EXHIBIT 10.5b
FRANCHISE AGREEMENT
THIS AGREEMENT, effective this 1st day of January, 1995, is between the
City of Taylorville, Illinois ("City") and ENSTAR COMMUNICATIONS CORPORATION and
ENSTAR INCOME PROGRAM II-2 L.P., ("Enstar").
WHEREAS, the City Council, at its meeting held on June 5, 1995 agreed
to renew Enstar's franchise pursuant to the terms reflected in this instrument
to which Enstar has agreed.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, it is agreed as follows:
SECTION 1. SHORT TITLE. This Agreement may be referred to and cited as
the "Enstar Franchise Agreement."
SECTION 2. DEFINITIONS. Except as provided below, the terms, phrases,
words, and their derivations used in this Agreement shall have the meaning given
in the City's Cable Ordinance:
"Application" means seeking an extension of its franchise, its
subsequent renewal proposals, the public hearings held relevant to the proposed
renewal, and all related correspondence.
"Cable Ordinance" means City Ordinance No. 2544 which governs the
operation of a cable system under this Agreement.
"Grantee" or "Franchisee" means Enstar or its lawful successor,
transferee or assignee.
SECTION 3. GRANT OF AUTHORITY.
(a) There is hereby granted by the City to the Grantee the right and
privilege to construct, operate, maintain and extend a cable system to all
places within the City. The rights granted
1
hereunder shall be non-exclusive and shall not be transferred or assigned
without the prior approval of the City as specified in the Cable Ordinance,
which approval shall not be unreasonably withheld.
(b) The Grantee shall have the right to use and occupy roads, streets,
alleys, public ways and easements for the purposes of installing its wires,
cables, and associated equipment in or on poles, by direct burial, or in
underground conduits as necessary for the operation of the cable system. This
authority, however, does not obviate the need for obtaining permits from the
City for construction involving the disturbance of public streets, sidewalks or
thoroughfares and for compliance with all City regulations and requirements
relative to construction and operation of facilities in the public
rights-of-way.
SECTION 4. COMPLIANCE WITH APPLICABLE LAWS AND ORDINANCES. The
Franchisee shall, at all times during the life of this Agreement, be subject to
all lawful exercise of the police power by the City consistent with the
Franchisee's contractual rights and to such reasonable regulation as the City
shall hereafter provide, and shall be required to comply fully with all federal
and state statutes and regulations governing cable communications. The authority
granted under this Agreement is subject to the City's Cable Ordinance. By its
acceptance of the terms of this Agreement, the Grantee specifically agrees to
also accept and abide by the requirements of said Cable Ordinance, which
requirements are incorporated hereby by reference, and all subsequent amendments
of the Cable Ordinance provided that such amendments do not abrogate
2
any contractual rights of the Grantee contained herein.
SECTION 5. PROVISION OF SERVICE.
(a) 1. Consistent with the requirements of the Cable Ordinance,
upon request the Franchisee shall extend cable service to all residents within
the City limits as determined as of July 1, 1995.
2. The Franchisee and the City agree that as of the date of
this Agreement certain residents of the City do not have cable service
available. The Franchisee agrees to identify such areas not served and to
provide cable service to all locations within the City limits on or before
January 1, 1996.
(b) The Franchisee shall extend service to each school and City
building passed by the cable system. No charge shall be made for installation or
for basic service, except the Franchisee may: 1.) charge for its cost of
installation if more than one connection is desired at each building; or 2.)
charge for that portion of the cost of installation which exceeds One Hundred
Dollars ($100.00). If during the term of this Agreement, new schools or other
public buildings are constructed within the City, the City may also require the
extension of service to such schools under the same terms and conditions as for
existing public buildings.
(c) The initial subscriber rates are to be as specified in Exhibit "A"
hereto. Subscriber rates may be later modified as provided for by federal law or
regulation, and as further procedurally defined by the Cable Ordinance.
(d) Regular basic service shall consist of a minimum of 12
3
channels. The Franchisee shall create and provide such other categories of
service as it may deem necessary, except that the total number of channels
available in all categories of service shall not be less than 35 channels. The
programming carried shall be determined by the Franchisee; provided, however,
the City may suggest changes from time-to-time that it believes will better
satisfy public needs in terms of broad categories of programming.
(e) At intervals of no less than once a year, the Franchisee shall
provide to the City and all of its subscribers the currently applicable
subscriber information specified in Section 15(c) of the Cable Ordinance,
excepting a copy of the service contract.
SECTION 6. LIABILITY AND INDEMNIFICATION.
(a) By its acceptance of this Agreement, the Grantee specifically
agrees that it will indemnify and hold the City, including all its officials,
employees and agents, harmless against any and all claims arising out of the
grant of this franchise and the operation of Grantee's cable system. The Grantee
shall pay all expenses incurred by the City in defending itself against all such
claims, including all out-of-pocket expenses such as attorney and consultant
fees, and the reasonable value of any service rendered by the City Attorney or
any employees of the City.
(b) The Grantee shall maintain throughout the terms of this Agreement
comprehensive liability insurance insuring the City, including its officials,
employees and agents, and the Grantee with regard to all damages with respect to
operations performed by, or on behalf of, the Grantee in the minimum amounts
specified in the
4
Cable Ordinance.
(c) In lieu of the twenty five thousand dollars ($25,000) security fund
required by Section 11 of the Cable Ordinance, the Grantee may, on or before the
effective date of this Agreement, establish a security fund in the amount of
five thousand dollars ($5,000) and a performance bond in the amount of twenty
thousand dollars ($20,000),which shall be used for insuring that the Grantee
will fulfill and perform each term and condition of this Agreement and the Cable
Ordinance. In case of any breach of a condition hereof, the amount of damages
shall be withdrawn by the City from the security deposit and then against any
performance bond. Following the procedures prescribed in the Cable Ordinance,
the Franchisee shall replenish any amounts withdrawn from the security fund and
any applicable performance bond.
(d) Because the City will suffer damages from any violation of this
Agreement, which damages may be difficult to quantify, the City and the
Franchisee agree to the following schedule of liquidated damages:
(1) Failure to file reports or supply information as required -
$50 per day
(2) Failure to perform annual sweep and balance tests -$100 per
day.
(3) Failure to perform maintenance and retain maintenance records
as required - $100 per day.
(4) Failure to maintain insurance or replenish security
fund/performance as required - $100 per day.
5
(5) Failure to achieve or maintain technical performance standards
- $100 per day.
(6) Failure to maintain customer service standards - $50 per day.
(7) Other material violations - $100 per day violations per day
that each violation continues.
Before assessing the Franchisee for liquidated damages, the City shall give
written notification to the Franchisee in advance so that the Franchisee will
have notice of the violation and an opportunity to correct it. The liquidated
damages shall not commence accruing for uncorrected violations until the 30th
day following the date the notice was received by the Franchisee. A violation
will not constitute a breach of the Agreement nor shall liquidated damages
accrue where it occurs as a result of acts of God, acts of Federal or City
Government which renders performance impossible.
(e) All insurance and bond instruments must be approved as to form by
the City Attorney prior to their effectiveness.
SECTION 7. TECHNICAL REQUIREMENTS. The Grantee shall maintain and
extend its system so as to provide high quality signals and reliable service
consistent with the proposal contained in its Application. The system shall meet
or exceed any applicable technical performance standards of the FCC and the
Cable Ordinance.
SECTION 8. EMERGENCY USE OF FACILITIES. In the case of any emergency or
disaster, the Grantee shall, upon request of the City, make available its
facilities to the City for emergency use during the emergency or disaster
period.
6
SECTION 9. OTHER BUSINESS LICENSES. This Agreement authorizes only the
operation of a cable system as provided for herein, and does not take the place
of any other franchise, license, or permit which might be required of the
Grantee by law.
SECTION 10. DURATION AND ACCEPTANCE OF AGREEMENT. This Agreement and
the rights, privileges, and authority hereby granted shall take effect and be in
force from the effective date of this Agreement and shall continue in force
throughout its term provided that within sixty (60) days after the date of
adoption of this Agreement by the City Council the Grantee shall provide
evidence of satisfactory compliance with the security fund/performance bond and
insurance requirements hereof, notwithstanding any contrary provision of the
Cable Ordinance. Failure of the Grantee to do so within said time period shall
operate to make this Agreement null and void without further action by the City.
SECTION 11. FRANCHISE FEE. As compensation to the City for the use made
of its roads, streets, and public thoroughfares, the Franchisee shall pay to the
City a franchise fee at the maximum allowable rate provided by law payable as
specified in the Cable ordinance. The maximum allowable rate payable shall be
determined as of January 1, 1995 and annually on September 1st of each year. In
the event of a change in the rate percentum to be paid, such charge shall become
effective on the succeeding January 1st.
SECTION 12. CUSTOMER SERVICE. The Franchisee shall provide customer
service consistent with its Application and the provisions of the Cable
Ordinance.
7
SECTION 13. SYSTEM MAINTENANCE.
(a) The Franchisee shall maintain the system at the highest
commercially practical level of technical quality. To that end, it shall
perform, at a minimum, all tests required to be performed by a Cable Operator
pursuant to FCC regulations in effect on the effective date of this franchise.
(b) The Franchisee shall retain a copy of all maintenance logs and
records for a period of two years. Upon request of the City, the Franchisee
shall provide copies of such documentation to the City.
(c) No less than once a year the Franchisee shall perform a sweep and
balance of the system activities to ensure that the entire system is performing
as required.
SECTION 14. CONFLICTS.
(a) In the event of a conflict between this Agreement and the Cable
Ordinance, the Cable Ordinance shall prevail unless said Ordinance provides for
an exception in the Franchise Agreement or unless this Agreement explicitly
modifies or waives a provision of the Ordinance.
(b) Section 14(a)(2) is hereby modified to require submission of
financial statements based upon the method set forth herein.
(1) Annually, the Franchisee shall file with the City
Clerk within three (3) months of the end of its
Fiscal Year a financial statement disclosing the
income and expenses of the
8
operations undertaken pursuant to this Agreement.
(2) Such financial statement shall be prepared by the
Chief Financial Officer of the Franchisee and shall
be sworn by him to be true, correct and complete to
the best of his personal knowledge.
(3) Such financial statement shall be prepared as the
basis of the Enstar Income Program II-2, Hillsboro
Region, or its successor (the "Region").
(4) Such Financial Statement shall be calculated by
multiplying the results of operations for said Region
by a fraction, the numerator of which is the number
of subscribers in the Franchisee Territory as of the
last day of the Fiscal Year reported and the
denominator of which is the number of basic
subscribers for the Region.
(5) In the event that the Franchisee commences accounting
for individual systems within the Region, such
commencement shall be deemed to be a relinquishment
of the relief granted in this subscription and the
Franchisee shall notify the City of such commencement
by the method set forth in Section 15 hereof.
SECTION 15. NOTICES. All formal notices under this Agreement
9
shall be delivered by U.S. mail (certified or registered), or any courier
service that verifies the date of delivery and shall be considered given upon
the date of receipt. Notices sent to the City shall be addressed to the City
Clerk with a copy to the City Attorney. Notices sent to the Franchisee shall be
addressed to its local office to the attention of Regional Manager, Enstar Cable
TV, 11 Clearing Avenue, P.O. Box 526, Taylorville, IL 62568 with a duplicate
notice to the attention of Senior Vice President, Enstar Communications
Corporation, 10900 Wilshire Blvd., Suite 1500, Los Angeles, CA 90024.
SECTION 16. MISCELLANEOUS PROVISIONS.
(a) Whenever this Agreement shall set forth any time for an act to be
performed by or on behalf of the Franchisee, such time shall be deemed of the
essence.
(b) This Agreement may not be amended except by written instrument
executed by both parties hereto.
(c) This Agreement shall be interpreted under the laws of the State of
Illinois.
(d) If any provisions of this Agreement is found by any court,
government agency or other body having jurisdiction to be invalid, illegal or
unenforceable, the parties shall negotiate appropriate changes to such
provision, and the remaining provisions, to the extent practical, shall remain
in full force and effect.
SECTION 17. TERM OF AGREEMENT. This Agreement shall take effect as of
January 1, 1995, provided that such execution occurs on or before July 31, 1995,
and one such executed copy is delivered
10
by Enstar to the City Clerk no later than 5:00 p.m., July 31, 1995. If not so
executed and delivered in a timely manner, this Agreement shall be null and
void. Once effective, this Agreement shall remain in effect until December 31,
2001, unless extended or renewed as provided for in Section 18 hereof. Provided,
however, if the requirements of Sections 6(b) and (c) and 10 of this Agreement
are not satisfied within sixty (60) days of the effective date, this Agreement
shall become null and void.
SECTION 18. RENEWAL AND EXTENSION OF FRANCHISE GRANTED HEREUNDER.
(a) The franchise granted hereunder shall be extended for a term
commencing at 12:00 a.m., January 1, 2002 and expiring at 11:59 p.m., December
31, 2009, upon substantial compliance by the Franchisee with the material terms
and conditions set forth in this section.
(b) In the event the Franchisee has requested a transfer of the
franchise by the filing of an Application for Transfer of Franchise pursuant to
Section 8 of the Cable Ordinance or by any other procedure which resulted in a
transfer of the franchise pursuant to Section 34 of the Cable Ordinance, the
right to extend the franchise set forth in subsection (a) above may be
transferred to any transferee upon a majority vote of the City Council taken at
a regular meeting.
(c) In the event that the City Council has revoked or terminated the
franchise pursuant to Section 35 of the Cable Ordinance, the extension of said
franchise set forth in subsection
11
(a) above shall be null and void.
(d) In the event the Franchisee is determined to have violated
subsection (c) of Section 37 or Section 38 of the Cable Ordinance, the right to
renew and extend said franchise set forth in subsection (a) above shall be null
and void.
(e)
(1) The Franchisee shall seek such renewal and extension of
the franchise by submitting a notice to the City Clerk requesting such
extension not later than January 1, 2002. Said request shall include a
sworn affidavit of an officer of the company indicating that the
Franchisee has substantially complied with applicable federal law and
the material provisions of Sections 10 through 19 of the Cable
Ordinance; has made payment of any and all sums due to the City of
Taylorville; and, the amount paid as liquidated damages as provided for
in Section 6(d) provided herein.
(2) Upon receipt of such notice by the City Clerk, the Mayor
and City Council shall commence a Performance Evaluation as provided
for in Section 33 of the Cable Ordinance for the purpose of determining
substantial compliance with federal law and Sections 10 to 19 of the
Cable Ordinance and substantial compliance with subsections (b) through
(e) of Section 18 of this Agreement.
(3) In the event that the City Council finds, as a result of
said performance evaluation, that the Franchisee has substantially
complied with said sections, the City Council
12
shall renew and extend the franchise of the Franchisee through and
including December 31, 2009 provided, however, that to obtain such
renewal, Franchisee must agree to pay to the City of Taylorville
franchise fees at the maximum allowable rate imposed by law; to pay all
of the costs incurred by the City of Taylorville, not to exceed Ten
Thousand Dollars ($10,000) in conducting a performance evaluation
provided for herein, and the execution of a substantially similar
franchise agreement setting forth the duties and obligations of the
parties.
(4) In the event that the City Council finds, as a result of
said performance evaluation, that the Franchisee has not substantially
complied with the provisions of this Agreement and all provisions of
the Cable Ordinance set forth therein, the extension of said franchise
set forth in subsection (a) above shall be null and void.
(5) The City Council shall adopt procedural rules for
conducting the Performance Evaluation provided for herein. Said Rules
shall provide that the determinations and findings to be made in the
subsections shall be adopted only by a majority vote of the City
Council at a regularly scheduled meeting.
SECTION 19. RECONSTRUCTION OF EXISTING SYSTEM. Notwithstanding any
provision of the Cable Ordinance, Enstar agrees to upgrade the distribution
system for the provision of the services provided for herein as set forth in
this section.
The upgrade of said system shall begin not later than July 1,
13
1995. The upgrade of said system shall be completed within 24 months from the
date of the commencement of construction. The system upgrade shall be designed
to a 750 megahertz and constructed for 550 megahertz capacity operation. Enstar
shall upgrade the system by installing a fiber optic cable piggyback trunkline
throughout said system. The system shall be constructed not less than the same
technical standards and capacities as all other franchise territories that are
served by the Taylorville region of Enstar. The company shall periodically
inform the City of the progress of such upgrade work and provide monthly written
status reports to the City on such progress, including maps showing areas where
such upgrade work is to be performed.
Prior to the commencement of construction, Enstar shall obtain all
necessary permits, licenses or other authorization as required by all applicable
laws and ordinances and shall otherwise comply with all terms and conditions of
this franchise and the cable Ordinance concerning construction.
In addition to requirements for insurance of the operations of Enstar,
the following additional insurance restrictions shall apply during the period of
said upgrade as set forth in this paragraph. Prior to the commencement of
construction, Enstar shall post with the City Clerk a Construction Bond in the
amount of $100,000 conditioned upon the upgrade of the system in a workmanlike
manner in accordance with the standards set forth in this Franchise Agreement
and in the cable Ordinance; and, a Performance Bond in the amount of $100,000
conditioned upon the completion of the
14
system within the times and in accordance with the specifications set forth
herein. Additionally, Enstar shall cause the City to be named as an additional
named insured on any certificate of insurance tendered by any contractor or
subcontractor performing work in connection with said upgrade as contemplated by
this section. Enstar shall be obligated to provide said certificates by the
latter of 60 days after the commencement of the upgrade or 60 days after the
execution of any contract or subcontract for the performance of upgrade work.
SECTION 20. PUBLIC, EDUCATIONAL AND GOVERNMENTAL ACCESS COMMITMENT.
Following completion of the Reconstruction of the System provided for in Section
19 hereof:
(a) Enstar agrees to make available to the City of Taylorville and the
appropriate educational and public organizations one channel each for public,
educational and governmental access programming. Such channels shall be
activated by Enstar upon it receipt and approval of an appropriate proposal for
the provision of public, educational or governmental access programming, which
proposal includes an agreement to indemnify Enstar for liability incurred as a
result of programming content. Enstar agrees to cooperate with the City of
Taylorville or any appropriate public or educational organization seeking
activation of an access channel and shall, to reasonable commercial limits,
provide assistance, technical expertise and other material as may be required
for the provision of access and programming.
(b) Enstar reserves the right to provide financial or
15
material assistance to the City of Taylorville or any qualified public or
educational organization which Enstar, in its sole discretion, deems appropriate
for such assistance to enhance the provision of access services in the City of
Taylorville.
(c) Enstar recognizes the value of the provision of cable television
services as an educational tool in the schools within the school districts
located within the corporate boundaries of the City of Taylorville. As a result
of such recognition, Enstar hereby covenants and agrees to provide free basic
services to said educational institutions now in existence and to provide
service to any newly constructed educational facility within the City of
Taylorville. In furtherance of said recognition, Enstar further agrees to
continue its participation in the "Cable in the Classroom" program or any
program providing similar substitute services, throughout the term of this
franchise and any extensions hereof.
SECTION 21. PROVISION OF LOCAL OFFICE FACILITIES. Enstar recognizes the
economic value of the location of its regional office facility in the City of
Taylorville. As a consequence, Enstar will exercise its best efforts during the
term of the franchise, and any extensions hereof, to retain the location of its
regional facility within the corporate limits of the City of Taylorville,
however, Enstar reserves the right to relocate its facility in the event Enstar
determines, in its sole discretion, that business conditions warrant such
relocation. Notwithstanding the foregoing or any contrary provisions of the
Cable Ordinance,
16
Enstar covenants and agrees to retain a regional office location in
substantially the form existing on the date of the adoption of this franchise
within the corporate limits of the City of Taylorville for a period of not less
than 36 months from the effective date of this franchise. Subsequent to said
period, Enstar agrees to provide not less than 90 days notice to the Mayor and
City Council of the City of Taylorville in the event it determines to relocate
the regional office facility to another community.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
as follows:
CITY OF TAYLORVILLE, ILLINOIS Attest:
By: /s/ Illegible /s/ Pamela J. Peabody
----------------------------------- ------------------------------------
Mayor City Clerk
Date: 7/1/96
---------------------------------
ENSTAR COMMUNICATIONS CORPORATION Attest:
By: /s/ Illegible /s/ Danielle Niellet
----------------------------------- ------------------------------------
Its V. P.
-------------------------------
Date: 4/17/96
---------------------------------
A fully executed copy of this Agreement was deposited and filed with
the City of Taylorville, Illinois, on the 1st day of July 1996.
/s/ Pamela J. Peabody
------------------------------------
City Clerk
17
ENSTAR CABLE TV - Taylorville, IL TAY892-TAYO1 (Effective: 4/15/95)
CHANNEL LINE-UP
* 2 QVC
* 3 WCIA 3-CBS CHAMPAIGN, IL
* 4 WAND 17-ABC DECATUR, IL
* 6 KSDK5-NBC ST. LOUIS, MO
* 6 USA NETWORK
7 THE MOVIE CHANNEL
* 8 WFHL 23-IND DECATUR, IL
* 9 WILL-TV 12-PBS URBANA-CHAMPAIGN, IL
* 10 WICS 2O-NBC SPRINGFIELD. IL
* 11 KPLR-TV II-IND ST. LOUIS. MO
+ 12 THE WEATHER CHANNEL
* 13 WRSP-TV 55 FOX SPRINGFIELD. IL
* 14 LIFETIME
15 CINEMAX
* 16 ESPN
17 THE DISNEY CHANNEL
+ 18 CNN
* 19 MTV
* 21 HBO
+ 22 THE NASHVILLE NETWORK
= 23 WGN-TV
= 24 WTBS 17-IND ATLANTA, GA
= 25 THE FAMILY CHANNEL
= 26 TNT
= 27 THE DISCOVERY CHANNEL
28 SHOWTIME
+ 29 CNN HEADLINE NEWS
* 30 LOCAL-CHARACTER GENERATED
* 31 ARTS & ENTERTAINMENT
* 32 COUNTRY MUSIC TV
* 33 AMERICAN MOVIE CLASSICS
* 34 NICKELODEON
* 35 CNBC
* 98 SCI-FI CHANNEL
* 99 C-SPAN
RATES
BASIC (*) 21.08
TIER (+) 1.26
SATPAC (=) 4.65
BASIC ON ADDITIONAL OUTLET 0.00
INSTALLATION/SERVICE (per hr) 45.00
INSTALL MATERIALS (if any) At Cost
REMOTE 0.14
NON-ADDRESSABLE CONVERTER 1.17
RADIO SERVICE 1.95
WIRE MAINTENANCE AGREEMENT 1.50
LATE PAYMENT FEE 1.50
RETURNED CHECK FEE 15.00
LOST/STOLEN CONVERTER EQUIP Prices Vary
DAMAGED CONVERTER EQUIPMENT Actual Cost to Repair
PREMIUM SERVICES
CINEMAX 10.45
THE DISNEY CHANNEL 9.45
HBO 11.00
THE MOVIE CHANNEL 10.45
SHOWTIME 10.45
- --------------------------------------------------------------------------------
All Broadcast TV stations carried on a channel higher than 13 can only be
received via cable through a converter box, unless you have a cable-ready TV
set. Converter boxes are available for rent at the low rate listed above.
The above rates may not include applicable taxes, fees and assessments. Any such
amounts will be itemized on your bill.