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(e) Grantor and Grantee expressly reserve the right to seek a judicial determination as to whether any particular service offered by Grantee on its system constitutes cable service for purposes of this Agreement. 2. GENERAL REQUIREMENTS 2.]. Governing Requirements. Grantee must comply with all provisions of this Agreement, the provisions of Chapter] 5 as it exists on the effective date of this Agreement, and all other generally applicable laws, ordinances, and regulations. Grantor will provide advance written notice to Grantee of any proposed amendments to Chapter ]5 and the opportunity to be heard on those proposed amendments. 2.2. Franchise Fee. (a) As compensation for the franchise granted by Grantor, and in consideration for authorization to use the streets and public ways of Grantor for the construction, reconstruction, operation, and maintenance of Grantee's cable television system, the Grantee will pay to the Grantor, in quarterly installments, a franchise fee of five percent (5%) of Gross Revenues, as defined in Section ]4 ofthis Agreement. (b) The parties acknowledge that, at present, applicable federal law limits the Grantor to collection ofa maximum permissible franchise fee of five percent (5%) of Gross Revenues derived from the operation of the cable system to provide cable services. ]f Congress, the FCC, or a court of competent jurisdiction alters the current franchise fee limitations on the percentage of the Gross Revenues to which the percentage is applied, in a manner that materially changes the benefits or obligations of either party, then the parties agree to comply with the requirements of Subsection ]3.7 of this Agreement. (c) Grantor acknowledges that, during the term of this Agreement, Grantee may offer to its subscribers, at a discounted rate, a bundled or combined package of services consisting of cable services, which are subject to the fee referenced above in paragraph (a), and other services that are not subject to that fee. If Grantee, or any of its affiliates, bundles or combines the sale of some or all of its cable services with non-cable services, and it becomes necessary to separately compute the amount of Gross Revenues attributable to cable services in order to determine the amount of franchise fees or PEG access support fees that are payable to the Grantor, then the following provisions will be applicable: ]. Grantee will not structure the pricing of any bundled or combined services so as to intentionally or unreasonably cause a reduction in the Gross Revenues upon which franchise fees or PEG access capital support payments are based. 2. If Grantor reasonably determines that Grantee has, contrary to this paragraph (c), unlawfully or inequitably allocated Gross Revenues between cable services and non-cable services in calculating franchise fee payments, then the parties will meet upon advance notice from the Grantor to discuss the allocation methodology. ]fthe parties cannot resolve the dispute within a reasonable period of time, then the parties will submit the matter to a mutually- 12097 -0002\680672v 19 .doc -7- Cit~, of Santa Ana EXECUTION COPY 4/07/05