City of Culver City, California
City Council Agenda Item Report
Page 1 of 5
RECOMMENDATION
Staff recommends the City Council adopt a resolution conditionally authorizing the
assignment and ultimate transfer of control of the cable television franchise from
Comcast Corporation to a wholly-owned subsidiary of Time Warner Cable Inc.
BACKGROUND
Comcast of Los Angeles, Inc., a corporate subsidiary of Comcast Corporation, is the
holder of the current Culver City cable television franchise. On June 14, 2005, the
City received an FCC Form 394 entitled “Application for Franchise Authority Consent
to Assignment or Transfer of Control of Cable Television Franchise” (“Form 394”).
The Form 394 seeks the City’s consent to the transfer of the City’s cable television
franchise from Comcast Corporation to a subsidiary of Time Warner Cable Inc. As
detailed below, if consented to by the City Council, the proposed transfer will involve
various corporate transactions which will ultimately result in the Culver City cable
television franchise being held by a subsidiary of Time Warner Cable Inc.
On April 20, 2005, Time Warner NY Cable, LLC (“TWNY”), a wholly-owned
subsidiary of Time Warner Cable Inc., and Comcast Corporation (“Comcast”), the
ultimate parent company of the City’s franchised cable operator, each entered into
separate definitive agreements to acquire, collectively, substantially all of the assets
of Adelphia Communications Corporation (“Adelphia”) for a total of $12.7 billion in
cash (of which TWNY will pay $9.2 billion and Comcast will pay the remaining $3.5
Meeting Date: 02/13/06 Item Number: A-1
AGENDA ITEM: Consideration of a Resolution Conditionally Authorizing the
Assignment and Ultimate Transfer of Control of a Cable Television Franchise by
Comcast Corporation to C-Native Exchange I, LLC, a Wholly-Owned Subsidiary of
Time Warner Cable Inc.
Contact Person/Dept.: Martin R. Cole,
ACAO & Roland Miranda/City Attorney’s
Office
Phone Number: (310) 253-6000; (310)
253-5660
Fiscal Impact: Yes [] No [x] General Fund: Yes [] No []
Public Hearing: [] Action Item: [x] Attachments: [x]
Public Notification: Master Notification List (02/08/06); Comcast of Los Angeles, Inc.
(02/08/06); Time Warner Cable (02/08/06)
Department Approval: Martin R. Cole
(02/08/06)
CAO Approval:
Martin R. Cole for Jerry B. Fulwood
(02/08/06)
City Controller Approval:
N/ACity of Culver City, California
City Council Agenda Item Report
Page 2 of 5
billion) and 16% of the common stock of Time Warner Cable Inc. It should be noted
that Adelphia filed for protection under Chapter 11 of the U.S. Bankruptcy Code on
June 25, 2002. At the same time that Comcast and TWNY entered into the
agreements to purchase Adelphia’s assets, Time Warner Cable Inc., Comcast, and
their respective subsidiaries also agreed to swap certain cable systems to enhance
their respective geographic clusters of subscribers (“Cable Swaps”). The cable
system now owned and operated by Comcast of Los Angeles, Inc., the franchisee in
the City of Culver City, is one of many cable systems in Southern California involved
in the Cable Swaps.
Under federal law, a franchising authority (in this case, the City Council) has 120
days from the date of submission of a Form 394 to act upon such an application for
transfer of a franchise. If a franchising authority does not act upon a transfer
application within 120 days, and no extension has been granted, the transfer
application will be deemed to have been unconditionally approved. At the City
Council meeting held on September 26, 2005, Comcast’s representative agreed to
an extension of the 120-day review period through November 29, 2005. This
extension was confirmed in writing by the City Attorney’s office. Further extensions
were agreed to by Comcast and the City ultimately extending the original 120-day
review period to February 15, 2006.
DISCUSSION
Section 35B-3(j) of Ordinance No. 87-021, which remains applicable to the cable
franchise, provides that the City has the right to review and to approve the financial,
technical, and legal qualifications of the proposed transferee in connection with the
requested assignment and ultimate transfer of control of the franchise.
City staff, the City’s cable consultant, and the City’s special counsel have reviewed
the documentation that accompanied the Form 394 and, based upon the
representations set forth in that documentation, have concluded that the proposed
transferee has the requisite financial, technical, and legal qualifications to
adequately perform, or to ensure the performance of, all obligations required of the
franchisee under the franchise, and that the transferee will be bound by all existing
terms, conditions, and obligations of the franchise as it currently exists or as it may
be modified or superseded prior to the closing of the transaction involving the Cable
Swaps.
The ultimate proposed transferee of the City’s cable franchise, C-Native Exchange I,
LLC, is a new entity with no history related to the ownership and operation of cable
television franchises. Consequently, the proposed transfer resolution is conditioned
upon Time Warner Cable Inc. guaranteeing C-Native Exchange I, LLC’s contractual
obligations under the franchise agreement. City of Culver City, California
City Council Agenda Item Report
Page 3 of 5
The transactions between Time Warner Cable Inc., Comcast, and Adelphia are
subject to regulatory review and approvals, including the U.S. Department of Justice,
the Federal Communications Commission, and local franchise authority approvals,
as well as the Adelphia bankruptcy process, which involves approvals by the
bankruptcy court having jurisdiction of Adelphia’s Chapter 11 case and Adelphia’s
creditors. The closing of these transactions is expected to occur during the first half
of 2006. Until the closing actually occurs, Comcast will continue to be required to
perform all of its obligations under the existing franchise agreement. These
obligations would include, but not be limited to, obligations relating to system
maintenance, customer service requirements, and the correction of electrical code
and safety violations, as discussed below. Once the cable franchise has been
transferred to C-Native Exchange I, LLC, all obligations under the franchise will
become the obligations of C-Native Exchange I, LLC, as the franchisee, and Time
Warner Cable Inc., as the corporate guarantor of the franchisee’s obligations.
At its meeting on September 26, 2005, the City Council considered the City’s
technical consultant’s report that summarized a safety inspection of Comcast’s cable
television system. After considerable discussion, City staff was directed to request
Comcast to inspect its cable plant, to identify all safety code violations, and to
implement a corrective action plan acceptable to the City. By letter dated
September 29, 2005, Comcast responded to the City’s letter dated August 18, 2005,
which transmitted the report of the safety inspections and requested a written
remedial plan. Comcast’s response was thereafter evaluated by City Staff, the City’s
technical consultant, and the City Council’s Cable TV Subcommittee. The City
Attorney’s office and the City’s special counsel drafted and submitted to Comcast on
October 21 a proposed corrective action plan that was discussed by representatives
of the parties on October 28. Comcast submitted a counter-proposal on November
2 that was discussed by the parties’ representatives that same day. No agreement
was reached on the terms and provisions of a proposed corrective action plan.
During the week of November 7, the City’s technical consultant attended a meeting
with officials in a neighboring municipality regarding the correction of safety
violations similar to those identified in Culver City. This meeting was also attended
by representatives of Adelphia, the incumbent cable operator, and of Time Warner
Cable, the parent company of the subsidiary to which the cable franchises will
ultimately be transferred. The representatives of Time Warner Cable noted that
several other Southern California cities were also in the process of negotiating
corrective action plans to remedy code violations and that Time Warner Cable
desired to develop and implement uniform and standardized procedures for the
remedial work that must be done. To achieve this objective, counsel for the affected
cities, in conjunction with technical and legal representatives of Time Warner Cable,
are expediting the negotiation and preparation of a uniform corrective action plan
that is acceptable to Time Warner Cable and that can be implemented in those City of Culver City, California
City Council Agenda Item Report
Page 4 of 5
cities. The Time Warner Cable representatives informed the City’s technical
consultant that this uniform corrective action plan, when approved by Time Warner
Cable, could and should be made applicable to Culver City.
Because the Corrective Action Plan (CAP) is a vital part of ensuring Culver City
residents receive high quality cable television services, the City Council Cable
Television Subcommittee (Councilmembers Corlin and Gross) continued to
emphasize the importance of this document and suggested staff pursue all avenues
to successfully negotiate a Plan that would achieve this goal. Unfortunately, after
many months’ time, discussions with Comcast on this subject were not producing
the desired outcome.
Based upon these facts, staff and the City’s Cable Television Consultant (Mr.
Jonathan Kramer) and the City’s Special Counsel for Cable Television (Mr. William
Rudell) opened communications with Time Warner Cable, the ultimate transferee of
the City’s cable television franchise, in January, 2006. With the intercession of Time
Warner, productive discussions resumed and have resulted in Schedule 2 to the
Assignment and Assumption Agreement: the CAP.
In summary, the CAP provides for the following:
Comcast shall achieve substantial compliance no later than June 1, 2007
Inspections shall be made by a “Field Inspection Crew” which shall consist of
one City inspector and one representative from Comcast
Comcast shall report its progress in achieving substantial compliance
beginning no later than six months after approval of the CAP and every three
months thereafter
Substantial Compliance shall be based upon a statistically accurate
inspection (SAI) made to the 90% level
Comcast may request an “early SAI” prior to June 1, 2007
Comcast is required to provide public notification of its inspections through
advertisement in a Culver City newspaper no fewer than once every second
week and through one of the following: (1) local advertising avails, (2)
subscriber bill inserts, or (3) the Culver City Community Bulletin Board
The CAP contains provisions that mirror those contained in other nearby cities and,
in staff’s opinion, adequately protects the interests of the City’s cable television
subscribers. It is expected the City and Comcast will work closely together during
this process to ensure strict adherence to the requirements of the Resolution and all
related documents.City of Culver City, California
City Council Agenda Item Report
Page 5 of 5
FISCAL ANALYSIS
The proposed resolution and attachments require the City to retain and pay for a
statistician to produce the statistically appropriate list of cable subscribers to be used
in the SAI. These costs are expected to be minimal and can be absorbed in current
appropriations in Fiscal Year 2005/2006. Should the SAI be conducted in Fiscal
Year 2006/2007, an amount therefore will be requested in the Proposed Budget.
CONCLUSION
This process began on June 14, 2005 and has spanned a period of eight months.
Despite early roadblocks, the City Council Subcommittee on Cable Television and
staff appreciate the efforts of the City’s Cable Television Technical Consultant, Mr.
Kramer, and the City’s Special Counsel on Cable Television, Mr. Rudell, for their
persistence which ultimately led to this proposed agreement.
Mr. Deane Leavenworth, Vice President of Corporate Relations and
Communications for Time Warner, and Mr. Lee Alpert, counsel to Time Warner,
have also re-engendered an environment of good-faith and cooperation as these
negotiations came to a close. Both representatives of Time Warner have been
invited to tonight’s meeting and are expected to be available for questions or
comments from the City Council.
Should the City Council take the recommended action tonight, it is expected staff will
prepare for renewed negotiations on the issue of renewal of the Franchise
Agreement and the City’s Franchise Ordinance. We look forward to continued
productive negotiations in the spirit of cooperation and good-faith.
ATTACHMENTS
Resolution.
MOTION:
That the City Council:
Adopt the resolution conditionally authorizing the assignment and ultimate transfer of
control of the cable television franchise by Comcast Corporation to a wholly-owned
subsidiary of Time Warner Cable Inc.
MEETING DATE: February 13, 2006
AGENDA ITEM: Consideration of a Resolution Conditionally Authorizing
the Assignment and Ultimate Transfer of Control of a Cable Television
Franchise by Comcast Corporation to C-Native Exchange I, LLC, a Wholly-
Owned Subsidiary of Time Warner Cable Inc.
ATTACHMENTS
Pages
1. Resolution 1-21CITY OF CULVER CITY
LOS ANGELES COUNTY, CALIFORNIA
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CULVER CITY CONDITIONALLY AUTHORIZING THE
ASSIGNMENT AND ULTIMATE TRANSFER OF CONTROL OF A
CABLE TELEVISION FRANCHISE BY COMCAST CORPORATION
TO C-NATIVE EXCHANGE I, LLC, A WHOLLY-OWNED
SUBSIDIARY OF TIME WARNER NY CABLE INC.
RECITALS:
A. Corncast of Los Angeles, Inc. ("Franchisee") is the authorized holder of a
franchise ("Franchise") that authorizes the construction, operation, and maintenance of a cable
television system within the City of Culver City ("Franchise Authority"). Comcast of Georgia,
Inc., is an intermediate subsidiary of Comcast Corporation, and Comcast of Georgia, Inc., has the
requisite corporate authority to effectuate a change in ownership and control of the Franchise and
the Franchisee.
B. On April 20, 2005, Time Warner NY Cable, LLC ("TWNY"), an indirect
subsidiary of Time Warner Cable Inc., and Comeast Corporation ("Comeast"), the ultimate
parent company of Franchisee, each entered into separate definitive agreements to acquire,
collectively, substantially all of the assets of Adelphia Communications Corporation
("Adelphia") for a total of $12.7 billion in cash (of which TWNY will pay $9.2 billion and
Comcast will pay the remaining $3.5 billion) and 16% of the common stock of Time Warner
Cable Inc. At the same time that Comcast and TWNY entered into the agreements to purchase
Adelphia's assets, Time Warner Cable Inc., Comcast, and their respective subsidiaries also
agreed to swap certain cable systems to enhance their respective geographic clusters of
subscribers ("Cable Swaps"). The cable system now owned and operated by Franchisee in the
City of Culver City is one of many cable systems in Southern California involved in the Cable
Swaps.
C. On June 14, 2005, the Franchise Authority received from Corncast of
Georgia, Inc. ("Transferor"), an intermediate subsidiary wholly-owned by Comeast Corporation,
and from Time Warner Cable Inc. ("Transferee"), an application for the assignment and ultimate
transfer of control of the existing Franchise. This application included FCC Form 394 titled
"Application for Franchise Authority Consent to Assignment or Transfer of Control of Cable
Television Franchise." Supplemental information was provided to the Franchise Authority by
the Transferee on July 25, 2005. Extensions of the 120-day review period were granted through
and including February 15, 2006.
D. In accordance with Section 35B-3(j) of Ordinance No. 87-201, the
Franchise Authority has the right to review and to approve the financial, technical, and legal
10022-00021836399v5.doc 2/7/05qualifications of the Transferee in connection with the proposed assignment and ultimate transfer
of control of the Franchise.
E. The staff of the Franchise Authority has reviewed the documentation that
accompanied FCC Form 394 and, based upon the representations set forth in that documentation,
has concluded that the proposed Transferee has the requisite financial, technical, and legal
qualifications to adequately perform, or to ensure the performance of, all obligations required of
the Franchisee under the Franchise, and that C-Native Exchange I, LLC will be bound by all
existing tenns, conditions, and obligations of the Franchise as it currently exists or as it may be
modified or superseded by the parties prior to the closing of the transaction involving the Cable
Swaps.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CULVER
CITY RESOLVES AS FOLLOWS:
Section 1. In accordance with Section 35B-3(j) of Ordinance No. 87-021, the
Franchise Authority consents to and approves the proposed assignment of the Franchise from
Franchisee to C-Native Exchange I, LLC, a wholly-owned subsidiary of Comcast of Georgia,
Inc., and the subsequent transfer of control of C-Native Exchange I, LLC to Time Warner Cable
Inc., which, upon the closing of the Cable Swaps transaction, will be the indirect parent and
owner of C-Native Exchange I, LLC.
Section 2. The authorization, consent and approval of the Franchise Authority to
the proposed assignment and ultimate transfer of control of the Franchise is conditioned upon
compliance by the Transferor or the Transferee with the following requirements, for which they
are jointly and severally responsible:
(a) Within 15 days after the adoption of this resolution, the Transferor
will execute and deliver to the Chief Administrative Officer the letter agreement in the form
attached as Schedule 2 to the Assignment and Assumption Agreement referenced below in
paragraph (b). The Chief Administrative Officer is authorized to execute that letter agreement
and thereby evidence the written consent of the Franchise Authority to the compliance plan set
forth in that document.
(b) Within 60 days after the adoption of this resolution, the Transferor
and the Transferee will execute and file in the office of the City Clerk an "Assignment and
Assumption Agreement" in substantially the form attached to this resolution as Exhibit A. The
Mayor is authorized to execute that document and thereby evidence the written consent of the
Franchise Authority to the assignment and assumption of all rights and obligations under the
Franchise.
(c) An original or conformed copy of the written instrument
evidencing the closing and consummation of the ultimate transfer of control of the Franchise to
the Transferee must be filed in the office of the City Clerk within 60 days after that closing and
consummation.
110022-00021836399v5.doc 217/05Section 3. If the conditions set forth above in paragraphs (a) and (b) of Section 2
are not satisfied within the period of time specified in each of those paragraphs, then the
authorization and consent of the Franchise Authority to the proposed interim assignment and
ultimate transfer of control as provided for in this resolution will be revoked and rescinded
without further action by the Franchise Authority, and the FCC Form 394 application will be
denied in all respects. In such event, the Chief Administrative Officer is authorized and directed
to give written notice to all affected parties of that revocation and rescission, which will be
deemed to be without prejudice to the right of those parties to submit a new FCC Form 394 to
the Franchise Authority if required by the Franchise or local ordinance.
Section 4. The City Clerk is directed to transmit a certified copy of this
resolution to the following persons:
Mr. Roger Keating, President
Los Angeles Division
Time Warner Cable Inc.
959 South Coast Drive
Suite 300
Costa Mesa, CA 92626
Ms. Sheila R. Willard
Senior Vice President, Government Affairs
Comcast of Georgia, Inc.
1500 Market Street
Philadelphia, PA 19102-2148
Section 5. The City Clerk is directed to certify to the passage and
adoption of this resolution.
PASSED, APPROVED, AND ADOPTED this day of , 2006.
MAYOR
ATTEST:
CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY|1010|10022-00021836399v5.doc 2/7/05EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND
GUARANTEE OF ASSIGNEE'S OBLIGATIONS
(CABLE TELEVISION FRANCHISE AGREEMENT)
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") is
entered into this day of , 2006, by and between Comcast of Los Angeles,
Inc., a California corporation ("Assignor"), C-Native Exchange I, LLC, a Delaware limited
liability company ("Assignee"), and the City of Culver City, a California municipal corporation
("Franchise Authority").
RECITALS:
A. Assignor is the authorized holder of a franchise that authorizes the
construction, operation, and maintenance of a cable television system within the City of Culver
City, California.
B. Subject to the prior consent of the Franchise Authority, Assignor desires to
assign and transfer to Assignee, and Assignee desires to assume, all rights, duties, and
obligations under the cable television franchise agreement between the Franchise Authority and
Comcast of Los Angeles, Inc. ("Franchise Agreement") as it currently exists or as it may be
modified or superseded by the parties prior to the closing of the transaction described in
Assignor's FCC Form 394.
THE PARTIES AGREE AS FOLLOWS:
1. Assignor assigns and transfers to Assignee all of Assignor's rights, duties,
and obligations under the Franchise Agreement.
2. Effective upon the closing of the transaction described in the FCC Form
394 filed with the Franchise Authority on June 14, 2005, Assignee covenants and agrees with
Assignor and with the Franchise Authority to assume all rights and to assume and perform all
duties and obligations of the Assignor under the Franchise Agreement including, without
limitation, the implementation and completion of corrective work that is required to bring the
cable system facilities into compliance with City Ordinance Nos. 87-020 and 87-021, as
specified in the letter agreement attached as Schedule 2 to this Agreement. The Franchise
Authority reserves any and all rights with respect to any noncompliance issues that may exist
prior to the Closing, and Assignee reserves any and all rights and defenses with respect to any
such noncompliance issues.
A 1
0022-0002 I 836399v5.doc 2/7/053. Franchise Authority consents to the assignment and transfer by Assignor
to Assignee of all rights, duties, and obligations specified in the Franchise Agreement, contingent
upon the execution by Time Warner Cable Inc., as guarantor, of the "Guarantee of Assignee's
Obligations" that is attached as Schedule 1 to this Agreement.
4. This Agreement will become operative and enforceable upon the closing
of the transaction described in the FCC Form 394 as filed with the Franchise Authority on
June 14, 2005.
TO EFFECTUA I t. THIS AGREEMENT, the parties have caused this Assignment and
Assumption Agreement to be executed by their authorized representatives as of the date set forth below
the authorized signature.
"ASSIGNOR"
COMCAST OF LOS ANGELES, INC.
a California corporation
By: (Authorized Corporate Officer)
Title: Date: APPROVED AS TO FORM:
LEGAL COUNSEL
"ASSIGNEE"
C-NATIVE EXCHANGE I, LLC,
a Delaware limited liability company
By:
(Authorized Officer)
Title: Date: APPROVED AS TO FORM:
LEGAL COUNSEL
A - 2
I 0022-0002183 6399v5.doc
2/7/05"FRANCHISE AUTHORITY"
CITY OF CULVER CITY
By:
Mayor
Date:
APPROVED AS TO FORM:
CITY ATTORNEY
ATTEST:
CITY CLERK
A - 3
10022-00021836399v5.doc
2/7/05
tpSCHEDULE 1
to
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND
GUARANTEE OF ASSIGNEE'S OBLIGATIONS
GUARANTEE
GUARANTEE, dated as of , 2006, made by TIME WARNER CABLE INC., a
Delaware corporation ("Guarantor"), in favor of the City of Culver City, California,
("Beneficiary").
For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce Beneficiary to timely consent to the transfer of the cable television
franchise issued by Beneficiary and currently held by Comcast of Los Angeles, Inc. (the
"Franchise") to C-Native Exchange I, LLC ("Transferee") in accordance with the Federal
Communications Commission Form 394 filed by Transferee, Guarantor agrees as follows:
I. Interpretive Provisions.
A. The words "hereof," "herein" and "hereunder" and words of similar import, when
used in this Guarantee, shall refer to this Guarantee as a whole and not to any
particular provision of this Guarantee, and section and paragraph references are to
this Guarantee unless otherwise specified.
B. The meanings given to terms defined herein shall be equally applicable to both
the singular and plural forms of such terms.
Guarantee.
A. Effective upon the close of the Cable Swaps transaction, Guarantor
unconditionally and irrevocably guarantees to Beneficiary the timely and
complete performance of all Transferee obligations under the Franchise (the
"Guaranteed Obligations"). The Guarantee is an irrevocable, absolute, continuing
guarantee of payment and performance, and not a guarantee of collection. If
Transferee fails to pay any of its monetary Guaranteed Obligations in full when
due in accordance with the terms of the Franchise, Guarantor will promptly pay
the same to Beneficiary or procure payment of same to Beneficiary. Anything
herein to the contrary notwithstanding, Guarantor shall be entitled to assert as a
defense hereunder any defense that is or would be available to Transferee under
the Franchise or otherwise.
A-4
10022-00021836399v5.doc 2/7/05B. This Guarantee shall remain in full force and effect until the earliest to occur of:
(i) performance in full of all Guaranteed Obligations at a time when no additional
Guaranteed Obligations remain outstanding or will accrue to Transferee under the
Franchise; and (ii) subject to any required consent of the Beneficiary, any direct
or indirect transfer of the Franchise from Transferee to (or direct or indirect
acquisition of Transferee or any successor thereto by (whether pursuant to a sale
of assets or stock or other equity interests, merger or otherwise)) any other person
or entity a majority of whose equity and voting interests are not beneficially
owned and controlled, directly or indirectly, by Guarantor. Upon termination of
this Guarantee in accordance with this Section II(B), all contingent liability of
Guarantor in respect hereof shall cease, and Guarantor shall remain liable solely
for Guaranteed Obligations accrued prior to the date of such termination_
III. Waiver. Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Guaranteed Obligations and notice of or proof of reliance by Beneficiary
upon this Guarantee or acceptance of this Guarantee. Guarantor waives diligence, presentment,
protest and demand for payment to Transferee or Guarantor with respect to the Guaranteed
Obligations; provided, however, that Guarantor shall be furnished with a copy of any notice of or
relating to default under the Franchise to which Transferee is entitled or which is served upon
Transferee at the same time such notice is sent to or served upon Transferee.
IV. Representations and Warranties. Each of Guarantor and Beneficiary represents and
warrants that: (i) the execution, delivery and performance by it of this Guarantee are within its
corporate, limited liability company or other powers, have been duly authorized by all necessary
corporate, limited liability company or other action, and do not contravene any law, order, decree
or other governmental restriction binding on or affecting it; and (ii) no authorization or approval
or other action by, and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by it of this Guarantee, except as
may have been obtained or made, other than, in the case of clauses (i) and (ii), contraventions or
lack of authorization, approval, notice, filing or other action that would not, individually or in the
aggregate, impair or delay in any material respect such party's ability to perform its obligations
hereunder.
V. Binding Effect.
This Guarantee, when executed and delivered by Beneficiary, will
constitute a valid and legally binding obligation of Guarantor, enforceable against it in
accordance with its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency or other similar laws applicable to creditors' rights generally and by equitable
principles (whether enforcement is sought in equity or at law).
VI. Notices.
All notices, requests, demands, approvals, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given and made if served by
personal delivery upon the party for whom it is intended or delivered by registered or certified
mail, return receipt requested, or if sent by Telecopier, provided that the telecopy is promptly
confirmed by telephone confirmation thereof, to the party at the address set forth below, or such
other address as may be designated in writing hereafter, in the same manner, by such party:
A - 5
10022-00021836399v5.doc 2/7/05To 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 Culver City
9770 Culver Boulevard
Culver City, CA 90232-0507
Telephone: (310) 253-6006
Telecopy: (310) 253-6010
Attention: Chief Administrative Officer
VII. Integration. 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.
VHI. Amendments in Writing. 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.
IX. Section Headings. 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.
X. No Assignment 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.
XI. 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.
XII. 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.
A - 6
10022-00021836399v5.doc 2/7/05XIII. Governing Law. This guarantee shall be governed by and construed and interpreted in
accordance with the laws of the state of California without regard to principles of conflicts of
law.
XIV. Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally waives
trial by jury in any legal action or proceeding relating to this guarantee and for any counterclaim
therein.
TO EFFECTUATE THIS GUARANTEE, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized officer on the date set forth
below the authorized signature.
"GUARANTOR"
TIME WARNER CABLE INC.
By: Name: Title: Date:
"BENEFICIARY"
CITY OF CULVER CITY
By: Name: Title: Date: A - 7
10022-00021836399v5.doc 2/7/05
IDSCHEDULE 2
to
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND
GUARANTEE OF ASSIGNEE'S OBLIGATIONS
COMPLIANCE PLAN
[Executed copy to be attached]
A - 8
I 0022-0002 1836399v5.doc
2/7/05[Comcast Letterhead]
February , 2006
City of Culver City
9770 Culver Boulevard
Culver City, California 90232-0507
Attn: Jeny Fulwood, Chief Administrative Officer
Subject: Compliance Plan Regarding Safety Violations
Dear Mr. Fulwood:
This letter agreement sets forth the understanding and agreement between the City
of Culver City ("City") and Comcast of Los Angeles, Inc. ("Comcast") regarding the
implementation of a compliance plan for corrective work on cable system service drops
within the City ("Compliance Plan"). For purposes of this Compliance Plan, the phrase
"cable system service drops" is defined as the cable and related field equipment from the
output of the subscriber signal tap to the cable entry point on the structure.
A. BACKGROUND
1. Comcast is the duly authorized cable television franchisee in the
City under a cable television franchise that was authorized by Ordinance No. 87-020, as
adopted on August 10, 1987 ("Franchise Agreement"). This Franchise Agreement was
transferred to Comcast in a transaction authorized by the City on June 24, 2002.
2. Ordinance No. 87-021 is the regulatory ordinance that governs
Comcast's Franchise Agreement. Section 35B-6(k)(1)(c) of that ordinance provides as
follows:
1"All installation of electronic equipment shall be of a
permanent nature, durable and installed in accordance with
the provisions of all applicable State and local codes."
For purposes of this Compliance Plan, the term "State and local codes" is defined to
include those codes specified in Ordinances No. 87-020 and No. 87-021.
3. In November 2004, the City conducted a technical audit to
determine Comcast's compliance with State and local codes and issued a report (the
"Audit Report"). As set forth in Comcast's letter to the City dated September 29, 2005,
Comcast disagrees with the conclusions in the Audit Report. Nevertheless, Comcast has
agreed to the provisions of this Compliance Plan in order to achieve substantial
compliance with the franchise requirements and has agreed to take the corrective actions
set forth below.
B. COMPLIANCE DEADLINE
On or before June 1, 2007, Comcast shall ensure that its cable system service
drops are in substantial compliance with the Franchise Agreement, as specified below in
Section E(1).
C. INACTIVE OVERHEAD SUBSCRIBER DROPS
In those instances where an inactive overhead subscriber drop cable is
physically disconnected or electronically insulated from the structure, and the drop
messenger at the structure is either connected to 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. At the time of|1010|i5service reactivation, Comcast must inspect and adjust the wiring as may be required to
comply with all current State and local codes.
D. PROGRESS REPORTING AND MONITORING
1. Corncast will maintain progress records. Upon City's request,
Comcast will deliver to City a progress report in spreadsheet format at three-month
intervals. The first progress report shall be made available on the six-month anniversary
of this agreement, and subsequent progress reports every third month thereafter. The
progress reports will set forth the following information:
(a) The time period covered by the report.
(b)
The number of current subscribers in the City as of the end
date of the progress report.
(c) The number of structures passed in the City by Comcast's
cable system ("serviceable addresses") as of the end date of the progress report.
(d) Addresses in the City verified by Comcast to be in
compliance with applicable State and local codes.
(e) Addresses in the City verified by Comcast to be legal non-
conforming installations, as defined below in Section E(2)(d), as of the end date of the
progress report.
(f)
Addresses in the City where the property owner or
occupant denied Comcast access to inspect, or where Comcast was unable to inspect due
3to a physical barrier. For each such address, the information specified in Section
E(2)(b)(i) must be provided in the progress report.
2. At the request of either party, the City and Comcast will meet to
discuss the work performed and reported on 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 occurred or may occur that adversely impact the
Compliance Plan. The purpose of each such meeting will be to monitor the progress of
the Compliance Plan to date, to discuss work that remains to be performed, and to
identify and attempt to resolve in advance any issues that may negatively impact future
progress.
3. Within 30 days after the mid-point of the Compliance Plan but no
later than July 31, 2006, the City will conduct an evaluation to independently verify the
progress of that plan. As used above, the term "mid-point' means that one-half of the
total number of serviceable addresses in the City have been certified by Comcast as being
in compliance with State and local codes, or are legal non-conforming serviceable
addresses. The purposes of this evaluation are as follows:
(a) To determine the accuracy and reliability of the progress
reports previously submitted.
(b) To enable the City to provide guidance to Comcast, as may
be requested by Comcast, to ensure the timely and successful completion of the
Compliance Plan.|1010|15(c) To discuss project-related matters that may be raised by the
City or by Comcast.
E. VERIFICATION OF COMCAST'S COMPLIANCE
1. Within 30 days after June 1, 2007, or upon receipt of a letter from
Comcast making such request, whichever occurs first, City shall commence a statistically
accurate (97% confidence level, plus or minus 3%) verification inspection ("SAT") to
determine whether Comcast has brought the cable system service drops into substantial
compliance with State and local codes. Substantial compliance is deemed to exist where
at least 90 percent of the cable system service drops comply with State and local codes.
For purposes of the definitions and calculations provided for in this Agreement, a
location that is found to be in noncompliance will be considered as a single failure,
regardless of the number of noncompliant items at that location
2. The following procedures will apply to the selection of addresses to
be inspected, and to the conduct of the verification inspection:
(a) Selection of Addresses to be Inspected
(i)
The City will propose no fewer than three
independent third-party statisticians, and within 15 days thereafter Comcast will select
one from the City's list. If Comcast fails to select one of the statisticians from the City's
list within 15 days, the City will select the statistician.
(ii) The statistician selected above in subparagraph (i)
will be retained and paid for by the City.|1010|tp(iii) Comcast will provide the statistician with a list of
all serviceable addresses in the City.
(iv) The statistician will perform a "six-times" random
sort on the list described above in subparagraph (iii).
(v) The statistician will provide the sorted list in
suitable spreadsheet format to the City. The statistician will retain a copy of the sorted
list for disclosure to Comcast upon notice from the City of completion of the verification
inspection.
(vi) The city will then plot the first non-excluded 450
addresses on a detailed street map ("verification inspection list").
(b) Exclusion of Addresses to be Inspected.
(i)
Comcast must provide to the City a list of every
address in the City where Comcast has been unable to gain access in order to inspect its
cable system service drops. For each such address, Comcast must 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 or occupant
requesting the necessary access.
(ii) In no event will Corncast be responsible for any
noncompliance that is beyond Comcast's reasonable control. For purposes of this
Compliance Plan, the phrase "beyond Comcast's reasonable control" means documented
6evidence (A) that the resident requested the drop not be removed; (B) that a third party
interfered with the cable system service drop rendering it noncompliant; (C) that an act of
nature rendered it noncompliant; or (D) that the residential owner or occupant is utilizing
the cable drop for services not provided by Comcast.
(iii) If any cable system service drop is determined to be
subject to the exclusions of subparagraphs (i) and (ii), the City will exclude each such
address from the inspection process, and the next available address on the sorted list will
be added in order (i.e., 451, then 452, then 453.)
(c) Field Inspections (2 or 3 crews)
(0 Each field inspection crew will consist of one City
inspector and one representative of Comcast.
(ii) Inspection crews will visit each of the 450 addresses
on the verification inspection list to assess compliance with State and local codes.
(iii) Any City inspector can issue a "pass" for a code-
compliant address.
(iv) Only one City-designated inspector can issue a
"fail" for a non-compliant address.
(v) For each "no access" address, or any address with
no subscriber drop plant, one additional inspection address will be added in order (i.e.,
451, then 452, then 453) from the sorted list to the verification inspection list.(vi) The verification inspection will be complete and the
percentage of substantial compliance will be computed when 450 addresses have been
inspected and a "pass" or "fail" finding has been assigned by the City to each of those
450 addresses.
(d) Legal Non-Conforming Installations. Where an inspected
installation does not meet the current State and local code requirements, but does comply
with the State and local codes that were in effect at the time of installation, and no
material changes have occurred to the installed facilities in the intervening period, the
installation will be deemed to be currently compliant and entitled to a "pass" finding.
The burden is on Comcast to demonstrate by clear and convincing evidence to the City's
satisfaction that the installation complied with the State and local codes that were in
effect at the time of installation and that no material changes to the installation have
occurred in the intervening period.
(e) Compliance Inspections Prior to June 1, 2007. In
accordance with Section E(1), Comcast may notify the City in writing that it desires to
proceed with the SA1 at any time prior to June 1, 2007. If an SA1 performed at
Comcast's request prior to June 1, 2007 (the "Early SAI") does not demonstrate
substantial compliance, as defined in Section E(1), Comcast shall not be in breach of this
agreement nor subject to the remedies provided herein unless and until Corncast fails to
demonstrate substantial compliance in the SAI to be conducted within 30 days after June
1, 2007. For each such failed Early SAL Comcast shall promptly reimburse the City for
its actual costs of performing the Early SAL If an Early SAI demonstrates the substantial|1010|Na\compliance required herein, the provisions of Section E(2)(0 ("Termination of
Obligations upon Compliance") shall apply.
(f)
Termination of Obligations upon Compliance. If the
verification inspection process discloses that Comcast has achieved substantial
compliance with State and local codes as defined in Section E(1) and has fulfilled its
obligation, if any, to fully reimburse the City as specified in Section E(2)(e) , City will
notify Comcast, and Comcast's obligations under this Compliance Plan will terminate.
City and Comcast reserve all rights they may have with respect to compliance issues
other than the cable system service drops addressed in this Compliance Plan.
(g) Failure to Achieve Substantial Compliance. Except where
substantial compliance is not demonstrated in an Early SAI authorized by Section
E(2)(e), Con-least' s failure to achieve substantial compliance will subject Comcast to the
remedies set forth in the Franchise Agreement.
F. BINDING UPON SUCCESSORS
The commitments in this Compliance Plan will be legally binding upon Comcast
and upon any successor-in-interest, assignee, or transferee of the Franchise Agreement
that may hereafter be authorized by the City.
G. PUBLIC NOTIFICATION
Comcast, at its sole cost, shall notify the property owners and occupants in the
City of the inspection and correction work required herein by placing advertisements in a
newspaper of general circulation in the City. Such advertisements shall start upon the
execution of this agreement, and continue thereafter no less frequently than every second
9week. Comcast shall also notify its current subscribers by at least one of the following
means: "local advertising avails" or subscriber bill inserts, or Culver City Community
Bulletin Board.
Please indicate the City's acceptance of this letter agreement by signing and returning the
enclosed duplicate of this letter.
Very truly yours,
COMCAST OF LOS ANGELES,
INC.
By: Title: Confirmed and Agreed to
on February 2006
CITY OF CULVER CITY
By: Title: 10
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