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17 <br /> fulfilling requirements of the franchise agreement. Such requirements may include, but are not limited <br /> to, Public, Educadon and Government(PEG)access television programming, Local origination(LO) <br /> programming,and Institutional Network expenses. <br /> Cable System Upgrade Costs <br /> Pursuant to the Social Contract,Time Warner is allowed to assess each CPST subscriber in 1997 <br /> $2.00 monthly to recover estimated costs associated with a cable system upgrade. This assessment is <br /> levied only on the CPST tier and will increase by$1.00 for each of the five years of the Social <br /> Contract. Thus, in the second year of the Contract,the operator will collect$2.00 per subscriber each <br /> month, $3.00 per subscriber,each month in the third year,etc. <br /> By the end of the Social Contract on December 31, 2000, it is estimated that Time Warner will have <br /> collected approximately$1,190,276.76 to fund its rebuild of both cable system within Orange <br /> County(see the table below for individual annual breakdown). <br /> Table M <br /> Cable System Upgrade Revenue Collection <br /> Projected Precapitalization of System Upgrade <br /> 5 Year Social Contract <br /> (All three systems included in calculations) <br /> Year of Contract Total Subscribers Monthly Chap per Amount To Be Collected <br /> with Subscriber <br /> 1%Growth Rate <br /> 1st year• 1996 6,439 $1.00 $77,268.00 <br /> 2d year• 1997 6,503 $2.00 $156,081.36 <br /> 3d year- 1998 6,568 $3.00' $236,463.26 <br /> 4th year• 1999 6,634 $4.00 $318,437.19 <br /> 5th year-2000 6,700 $5.00 5402,026.95 <br /> 5 year UM $1,190,276.76 <br /> b&oollected for, <br /> Social Contract: Upgrade=W Capital Counnibmuts <br /> According to Section 25 of the Time Warner Social Contract,Time Warner is obligated to provide <br /> "...an average of 15 new analog channels to benefit CPST subscribers and the initiation of digital <br /> distribution technology,which will expand the capacity of Titric Warner to add programming and <br /> improve picture quality." Time Warner agrees that at least"-.60%of all capital expended in <br /> connection with the upgrade commitment described in the Social Contract will be applied for the <br /> 14 <br />