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CC Resolution 1999-094d_\< RESOLUTION NO.99-94 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA, CALIFORNIA APPROVING THE TRANSFER OF A CABLE TELEVISION FRANCHISE ORIGINALLY GRANTED TO COLONY COMMUNICATIONS, INC. TO SUMMIT CABLE SERVICES OF GEORGIA, INC. WHEREAS, in 1 995, the City Council of the City of La Quinta repealed and readopted Chapter 5.10 of the La Quinta City Code establishing regulations for granting and operating multichannel service provider Systems hereinafter referred to as the Multichannel Service Provider Ordinance"); and WHEREAS, pursuant to the Multichannel Service Provider Ordinance, the City entered into a Franchise Agreement with Colony Communications, Inc. hereinafter referred to as the Grantee"), effective October 1 7, 1995 hereinafter referred to as the Franchise Agreement"). The Multichannel Service Provider Ordinance and the Franchise Agreement constitute, and will be hereinafter referred to as the Franchise"; and WHEREAS, pursuant to Resolution No.95-81, the City consented to a transfer of control of the Grantee to Continental Cablevision, Inc.; and WHEREAS, pursuant to Resolution No.96-62, the City consented to a transfer of control of the Grantee to U.S. West, Inc.; and WHEREAS, the City and Grantee have prepared an agreement entitled Agreement Relating To The Consent Of The City Of La Quinta, California To The Transfer Of The Franchise Agreement Held By Media One Enterprises, Inc.(hereinafter referred to as the Transfer Agreement"), attached as Exhibit A; and WHEREAS, the effect of the transaction is to transfer the Franchise Agreement to Summit Cable Services of Georgia, Inc. the Transferee"); and WHEREAS, City Code Section 5.10.650 requires City Council consent to any transfer or change of control of the Franchise; and WHEREAS, FCC Regulations 47 CFR Section 76.502(1) 1) require that in order for a cable operator to obtain City approval of a transfer or change in control of the Franchise, it must submit to the City an FCC Form 394 and any other information as may be required by the City; and BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\<Resolution No.99-94 Transfer Cable Franchise Colony to Summit Adopted: July20 1999 Page 2 WHEREAS, the Transferee has filed an FCC Form 394 with the City requesting City Council approval of the transfer of the Franchise Agreement to the Transferee hereinafter referred to as the Transfer"); and WHEREAS, in support of its Form 394 Application? the Grantee and the Transferee have submitted to the City certain documents which are on file with the City Clerk? and are collectively referred to as the Transfer Documents". NOW THEREFORE, BE IT RESOLVED by the City Council of the City of La Quinta does order as follows: Section 1. The City Council hereby approves and consents to the Transfer, subject to the Transferee complying with the terms and conditions of this Resolution. This approval and consent shall be deemed effective as of the date of closing of the Transfer. Section 2. Upon the close of the Transfer, Transferee shall comply with and be bound by the following documents: The Multichannel Service Provider Ordinance; The Franchise Agreement; The Transfer Agreement and all prior transfer agreements; and This Resolution. Section 3. The Mayor is authorized to execute the Transfer Agreement. The City Manager, the City Attorney, Special Counsel or their designees, are hereby authorized and empowered to execute any documents necessary, in their discretion, to implement the approvals contained herein. PASSED, APPROVED, AND ADOPTED at a regular meeting of the La Quinta City Council, held on this 201h day of July, 1 999 by the following vote: BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< Resolution No, 99-94 Trnnsler Cable Frnn?franchise Colony to Summit Adopted: July20, 1999 Page 3 AYES: Council Members Adolph, Henderson, Perkins, Sniff, Mayor Pena NOES: None ABSTAIN: None ABSENT: None City of La Quinta, California ATTEST Th LA, City Clerk City of La Quinta, California APPROVED AS TO FORM nUTAN & TUCKEfl, LLP BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< EXHIBIT A" AGREEMENT RELATING TO THE CONSENT OF THE CITY OF LA QUINTA, CALIFORNIA TO THE TRANSFER OF THE FRANCHISE AGREEKNT HELD BY MEDIA ONE ENTERPRISES, INC. This Agreement the Transfer Agreement") is entered into this day of July, 1999, between and among the City of La Quinta, California the City"), and Media One Enterprises, Inc., the Transferor"), Summit Cable Services of Georgia, Inc., the Transferee"), and TWI Cable Inc.(the Guarantor"). WHEREAS, City Council entered into a Franchise Agreement the Franchise") with a predecessorin-interest of the Transferor pursuant to the provisions of the La Quinta Municipal Code the Ordinance") to operate a cable television system within the City the System"); and WHEREAS, the Transferor has filed a written application to the City, the Application") wherein it has requested the consent of the City to the assignment of the Franchise to the Transferor the Transfer"); and WHEREAS, it is the intent of the City to approve the transaction whereby ownership and control of the Franchise and the cable system the System") shall be held by the Transferee and guaranteed by the Guarantor; and WHEREAS, the City Council of the City has reviewed the Transfer as well as all relevant documents, Staff Reports and recommendations; 1d WHEREAS, pursuant to the Ordinance, the Transfer is subject to written consent of the City Council; and WHEREAS, based upon the evidence presented to the City 124/D1S?1O-OOO4/3273421-3 BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\<Council, it has determined that it would be in the public interest to conditionally approve the Transfer. NOW, THEREFORE, it is agreed by and between the parties as follows: 1. The City Council of the City hereby gives its consent and approval to the Transfer as described herein. 2. The granting of this consent to the Transfer does not render or waive the right of the City to approve any subsequent change in the ownership of the Franchise or the ownership or legal or operating control of the Transferee where required by the Ordinance and there shall be no further material change, amendment, or modification of the ownership or equity composition of the Transferee which requires advance consent of the City pursuant to the Ordinance without further written consent of the City Council 3. By executing this Transfer Agreement, the Transferee agrees and acknowledges that 1) this Transfer Agreement and the approving resolution is not a new franchise agreement, the granting of a franchise, or the renewal of the existing franchise, but rather is exclusively an agreement to transfer control of the franchise and said Transfer Agreement neither affects nor prejudices in any way the City's or Transferee's rights under the Franchise; 2) under Section 625 of the Cable Act, the term commercially impracticable'1 means, with respect to a cable operator, that it Ls commercially impracticable or the operator to compl with such requirement as a result of a change in conditions which is beyond the control of the operator and the nonoccurrence of which was a basic assumption on which the requirement was based. Transferee agrees that in judging whether particular obligations are commercially impracticable, the parties will not consider i:he economic burden of debt service and 124!C15610-0004/3273421-3 2 BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< equity requirements incurred directly or indirectly to fund the Transfer to the extent such debt service and equity exceeds the debt service and equity re?uirements of the Transferor as they existed prior to the Transfer. 4. By executing this Transfer Agreement, the Transferee hereby accepts all the terms and conditions of the Franchise, the Ordinance, that Agreement relating to the Consent of the City of La Quinta, California to the Transfer of Control of the Franchise Agreement Granted to providence Journal Company", dated as of October 17, 1995, the 1995 Transfer Agreement"), that Agreement Relating to the Consent of the City of La Quinta, California to the Transfer of Control of the Franchise Agreement Granted to Continental Cablevision, Inc., to U.S. West, Inc.", approved as of August 6, 1996 the 1996 Transfer Agreement"), any lawful orders or directives of any administrative agency relating to the Franchise or the System including, but not limited to, the Federal Communications Commission the Commission") and this Transfer Agreement collectively, the Franchise Documents") and Transferee represents and warrants that it has examined the requirements of the Franchise Documents as well as the applicable federal, state, or local laws or regulations, and agrees to abide by all the terms and conditions thereof. The Transferee agrees and acknowledges that it has found the Franchise Documents specified herein to be legally sufficient, enforceable, valid, and binding and accept the same without condition or reservation. Transferee shall assume all rate refund obligations and possessory interest tax re und liability, if any, both actual and contingent, of the Transferor. The Transferor agrees to cooperate and furnish relevant information in relation to any audit and/or investigation relative to any audit and/or investigation relative to breaches and/or defaults accruing subsequent to the Transfer. 124/OISG1O-0004/3273421.3 3 BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< To the extent that the Transferee or Guarantor, or any related person or entity, challenges the validity or interpretation of the Franchise Documents in the future in any administrative proceeding or court of law, such a challenge shall be subject to all defenses which would have been available to the City had the Transferor, or any related person or entity, brought said challenge(s) including, but not limited to, waiver, estoppel, consent, unclean hands and accord and satisfaction, as well as any and all defenses independently available to the Transferee or Guarantor. 5. The parties expressly agree and acknowledge that Paragraph 5 of the 1996 Transfer Agreement, and the terms and conditions thereof, are applicable and binding upon, the Transferee in relation to this Transfer for the period from the Effective Date of this Transfer Agreement until the earlier of a substantive modification of the Federal Communications Commission's existing Cost-of-Service Regulations so that Transfer Goodwill, or a portion thereof, is expressly provided as being includable in the calculation of any Regulated Rate or the Fifth Anniversary of the Effective Date of this Transfer Agreement. 6. On or before the Effective Date, the Transferor, or its designee, shall pay to the City up to the sum of Five Thousand Dollars $5,000.00), as invoiced by the City, which amount is paid in, and only in, complete satisfaction and reimbursement of all thir';-party costs incurred by the City in relation to the Transfer the Payment1) In regard to said Pa?nt, the parti? expressly agree and covenant as follows: A. The Payment is within the exclusions from the term franchise fee" set forth in Section 622(g) 2) of the Cable Act 47 U.S.C. 542(g) 2); and 124/O1S?1O-OOO4/3273421-? 4- BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< B. The Payment shall not be deemed to be in the nature of a tax, and shall be in addition to any and all taxes of general applicability or other fees or charges which the Transferor, the Transferee, or the Guarantor shall be required to pay to the City or to any state or federal agency or authority; and C. Neither the Transferor, the Transferee nor the Guarantor shall have or make any claim or any deduction or other credit of all or any part of the amount of the Payment to be made pursuant to the franchise from or against any City or other governmental taxes of general applicability including any such tax, fee, or assessment imposed on both utilities and cable operators or their services but not including a tax, fee, or assessment which is duly discriminatory against cable operators or cable subscribers or income taxes) or other fees or charges which the Transferor, the Transferee, or the Guarantor is required to pay tothe City or other governmental agency; and D. Neither the Transferor, the Transferee, nor the Guarantor shall apply or seek to apply all or any part of the amount of the Payment to be made pursuant to this Transfer Agreement as a deduction or other credit from or against any City or other government taxes of general applicability other than income taxes) or other fees or charges; and E. Neither the Transfer, the Transferee nor the Guarantor shall apply or eek to apply all or any part of the arr?nt of any City or other government taxes or other fees or charges of general applicability including any such tax, fee, or assessment imposed on both utilities and cable operators or their services) as a deduction or other credit from or against the Payment to be made pursuan? to this Transfer Agreement; and i24!O1S?1O-3OO4/3273421-3 S- BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< 7. In regard to the Payment made to the City pursuant to this Transfer Agreement, the Transferor, Transferee, Guarantor, or any affiliate party will not pass through, externalize, or otherwise attempt to add the costs of the Payment pursuant to Paragraph 6 hereof, to any regulated rate. 8. Transferee represents that the letter of credit, insurance and bonding required by the Franchise Documents have been obtained, and that there will be no gaps in required coverages or liabilities. Transferee will continue to maintain the letter of credit and bonds that it was required to maintain under the Franchise notwithstanding the Transfer. 9. Transferor and Transferee agree to defend, indemnify and hold the City harmless against any loss, claim, damage, liability or expense including, without limitation, reasonable attorney's fees) arising out of this Transfer Agreement and/or incurred as a result of any representation or warranty made by Transferor or Transferee herein or in the application or in connection with the City's Review of the Transfer which proves to be untrue or inaccurate in any material respect. In the event the City receives any such notice of a loss, claim, damage, liability or expense, the City shall promptly notify Transferor and Transferee which shall at the sole discretion of the City assume sole and direct responsibility for defending against any such loss, claim, damage, liability or expense. 10. This consent is not an affirmation that Transferor is currently in compliance with the Franchi?e Agreement. Any c?nsent given by the City in this Transter Agreement and any resolution approving this Transfer Agreement is not a finding that, after the Transfer, Transferor or Transferee will be financially, technically or legally qualified, and no inference will be drawn, positively r negatively, as a result of the absence of a finding on this issue. Any consent is therefore 124,015610-0004/3273421-3 6- BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< made without prejudice to, or waiver of, the City's right to fully investigate and consider Transferor or Transferee's financial, technical and legal qualifications and any other relevant considerations during any proceeding including by way of example and not limitation, any future transfer or renewal proceeding. Without limiting the foregoing, any approval of the Transfer is not a finding or representation that the Franchise will be renewed or extended and approval shall not create an obligation to renew or extend the Franchise) that Transferor or Transferee is financially, technically or legally" qualified to hold a franchise; or that any other renewal issue that may arise with respect to past perfoi?ance or future cable-related needs and interests will be resolved in a manner favorable to Transferor or Transferee. Unless provided for within this Transfer Agreement, nothing in this Transfer Agreement shall constitute a waiver of any of Transferor's, Transferee's, Guarantor's, or City's rights or remedies under federal, state or local law. 11. The Transferee and Guarantor expressly agree that any litigation arising from or relating to the Franchise Documents shall be filed and litigated exclusively in the Superior Court, County of Riverside, State of California or, if jurisdictional requirements are otherwise met, the Federal District Court for the Central District, California. Transferee and Guarantor hereby jointly accept service of process by way of service upon the General Manager of the local office of the Transferee. 12. Guarantor hereby guarantees all of the obligat-ons of the Franchise Documents as a join? and several primary jiable party. Guarantor hereby waives any obligation which the City might possess to exhaust its remedies against the Transferee as a condition of enforcing obligations against the Guarantor pursuant to the Franchise Documents. i24/O1??1O-OCO4/327342i.3 7 BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< 13. Any violation of this Transfer Agreement Qr any of the terms contained in the Franchise Documents shall be deemed to be a violation of the Franchise and the Ordinance. 14. Transferee shall maintain a local office, staffed by live personnel which are employees of the Transferee, at which, at a minimum, subscribers can pay bills, receive or exchange equipment, and receive information within a six 6) mile radius of the intersection of Washington Street and Highway 111. 15. In addition to the Payment and any other payment required by this Transfer Agreement, Transferor shall reimburse the City the actual costs of an independent franchise fee audit for Fiscal Years 1995-1996 hrough 1998-1999 within thirty 30) days of the submission of a City invoice if, and only if, the audit concludes that he City has been underpaid franchise fees by one percent 1%) or more, as provided by Section 5.10.230(C) of the Ordinance. Transferor and Transferee shall cooperate with the City's audit of franchise fees. The City shall reasonably attempt to complete a final audit report the 11Audit Report'1) of franchise fees owed by Transferor within ninety 90) days of the Effective Date of this Agreement assuming that the Transferor and/or Transferee expeditiously respond to the City's Information Requests. If the Audit Report finds that Transferor owes the City underpaid franchise fees under the Franchise, and the difference between the amount paid and the amount determined by the City's audit is less than five percent 5%) of the amount paid to the City, or if Transferor does not dispute the results of the City's audit, then Transferor shall pay the City the difference in the amount determin d to be owed by the Audit Report. This obligation is guaranteed by the Transferee. If the Audit Report determines that the amount due and owing is more than five percent 5%) greater than the amount paid to the City and Transferor disputes the audit results, the dispute shall be submitted to a mutually agreed upon, independent certified public 124IC1561O-COO4!32?342i 3 8 BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< accountant CPA") whose determination of amount of franchise fees due shall be final and. binding on the parties. The costs of hiring the CPA shall be borne by Transferor. Any amounts determined by the independent CPA to be owed to the City shall be paid to the City within thirty 30) days of such determination. 16. Transferor represents and warrants that it has received cash refunds from Riverside County relating to possessory interest tax payments for tax years to the Tax Years") All, or a portion of these tax payments, were collected from subscribers as line item surcharges on monthly cable bills. Not later than four 4) months from the Effective Date, Transferee agrees to provide a written accounting to the City of the total amount collected from La Quinta subscribers for the Tax Years the Subscriber Payments11), the amount of the total refund received from Riverside County for the Tax Years the Total Refund"), the amount of the Total Refund allocable to La Quinta Subscribers on a pro rata subscriber basis the Gross La Quinta Refund"), the amount of expenses allocable to La Quinta Subscribers the Expense Allocation"), and the Net Refund" due La Quinta Subscribers, which is the Gross La Quinta Refund less the Expense Allocation. Tile Expense Allocation shall not exceed ten percent 10%) of the Gross La Quinta Refund. The Net Refund shall be credited to current subscribers no later than six 6) months from the Effective Date and written proof of said refund shall be submitted to City no later than eight B) months from the Effective Date. 17. Transferee will provide interactive high speed cable modem s??vices to buildings owned?or controlled by the City at most favorable commercial or governmental rate offeped nyw?A?e in its San Diego Division Systems by the Transferee, the Guarantor, or any Affiliate thereof. 18. The City hereby gives the Transferee notice that the Grant or transfer of the Franchise may create a taxable 124/O15?1O-OOO4/3273421.3 9- BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\< possessory interest upon which the Transferee may be liable for the payment of certain property taxes. The Transferee hereby acknowledges that it has received actual notice as provided by Revenue and Taxation Code Section 107.6 19. This Transfer Agreement shall be deemed effective upon the closing of the Transfer the 11Effective Date") 20. This Transfer Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. The parties agree that this Transfer Agreement will be considered signed when the signature of a party if delivered by facsimile transmission. Such facsimile signature shall be treated in all respects as having the same effect as an original signature. SIGNATURE BLOCK NEXT PAGE) 124?O15?1?-OOO4I32734213 10- BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02 d_\<ATTEST: CITY OF LA QUINTA, CALIFORNIA the City") City Clerk By: Its: APPROVED: MEDIA ONE ENTERPRISES, INC. Rutan & Thcker, LLP the Transferor") Special Counsel By: Its: SUMMIT CABLE SERVICES OF GEORGIA, INC. he Transferee") By: Its: TWI CABLE INC. the Guarantor") By: Its: 1241015610-0004/32734213 11- BIB] 08-02-1999-U01 09:48:15AM-U01 ADMIN-U01 CCRES-U02 99-U02 94-U02