2002-133-Consenting To Change Of Control Of Cable TV Franchise(; (: C~
RESOLUTION 2002 -133
RESOLUTION OF THE TOWN COUNCIL OF THE
TOWN OF LOS GATOS CONSENTING TO CHANGE
OF CONTROL OF CABLE TELEVISION FRANCHISE
WHEREAS:
A. TCI of Cleveland, Inc. ("Franchisee") is a cable franchise holder in the Town of Los
Gatos ("Town").
B. Franchisee is an indirect subsidiary of AT&T Corp. ("AT&T"), andAT&T intends
to merge its subsidiary, AT&T Broadband Corp., with Comcast Corporation ("Comcast") to create
a new company to be known as AT&T Comcast Corporation {"AT&T Comcast") pursuant to the
terms of an Agreement and.Plan of Merger dated December 19, 2001 byand among AT&T Corp.,
AT&T Broadband Corp., Comcast Corporation and certain of their respective affiliates, and a
Separation and Distribution Agreement dated December 19, 2001 by and between AT&T Corp. and
AT&T Broadband Corp. (the "Merger").
C. The .Merger will result in a change of ultimate control of the Franchisee from AT&T
to AT&T Comcast ("Change of Control"), but Franchisee will continue to operate the cable system
and continue to hold and be responsible for performance of the cable franchise with Town.
D. AT&T and AT&T Comcast have requested that the Town consent to the Change of
Control in accordance with the requirements of the cable franchise and have filed an FCC Form 394
("Application") with Town .requesting such consent to the Change of Control.
E. Town has reviewed the Application, considered the legal, financial and technical
qualifications of AT&T Comcast, and taken such other necessary steps in order to consider and act
upon the Application.
F. Town is willing to consent to the Change of Control.
RESOLVED:
1. Town hereby consents to the Change of Control in accordance with the terms of the
cable franchise, applicable law and a Change of Control and Settlement Agreement between Town
and Franchisee, a copy of which is.attached hereto as Exhibit "A" and by this reference incorporated
herein.
2. Franchisee retains .its current lawful obligations to fully perform all of the duties and
obligations required of it under the franchise .agreement. with Town.
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3. This Resolution shall be deemed effective upon adoption.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town
of Los Gatos, California held on the 15"' day of July, 2002, by the following vote:
COUNCIL MEMBERS:
AYES: Steven Blanton, Steve Glickman, Joe Przynski,
.Mayor .Randy Attaway.
NAYS: None
ABSENT: Sandy Decker
ABSTAIN: None
SIGNED:
MAYOR THE TO OF LOS GATOS
LOS GATOS, CALIF RNIA
ATTEST: ~~
CLERK OF THE TOWN OF LOS GAT S
LOS GATOS, CI~,LIFORNIA
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FRANCHISE TRANSFER AND SETTLEMENT AGREEMENT
THIS FRANCHISE ASSUMPTION AGREEMENT ("Agreement") made and entered
.into this day of July, 2002, at Los Gatos, California, by and between the TOWN OF LOS
GATOS, a municipal corporation of the State of California {``Grantor") and TCI of
CLEVELAND, INC., a Tennessee corporation and a wholly owned. subsidiary of AT&T. Corp.
"Franchisee").
WHEREAS:
A. Chapter 7 of the Town Code of :Los Gatos {"Franchise Ordinance") authorizes
Grantor to grant one or more non-exclusive franchises ("Franchise") to construct, operate, install
and maintain a cable communications system ("System") within the Town of Los Gatos.
B. Section 7.20.030 of the Franchise Ordinance governs transfers of franchises,
stating the requirement that Franchisee consent to tranfers and changes of ownership or control,
setting forth the procedure for obtaining such consent, and defining "transfers" to .include
"mergers."
C. On January 20, 1990, Grantor ;granted anon-exclusive .franchise to Hearst
Cablevision of California ("Franchise Agreement"), and thereafter consented to the transfer of
the franchise from Hearst Cablevision to Brenmor Cable Partners, L.P., dba South Bay
Cablevision, and from Brenmor to TCI of Cleveland, Inc.
D. On February 1, 1999,. Grantor consented to the merger of TCI and Franchisee
(Resolution 1999-10). In conjunction with said consent and as an inducement therefor,
Franchisee provided a Certification from AT&T Corp., to the effect that AT&T Corp. would take
no action inconsistent with the promises contained in the Franchise Agreement, and a Guaranty
from Tele-Communications, Inc. of the full and faithful performance of all the terms, obligations
and conditions contained in the Franchise Agreement.
E. On March 27, 2000, Franchisee, Grantor and Los Gatos Community Cablevision
"KCAT") entered into a Settlement.Agreement and Release that contains, inter alia, a
requirement that Franchisee maintain KCAT at cable channel 15, subject to the terms stated
therein ("Settlement Agreement").
F. On February 25, 2002, Franchisee notified Grantor of the intention to combine the
System and the other cable systems owned by AT&T Corp. with the cable systems owned by
Comcast Corporation into a new public company to be known as AT&T Comcast Corporation
"AT&T/Comcast"), the specifics of that transaction being described in the FCC Form 394
provided to Grantor.
G. On March 26, 2002, Grantor responded to Franchisee in writing by requesting
additional information concerning the proposed transaction; giving notice of several outstanding
services obligations under the .Franchise Agreement, and demanding payment of the TWENTY-
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FIVE THOUSANI} DOLLAR ($25,000) application fee required :pursuant to subsection (g) of
section 7.20.030 of the Franchise Ordinance ("Fee").
H. On April 5 , 2002, Franchisee responded to Grantor in writing. by declining to
provide the additional. information requested and pay the Fee, citing in support of each response
the .decision of the-trial court in Charter Communications, Inc. v. County of Santa Cruz,. 133
F,Supp.2d 1184 (N.D.CaL 2001).
I. A dispute exists between the parties hereto regarding whether the decision in
Charter Communications, Inc. v. County of Santa Cruz supports Franchisee's refusal to provide
additional information or pay the Fee. In addition, an appeal of the Charter Communications,
Inc, v, County of Santa Cruz decision is currently pending before the United States Court of
Appeals for the Ninth Circuit (No. O1-15846) ("Appeal").
J. The parties hereto desire to ,resolve the dispute in a .manner that will: (1) allow
Grantor to consent to the proposed transaction; and (2) make payment of the Fee dependent on
the outcome of the Appeal.
NOW,. THEREFORE, the parties do hereby agree as follows:
Section 1. FRANCHISE TRANSFER
1.1 Conditional Ap rp oval. Pursuant to the provisions of the Franchise Ordinance and
subject to applicable state and federal aw, AT&T/Comcast shall be .substituted in the place of
AT&T Corp. as entity controlling Franchisee for the purposes of the Franchise Agreement,
subject to the terms and conditions contained in this Agreement.
1.2 Assumption by AT&T/Comcast. Franchisee hereby expressly and unreservedly
covenants that AT&T/Comcast shall take no steps to in any way impair Franchisee's ability to
fully perform all of the duties and obligations required of it under the Franchise Agreement.
Section 2. OUTSTANDING FRANCHISE SERVICE ISSUES
2.1 Certification. Within 90 days of the effective date of this Agreement, Franchisee
shall certify to Grantor in writing that .all of the issues delineated in this Section 2 have been
addressed as provided herein.
2.2 Cable Connections. Franchisee hereby agrees that Grantor .has properly requested
pursuant to the Franchise Agreement that Franchisee provide certain cable interconnections
described below, that Franchisee is obligated to provide those interconnections, subject to the
rights and obligations of Franchisee under the Franchise .Agreement, .state and federal law, and
that. Grantor has the unrestricted right to cancel all or part of its request after receiving cost
estimates for said interconnections provided by Franchisee, but before Franchisee undertakes
installation of any of said interconnections that Grantor may wish to cancel. The interconnections
requested by Grantor are agreed to be as follows:
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2.2.1 Cable interconnection to Town Hall and KCAT (public access studio) to
allow for the broadcast of Town Council meetings.
2.2.2 .Data cable between the following Town facilities:
2.2.2.1 From the Town of Los Gatos switch room located at 110 E. Main
.Street to 41 .Miles Avenue (Corp. Yard), 208 E. Main Street (Neighborhood Center) and 104
Villa Avenue.
2.2.2.2 .From the Town of Los Gatos Police Department server room,
located at 110 E. Main Street to Winchester Fire House located at 14850 S. Winchester
Boulevard.
Section 3. PAYMENT OF FEE. The parties agree that the Fee shall be due and
owing to Grantor only in the event that the Appeal is resolved in any manner that amends or
overrules the trial court's determination that all fees are subject to the five percent (5%) franchise
fee cap as set forth in the 1992 Cable Act and FCC Regulations, and that the decision on that
.issue is final.
Section 4. FRANCHISE FEES.. Within thirty (30) days following the effective :date
fo this Agreeement, Franchisee shall file with Grantor a statement prepared by an independent,.
duly licensed, California certified public accountant, setting forth and certifying the accuracy of
the total ;gross revenues received by Franchisee for calendar .year 2001. Franchisee hereby
expressly and unreservedly covenants that it retains all liability for the payment of franchise fees
to Grantor, regardless of whether the payments arise :from periods prior to the closing of the
transaction involving AT&T/Comcast, and shall continue to be subject to the .requirements of the
Franchise Ordinance ..relating to the payment of franchise fees to the same extent as those
requirements .applied before the transaction.
:Section 5. KCAT :CHANNEL LOCATION.. Franchisee hereby expressly and
unreservedly covenants that it shall .assume and fully perform all of the duties and obligations
required of Franchisee under the Settlement Agreement.
Section b INSURANCE, BONDS AND OTHER REQUIREMENTS. Within ten
(10) days following the effective date of this Agreement, Franchisee covenants that it shall have
delivered to Grantor proof of its compliance with the insurance and bonding requirements, and
all other required terms .for securing Franchisee's performance, of the Franchise Agreement and
Franchise Ordinance.
Section 7. PENDING LITIGATION. Franchisee hereby represents and warrants to
Grantor, as of the effective date of this Agreement, that there is no claim, .action, suit,
proceeding, or investigation with respect to its operation of the .Franchise and its performance
under the Franchise Agreement.
Section 8. REPRESENTATIONS AND WARRANTIES. Franchisee warrant to
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Grantor that AT&T'/Comcast shall possess superior experience, character, and background
including, but not limited to, financial, legal and technical abilities and resources ..required to
comply with the requirements of the Franchise Agreement and Franchise Ordinance.
Franchisee and Comcast further warrant to Grantor that, as of the effective date of this
Agreement, AT&T/Comcast shall be duly qualified to do business in California.
Section 9. MISCELLANEOUS
9.1 Severablity, If any term, covenant, condition, or provision of this Agreement or the
application thereof to any person or circumstances is, to any extent, invalid or unenforceable, the
remaining terms, covenants, conditions and provisions of this Agreement, or the application of
such term, covenant,. condition, or provision to persons or circumstances other than those to
which it is :held invalid or unenforceable., shall not be affected thereby, and each term, covenant,
condition and provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
9.2 Waiver. The consent to transfer does not constitute a waiver of rights belonging to
Grantor under the Franchise. Franchisee does hereby waive and relinquish any and all .claims,
demands, actions or causes of action it may have against Grantor arising out of or in any way
connected with the Franchise Agreement or any other matter.
9.3 Notices. All notices .required under this Agreement shall be in writing and shall be
deemed to have been duly .given when delivered personally or mailed by first class mail, postage
pre-paid to the following addresses:
Grantor:
Town Manager
110 E. Main Street
P.O. Box 949
Los. Gatos, CA 95031
Franchisee:
9.4 Governing Law. This Agreement shall be interpreted in accordance with, and
governed by, the substantive and procedural law of the State of California.. The parties hereby
consent to the jurisdiction of the courts of the .State of California in resolving any dispute arising
under or concerning this Agreement. Venue for any such action shall be in Santa C ara County
in the State of California.
IN WITNESS WHEREOF,. Grantor and Franchisee have executed this Agreement on the
date above written.
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TOWN OF LOS GATOS TCI OF CLEVELAND,. INC.
By:
Debra Figone, Town Manager
Attest:
Marian V. Cosgrove, Town Clerk
Approved as to form:
By:
Orry P. Korb, Town Attorney