6.1. In addition to the service requirements in this Franchise, Grantee agrees to provide programming responsive to the Austin community's needs and interest for Spanish language programming.

6.2. This programming shall consist of at least two (2) Spanish language channels.

6.3. The parties expressly agree that the programming described in paragraphs 6.2 and 6.5 represent broad categories of video programming within the meaning of 47 U.S.C. 544(b) (2) (B).

6.4. Grantee shall retransmit all closed-captioned signals made available by programmers in conjunction with programming in its line-up and which are provided in order to facilitate viewing by handicapped persons. Grantee shall maintain the necessary head-end equipment to make SAP features available to Subscribers. Grantee's obligations under this subsection do not extend to providing customer premises equipment.

6.5. Grantee believes there is significant interest on the part of its customers in locally based music. Grantee intends to make available one full-time channel for the exhibition of programming concerning Austin music. Grantee intends to include in its program offering, a channel dedicated to local music throughout the full term of the Franchise, provided quality programming is available and customer interest continues.

6.5.1. Grantee does not intend to undertake any obligation to produce such programming itself, but rather the administration of this channel shall be performed by the City or its designee. Nothing herein shall prevent Grantee, the City, or the channel's programmer from selling commercial advertising time on this channel as agreed by the parties.

6.5.2. During the period that Grantee provides such channel, the maximum number of PEG Access Channels shall be reduced by one.

6.5.3. Notwithstanding any other provision in this Franchise, the Grantee agrees that the programming for this Channel may be transmitted over the Institutional Network to enable distribution to Cable System Subscribers, and all equipment provided for PEG Access may be used for the production of programming pursuant to Subsection 6.5.

SECTION 7. PROVISION OF INSTITUTIONAL NETWORK

7.1. Current System. The Institutional Network presently consists of approximately 257 miles of 400 MHz broadband coaxial cable mid-split two-way plant, switching, routing equipment, monitoring equipment, network management equipment, and user drops. Grantee shall provide to the City the Institutional Network including maintenance, operation, monitoring and provisioning at Grantee's Direct Cost.

7.2. Grantee Capital Obligations. Grantee shall provide the City a design for upgrading the Institutional Network within sixty (60)days of the effective date of this Franchise. The City will review, negotiate any changes and approve the design within thirty days of delivery. Grantee shall commence the INet upgrade in conjunction with the Rebuild. Grantee shall provide the City with quarterly construction updates indicating work completed, planned construction for next quarter, and projected time-line for project completion. The Institutional Network upgrade, shall be completed within forty months of the effective date of this agreement.

7.2.1. Upon request of the INet/XNet Authority and approval by the City Council, Grantee shall provide up to fifty (50) miles of extensions to the Institutional Network.

This mileage shall be in addition to the upgrading of the present 257 mile Institutional Network. Any extensions in excess of the fifty (50) miles provided by this Franchise shall be paid for by the user, however overall system mileage shall not exceed 325 miles during the term of this agreement. Grantee shall reconfigure and/or replace with optical fiber all amplifier cascades sufficient to attain a carrier to noise ratio of 46 dB and all applicable FCC standards.

7.2.2. Grantee shall upgrade the INet system to provide benchmark reliability of 99.5% and benchmark accuracy of 10-6 bit error rate for data signals, excluding any external factors such as end user equipment. Grantee shall not be subject to any penalty or sanction due to failure to meet the bit-error rate standard, provided that Grantee is meeting all other INet technical performance standards and is working in good faith with the City to meet the bit-error rate standard.

7.2.3. Grantee shall take appropriate measures to ensure that video signals arriving at the switching point (Master Control) for insertion into distribution channels meet all FCC standards and maintain a minimum of 46 dB carrier-to-noise ratio, excluding any external factors such as end-user equipment. Grantee shall not be subject to any penalty or sanction due to failure to meet the carrier-to-noise standard, provided that Grantee is meeting all other INet technical performance standards and is working in good faith with the City to meet the carrier-to-noise standard.

7.2.4. Grantee shall install monitoring and testing equipment on the INet sites so that Grantee can electronically detect and isolate network malfunctions. Grantee shall consult with the City to explore feasibility of providing remote read-only access to network management equipment so as to allow users to isolate network problems from user equipment problems.

7.3. Grantee Contributions for INet. Grantee shall expend funds to provide:

7.3.1. The upgrade of the INet as specified above over the period of 40 months commencing with the adoption of this Franchise;

7.3.2. User drops upon request of the INet/XNet Authority and approval by the City Council;

7.3.3. All other requirements of this Section.

Grantee's expenditures under this Section 7 shall not exceed $1.5 million in the period January 1, 1997 through August 12, 2005 and $500,000 in the period August 13, 2005 through August 12, 2011. The City may increase or decrease the amounts of support provided by the Grantee under this paragraph and Section 4.8 and reallocate such amounts, provided that in no event shall Grantee's combined obligations thereunder exceed $3 million in the period January 1, 1997 through August 12, 2005 and $1 million in the period August 13, 2005 through August 12, 2011.

Grantee shall provide a written report to the City every quarter as to the INet upgrade and expenditures.

7.4. Maintenance. Grantee shall provide demand maintenance twenty-four hours a day seven days a week and shall maintain the network to operate at or above FCC standards at all times. Grantee may charge the City a fee for use of the Inet ("Maintenance Fee"). The amount of the fee shall be limited to Grantee's Direct Cost to maintain and operate the Inet and shall not exceed $250,000 annually which may be adjusted no more frequently than every twelve months indexed to the Austin Regional Annual Consumer Price Index ("CPI").

In the event there are Direct Cost increases appreciably above the CPI, which result in the overall Direct Cost to be appreciably above the Maintenance Fee, the Grantee may request that the City grant an adjustment to the Maintenance Fee, due to such increases in Direct Cost which shall not be unreasonably denied. Such an adjustment in accordance with this paragraph may not be requested more frequently than every 24 months.

The fee to maintain the INet shall be paid as allocated by the City.

Grantee shall submit to the City an annual estimate of the Direct Cost for operation and maintenance for the next calendar year on March 1st of each year. Before January 31st of each year, Grantee shall submit documentation of the preceding year's actual Direct Cost. The documentation submitted will be subject to audit upon request by the City. The City will reimburse Grantee for its Direct Cost estimated for each calendar year, on a quarterly basis; such payments coinciding with the schedule outlined in Section 14 herein. The difference between amounts paid and the actual Direct Cost shall be paid or credited in the subsequent calendar year. The initial payment year shall be 1998.

Under normal operating conditions, Grantee shall respond to all outage reports within two hours and make necessary repairs within four hours of notification Monday through Friday, 6 a.m. to 10 p.m. Grantee shall provide a four hour response time and six hour repair time Monday through Friday, 10 p.m. through 6 a.m. and Saturday and Sunday. Under normal operating conditions, Grantee shall respond to degradation reports within twenty four hours. Grantee shall provide stand-by powering capable of four hours of operation in the event of failure of the power grid. Grantee shall operate the network to provide at least 99.5% reliability. For the purposes of this section, reliability means the ratio of the number of hours per year that the network is functioning and available to users divided by the total number of hours in a year, computed for each user location.

7.5. Interconnection. Grantee shall provide a direct fiber connection between Grantee's headend and the Greater Austin Area Telecommunications Network (GAATN) network control center in order to provide for GAATN video feeds or data that need to be routed to the subscriber PEG access channels. The capital cost of providing interconnection shall be counted against the capital amount set forth in Section 7.3.

7.6. Grantee shall continue to own and maintain the Institutional Network. The Institutional Network shall be for the use of the City as set forth herein and no portion thereof shall be used by any other person at any time, whether for payment or not. The Institutional Network shall be used only for non-commercial educational and governmental purposes and for Public Access Channels, subject to Sections 7.6 and 6.5. The Institutional Network shall not be extended to any location except as permitted by this Agreement and may not be used to transmit or receive any communication (in whatever form, whether video, audio, data, voice or otherwise) destined to or originating from any other switched network, including without limitation the facilities of any local or long-distance telephone company, except for programming for use on the PEG channels. Any use of the Institutional Network other than as permitted herein shall be on terms and conditions agreed to by Grantee and the City.

SECTION 8. CONSTRUCTION WORK REGULATION BY CITY AND UNDERGROUND CONDUIT USE BY GRANTEE

8.1. All work done by Grantee in connection with the construction, expansion, reconstruction, maintenance or repair of its facilities in the Public Rights-of-Way shall be subject to and governed by all City Requirements, and applicable federal and state rules and regulations. Grantee shall place certain facilities underground according to applicable City Requirements.

8.2. All excavations and other construction in the Public Rights-of-Way shall be performed in accordance with all applicable City Requirements, including the obligation to use trenchless technology whenever possible. Furthermore, all such construction shall be undertaken so as to minimize interference with the use of public and private property and in accordance with any direction given by the City under the police and regulatory powers of the City.

8.3. Grantee may be required by the City to attach portions of its facilities to poles or duct trench space maintained by any other person or entity franchised by the City. Grantee shall not be required to attach its facilities to the poles or duct trench space of any other person or entity franchised by the City if it can be shown to the City's satisfaction that Grantee shall be subjected thereby to increased risks of interruption to its service or to increased liability for accidents, or unreasonably delay construction or availability of service, or if the facilities of such other person or entity are not of the character, design and construction required by, or are not being maintained in accordance with current practice, or are not available to Grantee on reasonable terms, including without limitation a reasonable fee.

SECTION 9. REBUILD AND UPGRADE OF SYSTEM

9.1. The Grantee has submitted a construction schedule and specific construction sequencing plans and completion dates for each sequence of the Rebuild, "Upgrade Plan," attached hereto as Exhibit C. This Plan includes or will include as updated a separate map of the franchise area showing: (a) the location of the master headend, all subheadends/hubs, headend to hub interconnect network, fiber backbone; and (b) the proposed distribution of all principal trunk and distribution lines throughout the Cable System (including termination points of all lines). The Grantee must submit an updated construction schedule to the Director on a quarterly basis until the completion of the Rebuild. The Rebuild shall be completed on or before forty (40) months of the effective date provided herein, unless the schedule for completion is amended in accordance with the terms of this Franchise. The time set for completion of the upgrade is based on Grantee's past experience of the time required to obtain necessary permits or other permission from the City and/or other pole owners for the work required.

No less than thirty (30) days prior to completion of the Rebuild, the Grantee shall notify the Director that the Rebuild is substantially complete. The Director and the Grantee shall arrange for such inspections as shall enable the Director to ascertain whether the Rebuild has been completed as scheduled. The Director shall accept the completion of the Rebuild upon the Director's satisfaction that the obligations of the Grantee to complete the Rebuild have been fulfilled in all respects.

9.2. Completion of Rebuild. The Grantee agrees to fulfill its obligations pursuant to the Rebuild Plan . One hundred and twenty (120) days following completion of the Rebuild, the Grantee shall submit to the Director a certification that the Grantee is then in compliance with all obligations pursuant to the Upgrade Plan. Notice will be given to the Director of any material changes in such construction schedule, milestones or sequence, but no such changes shall adversely affect the operations or completion date of the Rebuild. Upon completion of the Rebuild, the Grantee shall submit to the City, in written and in computer form, "as built" maps for the entire System as upgraded.

Upon completion of the Rebuild, the Grantee shall be capable of providing the upgraded Cable Service to every potential subscriber in the Franchise Area except as provided in this Franchise. Upgraded Cable Services shall be made available to each Upgrade phase within 90 days of the Upgrade completion date shown in Exhibit C.

9.3. General Requirement. The Grantee agrees to comply with each of the terms set forth in Sections 8, 10 and 12 of this Franchise governing construction and technical requirements for the Cable System Rebuild, in addition to any other City Requirements or procedures reasonably specified by the Director and consistent with this Franchise.

9.4. Quality. All work involved in the construction, operation, maintenance, repair, upgrade, and removal of the Cable System shall be performed in a safe, thorough and reliable manner using materials of good and durable quality. If, at any time, it is determined by the City or any other agency or authority of competent jurisdiction that any part of the Cable System, including, without limitation, any means used to distribute signals over or within the Cable System, is harmful to the health or safety of any person, then the Grantee shall, at its own cost and expense, promptly correct all such conditions.

9.5. Technical Specifications of Cable System. The Grantee shall install all aerial and underground cables and wires in a manner consistent with City Requirements and in compliance with all applicable laws, ordinances, and safety Requirements including but not limited to the Federal Communications Commission, Federal Aviation Administration, National Electric Code, National Electric Safety Code, National Cable Television Association Standards of Good Engineering Practices, American Telephone & Telegraph Construction Procedures (Blue Book).

9.5.1. As provided in this Franchise, the Grantee shall comply with all applicable federal, state and City laws, rules, regulations, codes, and other requirements in connection with the construction of the Cable System.

9.5.2. The installation of all cables, wires, or other component parts of the Cable System in any structure shall be undertaken in a manner which does not interfere with the operation of any signal distribution system in said structure, including any conduit used in connection with such other system. For the purpose of routine maintenance, repair, connection, installation, or disconnection, all Cable System cabling and wiring in any structure shall be accessible from the "tap side" in a public hallway, roof, basement, stairwell, outside wall or other public area in said structure.

9.5.3. The Grantee must comply with, and shall ensure that its subcontractors comply with the City Requirements. If the installation, construction or operation of the Cable System does not comply with such rules, regulations and standards, the Grantee must, at its sole cost take steps necessary to ensure compliance with such rules, regulations and standards.

SECTION 10. WORK BY OTHERS, CONSTRUCTION BY ABUTTING OWNERS, ALTERATION TO CONFORM WITH PUBLIC IMPROVEMENT

10.1. The City reserves the right to lay and permit to be laid, sewer, gas, water, and other pipe lines or cables and conduits, and to do and permit to be done, any underground and overhead work, and any attachment, restructuring or changes in aerial facilities that may be deemed necessary or proper by the City Manager in, across, along, over or under any public street, alley or right-of-way occupied by Grantee, and to change any curb or sidewalk or the grade of any street. In permitting such work to be done, the City shall not be liable to Grantee for any damages not directly caused by the willful misconduct or negligence of the City; provided, however, nothing herein shall relieve any other person or entity, including any contractor, subcontractor, or agent from liability for damage to Grantee's Cable System.

10.2. In the event that, during the term of this Franchise, the City authorizes abutting landowners to occupy space under the surface of any public street, alley, or right-of-way, such grant to an abutting landowner shall be subject to the rights herein granted to Grantee. In the event that the City shall close or abandon any public street, alley or right-of-way, which contains any portion of Grantee's Cable System, any conveyance of land contained in such closed or abandoned public street, alley, or right-of-way shall be subject to the rights herein granted.

10.3. During the term of this agreement, Grantee shall be liable for the acts or omissions of any entity used by Grantee (including an Affiliate) when such entity is involved directly or indirectly in the construction and installation of Grantee's Cable System to the same extent as if the acts or omissions of such entity were the acts or omissions of Grantee.

10.4. Relocation or Removal of Facilities: Within thirty (30) days following written notice from the City, the Grantee shall, at its own expense, temporarily or permanently remove, relocate, change or alter the position of any of its Cable System or other of its facilities that are within the Public Rights-of-Ways whenever the City shall have determined that such removal, relocation, change or alteration is reasonably necessary for:

10.4.1. The construction, repair, maintenance or installation of any City or other public improvement in or upon the Public Rights-of-Way.

10.4.2. The operations of the City or other governmental entity in or upon the Public Rights-of-Way.

SECTION 11. COMPLIANCE WITH CITY CHARTER

Grantee recognizes, accepts and agrees that the terms, conditions and provisions of this Franchise are subject to the applicable provisions of the Austin City Charter. Any request by Grantee for a modification of this Franchise shall be subject to review by the City Attorney for compliance with the applicable provisions of the City Charter.

SECTION 12. CONSTRUCTION, MAINTENANCE, EXPANSION, RECONSTRUCTION, AND EXCAVATION

1.2.1 In furtherance of the public interest in safety, health and public welfare and to facilitate the safe management of Public Rights-of-Way, the construction, expansion, reconstruction, excavation, use, maintenance and operation of Grantee's Cable System and property shall be subject to all generally applicable City Requirements as determined by the City Manager, or designee. In addition to any other City Requirements, forty-five (45) days prior to the commencement of construction which involves any alteration to the surface or beneath the surface of the Public Rights-of-Way, to the extent generally required, Grantee shall provide the Public Works Director (or such other officials as the City may designate from time to time) with construction plans and maps showing the routing of any new construction and construction plans.

Grantee shall not commence construction until the plans and drawings have been approved in writing by the Public Works Director. Such approval shall not be unreasonably delayed. Grantee shall participate in the Austin Area Utility Coordination Council ("AAUCC") meetings and coordinate all new construction with the AAUCC. Grantee's facilities shall bear identification marks as may be established by the AAUCC, to the extent such facilities are installed after the AAUCC establishes such. Grantee shall not be held in non-compliance with any other requirement of this Franchise, including without limitation, the consumer service standards, due to its compliance with this Section.

12.2. Upon request by written notice of the City, Grantee shall remove and abate any facility that is declared an Emergency. Grantee and the City shall cooperate to the extent possible to assure continuity of service. If Grantee, after notice, fails or refuses to act, the City may remove or abate the same, at the sole cost and expense of Grantee, all without compensation or liability for damages to Grantee.

12.3. Upon completion of initial or any subsequent construction work, Grantee shall promptly restore the Public Rights-of-Way in accordance with applicable City Requirements. Grantee may excavate only for the construction, installation, expansion, repair, removal, and maintenance of all or a portion of its facilities.

12.4. Except in an Emergency, Grantee shall not excavate any pavement in any public alley or street or significant amounts of any unpaved Public Right-of-Way without first complying with all applicable City Requirements.

12.5. Within one hundred twenty (120) days of completion of each segment of Grantee's facilities , Grantee shall supply the City with a complete set of "as built" drawings for that segment in a format to be prescribed by the Public Works Director. Grantee shall provide every six (6) months a complete set of "as-built" drawings incorporating any changes to Grantee's facilities in the Public Rights-of-Way, in a format to be prescribed by the Public Works Director. Grantee will obtain the City's approval before any relocation of Grantee's Facilities in the Public Rights-of-Way. Such approval shall not be unreasonably withheld. In addition, Grantee shall provide annually to the City a map of its facilities.

SECTION 13. CONSUMER SERVICE STANDARDS

The Grantee agrees to abide by the Consumer Service Standards attached hereto as Exhibit A.