Cable Franchise Agreement

AN AGREEMENT GRANTING A FRANCHISE TO DISTRICT CABLEVISION, INC.  TO OPERATE A CABLE TELEVISION SYSTEM IN THE DISTRICT OF COLUMBIA AND SETTING FORTH CONDITIONS ACCOMPANYING THE GRANTING OF THE FRANCHISE.

THIS AGREEMENT, made and entered into this 23 rd day of September, 1985 at Washington, D.C., by and between the District of Columbia, and District Cablevision, Inc., a District of Columbia corporation;

WITNESSED WHEREAS, the District of Columbia, pursuant to D.C. Law 4-142, as amended, (D.C. Code 43-1801etseq. (1984 Supp.)) is authorized to grant one or more revocable franchises to operate, construct, maintain and reconstruct a cable television system within the boundaries of the District of Columbia; and WHEREAS, the District has solicited applications for a cable television franchise on a competitive basis, and after due evaluation of the applications received, and after public hearings, the District has determined that it is in the best interest of the District and its residents to grant a franchise to District Cablevision, Inc.

NOW,THEREFORE, the District of Columbia hereby grants to DistrictCablevision,

Inc. a cable television franchise in accordance with the provisions of this Agreement.

I. DEFINITIONS

For the purpose of this Agreement, the following words, terms, phrases, and their definitions shall have the meanings given herein.  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.  The word "shall" is always mandatory and not, merely directory.

1.1

"Agreement" or "Franchise Agreement" means this agreement and any amendments or renewals thereof.

1.3

"Basic Service" means local broadcast signals, public and municipal access channels, and all subscriber services voluntarily offered by Grantee and specified in the cable franchise agreement as basic service.

1.4

"Cable Television Converter" means a device used to facilitate the reception of non-standard television signals on conventional television receivers.

1.5

"Cable television system", "cable", and "CATV" mean a non-broadcast facility consisting of a set of transmission paths and associated signal generation, reception, and control equipment under common ownership and control, that distributes, or is designed to distribute to sub subscribers, the signals of 1 or more television broadcast stations, including any ancillary service offered by Grantee.  The terms, "cable television system", “cable” or “CATV” shall not include any facility that serves or will serve subscribers wholly in 1 or more single or multiple unit dwellings undercommon ownership or management and which does not Utilize public ways within the District of Columbia.

1.5a

"Commencement of construction" or "commence construction" means the time and date when construction of the cable television system is considered to have commenced, which shall be when the first strand is attached to poles or cable placed underground.

1.6

"Council" means the Council of the District of Columbia.

1.7

"Dwelling unit" means any distinct household.

1.8

"District" means the District of Columbia government.

1.9

"Fair market value”means the price that a willing buyer would pay to a willing seller for the cable system as a going concern based on an evaluation consistent with industry practice at the time, but not taking into account the remaining term of the franchise.

1.10

"Federal Communications Commission" and "FCC" mean the federal agency as presently constituted by the Communications Act of 1934 (47 U.S.C. § 151 et. seq.).

1.11

"Franchise" means the rights granted hereunder to construct and operate a cable television system along the public ways in the District of Columbia, or within specified areas in the District of Columbia, and is not intended to include any license or permit required for the privilege of transacting and carrying on a business within the District of Columbia as may be required by laws of the District.

1.12

"Franchise territory" means all or any portion of the District of Columbia for which a franchise has been granted.

1.13

"Full width of the improvement" means the width of original excavation plus space on each side of the excavation necessary to "shore up" the backfillto restrict settling of dirt.

1.14

"Grantee" means District Cablevision, Inc., or any person or entity whom or which succeeds District Cablevision, Inc. in accordance with the provisions of this Agreement.

1.15

"Gross revenues" meansallrevenues received by the Grantee which are derived from the sale of entertainment and ancillary services, excluding revenues received by the Grantee from competitive institutional services, customer deposits, and sales, excise or other taxes collected for direct pass-through to local or federal government.

1.16

"Initial Service Area" means the entire District of Columbia and all territory within its present and future local boundaries.

1.17

"Leased channel" means a channel or portion of a channel on any cable system which is reserved for carriage of program material provided by persons who lease channel time from Grantee for the presentation of programs.

1.18

"Mayor" means the Mayor of the District of Columbia.

1.19

"Minority" means Black Americans, native Americans, Hispanic Americans, Oriental Americans who, by virtue of being a member of the foregoing groups, have been found by the Council to be economically and socially disadvantaged because of historical discrimination practiced against these groups by the institutions within the United States of America.

1.20

"Municipal channels" means specifically designated channels on any cable television system which are reserved by this Agreement and D.C. Law 4-142, as amended, solely for the use of the District.

1.21

"Net income" means the amount remaining after deducting from gross revenues all of the direct expenses associated with the operation of the cable television system including the franchise fee, interest, depreciation and federal or state income taxes.

1.22

"Office" means the Office of Cable Television established by D.C. Code § 43-1805 (1984 Supp.).

1.23

"Ownership in a business" means an economic relationship witha business (any corporation, partnership, sole proprietorship, firm, enterprise, association, organization, self-employed individual, holding company, joint stock, trust, and any legal entity through which business is conducted for profit) as an officer, director, employee, or holder of stock in such a business with a f air market value of at least $1000.

1.24

"Public access channel" means a specifically designated, noncommercial channel on any cable television system which is reserved for noncommercial use by members of the public on a nondiscriminatory basis.

1.25

"Public way" means the surface, the air space above the surface, and the area below the surface of any public street, highway, lane, path, alley, sidewalk, boulevard, drive, or other public right-of-way including public utility easements or rights-of-way, and any temporary or permanent fixtures or improvements located thereon now or hereafter held by the District which may be utilized for the purpose of installing and maintaining Grantee's cable system after negotiation of terms and conditions mutually satisfactory to the District, Grantee, and the appropriate public utility.

1.26

"Repeated" means occurring two times or more, or lasting whichever is the lesser.  A two-day duration shall two days or more, whichever is the lesser.  A two-day duration shall be measured cumulatively over the term of this Agreement, and an incident need not itself last two days in order for it to be “repeated."  However for purposes of Sections 9.3(a)(1) and 9.3(a)(2) "repeated" means occurring ten times or more, or lasting ten daysor more, whichever is the lesser.  A ten-day duration shall be measured cumulatively over the term of this Agreement, and an incident need not itself last ten days in order for it to be "repeated."

1.27

"Section" means any section, subsection or provision of this Agreement.

1.28

"Service area" means that portion of the franchise territory for which cable television service isplanned.

1.29

"Subscriber" means a member of the general public who receives broadcast programming and any ancillary service distributed by a cable television system and does not further distribute it.

1.30

"Year" means the remaining portion of 1984.  Thereafter, "year" means a full calendar year.

2. GRANT OF FRANCHISE

2.1

Grant.  District Cablevision, Inc., a corporation with its principal place of business located in Washington, D.C.,(hereinafter called Grantee), is hereby granted for itself, its successors, and assigns, subject to the terms and conditions of this Agreement and D.C. Law 4-142, as amended to the extent not inconsistent with this Agreement (hereinafter referred to as D.C. Law 4-142, as amended) a franchise, and the authority, right, and privilege, for a fifteen (15) year period from and after the effective date of the franchise, to construct, operate, own, and maintain a cable television system above, along, within, and under the streets, and public ways and public places within the District of Columbia, as the same now or in the future may exist.

2.2

Right of the District to Issue Franchise.  Grantee acknowledges and accepts the right of the District to issue a franchise, and Grantee agrees it shall not now or at any time hereafter challenge this right in any way or in any local or Federal court.

2.3

Date of Award of the Franchise and Effective Date of the Franchise.  The District and Grantee expressly acknowledge that for purposes of the Cable Communications Policy Act of 1984 the date of award of the franchise shall be the date upon which this Agreement has been signed by the Mayor and ratified by the Council and shall not be contingent upon the thirty day period of congressional review as provided in Section 602(c)(1) of the District of Columbia Self Government and Governmental Reorganization Act.  For all other purposes, the franchise granted hereunder shall take effect after such thirty (30) day period of congressional review.

2.4

Duration.  The term of the franchise shall be fifteen (15) years from the effective date of the franchise and on the fifteenth anniversary of the effective date, the franchise shall expire or be renewed in accordance with D.C. Law 4-142, as amended, and the Cable Communications Policy Act of 1984.

2.5

Franchise Not Exclusive.  The franchise granted hereunder is expressly conditioned upon the reservation by the District of the right through itsproper officers, to grant to other persons or corporations, rights, privileges, or authority similarto or different from the rights, privileges, and authority herein set forth, in the same or other streets and public ways or public places, provided, however, that such additional grants shall not operate to revoke, terminate or materially modify any rights granted to Grantee herein.  In the event that the District awards other franchises for cable television systems, and such franchises incorporate provisions more favorable to other persons or corporations than the provisions herein contained, the District agrees to make appropriate modifications in the franchise granted hereunder to ensure equality of treatment.

2.6

Execution and Effective Date of Agreement.  This Agreement shall be executed by signing by the Mayor, or his designated representative, and Grantee, and shall be effective as of the date of its signing, provided that the terms and conditions contained herein are ratified by the Council.  Ratification of the terms and conditions of this Agreement shall occur upon passage by the Council of the act awarding to Grantee the franchise provided herein.

2.7

Franchise Acceptance.

2.7.01

Grantee by executing this Agreement accepts the franchise granted herein, and contingent upon ratification of this Agreement by the Council, agrees to be bound by, and guarantees the performance of all the terms and conditions contained herein.

2.7.02

Grantee, by accepting the franchise, acknowledges that it hasnot been induced to accept the same by any promise, oral or written, by or on behalf of the District or by any third person regarding any term or condition imposed by law or this Agreement, not contained herein.  Grantee further pledges that no promise or inducement, oral or written, has been made to any District employee or official regarding receipt of the franchise.

2.7-03

Grantee further acknowledges, by acceptance of the franchise, that Grantee has carefully read the terms and conditions of D.C. Law 4-142, as amended, and all other applicable laws and accepts without reservation the obligations imposed by the terms and conditions contained therein regardless of whether said obligations are expressly stated herein, or in the franchise documents.

2.8

Rights Reserved to the District.  The District shall have the right to exercise its governmental powers, now or hereafter, to the full extent that the powers may be vested in or granted to the District.

2.9

Incorporation by Reference of Provisions of D.C. Law 4-142, as amended.  To the extent not expressly stated herein, all provisions, terms, and conditions relating to the franchise granted herein, which are contained in D.C. Law 4-142, as amended, are hereby incorporated by reference and made a part of the franchise and this Agreement.

2.10

Incorporation by Reference of Exhibits.The attached Exhibits A and B are hereby incorporated and made a part of this Agreement.

3. GENERAL REQUIREMENTS

3.1  Governing Requirements.  The franchise application of Grantee as modified by this Agreement shall be incorporated herein as if fully set forth.  Grantee shall comply with the requirements of this Agreement and D.C. Law 4-142, as amended, and all offerings contained in Grantee’s franchise application as modified by this Agreement.  In the event of any conflict between this Agreement and Grantee's application, the provisions of this Agreement will prevail.

3.2Franchise Fee.  Grantee shall pay to the District an annual franchise fee equal to five percent (5%) of annual gross revenues or $250,000, whichever is greater.  The annual franchise fee shall be payable quarterly.  Grantee's fiscal quarters for payment of the annual franchise fee shall extend from January 1 to March 31 for the 1stquarter; from April 1 to June 30 for the 2nd quarter; from July1 to September 30for the 3rd quarter; and from October 1 to December 31for the 4th quarter.  Commencing with the effective date of the franchise, Grantee shall file with the Office within 30 days after the expiration of each of the quarters stipulated herein, a financial statement clearly showing the gross revenues received by Grantee during the preceding quarter.  Grantee shall pay to the Office at the time the statement is filed a sum equal to five percent (5%) of gross revenues received during the preceding quarter or $62,500, whichever is greater, provided that for calendar year 1985, the quarterly payment and financial statement shall be submitted on or before March 14, 1985, and October 31, 1985, and such payments shall fully discharge Grantee's payment and financial obligations for such calendar year.  If, at the expiration of the fourth quarter, payments have exceeded both five percent (5%) of gross revenues and $250,000, the District shall remit to Grantee the difference between the amount of such total payments and the greater of five percent (5%) of gross revenues or $250,000.  Grantee shall also file with the Office within 120 days after the expiration of the 4th quarter, an annual report, prepared and audited by a certified public accountant acceptable to the Office, showing the yearly total gross revenues.

3.2.01 The Office shall have the right, consistent with the provisions of D.C. Law 4-142, as amended, to audit and to recompute any amounts determined to be payable in satisfaction of the annual franchise fee, provided that the audit shall take place within 12 months following the close of each of Grantee's fiscal years.  Any additional amount due the District as a result of the audit shall be paid by Grantee within 30 days following written notice to Grantee by the Office.  The notice which the Office sends to Grantee shall include a copy of the audit report.  Grantee shall pay the cost of the audit if the office determines that annual payment to the District for the preceding year is thereby increased by more than five percent (5%).

3.2.02 In the event that payment of any franchise fee amount which has been recomputed pursuant to Section 3.2.01 of this Agreement is not made on or before the expiration of thirty (30) days following written notice by the Office, Grantee shall be charged and shallpay, in addition to the amount due, interest on the amount due equal to the prevailing prime rate of interest compounded daily from the due date for payment of the recomputed amount.

3.9.03 In the event this franchise is terminated prior to its expiration date, and the District invokes its right to purchase Grantee's cable television system as provided in D.C. Law4-142, as amended, Grantee shall file with the Office, within thirty ( 30) calendar days following the date that ownership and control passes to the District or its assignee, and control passes to the District or its assignee, a financial statement clearly showing the gross revenues received by Grantee since the end of the previous fiscal quarter and shall pay the franchise fee at the time the statement is filed.

3.3     Payment of Award Fee and Reimbursement of District of Columbia Expenses.  No later than October 24, 1985, Grantee shall pay to the Office, a franchise award fee in the amount of Two Hundred and Fifty Thousand Dollars ($250,000) which payment shall be nonrefundable and shall be made payable by certified check to the order of the D.C. Treasurer.  In addition, Grantee shall pay to the Office an additional sum of Five Hundred Thousand Dollars ($500,000) as reimbursement to the District for its other expenses in awarding this franchise, payable in two installments as follows: $250,000 no later than October 1, 1986 and $250,000 no later than October 1, 1987. These payments shall also be nonrefundable and made payable by certified check to the order of the D.C. Treasurer.

3.4 Service of Technical, Financial, or Legal Consultants.  As necessary to aid in the analysis of all future dispute matters relative to the franchise, the Office in cooperation with Grantee, shall be entitled to employ the services of mutually agreed upon technical, financial, or legal consultant or consultants.  All reasonable fees of the consultants incurred by the Office in this regard, not to exceed $150,000 during any calendar year, shall be equally borne by Grantee and the Office, regardless of the outcome of any specific dispute under consideration.  If within thirty (30) days, agreement on the selection of the consultant cannot be reached, the selection decision shall be submitted to arbitration pursuant to Section 14 of this Agreement.

3.5Payment to District.  No acceptance by the District of any payment shall be construed as an accord that the amount paid is in fact the correct amount, nor shall such acceptance of payment be construed as a release of any claim the District may have for further or additional sums payable under the provisions of this Agreement.  All amounts paid to the District shall be subject to audit and recomputation by the District, provided, however, that such audit and recomputation shall take place within twelve (12) months following the close of Grantee's fiscal year.  A determination by the District that an underpayment resulted from the misfeasance or gross negligence of Grantee shall allow the District to audit and recompute sums payable under the provisions of this Agreement for any of Grantee's prior fiscal years.

3.6 Form of Payment.  Unless otherwise provided in this Agreement all payments required by this Agreement or by D.C. Law 4-142, as amended, to be made payable to the District, shall be made payable by bank check drawn on shall be made payable by bank check drawn on a District of Columbia bank to the order of the D.C. Treasurer.

3.7Liability and Indemnity.

3.7.01 As between the District and Grantee, Grantee shall be responsible for any damage or loss to any real or personal property, and for injury to or death of any person arising out of or In connection with the construction, operation, maintenance, repair, or removal of the cable television system, or in respect to any of its activities or the activities of any of its subcontractors within the scope of the provision of cable television service, provided, however, that Grantee shall not be responsible for the acts or omissions of the Public Access Corporation or for any damage or injury caused solely bythe District, its agents, or employees.  Unless the District is solely responsible for any loss of or damage to property, Grantee shall replace, repair or restore all such property to its prior condition within a reasonable time and at its own expense.

3.7.02  Except as caused solely by its own actions or those of its officers, agents, or employees, the District, its officers, employees, and agents shall not be liable for any loss or damage to any real or personal property, orfor any injury to or death of any person, arising out of or in connection with the construction, operation, maintenance, repair, or removal of the or in respect to any activity within the cable television system, or in respect to any activity within the scope of the provision of cable television service.

3.7.03   The District may remove or damage Grantee's facilities in the case of fire, disaster, or other emergency, as determined by the Mayor, the Office , the Fire Chief , or the Chief of the Metropolitan Police Department.  In such event neither the District nor any agent thereof shall be liable to Grantee for any damage caused to Grantee’s facilities other than to the extent permitted or provided by law.

3.7.04 Other than to the extent permitted or provided by law, the District shall not be liable to Grantee for any damage or loss caused to any facility under the control of Grantee, as a result of protection, breaking through, movement, removal, alteration, or relocation of any part of the cable television system by or on behalf of Grantee or the District in connection with any emergency, public work or public improvement.

3.7.05 Other than to the extent permitted or provided by law, the District, its officers, employees, and agents shall not be liable to Grantee for any damages of whatever kind that may be incurred by Grantee as a result of the District's lawful exercise of any right vested pursuant to this Agreement or D.C. Law 4-142, as amended, or other applicable laws.

3.7.06 Grantee shall, at its sole cost and expense, indemnify and hold harmless the District, its officers, boards, commissions, agents, and employees against any and all claims, suits, causes of action, proceedings, and judgments for damages and costs and expenses related thereto arising out of copyright infringements relating to programs and other services delivered by Grantee and damages arising out of any failure by Grantee to secure consent from the owners, authorized distributors, or licensees of programs and other services to be delivered by Grantee, whether or not any act or omission complained of is authorized, allowed, or prohibited by this Agreement.

Indemnified expenses, shall include, but not be limited to ail out-of-pocket expenses, such as attorneys' fees and shall also include the reasonable value of any services rendered by the Corporation Counsel of the District of Columbia, or his or her designee.  The indemnity contained herein is conditioned upon the Office giving Grantee notice within sixty (60) days of the receipt of a notice to sue or the commencement of any suit or action against the District covered by the terms of this Section and prior to settlement of any claim, suit or action.  Nothing herein shall be deemed to prevent the District from cooperating with Grantee and participating in the defense of any litigation by its own counsel at its sole cost and expense.

3.7.07 In the event that Congress disapproves the act awarding this franchise the District shall not be liable for any costs incurred by Grantee.

3.8Insurance and Bonds.

3.8.0lInsurance.  At all times during the term of the franchise, including any time for removal of facilities or management, Grantee shall, in full accordance with D.C. Law 4-142, as amended, and this Agreement, obtain, maintain, and pay all premiums for all insurance policies described in this Section.  At or before the effective date of the franchise granted hereunder, Grantee shall file with the Office written evidence of payment of premiums and executed duplicate copies of such insurance policies subject to the approval of the Corporation Counsel as to form.  Failure to obtain, maintain, or pay any premium for any insurance policy required by this Section shall be deemed a material breach of this Agreement and may be grounds for termination pursuant to Section 3.12 of this Agreement.

a.  Property Damage Liability-- Ten Million Dollars ($10,000,000).  The property damage insurance required by this Section shall indemnify, defend, and hold harmless Grantee and the District and the respective officers, boards, commissions, agents, and employees of each from and against all claims made by any person for property damage caused by the operation of Grantee under the franchise herein granted or alleged to have been so caused or alleged to have occurred.

b.  Comprehensive Public Liability-- Ten Million Dollars ($10,000,000).  The comprehensive public liability insurance required by this Section shall indemnify, defend, and hold harmless Grantee and the District and the respective officers, boards, commissions, agents, and employees of each from any and all claims made by any person on account of injury to, or death of a person or persons caused by the operations of Grantee under the franchise herein granted or alleged to have been so caused or alleged to have occurred.

c.  Comprehensive Automobile Liability-Five Million Dollars ($5,000,000).  The comprehensive automobile liability insurance required by this Section shall indemnify, defend and hold harmless Grantee and the District and the respective officers, boards, commissions, employees and agents of each from any and all claims made by any person on account of collision, personal injury or property damage caused by use of any owned, hired, or non-owned motor vehicles used in conjunction with the franchise herein granted or alleged to have been so caused or alleged to have occurred.

d.  Wrap-Around Builder's Risk, Fire and Extended Coverage-- One Hundred Percent Liability.  The wrap around builder's risk, fire and extended coverage required by this Section shall indemnify, defend, and hold harmless Grantee and the District and the respective officers, boards, commissions, agents, and employees of each in respect to claims made by any person resulting from occurrences during construction of the cable television system or alleged to have so resulted or alleged to have occurred.

e. Broadcaster's Liability-- Five Million Dollars ($5,000,000).  The Broadcaster's liability insurance required by this Section shall indemnify, defend and hold harmless Grantee and the District and the respective officers, boards, commissions, employees and agents of each from any and all claims which may arise from or be occasioned by any matter contained in or resulting from the transmission of any communication over the system, including but not limited to libel, slander, invasion of privacy, copyright violations, unauthorized use of trademark, trade name or service mark or patent and any exposure to liability relating to professional responsibility and broadcasting and advertising activities; provided, however, that the Grantee shall not be responsible for maintaining any such insurance for the acts or omissions of the Public Access Corporation or the District, its agents or employees.

f. Worker Compensation.  Grantee shall also submit to the Office proof that satisfactory worker compensation policies are in force which meet all requirements of all applicable worker compensation laws.

3.8.02 Bonds.  Grantee shall, in full accordance with D.C. Law 4-142, as amended and this Agreement, obtain, maintain, and pay all premiums for all bonds described in this Section.  On the date specified below, Grantee shall file with the Office written evidence of payment of premiums and executed duplicate copies of all such bonds subject to the approval of the Corporation Counsel as to form.  Failure to obtain, maintain, or pay any premiums for any bonds required by this Section shall be deemed a material breach of this Agreement and may be grounds for termination pursuant to Section 3.12 of this Agreement.

c. Performance Bond.  Not later than thirty (30) days prior to the scheduled date for commencement of construction as set forth in Exhibit A, Grantee shall file with the Office a good and sufficient performance bond in the penal sum equal to Three Million Dollars ($3,000,000) in favor of the District to cover any material breach of any duty by Grantee assured by such bond.  Grantee shall be permitted to reduce the amount of the bond to not less than One-Million Dollars ($1,000.000) upon completion of construction as provided for in Exhibit A. Such bond shall be with a surety company authorized by the Superintendent of Insurance, D.C., to transact business in the District of Columbia.

(1) Such bond shall for the life of the franchise insure the faithful performance and proper fulfillment of all obligations including construction obligations set forth in this Agreement and shall also cover the cost of removal of any properties installed by Grantee in the event said Grantee shall default in the performance of its obligations under this Agreement.

(2) In no event shall the amount of said bond be construed to limit the liability of Grantee for damages or restrict the right of the District to assess charges against the Security Fund described in Section 3.9. of this Agreement.

3.8-03 All bonds and insurance policies called for herein shall require 30 calendar days written notice of any cancellation to both the Office and Grantee.  Grantee shall, in the event of any cancellation notice, obtain, maintain, pay all premiums for, and file with the Office written evidence of payments of premiums, for appropriate replacement bonds or insurance policies so canceled within 30 calendar days following receipt by the Office or Grantee of notice of cancellation.

3.8.04 No recovery by the District of any sum by reason of any bond or any insurance policy required by this Agreement or by D.C. Law 4-142, as amended, shall be any limitation upon the liability of Grantee to the District or to other persons.

3.9Security Fund.

3.9-01   On or before January 2, 1986, Grantee shall deposit with a bank within the District of Columbia in an interest-bearing escrow account established in the name of the District an amount in the sum of Five Hundred Thousand Dollars ($500,000) as security.  Of said amount, no less than One Hundred Thousand Dollars ($100,000) must be in cash; with Four Hundred Thousand Dollars ($400,000) in the form of an irrevocable letter of credit, the form of which is subject to the approval of the Corporation Counsel of the District of Columbia.  The amounts deposited into said  escrow account by Grantee shall constitute

the Security Fund.  The Security Fund shall be replenishable up to a limit (including the initial Five Hundred Thousand Dollars ($500,000)) of Two Million Dollars ($2,000,000).  Of said amount, at all times no less than One Hundred Thousand Dollars ($100,000) must be in cash with Four Hundred Thousand Dollars ($400,000) in the form of an irrevocable letter of credit, the form of which is subject to approval by the Corporation Counsel of the District of Columbia.  Grantee shall be entitled to interest on all cash amounts remaining in the Security Fund, and the District, at Grantee's request, shall take appropriate action to secure release of accrued interest on a quarterly basis to Grantee's designated account.

3.9.02 The Security Fund shall be as security for the faithful performance by Grantee of all the provisions of this Agreement and compliance with all orders, permits, and directions of any agency of the District having jurisdiction over Grantee's acts or defaults under this Agreement, and the payment by Grantee of any claims, and liens due the District which arise by reason of the construction, operation, or maintenance of the cable television system.  The withdrawal of amounts from the Security Fund shall constitute a credit against the amount of the applicable liability of Grantee to the extent of said withdrawal.

3.9-03 Immediately after failure of Grantee to pay to the District, when due, the Franchise Fee amount provided for in Section 3.2, the Award Fee for the Reimbursement of District of Columbia Expenses provided for in Section 3.3, or payments to the District and the Public Access Corporation provided for in Sections 7.2.01, 7.2.02 and 7.3.01, respectively, of this Agreement, the Office may assess and withdraw the amount due from the Security Fund with three (3) days prior notice to Grantee.

3.9.04 The Office may assess the Security Fund for the following after thirty (30) days notice to Grantee to pay:

a. sums to reimburse the District for costs incurred by the District to correct violations of this Agreement not corrected by Grantee, after due notice;

b. monetary remedies, penalties, or liquidated damages assessed against Grantee pursuant to Sections 4.4.01 and 9.3 of this Agreement;

c. reimbursement of costs for restoration of any damage or disturbance caused to the public way as may be required by Section 3.10 of this Agreement; and

d. other sums due under the terms of this Agreement.

The Office may assess and withdraw from the Security Fund the amount due from the date of violation of this Agreement, for assessments made under subsections (a), (b), (c), and (d) of this Section, with interest, compounded daily and set at the one-year United States Treasury bill rate existing on the date of violation by Grantee, plus three (3) percentage points, and any liquidated damages; provided however, if Grantee seeks judicial review of any part of its liability for payment due within thirty (30) days after the notice from the Office, the Office may not withdraw the amount in controversy from the Security Fund until issuance of a final court order sustaining such liability.  In the event that Grantee seeks judicial review, and a court order sustaining such liability is issued, Grantee shall be liable and the Security Fund shall be assessed the compounded interest and liquidated damages provided herein from the date of violation until full payment is made from the Security Fund or Grantee.

3.9-05 The Security Fund described in this Section shall become the property of the District to the extent necessary to cure outstanding violations including outstanding liquidated damages provided for in this Agreement in the event that the franchise is terminated by reason of the default of Grantee.  Grantee shall be entitled to the return of such Security Fund, or portion thereof, as remains on deposit no later than ninety (90) days after the expiration of the term of the franchise, provided that there is then no outstanding violation of this Agreement on the part of Grantee.

3.9.06 The rights reserved to the District with respect to the Security Fund are in addition to all other rights of the District whether reserved by this Agreement or authorized by law, and no action, proceeding or exercise of a right with respect to such Security Fund shall affect any other right the District may have.

3.9.07 Any failure by Grantee to make deposits into the Security Fund shall be deemed a material breach of this Agreement and may be grounds for termination pursuant to Section 3.12 of this Agreement.

3.10Occupancy of Public Ways.

3.10.01   Nothing in this Agreement shall abrogate the right of the District or the Federal Government to the extent required or permitted by law to perform any public works or public improvements of any description including without limitation, all work authorized by the Washington Metropolitan Transit Authority to the extent required by law.  In the event the cable television system interferes with the construction, operation, maintenance, or repair of such public works or public projects access to which is granted to Grantee under the terms of this Agreement, Grantee shall, upon the granting of its request for access, protect or promptly alter or relocate the cable television system, or any part thereof, as directed by the appropriate governmental authority at Grantee's own expense.

3.10.02 Nothing in this Agreement shall be construed as a waiver or release of the rights of the District in or to public ways within the District of Columbia.  In the event that all or part of a public way is eliminated, discontinued, and closed, all rights and privileges granted pursuant to this Agreement with respect to said public way, or any part thereof so eliminated, discontinued, and closed, shall cease upon the effective date of the act in which said public way, or any part thereof is ordered closed.  The Office shall review all applications to close all or part of a public way, and where such applications affect the rights and privileges granted hereunder shall, as appropriate, make such recommendations regarding the proposed closing to protect and promote the public interest in cable television.

3.10.03 No location of any pole or wire-holding structure shall be a vested interest and poles or structures shall be removed or modified by Grantee at its own expense whenever the District determines that the public convenience would be enhanced thereby.

3.10.04 All excavation work performed by Grantee in any public way shall be subject to all applicable laws, rules, and regulations of the District or any agency thereof.  Unless otherwise provided, nothing in this Agreement shall be deemed to relieve Grantee of the obligation to obtain all permits, licenses, authorizations, and approvals, or to meet any condition or requirement of any law, rule, or regulation of general applicability in respect to the use, installation, construction, repair, removal, or maintenance of Grantee's facilities in, on, under, or above the public ways within the District of Columbia.

3.10-05    Grantee shall utilize existing poles, conduits, and other facilities whenever practicable, and shall not construct or install any new, different, or additional poles, conduits, or other facilities until the written approval of the District is obtained.

3.10.06 Where permitted by District law, construction of the cable system shall be above ground.  In all other instances where both electrical and telephone utility wiring are located underground within separate conduit, either at the time of initial construction or subsequent thereto, and there is adequate capacity in the existing telephone utility conduit for television cable, the cable shall be located underground within the existing telephone utility conduit.  If there is not adequate capacity in the existing underground telephone conduits, the District shall determine whether cable wiring should be located underground or overhead.  Nothing in this Section shall be construed to supersede any provision of existing laws or regulations with respect to the prohibition of the installation of overhead wiring in certain areas of the District of Columbia.

3.10.07 All transmission lines, equipment, and structures shall be so installed and located as to cause minimum interference with the rights, appearance, and reasonable convenience of property owners who adjoin on any public way and at all times shall be kept and maintained in a safe, adequate, substantial condition, and in good order and repair.  Grantee shall at all times employ ordinary care and shall install and maintain in use commonly accepted methods and devices for preventing failures and accidents which are likely to cause damage, injuries, or nuisances to the public.  Any poles or other fixtures placed in any public way shall be placed in a manner so as not to interfere with the usual travel on the public way.

3.10.08 Grantee shall, at its own expense and in a manner approved by the District, restore to District standards and specifications, on an interim basis, any damage or disturbance caused to the public way as a result of its operations or construction of its operations on its behalf , and shall guarantee the restoration until a permanent restoration is made.  Permanent restoration shall be performed by the District and the costs associated therewith shall be billed to Grantee for the full width of the permanent improvement.

3.10.09 At the request of any person holding a valid permit issued by the District to remove a building, and upon at least forty-eight (48) hours notice, Grantee shall temporarily raise, lower, or cut its wires as may be necessary to facilitate the move.  The direct expense of the temporary changes, including standby time, shall be paid by the permit holder, and Grantee shall have the authority to require payment in advance.

3.10.10 Grantee shall have the authority to trim trees on public property at its own expense as may be necessary to protect its wire and facilities, subject to the supervision and direction of the District.  Trimming of trees on private property shall require written consent of the property owner.

3.10.11 In no event shall this Section be construed to limit the right of the District to correct violations of this Agreement after giving Grantee appropriate notice of such violation, and assess, the cost of correction against the Security Fund pursuant to Section 3.9.04 of this Agreement.

3.11Ownership Structure, Sale, Transfer, Assignment and Governing Board Structure.

3.11.01 Throughout the term of the franchise, minority persons shall comprise at least sixty (60) percent of Grantee’s governing body and the trustees of the voting trust.  The trustees of the voting trust shall themselves appoint new trustees whenever there shall be an open trustee position, including any time at which the number of trustees is increased.  Grantee's governing body shall have the full power to direct the affairs of Grantee, as would vest in a Board of Directors.  Grantee represents that, as of the effective date of this Agreement 44.7% percent of its ownership structure is comprised of minority persons. Grantee represents that, as of the effective date as of this Agreement 64% percent of its governing body and 58% percent of the trustees include minority persons Grantee agrees.  Grantee agrees to identify its ownership structure, governing body, and trustees, annually.

3.11.02 The franchise granted hereunder shall be a privilege to be held in personal trust by Grantee.  It shall not be assigned, transferred, sold, or disposed of, in whole or part, by voluntary sale, merger, consolidation, or otherwise by forced or involuntary sale, without the prior consent of the Council.  The Council may consider the following factors in determining whether to grant or withhold consent:

a. Adequacy of minority and local ownership and control of the franchise.

b. Adequacy of financial resources to perform the contract, or the ability to obtain them;

c. Ability to perform in timely manner, considering all existing commercial and governmental business commitments;

d. Existence of satisfactory performance records;

e. Existence of satisfactory record of integrity and business ethics;

f. Existence of necessary organization, experience, accounting and operational controls, and technical skills or the ability to obtain them;

g. Existence of the necessary production, construction, and technical equipment and facilities or the ability to obtain them; and

h. Qualification and eligibility to receive this franchise under applicable laws and regulations.

The District may take legal or equitable action to set aside, annul, revoke, or cancel the transfer of the franchise, if the transfer violates any provision of this Agreement or D.C. Law 4-142, as amended, a transfer which violates any such provision shall be deemed a material breach of 'this Agreement and may be grounds for termination pursuant to Section 3.12 of this Agreement.

3.11.03 No person who has an ownership interest exceeding 5% in the franchise shall transfer, sell, assign, or otherwise dispose of the interest so that the person's ownership interest shall be less than 5% without the prior consent of the Council, which consent shall not be unreasonably withheld.  Reasonable bases shall include but not be limited to concern for adequate minority and local ownership and control of the franchise or any part thereof.  No person shall purchase or otherwise acquire an ownership interest exceeding 5% without the prior consent of the Council which consent shall not be unreasonably withheld The District may take legal or equitable action to set aside, annul, revoke, or cancel the transfer of the ownership interest, if the transfer is not made according to D.C. Law 4-142, as amended, or this Agreement; a transfer which violates any such provision shall he deemed a material breach of this Agreement and may be grounds for termination pursuant to Section 3.12.

3.11.04   Any sale, transfer, or assignment proposed by Grantee shall be made by a proposed bill of sale or similar document, a copy of which shall be filed with the Office ninety (90) days prior to any proposed sale, transfer or assignment.

3.11.05 The Office shall recommend whether Council approval of the proposed sale, transfer or assignment should be granted.  The proposed assignee must comply with all provisions of D.C. Law 4-142, as amended and must be able to provide proof of financial, legal, technical, and, as to controlling persons, character qualifications, as well as, for non-pubic companies, a complete disclosure of all those persons holding an ownership interest in the proposed assignee.

3.11.06 Prior consent of the Council shall he required for a transfer in trust, mortgage a transfer in trust, mortgage, or other instrument of hypothecation in whole or part, to secure an indebtedness of Grantee, provided, however, that such consent shall not be required in connection with any transaction entered into by Grantee within six (6) years of the effective date of this franchise for the purpose of financing the initial construction of the cable television system or its operation.  No such transfer in trust, mortgage, or other instrument of hypothecation shall give the holder any interest in the franchise granted by this Agreement or any right to operate the franchise other than on a temporary basis pending the selection of a permanent franchisee by the District.

3.11.07 The consent of the Council to any sale, transfer, lease, trust, mortgage, or other instrument of hypothecation shall not constitute a waiver or release of any of the rights of the District under this agreement or D.C. Law 4-142, as amended.

3.12Franchise Termination, Renewal and Amendment.

3.12.01 If any of the following conditions are not met, the franchise granted under this Agreement shall terminate immediately and automatically except where the Council has extended the time in which to comply with or accomplish the following:

a. The Federal Communications Commission has not issued by June 15, 1985 an initial decision authorizing construction and maintenance of the cable transport system by The Chesapeake and Potomac Telephone Company pursuant to Section 214 of the Communications Act of 1934, as amended.

b. Grantee does not obtain by March 14, 1986, adequate financial resources to perform its obligations pursuant to this Agreement in a timely manner.  Adequate financial resources shall constitute at least Twenty Million Dollars ($20,000,000), in immediately available cash, lines of credit, and/or firm construction financing commitments, to allow Grantee to perform it obligations under this Agreement.  Where the Office and Grantee disagree as to whether the financial resources specified above are available to Grantee, they shall appoint financial experts to arbitrate this issue, under the procedures contained in Section 14 of this Agreement.  If the arbitrators decide that Grantee does not have such financial resources available, the franchise shall terminate immediately upon the arbitrators' decision.

c. Grantee has not commenced construction of the cable television system by June 1, 1986.

d. Grantee has not submitted its Management Agreement to the District by April 1, 1985.

3.12.02Termination After HearingThe following constitute grounds for suspension or termination of the franchise after completion of the procedures set forth in Section 3.12.04:

a.  Bankruptcy of Grantee;

b. Engagement by Grantee in a pattern of noncompliance with the material terms and conditions of this Agreement or D.C. Law 4-142, as amended provided that Grantee has received notice of violations which constitute such a pattern.

c. Attempted practice or actual practice of any fraud upon the District or subscribers by Grantee.

d. Determination by the District, after reviewing contracts or revisions to contracts that the District's interests would be materially adversely affected.

3.12.03Termination After Opportunity to Correct  The following constitute grounds for suspension or termination of the franchise, if not corrected within a reasonable period of time and after completion of the procedures set forth in Section :

3.12.04

a. Failure, refusal, or neglect to construct, conduct, operate, or maintain the cable television system to comply substantially with the material terms of this Agreement or D.C. Law 4-142, as amended;

b . Failure, refusal or neglect to comply substantially with the conditions of street occupancy;

c. Failure, refusal or neglect to make required extensions;

d. Arbitrary or capricious discontinuance of service to subscribers,

e. Insolvency or inability of Grantee to pay  its debts;

f. Failure to pay to the District any franchise fees or benefits provided under Sections 7.2 and 7.3 of this Agreement, or any damages, costs, or expenses which the District is compelled to pay by reason of any act or default Grantee in connection with this franchise; or

g. Other repeated violations of the material terms and conditions of this Agreement

or D.C. Law 4-142, as amended.

3.12.04Procedures for Termination, Suspension or Forced Purchase

a.Notice and Recommendation for Section 3.12.02 Noncompliance.  Upon a finding by the Office that Grantee has materially breached the terms and conditions set forth in Section 3.12.02, .he Office shall recommend to the Council that it take action to suspend or terminate the franchise.  The Office shall send a copy of such recommendation to Grantee.

b.Notice and Recommendation for Section 3.12.03 Noncompliance.

(1)Notice.  For those acts of noncompliance set forth in Section 3.12-03 of this Agreement, the Office shall notify Grantee in writing of the nature and facts of the noncompliance and shall advise Grantee that it must correct such noncompliance within:

(a) ten (10) days after receipt for failure to pay to the District any franchise fee or benefits to be provided under Sections 7.9- or 7.3 of this Agreement under Sections 7.9- or 7.3 of this Agreement, or any damages, costs, or expenses which the D'-strict is compelled to pay by reason of any act or default of Grantee in connection with this franchise;

( b ) thirty days after receipt for any other violations set forth in Section 3.12-03 of this Agreement.

The Office may at its sole discretion, extend the period for correction If it determines that correction cannot be accomplished within the applicable time periods specified above due to the inherent nature of the noncompliance.

(2)Recommendation.  Upon a finding that Grantee has materially breached the terms and conditions set forth in Section 3.12-03 of this Agreement, and that Grantee has failed to take corrective action as required by the Office, the Office shall recommend to the Council that it take action to suspend or terminate the franchise.  The Office shall send a copy of such recommendation to Grantee.

c.Action by Council.  If at any time during the term of the franchise, the Council determines, based on a recommendation by the Office, that Grantee has materially breached the terms and conditions imposed by this Agreement, the Council may, by act, either suspend for a time certain, or terminate the franchise, or authorize the District's exercise of the right of first refusal to purchase the assets of the Grantee's cable television system at the fair market value of all tangible and intangible property of said system.

(1)Termination or Suspension.  Prior to Council action to terminate or suspend this franchise, Grantee shall be given an opportunity to appear before the Council at a public hearing.  At least ten (10) days before such hearing, the Office shall notify Grantee of the time and place of the hearing.  Such notice shall he published at least .en (10) days prior to such hearing in a newspaper of general circulation within the District of Columbia, and shall include a statement of opportunity for public comment.

(2)Option to Purchase.  In the event the Council authorizes the District to exercise its option to purchase the assets of the franchise at the fair market value of all tangible and intangible property of said cable television system, it shall give Grantee written notice of its intent to do so.  Grantee shall, within 7 days of receipt of the notice, enter into bona fide negotiations with the Office for the purpose of consummating the transaction at the earliest possible date.  If Grantee and Office fail to agree on the fair market value, the final price for the cable television system shall be determined by arbitration pursuant to Section 14 of this Agreement.

3.12.05Grantee's Termination Obligations.  Should the Council decide to terminate the franchise, Grantee shall continue to operate the cable television system until the Council has selected a new franchise.

3.12.06 Renewal.  Renewal of the Franchise granted hereunder shall be accomplished in accordance with the requirements and procedures set forth in D.C. Law 4-142, as amended, and in accordance with Section 626 of the Cable Communications Policy Act of 1984, which Section shall control in the event of any conflict between it and any provision of law or of this Agreement.

3.12-07Amendment to the Agreement.

a.State-of-the-Art-Changes. It shall be the policy of the District to amend this Agreement when necessary to enable Grantee to take advantage of advancements in the state-of-the-art.  When Grantee deems it necessary to amend the agreement to afford an opportunity to more effectively, efficiently, or economically serve subscribers Grantee may apply to amend this Agreement.  This section shall not be construed to require the Council to amend this Agreement.  The Council shall hold a public hearing every three (3) years following the grant of the franchise to discuss state-of-the-art changes.

b.Economic Viability.

(1) As provided in the Cable Communications Policy Act of 1984, this Agreement shall be modified where Grantee has demonstrated that a requirement for facilities or equipment is commercially impracticable and that the proposed modification is appropriate on such grounds.  This impracticability must result from a change in conditions beyond the control of Grantee the non-occurrence of which was a basic assumption on which the requirement was based.

(2) In any other event where Grantee encounters extraordinary circumstances beyond the control of Grantee in connection with the construction or operation of the cable system, and such circumstances are likely to, or do in fact adversely impact the economic viability of the cable system as a whole, Grantee may petition the Office for modification of this Agreement.  Grantee's petition shall be submitted to the Office, which shall within 30 days hold a hearing on the petition.  Within 60 days of the submittal of Grantee's petition the Office shall make findings and recommendations on the record utilizing the modification standard specified in this subsection, and shall transmit such findings and recommendations along with the record to the Council for final decision.  The Council shall review and act upon the Office's findings and recommendations and shall not unreasonably withhold appropriate relief where Grantee has sufficiently demonstrated that modification of this Agreement is necessary to ensure the economic viability of the cable television system as a whole.  For purposes of this subsection, "extraordinary circumstances" shall mean facts, events, particular incidents or results the occurrence or risk of which ordinary experience or prudence could not in fact foresee.  "Appropriate relief" shall mean that relief necessary to reasonably assure economic viability and which is consistent with protection and furtherance of the public interest in cable television.  "Economic viability" shall mean the economic opportunity to operate in such a fashion that the Grantee can recoup operating costs, including the cost of capital, and shall include consideration of such factors including, but not limited to, return on investment, bank covenants, cash flow, cost per mile, alternate delivery systems, negative impact of subscriber churn, utility duct rental costs, and abuse of system service or property.  The Council in fashioning appropriate relief may adopt and impose such reasonable terms and conditions and may provide for future review of any modification adopted as may be deemed appropriate.

3.13Books, Documents and Records.

3.13.01   The books and records of Grantee's operation within the District of Columbia shall be made available during normal business hours after reasonable notice for inspection and audit by the Office.

3.13.02 Copies of Grantee's schedule of charges, contract or application forms for basic service, policy regarding the processing of subscriber complaints, delinquent subscriber disconnect and reconnect procedures, and any other terms and conditions adopted as Grantee's policy in connection with its subscribers shall be filed with the Office and conspicuously posted in Grantee's local office.  Grantee shall maintain logs including all subscriber complaints received and all records of performance tests, and shall file with the Office a monthly summary of such logs.

3.13-03 Copies of all correspondence, petition, reports, applications, and other documents between Grantee and federal or District agencies having appropriate jurisdiction in matters affecting cable television operation shall be made available simultaneously by Grantee to the Office.

3.13.04 Copies of all agreements between Grantee and any major owner of Grantee and any major service provider to Grantee shall be included as Exhibit I of this Agreement.  Exhibit I shall specifically include any agreements between Grantee and The Chesapeake and Potomac Telephone Company; Grantee and United Cable; and Grantee and TCI Development Corporation.  In addition, Grantee shall file with the Office a copy of any agreement between Grantee and any other major owners which shall constitute any ownership interest exceeding five (5) percent of the franchise, and any service providers which receive payments of any kind from Grantee exceeding five (5) percent of Grantee's annual revenues.  Any amendment, addition, renewal, or recession of any such agreement shall also be filed with the Office within thirty (30) days of the change in status.

3.14Franchise Commitments.  Grantee hereby acknowledges that it undertakes the commitments specified in Sections 6, 7, 8, and 12 of this Agreement voluntarily and at its own option.  Grantee recognizes that such commitments will be of benefit to Grantee by fostering goodwill and increasing interest in cable services on the part of District of Columbia residents.  Grantee also recognizes that such commitments will serve and benefit ail of the subscribers to the system, by providing each and all of the subscribers the opportunity to view the programming fostered by such commitments, including public access programming, and the opportunity to participate in the generation of public access programming.  Grantee acknowledges that no specific provision or provisions in Sections 6, 7, 8, and 12 were mandated by the District, nor was Grantee's offer of any provision in Sections 6, 7, 8, and 12 a condition to the award of this franchise.

3.14.02 Grantee also acknowledges that all of its commitments specified in Sections 6, 7, 8, and 12 are legitimate concerns of the District of Columbia under its police powers.  Such commitments are undertaken to minimize the disruption to the District of Columbia and its residents of the construction and operation of the cable television system and to best facilitate the adjustment of the District and Its residents to the construction and operation of the cable television system.

3.14.03 Grantee shall not initiate any action before any federal or District agency or court which could, in any way, cause that agency or court to limit or interfere with Grantee's full performance of its commitments under this Agreement.  Notwithstanding any other provision of this Agreement, Grantee will fully abide by the provisions of Sections 6, 7, 8, and 12 unless specifically and by name directed by a federal or District agency or court to refrain from abiding by those provisions.

3.14.04 Grantee understands and expects that the District will engage in substantial actions in reliance upon the commitments made herein by Grantee in Sections 6, 7, 8, and 12.  Those commitments are of substantial economic concern to the District. 3.15 Equipment and Facilities Ownership.  Any equipment, facilities or other materials purchased by the District or its designees under sections 7.2 or 7.3 of this Agreement, may in turn be purchased by Grantee with the mutual consent of Grantee and the District or its designee at Grantee's option within sixty (60) days after notice by the District of the District's purchase of such equipment, facilities or other materials.  Grantee shall reimburse the District or its designee for the full cost to the District or its designee of said item.  Grantee shall lease any such item to the District or its designee which has sold that item, to be used in the sole discretion of the District or its designee and under the conditions established in sections 7.2 and 7.3 of this Agreement.  Grantee shall determine the schedule of payments for such a Lease.  The total amount of payments shall not exceed the amount that Grantee has paid to the District or its designee to purchase the item plus reasonable administrative and carrying costs incurred by Grantee in the purchase and leasing of such items.

3.16Form of Notice.  Unless otherwise specified, any notice required to be given by either the District or Grantee shall be in writing and shall be sent by certified mail.  No later than the effective date of this Agreement, Grantee shall designate a representative to receive any notice issued pursuant to this Agreement.

4. CONSTRUCTION AND SERVICE REQUIREMENTS

4.1  General.  Grantee shall meet, or exceed all the material construction and service requirements set out in this Agreement, D.C. Law 4-142, as amended, and Grantee's franchise application as modified by this Agreement.  Grantee agrees to construct, operate, and maintain the cable television system subject to the supervision of and inspection by the Office and in full compliance with the regulations, including applicable amendments, of the Federal Communications Commission and all other applicable federal or District laws and regulations, including the latest editions of the National Electrical Safety Code and the National Fire Protection Association National Electrical Code.  Grantee shall meet the service requirements set out in this Agreement; D.C. Law 4-142, as amended; Grantee's franchise application as modified by this Agreement; and all other applicable laws, rules, or regulations regardless of whether subscriber penetration and/or revenue projections contained in Grantee's franchise application prove correct.

4.2Construction and Service Schedule.  Grantee shall complete construction of the cable television system and offer service to all residents within sixty (60) months after the scheduled date of commencement of construction.  Grantee shall use all reasonable efforts to negotiate pole line attachment agreements or their equivalent with the utility pole owners within three (3) months after the effective date of this franchise.  Grantee shall, within ninety (90) days of the effective date of this franchise, file the documents required to obtain all licenses, permits and authorizations necessary to commence construction.  Grantee shall file all documents required for necessary licenses, permits, and authorizations which are required in the conduct of its business with due diligence thereafter.  Grantee shall complete construction of the cable television system in accordance with the schedules, maps, and requirements set forth in Exhibit A. Grantee shall file monthly written reports with the Office commencing thirty (30) days after the effective date of this franchise, stating any delays in obtaining all necessary federal and District licenses, permits, and authorizations required for the conduct of its business.

Every three months after +the start of construction, Grantee shall furnish a written report to the Office on the progress of construction until construction is completed.  The report shall include a map that clearly defines the area wherein regular subscriber service is available.  Grantee shall offer and be ready to deliver cable television service to subscribers in not less than 20% of the occupied dwelling units in the franchise territory within one (1) year after receiving all necessary permits, authorizations, and licenses and to the franchise territory in not less than 100% of the occupied dwelling units within five (5) years.  Grantee shall offer service to all residents and institutions within an area no later than ninety (90) days after the cables have been activated therein.

4.3  Amendment of Construction Schedule.  The Office may amend any scheduled construction dates set forth in this Agreement or in Exhibit A upon a showing by Grantee that any asserted construction delay was beyond Grantee's reasonable control or was not reasonably foreseeable.  In the event of such an amendment, all references in this Agreement to the scheduled date for commencement of construction as set forth in Exhibit A shall be to the date as amended by the Office.

4.4  Remedies for Delay in Construction or Service Schedule.

The Office may in its sole discretion apply any or all of the following remedies for delays in the construction of the cable television system including delays in meeting construction and service dates set forth in Exhibit A of this Agreement when such delays are due to causes which are within Grantee's reasonable control.

4.4.01 Assess liquidated damages against the Security Fund or Grantee directly in the amount of One Thousand Dollars ($1,000) per day for delays up to one hundred and fifty (150) days; of Five Thousand Dollars ($5,000) per day for delays of over one hundred and fifty (150) days.  At the Office's election, any delay for a period greater than one hundred and fifty (150) days shall be deemed a material breach of this Agreement, and may be grounds for termination of this Agreement pursuant to Section 3.12 of this Agreement.

4.4.02    Reduce the duration of the franchise on a month-for-month basis for each month of delay exceeding five (5) months.

4.4-03    Exercise its rights under the performance bond for delays exceeding one (1) year.

4.4.04   Initiate the termination procedures set forth in Section 3.12.01 of this Agreement if Grantee fails to commence construction of the cable television system by June 1, 1986.

4.4-05   Initiate the termination procedures set forth in Section 3.12-03 of this Agreement if Grantee has failed to substantially conform to the requirements set forth in Section 4.2 of this Agreement or forconstruction or service delays of more than eighteen (18) months other than those set forth in Section 4.4.04 above.

4.5    Right of Inspection of Construction.  The Office shall have the right to inspect all construction or installation work performed subject to the provisions of this Agreement and to make such tests as it shall find necessary to ensure compliance with the terms of this Agreement and other pertinent provisions of law.  Any significant delay in the construction schedule caused by any such inspection shall extend on such inspection shall extend on a day for day basis the date for completion of construction set forth in Exhibit A; however, no such extension shall be granted for any delays stemming from correction, modifications, additions, or deletions which the Office determines are necessary in the course of any such inspection or test.

4.6.01   Provision of Residential Service.  Subject to the provisions of Section 4.6.02, Grantee shall offer and be ready to deliver all residential services to all residents of the District of Columbia at uniform installation charges and monthly rates, within the schedules of Section 4.2 above.  In areas where the cable has been activated, Grantee shall offer services to new residences within ninety (90) days after occupancy, except as provided in Section 12.4 of this Agreement.

4.6.02 Non-Standard Installations.  If a subscriber requests a non-standard installation for aesthetic purposes including, but not limited to, optional underground construction, concealed wiring or routing-from the tap to the dwelling unit that differs from the easiest route that could otherwise be taken (usually following the telephone drop) which results in greater costs, Grantee may charge the subscriber for such nonstandard installation in an amount equal to the cost or labor plus overhead and materials in accordance with industry standards.  Grantee shall provide such subscriber a written estimate of the cost of such installation and obtain the subscriber's written consent prior to any such installation; provided, however, that Grantee may require an advance payment of such costs from such subscriber as a condition of performing the requested installation.

4.7  Provision of Equipment and Services.  Grantee agrees to provide such equipment and services as were proposed in its application as modified by this Agreement or the equivalent thereof; except that any substitution of equipment and services under Sections 7.2 shall be governed by those sections.  In the event that equivalent equipment or equivalent services are proposed for substitution for any equipment or service to be provided under Section 5.6 of the Agreement, the Office shall be given thirty (30) days advance notice thereof with appropriate explanations therefor.

4.8  Location of Facilities.  Except where the Office concurs that it is not technically feasible, all warehouses, maintenance shops, headend(s), administration offices, training facilities, and other such facilities, which are a part of the construction and operations of the cable television system shall be located within the District of Columbia.

5. SYSTEM DESIGN AND PERFORMANCE REQUIREMENTS

5.1  System Configuration.  The cable television system shall consist of a residential network.  Grantee shall provide capacity on the residential network system for an institutional network system.  If Grantee determines that there is a need for additional channel capacity or the activation of upstream channel capacity for its institutional network system, Grantee shall provide such additional capacity or activate any or all of such capacity either on the subscriber network system or on a separate institutional network system upon its determination that such capacity is technically and economically feasible.

Grantee shall construct a residential network system utilizing one trunk and one feeder cable, providing a minimum upper limit bandwidth of 55OMHz with return transmission paths, which shall be capable of transmitting seventy-nine (79) channels downstream and four (4) channels upstream (trunk only).  Such system shall be designed and capable of being a 550 MHz system with 550 MHz high capacity p5.ssives to provide a minimum of seventy-nine (79) channels downstream and initially be activated at a minimum upper limit bandwidth of 450 MHz providing a minimum of fifty-four (54) channels downstream, activated upon initiation of service to subscribers.  Grantee shall expand the initial channel capacity of such system as soon as 550 MHz technology has been reasonably perfected to ensure high performance and quality throughout the distribution network system and as soon as reasonably practicable pursuant to its finding that such additional channel capacity is needed and economically feasible.  When it is technically and economically feasible, Grantee shall expand the initial capacity of those portions of its cable television system utilizing an alternative technology or combination thereof as soon as reasonably practicable after notice by the Office pursuant to its finding that such additional channel capacity is needed.

5.4     Capacity for Interactive Residential Services.  Grantee shall provide upon commencement of services the capability for interactive residential services including security, pay per view, video game downloading, and Dow Jones, subject to the technical availability of requisite software, hardware, and programming to support such services.  Grantee shall also provide the capacity for Communicom services, i.e., home shopping, home banking, electronic mail, personal computer connection, and the community information service to be added in the future.  All customer equipment necessary for such services, such as addressable interactive converters, home terminals, and home detectors, shall be provided to subscribers by Grantee in accordance with established and uniform rate schedules.  Grantee may implement and provide any and all interactive services it wishes at any time provided that the provision of said services conform to the terms and conditions of D.C. Law 4-142, as amended, and this Agreement.

5.6Institutional Network

5.6.01 Grantee shall install trunk cable for a separate institutional network wherever it installs trunk cable for the underground residential network.  However, additional construction of the I-Net shall not occur until demand for such a system develops.  Grantee shall determine, at its sole discretion, the number and types that will be offered, based upon the financial viability of such services and the legal and regulatory environment.  Grantee shall have the right to compete for provision of all I-Net services and shall complete construction of the I-Net as demand justifies.  Prior to such time, I-Net trunk shall be available for direct use by the District where the District adds electronics and passives as required.  Ten percent (10%) of the capacity of any completed and activated portion of the I-Net shall be reserved for the use of the District on the same terms and conditions as capacity reserved on the residential network for municipal use.

Further, upon completion of construction of fifty(50) percent of the residential network, Grantee shall hire a purchasing agent acceptable to the Office for a term to expire upon activation of the entire institutional network and at a salary of $50,000 per year plus reasonable commissions.  Such purchasing agent shall solicit commercial institutional network customers and shall, at 90 day intervals, provide written reports to the Office and Grantee concerning customer solicitations and the results thereof.

5.6.03 Subject to construction as specified in 5.6.01, if any segment of the institutional network remains to be activated after the completion of construction of the residential network, the Office at any time thereafter may require Grantee to activate any such unactivated segment within six months after issuance of the direction; provided that, In no event shall the Office issue a directive before the fourth anniversary date of the scheduled date for commencement of construction as set forth in Exhibit A.

5.6.04  Failure by Grantee to meet any requirement imposed by this Section shall be deemed a material breach of this Agreement and may be grounds for termination pursuant to Section 3.12 of this Agreement.

5.7  Interconnection.  Upon request by the Office, Grantee shall negotiate in good faith to interconnect the cable television system with other cable television systems in the District of Columbia or neighboring jurisdictions to distribute access, local origination, and institutional services.  Within six (6) months of a request by the Office, Grantee shall report in writing to the Office the results of the negotiations.  Grantee shall provide its fair share of the costs involved in interconnecting with other cable systems and shall agree to submit to immediate arbitration any disputes regarding appropriate division costs which may arise between Grantee and any other cable system with which it may interconnect.

5.8  Emergency Alert Capability.  Grantee shall provide the system capability to transmit an emergency alert signal to all participating subscribers.  Grantee shall also provide an emergency audio override capability to permit the District to interrupt and cablecast an audio message on all channels simultaneously in the event of disaster or public emergency.

5.9  Standby Power. Grantee shall provide standby power generating capacity at the cable communications system control center and at all hubs.  Grantee shall maintain standby power system supplies throughout the distribution networks.  Grantee shall provide standby power for critical system elements for up to twelve (12) hours of continuous operation in the event of commercial power failure.

5.10    Parental Control Lock.  Grantee shall offer all subscribers a parental control locking device or digital code that permits inhibiting the viewing of premium channels and shall provide such devices to all requesting subscribers at no charge upon installation of-service to the subscriber’s home.

5.11    Status Monitoring.  Upon activation of bi-directional capability of the cable television system, Grantee shall provide an automatic status monitoring system as an integral part of the network.

5.12Technical Standards.  Grantee shall, at all times during the term of this franchise, comply at least with the minimum -Technical standards required by the Federal Communications Commission.

5.13Tests and Performance Monitoring.

5.13.01 No later than ninety (90) calendar days after any new or substantially rebuilt portion of the cable television system is made available for service to subscribers, technical performance tests shall be conducted by Grantee to demonstrate full compliance with the technical standards of the FCC, this Agreement, and applicable District law.  These tests shall be performed by, or under the supervision of a qualified registered professional engineer or an engineer with proper training and experience.  A copy of the report shall be submitted to the Office describing test results, instrumentation, calibration, and test procedures, and the qualifications of the engineer responsible for the tests.

5.13.02 System monitor test points shall be established at or near the output of the last amplifier in the longest feeder line, at or near the trunk line extremities, and at not fewer than 8 widely scattered locations.  At least once each month, the following data shall be obtained and recorded for each monitor test point, made available for inspection by the Office, and retained in Grantee's files until the relevant portion of the system has been either substantially rebuilt or replaced:

a.    Visual and aural carrier levels on each active channel.

b.    Carrier-to-noise ratio of at leas'. 4 frequencies distributed across the pass band (to avoid interrupting service, these measurements may be approximate and will be used only to detect significant changes).

c. Any other data which the Office may reasonably require.

5.13.03 At any time after commencement of service to subscribers, the office may reasonably require additional tests, full or partial repeat tests, different test procedures, involving a specific subscriber's terminal.  Requests for additional tests will be made on the basis of complaints or tests received or other evidence indicating an unresolved controversy or noncompliance.  The Office will endeavor to arrange its request for special tests so as to minimize hardship to Granteeor to the subscriber.

5.13.04 A copy of the annual performance test report required by the Federal Communications Commission shall be simultaneously submitted to the Office.

5.14.0l Annual Review of Performance.  Within ninety (90)  days of the first anniversary of the effective date of this franchise, and each year thereafter throughout the term of the franchise, the Office may require Grantee to attend a public meeting to review the performance, quality of service and rates of the cable television system.  The log maintained by Grantee regarding subscriber complaints, Grantee records of performance tests, and an annual opinion survey report conducted by Grantee shall be utilized as the basis for review.  In addition, any subscriber may submit complaints during the review meetings, either orally or in writing, and these shall be considered.  Grantee shall be represented by its general manager or highest local decision-making officer.

5.14.02 Within thirty (30) days after conclusion of the system performance review meetings, the Office shall issue written findings with respect to the adequacy of system performance and quality of service.  If inadequacies are found, the Office may direct Grantee to correct the inadequacies within a reasonable period of time.

5.14-03 Failure of Grantee, after due notice, to correct the inadequacies shall be deemed a material breach of this Agreement, and the District may exercise any remedy within the scope of this Agreement or D.C. Law 4-142, as amended, considered appropriate.

5.15    System and Services Review.  To provide for technological, economic, and regulatory changes in the state of the art of cable communications, to facilitate renewal procedures, to promote the maximum degree of flexibility in the cable system, and to achieve a continuing, advanced modern system, the Office and Grantee shall comply with the following system and services review provisions set forth in this Section. 5.15-01 The Office and Grantee shall hold a system and services review session on the third anniversary date of this franchise.  Subsequent review sessions shall be scheduled by the Office each three years thereafter.  Each session shall be open to the public with notice of the date, time, and locations of all hearings given by the Office at least sixty (60) days prior to the session.  Members of the public shall be afforded an opportunity to comment at the sessions.  The Public Access Corporation shall participate to the fullest extent possible in the session.  Any materials required by the Office shall be filed with the Office in preparation for the session.  Copies of all materials filed with the Office in conjunction with this review shall be provided to the Public Access Corporation and filed with each branch of the D.C. Public Library System.

5.15.02 Sixty (60) days prior to the scheduled system and services review session, Grantee shall submit a report to the Office and to each branch of the D.C. Public Library system addressing the following:

a.    All cable system services that are being provided on an operational basis, excluding tests and demonstrations, to the urban cable systems in the top twenty DMA's (Designated Market Areas) for cable television, as identified by the most current A.C. Nielson Co. or another acceptable standard rating service, that are not provided by the Grantee; and

b. A plan for provision of such services, or a justification indicating why such services are not feasible for the franchise territory.

5.15.03   Topics for discussion and review at the system and services review sessions shall include but shall not be limited to services provided, rate structure, free or disconnected services, application of new technologies, system performance, programming, subscriber complaints, user complaints, rights of privacy, amendments to the Agreement, undergrounding processes, developments in the law, and regulatory constraints.

5.15.04   Either the Office or Grantee may select additional topics for discussion at any review session.

5.15.05 Not later than sixty (60) days after the conclusion of each system and services review session, the Office shall prepare findings and transmit them to the Council.  Such findings shall include, among other matters, shall include, among other matters, a listing of any cable services not being provided in the franchise territory which are considered technically and economically feasible, and are being provided to a majority of the top 20 DMA’s.  Materials provided by Grantee shall be attached to the findings.

5.15.06 Based upon the findings transmitted by the Office to the Council, the Council may direct Grantee to provide those services which are technically and economically feasible and which are being provided to a majority of urban cable systems in the top 20 DMA's within a reasonable time.

5.16Maintenance Service; Subscriber Complaints; Interruption of Service.

5.16.0l Grantee shall establish and maintain service maintenance capability enabling the prompt location and correction of major system malfunctions.  Grantee's maintenance service shall include provision of services and repairs for downed lines and other accidents involving the cable television system.  The maintenance service shall be available 24 hours per day, 7 days a week 'throughout the year.

5.16.02

a. The Grantee shall maintain an office in the franchise territory which shall be open during all usual business hours, have a publicly listed telephone, and be so operated to receive subscriber complaints and requests for repairs or adjustments on a twenty-four 24 hour a day basis.

b. Investigative action shall be initiated in response to all service calls, other than major outages, no later than the next business day after the call is received.  Corrective action shall be completed as promptly as practical.

c. Grantee shall maintain records of all complaints, related service calls, and corrective actions completed.  These records shall be available for inspection by the Office during normal business hours and retained in Grantee's files for not less than three (3) years.

5.16.03    Grantee shall maintain a repair force of technicians capable of responding to subscriber complaints or request for service on the next business day after receipt of the complaint or request.  No charge shall be made to the subscriber for this service provided, however, that after the first service call a reasonable charge may be made if faulty operation is due to the fault of the subscriber.  Grantee's business days shall consist of Monday through Saturday.

5.16.04   Grantee shall furnish each subscriber at the time service is installed, written instructions that clearly set forth procedures for making inquiries or complaints, including the name, address and local telephone number of the employee or employees or agent to whom such inquiries or complaints are to be addressed, and furnish information concerning the Office of Cable Television including its address and telephone number.

5.16.05 Grantee shall interrupt system service after 7:00 a.m. and before 1:00 a.m. only with good cause and for the shortest time possible, and, except in emergency situations, only after Office approval and notification to subscribers.  Grantee may interrupt service between 1:00 a.m. and 7:00 a.m. for routine tests, maintenance, and repair, with prior notification to the Office and subscribers.  Such interruptions for routine test, maintenance, and repair nay be undertaken any night except Friday, Saturday, Sunday, or the night preceding a holiday.  Grantee shall maintain a written log of all service interruptions.

6. SERVICES AND PROGRAMMING

6.1  Municipal Channels.  During the term of this Agreement, at no charge to the District, Grantee shall provide the District on its residential network system two (2) municipal channels.  The District shall have exclusive control of this municipal channel capacity, provided, however, that the District shall not utilize such municipal channel capacity to provide, directly or otherwise, commercial programming services in competition with Grantee.  The municipal channels shall be utilized for non-commercial programming and purposes without any charges by the District to any subscriber.  Grantee shall have no authority or control over any programming cablecast on such dedicated channels.  Programming- cablecast on such dedicated channels shall not be considered origination cablecasting for purposes of Grantee's compliance with Section 76 Subpart G of the FCC rules and regulations unless otherwise determined by the FCC with respect to Grantee.  Grantee shall have no responsibility for programming cablecast on municipal channels.  Nothing in this Section shall be construed to imply that Grantee is a common carrier.  Upon demonstration by the District of full utilization of the municipal channel capacity, Grantee shall exercise its best efforts to provide additional channel capacity to the District on its cable television system to meet the reasonable needs of the District unless to do so would place an unreasonable economic burden on Grantee.

6.2  Services and Programming. Grantee shall provide subscriber television services in two (2) price tiers upon activation and initiation of service on the 450 MHz 54 channel cable television system specified in Section 5.1. Upon expansion and activation of the cable television system to 79 channels as provided for in Section 5.1, Grantee shall provide subscriber television services in three (3) price tiers.  Throughout the term of the franchise.  Grantee shall provide to subscribers broad categories of programming and nonprogramming services typically provided by cable television in comparable markets, subject to technical feasibility.  In the two (2) price tier construct as required by this Section, Grantee shall maintain a mix and quality, and to the extent practicable, a level of services comparable to the mix, quality and level of services for equivalent tiers proposed in Grantee's franchise application.  In the three (3) price tier construct as required by this Section, Grantee shall maintain a mix, quality, and a level of services comparable to the mix, quality and level of services for equivalent tiers proposed in Grantee’s franchise application.  Grantee shall have the right to change services and monthly subscriber fees upon thirty (30) days prior written notice to the Office and the subscribers affected thereby, subject however to Section 9.2, and provided however that any change in service shall maintain the mix, quality, and level of services being provided by Grantee as required by this Section.

6.3  Pay Television.  Grantee shall offer a broad range of optional pay television services of the same general class typically provided by cable television systems in major urban areas.

6.5  Leased Channel Service.

6.5.01  Grantee shall offer channel capacity for commercial use at such terms, conditions and rates as may be negotiated with each licensee, subject to the requirements of Federal law.

6.5.02  At least one of the leased channels shall be reserved for District of Columbia based businesses.  Thirty-five (35) percent of the leased channels shall be reserved for lease to black and other minority businesses and organizations.

6.7   Interactive Service.

6.7.01 Potential interactive services to be provided by Grantee to residential network subscribers when technically and economically viable shall include, but not be limited to, the following:

Home shopping, home banking, electronic mail, opinion polling, personal computer connection, community information service, security, pay per view, video game downloading.

7. SUPPORT FOR PUBLIC CABLE SERVICES

7.1   Public Services.  It is the District's intent to utilize the cable television system for public service to the maximum extent feasible.  To promote and develop public benefit usage of the cable television system, the District may receive and allocate support funds and other consideration from Grantee and/or others.

7.2  Grantee Support for Public Cable Services.  Notwithstanding any other provision of this Agreement or of Grantee's proposal to the contrary, Grantee's obligation to provide support of public access and municipal programming (whether in cash, in-kind, or through the provision of facilities and/or equipment) is expressly limited to the provision of channel capacity as specified in Section 6.1 and 7.2.04 hereof, and to the cash payments and facilities and services specified be low.

7.2.01  Grantee shall pay to the District Five Hundred Thousand Dollars ($500,000) on March 14, 1989, to be used by the District for municipal programming.  As construction of the cable system passes such facilities, Grantee shall provide at least one (1) basic tier I service outlet, at no charge to the District, to the following facilities under the control or ownership of the District including public schools, educational institutions, police and fire stations, public school buildings used for municipal purposes, hospitals, health clinics, and municipal agency offices provided, however, that such facilities shall be accessible by aerial plant or by existing C&P building area conduit for installation of the drop cable.  At any time, the Office may designate which facilities shall be provided and which shall receive basic tier I residential cable services, at no installation charge or monthly rate.  All such facilities shall be provided free access to the full range of institutional cable services as such services are offered to commercial customers.  Access to institutional services shall mean physical connection to the cable system, which shall provide the facility with capability to transmit and/or receive signals of any type with the addition of appropriate modulator/demodulation and interface equipment.

7.2.02  Grantee shall pay to the Public Access Corporation Five Hundred Thousand Dollars ($500,000) on March 14, 1988, to be used by the Public Access Corporation for access programming.

7.2.03 Grantee shall build, equip, and maintain a studio within the District of Columbia.  The studio shall be operational by March 14, 1987 and shall be used for local origination, public access and municipal programming.  Grantee's production equipment used for local origination programming shall be made available on reasonable notice for municipal and public access programming.  Grantee shall submit the following to the Office no later than September 14, 1986:

a. plans for studio Location;

b. proposed regulations for shared use of the studio by public access and municipal access users, and Grantee;

c. proposed regulations governing public and municipal access use of production equipment used by Grantee for local origination or other Grantee programming, including a description of the production equipment to be made available.

All regulations and plans as specified above, and any Grantee amendment thereof, shall require approval by the Office.  The Office shall submit to the Council for its review and approval all plans and regulations which the Office proposes to approve tinder this Section.  An approval of a plan or regulation by the Office shall take effect 60 days after its submittal to the Council unless a resolution disapproving such a plan or regulation or a part thereof is passed by the Council.  The Council in such resolution may provide for such terms and conditions of Office approval of a plan or regulation as is deemed appropriate.

7.2.04 Grantee shall provide four channels for public access.  Any dedicated but non-operational and unused channel capacity reserved for either public or municipal access, may be utilized by the Grantee for other purposes and programming, provided however that Grantee must dedicate such channels to municipal or public use within six (6) months after a request by the Office for such channels.

7.2.05 Failure by Grantee to meet any requirements imposed by Section 7.2 of this Agreement shall be deemed a material breach of this Agreement and may be grounds for termination of this franchise pursuant to Section 3.12 of this Agreement.

7.3  Additional Public Services.

7.3.01 In addition to any other obligations specified in this Section, Grantee will commence on March 14, 1986, payment to the Public Access Corporation of the greater of 1% of gross revenues or $100,000 per year.

7.3.02  Failure by Grantee to meet any requirement imposed by this Section shall be deemed a material breach of this Agreement and may be grounds for termination pursuant to Section 3.12. of this Agreement.

8. RATES AND CHARGES

8.1  Initial Rates and Charges.  Grantee shall provide services and facilities at rates and charges which Grantee shall establish and which are reasonable, compensatory and consistent with the provisions of this Section 8, Section 6.2 and Section 9.2. Exhibit B includes a representative listing of rates and charges for the 54 channel cable system which Grantee believes to be reasonably compensatory and appropriate.  Grantee shall have the authority and right to change rates and charges, including monthly subscriber fees, upon thirty (30) days prior written notice to the Office and the subscribers effected thereby, subject to the requirements of Section 9.2.

8.8  Subscriber Rates - Conditions.

8.8.01  Grantee shall publish and make available to each potential subscriber a schedule of all applicable fees and charges for providing cable television service.

8.8.02  Unless specifically authorized-by law, Grantee shall not, with regard to fees, discriminate or grant any preference or advantage to any person; Grantee may, however, negotiate fees with groups of subscribers as follows: Fees may be negotiated between Grantee and the subscribers, or a committee acting on behalf of subscribers, for basic service provided to 10 or more dwelling units within an apartment building, condominium, garden apartment, or townhouse complex under common ownership; to 10 or more room units within hotels or motels; or to commercial establishments engaged in the sale of television receivers.

8.8.03 Grantee shall have the authority and the right at any time to add to its service or installation fees, including basic service, any federal, state, or District taxes or fees directly imposed on subscribers, and for any copyright fees that may be imposed as a result of legislative, judicial, or administrative action at the federal, state, or local level, and any incremental cost adjustments implemented by satellite program suppliers.  If during the term of the franchise Grantee receives refunds of any copyright payments, it shall, without delay, notify the Office, suggest a plan for flow through of the refunds to subscribers, and retain the refunds in an interest bearing account pending order of the Office.  After considering a plan submitted by Grantee, the Office shall order the flow through of refunds to Grantee's subscribers in a fair and equitable manner.

8.8.04 Grantee may for promotional purposes and at its own discretion, waive, reduce, or suspend connection or monthly service fees for specific or indeterminate periods not to exceed 30 days.

8.8.05 Grantee shall provide a reasonable amount of space on its regular bills to its subscribers for the Public Access Corporation to insert wording of its choice to have subscribers contribute to or join the Public Access Corporation.  Grantee will provide that such contributions or requests to join the Corporation may be made through the return of payment of the Grantee's bills.

9. REGULATION

9.1  Franchise Regulation.  The franchise granted under this Agreement shall be subject to regulation by the District in accordance with the provisions of D.C. Law 4-142, as amended.  The District may, after consulting Grantee, enter into joint regulatory agreements with adjacent jurisdictions interconnected with the District's cable television system.

9.2  Rate Regulation.  Rate regulation shall apply to the extent Grantee is not exempt from local rate regulation by preemption of federal law.  Grantee shall have the authority to set rates and charges for services for which local rate regulation is not preempted, provided however that such rates shall not be unreasonable or excessively compensatory.

9.3  Liquidated Damages.

9.3.01   In addition to the remedies specified elsewhere in this Agreement, including the remedies specified in Section 3-9-03 of this Agreement, the remedies for delay in construction or service as specified in Section 4.4 of this Agreement, and the termination provisions specified in Section 3.12 of this Agreement, the Office reserves the right to impose any of the following liquidated damages, in the event Grantee violates any material term or condition of this Agreement or D.C. Law 4-142, as amended, provided that Grantee has not commenced substantial corrective action within thirty (30) days after receipt of written notice by certified mail from the Office to Grantee:

a. Impose liquidated damages, to be assessed against the Security Fund, as follows:

(1)   For repeated or willful individual failure to provide data, documents, reports, or information required by this Agreement, or failure to cooperate with the District during any review of the performance of Grantee, Grantee shall pay $100 per day for each incident so long as the violation continues; however, where such failure prevents the Office from verifying that Grantee has made all payments or contributions due under this Agreement, Grantee shall pay $1000 per day for each incident so long as the violation continues.

(2)   For repeated or willful individual failure of Grantee to comply with testing, inspection, or maintenance standards required in this Agreement, Grantee shall pay $1000 per day for each incident so long as the violation continues.

(3)   For repeated or willful individual failure to provide the types of cablecast services and programming required in this Agreement or to comply with operational standards, Grantee shall pay $1000 per day for each incident so long as the violation continues.

(4)   For repeated or willful individual failure to furnish, maintains and continue to offer service to any dwelling unit within the District at such time as the system is made operational in that area of the District, unless specifically exempted by this Agreement, Grantee shall pay $10 per day per dwelling unit for each incident so long as the violation continues.

(5) For any repeated or any willful individual failure to abide by the terms of any provision of this Agreement, where no specific liquidated damage amount has been stated, Grantee shall pay $250 per day or per incident, if an incident lasts less than a day, but, otherwise, each day, so long as that incident lasts.

b.   If the Office, in its discretion, invokes remedies specified in Section 3.9 of this Agreement for the violations specified in this Section, the Office may assess damages to be assessed against the Security Fund, for failure to make any payments or contributions under the terms of this Agreement or D.C. Law 4-142, as amended, including but not limited to those specified in Sections 3.2, 3.3, 3.4, 7.2 and 7.3, in the amount of $5000 per day per incident for each day for each incident so long as the violation continues, provided that any amount assessed under this provision shall be credited against the amount due from Grantee under this Section.

c.   The District and Grantee agree that the liquidated damages specified in subsection 9.3.01(a) are reasonable in light of the actual damages the District can be expected to sustain if the specified violations occur.  Such liquidated damage amounts represent the best assessment by the District and Grantee of the District's expected damages and shall not be construed by the District or Grantee to constitute penalties.

d.   The Office may require Grantee to adjust billing charges or make rate rebates or payments to the customers or classes of customers in such amount and on such basis as the Office may deem reasonable.

e. The Office may require Grantee to correct or otherwise remedy a violation of a material term or condition of this Agreement prior to any rate increase becoming effective.

9.3.02 In the event the stated violation is not reasonably curable within thirty (30) days, damages under this Section shall not be imposed if Grantee provid6s, within the said thirty (30) days, a plan, satisfactory to the Office, to remedy the violation as expeditiously as possible and continues to demonstrate good faith in seeking to correct said violation.

9.3.03    In determining which remedy or remedies for Grantee's violation are appropriate, the Office may take into consideration the nature of the violation, the person or persons bearing the impact of the violation, circumstances affecting the economic viability of the provision of cable service to District of Columbia subscribers, the nature of the remedy required in order to prevent further such violations and such other matters as the Office may deem appropriate; provided, however, that adequate remedies must be invoked if service is in any way materially lessened, or if any material provision of this Agreement is not complied with.

9.4Procedure Where Grantee Claims Inability to Perform.

9.4.01 If the Office notifies Grantee that Grantee has violated any provision of this Agreement, any rule or regulation promulgated pursuant hereto or any applicable federal or local law, Grantee may notify the Office within seven (7) days of receipt of such notification by the Office of any claimed inability to perform under the provisions of Section 11.1 of this Agreement and Grantee shall indicate whether it wishes a hearing on such claimed inability to perform.  Should Grantee request a hearing, the Office shall give Grantee twenty-five (25) days written notice of the time and the place of the hearing.

9.4.02 If the Office determines that such a violation, breach, failure, refusal or neglect by Grantee was excusable for reasons set forth in Section 11.1 of this Agreement, the Office shall direct Grantee to correct or remedy the same within such additional time, in such manner and upon such terms and conditions as the Office may direct.

9.4.03 If the Office determines that such violation, breach, failure, refusal or neglect was inexcusable, then the office may invoke any remedy in accordance with Section 3.9-03, 3.12, 4.3, or 9.3 above.

10. SEPARABILITY

If D.C. Law No. 4-142, as amended, or this Agreement or any material section thereof is determined by the City Council or an appropriate government agency, or judicial authority to be invalid or preempted by federal or local regulations or laws, the Council shall have the right to modify such section; provided, however, that no such modification shall impose upon Grantee total financial obligations in excess of those imposed upon Grantee under this Agreement.  If Grantee does not agree to such modifications the matter of appropriate modifications shall be submitted to arbitration as provided in Section 14 of this Agreement, and the decision of the arbitrators shall he binding on the parties.  During any period before Grantee has agreed to such modifications or before a decision of the arbitrator(s) has been issued, the existing section of this Agreement shall remain in full force and effect.

11. FORCE MAJEURE AND GRANTEE'S INABILITY TO PERFORM

11.1  Force Majeure.  In the event Grantee's performance of any of the terms, conditions, obligations or requirements of this Agreement or D.C. Law No. 4-142, as amended, is prevented or impaired due to any cause beyond its reasonable control or not reasonably foreseeable, such inability to perform shall be deemed to be excused and no penalties or sanctions shall be imposed as a result thereof, provided Grantee has notified the Office in writing within thirty (30) days of its discovery of the occurrence of such an event.  Such causes beyond Grantee's reasonable control or not reasonably foreseeable shall include, but shall not be limited to, acts of God, civil emergencies and labor unrest or strikes.  If the Office determines that Grantee's ability to perform was not prevented or impaired due to causes set forth in this Section, the Office shall so notify Grantee in writing.  Grantee may notify the Office within seven (7) days of receipt of such notification by the Office that it wishes a hearing on this issue.  Should Grantee request a hearing, the Office shall give Grantee a fifteen (15) day written notice of the time and the place of the hearing. If the Office determines that Grantee's ability vas prevented or impaired due to causes set forth in this Section, the Office may not invoke any remedies for delays or violations due to such causes.  If the Office determines that Grantee’s ability was not prevented or impaired due to causes set forth in this Section, the Office may assess damages or assert remedies in accordance with Sections 3.9-03, 3.12, 4.13, or 9.3 of this Agreement.

11.2   In any event, if at the end of ninety (90) days from the date upon which Grantee notified the Office of its inability to perform for the reasons set forth in this Section, the Office finds that the Grantee will not be able to provide significant services within another six (6) months, and, if the Office believes that another party would be able to provide all of those significant services in addition to all other material commitments of this Agreement within that subsequent six (6) month period, the Office shall hold a hearing at which Grantee and other interested parties may comment upon the ability of Grantee and other parties to provide significant services within that six (6) month period.  The Office shall notify Grantee at least thirty (30) days before the hearing of the time and place of the hearing and the significant services that the Office believes Grantee will not be able to provide.  After this hearing, the Council shall have the discretion to terminate this franchise and shall have the discretion to award this franchise to another party, even if Grantee's inability to perform is beyond its control.  Significant services under this provision shall consist of the cable services to be provided over the cable television system, and payments for fees due under this Agreement, and the items specified in Section 7.2 or this Agreement.

12. SUBSCRIBER, RESIDENT, AND MINORITY RIGHTS

12.1 Rights of Individuals.

12.1.01 Grantee shall not deny service, deny access, Or otherwise discriminate against subscribers, channel users, or general citizens on the basis of race, color, religion, national origin, age, sex, marital status, personal appearance, sexual orientation, family responsibilities, physical handicap, matriculation or political affiliation.  Grantee shall comply at all times with all other applicable federal and District laws and regulations, and all executive and administrative orders relating to nondiscrimination which are hereby incorporated and made part of this Agreement by reference.

12.1.02 Grantee shall not permit the installation of any special terminal equipment in any subscriber's premises that will permit transmission of two-way services utilizing aural, visual, or digital signals without first obtaining written permission from the subscriber.  No signals of a two-way cable communications channel, whether aural, visual, or digital shall be transmitted for purpose of monitoring or polling individual viewing patterns or practices without the express written permission of the subscriber.  The request for such permission shall be contained in a separate document which may be the subscriber agreement with a prominent statement that the subscriber is authorizing the permission in full knowledge of this provision.  Such written permission shall be for a limited period of time not to exceed two (2) years, which shall be renewable at the option of the subscriber, either by, affirmative or negative consent, upon request by Grantee.  No penalty shall be invoked for subscriber's failure to provide or renew such an authorization.  The authorization shall be revocable at any time by the subscriber without penalty of any kind whatsoever.  Subscriber authorization is required for each type or classification of two-way cable television activity planned; provided, however, that Grantee shall be entitled to conduct system-wide or individually addressed "sweeps" for the purpose of verifying system integrity, controlling return-path transmission, or billing for services.  This Section shall not in any event preclude use of transmission of signals useful only for the control or measurement of system performance.

12.1-03 Subscriber Information

a. Grantee shall not provide to any person, except the subscriber as provided in this section below, any data in its possession with respect to an individual subscriber's financial transactions, viewing selections, and utilization of computer-based interactive services, or any other personal or private information.

b. Grantee shall exercise the highest possible standard of care in protecting the privacy of this data.  Grantee shall provide to the Public Access Corporation a list of the names and addresses of its subscribers, which list shall be updated on a periodic basis, but at least once every twelve months; provided, however, that subscribers may refuse to have their names and addresses made available to the Public Access Corporation by so indicating on their initial subscription to the service.

c. Any information concerning individual subscriber viewing habits or responses, except for information for billing purposes, shall be destroyed within ninety (90) days, except where the subscriber consents to the retention of such information for a longer period of time.  Information for billing purposes shall be kept for three (3) years and then destroyed unless otherwise required to be kept by law.

d. Any information obtained by Grantee about a subscriber by means of two-way cable television transmission shall be made available to the subscriber within ten (10) days after a receipt of a request from the subscriber to examine.

e. Upon subscriber's application for cable television service, including, but not limited to, interactive service, Grantee shall provide a prospective subscriber with a separate notice explaining the subscriber's right to privacy protection under this Section and applicable federal and District law.

f.  Any violation of any provision of this section mandated by D.C. law 4-142, as amended, shall be deemed a material breach of this Agreement and shall constitute grounds for termination pursuant to Section 3.12 of this Agreement.

12.1.04Fairness of Accessibility. The entire cable television system of Grantee shall be operated in a manner consistent with the principal of fairness and equal accessibility of its facilities, equipment, channels, studios and other services to all citizens, businesses, public agencies and other entities having a legitimate use for the network and no one shall be arbitrarily excluded from its use; allocation of use of said facilities shall be made according to the rules or decisions of Grantee and any regulatory agencies affecting the same.

12.2Continuity of Service Mandatory.

12.2.01 It shall be the right of all subscribers to continue receiving service insofar as their financial and other obligations to Grantee are honored.  In the event Grantee elects to rebuild, modify, or sell the system, or the District gives notice of intent to terminate or fails to renew this franchise, Grantee shall act so as to ensure to the extent practicable that all subscribers receive continuous, uninterrupted service regardless of the circumstances.

In the event of a change of franchisee, or in the event a new operator acquires the system, Grantee shall cooperate with the District and the new franchisee or operator in maintaining continuity of service to all subscribers.  During such period, Grantee shall be entitled to the revenues for any period during which it operates the system, and shall be entitled to reasonable costs for its services when it no longer operates the cable television system.

12.2.02 In the event Grantee fails to operate the cable television system for seven (7) consecutive days without prior approval of the Office or without just cause, the District may, at its option, operate the system or designate an operator until such time as Grantee restores service under conditions acceptable to the Office or a permanent operator is selected.

If the District is required to fulfill this obligation for Grantee, Grantee shall reimburse the District for all reasonable costs or damages that are the result of Grantee's failure to perform which are in excess of revenues the District receives from the cable television system.  The Office may assess the Security Fund established under Section 3.9 of this Agreement for all such costs or damages in excess of revenues.  If the Office and Grantee cannot agree as to whether the failure to operate the cable television system was with just cause, the issue of just cause shall be submitted to arbitration pursuant to Section 14 of this Agreement.

12.3Grantee Rules and Regulations.  Grantee shall have the authority to promulgate such rules, regulations, terms and conditions governing the conduct of its business as shall be reasonably necessary to enable Grantee to exercise its rights and perform its obligations under this Agreement, and to assure an uninterrupted service to each and all of its customers.  Provided, however, that such rules, regulations, terms and conditions shall not be in conflict with the provisions hereof or applicable District and federal laws, rules and regulations.  Such rules, regulations, terms and conditions which affect service provided to subscribers shall be provided to the Office within thirty (30) days of their promulgation.  Those rules shall be subject to approval by the Office within thirty (30) days of their receipt by the Office or shall otherwise take effect.

12.4Tenant Rights. Subject to the provisions Of Exhibit A, Grantee shall be required to provide to tenants in individual units Of a multiple housing facility all services offered to other subscribers within the franchise territory.  However, the Office shall waive this requirement to provide service if Grantee submits written evidence that the landlord of the multiple housing facility has demanded, either or both of the following.

a. Excessive payments; or

b. Unreasonable conditions for installation, inspection and maintenance of the Grantee's system.

In providing such services Grantee shall strictly adhere to all requirements as set forth in D.C. Law 4-142, as amended, regarding the conformance of the installation of facilities to the reasonable conditions of the landlord; indemnification to the landlord; bearing the costs of installation, operation, or removal; and the payment of adequate compensation to landlords.

12.5Affirmative Action and Training.

12.5.01 Each year on the anniversary date of the effective date of this franchise, Grantee shall submit to the Office of Human Rights a written Affirmative Action Plan for approval in accordance with Section 253 of the District of Columbia Human Rights Act of 1977 effective December 13, 1977 (D.C. Law 2-38, D.C. Code, sec 1-2501 et seq.), as amended.  The plan shall apply to all job categories with Grantee's workforce.  Grantee's plan shall also include detailed on-the-job training and apprenticeship programs designed to provide the District of Columbia residents, particularly unskilled and semi-skilled minority youth with job skills, job opportunities, and upward mobility, both within the cable television Industry and Grantee's workforce.  Grantee shall fully abide by the provisions of Mayor's Order 83-265, dated November 9, 1983, so long as such order shall remain in force and effect.  These programs shall be applicable to all job categories in the applicant's workforce and shall be maintained throughout the term of the franchise.

12.5.02 Grantee shall make a positive and good faith effort to establish employment goals and timetables designed to achieve minority representation equal to the percentage of minority population of the District of Columbia by the end of the second year of the franchise and throughout the balance of the franchise term, provided qualified or qualifiable minority persons are available.  The adoption and implementation of goals and timetables by Grantee shall not constitute a discriminatory practice prohibited by this Agreement or law.

12.5-03 Upon award of this franchise, Grantee shall submit construction and skilled trade apprenticeship training programs to the Director of the District of Columbia Apprenticeship Council for approval and registration pursuant to Section 5 of the Amendments to An Act To Provide for Voluntary Apprenticeship in the District of Columbia Act of 1978, effective March 6, 1979 (D.C. Law 2-56; D.C. Code, Sec. 36-409).  Not less than fifty-one (51%) percent of Grantee's apprentices and trainees and those of its subcontractors on work performed for Grantee shall consist of District of Columbia residents.

12.5.04 Grantee shall report annually to the Office of Human Rights regarding the status of its training programs including a detailed analysis of Grantee's efforts to achieve its goals and timetables.

12.5.05 Failure to comply with any provision of this Section shall constitute an unlawful discriminatory practice and shall subject Grantee to fines imposed by the Commission on Human Rights of not less than $1,000 for each day that the violation persists and any other penalties that may be imposed pursuant to District law or this Agreement.  Where deemed appropriate, the Office of Human Rights may recommend to the Council suspension or termination of the franchise in accordance with procedures set forth in D.C. law 4-142, as amended, and in Section 3.12 of this Agreement.

12.5.06 For purposes of this Section, the term ‘qualifiable’ refers to minority persons who can be trained in accordance with the requirements of this Section.

12.6Grantee's Responsibility Not to Discriminate.  Grantee shall not refuse to hire or employ, discharge, or otherwise discriminate against any person for any reason provided in the Human Rights Act of 1977 (D.C. Law 2-38; D.C. Code, sec. 1-2501 et seq.).

12.7Contracting Requirements.  Grantee shall be treated as an agency for purposes of minority contracting.  All provisions of the Minority Contracting Act of 1976 (D.C. Law I95; D.C. Code, sec. 1-1141 et seq.), shall apply to Grantee, except the meaning of the term 'minority' shall have the same meaning as defined in D.C. Law 4-142,'as amended and Section 1 of this Agreement.  Where a minority business enterprise is otherwise qualified but cannot obtain necessary bonding or insurance, Grantee shall provide or obtain bonding or insurance and transfer the cost to the minority business enterprise.

12.8Local Hiring and Purchasing Policy.  Grantee's employee workforce and that of its subcontractors shall consist of not less than 51% District of Columbia residents.  Grantee and all of its subcontractors shall utilize the Job Service operated by the District of Columbia Department of Employment Services as a first source of referral for qualified applicants, trainees, and other workers.

12.9 Any violation of this Section shall be deemed a material breach of this Agreement, and may constitute grounds for termination pursuant to Section 3.12 of this Agreement.

13. ESSENTIAL ELEMENTS OF AGREEMENT

Whenever this Agreement sets forth any time for any act to be performed by or on behalf of Grantee, the time shall be deemed of the essence and Grantee's failure to perform within the time allocated shall, in all cases, be sufficient grounds for the District to invoke the remedies available under the terms and conditions of this Agreement and D.C. Law 4-142, as amended.

Those provisions of this Agreement whose breach has been designated as "material" do not constitute the exclusive list of such provisions.  Violation of other provisions may also be deemed by the District as grounds for termination where they would constitute a material breach of this Agreement.

14. ARBITRATION

14.1 Arbitration under any provision of this Agreement which explicitly calls for arbitration by Grantee of any disputes between Grantee and the Office thereunder shall be structured as follows and shall be binding:

14.1.01 The Office shall issue written notice to Grantee that the parties cannot reach agreement on the disputed matter and that arbitration is required.

14.1.02 Within fifteen (15) days of such notice, Grantee and the Office shall each appoint a person to arbitrate the dispute.  Each arbitrator so chosen shall not be an officer, employee, owner, or supplier of disputants, and shall have no financial relationship whatsoever with disputants, except for the reasonable reimbursement of such persons for their performance as arbitrators.  Within fifteen (15) days of the appointment of these arbitrators, they shall choose a third person to serve as an arbitrator, and the three shall constitute an arbitration panel.  This third person also shall not be an officer, employee, owner or supplier of disputants and shall have no financial relationship whatsoever with disputants, except for the reasonable reimbursement of such person for his performance.  The costs of such arbitration shall be evenly divided among the parties thereto.  The arbitrators shall establish whatever arbitration procedures they deem necessary and shall make their decisions as quickly as possible.

14.1.03 If an arbitration panel has not been constituted under Subsection 14.1.02 within thirty (30) days, the parties shall request 'the American Arbitration Association

(the "Association") to conduct an arbitration under its procedures.  If the arbitrator or arbitrators appointed by the Association determine that the Grantee or the Office, or the arbitrators appointed respectively by each of them, unreasonably refrained from participating in arbitration under subsection 14.1.02 that party shall be assessed for the full costs of arbitration under this Subsection.

14.2 Arbitration under any provision of this Agreement which explicitly calls for arbitration by the Grantee of any disputes between the Grantee and any party other than the Office thereunder shall be structured as follows and shall be binding.

14.2.01 Grantee and the party with whom it maintains a dispute ("the other party") may enter into an arbitration arrangement of their choice.

14.2.02 If either the Grantee or the other party inform the office of an inability to agree upon an arbitration arrangement, then, within fifteen (15) days, the Grantee and the other party shall each appoint a person to arbitrate the dispute.  Each arbitrator so chosen shall not be an officer, employee, owner, or supplier of disputants, and shall have no financial relationship whatsoever with disputants, except for the reasonable reimbursement of such persons for their performance as arbitrators.  Within fifteen (15) days of the appointment of these arbitrators, they shall choose a third person to serve as an arbitrator, and the three shall constitute an arbitration panel.  This third person also shall not be an officer, employee, owner or supplier of disputants and shall have no financial relationship whatsoever with disputants, except for the reasonable reimbursement of such person for his performance.  The Costs of such arbitration shall be evenly divided among the parties thereto.  The arbitrators shall establish whatever arbitration procedures they deem necessary and shall make their decisions as quickly as possible.

14.2.03 If an arbitration panel has not been constituted under Subsection 14.2.02 within thirty (30) days of the date upon which the Office has been informed of the inability of disputants to agree upon an arbitration arrangement, the parties shall request the American Arbitration Association (the "Association") to conduct an arbitration under its procedures.  If the arbitrator or arbitrators appointed by the Association determine that the Grantee or the other party, or the arbitrators appointed respectively by each of them, unreasonably refrained from participating in arbitration under subsection 14.2.02, that party shall be assessed for the full costs of arbitration under this subsection.

15. CONSTRUCTION OF AGREEMENT.

This Agreement shall be construed in accordance with the laws of the District of Columbia.  Any litigation involving this Agreement shall be tried in the courts of the District of Columbia.  This Agreement is intended to be complete and final expression of the rights and duties of the District and Grantee.

IN WITNESS THEREOF, the District and Grantee have executed this Agreement the date and year first above written.

Signed by Mayor Marion Barry

Signed by Robert Johnson

EXHIBIT A

The following construction and service schedule, construction map, neighborhood construction schedule, and trunk routing map shall be used to judge Grantee compliance with the construction requirements of this Agreement.

Grantee shall meet or exceed all schedules and requirements contained in this Exhibit.

1. DCI shall commence construction not later than June 1, 1986.  Prior to such date, Grantee shall obtain pole attachments complete detailed engineering design, place equipment orders, commence construction of headend and obtain necessary licenses.

2. Construction of the residential network shall proceed in accordance with the following schedule:

Month from Commencement of Construction Activity

0 -12  Complete construction and provide service to 14% of the dwelling units within the Franchise Area.

13 –24  Complete construction and provide service to 43% of the dwelling units within the Franchise Area.

25 - 36  Complete construction and provide service to 70% of the dwelling units within the Franchise Area.

37-60  Complete construction and provide service to 100% of the dwelling units within the Franchise Area.

EXHIBIT B

REPRESENTATIVE TIER STRUCTURE

BASIC SERVICE

$3.95 per month

Channels 2-22

TIER II

$12.95 per month

Channels 23-54