An Ordinance Granting a Franchise to Eagle Communications for the Construction and Operation of a Broadband Cable System within the City of Chapman, Kansas

The City of Chapman, having determined that the financial, legal, and technical ability of Eagle Communications, is reasonably sufficient to provide services, facilities, and equipment necessary to meet the future cable-related needs of the community, does hereby ordain as follows:

Section 1. Definition of terms.

For the purpose of this ordinance (the “Ordinance”), the following terms, phrases, words and abbreviations shall have the meanings ascribed to them below. When not inconsistent with the context, words used in the present tense include the future tense, words in the plural number include the singular number, and words in the singular number include the plural number:

a. “Affiliate” means an entity which owns or controls, is owned or controlled by, or is under common ownership or control with Grantee.

b. “Basic Cable” means the tier of Cable Service regularly provided to all Subscribers that includes the retransmission of local broadcast television signals.

c. “Cable Service” means (i) the two-way transmission to and from Subscribers of Video Programming or other services, and (ii) Subscriber interaction, if any, which is required for the selection or use of such Video Programming or other services.

d. “Cable System” means a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment or other equipment that is designed to provide Cable Service or other services to Subscribers.

e. “FCC” means Federal Communications Commission, or successor governmental entity thereto.

f. “Franchise” means the initial authorization, or renewal thereof, issued by Franchising Authority, whether such authorization is designated as a franchise, permit, license, resolution, contract, certificate, or otherwise, which authorizes construction and operation of the Cable System for the purpose of offering Cable Service or other service to Subscribers.

g. “Franchising Authority” means the City of Chapman, Kansas, or the lawful successor, transferee, or assignee thereof.

h. “Grantee” means Eagle Communications, or the lawful successor, transferee, or assignee thereof.

i. “Gross Revenues” means the monthly revenues for the provision of Basic and Premium Cable Services received by Grantee from Subscribers located within the Service Area. “Gross Revenues” does not include: (i) any revenues received from any advertising carried on the Cable System; (ii) any taxes on Cable Service which are imposed directly or indirectly on any Subscriber by any governmental unit or agency, and which are collected by Grantee on behalf of such governmental unit or agency.

j “Person” means an individual, partnership, association, joint stock company, trust corporation, or governmental entity.

k. “Public Way” means the surface of, and the space above and below, any public street highway, freeway, bridge, land path, alley, court, boulevard, sidewalk, parkway, way, lane, public way, drive circle, or other public right-of-way, including, but not limited to, public utility easements, dedicated utility strips, or rights-of-way dedicated for compatible uses and any temporary or permanent fixtures or improvements located thereon now or hereafter held by Franchising Authority in the Service Area which shall entitle Franchising Authority and Grantee to the use thereof for the purpose of installing, operating, repairing, and maintaining the Cable System. “Public Way” also means any easement now or hereafter held by Franchising Authority within the Service Area for the purpose of public travel, or for utility or public service use dedicated for compatible uses, and shall include other easements or rights-of-way as shall within their proper use and meaning entitle Franchising Authority and Grantee to the use thereof for the purposes of installing or transmitting Grantee’s Cable Service or other service over poles, wires, cables, conductors, ducts, conduits, vaults, manholes, pedestals, amplifiers, appliances, attachments, and other related property or equipment as may be necessary or appurtenant to the Cable System.

l. “Service Area” means the present municipal boundaries of Franchising Authority if Franchising Authority is a city, and shall include any additions thereto by annexation or other legal means; and means the county boundaries of Franchising Authority if Franchising Authority is a county.

m. “Subscriber” means a user of the Cable System who lawfully receives Cable Service or other service there from with Grantee’s express permission.

n. “Video Programming” means programming provided by, or generally considered comparable to programming provided by, a television broadcast station.

Section 2. Grant of franchise.

2.1 Grant. Franchising Authority hereby grants to Grantee a nonexclusive Franchise which authorizes Grantee to construct and operate a Cable System and offer Cable Service and other service in, along, among, upon, across, above, over, under, or in any manner connected with Pubic Ways within the Service Area and for that purpose to erect, install, construct, repair, replace, reconstruct, maintain, or retain in, on, over, under, upon, across, or along any Public Way and all extensions thereof and additions thereto, such poles, wires, cables, conductors, ducts, conduits, vaults, manholes, pedestals, amplifiers, appliances, attachments, and other related property or equipment as may be necessary or appurtenant to the Cable System.

2.2 Term. The Franchise granted pursuant to this Ordinance shall be for an initial term of five (5) years from the passed and adopted date of the Franchise unless otherwise lawfully terminated in accordance with the terms of this Ordinance.

2.3 Acceptance. Grantee shall accept the Franchise granted pursuant hereto by signing this Ordinance and filing same with the City Clerk or other appropriated official or agency of Franchising Authority within sixty (60) days after the passage and final adoption of this Ordinance.

2.4 Favored Nations. In the event Franchising Authority enters into a franchise, permit, license, authorization, or other agreement of any kind with any Person other than Grantee to enter into Franchising Authority’s streets and public ways for the purpose of constructing or operating a Cable System or providing Cable Service to any part of the Service Area, the material provisions thereof shall be reasonably comparable to those contained herein, in order that one operator not be granted an unfair competitive advantage over another, and to provide all parties equal protection under the law.

Section 3. Standards of service.

3.1 Right of Way Management. Any right of way management shall be consistent with the current City of Chapman right of way management ordinance.

3.2 Service. Grantee shall not be required to provide no more than two PEG access channels.

Section 4. Regulation by franchising authority.

4.1 Franchise Fee.

(A) Grantee shall pay to Franchising Authority a franchise fee equal to five percent (5%) of Gross Revenues received by Grantee on a quarterly basis; provided, however, that Grantee may credit against any such payments: (i) any tax, fee, or assessment of any kind imposed by Franchising Authority on a cable operator, or Subscriber, or both, solely because of their status as such; (ii) any tax, fee or assessment of general applicability which is unduly discriminatory against cable operators or Subscribers (including any such tax, fee, or assessment imposed, both on utilities and cable operators and their services), and (iii) any other special tax, assessment, or fee such as a business, occupation, and entertainment tax. For the purpose of this Section, the 12-month period applicable under the Franchise for the computation of the franchise fee shall be a calendar year, unless otherwise agreed to in writing by Franchising Authority and Grantee. The franchise fee payment shall be due and payable sixty (60) days after the close of the preceding calendar quarter. Each payment shall be accompanied by a letter from a representative of Grantee showing the basis for the computation.

(B) Limitation on Franchise Fee Actions. The period of limitation for recovery of any franchise fee payable hereunder shall be five (5) years from the date on which payment by Grantee is due. Unless within five (5) years from and after such payment due date Franchising Authority initiates a lawsuit for recovery of franchise fees in a court of competent jurisdiction, recovery shall be barred and Franchising Authority shall be estopped from asserting any claims whatsoever against Grantee relating to alleged franchise fee deficiencies.

4.2 Rates and Charges. Franchising Authority may not regulate the rates for the provision of Cable Service or other service, including, but not limited to, ancillary charges relating thereto, except as expressly provided herein and except as may be authorized pursuant to federal and state law. From time to time, and at any time, Grantee has the right to modify its rates and charges, at its discretion and without consent of Franchising Authority, including, but not limited to, the implementation of additional charges and rates; provided, however, that Grantee shall give notice to Franchising Authority of any such modifications or additional charges thirty (30) days prior to the effective date thereof.

4.3 Conditions of Sale. Except to the extent expressly required by federal or state law, if a renewal or extension of the Franchise is denied or the Franchise is lawfully terminated, and Franchising Authority either lawfully acquires ownership of the Cable System or by its actions lawfully effects a transfer of ownership of the Cable System to another party, any such acquisition or transfer shall be at a fair market value, determined on the basis of the Cable System valued as a going concern. Grantee and Franchising Authority agree that in the case of a lawful revocation of the Franchise, at Grantee’s request, which shall be made in its sole discretion, Grantee shall be given a reasonable opportunity to effectuate a transfer of its Cable System to a qualified third party. Franchising Authority further agrees that during such a period of time, it shall authorize Grantee to continue to operate pursuant to the terms of its prior Franchise; however, in no event shall such authorization exceed a period of time greater than six (6) months from the effective date of such revocation. If, at the end of that time Grantee is unsuccessful in procuring a qualified transferee or assignee of its Cable System which is reasonably acceptable to Franchising Authority, Grantee and Franchising Authority may avail themselves of any rights they may have pursuant to federal or state law; it being further agreed that Grantee’s continued operation of its Cable System during the six (6) month period shall not be deemed to be a waiver, nor an extinguishment of, any rights of either Franchising Authority or Grantee. Notwithstanding anything to the contrary set forth in this Section 4.4, neither Franchising Authority nor Grantee shall be required to violate federal or state law.

4.4 Transfer of Franchise. All of the rights and privileges and all of the obligations, duties and liabilities created by this Franchise shall pass to and be binding upon the successors of the Franchising Authority and the successors and assigns of Grantee; and the same shall not be assigned or transferred without the written approval of the Franchising Authority, which approval shall not be unreasonably withheld; provided, however, that this Section shall not prevent the assignment or hypothecation of the Franchise by Grantee as security for debt without such approval; and provided further that transfers or assignments of this Franchise between any parent and subsidiary corporation or between entities of which at least fifty percent (50%) of the beneficial ownership is held by the same person, persons, or entities, or entities which are controlled or managed by the same person, persons, or entities, shall be permitted without the prior approval of the Franchising Authority.

Section 5. Compliance and monitoring.

5.1 Books and Records. Grantee agrees that Franchising Authority may review such of Grantee’s books and records, during normal business hours and on a non-disruptive basis, as are reasonably necessary to monitor compliance with the terms hereof. Such records include, but are not limited to, any public records required to be kept by Grantee pursuant to the rules and regulations of the FCC. Notwithstanding anything to the contrary set forth herein, Grantee shall not be required to disclose information which it reasonably deems to be proprietary or confidential in nature. Franchising Authority agrees to treat any information disclosed to it by Grantee as confidential, and to disclose it only to employees, representatives, and agents of Franchising Authority that have a need to know or in order to enforce the provisions hereof. Upon request of the Franchising Authority, Grantee shall file a current map or set of maps, showing the “standard design” and location of all CATV system equipment installed in the City. Grantee shall keep a set of books and records which shows all of Grantee’s gross revenues from the CATV system within the City and upon request shall provide same to the Franchising Authority.

5.2 Periodic reviews.

A. The City may require a review of the franchise on or about the third and seventh anniversary of its effective date.

(a) Any such review shall be open to the public and announced in the official City newspaper. Grantee shall reasonably notify its local subscribers of review sessions by announcing same on a local origination channel of the CATV system.

(b) Topics to be discussed at any scheduled review session may include, but will not be limited to: franchise fees, if regulation thereof is permitted under applicable law; free or discounted services; application of new technologies; system performance; services provided; programming offered; customer complaints; privacy; amendments to the Ordinance; judicial and FCC rulings; line extension policies; and Grantee and City rules.

(c) Members of the general public may add topics by requesting of the City that such topics be added to the agenda of its meeting.

(d) During a review and evaluation by the City, Grantee shall fully cooperate with the City and shall provide such non-confidential information and documents as the City may need to reasonably perform the review.

5.3 Complaints. All complaints shall be handled by Eagle Communications on an informal basis. Eagle Communications shall implement a process for handling inquiries, billing issues, service issues and other complaints. In the event that an issue is not resolved through this process, the City may request a confidential, non-binding mediation with Eagle Communications, with the costs to be shared equally between the City and Eagle Communications. Grantee shall respond to subscriber complaints within thirty-six (36) hours after a complaint is made, except for acts of God.

Section 6. Insurance, indemnification, and bonds or other surety.

6.1 Insurance Requirements. Grantee shall maintain in full force and effect during the term of the Franchise, at its own cost and expense, Comprehensive General Liability Insurance in the amount of $2,000,000 combined single limit for bodily injury and property damage. Such insurance shall designate Franchising Authority as an additional insured.

6.2 Indemnification. Grantee agrees to indemnify, save and hold harmless, and defend Franchising Authority, its officers, boards and employees, from and against any liability for damages and for any liability or claims resulting from property damage or bodily injury (including accidental death) which arise out of Grantee’s construction, operation or maintenance of its Cable System, including, but not limited to, reasonable attorneys’ fees and costs.

6.3 Bonds and other Surety. Except as expressly provided herein, Grantee shall not be required to obtain or maintain bonds or other surety as a condition of being awarded the Franchise or continuing its existence. Franchising Authority acknowledges that the legal, financial, and technical qualifications of Grantee are sufficient to afford compliance with the terms of the Franchise and the enforcement thereof. Grantee and Franchising Authority recognize that the costs associated with bonds and other surety may ultimately be borne by the Subscribers in the form of increased rates for Cable Service or other service. In order to minimize such costs, Franchising Authority agrees to require bonds and other surety only in such amounts and during such times as there is a reasonably demonstrated need therefor. Franchising Authority agrees that in no event, however, shall it require a bond or other related surety in an aggregate amount greater than $10,000, conditioned upon the substantial performance of the material terms, covenants, and conditions of the Franchise. Initially, no bond or other surety shall be required. In the event that one is required in the future, Franchising Authority agrees to give Grantee at least sixty (60) days prior written notice thereof stating the exact reason for the requirement. Such reason must demonstrate a change in Grantee’s legal, financial, or technical qualifications which would materially prohibit or impair its ability to comply with the terms of the Franchise or afford compliance therewith.

Section 7. Enforcement and termination of franchise.

7.1 Notice of Violation. In the event that Franchising Authority believes that Grantee has not complied with the terms of the Franchise, it shall notify Grantee in writing of the exact nature of the alleged default.

7.2 Grantee’s Right to Cure or Respond. Grantee shall have thirty (30) days from receipt of the notice described in Section 7.1: (a) to respond to Franchising Authority contesting the assertion of default; (b) to cure such default; or (c) in the event that, by the nature of the default, such default cannot be cured within the thirty (30) day period, to initiate reasonable steps to remedy such default and to notify Franchising Authority of the steps being taken and the projected date that they will be completed.

7.3 Public Hearing. In the event that Grantee fails to respond to the notice described in Section 7.1 pursuant to the procedures set forth in Section 7.2 or in the event that the alleged default is not remedied within sixty (60) days after Grantee is notified of the alleged default pursuant to Section 7.1, Franchising Authority shall schedule a public meeting to investigate the default. Such public meeting shall be held at the next regularly scheduled meeting of Franchising Authority which is scheduled at a time which is no fewer than five (5) business days therefrom. Franchising Authority shall notify Grantee of the time and place of such meeting and provide Grantee with an opportunity to be heard.

7.4 Enforcement. Subject to applicable federal and state law, in the event Franchising Authority determines, after such meeting, that Grantee is in default of any provision of the Franchise, Franchising Authority may in their discretion, chose one or more of the following:

(a) Foreclose on all or any part of any security provided under the Franchise, if any, including, without limitation, any bonds or other surety; provided, however, that the foreclosure shall only be in such a manner and in such amount as Franchising Authority reasonably determines is necessary to remedy the default;

(b) Commence an action at law for monetary damages or seek other equitable relief;

(c) In the case of a substantial default of a material provision of the Franchise, declare the Franchise to be revoked;

(d) Seek specific performance of any provision which reasonably lends itself to such remedy, as an alternative to damages. Grantee shall not be relieved of any of its obligations to comply promptly with any provision of the Franchise by reason of any failure of Franchising Authority to enforce prompt compliance.

7.5 Acts of God. Grantee shall not be held in default of the provisions of the Franchise, nor suffer any enforcement or penalty relating thereto, where such alleged default is caused by strikes, acts of God, power outages, or other events reasonably beyond its ability to control.

Section 8. Miscellaneous provision.

8.1 Preemption. If the FCC or any other federal or state body or agency shall now or hereafter exercise any paramount jurisdiction over the subject matter of the Franchise, then to the extent such jurisdiction shall preempt and supersede or preclude the exercise of the like jurisdiction by Franchising Authority, the jurisdiction of Franchising Authority shall cease and no longer exist.

8.2 Actions of Franchising Authority. In any action by Franchising Authority or representative thereof mandated or permitted under the terms hereof, such party shall act in a reasonable, expeditious and timely manner. Furthermore, in any instance where approval or consent is required under the terms hereof, such approval or consent shall not be unreasonably withheld.

8.3 Notice. Unless expressly otherwise agreed between the parties, every notice of response to be served upon Franchising Authority or Grantee shall be in writing, and shall be deemed to have been duly given to the required party five (5) business days after having been posted prepaid, at a Post Office or branch thereof regularly maintained by the U.S. Postal Service.

The notices or responses to Franchising Authority shall be addressed as follows:

City of Chapman                       Express Delivery or Packages Only:

Cable Operations                      City Office

Box 321                               Chapman, Kansas 67431

Chapman, Kansas 67431

The notices or responses to Grantee shall be addressed as follows:

Eagle Communications            Express Delivery or Packages Only:

P.O. Box 817                    2703 Hall Street, Suite 15

Hays, Kansas 67601              Hays, Kansas 67601

Franchising Authority and Grantee may designate such other address or addresses from time to time by giving written notice to the other party.

9.4 Descriptive Headings. The captions to Sections contained herein are intended solely to facilitate the reading thereof. Such captions shall not affect the meaning or interpretation of the text herein.

9.5 Severability. If any Section, sentence, paragraph, term, or provision hereof is determined to be illegal, invalid, or unconstitutional, by any court of competent jurisdiction or by any state or federal regulatory authority having jurisdiction thereof, such determination shall have no effect on the validity of any other Section, sentence, paragraph, term or provision hereof, all of which shall remain in full force and effect for the term of the Franchise, or any renewal or renewals thereof.