Media One US West /Franchise 96•
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.
This Agreement (the "Transfer Agreement") is entered into this (�� day of August,
1996, between and among the City of La Quinta, California (the "City"), Continental Cablevision,
Inc., (the "Transferor") and U S WEST, Inc. (the "Transferee").
WHEREAS, Colony Communications, Inc. ("Franchisee") is the duly authorized holder of
a franchise (the "Franchise") authorizing the operation and maintenance of a cable television system
and authorizing Franchisee to serve the City; and
WHEREAS, Franchisee is a wholly -owned subsidiary of the Transferor; and
WHEREAS, Transferor and Transferee have entered into an Agreement and Plan of Merger
dated as of February 27, 1996 (the "Agreement"), subject to, among other considerations, any
required approval of the Transfer with respect thereto; and
WHEREAS, in connection with the merger (the "Transfee,) contemplated by the
Agreement, the parent company Continental will merge with a wholly -owned subsidiary of U S
WEST; and
WHEREAS, Franchisee will remain in place and continue to hold the Franchise; and
WHEREAS, Transferee may thereafter assign or transfer the Franchise or control related
thereto to a wholly -owned subsidiary of Transferee upon notice to the City; and
WHEREAS, the City Council of the City has reviewed the Transfer as well as all relevant
document, staff reports and recommendations; and
WHEREAS, pursuant to La Quinta Municipal Code Section 5.10.650 (the "Ordinance"),
the Transfer is subject to written consent of the City; and
WHEREAS, based upon the evidence presented to the City 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 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 or the Franchise without further written consent of
the City Council. Notwithstanding the foregoing, Transferee may hereafter assign or transfer the
1
•
Franchise or control related thereto to a wholly -owned subsidiary of Transferee upon notice to the
City and the provision of a written guarantee of Transferee in a form satisfactory to the City.
3. By executing this Transfer Agreement, the Transferee agrees and acknowledges that
this Transfer Agreement and 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, the Franchisee's or the Transferee's rights under the Franchise. Transferee further
agrees that (i) in adjudging whether particular obligations are commercially impracticable, as that
term is used and defined under Section 625 of the Cable Communications Policy Act of 1984, as
amended (the "Cable Act"), or (ii) in any proceeding relating to the approval or establishment of a
rate subject to the jurisdiction of the City, the parties will not consider the economic burden of debt
service and equity requirements incurred directly or indirectly to fund the Transfer to the extent
such debt service and equity exceeds the debt service and equity requirements 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, any prior Transfer Agreements relating to the
System, and 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 Transferee represents and warrants that it has examined the requirements of
the Franchise, Ordinance, any prior Transfer Agreements relating to the System, this Transfer
Agreement, 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 is has found the Ordinance, the Franchise,
any prior Transfer Agreements relating to the System, and the other documents specified herein to
be legally sufficient, enforceable, valid, and binding and accept the same without condition or
reservation. Transferee accepts the Franchise, and all obligations thereof, subject to and assuming
liability for all existing disclosed and undisclosed breaches, defaults, and violations including,
without limitation, any obligation to pay franchise fees, to comply with the Rebuild requirements
of the Franchise, and to properly establish regulated rates. Transferee shall assume all rate refund
obligations, both actual and contingent, of the Transferor. The Transferee agrees to cooperate and
furnish relevant. information in relation to any audit and/or investigation relative to breaches and/or
defaults accruing subsequent to the Transfer.
To the extent that the Transferee, or any related person or entity, challenges the validity or
interpretation of said above listed 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
2
not limited to, waiver, estoppel, consent, unclean hands and accord and satisfaction, as well as any
and all defenses independently available to the Transferee.
5. The parties hereby acknowledge and recognize that the City has expressed a
concern regarding the effect which the Transfer may have upon the amount of level of rates subject
to the jurisdiction of the City under existing and future provisions of Regulations of the Federal
Communication Commission (the "Commission") has further expressed its intent that it would not
approve the Transfer if that transaction, or the City's consent thereto, could in any way be utilized
by Transferee to justify rates subject to the jurisdiction of the City higher than could be justified in
the absence of the Transfer.
The Transferee hereby covenants, represents and warrants to the City, as partial
consideration for the City's approval of the Transfer and this Transfer Agreement, as follows:
a) Transferee will specifically identify any Goodwill, as that term is defined in
paragraph 99 of that Report and Order and Further Notice of Proposed Rule Making (MM
Docket No. 93-215, CS Docket No. 94-28) March 30, 1994 (the "Cost of Service Report",
that is included in any filing to the City or the Commission relating to the calculation or
determination of a permitted Basic Service Rate or other rates subject to the jurisdiction of
the City. To the extent that any such Goodwill was created solely as a consequence of the
Transfer ("Transfer Goodwill"), Transferee will include adjustments and/or modifications
to the calculation or determination of a permitted Basic Service Rate or other rates subject to
the jurisdiction of the City ("Regulated Rates") that remove the effect of any Transfer
Goodwill on the Calculation or determination of any such rate(s); however, to the extent
that any Goodwill arose prior to the Transfer, and/or was not created as a result of the
Transfer, then Transferee shall not be prohibited pursuant to the Agreement to include such
Goodwill in the calculation or determination of any such rate to the extent permitted under
then applicable rules of the Commission.
b) Transferee expressly waives any right it may have under current
Commission rules to claim that facts exist which would rebut the presumption of the Cost
of Service Report that Transfer Goodwill should be disallowed from the rate base for the
purpose of any proceeding to calculate or determine any Regulated Rate.
c) If, and to the extent, either Transferee or any related person or entity, files
any documents with the City or Commission which is inconsistent with the requirements of
Sections 5(a) and 5(b) above, Transferee shall, upon notice from the City, promptly
resubmit the affected documents in a manner which conforms to the requirements of
Sections 5(a) and 5(b) above. If Transferee fails to resubmit the affected documents within
thirty (30) days of receiving notice from the City, then Transferee shall indemnify the City
and pay all of its reasonable costs including the costs of attorney's accountants, financial
c
M
consultants, experts, and staff time necessary to determine and remove from the rate
calculations contained in the document the impact of any Transfer Goodwill that should
have been removed pursuant to the requirements of Sections 5(a) and 5(b) above. Said
amounts shall be paid, on an ongoing basis, within thirty (30) days of receipt of an invoice
by the City and failure to pay said amounts in a timely manner shall constitute a material
breach of the Franchise and this Transfer Agreement.
d) The reservation of rights and expression of intent and understanding set
forth in this section are not intended by the parties, nor shall they be used or operate, to
permit the City to revoke, or further condition or qualify, its consent to the Transfer or
invalidate this Transfer Agreement. Neither parry's entry into this Transfer Agreement nor
the City's approval of the Transfer shall, in any way, prejudice the position of either party
in any subsequent proceeding for the setting, making, adjustment, or modification of any
Regulated Rate, except as expressly provided herein.
The terms of this Section 5 are effective until the earlier of a substantive
modification of the 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 Closing of the Transfer. Except as expressly provided herein,
the Transferor and Transferee do not waive any right which they may possess in relation to rate
regulation.
6. Within sixty (60) days of its Effective Date, the City shall provide the Transferee a
written schedule of then known franchise compliance issues, if any. Nothing herein shall
constitute a waiver of the City's right to pursue other compliance issues which are not specified on
said schedule.
7. Transferee hereby certifies and warrants that all applicable completion dates
contained in the Franchise relating to completion of the Rebuild, as defined therein, will, to the best
of the Transferee's current knowledge, be attained and that the Rebuild, and all portions thereof,
will be timely completed.
8. By executing this Transfer Agreement, the Transferor agrees to fully reimburse the
City for all costs up to a maximum of Four Thousand Dollars ($4,000.00) incurred by it in relation
to this Transfer proceeding including, but not limited to, all attorneys fees, consultant fees, and
audit fees. The City shall inform the Transferor of the amount of said costs, which may include
costs directly incurred by the City and its share of joint costs incurred with other reviewing
franchising authorities, by providing the Franchisee's Vice President for Corporate and Legal
Affairs (550 N. Continental Blvd., Suite 250, El Segundo, CA 90245) with a statement within ten
(10) days of the City's adoption of the resolution approving this Agreement. Such statement shall
include a certification that the costs were incurred by it in relation to the Transfer and subsequent to
4
i
April 15, 1996. Failure of the Transferor to pay said cost within twenty (20) days of receipt of
such statement shall result in this Transfer Agreement and the approving resolution being null and
void, the consent to the Transfer becoming void, and the Transfer deemed disapproved as of the
date of the approving resolution of this Transfer Agreement for just cause.
9. Any violation of this Transfer Agreement shall be deemed to be a violation of the
Ordinance and the Franchise.
10. The City hereby gives the Transferee notice that the Grant or Transfer of the
Franchise may create a taxable 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.
11. 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 is
delivered by facsimile transmission. Such facsimile signature shall be treated in all respects as
having the same effect of an original signature.
12. This Transfer Agreement shall be deemed effective upon the closing of the Transfer
(the "Effective Date") so long as it is executed by the Transferee and delivered to the City within
thirty (30) days of its approval by the City Council, provided, however, the obligation of the
Transferor to pay costs as specified in Paragraph 8 when same become effective upon execution
and delivery of this Transfer Agreement is not conditioned upon the occurrence, or lack thereof, of
any other event.
A T:
Clerk
City Attorney
CONTINENTAL CABLEVISION, INC.
"TransferorD� �� J fb � LS
By:
Its: e,*1 a, /r-
U S WEST, INC.
"Transferee"
By: v a 7�TttQ
Its: VP L,-,-
W1
T4bt
"
78-495 CALLE TAMPICO - LA DUINTA, CALIFORNIA 92253 - (619) 777-7000
FAX (619) 777-7101
December 24, 1996
Continental Cablevision, Inc.
550 North Continental Boulevard Suite 250
El Segundo, California 90245
Attn: Matthew P. Zinn, Corporate Counsel
Dear Mr. Zinn:
Please find enclosed, two fully executed copies of the agreement relating to the
consent of the City of La Quinta to the transfer of control of the franchise
agreement granted to Continental Cablevision, Inc. to U S West, Inc.
If I can be of further assistance, please feel free to give me a call.
;Sirely,
SAUNDRA L. JUHOLA, City Clerk
City of La Quinta, California
r�
MAILING ADDRESS - P.O. BOX .1504 - LA QUINTA, CALIFORNIA 92253
Continental
Cablevision
December 10, 1996
Via Federal Express
Saundra L. Juhola, City Clerk
City of La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
RE: Transfer Agreement
Dear Ms. Juhola:
Pursuant to your request, enclosed please find three (3) copies of
the Transfer Agreement among the City, Continental Cablevision, and
U S West executed by Continental and U S West.
Thanks for your cooperation.
Sincerely,
CONTINENTAL CABLEVISION
Matthew P. nn
Corporat C nsel
Attachments
Western Region
550 North Continental Boulevard • Suite 250 • El Segundo, CA 90245 • Telephone (310) 647-3000