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CVTV/Franchise Transfer-Colony 95ORIGINAL /� a - AGREEMENT RELATING TO THE CONSENT OF THE CITY OF LA FRANCHISE AGORNIA REEMEOTHE NT RANTED TO ER OF C O PROVIDENCE NNCE JOURNAL COMPANY This Agreement (the "Transfer Agreement") is entered into this 17th day of October 1995, between and among the City of La Quinta California (the "City") and Continental Cablevision, Inc., (the "Transferee"). WHEREAS, on June 17th, 1986 the City Council of the City entered into a Cable License Agreement (the "Franchise") with Coachella Valley Television, a division of Palmer Communications, Inc., the predecessor in interest to Colony Cablevision of California, a division of Providence Journal Company (the "Transferor") pursuant to the provisions of the La Quinta Municipal Code (the "Ordinance") for a term of fifteen (15) years to operate a cable television system within the City (the "System"); and WHEREAS, by Resolution No. 92-35, the City consented to the transfer of the Franchise to Transferor; 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 and to the change in control of the Franchise to the Transferee; and 1995, ownership and control of the Franchise and the WHEREAS, as of October 5, System is held by Transferee by way of a wholly owned subsidiary of the Transferee, Colony Communications, Inc.; and WHEREAS, it is the intent of the City to approve the transaction whereby ownership and control of the Franchise and the System shall be ultimately held by the Transferee through a wholly owned subsidiary thereof, Colony Communications, Inc.; and WHEREAS, the City Council of the City has reviewed the Transfer as well as all relevant documents, staff reports and recommendations; and WHEREAS, pursuant to Sections 5.10.650 of 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: 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, 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 rights under the Franchise; (2) under Section 625 of the Cable Act, the term "commercially impracticable" means, with respect to a cable operator, that it is commercially impracticable for the operator to comply 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 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 and any lawful orders or directives of any administrative agency relating to the Franchise or the System including, but not limited to, the 2 Federal Communications Commission (the "Commission") and Transferee represents and warrants that it has examined the requirements of the Franchise, Ordinance, 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 it has found the Ordinance, the Franchise, and the other 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, 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. The City agrees and acknowledges that it has found the Transferor to be currently in full compliance with the Franchise and all its obligations, and that there are no outstanding franchise compliance issues or violations of the Franchise by the Transferor, despite the City's letter dated February 9, 1995 notifying the Transferor of alleged franchise violations. 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 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 or level of rates subject to the jurisdiction of the City under existing and future provisions of Regulations of the Federal Communications 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. KI 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: (i) 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. (ii) Transferee expressly waives any right it may have under current Commission rules to claim that facts exist which would rebut the presumption in 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. El (iii) 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 (i) and 5 (ii) above, Transferee shall, upon notice from the City, promptly resubmit the affected documents in a manner which conforms to the requirements of Sections 5 (i) and 5 (ii) 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 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 (i) and 5 (ii) 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. (iv) 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 party'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. 5 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. Any violation of this Transfer Agreement shall be deemed to be a violation of the Ordinance and the Franchise. 7. 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. 8. This Transfer Agreement shall be deemed effective upon the closing of the Transfer so long as it is executed by the Transferee within ten (10) days of its approval by the City Council. 9. 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 as an original signature. 0 10. Within ten (10) days of the approval of this Transfer Agreement by the City, the Transferee shall provide its unconditional corporate guarantee of the Franchise, the Ordinance, and this Transfer Agreement in a form reasonably acceptable to the City Attorney. 0. /C �'/' , " 0 City Attorney ►I A, CALIFORNIA