate to modify any of the provisions herein
to such reasonable extent as may be necessary to carry out the full intent and
purpose of this agreement.
17.44 LANDLORD AND TENANT.
(a) Neither the owner of any multiple unit residential dwelling nor his
agent or representative shall interfere with the right of any tenant or lawful
resident thereof to receive cable television service, cable installation or
maintenance from a cable television Grantee regulated by and lawfully operating
under a valid and existing franchise issued by the Village.
(b) Neither the owner or any multiple unit residential dwelling nor his
agent or representative shall penalize, charge or surcharge a tenant or resident
or forfeit or threaten to forfeit any right of such tenant or resident, or
discriminate in any way against such tenant or resident who requests or receives
cable television service from a Grantee operating under a valid and existing
cable television franchise issued by the Village.
(c) No person shall resell, without the expressed, written consent of both
the Grantee and the Village, any cable service, program or signal transmitted by
a cable television Grantee under a franchise issued by the Village.
(d) Nothing in this chapter shall prohibit a person from requiring that
cable television system facilities conform to laws and regulations and
reasonable conditions necessary to protect safety, functioning, appearance and
value of premises or the convenience and safety of persons or property.
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<PAGE>
(e) Nothing in this chapter shall prohibit a person from requiring a
Grantee to agree to indemnify the owner, or his agents or representatives for
damages or from liability for damages caused by the installation, operation,
maintenance or removal of cable television facilities.
17.45 APPLICANTS' BIDS FOR INITIAL FRANCHISE.
(a) All bids received by the Village from the applicants for an initial
franchise will become the sole property of the Village.
(b) The Village reserves the right to reject any and all bids and waive
informalities and/or technicalities where the best interest of the Village may
be served.
(c) All questions regarding the meaning or intent of this chapter or
application documents shall be submitted to the Village in writing. Replies will
be issued by addenda mailed or delivered to all parties recorded by the Village
as having received the application documents. The Village reserves the right to
make extensions of time for receiving bids as it deems necessary. Questions
received less than 14 days prior to the date for the opening of bids will not be
answered. Only replies to questions by written addenda will be binding. All bids
must contain an acknowledgment of receipt of all addenda.
(d) Bids must be sealed, and submitted at the time and place indicated in
the application documents for the public opening. Bids may be modified at any
time prior to the opening of the bids, provided that any modifications must be
duly executed in the manner that the applicant's bid must be executed. No bid
shall be opened or inspected before the public opening.
(e) Before submitting a bid, each applicant shall:
(1) Examine this chapter and the application documents thoroughly; and
(2) Familiarize himself/herself with local conditions that may in any
manner affect performance under the franchise; and
(3) Familiarize himself/herself with federal, state and local laws,
ordinances, rules and regulations affecting performance under the
franchise; and
(4) Carefully correlate the bid with the requirements of this chapter
and the application documents.
(f) The Village may make such investigations as it deems necessary to
determine the ability of an applicant to perform under the franchise, and the
applicant shall furnish to the Village all such information and data for this
purpose as the Village may request. The Village reserves the right to reject any
bid if the evidence submitted by, or investigation of, such applicant fails to
satisfy the Village that such applicant is properly qualified to carry out the
obligations of the franchise and to complete the work contemplated therein.
Conditional bids will not be accepted.
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<PAGE>
(g) All bids received shall be placed in a secure depository approved by
the Village and shall not be opened nor inspected prior to the public opening.
17.46 FINANCIAL, CONTRACTUAL, SHAREHOLDER, AND SYSTEM DISCLOSURE FOR
FRANCHISES.
(a) No franchise will be granted to any applicant unless all requirements
and demands of the Village regarding financial, contractual, shareholder and
system disclosure have been met.
(b) Applicants, including all shareholders and parties with any interest in
the applicant, shall fully disclose all agreements and undertakings, whether
written or oral, or implied with any person, firm, group, association or
corporation with respect to the franchise and the proposed cable television
system. The Grantee of a franchise shall disclose all other contracts to the
Village as the contracts are made. This section shall include, but not be
limited to, any agreements between local applicants and national companies.
(c) Applicants, including all shareholders and parties with any interest in
the applicant, shall submit all requested information as provided by the terms
of this chapter or the application documents, which are incorporated herein by
reference. The requested information must be complete and verified as true by
the applicant.
(d) Applicants, including all shareholders and parties with any interest in
the applicant, shall disclose the numbers of shares of stock, and the holders
thereof, and shall include the amount of consideration for each share of stock
and the nature of the consideration.
(e) Applicants, including all shareholders and parties with any interest in
the applicant, shall disclose any information required by the application
documents regarding other cable systems in which they hold an interest of any
nature, including, but not limited to, the following:
(1) Locations of all other franchises and the dates of award for each
location; and
(2) Estimated construction costs and estimated completion dates for
each system; and
(3) Estimated number of miles of construction and number of miles
completed in each system as of the date of this application; and
(4) Date for completion of construction as promised in the application
for each system.
(f) Applicants, including all shareholders and parties with any interest
in the applicant, shall disclose any information required by the application
documents regarding pending applications for other cable systems, including, but
not limited to, the following:
(1) Location of other franchise applications and date of application
for each system; and
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<PAGE>
(2) Estimated dates of franchise awards; and
(3) Estimated number of miles of construction; and
(4) Estimated construction costs.
17.47 PENALTIES.
For the violation of any of the following provisions of this chapter or the
franchise agreement, penalties may be levied against the Grantee and shall be
paid by the Grantee and, if not so paid, shall be chargeable to the letter of
credit or cash security deposit, as follows, and the Village Board of Trustees
may determine the amount of the penalty for other violations which are not
specified in a sum not to exceed $750.00 for each violation, with each day
constituting a separate violation:
(a) Failure to furnish, maintain, or offer all cable services to any
potential Subscriber within the Village upon order of the Village: $250.00 per
day, per violation, for each day such failure occurs or continues;
(b) Failure to obtain or file evidence of required insurance,
construction bond, performance bond, or other required financial security:
$200.00 per day, per violation, for each day such failure occurs or continues;
(c) Failure to provide access to data, documents, records, or reports to
the Village as required by this chapter, including without limitation Sections
20, 30, 31, and 32: $150.00 per day, per violation, for each day such failure
occurs or continues;
(d) Failure to comply with applicable construction, operation, or
maintenance standards: $200.00 per day, per violation, for each day such failure
occurs or continues;
(e) Failure to comply with a rate decision or refund order: $300.00 per
day, per violation, for each day such a violation occurs or continues;
(f) Any violations for non-compliance with the customer service standards
of Sections 24, 25, or 26: $250.00 per day, per violation, for each day that
such noncompliance continues;
(g) Any other violations of the this chapter or the franchise agreement: up
to $500.00 per day, per violation, for each day such violation occurs or
continues;
(h) Grantor may impose any or all of the above enumerated measures against
the Grantee, which shall be in addition to any and all other legal or equitable
remedies it has under this chapter, the franchise agreement, or any other
applicable law.
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<PAGE>
17.48 PROCEDURES.
(a) Whenever the Village believes that the Grantee has violated any term,
condition or provision of this chapter or the franchise agreement, and wishes to
impose monetary penalties, a written notice shall be given to the Grantee
informing it of such alleged violation or liability. The written notice shall
describe in reasonable detail the specific violation so as to afford the Grantee
an opportunity to remedy the violation. The Grantee shall have 30 days
subsequent to the date of such notice in which to correct the violation before
the Village may impose penalties unless the violation is, in the opinion of the
Village, of such a nature so as to require more than 30 days and the Grantee
proceeds, immediately upon receipt of such notice, and continuously, and
diligently, to correct the violation. In any case where the violation is not
cured within 30 days of notice from the Village, or such other time to which the
Grantee and the Village may mutually agree, the Village may proceed to impose
liquidated damages and to exercise any other remedy provided in this chapter or
the franchise agreement.
(b) The Grantee may, within 10 days of receipt of notice, notify the
Village that there is a dispute as to whether a violation or failure has, in
fact, occurred. Such notice by the Grantee to the Village shall specify with
particularity the matters disputed by the Grantee and shall stay the running of
the 30-day cure period pending Board decision as required below. The Board
shall hear the Grantee's dispute. The Grantee must be given at least five days
notice of the hearing. At the hearing, the Grantee shall be entitled to the
right to present evidence and the right to be represented by counsel. In the
event the Village upholds the finding of a violation, the Grantee shall have 15
days thereafter or the remaining time period set in Subsection (a) above,
whichever is longer, or such other time period as the Grantee and the Village
mutually agree, to correct the violation. In any case where the violation is not
cured within 30 days of notice from the Village, or such other time to which the
Grantee and the Village may mutually agree, the Village may proceed to impose
liquidated damages and to exercise any other remedy provided in this chapter or
the franchise agreement.
(c) The rights reserved to the Village under this section are in addition
to all other rights of the Village whether reserved by this chapter or
authorized by law or equity, and no action, proceeding or exercise of a right
with respect to penalties shall affect any other right the Village may have.
17.49 LIMITS ON GRANTEE RECOURSE.
(a) The Grantee may seek enforcement of the terms of its franchise in
equity, but shall have no recourse against the Village for money damages or for
any loss, expense, or damage resulting from the terms and conditions of the
franchise nor because of the Village's enforcement thereof. The Grantee shall
be deemed to expressly agree that it accepts the franchise relying solely on its
own investigation and understanding of the power and authority of the Village to
grant said franchise and that, in partial consideration of the grant of the
franchise, the Grantee waives and releases all claims of damages of any kind
whatsoever, either known or unknown, existing or future, that it may have in
connection with any matter specified in this Subsection.
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<PAGE>
(b) The Grantee shall acknowledge that it has not been induced to accept
the franchise by any promise, verbal or written, by or on behalf of the Village
or by any third Person regarding any term or condition of the franchise not
otherwise expressed herein. The Grantee shall further be deemed to warrant that
no promise or inducement, oral or written, has been made to any Village employee
or official regarding receipt of the franchise, other than as contained in the
franchise.
17.50 NONENFORCEMENT BY VILLAGE.
The Grantee shall not be excused from complying with any of the terms and
conditions of the franchise by any failure of the Village, on any one or more
occasions, to insist on the Grantee's performance of, or to seek the Grantee's
compliance with, any one or more of said terms or conditions.
17.51 RIGHTS AND REMEDIES.
In the event of a violation or an alleged violation of the franchise by
the Grantee, the Village, by suit, action, mandamus, or other proceeding, in law
or in equity, may enforce or compel the performance of the terms of the
franchise to the full allowable extent. In the event of a judicial proceeding,
the prevailing party shall be entitled to reimbursement of all costs and
expenses, including reasonable attorneys fees, incurred in connection with such
judicial proceeding.
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<PAGE>
EXHIBIT 10.1.7
VILLAGE OF LIBERTYVILLE
ORDINANCE NO. 97-O- 75
--
AN ORDINANCE APPROVING COMPREHENSIVE
NEW CABLE REGULATIONS
AND A CABLE FRANCHISE RENEWAL AGREEMENT
AND LETTER AGREEMENT WITH JONES INTERCABLE
================================================================================
Adopted by the
President and Board of Trustees
of
the Village of Libertyville
Lake County, Illinois
this 23rd day of September 1997
---- ---------
================================================================================
Published in pamphlet form by direction
and authority of the Village of Libertyville
Lake County, Illinois
this 24th day of September 1997
---- ---------
<PAGE>
VILLAGE OF LIBERTYVILLE
ORDINANCE NO. 97-O- 75
--
AN ORDINANCE APPROVING COMPREHENSIVE
NEW CABLE REGULATIONS
AND A CABLE FRANCHISE RENEWAL AGREEMENT
AND LETTER AGREEMENT WITH JONES INTERCABLE
------------------------------------------
WHEREAS, Cable TV Fund 12-A, d/b/a Jones Intercable ("Jones Intercable"),
has been the cable television service provider to the Village of Libertyville
pursuant to a cable television franchise granted by the Village pursuant to
Libertyville Ordinance No. 81-O-5 and transferred to Jones Intercable in 1984
(the "Franchise"); and
WHEREAS, the Franchise was due to expire on March 31, 1996, and has been
extended pursuant to a series of agreements between the Village and Jones
Intercable; and
WHEREAS, the Village has participated in a Cable Consortium comprised of
the Village, the Villages of Grayslake, Mundelein, and Wauconda, and the County
of Lake; and
WHEREAS, the Cable Consortium has carefully and thoroughly analyzed the
cable-related needs and interests of the members of the Consortium and has
negotiated with Jones Intercable (i) the terms of a cable ordinance, including
comprehensive regulations applicable to cable television service providers
within the Village and within the jurisdictions of the other members of the
Cable Consortium, (ii) the terms of a cable franchise renewal agreement,
including provisions satisfactory for renewal of the Franchise and of the
franchises between Jones Intercable and the other members of the Consortium, and
(iii) the terms of a letter agreement providing for payment by Jones Intercable
of certain fees, costs, and expenses to the members of the Consortium; and
WHEREAS, the President and Board of Trustees of the Village of Libertyville
have reviewed all of the provisions of the documents negotiated by the Cable
Consortium, have considered all of the facts and circumstances related to the
Franchise, have analyzed the cable-related needs and
<PAGE>
interests of the Village, and have determined that the terms of the proposed
cable ordinance, the proposed cable franchise renewal agreement, and the
proposed letter agreement are appropriate, proper, and in the best interests of
the Village and its residents;
NOW, THEREFORE, BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF
THE VILLAGE OF LIBERTYVILLE, COUNTY OF LAKE, STATE OF ILLINOIS, AS FOLLOWS:
SECTION ONE: Recital. The foregoing recitals are hereby incorporated
----------- -------
herein as if fully set forth.
SECTION TWO: Approval of Cable Ordinance. The President and Board of
----------- ----------------------------
Trustees hereby approve the cable ordinance in the form attached hereto and by
this reference incorporated herein as Exhibit A (the "Cable Ordinance").
SECTION THREE: Approval of Cable Franchise Renewal Agreement. The President
------------- ---------------------------------------------
and Board of Trustees hereby approve the cable franchise renewal agreement in
the form attached hereto and by this reference incorporated herein as Exhibit B
(the "Cable Franchise Renewal Agreement") and hereby authorize and direct the
Village President and the Village Clerk to execute and attest, respectively, the
Cable Franchise Renewal Agreement after Jones Intercable has fully and properly
executed and attested the Cable Franchise Renewal Agreement and after Jones
Intercable has fulfilled the terms of paragraphs numbered 1 and 2 in the Letter
Agreement defined in Section Four of this ordinance.
SECTION FOUR: Approval of Letter Agreement. The President and Board of
------------ ----------------------------
Trustees hereby approve the letter agreement between Jones Intercable and the
Village in the form attached hereto and by this reference incorporated herein as
Exhibit C (the "Letter Agreement") and hereby
<PAGE>
authorize and direct the Village President and the Village Clerk to execute and
attest, respectively, the Letter Agreement after it has been fully and properly
executed and attested by Jones Intercable.
SECTION FIVE: Effective Date. This ordinance shall be in full force and
------------ --------------
effect from and after its passage, approval, and publication in pamphlet form in
the manner provided by law.
PASSED this 23rd of September 1997.
---- ---------
AYES: LeGATES, LARSON, GIZA, HARGER, FRANZEN, TOPPER
NAYS: None
ABSENT: None
APPROVED this 24th day of September 1997.
---- ---------
/s/ signature illegible
-----------------------
Village President
ATTEST:
/s/ signature illegible
- -----------------------
Village Clerk
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<PAGE>
VILLAGE OF LIBERTYVILLE
CABLE TELEVISION FRANCHISE ORDINANCE
SEC.1. SHORT TITLE.
This chapter shall be known and may be cited as the "Village of
Libertyville Cable Television Franchise Ordinance."
SEC.2. DEFINITIONS.
For the purpose of this chapter the following terms, phrases, words, and
their derivations shall have the meaning given herein:
"Additional Service" means any subscriber service provided by the grantee
for which a special charge is made based on program or service content, time, or
spectrum space usage.
"Basic Service" means all subscriber services provided by the Grantee in
one or more service tiers for an established regular monthly fee, which includes
at a minimum the delivery of local broadcast stations, and public, educational
and government access channels. Basic Service does not include optional program
and satellite service tiers, a la carte services, per channel, per program, or
auxiliary services for which a separate charge is made. However, Grantee may
include other satellite signals on the Basic Service tier.
"Board" means the Village of Libertyville Board of Trustees.
"Cable Service" means the one-way transmission to subscribers of video
programming or other programming service and subscriber interaction, if any,
which is required for the selection or use of such programming or other
programming service. This definition does not authorize, and shall not be
construed, interpreted, or applied to authorize, the use of the Cable System for
telephone, data, or voice communication services, which services are not
authorized by this chapter.
"Cable System" or "System" or "Cable Television System" means a system of
antennas, cables, wires, lines, towers, wave guides, or other conductors,
converters, equipment or facilities, designed and constructed for the purpose of
producing, receiving, transmitting, amplifying and distributing, audio, video,
and other forms of electronic, electrical or optical signals, which includes
cable television service and which is located in the Village. The definition
shall not include any such facility that serves or will serve only subscribers
without using Village rights-of-way. The definition of "Cable System" shall not
be construed, interpreted, or applied to authorize telephone, data, or voice
communication services, and no such telephone, data, or voice communication
services are authorized by this chapter. In addition, the definition of "Cable
System" shall not be deemed to circumscribe any valid authority of any
governmental body, including the Village, to regulate the activities of
telephone or telegraph companies, or the provision of any service over the Cable
System that is not a "cable service" as such term is defined herein.
<PAGE>
"Class IV Channel" means a signaling path provided by a cable
communications system to transmit signals of any type from a subscriber terminal
to another point in the cable communications system.
"Complaint" means any complaint regarding service, picture quality,
charges or other matter relating to the cable system made by a customer to the
Grantee, whether in written or oral form.
"Control" or "Controlling Interest" means actual working control or
ownership of a System in whatever manner exercised. A rebuttable presumption of
the existence of control or a controlling interest shall arise from the
beneficial ownership, directly or indirectly, by any Person or Entity (except
underwriters during the period in which they are offering securities to the
public) of 5 percent or more of a Cable System or the Franchise under which the
System is operated. A change in the control or controlling interest of an Entity
which has control or a controlling interest in a Grantee shall constitute a
change in the control or controlling interest of the System under the same
criteria. Control or controlling interest as used herein may be held
simultaneously by more than one Person or group of Persons.
"Converter" means an electronic device which converts signals to a
frequency not susceptible to interference, within the television receiver of a
subscriber, and by an appropriate channel selector also permits a subscriber to
view more than 12 channels delivered by the system at designated converter dial
locations.
"FCC" means the Federal Communications Commission and any legally
appointed, designated or elected agent or successor.
"Grantee" means a person or entity to whom or which a franchise under
this chapter is granted by the Village, along with the lawful successors or
assigns of such person or entity.
"Gross Revenues" means all revenue collected directly or indirectly by
the Grantee, arising from or attributable to the provision of cable service by
the Grantee within the Village including, but not limited to: fees charged
Subscribers for any basic, optional, premium, per-channel or per-program
service; franchise fees; installation and re-connection fees; leased channel
fees; converter rentals and/or sales; program guide revenues; studio or
production equipment rentals; late or administrative fees; upgrade, downgrade or
other change-in-service fees; advertising revenues; revenues from home shopping
and bank-at-home channels; revenues from the sale, exchange, use or cable cast
of any programming developed on the system for community or institutional use;
and any value (at retail price levels) of any non-monetary remuneration received
by Grantee in consideration of the performance of advertising or any other
service of the system; provided, however, that this shall not include any taxes
on services furnished by the Grantee herein imposed directly upon any subscriber
or user by the state, local or other governmental unit and collected by the
Grantee on behalf of the governmental unit.
"Installation" means the connection of the System from feeder cable to
subscribers' terminals.
"May" is permissive.
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<PAGE>
"Monitoring" means observing a communications signal, or the absence of a
signal, where the observer is neither the subscriber nor the programmer, whether
the signal is observed by visual or electronic means, for any purpose
whatsoever; provided monitoring shall not include system-wide, non-individually
addressed sweeps of the system for purposes of verifying system integrity,
controlling return paths transmissions, or billing for pay services.
"Normal Business Hours" means those hours during which similar businesses
in the Village are open to serve customers. In all cases, normal business hours
must include some evening hours at least one night per week, and some weekend
hours.
"Normal Operating Conditions" means those service conditions that are
within the control of the Grantee. Those conditions that are not within the
control of the Grantee are defined in Section 40 of this chapter.
"Person" means any natural person, or any association, firm, partnership,
joint venture, corporation, or other legally recognized entity or organization,
whether for-profit or not-for-profit, but excluding the Village.
"Public Way" means, except where expressly limited by this chapter or a
franchise and, in any event, only to the extent necessary to permit the
installation and maintenance of a Cable System, the surface, the air space above
the surface, and the area below the surface of any public street, highway, lane,
path, alley, sidewalk, boulevard, drive, bridge, conduit, tunnel, park, parkway,
waterway, utility easement (as defined in Section 541 of the Cable Act) or other
public right-of-way now or hereafter held by, or dedicated to, the Village in
which the rights and title of the Village are such as to entitle the Village and
the Grantee to the use thereof for the purpose of installing and maintaining the
Grantee's Cable System. No reference in this chapter to "Public Way" shall be
deemed to be a representation or guarantee by the Village that its title or
interest in any property is sufficient to permit its use for such purpose, and a
franchise shall, by the use of such term, be deemed to grant only such rights to
use property in the Village as the Village may have the right and power to grant
in such franchise.
"Shall" is mandatory.
"Service Area" means all areas within the Village corporate limits.
"Service Interruption" or "Outage" means the loss of either picture or
sound or both for any channel for single or multiple subscriber(s).
"Street" means the surface of and all rights-of-way and the space above
and below any public street, road, highway, freeway, lane, path, Public Way or
place, sidewalk, alley, court, boulevard, parkway, drive or easement now or
hereafter held by the Village for the purpose of public travel.
"Subscriber" means any person, firm, Grantee, corporation, or association
lawfully receiving Cable Service provided by a Grantee pursuant to this chapter.
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<PAGE>
"User" means a party utilizing a cable television system channel for
purposes of production or transmission of material to subscribers, as contrasted
with receipt thereof in a subscriber capacity.
"Village" means the Village of Libertyville, Illinois.
"Village Administrator" means the Village Administrator of the Village or
his or her designee.
SEC.3. RIGHTS AND PRIVILEGES OF GRANTEE.
Any cable television franchise granted by the Village shall grant to the
Grantee the right and privilege to erect, construct, operate, and maintain in,
upon, along, across, above, over, and under the streets now in existence and as
may be created or established during its terms any poles, wires, cable,
underground conduits, manholes, and other television conductors and fixtures
necessary for the maintenance and operation of a Cable System, but only in
strict compliance with the provisions of such franchise and this chapter. Each
such franchise shall include the following terms: (1) a franchise fee not less
than the fee required pursuant to Section 29 of this chapter; (2) performance
security not less than the security required pursuant to Section 14 of this
chapter; (3) a franchise term not longer than the maximum term provided in
Section 6 of this chapter, and (4) specially designated noncommercial channels
for use by local governmental, educational, and public authorities as provided
in Section 35 of this chapter.
SEC.4. AGREEMENT AND INCORPORATION OF APPLICATION BY REFERENCE.
(a) The execution of a franchise agreement by the Grantee shall be
agreement and acknowledgment of the Grantee to be bound by all the terms and
conditions contained in this chapter.
(b) The Grantee shall provide all services specifically set forth in its
application and shall provide cable television service within the confines of
the Village; and by its acceptance of the franchise, the Grantee specifically
grants and agrees that its application is thereby incorporated by reference and
made a part of the franchise.
SEC.5. FRANCHISE TERRITORY.
Any franchise is for the current territorial limits of the Village and
for any area henceforth added thereto during the term of the franchise.
SEC.6. DURATION AND ACCEPTANCE OF FRANCHISE.
Any franchise and the rights, privileges and authority hereby authorized
shall take effect and be in force from and after the signing of a franchise
agreement by the Village, as provided by law, and shall continue in force and
effect for an initial term of no longer than 12 years; provided, however, that
such franchise shall have no force or effect and shall be null and void except
only if the Grantee, within 30 days after the date of Village approval of the
franchise, shall file with the Village its unconditional acceptance of the
franchise and promise to comply with and abide by all
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of its provisions, terms and conditions and the provisions of this chapter. Such
acceptance and promise shall be in writing duly executed and sworn to, by, or on
behalf of the Grantee before a notary public or other officer authorized by law
to administer oaths. Such franchise shall be non-exclusive and revocable.
SEC.7. FRANCHISE RENEWAL.
(a) To the extent applicable, current federal procedures and standards
pursuant to 47 U.S.C. (S) 546 shall govern the renewal of any franchise awarded
under this chapter.
(b) In the event that any or all of the applicable provisions of federal
law are repealed or otherwise modified, and to the full extent consistent with
such applicable provisions then in effect, the following section(s) shall apply:
(1) At least 24 months prior to the expiration of the franchise, the
Grantee shall inform the Village in writing of its intent to
seek renewal of the franchise.
(2) The Grantee shall submit a proposal for renewal which
demonstrates:
a. That it has been and continues to be in substantial
compliance with the terms, conditions, and limitations of
this chapter and its franchise;
b. That its system has been installed, constructed, maintained
and operated in accordance with the accepted standards of
the industry, and this chapter and its franchise;
c. That it has the legal, technical, financial, and other
qualifications to provide the services, facilities, and
equipment set forth in its proposal; and
d. That it has made a good faith effort to provide services
and facilities which accommodate the demonstrated needs and
interests of the community as may be reasonably ascertained
by the Village, with public input; and that it has made a
good faith effort to maintain, operate, and extend its
system as the state of the art progresses so as to assure
its Subscribers high quality service, balanced against the
costs of such needs and interests.
(3) The Village shall proceed to determine whether the Grantee has
satisfactorily performed its obligations under the franchise. To
determine satisfactory performance, the Village shall consider
technical developments, performance of the system and the
quality of the operator's service, including signal quality,
response to customer complaints, and billing practices, but
without regard to the mix or quality of cable services or other
services provided over the system. The Village shall also
consider the Grantee's reports made to the Village and to the
FCC, and the Village may require the Grantee to make
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available specified records, documents, and information for this
purpose, and may inquire specifically whether the Grantee will
supply services sufficient to meet community needs and interests
in light of the costs of such needs and interests. Provision
shall be made for public comment with adequate prior notice of
at least 10 days.
(4) The Village shall then prepare any amendments to this chapter
and the franchise that it believes necessary.
(5) If the Village finds the Grantee's performance satisfactory, and
finds the Grantee's technical, legal, and financial abilities
acceptable, and finds the Grantee's renewal proposal meets the
future cable-related needs of the Village, balanced against the
costs of meeting these needs and interests, a new franchise
shall be granted pursuant to this chapter as amended for a
period to be determined by the Village.
(6) If the Grantee is determined by the Village to have performed
unsatisfactorily, new applicants may be sought and evaluated and
a franchise award shall be made by the Village according to
franchising procedures adopted by the Village.
SEC.8. FRANCHISE REVIEW AND MODIFICATION.
(a) To the extent applicable, the modification provisions of the Cable
Act, as the same may be amended from time to time, shall govern the procedures
and standards for modification of a franchise. The Grantee may file a request
for modification of a franchise with the Village in accordance with said
modification provisions at any time during the term of the franchise.
(b) To the extent that the modification provisions of the Cable Act, as
the same may be amended from time to time, are repealed or otherwise not
applicable, a franchise may be modified to the extent permitted by applicable
law, according to the standards set forth in Subsection (c) below and in other
applicable provisions of this chapter.
(c) It shall be the policy of the Village to amend a franchise with the
consent of the Grantee when necessary to enable the Grantee to take advantage of
technological advancements that will afford the Grantee an opportunity to more
effectively, efficiently, or economically serve the Subscribers; provided,
however, that this Subsection shall not be construed to require the Village to
adopt any such amendment. Further, the Village may modify or revise the terms of
a franchise at any time if necessary to protect the public health or safety.
SEC.9. POLICE POWERS.
(a) In accepting a franchise, the Grantee acknowledges that its rights
thereunder are subject to the police power of the Village to adopt and enforce
general ordinances necessary to the safety and welfare of the public; and it
agrees to comply with all applicable general laws and ordinances enacted by the
Village pursuant to such power.
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(b) Any conflict between the provisions of a franchise and any other
present or future lawful exercise of the Village's police powers shall be
resolved in favor of the latter.
SEC.10. FRANCHISE REQUIRED.
No cable television system shall be allowed to operate or to occupy or
use any Public Way for system installation and maintenance purposes without a
franchise.
SEC.11. USE OF GRANTEE FACILITIES.
The Village shall have the right to install and maintain free of charge
upon the poles of the Grantee any wire or pole fixtures that do not unreasonably
interfere with the cable television system operations of the Grantee. The
Village shall indemnify and hold harmless the Grantee from any claim that might
arise due to or as a result of the Village's use.
SEC.12. INITIAL FRANCHISE COSTS.
Grantee shall pay all costs and charges incidental to the awarding or
enforcing of its initial franchise, including but not limited to:
administrative, engineering, legal and consulting expenses, all costs of
publications of notices prior to any public meeting provided for pursuant to
this chapter, and any costs not covered by application fees incurred by the
Village in its study, preparation of proposal documents, evaluation of all
applications, and examinations of the applicant's qualifications.
SEC.13. NOTICES.
All notices from the Grantee to the Village pursuant to any franchise
shall be sent to the Office of the Village President, with a copy to the Village
Administrator. The Grantee shall maintain with the Village, throughout the term
of the franchise, an address for service of notices by mail. The Grantee shall
maintain a central office to address any issues relating to operating under this
chapter.
SEC.14. LETTER OF CREDIT AND CASH SECURITY DEPOSIT.
(a) Within 15 days after the award of an initial franchise, the Grantee
shall deposit with the Village either an irrevocable letter of credit from a
financial institution acceptable to the Village Board of Trustees or a cash
security deposit in the amount of $100,000.00. The form and content of such
letter of credit shall be approved by the Village Attorney. No interest shall be
paid on any cash deposit.
(b) Within 15 days after the award of a renewal franchise, the Grantee
shall deposit with the Village an irrevocable letter of credit from a financial
institution acceptable to the Village Board of Trustees in the amount of
$25,000.00 and a cash security deposit in the amount of $5,000.00. The form and
content of such letter of credit shall be approved by the Village Attorney. No
interest shall be paid on any cash security deposit.
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(c) The letter of credit and cash security deposit shall be used to
ensure the faithful performance of the Grantee of all provisions of this
chapter, and to ensure compliance with all orders, permits and directions of any
agency, commission, board, department, division, or office of the Village having
jurisdiction over its acts or defaults under this chapter, and to ensure the
payment by the Grantee of any claims, liens, and taxes and penalties assessed
pursuant to Section 47 of this chapter due the Village which arise by reason of
the construction, operation or maintenance of the system.
(d) The letter of credit and cash security deposit shall be maintained at
the amount established herein for the entire term of the franchise, even if
amounts have to be withdrawn pursuant to this chapter. Grantee shall promptly
replace any amounts withdrawn from the letter of credit or security deposit.
(e) If the Grantee fails to pay to the Village any compensation within
the time fixed herein; or fails to pay to the Village any penalties assessed on
taxes due and unpaid; or fails to repay the Village any damages, costs or
expenses which the Village incurs as a result of the Grantee's failure to comply
with all rules, regulations, orders, permits, and other directives of the
Village issued pursuant to a franchise or which the Village is compelled to pay
by reason of any act or default of the Grantee in connection with a franchise;
or fails to properly and adequately restore any public way, public property or
private property disturbed by the Grantee's activities; or fails to pay any
costs incurred by the Village in connection with the award of any franchise or
renewal franchise; or otherwise fails to faithfully perform the duties and
responsibilities of a franchise, then the Village may withdraw money from the
letter of credit or cash security fund in accordance with the procedures set
forth in Subsection (f) below.
(f) The Village shall provide Grantee with written notice informing
Grantee that such amounts are due to the Village. The written notice shall
describe, in reasonable detail, the reasons for the assessment. The Grantee
shall have 15 days subsequent to receipt of the notice within which to cure
every failure cited by the Village or to notify the Village that there is a
dispute as to whether Grantee believes such amounts are due the Village. Such
notice by the Grantee to the Village shall specify with particularity the basis
of Grantee's belief that such monies are not due the Village.
(g) The rights reserved to the Village with respect to the letter of
credit and cash security deposit are in addition to all other rights of the
Village, whether reserved by the franchise or authorized by law, and no action,
proceeding or exercise of a right with respect to such letter of credit and
security deposit shall affect any other right the Village may have.
(h) The letter of credit shall contain the following endorsement: "It is
hereby understood and agreed that this letter of credit may not be canceled by
the issuer bank nor the intention not to renew be stated by the issuer bank
until 45 days after receipt by the Village, by registered mail, of a written
notice of such intention to cancel or not to renew."
(i) Receipt of the 45-day notice by the Village shall be construed as a
default granting the Village the right to immediate payment from the issuer bank
of the entire amount of the letter of credit.
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(j) The Village, at any time during the term of a franchise, may waive,
in writing, Grantee's requirement to maintain a letter of credit or cash
security deposit.
SEC.15. CONSTRUCTION BOND.
(a) Prior to being approved for an initial installation of a system, the
Grantee shall file with the Village a construction bond in the amount of not
less than 110 percent of the costs to install the System in the service area
contained in the application or renewal proposal in favor of the Village. This
bond shall be maintained throughout the construction period and until such time
as determined by the Village, unless specified in the franchise agreement.
(b) Prior to being approved for an upgrade of the system that involves
significant excavation or other disturbance of Public Way, the Grantee shall
file with the Village a performance bond in the amount of not less than
$100,000.00. This bond shall be maintained throughout the upgrade period and
until such time as determined by the Village, unless specified in the franchise
agreement.
(c) If the Grantee fails to diligently pursue and complete the
construction required for the installation or upgrade of its cable system, or
fails to well and truly observe, fulfill and perform each term and condition of
this chapter or of the franchise as it relates to construction, installation or
upgrade of the system, then there shall be recoverable jointly and severally,
from the principal and surety of the bond, the cost of completing such
construction and any damages or loss suffered by the Village as a result,
including the full amount of any compensation, indemnification, or cost of
removal or abandonment of any property of the Grantee, plus a reasonable
allowance for attorney's fees, including the Village's legal staff, and costs,
up to the full amount of the bond. This Section shall be an additional remedy
for any and all violations outlined in Subsection 14(e).
(d) The bond shall contain the following endorsement: "It is hereby
understood and agreed that this bond may not be canceled by the surety nor the
intention not to renew be stated by the surety until 45 days after receipt by
the Village, by registered mail, a written notice of such intent to cancel or
not to renew."
(e) Upon receipt of a 45-day notice, this shall be construed as default
granting the Village the right to demand payment on the bond.
(f) The Village, at any time during the term of this chapter, may, in
writing, waive or reduce Grantee's requirement to maintain a performance bond.
SEC.16. LIABILITY AND INSURANCE.
(a) The Grantee shall maintain and by its acceptance of a franchise
specifically agrees that it will maintain throughout the term of the franchise,
liability insurance insuring the Grantee and the Village and the Village's
officers, boards, commissions, elected and appointed officials, agents,
and employees, in the minimum amounts of:
(1) $2,000,000.00 for bodily injury or death to each person;
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(2) $3,000,000.00 for bodily injury or death from any one accident;
(3) $3,000,000.00 for property damage from any one accident;
(4) $2,000,000.00 for all other types of liability.
(b) The Grantee shall carry and maintain in its own name automobile
liability insurance with a limit of $2,000,000 for each person and $2,000,000
for each accident for property damage with respect to owned and non-owned
automobiles for the operation of which the Grantee is responsible
(c) The certificate of insurance obtained by the Grantee in compliance
with this Section must be approved by the Village Attorney and such insurance
policy certificate of insurance, along with written evidence of payment of
required premiums, shall be filed and maintained with the Village during the
term of the franchise. The Grantee shall immediately advise the Village Attorney
of any litigation that may develop that would affect this insurance.
(d) Neither the provisions of this Section, nor any damages recovered by
the Village thereunder, shall be construed to or limit the liability of the
Grantee under any franchise issued hereunder or for damages.
(e) Such insurance policies provided for herein shall name the Grantor,
its officers, boards, commissions, agents and employees as additional insured,
and shall be primary to any insurance carried by the Grantor. The insurance
policies required by this Section shall be carried and maintained by the Grantee
throughout the term of the franchise and such other period of time during which
the Grantee operates or is engaged in the removal of its cable system. Each
policy shall contain the following endorsement: "It is hereby understood and
agreed that this insurance policy may not be canceled by the surety nor the
intention not to renew be stated by the surety until 30 days after receipt by
the Village, by registered mail, of written notice of such intention to cancel
or not to renew."
SEC.17. INDEMNIFICATION.
(a) The Village shall not at any time be liable for injury or damage
occurring to any Person or property from any cause whatsoever arising out of the
construction, maintenance, repair, use, operation, condition or dismantling of
the Grantee's Cable Television System or due to the act or omission of any
Person or entity other than the Village or those Persons or entities for which
the Village is legally liable as a matter of law.
(b) The Grantee shall, at its sole cost and expense, indemnify and hold
harmless the Village, all associated, affiliated, allied and subsidiary entities
of the Village now existing or hereinafter created, and their respective
officers, boards, commissions, employees, agents, attorneys and contractors
(hereinafter referred to as "Indemnitees") from and against:
(1) Any and all liabilities, obligations, damages, penalties,
claims, liens, costs, charges, losses and expenses (including,
without limitation, fees and
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expenses of attorneys, expert witnesses and consultants), which
may be imposed upon, incurred by or asserted against the
Indemnitees by reason of any act or omission of the Grantee, its
personnel, employees, agents, contractors or subcontractors,
resulting in personal injury, bodily injury, sickness, disease
or death to any Person or damage to, loss of or destruction of
tangible or intangible property, libel, slander, invasion of
privacy and unauthorized use of any trademark, trade name,
copyright, patent, service mark or any other right of any
Person, firm or corporation, which may arise out of or be in any
way connected with the construction, installation, operation,
maintenance, use or condition of the Cable Television System
caused by Grantee, its subcontractors or agents or the Grantee's
failure to comply with any federal, state or local statute,
ordinance or regulation.
(2) Any and all liabilities, obligations, damages, penalties,
claims, liens, costs, charges, losses and expenses (including,
without limitation, fees and expenses of attorneys, expert
witnesses and consultants), which are imposed upon, incurred by
or asserted against the Indemnitees by reason of any claim or
lien arising out of work, labor, materials or supplies provided
or supplied to the Grantee, its contractors or subcontractors,
for the installation, construction, operation or maintenance of
the Cable Television System. Upon the written request of the
Village such claim or lien shall be discharged or bonded within
15 days following such request.
(3) Any and all liabilities, obligations, damages, penalties,
claims, liens, costs, charges, losses and expenses (including,
without limitation, fees and expenses of attorneys, expert
witnesses, and consultants), which may be imposed upon,
incurred by or asserted against the Indemnitees by reason of any
financing or securities offering by Grantee or its Affiliates
for violations of the common law or any laws, statutes or
regulations of the State of Illinois or of the United States,
including those of the Federal Securities and Exchange
Commission, whether by the Grantee or otherwise; excluding
therefrom, however, claims which are solely based upon and arise
solely out of information supplied by the Village to the Grantee
in writing and included in the offering materials with the
express written approval of the Village prior to the offering.
(c) The Grantee undertakes and assumes for its officers, agents,
contractors and subcontractors and employees all risk of dangerous conditions,
if any, on or about any village-owned or controlled property, including public
rights-of-way and easements, and the Grantee hereby agrees to indemnify and hold
harmless the Indemnitees against and from any claim asserted or liability
imposed upon the Indemnitees for personal injury or property damage to any
Person arising out of the installation, operation, maintenance or condition of
the Cable Television System or the Grantee's failure to comply with any federal,
state or local statute, ordinance or regulation, except for any claim asserted
or liability imposed upon the Indemnitees that arises or is related to willful
negligence by the Indemnitees.
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(d) In the event any action or proceeding shall be brought against the
Indemnitees by reason of any matter for which the Indemnitees are indemnified
hereunder, the Grantee shall, upon notice from any of the Indemnitees, at the
Grantee's sole cost and expense, resist and defend the same with legal counsel
acceptable to the Village Attorney, provided further, however, that the Grantee
shall not admit liability in any such matter on behalf of the Indemnitees
without the written consent of the Village Attorney or the Village Attorney's
designee.
(e) The Village shall give the Grantee prompt notice of the making of any
written claim or the commencement of any action, suit or other proceeding
covered by the provisions of this Section.
(f) Nothing in this chapter or in any franchise is intended to, or shall
be construed or applied to, express or imply a waiver by the Village of
statutory provisions, privileges or immunities of any kind or nature as set
forth in Illinois Statutes, including the limits of liability of the Village as
exists presently or as may be increased from time to time by the Legislature.
SEC.18. RIGHTS OF INDIVIDUALS.
(a) The Grantee shall not deny service, deny access, or otherwise
discriminate against subscribers, channel users, or general citizens on the
basis of race, color, religion, national origin, income, gender, marital status,
sexual preference or age. The Grantee shall comply at all times with all other
applicable federal, state and local laws and regulations and all executive and
administrative orders relating to nondiscrimination which are hereby
incorporated and made part of this chapter by reference.
(b) The Grantee shall strictly adhere to the equal employment opportunity
requirements of the Federal Communications Commission and of state and local
governments, and as amended from time to time.
(c) The Grantee shall, at all times, comply with the privacy requirements
of state and federal law.
(d) Grantee shall make cable service available to all residential areas
within the Village, provided that all such permission as may be required from
the owner of the property is reasonably available, and that service can be
provided in accordance with the line extension requirements of Section 21.
Grantee will only be required to provide service to multi-dwelling units so long
as the owner of the facility consents to the following:
(1) To Grantee's providing of the service to units of the facility;
(2) To reasonable conditions and times for installation, maintenance
and inspection of the system on the facility premises;
(3) To reasonable conditions promulgated by Grantee to protect
Grantee's equipment and to encourage widespread use of the
system; and
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(4) To not demand payment from Grantee for permitting Grantee to
provide service to the facility and to not discriminate in
rental charges, or otherwise, between tenants who receive Cable
Service and those who do not.
SEC.19. PUBLIC NOTICE.
Minimum public notice of any public meeting relating to the franchise
shall follow state statutory requirements and shall be on at least one channel
of the Grantee's System between the hours of 7:00 p.m. and 9:00 p.m., for five
consecutive days prior to the meeting.
SEC.20. SERVICE AVAILABILITY AND RECORD REQUEST.
The Grantee shall provide cable television service throughout the entire
franchise area pursuant to the provisions of this chapter and the franchise and
shall keep a record for at least three years of all requests for service
received by the Grantee. This record shall be available for public inspection at
the local office of the Grantee during regular office hours.
SEC.21. SYSTEM CONSTRUCTION.
(a) New construction timetable.
(1) Within two years from the date of the award of an initial
franchise, the Grantee must make cable television service
available to every dwelling unit within the service area.
a. The Grantee must make cable television service available to
at least 20 percent of the dwelling units within the
service area within six months from the date of the award
of the franchise.
b. The Grantee must make cable television service available to
at least 50 percent of the dwelling units within the
service area within one year from the date of the award of
the franchise.
(2) The Grantee, in its application, may propose a timetable of
construction which will make cable television service available
in the service area sooner than the above minimum requirements,
in which case said schedule will be made part of the franchise
agreement, and will be binding upon the Grantee.
(3) Any delay beyond the terms of this timetable, unless
specifically approved by the Village, will be considered a
violation of this chapter for which the provisions of either
Sections 39 or 47 shall apply, as determined by the Village.
(4) In special circumstances and for good cause shown by the
Grantee, the Village, in the exercise of its sole discretion,
may waive 100 percent completion within the two-year time frame,
provided that substantial
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completion is accomplished within the allotted time frame,
substantial completion to be not less than 95 percent.
Justification for less than 100 percent must be submitted
subject to the approval of the Village.
(b) Line extensions:
(1) In areas of the franchise territory not initially served, a
Grantee shall be required to extend its system pursuant to the
following requirements:
a. No customer shall be refused service arbitrarily. To
expedite the process of extending the Cable System into a
new subdivision, the Village will forward to the Grantee an
approved engineering plan of each project. Subject to the
density requirements, the Grantee shall commence the design
and construction process upon receipt of the final
engineering plan. Upon notification from the Village that
the first home in the project has been approved for a
building permit, the Grantee shall have a maximum of three
months to complete the construction/activation process
within the applicable project phase, barring any unforeseen
adverse weather or ground conditions.
b. The Grantee shall extend and make cable television service
available to every dwelling unit in all unserved,
developing areas having at least 25 dwelling units planned
per street mile, as measured from the existing system, and
shall extend its system simultaneously with the
installation of utility lines.
c. The Grantee shall extend and make cable television service
available to any isolated resident outside the initial
service area requesting connection at the standard
connection charge, if the connection to the isolated
resident would require no more than a standard 125-foot
drop line.
(2) In areas not meeting the requirements for mandatory extension of
service, the Grantee shall provide, upon the request of a
potential subscriber desiring service, an estimate of the
Grantee's costs required to extend service to the subscriber.
The Grantee shall then extend service upon request of the
potential subscriber. The Grantee may require advance payment or
assurance of payment satisfactory to the Grantee. In the event
the area subsequently reaches the density required for mandatory
extension, such payments shall be refunded to the subscriber.
(3) In cases of new construction or property development where
utilities are to be placed underground, all cable system
facilities also shall be placed underground, except as otherwise
specifically approved in advance by the Village. If the Grantee
receives notice of such new construction or property
development, including the date on which open trenching is
available for the
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Grantee's work (the "Notice"), then the Grantee shall provide,
to the developer or property owner and to the Village, the
specifications for its trenching and the Grantee shall install
its conduit, pedestals and vaults, and laterals within five
working days after the trenches first become available to the
Grantee for such work. Costs of trenching and easements required
to bring service to the development shall be borne by the
developer or property owner; provided, however, that if the
Grantee fails to install its conduit, pedestals and vaults, and
laterals within said five working days, then the cost of any new
trenching, and easements if necessary, shall be borne by the
Grantee. The Notice may be given to the Grantee at the address
stated in the franchise agreement or to the local general
manager or system engineer of the Grantee. Written or oral
notice from the developer, property owner, or Village shall be
sufficient to qualify as the Notice.
(c) Nothing herein shall be construed to prevent the Grantee from serving
areas of the Village not covered under this Section upon agreement with
developers, property owners, residents, or businesses, provided that all
applicable fees are paid by the Grantee to the Village therefor, including
without limitation the franchise fee provided in this chapter.
(d) A Grantee, in its new or renewal application, may propose a line
extension policy that will result in serving more residents of the Village than
as required above, in which case the Grantee's policy will be incorporated into
the franchise agreement and will be binding on the Grantee.
(e) The violation of this Section shall be considered a violation of this
chapter for which the provisions of either Sections 39 or 47 shall apply, as
determined by the Village.
SEC.22. CONSTRUCTION AND TECHNICAL STANDARDS.
(a) The Grantee shall construct, install, operate and maintain its system
in a manner consistent with all laws, ordinances, construction standards,
governmental requirements, and FCC technical standards. In addition, the Grantee
shall provide the Village, upon request, a written report of the results of the
Grantee's annual proof of performance tests conducted pursuant to Federal
Communications Commission standards and requirements.
(b) The following additional specifications shall apply:
(1) Construction, installation and maintenance of the cable
television system shall be performed in an orderly and
workmanlike manner. All cables and wires shall be installed,
where possible, parallel with electric and telephone lines.
Multiple cable configurations shall be arranged in parallel and
bundled with due respect for engineering considerations.
(2) The Grantee shall at all times comply with the most recent
version adopted by the Village of:
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a. National Electrical Safety Code (National Bureau of
Standards);
b. National Electrical Code (National Bureau of Fire
Underwriters);
c. Bell System Code of Pole Line Construction; and
d. Applicable FCC or other federal, state and local
regulations.
(3) In any event, the System shall not endanger or interfere with
the safety of persons or property in the franchise area or other
areas where the Grantee may have equipment located.
(4) Any antenna structure used in the system shall comply with
construction, marking, and lighting of antenna structure,
required by the United States Department of Transportation.
(5) All working facilities and conditions used during construction,
installation and maintenance of the System shall comply with the
standards of the Occupational Safety and Health Administration.
(6) The Grantee regularly shall check radio frequency leakage at
reception locations for emergency radio services to prove that
no interference signal combinations are possible. Stray
radiation shall be measured adjacent to any proposed
aeronautical navigation radio sites to prove no interference to
airborne navigational reception in the normal flight patterns.
FCC rules and regulations shall govern.
(7) The Grantee shall maintain equipment capable of providing
standby power for headend, transportation and trunk amplifiers
for a minimum of two hours.
(8) In all areas of the Village where the cables, wires and other
like facilities of public utilities are placed underground, all
cables, wires and other like facilities of the Grantee installed
after the effective date of the Grantee's franchise shall be
placed underground. When public utilities relocate their
facilities from pole to underground, the Grantee shall
concurrently do so at no expense to the Village.
(c) Plans & Permits.
(1) Right to review; briefings.
a. The Village shall have the right to review the Grantee's
construction plans and specifications prior to the
commencement of any new construction to assure compliance
with the standards specified in this chapter and to inspect
all aspects of Cable System construction. The Village shall
not, however, be required to review or approve such
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plans and specifications or to make such inspections, and
the Village specifically disclaims such obligation. The
Grantee shall be solely responsible for taking all steps
necessary to assure compliance with such standards and to
ensure that the Cable System is installed in a safe manner
and pursuant to the terms and conditions of this chapter
and the franchise agreement.
b. Before beginning new construction of, or on any part of,
the Cable System, the Grantee's chief engineer or
designated individual shall meet with the Village
Administrator or designated individual to explain the
Grantee's construction plans and work program in detail.
Similar briefings shall be held from time to time as deemed
necessary by either the Village or the Grantee until the
work is completed.
(2) The Grantee shall, within 90 days after the Effective Date of
its franchise, furnish to the Village complete "as-built" plans
of the Cable System and shall, thereafter, furnish to the
Village amendments to such plans within 45 days after completion
of any extension or modification of the Cable System. If so
requested by the Grantee, the Village shall keep such as-built
plans confidential to the extent allowable by law, and shall
show such plans only to those employees, contractors or Village
officials who need to see them as a part of their
responsibilities to the Village, or pursuant to their J.U.L.I.E.
responsibilities.
(3) The Grantee shall obtain permits from the Village before
commencing any new construction of or within the Cable System,
with specific permission being required for the opening or
disturbance of any Public Way within the Village. The permit
application shall include a plan drawn in sufficient detail to
demonstrate to the Village that the Cable System will be
constructed in accordance with all applicable codes and
ordinances. Where cable is to be installed on existing poles,
the permit application shall include a drawing showing the
existing poles and additional poles, if requested. Without
characterizing the violation of other provisions of this
chapter, the failure to obtain said permits shall constitute a
material violation of this chapter. The Grantee also, before the
commencement of new construction of, or on any part of, the
Cable System, shall become and remain a member of the J.U.L.I.E.
system.
(d) All work involved in the construction, operation, maintenance,
repair, and removal of the Cable System, or any part thereof, shall be performed
in a workmanlike manner using materials of good and durable quality. If, at any
time, it is determined by the Village or any other agency or authority of
competent jurisdiction that any part of the Cable System, including without
limitation any means used to distribute signals over or within the Cable System,
is harmful to the health or safety of any Person, then the Grantee, at its sole
cost and expense, shall promptly correct all such conditions. Any contractor,
subcontractor, or other Person proposed to be employed for the installation,
maintenance, relocation, or repair of Cable System equipment or facilities shall
be
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licensed in accordance with applicable laws and shall be thoroughly experienced
in the work for which he or she is retained.
(e) Unless expressly provided otherwise in the Franchise, the Grantee
shall at all times comply with any and all rules and regulations enacted or to
be enacted by the Village with reference to construction activity in Public
Ways. All poles, wires, conduits, cables, equipment, pipes, appurtenances,
structures, and other facilities of the Cable System shall be installed and
located in compliance with all applicable Village codes and ordinances and the
applicable provisions of the Franchise so as to cause minimum interference with
the rights and reasonable convenience of the general public, all as determined
by the Village in its sole and absolute discretion. Unless the Village shall in
writing waive its right to review plans, no construction or other work relating
to such facilities within the Public Ways of the Village shall be commenced
until the Village shall have approved and issued a permit on the plans,
specifications and methods for such work. Any such permit may be so conditioned
or restricted as deemed necessary by the Village to assure compliance with the
Franchise and to protect the public health and safety. All such facilities shall
at all times be kept and maintained in a safe condition and in good order and
repair. The Grantee shall at all times employ reasonable care and shall install,
maintain, and use commonly accepted methods and devices for preventing failures
and accidents that are likely to cause damage, injuries or nuisances to the
general public. Suitable barricades, flags, lights, flares or other devices
shall be used at such times and places as are required by applicable ordinances
and at such additional times and places as are required for the safety of all
members of the general public. Any such facilities placed in any Public Way by
the Grantee shall be placed and maintained in such a manner as not to interfere
with the usual travel or other existing or projected uses of such Public Way.
(f) Excavation Work and Time Periods.
(1) No excavation on or in any Public Way, public property or
private property in the Village permitted hereunder in
connection with the installation of any Cable System facilities
shall be made more than 24 hours immediately before installation
of such facilities. The Grantee may apply for a waiver in
unusual circumstances.
(2) The Grantee shall notify the Village Administrator at least 72
hours before any excavation on or in any Public Way, public
property or private property so that the Village Administrator
will have the opportunity to inspect such excavation work.
(3) All excavations in lawns or grassy parkways shall be promptly
backfilled, tamped and restored with sod in accordance with the
applicable provisions of this chapter.
(g) Location of Pedestals and Vaults.
(1) Pedestals and Similar Above Ground Appurtenances.
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a. The Village has determined that pedestals and similar
aboveground appurtenances located on a Public Way (other than in
an alley or as provided in Paragraph c below) or on public
property will adversely affect the appearance of the Village and
of the property therein and, accordingly, pursuant to Section
541(a)(2) of the Cable Act, the Grantee shall not under any
circumstances install or locate a pedestal or any similar above
ground appurtenance on any Public Way (other than in an alley or
as provided in Paragraph c below) or on any public property as a
part of any new construction or any relocation or
reinstallation.
b. Pedestals or similar above ground appurtenances may be installed
on private property only with the express, prior written consent
and permission of the affected property owner or his or her
authorized agent, or the duly elected or appointed
representative of the affected property; provided, however, that
such pedestals or above ground appurtenances shall comply with
all applicable provisions of the Village of Libertyville
Municipal Code.
c. Notwithstanding Paragraph b above, pedestals or similar above
ground appurtenances may be installed within certain utility
easements on private property without the consent or permission
of the affected property owner provided that (i) the Grantee is
lawfully authorized to use such utility easement pursuant to
state or federal law; (ii) no such pedestal or similar above
ground appurtenance may be installed unless, at the time of the
desired installation, there exists within the utility easement,
a similar above ground appurtenance of another utility company
or entity; and (iii) the Grantee's pedestal or similar above
ground appurtenance shall be located as close as is practicable
to said existing above ground appurtenance.
(2) Vaults.
a. The Grantee shall not install underground vaults on any Public
Way after the effective date of this franchise, except in
accordance with and pursuant to the provisions of paragraph d.
of this subsection. All underground vaults shall be flush
mounted with the surface of the land area.
b. The Grantee shall inform the owner of any private property in
the Village where the Grantee contemplates placing a vault on
the parkway immediately adjacent to said private property, that
the owner has the right to elect between the construction and
installation of an underground vault on the owner's private
property or on the Public Way (including, without limitation,
the parkway) immediately adjacent to the owner's property. Said
notice shall be in writing, in
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form and substance acceptable to the Village Administrator, and
delivered by certified mail or personal delivery to said owner
at least 30 days immediately before the commencement of
construction on or around the owner's property.
c. If the owner elects to allow construction and installation of an
underground vault on the owner's property, then the owner shall
be required to grant the Grantee and easement, in form reviewed
and approved by the Village Attorney, allowing for such
construction and installation.
d. If the owner (i) elects not to allow construction and
installation of an underground vault on the owner's property; or
(ii) fails to respond to the election notice delivered by the
Grantee pursuant to Paragraph b above within 45 days after the
owner receives the notice; or (iii) refuses to grant the Grantee
the easement pursuant to Paragraph c above within 30 days after
the owner's receipt of an easement document, then the Grantee
shall be entitled to construct and install an underground vault
on the Public Way (including, without limitation, the parkway)
that is immediately adjacent to the owner's property.
SEC.23. USE OF STREETS.
(a) The Grantee's system, poles, wires and appurtenances shall be
located, erected and maintained so that none of its facilities shall endanger
or interfere with the lives of persons or interfere with the rights or
reasonable convenience of property owners who adjoin any of the streets and
Public Ways, or interfere with any improvements the Village may make, or hinder
or obstruct the free use of the streets, alleys, bridges, easements or public
property.
(b) In case of any disturbance of pavement, sidewalk, landscaping,
driveway or other surfacing, the Grantee shall, at its own cost and expense and
in a manner approved by the Village, replace and restore all paving, sidewalk,
driveway, landscaping, or surface of any street or alley disturbed, in at least
as good condition as before the work was commenced and in accordance with
standards for such work set by the Village. If, after 30 days, restoration
measures are not performed to the reasonable satisfaction of the Village, the
Village may undertake remedial restoration activities, such activities to be
performed at the Grantee's cost, with such costs to be chargeable against the
security deposit required of the Grantee in Subsection 14(e) of this chapter.
(c) Erection, removal and common uses of poles:
(1) No poles or other wire-holding structures shall be erected by
the Grantee without prior approval of the Village with regard to
location, height, types, and any other pertinent aspect.
However, no location of any pole or wire-holding structure of
the Grantee shall be a vested interest and such poles or
structures shall be removed or modified by the Grantee at its
own expense
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whenever the Village determines that the public convenience
would be enhanced thereby.
(2) Where poles or other wire-holding structures already existing
for use in serving the Village are available for use by the
Grantee, but it does not make arrangements for such use, the
Village may require the Grantee to use such poles and structures
if it determines that the public convenience would be enhanced
thereby and the terms of the use available to the Grantee are
just and reasonable.
(3) Where the Village or a public utility serving the Village
desires to make use of the poles or other wire-holding
structures of the Grantee, but agreement thereof with the
Grantee cannot be reached, the Village may require the Grantee
to permit such use for such consideration and upon such terms as
the Village shall determine to be just and reasonable, if the
Village determines that the use would enhance the public
convenience and would not unduly interfere with the Grantee's
operations.
(d) If at any time during the period of the franchise the Village shall
elect to alter, or change the grade of any street, alley or other Public Ways or
utilities, the Grantee, upon reasonable notice by the Village, shall promptly
remove or relocate as necessary its poles, wires, cables, underground conduits,
manholes and other fixtures at its own expense.
(e) The Grantee shall, on the request of any person holding a building
moving permit issued by the Village, temporarily raise or lower its wires to
permit the moving of buildings. The expense of such temporary removal, raising
or lowering of wires shall be paid by the person requesting the same, and the
Grantee shall have the authority to require such payment in advance. The Grantee
shall be given not less than 48 hours advance notice to arrange for such
temporary wire changes.
(f) The Grantee shall not remove any tree or trim any portion, either
above, at or below ground level, of any tree within any public place without the
prior consent of the Village. The Grantee shall provide notice to any affected
residents at the same time that the Grantee applies to the Village for consent
to perform tree trimming. The Village shall have the right to do the trimming
requested by the Grantee at the cost of the Grantee. Regardless of who performs
the work requested by the Grantee, the Grantee shall be responsible, shall
defend and hold Village harmless from any and all damages to any tree as a
result of trimming, or to the property surrounding any tree, whether such tree
is trimmed or removed.
(g) The Grantee shall not use road cuts for the laying of cable or wires
without the prior approval of the Village.
(h) The right of the Grantee to use and occupy the Public Ways shall not
be exclusive. The Village reserves the right to grant any right or use of such
Public Ways to any Person at any time during the term of the franchise or any
other franchise subsequently granted to any other Person.
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(i) If any public way or portion thereof used by the Grantee shall be
vacated by the Village, or the use thereof discontinued by the Village or the
Grantee, during the term of the franchise, then the Grantee shall forthwith at
its sole cost and expense remove its facilities therefrom unless specifically
permitted to continue to use the same and, on the removal thereof, the Grantee
shall restore, repair, or reconstruct the Public Way area where such removal has
occurred to its original condition as required by the Village. In the event of
any failure, neglect, or refusal by the Grantee, after 30 days written notice
from the Village to repair, improve, or maintain such Public Way, the Village
may, but shall be under no obligation to, conduct such work, or cause it to be
conducted, and the actual cost thereof shall be paid by the Grantee in the time
and manner as directed by the Village. Collection may be made by resort to the
letter of credit or cash security deposit established pursuant to Section 14 of
this chapter, or by court action, or otherwise.
SEC.24. OPERATIONAL STANDARDS.
(a) The Grantee shall maintain all parts of the system in good condition
throughout the entire franchise period.
(b) Upon the reasonable request for service by any person located within
the franchise territory, the Grantee shall, within 30 days, finish the requested
service to such person within terms of the line extension policy. A request for
service shall be unreasonable for the purpose of this subsection if no trunk
line installation capable of servicing that person's block has been installed.
(c) Temporary Service Drops:
(1) The Grantee shall put forth every effort to bury temporary drops
within 10 working days after placement. Any delays for any other
reason than listed will be communicated to the Village. The
following delays will be found understandable and within the
course of doing business: weather, ground conditions, street
bores, system redesign requirements and any other unusual
obstacle, such as obstructive landscaping that is created by the
customer.
(2) Upon request of the Village the Grantee shall provide a monthly
report to the Village on the number of drops pending.
(d) The Grantee shall render efficient service, make repairs promptly,
and interrupt service only for good cause and for the shortest time possible.
Such interruptions, insofar as possible, shall be preceded by notice and shall
occur during periods of minimum system use.
(e) The Grantee shall not allow its cable or other operations to
interfere with television reception of subscribers or persons not served by the
Grantee, nor shall the system interfere with, obstruct or hinder in any manner
the operation of the various utilities serving the residents within the confines
of the Village nor shall other utilities interfere with the Grantee's system.
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SECTION 25. CUSTOMER SERVICE STANDARDS.
(a) Nothing in this chapter shall be construed to prohibit the
enforcement of any federal, state or local law or regulation concerning customer
service or consumer protection that imposes customer service standards or
consumer protection requirements that exceed the customer service standards set
out in this chapter or that address matters not addressed in this chapter.
(b) The Grantee shall maintain a local or toll-free telephone access line
which is available to its subscribers and shall have knowledgeable, qualified
representatives available to respond to customer telephone inquiries 24 hours
per day, seven days per week. Under normal operating conditions, telephone
answer time, including wait time and the time required to transfer the call,
shall not exceed 30 seconds. This standard shall be met no less than 90 percent
of the time as measured on a quarterly basis. Under normal operating conditions,
the customer will receive a busy signal less than three percent of the time.
(c) Customer service centers and bill payment locations will be open for
walk-in customer transactions a minimum of eight hours per day Monday through
Friday, unless there is a need to modify those hours because of the location or
customers served. The Grantee and Village by mutual consent shall establish
supplemental hours on weekdays and weekends as fits the needs of the community.
(d) Under normal operating conditions, each of the following standards
will be met no less than 95 percent of the time as measured on an annual basis.
(1) Standard installations will be performed within seven business
days after an order has been placed. A standard installation is
one that is within 125 feet of the existing system.
(2) Excluding those situations that are beyond its control, the
Grantee will respond to any service interruption promptly and in
no event later than 24 hours from the time of initial
notification. All other regular service requests will be
responded to within 36 hours during the normal work week for
that system. The appointment window alternatives for
installations, service calls and other installation activities
will be: "morning" or "afternoon"; not to exceed a four-hour
"window" during normal business hours for the system, or at a
time that is mutually acceptable. The Grantee shall schedule
supplemental hours during which appointments can be scheduled
based on the needs of the community. If at any time an installer
or technician is running late, an attempt to contact the
customer will be made and the appointment rescheduled as
necessary at a time that is convenient to the customer.
(e) In the event of a Service Interruption, the following standards for
Subscriber credits shall be applied by the Grantee:
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(1) If a Subscriber experiences a Service Interruption totaling four
hours or more on one, two, or three days in any calendar month,
then the Grantee shall provide a credit to that Subscriber equal
to one-thirtieth of one month's total fees paid by that
Subscriber for each day on which such a Service Interruption
occurs; provided, however, that such credit shall not apply to a
Subscriber disconnected because of non-payment or excessive
signal leakage. Such credit shall be provided by the Grantee
automatically upon notice from that Subscriber of such Service
Interruption, regardless of whether that Subscriber requests a
credit.
(2) If a Subscriber experiences a Service Interruption totaling four
hours or more on four or more days in any calendar month, then
the Grantee shall provide a credit to that Subscriber equal to
one month's total fees paid by that Subscriber; provided,
however, that such credit shall not apply to a Subscriber
disconnected because of non-payment or excessive signal leakage.
Such credit shall be provided by the Grantee automatically upon
notice from that Subscriber of the fourth such Service
Interruption, regardless of whether that Subscriber requests a
credit.
(f) The Grantee shall provide written information for each of the
following areas at the time of installation and at any future time upon the
request of the customer:
(1) Product and services offered; and
(2) Prices and service options; and
(3) Installation and service policies; and
(4) How to use the cable television services.
(g) Bills will be clear, concise and understandable, with all charges for
cable services itemized.
(h) A Grantee may not impose a late, administrative or other fee on a
customer for nonpayment of a bill until 30 days have elapsed after the end of
the billing cycle which is the subject of the unpaid bill.
(I) Credits will be issued promptly, but no later than the customer's
next billing cycle following the resolution of the request and the return of the
equipment by the Grantee if service has been terminated.
(j) The Grantee shall notify customers a minimum of 30 days in advance of
any rate or channel change.
(k) The Grantee shall maintain and operate its network in accordance with
the rules and regulations incorporated herein and as may be promulgated by state
or federal regulators.
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(l) The Grantee shall continue, through the term of the franchise, to
maintain the technical standards and quality of service set forth in this
chapter and the franchise. Should the Village find, by resolution, that the
Grantee has failed to maintain these technical standards and quality of service,
and should it, by resolution, specifically enumerate improvements to be made,
the Grantee shall make such improvements. Failure to make such improvements
within three months of such resolution will constitute a breach of a condition
for which penalties contained in Section 47 are applicable.
(m) The Grantee shall keep a monthly service log which indicates the
nature of each service complaint received in the last 24 months, the date and
time each complaint was received, the disposition of each complaint, and the
time and date thereof. This log shall be sent to the Village monthly upon
request.
(n) The Grantee shall provide a copy of the Customer Service Standards
included in this Section to every subscriber via a bill insert at least once
every calendar year. The Grantee shall also provide a copy of these Customer
Service Standards to every new customer within 30 days of connection.
SEC.26. CONTINUITY OF SERVICE MANDATORY.
(a) It shall be the right of all subscribers to continue receiving
service as long as their financial and other obligations to the Grantee are
honored. If the Grantee elects to over build, rebuild, modify or sell the
system, or the Village gives notice of intent to terminate or fails to renew the
franchise, the Grantee shall act so as to ensure that all subscribers receive
continuous, uninterrupted service regardless of the circumstances for a period
not to exceed six months after the franchise has terminated.
(b) If there is a change of franchise, or if a new operator acquires the
system, the Grantee shall cooperate with the Village, new franchisee and
operator in maintaining continuity of service to all subscribers. During such
period, the Grantee shall be entitled to the revenues for any period during
which it operates the system.
(c) If the Grantee fails to operate the system for three consecutive days
without prior approval of the Village or without just cause, the Village may, at
its option, operate the system or designate an operator until such time as the
Grantee restores service under conditions acceptable to the Village or a
permanent operator is selected. If the Village is required to fulfill this
obligation for the Grantee, the Village shall be entitled to all revenues for
any period during which it operates the system and shall be entitled to draw on
the letter of credit and cash security deposit established pursuant to Section
14 of this chapter to recover all of its costs and damages in excess of such
revenues, and, in any event, the Grantee shall be obligated to reimburse the
Village for all costs or damages incurred by the Village resulting from the
Grantee's failure to perform that the Village does not recover from such
revenues or said letter of credit or cash security deposit.
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SEC.27. COMPLAINT PROCEDURE.
(a) During the term of the franchise and any renewal thereof, the Grantee
shall maintain a central office for the purpose of receiving and resolving all
complaints regarding the quality of service, equipment malfunctions, and similar
matters. The office must be reachable by a local and/or toll-free telephone call
to receive complaints regarding quality of service, equipment functions and
similar matters. The Grantee will make good faith efforts to arrange for one or
more payment locations in a central location where customers can pay bills or
conduct other business activities.
(b) As subscribers are connected or reconnected to the system, the
Grantee shall, by appropriate means such as a card or brochure, furnish
information concerning the procedures for making inquiries or complaints,
including the name, address and local or toll free telephone number of the
employee or employees or agent to whom such inquiries or complaints are to be
addressed.
(c) When there have been similar complaints made, or where there exists
other evidence, which, in the judgment of the Village, in consultation with the
Grantee, casts doubt on the reliability or quality of cable service, the Village
shall have the right and authority to require the Grantee to test, analyze and
report on the performance of the system. The Grantee shall fully cooperate with
the Village in performing such testing and shall prepare results and a report,
if requested, within 30 days after notice. Such report shall include the
following information:
(1) The nature of the complaint or problem that precipitated the
special tests; and
(2) The system component(s) tested; and
(3) The equipment used and procedures employed in testing; and
(4) The method, if any, in which such complaint or problem was
resolved; and
(5) Any other information pertinent to the tests and analysis which
may be required.
(d) If, after receiving Grantee's report, and after the Grantee has
completed any corrective action identified in the report, the Village determines
that reasonable evidence still exists of inadequate System Performance, then the
Village may enlist an independent engineer at Grantee's expense to perform tests
and analysis directed toward such suspected failures to meet the requirements of
this chapter. Grantee shall cooperate and permit such testing.
(e) The Village shall require tests, analysis and reports covering specific
subjects and characteristics based on complaints or other evidence only when the
Village has reasonable grounds to believe that the complaints or other evidence
require that tests be performed to protect the public against substandard cable
service.
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SEC.28. GRANTEE RULES AND REGULATIONS.
The Grantee shall have the authority to promulgate such rules,
regulations, terms, and conditions governing the conduct of its business as
shall be reasonably necessary to enable the Grantee to exercise its rights and
perform its obligations under the franchise, and to assure uninterrupted service
to each and all of its customers; provided, however, that such rules,
regulations, terms and conditions shall not be in conflict with the provisions
hereof or applicable state and federal laws, rules and regulations.
SEC.29. FRANCHISE FEE.
(a) A Grantee shall pay to the Village a franchise fee of not less than
five percent of the Grantee's gross revenues or such other maximum amount as
allowed by law.
(b) The franchise fee payment shall be in addition to any other tax or
payment owed to the Village by the Grantee and shall not be construed as payment
in lieu of municipal property taxes or other state, county or local taxes.
(c) The franchise fee and any other costs or penalties assessed shall be
payable quarterly on a calendar year basis to the Village within 30 days after
the end of each quarter. The Grantee shall also file a complete and accurate
verified statement of all gross receipts as previously defined within said 30
days.
(d) The Village shall have the right to inspect and copy the Grantee's
income records and the right to audit and to recompute any amounts determined to
be payable under this chapter. Any additional amount due the Village as a result
of an audit shall be paid within 30 days following written notice to the Grantee
by the Village, which notice shall include a copy of the audit report. If any
audit discloses an underpayment of a franchise fee by an amount in excess of
five percent of the applicable fee, then the Grantee shall pay the full cost of
the audit. The Grantee shall maintain books and records of its operations within
and related to the Village and the Grantee's cable system in sufficient detail
to show gross revenue, by service category, consistent with generally accepted
accounting principles. Said books and records shall be retained in accordance
with the Grantee's document retention policies, but in no event less than five
years.
(e) If any franchise payment or re-computed amount, cost or penalty, is
not made on or before the applicable dates heretofore specified, interest shall
be charged daily from such date at an annual rate of 12 percent.
(f) The acceptance by the Village of any franchise fee payment shall not
in any way be construed as an accord that the amount paid is in fact the correct
amount, nor shall such acceptance of any payment be construed as a release of
any claim the Village may have for further or additional sums payable under the
provisions of the franchise. All franchise fee payments shall be subject to
audit and re-computation by the Village in accordance with this Section.
(g) The Grantee shall acknowledge as follows:
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(1) The franchise fee is not a tax; and
(2) The franchise fee shall be in addition to any and all taxes,
other fees or charges that the Grantee or any affiliate shall be
required to pay to the Village or to any state or federal agency
or authority, all of which shall be separate and distinct
obligations of the Grantee and its affiliates; and
(3) Neither the Grantee nor any affiliate shall have or make any
claim for any deduction or other credit of all or any part of
the franchise fee from or against any of said Village taxes or
other fees or charges that the Grantee or any affiliate is
required to pay to the Village except as may be identified and
authorized by federal law; and
(4) Neither the Grantee nor any affiliate shall apply or seek to
apply all or any part of the franchise fee as a deduction or
other credit from or against any of said Village taxes or other
fees or charges, each of which shall be deemed to be separate
and distinct obligations of the Grantee and its affiliates.
(5) Except as authorized by law, if the Grantee or any affiliate
applies or seeks to apply all or any part of the amount of the
franchise fee as a deduction or other credit from or against any
Village tax or other fee or charge, or if the Grantee or any
affiliate applies or seeks to apply all or any part of any such
tax or other fee or charge as a deduction or other credit from
or against the franchise fee, then, in any such event, the
Village may revoke the franchise pursuant to the applicable
provisions of this chapter without any liability to the Grantee
or any affiliate.
(h) The Village may increase the franchise fee if and to the extent that
the maximum allowable franchise fee is increased by the FCC. If the Village
desires to increase the franchise fee in that event, then the Village shall
provide at least 30 days written notice to the Grantee. If, within 30 days after
the Village's notice, the Grantee so requests, the Village shall conduct a
public hearing on the franchise fee increase. The effective date of the proposed
franchise fee increase shall be delayed until the expiration of the 30-day
notice period, if within that period the Grantee does not request a hearing, or
if a hearing is requested, until the conclusion of the public hearing conducted
pursuant to this Subsection.
SEC.30. TRANSFER OF OWNERSHIP OR CONTROL.
(a) Except as provided in Subsection (f) of this section below, a
franchise shall not be assigned, transferred, pledged, leased, sublet,
hypothecated, or mortgaged, either in whole or in part, in any manner, nor shall
title thereto, either legal or equitable or any right, interest or property
therein, pass to or vest in any person without the prior written approval of the
Village. The Grantee may, however, transfer or assign the franchise to a wholly
owned subsidiary of the Grantee and such subsidiary may transfer or assign the
franchise back to the Grantee without such consent, providing that such
assignment is without any release of liability of the Grantee. Any proposed
assignee must show legal, technical and financial responsibility as determined
by the Village and must agree to
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comply with all provisions of the franchise. The Grantee shall submit a petition
to the Village requesting the Village's approval at least 90 days before the
Grantee takes any action in furtherance of accomplishing any such assignment,
transfer, pledge, lease, sublet, hypothecation, or mortgage, containing or
accompanied by such information as is required in accordance with FCC
regulations and by the Village. The Village shall have 120 days to act upon any
request for approval of any such assignment, transfer, pledge, lease, sublet,
hypothecation, or mortgage. The Village shall be deemed to have consented to a
proposed assignment, transfer, pledge, lease, sublet, hypothecation, or mortgage
if its refusal to consent is not communicated in writing to the Grantee within
120 days following receipt of said petition and receipt of all necessary
information as to the effect of the proposed assignment, transfer, pledge,
lease, sublet, hypothecation, or mortgage upon the public, unless the requesting
party and the Village agree to an extension of time. The Village shall not
unreasonably withhold consent to a proposed transfer.
(b) The Grantee shall promptly notify the Village of any actual or
proposed change in, or transfer of, or acquisition by any other party of,
control of the Grantee. The word "control" as used herein is not limited to
major stockholders but also includes actual working control in whatever manner
exercised. A rebuttable presumption that a transfer of control has occurred
shall arise upon the acquisition or accumulation by any person or group of
persons of five percent of the voting shares of the Grantee. Change, transfer or
acquisition of control of the Grantee without the Village's consent shall make
the franchise subject to cancellation unless and until the Village shall have
consented thereto, which consent shall not be unreasonably withheld. For the
purpose of determining whether it shall consent to such change, transfer or
acquisition of control, the Village may inquire into the qualifications of the
prospective controlling party, and the Grantee shall assist the Village in such
inquiry.
(c) The consent or approval of the Village to any transfer of the Grantee
shall not constitute a waiver or release of the rights of the Village in and to
any Public Way, and any transfer shall by its terms, be expressly subordinate to
the terms and conditions of the franchise.
(d) In the absence of extraordinary circumstances, the Village shall not
be required to approve any transfer or assignment of a new franchise prior to
substantial completion of construction of the proposed system.
(e) In no event shall a transfer of ownership or control be approved
without the successor(s) in interest becoming a signatory to the franchise
agreement.
(f) Nothing in this section shall be deemed to prohibit any assignment,
pledge, lease, sublease, mortgage, or other transfer of all or any part of the
Grantee's cable system, or any right or interest therein, solely for financing
purposes, provided that each such assignment, pledge, lease, sublease, mortgage,
or other transfer shall be subject and subordinate to the rights of the Village
pursuant to this chapter, the franchise agreement, and applicable law.
SEC.31. AVAILABILITY OF BOOKS AND RECORDS.
(a) The Grantee shall fully cooperate in making available at reasonable
times, and the Village shall have the right to inspect, where reasonably
necessary for the enforcement of the
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franchise, books, records, maps, plans and other like materials of the Grantee
applicable to the cable television system, at any time during normal business
hours; provided where volume and convenience necessitate, the Grantee may
require inspection to take place on the Grantee premises.
(b) The following records and/or reports shall be sent to the Village,
but no more frequently than on a quarterly basis if so mutually agreed upon by
the Grantee and the Village:
(1) a quarterly review and resolution or progress report submitted
by the Grantee to the Village; and
(2) periodic preventive maintenance reports; and
(3) any copies of FCC Form 395-A (or successor form) or any
supplemental forms related to equal opportunity or fair
contracting policies; and
(4) subscriber inquiry/complaint resolution data and the right to
review documentation concerning these inquiries and/or
complaints periodically; and
(5) periodic construction update reports including, where
appropriate, the submission of as-built maps.
SEC.32. OTHER PETITIONS AND APPLICATIONS.
Upon request, copies of all petitions, applications, communications and
reports submitted by the Grantee to the Federal Communications Commission, to
the Securities and Exchange Commission, or to any other federal or state
regulatory commission or agency having jurisdiction in respect to any matters
affecting cable television operations authorized pursuant to the franchise or
received from such agencies shall be provided to the Village within 10 days of
the Village's request.
SEC.33. FISCAL REPORTS.
The Grantee shall, annually within 90 days after the close of the
Grantee's fiscal year, prepare in accordance with generally accepted accounting
principles, and submit to the Village, a statement of gross revenues audited by
a certified public accountant and covering the Grantee's operations in and
relating to the Village and the Grantee's cable system as well as such
additional financial statements and records as may be required by the Village.
SEC.34. REMOVAL OF CABLE SYSTEM.
At the expiration of the term for which the franchise is granted or when
any renewal is denied, or upon its termination as provided herein, the Grantee
shall forthwith, upon notice by the Village, remove at its own expense all
portions of the cable television system designated by the Village from all
streets and public property within the Village. If the Grantee fails to do so,
the Village may perform the work at the Grantee's expense. Upon such notice of
removal, a bond shall
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be furnished by the Grantee in an amount sufficient to cover this expense as
determined by the Village.
SEC.35. REQUIRED SERVICES AND FACILITIES.
(a) The Grantee shall make available to all subscribers the option to
receive not fewer than 85 channels.
(b) If the Grantee serves the Village pursuant to an agreement only with
the Village and not by agreement negotiated as part of a collective process with
other franchising authorities, then the Grantee shall maintain not fewer than
one specially designated noncommercial channel for the exclusive use of the
Village and other public, educational, and governmental authorities in the
Village. The Grantee shall not make use of any channel reserved for use pursuant
to this Subsection (b).
(c) If the Grantee receives its franchise within the Village pursuant to
an agreement negotiated as part of a collective process among, and the Grantee's
System thus serves, the Village and other franchising authorities including the
Villages of Grayslake, Mundelein, and Wauconda and the County of Lake
(collectively the "Authorities"), then the Grantee shall maintain at least five
channels of its system exclusively available as follows:
(1) At least one specially designated noncommercial channel for use
by all local library authorities within the corporate limits of
the Authorities; and
(2) At least one specially designated noncommercial channel for use
by all local educational authorities within the corporate limits
of the Authorities; and
(3) At least one specially designated noncommercial channel for use
by all local governmental agencies within the corporate limits
of the Authorities; and
(4) At least one specially designated noncommercial channel for use
by all local park and recreation districts, departments, and
agencies within the corporate limits of the Authorities; and
(5) At least one specially designated noncommercial channel for use
by the Authorities as an Interactive Video Bulletin Board.
The Authorities may allocate the use of such channels among the entities listed
above in such manner as the Authorities determine is appropriate.
For any System that serves the Village and other franchising authorities as
described in this Subsection (c) and that has the capacity for any number of
channels greater than 85, the Grantee shall provide, in addition to the channels
otherwise required pursuant to this Subsection (c), two specially designated
noncommercial channels for the exclusive use of the Village and other local
governmental, educational, and public authorities, subject to the conditions set
forth in the next two sentences. Such two additional channels shall be provided
immediately upon notice from the Village
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of sufficient demand therefor. For purposes of this requirement, the phrase
"sufficient demand" shall mean that four of the five specially designated
noncommercial channels otherwise required pursuant to this Subsection (c) are
used for original, noncommercial public, educational, and governmental access
video programming not less than an average of six hours per day, five days each
week, over a period of 45 days.
The Grantee shall not make use of any channel reserved for use pursuant to this
Subsection (c); provided, however, that the Grantee may use the two channels
described in the immediately preceding paragraph but only until receipt of
notice from the Village pursuant to the second sentence of the preceding
paragraph.
(d) Studios and associated production equipment will be located in a
mutually agreed upon site to meet the public's need for public access, and to
accommodate the specially designated channels described in this Paragraph.
Financial and technical support and replacement and maintenance of equipment for
such facilities shall be separately incorporated into the franchise by
agreement.
(e) The Grantee shall incorporate into its cable television system the
capacity to permit the Village, in times of emergency, to override by remote
control the audio, video and/or text of all channels, simultaneously, which the
Grantee may lawfully override. The Grantee shall provide emergency broadcast
capacity pursuant to FCC rules. The Grantee shall cooperate with the Village in
the use and operation of the emergency alert system.
(f) Interconnection.
(1) The Grantee shall, on request by the Village, connect its cable
system within the Village to any cable system that is owned or
operated by the Grantee or any affiliate or subsidiary of the
Grantee in any contiguous municipality.
(2) The Village also may request that the Grantee interconnect its
system with other communication facilities within or contiguous
to the Village. Such interconnection shall be negotiated by the
Village and the Grantee. Upon receiving a request from the
Village to so interconnect, the Grantee shall immediately
initiate negotiations with the other affected system or systems
in order that all costs may be shared equally among cable
companies for both construction and operation of the
interconnection link.
The Grantee may be granted reasonable extensions of time to
interconnect, or the Village shall rescind its request to
interconnect, upon petition by the Grantee to the Village, if
the Grantee has negotiated in good faith and has arrived at
impasse with the operator or franchising authority of the
system to be interconnected, or that the cost of the
interconnection would cause an unreasonable or unacceptable
increase in subscriber rates, or that the interconnection is
technically infeasible.
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(3) The Grantee shall cooperate with any interconnection
corporation, regional interconnection authority, municipality,
or county, state, or federal regulatory agency that may be
hereafter established for the purpose of regulating, financing,
or otherwise providing for the interconnection of cable systems
beyond the boundaries of the Village.
(g) The Grantee shall provide such additional services and facilities as
are contained in its application.
SEC.36. RULES AND REGULATIONS.
(a) In addition to the inherent powers of the Village to regulate and
control any cable television franchise, and those powers expressly reserved by
the Village, or agreed to and provided for herein, the right and power is hereby
reserved by the Village to promulgate such additional regulations as it shall
find necessary in the exercise of its lawful powers and furtherance of the
terms and conditions of the franchise; provided, however, that such rules,
regulations, terms and conditions shall not be in conflict with the provisions
hereof or applicable state and federal laws, rules and regulations.
(b) The Village may also adopt such regulations at the request of Grantee
upon application.
SEC.37. PERFORMANCE EVALUATION SESSIONS.
(a) The Village and the Grantee may hold scheduled yearly performance
evaluation sessions within 30 days of each anniversary date of the Grantee's
award or renewal of the franchise and as may be required by federal and state
law.
(b) Special evaluation sessions may be held at any time during the term
of the franchise at the request of the Village or the Grantee.
(c) All evaluation sessions shall be open to the public and announced in
a newspaper of general circulation in accordance with legal notice. The Grantee
shall notify its subscribers of all evaluation sessions by announcements on at
least one channel of its system between the hours of 7:00 p.m. and 9:00 p.m. for
five consecutive days preceding each session.
(d) Topics which may be discussed at any scheduled or special evaluation
session may include, but are not limited to: service rate structures; franchise
fee, penalties, free or discounted services; application of new technologies;
system performance; services provided; programming offered; customer complaints;
privacy; amendments to this chapter; judicial and FCC rulings; line extension
policies; and Grantee or Village rules.
(e) Members of the general public may add topics either by working
through the negotiating parties or by presenting a petition. If such a petition
bears the valid signatures of 50 or more residents of the Village, the proposed
topic or topics shall be added to the list of topics to be discussed at the
evaluation session.
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SEC.38. RATE CHANGE PROCEDURES.
Pursuant to the Cable Television Consumer Protection and Competition Act
of 1992, the Village is currently certified to regulate the Basic Service rates
charged by Grantee. Under these rules, the Grantee is required to obtain
approval from the Village for a rate increase for any change to the rates for
Basic Service. Should Federal or State law permit further rate regulation beyond
Basic Service, the Village may assume such rate regulation and adopt appropriate
procedures for such regulation.
SEC.39. FORFEITURE AND TERMINATION.
(a) In addition to all other rights and powers retained by the Village
under this chapter or otherwise, the Village reserves the right to terminate the
franchise and all rights and privileges of the Grantee hereunder in the event of
a breach of its terms and conditions. A breach by the Grantee shall include, but
shall not be limited to the following:
(1) Violation of any material provision of the franchise or any
material rule, order, regulation or determination of the Village
made pursuant to the franchise; or
(2) Attempt to evade any provision of the franchise or to practice
any fraud or deceit upon the Village or its subscribers or
customers; or
(3) Failure to begin or complete system construction or system
extension as provided under Section 21; or
(4) Failure to provide the services promised in the Grantee's
initial application; or
(5) Failure to restore service after 96 consecutive hours of
interrupted service, except when approval of such interruption
is obtained from the Village; or
(6) Material misrepresentation of fact in the application for or
negotiation of the franchise; or
(7) Failure to pay any fees or other consideration when due pursuant
to the franchise or this chapter.
(b) The Village may make a written demand that the Grantee comply with
any such provision, rule, order or determination under or pursuant to the
franchise. If the violation by the Grantee continues for a period of 30 days
following such written demand without written proof satisfactory to the Village
that the corrective action was initiated immediately and thereafter has been
completed or has been continuously, actively, and expeditiously pursued, the
Village may place the issue of termination of the franchise before the Village
Board. The Village shall cause to be served upon the Grantee, at least 20 days
prior to the date of such meeting, a written notice of intent to request such
termination and the time and place of the meeting.
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(c) The Village Board shall hear and consider the issues and shall hear
any person interested therein and shall determine in its discretion whether any
violation by the Grantee has occurred. The Grantee shall be afforded an
opportunity to be heard at the hearing, including an opportunity to present all
relevant evidence and witnesses and to question witnesses presented against the
Grantee. The Grantee may, at its own expense, make a transcript of any such
hearing.
(d) If the Village Board determines that the violation by the Grantee was
the fault of the Grantee and within its control, then the Board may, by
resolution stating the violation or violations on which the decision is based,
declare that the franchise of the Grantee shall be forfeited and terminated
immediately or within such period as the Board in its sole discretion may fix,
unless there is compliance.
SEC.40. FORCE MAJEURE.
Whenever a period of time is provided for in the franchise for either the
Village or the Grantee to do or perform any act or obligation, neither party
shall be liable for any delays or inability to perform due to causes beyond the
control of said party such as war, riot, insurrection, rebellion, strike,
lockout, unavoidable casualty or damage to personnel, materials or equipment,
fire, flood, storm, earthquake, tornado, or any act of God; provided, however,
that said time period shall be extended for only the actual amount of time said
party is so delayed. An act or omission shall not be deemed to be "beyond the
Grantee's control" if committed, omitted, or caused by the Grantee, the
Grantee's employees, officers, or agents or a subsidiary, affiliate, or parent
of the Grantee, or by any corporation or other business entity that holds a
controlling interest in the Grantee, whether held directly or indirectly.
Further, the failure of the Grantee to obtain financing or to pay any money due
from it to any Person, including the Village, for whatever reason, shall not be
an act or omission "beyond the Grantee's control." The failure of the Grantee to
obtain necessary permits from applicable governmental or utility agencies shall
be deemed "beyond the Grantee's control" only if the Grantee has made a timely
and complete request and application for said permit and is diligently pursuing
the issuance of said permit.
SEC.41. FORECLOSURE.
Upon the foreclosure or other judicial sale of all or a substantial part
of the system, or upon the termination of any lease covering all or a
substantial part of the system, the Grantee shall notify the Village of such
fact, and such notification shall be treated as a notification that a change in
control of the Grantee has taken place, and the provisions of the franchise
governing the consent of the Village to such change in control of the Grantee
shall apply.
SEC.42. RECEIVERSHIP.
The Village shall have the right to cancel a franchise 120 days after the
appointment of a receiver, or trustee, to take over and conduct the business of
the Grantee, whether in receivership, reorganization, bankruptcy or other action
or proceeding, unless such receivership or trusteeship shall have been vacated
prior to the expiration of 120 days, or unless:
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(1) Within 120 days after his/her election or appointment, such receiver
or trustee shall have fully complied with all the provisions of this
chapter and remedied all defaults thereunder; and
(2) Such receiver or trustee, within the 120 days, shall have executed
an agreement, duly approved by the court having jurisdiction in the
premises, whereby such receiver or trustee assumes and agrees to be
bound by each and every provision of this chapter and the franchise
granted to the Grantee.
SEC.43. COMPLIANCE WITH STATE AND FEDERAL LAWS.
(a) Notwithstanding any other provisions of the franchise to the
contrary, the Grantee shall at all times comply with all laws and regulations of
the state and federal government or any administrative agencies thereof;
provided, however, if any such state or federal law or regulation shall require
the Grantee to perform any service, or shall permit the Grantee to perform any
service, or shall prohibit the Grantee from performing any service, in conflict
with the terms of the franchise or of any law or regulation of the Village,
then as soon as possible following knowledge thereof, the Grantee shall notify
the Village of the point of conflict believed to exist between such regulation
or law and the laws or regulations of the Village or the franchise.
(b) If the Village determines that a material provision of this chapter
is affected by any subsequent action of the state or federal government, the
Village and the Grantee shall negotiate to modify any of the provisions herein
to such reasonable extent as may be necessary to carry out the full intent and
purpose of this agreement.
SEC.44. LANDLORD AND TENANT.
(a) Neither the owner of any multiple unit residential dwelling nor his
agent or representative shall interfere with the right of any tenant or lawful
resident thereof to receive cable television service, cable installation or
maintenance from a cable television Grantee regulated by and lawfully operating
under a valid and existing franchise issued by the Village.
(b) Neither the owner of any multiple unit residential dwelling nor his
agent or representative shall penalize, charge or surcharge a tenant or resident
or forfeit or threaten to forfeit any right of such tenant or resident, or
discriminate in any way against such tenant or resident who requests or receives
cable television service from a Grantee operating under a valid and existing
cable television franchise issued by the Village.
(c) No person shall resell, without the expressed, written consent of
both the Grantee and the Village, any cable service, program or signal
transmitted by a cable television Grantee under a franchise issued by the
Village.
(d) Nothing in this chapter shall prohibit a person from requiring that
cable television system facilities conform to laws and regulations and
reasonable conditions necessary to protect safety, functioning, appearance and
value of premises or the convenience and safety of persons or property
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(e) Nothing in this chapter shall prohibit a person from requiring a
Grantee to agree to indemnify the owner, or his agents or representatives for
damages or from liability for damages caused by the installation, operation,
maintenance or removal of cable television facilities.
SEC.45. APPLICANTS' BIDS FOR INITIAL FRANCHISE.
(a) All bids received by the Village from the applicants for an initial
franchise will become the sole property of the Village.
(b) The Village reserves the right to reject any and all bids and waive
informalities and/or technicalities where the best interest of the Village may
be served.
(c) All questions regarding the meaning or intent of this chapter or
application documents shall be submitted to the Village in writing. Replies will
be issued by addenda mailed or delivered to all parties recorded by the Village
as having received the application documents. The Village reserves the right to
make extensions of time for receiving bids as it deems necessary. Questions
received less than 14 days prior to the date for the opening of bids will not be
answered. Only replies to questions by written addenda will be binding. All bids
must contain an acknowledgment of receipt of all addenda.
(d) Bids must be sealed, and submitted at the time and place indicated in
the application documents for the public opening. Bids may be modified at any
time prior to the opening of the bids, provided that any modifications must be
duly executed in the manner that the applicant's bid must be executed. No bid
shall be opened or inspected before the public opening.
(e) Before submitting a bid, each applicant shall:
(1) Examine this chapter and the application documents thoroughly;
and
(2) Familiarize himself/herself with local conditions that may in
any manner affect performance under the franchise; and
(3) Familiarize himself/herself with federal, state and local laws,
ordinances, rules and regulations affecting performance under
the franchise; and
(4) Carefully correlate the bid with the requirements of this
chapter and the application documents.
(f) The Village may make such investigations as it deems necessary to
determine the ability of an applicant to perform under the franchise, and the
applicant shall furnish to the Village all such information and data for this
purpose as the Village may request. The Village reserves the right to reject any
bid if the evidence submitted by, or investigation of, such applicant fails to
satisfy the Village that such applicant is properly qualified to carry out the
obligations of the franchise and to complete the work contemplated therein.
Conditional bids will not be accepted.
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(g) All bids received shall be placed in a secure depository approved by
the Village and shall not be opened nor inspected prior to the public opening.
SEC.46. FINANCIAL, CONTRACTUAL, SHAREHOLDER, AND SYSTEM DISCLOSURE FOR
FRANCHISES.
(a) No franchise will be granted to any applicant unless all requirements
and demands of the Village regarding financial, contractual, shareholder and
system disclosure have been met.
(b) Applicants, including all shareholders and parties with any interest
in the applicant, shall fully disclose all agreements and undertakings, whether
written or oral, or implied with any person, firm, group, association or
corporation with respect to the franchise and the proposed cable television
system. The Grantee of a franchise shall disclose all other contracts to the
Village as the contracts are made. This section shall include, but not be
limited to, any agreements between local applicants and national companies.
(c) Applicants, including all shareholders and parties with any interest
in the applicant, shall submit all requested information as provided by the
terms of this chapter or the application documents, which are incorporated
herein by reference. The requested information must be complete and verified as
true by the applicant.
(d) Applicants, including all shareholders and parties with any interest
in the applicant, shall disclose the numbers of shares of stock, and the holders
thereof, and shall include the amount of consideration for each share of stock
and the nature of the consideration.
(e) Applicants, including all shareholders and parties with any interest
in the applicant, shall disclose any information required by the application
documents regarding other cable systems in which they hold an interest of any
nature, including, but not limited to, the following:
(1) Locations of all other franchises and the dates of award for
each location; and
(2) Estimated construction costs and estimated completion dates for
each system; and
(3) Estimated number of miles of construction and number of miles
completed in each system as of the date of this application; and
(4) Date for completion of construction as promised in the
application for each system.
(f) Applicants, including all shareholders and parties with any interest
in the applicant, shall disclose any information required by the application
documents regarding pending applications for other cable systems, including, but
not limited to, the following:
(1) Location of other franchise applications and date of application
for each system; and
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(2) Estimated dates of franchise awards; and
(3) Estimated number of miles of construction; and
(4) Estimated construction costs.
SEC.47. PENALTIES.
For the violation of any of the following provisions of this chapter or
the franchise agreement, penalties may be levied against the Grantee and shall
be paid by the Grantee and, if not so paid, shall be chargeable to the letter of
credit or cash security deposit, as follows, and the Village Board of Trustees
may determine the amount of the penalty for other violations which are not
specified in a sum not to exceed $750.00 for each violation, with each day
constituting a separate violation:
(a) Failure to furnish, maintain, or offer all cable services to any
potential Subscriber within the Village upon order of the Village: $250.00 per
day, per violation, for each day such failure occurs or continues;
(b) Failure to obtain or file evidence of required insurance,
construction bond, performance bond, or other required financial security:
$200.00 per day, per violation, for each day such failure occurs or continues;
(c) Failure to provide access to data, documents, records, or reports to
the Village as required by this chapter, including without limitation Sections
20, 30, 31, and 32: $150.00 per day, per violation, for each day such failure
occurs or continues;
(d) Failure to comply with applicable construction, operation, or
maintenance standards: $200.00 per day, per violation, for each day such failure
occurs or continues;
(e) Failure to comply with a rate decision or refund order: $300.00 per
day, per violation, for each day such a violation occurs or continues;
(f) Any violations for non-compliance with the customer service standards
of Sections 24, 25, or 26: $250.00 per day, per violation, for each day that
such noncompliance continues;
(g) Any other violations of this chapter or the franchise agreement:
up to $500.00 per day, per violation, for each day such violation occurs or
continues;
(h) Grantor may impose any or all of the above enumerated measures
against the Grantee, which shall be in addition to any and all other legal or
equitable remedies it has under this chapter, the franchise agreement, or any
other applicable law.
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SEC.48. PROCEDURES.
(a) Whenever the Village believes that the Grantee has violated any term,
condition or provision of this chapter or the franchise agreement, and wishes to
impose monetary penalties, a written notice shall be given to the Grantee
informing it of such alleged violation or liability. The written notice shall
describe in reasonable detail the specific violation so as to afford the Grantee
an opportunity to remedy the violation. The Grantee shall have 30 days
subsequent to the date of such notice in which to correct the violation before
the Village may impose penalties unless the violation is, in the opinion of the
Village, of such a nature so as to require more than 30 days and the Grantee
proceeds, immediately upon receipt of such notice, and continuously, and
diligently, to correct the violation. In any case where the violation is not
cured within 30 days of notice from the Village, or such other time to which the
Grantee and the Village may mutually agree, the Village may proceed to impose
liquidated damages and to exercise any other remedy provided in this chapter or
the franchise agreement.
(b) The Grantee may, within 10 days of receipt of notice, notify the
Village that there is a dispute as to whether a violation or failure has, in
fact, occurred. Such notice by the Grantee to the Village shall specify with
particularity the matters disputed by the Grantee and shall stay the running of
the 30-day cure period pending Board decision as required below. The Board shall
hear the Grantee's dispute. The Grantee must be given at least five days notice
of the hearing. At the hearing, the Grantee shall be entitled to the right to
present evidence and the right to be represented by counsel. In the event the
Village upholds the finding of a violation, the Grantee shall have 15 days
thereafter or the remaining time period set in Subsection (a) above, whichever
is longer, or such other time period as the Grantee and the Village mutually
agree, to correct the violation. In any case where the violation is not cured
within 30 days of notice from the Village, or such other time to which the
Grantee and the Village may mutually agree, the Village may proceed to impose
liquidated damages and to exercise any other remedy provided in this chapter or
the franchise agreement.
(c) The rights reserved to the Village under this section are in addition
to all other rights of the Village whether reserved by this chapter or
authorized by law or equity, and no action, proceeding or exercise of a right
with respect to penalties shall affect any other right the Village may have.
SEC.49. LIMITS ON GRANTEE RECOURSE.
(a) The Grantee may seek enforcement of the terms of its franchise in
equity, but shall have no recourse against the Village for money damages or for
any loss, expense, or damage resulting from the terms and conditions of the
franchise nor because of the Village's enforcement thereof. The Grantee shall be
deemed to expressly agree that it accepts the franchise relying solely on its
own investigation and understanding of the power and authority of the Village to
grant said franchise and that, in partial consideration of the grant of the
franchise, the Grantee waives and releases all claims of damages of any kind
whatsoever, either known or unknown, existing or future, that it may have in
connection with any matter specified in this Subsection.
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(b) The Grantee shall acknowledge that it has not been induced to accept
the franchise by any promise, verbal or written, by or on behalf of the Village
or by any third Person regarding any term or condition of the franchise not
otherwise expressed herein. The Grantee shall further be deemed to warrant that
no promise or inducement, oral or written, has been made to any Village employee
or official regarding receipt of the franchise, other than as contained in the
franchise.
SEC.50. NONENFORCEMENT BY VILLAGE.
The Grantee shall not be excused from complying with any of the terms and
conditions of the franchise by any failure of the Village, on any one or more
occasions, to insist on the Grantee's performance of, or to seek the Grantee's
compliance with, any one or more of said terms or conditions.
SEC.51. RIGHTS AND REMEDIES.
In the event of a violation or an alleged violation of the franchise by
the Grantee, the Village, by suit, action, mandamus, or other proceeding, in law
or in equity, may enforce or compel the performance of the terms of the
franchise to the full allowable extent. In the event of a judicial proceeding,
the prevailing party shall be entitled to reimbursement of all costs and
expenses, including reasonable attorneys fees, incurred in connection with such
judicial proceeding.
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EXHIBIT A
CABLE ORDINANCE
[to be inserted]
<PAGE>
EXHIBIT B
CABLE FRANCHISE RENEWAL AGREEMENT
[to be inserted]
<PAGE>
EXHIBIT 10.1.8
VILLAGE OF MUNDELEIN
CABLE TELEVISION FRANCHISE RENEWAL AGREEMENT
THIS AGREEMENT is made as of this 22nd day of September 1997 by and
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between the Village of Mundelein, Illinois, an Illinois municipal corporation
(the "Village"), and Cable TV Fund 12-A, Ltd., a Colorado limited partnership
(the "Grantee"),
WITNESSETH:
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WHEREAS, the Village granted a cable television franchise to Cox Cable
Communications, Inc., and Cox Cable of Lake County, Inc., (the "Franchise")
pursuant to Village Ordinance No. 81-2-3 adopted on February 23, 1981; and
WHEREAS, pursuant to Resolution No. 84-12-26, dated December 22, 1984, the
Village approved transfer of the Franchise to Jones Intercable, Inc.; and
WHEREAS, pursuant to Resolution No. 85-5-9, dated May 6, 1985, the Village
approved transfer of the Franchise to the Grantee; and
WHEREAS, the Franchise was due to expire on March 15, 1996; and
WHEREAS, the Village and the Grantee executed a series of agreements
extending the term of the Franchise until September 30, 1997, and
WHEREAS, the Grantee has asked the Village to renew the Franchise, so that
the Grantee can continue to provide cable television service in the Village; and
WHEREAS, the Village has reviewed the Grantee's performance under the
Franchise; has identified the future cable-related needs and interests of the
community; has considered the financial, technical, and legal qualifications of
the Grantee; has determined that the Grantee's plans for construction and
operation of its cable system are reasonable to meet the future cable-related
needs of the community; and has determined that the Grantee has the financial,
technical, and legal
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<PAGE>
qualifications to provide the services, facilities, and equipment as set forth
in the Grantee's proposal; and
WHEREAS, the Village has determined that, subject to compliance with the
terms and conditions set forth in this Agreement and with the provisions of the
Village's Cable Television Franchise Ordinance approved by Mundelein Ordinance
No. 97-9-39 (the "Cable Ordinance"), the renewal of a nonexclusive franchise to
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the Grantee is consistent with the public interest; and
WHEREAS, the Village and the Grantee have reached agreement on the terms
and conditions for renewal of the Franchise;
NOW, THEREFORE, in consideration of the faithful performance and strict
observance by the Grantee of all the terms set forth herein and those provided
for in the Cable Ordinance, pursuant to which this Agreement is executed, and in
consideration of the grant to the Grantee of renewal of the Franchise by the
Village, the parties agree as follows:
Section 1. Recitals. The foregoing recitals are by this reference
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incorporated into this Agreement as substantive provisions of this Agreement.
Section 2. Franchise Renewal.
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A. Grant of Renewal. The Village hereby grants to the Grantee renewal of
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its nonexclusive Franchise to construct, operate, and maintain a cable
television communication system within the public ways of the Village in
accordance with the terms and conditions of this Agreement and the Cable
Ordinance.
B. Effective Date; Term. The Franchise shall become effective on the date
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of the execution of this Agreement by the Village (the "Effective Date") and
shall remain in effect until September 30, 2009, and shall expire at the end of
that day; provided, however, that said term may be extended pursuant to Section
3 of this Agreement. The Village shall execute this Agreement only after it has
been fully and properly executed by the Grantee.
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<PAGE>
C. Acceptance and Compliance by Grantee. The Grantee hereby accepts the
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Franchise and agrees to abide by all the provisions of this Agreement, the Cable
Ordinance, and all other applicable regulations of the Village.
D. This Agreement Controls. In the event of a conflict between the
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provisions of this Agreement and the provisions of the Cable Ordinance, the
provisions of this Agreement shall apply and control.
E. Good Faith of Grantee. The Grantee hereby agrees that it has negotiated
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this Agreement in good faith and with due knowledge of its rights and
responsibilities under relevant local, State of Illinois, and federal laws.
Section 3. Increased Channel Capacity and Extended Term.
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A. Increased Capacity by September 1999: Eight-Year Extension. If the
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Grantee shall make available to all users of its cable system in the Village the
option to receive 85 channels by no later than September 30, 1999, in accordance
with Subsection 35(a) of the Cable Ordinance, then the term of the Franchise
shall he extended from September 30, 2009, to September 30, 2017, and shall
expire at the end of that day.
B. Increased Capacity by September 2000; Six-Year Extension. If the Grantee
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shall make available to all users of its cable system in the Village the option
to receive 85 channels by no later than September 30, 2000, in accordance with
Subsection 35(a) of the Cable Ordinance, then the term of the Franchise shall be
extended from September 30, 2009, to September 30, 2015, and shall expire at the
end of that day.
C. Increased Capacity by September 2001; Three-Year Extension. If the
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Grantee shall make available to all users of its cable system in the Village the
option to receive 85 channels by no later than September 30, 2001, in accordance
with Subsection 35(a) of the Cable Ordinance, then
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<PAGE>
the term of the Franchise shall be extended from September 30, 2009, to
September 30, 2012, and shall expire at the end of that day.
D. Village Determination. The determination whether the Grantee has
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satisfied the standard set forth in Subsection A, B, or C above shall be made by
the Village. The Village shall have the right to have an independent engineer or
consultant audit the Grantee's cable system to determine satisfaction of such
standard.
Section 4. Immediate Revocation if No 85-Channel Capacity by September 30,
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2002. In addition to any forfeiture and termination provisions of the Cable
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Ordinance and notwithstanding any procedural requirements of any such provision,
the Village may terminate this Agreement and revoke the Franchise immediately,
and the Grantee shall have no right to any procedures related to forfeiture or
termination set forth in Section 39 or any other section of the Cable Ordinance,
if the, Grantee has not made available to all users of its cable system in the
Village the option to receive 85 channels by September 30, 2002.
Section 5. Emergency Alert System. The Grantee shall make all required
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improvements to its Emergency Alert System required by federal law or regulation
or required pursuant to Section 35(d) of the Cable Ordinance within the time
frames established by the Federal Communications Commission (the "FCC"). Neither
the Grantee nor any successor to the Grantee shall request extensions to any
such FCC time frame to make said improvements without the prior written approval
of the Village. Prior to making said improvements, the Grantee shall hold a
meeting with Village representatives to provide information concerning the
changes to be implemented to the Emergency Alert System and to solicit
recommendations from the Village regarding said improvements. At all times
during the term of this Agreement, the Grantee shall make its representatives
available to the Village at all reasonable times to discuss the configurations
of the Emergency Alert System.
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<PAGE>
Section 6. Interactive Video Bulletin Board Channel; Mobile Van.
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A. Interactive Video Bulletin Board Channel. Within 120 days after receipt
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of a request from the Village, the Grantee shall make available to the Village
the Interactive Video Bulletin Board ("IVBB"). The IVBB will turn one or more
local public, educational, and governmental access channels into an interactive
information display system and will be designed and operated at least to the
minimum standards and specifications set forth in Exhibit A to this Agreement,
which Exhibit A is by this reference specifically incorporated into this
Agreement and made a substantive part of this Agreement. In between responding
to the telephone requests for information, the IVBB will show menus of available
topics. The Grantee shall be responsible for system data entry, entering
information supplied by the Village; provided, however, that in the event of
urgency when the Grantee cannot immediately enter such system data, the Grantee
shall, at the request of the Village, allow a duly designated representative of
the Village access to the Grantee's facilities and equipment to undertake such
system data entry. It shall generally be the responsibility of the Village to
send information to the Grantee for such entry via a floppy disk by regular mail
or hand delivery, or via electronic mail.
B. Mobile Production Van. The Village and other public or educational users
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shall have access to the Grantee's mobile production van to be used for public,
educational, or governmental production in accordance with the terms and
conditions established by the Grantee for use of such van; provided, however,
that the Grantee shall ensure that such van is reasonably available to the
Village and such other users. If a problem arises regarding the availability of
such van to the Village and such other users, then the Grantee and the Village
shall meet to discuss a resolution to such problem and the Grantee shall take
such steps as are necessary to assure that mobile production equipment is
reasonably available to the Village and such other users.
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<PAGE>
Section 7. Institutional Network. Except as provided through negotiations
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undertaken pursuant to this section, the Grantee shall not be required to
provide an institutional network. Either the Grantee or the Village can,
however, initiate discussions concerning the provision of an institutional
network in the Village during the term of this Agreement. Such discussions shall
include, but shall not be limited to, proposed configurations for the
construction and operation of the institutional network, a cost-sharing formula
between the Grantee and the Village for the construction and installation of
the institutional network, and appropriate use limitations that the Grantee may
wish to impose on the Village use of the institutional network. If the Village
provides the Grantee with a written request to initiate such discussions, then
the Grantee shall make itself available to meet with Village representatives
within 30 days after receipt of such request.
Section 8. Certain Additional Installations; Free Monthly Basic Cable
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Service; Modems.
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A. Installations and Service. The Grantee, within six months after the
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Effective Date of this Agreement, shall install, at its expense, cable drops to,
and shall provide free monthly basic cable service for, each existing
qualifying educational facility ("QEF") and each existing municipal location
("ML") within the Village designated on Exhibit B to this Agreement, which
Exhibit B is by this reference specifically incorporated into this Agreement and
made a substantive part of this Agreement, so that each QEF and ML is served by
not fewer than three cable drops. The Grantee shall not reduce the number of
cable drops that may currently serve any QEF or ML. The Grantee also shall
install, at its expense, up to three cable drops in, and provide free monthly
basic cable for, any newly constructed or relocated educational or municipal
facility; provided, however, that if any such newly constructed or relocated
educational or municipal facility is located more than 250 feet away from the
then-current limit of the Grantee's existing system, then such educational or
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<PAGE>
municipal user shall be required to contribute the actual cost of material and
labor for that portion of construction of the system extension that is beyond
said 250 feet.
B. Modems. Within three months after the Grantee begins to offer, on a
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commercial basis, cable modems and related service to any subscribers within
Lake County, the Grantee shall provide, at the Grantee's expense, one such cable
modem to each QEF and ML.
Section 9. Public, Educational, and Governmental Channels. Until the
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Grantee makes available to its users the option to receive 85 channels, the
Grantee shall maintain no fewer than the two public, educational, and
governmental channels existing as of the date of this Agreement. Immediately
upon making available 85 channels, the Grantee shall provide no fewer than the
five public, educational, and governmental channels set forth in Subsection
35(c) of the Cable Ordinance, for the use of the Cable Consortium including the
Villages of Grayslake, Libertyville, Mundelein, and Wauconda and the County of
Lake.
Section 10. Entire Agreement, Amendments to Cable Ordinance. This
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Agreement constitutes the entire understanding and agreement between the parties
and supersedes any and all previous agreements between the parties with respect
to the subject matter. This Agreement shall not be changed, amended, or
supplemented except by an agreement in writing signed by both parties. The
Village may from time to time amend the Cable Ordinance pursuant to its lawful
police powers; provided, however, such amendments shall not serve to impair the
rights nor increase the obligations of the Grantee specifically described in
this Agreement.
Section 11. No Recourse.
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A. Recourse Limited. Except for an action seeking specific performance, the
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Grantee shall have no recourse whatsoever against the Village for any loss,
cost, expense, or damage arising out of any provisions or requirements of this
Agreement or because of the enforcement thereof by
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<PAGE>
the Village, or for the failure of the Village to perform pursuant to this
Agreement, or for the failure of the Village to have authority to enter into all
or any part of this Agreement.
B. Grantee's Own Investigation. The Grantee expressly acknowledges that in
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accepting a Franchise it does so relying on its own investigation and
understanding of the power and authority of the Village to enter into this
Agreement and not in any way on any representation of the Village.
C. No Inducement. The Grantee acknowledges that it has not been induced to
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enter into this Agreement by any understanding or promise or other statement,
whether oral or written, by or on behalf of the Village or by any third person
concerning any term or condition of the Franchise not expressed herein.
Section 12. Acceptance by Grantee. The Grantee shall have until September
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30, 1997, to accept and execute this Agreement. Such acceptance and execution by
the Grantee, and subsequent execution by the Village, shall be deemed the grant
of the Franchise for all purposes. If the Grantee has not accepted and executed
this Agreement by said date or such additional time as the Village might allow
specifically and in writing, then this Agreement and any Franchise shall be
deemed to be, and shall be, null and void.
Section 13. Notice. Unless expressly or otherwise agreed between the
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parties, every notice or response to be served on the Village or Grantee shall
be in writing, and shall be deemed to have been duly given to the required party
five business days after having been posted in a properly sealed and correctly
addressed envelope by certified or registered mail, postage prepaid, at a Post
Office or branch thereof regularly maintained by the U.S. Postal Service.
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<PAGE>
Notices or responses to the Village shall be addressed as follows:
Village of Mundelein
440 East Hawley Street
Mundelein, Illinois 60060
Attention: Village Administrator
Notices or responses to the Grantee shall be addressed as follows:
Jones Intercable
1901 Industrial Drive
Libertyville, IL 60048
Attention: General Manager
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the date first stated above.
VILLAGE OF MUNDELEIN CABLE FUND 12-A, LTD.
By: [SIGNATURE ILLEGIBLE] By: Its General Partner
----------------------- Jones Intercable, Inc.
Village President
By: [SIGNATURE ILLEGIBLE]
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Its: Group Vice President/Operations
ATTEST: ATTEST:
By: [SIGNATURE ILLEGIBLE] By: [SIGNATURE ILLEGIBLE]
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Village Clerk Its: Assistant Secretary
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<PAGE>
LETTER AGREEMENT BETWEEN CABLE TV FUND 12-A, LTD.
AND THE VILLAGE OF MUNDELEIN
The undersigned, who represent themselves to be the duly authorized
agents of the Village of Mundelein, Illinois (the "Village") and Cable TV Fund
12-A, Ltd. (doing business as Jones Intercable) ("Jones"), having the authority
to make the representations and agreements contained herein, do hereby stipulate
and agree as of September 22, 1997, as follows:
1. Jones shall pay to the Village, on or before October 31, 1997, the sum
of $24,000. In consideration of such payment the Village releases Jones from any
obligation that may have existed to provide institutional network facilities
and/or services except only by agreement pursuant to that certain Cable
Television Franchise Renewal Agreement between Jones and the Village dated
September 22, 1997.
2. In addition to the payment provided in Paragraph 1 above, Jones shall
pay to the Villages of Grayslake, Libertyville, Mundelein, and Wauconda, and the
County of Lake (the "Consortium"), on or before October 31, 1997, the sum of
$40,000, to be used by the Consortium to offset the costs incurred by the
Consortium in renewing Jones' cable television franchise. Such payment to the
Consortium shall be the total payment received by the Village and other
Consortium members from Jones for expenses incurred in renewing Jones' cable
television franchise in the Village. Such payment shall not be construed or
applied as a concession by Jones of the validity of such payment under the Cable
Act; provided, however, that Jones hereby waives and releases any and all rights
and claims it has or may have to challenge payment of or to recover all or any
portion of such payment from the Village or any other Consortium member.
3. Jones has paid to the Village $28,318.61 which represents an amount
equal to a five percent (5%) franchise fee on advertising and home shopping
revenues for the period January 1, 1990 - March 31, 1993, and an interest
payment of 1 1/2 percent per month. This amount is deemed payment in full for
any and all such fees for said revenues owed to the Village pursuant to Cable TV
Franchise Ordinance, Ordinance No. 81-2-3, an Ordinance Granting a Franchise
Concerning the Establishment, Construction, Operation and Maintenance of a Cable
Television System in the Village of Mundelein, Illinois.
4. Except as expressly set forth herein, nothing contained in this
Agreement shall amend, modify or alter any provision in the franchise renewal
agreement entered into by Jones and the Village or the Village of Mundelein
Cable Television Franchise Ordinance, Ordinance No. 97-9-39. If there is any
conflict between this Agreement and the Franchise Agreement and Ordinance, then
the terms of this Agreement shall prevail.
Upon execution of this Letter Agreement by Jones and the Village, this
letter shall constitute a fully binding and enforceable agreement between the
parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
VILLAGE OF MUNDELEIN CABLE TV FUND 12-A, LTD.
By: [SIGNATURE ILLEGIBLE] By: Its General Partner
----------------------- Jones Intercable, Inc.
Its:
-----------------------
By: /s/ Ruth E. Warren
--------------------------
Ruth E. Warren, Group Vice
President/Operations
ATTEST: ATTEST:
/s/ [SIGNATURE ILLEGIBLE] /s/ Lorri Ellis
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Lorri Ellis, Asst. Secretary
<PAGE>
ORDINANCE NO. 97-9-39
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VILLAGE OF MUNDELEIN
CABLE TELEVISION FRANCHISE ORDINANCE
Published in pamphlet form by authority
of the President and Board of Trustees
of the Village of Mundelein, Illinois
Date of Publication: October 3, 1997
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<PAGE>
VILLAGE OF MUNDELEIN
CABLE TELEVISION FRANCHISE ORDINANCE
SEC. 1. SHORT TITLE.
This chapter shall be known and may be cited as the "Village of Mundelein
Cable Television Franchise Ordinance."
SEC. 2. DEFINITIONS.
For the purpose of this chapter the following terms, phrases, words, and
their derivations shall have the meaning given herein:
"Additional Service" means any subscriber service provided by the grantee
for which a special charge is made based on program or service content, time, or
spectrum space usage.
"Basic Service" means all subscriber services provided by the Grantee in
one or more service tiers for an established regular monthly fee, which includes
at a minimum the delivery of local broadcast stations, and public, educational
and governmental access channels. Basic Service does not include optional
program and satellite service tiers, a la carte services, per channel, per
program, or auxiliary services for which a separate charge is made. However,
Grantee may include other satellite signals on the Basic Service tier.
"Board" means the Mundelein Board of Trustees.
"Cable Service" means the one-way transmission to subscribers of video
programming or other programming service and subscriber interaction, if any,
which is required for the selection or use of such programming or other
programming service. This definition does not authorize, and shall not be
construed, interpreted, or applied to authorize, the use of the Cable System for
telephone, data, or voice communication services, which services are not
authorized by this chapter.
"Cable System" or "System" or "Cable Television System" means a system of
antennas, cables, wires, lines, towers, wave guides, or other conductors,
converters, equipment or facilities, designed and construed for the purpose of
producing, receiving, transmitting, amplifying and distributing, audio, video,
and other forms of electronic, electrical or optical signals, which includes
cable television service and which is located in the Village. The definition
shall not include any such facility that serves or will serve only subscribers
without using Village rights-of-way. The definition of "Cable System" shall not
be construed, interpreted, or applied to authorize telephone, data, or voice
communication services, and no such telephone, data, or voice communication
services are authorized by this chapter. In addition, the definition of "Cable
System" shall not be deemed to circumscribe any valid authority of any
governmental body, including the Village, to regulate the activities of
telephone or telegraph companies, or the provision of any service over the Cable
System that is not a "cable service" as such term is defined herein.
<PAGE>
"Class IV Channel" means a signaling path provided by a cable
communications system to transmit signals of any type from a subscriber terminal
to another point in the cable communications system.
"Complaint" means any complaint regarding service, picture quality, charges
or other matter relating to the cable system made by a customer to the Grantee,
whether in written or oral form.
"Control" or "Controlling Interest" means actual working control or
ownership of a System in whatever manner exercised. A rebuttable presumption of
the existence of control or a controlling interest shall arise from the
beneficial ownership, directly or indirectly, by any Person or Entity (except
underwriters during the period in which they are offering securities to the
public) of 5 percent or more of a Cable System or the Franchise under which the
System is operated. A change in the control or controlling interest of an Entity
which has control or a controlling interest in a Grantee shall constitute a
change in the control or controlling interest of the System under the same
criteria. Control or controlling interest as used herein may be held
simultaneously by more than one Person or group of Persons.
"Converter" means an electronic device which converts signals to a
frequency not susceptible to interference, within the television receiver of a
subscriber, and by an appropriate channel selector also permits a subscriber to
view more than 12 channels delivered by the system at designated converter dial
locations.
"FCC" means the Federal Communications Commission and any legally
appointed, designated or elected agent or successor.
"Grantee" means a person or entity to whom or which a franchise under this
chapter is granted by the Village, along with the lawful successors or assigns
of such person or entity.
"Gross Revenues" means all revenue collected directly or indirectly by the
Grantee, arising from or attributable to the provision of cable service by the
Grantee within the Village including, but not limited to: fees charged
Subscribers for any basic, optional, premium, per-channel or per-program
service; franchise fees; installation and re-connection fees; leased channel
fees; converter rentals and/or sales; program guide revenues; studio or
production equipment rentals; late or administrative fees; upgrade, downgrade or
other change-in-service fees; advertising revenues; revenues from home shopping
and bank-at-home channels; revenues from the sale, exchange, use or cable cast
of any programming developed on the system for community or institutional use;
and any value (at retail price levels) of any non-monetary remuneration received
by Grantee in consideration of the performance of advertising or any other
service of the system; provided, however, that this shall not include any taxes
on services furnished by the Grantee herein imposed directly upon any subscriber
or user by the state, local or other governmental unit and collected by the
Grantee on behalf of the governmental unit.
"Installation" means the connection of the System from feeder cable to
subscribers' terminals.
"May" is permissive.
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<PAGE>
"Monitoring" means observing a communications signal, or the absence of a
signal, where the observer is neither the subscriber nor the programmer, whether
the signal is observed by visual or electronic means, for any purpose
whatsoever, provided monitoring shall not include system-wide, non-individually
addressed sweeps of the system for purposes of verifying system integrity,
controlling return paths transmissions, or billing for pay services.
"Normal Business Hours" means those hours during which similar businesses
in the Village are open to serve customers. In all cases, normal business hours
must include some evening hours at least one night per week, and some weekend
hours.
"Normal Operating Conditions" means those service conditions that are
within the control of the Grantee. Those conditions that are not within the
control of the Grantee are defined in Section 40 of this chapter.
"Person" means any natural person, or any association, firm, partnership,
joint venture, corporation, or other legally recognized entity or organization,
whether for-profit or not-for-profit, but excluding the Village.
"Public Way" means, except where expressly limited by this chapter or a
franchise and, in any event, only to the extent necessary to permit the
installation and maintenance of a Cable System, the surface, the air space above
the surface, and the area below the surface of any public street, highway, lane,
path, alley, sidewalk, boulevard, drive, bridge, conduit, tunnel, park, parkway,
waterway, utility easement (as defined in Section 541 of the Cable Act) or other
public right-of-way now or hereafter held by, or dedicated to, the Village in
which the rights and title of the Village are such as to entitle the Village and
the Grantee to the use thereof for the purpose of installing and maintaining the
Grantee's Cable System. No reference in this chapter to "Public Way" shall be
deemed to be a representation or guarantee by the Village that its title or
interest in any property is sufficient to permit its use for such purpose, and a
franchise shall, by the use of such term, be deemed to grant only such rights
to use property in the Village as the Village may have the right and power to
grant in such franchise.
"Shall" is mandatory.
"Service Area" means all areas within the Village corporate limits.
"Service Interruption" or "Outage" means the loss of either picture or
sound or both for any channel for single or multiple subscriber(s).
"Street" means the surface of and all rights-of-way and the space above and
below any public street, road, highway, freeway, lane, path, Public Way or
place, sidewalk, alley, court, boulevard, parkway, drive or easement now or
hereafter held by the Village for the purpose of public travel.
"Subscriber" means any person, firm, Grantee, corporation, or association
lawfully receiving Cable Service provided by a Grantee pursuant to this chapter.
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<PAGE>
"User" means a party utilizing a cable television system channel for
purposes of production or transmission of material to subscribers, as contrasted
with receipt thereof in a subscriber capacity.
"Village" means the Village of Mundelein, Illinois.
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"Village Administrator" means the Village Administrator of the Village or
his or her designee.
SEC. 3. RIGHTS AND PRIVILEGES OF GRANTEE.
Any cable television franchise granted by the Village shall grant to the
Grantee the right and privilege to erect, construct, operate, and maintain in,
upon, along, across, above, over, and under the streets now in existence and as
may be created or established during its terms any poles, wires, cable,
underground conduits, manholes, and other television conductors and fixtures
necessary for the maintenance and operation of a Cable System, but only in
strict compliance with the provisions of such franchise and this chapter. Each
such franchise shall include the following terms: (1) a franchise fee not less
than the fee required pursuant to Section 29 of this chapter; (2) performance
security not less than the security required pursuant to Section 14 of this
chapter; (3) a franchise term not longer than the maximum term provided in
Section 6 of this chapter; and (4) specially designated noncommercial channels
for use by local governmental, educational, and public authorities as provided
in Section 35 of this chapter.
SEC. 4. AGREEMENT AND INCORPORATION OF APPLICATION BY REFERENCE.
(a) The execution of a franchise agreement by the Grantee shall be
agreement and acknowledgment of the Grantee to be bound by all the terms and
conditions contained in this chapter.
(b) The Grantee shall provide all services specifically set forth in its
application and shall provide cable television service within the confines of
the Village; and by its acceptance of the franchise, the Grantee specifically
grants and agrees that its application is thereby incorporated by reference and
made a part of the franchise.
SEC. 5. FRANCHISE TERRITORY.
Any franchise is for the current territorial limits of the Village and for
any area henceforth added thereto during the term of the franchise.
SEC. 6. DURATION AND ACCEPTANCE OF FRANCHISE.
Any franchise and the rights, privileges and authority hereby authorized
shall take effect and be in force from and after the signing of a franchise
agreement by the Village, as provided by law, and shall continue in force and
effect for an initial term of no longer than 12 years; provided, however, that
such franchise shall have no force or effect and shall be null and void except
only if the Grantee, within 30 days after the date of Village approval of the
franchise, shall file with the Village its unconditional acceptance of the
franchise and promise to comply with and abide by all
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<PAGE>
of its provisions, terms and conditions and the provisions of this chapter. Such
acceptance and promise shall be in writing duly executed and sworn to, by, or on
behalf of the Grantee before a notary public or other officer authorized by law
to administer oaths. Such franchise shall be non-exclusive and revocable.
SEC. 7. FRANCHISE RENEWAL.
(a) To the extent applicable, current federal procedures and standards
pursuant to 47 U.S.C. (S) 546 shall govern the renewal of any franchise awarded
under this chapter.
(b) In the event that any or all of the applicable provisions of federal
law are repealed or otherwise modified, and to the full extent consistent with
such applicable provisions then in effect, the following section(s) shall apply:
(1) At least 24 months prior to the expiration of the franchise, the
Grantee shall inform the Village in writing of its intent to seek
renewal of the franchise.
(2) The Grantee shall submit a proposal for renewal which
demonstrates:
a. That it has been and continues to be in substantial
compliance with the terms, conditions, and limitations of
this chapter and its franchise;
b. That its system has been installed, constructed, maintained
and operated in accordance with the accepted standards of
the industry, and this chapter and its franchise;
c. That it has the legal, technical, financial, and other
qualifications to provide the services, facilities, and
equipment set forth in its proposal; and
d. That it has made a good faith effort to provide services and
facilities which accommodate the demonstrated needs and
interests of the community as may be reasonably ascertained
by the Village, with public input; and that it has made a
good faith effort to maintain, operate, and extend its
system as the state of the art progresses so as to assure
its Subscribers high quality service, balanced against the
costs of such needs and interests.
(3) The Village shall proceed to determine whether the Grantee has
satisfactorily performed its obligations under the franchise. To
determine satisfactory performance, the Village shall consider
technical developments, performance of the system and the quality
of the operator's service, including signal quality, response to
customer complaints, and billing practices, but without regard to
the mix or quality of cable services or other services provided
over the system. The Village shall also consider the Grantee's
reports made to the Village and to the FCC, and the Village may
require the Grantee to make
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available specified records, documents, and information for this
purpose, and may inquire specifically whether the Grantee will
supply services sufficient to meet community needs and interests
in light of the costs of such needs and interests. Provision
shall be made for public comment with adequate prior notice of at
least 10 days.
(4) The Village shall then prepare any amendments to this chapter and
the franchise that it believes necessary.
(5) If the Village finds the Grantee's performance satisfactory, and
finds the Grantee's technical, legal, and financial abilities
acceptable, and finds the Grantee's renewal proposal meets the
future cable-related needs of the Village, balanced against the
costs of meeting these needs and interests, a new franchise shall
be granted pursuant to this chapter as amended for a period to be
determined by the Village.
(6) If the Grantee is determined by the Village to have performed
unsatisfactorily, new applicants may be sought and evaluated and
a franchise award shall be made by the Village according to
franchising procedures adopted by the Village.
SEC. 8. FRANCHISE REVIEW AND MODIFICATION.
(a) To the extent applicable, the modification provisions of the Cable Act,
as the same may be amended from time to time, shall govern the procedures and
standards for modification of a franchise. The Grantee may file a request for
modification of a franchise with the Village in accordance with said
modification provisions at any time during the term of the franchise.
(b) To the extent that the modification provisions of the Cable Act, as the
same may be amended from time to time, are repealed or otherwise not applicable,
a franchise may be modified to the extent permitted by applicable law,
according to the standards set forth in Subsection (c) below and in other
applicable provisions of this chapter.
(c) It shall be the policy of the Village to amend a franchise with the
consent of the Grantee when necessary to enable the Grantee to take advantage of
technological advancements that will afford the Grantee an opportunity to more
effectively, efficiently, or economically serve the Subscribers; provided,
however, that this Subsection shall not be construed to require the Village to
adopt any such amendment. Further, the Village may modify or revise the terms of
a franchise at any time if necessary to protect the public health or safety.
SEC. 9. POLICE POWERS.
(a) In accepting a franchise, the Grantee acknowledges that its rights
thereunder are subject to the police power of the Village to adopt and enforce
general ordinances necessary to the safety and welfare of the public; and it
agrees to comply with all applicable general laws and ordinances enacted by the
Village pursuant to such power.
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(b) Any conflict between the provisions of a franchise and any other
present or future lawful exercise of the Village's police powers shall be
resolved in favor of the latter.
SEC. 10. FRANCHISE REQUIRED.
No cable television system shall be allowed to operate or to occupy or use
any Public Way for system installation and maintenance purposes without a
franchise.
SEC. 11. USE OF GRANTEE FACILITIES.
The Village shall have the right to install and maintain free of charge
upon the poles of the Grantee any wire or pole fixtures that do not unreasonably
interfere with the cable television system operations of the Grantee. The
Village shall indemnify and hold harmless the Grantee from any claim that might
arise due to or as a result of the Village's use.
Sec. 12. INITIAL FRANCHISE COSTS.
Grantee shall pay all costs and charges incidental to the awarding or
enforcing of its initial franchise, including but not limited to:
administrative, engineering, legal and consulting expenses, all costs of
publications of notices prior to any public meeting provided for pursuant to
this chapter, and any costs not covered by application fees incurred by the
Village in its study, preparation of proposal documents, evaluation of all
applications, and examinations of the applicant's qualifications.
SEC. 13. NOTICES.
All notices from the Grantee to the Village pursuant to any franchise shall
be sent to the Office of the Village President, with a copy to the Village
Administrator. The Grantee shall maintain with the Village, throughout the term
of the franchise, an address for service of notices by mail. The Grantee shall
maintain a central office to address any issues relating to operating under this
chapter.
SEC. 14. LETTER OF CREDIT AND CASH SECURITY DEPOSIT.
(a) Within 15 days after the award of an initial franchise, the Grantee
shall deposit with the Village either an irrevocable letter of credit from a
financial institution acceptable to the Village Board of Trustees or a cash
security deposit in the amount of $100,000.00. The form and content of such
letter of credit shall be approved by the Village Attorney. No interest shall be
paid on any cash deposit.
(b) Within 15 days after the award of a renewal franchise, the Grantee
shall deposit with the Village an irrevocable letter of credit from a financial
institution acceptable to the Village Board of Trustees in the amount of
$25,000.00 and a cash security deposit in the amount of $5,000.00. The form
and content of such letter of credit shall be approved by the Village Attorney.
No interest shall be paid on any cash security deposit.
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(c) The letter of credit and cash security deposit shall be used to ensure
the faithful performance of the Grantee of all provisions of this chapter, and
to ensure compliance with all orders, permits and directions of any agency,
commission, board, department, division, or office of the Village
having jurisdiction over its acts or defaults under this chapter, and to ensure
the payment by the Grantee of any claims, liens, and taxes and penalties
assessed pursuant to Section 47 of this chapter due the Village which arise by
reason of the construction, operation or maintenance of the system.
(d) The letter of credit and cash security deposit shall be maintained at
the amount established herein for the entire term of the franchise, even if
amounts have to be withdrawn pursuant to this chapter. Grantee shall promptly
replace any amounts withdrawn from the letter of credit or security deposit.
(e) If the Grantee fails to pay to the Village any compensation within the
time fixed herein; or fails to pay to the Village any penalties assessed on
taxes due and unpaid; or fails to repay the Village any damages, costs or
expenses which the Village incurs as a result of the Grantee's failure to comply
with all rules, regulations, orders, permits, and other directives of the
Village issued pursuant to a franchise or which the Village is compelled to pay
by reason of any act or default of the Grantee in connection with a franchise;
or fails to properly and adequately restore any public way, public property or
private property disturbed by the Grantee's activities; or fails to pay any
costs incurred by the Village in connection with the award of any franchise or
renewal franchise; or otherwise fails to faithfully perform the duties and
responsibilities of a franchise, then the Village may withdraw money from the
letter of credit or cash security fund in accordance with the procedures set
forth in Subsection (f) below.
(f) The Village shall provide Grantee with written notice informing Grantee
that such amounts are due to the Village. The written notice shall describe, in
reasonable detail, the reasons for the assessment. The Grantee shall have 15
days subsequent to receipt of the notice within which to cure every failure
cited by the Village or to notify the Village that there is a dispute as to
whether Grantee believes such amounts are due the Village. Such notice by the
Grantee to the Village shall specify with particularity the basis of Grantee's
belief that such monies are not due the Village.
(g) The rights reserved to the Village with respect to the letter of credit
and cash security deposit are in addition to all other rights of the Village,
whether reserved by the franchise or authorized by law, and no action,
proceeding or exercise of a right with respect to such letter of credit and
security deposit shall affect any other right the Village may have.
(h) The letter of credit shall contain the following endorsement: "It is
hereby understood and agreed that this letter of credit may not be canceled by
the issuer bank nor the intention not to renew be stated by the issuer bank
until 45 days after receipt by the Village, by registered mail, of a written
notice of such intention to cancel or not to renew."
(i) Receipt of the 45-day notice by the Village shall be construed as a
default granting the Village the right to immediate payment from the issuer bank
of the entire amount of the letter of credit.
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(j) The Village, at any time during the term of a franchise, may waive, in
writing, Grantee's requirement to maintain a letter of credit or cash security
deposit.
SEC. 15. CONSTRUCTION BOND.
(a) Prior to being approved for an initial installation of a system, the
Grantee shall file with the Village a construction bond in the amount of not
less than 110 percent of the costs to install the System in the service area
contained in the application or renewal proposal in favor of the Village. This
bond shall be maintained throughout the construction period and until such time
as determined by the Village, unless specified in the franchise agreement.
(b) Prior to being approved for an upgrade of the system that involves
significant excavation or other disturbance of Public Way, the Grantee shall
file with the Village a performance bond in the amount of not less than
$100,000.00. This bond shall be maintained throughout the upgrade period and
until such time as determined by the Village, unless specified in the franchise
agreement.
(c) If the Grantee fails to diligently pursue and complete the construction
required for the installation or upgrade of its cable system, or fails to well
and truly observe, fulfill and perform each term and condition of this chapter
or of the franchise as it relates to construction, installation or upgrade of
the system, then there shall be recoverable jointly and severally, from the
principal and surety of the bond, the cost of completing such construction and
any damages or loss suffered by the Village as a result, including the full
amount of any compensation, indemnification, or cost of removal or abandonment
of any property of the Grantee, plus a reasonable allowance for attorney's fees,
including the Village's legal staff, and costs, up to the full amount of the
bond. This Section shall be an additional remedy for any and all violations
outlined in Subsection 14(e).
(d) The bond shall contain the following endorsement: "It is hereby
understood and agreed that this bond may not be canceled by the surety nor the
intention not to renew be stated by the surety until 45 days after receipt by
the Village, by registered mail, a written notice of such intent to cancel or
not to renew."
(e) Upon receipt of a 45-day notice, this shall be construed as default
granting the Village the right to demand payment on the bond.
(f) The Village, at any time during the term of this chapter, may, in
writing, waive or reduce Grantee's requirement to maintain a performance bond.
SEC. 16. LIABILITY AND INSURANCE.
(a) The Grantee shall maintain and by its acceptance of a franchise
specifically agrees that it will maintain throughout the term of the franchise,
liability insurance insuring the Grantee and the Village and the Village's
officers, boards, commissions, elected and appointed officials, agents, and
employees, in the minimum amounts of:
(1) $2,000,000.00 for bodily injury or death to each person;
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(2) $3,000,000.00 for bodily injury or death from any one accident;
(3) $3,000,000.00 for property damage from any one accident;
(4) S2,000,000.00 for all other types of liability.
(b) The Grantee shall carry and maintain in its own name automobile
liability insurance with a limit of $2,000,000 for each person and $2,000,000
for each accident for property damage with respect to owned and non-owned
automobiles for the operation of which the Grantee is responsible.
(c) The certificate of insurance obtained by the Grantee in compliance with
this Section must be approved by the Village Attorney and such insurance policy
certificate of insurance, along with written evidence of payment of required
premiums, shall be filed and maintained with the Village during the term of the
franchise. The Grantee shall immediately advise the Village Attorney of any
litigation that may develop that would affect this insurance.
(d) Neither the provisions of this Section, nor any damages recovered by
the Village thereunder, shall be construed to or limit the liability of the
Grantee under any franchise issued hereunder or for damages.
(e) Such insurance policies provided for herein shall name the Grantor, its
officers, boards, commissions, agents and employees as additional insured, and
shall be primary to any insurance carried by the Grantor. The insurance policies
required by this Section shall be carried and maintained by the Grantee
throughout the term of the franchise and such other period of time during which
the Grantee operates or is engaged in the removal of its cable system. Each
policy shall contain the following endorsement: "It is hereby understood and
agreed that this insurance policy may not be canceled by the surety nor the
intention not to renew be stated by the surety until 30 days after receipt by
the Village, by registered mail, of written notice of such intention to cancel
or not to renew."
SEC. 17. INDEMNIFICATION.
(a) The Village shall not at any time be liable for injury or damage
occurring to any Person or property from any cause whatsoever arising out of the
construction, maintenance, repair, use, operation, condition or dismantling of
the Grantee's Cable Television System or due to the act or omission of any
Person or entity other than the Village or those Persons or entities for which
the Village is legally liable as a matter of law.
(b) The Grantee shall, at its sole cost and expense, indemnify and hold
harmless the Village, all associated, affiliated, allied and subsidiary entities
of the Village now existing or hereinafter created, and their respective
officers, boards, commissions, employees, agents, attorneys and contractors
(hereinafter referred to as "Indemnitees") from and against:
(1) Any and all liabilities, obligations, damages, penalties, claims,
liens, costs, charges, losses and expenses (including, without
limitation, fees and
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expenses of attorneys, expert witnesses and consultants), which
may be imposed upon, incurred by or asserted against the
Indemnitees by reason of any act or omission of the Grantee, its
personnel, employees, agents, contractors or subcontractors,
resulting in personal injury, bodily injury, sickness, disease or
death to any Person or damage to, loss of or destruction of
tangible or intangible property, libel, slander, invasion of
privacy and unauthorized use of any trademark, trade name,
copyright, patent, service mark or any other right of any Person,
firm or corporation, which may arise out of or be in any way
connected with the construction, installation, operation,
maintenance, use or condition of the Cable Television System
caused by Grantee, its subcontractors or agents or the Grantee's
failure to comply with any federal, state or local statute,
ordinance or regulation.
(2) Any and all liabilities, obligations, damages, penalties, claims,
liens, costs, charges, losses and expenses (including, without
limitation, fees and expenses of attorneys, expert witnesses and
consultants), which are imposed upon, incurred by or asserted
against the Indemnitees by reason of any claim or lien arising
out of work, labor, materials or supplies provided or supplied to
the Grantee, its contractors or subcontractors, for the
installation, construction, operation or maintenance of the Cable
Television System. Upon the written request of the Village such
claim or lien shall be discharged or bonded within 15 days
following such request.
(3) Any and all liabilities, obligations, damages, penalties, claims,
liens, costs, charges, losses and expenses (including, without
limitation, fees and expenses of attorneys, expert witnesses and
consultants), which may be imposed upon, incurred by or asserted
against the Indemnitees by reason of any financing or securities
offering by Grantee or its Affiliates for violations of the common
law or any laws, statutes or regulations of the State of Illinois
or of the United States, including those of the Federal Securities
and Exchange Commission, whether by the Grantee or otherwise;
excluding therefrom, however, claims which are solely based upon
and arise solely out of information supplied by the Village to the
Grantee in writing and included in the offering materials with the
express written approval of the Village prior to the offering.
(c) The Grantee undertakes and assumes for its officers, agents,
contractors and subcontractors and employees all risk of dangerous conditions,
if any, on or about any village-owned or controlled property, including public
rights-of-way and easements, and the Grantee hereby agrees to indemnify and hold
harmless the Indemnitees against and from any claim asserted or liability
imposed upon the Indemnitees for personal injury or property damage to any
Person arising out of the installation, operation, maintenance or condition of
the Cable Television System or the Grantee's failure to comply with any federal,
state or local statute, ordinance or regulation, except for any claim asserted
or liability imposed upon the Indemnitees that arises or is related to willful
negligence by the Indemnitees.
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(d) In the event any action or proceeding shall be brought against the
Indemnitees by reason of any matter for which the Indemnitees are indemnified
hereunder, the Grantee shall, upon notice from any of the Indemnitees, at the
Grantee's sole cost and expense, resist and defend the same with legal counsel
acceptable to the Village Attorney, provided further, however, that the Grantee
shall not admit liability in any such matter on behalf of the Indemnitees
without the written consent of the Village Attorney or the Village Attorney's
designee.
(e) The Village shall give the Grantee prompt notice of the making of any
written claim or the commencement of any action, suit or other proceeding
covered by the provisions of this Section.
(f) Nothing in this chapter or in any franchise is intended to, or shall be
construed or applied to, express or imply a waiver by the Village of statutory
provisions, privileges or immunities of any kind or nature as set forth in
Illinois Statutes, including the limits of liability of the Village as exists
presently or as may be increased from time to time by the Legislature.
SEC. 18. RIGHTS OF INDIVIDUALS.
(a) The Grantee shall not deny service, deny access, or otherwise
discriminate against subscribers, channel users, or general citizens on the
basis of race, color, religion, national origin, income, gender, marital status,
sexual preference or age. The Grantee shall comply at all times with all other
applicable federal, state and local laws and regulations and all executive and
administrative orders relating to nondiscrimination which are hereby
incorporated and made part of this chapter by reference.
(b) The Grantee shall strictly adhere to the equal employment opportunity
requirements of the Federal Communications Commission and of state and local
governments, and as amended from time to time.
(c) The Grantee shall, at all times, comply with the privacy requirements
of state and federal law.
(d) Grantee shall make cable service available to all residential areas
within the Village, provided that all such permission as may be required from
the owner of the property is reasonably available, and that service can be
provided in accordance with the line extension requirements of Section 21.
Grantee will only be required to provide service to multi-dwelling units so long
as the owner of the facility consents to the following:
(1) To Grantee's providing of the service to units of the facility;
(2) To reasonable conditions and times for installation, maintenance
and inspection of the system on the facility premises;
(3) To reasonable conditions promulgated by Grantee to protect
Grantee's equipment and to encourage widespread use of the system;
and
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(4) To not demand payment from Grantee for permitting Grantee to
provide service to the facility and to not discriminate in rental
charges, or otherwise, between tenants who receive Cable Service
and those who do not.
SEC. 19. PUBLIC NOTICE.
Minimum public notice of any public meeting relating to the franchise shall
follow state statutory requirements and shall be on at least one channel of the
Grantee's System between the hours of 7:00 p.m. and 9:00 p.m., for five
consecutive days prior to the meeting.
SEC. 20. SERVICE AVAILABILITY AND RECORD REQUEST.
The Grantee shall provide cable television service throughout the entire
franchise area pursuant to the provisions of this chapter and the franchise and
shall keep a record for at least three years of all requests for service
received by the Grantee. This record shall be available for public inspection at
the local office of the Grantee during regular office hours.
SEC. 21. SYSTEM CONSTRUCTION.
(a) New construction timetable.
(1) Within two years from the date of the award of an initial
franchise, the Grantee must make cable television service
available to every dwelling unit within the service area.
a. The Grantee must make cable television service available to
at least 20 percent of the dwelling units within the service
area within six months from the date of the award of the
franchise.
b. The Grantee must make cable television service available to
at least 50 percent of the dwelling units within the service
area within one year from the date of the award of the
franchise.
(2) The Grantee, in its application, may propose a timetable of
construction which will make cable television service available in
the service area sooner than the above minimum requirements, in
which case said schedule will be made part of the franchise
agreement, and will be binding upon the Grantee.
(3) Any delay beyond the terms of this timetable, unless specifically
approved by the Village, will be considered a violation of this
chapter for which the provisions of either Sections 39 or 47 shall
apply, as determined by the Village.
(4) In special circumstances and for good cause shown by the Grantee,
the Village, in the exercise of its sole discretion, may waive 100
percent completion within the two-year time frame, provided that
substantial
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completion is accomplished within the allotted time frame,
substantial completion to be not less than 95 percent.
Justification for less than 100 percent must be submitted subject
to the approval of the Village.
(b) Line extensions:
(1) In areas of the franchise territory not initially served, a
Grantee shall be required to extend its system pursuant to the
following requirements:
a. No customer shall be refused service arbitrarily. To expedite
the process of extending the Cable System into a new
subdivision, the Village will forward to the Grantee an
approved engineering plan of each project. Subject to the
density requirements, the Grantee shall commence the design
and construction process upon receipt of the final
engineering plan. Upon notification from the Village that the
first home in the project has been approved for a building
permit, the Grantee shall have a maximum of three months to
complete the construction/activation process within the
applicable project phase, barring any unforeseen adverse
weather or ground conditions.
b. The Grantee shall extend and make cable television service
available to every dwelling unit in all unserved, developing
areas having at least 25 dwelling units planned per street
mile, as measured from the existing system, and shall extend
its system simultaneously with the installation of utility
lines.
c. The Grantee shall extend and make cable television service
available to any isolated resident outside the initial
service area requesting connection at the standard
connection charge, if the connection to the isolated resident
would require no more than a standard 125-foot drop line.
(2) In areas not meeting the requirements for mandatory extension of
service, the Grantee shall provide, upon the request of a
potential subscriber desiring service, an estimate of the
Grantee's costs required to extend service to the subscriber. The
Grantee shall then extend service upon request of the potential
subscriber. The Grantee may require advance payment or assurance
of payment satisfactory to the Grantee. In the event the area
subsequently reaches the density required for mandatory extension,
such payments shall be refunded to the subscriber.
(3) In cases of new construction or property development where
utilities are to be placed underground, all cable system
facilities also shall be placed underground, except as otherwise
specifically approved in advance by the Village. If the Grantee
receives notice of such new construction or property development,
including the date on which open trenching is available for the
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Grantee's work (the "Notice"), then the Grantee shall provide, to
the developer or property owner and to the Village, the
specifications for its trenching and the Grantee shall install its
conduit, pedestals and vaults, and laterals within five working
days after the trenches first become available to the Grantee for
such work. Costs of trenching and easements required to bring
service to the development shall be borne by the developer or
property owner; provided, however, that if the Grantee fails to
install its conduit, pedestals and vaults, and laterals within
said five working days, then the cost of any new trenching, and
easements if necessary, shall be borne by the Grantee. The Notice
may be given to the Grantee at the address stated in the
franchise agreement or to the local general manager or system
engineer of the Grantee. Written or oral notice from the
developer, property owner, or Village shall be sufficient to
qualify as the Notice.
(c) Nothing herein shall be construed to prevent the Grantee from serving
areas of the Village not covered under this Section upon agreement with
developers, property owners, residents, or businesses, provided that all
applicable fees are paid by the Grantee to the Village therefor, including
without limitation the franchise fee provided in this chapter.
(d) A Grantee, in its new or renewal application, may propose a line
extension policy that will result in serving more residents of the Village than
as required above, in which case the Grantee's policy will be incorporated into
the franchise agreement and will be binding on the Grantee.
(e) The violation of this Section shall be considered a violation of this
chapter for which the provisions of either Sections 39 or 47 shall apply, as
determined by the Village.
SEC. 22. CONSTRUCTION AND TECHNICAL STANDARDS.
(a) The Grantee shall construct, install, operate and maintain its system
in a manner consistent with all laws, ordinances, construction standards,
governmental requirements, and FCC technical standards. In addition, the Grantee
shall provide the Village, upon request, a written report of the results of the
Grantee's annual proof of performance tests conducted pursuant to Federal
Communications Commission standards and requirements.
(b) The following additional specifications shall apply:
(1) Construction, installation and maintenance of the cable
television system shall be performed in an orderly and
workmanlike manner. All cables and wires shall be installed,
where possible, parallel with electric and telephone lines.
Multiple cable configurations shall be arranged in parallel and
bundled with due respect for engineering considerations.
(2) The Grantee shall at all times comply with the most recent version
adopted by the Village of:
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a. National Electrical Safety Code (National Bureau of
Standards);
b. National Electrical Code (National Bureau of Fire
Underwriters);
c. Bell System Code of Pole Line Construction; and
d. Applicable FCC or other federal, state and local regulations.
(3) In any event, the System shall not endanger or interfere with the
safety of persons or property in the franchise area or other areas
where the Grantee may have equipment located.
(4) Any antenna structure used in the system shall comply with
construction, marking, and lighting of antenna structure, required
by the United States Department of Transportation.
(5) All working facilities and conditions used during construction,
installation and maintenance of the System shall comply with the
standards of the Occupational Safety and Health Administration.
(6) The Grantee regularly shall check radio frequency leakage at
reception locations for emergency radio services to prove that no
interference signal combinations are possible. Stray radiation
shall be measured adjacent to any proposed aeronautical navigation
radio sites to prove no interference to airborne navigational
reception in the normal flight patterns. FCC rules and regulations
shall govern.
(7) The Grantee shall maintain equipment capable of providing standby
power for headend, transportation and trunk amplifiers for a
minimum of two hours.
(8) In all areas of the Village where the cables, wires and other like
facilities of public utilities are placed underground, all cables,
wires and other like facilities of the Grantee installed after the
effective date of the Grantee's franchise shall be placed
underground. When public utilities relocate their facilities from
pole to underground, the Grantee shall concurrently do so at no
expense to the Village.
(c) Plans & Permits.
(1) Right to review; briefings.
a. The Village shall have the right to review the Grantee's
construction plans and specifications prior to the
commencement of any new construction to assure compliance
with the standards specified in this chapter and to inspect
all aspects of Cable System construction. The Village shall
not, however, be required to review or approve such
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plans and specifications or to make such inspections, and the
Village specifically disclaims such obligation. The Grantee
shall be solely responsible for taking all steps necessary to
assure compliance with such standards and to ensure that the
Cable System is installed in a safe manner and pursuant to
the terms and conditions of this chapter and the franchise
agreement.
b. Before beginning new construction of, or on any part of, the
Cable System, the Grantee's chief engineer or designated
individual shall meet with the Village Administrator or
designated individual to explain the Grantee's construction
plans and work program in detail. Similar briefings shall be
held from time to time as deemed necessary by either the
Village or the Grantee until the work is completed.
(2) The Grantee shall, within 90 days after the Effective Date of its
franchise, furnish to the Village complete "as-built" plans of the
Cable System and shall, thereafter, furnish to the Village
amendments to such plans within 45 days after completion of any
extension or modification of the Cable System. If so requested by
the Grantee, the Village shall keep such as-built plans
confidential to the extent allowable by law, and shall show such
plans only to those employees, contractors or Village officials who
need to see them as a part of their responsibilities to the
Village, or pursuant to their J.U.L.I.E. responsibilities.
(3) The Grantee shall obtain permits from the Village before commencing
any new construction of or within the Cable System, with specific
permission being required for the opening or disturbance of any
Public Way within the Village. The permit application shall include
a plan drawn in sufficient detail to demonstrate to the Village
that the Cable System will be constructed in accordance with all
applicable codes and ordinances. Where cable is to be installed on
existing poles, the permit application shall include a drawing
showing the existing poles and additional poles, if requested.
Without characterizing the violation of other provisions of this
chapter, the failure to obtain said permits shall constitute a
material violation of this chapter. The Grantee also, before the
commencement of new construction of, or on any part of, the Cable
System, shall become and remain a member of the J.U.L.I.E. system.
(d) All work involved in the construction, operation, maintenance, repair,
and removal of the Cable System, or any part thereof, shall be performed in a
workmanlike manner using materials of good and durable quality. If, at any time,
it is determined by the Village or any other agency or authority of competent
jurisdiction that any part of the Cable System, including without limitation any
means used to distribute signals over or within the Cable System, is harmful to
the health or safety of any Person, then the Grantee, at its sole cost and
expense, shall promptly correct all such conditions. Any contractor,
subcontractor, or other Person proposed to be employed for the installation,
maintenance, relocation, or repair of Cable System equipment or facilities shall
be
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licensed in accordance with applicable laws and shall be thoroughly experienced
in the work for which he or she is retained.
(e) Unless expressly provided otherwise in the Franchise, the Grantee shall
at all times comply with any and all rules and regulations enacted or to be
enacted by the Village with reference to construction activity in Public Ways.
All poles, wires, conduits, cables, equipment, pipes, appurtenances, structures,
and other facilities of the Cable System shall be installed and located in
compliance with all applicable Village codes and ordinances and the applicable
provisions of the Franchise so as to cause minimum interference with the rights
and reasonable convenience of the general public, all as determined by the
Village in its sole and absolute; discretion. Unless the Village shall in
writing waive its right to review plans, no construction or other work relating
to such facilities within the Public Ways of the Village shall be commenced
until the Village shall have approved and issued a permit on the plans,
specifications and methods for such work. Any such permit may be so conditioned
or restricted as deemed necessary by the Village to assure compliance with the
Franchise and to protect the public health and safety. All such facilities shall
at all times be kept and maintained in a safe condition and in good order and
repair. The Grantee shall at all times employ reasonable care and shall
install, maintain, and use commonly accepted methods and devices for preventing
failures and accidents that are likely to cause damage, injuries or nuisances to
the general public. Suitable barricades, flags, lights, flares or other devices
shall be used at such times and places as are required by applicable ordinances
and at such additional times and places as are required for the safety of all
members of the general public. Any such facilities placed in any Public Way by
the Grantee shall be placed and maintained in such a manner as not to interfere
with the usual travel or other existing or projected uses of such Public Way.
(f) Excavation Work and Time Periods.
(1) No excavation on or in any Public Way, public property or private
property in the Village permitted hereunder in connection with the
installation of any Cable System facilities shall be made more
than 24 hours immediately before installation of such facilities.
the Grantee may apply for a waiver in unusual circumstances.
(2) The Grantee shall notify the Village Administrator at least 72
hours before any excavation on or in any Public Way, public
property or private property so that the Village Administrator
will have the opportunity to inspect such excavation work.
(3) All excavations in lawns or grassy parkways shall be promptly
backfilled, tamped and restored with sod in accordance with the
applicable provisions of this chapter.
(g) Location of Pedestals and Vaults.
(1) Pedestals and Similar Above Ground Appurtenances.
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a. The Village has determined that pedestals and similar
aboveground appurtenances located on a Public Way (other
than in an alley or as provided in Paragraph c below) or on
public property will adversely affect the appearance of the
Village and of the property therein and, accordingly,
pursuant to Section 541(a)(2) of the Cable Act, the Grantee
shall not under any circumstances install or locate a
pedestal or any similar above ground appurtenance on any
Public Way (other than in an alley or as provided in
Paragraph c below) or on any public property as a part of
any new construction or any relocation or reinstallation.
b. Pedestals or similar above ground appurtenances may be
installed on private property only with the express, prior
written consent and permission of the affected property
owner or his or her authorized agent, or the duly elected or
appointed representative of the affected property; provided,
however, that such pedestals or above ground appurtenances
shall comply with all applicable provisions of the Mundelein
---------
Municipal Code.
c. Notwithstanding Paragraph b above, pedestals or similar
above ground appurtenances may be installed within certain
utility casements on private property without the consent or
permission of the affected property owner provided that (i)
the Grantee is lawfully authorized to use such utility
easement pursuant to state or federal law; (ii) no such
pedestal or similar above ground appurtenance may be
installed unless, at the time of the desired installation,
there exists within the utility easement, a similar above
ground appurtenance of another utility company or entity;
and (iii) the Grantee's pedestal or similar above ground
appurtenance shall be located as close as is practicable to
said existing above ground appurtenance.
(2) Vaults.
a. The Grantee shall not install underground vaults on any
Public Way after the effective date of this franchise, except
in accordance with and pursuant to the provisions of
paragraph d. of this subsection. All underground vaults shall
be flush mounted with the surface of the land area.
b. The Grantee shall inform the owner of any private property in
the Village where the Grantee contemplates placing a vault on
the parkway immediately adjacent to said private property,
that the owner has the right to elect between the
construction and installation of an underground vault on the
owner's private property or on the Public Way (including,
without limitation, the parkway) immediately adjacent to the
owner's property. Said notice shall be in writing, in
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form and substance acceptable to the Village Administrator,
and delivered by certified mail or personal delivery to said
owner at least 30 days immediately before the commencement of
construction on or around the owner's property.
c. If the owner elects to allow construction and installation of
an underground vault on the owner's property, then the owner
shall be required to grant the Grantee and easement, in form
reviewed and approved by the Village Attorney, allowing for
such construction and installation.
d. If the owner (i) elects not to allow construction and
installation of an underground vault on the owner's property;
or (ii) fails to respond to the election notice delivered by
the Grantee pursuant to Paragraph b above within 45 days
after the owner receives the notice; or (iii) refuses to
grant the Grantee the easement pursuant to Paragraph c above
within 30 days after the owner's receipt of an easement
document, then the Grantee shall be entitled to construct and
install an underground vault on the Public Way (including,
without limitation, the parkway) that is immediately adjacent
to the owner's property.
SEC. 23. USE OF STREETS.
(a) The Grantee's system, poles, wires and appurtenances shall be located,
erected and maintained so that none of its facilities shall endanger or
interfere with the lives of persons or interfere with the rights or reasonable
convenience of property owners who adjoin any of the streets and Public Ways, or
interfere with any improvements the Village may make, or hinder or obstruct the
free use of the streets, alleys, bridges, easements or public property.
(b) In case of any disturbance of pavement, sidewalk, landscaping, driveway
or other surfacing, the Grantee shall, at its own cost and expense and in a
manner approved by the Village, replace and restore all paving, sidewalk,
driveway, landscaping, or surface of any street or alley disturbed, in at least
as good condition as before the work was commenced and in accordance with
standards for such work set by the Village. If, after 30 days, restoration
measures are not performed to the reasonable satisfaction of the Village, the
Village may undertake remedial restoration activities, such activities to be
performed at the Grantee's cost, with such costs to be chargeable against the
security deposit required of the Grantee in Subsection 14(e) of this chapter.
(c) Erection, removal and common uses of poles:
(1) No poles or other wire-holding structures shall be erected by the
Grantee without prior approval of the Village with regard to
location, height, types, and any other pertinent aspect. However,
no location of any pole or wire-holding structure of the Grantee
shall be a vested interest and such poles or structures shall be
removed or modified by the Grantee at its own expense
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whenever the Village determines that the public convenience would
be enhanced thereby.
(2) Where poles or other wire-holding structures already existing for
use in serving the Village are available for use by the Grantee,
but it does not make arrangements for such use, the Village may
require the Grantee to use such poles and structures if it
determines that the public convenience would be enhanced thereby
and the terms of the use available to the Grantee are just and
reasonable.
(3) Where the Village or a public utility serving the Village desires
to make use of the poles or other wire-holding structures of the
Grantee, but agreement thereof with the Grantee cannot be reached,
the Village may require the Grantee to permit such use for such
consideration and upon such terms as the Village shall determine
to be just and reasonable, if the Village determines that the use
would enhance the public convenience and would not unduly
interfere with the Grantee's operations.
(d) If at any time during the period of the franchise the Village shall
elect to alter, or change the grade of any street, alley or other Public Ways or
utilities, the Grantee, upon reasonable notice by the Village, shall promptly
remove or relocate as necessary its poles, wires, cables, underground conduits,
manholes and other fixtures at its own expense.
(e) The Grantee shall, on the request of any person holding a building
moving permit issued by the Village, temporarily raise or lower its wires to
permit the moving of buildings. The expense of such temporary removal, raising
or lowering of wires shall be paid by the person requesting the same, and the
Grantee shall have the authority to require such payment in advance. The Grantee
shall be given not less than 48 hours advance notice to arrange for such
temporary wire changes.
(f) The Grantee shall not remove any tree or trim any portion, either
above, at or below ground level, of any tree within any public place without the
prior consent of the Village. The Grantee shall provide notice to any affected
residents at the same time that the Grantee applies to the Village for consent
to perform tree trimming. The Village shall have the right to do the trimming
requested by the Grantee at the cost of the Grantee. Regardless of who performs
the work requested by the Grantee, the Grantee shall be responsible, shall
defend and hold Village harmless from any and all damages to any tree as a
result of trimming, or to the property surrounding any tree, whether such tree
is trimmed or removed.
(g) The Grantee shall not use road cuts for the laying of cable or wires
without the prior approval of the Village.
(h) The right of the Grantee to use and occupy the Public Ways shall not be
exclusive. The Village reserves the right to grant any right or use of such
Public Ways to any Person at any time during the term of the franchise or any
other franchise subsequently granted to any other Person.
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(i) If any public way or portion thereof used by the Grantee shall be
vacated by the Village, or the use thereof discontinued by the Village or the
Grantee, during the term of the franchise, then the Grantee shall forthwith at
its sole cost and expense remove its facilities therefrom unless specifically
permitted to continue to use the same and, on the removal thereof, the Grantee
shall restore, repair, or reconstruct the Public Way area where such removal has
occurred to its original condition as required by the Village. In the event of
any failure, neglect, or refusal by the Grantee, after 30 days written notice
from the Village to repair, improve, or maintain such Public Way, the Village
may, but shall be under no obligation to, conduct such work, or cause it to be
conducted, and the actual cost thereof shall be paid by the Grantee in the time
and manner as directed by the Village. Collection may be made by resort to the
letter of credit or cash security deposit established pursuant to Section 14 of
this chapter, or by court action, or otherwise.
SEC.24. OPERATIONAL STANDARDS.
(a) The Grantee shall maintain all parts of the system in good condition
throughout the entire franchise period.
(b) Upon the reasonable request for service by any person located within
the franchise territory, the Grantee shall, within 30 days, furnish the
requested service to such person within terms of the line extension policy. A
request for service shall be unreasonable for the purpose of this subsection if
no trunk line installation capable of servicing that person's block has been
installed.
(c) Temporary Service Drops:
(1) The Grantee shall put forth every effort to bury temporary drops
within 10 working days after placement. Any delays for any other
reason than listed will be communicated to the Village. The
following delays will be found understandable and within the
course of doing business: weather, ground conditions, street
bores, system redesign requirements and any other unusual
obstacle, such as obstructive landscaping that is created by the
customer.
(2) Upon request of the Village the Grantee shall provide a monthly
report to the Village on the number of drops pending.
(d) The Grantee shall render efficient service, make repairs promptly, and
interrupt service only for good cause and for the shortest time possible. Such
interruptions, insofar as possible, shall be preceded by notice and shall occur
during periods of minimum system use.
(e) The Grantee shall not allow its cable or other operations to interfere
with television reception of subscribers or persons not served by the Grantee,
nor shall the system interfere with, obstruct or hinder in any manner the
operation of the various utilities serving the residents within the confines of
the Village nor shall other utilities interfere with the Grantee's system.
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SECTION 25. CUSTOMER SERVICE STANDARDS.
(a) Nothing in this chapter shall be construed to prohibit the enforcement
of any federal, state or local law or regulation concerning customer service or
consumer protection that imposes customer service standards or consumer
protection requirements that exceed the customer service standards set out in
this chapter or that address matters not addressed in this chapter.
(b) The Grantee shall maintain a local or toll-free telephone access line
which is available to its subscribers and shall have knowledgeable, qualified
representatives available to respond to customer telephone inquiries 24 hours
per day, seven days per week. Under normal operating conditions, telephone
answer time, including wait time and the time required to transfer the call,
shall not exceed 30 seconds. This standard shall be met no less than 90 percent
of the time as measured on a quarterly basis. Under normal operating conditions,
the customer will receive a busy signal less than three percent of the time.
(c) Customer service centers and bill payment locations will be open for
walk-in customer transactions a minimum of eight hours per day Monday through
Friday, unless there is a need to modify those hours because of the location or
customers served. The Grantee and Village by mutual consent shall establish
supplemental hours on weekdays and weekends as fits the needs of the community.
(d) Under normal operating conditions, each of the following standards will
be met no less than 95 percent of the time as measured on an annual basis.
(1) Standard installations will be performed within seven business
days after an order has been placed. A standard installation is
one that is within 125 feet of the existing system.
(2) Excluding those situations that are beyond its control, the
Grantee will respond to any service interruption promptly and in
no event later than 24 hours from the time of initial
notification. All other regular service requests will be responded
to within 36 hours during the normal work week for that system.
The appointment window alternatives for installations, service
calls and other installation activities will be: "morning" or
"afternoon"; not to exceed a four-hour "window" during normal
business hours for the system, or at a time that is mutually
acceptable. The Grantee shall schedule supplemental hours during
which appointments can be scheduled based on the needs of the
community. If at any time an installer or technician is running
late, an attempt to contact the customer will be made and the
appointment rescheduled as necessary at a time that is convenient
to the customer.
(e) In the event of a Service Interruption, the following standards for
Subscriber credits shall be applied by the Grantee:
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(1) If a Subscriber experiences a Service Interruption totaling four
hours or more on one, two, or three days in any calendar month,
then the Grantee shall provide a credit to that Subscriber equal
to one-thirtieth of one month's total fees paid by that Subscriber
for each day on which such a Service Interruption occurs;
provided, however, that such credit shall not apply to a
Subscriber disconnected because of non-payment or excessive signal
leakage. Such credit shall be provided by the Grantee
automatically upon notice from that Subscriber of such Service
Interruption, regardless of whether that Subscriber requests a
credit.
(2) If a Subscriber experiences a Service Interruption totaling four
hours or more on four or more days in any calendar month, then the
Grantee shall provide a credit to that Subscriber equal to one
month's total fees paid by that Subscriber; provided, however,
that such credit shall not apply to a Subscriber disconnected
because of non-payment or excessive signal leakage. Such credit
shall be provided by the Grantee automatically upon notice from
that Subscriber of the fourth such Service Interruption,
regardless of whether that Subscriber requests a credit.
(f) The Grantee shall provide written information for each of the following
areas at the time of installation and at any future time upon the request of the
customer:
(1) Product and services offered; and
(2) Prices and service options; and
(3) Installation and service policies; and
(4) How to use the cable television services.
(g) Bills will be clear, concise and understandable, with all charges for
cable services itemized.
(h) A Grantee may not impose a late, administrative or other fee on a
customer for nonpayment of a bill until 30 days have elapsed after the end of
the billing cycle which is the subject of the unpaid bill.
(i) Credits will be issued promptly, but no later than the customer's next
billing cycle following the resolution of the request and the return of the
equipment by the Grantee if service has been terminated.
(j) The Grantee shall notify customers a minimum of 30 days in advance of
any rate or channel change.
(k) The Grantee shall maintain and operate its network in accordance with
the rules and regulations incorporated herein and as may be promulgated by state
or federal regulators.
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(l) The Grantee shall continue, through the term of the franchise, to
maintain the technical standards and quality of service set forth in this
chapter and the franchise. Should the Village find, by resolution, that the
Grantee has failed to maintain these technical standards and quality of service,
and should it, by resolution, specifically enumerate improvements to be made,
the Grantee shall make such improvements. Failure to make such improvements
within three months of such resolution will constitute a breach of a condition
for which penalties contained in Section 47 are applicable.
(m) The Grantee shall keep a monthly service log which indicates the nature
of each service complaint received in the last 24 months, the date and time each
complaint was received, the disposition of each complaint, and the time and date
thereof. This log shall be sent to the Village monthly upon request.
(n) The Grantee shall provide a copy of the Customer Service Standards
included in this Section to every subscriber via a bill insert at least once
every calendar year. The Grantee shall also provide a copy of these Customer
Service Standards to every new customer within 30 days of connection.
SEC. 26. CONTINUITY OF SERVICE MANDATORY.
(a) It shall be the right of all subscribers to continue receiving service
as long as their financial and other obligations to the Grantee are honored. If
the Grantee elects to over build, rebuild, modify or sell the system, or the
Village gives notice of intent to terminate or fails to renew the franchise, the
Grantee shall act so as to ensure that all subscribers receive continuous,
uninterrupted service regardless of the circumstances for a period not to exceed
six months after the franchise has terminated.
(b) If there is a change of franchise, or if a new operator acquires the
system, the Grantee shall cooperate with the Village, new franchisee and
operator in maintaining continuity of service to all subscribers. During such
period, the Grantee shall be entitled to the revenues for any period during
which it operates the system.
(c) If the Grantee fails to operate the system for three consecutive days
without prior approval of the Village or without just cause, the Village may, at
its option, operate the system or designate an operator until such time as the
Grantee restores service under conditions acceptable to the Village or a
permanent operator is selected. If the Village is required to fulfill this
obligation for the Grantee, the Village shall be entitled to all revenues for
any period during which it operates the system and shall be entitled to draw on
the letter of credit and cash security deposit established pursuant to Section
14 of this chapter to recover all of its costs and damages in excess of such
revenues, and, in any event, the Grantee shall be obligated to reimburse the
Village for all costs or damages incurred by the Village resulting from the
Grantee's failure to perform that the Village does not recover from such
revenues or said letter of credit or cash security deposit.
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SEC. 27. COMPLAINT PROCEDURE.
(a) During the term of the franchise and any renewal thereof, the Grantee
shall maintain a central office for the purpose of receiving and resolving all
complaints regarding the quality of service, equipment malfunctions, and similar
matters. The office must be reachable by a local and/or toll-free telephone call
to receive complaints regarding quality of service, equipment functions and
similar matters. The Grantee will make good faith efforts to arrange for one or
more payment locations in a central location where customers can pay bills or
conduct other business activities.
(b) As subscribers are connected or reconnected to the system, the Grantee
shall, by appropriate means such as a card or brochure, furnish information
concerning the procedures for making inquiries or complaints, including the
name, address and local or toll free telephone number of the employee or
employees or agent to whom such inquiries or complaints are to be addressed.
(c) When there have been similar complaints made, or where there exists
other evidence, which, in the judgment of the Village, in consultation with the
Grantee, casts doubt on the reliability or quality of cable service, the Village
shall have the right and authority to require the Grantee to test, analyze and
report on the performance of the system. The Grantee shall fully cooperate with
the Village in performing such testing and shall prepare results and a report,
if requested, within 30 days after notice. Such report shall include the
following information:
(1) The nature of the complaint or problem that precipitated the
special tests; and
(2) The system component(s) tested; and
(3) The equipment used and procedures employed in testing; and
(4) The method, if any, in which such complaint or problem was
resolved; and
(5) Any other information pertinent to the tests and analysis which
may be required.
(d) If, after receiving Grantee's report, and after the Grantee has
completed any corrective action identified in the report, the Village determines
that reasonable evidence still exists of inadequate System Performance, then the
Village may enlist an independent engineer at Grantee's expense to perform tests
and analysis directed toward such suspected failures to meet the requirements of
this chapter. Grantee shall cooperate and permit such testing.
(e) The Village shall require tests, analysis and reports covering specific
subjects and characteristics based on complaints or other evidence only when the
Village has reasonable grounds to believe that the complaints or other evidence
require that tests be performed to protect the public against substandard cable
service.
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SEC. 28. GRANTEE RULES AND REGULATIONS.
The Grantee shall have the authority to promulgate such rules, regulations,
terms, and conditions governing the conduct of its business as shall be
reasonably necessary to enable the Grantee to exercise its rights and perform
its obligations under the franchise, and to assure uninterrupted service to each
and all of its customers; provided, however, that such rules, regulations, terms
and conditions shall not be in conflict with the provisions hereof or applicable
state and federal laws, rules and regulations.
SEC. 29. FRANCHISE FEE.
(a) A Grantee shall pay to the Village a franchise fee of not less than
five percent of the Grantee's gross revenues or such other maximum amount as
allowed by law.
(b) The franchise fee payment shall be in addition to any other tax or
payment owed to the Village by the Grantee and shall not be construed as payment
in lieu of municipal property taxes or other state, county or local taxes.
(c) The franchise fee and any other costs or penalties assessed shall be
payable quarterly on a calendar year basis to the Village within 30 days after
the end of each quarter. The Grantee shall also file a complete and accurate
verified statement of all gross receipts as previously defined within said 30
days.
(d) The Village shall have the right to inspect and copy the Grantee's
income records and the right to audit and to recompute any amounts determined to
be payable under this chapter. Any additional amount due the Village as a
result of an audit shall be paid within 30 days following written notice to the
Grantee by the Village, which notice shall include a copy of the audit report.
If any audit discloses an underpayment of a franchise fee by an amount in
excess of five percent of the applicable fee, then the Grantee shall pay the
full cost of the audit. The Grantee shall maintain books and records of its
operations within and related to the Village and the Grantee's cable system in
sufficient detail to show gross revenue, by service category, consistent with
generally accepted accounting principles. Said books and records shall be
retained in accordance with the Grantee's document retention policies, but in no
event less than five years.
(e) If any franchise payment or re-computed amount, cost or penalty, is not
made on or before the applicable dates heretofore specified, interest shall be
charged daily from such date at an annual rate of 12 percent.
(f) The acceptance by the Village of any franchise fee payment shall not
in any way be construed as an accord that the amount paid is in fact the correct
amount, nor shall such acceptance of any payment be construed as a release of
any claim the Village may have for further or additional sums payable under the
provisions of the franchise. All franchise fee payments shall be subject to
audit and re-computation by the Village in accordance with this Section.
(g) The Grantee shall acknowledge as follows:
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(1) The franchise fee is not a tax; and
(2) The franchise fee shall be in addition to any and all taxes, other
fees or charges that the Grantee or any affiliate shall be
required to pay to the Village or to any state or federal agency
or authority, all of which shall be separate and distinct
obligations of the Grantee and its affiliates; and
(3) Neither the Grantee nor any affiliate shall have or make any claim
for any deduction or other credit of all or any part of the
franchise fee from or against any of said Village taxes or other
fees or charges that the Grantee or any affiliate is required to
pay to the Village except as may be identified and authorized by
federal law; and
(4) Neither the Grantee nor any affiliate shall apply or seek to apply
all or any part of the franchise fee as a deduction or other
credit from or against any of said Village taxes or other fees or
charges, each of which shall be deemed to be separate and
distinct obligations of the Grantee and its affiliates.
(5) Except as authorized by law, if the Grantee or any affiliate
applies or seeks to apply all or any part of the amount of the
franchise fee as a deduction or other credit from or against any
Village tax or other fee or charge, or if the Grantee or any
affiliate applies or seeks to apply all or any part of any such
tax or other fee or charge as a deduction or other credit from or
against the franchise fee, then, in any such event, the Village
may revoke the franchise pursuant to the applicable provisions of
this chapter without any liability to the Grantee or any
affiliate.
(h) The Village may increase the franchise fee if and to the extent that
the maximum allowable franchise fee is increased by the FCC. If the Village
desires to increase the franchise fee in that event, then the Village shall
provide at least 30 days written notice to the Grantee. If, within 30 days after
the Village's notice, the Grantee so requests, the Village shall conduct a
public hearing on the franchise fee increase. The effective date of the proposed
franchise fee increase shall be delayed until the expiration of the 30-day
notice period, if within that period the Grantee does not request a hearing, or
if a hearing is requested, until the conclusion of the public hearing conducted
pursuant to this Subsection.
SEC.30. TRANSFER OF OWNERSHIP OR CONTROL.
(a) Except as provided in Subsection (f) of this section below, a franchise
shall not be assigned, transferred, pledged, leased, sublet, hypothecated, or
mortgaged, either in whole or in part, in any manner, nor shall title thereto,
either legal or equitable or any right, interest or property therein, pass to or
vest in any person without the prior written approval of the Village. The
Grantee may, however, transfer or assign the franchise to a wholly owned
subsidiary of the Grantee and such subsidiary may transfer or assign the
franchise back to the Grantee without such consent, providing that such
assignment is without any release of liability of the Grantee. Any proposed
assignee must show legal, technical and financial responsibility as determined
by the Village and must agree to
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comply with all provisions of the franchise. The Grantee shall submit a petition
to the Village requesting the Village's approval at least 90 days before the
Grantee takes any action in furtherance of accomplishing any such assignment,
transfer, pledge, lease, sublet, hypothecation, or mortgage, containing or
accompanied by such information as is required in accordance with FCC
regulations and by the Village. The Village shall have 120 days to act upon any
request for approval of any such assignment, transfer, pledge, lease, sublet,
hypothecation, or mortgage. The Village shall be deemed to have consented to a
proposed assignment, transfer, pledge, lease, sublet, hypothecation, or mortgage
if its refusal to consent is not communicated in writing to the Grantee within
120 days following receipt of said petition and receipt of all necessary
information as to the effect of the proposed assignment, transfer, pledge,
lease, sublet, hypothecation, or mortgage upon the public, unless the requesting
party and the Village agree to an extension of time. The Village shall not
unreasonably withhold consent to a proposed transfer.
(b) The Grantee shall promptly notify the Village of any actual or proposed
change in, or transfer of, or acquisition by any other party of, control of the
Grantee. The word "control" as used herein is not limited to major stockholders
but also includes actual working control in whatever manner exercised. A
rebuttable presumption that a transfer of control has occurred shall arise upon
the acquisition or accumulation by any person or group of persons of five
percent of the voting shares of the Grantee. Change, transfer or acquisition of
control of the Grantee without the Village's consent shall make the franchise
subject to cancellation unless and until the Village shall have consented
thereto, which consent shall not be unreasonably withheld. For the purpose of
determining whether it shall consent to such change, transfer or acquisition of
control, the Village may inquire into the qualifications of the prospective
controlling party, and the Grantee shall assist the Village in such inquiry.
(c) The consent or approval of the Village to any transfer of the Grantee
shall not constitute a waiver or release of the rights of the Village in and to
any Public Way, and any transfer shall by its terms, be expressly subordinate to
the terms and conditions of the franchise.
(d) In the absence of extraordinary circumstances, the Village shall not be
required to approve any transfer or assignment of a new franchise prior to
substantial completion of construction of the proposed system.
(e) In no event shall a transfer of ownership or control be approved
without the successor(s) in interest becoming a signatory to the franchise
agreement.
(f) Nothing in this section shall be deemed to prohibit any assignment,
pledge, lease, sublease, mortgage, or other transfer of all or any part of the
Grantee's cable system, or any right or interest therein, solely for financing
purposes, provided that each such assignment, pledge, lease, sublease, mortgage,
or other transfer shall be subject and subordinate to the rights of the Village
pursuant to this chapter, the franchise agreement, and applicable law.
SEC. 31. AVAILABILITY OF BOOKS AND RECORDS.
(a) The Grantee shall fully cooperate in making available at reasonable
times, and the Village shall have the right to inspect, where reasonably
necessary for the enforcement of the
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franchise, books, records, maps, plans and other like materials of the Grantee
applicable to the cable television system, at any time during normal business
hours; provided where volume and convenience necessitate, the Grantee may
require inspection to take place on the Grantee premises.
(b) The following records and/or reports shall be sent to the Village, but
no more frequently than on a quarterly basis if so mutually agreed upon by the
Grantee and the Village:
(1) a quarterly review and resolution or progress report submitted by
the Grantee to the Village; and
(2) periodic preventive maintenance reports; and
(3) any copies of FCC Form 395-A (or successor form) or any
supplemental forms related to equal opportunity or fair
contracting policies; and
(4) subscriber inquiry/complaint resolution data and the right to
review documentation concerning these inquiries and/or complaints
periodically; and
(5) periodic construction update reports including, where appropriate,
the submission of as-built maps.
SEC.32. OTHER PETITIONS AND APPLICATIONS.
Upon request, copies of all petitions, applications, communications and
reports submitted by the Grantee to the Federal Communications Commission, to
the Securities and Exchange Commission, or to any other federal or state
regulatory commission or agency having jurisdiction in respect to any matters
affecting cable television operations authorized pursuant to the franchise or
received from such agencies shall be provided to the Village within 10 days of
the Village's request.
SEC.33. FISCAL REPORTS.
The Grantee shall, annually within 90 days after the close of the Grantee's
fiscal year, prepare in accordance with generally accepted accounting
principles, and submit to the Village, a statement of gross revenues audited by
a certified public accountant and covering the Grantee's operations in and
relating to the Village and the Grantee's cable system as well as such
additional financial statements and records as may be required by the Village.
SEC.34. REMOVAL OF CABLE SYSTEM.
At the expiration of the term for which the franchise is granted or when
any renewal is denied, or upon its termination as provided herein, the Grantee
shall forthwith, upon notice by the Village, remove at its own expense all
portions of the cable television system designated by the Village from all
streets and public property within the Village. If the Grantee fails to do so,
the Village may perform the work at the Grantee's expense. Upon such notice of
removal, a bond shall
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be furnished by the Grantee in an amount sufficient to cover this expense as
determined by the Village.
SEC. 35. REQUIRED SERVICES AND FACILITIES.
(a) The Grantee shall make available to all subscribers the option to
receive not fewer than 85 channels.
(b) If the Grantee serves the Village pursuant to an agreement only with
the Village and not by agreement negotiated as part of a collective process with
other franchising authorities, then the Grantee shall maintain not fewer than
one specially designated noncommercial channel for the exclusive use of the
Village and other public, educational, and governmental authorities in the
Village. The Grantee shall not make use of any channel reserved for use pursuant
to this Subsection (b).
(c) If the Grantee receives its franchise within the Village pursuant to an
agreement negotiated as part of a collective process among, and the Grantee's
System thus serves, the Village and other franchising authorities including the
Villages of Grayslake, Mundelein, and Wauconda and the County of Lake
(collectively the "Authorities"), then the Grantee shall maintain at least five
channels of its system exclusively available as follows:
(1) At least one specially designated noncommercial channel for use by
all local library authorities within the corporate limits of the
Authorities; and
(2) At least one specially designated noncommercial channel for use by
all local educational authorities within the corporate limits of
the Authorities; and
(3) At least one specially designated noncommercial channel for use by
all local governmental agencies within the corporate limits of the
Authorities; and
(4) At least one specially designated noncommercial channel for use by
all local park and recreation districts, departments, and agencies
within the corporate limits of the Authorities; and
(5) At least one specially designated noncommercial channel for use by
the Authorities as an Interactive Video Bulletin Board.
The Authorities may allocate the use of such channels among the entities listed
above in such manner as the Authorities determine is appropriate.
For any System that serves the Village and other franchising authorities as
described in this Subsection (c) and that has the capacity for any number of
channels greater than 85, the Grantee shall provide, in addition to the channels
otherwise required pursuant to this Subsection (c), two specially designated
noncommercial channels for the exclusive use of the Village and other local
governmental, educational, and public authorities, subject to the conditions set
forth in the next two sentences. Such two additional channels shall be provided
immediately upon notice from the Village
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of sufficient demand therefor. For purposes of this requirement, the phrase
"sufficient demand" shall mean that four of the five specially designated
noncommercial channels otherwise required pursuant to this Subsection (c) are
used for original, noncommercial public, educational, and governmental access
video programming not less than an average of six hours per day, five days each
week, over a period of 45 days.
The Grantee shall not make use of any channel reserved for use pursuant to this
Subsection (c); provided, however, that the Grantee may use the two channels
described in the immediately preceding paragraph but only until receipt of
notice from the Village pursuant to the second sentence of the preceding
paragraph.
(d) Studios and associated production equipment will be located in a
mutually agreed upon site to meet the public's need for public access, and to
accommodate the specially designated channels described in this Paragraph.
Financial and technical support and replacement and maintenance of equipment for
such facilities shall be separately incorporated into the franchise by
agreement.
(e) The Grantee shall incorporate into its cable television system the
capacity to permit the Village, in times of emergency, to override by remote
control the audio, video and/or text of all channels, simultaneously, which the
Grantee may lawfully override. The Grantee shall provide emergency broadcast
capacity pursuant to FCC rules. The Grantee shall cooperate with the Village in
the use and operation of the emergency alert system.
(f) Interconnection.
(1) The Grantee shall, on request by the Village, connect its cable
system within the Village to any cable system that is owned or
operated by the Grantee or any affiliate or subsidiary of the
Grantee in any contiguous municipality.
(2) The Village also may request that the Grantee interconnect its
system with other communication facilities within or contiguous to
the Village. Such interconnection shall be negotiated by the
Village and the Grantee. Upon receiving a request from the Village
to so interconnect, the Grantee shall immediately initiate
negotiations with the other affected system or systems in order
that all costs may be shared equally among cable companies for
both construction and operation of the interconnection link.
The Grantee may be granted reasonable extensions of time to
interconnect, or the Village shall rescind its request to
interconnect, upon petition by the Grantee to the Village, if the
Grantee has negotiated in good faith and has arrived at impasse
with the operator or franchising authority of the system to be
interconnected, or that the cost of the interconnection would
cause an unreasonable or unacceptable increase in subscriber
rates, or that the interconnection is technically infeasible.
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(3) The Grantee shall cooperate with any interconnection corporation,
regional interconnection authority, municipality, or county,
state, or federal regulatory agency that may be hereafter
established for the purpose of regulating, financing, or otherwise
providing for the interconnection of cable systems beyond the
boundaries of the Village.
(g) The Grantee shall provide such additional services and facilities as
are contained in its application.
SEC. 36. RULES AND REGULATIONS.
(a) In addition to the inherent powers of the Village to regulate and
control any cable television franchise, and those powers expressly reserved by
the Village, or agreed to and provided for herein, the right and power is hereby
reserved by the Village to promulgate such additional regulations as it shall
find necessary in the exercise of its lawful powers and furtherance of the
terms and conditions of the franchise; provided, however, that such rules,
regulations, terms and conditions shall not be in conflict with the provisions
hereof or applicable state and federal laws, rules and regulations.
(b) The Village may also adopt such regulations at the request of Grantee
upon application.
SEC. 37. PERFORMANCE EVALUATION SESSIONS.
(a) The Village and the Grantee may hold scheduled yearly performance
evaluation sessions within 30 days of each anniversary date of the Grantee's
award or renewal of the franchise and as may be required by federal and state
law.
(b) Special evaluation sessions may be held at any time during the term of
the franchise at the request of the Village or the Grantee.
(c) All evaluation sessions shall be open to the public and announced in a
newspaper of general circulation in accordance with legal notice. The Grantee
shall notify its subscribers of all evaluation sessions by announcements on at
least one channel of its system between the hours of 7:00 p.m. and 9:00 p.m. for
five consecutive days preceding each session.
(d) Topics which may be discussed at any scheduled or special evaluation
session may include, but are not limited to: service rate structures; franchise
fee, penalties, free or discounted services; application of new technologies;
system performance; services provided; programming offered; customer complaints;
privacy; amendments to this chapter; judicial and FCC rulings; line extension
policies; and Grantee or Village rules.
(e) Members of the general public may add topics either by working through
the negotiating parties or by presenting a petition. If such a petition bears
the valid signatures of 50 or more residents of the Village, the proposed topic
or topics shall be added to the list of topics to be discussed at the evaluation
session.
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SEC. 38. RATE CHANGE PROCEDURES.
Pursuant to the Cable Television Consumer Protection and Competition Act of
1992, the Village is currently certified to regulate the Basic Service rates
charged by Grantee. Under these rules, the Grantee is required to obtain
approval from the Village for a rate increase for any change to the rates for
Basic Service. Should Federal or State law permit further rate regulation beyond
Basic Service, the Village may assume such rate regulation and adopt appropriate
procedures for such regulation.
Sec. 39. FORFEITURE AND TERMINATION.
(a) In addition to all other rights and powers retained by the Village
under this chapter or otherwise, the Village reserves the right to terminate the
franchise and all rights and privileges of the Grantee hereunder in the event of
a breach of its terms and conditions. A breach by the Grantee shall include, but
shall not be limited to the following:
(1) Violation of any material provision of the franchise or any
material rule, order, regulation or determination of the Village
made pursuant to the franchise; or
(2) Attempt to evade any provision of the franchise or to practice any
fraud or deceit upon the Village or its subscribers or customers;
or
(3) Failure to begin or complete system construction or system
extension as provided under Section 21; or
(4) Failure to provide the services promised in the Grantee's initial
application; or
(5) Failure to restore service after 96 consecutive hours of
interrupted service, except when approval of such interruption is
obtained from the Village; or
(6) Material misrepresentation of fact in the application for or
negotiation of the franchise; or
(7) Failure to pay any fees or other consideration when due pursuant
to the franchise or this chapter.
(b) The Village may make a written demand that the Grantee comply with any
such provision, rule, order or determination under or pursuant to the franchise.
If the violation by the Grantee continues for a period of 30 days following such
written demand without written proof satisfactory to the Village that the
corrective action was initiated immediately and thereafter has been completed or
has been continuously, actively, and expeditiously pursued, the Village may
place the issue of termination of the franchise before the Village Board. The
Village shall cause to be served upon the Grantee, at least 20 days prior to the
date of such meeting, a written notice of intent to request such termination and
the time and place of the meeting.
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(c) The Village Board shall hear and consider the issues and shall hear any
person interested therein and shall determine in its discretion whether any
violation by the Grantee has occurred. The Grantee shall be afforded an
opportunity to be heard at the hearing, including an opportunity to present all
relevant evidence and witnesses and to question witnesses presented against the
Grantee. The Grantee may, at its own expense, make a transcript of any such
hearing.
(d) If the Village Board determines that the violation by the Grantee was
the fault of the Grantee and within its control, then the Board may, by
resolution stating the violation or violations on which the decision is based,
declare that the franchise of the Grantee shall be forfeited and terminated
immediately or within such period as the Board in its sole discretion may fix,
unless there is compliance.
SEC. 40. FORCE MAJEURE.
Whenever a period of time is provided for in the franchise for either the
Village or the Grantee to do or perform any act or obligation, neither party
shall be liable for any delays or inability to perform due to causes beyond the
control of said party such as war, riot, insurrection, rebellion, strike,
lockout, unavoidable casualty or damage to personnel, materials or equipment,
fire, flood, storm, earthquake, tornado, or any act of God; provided, however,
that said time period shall be extended for only the actual amount of time said
party is so delayed. An act or omission shall not be deemed to be "beyond the
Grantee's control" if committed, omitted, or caused by the Grantee, the
Grantee's employees, officers, or agents or a subsidiary, affiliate, or parent
of the Grantee, or by any corporation or other business entity that holds a
controlling interest in the Grantee, whether held directly or indirectly.
Further, the failure of the Grantee to obtain financing or to pay any money due
from it to any Person, including the Village, for whatever reason, shall not be
an act or omission "beyond the Grantee's control." The failure of the Grantee to
obtain necessary permits from applicable governmental or utility agencies shall
be deemed "beyond the Grantee's control" only if the Grantee has made a timely
and complete request and application for said permit and is diligently pursuing
the issuance of said permit.
SEC. 41. FORECLOSURE.
Upon the foreclosure or other judicial sale of all or a substantial part of
the system, or upon the termination of any lease covering all or a substantial
part of the system, the Grantee shall notify the Village of such fact, and such
notification shall be treated as a notification that a change in control of the
Grantee has taken place, and the provisions of the franchise governing the
consent of the Village to such change in control of the Grantee shall apply.
Sec. 42. RECEIVERSHIP.
The Village shall have the right to cancel a franchise 120 days after the
appointment of a receiver, or trustee, to take over and conduct the business of
the Grantee, whether in receivership, reorganization, bankruptcy or other action
or proceeding, unless such receivership or trusteeship shall have been vacated
prior to the expiration of 120 days, or unless:
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(1) Within 120 days after his/her election or appointment, such
receiver or trustee shall have fully complied with all the
provisions of this chapter and remedied all defaults thereunder;
and
(2) Such receiver or trustee, within the 120 days, shall have executed
an agreement, duly approved by the court having jurisdiction in
the premises, whereby such receiver or trustee assumes and agrees
to be bound by each and every provision of this chapter and the
franchise granted to the Grantee.
SEC. 43. COMPLIANCE WITH STATE AND FEDERAL LAWS.
(a) Notwithstanding any other provisions of the franchise to the contrary,
the Grantee shall at all times comply with all laws and regulations of the state
and federal government or any administrative agencies thereof; provided,
however, if any such state or federal law or regulation shall require the
Grantee to perform any service, or shall permit the Grantee to perform any
service, or shall prohibit the Grantee from performing any service, in conflict
with the terms of the franchise or of any law or regulation of the Village, then
as soon as possible following knowledge thereof, the Grantee shall notify the
Village of the point of conflict believed to exist between such regulation or
law and the laws or regulations of the Village or the franchise.
(b) If the Village determines that a material provision of this chapter is
affected by any subsequent action of the state or federal government, the
Village and the Grantee shall negotiate to modify any of the provisions herein
to such reasonable extent as may be necessary to carry out the full intent and
purpose of this agreement.
SEC. 44. LANDLORD AND TENANT.
(a) Neither the owner of any multiple unit residential dwelling nor his
agent or representative shall interfere with the right of any tenant or lawful
resident thereof to receive cable television service, cable installation or
maintenance from a cable television Grantee regulated by and lawfully operating
under a valid and existing franchise issued by the Village.
(b) Neither the owner or any multiple unit residential dwelling nor his
agent or representative shall penalize, charge or surcharge a tenant or resident
or forfeit or threaten to forfeit any right of such tenant or resident, or
discriminate in any way against such tenant or resident who requests or receives
cable television service from a Grantee operating under a valid and existing
cable television franchise issued by the Village.
(c) No person shall resell, without the expressed, written consent of both
the Grantee and the Village, any cable service, program or signal transmitted by
a cable television Grantee under a franchise issued by the Village.
(d) Nothing in this chapter shall prohibit a person from requiring that
cable television system facilities conform to laws and regulations and
reasonable conditions necessary to protect safety, functioning, appearance and
value of premises or the convenience and safety of persons or property.
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(e) Nothing in this chapter shall prohibit a person from requiring a
Grantee to agree to indemnify the owner, or his agents or representatives for
damages or from liability for damages caused by the installation, operation,
maintenance or removal of cable television facilities.
SEC. 45. APPLICANTS' BIDS FOR INITIAL FRANCHISE.
(a) All bids received by the Village from the applicants for an initial
franchise will become the sole property of the Village.
(b) The Village reserves the right to reject any and all bids and waive
informalities and/or technicalities where the best interest of the Village may
be served.
(c) All questions regarding the meaning or intent of this chapter or
application documents shall be submitted to the Village in writing. Replies will
be issued by addenda mailed or delivered to all parties recorded by the Village
as having received the application documents. The Village reserves the right
to make extensions of time for receiving bids as it deems necessary. Questions
received less than 14 days prior to the date for the opening of bids will not be
answered. Only replies to questions by written addenda will be binding. All bids
must contain an acknowledgment of receipt of all addenda.
(d) Bids must be sealed, and submitted at the time and place indicated in
the application documents for the public opening. Bids may be modified at any
time prior to the opening of the bids, provided that any modifications must be
duly executed in the manner that the applicant's bid must be executed. No bid
shall be opened or inspected before the public opening.
(e) Before submitting a bid, each applicant shall:
(1) Examine this chapter and the application documents thoroughly; and
(2) Familiarize himself/herself with local conditions that may in any
manner affect performance under the franchise; and
(3) Familiarize himself/herself with federal, state and local laws,
ordinances, rules and regulations affecting performance under the
franchise; and
(4) Carefully correlate the bid with the requirements of this chapter
and the application documents.
(f) The Village may make such investigations as it deems necessary to
determine the ability of an applicant to perform under the franchise, and the
applicant shall furnish to the Village all such information and data for this
purpose as the Village may request. The Village reserves the right to reject any
bid if the evidence submitted by, or investigation of, such applicant fails to
satisfy the Village that such applicant is properly qualified to carry out the
obligations of the franchise and to complete the work contemplated therein.
Conditional bids will not be accepted.
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(g) All bids received shall be placed in a secure depository approved by
the Village and shall not be opened nor inspected prior to the public opening.
SEC. 46. FINANCIAL, CONTRACTUAL, SHAREHOLDER, AND SYSTEM DISCLOSURE FOR
FRANCHISES.
(a) No franchise will be granted to any applicant unless all requirements
and demands of the Village regarding financial, contractual, shareholder and
system disclosure have been met.
(b) Applicants, including all shareholders and parties with any interest in
the applicant, shall fully disclose all agreements and undertakings, whether
written or oral, or implied with any person, firm, group, association or
corporation with respect to the franchise and the proposed cable television
system. The Grantee of a franchise shall disclose all other contracts to the
Village as the contracts are made. This section shall include, but not be
limited to, any agreements between local applicants and national companies.
(c) Applicants, including all shareholders and parties with any interest in
the applicant, shall submit all requested information as provided by the terms
of this chapter or the application documents, which are incorporated herein by
reference. The requested information must be complete and verified as true by
the applicant.
(d) Applicants, including all shareholders and parties with any interest in
the applicant, shall disclose the numbers of shares of stock, and the holders
thereof, and shall include the amount of consideration for each share of stock
and the nature of the consideration.
(e) Applicants, including all shareholders and parties with any interest in
the applicant, shall disclose any information required by the application
documents regarding other cable systems in which they hold an interest of any
nature, including, but not limited to, the following:
(1) Locations of all other franchises and the dates of award for each
location; and
(2) Estimated construction costs and estimated completion dates for
each system; and
(3) Estimated number of miles of construction and number of miles
completed in each system as of the date of this application; and
(4) Date for completion of construction as promised in the application
for each system.
(f) Applicants, including all shareholders and parties with any interest
in the applicant, shall disclose any information required by the application
documents regarding pending applications for other cable systems, including,
but not limited to, the following:
(1) Location of other franchise applications and date of application
for each system; and
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(2) Estimated dates of franchise awards; and
(3) Estimated number of miles of construction; and
(4) Estimated construction costs.
SEC. 47. PENALTIES.
For the violation of any of the following provisions of this chapter or the
franchise agreement, penalties may be levied against the Grantee and shall be
paid by the Grantee and, if not so paid, shall be chargeable to the letter of
credit or cash security deposit, as follows, and the Village Board of Trustees
may determine the amount of the penalty for other violations which are not
specified in a sum not to exceed $750.00 for each violation, with each day
constituting a separate violation:
(a) Failure to furnish, maintain, or offer all cable services to any
potential Subscriber within the Village upon order of the Village: $250.00 per
day, per violation, for each day such failure occurs or continues;
(b) Failure to obtain or file evidence of required insurance, construction
bond, performance bond, or other required financial security: $200.00 per day,
per violation, for each day such failure occurs or continues;
(c) Failure to provide access to data, documents, records, or reports to
the Village as required by this chapter, including without limitation Sections
20, 30, 31, and 32: $150.00 per day, per violation, for each day such failure
occurs or continues;
(d) Failure to comply with applicable construction, operation, or
maintenance standards: $200.00 per day, per violation, for each day such failure
occurs or continues;
(e) Failure to comply with a rate decision or refund order: $300.00 per
day, per violation, for each day such a violation occurs or continues;
(f) Any violations for non-compliance with the customer service standards
of Sections 24, 25, or 26: $250.00 per day, per violation, for each day that
such noncompliance continues;
(g) Any other violations of the this chapter or the franchise agreement: up
to $500.00 per day, per violation, for each day such violation occurs or
continues;
(h) Grantor may impose any or all of the above enumerated measures against
the Grantee, which shall be in addition to any and all other legal or equitable
remedies it has under this chapter, the franchise agreement, or any other
applicable law.
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SEC. 48. PROCEDURES.
(a) Whenever the Village believes that the Grantee has violated any term,
condition or provision of this chapter or the franchise agreement, and wishes
to impose monetary penalties, a written notice shall be given to the Grantee
informing it of such alleged violation or liability. The written notice shall
describe in reasonable detail the specific violation so as to afford the Grantee
an opportunity to remedy the violation. The Grantee shall have 30 days
subsequent to the date of such notice in which to correct the violation before
the Village may impose penalties unless the violation is, in the opinion of the
Village, of such a nature so as to require more than 30 days and the Grantee
proceeds, immediately upon receipt of such notice, and continuously, and
diligently, to correct the violation. In any case where the violation is not
cured within 30 days of notice from the Village, or such other time to which the
Grantee and the Village may mutually agree, the Village may proceed to impose
liquidated damages and to exercise any other remedy provided in this chapter or
the franchise agreement.
(b) The Grantee may, within 10 days of receipt of notice, notify the
Village that there is a dispute as to whether a violation or failure has, in
fact, occurred. Such notice by the Grantee to the Village shall specify with
particularity the matters disputed by the Grantee and shall stay the running of
the 30-day cure period pending Board decision as required below. The Board shall
hear the Grantee's dispute. The Grantee must be given at least five days notice
of the hearing. At the hearing, the Grantee shall be entitled to the right to
present evidence and the right to be represented by counsel. In the event the
Village upholds the finding of a violation, the Grantee shall have 15 days
thereafter or the remaining time period set in Subsection (a) above, whichever
is longer, or such other time period as the Grantee and the Village mutually
agree, to correct the violation. In any case where the violation is not cured
within 30 days of notice from the Village, or such other time to which the
Grantee and the Village may mutually agree, the Village may proceed to impose
liquidated damages and to exercise any other remedy provided in this chapter or
the franchise agreement.
(c) The rights reserved to the Village under this section are in addition
to all other rights of the Village whether reserved by this chapter or
authorized by law or equity, and no action, proceeding or exercise of a right
with respect to penalties shall affect any other right the Village may have.
SEC. 49. LIMITS ON GRANTEE RECOURSE.
(a) The Grantee may seek enforcement of the terms of its franchise in
equity, but shall have no recourse against the Village for money damages or for
any loss, expense, or damage resulting from the terms and conditions of the
franchise nor because of the Village's enforcement thereof. The Grantee shall be
deemed to expressly agree that it accepts the franchise relying solely on its
own investigation and understanding of the power and authority of the Village to
grant said franchise and that, in partial consideration of the grant of the
franchise, the Grantee waives and releases all claims of damages of any kind
whatsoever, either known or unknown, existing or future, that it may have in
connection with any matter specified in this Subsection.
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(b) The Grantee shall acknowledge that it has not been induced to accept
the franchise by any promise, verbal or written, by or on behalf of the Village
or by any third Person regarding any term or condition of the franchise not
otherwise expressed herein. The Grantee shall further be deemed to warrant that
no promise or inducement, oral or written, has been made to any Village employee
or official regarding receipt of the franchise, other than as contained in the
franchise.
SEC. 50. NONENFORCEMENT BY VILLAGE
The Grantee shall not be excused from complying with any of the terms and
conditions of the franchise by any failure of the Village, on any one or more
occasions, to insist on the Grantee's performance of, or to seek the Grantee's
compliance with, any one or more of said terms or conditions.
SEC. 51. RIGHTS AND REMEDIES.
In the event of a violation or an alleged violation of the franchise by
the Grantee, the Village, by suit, action, mandamus, or other proceeding, in law
or in equity, may enforce or compel the performance of the terms of the
franchise to the full allowable extent. In the event of a judicial proceeding,
the prevailing party shall be entitled to reimbursement of all costs and
expenses, including reasonable attorneys fees, incurred in connection with such
judicial proceeding.
SEC. 52. This Ordinance shall be in full force and effect from and after its
passage, approval and publication in pamphlet form, as required by law.
The foregoing ordinance was adopted by a roll call vote as follows:
AYES NAYS ABSENT AND/OR NOT VOTING
---- ---- ------------------------
Trustees Campbell None Trustee Powell
Nutschnig
Dudek
Kosova
Semple
[SIGNATURE ILLEGIBLE]
--------------------
President
PASSED: September 22, 1997
-------------------
APPROVED: September 22, 1997
------------------
PUBLISHED in pamphlet form: October 3, 1997
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ATTEST: [SIGNATURE ILLEGIBLE]
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Village Clerk
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EXHIBIT 10.3.1
PURCHASE AND SALE AGREEMENT
BY AND AMONG
CABLE TV FUND 12-A, LTD.
AS SELLER
JONES INTERCABLE, INC.
AND
OLYMPUS COMMUNICATIONS, L.P.
AS BUYER
<PAGE>
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS........................................... 1
---------------------------
1.01 TRANSFER OF ASSETS............................................... 1
------------------
1.02 ASSUMED LIABILITIES.............................................. 2
-------------------
1.03 EXCLUDED ASSETS.................................................. 4
---------------
2. CLOSING DATE, PURCHASE PRICE, PAYMENT & ADJUSTMENTS................... 5
----------------------------------------------------
2.01 CLOSING DATE AND LOCATION........................................ 5
-------------------------
2.02 PURCHASE PRICE................................................... 5
--------------
2.03 DEPOSIT.......................................................... 5
-------
2.04 PAYMENT OF THE PURCHASE PRICE.................................... 5
-----------------------------
2.05 ALLOCATION OF PURCHASE PRICE..................................... 6
----------------------------
2.06 ADJUSTMENTS TO THE PURCHASE PRICE PRORATIONS..................... 6
--------------------------------------------
2.07 NON-COMPETITION AGREEMENTS....................................... 8
--------------------------
3. REPRESENTATIONS WARRANTIES AND COVENANTS OF SELLER.................... 9
--------------------------------------------------
3.01 PARTNERSHIP STANDING............................................. 9
--------------------
3.02 AUTHORIZATION.................................................... 9
-------------
3.03 FINANCIAL STATEMENTS.............................................10
--------------------
3.04 TITLE TO ASSETS..................................................10
---------------
3.05 THE ACQUIRED SYSTEMS.............................................11
--------------------
3.06 FRANCHISES.......................................................15
----------
3.07 POLE ATTACHMENT AGREEMENTS.......................................16
--------------------------
3.08 HEAD-END SITES AND OFFICE LOCATIONS..............................17
-----------------------------------
3.09 OTHER CONTRACTS AND LEASES.......................................17
--------------------------
3.10 AGREEMENTS WITH EMPLOYEES........................................18
-------------------------
3.11 LITIGATION OR JUDGMENTS..........................................18
-----------------------
<PAGE>
3.12 TAX RETURNS AND PAYMENTS.........................................18
------------------------
3.13 COMPLIANCE WITH LAWS.............................................19
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3.14 ADVERSE DEVELOPMENTS.............................................19
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3.15 CONDITION OF ASSETS TO BE ACQUIRED AND INSURANCE.................19
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3.16 PATENTS, TRADEMARKS AND COPYRIGHTS...............................20
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3.17 LABOR RELATIONS..................................................20
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3.18 RESTORATION......................................................20
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3.19 BULK SALES COMPLIANCE............................................20
---------------------
3.20 RIGHT OF FIRST REFUSAL...........................................21
----------------------
3.21 ENVIRONMENTAL MATTERS............................................21
---------------------
3.22 EQUIVALENT BASIC SUBSCRIBERS; GROSS REVENUES.....................21
--------------------------------------------
3.23 HSR ACT FILING...................................................22
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3.24 DISCLOSURE.......................................................22
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4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER....................22
--------------------------------------------------
4.01 STATUS, POWER AND AUTHORITY......................................22
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4.02 AUTHORIZATION OF AGREEMENT.......................................23
--------------------------
4.03 LITIGATION.......................................................23
----------
4.04 HSR ACT FILING...................................................23
--------------
4.05 CONSUMMATION OF AGREEMENT........................................23
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5. CONDUCT OF BUSINESS OF ACQUIRED SYSTEMS PENDING CLOSING AND
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ADDITIONAL COVENANTS OF SELLER.............................................24
- ------------------------------
5.01 MAINTENANCE OF BUSINESS..........................................24
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5.02 INSURANCE........................................................25
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5.03 ORGANIZATION.....................................................25
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5.04 ACCESS FOR INVESTIGATION.........................................25
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5.05 NOTICE...........................................................25
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5.06 CONSUMMATION OF AGREEMENT........................................25
-------------------------
<PAGE>
5.07 COOPERATION WITH BUYER...........................................25
----------------------
5.08 ACCOUNTS LIST....................................................26
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5.09 FCC APPROVAL.....................................................26
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5.10 CERTIFICATES.....................................................26
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5.11 THIRD-PARTY CONSENTS.............................................26
--------------------
5.12 APPROVAL OF FRANCHISE AUTHORITIES................................26
---------------------------------
5.13 FCC AND OTHER REGULATORY COMPLIANCE..............................27
-----------------------------------
5.14 APPROVAL OF LESSORS..............................................27
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5.15 EMPLOYEES........................................................27
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5.16 TRANSITIONAL BILLING SERVICES....................................27
-----------------------------
5.17 FINANCIAL STATEMENTS.............................................28
--------------------
6. CONDITIONS TO CLOSING - BUYER.........................................28
-----------------------------
6.01 CONDITIONS TO OBLIGATIONS OF BUYER...............................28
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7. CONDITIONS TO CLOSING - SELLER........................................31
------------------------------
7.01 CONDITIONS TO OBLIGATIONS OF SELLER..............................31
-----------------------------------
8. CLOSING...............................................................33
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8.01 ACTION TO BE TAKEN AT AND AFTER CLOSING..........................33
---------------------------------------
9. REAL ESTATE PRORATION AND ADJUSTMENT ITEMS............................34
------------------------------------------
10. DAMAGE TO PROPERTY AND RISK OF LOSS...................................35
-----------------------------------
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...........36
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11.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................36
------------------------------------------
11.02 INDEMNIFICATION.................................................36
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11.03 INDEMNIFICATION WITH RESPECT TO THIRD-PARTY CLAIMS..............37
--------------------------------------------------
12. TERMINATION AND REMEDIES..............................................40
------------------------
<PAGE>
12.01 TERMINATION BY MUTUAL AGREEMENT.................................40
-------------------------------
12.02 BUYER'S DEFAULT.................................................41
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12.03 SELLER'S DEFAULT................................................41
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12.04 TERMINATION BY BUYER OR SELLER..................................41
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13. NOTICE................................................................42
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14. BROKERAGE COMMISSION..................................................43
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15. LAWS GOVERNING........................................................43
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15.01 LAWS GOVERNING..................................................43
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15.02 CONSENT TO JURISDICTION.........................................43
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16. MISCELLANEOUS.........................................................43
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16.01 COUNTERPARTS; TELECOPY..........................................43
----------------------
16.02 ASSIGNMENT......................................................44
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16.03 ENTIRE AGREEMENT................................................44
----------------
16.04 INTERPRETATION..................................................44
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16.05 EXPENSES........................................................44
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16.06 CONFIDENTIALITY.................................................44
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16.07 PUBLIC ANNOUNCEMENTS............................................45
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16.08 WAIVERS.........................................................45
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16.09 PARTIAL INVALIDITY..............................................45
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16.10 INCORPORATION BY REFERENCE......................................46
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16.11 ATTORNEYS' FEES.................................................46
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<PAGE>
AGREEMENT
THIS AGREEMENT is made this 25th day of March, 1998, by and among
CABLE TV FUND 12-A, LTD., a Colorado limited partnership ("Seller"), OLYMPUS
COMMUNICATIONS, L.P. ("Buyer") and, solely with respect to its obligations in
SECTION 11 hereof, JONES INTERCABLE, INC. ("Jones").
RECITALS
--------
WHEREAS, Seller owns and operates cable television ("CATV") systems in
and around the communities of Lee County, Florida and the City of Ft. Myers,
Florida (the "Acquired Systems"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, on the terms and conditions hereinafter set forth, all of the
assets of Seller used by, or useful to, Seller in connection with the operation
of the Acquired Systems, except the Excluded Assets (as defined in SECTION
1.03); and
WHEREAS, Jones is the general partner of Seller.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and each act done pursuant hereto, the parties
hereto, intending to be legally bound, do represent, warrant, covenant and agree
as follows:
1. PURCHASE AND SALE OF ASSETS.
----------------------------
1.01 Transfer of Assets. On the Closing Date, as defined in SECTION 2.01,
------------------
Seller shall sell, convey, transfer and assign to Buyer, and Buyer shall
purchase from Seller, all of the assets of Seller of every kind and character,
real, personal, tangible, intangible or mixed, used by, or useful to, Seller in
connection with the operation of, the Acquired Systems in existence on the
Closing Date (the "Assets to be Acquired"), which shall include, but not be
limited to, the following:
(a) All items of tangible personal property owned or leased and used
by Seller in connection with the operation of the Acquired Systems, including
all equipment associated with receiving and distributing signals at the headend
sites, and all other antennas and down leads and all electronic equipment,
headend amplifiers and associated equipment, line amplifiers, aerial and
underground trunk and feeder line cable, distribution plant, programming signal
decoders for each satellite service which scrambles its signal, converters,
housedrops, including disconnected housedrops, installed subscriber devices,
utility poles, local origination equipment (wherever located), test equipment,
machinery, spare equipment and parts inventory, housedrop equipment inventory,
system design and engineering maps and drawings, supplies, vehicles and trailers
(to be transferred under fee title and not under lease), furnishings
<PAGE>
and other personal property of any nature, and all real property interests owned
or leased and used by Seller in connection with the operation of the Acquired
Systems, including all fee interests, leasehold interests and rights-of-way in
real property, buildings and improvements and construction-in-progress, towers,
fixtures, poles, vaults and pedestals.
(b) All of the rights of Seller to, in and under any and all
subscription contracts with subscribers for CATV service relating to the
Acquired Systems; except as provided in SECTION 1.03, all instruments and
agreements for the purchase, sale or other receipt or distribution of
programming, news, data and microwave relay signals relating to the Acquired
Systems which Buyer expressly agrees to include among the Assets to be Acquired
at Closing; and all of the Franchises (as herein defined) and any franchise
applications; all of the Pole Attachment Agreements (as herein defined) and all
retransmission consent agreements relating to the Acquired Systems which Seller
does not retain as provided in SECTION 1.03(C); all variances, easements, right-
of-way agreements, licenses, registrations, copyright notices, signal
registration and other statements, construction and other permits, leases,
including leases of all head-end sites, and all other contracts or agreements
relating to the Acquired Systems.
(c) All options, claims and contract rights and all goodwill relating
to the Acquired Systems; all subscriber accounts receivable of the Acquired
Systems for all periods prior and subsequent to Closing; subscriber and customer
lists and subscription contracts of the Acquired Systems; and all books and
records which relate solely to the operation of the Acquired Systems (including,
without limitation, subscriber records, vendor records, accounting records,
accounts payable records, accounts receivable records, general ledgers and any
other documents necessary to support a regulatory filing); provided, however,
that Seller shall provide Buyer with access to such other books and records of
Seller as is reasonably necessary for Buyer's review and operation of the
Acquired Systems for a period of three years subsequent to the date of Closing.
Seller acknowledges and agrees that Buyer shall be the exclusive owner of all
subscriber and customer lists relating to the Acquired Systems subsequent to
Closing.
(d) All of the rights of Seller to, in and under that Joint Venture
Agreement dated as of April 27, 1992, between Seller and Palmer Communications
Incorporated, a Delaware corporation, as the same has been amended or extended
from time to time (the "Joint Venture Agreement") which Joint Venture Agreement
created the venture otherwise known as Southwest Florida Cable Advertising.
1.02 Assumed Liabilities. At the Closing on the Closing Date, Buyer shall
-------------------
assume, by instruments of assumption reasonably satisfactory to counsel for
Seller, and discharge at the Closing or as they become due and payable, the
following liabilities and obligations of Seller and no others:
-2-
<PAGE>
(a) All obligations of the Seller arising after the Closing Date under
the Franchises, Leases and Rights-of-Way, Pole Attachment Agreements, licenses,
and any agreements, consents, permits and other instruments relating to the
Acquired Systems and in existence on the Closing Date and entered into in the
ordinary course of business to the extent included in the Assets to be Acquired;
(b) The obligations of Seller for subscriber deposits and subscriber
advance payments, any other liabilities and obligations of Seller shown on the
1998 balance sheets of Seller as current liabilities, part of SCHEDULE 3.03
-------------
attached hereto, to the extent that such liabilities are so shown and have not
been paid prior to the Closing Date, and other obligations and liabilities of
Seller relating to the Acquired Assets but only to the extent that there is an
adjustment to the Purchase Price in favor of Buyer with respect thereto;
(c) All unpaid liabilities and obligations of the Seller incurred in
its operations in the ordinary course of business from the date of December 31,
1997, balance sheets to the Closing Date which would appear as current
liabilities on a balance sheet prepared in accordance with generally accepted
accounting principles ("GAAP") and are identified by name and amount on an
update to SCHEDULE 3.03 to be delivered by Seller to Buyer on the Closing Date
-------------
but only to the extent that there is an adjustment to the Purchase Price in
favor of Buyer with respect thereto; and
(d) All obligations of Seller arising after the Closing Date under the
Joint Venture Agreement, including, but not limited to, capital contributions
required to be made thereunder and any obligations or liabilities related to
Southwest Florida Cable Advertising.
The liabilities and obligations described in this SECTION 1.02, to the
extent they are to be assumed by Buyer, shall be herein referred to as the
"Assumed Liabilities." Buyer shall assume only those Assumed Liabilities
specifically stated in this SECTION 1.02 and no others. Without limiting the
foregoing and except as provided above where an adjustment to the purchase price
has been made, Buyer shall not assume or become liable for (i) any income,
profits, franchise, sales, use, occupation, property, excise, ad valorem or any
other tax to which the Assets to be Acquired are subject prior to the Closing
Date, and Buyer shall not assume or become liable for any liability or tax due
as a result of any contest, audit or other tax proceeding involving Seller or
the Assets to be Acquired for any taxable period ending on or prior to the
Closing Date, except as otherwise provided herein, (ii) any liabilities relating
to the Excluded Assets, (iii) any liability for franchise fees, pole attachment
fees, leasehold rentals, any obligation for wages, commissions, overtime,
vacation and holiday pay, sick pay, bonuses, other employee benefits or any
pension withdrawal liability, any on-going workers' compensation benefits for
any accident arising prior to the Closing Date except for accrued overtime, sick
pay, vacation pay, holiday pay or other employee benefits
-3-
<PAGE>
treated as a current liability under SECTION 2.06(B)(XII) hereof, or any
obligation under any employment agreement or employment-at-will relationship
other than obligations arising from and after the Closing Date, or (iv) any
liability or obligation of Seller which is not a current liability as defined
under GAAP and which is not included as part of the Working Capital Adjustment
pursuant to SECTION 2.06(A) OR (B).
1.03 Excluded Assets. Notwithstanding the foregoing, it is specifically
---------------
agreed that the following assets are excluded from the Assets to be Acquired
(collectively, the "Excluded Assets"):
(a) all cash and cash equivalents on hand or in the bank accounts of
Seller;
(b) all satellite programming agreements and agreements which Seller
maintains with any of its respective suppliers of programming;
(c) any retransmission consents, must carry or will carry agreements
designated on SCHEDULE 1.03 which Seller maintains that relate to broadcast
-------------
signals which are carried on other Jones cable systems;
(d) all documents relating to the legal existence of the Seller;
(e) all insurance policies, intercompany receivables, letters of
credit and surety bonds and any cash surrender value in regard thereto;
(f) all claims, rights and interest in and to any refunds for federal,
state or local income or other taxes or fees of any nature whatsoever for
periods prior to the Closing Date, including, without limitation, fees paid to
the United States Copyright Office;
(g) any books and records that Seller is required by law to retain,
subject to the right of Buyer to have access to and to copy for a reasonable
period, not to exceed five years from the Closing Date, and other books and
records related to internal corporate matters and financial relationships with
Seller's lenders, provided that nothing herein shall limit Buyer's right to
receive at Closing copies of all documents, books and records necessary in
connection with the operation of the Business;
(h) the trademarks, trade names, copyrights, service marks and all
other information and similar intangible assets relating to Seller or the
Acquired Systems;
(i) contracts and agreements relating to Seller's subscriber billing
system and all equipment related thereto;
(j) any of the Assets to be Acquired sold or otherwise disposed of in
the ordinary course of business and not in violation of the terms and provisions
of this
-4-
<PAGE>
Agreement between the date of this Agreement and the Closing Date;
(k) all interest of Seller and/or Jones, if any, in Gateway/Jones
Communications, Ltd.; and
(l) The rights, assets and properties described on SCHEDULE 1.03.
-------------
2. CLOSING DATE, PURCHASE PRICE, PAYMENT & ADJUSTMENTS.
----------------------------------------------------
2.01 Closing Date and Location. The consummation of the transfer and
-------------------------
delivery of the Assets to be Acquired to Buyer and the receipt of the
consideration therefor by Seller shall constitute the "Closing." Unless
otherwise mutually agreed to by the parties, the Closing shall take place at
10:00 a.m., local time, at the offices of Jones Intercable, Inc., 9697 East
Mineral Avenue, Englewood, Colorado 80112. The parties agree to close the
transactions contemplated by this Agreement upon a date designated in a Closing
Notice, as herein defined, which in no event shall be sooner than ten (10)
business days after either party's receipt of such Closing Notice, which
specified date and time shall constitute the "Closing Date." A party shall have
the right to deliver a Closing Notice once all of the conditions to Closing set
forth in SECTIONS 6 AND 7 have been satisfied or waived. Either Buyer or Seller
may deliver notice in writing to the other parties hereto setting a Closing Date
in accordance with this SECTION 2.01 (a "Closing Notice"). The effective date of
the sale of the Acquired Systems shall be at the close of business on the
Closing Date and all prorations and allocations provided for hereunder shall be
made as of the close of business on the Closing Date, except as otherwise agreed
in writing by the parties. Notwithstanding the foregoing, this Agreement may be
terminated pursuant to SECTION 12 hereof if the Closing has not occurred by
October 31, 1998.
2.02 Purchase Price. Buyer shall acquire and accept the Assets to be
--------------
Acquired from Seller and shall pay to Seller the aggregate amount of One Hundred
Ten Million and No/100th Dollars ($110,000,000.00) for the Assets to be Acquired
(the "Purchase Price"), subject to adjustment pursuant to the provisions of
SECTION 2.06.
2.03 Deposit. Upon execution and delivery of this Agreement by Buyer and
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Seller, Buyer shall deliver to Colorado National Bank ("Escrow Agent") the sum
of Seven Million Five Hundred Thousand and No/100th Dollars ($7,500,000.00)(the
"Deposit"), to be held in an interest bearing account and applied pursuant to
the terms of that certain Escrow Agreement, dated the date hereof, by and among
Seller, Buyer and Escrow Agent.
2.04 Payment of the Purchase Price. On the Closing Date, Buyer will pay to
-----------------------------
Seller, in immediately available funds by wire transfer, an amount equal to the
Purchase Price less the amount of the Deposit which shall be delivered by Escrow
-5-
<PAGE>
Agent to Seller at Closing. The Purchase Price shall be further adjusted at
Closing pursuant to the provisions of SECTION 2.06. At Closing, any interest
which has accrued on the Deposit shall be delivered to Buyer by Escrow Agent.
2.05 Allocation of Purchase Price. The Purchase Price shall be allocated
----------------------------
among the Assets to be Acquired based upon an appraisal to be obtained prior to
the Closing. The parties agree to engage Kane Reece Associates, Inc. ("KRA") or,
if unavailable, The Strategis Group, to prepare such appraisal, and agree to
share equally the costs of the appraisal. The parties shall cause the appraiser
to consult with Buyer and Seller during the preparation of such appraisal, and
the appraiser shall deliver the final appraisal to Buyer and Seller
simultaneously. Buyer and Seller agree to be bound by such allocation and to
file all returns and reports in respect of the transactions herein contemplated,
including all federal, state and local tax returns, on the basis of such
allocation.
2.06 Adjustments to the Purchase Price Prorations.
--------------------------------------------
(a) The Purchase Price shall be: (i) decreased by an amount equal to
the Working Capital Adjustment (as hereinafter defined) to the extent such
Working Capital Adjustment is a negative amount as of the Closing Date; or (ii)
increased by an amount equal to the Working Capital Adjustment to the extent
such Working Capital Adjustment is a positive amount as of the Closing Date. For
purposes hereof, the Working Capital Adjustment shall be the number obtained by
subtracting (x) the sum of the liabilities of Seller (as defined and determined
in accordance with GAAP) on the Closing Date which constitute Assumed
Liabilities, including, but not limited to, Seller's pro rata share of the
liabilities of the Joint Venture, from (y) the sum of the current assets of
Seller (as defined and determined in accordance with GAAP, except that inventory
shall not be included as a current asset) on the Closing Date which are included
within the Assets to be Acquired, including, but not limited to, Seller's pro
rata share of the assets of the Joint Venture, exclusive of inventory. The
Working Capital Adjustment shall be determined in accordance with GAAP.
(b) Without limiting the foregoing, in connection with the
determination of the Working Capital Adjustment:
(i) the amount of service charges of Seller that have been
prepaid by subscribers shall be a current liability;
(ii) the amount of accrued but unpaid pole rentals of Seller, if
any, shall be a current liability;
(iii) the amount of prepaid pole rentals of Seller transferred to
Buyer, if any, shall be a current asset;
-6-
<PAGE>
(iv) the amount of franchise fees of Seller payable by Buyer
after Closing covering periods prior to Closing shall be a current
liability, and the current portion of all other accrued but unpaid
liabilities under all agreements which constitute Assets to be Acquired
shall be current liabilities;
(v) the pro rata share accrued to the Closing Date of
rentals, utility charges, water and sewer charges, municipal garbage and
rubbish removal charges, rents and other customarily proratable items of
Seller (relating to the Assets to Be Acquired) shall be determined and
appropriately credited;
(vi) the amount of all refundable deposits from subscribers of
Seller for converters, encoders, decoders and any related equipment, and
any other prepaid item shall be a current liability;
(vii) the amount of all prepaid expenses of Seller which are
part of the Assets to be Acquired (except for prepaid expenses related to
the Excluded Assets and any insurance or bonds) shall be current assets;
(viii) the amount Buyer shall be required to pay, if any, in
order to obtain fee title to all leased vehicles of Seller which constitute
Assets to be Acquired shall be current liabilities;
(ix) the amount of Seller's pro rata share of the copyright
royalty payments to be paid after the Closing Date, as measured by the
number of days during the semi-annual accounting period during which Seller
operated the Acquired Systems divided by the total number of days in such
accounting period, shall be current liabilities;
(x) the amount of any accrued but unpaid real estate taxes of
Seller as of the Closing Date, as determined in accordance with SECTION 9
of this Agreement, shall be a current liability;
(xi) all accounts receivable of Seller and/or Southwest
Florida Cable Advertising for services rendered in connection with the
Acquired Systems prior to the Closing Date shall be current assets except
for those accounts receivable which were declared as uncollectable in
accordance with GAAP as reflected on the books and records of Seller and/or
Southwest Florida;
(xii) all accrued overtime, sick pay, vacation pay, holiday pay
or other employee benefits assumed by Buyer for employees being hired by
Buyer pursuant to SECTION 5.15 shall be current liabilities; and
(xiii) unpaid development fees, if any, that are due and payable
as of the Closing Date shall be a current liability.
-7-
<PAGE>
(c) At least three business days prior to the Closing Date, Seller
shall deliver to Buyer a certificate setting forth a good faith estimated
calculation of the adjustments to the Purchase Price calculated as of the
Closing Date pursuant to subparagraphs (a) and (b) above (the "Estimated
Adjustment"), together with such supporting documentation as the Buyer may
reasonably request. The Estimated Adjustment shall be used to determine the
estimated adjustment to the Purchase Price pursuant to subparagraphs (a) and (b)
above on the Closing Date.
(d) On or before 90 days after the Closing Date, Seller shall deliver
to Buyer a final calculation of the adjustments calculated as of the Closing
Date (the "Final Adjustment"), together with such supporting documentation as
Buyer may reasonably request, which shall evidence in reasonable detail the
nature and extent of each adjustment. Each party shall cooperate with the other
and provide reasonable access to the necessary personnel and records of the
other to review the Final Adjustment. Should Buyer dispute Seller's Final
Adjustment, Buyer shall promptly, but in no event later than 60 days after
receipt of the Final Adjustment (the "Grace Period"), deliver to Seller written
notice describing in reasonable detail the dispute, together with Buyers
determination as to the Final Adjustment in reasonable detail. If the dispute is
not resolved by the parties within 20 days from the date of receipt by Seller of
written notice from Buyer, the parties agree to engage promptly the Pittsburgh,
Pennsylvania office of Price Waterhouse or, if unavailable, another "big six"
accounting firm mutually acceptable to Seller and Buyer (the "Independent
Accountant") to resolve the dispute within 30 days after such engagement. The
Independent Accountant's determination shall be final and binding on the
parties. The Buyer, on the one hand, or Seller, on the other hand, shall make
appropriate payment to the other of the difference between the Final Adjustment
amount and the Estimated Adjustment amount within twenty business days following
either the resolution of the dispute by the parties or the receipt of the
Independent Accountants final determination, as the case may be; provided, that
any amount which is payable based upon the Final Adjustment delivered by Seller
hereunder shall be paid before resolution of the dispute by the parties or
receipt of the Independent Accountant's final determination. All fees and costs
of the Independent Accountant shall be borne pro rata by the Buyer and by the
Seller in proportion to the difference between the Independent Accountant's
determination of the Final Adjustment and each of the Seller's and the Buyers
determination of such adjustment divided by the sum of the two differences.
Buyer shall not dispute Sellers Final Adjustment unless the Buyer's computation
of the Final Adjustment differs from Sellers computation by more than $25,000.
If Buyer fails to notify Seller prior to the expiration of the Grace Period that
it disputes Sellers Final Adjustment, Seller's Final Adjustment shall be deemed
to be accepted by Buyer and shall be final and binding on the parties.
2.07 Non-Competition Agreement. On the Closing Date, Seller and Jones
-------------------------
shall execute and deliver to Buyer a non-competition agreement, substantially in
the
-8-
<PAGE>
form of EXHIBIT A (the "Non-Competition Agreement").
---------
3. REPRESENTATIONS WARRANTIES AND COVENANTS OF SELLER
--------------------------------------------------
Seller represents and warrants that the following statements and
representations are true and correct as of the date hereof in addition to which
Seller covenants with Buyer as follows:
3.01 Partnership Standing. Seller is a limited partnership duly organized,
--------------------
validly existing and in good standing under the laws of the State of Colorado.
Seller has all of the requisite partnership power and authority to own or lease
all of its assets, to own and operate the Acquired Systems owned and operated by
it, to carry on its business as now conducted, to enter into this Agreement and
to perform the terms of this Agreement. Seller is duly qualified or licensed to
do business and is in good standing in the State of Florida. Jones is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado and has all requisite corporate power and authority to
own all its assets and to carry on its business as now conducted. Jones is duly
qualified and licensed to do business and in good standing in the State of
Florida.
3.02 Authorization.
-------------
(a) Except as set forth on SCHEDULE 3.02, the execution and delivery
-------------
of this Agreement and of the Seller Transaction Documents by Seller, the
consummation of the transactions contemplated hereby and thereby and fulfillment
of and compliance with the terms and provisions hereof and thereof do not and
will not: (i) violate any provision of any judicial or administrative order,
award, judgment or decree applicable to Seller; (ii) conflict with or violate
any of the provisions of the Limited Partnership Agreement of Seller; or (iii)
conflict with, result in a breach of or constitute a default under any agreement
or instrument to which Seller is a party or by which Seller or any of its assets
is bound, subject to obtaining required consents from, or giving notices to,
third parties. SCHEDULE 3.02 sets forth the name of any governmental authority
-------------
or other third party from whom consent must be obtained or to whom notice must
be given in order for Seller to validly and lawfully perform its obligations
hereunder and under the Seller Transaction Documents.
(b) This Agreement has been, and each and every other agreement,
instrument, certificate or other document to which Seller is a party that is to
be executed, delivered and performed by Seller pursuant hereto, including,
without limitation, the Noncompetition Agreements (collectively, "Seller
Transaction Documents"), when executed and delivered by Seller, will have been,
duly authorized, executed and delivered by Seller and constitutes, or, when
executed and delivered by Seller will constitute, legal, valid and binding
obligations of Seller, enforceable against
-9-
<PAGE>
them in accordance with their terms.
3.03 Financial Statements. True, complete and correct copies of the
unaudited financial statements of Seller for the three years ended December 31,
1997, December 31, 1996 and December 31, 1995 and true, correct and complete
unaudited financial statements for the month of January, 1998 are attached as
SCHEDULE 3.03. Except as set forth on SCHEDULE 3.03, such financial statements
- ------------- -------------
accurately reflect all of the cash flows, income, expenses, liabilities,
operations, equity and assets of Seller and the Acquired Systems at the
respective dates thereof and the operations of the Acquired Systems as of such
dates. Except as set forth on SCHEDULE 3.03, all of the assets reflected in such
-------------
financial statements and all assets acquired by the Seller since the date of
such financial statements are included within the Assets to be Acquired, except
the Excluded Assets and such assets as have been consumed, replaced or sold in
the normal course of business or as have been destroyed by fire, act of God or
other occurrence beyond the control of Seller prior to the date hereof. Except
as set forth on SCHEDULE 3.03, the respective above-referenced financial
-------------
statements, including the notes thereto, if any: (a) are in accordance with the
respective books and records of Seller; (b) are true and correct in all material
respects and present fairly the financial condition of Seller as of the dates of
such financial statements and its respective results of operations and cash
flows for the respective periods then ended; and (c) except as indicated in the
notes to such financial statements, have been prepared in accordance with GAAP,
consistently applied with prior periods, and can be reconciled with the
financial records maintained, and the accounting methods applied, by Seller for
tax purposes. Also attached hereto as SCHEDULE 3.03 are (i) true and correct
-------------
copies of an accounts receivable aging for the Acquired Systems as of December
31, 1997; and (ii) a true and correct schedule of liabilities of the Seller at
December 31, 1997.
3.04 Title to Assets. Except as set forth on SCHEDULE 3.04 attached
-------------
hereto, Seller has good and marketable title to all of the Assets to be
Acquired, free and clear of all mortgages, liens, pledges, security interests,
liens, restrictions, encumbrances or other charges of any nature whatsoever (a
"Lien"), except for the following with respect to real property owned or leased
by Seller: (a) liens for taxes not yet due and payable; (b) easements,
rights-of-way, restrictive covenants and other encumbrances of record; (c)
zoning, subdivision and other similar laws and ordinances; (d) matters which
would be disclosed by an accurate survey of the property; (e) minor
imperfections of title with respect to real property under lease used in the
Acquired Systems which do not interfere with the use of or impair the value of
said property; and (f) except for any Lien not listed on SCHEDULE 3.04 with
-------------
respect to which the underlying indebtedness is paid in full and the Lien
removed from the record on or before the Closing Date (collectively, the
"Permitted Liens"). The Assets to be Acquired, whether owned or leased,
constitute all of the assets used in connection with the Acquired Systems as
presently conducted, except for the Excluded Assets.
-10-
<PAGE>
3.05 The Acquired Systems.
--------------------
(a) To the best of Seller's Knowledge, the information as to the
mileage of trunk and feeder plant of the Acquired Systems, the channel capacity
of the Acquired Systems and the dwelling units passed by the Acquired Systems
plant set forth on SCHEDULE 3.05 attached hereto are all true and correct in all
-------------
material respects. The Acquired Systems, when loaded with the number of
television channels (picture and sound) indicated on SCHEDULE 3.05 will perform
-------------
in all material respects to the standards contained in the Rules and Regulations
of the Federal Communications Commission (the "FCC"). As of January 31, 1998,
to the best of Seller's Knowledge, there are approximately 778 miles of
energized cable plant, approximately 61,813 residential dwelling units passed by
the Acquired Systems, and approximately 11,985 of bulk units passed by the
Acquired Systems. The Cable Data Report for the Acquired Systems for the month
ended December, 1997, a copy of which is attached hereto as part of SCHEDULE
--------
3.05 is true, correct and complete in all material respects. Seller has not
- ----
itself, nor have any of Seller's officers, directors, partners, affiliates,
agents or employees (except to the extent that payment was made for CATV
services received by them at their own dwelling), paid any of Seller's accounts
receivable from subscribers. Except as set forth on SCHEDULE 3.05, since
-------------
January 1, 1998, Seller has not changed the channel lineup of the Acquired
Systems set forth on SCHEDULE 3.05; added additional channels to the Acquired
-------------
Systems; increased its subscriber rates and services set forth on SCHEDULE 3.05;
-------------
or conducted any extraordinary or unusual marketing programs, including any
amnesty programs.
(b)(i) Seller has complied in all material respects with all
notification and reporting provisions and all other provisions
of the FCC rules and regulations applicable to the Acquired
Systems; the Acquired Systems have been and are being operated
in substantial compliance with the Communications Act of 1934,
as amended, including the amendments effected by the Cable
Communications Policy Act of 1984 (the "1984 Act"), the Cable
Television Consumer Protection and Competition Act of 1992 (the
"1992 Act") and the Copyright Act of 1976, as amended (the
"Copyright Act"), and with all Rules and Regulations of the FCC
and the U.S. Copyright Office; provided that Seller does not
make any representations about rates charged to subscribers
except as set forth below. Without limiting the generality of
the foregoing, each of the communities served by the Acquired
Systems has been registered with the FCC; all of the semi-
annual and annual performance tests on the Acquired Systems
described in Section 76.601 of the FCC Rules and Regulations
have been made by Seller; the Acquired Systems currently meet
the technical standards set forth in the FCC Rules and
Regulations,
-11-
<PAGE>
including the leakage limits contained in Section 76.605(a)(11);
and Seller has delivered to Buyer a copy of the most recent FCC
Forms 320 filed with the FCC (Basic Signal Leakage Performance
Report) for Seller. Copies of the most recent signal leakage
tests conducted in accordance with Section 76.611 of the FCC
Rules and copies of the most recent "proof of performance" tests
on the Acquired Systems have been delivered to Buyer by Seller
(the "Proof of Performance Tests"). Each of the signal leakage
tests and the Proof of Performance Test was conducted on the
Acquired Systems within the last six (6) months and in accordance
with the testing procedures set forth in Sections 76.601 and
76.609 of the Rules and Regulations of the FCC and evidence that
the Acquired Systems meet or exceed all of the technical
standards set forth in Section 76.605 of the Rules and
Regulations of the FCC. The Acquired Systems are being operated
in compliance with the provisions of Sections 76.610 through
76.619 of the FCC Rules and Regulations (midband and superband
signal carriage); appropriate authorization from the FCC has been
obtained for the use of all aeronautical frequencies in use in
the Acquired Systems; the Acquired Systems are presently being
operated in compliance with such authorization; Seller has
provided privacy notices to subscribers of the Acquired Systems
in accordance with the requirements of Section 63(a)(1) of the
1984 Act; and the Acquired Systems are in compliance in all
material respects with the requirements of Sections 76.92
(Network Non-Duplication Protection) and 76.151 (Syndicated
Program Exclusivity) of the FCC Rules and Regulations.
(ii) The monthly rates charged by Seller for each service provided by
Seller to subscribers of the Acquired Systems are set forth on
SCHEDULE 3.05. Such rates were calculated in good faith in
-------------
accordance with the FCC Rules and Regulations to comply with the
FCC Rules and Regulations as of the date hereof unless such rates
were not subject to regulation pursuant to a specific exemption
from rate regulation contained in the Cable Act. Except as
provided above, Seller makes no representations or warranties
that rates charged to subscribers (a) are allowable under any
rules or regulations of the FCC or any authoritative
interpretation thereof; or (b) would be allowable under any rules
or regulations of the FCC or any authoritative interpretation
thereof, promulgated after the Closing Date. Except as set forth
on SCHEDULE 3.05, Seller has not received any notice that it has
-------------
any obligation or liability to refund any portion of the revenue
received by it from the subscribers of the Acquired Systems.
-12-
<PAGE>
(iii) There is no legal action or governmental proceeding pending or,
to Seller's Knowledge, as hereinafter defined, any investigation
or proceeding threatened (nor any basis therefor of which it is
aware) for the purpose of modifying, revoking, terminating,
suspending, canceling or reforming any of Seller's FCC licenses
or other FCC authorizations or permits, or which might have a
material adverse effect upon, or cause disruption to, the
operation of the Acquired Systems.
(iv) The Acquired Systems are currently operated and maintained in all
material respects in accordance with the National Electrical
Safety Code and the terms and conditions of all pole attachment
agreements between Seller and any public utility, municipality or
other authority which has granted such authorization.
(v) Seller holds all FCC licenses, permits and authorizations
necessary or used in connection with the operation of the
Acquired Systems. Except as set forth on SCHEDULE 3.05, each such
-------------
FCC license, permit and authorization is listed on SCHEDULE 3.05
-------------
is in full force and effect, has been validly issued or assigned
to Seller, accurately lists the current parameters of the
facility licensed and is not subject to any special conditions or
limitations. All licensed facilities owned or operated by Seller
are being operated in accordance with the operating parameters of
the relevant FCC license.
(vi) Each employment unit operated by Seller, including any
headquarters employment unit has been certified by the FCC for
compliance with the equal employment opportunity requirements
contained in the 1984 Act for each calendar year from 1991
through 1997 and any subsequent periods prior to the Closing
Date.
(vii) All broadcast television signals carried on the Acquired Systems
are being carried in accordance with the requirements of the
Communications Act of 1934, as amended, and FCC regulations
promulgated thereunder. Seller has entered into a retransmission
consent agreement with each broadcaster of television signals so
identified on SCHEDULE 3.05. Seller is carrying, pursuant to a
-------------
"must-carry" request, each broadcaster of television signals so
identified on SCHEDULE 3.05 Seller has not received any notice
-------------
that any broadcaster of television signals has complained
regarding its channel positioning.
-13-
<PAGE>
(c) The Acquired Systems are in material compliance with respect to
all notices, filings and payments of copyright fees required by Section III of
the Copyright Act and the United States Copyright Office regulations. The
copyright fees shown to be due on all Statements of Account (as amended by any
required filings and/or any other corrective supplements) have been calculated
in accordance with the regulations of the United States Copyright Office issued
pursuant to the Copyright Act. Except as set forth on SCHEDULE 3.05, Seller has
not received any notices from the United States Copyright Office, or any other
person or entity either questioning any copyright filing or payment, or the
failure to make any copyright filing or payment, or threatening to bring suit
for copyright infringement which have not been settled and resolved.
(d) The Acquired Systems are being operated in compliance with the
Rules and Regulations of the Federal Aviation Administration ("FAA"). SCHEDULE
--------
3.05 lists all of the existing towers of the Acquired Systems. Without limiting
- ----
the generality of the foregoing, the existing towers of the Acquired Systems are
obstruction marked and lighted in accordance with the Rules and Regulations of
the FAA and FCC or are exempt from such requirements. All required
authorizations, including, but not limited to, Hazard to Air Navigation
determinations, for such towers have been issued by and pursuant to the Rules
and Regulations of the FAA. Except as set forth on SCHEDULE 3.05, Seller does
-------------
not lease space on such towers to any third party. Copies of all FAA documents
and correspondence relating to such towers have been delivered to Buyer.
(e) Except as set forth in SCHEDULE 3.05, and except for customer
-------------
claims (other than those on Form 329, which are listed on SCHEDULE 3.05 arising
-------------
in the ordinary course of business, none of which, individually or in the
aggregate, are material), there are no claims pending or, to the best of
Seller's Knowledge, threatened against Seller with respect to the operation of
the Acquired Systems.
(f) Except as set forth on SCHEDULE 3.05, there are no unfulfilled
-------------
promises or commitments for capital improvements, whether or not legally
binding, which Seller has made to third parties in connection with the Acquired
Systems. Seller has described in SCHEDULE 3.05 all construction and improvement
-------------
programs in progress. Except as set forth on SCHEDULE 3.05, there are no
-------------
obligations or liabilities to subscribers or to other users of Seller's CATV
services which are material to the business of the Acquired Systems, except: (i)
with respect to deposits made by such subscribers or such other users; and (ii)
the obligation to supply services to subscribers in the ordinary course of
business pursuant to the Franchises. No default exists in respect of any
provisions of any Franchise governing relations with subscribers or other users
of Seller's CATV services, and no notice of any such default has been received
by Seller. Except as set forth on SCHEDULE 3.05, to Seller's Knowledge, no
-------------
complaints have been made by subscribers or other users of Seller's CATV
services that, individually or in the aggregate, could have a material adverse
effect upon the
-14-
<PAGE>
Assets to be Acquired or the financial condition or operation of the Acquired
Systems.
(g) The Acquired Systems are in compliance in all material respects
with engineering standards generally accepted in the CATV industry.
(h) Except as set forth on SCHEDULE 3.05, there is no free service
-------------
liability to subscribers existing with respect to the Acquired Systems. Except
with respect to deposits for converters, encoders, decoders and related
equipment, and any other prepaid income item which Buyer is to receive a credit
for pursuant to SECTION 2.06 and except as set forth on SCHEDULE 3.05, to
-------------
Seller's Knowledge, Seller has no obligation or liability for the refund of
monies to its subscribers.
(i) Except as set forth on SCHEDULE 3.05, with respect to the Acquired
-------------
Systems, Seller has not made a commitment to any franchising authority to
maintain a local office in any location. Further, Seller has not made any
commitment to any of the municipalities served by the Acquired Systems to pay
franchise fees to any such municipality in excess of the amounts set forth on
SCHEDULE 3.05.
- -------------
(j) Except as described on SCHEDULE 3.04, and other than satellite
-------------
master antenna television services, multichannel multipoint distribution
services and direct broadcast satellite services, as of the date of this
Agreement, (i) the System is the only multiple channel operator presently
serving the communities which it serves, (ii) to Seller's Knowledge, no other
multiple channel operator is presently contemplated by any Person in the
communities now served by the System, and (iii) no franchises or other
authorizations other than the Franchises have been issued with respect to the
communities served by the System.
3.06 Franchises.
----------
(a) Listed and identified on SCHEDULE 3.06 attached hereto are all of
-------------
the existing governmental authorizations for maintenance and operation of the
Acquired Systems (individually, a "Franchise" and collectively, the
"Franchises") presently held by Seller, and the political entity or authority
which has granted each Franchise. All governmental authorizations necessary or
required for the construction, maintenance and operation of the Acquired Systems
have been obtained by Seller, as the case may be. To the best of Seller's
Knowledge, all such agreements, statutes, ordinances, resolutions, licenses or
permits granting the Franchises are validly existing, legally enforceable
obligations of Seller and are validly existing, legally enforceable obligations
of the other parties thereto, in accordance with their terms, and that the same
have been granted and renewed in accordance with all applicable federal, state
and local laws, and Seller is validly and lawfully operating the Acquired
Systems under the Franchises and applicable law. Further, Seller has obtained
in accordance with all federal, state and local laws all Franchises required for
the lawful operation of the Acquired Systems. Except as set forth on SCHEDULE
--------
3.06, none of the political entities
- ----
-15-
<PAGE>
or authorities which have granted a Franchise have been, or have applied to be,
certified to regulate the CATV rates charged by Seller pursuant to the 1992 Act
and the FCC Rules and Regulations.
Each of the Franchises expires on the dates set forth on SCHEDULE 3.06
-------------
attached hereto. Except as set forth on SCHEDULE 3.06, Seller has duly complied
-------------
in all material respects with all of the terms and conditions of the Franchises
and has not done or performed any act which would invalidate its rights under,
or give to the granting authority the right to terminate, the Franchises. There
is no pending assertion or claim that operations pursuant to any Franchise have
been improperly conducted or maintained, or, to Seller's Knowledge, any facts or
circumstances that might give rise to any such assertion or claim. Except as
set forth on SCHEDULE 3.06, all construction of distribution plant required by
-------------
any of the Franchises has been completed in accordance with the terms of such
Franchises.
(b) True, complete and correct copies of the Franchises, all
amendments, assignments and consents thereto and the latest rate change
approval, if any, to the date hereof have been delivered by Seller to Buyer.
3.07 Pole Attachment Agreements.
--------------------------
(a) Listed on SCHEDULE 3.07 are all of the pole attachment
-------------
authorizations and agreements (individually, a "Pole Attachment Agreement," and
collectively, the "Pole Attachment Agreements") presently held by Seller and the
public utility, municipality or other authority which has granted such
authorizations. True, complete and correct copies of each of the agreements,
ordinances, resolutions, licenses or permits granting the Pole Attachment
Agreements and all amendments, assignments and consents thereto have been
furnished by Seller to Buyer. Seller has duly complied in all material respects
with all of the terms and conditions of the Pole Attachment Agreements to which
it is a party and has not done or performed any act which would invalidate its
rights under the Pole Attachment Agreements. There is no pending assertion or
claim against Seller that operations pursuant to any Pole Attachment Agreement
have been improperly conducted or maintained or, to Seller's Knowledge, no facts
or circumstances that might give rise to any such assertion or claim. SCHEDULE
--------
3.07 lists and describes the results of any audits or investigations conducted
- ----
by any of the parties to the Pole Attachment Agreements during the previous
three (3) years.
(b) All poles shown on SCHEDULE 3.07 are contacted under valid permit
-------------
under and in accordance with the terms of the Pole Attachment Agreements. All
fees due and payable under the Pole Attachment Agreements have been paid. A
true, correct and complete copy of the most recent invoice from each utility or
other entity with whom Seller has entered into a Pole Attachment Agreement has
been delivered by Seller to Buyer.
-16-
<PAGE>
(c) There is no claim or action pending or, to Seller's Knowledge,
threatened, against Seller by any public utility, municipality or other
authority which has granted a Pole Attachment Agreement, or by any third party.
All rearrangement work on the poles and/or all pole changeout work requested of
Seller prior to the date hereof by any grantor of a Pole Attachment Agreement or
required under any Pole Attachment Agreement has been completed or, if in
progress, will be completed by the Closing Date, or if not completed, an
adequate reserve has been accrued therefor by the Seller.
(d) The location of each utility pole owned by Seller is set forth on
SCHEDULE 3.07.
- -------------
3.08 Head-end Sites and Office Locations.
-----------------------------------
(a) All of the real property owned by Seller is described on SCHEDULE
--------
3.08 attached hereto. Except as otherwise described on SCHEDULE 3.01, Seller
- ---- -------------
has fee simple title to all such real property, free and clear of all mortgages,
claims, security interests, liens or encumbrances of any kind, except for the
Permitted Liens and minor exceptions to title which do not affect the use of the
property in the Acquired Systems. A copy of the deed pursuant to which Seller
acquired such real property and any title insurance policies related thereto, if
any, have been furnished by Seller to Buyer.
(b) All leases and rights-of-way used in the Acquired Systems are
listed on SCHEDULE 3.08 (the "Leases and Rights-of-Way"). Except as set forth on
-------------
SCHEDULE 3.08, Seller has a valid and subsisting lease for and leasehold
- -------------
interest in and right-of-way to all of the real property not owned by Seller and
used by Seller as head-end sites or office locations for the Acquired Systems.
Except as set forth on SCHEDULE 3.08, as allowed by federal law, or where the
-----------
failure to do so would not have a material adverse effect on the Assets to be
Acquired taken as a whole, Seller has a valid and subsisting right-of-way
agreement, whether public or private, for all of the real property crossed by
its CATV plant. Except as disclosed on SCHEDULE 3.08 attached hereto, all such
-------------
leases and rights-of-way are fully assignable by Seller. Except as disclosed on
SCHEDULE 3.08, all written leases or memoranda of leases with respect to headend
- -------------
or office sites are in recordable form. True, correct and complete copies of
each of such leases, written rights-of-way, all amendments, assignments and
consents thereto have been furnished by Seller to Buyer, and each of such leases
and rights-of-way is described on SCHEDULE 3.08 attached hereto. Seller has duly
-------------
complied in all material respects with all of the terms and conditions of such
leases and rights-of-way and has not done or performed or failed to perform any
act which would allow for the termination of its rights under such leases or
rights-of-way.
3.09 Other Contracts and Leases. SCHEDULE 3.09 lists each existing
-------------------------- -------------
contract, agreement, lease, permit, consent, license, microwave agreement or
commitment, including pole line agreements, whether written or oral, affecting
or relating to the
-17-
<PAGE>
Acquired Systems (the "Agreements") other than the Excluded Assets; the
Franchises; the Pole Attachment Agreements; the Leases and Rights-of-Way;
subscription agreements with individual residential subscribers for the cable
services provided in the ordinary course of business, agreements which may be
canceled by Seller without penalty on not more than 30 days notice;
miscellaneous service contracts terminable at will without penalty; other
contracts or agreements relating to the Acquired Systems not involving either
aggregate liabilities under all such agreements exceeding $25,000 or any
material nonmonetary obligation; and programming agreements. Each of the
Agreements is in full force and effect in accordance with its terms. Without
limiting the foregoing, the Acquired Systems, and all equipment and real
property used in connection therewith, are now being utilized, operated and
maintained in conformity in all material respects with the provisions of the
Agreements. Seller has not in any manner failed to so utilize, operate and
maintain the Acquired Systems in a manner which could now or hereafter result in
cancellation or termination of, or liability for damages under, the Agreements,
nor is Seller in default in any material respect in the performance of one or
more of its obligations pursuant to the Agreements.
3.10 Agreements with Employees.
-------------------------
(a) Except as set forth on SCHEDULE 3. 10, Seller is not a party to
--------------
any employment agreement, written or oral, which cannot be terminated at will by
Seller, and, except as set forth on SCHEDULE 3.10, Seller does not currently
-------------
have any pension or profit sharing or other employee benefit plan for its
employees. True, correct and complete copies of all agreements and descriptions
of the plans listed on SCHEDULE 3. 10 hereto have heretofore been delivered by
--------------
Seller to Buyer.
(b) The titles and rates of compensation of all of the employees of Seller
are listed on SCHEDULE 3.10.
-------------
(c) Seller's policy with respect to the amount of vacation time earned by
employees is set forth on SCHEDULE 3.10.
-------------
3.11 Litigation or Judgments. Except as set forth on SCHEDULE 3.11 to
-------------
this Agreement, there is no litigation, at law or in equity, or any proceedings
before any commission, agency or other governmental authority, pending or, to
Seller's Knowledge, threatened against Seller or the Acquired Systems, and, to
Seller's Knowledge, no facts or circumstances exist which could reasonably be
expected to give rise to any such litigation or proceedings.
3.12 Tax Returns and Payments. With respect to the Acquired Systems,
Seller has timely and properly filed or caused to be filed all tax returns which
it is or has been required to file on or prior to the date hereof by any
jurisdiction to which it is or has been subject, all such tax returns being
true, correct and complete in all material respects. All income, unemployment,
social security, franchise, property and other
-18-
<PAGE>
taxes levied, assessed or imposed upon Seller or the Acquired Systems by the
United States, or any state, or governmental sub-division of either, to the
extent due and payable and not contested by Seller, have been timely and
properly paid to date, and no liability exists for deficiencies. Except as set
forth on SCHEDULE 3.12 attached hereto, there are no tax audits pending nor any
-------------
outstanding agreements or waivers extending the statutory period of limitations
applicable to any federal, state or local income tax return of Seller for any
period. Except as set forth on SCHEDULE 3.12, to Sellers Knowledge, no tax
-------------
deficiencies have been determined, nor proposed tax assessments charged, against
Seller (nor is there any reasonable basis therefor). Seller has made or caused
to be made all withholdings of taxes required to be made, and such withholdings
have either been paid to the appropriate governmental agency or set aside in
appropriate accounts for such purpose. True, correct and complete copies of the
federal, state and local tax returns of Seller for the Acquired Systems for all
income, gross receipts, franchise and property taxes for the last three (3)
fiscal years have been delivered to Buyer.
3.13 Compliance with Laws. Seller is in compliance in all material
--------------------
respects with all applicable foreign, federal, state and local laws, rules,
regulations, orders, writs, injunctions, ordinances or decrees of any governing
authority, federal, state or local court, or of any municipal or governmental
department, commission, board, bureau, agency or municipality having
jurisdiction over it or the Acquired Systems.
3.14 Adverse Developments. Since October 1, 1997, (i) no material adverse
--------------------
change has occurred with respect to the Acquired Systems or their financial
conditions or operations, taken as a whole, other than changes arising from (a)
matters of a general economic nature or any change affecting the United States
cable industry as a whole; (b) matters caused by or arising from legislation,
rulemaking or regulation affecting the cable industry in general; or (c)
competition caused by or arising from other multiple channel distribution
services; and (ii) there has been no material damage, destruction, loss or other
casualty to the Assets to be Acquired, taken as a whole, that has not been
repaired or replaced.
3.15 Condition of Assets to be Acquired and Insurance. The Acquired
------------------------------------------------
Systems, both as integrated systems and in their respective component parts, are
operated and maintained in a proper manner; to Seller's Knowledge, are free from
any material (either individually or in the aggregate) defects of workmanship or
material in light of its age and the use to which it has been put; and meet in
all material respects the requirements of: (i) the Franchises, (ii) the Pole
Attachment Agreements, (iii) the Agreements, and (iv) all applicable technical
standards, rules, regulations and orders of federal, state and local governing
or regulatory authorities. The Assets to be Acquired are all in good operating
condition, reasonable wear and tear excepted. None of the cable used in the
Acquired Systems requires any rearrangement or rehabilitation other than routine
system maintenance. The Assets to be Acquired include such spare parts as are
necessary in order to permit the operation of the Acquired Systems without
material
-19-
<PAGE>
interruption for a thirty-day period. Except as set forth on SCHEDULE 3.15, the
-------------
Assets to be Acquired are and have been insured, and all such insurance policies
are in full force and effect, are on an "occurrence" basis, and are in terms and
scope and amounts which are customary in accordance with industry standards for
CATV systems of comparable size. Seller has not received any notice of
cancellation with respect to such policies. During the past three (3) years, no
application by Seller for insurance with respect to the Assets to be Acquired
has been denied for any reason. Seller has provided Buyer with copies of the
loss claims history of Seller for the past three (3) years.
3.16 Patents, Trademarks and Copyrights. The operation of the Acquired
----------------------------------
Systems by Seller does not infringe upon, or otherwise violate, the rights of
any person or entity in any copyright, trade name, trademark right, service
mark, service name, patent, patent right, license, trade secret or franchise,
and there is not pending or, to Seller's Knowledge, threatened any action with
respect to any such infringement or breach.
3.17 Labor Relations. Except as set forth on SCHEDULE 3. 11, the employees
--------------- --------------
of Seller are not parties to any collective bargaining agreement. This Agreement
and the transactions contemplated hereunder shall not obligate Buyer to
recognize any union or to assume any collective bargaining agreement that
applies to Seller's employees. Except as set forth on SCHEDULE 3.17, There
-------------
currently are not, nor in the past five years have there been, any grievances,
unfair labor practice claims, disputes or controversies with any union, or
threats of strikes, work stoppages or any pending demands for collective
bargaining by any union. Seller has received no notice of any grievances, unfair
labor practice claims, disputes or controversies with any other organization of
Seller's employees, or threats of strikes, work stoppages or any pending demands
for collective bargaining by any such organization.
3.18 Restoration. Other than in the ordinary course of business, no
-----------
material restoration, repaving, repair or other work is required to be made by
Seller to any street, sidewalk or abutting or adjacent area pursuant to the
requirements of any ordinance, code, permit, easement or contract relating to
the installation, construction or operation of the Acquired Systems. Except with
respect to the installation of cable lines and facilities in the ordinary course
of business, no property of any person or entity has been damaged, destroyed,
disturbed or removed in the process of construction-or maintenance of the
Acquired Systems which has not been, or will not be, prior to Closing, repaired,
restored or replaced, or, if not repaired, restored or replaced, for which an
adequate reserve has not been accrued by the Seller prior to Closing.
3.19 Bulk Sales Compliance. Seller shall comply, in connection with the
---------------------
sale and transfer of the Assets to be Acquired pursuant to this Agreement, with
any applicable law pertaining to bulk sales or transfers.
-20-
<PAGE>
3.20 Right of First Refusal. Except as set forth on SCHEDULE 3.20, no
---------------------- -------------
person or entity has any option, warrant or right of first refusal to purchase
either the Acquired Systems or any of the Assets to be Acquired.
3.21 Environmental Matters. Except as set forth on SCHEDULE 3.21, Seller
--------------------- -------------
has complied and is in compliance in all material respects with all applicable
federal, state and local laws, regulations and ordinances relating to protection
of human health and the environment ("Environmental Laws"), including those
related to hazardous substances, wastes, discharges, emissions, disposals,
dumping, burial or other forms of disposal, as defined by the Environmental
Laws. Except as set forth on SCHEDULE 3.21, there are no current or pending
-------------
claims, administrative proceedings, judgments, declarations or orders relating
to violations of Environmental Laws or to the presence of Hazardous Substances
(as defined by the Environmental Laws) on, in or under the owned or leased real
property of Seller. No hazardous waste has been dumped, buried, discharged or
disposed of on, in or under the owned or leased real property of Seller by
Seller in violation of any Environmental Laws or, to the best Knowledge of
Seller, by any other person or entity. Except as set forth on SCHEDULE 3.21,
-------------
neither Seller nor, to the Knowledge of Seller, any third party has installed or
placed on, under or in the owned real property or the leased real property of
Seller: (i) any treatment, storage, recycling or disposal facility for any
hazardous waste as that term is defined under 40 CFR Part 261 or any state
equivalent; (ii) any underground storage tanks, in use or abandoned; or (iii)
any polychlorinated biphenyls (PCBs) in any hydraulic oils, transformers,
capacitors or other electrical equipment.
3.22 Equivalent Basic Subscribers; Gross Revenues. At the conclusion of
--------------------------------------------
the 1997 calendar year, the Acquired Systems had 46,450 "Equivalent Basic
Subscribers." For the year 1997, the Acquired Systems had approximately
$19,234,640.00 in gross revenues. For the purposes of this Agreement, the term
"Equivalent Basic Subscriber" shall mean the number obtained by adding (i) the
number of first outlet residential subscribers for basic CATV service of the
Acquired Systems who have made at least one monthly payment for service at the
normal monthly rate for basic service and whose accounts are not more than sixty
(60) days past due from the first day of the month for which service was
rendered (ii) the result obtained by dividing the aggregate of the gross monthly
billing for limited basic, tier 1 and tier 2 services (excluding installation,
connection, relocation and disconnection fees and miscellaneous rental charges
for equipment such as remote control devices and converters) from business and
commercial accounts, residential bulk units, hotels/motels and other commercial
establishments who have made at least one monthly payment for service at the
normal monthly rate and whose accounts are not more than sixty (60) days past
due from the first day of the month for which such service was rendered, by
$28.60, which represents the average monthly service charge in effect for a
first outlet residential connection for expanded basic CATV service.
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<PAGE>
3.23 HSR Act Filing. Seller shall cooperate reasonably with Buyer
--------------
and, to the extent required, shall file or cause to be filed with the Federal
Trade Commission ("FTC") and the Department of Justice ("DOJ") within thirty
(30) days after the date hereof a notification and report on behalf of Seller,
completed in accordance with applicable law and regulations, with respect to the
transactions contemplated hereby, pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules promulgated
thereunder. Seller agrees to use commercially reasonable efforts to comply with
any additional requests for information, whether formal or informal, under the
HSR Act; provided, however, that, notwithstanding such efforts, if the FTC or
the DOJ has not certified as complete each party's compliance with a formal
second request under the HSR Act by the Termination Date, then Seller may
terminate this Agreement without further obligation hereunder.
3.24 Disclosure. No representation or warranty by Seller in this
----------
Agreement or any Schedule or Exhibit, or any statement, list or certificate
furnished or to be furnished by Seller pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading or necessary in order to provide a prospective purchaser
of the Acquired Systems with proper material information as to the Assets to be
Acquired and the business of Seller.
3.25 Media One Facilities Agreement. Seller has been negotiating the
------------------------------
terms of a Facilities Agreement with Colony Communications, Inc., d/b/a MediaOne
(the "Facilities Agreement"). A copy of the latest draft of the Facilities
Agreement is attached hereto as SCHEDULE 3.25. Seller represents and warrants
-------------
that the Facilities Agreement has not been executed by Seller.
For the purposes of the representations and warranties made by Buyer
and Seller hereunder, the term "Knowledge," with respect to any matter, shall
mean the actual awareness or knowledge of such person (if a natural person) or
any of the officers or general manager of the Acquired Systems (if not a natural
person), as opposed to implied or institutional knowledge, but without any duty
of investigation or inquiry.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. Buyer represents and
--------------------------------------------------
warrants that the following representations and warranties are true and correct
as of the date hereof and will also be true and correct on the Closing Date, in
addition to which it covenants with Seller that:
4.01 Status, Power and Authority. Buyer is a corporation duly organized,
---------------------------
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to own and lease its properties and to
conduct its
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<PAGE>
business as currently conducted and to acquire the Assets to be Acquired.
4.02 Authorization of Agreement.
--------------------------
(a) Buyer has taken all necessary action to authorize and approve this
Agreement, the consummation of the transactions contemplated hereby and the
performance by Buyer of all of the terms and conditions hereof on the part of
Buyer to be performed. The execution and delivery by Buyer of this Agreement and
each and every other agreement, instrument, certificate or document to which
Buyer is a party that is to be executed, delivered and performed by Buyer
pursuant thereto (collectively, "Buyer Transaction Documents"), and the
consummation of the transactions contemplated hereby and thereby, do not and
will not: (i) violate any provisions of any judicial or administrative order,
award, judgment or decree applicable to Buyer, or (ii) conflict with any of the
provisions of the charter documents of Buyer, or (iii) conflict with, result in
a breach of or constitute a default under any material agreement or instrument
to which Buyer is a party or by which it is bound.
(b) This Agreement and the Buyer Transaction Documents, when executed
and delivered by Buyer, will have been duly authorized, executed and delivered
by Buyer, and this Agreement constitutes, and the Buyer Transaction Documents,
when executed and delivered by Buyer, will constitute, legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms.
4.03 Litigation. There is no litigation, at law or in equity, or any
----------
proceedings before any commission or other governmental authority, pending or,
to the knowledge of Buyer, after due inquiry, threatened against Buyer which
could reasonably be expected to impair the ability of Buyer to consummate the
transactions contemplated by this Agreement.
4.04 HSR Act Filing. Buyer shall, to the extent required, file or cause to
--------------
be filed with the FTC and the DOJ within thirty (30) days after the date hereof
a notification and report form on behalf of Buyer, completed in accordance with
applicable law and regulations, with respect to the transactions contemplated
hereby, pursuant to the HSR Act and the rules promulgated thereunder. Buyer
agrees to use commercially reasonable efforts to comply with any additional
requests for information, whether formal or informal, under the HSR Act;
provided, however, that, notwithstanding such efforts, if the FTC or the DOJ has
not certified as complete each party's compliance with a formal second request
under the HSR Act by the Termination Date, then Buyer may terminate this
Agreement without further obligation hereunder.
4.05 Consummation of Agreement. Buyer shall use commercially reasonable
-------------------------
efforts to perform and fulfill all obligations and conditions on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this
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<PAGE>
Agreement shall be fully carried out.
5. CONDUCT OF BUSINESS OF ACQUIRED SYSTEMS PENDING CLOSING AND ADDITIONAL
----------------------------------------------------------------------
COVENANTS OF SELLER. Seller covenants and agrees with Buyer that from the date
- -------------------
hereof to and including the Closing Date:
5.01 Maintenance of Business. Seller shall continue to operate the Acquired
-----------------------
Systems, shall maintain the Assets to be Acquired (including the maintaining of
a level of inventory of spare equipment and parts in a manner consistent with
past practices) and shall keep all of its business books, records and files, all
in the ordinary course of business in accordance with past practices
consistently applied and in accordance with the capital budget and operating
budget delivered by Seller to Buyer. Seller shall not sell, transfer or assign
any assets except in the ordinary course of business and for fair market value.
Seller shall not permit the creation of any lien, charge or encumbrance on any
of its assets that would survive the Closing other than the lien of current
taxes not yet due and payable. Seller shall not initiate or otherwise cause any
other person to initiate any action to amend or cancel, nor permit any other
person to take any action to amend or cancel, any of the Franchises, the Pole
Attachment Agreements or the Agreements without the prior written consent of
Buyer. Promptly after becoming aware thereof, Seller shall notify Buyer of any
action taken or proposed to be taken by a person other than Seller to amend or
cancel any of the Franchises, the Pole Attachment Agreements or the Agreements.
Seller shall not enter into any contract or commitment nor incur any
indebtedness or other liability or obligation of any kind relating to the
Acquired Systems which is not in the ordinary course of business in accordance
with past practices without the prior written consent of Buyer. Seller shall not
permit any of its partners, officers, directors, shareholders, agents, employees
or affiliates to pay any of Seller's accounts receivable from subscribers
outstanding on the date hereof. Notwithstanding the foregoing, such persons
shall be permitted to make payment for CATV services received by them at their
own dwellings. Without the prior written consent of Buyer, which consent shall
not be unreasonably withheld, delayed or conditioned, Seller shall not, except
as otherwise required by law: change the channel lineup of the Acquired Systems;
add additional channels to the Acquired Systems, except for channels added at
the request of a franchising authority as part of the process of renewing a
Franchise (in which event, Seller shall give Buyer written notice of the
addition of such channels); change its subscriber rates other than in the
ordinary course of business (provided, however, that if Seller is required to
change its subscriber rates pursuant to a regulatory order, Seller may do so
without the consent of Buyer upon 30 days' prior written notice); or conduct any
extraordinary or unusual marketing or collection programs, including, without
limitation, any amnesty programs, or any extraordinary collection practices
which might adversely affect customer relationships. Seller shall increase its
subscriber rates in the ordinary course of business consistent with past
practice and with the prior written approval of Buyer, not to be unreasonably
withheld. Seller shall comply with all laws, rules and regulations of federal,
state, city and local governments. Seller shall not violate the terms of any
lease or contract
-24-
<PAGE>
connected with the operation of the Acquired Systems or with the utilization of
the Assets to be Acquired. Seller shall not grant any increase in the rate of
wages, salaries, bonuses or other remuneration of any employee, except in
accordance with past practices, and provided that Seller may incent employees to
remain employees of the Acquired Systems through the Closing Date without
violating this covenant.
5.02 Insurance. Seller shall use commercially reasonable efforts to
---------
maintain in full force and effect until Closing all existing insurance policies
to cover and protect the Assets to be Acquired against damage or destruction.
5.03 Organization. Seller shall use commercially reasonable efforts
------------
consistent with sound business judgment to preserve intact its present business
and organization, to retain the services of its present employees, to preserve
its relationships with subscribers, suppliers and others having business
relationships with it and to maintain the goodwill enjoyed within the
municipalities serviced by the Acquired Systems.
5.04 Access for Investigation. Seller shall afford Buyer and its
------------------------
representatives access during normal business hours to the properties, plant and
equipment and to the books and records of Seller in order that Buyer shall have
full opportunity to investigate the business affairs of Seller.
5.05 Notice.
------
(a) Promptly upon Seller becoming aware of the occurrence of, or the
impending or threatened occurrence of, any event which would cause any of the
representations or warranties of Seller contained herein, or in any Schedule or
Exhibit, to be inaccurate in any material respect, Seller shall give detailed
written notice thereof to Buyer and shall use commercially reasonable efforts to
prevent or promptly remedy the same.
(b) Seller shall refrain from knowingly taking, and shall use
commercially reasonable efforts to refrain from knowingly suffering or
permitting, any action which would render untrue any of the representations or
warranties of Seller contained herein, and Seller shall not knowingly omit to
take any action reasonably required to maintain the goodwill enjoyed within the
municipalities serviced by the Acquired Systems in the ordinary course of
business, consistent with past practice.
5.06 Consummation of Agreement. Seller shall use commercially reasonable
-------------------------
efforts to perform and fulfill all obligations and conditions on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out.
5.07 Cooperation with Buyer. Seller shall cooperate, to the extent not
----------------------
inconsistent with its obligations hereunder, as Buyer may reasonably request, in
apprising the municipalities serviced by the Acquired Systems and the utility
companies
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<PAGE>
which have issued the Pole Attachment Agreements of the sale of the Acquired
Systems to Buyer in such manner as to preserve the goodwill of such
municipalities and utility companies.
5.08 Accounts List. Prior to the Closing Date, Seller shall deliver to
-------------
Buyer a list of all persons to whom Seller makes recurring periodic payments in
connection with the business and operations of the Acquired Systems (the
"Accounts List"), except for persons to whom Seller makes recurring periodic
payments in connection with any Excluded Asset. Each individual entry set forth
on the Accounts List shall list the name and address of each account creditor
and the approximate average amount and approximate frequency of the recurring
periodic payments paid to each such account creditor. Seller shall use its
reasonable efforts to ensure the accuracy and completeness of the Accounts List.
5.09 FCC Approval. Seller shall make application to the FCC for the consent
------------
and approval of the FCC to the transfer of the ownership and operation of any
FCC licenses of the Acquired Systems from Seller to Buyer, to the extent such
consent and approval is required to be obtained.
5.10 Certificates. On or before the Closing Date, Jones shall deliver to
------------
Buyer: Certificates of Good Standing issued by the Secretary of State of
Colorado as to Jones's good standing in such state and a Certificate of Good
Standing from the State of Florida.
5.11 Third-Party Consents. Except for fees relating to filings required by
--------------------
the Hart-Scott-Rodino Antitrust Improvements Act, the costs of which shall be
shared equally by Buyer and Seller, Seller shall, at its sole cost and expense,
use commercially reasonable efforts to obtain prior to Closing all consents and
approvals from third parties which are identified on SCHEDULE 3.02 (including a
-------------
provision permitting the subsequent assignment by Buyer to any affiliate of
Buyer); provided, however, that the costs and expenses associated with the
performance after the Closing Date of obligations which are required by a third
party as a condition of granting its consent or approval and which obligations
are accepted by the Buyer shall be borne solely by the Buyer. All such consents
shall be in writing and in form and substance reasonably satisfactory to Buyer.
In the event that Buyer's cooperation is required to obtain such consents, Buyer
shall reasonably cooperate with Seller and shall be responsible for its own out-
of-pocket costs in connection therewith. If a third party refuses to include a
provision allowing the subsequent assignment by' Buyer to its affiliates, Seller
will notify Buyer and Buyer may discuss such refusal with the third party.
5.12 Approval of Franchise Authorities. Seller shall use its commercially
---------------------------------
reasonable efforts to obtain the consent of the applicable franchisors to the
transfer to Buyer (and subsequently by Buyer to its affiliates) of all of the
Franchises. Seller shall use commercially reasonable efforts to obtain a
certificate from each franchisor
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<PAGE>
certifying that: (a) the Franchise was properly granted; (b) the Franchise was
properly extended (if applicable); (c) the Franchise is validly existing and in
full force and effect; (d) there exists no fact or circumstance which, with the
passage of time or the giving of notice or both, would constitute a default
under the Franchise, or permit the franchisor to cancel or terminate the rights
thereunder, except upon the expiration of the full term thereof; (e) the
Franchise may be collaterally assigned to Buyer's lenders. Buyer shall
reasonably cooperate with Seller in Seller's efforts to secure such approvals
and consents, including attending such meetings and providing such information
with respect to Buyer as the franchisors may reasonably request. Buyer shall
post any bond or other security reasonably required pursuant to the terms of
such approvals and consents.
5.13 FCC and Other Regulatory Compliance. Seller shall consult with Buyer
-----------------------------------
prior to implementing any subscriber rate changes relating to the implementation
of any FCC regulations, except as otherwise provided in SECTION 5.01 hereof.
5.14 Approval of Lessors. Seller shall use its commercially reasonable
-------------------
efforts to obtain the consent of each lessor of real property relating to the
Acquired Systems listed on SCHEDULE 3.02 as being required to consent to the
assignment to Buyer of any lease. Seller shall use its commercially reasonable
efforts to obtain a certificate from the lessor under each lease for real
property relating to the Acquired Systems to which Seller is a party and which
is listed on SCHEDULE 3.01 certifying that: (a) the lease is validly existing
and in full force and effect; and (b) all payments under the lease due and
payable prior to the date of such certificate have been paid in full.
5.15 Employees. Seller shall terminate all of its employees immediately
---------
prior to Closing. Seller shall remain solely responsible for any termination
benefits to which any of the employees is entitled by reason of such termination
whether or not such person is subsequently employed by Buyer. Buyer shall have
no obligation to offer employment to any of the employees of Seller. Buyer shall
notify Seller at least 60 days after the date of this Agreement, or 30 days
prior to Closing, whichever is earlier, of those employees to whom Buyer intends
to offer employment. Buyer agrees to offer such employees credit for accrued
overtime, sick pay, vacation pay, holiday pay and other employee benefits to the
extent Buyer offers equivalent benefits to its existing employees and to the
extent the foregoing are included as current liabilities under SECTION 2.05(A)
hereof. Seller shall refrain from making any statements or communications to its
employees regarding subsequent employment by Buyer or Buyers employment policies
without Buyer's prior written consent.
5.16 Transitional Billing Services. Seller shall provide to Buyer, upon
-----------------------------
request, access to and the right to use its billing system computers, software
and related fixed assets in connection with the Acquired Systems for a period of
up to 90 days following the Closing Date to allow for conversion of existing
billing arrangements ("Transitional Billing Services"). Buyer shall notify
Seller at least 60 days after the
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<PAGE>
date of this Agreement as to whether it desires Transitional Billing
Services. Transitional Billing Services, if any, that are requested by Buyer
shall be provided on terms and conditions reasonably satisfactory to Seller;
provided, however, that the amount to be paid by Buyer for such Transitional
Billing Services shall not exceed the reasonable direct incremental cost to
Seller of providing such Transitional Billing Services.
5.17 Financial Statements. Seller shall provide Buyer with copies of all
--------------------
regularly prepared monthly financial statements relating to the Acquired Systems
promptly after the same become available in the ordinary course.
5.18 Facilities Agreement. Seller shall not execute the Facilities
--------------------
Agreement without the prior written consent of Buyer, which consent shall not be
unreasonably withheld. Seller shall not withhold its consent to Seller's
execution of the Facilities Agreement if: (a) the Facilities Agreement is not
modified from the form attached hereto as SCHEDULE 3.25 except as set forth
-------------
below; and (b) the Facilities Agreement: (i) prohibits MediaOne from splicing
into the fiber covered by the proposed Facilities Agreement with the exception
of splices at the end points of the fiber run; (ii) has a maximum term of two
(2) years; and (c) the Facilities Agreement does not authorize further build-out
of additional dark fiber facilities on the System by MediaOne; provided,
however, that Buyer shall have the right to review and approve the language to
the Facilities Agreement effectuating the changes contemplated by subparagraphs
(b) and (c) above. In the event that Seller executes the Facilities Agreement
in accordance with the provisions hereof, Buyer shall assume Seller's rights and
obligations under the Facilities Agreement arising after the Closing Date.
Seller reserves the right not to enter into the Facilities Agreement and/or to
terminate its existing arrangement with MediaOne at any time. Except for
routine maintenance and construction, Seller covenants and agrees that it will
not at any time after the date hereof commit to any build-out of the facilities
to be transferred to Buyer for the benefit of any third party without the prior
written consent of Buyer.
6. CONDITIONS TO CLOSING - BUYER.
-----------------------------
6.01 Conditions to Obligations of Buyer. The obligations of Buyer to
----------------------------------
consummate the purchase of the Assets to be Acquired at Closing shall be subject
to the satisfaction of the following conditions precedent, except to the extent
waived by Buyer in writing:
(a) All of the representations and warranties of the Seller contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date as though such representations and warranties were made at
and as of such time except for changes permitted or contemplated by this
Agreement and except for representations or warranties made as of a specific
date; Seller shall have performed and be in compliance in all material respects
with all of the covenants, agreements,
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<PAGE>
terms and provisions set forth herein on its part to be observed or performed,
and no event which would constitute a material breach of the terms of this
Agreement on the part of Seller shall have occurred and be continuing at the
Closing Date.
(b) Since the date of this Agreement, (i) there shall not have
occurred any material adverse change with respect to the Acquired Systems or
their financial condition or operations, taken as a whole, other than (a)
matters of a general economic nature or any change affecting the United States
cable industry as a whole; (b) matters caused by or arising from legislation,
rulemaking or regulation affecting the cable industry in general; or (c)
competition caused by or arising from other multiple channel distribution
services; and (ii) there has been no material damage, destruction, loss or other
casualty to the Assets to be Acquired, taken as a whole, that has not been
repaired or replaced.
(c) The number of "Equivalent Basic Subscribers" of the Acquired
Systems for the month of Closing shall not be less than 90% of the Equivalent
Basic Subscribers of the Acquired Systems for the same month of the Date of
Closing in the year 1997. The parties acknowledge and agree that Exhibit B
---------
attached hereto sets forth the number of Equivalent Basic Subscribers for each
month of the year 1997. For example, if the Date of Closing were to occur in
August of 1998, Buyer and Seller would look at the number of Equivalent Basic
Subscribers for the Acquired Systems in August of 1997 as shown on Exhibit B.
---------
Per Exhibit B, the Acquired Systems had 42,549 Equivalent Basic Subscribers in
August of 1997. Buyer's condition to Closing would then be that the number of
Equivalent Basic Subscribers for the month of Closing (August) would not be less
than 38,294.
(d) The general partner of Seller shall have executed and delivered to
Buyer on the Closing Date a Certificate, dated that date, in form and substance
reasonably satisfactory to Buyer to the effect that the conditions set forth in
each of the provisions of SECTION 6.01(A) AND (B) of this Agreement have been
satisfied in full.
(e) Seller shall have delivered to Buyer complete and correct copies
of the resolutions of its general partner authorizing the execution, delivery
and performance of the Seller Transaction Documents and the sale of the Assets
to be Acquired and the transactions contemplated hereby, certified by the
general partner of Seller.
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<PAGE>
(f) Seller shall have obtained and delivered to Buyer each of the
consents of the governmental agencies and third parties designated on SCHEDULE
--------
3.02 as Required Consents, with no adverse conditions imposed by such consents;
- ----
provided, however, that for the purposes of this Section 6.01(f), the consent of
---------------
the respective utilities with whom Seller has pole attachment agreements shall
be deemed to have been given if, as of the Date of Closing, any such utility
company is not threatening to: (a) refuse to consent to the assignment of such
pole attachment agreement to Buyer; (b) refuse to execute with Buyer a
replacement pole attachment agreement in such form as is customarily executed by
such utility with cable television companies and which does not contain material
changes from the agreement heretofore existing between Seller and the utility
company; or (c) order or otherwise compel the removal of the cable plant owned
by Seller from such utility poles. Notwithstanding the foregoing, Seller agrees
to continue to use Seller's good faith, commercially reasonable efforts
subsequent to the Date of Closing to complete the assignment to Buyer of any
pole attachment agreements not actually transferred to Buyer as of the Date of
Closing.
(g) Buyer shall have received a legal opinion from the General Counsel
of the general partner of Seller, dated the Closing Date and in a form mutually
agreeable to both Seller and Buyer.
(h) Seller shall have delivered to Buyer:
(i) the Non-Competition Agreements duly executed by Seller and
its general partner;
(ii) the Good Standing Certificates described in SECTION 5.10;
and
(iii) a certificate of incumbency of the general partner of
Seller duly executed by the Assistant Secretary and each of
the officers of the general partner executing this
Agreement and the documents delivered hereunder on behalf
of Seller.
(i) Buyer shall have received an opinion of Cole, Raywid, & Braverman,
LLP, FCC counsel for Seller, dated the Closing Date and in a form mutually
agreeable to Seller, Buyer and Seller's FCC counsel.
(j) All documents and other items required to be delivered hereunder
to Buyer at or prior to Closing shall have been delivered or shall be tendered
at the Closing.
(k) On the Closing Date, no suit or action or other proceeding shall
be pending or threatened before any court or other governmental agency against
Seller
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<PAGE>
or Buyer in which the consummation of the transactions contemplated by this
Agreement are sought to be enjoined.
(l) Seller shall have delivered to Buyer, at Seller's expense, at
least ten (10) days prior to the Closing Date, lien searches dated not more than
forty (40) days prior to the Closing Date showing all UCC-1 financing statements
filed with any filing offices in the States of Florida and Colorado wherein
Seller is named a debtor, all federal, state or local tax liens filed against
the Seller, and all unsatisfied judgments naming Seller as a judgment debtor,
all of which shall be released or terminated prior to or at the Closing.
(m) All notification and report forms required to be filed on behalf
of the parties to this Agreement with the FTC and the DOJ under the HSR Act and
rules shall have been filed, and the waiting period required to expire under the
HSR Act and rules, including any extension thereof, shall have expired or early
termination of the waiting period shall have been granted.
(n) Seller shall have delivered to Buyer a commitment or commitments
for owners title insurance with respect to real estate owned by Seller as part
of the Assets to be Acquired, issued by a nationally reputable entity, agreeing
to insure fee simple title to each parcel of real property, subject only to the
Permitted Liens including, but not limited to, (i) zoning restrictions,
prohibitions, and other requirements imposed by any governmental authority
having jurisdiction over the property, (ii) public utility easements of record,
(iii) taxes not yet due and payable, (iv) easements, rights-of-way,
restrictions, and other similar encumbrances of record, and (v) other standard
exceptions, including survey exceptions. Such commitment or commitments shall be
dated not more than sixty (60) days prior to the Closing Date (provided that any
insurance shall be obtained at Buyer's cost).
(o) Seller shall stand ready to deliver the matters described in
SECTION 8 hereof.
7. CONDITIONS TO CLOSING - SELLER.
------------------------------
7.01 Conditions to Obligations of Seller. The obligations of the Seller to
-----------------------------------
consummate the sale of the Assets to be Acquired at Closing shall be subject to
the satisfaction of the following conditions precedent, except to the extent
waived by Seller in writing:
(a) All of the representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date as though such representations and warranties were made at and
as of such time, and Buyer shall be in compliance in all material respects with
all of the covenants, agreements, terms and provisions set forth herein on its
part to be observed and
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<PAGE>
performed, and no event which would constitute a material breach of the terms of
this Agreement on the part of Buyer shall have occurred and be continuing at the
Closing Date.
(b) An executive officer of Buyer shall have executed and delivered to
Seller on the Closing Date a Certificate, dated that date, in form and substance
reasonably satisfactory to Seller to the effect that the conditions set forth in
each of the provisions of SECTION 7.01 (a) of this Agreement have been satisfied
in full.
(c) Buyer shall have delivered the Purchase Price, as adjusted, to
Seller in accordance with SECTION 2.03.
(d) Buyer shall have delivered to Seller complete and correct copies
of the corporate resolutions of Buyer authorizing the execution, delivery and
performance of this Agreement and the purchase of the Assets to be Acquired.
(e) Seller shall have received an opinion from Colin Higgin, Deputy
General Counsel for Buyer, dated the Closing Date substantially in the form
mutually agreeable to both Seller and Buyer.
(f) On the Closing Date, no suit or action or other proceeding shall
be pending or threatened before any court or other governmental agency against
Seller or Buyer in which the consummation of the transactions contemplated by
this Agreement are sought to be enjoined.
(g) Buyer shall have executed and delivered to Seller assumption
documents in form and substance reasonably satisfactory to Seller pursuant to
which Buyer shall have assumed the Assumed Liabilities.
(h) Buyer shall have delivered to Seller Certificates of Good Standing
issued by the Secretary of State of Delaware and the Commonwealth of
Pennsylvania as to Buyer's good standing in such jurisdictions.
(i) All notification and report forms required to be filed on behalf
of the parties to this Agreement with the FTC and the DOJ under the HSR Act and
rules thereunder shall have been filed, and the waiting period required to
expire under the HSR Act and rules thereunder, including any extension thereof,
shall have expired or early termination of the waiting period shall have been
granted.
(j) Buyer shall have delivered to Seller a certificate of incumbency
duly executed by the Assistant Secretary of the Buyer and each of the officers
of Buyer executing this Agreement and the documents delivered hereunder.
(k) Seller shall have obtained the consent of each applicable
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franchising authority to the transfer of the Franchises to Buyer.
8. CLOSING.
-------
8.01 Action to be Taken at and after Closing.
---------------------------------------
(a) At Closing, Seller shall deliver to Buyer:
(i) Such bills of sale, endorsements, assignments, general
warranty deeds and other good and sufficient instruments of
transfer and conveyance as shall be reasonably deemed
necessary or appropriate by Buyer to vest in or confirm to
Buyer good and marketable title to all of the assets and
properties constituting the Assets to be Acquired, free and
clear of any and all liens, security interests, mortgages,
charges or encumbrances of any kind, except for current
taxes which are not yet due and payable but which are timely
paid and except for the Permitted Liens;
(ii) A complete itemized list of all of Seller's subscriber
accounts receivable relating to the Acquired Systems as of a
date no later than thirty (30) days prior to the Closing
Date, showing sums due and their respective aging for the
period ending on the Closing Date;
(iii) With respect to the Acquired Systems, a true, accurate and
complete schedule as of the Closing Date of monetary
obligations owed by Seller and not yet paid, items billed to
Seller and not yet paid, items charged to or claimed against
Seller and not yet paid, whether or not disputed, under each
of the Franchises, Pole Attachment Agreements and Agreements
to be assumed by Buyer under the terms of this Agreement;
(iv) Actual possession and operating control of the Acquired
Systems;
(v) The documents and instruments required to be delivered by
Seller to Buyer pursuant to the terms of SECTION 6; and
(vi) All of the consents designated as Required Consents on
SCHEDULE 3.02.
-------------
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(b) At Closing, Buyer shall deliver to Seller:
(i) The Purchase Price, as adjusted in accordance with SECTION
2.06; and
(ii) The documents and instruments required to be delivered by
Buyer to Seller pursuant to the terms of SECTION 7.
(c) After Closing, Seller shall deliver to Buyer, as received from
time to time:
(i) any cash or other property that it may receive in respect
to subscriber accounts receivable received after the
Closing Date relating to the business and operations of the
Acquired Systems arising prior to or subsequent to the
Closing Date;
(ii) any Assets to be Acquired not effectively transferred to
Buyer at the Closing; and
(iii) from time to time at the request of Buyer and without
further consideration, such further instruments of
conveyance, transfer and assignment as Buyer may reasonably
request in order to convey more effectively the transfer to
Buyer of any of the Assets to be Acquired, and Seller shall
assist Buyer in the reduction to possession of any such
assets, possession of which was not delivered to Buyer at
Closing. Buyer shall be responsible for the preparation of
all of the documents incidental to such conveyance,
transfer and reduction to possession.
9. REAL ESTATE PRORATION AND ADJUSTMENT ITEMS. Water and sewer charges,
------------------------------------------
municipal garbage and rubbish removal charges, rents, interest, real estate
taxes, common area maintenance charges, utilities and other charges of an annual
or recurrent nature, assessed against or paid in conjunction with the ownership
or operation of any real property owned or leased by Seller to be transferred to
Buyer hereunder shall be prorated as of the Closing Date. Real estate taxes
shall be prorated as of the Closing Date. Real estate taxes for the calendar
year of Closing shall be prorated based upon real estate taxes levied or
estimated to be levied in that year by each taxing body (without regard to the
date of levy or the fiscal year of the taxing body); provided, however, if any
of such real estate taxes have not yet been levied as of the Closing Date for
the calendar year in which the Closing Date occurs, the tax PRORATION shall be
based upon the prior years tax levy, taking into account any adjustments in real
estate tax assessments which may have been made. Upon final levy
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of the real estate taxes, Seller and Buyer agree that a final proration will be
made as of the Closing Date, and if it is determined that either party shall owe
the other based upon a discrepancy between the amounts included in the Final
Adjustment and the final proration, then the owing party shall make payment to
the other within thirty (30) days of final settlement thereof
10. DAMAGE TO PROPERTY AND RISK OF LOSS
-----------------------------------
.
(a) The risk of any loss or damage to the Assets to be Acquired and the
Acquired Systems resulting from fire, theft or any other casualty (but excluding
any loss or damage attributable to reasonable wear and tear) ("Damage") shall be
borne by Seller at all times prior to the Closing. In the event that any such
Damage shall be sufficiently substantial so as to preclude and prevent
resumption of normal operations of all or any portion of the Acquired Systems
within thirty (30) days from the occurrence of the event resulting in such loss
or damage, Seller shall immediately notify Buyer in writing of its inability to
resume normal operations or to replace or restore the lost or damaged property,
and Buyer, at any time within ten (10) days after receipt of such notice, may
elect either (a) to waive such defect and proceed toward consummation of the
transaction in accordance with the terms of this Agreement, or (b) to terminate
this Agreement. If Buyer elects to terminate this Agreement pursuant to this
Section, the parties hereto shall stand fully released and discharged of any and
all obligations hereunder and the Deposit shall be returned to Buyer.
(b) If Buyer shall elect to consummate this transaction notwithstanding such
Damage and does so, there shall be no diminution of the Purchase Price, and all
insurance proceeds (other than for bodily injury or for damage to property other
than the Assets to be Acquired or for business interruption prior to the Closing
Date) payable as a result of the occurrence of the event resulting in the Damage
shall be delivered to Buyer, or the rights thereto shall be assigned to Buyer if
not yet paid over to Seller, and Seller shall pay to Buyer the amount of any
deductible associated with the insurance claim.
(c) Notwithstanding the provisions of this SECTION 10, in the event of
Damage to the Acquired Systems which is not material damage to the Acquired
Systems, Seller shall have the full responsibility for the completion of all
necessary repair and/or restoration work with respect to such damage, whether or
not such work is capable of being completed prior to the Closing Date, and shall
promptly and with due diligence, in a prudent and workmanlike manner, proceed
with such work, time being of the essence.
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11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
-----------------------------------------------------------
11.01 Survival of Representations and Warranties. All representations,
------------------------------------------
warranties, covenants, stipulations, certifications, indemnities and agreements
contained herein or in any document delivered pursuant hereto shall survive the
consummation of the transactions provided for in this Agreement; provided that
the representations and warranties contained in this Agreement shall expire and
be extinguished six months after the Closing Date, except for representations
and warranties relating to (i) title and ownership, which shall survive forever,
(ii) environmental matters, which shall survive for five years, and (iii) tax
matters, which shall survive until the third annual anniversary of the Closing
Date, and Buyer's and Seller's rights to make claims based thereon shall
likewise expire and be extinguished on such dates. The parties hereto
acknowledge and agree that Seller shall remain responsible for any refund
liability with respect to the rates charged by Seller in the Acquired Systems
through the Closing Date and Buyer's right to be indemnified for any such claims
shall survive forever.
11.02 Indemnification.
---------------
(a) Seller and Jones shall, jointly and severally, defend, indemnify
and hold Buyer harmless from and against any and all claims, liabilities,
damages, losses, deficiencies and expenses (including reasonable attorneys' fees
and expenses and costs of suit including, but not limited to, travel expenses
and discovery costs for such matters as transcripts, photocopying, subpoenas and
telecopies) (individually, a "Loss" and collectively, "Losses") arising out of
(i) any and all inaccurate representations and warranties, and out of any and
all breaches of covenants, agreements and certifications made by or on behalf of
Seller in this Agreement or in any document delivered hereunder, (ii) any
failure to comply with any applicable bulk transfer acts, or (iii) any and all
liabilities and obligations of Seller (except for the Assumed Liabilities) and
any and all liabilities and obligations of Seller not disclosed to Buyer in this
Agreement; provided that in connection with the indemnification provided for in
SECTION 11.02(A)(I) hereof, Seller and Jones shall not be obligated to indemnify
Buyer for Losses subject to indemnification thereunder (other than Losses
relating to tax matters) once the total amount of Losses for which Seller and
Jones have provided indemnification under such SECTION 11.02(A)(I) equals
$7,500,000 ("Seller's Cap"). Buyer shall not be entitled to be indemnified by
Seller or Jones for any Losses under this SECTION 11.02(A) arising out of any
single claim or aggregate claims until the total amount of all such Losses
suffered or paid by Buyer exceeds $500,000 ("Seller's Basket"). Buyer shall
then be entitled to be indemnified for all such Losses under this SECTION
1.02(A) arising out a single claim or aggregate claims. For example, if the
total amount of such Losses equals $502,000, Buyer shall be entitled to be
indemnified for the entire amount of such Losses, and not just the amount of
Losses in excess of
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$500,000.
(b) Buyer shall defend, indemnify and hold Seller harmless from and
against any and all Losses arising out of (i) any and all inaccurate
representations, and out of any and all breaches of covenants, warranties,
stipulations, agreements and certifications made by or on behalf of Buyer in
this Agreement or in any document delivered by Buyer hereunder; (ii) the Assumed
Liabilities; and (iii) all debts, liabilities or claims owing by or against
Buyer subsequent to the Closing Date or arising out of the business activities
of Buyer subsequent thereto.
11.03 Indemnification with Respect to Third-Party Claims.
--------------------------------------------------
(a) Definition. As used herein, a "Third-Party Claim" means a Loss or
----------
potential Loss for which indemnification is claimed by Buyer or Seller (the
"Indemnitee") under the provisions of this Article 11 and which is consequent to
a claim against the Indemnitee by a person, corporation, association,
partnership or other business organization, or an individual, or a government,
any political subdivision thereof or a governmental agency by commencement
against the Indemnitee of a legal action or proceeding or receipt by the
Indemnitee of an assertion of a claim for which indemnification is provided
pursuant to this Article 11 by Buyer or Seller and Jones, as the case may be
(the "Indemnitor").
(b) The Indemnitee will give notice of a Third-Party Claim to the
Indemnitor, together with, if such Third-Party Claim is subject to arbitration
pursuant to SECTION 14 hereof, demand for arbitration, stating the nature
thereof and enclosing copies of any complaint, summons, written assertion of
such Third-Party Claim or similar document. No claim for indemnification on
account of a Third-Party Claim shall be made and no indemnification therefor
shall be available under this Article 11 until the Indemnitee shall have given
initial written notice of its claim to the Indemnitor.
(c) Retention of Counsel by the Indemnitor. Except as hereinafter
--------------------------------------
provided (including, but not limited to, SECTION 11.03(D)(II) hereof), the
Indemnitor shall engage counsel to defend a Third-Party Claim, and shall provide
notice to the Indemnitee not later than 15 business days following delivery by
the Indemnitee to the Indemnitor of a notice of a Third-Party Claim. The
Indemnitee will fully cooperate with such counsel. The Indemnitor will cause
such counsel to consult with the Indemnitee as appropriate as to the defense of
such claim, and the Indemnitee may, at its own expense, participate in such
defense, assistance or enforcement, but the Indemnitor shall control such
defense, assistance or enforcement. The Indemnitor will cause such counsel
engaged by the Indemnitor to keep the Indemnitee informed at all times of the
status of such defense, assistance or enforcement.
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(d) Employment of Counsel by the Indemnitee.
---------------------------------------
(i) Notwithstanding the provisions of SECTION 11.03(C), the
Indemnitee shall have the right to engage counsel and to
control the defense of a Third-Party Claim if the
Indemnitor shall not have notified the Indemnitee of its
appointment of counsel and control of the defense of a
Third-Party Claim pursuant to SECTION 11.03 (C) within the
time period therein provided.
(ii) Notwithstanding the engagement of counsel by the
Indemnitor, the Indemnitee shall have the right, at its own
expense, to engage counsel to participate jointly with the
Indemnitor in, and to control jointly with the Indemnitor,
the defense of a Third-Party Claim if (x) the Third-Party
Claim involves remedies other than monetary damages and
such remedies, in the Indemnitee's reasonable judgment,
could have an effect on the conduct of the Indemnitee's
business, or (y) the Third-Party Claim relates to acts,
omissions, conditions, events or other matters occurring
after the Closing Date as well as to acts, omissions,
conditions, events or other matters occurring prior to the
Closing Date, or (z) the claims involve monetary damages
which could exceed Seller's Cap.
(iii) If the Indemnitee chooses to exercise its right to appoint
counsel under this SECTION 11.03(D), the Indemnitee shall
deliver notice thereof to the Indemnitor setting forth in
reasonable detail why it believes that it has such right
and the name of the counsel it proposes to employ. The
Indemnitee may deliver such notice at any time that the
conditions to the exercise of such right appear to be
fulfilled, it being recognized that in the course of
litigation, the scope of litigation and the amount at stake
may change. The Indemnitee shall thereupon have the right
to appoint such counsel.
(iv) The reasonable fees and expenses of counsel and any
accountants, experts or consultants engaged by the
Indemnitee in accordance with the provisions of SECTION
11.03(D)(I) in connection with defending a Third-Party
Claim shall be paid by the Indemnitor in accordance with
the provisions of this Article 11. If the Indemnitee's
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employment of counsel is for a Third-Party Claim of the
type described in subdivision (ii)(y) or (ii)(z) of this
SECTION 11.03(D), then subject to the provisions of SECTION
11.03(E), the amount of fees and expenses so payable by the
Indemnitor shall be that fraction of the aggregate of such
fees and expenses, the numerator of which is the portion of
the amount of any judgment on, or settlement of, such
Third-Party Claim for which the Indemnitee is indemnified
pursuant to this Article II and the denominator of which is
the total amount of such judgment or settlement, but
provided further, if such defense of a Third-Party Claim is
successful (in the sense that as a consequence thereof,
there is no Loss (other than such fees and expenses) for
which the Indemnitee is indemnified pursuant to this
Article 11), the Indemnitee and the Indemnitor will attempt
in good faith to reach an agreement on the amount of such
fees and expenses so payable by the Indemnitor.
(e) Settlement of Third-Party Claims.
--------------------------------
(i) The Indemnitor may settle any Third-Party Claim solely
involving monetary damages only if the amount of such
settlement is to be paid entirely by the Indemnitor
pursuant to this Article 11.
(ii) The Indemnitor will not enter into a settlement of a Third-
Party Claim which involves a non-monetary remedy or which
will not be paid entirely by the Indemnitor pursuant to
this Article 11 without the written consent of the
Indemnitee (which consent shall not be unreasonably
withheld, delayed or conditioned).
(iii) The Indemnitee will not enter into a settlement of a Third-
Party Claim without the written consent of the Indemnitor,
which consent shall not be unreasonably withheld, under the
circumstances described in subdivision (i) of SECTION
11.03(D), if the Indemnitor has accepted all or any portion
of the liability for such Third-Party Claim. Otherwise, the
Indemnitee shall be free to compromise, defend and settle
Third-Party Claims without prejudice to any of its rights
hereunder or under applicable law.
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(iv) As to any Third-Party Claim of the type described in
SUBSECTION (ii)(y) or SUBSECTION (ii)(z) of SECTION
11.03(d), the Indemnitee and the Indemnitor shall consult as
to any proposed settlement. If the Indemnitee notifies the
Indemnitor that it wishes to accept a proposed settlement
and the Indemnitor is unwilling to do so, if the amount for
which the Third-Party Claim is ultimately resolved is
greater than the amount for which the Indemnitee desired to
settle, then (x) the Indemnitee shall be liable only for the
amount, if any, which it would have paid had the Third-Party
Claim been settled as proposed by the Indemnitee, and (y)
all reasonable attorneys' fees and expenses and costs of
suit incurred by the Indemnitee subsequent to the time of
the proposed settlement shall be paid or reimbursed by the
Indemnitor.
(v) In determining whether to accept or reject any settlement
proposal, each party shall act in good faith and with due
regard for the reasonable commercial and financial interests
of the other.
(f) Claims as to Which Indemnification is Partially Payable.
-------------------------------------------------------
Notwithstanding the foregoing, in the event of any settlement of, or final
judgment with respect to, a Third-Party Claim which relates to acts, omissions,
conditions, events or other matters occurring both before and after the Closing
Date, the Indemnitee and the Indemnitor shall negotiate in good faith as to the
portion of such Third-Party Claim as to which such indemnification is payable.
(g) Cooperation, etc. The Indemnitee and the Indemnitor shall
-----------------
cooperate with one another in good faith in connection with the defense,
compromise or settlement of any claim or action. Without limiting the generality
of the foregoing, the party controlling the defense or settlement of any matter
shall take steps reasonably designed to ensure that the other party and its
counsel are informed at all times of the status of such matter. Neither party
shall dispose of, compromise or settle any claim or action in a manner that is
not reasonable under the circumstances and in good faith. The Indemnitor and
Indemnitee shall enter into such confidentiality and other non-disclosure
agreements as the Indemnitee or Indemnitor, as the case may be, shall reasonably
request in order to protect trade secrets and other confidential or proprietary
information of the Indemnitee or Indemnitor, as the case may be.
12. TERMINATION AND REMEDIES.
------------------------
12.01 Termination by Mutual Agreement. This Agreement may be terminated
-------------------------------
prior to Closing (i) by mutual agreement of Seller and Buyer or (ii) by Buyer in
the
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event of a substantial loss under SECTION 10. In such event, this Agreement
shall terminate and neither Buyer nor Seller shall have any further obligation
or liability to the other hereunder, except that SECTIONS 14, 15, 16.05, 16.06
and 16.07 of the Agreement shall survive and continue in full force and effect
notwithstanding such termination.
12.02 Buyer's Default. In the event that the transactions contemplated by
---------------
this Agreement are not consummated on the Closing Date (if and as extended upon
the mutual agreement of Seller and Buyer) due to Buyer's failure or refusal to
close, and Seller is not in material default under the terms and provisions
hereof, then Seller shall be entitled to terminate this Agreement and pursue any
and all of its legal and equitable causes of action against Buyer, including
without limitation, the remedy of specific performance by Buyer of it
obligations hereunder. Notwithstanding anything to the contrary contained in
this Agreement, Buyer and Seller acknowledge that Seller may apply all, or any
portion of, the Deposit against any damages incurred by Seller as a result of
Buyer's failure or refusal to close or as a result of Buyer's breach of any of
the terms and provisions of this Agreement. The application of the Deposit
against any such damages incurred by Seller shall be governed by the terms and
provisions of the Escrow Agreement. In no event shall the amount of the Deposit
be deemed to limit or restrict the monetary damages that Seller may assert
against Buyer in the event of a default by Buyer under the terms and provisions
of this Agreement and in no event shall the forfeiture of all or any portion of
the Deposit by Buyer be deemed or construed as payment of liquidated damages for
Buyer's default under the terms and provisions hereof. Notwithstanding the
foregoing, Seller acknowledges that in the event that the amount of damages
incurred by Seller as a result of Buyer's breach of the terms and provisions of
this Agreement is less than the amount of the Deposit, then that portion of the
Deposit which is not applied by Seller towards such damages shall be returned to
Buyer.
12.03 Seller's Default. In the event that the transactions contemplated by
----------------
this Agreement are not consummated on the Closing Date (if and as extended upon
the mutual agreement of Seller and Buyer) due to Seller's failure or refusal to
close, and Buyer is not in material default under the terms and provisions
hereof, then Buyer shall have the right to terminate the Agreement and Buyer
shall be entitled to pursue any and all of its equitable and legal causes of
action against Seller, including, without limitation, the remedy of specific
performance by Seller of its obligations hereunder, and without regard to
Seller's Cap on damages provided in SECTION 11.02(A).
12.04 Termination by Buyer or Seller. This Agreement may be terminated by
------------------------------
Buyer or Seller at any time after October 31, 1998 (the "Termination Date") in
the event that any condition set forth in SECTIONS 6 OR 7 hereof has not been
satisfied or tendered by the party owing performance for any reason other than a
material breach or default by such party of its respective covenants,
agreements, or other obligations under this Agreement, unless such condition has
been waived by the party for whose
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benefit the condition is intended. Upon such termination, neither Buyer
nor Seller shall have any further obligation or liability to the other
hereunder, except that SECTIONS 14, 15, 16.05, 16.06 AND 16.07 of this Agreement
shall survive and continue in full force and effect notwithstanding such
termination.
13. NOTICE. All notices and other communications hereunder shall be in writing
------
and delivered by one of the following methods of delivery: (i) personally, (ii)
by registered or certified mail, return receipt requested, postage prepaid,
(iii) by overnight courier, or (iv) by legible facsimile transmission, in all
cases addressed as follows:
To Buyer:
Olympus Communications, L.P.
c/o Adelphia Communications Corporation
5 West Third Street
Coudersport, PA 16915
Telecopy: (814) 274-8631
Attention: Colin H. Higgin, Esq.
With a copy to:
Buchanon Ingersol Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburg, Pa 15219-1041
Telecopy: (412) 562-1041
Attn: Thomas G. Buchanon, Esq.
To Seller or Jones:
Jones Intercable, Inc.
9697 E. Mineral Avenue
Englewood, CO 80112
Telecopy: (303) 799-4675
Attention: President
With a copy to:
Jones Intercable, Inc.
9697 E. Mineral Avenue
Englewood, CO 80112
Telecopy: (303) 799-1644
Attention: General Counsel
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<PAGE>
or to such address as such party may indicate by a notice delivered to the other
parties hereto. Notice shall be deemed received the same day (when delivered
personally), five (5) days after mailing (when sent by registered or certified
mail) or the next business day (when sent by facsimile transmission or when
delivered by overnight courier). Any party to this Agreement may change its
address to which all communications and notices may be sent hereunder by
addressing notices of such change in the manner provided.
14. BROKERAGE COMMISSION. Buyer and Seller each represent and warrant that all
--------------------
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried on by each directly with the other without intervention of any
person, except that Seller has retained The Jones Group, Ltd. ("Seller's
Broker") as its sole broker and finder in connection with this Agreement and the
transactions contemplated hereby, and Seller has agreed to pay the entire
commission of Seller's Broker. Buyer shall have no liability or responsibility
for the commissions payable to the Seller's Broker. Each party to this Agreement
indemnifies the other and holds it harmless against and in respect of any claim
against the other for brokerage or other commissions relative to this Agreement
and the transactions contemplated hereby by the indemnifying party's employees,
agents or consultants.
15. LAWS GOVERNING.
--------------
15.01 Laws Governing. The construction, interpretation and enforcement of
--------------
this Agreement and the rights of the parties hereunder shall be governed by the
laws of the State of Florida without regard to any jurisdiction's conflicts of
law provisions.
15.02 Consent to Jurisdiction. Each of the parties hereto hereby
-----------------------
irrevocably consents and submits to the nonexclusive personal jurisdiction of
the United States District Court for the Southern District of Florida and the
courts of Lee County, Florida over any suit, action or proceeding under this
Agreement, and irrevocably agrees that all claims with respect thereto may be
heard and determined in such courts. Service of process in any such suit, action
or proceeding may be made in the manner hereinabove set forth for the giving of
notices and the same shall constitute valid personal service for all purposes,
each party hereby waiving personal service by other means.
16. MISCELLANEOUS.
-------------
16.01 Counterparts; Telecopy. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall be deemed an original, but all of which,
when taken together, shall constitute one and the same instrument. Delivery of
executed signature pages hereof by facsimile transmission shall constitute
effective and binding execution and delivery hereof.
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16.02 Assignment. This Agreement may not be assigned by any party hereto
----------
without the prior written consent of the other parties; provided, however, that
Buyer may assign this Agreement to one or more of the subsidiaries or affiliates
of Buyer, without the prior written consent of Seller, provided Buyer remains
primarily liable to fully perform the terms of this Agreement.
16.03 Entire Agreement. This Agreement is an integrated document, contains
----------------
the entire agreement between the parties, wholly cancels, terminates and
supersedes any and all previous and/or contemporaneous oral agreements,
negotiations, commitments and writings between the parties hereto with respect
to such subject matter. No change, modification, termination, notice of
termination, discharge or abandonment of this Agreement or any of the provisions
hereof, nor any representation, promise or condition relating to this Agreement,
shall be binding upon the parties hereto unless made in writing and signed by
the parties hereto, except that termination or notices of termination which may
be effected pursuant to the terms of this Agreement by either party to the
Agreement shall be binding if made in writing and signed by the applicable
party.
16.04 Interpretation. Article titles and headings to Sections herein are
--------------
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of any of the provisions of this
Agreement. All references to Sections, subsections, Schedules or Exhibits
contained in this Agreement are references to the Sections and subsections of
this Agreement and the Schedules or Exhibits described on the list immediately
following the signature page hereto and attached hereto. All references to the
word "including" shall have the meaning represented by the phrase "including
without limitation." As used herein, the phrase "after due inquiry" is limited
to inquiry within the organization of Seller or Buyer, as the case may be. As
used herein, the phrase "commercially reasonable efforts" shall not be deemed to
require a party to undertake extraordinary measures, including the initiation or
prosecution of legal proceedings or the payment of amounts in excess of normal
and usual filing and processing fees, if any.
16.05 Expenses. Except as otherwise expressly provided herein, Seller and
--------
Buyer each will pay all costs and expenses, including any and all legal and
accounting fees, of its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with. Seller
and Buyer agree to share equally (i) any sales or transfer taxes, recording fees
or other similar costs or fees payable in connection with the transfer of the
Assets to be Acquired, (ii) the costs and expenses relating to the appraisals
performed pursuant to SECTION 2.05, and (iii) the fees required under the HSR
Act.
16.06 Confidentiality. Any and all information obtained by Buyer from Seller
---------------
in connection with the transactions contemplated by this Agreement which is
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confidential in nature (collectively, the "Evaluation Material") shall be kept
strictly confidential by Buyer prior to the Closing Date; provided, however,
that any Evaluation Material may be disclosed to agents, employees, officers,
directors, investors, advisors and other representatives of Buyer who need to
know such Evaluation Material (it being agreed that such representative shall be
informed by Buyer of the confidential nature of such Evaluation Material and
shall be directed to deal with such Evaluation Material confidentially) and,
further, may be disclosed to the extent required by law, including applicable
securities laws, or by written or oral question or request for information or
documents in legal proceedings, interrogatories, subpoenas, civil investigative
demands or similar processes. For purposes of this Agreement, the term
"Evaluation Material" does not include information which (i) becomes generally
available to the public other than as a result of disclosure by Buyer or any
Buyer representative in violation of the terms hereof, (ii) was available on a
nonconfidential basis prior to disclosure to Buyer by Seller or any of their
directors or any of its directors, officers, employees, agents or
representatives, or (iii) becomes available to Buyer on a non-confidential basis
from a source which is not bound by a confidentiality agreement with Seller.
16.07 Public Announcements. Neither Buyer nor Seller shall, without the
--------------------
approval of the other party (which may not be unreasonably withheld), make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall be so obligated by law (including any legal obligation imposed on Buyer in
connection with its status as a publicly-held corporation), in which case the
other party shall be advised and Buyer and Seller shall use their reasonable
efforts to cause a mutually agreeable release or announcement to be issued.
16.08 Waivers. Any term or provision of this Agreement may be waived, or
-------
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof, but any such waiver must be in writing and must comply
with the notice provisions contained in SECTION 13. The failure of any party
hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
16.09 Partial Invalidity. Wherever possible, each provision hereof shall be
------------------
interpreted in such a manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein, unless the
deletion of such provision or provisions would
-45-
<PAGE>
result in such a material change as to cause the completion of the transactions
contemplated hereby to be unreasonable.
16.10 Incorporation by Reference. Any and all Schedules, Exhibits,
--------------------------
Recitals, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are incorporated herein by reference
thereto as though fully set forth at the point referred to in this Agreement.
16.11 Attorneys' Fees. Notwithstanding any other provision of this
---------------
Agreement, the prevailing party in any litigation or other legal proceeding
between Buyer and Seller with respect to this Agreement or the transactions
contemplated hereby shall be entitled to recover from the nonprevailing party
its reasonable attorneys' fees and costs of the proceeding.
-46-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized corporate officers on the day and year
first above written.
OLYMPUS COMMUNICATIONS, L.P.
By: ACP Holdings, Inc., its managing general
partner
By: /S/ Timothy J. Rigas
----------------------------------------
Title: Executive Vice President
-------------------------------------
CABLE TV FUND 12-A, LTD.,
a Colorado limited partnership
By: JONES INTERCABLE, INC.,
General Partner
By:/s/ Elizabeth Steele
----------------------------------------
Title: Vice President
-------------------------------------
JONES INTERCABLE, INC.
By:/s/ Elizabeth Steele
----------------------------------------
Title:Vice President
-------------------------------------
-47-
<PAGE>
EXHIBIT A
[FORM OF NONCOMPETITION AGREEMENT]
(See Separate Document Attached)
-48-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,047,098
<SECURITIES> 0
<RECEIVABLES> 1,245,099
<ALLOWANCES> (47,572)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 86,596,679
<DEPRECIATION> (54,740,733)
<TOTAL-ASSETS> 37,049,738
<CURRENT-LIABILITIES> 1,828,168
<BONDS> 23,272,240
0
0
<COMMON> 0
<OTHER-SE> 11,949,330
<TOTAL-LIABILITY-AND-EQUITY> 37,049,738
<SALES> 0
<TOTAL-REVENUES> 36,986,475
<CGS> 0
<TOTAL-COSTS> 4,830,338
<OTHER-EXPENSES> 20,306
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,765,957
<INCOME-PRETAX> 3,044,075
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,044,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,044,075
<EPS-PRIMARY> 28.98
<EPS-DILUTED> 28.98
</TABLE>
