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2000F19- CABLE TELEVISION '. .. Grande Communications, Inc. ORDINANCE NO. OO-F-19 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS, ESTABLISHING A FRANCHISE AGREEMENT WITH GRANDE COMMUNICATIONS, INC. FOR CABLE TELEVISION AND OTHER SERVICES; PROVIDING THE TERMS AND CONDITIONS UNDER WHICH THE FACILITIES OF GRANDE COMMUNICATIONS, INC. WILL BE INSTALLED, OPERATED AND MAINTAINED; ESTABLISHING A TERM FOR THE FRANCHISE; AND ESTABLISHING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS: Section 1. Definitions; construction. In this Ordinance: 1. Basic monthly service means the minimum level of cable service for which Grantee charges the lowest monthly fee. 2. "Cable service" means a. the one-way traru>mission to customers of (1) video programming provided by, or comparable to video programming provided by, a television broadcast station; or (2) other programming services, by which is meant video, audio, or data information that Grantee makes generally available to all customers, to the extent the services are deemed to be "cable service" under federal law; and b. customer interactive (two-way) transmissions required for the selection or use of video programming or other programming services (such as, for example, customers' accessing and utilization of data bases, the Internet, video game services, or other services), to the extent they are "cable service" under federal law . 3. "City" means the City of Schertz, a Texas municipal corporation. 4. "City Council" means the City Council ofthe City. 5. "City Manager" means the City Manager of the City or the City Manager's designated representative. 6. "City requirements" means all City charter provisions, ordinances, regulations, resolutions, and policies, in effect on the effective date of this Ordinance and as they may be 633928.6 I " changed from time to time during the term of this Ordinance, that apply to Grantee's activities under this Ordinance. 7. "City right-of way " means the surface, the air space above the surface, and the area below the surface of any public street, highway, alley, sidewalk, boulevard, bridge, tunnel, utility easement, or similar property in which the City holds a property interest or exercises a right of management or control (including property hereafter added to the territorial limits ofthe City) and which may be used for the installation and maintenance of Grantee's facilities. 8. "FCC" means the Federal Communications Commission. 9. "Grantee" means Grande Communications, Inc., a Delaware corporation. 10. "Grantee's facilities" means Grantee's cables, lines, wiring, towers, poles, underground conduits, manholes, electronic conductors, and other fixtures necessary for the maintenance and operation of Grantee's cable television signal distribution system and service. 11. "Person" means any individual, firm, partnership, association, corporation, company, or organization of any kind. 12. "Significant service interruption" means a cable service outage lasting four continuous hours or more to 1,000 or more of Grantee's customers in the City. 13. "Start-up date" means the date on which Grantee begins distributing cable television services to any customer through Grantee's facilities. 14. "Will" is mandatory and not merely directory. Words and phrases that are not defined in this Section will have the meaning provided in the federal Communications Act of 1934 as amended by the Cable Communications Policy Act of 1984, the Cable Television Consumer Protection and Competition Act of 1992, and the Telecommunications Act of 1996, and, ifnot so defined, will have their common and ordinary meaning. Section 2. Grant of Franchise. A. The City hereby grants to Grantee a non-exclusive franchise to construct, erect, operate, and maintain Grantee's facilities in, across, over, above, and under City right-of-way, subject to the terms of this Ordinance. B. The City grants this franchise only to the extent of the City's interest in the City right-of-way. In granting this franchise, the City does not 1. warrant title to any City right-of-way to Grantee; 2. assume any responsibility for securing for Grantee any City right-of-way that the City does not already own or control; 633928.6 2 . . 3. give to Grantee any form of permission to make and maintain attachments to City utility poles or to use any City property other than City rights-of-way; 4. make the City responsible in any way for the construction, operation, maintenance, or performance of Grantee's facilities, or for any other activity or obligation of Grantee; 5. convey to Grantee any ownership or property right in any City right-of-way occupied or used by Grantee regardless of any payments made by Grantee to the City, nor any other action or inaction by the City or by Grantee; 6. grant to Grantee any right or privilege lawfully within the jurisdiction of any other regulatory body or agency, it being Grantee's responsibility to secure and hold all necessary licenses, permits, and authorizations required in order to install, operate, and maintain Grantee's facilities; or 7. grant to Grantee the right to allow the use of Grantee's facilities by any other entity for the provision of any service. Grantee will not allow the use of Grantee's facilities by another entity to provide any service unless the enti.ty warrants that it has obtained all authorizations required by the City for such use. C. This franchise is not exclusive. The City reserves the right to make a similar grant to any other Person at any time. Section 3. Protection of Persons and Property; Indemnification and Waiver; Insurance. A. Grantee will take all necessary precautions to protect all Persons and property against personal injury or property damage that may result from the installation, maintenance, or operation of Grantee's facilities. If, in the City's opinion, Grantee has not taken any such necessary precautions, the City may notify Grantee in writing, and Grantee will correct the situation within a reasonable time. Grantee agrees, however, that it is solely responsible for the installation, maintenance, and operation of Grantee's facilities, and the City does not assume any such responsibility because of the City's actions or inactions regarding the installation, maintenance, or operation of Grantee's facilities. B. Grantee shall carry, throughout the term of this Ordinance, personal and property damage liability insurance with insurance companies qualified to do business in the State of Texas. Such insurance shall show the City as an additional insured party. The amounts of such insurance to be carried for liability due to property damage shall be $500,000 as to anyone occurrence, and against liability due to injury or death of a person $2,000,000 as to anyone person and $5,000,000 as to anyone occurrence. A certificate or certificates of insurance shall be filed and maintained with the City during the term of this Ordinance. Grantee agrees that, at the end of the fifth (5th) and tenth (10th) complete fiscal years following the effective date of this Ordinance, it will increase the amounts of insurance required to be maintained by Grantee under this Section 3B in accordance with an opinion of a qualified insurance consultant agreed to by the City and Grantee stating that such amounts should be increased. C. GRANTEE AGREES TO HOLD HARMLESS, INDEMNIFY, AND DEFEND THE CITY AND ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ALL CLAIMS, DAMAGES, AND LIABILITY, INCLUDING FEES OF ATTORNEYS AND EXPERT 633928.6 3 WITNESSES, ARISING IN CONNECTION WITH THE INSTALLATION, MAINTENANCE, AND OPERATION OF GRANTEE'S FACILITIES. GRANTEE WILL DEFEND AT ITS EXPENSE ALL ACTIONS THAT MAY BE COMMENCED AGAINST THE CITY IN CONNECTION WITH THE INSTALLATION, MAINTENANCE, AND OPERATION OF GRANTEE'S FACILITIES. The selection oflegal counsel for any such defense will be at the sole discretion of the City. The specification of minimum coverage limits in Section 3B does not limit Grantee's indenmity obligations in any way. Section 4. Facilities Construction; Service Availability. A. Grantee will complete the initial construction of all of Grantee's facilities in the City by June I, 2006. As ofthat date, Grantee will make cable service available to 100% ofthe residences within the City. If Grantee does not complete construction of Grantee's facilities throughout the City at the same time, Grantee will give written notice to the City ofthe date for initiation of service to each area of the City in which Grantee is completing construction. B. Grantee will install its facilities in compliance with all applicable laws and regulations, including the City requirements and the regulations of the FCC and the Federal Aviation Administration. C. Grantee will extend its facilities and make cable services available to new residential areas within the City whenever a density of at least 25 residential units per cable mile is realized, as measured from Grantee's facilities then existing. Measurement of cable length will not include service drops to residences. D. In addition to its obligations above, Grantee will extend Grantee's facilities and make cable services available to any residence or business where the potential customer agrees to pay the cost of the extension. E. If, during the term of this Ordinance, the City grants approval of plats for new developments, the City shall notify Grantee or advise the developer to notify Grantee of the timing of construction and location of trenching rights-of-way and give Grantee reasonable opportunity to place cable or conduit in such trenches. The City will make available to Grantee copies of all plats for new developments approved by the City during the term of this Ordinance. F. Grantee shall provide a locking or electronic blocking device to any subscriber of the Cable service, at the subscriber's request, which, when locked by a key or electronically blocked, will prevent the television set from being tuned to any channel designated by the subscriber. Grantee shall have the right to charge an amount equal to its cost of providing said locking device. Section 5. Operation and Maintenance of Grantee's Facilities. A. Grantee will operate and maintain Grantee's facilities so that they produce audio and visual signals that are clear and undistorted, and as good as state-of-the-art cable service technology allows as of the start-up date of this Ordinance and throughout the term ofthis Ordinance. B. Grantee will operate and maintain Grantee's facilities in compliance with all applicable laws and regulations, including the City requirements and the regulations of the FCC and the Federal Aviation 633928.6 4 Administration. Grantee will install, operate, and maintain Grantee's facilities so that they do not cause cross-modulations in the cable or interference with other electrical or electronic systems. C. Grantee will operate and maintain an office convenient to residents of the City that will be open during normal business hours and will have a local listed telephone number to receive complaints and requests forrepairs or adjustments at any time, 24 hours per day, seven days per week. Grantee will maintain a force of one or more agents or employees specifically assigned to the City at all times and will have sufficient employees to provide safe, adequate, and proper services for Grantee's facilities. Grantee will locate and correct malfunctions in Grantee's facilities promptly. If a customer is not satisfied with the resolution of a service complaint after contacting the local office twice for the same complaint, on the third contact the complaint will be handled personally by Grantee's local office manager or his equally authorized desiguee. On the fourth complaint, Grantee will promptly notify the City Manager in writing, and the complaint will be promptly resolved by Grantee to the complete satisfaction of the City Manager. D. Grantee will notify all customers by mail of all channel changes within seven (7) days prior to the change. E. Grantee will employ a trained and competent staff for the installation, operation, and maintenance of Grantee's facilities. F. Grantee will render efficient service, make repairs promptly and properly, and interrupt service only for good cause and for the shortest time possible. Planned service interruptions will be preceded by notice to customers and will occur during periods of minimum use of Grantee's facilities by Grantee's customers. G. All installations and repairs made by Grantee will be performed in a good, substantial, safe, and workmanlike manner. Grantee will make all connections of wires, cables, and equipment to customers' residences and buildings in a manner that is waterproof and prevents access by insects and vermm. H. Grantee agrees to provide programming responsive to the City's needs and interest for Spanish language programming. This programming shall consist of at least two (2) Spanish language channels or other Spanish cultural equivalents available at all times in the most popular service level offered by Grantee. L Grantee will not hinder the retransmission of a signal transmitted by any broadcast or non- broadcast service for the benefit of the hearing impaired. J. Effective one (1) year after Grantee completes its system buildout as described in Section 4A, Grantee will provide a report to the City Manager within fifteen (15) days after the end of each calendar quarter that includes the following for the preceding calendar quarter: 1. Grantee's compliance with FCC customer service requirements, with previous one- year history, in narrative, table, and graph form; and 633928.6 5 2. the total number and the total duration of significant service interruptions, in narrative, table, and graph form. K. Grantee will not disclose personally identifiable information concerning any customer to any third party without the prior written consent of the customer. Personally identifiable information will not include any record of aggregate data which does not identify particular persons. L. The City Council shall have the right under this Ordinance at any time to review the performance of Grantee hereunder and to ascertain that all provisions of this Ordinance are being fully and faithfully carried out. The City Council may conduct formal performance evaluations of Grantee's Facilities and the Cable services on or about the fifth (5th), ninth (9th), and thirteenth (13th) anniversary of the effective date of this Ordinance. The City shall permit the Grantee to be involved in and comment on establishing the method and format of such evaluation prior to the evaluation. M. The City shall automatically have all of the rights, benefits and powers granted to municipalities under federal or State of Texas cable television laws or regulations in effect and as amended during the term of this Ordinance, including specifically all powers or rights to regulate cable television rates, services and programming, as if such laws and regulations were incorporated herein. Any other matters permitted by such enactments or amendments shall be negotiated in good faith by the City and Grantee. Section 6. Provision by Grantee of Facilities and Services to Public Entities. A. To the extent permitted by law, Grantee agrees to install at its expense, on a regional basis, all equipment necessary to enable local emergency management officials to interrupt all television broadcasting on Grantee's facilities for the purpose of making emergency audio and video management announcements and to provide that such override may be introduced from a facility easily accessible by the City. This equipment is to be installed at a location accessible by and reasonably acceptable to the City by the system build-out date described in Section 4A. B. Grantee shall provide one (1) service connection, including cable television and/or internet service through a minimum of two-pair fiber optic service to each City building or facility as may be now or hereinafter designated by the City Manager and cable television and/or internet service in each ofthe following locations: I. all public and parochial school buildings as may be now or hereinafter designated by the City Manager; and 2. each classroom building and dormitory building of each college or university. If, during the term of this Ordinance, Grantee develops, builds, or obtains the ability to provide other forms of cable television services not currently being provided, and such new services are offered and provided to either residential or commercial subscribers in the City, and if such services are subscribed to by residential or commercial subscribers, Grantee shall so inform the City Manager in writing and shall provide at least one (1) service connection to provide such service to the City's facilities as set forth above; however, Grantee shall be under no obligation to continue to provide such new service(s) to the City if Grantee ceases to offer or provide such new service(s) to either resident or commercial 633928.6 6 subscribers in the City. No charge shall be made by Grantee for the installation, disconnection (when reasonably requested), reconnection (when reasonably requested), monthly services, and/or maintenance of equipment authorized by this Section; however, Grantee shall not be required to make such installations if line extension in excess of 300 feet would be required. C. Grantee shall advise the City with its quarterly report under Section 5J of any major changes in federal and/or Texas law and regulation relating to the cable industry and any significant advances in technology in the cable industry relating to the quality and quantity of services which may be available and shall promptly inform the City in writing of the implementation of any interconnect with another cable system. D. Grantee shall arrange for its representatives to meet at least once each year with representatives of the City to provide additional information which Grantee believes is useful to the City in connection with Grantee's Facilities and to respond to inquires from the City in connection with Grantee's Facilities and this Ordinance. E. Grantee shall meet or exceed all local programming requirements or recommendations of the FCC or applicable State of Texas or federal law or regulation. Grantee may produce such programming itself or may rely on local groups to produce such programming with technical assistance from Grantee. Grantee agrees to permit the City, as the City's option, to participate in the formation and operation of a broadly representative advisory board to help implement community involvement in local origination production and use of public access channels. Grantee shall provide and maintain a studio in San Antonio, Texas or in another location at Grantee's option reasonably accessible to residents ofthe City for the purpose oflocal program production and origination. Section 7. Promulgation of Rules by Grantee; Refunds. A. Grantee may promulgate rules, regulations, terms, and conditions governing the conduct of its business. These rules, regulations, terms, and conditions must be reasonable and must not conflict with the terms of this Ordinance or other ordinances or the charter, laws, regulations, or policies of the City, the State of Texas, or the United States. B. Grantee will make appropriate credits or refunds to customers for periods when Grantee's facilities undergo a significant service interruption and in other circumstances in which Grantee's services are not of the highest quality. Section 8. Conditions on Occupancy of City Right-of-Way. A. Grantee will submit plans for any change in Grantee's facilities in City right-of-way, including but not limited to changes in the location of facilities and the extension or construction of new facilities, to the City Manager at least five (5) days prior to the start of construction of the change. Grantee will not begin construction of the change without fust obtaining the approval of the plan by the City Manager. These requirements do not apply to bona fide emergency repairs. Grantee will provide immediate verbal notice to the City Manager of any excavation performed within a City right-of-way in connection with an emergency repair. Grantee will in all events .comply with all construction codes and regulations and all permitting requirements of the City. 633928.6 7 B. Grantee shall not install additional poles where poles are already in place and shall secure all necessary licensing agreements to utilize existing poles for its cable. C. Grantee will not place Grantee's facilities where they will interfere with the existing lines, equipment, or fixtures of any water, wastewater, gas, electric, other cable television, or telephone utility, or with drainage, in a City right-of-way. Grantee will place any poles, equipment, and fixtures set by it in any street or alley at the outer edge ofthe sidewalk and as close as practicable to the boundary ofthe street or alley, and in a manner that does not interfere with vehicle or pedestrian travel on streets, alleys, and rights-of-way. D. In City right-of-way where electric, existing cable television, and telephone service lines are routed underground, Grantee will route its lines underground. E. When Grantee or its contractors, agents, or employees disturb any pavement, sidewalk, driveway, or other improved surfacing in City rights-of-way, Grantee will replace and restore the surfacing throughout the disturbed area to a condition as good or better than the condition of the surface before work was commenced. Grantee will repair any settling or deterioration of the restored surface for a period of one (1) year after the completion of the work. Grantee will fully comply with all regulations applicable to such work, including but not limited to sawcutting, backfilling, compaction, and paving standards. Grantee will replace or repair all privately and publicly owned property damaged as a result ofthe installation, operation, or maintenance of Grantee's facilities. F. Grantee's use of City right-of-way will be subordinate to roadway, sidewalk, and drainage uses. If the City elects to install or alter the route, location, width, or grade of any street, alley, sidewalk, drainage, or related facility in a City right-of-way, Grantee will remove, relay, or relocate Grantee's facilities that are affected at Grantee's expense upon reasonable notice by the City. The City will have the right to require Grantee to change the location of any of Grantee's facilities at Grantee's expense when the public convenience requires the change, as determined by the City Manager. In the event a City right-of-way is vacated or abandoned, Grantee will remove all of its facilities from the right-of- way and restore the premises without delay or cost to the abutting owners or the City. If Grantee refuses or fails to remove, relay, or relocate Grantee's facilities after notice by the City, the City will have the right to remove, relay, or relocate Grantee's facilities and charge the costs to Grantee, and any resulting interruptions in service to any of Grantee's customers will be the sole responsibility of Grantee. GRANTEE WILL HOLD THE CITY AND THE CITY'S AGENTS, EMPLOYEES, AND CONTRACTORS HARMLESS FOR ANY DAMAGE TO GRANTEE'S FACILITIES LOCATED IN CITY RIGHT-OF-WAY IN THE EVENT GRANTEE'S FACILITIES ARE DAMAGED AS A RESULT OF CONSTRUCTION OR MAINTENANCE OPERATIONS PERFORMED ON THE CITY'S ROADWAYS, SIDEWALKS OR DRAINAGE FACILITIES BY THE CITY OR THE CITY'S AGENTS, EMPLOYEES, OR CONTRACTORS. G. Grantee's use of City right-of-way will be subordinate to use by City utilities. If the City elects to install or alter the route, location, or character of any City utility facility in a City right-of-way, Grantee will remove, relay, or relocate Grantee's facilities that are affected at Grantee's expense upon reasonable notice by the City J'f Grantee refuses or fails to remove, relay, or relocate Grantee's facilities after notice by the City) the City will have the right to remove, relay, or relocate Grantee's facilities and charge the costs to Grantee, and any resulting interruptions in service to any of Grantee's customers will 633928.6 8 be the sole responsibility of Grantee. GRANTEE WILL HOLD THE CITY AND THE CITY'S AGENTS, EMPLOYEES, AND CONTRACTORS HARMLESS FOR ANY DAMAGE TO GRANTEE'S FACILITIES LOCATED IN CITY RIGHT-OF-WAY IN THE EVENT GRANTEE'S FACILITIES ARE DAMAGED AS A RESULT OF INSTALLATION OR MAINTENANCE OPERATIONS PERFORMED ON THE CITY'S UTILITIES BY THE CITY OR THE CITY'S AGENTS, EMPLOYEES, OR CONTRACTORS. H. Grantee will provide as-built maps of all or part of Grantee's facilities in hard copy and computer form, compatible with the City's mapping systems, at the request of the City Manager. I. Grantee will comply with all City requirements, requirements of other governmental agencies, and industry standards for locating existing utility facilities prior to performing any maintenance work on Grantee facilities that requires excavation. :~~~---~--,_.--., J. Grantee will temporarily raise or lower its wires and cables to permit the moving of buildings at the request of any person holding a building moving permit issued by the City. Grantee may charge to the requesting person the reasonable expense of temporary removal, raising, or lowering of wires and cables, and Grantee may require payment in advance. Grantee may require that a request be made at least 72 hours in advance. K. Grantee will have the authority to trim trees upon and overhanging streets, alleys, sidewalks, and public places of the City to prevent branches from coming in contact with Grantee's facilities. All trimming will be done in accordance with City requirements and at Grantee's expense. Section 9. Preferential or Discriminatory Practices Prohibited. A. Grantee will not grant any reference or advantage to any Person, nor subject any Person to any prejudice or disadvantage as to rates, charges, service facilities, rules, regulations, or other aspects of its business practices. This does not prohibit Grantee from establishing a graduated scale of charges and classified rate schedules to which any customer coming within the classification would be entitled. Grantee will not deny access to cable service to any potential residential customer because of the income of the customer or of residents of the area in which the customer is located. Grantee will provide cable service programming on an equal basis to all areas ofthe City. B. Grantee will not discriminate in any way in the provision of services to customers on the basis of race, color, religion, national origin, age, sex, or disability. C. Grantee will not discriminate against any Person in its employment practices because of race, color, religion, national origin, age, or sex, nor will Grantee discriminate in its employment practices against any qualified person because of disability. Section 10. Approval of Transfer. A. All of the rights and privileges and all of the obligations, duties, and liabilities created by this Ordinance shall pass to and be binding upon the successors of the City and the permitted successors and assigns of Grantee; and the same shall not be assigned, transferred, sold, or disposed of by Grantee and no sale, merger, consolidation, or transfer of controlling ownership interest in Grantee shall be permitted 633928.6 9 without the prior written approval of the City Council, which approval shall not be unreasonably withheld; however, this Section shall not prevent Grantee's assignment or pledge of the franchise granted by this Ordinance as security for debt without such approval; and provided further that assignments, transfers, sales, or dispositions by Grantee of Grantee's rights, duties, and obligations under this Ordinance or the sale, merger, consolidation, or transfer of controlling interest in Grantee to any entity controlling, controlled by, or under the same common control as Grantee shall be permitted without the prior written approval of the City Council; provided, further Grantee shall give written notice to the City Manager of all such actions at last sixty (60) days prior to the effective date thereof. B. Any permitted successor or assignee of Grantee will be bound by all the terms of this Ordinance. Any transfer or assignment or other action will be effective only when the assignee files its written acceptance and agreement to be bound by this Ordinance with the City Manager. Section 11. Payment of Franchise Fee to City; Audit. A. The City Council finds that the City rights-of-way to be used by Grantee in the provision of services in the City is valuable public property, acquired and maintained by the City at substantial expense and obligations to City taxpayers. Without the rights granted by this Ordinance, Grantee would be required to undertake substantial investments and obligations in acquiring its own rights-of-way and easements. Grantee agrees to pay to the City as general compensation a franchise fee consisting of five percent (5%) of Grantee's gross revenue derived within the City from cable service (including but not limited to installation fees, subscriber fees, and pay television services, but excluding taxes or fees (other than fees payable under this Section) collected by Grantee and wholly transmitted to a governmental authority). It is the intent of the parties to include in the term "gross revenue" the value of all consideration to Grantee, cash and otherwise, that Grantee derives from the provision of cable service through and in connection with Grantee's facilities, including the following: 1. all fees charged to Grantee's customers for use of Grantee's facilities; 2. revenues from leasing Grantee's facilities to third parties for provision of services otherwise governed by the terms of this Ordinance; 3. advertising, including a prorata portion of national revenue attributable to Grantee from the operation of Grantee's facilities in the City; and 4. sale or rental of customer lists. "Gross revenue" does not include Grantee's revenues from telecommunications services, nor does it include revenue not actually received. B. Grantee will make franchise fee payments to the City computed and paid quarterly, thirty (30) days after the close of each quarter of Grantee's fiscal year, currently ending on December 31 of each year. Grantee will make these payments to the office of the City Manager. Each payment will be accompanied by a summary of the data and calculations to support the amount ofthe payment, including a breakout by month. 633928.6 10 C. The compensation described in this Section is in addition to all special assessments and taxes, including, but not limited to, ad valorem taxes, right-of-way construction permits, inspection fees, and assessments for recovery of costs incurred by the City. D. For any quarterly payment made after noon on the date due, Grantee shall pay a late payment charge of$100. E. Grantee's payment of compensation under this Section does not limit or impair the privileges or rights ofthe City, whether under this Ordinance or otherwise. The City's acceptance of payment will not be construed as an agreement that the amount paid is correct, nor will it be construed as a release of any claim which the City may have. F. Grantee will file with the City Manager a statement of Grantee's gross revenue derived from its business and operations in the City for each fiscal year not later than the 120th day after the end of Grantee's fiscal year which is, on the effective date of this Ordinance, December 31. The statement must contain a detailed description of gross revenue and uncollectible accounts for the year. G. Grantee will keep complete and accurate Tecords and books of accounts of its business and operations in the City in accordance with generally accepted accounting principles. The City shall have the right to inspect and audit Grantee's income records and the right to recompute any amounts determined to be payable under this Ordinance. An audit of any fiscal year may be made at any time during the term of this Ordinance but limited only to the examination of Grantee's books for the two (2) complete fiscal years immediately preceding the date of such audit request. Any additional amount due as a result of such audit, together with interest at the maximum interest rate permitted by law from the last day of the fiscal year from which such additional amount is due, shall be paid to the City within thirty (30) days following written notice to Grantee by the City, which notice shall include a copy of the audit report. The cost of such audit shall be borne by Grantee if it is determined that franchise fees should be increased by three percent (3%) or more of the City's annual franchise fee received in the immediate preceding two (2) calendar years from the date of such audit. Should there be such a deficiency following an audit of Grantee's books, the City shall have the right during the term of this Ordinance to conduct a second examination of Grantee's books which may, at the City's option, extend to the time period ending with the last audit period that reflected a deficiency in the City's expense by an independent account firm to be mutually agreed upon between the parties. H. Acceptance of any payment by the City shall not be construed as a release or as an accord and satisfaction of any claim the City may have for further or additional sums payable as a franchise fee or for the performance of any obligation of Grantee hereunder. I. Grantee's books of accounts and records of its business and operations under and in connection with this Ordinance shall be available at Grantee's office in San Antonio, Texas. The City shall have access upon reasonable advance written notice and at reasonable times to review all of Grantee's books of accounts and records of its business and operations in the City to the extent reasonably necessary to enforce the terms ofthis Ordinance. Any intentional false entry in the books of account or records of Grantee or any intentional false statement in the reports to the City as to a material fact, knowingly made by Grantee shall constitute a major violation of this Ordinance. Unintentional errors in such books and reports shall not constitute a violation. 633928.6 11 Section 12. Term of Franchise; Extensions; Forfeiture; Termination. A. This Ordinance will be in full force and effect for a term of fifteen (15) years beginning September 1, 2000. B. Grantee will be entitled to receive one five (5)-year extension of the term of this Ordinance. The request must be in writing and must be submitted to the City Manager no later than January I, 2012. The extension, upon timely notice to the City Manager, will be automatic if L Grantee is in compliance with the material terms and conditions of this Ordinance; and 2. Grantee's performance has been consistent with current overall industry technical practices and range and level of services, and Grantee has the demonstrated ability and agrees to perform consistently with industry practices during the extension period by implementing improvements to Grantee's facilities that are commercially feasible. C. The City Council may initiate a review of the performance of Grantee under this Ordinance at any time. To determine satisfactory performance, the City will consider Grantee's technical performance, its customer service experience, and its compliance with the terms of this Ordinance. If the City Council finds the performance of Grantee to be unsatisfactory, the City Manager will notify Grantee in writing of the specific areas of unsatisfactory performance and give Grantee a reasonable time to correct the deficiency. If Grantee does not correct the deficiency within the time given, the City Council may terminate this Ordinance. D. Grantee commits a default under this Ordinance if Grantee L fails to make any required payment to the City in a timely manner; 2. violates Section 3B, 3C, 6A, 6B, 8F, 8G, 11A, liB, lID, 11F, 111, or any other material provision of this Ordinance or any determination made by the City Manager or City Council under this Ordinance, or fails to comply with any City requirement; 3. fails to exercise diligence in commencing or completing construction of Grantee's facilities; 4. fails or ceases to furuish cable services in accordance with this Ordinance; or 5. attempts to evade any of the provisions ofthis Ordinance or attempts to practice any fraud or deceit upon the City. E. In addition to all other rights of the City under this Ordinance or otherwise, the City Council may terminate this Ordinance on the basis of a default by Grantee if Grantee fails to cure the default within thirty (30) days after receipt of written notice from the City Manager of the default, or within a different time period set by the City Manager for good cause in the notice of default. F. In the event the City terminates this Ordinance, Grantee will have ninety (90) days from the date of receipt of notice of termination to remove all of its facilities from City right-of-way. The City 633928.6 12 may remove and dispose of, or may assume ownership of and may use, any of Grantee's facilities that are not timely removed by Grantee. The City may charge any costs for removal and disposal of Grantee's facilities to Grantee. G. Any failure ofthe City to enforce any provision ofthis Ordinance in one or more instances will not be construed as a waiver of the City's right to fully enforce this Ordinance after that time. Section 13. Equal Treatment. If at any time during the term of this Ordinance, Grantee modifies or renews its franchise agreement with any other franchisor located wholly or in part in Bexar County, Texas, Grantee shall notify the City and provide the City with a copy of such modification or renewal instrument If such franchise agreement, as modified or renewed, contains provisions relating to franchise fees, city tax calculations or payments, or services provided to or available to the grantor of a franchise or its residents, and the City believes such provisions to be of benefit to the City, then, at the written request of the City, such provisions shall be incorporated into this Ordinance. The City agrees, however, that the City shall not request inclusion of any provisions relating to (1) purchase of Grantee's facilities by the City; (2) expenditures related to franchise renewal or modification; or, (3) public, educational, or governmental access in excess of that required by law. Section 14. Miscellaneous Provisions. A. Notices required by this Ordinance will be provided by the parties to one another by certified mail, return receipt requested, or by confirmed facsimile transmission, to the following addresses: To the City: City of Schertz City of Schertz Municipal Offices 1400 Schertz Parkway P. O. Drawer 1 Schertz, T)( 78154 Attention: City Manager Fax: 210/658-7477 To Grantee: Grande Communications, Inc. 1801 Lavaca, Suite 115 Austin, T)( 78701 Attention: Regional Director Fax: 512/457-0507 If a party changes its address or facsimile number for notice purposes, it will provide written notice of the change to the other party within ten (10) days. 633928.6 13 B. If any word, phrase, clause, sentence, or paragraph of this Ordinance is held to be unconstitutional or invalid by a court of competent jurisdiction, the other provisions ofthis Ordinance will continue in force ifthey can be given effect without the invalid portion. C. If Grantee is rendered unable to carry out a specific obligation under this Ordinance, other than an obligation to make payments to the City, because of a circumstance beyond Grantee's control (an ''uncontrollable circumstance''), such as a civil disturbance, unforeseeable material and service shortages, unavoidable casualty, labor dispute, severe weather, or other similar event, or an order, decree, rule, or regulation of any court or government body having jurisdiction over Grantee, or any mandates imposed by the City which have the effect of rendering Grantee unable to perform under the terms of this Ordinance, Grantee will give prompt written notice to the City ofthe uncontrollable circumstance and the obligation involved, and the obligation will be suspended during the period of the uncontrollable circumstance. D. This Ordinance will be in effect from and after its passage by the City Council of Schertz, publication of notice its adoption in a newspaper of general circulation in the City as required by the City Charter and the filing of acceptance by Grantee with the City Secretary. E. Grantee will have thirty (30) days after the date ofthe publication of notice of adoption of this Ordinance to file its written acceptance with the City Secretary. The written acceptance will be in the form attached as Exhibit A. [The remainder of this page intentionally left blank.) 633928.6 14 PASSED AND APPROVED on first reading the 12th day of July, 2000. ~4/4/& MAY ~-/E:/1! ATTEST: ~~ CIT SECRETARY PASSED AND FINALLY APPROVED on the 15th day of August, 2000. ~ , &L--- MAYOR f7~ TE/VT ATTEST: ~~-a..U CITY SECRETARY 633928.6 S-1 EXHIBIT A ACCEPTANCE WHEREAS, the City Council of the City of Schertz, Texas, has adopted this Ordinance granting to Grande Communications, Inc. a franchise to operate within the City and use the City right-of-way and prescribing certain obligations and duties as set forth in the Ordinance, to become effective upon filing of this acceptance; NOW, THEREFORE, for the purpose of complying with the terms of this Ordinance and for the purpose of accepting the Ordinance, Grande Communications, Inc. executes this written acceptance of all the terms and provisions of the Ordinance, and files this Acceptance with the City Secretary of the City of Schertz, Texas on August 28, ,2000. Signa . e President & General Manager Printed name, title GRANDE CO~ICATIONS, INC. 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