O2177
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F:\MunicipaILaw\Share\LAWS\JL\TimeWamerCableFranchise 021406 mtg. doc
City Council Meeting: February 14, 2006 Santa Monica, California
ORDINANCE NUMBER 2177 (CCS)
(City Council Series)
AN ORDINANCE APPROVING AND CONSENTING, SUBJECT TO
CERTAIN CONDITIONS, TO THE TRANSFER OF CONTROL OF CENTURY-TCI
CALIFORNIA, L.P., WHICH OPERATES CABLE SYSTEMS IN THE
CITY OF SANTA MONICA, FROM ADELPHIA COMMUNICATIONS CORPORATION
TO COMCAST CABLE HOLDINGS, LLC AND TO THE TRANSFER OF
OWNERSHIP AND CONTROL OF CAC EXCHANGE I, LLC
FROM COMCAST CABLE HOLDINGS, LLC TO TIME WARNER CABLE INC.
WHEREAS, Century-TCI California, L.P. ("Century-TCI"), which is jointly owned
by Century-TCI California Communications, L.P. and Century-TCI Holdings, LLC, and
affiliated with Adelphia Communications Corporation ("Adelphia"), owns, operates and
maintains cable television systems in the City, and is providing service under the terms
and conditions of Franchise Agreement dated June 4, 2002 with an effective date of
October 1, 1999 and an expiration date of July 3, 2007 ("Franchise Agreement"),
Ordinance 6.108 of the Santa Monica Municipal Code ("Ordinance"), Resolution 9766
passed May 21, 2002 ("Resolution"); Settlement Agreement between the City and
Century-TCI dated May 28, 2002 ("2002 Settlement Agreement"), I-Net and
Construction Agreement dated May 28,2002 between the City and Century-TCI ("I-Net
Agreement") and have agreed to enter into a Settlement and Mutual release Agreement
with the City in January 2006 ("2006 Settlement" or "Century-TCI Settlement
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Ag reement"). The Franchise Agreement, Ordinance, Resolution, 2002 Settlement
Agreement, I-Net Agreement and 2006 Settlement are referred to collectively herein as
the "Franchise Documents;" and
WHEREAS, Century-TCI has preserved its rights with respect to renewal of the
Franchise under 47 U.S.C. 9 546(a)-(g); and
WHEREAS, the City and Century-TCI have agreed to settle claims by the City
arising from the performance by Century-TCI under the terms and conditions of the
Franchise Documents pursuant to the terms and conditions of the Century-TCI
Settlement Agreement; and
WHEREAS, Adelphia and Comcast Corporation ("Com cast") have entered into
an "Asset Purchase Agreement" dated April 20, 2005 (the "Purchase Agreement"),
pursuant to which Comcast Cable Holdings, LLC ("CCH"), a subsidiary of Comcast, will
purchase Adelphia's partnership interest in Century-TCI (the "Adelphia Transaction");
and
WHEREAS, Comcast and Time Warner Cable Inc. ("Time Warner Cable") and
other parties named therein, have entered into an "Exchange Agreement" dated April
20, 2005 (the "Exchange Agreement"), pursuant to which CCH will cause Century-TCI
to assign its assets, including the Franchise to CAC Exchange I, LLC ("CAC"), which will
become a wholly-owned subsidiary of Century-TCI, and forthwith to transfer 100% of
the outstanding equity securities of CAC to Time Warner Cable (the "Exchange
Transaction"). The Adelphia Transaction and the Exchange Transaction are referred to
collectively herein as the "Proposed Transactions"; and
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WHEREAS, on June 14, 2005, Time Warner Cable submitted to the City on
behalf of Century-TCI, Adelphia and CCH, materials including Federal Communications
Commission ("FCC") Form 394 dated June 10. 2005, requesting that the City approve
the transaction transferring control of Century- TCI from Adelphia to CCH (the "Century
Change of Control Application"); and
WHEREAS, in the materials filed with the City on June 14, 2005, Comcast
represented that an internal transaction, for which Comcast did not request City
approval, would result in the assignment of the assets of Century-TCI, including the
Franchise from Century- TCI to CAC, but that this internal assignment would only occur
immediately prior to, and for the sole purpose of, consummating the Exchange
Transaction; and
WHEREAS, on June 14, 2005, Time Warner Cable also submitted to the City on
behalf of Century-TCI, Time Warner Cable, CCH and CAC, materials including FCC
Form 394 dated June 10, 2005 requesting that the City approve the transaction
transferring 100% ownership and control of CAe (whose assets will at this point include
the Franchise) from Century-TCI to Time Warner Cable (the "Comcast-Time Warner
Transfer Application"). The Comcast-Time Warner Transfer Application and the
Century Change of Control Application are referred collectively to herein as the
"Transfer Applications"; and
WHEREAS, the Proposed Transactions will result in a transfer of control of
Century-TCI and a transfer and change of control of the Franchise and CAC, which is
subject to the City's approval under the terms and conditions of the Franchise
Documents ; and
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WHEREAS, CCH has represented that the Exchange Transaction should close
contemporaneous with the Proposed Transaction but acknowledges the possibility of a
delay in the closing of the Exchange Transaction which could result in CCH owning and
controlling Century-TCI for a period of time; and
WHEREAS, CCH agrees, from and afte r closing of the Adelphia Transaction, to
accept control over Century-TCI and accepts, acknowledges, and agrees that Century-
TCI is bound by all the commitments, duties, and obligations, present, continuing and
future, of the Franchise Documents; and
..
WHEREAS, CCH agrees to unconditionally guarantee the performance of
Century-TCI under the Franchise Documents if the Exchange Transaction does not
close contemporaneously with the Adelphia Transaction and only until such time as the
Exchange Transaction closes and Time Warner Cable becomes the guarantor; and
WHEREAS, Time Warner Cable has agreed to unconditionally guarantee the
performance of CAC under the Franchise Documents from and after the closing of the
Exchange Transaction; and
WHEREAS, Century-TCI has activated its rights with respect to renewal of the
Franchise under 47 U.S.C. ~ 546(a)-(g);
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES ORDAIN AS FOLLOWS:
Section 1. Pursuant to the Franchise Documents, the City consents to the
transfer of control of Century-TCI from Adelphia to CCH, the transfer of the Franchise
from Century-TCI to CAC, and the transfer of control of CAC to Time Warner Cable,
subject to the following conditions:
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(a) Century-TCI, Adelphia, CCH, CAC and Time Warner Cable shall
execute and file with the City Manager a Change of Control Agreement ("Change of
Control Agreement") in the form attached hereto as Appendix A no later than January
30,2006.
(b) CCH shall execute and file with the City Manager an Acceptance in
the form set forth as Exhibit B to the Change of Control Agreement, no later than
January 30, 2006.
(c) CCH shall execute and file with the City Manager the Guarantee of
Performance in the form set forth as Exhibit C to the Change of Control Agreement, no
later than January 30, 2006.
(d) Time Warner Cable shall cause CAC to execute and file with the
City Manager an Acceptance in the form set forth as Exhibit D to the Change of Control
Agreement, no later than January 30, 2006.
(e) Time Warner Cable shall execute and file with the City Manager a
Guarantee of Performance in the form set forth as Exhibit E to the Change of Control
Agreement, no later than January 30, 2006.
(f) The Adelphia Transaction must close by October 31, 2006. The
Exchange Transaction must close by December 31,2006. The Proposed Transactions
shall be consummated on the terms and conditions that are not in any material respect
different from those described in the Transfer Applications and other related materials
provided to the City, this Ordinance, and the Change of Control Agreement.
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(g) Adelphia shall execute and file with the City Manager the Century-
TCI Settlement Agreement, in a form acceptable to the City Manager and Century-TCI,
no later than January 30, 2006.
(h) The terms and conditions of the Century-TCI Settlement shall be
fully complied with according to the terms and conditions of that agreement.
Section 2. If any of the conditions specified in Section 1 hereof are not both
agreed to and timely satisfied, then upon written notice by the City to Adelphia, CCH
and Time Warner Cable, the City's consent to the Proposed Transactions shall be
voidable by the City, in its sole discretion, in accordance with the terms of the Change of
Control Agreement and the applicable transfer(s) shall be deemed denied as of January
24, 2006, unless extended by written agreement of the City Manager.
Section 3. Any material misrepresentation in the Transfer Applications shall
constitute a violation of the Franchise Documents, subject to all the remedies available
to the City under the Franchise Documents.
Section 4. The City Manager is authorized to execute the Change of Control
Agreement and any amendments on behalf of the City.
Section 5. The City Manager is authorized to negotiate and execute the Century-
TCI Settlement Agreement and any amendments on behalf of the City.
Section 6. This Ordinance is a final decision on the Transfer Applications within
the meaning of 47 U.S.C. 9 537, and for these purposes the Transfer Applications are
deemed acted upon when this Ordinance is approved by the Council.
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Section 7. The Mayor shall sign and the City Clerk shall attest to the passage of
this Ordinance. The City Clerk shall cause the same to be published once in the official
newspaper within 15 days after its adoption. This Ordinance shall become effective 30
days from its adoption.
APPROVED AS TO FORM:
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Approved and adopted this 14th day of February, 2006.
~~~
Robert 1. Holbrook, Mayor
State of California )
County of Los Angeles) ss.
City of Santa Monica )
I, Maria M. Stewart, City Clerk of the City of Santa Monica, do hereby certify that the
foregoing Ordinance No. 2177 (CCS) had its introduction on January 24,2006, and was
adopted at the Santa Monica City Council meeting held on February 14, 2006, by the
following vote:
Ayes: Council members: Bloom, Genser, McKeown, O'Connor
Mayor Pro Tem Shriver, Mayor Holbrook
Noes: Council members: None
Abstain: Council members: None
Absent: Council members: Katz
ATTEST:
~\u ~..~A-
Maria M. Stewart, City Clerk
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CONTRACT NO:, 8554 (CCS) EXHIBIT A
CHANGE OF CONTROL AGREEMENT
BETWEEN
CENTURY TCI - COMCAST- TIME WARNER
AND THE CITY OF SANTA MONICA
THIS CHANGE OF CONTROL AGREEMENT ("Agreement") is made this :?Q*'dayof
January, 2006, by and between:
1. The City of Santa Monica, California (the "City");
2. Century- TCI California, L.P, a Delaware Limited Partnership ("Century- TCI");
3. Adelphia Communications Corporation, a Delaware corporation ("Adelphia");
4. Comcast Cable Holdings, LLC ("CCH"), a Delaware Limited Liability Company;
5. CAC Exchange I, LLC ("CAC" or "Franchisee"), a Delaware Limited Liability
Company; and
6. Time Warner Cable Inc. ("Time Warner Cable"), a Delaware corporation.
For purposes of this Agreement, Century-Tel, Adelphia, CCH, CAC, and TWC,
individually or collectively are referred to herein as the "Companies." For purposes ofthis
Agreement, "Franchisee" shall mean the entity holding the Franchise at any given time. Thus, as
of January 1,2006, the Franchisee was Century-TCL After the Exchange Agreement, as defined
below, closes with regard to the City, the Franchisee will be CAC.
RECIT ALS
WHEREAS, Century- TCl, which is jointly owned by Century-Tel California
Communications, L.P. and Century- TCI Holdings, LLC, and affiliated with Adelphia
Communications Corporation ("Adelphia"), owns, operates and maintains a cable television
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system in the City, and is providing services under a franchise ("Franchise") pursuant to a
Franchise Agreement dated June 4,2002 with an effective date of October 1, 1999 and an
expiration date of July 10, 2007 ("Franchise Agreement"), Ordinance 6.108 of the Santa Monica
Municipal Code ("Ordinance"); Resolution 9766 passed May 21, 2002 ("Resolution");
Settlement Agreement between the City and Century- TCI dated May 28, 2002 ("2002
Settlement Agreement"), I-Net and Construction Agreement dated May 28,2002 between the
City and Century- TCI("I-Net Agreement") and Settlement and Mutual Release Agreement
dated January ,2006 ("2006 Settlement"). The Franchise Agreement, Ordinance, Resolution,
2002 Settlement Agreement, I-Net Agreement and 2006 Settlement are referred to collectively
herein as the "franchise Documents;" and
WHEREAS, Adelphia and Century- TCI are debtors in possession with chapter 11 cases
pending in the United States Bankruptcy Court for the Southern District of New York, No. 02-
41729 (REG); and
WHEREAS, the City and Century- TCI have agreed to enter into a separate settlement
and release agreement (the "Century- TCI Settlement Agreement"), which will resolve to the
satisfaction of the City claims by the City arising from the performance by Century- TCI under
the Franchise Documents; and
WHEREAS, Adelphia and Comcast Corporation ("Comcast") have entered into that
certain "Asset Purchase Agreement" dated April 20, 2005 (the "Purchase Agreement"), pursuant
to which CCH will acquire Adelphia's joint venture interest in Century- TCI (the "Adelphia
Transaction"); and
WHEREAS, Comcast and Time Warner Cable Inc. ("Time Warner Cable") and other
parties named therein, have entered into that certain "Exchange Agreement" dated April
2
20,2005 (the "Exchange Agreement"), pursuant to which CCH will cause Century-TCI to assign
its assets, including the Franchise to CAC Exchange I, LLC ("CAC"), which will become a
wholly-owned subsidiary ofCentury-TCI, and forthwith to transfer 100% of the outstanding
equity securities ofCAC to a subsidiary of Time Warner Cable (the "Exchange Transaction").
The Exchange Transaction and the Adelphia Transaction are referred to collectively herein as the
"Proposed Transactions"; and
WHEREAS, on June 14, 2005, Time Warner Cable submitted to the City on behalf of
Century- TCI, Adelphia and CCH, materials including Federal Communications Commission
("FCC") Form 394 dated June 10, 2005, requesting that the City approve the Adelphia
Transaction transferring control ofCentury-TCI from Adelphia to CCH (the "Century Change of
Control Applications"); and
WHEREAS, in the materials filed with the City on June 14,2005, CCH represented that
an internal transaction, for which Comcast did not request City approval, would result in the
assignment of the assets ofCentury-TCI, including the Franchise~ from Century-TCI to CAC, but
that this internal assignment would only occur immediately prior to, and for the sole purpose of,
consummating the Exchange Transaction; and
WHEREAS, on June 14,2005, Time Warner Cable also submitted to the City on behalf
of Century- TCI, Time Warner Cable, CCH, and CAe, materials including FCC Form 394 dated
June 10,2005 requesting that the City approve the transaction transferring 100% ownership and
control ofCAC from Century-TCI to Time Warner Cable (the "Comcast-Time Warner Change
of Control Application"). The Comcast- Time Wamer Change of Control Application and the
Century Change of Control Application are collectively referred to herein as the "Transfer
Applications"; and
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WHEREAS, the Adelphia Transaction will result in a transfer of control of Century- TCI
which is subject to the City's approval under the terms and conditions of the Franchise
Documents; and
WHEREAS, CCH has represented that the Exchange Transaction should close
contemporaneous with the Adelphia Transaction, but acknowledges the possibility of a delay in
the closing of the Exchange Transaction which could result in CCH owning and controlling
Century- TCI for a period of time; and
WHEREAS, the various transaction agreements referred to above also provide for the
possibility that the Adelphia Transaction could be modified and the Exchange Transaction could
be canceled, such that Adelphia's 75% ownership interest in Century-TCI would be acquired and
retained by TWNY and Comcast would retain its 25% ownership interest in Century- TCI
("Alternate Transaction").
WHEREAS, CCH agrees to unconditionally guarantee the performance of Century- TCI
under the Franchise Documents if the Exchange Transaction does not close contemporaneously
with the Adelphia Transaction and only until such time as the Exchange Transaction closes and
Time Warner Cable becomes the guarantor; and
WHEREAS, Time Warner Cable has agreed to unconditionally guarantee the
performance ofCAC under the Franchise Documents upon the close of the Exchange
Transaction; and
WHEREAS, the Adelphia Transaction and the Exchange Transaction are referred to
collectively herein as the "Transfer."
WHEREAS, the City Council has approved an Ordinance approving the Transfer
Applications, subject to certain conditions, in the form attached hereto as Exhibit A ("Transfer
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Ordinance"), one of which is the execution and full performance of this Agreement by the
Companies.
NOW, THEREFORE, in consideration of the mutual covenants, agreements, promises
and undertakings contained herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the City and the Companies do hereby agree as
follows:
1. TRANSFER OF FRANCHISE
1.1 The City, upon adoption by the City ofthe Transfer Ordinance, and the
satisfaction by the Companies of all conditions established in the Transfer Ordinance and this
Agreement, consents to the transfer of the ownership and control ofCentury-TCI (and as a result
the Franchise) from Adelphia to CCH, with CCH being wholly owned by Comcast, as
specifically described in the Century Change of Control Application. The City further consents
to the transfer of the ownership and control of CAe and control of the Franchise from Century-
TCI to Time Warner Cable, as specifically described in the Comcast-Time Warner Change of
Control Application and this Agreement.
1.2 The City reserves all rights and powers not contrary to the terms of this
Agreement, including but not limited to, and without limitation, the following:
1.2.1 Neither this Agreement, the City's consent to the transfer of the ownership
and control of the Franchise, nor any other action or omission by the City at or before the
execution of this Agreement, shall be construed to constitute the City's consent to any
future assignment, transfer, change of ownership, or change in control of the Franchisee,
the Franchise, or any of them, or any future assignment, transfer, change of ownership, or
change in control of the cable system providing services in the City; or to mean that the
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City's consent to any future transaction is not required in accordance with the terms of
the Franchise Documents. Likewise, the City's consent to the transfer ofthe ownership
and control of the Franchisee shall not expand any rights beyond those contained in the
,
Franchise Documents.
1.2.2 The City and the Companies agree that any approval of the Proposed
Transactions is not a finding or representation by the City that the Franchise will be
renewed or extended (and approval shall not create an obligation to renew or extend the
Franchise); that the Franchisee is "financially, technically or legally" qualified to hold a
renewed franchise; or that any other renewal issue that may arise with respect to the
Franchisee's past performance or future cable-related needs and interests will be resolved
in a manner favorable to the Franchisee. Any consent given by the City to the Proposed
Transactions is made without prejudice to, or waiver of, the City's right to fully
investigate and consider the financial, technical, and legal qualifications and other
relevant facts related to the Franchisee, or persons or entities owning or controlling or
proposing to own or control the Franchisee or the Franchise, during any future franchise
renewal or transfer process.
1.2.3 Neither the Proposed Transactions nor this Agreement waives or affects
any right with respect to the City's ability at the time of renewal of the Franchise to
consider or raise claims arising after the date of Transfer based on then current or future
defaults, failure to provide reasonable service in light of the community's needs, failure to
comply with the terms, conditions and provisions of the Franchise Documents and
applicable law or to determine the future cable-related needs and interests of the City
pursuant to applicable law.
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1.2.4 Except as set forth in the Century- TCI Settlement Agreement, the City's
approval of the Proposed Transactions will in no way be deemed to be an admission that
Century- TCI is presently in compliance with all of its obligations under this Agreement
or the Franchise Documents. Upon satisfaction of the terms of this Agreement, CCH will
not be responsible for Century-TCl's defaults prior to the date of the closing of the
Adelphia Transaction. Upon close of the Exchange Transaction, Time Warner Cable will
cure any ofCCH's or CAC's defaults in existence prior to the date of the closing of the
Exchange Transaction. Century and CAC (in the event the Exchange Transaction closes),
during the time that each holds the Franchise, shall ensure compliance, within 18 months,
of the construction and safety code compliance requirements as set forth in Exhibit F to
this Agreement even if non-compliance occurred in whole or in part prior to the adoption
of the Transfer Ordinance and this Agreement. Franchisee agrees that, in accordance
with the procedures set forth in Section 6.108.08.040 of the Cable Ordinance, liquidated
damages may be assessed in the amount of $500 per day for failure to achieve Substantial
Compliance with the Required Safety Codes by the deadline set forth in Exhibit F. The
City shall provide written notice to Franchisee of its intent to assess liquidated damages.
Such notice shall state with particularity the nature and location of each alleged failure to
achieve Substantial Compliance. No liquidated damages may be assessed for any alleged
violation that is cured within 45 days of receipt by Franchisee of such notice.
1.2.5 This Agreement does not waive or affect any right with respect to the
Franchisee's future compliance with the terms, conditions, provisions, requirements and
other obligations set forth in the Franchise Documents, including the City's right to
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regulate and to compel the Franchisee to comply with the Franchise Documents and other
applicable law.
1.2.6 By executing this Agreement, the City and the Franchisee agree and
acknowledge that this Agreement and the Transfer Ordinance 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 Century- TCl and CAC and to transfer
the Franchise Agreement. This Agreement neither affects nor prejudices in any way the
City's rights nor the Franchisee's rights under the Franchise Documents. The City and
Franchisee agree that compliance with the Franchise Agreement as it exists as of the date
of this Agreement, and assuming the economic impact, or lack thereof, of federal, state
and local statutes and administrative regulations existing as of the date of this Agreement,
is neither commercially impracticable as the term is used in Section 625(e) of the Cable
Communications Policy Act of 1984 or the Cable Television Consumer Protection and
Competition Act of 1992 (collectively, the "Cable Act") nor economically infeasible
upon closing of the Transfer based upon (i) any and all debt service incurred or to be
incurred by the Franchisee, or any related entity, to directly or indirectly finance the
Transfer, or (ii) any return on equity investment made, or to be made, by the Franchisee
or any related entity, based upon the equity portion of the financing provided for the
Transfer.
2. ACCEPTANCE OF FRANCHISE OBLIGATIONS & GUARANTEE
2.1 From and after the closing of the Ade1phia Transaction, CCH accepts control of
the Franchisee and accepts, acknowledges, and agrees that: (i) the Franchisee is bound by all the
commitments, duties, and obligations, present, continuing and future, of the Franchise
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Documents and all applicable and lawful City ordinances, rules and regulations, as amended; and
(ii) that the Adelphia Transaction will have no effect on these obligations.
2.1.1 No later than January 30,2006, CCH shall execute and submit to the City
an Acceptance of Franchise ("Comcast Acceptance") in the form attached hereto as Exhibit B.
2.1.2 Century- TCl, under the control of CCH, agrees to assume responsibility
for and be liable for any acts and omissions under the Franchise Documents from and after the
date of the closing of the Adelphia Transaction until the date of the closing of the Exchange
Transaction for all purposes.
2.1.3 CCH agrees to provide a parent company Guarantee of Performance
assuring compliance by the Franchisee with all the obligations of the Franchise Documents from
and after the date of the closing of the Adelphia Transaction until the date of the closing of the
Exchange Transaction. No later than January 30, 2006, CCH shall execute and submit to the
City a Guarantee in a form attached hereto as Exhibit C.
2.2 From and after the closing of the Exchange Transaction, Time Warner Cable
accepts control of CAC and accepts, acknowledges, and agrees that: (i) CAC is bound by all the
commitments, duties, and obligations, present, continuing and future of the Franchise Documents
and all applicable and lawful City ordinances, rules and regulations, as amended; and (ii) that the
Exchange Transaction will have no effect on these obligations. Time Wamer Cable guarantees
performance by CAC of all obligations under the Franchise Documents and agrees that CAC and
Time Warner Cable will be responsible and be liable for any acts and omissions under the
Franchise Documents from and after the date of closing of the Exchange Transaction and that
upon the closing of the Exchange Transaction Time Warner Cable will cure any non-monetary
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defaults then in existence under the Franchise Documents and any monetary default arising from
or after the date of closing of the Adelphia Transaction.
2.2.1 No later than January 30, 2006, Time Warner Cable shall cause
CAC to execute and submit to the City an Acceptance of the Franchise ("CAC Acceptance") in
the form attached hereto as Exhibit D.
2.2.2 CAC, under the control of Time Warner Cable, agrees to assume
responsibility and be liable for any acts and omissions, under the Franchise Documents from and
after the date of the closing of the Exchange Transaction, for all purposes.
2.2.3 Time Warner Cable agrees to provide a parent company Guarantee
of Performance ("Time Warner Guarantee") assuring compliance by CAC with all the'
obligations of the Franchise Documents from and after the closing of the Exchange Transaction.
No later than January 30,2006, Time Warner Cable shall execute and submit to the City the
Time Warner Guarantee in the form attached hereto as Exhibit E.
2.3 The Companies acknowledge and agree that, by entering into this Agreement, the
City reserves all of its rights with respect to the compliance by the Franchisee with the terms,
'.
conditions, requirements and obligations set forth in the Franchise Documents from and after the
closings of the Transfer. No delay or failure to enforce any provision of the Franchise
Documents will operate against the City or the Companies as an estoppel or waiver.
2.4 Time Warner Cable agrees, from and after the Closing of the Exchange
Transaction, to provide the same level of customer service to its customers located in the City as
is provided to Time Warner Cable's customers in the City of Los Angeles. Except as set forth in
this Agreement, nothing in this Agreement amends or alters the Franchise Documents or any
requirements therein in any way.
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2.5 CCH agrees, from and after the Closing of the Adelphia Transaction, to provide
the same level of customer service to its customers located in the City as is provided to
Comcast's customers in the City of Los Angeles. Except as set forth in this Agreement, nothing
in this Agreement amends or alters the Franchise Documents or any requirements therein in any
way.
3. EFFECT ON FRANCHISE REQUIREMENTS
3.1. Except as expressly provided to the contrary, nothing in this Agreement
diminishes or affects the commitments, duties, and obligations, present, continuing and future,
from and after the closing of the Transfer of the Franchisee under the Franchise Documents. All
provisions of the Franchise Documents remain in full force and effect and are enforceable in
accordance with its terms.
3.2 The Companies acknowledge that, nothing in this Agreement either expands or
contracts the rights any party may have under 47 U .S.c. ~ 546(a)-(g).
4. ADDITIONAL CONDITIONS
4.1 It is expressly recognized by the parties that the City's approval (final, valid and
unmodified from that of Exhibit A) of the Transfer will be a condition precedent to the
effectiveness of this Agreement. The execution of this Agreement will in no way bind the City
to approve the Proposed Transactions, and this Agreement and the Century- TCl Settlement
Agreement will become null and void if the City does not approve the Proposed Transactions.
4.2 If all of the necessary conditions to the City's approval of the Proposed
Transactions are not executed by all the appropriate Companies when required by the Transfer
Ordinance, then the City's consent to the Proposed Transactions will become voidable, and if
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voided by the City, the Proposed Transactions will be deemed to have been timely denied on
January 24, 2006.
4.3 The Adelphia Transaction must close by October 31, 2006. The Exchange
Transaction must close by December 31, 2006. In the event that a proposed transaction does not
close by the date specified above, the City's consent to such proposed transaction will become
voidable for any such unclosed transaction upon written notice to Adelphia, Time Wamer Cable
and Comcast, and if voided by the City, the Companies agree that such transaction will be
deemed to have been timely and lawfully denied on January 24, 2006.
4.4 In the event that the City's consent to the Proposed Transactions is denied
pursuant to Sections 4.2 or 4.3, neither the City nor the Companies waive any rights they have
under applicable law including, without limitation~ any rights or privileges under Title 11 of the
United States Code (the "Bankruptcy Code").
4.5 Except as provided in Section 4.4, hereof, the Companies hereby agree that any
denial of the Transfer Applications pursuant to Section 2 of the Transfer Ordinance satisfies the
requirements established by any applicable law including, without limitation, the Cable
Communications Policy Act of 1984,47 U.S.c. ~S 521 et seq., as amended, the FCC's rules or
regulations, the First Amendment of the U.S. Constitution, or any other law or regulation.
4.6 In the event that the City's consent to the Transfer Applications is denied pursuant
to Section 2 of the Transfer Ordinance, the Companies hereby waive any and all claims that the
deemed denial of such consent by operation of this Agreement fails to satisfy the deadlines
established by 47 U.S.c. S 537, as amended.
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5. RATES
5.1 The Companies covenant, promise, warrant and represent that the costs associated
with the Proposed Transactions itself will not resul t in any increase in subscriber rates
5.2 The Companies agree that no payment, expenditure, or other consideration
provided pursuant to or arising from this Agreement shall be treated as a cost arising from a
condition of the Franchise Documents in accordance with 47 C.F.R. ~ 76.925. The Companies
agree that any payment, expenditure, or other consideration provided pursuant to or arising from
this Agreement or amounts paid under the 2006 Settlement will not be passed through to
subscribers on future bills issued after the effective date ofthis Agreement.
5.3 Nothing in this Agreement, the Comcast Acceptance, the CAC Acceptance, the
CCH Guarantee, the Time Wamer Guarantee or the Transfer Ordinance shall restrict the
authority of the Companies to establish rates in accordance with FCC regulations.
6. DISPUTES REGARDING THIS AGREEMENT
6.1 Any material breach of this Agreement will be deemed a breach of the Franchise
Documents and will be subject to all remedies available for a breach ofthe Franchise
Documents. The remedies set forth in this Section will be in addition to, and not exclusive of,
any other remedies the City may have under this Agreement or the Franchise Documents, and at
law or equity.
6.2 Any material misrepresentation in the Transfer Applications shall constitute a
material violation of Franchise Documents and shall be subject to all the remedies available to
the City under the Franchise Documents and section 4 of this Agreement.
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7. REPRESENTATIONS AND WARRANTIES
7.1 Each of the Companies hereby covenant, represent and warrant that at the time of
the execution of this Agreement: (a) it is a corporation, partnership or limited liability company
duly organized, validly existing and in good standing under the laws of the jurisdiction in which
it is organized; (b) the Franchise Documents, and assuming due execution hereof by the other
parties hereto, this Agreement constitute legal, valid and binding obligations of the Companies,
and each of them, enforceable in accordance with their terms; (c) the execution and delivery of,
and performance by the Companies, and each of them, under this Agreement and the Franchise
Documents are within each of the Companies' power and authority without the joinder or
consent of any other party except to the extent required by the Bankruptcy Code and have been
duly authorized by all requisite corporate or partnership action on the part of each and are not in
contravention of any of the Companies' partnership agreement, charter, bylaws, and/or other
organizational documents; and (d) the execution and delivery of this Agreement and attached
documents do not contravene, result in a breach of, or constitute a default under any contract or
agreement to which any of them is a party or by which any ofthem or any of their properties
may be bound (nor would such execution and delivery constitute such a default with the passage
of time or the giving of notice or both), and do not violate or contravene any law, order, decree,
rule, regulation or restriction to which any of them is subject.
7.2 CCH and Time Wamer covenant represent and warrant that the Proposed
Transactions will not adversely affect the financial position ofthe Franchisee, or limit the funds
available to the Franchisee.
7.3 CCH and Time Wamer agree that with respect to the Franchisee that they and
their affiliates shall take no action inconsistent with the terms and conditions contained in the
14
Franchise Documents and will cause the Franchisee to fully comply with all of the terms and
conditions of the Franchise Documents and this Agreement. To the extent that any provisions of
any document associated with the Proposed Transactions or Transfer, of any other contract,
conflicts with the Franchise Documents, subject to applicable law, this Agreement or applicable
federal, state or local laws, the parties agree that any such provision will be of no force or effect
as between any of the Companies and the City.
7.4 The Companies acknowledge and agree that the City's consent to the Proposed
Transactions is made in reliance upon the covenants, representations, warranties, documents, and
information provided by the Companies in connection with the Transfer Applications. The
Companies will be liable for their own representations and warranties relied upon by the City.
7.5 Each of the Companies agrees to indemnify and hold the City harmless against
any loss, claim, damage, liability or expense (including, without limitation, all associated costs
and expenses) caused directly or indirectly by any representation or warranty made by it which
proves to be untrue, incomplete or inaccurate in any material respect
7.6 In the event that the Exchange Transaction does not close in immediate
succession to the Adelphia Transaction, Adelphia and Comcast shall promptly provide the City
with written notice describing the delay in closing the Exchange Transaction, a good faith
estimate as to whether the Exchange Transaction will close (and if so, when), identification of
relevant contact !Jersons and telephone numbers, including the persons responsible for customer
service and compliance with Exhibit F, of those operating the system in the City after the closing
of the Adelphia Transaction and the name under which cable services will be provided.
15
7.7 In the event that the Proposed Transactions do not close and the Alternate
Transaction will close, Adelphia and Time Warner Cable (or affiliates of each as appropriate)
will submit a Form 394 to the City with respect to the Alternative Transaction.
8. MISCELLANEOUS PROVISIONS
8.1 Effective Date: If all the conditions precedent to the effectiveness of this
Agreement occur, the effective date of this Agreement shall be the date of execution by all
parties.
8.2 Entire Agreement: This Agreement, together with the Transfer Ordinance and the
Century- TCI Settlement Agreement, constitute the entire agreement and understanding of the
parties with respect to the Transfer Applications, tlte settlement of issues related to compliance
by Century- TCI with the Franchise Documents, and the City's consent to the Proposed
Transactions. No statements, promises or inducements inconsistent with this Agreement made
by any party will be valid or binding, unless in writing and executed by all parties. This
Agreement may only be modified by written amendments signed by all parties hereto.
8.3 Binding Acceptance: This Agreement shall bind and benefit the parties hereto
and their respective heirs, beneficiaries, administrators, executors, receivers, trustees, successors
and assigns. Any purported assignment of this Agreement is void without the express written
consent of each signatory.
8.4 V oluntary Agreement: This Agreement is freely and voluntarily given by each
party, without any duress or coercion, and after each party has consulted with its counsel. Each
party has carefully and completely read all of the terms and provisions of this Agreement.
8.5 Counterparts: This Agreement may be executed in several counterparts, each of
which when so executed will be deemed to be an original copy, and all of which together will
16
constitute one agreement binding upon all parties hereto, notwithstanding that all parties will not
have signed the same counterpart.
8.6 Governing Law: This Agreement will be governed in all respects by the law of
the State of California and applicable federal law.
8.7 Time is of Essence: In determining whether a party has complied with any term,
condition or provision of this Agreement, the parties agree and understand that time is of the
essence.
8.8 Captions and References: The captions and headings of sections throughout this
Agreement are intended solely to facilitate reading and reference to the sections and provisions
of this Agreement. Such captions will not affect the meaning or interpretation of this
Agreement.
8.9 Severability: If any term, condition, or provision of this Agreement, other than
Section 4.1 shall, to any extent, be held to be invalid, preempted, or unenforceable, the remainder
hereof shall be valid in all other respects and continue to be effective.
/ / / /
/ / / /
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the
date and year first above written.
City of Santa Monica,
a municipal corporation
--.-
~~ ~
~ W Jo.N
Maria Stewart
City Clerk
Approved as to form:
'\
/ / / /
/ / / /
18
Century- TCI California, L.P
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
~ dW9-
B}!.. Itt '\I\A ~.. .
titlel V"l ~ f~ ~
Adelphia Communications Corporation
(~t~
B)1.
. title] Vi Q. fr l? ~\ c
Comcast Cable Holdings, LLC
By:
(title]
CAC Exchange I, LLC
By:
[titlel
Time Wamer Cable Inc.
By:
(title]
19
Century- TCI California, L.P
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
By:
[title]
Adelphia Communications Corporation
By:
[title)
Comcast Cable Holdings, LLC
~~ f<-.~ ;)-01-(;'&
By: I [titlel~. l(t'la' (().ALtiJt.v..r
CAC EXChan~
By: (J;.; ;.) -I- c(.
[title] $,.l), P
Time Warner Cable Inc.
{\
~'\ ." (
By: .~. '. .~ '~~f?-,~ v,,-.
_.
[title] S>Y?/ I ~-S
19
EXHIBIT A
TRANSFER ORDINANCE
ORDINANCE NO.
.;r>
AN ORDINANCE APPROVING AND CONSENTING, SUBJECT TO CERTAIN
CONDITIONS, TO THE TRANSFER OF CONTROL OF CENTURY-TCI
CALIFORNIA, L.P., WHICH OPERATES CABLE SYSTEMS IN THE CITY OF SANTA
MONICA, FROM ADELPHIA COMMUNICATIONS CORPORATION TO COMCAST
CABLE HOLDINGS, LLC AND TO THE TRANSFER OF OWNERSHIP AND
CONTROL OF CAC EXCHANGE I, LLC FROM COMCAST CABLE HOLDINGS, LLC
TO TIME WARNER CABLE INC.
WHEREAS, Century- TCI California, L.P. ("Century- TCI"), which is jointly owned by
Century- TCI California Communications, L.P. and Century- TCI Holdings, LLC, and affiliated
with Adelphia Communications Corporation ("Adel phi a"), owns, operates and maintains cable
television systems in the City, and is providing service under the terms and conditions of
Franchise Agreement dated June 4,2002 with an effective date of October 1, 1999 and an
expiration date of July 3, '2007 ("Franchise Agreement"), Ordinance 6.108 of the Santa Monica
Municipal Code ("Ordinance"), Resolution 9766 passed May 21, 2002 ("Resolution");
Settlement Agreement between the City and Century- TCI dated May 28, 2002 ("2002
Settlement Agreement"), I-Net and Construction Agreement dated May 28,2002 between the
City and Century- TCI ("I-Net Agreement") and have agreed to enter into a Settlement and
Mutual release Agreement with the City in January 2006 ("2006 Settlement" or "Century- TCI
Settlement Agreement"). The Franchise Agreement, Ordinance, Resolution, 2002 Settlement
Agreement, I-Net Agreement and 2006 Settlement are referred to collectively herein as the
"Franchise Documents;" and
20
WHEREAS, Century- TCI has preserved its rights with respect to renewal of the
Franchise under 47 D.S.C. ~ 546(a)-(g); and
WHEREAS, the City and Century- TCI have agreed to settle claims by the City arising
from the performance by Century- TCI under the terms and conditions ofthe Franchise
Documents pursuant to the terms and conditions of the Century- TCI Settlement Agreement; and
WHEREAS, Adelphia and Comcast Corporation ("Comcast") have entered into an
"Asset Purchase Agreement" dated April 20, 2005 (the "Purchase Agreement"), pursuant to
which Comcast Cable Holdings, LLC ("CCH"), a subsidiary of Comcast, will purchase
Adelphia's partnership interest in Century- TCI (the "AdelphiaTransaction"); and
WHEREAS, Comcast and Time Warner Cable Inc. ("Time Warner Cable") and other
parties named therein, have entered into an "Exchange Agreement" dated April 20, 2005 (the
"Exchange Agreement"), pursuant to which CCH will cause Century- TCI to assign its assets,
including the Franchise to CAC Exchange I, LLC ("CAC"), which will become a wholly-owned
subsidiary of Century- TCI, and forthwith to transfer 100% of the outstanding equity securities
.
ofCAC to Time Warner Cable (the "Exchange Transaction"). The Adelphia Transaction and
the Exchange Transaction are referred to collectively herein as the "Proposed Transactions";
and
WHEREAS, on June 14,2005, Time Warner Cable submitted to the City on behalf of
Century- TCI, Adelphia and CCH, materials including Federal Communications Commission
("FCC") Form 394 dated June 10, 2005, requesting that the City approve the transaction
transferring control of Century- TCI from Adelphia to CCH (the "Century Change of Control
Application"); and
21
WHEREAS, in the materials filed with the City on June 14,2005, Comcast represented
that an internal transaction, for which Comcast did not request City approval, would result in the
assignment of the assets of Century- TCI, including the Franchise from Century- TCI to CAC, but
that this internal assignment would only occur immediately prior to, and for the sole purpose of,
consummating the Exchange Transaction; and
WHEREAS, on June 14,2005, Time Warner Cable also submitted to the City on behalf
ofCentury-TCI, Time Warner Cable, CCH and CAC, materials including FCC Form 394 dated
June 10, 2005 requesting that the City approve the transaction transferring 100% ownership and
control ofCAC (whose assets will at this point include the Franchise) from Century-TCI to Time
Warner Cable (the "Comcast-Time Warner Transfer Application"). The Comcast-Time Warner
Transfer Application and the Century Change of Control Application are referred collectively to
herein as the "Transfer Applications"; and
WHEREAS, the Proposed Transactions will result in a transfer of control of Century-
TCI and a transfer and change of control of the Franchise and CAC, which is subject to the
City's approval under the terms and conditions of the Franchise Documents; and
WHEREAS, CCH has represented that the Exchange Transaction should close
contemporaneous with the Proposed Transaction but acknowledges the possibility of a delay in
the closing of the Exchange Transaction which could result in CCH owning and controlling
Century- TCI for a period of time; and
WHEREAS, CCH agrees, from and after closing of the Adelphia Transaction, to accept
control over Century- TCI and accepts, acknowledges, and agrees that Century- TCI is bound by
all the commitments, duties, and obligations, present, continuing and future, ofthe Franchise
Documents; and
22
WHEREAS, CCH agrees to unconditionally guarantee the performance of Century- TCI
under the Franchise Documents if the Exchange Transaction does not close contemporaneously
with the Adelphia Transaction and only until such time as the Exchange Transaction closes and
Time Warner Cable becomes the guarantor; and
WHEREAS, Time Warner Cable has agreed to unconditionally guarantee the
performance ofCAC under the Franchise Documents from and after the closing of the Exchange
Transaction; and
WHEREAS, Century- TCI has activated its rights with respect to renewal of the
Franchise under 47 US.C. S 546(a)-(g);
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES ORDAIN AS FOLLOWS:
Section 1. Pursuant to the Franchise Documents, the City consents to the transfer of
control of Century- TCI from Adelphia to CCH, the transfer of the Franchise from Century- TCI
to CAC, and the transfer of control of CAC to Time Warner Cable, subject to the following
conditions:
(a) Century-TCI, Adelphia, CCH, CAC and Time Warner Cable shall execute
and file with the City Manager a Change of Control Agreement ("Change of Control
Agreement") in the form attached hereto Appendix A no later than January 30,2006.
(b) CCH shall execute and file with the City Manager an Acceptance in the
form set forth as Exhibit B to the Change of Control Agreement, no later than January 30,2006.
(c) CCH shall execute and file with the City Manager the Guarantee of
Performance in the form set forth as Exhibit C to the Change of Control Agreement, no later than
January 30, 2006.
23
(d) Time Warner Cable shall cause CAC to execute and file with the City
Manager an Acceptance in the form set forth as Exhibit D to the Change of Control Agreement,
no later than January 30,2006.
(e) Time Warner Cable shall execute and file with the City Manager a
Guarantee of Performance in the form set forth as Exhibit E to the Change of Control
Agreement, no later than January 30, 2006.
(f) The Adelphia Transaction must close by October 31, 2006. The Exchange
Transaction must close by December 31, 2006. The Proposed Transactions shall be
consummated on the terms and conditions that are not in any material respect different from
those described in the Transfer Applications and other related materials provided to the City, this
Ordinance, and the Change of Control Agreement.
(g) Adelphia shall execute and file with the City Manager the Century- TCI
Settlement Agreement, in a form acceptable to the City Manager and Century- TCI, no later than
January 30,2006.
(h) The terms and conditions of the Century-TCI,settlement shall be fully
complied with according to the terms and conditions ofthat agreement.
Section 2. If any ofthe conditions specified in Section 1 hereof are not both agreed to
and timely satisfied, then upon written notice by the City to Adelphia, CCH and Time Warner
Cable, the City's consent to the Proposed Transactions shall be voidable by the City, in its sole
discretion, in accordance with the terms of the Change of Control Agreement and the applicable
transfer(s) shall be deemed denied as of January 24,2006, unless extended by written agreement
of the City Manager.
24
Section 3. Any material misrepresentation in the Transfer Applications shall
constitute a violation of the Franchise Documents, subject to all the remedies available to the
City under the Franchise Documents.
Section 4. The City Manager is authorized to execute the Change of Control
Agreement and any amendments on behalf of the City.
Section 5. The City Manager is authorized to negotiate and execute the Century- TCI
Settlement Agreement and any amendments on behalf of the City.
Section 6. This Ordinance is a final decision on the Transfer Applications within the
meaning of 47 V.S.C. 9 537, and for these purposes the Transfer Applications are deemed acted
upon when this Ordinance is approved by the Council.
Section 7. The Mayor shall sign and the City Clerk shall attest to the passage of this
Ordinance. The City Clerk shall cause the same to be published once in the official newspaper
within 15 days after its adoption. This Ordinance shall become effective 30 days from its
adoption.
APPROVED AS TO FORM:
MARSHA JONES MOUTRIE
City Attorney
25
EXHIBIT B
ACCEPTANCE BY COMCAST CABLE HOLDINGS. LLC
Comeast Cable Holdings LLC, ("CCH") a Delaware Limited Liability Company which is
wholly-owned by Comcast Corporation, a Pennsylvania Corporation, hereby accepts, as of the
closing of the proposed transaction approved by Ordinance No.7L13 (the "Closing"), control
over Century- TCI, which is subject to the terms and conditions of that certain Franchise
Agreement dated June 4,2002 with an effective date of October 1, 1999 and an expiration date
of July 3,2007 ("Franchise Agreement"), Ordinance 6.108 of the Santa Monica Municipal Code
("Ordinance") Resolution 9766 passed May 21, 2002 ("Resolution"); Settlement Agreement
between the City and Century- TCI dated May 28, 2002 ("2002 Settlement Agreement"), I-Net
and Construction Agreement dated May 28,2002 between the City and Century- TCI ("I-Net
Agreement") and Settlement and Mutual Release Agreement dated January ~2006 (2006
Settlement). The Franchise Agreement, Ordinance, Resolution, 2002 Settlement Agreement, 1-
Net Agreement and 2006 Settlement are referred to collectively herein as the "Franchise
Documents;" and
By accepting control ofCentury-TCI, CCH further: (1) acknowledges and accepts the
City's legal right to issue and enforce the Franchise Documents, (2) agrees that it will not oppose
the City's intervention in any proceeding affecting the Franchise Documents; or obligations
thereunder, (3) accepts and agrees that, so long as it is controlled by CCH, Century- TCI will
comply with each and every provision of the Franchise Documents, and (4) agrees that Franchise
was granted pursuant to processes and procedures consistent with applicable law, and that it will
not raise any claim to the contrary.
CCH declares that it has carefully read all ofthe terms and conditions of the Franchise
Documents and accepts and agrees that Century-Tel, so long as it is controlled by CCH, will
abide by the same until the Franchise is transferred, expires or otherwise terminates.
As of the Closing, CCH is bound to ensure that Century-TCI will maintain and operate
cable systems under the terms, conditions, provisions and limitations set forth in the Franchise
Documents; and other applicable law, including all applicable and lawful City ordinances, rules
and regulations, as amended.
-E- Fe-6~J
AGREED TO THIS ?-' DAY OF JANUAltY, 2006.
Corncast Cable Holdings LLC
~ t..k
By: !~...,
26
EXHmIT C
COMCAST HOLDINGS CORPORATION FRANCHISE GUARANTEE
As set forth in the Change of Control Agreement Between Century TCI-Comcast- Time
Warner and the City of Santa Monica ("Change of Control Agreement"), Comcast Holdings
Corporation ("Comcast Holdings"), a Pennsylvania corporation, an indirect parent company of
CCH, provides this Franchise Guarantee (the "Guarantee") assuring compliance by Century- TCI
with all the obligations of the Franchise Agreement dated June 4, 2002, with an effective date of
October 1, 1999 and expiration date of July 3, 2007 (Franchise Agreement), Ordinance 6.108 of
the Santa Monica Municipal Code (Ordinance, Resolution 9766 passed May 21, 2002
("Resolution"); Settlement Agreement between the City and Century- TCI dated May 28, 2002
("2002 Settlement Agreement"), I-Net and Construction Agreement dated May 28,2002
between the City and Century-TCI ("I-Net Agreement" and Settlement and Mutual Release
Agreement dated JanuaryiQ, 2006 (2006 Settlement)) (the Franchise Agreement, Ordinance,
Resolution, 2002 Settlement Agreement, I-Net Agreement and 2006 Settlement. are collectively
referred to as the "Franchise Documents") from and after the closing of the Adelphia Transaction
and until such time as Comcast Cable Holdings, LLC no longer controls Century- TCI or
Century- TCl is no longer the Franchisee. From and after the closing of the Adelphia
Transaction, Comcast Holdings hereby unconditionally and irrevocably. guarantees the timely
and complete performance of all Franchisee obligations under the Franchise Documents until the
transfer, expiration or termination of the Franchise Agreement. If Franchisee fails to pay any of
its monetary obligations in full when due in accordance with the terms of the Franchise
Documents, Comcast Holdings will promptly cause the Franchisee to pay the same or will make
such payment directly to the City. Anything herein to the contrary notwithstanding, Comcast
Holdings shall be entitled to assert as a defense hereunder any defense that is or would be
available to Franchisee under the Franchise Documents or otherwise.
This Guarantee shall automatically terminate with either the closing of the Exchange
Transaction or at such other time as CCH no longer controls Century- TCI or Century- TCI no
longer operates the cable system in the City.
o yX' I-::e--.br~j
EXECUTED as of THIS LDAY OFJA~ruARY, 2006
COMCAST HOLDINGS CORPORATION
By: ~
Name: Ar1k ~i...l.-
Title: ~J p
Address:
1500 Market Street, 35th Floor
Philadelphia, P A 19102
Attention: General Counsel
27
EXHIBIT D
ACCEPT ANCE BY CAC EXCHANGE I. LLC
CAC Exchange I, LLC, ("CAC") a Delaware Limited Liability Company which, upon
the closing of the Exchange Transaction, as defined in and approved by Ordinance No ~177 (CCS), is
wholly-owned by Time Warner Cable Inc, a Delaware Corporation, hereby accepts, as of the
closing of the Exchange Transaction (the "Closing"), the terms and conditions of that certain
Franchise Agreement dated June 4,2002 with an effective date of October 1, 1999 and an
expiration date of July 3, 2007 ("Franchise Agreement"), Ordinance 6.108 of the Santa Monica
Municipal Code ("Ordinance"), Resolution"9766 passed May 21, 2002 ("Resolution"); Settlement
Agreement between the City and Century-TCI dated May 28,2002 ("2002 Settlement Agreement"), I-Net
and Construction Agreement dated May 28, 2002 between the City and Century-TCI ("I-Net Agreement")
and the Settlement and Mutual Release Agreement dated January -302006 (2006 Settlement). The
Franchise Agreement, Ordinance, Resolution, 2002 Settlement Agreement, I-Net Agreement and 2006
Settlement are referred to collectively herein as the "Franchise Documents;" and
By accepting the Franchise, CAC further: (1) acknowledges and accepts the City's legal
right to issue and enforce the Franchise Documents; (2) agrees that it will not oppose the City's
intervention in any proceeding affecting the Franchise or obligations thereunder; ((3) accepts and
agrees to comply with each and every provision of the Franchise Documents and (4) agrees that
Franchise was granted pursuant to processes and procedures consistent with applicable law, and
that it will not raise any claim to the contrary.
CAC declares that it has carefully read all of the terms and conditions of the Franchise
Documents and accepts and agrees to abide by the same.
As of the Closing of the Exchange Transaction, CAC is bound to maintain and operate
the cable system under the terms, conditions, provisions and limitations set forth in the Franchise
Documents, subject to applicable law.
AGREED TO THIS d-- DAY OF ~OO6.
CAC Exchange I, LLC
~~ ~
By:. ., '\. \. f\ ~
28
""-..
EXHIBITE
TIME WARNER CABLE GUARANTEE
GUARANTEE, dated as of this 30th day of January, 2006, made by TIME WARNER
CABLE INC., a Delaware corporation ("Guarantor"), in favor of the City of Santa Monica,
California ("Beneficiary").
WHEREAS, in accordance with the relevant provisions of the City of Santa Monica
Municipal Code, the Beneficiary, pursuant to an Ordinance of the City Council dated February
lA., 2006 (the "Transfer Ordinance") has approved:
A. (i) the transfer of control of Century- TCI California, L.P. ("Century"), which
is providing service in the City under the terms and conditions of a Franchise Agreement dated
June 4,2002 with an effective date of October 1, 1999 and an expiration date of July 3,2007
("Franchise Agreement"), Ordinance 6.108 of the Santa Monica Municipal Code ("Ordinance"),
Resolution 9766 passed May 21, 2002 ("Resolution"); Settlement Agreement between the City and
Century-TCI dated May 28,2002 ("2002 Settlement Agreement"), I-Net and Construction Agreement
dated May 28,2002 between the City and Century-TCl ("I-Net Agreement" and the Settlement and
Mutual Release Agreement dated January 30, 2006 (2006 Settlement)) (the Franchise Agreement,
Ordinance, Resolution, 2002 Settlement Agreement, I-Net Agreement and 2006 Settlement are
collectively referred to as the "Franchise Documents") and (ii) the assignment of the Franchise
from CAC Exchange I, LLC ("CAC I"); and the simultaneous transfer of control of the
Franchise from CAC I to Guarantor;
WHEREAS, pursuant to Ordinance No. 2177(CCS), the City's approval of the transfer was
conditioned, among other things, on Guarantor, from and after the closing of the Exchange
Transaction, as defined in and approved by Ordinance No. 2177(CCS), unconditionally guaranteeing
29
the performance of CAC I under the terms and conditions of the Franchise Documents
(hereinafter referred to as the "Transfer Agreemenf');
WHEREAS, upon closing of the Exchange Transaction, which will result in certain
transfers described herein, Guarantor will also become the indirect parent of CAC I, and
Guarantor will have a substantial interest in the cable system and the Franchise as well as in the
management and control ofCAC I ("Transferee").
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and to induce Beneficiary to consent to the transfers
described above, Guarantor agrees as follows:
1. Interpretive Provisions
1.1 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.
1.2 The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Guarantee.
2.1 Guarantor unconditionally and irrevocably guarantees to
Beneficiary the timely and complete performance of all obligations of the Transferee under the
Franchise Documents and the Transfer Agreement, including but not limited to Section 2.2 of the
Transfer Agreement, (the "Guaranteed Obligations") from and after the closing of the Exchange
Transaction. . The Guarantee is an irrevocable, absolute, continuing guarantee of payment and
performance, and not a guarantee of collection. If Transferee fails to pay any of its monetary
30
Guaranteed Obligations in full when due in accordance with the terms of the Franchise
Documents or Transfer Agreement, 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 Documents the Transfer Agreement or otherwise.
2.2 This Guarantee shall remain in full force and effect for so long as
the Transferee, or its successors or assigns, are providing services over the cable system under
the Franchise Documents; provided, however, that this Guarantee shall terminate upon 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 the Transferee under the
Franchise Documents or Transfer Agreement and (ii) with respect to any particular Franchise,
any direct or indirect transfer of the rights to provide the services which are the subject of the
Franchise Documents from the Transferee to (or direct or indirect acquisition of the applicable
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, so
long as any such transfer is approved in writing by the Beneficiary; provided that, nothing herein
is intended to amend or modify the transfer provisions of the Franchise Documents or the
Transfer Agreement.
2.3 In the event of a conflict or contradiction between the forgoing proviso
and the Franchise Documents, the language ofthis Guarantee will prevail. Upon termination of
this Guarantee in accordance with this Section 2.2, all contingent liability of Guarantor in respect
hereof shall cease and Guarantor shall remain liable solely for Guaranteed Obligations accrued
31
prior to the date of such termination. Except as provided above, no termination, substitution or
cancellation ofthis Guarantee may occur without the prior written approval ofthe Beneficiary.
To the extent that the Beneficiary approves a substitution ofthe Guarantor under this Guarantee,
such substitution will be implemented in a manner that ensures the substitute guarantee is in
place and effective prior to or contemporaneously with the termination and/or release of the
existing Guarantee.
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 the 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 Documents to which the Transferee is entitled
or which is served upon the Transferee at the same time such notice is sent to or served upon the
Transferee.
4. Reoresentations 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
32
not, individually or in the aggregate, impair or delay in any material respect such party's ability
to perform its obligations hereunder.
5. Bindin2: Effect. This Guarantee, ~hen 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 confinnation 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:
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 Santa Monica and City of Santa Monica
1685 Main Street, Room 209 1685 Main Street, Room 310
Santa Monica, CA 90401 Santa Monica, CA 90401
Telephone: (310) 458-8301 Telephone: (310) 458-8336
Telecopy: (310) 917-6640 Telecopy: (310) 395-6727
Attention: City Manager Attention: City Attorney
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7. Intel!ration. 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 subject matter hereof other than those expressly set forth herein.
8. Amendments in Writinl!. 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 waived by Beneficiary in a letter or agreement
executed by Beneficiary.
9. Section Headinl!s. 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 Asshmment or Benefit to Third Parties. This Agreement shall be
binding upon and inure to the benefit of the parties hereto. Nothing in this Agreement, express
or implied, is intended to confer upon anyone other than Guarantor and Beneficiary and their
respective permitted assigns, any rights or remedies under or by reason of this Guarantee.
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. Governinl! Law. This Guarantee shall be governed by and construed and
interpreted in accordance with the laws ofthe state of California without regard to principles of
34
conflicts oflaw.
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.
TIME WARNER CABLE INe.
(/' j: n I
BY~~ ~ --- "',-,~<l.~,
Name: ~~~ ~
Title: S V~ / l/l;V'-e~-S"
CITY OF SANTA MONICA,
a municipal corporation
35
EXHIBIT F
CONSTRUCTION AND SAFETY CODE COMPIANCE
Findin2s:
1. Portions of the Franchisee's outside cable plant do not currently comply with the
Required Safety Codes.
2. Compliance with the Required Safety Codes is a material requirement of the
Franchise Documents.
3. The time to cure the non-compliant portions of the Outside Cable Plant and
Subscriber Drop Plant (both as defined below) will substantially exceed 45 days.
4. The City of Santa Monica ("City") and Franchisee agree to a project and schedule
whereby Franchisee will satisfy the Required Safety Codes.
Proiect Purpose: To repair and maintain the cable television outside plant in the City to
achieve measurable compliance with California Public Utilities Commission General Order 95
(1998 version) and General Order 128 (1998 version), and with the National Electric Code (2005
version) (together, the "Required Safety Codes"). At the end ofthe cure period, the Franchisee's
Outside Cable Plant and Subscriber Drop Plant will be in Substantial Compliance with the
Required Safety Codes, all as defined herein.
Definitions:
The "Outside Cable Plant" consists of the that entire physical portion of the Franchisee's
cable system from the headend to and including without limitation fiber optic cables; coaxial
cables; physical enclosures above ground, at grade, and below ground; pole and underground
hardware and attachments; pole strand and down-guying devices; but specifically excluding the
"Subscriber Drop Plant" as defined below.
The "Subscriber Drop Plant" consists of that entire physical portion of Franchisee's
outside plant from the output of the outside plant subscriber tap to and including the point of
physical entry, if any, of the Franchisee's drop cable in to a structure, regardless of whether the
subscriber drop is serving an active subscriber.
Time to Cure: Franchisee agrees that within eighteen (18) months from the effective
date of the Change of Control Agreement, Franchisee's Subscriber Drop Plant will be in
substantial compliance with applicable Required Safety Codes.
Pro2ress Reportin2: Franchisee shall maintain progress records, and upon the City's
request deliver to the City a Progress Report in spreadsheet format at six-month intervals. The
progress records and Progress Reports shall contain the following information:
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1. The time period covered by the report.
2. Count of current subscribers in the City as of the end date of the Progress Report.
3. Count of structures passed in the City by the Franchisee's cable system
("serviceable address") as of the end date of the Progress Report.
4. Addresses in the City verified by the Franchisee to be in compliance with the
Required Safety Codes.
5. Addresses in the City verified by the Franchisee to be Legal Non-Conforming
installations as defined below, as of the end date of the Progress Report.
6. Addresses in the City where the property owner and/or occupant denied the
Franchisee access to inspect and/or make corrections, or where the Franchisee was unable to
inspect andlor make corrections due to a physical barrier. Details for each such address shall be
provided in the Progress Report.
7. A list of any additional modifications during the period covered by the report to
Franchisee's outside cable plant, other than those relating to subscriber drop plant, in order to
comply with the Required Safety Codes.
Semi-Annual Proeress Meetine: At the request ofthe City or the Franchisee, the City
and the Franchisee shall meet to discuss the work performed and reported during the previous
two calendar quarters, the work to be performed during the next two calendar quarters, and any
anticipated events of a material nature that have or may occur impacting the project.
The intent of each such meeting will be to monitor the progress of the project to date,
work yet to be performed, and to identify and attempt to resolve in advance any issues that may
negatively impact future project progress.
Mid-Project Field Meetine: Within a calendar month preceding or following the
midpoint of the project, defined as one half of the total number of serviceable addresses in the
City being certified by the Franchisee as being compliant with the Required Safety Codes or as
Legal Non-Conforming Installations as defined below, the City shall conduct an evaluation to
independently verify the progress of the project to date.
The evaluation shall be:
1. To determine the accuracy and reliability of the Franchisee's in-progress reports
submitted to date.
2. To allow the City to provide guidance to the Franchisee as may be required to
assure the timely and successful completion of the project.
3. To discuss project-related matters as may be raised by the City or the Franchisee.
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Substantial Compliance: The Franchisee is required to inspect and adjust its outside
plant as necessary to insure that the outside plant complies with the Required Safety Codes. For
the purposes of this Exhibit, Substantial Compliance shall be achieved where within the Time to
Cure at least 90 percent ofthe subscriber drop plant complies with the Required Safety Codes.
Once such Substantial Compliance is achieved within the Time to Cure, Franchisee shall
thereafter be required to insure that it maintains at least 90 percent of its outside plant in
compliance with the Required Safety Codes.
Proiect Completion Inspection: Within 30 days after the 18th month following the
effective date of the Change of Control Agreement, the City shall commence to conduct a
statistically accurate inspection ("SA!") of the Franchisee's outside cable plant in the City to
determine whether the plant is in substantial compliance with the Required Safety Codes.
Proiect Completion Inspection Methodol()2:Y: The SA! shall determine on a City-wide
basis to a 97 percent confidence level, plus or minus 3 percent, the overall percentage of
compliance ofthe subscriber drop plant with the Required Safety Codes. The following process
is to be used to select the addresses to be inspected and to conduct the SAI:
A. Selection of Addresses to be Inspected.
\. Within 30 days after the 18th month, the City shall propose no fewer than three
independent third party statisticians, and the Franchisee shall select one from the City's list. In
the event that within 30 days the Franchisee fails to select one of the statisticians from the City's
list, the City shall select th,e statistician.
H. The statistician selected in (i), above shall be retained by the City and paid for by
the City.
H\. The Franchisee shall provide the statistician with a list of all serviceable addresses
in the City.
IV. The statistician shall perform a "six times" random sort on the list described in
(iii), above.
v. The statistician shall provide the sorted list in suitable spreadsheet format only to
the City. Statistician retains a copy of the sorted list for disclosure to the Franchisee upon notice
from the City after the completion of the SA!.
B. The Franchisee shall provide the City with a list of every address in the City
where the Franchisee was unable to inspect and/or correct its cable system to comply with the
Required Safety Codes (a "no access" address). For each such no access address, the Franchisee
shall provide the City with evidence that it has made a minimum of three attempts to gain access,
including evidence that it has sent a certified letter (return receipt requested) to the owner and/or
occupant of the address requesting the necessary access. The City shall exclude each such no
access address from the SA! list, and an additional address shall be added in order (i.e., 451, 452,
453...).
C. City plots first 450 test addresses on a detailed street map.
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D. Field inspections (2 or 3 crews)
1. Each field inspection crew shall consist of one City inspector and one
representative ofthe Franchisee.
11. Crews visit each of the 450 addresses to assess compliance with the Required
Safety Codes.
Ill. Any City inspector can issue a 'pass' for a code-compliant address.
,{
IV. Only the City-designated Senior Inspector can issue a 'fail' for a non-compliant
address.
v. Where the City determines that the Franchisee's Subscriber Drop Plant is in non-
compliance with the Required Safety Codes at a particular address due to a reason beyond the
Franchisee's reasonable control, the address shall be removed from the SAI inspection list, and
an additional address shall be added in order (i.e., 451, 452,453...). For purposes of this Exhibit,
the phrase "beyond Franchisee's reasonable control" means, but is not limited to, documented
evidence (a) that the resident requested the drop not be removed; (b) that a third party interfered
with or altered the cable system service drop rendering it noncompliant; (c) that an act of nature
rendered it noncompliant; (d) that the resident is receiving a satellite service or engaging in cable
theft; or (e) that the drop is located at a "no access'" address.
VI. Any address with no Subscriber Drop Plant shall be removed from the SAI
inspection list, and an additional address shall be added in order (i.e., 451, 452, 453...).
VIl. The inspection will be complete and the percentage of compliance shall be
computed when 450 addresses have been inspected and a pass or fail finding has been assigned
by the City to each of the addresses.
Vlll. If the City identifies Outside Cable Plant locations (other than Subscriber Drop
Plant) where Franchisee's Outside Cable Plant fails to comply with the Required Safety Codes,
Franchisee shall perform corrective measures within 60 days. Where the Franchisee has made
timely notice to other utilities or permitting agencies to perform make ready or other necessary
cooperative measures or to issue permits to enable the Franchisee to comply with the Required
Safety Codes, the 60 day term shall be tolled while those other utilities and/or permitting
agencies perform the required work or issue permits.. The Franchisee shall provide the City
with a written notice detailing the locations and dates for which any claimed toll applies.
Lee:al Non-Conforminf! Installations: Where an inspected installation does not meet the
current Required Safety Code requirements, but does comply with then current Required Safety
Codes at the time of installation and no material changes have occurred to the installed facilities
in the intervening period, the installation shall be deemed to be currently compliant (pass). The
burden is on the Franchisee to demonstrate by clear and convincing evidence to the City's
satisfaction that the installation did comply with the then current Required Safety Codes at the
time of installation and that no material changes to the installation have occurred that would
require compliance with the current Required Safety Codes.
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Disconnected Installations: Where an inactive overhead subscriber drop cable is
physically disconnected or electrically insulated from the structure, and the drop messenger at
the structure is connected to either an insulated house hook or the house hook is installed in or on
a non-conductive surface, no further bonding with the structure's electrical ground will be
required until service is reactivated. Disconnected service locations inspected under the SA!
program that meet the requirements of this section shall be deemed to comply with the
groundinglbonding requirements of the National Electrical Code.
At the time of service reactivation, the Franchisee shall inspect and adjust the wiring as
required to comply with all Required Safety Codes including without limitation all of the then
current grounding/bonding requirements ofthe National Electrical Code.
Outside Plant ReQuired Safety Code Compliance Near-to-Ground: Franchisee
agrees that within eighteen (18) months from the effective date of the Change of Control
Agreement, that portion of Franchisee's Outside Cable Plant located at and between eight feet
(8') above the ground and the ground level shall comply with the Required Safety Codes. This
eighteen (18) period shall be subject to the same tolling due to utility cooperation and permitting
as described above.
Certification of Completion: If the SAI discloses that the Franchisee has successfully
demonstrated substantial compliance with the Required Safety Codes with respect to the
Subscriber Drop Plant, as defined above, the City shall notify the Franchisee, and the
Franchisee's obligations under this Exhibit shall be terminated with respect to any pre-existing
failure of the Subscriber Drop Plant to substantially comply with the Required Safety Codes.
Termination of Franchisee's obligations under this Exhibit does not relieve the Franchisee of any
future compliance with the Required Safety Codes or any other related or unrelated obligation in
the Franchise Documents. The City and the Franchisee reserve all rights they may have with
respect to compliance issues other than the issues treated in this Exhibit.
F:\MunicipaILaw\Share\CONTRACTSVL\TimeWamer\Final OI.19-06\Transfer Agreemenl 01 1905.DOC
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