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HomeMy WebLinkAboutAGENDA REPORT 2005 1102 CC REG ITEM 09DMOORPARK CITY COUNCIL AGENDA REPORT TO: Honorable City Council ITEM 9 • D- CITY OF MOORPARK, CALIFORNIA City Council Meeting Of / f - o2 -Ragg' ACTION: 5�a- a4 BY: FROM: Hugh R. Riley, Assistant City Manager�i��i� DATE: October 20, 2005 (CC Meeting of 11/02/05) SUBJECT: Consider Resolution Approving Requests for the Transfer of Cable Television System Franchise Responsibilities to Time Warner and Approve Settlement and Release Agreement for Franchise Fees Due to the City DISCUSSION On June 14, 2005, the City of Moorpark received requests from Time Warner Cable Inc. for the transfer of Cable TV franchise responsibilities for the Moorpark Systems currently operated by Century -TCI California, L.P. (Adelphia) . The sale of Adelphia's Southern California Cable Systems is a result of Adelphia's bankruptcy filed in June 2002. Federal Communications Commission Regulations allow the City 30 days in which to determine and declare if the requesting documents (FCC Form 394) are complete and 120 days to complete its review of the request and other associated activity and approve or deny the request. Assuming the 120- day review time period is in effect, the deadline for completion of the City's review of the Transfer Requests was October 12, 2005. The City's consultant, Telecommunications Management Corporation (TMC) has completed a review of the Transfer Request as well as a Franchise Fee Audit of Adelphia's Cable TV operations in Moorpark for the past several years. Staff provided the City Council with a copy of the TMC Report concerning the Transfer Requests and a summary of the consultant's conclusions on August 25, 2005. A copy of the Transmittal Memorandum is provided with this report as Attachment 1 for your convenience. The primary issue yet to be 00014-7 Honorable City Council October 20, 2005 Page 2 resolved is the receipt of information concerning the intended Franchisee Company, Exchange I, LLC. On July 7, 2005 a letter was sent to the cable companies advising them of the deficiencies. A copy of the letter is provided as Attachment 2 to this report. The Franchise Fee Audit has been completed by TMC and the results indicate that funds totaling $38,479 are due the City from Adelphia including past due amounts, interest, penalties and the City's cost for the audit. A Settlement and Release Agreement has been prepared for execution by Adelphia dba Century -TCI California, P.P. and the City of Moorpark. A copy of the agreement is included with this report as Attachment 3. Anticipating further delays in the receipt of information and to allow time for review of the audit report, on September 13, 2005, staff sent a letter requesting an extension to the review deadline from October 12 to November 7, 2005. Confirmation of the approval of the extension by Time Warner was obtained verbally during a meeting with Time Warner representatives on September 26 and obtained in writing on October 13, 2005. Copies of this correspondence are included with this report as Attachment 4. The purpose of the attached Resolution is to provide conditional approval of the Requests for Transfer. The recommended conditions are summarized as follows: 1. Completion of all Transactions between Franchisee (Century - TCI- California L.P. ( Adelphia]) to Comcast Cable Holdings, LLC (Transferee No. 1) and from Transferee No. 1 to Time Warner Cable (Transferee No. 2) as Specified in Section 1 of the Resolution. 2. Execution by all parties of Change of Ownership Consent Agreement (Exhibit A to Resolution). 3. Execution and delivery of original Guarantee (Exhibit B to Resolution) by Time Warner Cable on behalf of CAC Exchange I, LLC. 4. Execution of Settlement and Release Agreement and payment in full of all franchise fees, penalties and interest and other fees due the City from Adelphia totaling $38,479. 0001.13 Honorable City Council October 20, 2005 Page 3 STAFF RECOMMENDATION 1. Adopt Resolution No. 2005- 2. Authorize Mayor to Sign Change of Ownership Consent Agreement subject to final language approval by the City Manager and City Attorney. 3. Authorize City Manager to sign Settlement and Release Agreement for Franchise Fees subject to final language approval by the City Manager and the City Attorney. Attachment: 1. August 25, 2005 Transmittal Memorandum- TMC Report 2. July 7, 2005 Deficiency Letter 3. Franchise Fee Audit Settlement and Release Agreement 4. Extension Request Correspondence 5. Resolution No. 2005- 000-179 INTEROFFICE MEMORANDUM ASSISTANT CITY MANAGER'S OFFICE TO: HONORABLE CITY COUNCIL FROM: HUGH RILEY, ASSISTANT CITY MANAGE SUBJECT: CONSULTANT'S REPORT TRANSFER OF CABLE FRANCHISE DATE: AUGUST 25, 2005 CC: STEVE KUENY, CITY MANAGER Telecommunications Management, Inc. was retained by the City to review the Cable TV Franchise Transfer Requests submitted by Time Warner Cable, Inc. A copy of their report is attached. An outline of the report's conclusions and summary of the options available tot he City follows below: CONCLUSIONS AND CITY OPTIONS A. Conclusions Based on the foregoing evaluation, the following conclusions are reached: (1) For the reasons given, TMC believes that the Forms 394 received by the City were not complete and were not accurate on their face, and that the additional information provided by Time Warner and Comcast in response to the City's requests for additional information and clarification did not make the Forms accurate and complete. This leads to the conclusion that the transfer review period has not yet started. (2) Using an abundance of caution and in spite of the conclusion of (1) above, it is believed that the City should plan to take action on the transfer request prior to the mandated 120 -day deadline of October 12, 2005. However, the City must preserve its rights, particularly with respect to settlement of the pending franchise fee audit. (3) The proposed franchisee, "CAC Exchange I, LLC" is a new entity with no franchise history. Time Warner has declined to provide any parent ATTACHMENT 1 0001.50 Honorable City Council Cable Transfer August 25, 2005 Page 2 company guarantees for this entity. TMC believes that such a guarantee is appropriate and should be required as part of any franchise transfer. (4) The possibility that Comcast, rather than Time Warner, might become the Moorpark franchisee, may contravene the City's evaluation efforts in the transfer process. (5) While no immediate impact on subscriber rates or services may occur, the new status of Time Warner in the area with approximately 1,900,000 subscribers will increase the company's regional market power tremendously. This may have the potential for some benefits, but also may result in reduced access to program services, disproportionate rate increase and /or poorer quality of services. B. City Options The following options are among those that warrant consideration. Alternate options proposed by the City Attorney also should be considered. (1) Consent to the Transfer, Without Conditions If the City has no objection to the proposed transfer, it can consent to the transfer request through an appropriate Council resolution or by taking no action within the 120 -day deadline. (2) Consent to the Transfer, With Conditions The conditions that the City may wish to consider include, bur are not necessarily limited to, the following: (a) A request for an extension of time to permit completion and settlement of the pending franchise fee audit. If the extension is denied, the City may wish to consider denying consent to the franchise transfer, without prejudice. (b) A requirement for appropriate parent company financial guarantees, as a condition of the transfer. (c) A clear identification of the proposed franchisee, including all intermediate entities. (d) A reservation of rights, requiring the franchisee (CAC Exchange I, LLC) or a parent Time Warner entity, to assume 000-1.52. Honorable City Council Cable Transfer August 25, 2005 Page 3 responsibility for any franchise non - compliance issues existing prior to the time of the transfer that may not be known at this time. Any known franchise non - compliance issues should be resolved either prior to, or as a condition of, franchise transfer approval. (e) A contingency provision that would make the consent ineffective unless all of the contemplated transactions take place. (f) A requirement that the transferor and /or transferee reimburse the City for the City's cost in processing the transfer request. (3) Denial of Consent to the Transfer If City wishes to deny its consent to the franchise transfer, the Council should issue findings as to the reasons for its action. A review by the City Attorney would be appropriate, since litigation may result. As this point, TMC recommends consideration of (2) above, with the final decision made subsequent to advice from counsel. C. Transfer Resolution Whatever option the City selects, the transfer resolution should differ from the suggested resolution enclosed by the cable operators with the Form 394. At a minimum, the resolution should include a reservation of rights, clear identification of the proposed franchise holder (and intermediate entities), requirement for a corporate financial guarantee for the new franchisee and reimbursement of the City's renewal processing costs. Staff is inclined to recommendation the course of action described in item 2 above. However it is probably advisable to wait for the results of the Fee Audit before deciding on a final course of action. Attachments: TMC Report 0000. 's Z MOORPARK 799 Moorpark Avenue Moorpark, California 93021 (805) 517 -6200 July 7, 2005 Patricia Fregoso -Cox, Director Government Affairs Adelphia Cable Communications Tower 41551 10th Street West Palmdale, CA 93551 Gary Matz Time Warner Cable 290 Harbor Drive Stamford, CT 06902 Dear Ladies and Gentilement: Sheila R. Willard Comcast Cable Communications, LLC 1500 Market Street, 28th Floor West Philadelphia, PA 19102 The City of Moorpark (the City) has received two Federal Communications Commission (FCC) Forms 394' submitted by Time Warner Cable on behalf of Adelphia Communications Corporation ( Adelphia). The first Form 394 requests a transfer of the franchise from Adelphia to Comcast Cable Holdings, LLC ( Comcast). The second Form 394 requests a transfer from the current franchisee, Century-TCI California, LP to CAC Exchange I, LLC, an indirect subsidiary of Time Warner Cable, Inc. (Time Warner). The relevant FCC regulations state: "A franchise authority that questions the accuracy of the information provided under paragraph (a) must notify the cable operator within 30 days of the filing of such information, or such information shall be deemed accepted, unless the cable operator has failed to provide any additional information reasonably requested by the franchise authority within 10 days of such request."' The FCC Forms 394 were received by the City on June 14, 2005. This letter is being sent within the initial 30 -day period specified by the FCC regulation for questioning the accuracy of the information provided by the cable operator. Enclosed is a request for additional information and /or clarification relative to the transfer request. Since Adelphia manages the cable system as the City's franchisee, it is the City's position that the Form 394 transfer request should be submitted by Adelphia, rather than ' Application for Franchise Authority Consent to Assignment or Transfer of Control of Cable Television Franchise. 2 47 C.F.R. 76.502(b) ATTACHMENT 2 00©x.53 PATRICK HUNTER CLINT D. HARPER ROSEANN MIKOS KEITH F. MILLHOUSE JANICE S. PARVIN� Mayor Mavor Pro Tern Councilmember Councilmember Councilmember Time Warner. It is for this reason that this letter is addressed to Adelphia, the City's franchisee. As a courtesy, a copy is being sent to Time Warner. Unless and until Adelphia (the City's franchisee) submits a written request and authorization for the City to deal directly with Time Warner, the City is not in a position to deal with someone other than Adelphia regarding the Adelphia franchise. The City looks forward to receiving Adelphia's accurate and complete response. Sincerely, Steven Kueny City Manager Cc: Gary Matz Time Warner Cable Enclosure: Attachment 1 UO®i_S4 Attachment 1 Inaccuracies and/or Incomplete Information FCC Form 394 City of Moorpark A. Transfer Process The information provided in the Form 394 is incomplete with regard to describing the proposed steps in the transfer process. For example, it appears (but is incompletely described) that the first Form 394 describes a change of control of the 75% of the current franchisee held by Adelphia by transferring this ownership percentage to Comcast Cable Holdings, LLC. The relationship of Comcast Cable Holdings to the current franchisee is not identified. In a second step, it appears (but is incompletely described) that Comcast Cable Holdings, LLC receives the 25% of the current franchisee from some unidentified Comcast entity. No Form 394 for this transaction has been provided. In a third step, it appears (but is incompletely described) that the 100% then held by Comcast Cable Holdings is transferred to CAC Exchange I, LLC. This entity would be 100% held by Comcast Corporation. No Form 394 for this transaction has been provided. In a final step, ownership and control of CAC Exchange I, LLC is exchanged with Time Warner. This appears to be the second Form 394, but the Transferor /Assignor of this Form 394 is not CAC Exchange I, LLC, but is the current franchisee, Century-TCI California, L.P. No narrative describing this process in sufficient detail to understand the transactions has been included with the Forms 394. It also appears that one or more Forms 394 for apparent changes of ownership or control have not been provided. Please provide a narrative in sufficient detail to explain the various transactions, along with all Forms 394 required for each step of the changes of ownership or control. B. CAC Exchange I, LLC As described above, the transaction appears to have multiple steps or stages. Please indicate the assurances or guarantees that exist or can be provided that all anticipated transactions will be completed. For example, from the limited (and incomplete) information provided, it appears possible that the transaction from Comcast to Time Warner is not a required act. Please indicate whether this apparent lack of a required transfer to the Time Warner entity is consistent with the terms of the agreements between the parties. If there exists a possibility that the transaction will conclude prior 000 -.S5 to assumption by Time Warner, please indicate whether a City approval to the transfers conditioned on all transactions being completed is acceptable to the parties. C. Financial Capability The entity "CAC Exchange I, LLC," apparently has no prior cable system operating experience, and therefore no historical financial statements. Provide information as to the initial capitalization of CAC Exchange I, LLC, including any financial guarantees by Time Warner, and financial pro formas, including operating statements and balance sheets, for at least a three -year "going forward" period. D. System Records The response provided in Part Il, 1(d) does not "Indicate the address where the system's records wills be maintained." The statement that the "Transferee is not proposing to change the location of the system's records" does not provide the response required. Please specify the address where the system's records will be maintained. E. Intermediate Entities The "Exchange" diagram included with the second FCC Form 394 shows "Intermediate Entities" as holding 100% ownership of the new franchisee, CAC Exchange I, LLC. Please identify each "Intermediate Entity" and the related ownership percentage of each entity to each other related entity. OOOA SETTLEMENT AND RELEASE AGREEMENT This Settlement and Release is entered into this day of �t � 2005, by and between the City of Moorpark, California ( "City "), and Century-TCI California, L.P. ( "Debtor "). WHEREAS, Debtor has provided cable television service during the period from January 1, 2001 through March 31, 2005 to the residents of the City pursuant to a franchise agreement which was subsequently renewed (collectively, the "Franchise Agreement"); WHEREAS, the City contends that Debtor failed to pay the full amount of fees required by the Franchise Agreement for the period from January 1, 2001 through March 31, 2005 and that this underpayment constitutes a default of the Franchise Agreement, (the "Cure Claim"); WHEREAS, Debtor has disputed the amount of the Cure Claim; WHEREAS, the City and the Debtor (the "Parties ") have agreed to resolve this Cure Claim; WHEREAS, the terms of this Settlement and Release Agreement ( "Settlement Agreement ") will cure any default caused by this underpayment of fees required by the Franchise Agreement; WHEREAS, Debtor believes that this Settlement Agreement is fair, equitable and in the best interests of the Debtor's estates; NOW, THEREFORE, in consideration of the foregoing, the Parties mutually agree as follows: Debtor agrees to pay the City the Cure Claim in the amount of Thirty Eight Thousand Four Hundred Seventy Nine Dollars and Zero Cents ($38,479.00), within thirty days of the later of (i) approval of the Settlement Agreement by the Bankruptcy Court, as further described in paragraph 7 below; and (ii) Century-TCI California, L.P.'s receipt of a fully executed Settlement Agreement. The Parties further agree that such amount is the amount required to cure any default under the Franchise Agreement pursuant to 11 U.S.C. 365(b)(1)(A) (the "Settlement Amount "). 2. All terms of the Franchise Agreement shall continue in full force and effect, including the fact that the Franchise Agreement is effective through September 30, 2019. 3. Both Parties waive and release any claims (as such term is defined in 11 U.S.C. §101(5)) against the other Party, their successors, affiliates, directors, officers, employees, attorneys, agents, and representatives from any claims or charges relating to franchise fee payment obligations which arose prior to the execution of this Settlement Agreement. 4. The Parties agree that nothing herein shall be deemed to be an admission of liability with respect to this matter. 5. The Parties represent and warrant to each other that each has the legal right, power and authority to enter into this Settlement Agreement and to perform its obligations hereunder. ATTACHMENT 3 6. The Parties acknowledge that the releases contained in this Settlement Agreement are general releases, and each hereby expressly waives the provisions of Section 1542 of the Civil Code which provides: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. 7. This Settlement Agreement is subject to and shall be effective upon approval by the Bankruptcy Court presiding over the Debtor's pending bankruptcy case. Such approval may be obtained pursuant to settlement procedures previously approved by the Bankruptcy Court. If the Bankruptcy Court does not approve this Settlement Agreement, (a) nothing contained herein shall be deemed to be a waiver of any claims or an admission of liability by any party hereto; and (b) this Settlement Agreement shall be void, and all rights of the parties prior to this Settlement Agreement shall be preserved. IN WITNESS WHEREOF, the parties hereto, through their duly authorized representative, have executed this Settlement Agreement. 000:41_Sa THE CITY OF MOORPARK, CA By: Steven Kueny City Manager Date: CENTURY -TCI CALIFORNIA, L.P. A Delaware limited partnership By: Century -TCI California Communications, L.P., A Delaware limited partnership, Its General Partner By: Century Exchange L.L.C. A Delaware limited liability company, Its General Partner, By: Century Cable Holding Corporation, A New York corporation, Its Sole Member Wo Name: Title: Date: 000-14A.S9 MOORPARK 199 Moorpark Avenue Moorpark, California 93021 (805) 517 -6200 September 13, 2005 Patricia Fregoso -Cox, Director Government Affairs Adelphia Cable Communications 41551 10th Street West Palmdale, CA 93551 Gary Matz Time Warner Cable 290 Harbor Drive Stamford, CT 06902 Dear Ladies and Gentleman: Sheila R. Willard Comcast Cable Communications, LLC 1500 Market Street, 28th Floor West Tower Philadelphia, PA 19102 The City of Moorpark (the City) received two Federal Communications Commission (FCC) Forms 394' submitted by Time Warner Cable on behalf of Adelphia Communications Corporation ( Adelphia). The first Form 394 requests a transfer of the franchise from Adelphia to Comcast Cable Holdings, LLC ( Comcast). The second Form 394 requests a transfer from the current franchisee, Century-TCI California, LP to CAC Exchange I, LLC, an indirect subsidiary of Time Warner Cable, Inc. (Time Warner). On July 7, 2005 the City sent a letter to each of you acknowledging receipt or the 394 Forms and requesting information relating to the transfer including specific information about the proposed transferee (CAC Exchange I, LLC). On July 11, 2005 the City's Cable Consultant, TMC sent a letter to Adelphia requesting certain information pertaining to the City's Franchise Fee Audit. The City considers the completion of the fee audit to be a relevant and important component of its revieew of the transfer requests as the audit may reveal that funds are due the City and need to be paid prior to the transfer. On July 21, the City received Time Warner's response to the Request for Information however the response was incomplete and contained no information about CAC Exchange I, LLC. The City's position is that full disclosure of the requested information Application for Franchise Authority Consent to Assignment or Transfer of Control of Cable Television Franchise, ATTACHMENT 4 (30®11_"3® PATRICK HUNTER Mayor CLINT D. HARPER Mayor Pro Tem ROSEANN MIKOS Councilmember KEITH F. MILLHOUSE Councilmember 0 JANICE S. PARVI CouncilmPmhcr about the franchisee or, at a minimum, a performance and financial guarantee from Time Warner is and remains a requirement before action can be taken on the requests. Information requested in TMC's letter of July 11, 2005 was not received until August 26, 2005 causing a delay in the completion of the franchise fee audit. Because of this delay, the City will not have sufficient time to review the audit findings or obtain any settlement that may be due. Considering the above, the City of Moorpark respectfully requests an extension to the time requirement for action on the request from October 12, 2005 to November 7, 2005. Sincerely, Steven Kueny City Manager cc: Hugh R. Riley, Assistant City Manager Steve Onstot, Burke, Williams and Sorensen Michael Friedman, TMC 3100 Ocean Park Blvd. Suite 300 Santa Monica, CA 90405 -Adelphia VIA UPS OVERNIGHT City of Moorpark Attn: Mr. Hugh R. Riley 799 Moorpark Avenue Moorpark, CA 93021 Writer's Direct (310) 314 -8921 Fax (310) 314 -8979 e -mail tom.carlock@adelphia.com ECEIVE 1 Rtober 2005 OCT 13 2005 Assistant City Manager's Office Re: Adelphia/Time Warner Transaction: City of Moorpark Dear Mr. Riley, I am in receipt of your letter of September 13, 2005, proposing an extension of the time regarding the 120 -day transfer application approval time period for the City of Moorpark to act on the FCC Form 394 dated June 10, 2005. Accordingly, without waiving any of their respective rights under federal law, please let this letter serve as Adelphia's and Time Warner's consent to an extension of time under FCC regulations for the City of Moorpark to act on the FCC Form 394 to November 7, 2005. I look forward to receiving a draft of the proposed transfer documents. Please feel free to contact me at my direct number 310 - 314 -8921. cc: Patricia Fregoso -Cox Trish McCausland, Esq. Deane Leavenworth Vc r truly yours, f -� T omas E. Carlock Vice President Law and Public Policy 000.92 RESOLUTION NO. 2005- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MOORPARK, CALIFORNIA, ESTABLISHING CONDITIONS FOR THE APPROVAL OF A TRANSFER OF A CABLE TELEVISION FRANCHISE FROM CENTURY - TCI CALIFORNIA, L.P. TO CAC EXCHANGE I, LLC. WHEREAS, Century -TCI California, L.P. ( "Franchisee ") owns, operates and maintains a cable system ( "System ") in the City of Moorpark ( "City "); and WHEREAS, Franchisee provides cable service in the City pursuant to the terms of a cable system franchise ( "Franchise ") granted to Franchisee effective October 1, 2004 for the City; and WHEREAS, the Franchise has an expiration date of September 30, 2019; and WHEREAS, Franchisee is seventy five percent (750) owned by entities affiliated with Adelphia Communications Corporation ( "Adelphia ") and twenty five percent (25 %) owned by entities affiliated with Comcast Corporation ( "Comcast "); and WHEREAS, Adelphia, Comcast Corporation and Time Warner Cable Inc. ( "Time Warner ") are parties to an asset purchase agreement and an exchange agreement (collectively the "Sale Agreements ") pursuant to which the System and the Franchise are to be transferred from Franchisee to Comcast Cable Holdings, LLC ( "Transferee Number 1 ") and then from Transferee Number 1 to CAC Exchange I, LLC ( "Transferee Number 2 "), which will become a Time Warner entity, through a series of transactions; and WHEREAS, on June 14, 2005, the City received two F.C.C. Forms 394 requesting a transfer of the Franchise from Franchisee to Transferee Number 1 and from Transferee Number 1 to Transferee Number 2; and WHEREAS, the City has one hundred twenty (120) days from the receipt of a complete F.C.C. Form 394 to act upon a transfer request or the request automatically is deemed to have been approved; and WHEREAS, as provided for in applicable law, the City, within thirty (30) days of receipt of the transfer requests, ATTACHMENT 5 000-103 Resolution No. 2005 - November 2, 2005 Page 2 noticed the Franchisee, Transferee Number 1 and Transferee Number 2 that the F.C.C. Forms 394 were inaccurate and incomplete; and WHEREAS, Transferee Number 1 and Transferee Number 2 allege that the F.C.C. Forms 394 were complete and accurate and that the one hundred twenty (120) day review period started on June 14, 2005; and WHEREAS, the one hundred twenty (120) day review period expires on October 12, 2005, if a June 14, 2005 receipt date is to be considered correct; and WHEREAS, Time Warner has granted an extension of the approval deadline to November 7, 2005; and WHEREAS, to the extent required by Moorpark Municipal Code the Franchise cannot be transferred or assigned without the City Council's consent; and WHEREAS, federal regulations permit the City to evaluate the legal, technical and financial qualifications of Transferee to operate the Franchise; and WHEREAS, the legislative history of the Federal Cable Television Consumer Protection and Competition Act of 1992 further indicates that Congress intended that local franchising authorities consider the ability of the transferee to fulfill the obligations of any applicable franchise; and WHEREAS, the United States Court of Appeals for the Ninth Circuit, in a case involving the County of Santa Cruz, California and Charter Communications, found that local cable franchising authorities should be afforded broad deference in legislative acts in their role as stewards of the public good; and WHEREAS, the proposed final franchise holder, Transferee Number 2, is a new entity with no historical performance record and no identified assets; and WHEREAS, the City, as steward of the public good, believes that the transfer will be in the best interest of Moorpark subscribers provided the transfer is conditioned in order to safeguard the interests of Moorpark System subscribers; and Resolution No. 2005 - November 2, 2005 Page 3 WHEREAS,. the City desires to proceed with the proposed transfers on the terms and conditions set forth herein. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City hereby consents to the transfers, subject to the following conditions: 1. All proposed transactions, from Franchisee to Transferee Number 1 and from Transferee Number 1 to Transferee Number 2, must be completed as follows: (a) In connection with the transfer to Transferee Number 1, the City authorizes and consents to the acquisition by Transferee Number 1 from Adelphia, as the ultimate parent company of Franchisee, of Adelphia's seventy five percent (750) direct and indirect ownership interest in Franchisee (the "Adelphia Transaction "). As a consequence of the Adelphia Transaction, Transferee Number 1 will become the direct parent company and sole owner of the Franchisee. (b) Contingent upon the closing of the Adelphia Transaction referenced in Section 1.1(a) above, the City authorizes and approves the transfer of the Franchise from Transferee Number 1 to Transferee Number 2. Upon the close of the transactions contemplated in the Sale Agreements, Transferee Number 2 will be a wholly owned subsidiary of Time Warner NY Cable LLC, which will be controlled solely by Time Warner and will do business in the City under the trade name Time Warner Cable. (c) Time Warner has represented to the City that the transactions authorized in Section 1.1(b) above are based upon the "expectation of sequential closing" and that the transactions are expected "to close contemporaneously and in direct succession." 2. Transferee Number 2, will be owned and controlled as indicated in Exhibit A attached hereto. To the extent required by the Moorpark Municipal Code, any change of ownership or control of Transferee Number 2 from the ownership and control indicated in Exhibit A shall be subject to prior City review and consent. 000 A 0 Resolution No. 2005 - November 2, 2005 Page 4 3. Time Warner, the indirect parent company of Transferee Number 2, shall unconditionally guarantee the performance of Transferee Number 2 under the terms of the Franchise, and shall be a signatory to the "Guarantee," attached hereto as Exhibit B. Time Warner shall submit the same to the City Clerk within sixty (60) days of this approval. If Time Warner fails to do so, or otherwise refuses to accept the conditions on the proposed transfers, consent to the transfers shall be automatically withdrawn, effective the date of adoption of this resolution, and the requests to transfer shall be deemed denied unless expressly waived by the City in writing. 4. The City shall retain all rights under the Franchise and applicable law with respect to any non - compliance issues on the part of Franchisee, whether known or unknown, which exist prior to the effective date of these transfers. Franchisee and Transferees reserve any and all rights and defenses with respect to any such non - compliance issues. 5. The City shall be reimbursed for the City's costs incurred in the processing of the requests for transfers from the $6,000 payment submitted with the Form 394 filings as required by Section 5.06.660(1) of the Moorpark Municipal Code. 6. All terms of the Franchise agreement shall remain in full force and effect, including all terms contained in Sections 2.6 (Security Fund) and 5 (Services and Programming) of the Agreement and Exhibits C (Grantee Commitment to PEG Access Facilities and Equipment) and D (Institutional Network) and all other Exhibits to the Franchise Agreement. 7. Transferee Number 1 and Transferee Number 2 (the "Transferees ") shall evidence acceptance of these conditions by signing a copy of the "Change of Ownership Consent Agreement," in substantially the same form as attached to this Resolution as Exhibit A. Each Transferee shall cause the same to be submitted to the City Clerk within sixty (60) days of this approval. If either Transferee fails to do so, or otherwise refuses to accept the conditions placed on the proposed transfers, consent to the transfers shall be automatically withdrawn, effective the date of adoption of this Resolution, and the requests to transfer shall be deemed denied, unless expressly waived by the City in writing. 000 -1.:06 Resolution No. 2005 - November 2, 2005 Page 5 SECTION 2. Other than with respect to the conditions made in Sections 1.1 and 1.3 above, if any sentence, clause, phrase or portion of any condition imposed in Section 1 hereof is for any reason held by a court of competent jurisdiction to be invalid or unenforceable, such decision shall not affect the validity of the remaining conditions placed on this transfer. The City Council of the City of Moorpark hereby declares that it would have adopted this Resolution and each and every condition set forth in Section 1 hereof separately, irrespective of the fact that one or more of these conditions may be declared invalid or unenforceable. SECTION 3. This Resolution shall be deemed effective immediately, taking into account the conditions listed in Section 2. SECTION 4. Subject to the reservation of rights of Section 1.4 above, the City hereby releases Franchisee and Transferee Number 1, as applicable, effective upon the consummation of the transaction contemplated in the Sale Agreements (the "Closing Date ") from all obligations and liabilities under the Franchise that accrue on or after the Closing Date. Franchisee and Transferee Number 1, as applicable, shall remain responsible for all obligations and liabilities under the Franchise that accrue up to the Closing Date. Transferee Number 2 shall be responsible for any obligations and liabilities under the Franchise that accrue on or after the Closing Date. SECTION 5. Once Exhibit A and B to this Resolution have been accepted by the parties, the City shall not revise this Resolution without the prior written consent of the Franchisee and /or Transferee. SECTION 6. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the book of original resolutions. 00®x_07 Resolution No. 2005 - November 2, 2005 Page 6 PASSED AND ADOPTED this 2nd day of November, 2005. Patrick Hunter, Mayor ATTEST: Deborah S. Traffenstedt City Clerk EXHIBIT A CHANGE OF OWNERSHIP CONSENT AGREEMENT gPI"t i nn 1 Terms used in this Change of Ownership Consent Agreement shall be as defined in Resolution 2005- (the "Resolution "). gprt i nn ? Each signatory to this agreement recognizes the Resolution which approved the involved the various conditions listed therein, and the terms in the Resolution is fair, rea permissible, and that each Transferee will and comply with each of the conditions. that the City passed transfers subject to agrees that each of sonable, and legally diligently prosecute The Transferees each further agree to accept transfers described in the Resolution, subject to the following conditions: 1. All proposed transactions, from Franchisee to Transferee Number 1 and from Transferee Number 1 to Transferee Number 2, must be completed as follows: (a) In connection with the transfer to Transferee Number 1, the City authorizes and consents to the acquisition by Transferee Number 1 from Adelphia, as the ultimate parent company of Franchisee, of Adelphia's seventy five percent (750) direct and indirect ownership interest in Franchisee (the "Adelphia Transaction "). As a consequence of the Adelphia Transaction, Transferee Number 1 will become the direct parent company and sole owner of the Franchisee. (b) Contingent upon the closing of the Adelphia Transaction referenced in Section 2.1(a) above, the City authorizes and approves the transfer of the Franchise from Transferee Number 1 to Transferee Number 2. Upon the close of the transactions contemplated in the Sale Agreements, Transferee Number 2 will be a wholly owned subsidiary of Time Warner NY Cable LLC, which will be controlled solely by Time Warner and will do business in the City under the trade name Time Warner Cable. (c) Time Warner has represented to the City that the transactions authorized in Section 2.1(b) above are based upon the "expectation of sequential closing" and that the A -1 000.99 transactions are expected "to close contemporaneously and in direct succession." 2. Transferee Number 2 will be owned and controlled as indicated in Figure 1 attached hereto. To the extent required by Moorpark Municipal Code, any change of ownership or control of Transferee Number 2 from the ownership and control indicated in Figure 1 shall be subject to prior City review and consent. 3. Time Warner, the indirect parent company of Transferee Number 2, shall unconditionally guarantee the performance of Transferee Number 2 under the terms of the Franchise, and shall be a signatory to the "Guarantee" attached to the Resolution as Exhibit B. For purposes of that agreement, Time Warner shall be known as the "Guarantor." 4. The City expressly reserves any and all rights that it may possess under the Franchise and applicable law with respect to any non - compliance issues on the part of Franchisee, whether known or unknown, which exist prior to the effective date of this transfer, and Franchisee and Transferee reserve any and all rights and defenses with respect to any such non - compliance issues. 5. All terms of the Franchise agreement force and effect. It is expressl Franchise Agreement includes Section Section 5 (Services and Programming), the Franchise Agreement including Commitment to PEG Access Facilities Exhibit D (Institutional Network). shall remain in full y affirmed that the 2.6 (Security Fund), and all exhibits to Exhibit C (Grantee and Equipment) and 6. Transferee Number 1 and Transferee Number 2 shall evidence acceptance of these conditions by signing a copy of this "Change of Ownership Consent Agreement," and submitting the same to the City Clerk within sixty (60) days of this approval. If either Transferee Number 1 or Transferee Number 2 fails to submit a signed copy of this "Change of Ownership Consent Agreement" to the City Clerk within said sixty (60) day period, or otherwise refuses to accept the conditions placed on the proposed transfers, consent to the transfers shall be automatically withdrawn, effective the date of adoption of City of Moorpark Resolution No. 2005- , and the requests to transfer shall be deemed denied unless expressly waived by the City in writing. A -2 0 Q0�90 .qPrt i nn -� Other than with respect to the promises made in Sections 2.1 and 2.3 above, if any sentence, clause, phrase or portion of any condition imposed in Section 2 hereof if for any reason held by a court of competent jurisdiction to be invalid or unenforceable, such decision shall not affect the validity of the remaining conditions placed on this transfer. The City Council of the City of Moorpark hereby declares that it would have entered into this "Change of Ownership Consent Agreement" and each and every condition set forth in Section 2 hereof separately, irrespective of the fact that one or more of these conditions may be declared invalid or unenforceable. Bari- i nn A Subject to the reservation of rights of Section 2.4 above, the City hereby releases Franchisee and Transferee Number 1, as applicable, effective upon the consummation of the transactions contemplated in the Agreements (the "Closing Date ") from all obligations and liabilities under the Franchise that accrue on or after the Closing Date. Franchisee and Transferee Number 1, as applicable, shall remain responsible for all obligations and liabilities under the Franchise that accrue up to the Closing Date. Transferee Number 2 shall be responsible for any obligations and liabilities under the Franchise that accrue on or after the Closing Date. Section 5 This Agreement and Exhibits shall have the force of a continuing agreement with the Franchisee, Transferee Number 1 or Transferee Number 2, as applicable, and the City shall not amend or otherwise alter this Agreement without the prior written consent of the Franchisee and /or Transferee. .qPrtinn , This Agreement shall be effective upon the Closing Date at which time Franchise and System ownership shall have transferred from Franchisee to Transferee Number 1 and from Transferee Number 1 to Transferee Number 2. A -3 00020-1- "City" City of Moorpark Patrick Hunter, Mayor Attest: Deborah S. Traffenstedt, City Clerk Approved as to Form: Joseph M. Montes, City Attorney A -4 "Transferee Number 1" Comcast Cable Holdings I, LLC Its: Date: "Transferee Number 2" CAC Exchange I, LLC M Its: Date: 000202 i ime vvarner iv r uaoie rnoung inc. 100% Ti arner NY Cable C A -5 0 0 0 � 0 3 EXHIBIT B GUARANTEE This is a GUARANTEE, dated as of , made by TIME WARNER CABLE INC., a Delaware corporation ( "Guarantor "), in favor of the City of Moorpark, CA ( "Beneficiary "). For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce Beneficiary to timely consent to the transfer of the cable television franchise for the City of Moorpark (the "Franchise ") to CAC Exchange I, L.L.C. ( "Transferee ") in accordance with the Federal Communications Commission Form 394 filed by Transferee, Guarantor agrees as follows: 1. Interpretive Provisions. (a) The words "hereof," "herein" and "hereunder" and words of similar import, when used in this Guarantee, shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and section and paragraph references are to this Guarantee unless otherwise specified. (b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 2. Guarantee. (a) From and after the Closing Date referenced in Section 4 of the "Change of Ownership Consent Agreement," Guarantor unconditionally and irrevocably guarantees to Beneficiary the timely and complete performance of all Transferee obligations under the Franchise (the "Guaranteed Obligations"). The Guarantee is an irrevocable, absolute, continuing guarantee of payment and performance, and not a guarantee of collection, of the franchise, including all Exhibits to the Franchise, which includes Exhibit D (Institutional Network). If Transferee fails to pay any of its monetary Guaranteed Obligations in full when due in accordance with the terms of the Franchise, Guarantor will promptly pay the same to Beneficiary or procure payment of same to Beneficiary. Anything herein to the contrary notwithstanding, Guarantor shall be entitled to assert as a defense hereunder any defense that is or would be available to Transferee under the Franchise or otherwise. B -1 000204 (b) This Guarantee shall remain in full force and effect until the earliest to occur of: (i) performance in full of all Guaranteed Obligations at a time when no additional Guaranteed Obligations remain outstanding or will accrue to Transferee under the Franchise and (ii) any direct or indirect transfer of the Franchise from Transferee to (or direct or indirect acquisition of Transferee or any successor thereto by (whether pursuant to a sale of assets or stock or other equity interests, merger or otherwise)) any other person or entity a majority of whose equity and voting interests are not beneficially owned and controlled, directly or indirectly, by Guarantor. Upon termination of this Guarantee in accordance with this Section 2(b), all contingent liability of Guarantor in respect hereof shall cease and Guarantor shall remain liable solely for Guaranteed Obligations accrued prior to the date of such termination. 3. Waiver. Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by Beneficiary upon this Guarantee or acceptance of this Guarantee. Guarantor waives diligence, presentment, protest and demand for payment to Transferee or Guarantor with respect to the Guaranteed Obligations; provided, however, that Guarantor shall be furnished with a copy of any notice of or relating to default under the Franchise to which Transferee is entitled or which is served upon Transferee at the same time such notice is sent to or served upon Transferee. 4. Representations and Warranties. Each of Guarantor and Beneficiary represents and warrants that: (i) the execution, delivery and performance by it of this Guarantee is within its corporate, limited liability company or other powers, have been duly authorized by all necessary corporate, limited liability company or other action, and do not contravene any law, order, decree or other governmental restriction binding on or affecting it and (ii) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by it of this Guarantee, except as may have been obtained or made, other than, in the case of clauses (i) and (ii), contraventions or lack of authorization, approval, notice, filing or other action that would not, individually or in the aggregate, impair or delay in B -2 00®4021 05 any material respect such party's ability to perform its obligations hereunder. 5. Bindinq Effect. This Guarantee, when executed and delivered by Beneficiary, will constitute a valid and legally binding obligation of Guarantor, enforceable against it in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency or other similar laws applicable to creditors' rights generally and by equitable principles (whether enforcement is sought in equity or at law). 6. Notices. All notices, requests, demands, approvals, consents and other communications hereunder shall be in writing and shall be deemed to have been duly given and made if served by personal delivery upon the party for whom it is intended or delivered by registered or certified mail, return receipt requested, or if sent by telecopier, provided that the telecopy is promptly confirmed by telephone confirmation thereof, to the party at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such party: 7. To Guarantor and Transferee: Time Warner Cable Inc. 290 Harbor Drive Stamford, CT 06902 -6732 Telephone: (203) 328 -0631 Telecopy: (203) 328 -4094 Attention: General Counsel To Beneficiary: City of Moorpark 799 Moorpark Avenue Moorpark, CA 93021 Telephone: (805) 517 -6200 Telecopy: (805) 529 -8270 Attention: City Manager Intearation. This Guarantee represents the agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by Guarantor or Beneficiary relative to the B-3 0002(16 subject matter hereof other than those expressly set forth herein. 8• Amendments in Writina. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except by a written instrument executed by Guarantor and Beneficiary, provided that any right, power, or privilege of Beneficiary arising under this Guarantee may be expressly waived by Beneficiary in a letter executed by Beneficiary. 9. Section Headinas. The section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 10. No Assignment or Benefit to Third Parties. This Agreement shall be bii benefit of the parties hereto. express or implied, is intended to Guarantor and Beneficiary and assigns, any rights or remedies Guarantee. iding upon and inure to the Nothing in this Agreement, confer upon anyone other than their respective permitted under or by reason of this 11. Expenses. All costs and expenses incurred in connection with this Guarantee and the transactions contemplated hereby shall be borne by the party incurring such costs and expenses. 12. Counterparts. This Guarantee may be executed by Guarantor and Beneficiary on separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 13. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. B -4 000 ( 7 14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN. IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and year first above written. GUARANTOR TIME WARNER CABLE INC. By: _ Name: Title. BENEFICIARY CITY OF MOORPARK By: _ Name: Title. Patrick Hunter Mayor