1
EXHIBIT 10.15
FRANCHISE AGREEMENT
THIS AGREEMENT, effective this lst 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.
1
2
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 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 any contractual rights of the Grantee contained herein.
2
3
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
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
3
4
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 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.
4
5
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) 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.
5
6
(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.
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
6
7
maximum allowable rate payable shall be determined as of January 1, 1995 and
annually on September lst 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.
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
7
8
income and expenses of the operations undertaken
pursuant to this Agreement.
(2) Such financial statement shall be prepared 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
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, 00 Xxxxxxxx Xxxxxx, X.X.
0
9
Xxx 000, Xxxxxxxxxxx, XX 00000 with a duplicate notice to the attention of
Senior Vice President, Enstar Communications Corporation, 00000 Xxxxxxxx Xxxx.,
Xxxxx 0000, Xxx Xxxxxxx, XX 00000.
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 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.
9
10
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 (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.
10
11
(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 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.
11
12
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, 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 system within the times and in
accordance with the specifications set forth
12
13
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 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
13
14
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, co 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, 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:_________________________________ ______________________________________
MAYOR City Clerk
Date:_______________________________
14
15
ENSTAR COMMUNICATIONS CORPORATION Attest:
By:_________________________________ ______________________________________
Its ______________________
Date:_______________________________
A fully executed copy of this Agreement was deposited and filed with
the City of Taylorville, Illinois, on the ________day of _____________199____,
______________________________________
City Clerk
15
