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98-32S v.ru s e., - ��y � 9 g RESOLUTION CITY OF SAlN7 PAUL, MINNESOTA Presented Refened To Committee Date 1 2 WF�REAS, the City has granted a non-exclusive cable franchise to Continental Cablevision 3 of Saint Paul, Inc., as provided in Appendix H of the Legislative Code, as amended by the 4 Settlement Agreement of September 15, 1942 and the Transfer Agreement of November 13, 1446, 6 7 10 11 12 13 14 15 16 17 18 19 20 21 WI3EREAS, Continental Cablevision of Saint Paui is now a whoily owned subsidiary of US WEST, Tnc., which fact was known to the City and relied upon by at itt granting the Franchise; and WI�REAS, on Ju1y 16, 1997, Continental Cablevision of St. Paul, as transferor, and CC-St. Paul, LCC, as transferee requested the consent of the City to a transfer of the franchise cable system assets from the transferor to the transferee WHEREAS, the Franchise provides that every change, transfer or acquisifion of control shall make the Franchise subject to cancellation unless and until the Council shall have consented thereto, which consent will not be unreasonably withheld; and Council File # 9g-3 Green Sheet # �� WHEREAS, state and federal law require City consent for said transfer to be effecrive; and WHEREAS, staff identified certain detrimental consequences to the City and to the public from the proposed transfer; and 22 WHEREAS, the Transfer Agreement, a copy of which is attached hereto, negotiated with 23 City staff, and executed by authorized representatives of the transfer parties, provides remedies for 24 these detrimental consequences, now, therefore, be it further 25 26 27 28 29 30 31 32 33 34 35 36 37 38 RESOLVED, that the transfer is approved subject to each and every one of the conditions specified in the Transfer Agreement; and now therefore be it furdier RESOLVED, that if any of the conditions aze not satisfied, or if the Transfer Agreement is not fully executed by January 31, 1998, or the transactions which constitute the Transfer do not close by April 1, 1998, the request for approval shall be deemed denied as of the effective date of this Resolution, now therefore be it RESOLVED, that the Mayor and the Director of Financial Services are hereby authorized to execute the Transfer Agreement and, be it further RESOLVED, that stafF be and hereby is directed to draft the appropriate ordinance amendments for submission for Council consideration. °�8-3a. By: Approved by Mayor: Requested by Department of: � Porm Approved by City Attorney � Approved by Mayor for Submission to Council � Adopted by Council: Date � Adoption Certified by Council S�retary � 98-3z Council Strathman 14, 1998 1/8/98 RqRING TOTAL # OF SIGNATURE PAGES GREEN SHEET No 62189 u �.,,�,�,*� u ��„�— ❑ �,,,,� ❑ a,,,� ❑ n,,wuatsErsxeFSOUt ❑ nux�uaonn.cerc ❑ W`f011(ORllbffiSNRI ❑ (CLIP ALL LOCATIONS FOR SIGNATURE) Approving tfie transfer of Saint Paul Cable Television Franchise from US West to Charter Communications. PLANNING CAMMISSION CIB COMMITTEE CNIL SERVICE COMMISSION I111r2 CT3�:7�!�a.3SiC7'J Fles ihis pe�soNfiim everworked untler a eonhact for thie departmeM? VES NO Hea this Pe�Nfirtn ever been a cdY empbyee4 VES NO Does �his PersoNfirtn possess a Skll r� normallypOSeessed bY arry wrreM �Y emPluYee7 VES NO Is tA� persoNfirm a targHed ventloYt YES NO COS71RE4ENUE BUDGETFA fCIRCLE Gt1E� YE8 HO SOURCE ACTNITY ttU1d8ER INFDRMAliON (O(PWN] TRANSFER AGREEMENT DATED JANTJARY 12, 1997 Am��nd�d Vers �'oN - �8"�� j�y �98 THE CITY OF ST. PAUL, MINNESOTA ("CITY"), CON'ITNENTAL CABLEVISION OF ST. PAUL, INC. ("CCSP"), MEDIAONE OF DELAWARE, INC. ("MEDIAONE") US WEST, INC.(USWEST), CHARTER COMMiJNICATIONS, INC. ("CIIARTER"), CCTC HOLDINGS, INC. ON ITS OWN BEHALF AND ON BEIIALF OF CERTAIN SUBSIDIARIES ("CCTC") AND CIIARTER COMMiJNICATIONS ST PAUL, INC. ("CC-ST. PAUL") DO HEREBY AGREE AS FOLLOWS: WFIEREAS, CCSP is the holder of a franchise to provide cable service in the City of St. Paul, subject to the provisions of that certain franchise agreement between the City and Company dated November 10, 1983, as amended, including by that certain Settlement Agreement dated September 15, 1992, and that certain Transfer and Franchise Modification Agreement dated November 13, 1996, all of which are subject further to Chapter 430 of the St. Paul Legislative Code (collecfively, the "Franchise Documents"); and subject fiu�ther to that certain Correcfive Plan Agreement and Corrective Plan, dated December 22, 1997 and such amendments to the Franchise Documents as may be made pursuant to that Corrective Plan Agreement (collectively the agreement, plan and amandments are refened to as the "Corrective Plan"); and WHEREAS, since 1996 CCSP has been owned and controlled by MediaOne, which in turn is owned and controlled by USWEST; and WAEREAS, USWEST was under an obligation to divest itself of its interests in the cable system in St. Paul (IJSWEST, CCSP and MediaOne aze collecfively referred to as the "U5 WEST Parties"); WHEREAS, on May 27, 1997 CCSP, King Videocable Company-Minnesota (King, Inc.), and MediaOne of Delaware, Inc. entered into a contract with CCTC Holdings, Inc. ("CCTC") to sell those assets which comprise the franchise to operate a cable system within the City; WHEREAS, CCTC is controlled by Charter Communications, Ina ("Charter"); WHEREAS, CCTC owns 100% of the newly formed Charter Communications Twin Cities, Ina (Twin Cities), which in turn owns 100% of Charter Communications Minnesota, Inc. (CCMT). Twin Ciries owns 99% of each of CC - King, LLC (CC - King) and CC - St. Paul, LLC (CC - St. Paul) while CCMI owns 1% of each of CC - King and CC - St. Paul (these entifies, along with Charter, are refened to collectively as the "Charter Parties") and as their pazent, CCTC entered into the agreement with CCSP, King, Inc. and MediaOne; and WHEREAS, a request for assignment of the franchise, the cable system, and the assets thereof, from CCSP to CC - St. Paul has been filed with the City (the transactions which shall c��-32 coilectively result in the sales and assignments, as described in the Form 394 and the aitackunents thereto aze refened to collectively below as the "Transfer"); and WI�REAS, by agreement of US West and Charter Parties (collectively referred to as the "Transfer Parties"), the City has until January 22 , 1998 to introduce the necessary resolutions or ordinances required to act upon that request for approval of the Transfer; and WHEREAS, at the time the request was filed, there were certain substantial outstanding issues with respect to the e�sting franchise, and the obligations owed to the City thereunder and as a result of negotiations with the USWEST parties, those certain issues were to be resolved pursuant to the Corrective Plan; and WIIEREAS, the City has determined that, in light of the facts available to it, it would not be appropriate to approve the transfer absent certain guarantees and agreements, binding upon the parties to the Transfer, including certain promises to ensure compliance with the provisions of the Franchise Documents, and Conecfive Plan; and WHEREAS, among other things, the City has determined that, given the length of time remaining on the existing franchise under which CCSP provides service to the City, there must be an agreement on the terms of a franchise defining the financial and technical obligations that CC - St. Paul would have to the City; and WHEREAS, the Transfer Parties agree that it is appropriate to make such guarantees and agreements, subject to the City's approval of the Transfer; and WHEREAS, CC - St. Paul has agreed to the terms of a franchise that would govern its operations once adopted and effective (the "Replacement Franchise"); NOW THEREFORE, IN CONSIDERATION OF THE FOREGOING AND THE MUTUAL CONSENTS SET FORTH HEREIN, THE PARTIES AGREE AS FOLLOWS: Section 1. Assumption of Franchise Obligations; General Representations and Warranties. 1.1 Acceptance - CC - St. Paul hereby accepts, acknowledges, and agrees to be bound by all of the commitments, duties and obligafions, present, continuing and future (a) of CCSP as set forth in the Franchise Documents; (b) of CCSP as set forth in the Correcrive Plan, (and as amended by the Replacement Franchise once it becomes effective); and (c) as set forth in the Replacement Franchise, once it becomes effective. The Replacement Fzanchise, once it becomes effective, will become the franchise agreement that governs operations within the CiTy from and after its effective date, and from and after the effective date of the Replacement Franchise, CC - St. Pau1 shall be deemed to have surrendered its franchise rights under the Franchise Documents. 1.2 Assum�tion of Obli�ations - CC - St. Paul agrees that as between itself and the City neither the Transfer nor the City's approval of the Transfer shall in any respect relieve it of � ��-�� responsibility for past acts or omissions, lmown ar unknown of CCSP; and CGSt. Paul hereby reaffiruis that, from and after the time of closing of the Transfer (the "Closing Date"), it shall be liable for and accepts the consequences of, any such acts and omissions, known and uulniown, including liability for any and all previously accrued but mifulfilled obligations to the Ciry under the Francluse Documents, the Corrective Plan and applicable law, for all purposes. By way of example and not limitation, tius shaIl require CC - St. Paul to pay franchise fees to the City for any period prior to the effective daxe of the Replacement Franchise for which revenues had been coilected but fees not paid and to conect past underpayments, if any. By way of further example and not limitation, the payments that would be due under Article III, Section 6 on Februaiy i 5, 1998, sha11 be owed by CC - St. Paul if the payment has not been made as of the Closing Date; and in addition, CC- St. Paul will owe a pro rata shaze of the payment that would be owed under Appendix H for 1998, calculated by dividing the total payment owed for 1998 by 12 and multiplying the result times the number of months between the first of the yeaz and the effective date of the Replacement Franchise (partial months coun6ng as whole months for pwpose of this catculation). This liability shall be joint and several with the liability of US WEST and CCSP to the extent ptovided below. 13 Conflictina Provisions Disallowed - The City, by its approval of this Transfer, is not approving or endorsing the terms of any documeni related to the Transfer. Without limiting the foregoing, to the extent there is a conflict between (1) the terms and conditions of this Agreement, the Franchise Documents, the Corrective Plan or the Replacement Franchise, or applicable federal, state or local laws; and (2) any contract (other than an contract with the City) related to the Transfer, or any contract that may affect St. Paul as a result of the Transfer, the Transfer Parties agree that the terms of the latter shall be expressly subordinate to the terms and conditions of the former. 1.4 Citv's Reliance Upon Companies' ReUresentations - The Transfer Parties acknowledge and agree that: the City's consent to the Transfer is made in reliance upon the representations, documents, and information provided by the Transfer Parties in connection with the Transfer Application; each of the Transfer Parties is liable for its representations and warranties and jointly and severally liable far joint representations and warranties; and that the representations and warranties include, without limitation the following: 1.41 The Transfer Parties represent and warrant that CGSt. Paul will succeed CCSP as lessee at the. Union Depot. The transfer requires the priar approval of the landlord of the Union Depot but that approval has been obtained so that consummafion o£the Transfer will not in any respect affect the lease ar leases for the Union Depot including any lease for any properiy in that building occupied by Cable Access St. Paul, Inc., d!b/a St. Paul Neighborhood Network; 1.4.2 The Transfer Parties represent and warrant that they understand that, in approving this Transfer, St. Paul is only agreeing to approve the Transfer set forth in the Form 394 as it is to be completed at closing, with CC - St. Paul becoming the franchisee and as fixrther shown on E�ibit A hereto; the City is not agreeing to approve any future transfer, whether 3 ° � contemplated in connection with the Transfer or not, and any agreement or option that would permit a transfer to occur without the approval of the City is disallowed. 1.43 The Charter Parties represent and warrant that they will not in any respect reduce the level of customer service in St. Paul, either by reducing the number of customer service representatives, technicians or technical managers serving St. Paul, or by consolidating the St. Paul customer service operations with other customer service operations. If CGSt. Paul does consolidate its customer service operations, it shall ensure that at least seventeen (17) percent of its work force is located within the City of St. Paul. 1.4.4 The Charter Parties represent and warrant that there will not be an increase in subscriber rates, as a result of any cost associated with compiiance with the Corrective Plan, including costs associated with the amendments to the Corrective Plan provided far under the Replacement Franchise). The Charter Parties further agree that any costs associated with complying with this Transfer Agreement are not external costs. The Charter parties further stipulate that for purposes of any rate proceeding, the Transfer does not result in a cognizable increase in good will, intangibles or tangible assets of the cable system serving St. Paul, above the level that could have been reflected in rates prior to the Transfer. 1.4.5 Each of the Transfer Parties each hereby represent and warrant that as to it: (a) the execution and delivery of this Agreement does not contra�ene, result in a breach of, or constitute a default under, any contract or agreement to which it is a party or by which it or any of its properties may be bound (nor would such execution and delivery consritute such a default with the passage of time or the giving of notice or both), and does not violate or contravene any law, order, decree, rule, regulation or restricfion to which it is subject; (b) each of the Transfer Parties is duly organized, legally existing and in good standing under the laws of the states of their respective organization; (c) the terms of this Agreement which apply to it constitute legat, valid and binding obligations of it, enforceable in accordance with such terms; and (d) the execution and delivery of, and performance under, this Agreement is within its respective power and authority without the joinder or consent of any other party and have been duly authorized by all requisite action and are not in contravention of its respective charters, bylaws, or other organizational documents, or of any indenture, agreement ar undertaking to which it is a pariy or by which its is bound. Section 2. Promise of Charter Parties Each of the Charter Parties (other than CC- St. Paul) agrees that, from and after the consuinmation of the Transfer, it will not take any action inconsistent with the promises contained in the Franchise Documents, the Conective Plan (as amended once the Replacement Franchise becomes effective), or the Replacement Franchise. CC - St. Paul agrees that it will sign an acceptance of the Replacement Franchise before the Closing Date and will not take any action to prevent the Replacement Franchise from going into effect and becoming a binding obligation of the company. Charter agrees that it shall guarantee the performance of CC - St. Paul. Charter agrees that, prior to the Closing Date, it shall deliver an unconditional guarantee, in a form substantially similar to E�ibit B to this Agreement, guaranteeing each and every � °1�-� � obligaUon of CC - St. Paul under the Franchise Docuxnents, this Agreement (when executed and delivered), the Conective Plan (as amended by the Replacement Franchise when it becomes effective) and the Replacement Franchise, when it becomes effective. CC-St. Paul, in addition to obtaining all the bonds, letters of credit and satisfying other conditions of the Franchise Documents and the Replacement Franchise that are to be sa6sfied prior to Closing, shall obtain the letter of credit required of the Company under the Corrective Plan Agreement Secrion 9. The release of US WEST and CCSP from liability shall not act to release any of the Charter Parties from their liability under any provision of this Agreement, the Franchise Documents or the Conective Plan (as amended once the Replacement Franchise becomes effective). Section 3. Promise of the US WEST Parties 31. The US WEST Parties agree that, after the Closing Date, the Charter Parties shall be responsible for implementing the Correcfive Plan (as it may be amended by the Replacement Pranchise once the Replacement Franchise becomes effective). On the Closing Date, the US WEST Parties will provide Charter all documents related to work performed on the Corrective Plan, through and including the Closing Date, including any materials in an electronic format. The US WEST Parties also agree to respond to questions from the Charter Parties regarding the work performed. The US WEST Parties shall act at all rimes so that work on the insritutional network can be completed properly and in a timely manner. However, while Charter is responsible for implementing the Corrective Plan as it may be amended, the US VJEST Parties remain liable for the costs associated with implementing the Corrective Plan as dated December 22, 1997. The letter of credit required of the Company under Section 9 of the Corrective Plan Agreement must be maintained by CCSP. Each of US WEST, as guarantor, and CCSP as the signatory to Appendix H and the Conecrive Plan, shall remain liable for any breach or costs associated with complying with the Corrective Plan as it existed on December 22, 1997, until all obligations to construct and test the institutional network upgrade required by the Corrective Plan, (as amended by the Replacement Franchise, once it becomes effective) aze satisfactorily dischazged. This liability shall be joint and several with CC - ST. Paul and Charter. The release of CC - St. Paul or Gharter from liability shall not act to release any of the US WEST Parties fiom their liability hereunder. The US WEST Parties promise that they will no nothing to interfere with or delay the timely completion of the Corrective Plan (as amended by the Replacement Franchise once it becomes effective), or to interfere with or delay Charter's ability to comply with this Agreement, the Franchise Documents, or the Replacement Franchise once it becomes effective. They further agree, that the Corrective Pian is hereby amended so that, if the Replacement Franchise goes into effect, Section 8 of the Conecrive Plan Agreement shall not operate to release them from any ongoing obligations under the Corrective Plan, or allow them or anyone else to chazge for the use of the institutional network, except as provided in the Replacement Franchise. The Conective Plan as it e�sted on December 22, 1997 is not breached by compliance with the Corrective Plan as amended, and the US WEST Parties are not ]iable for a breach of atnendments to the Conective Plan to which they aze not a party. 3.2. Each of the USWEST Parties agrees that, except to the extent the same are transferred to the Charter Parties, it will retain all documents related to the cable system, including a11 documents that show or record revenues derived from the operation of the cable ��-�� system in the City. These documents wiil be made auailable to the City for inspection at the St. Paul City Hall within 30 days of a request therefor. The obligation under ttus section estends to retanring and producing documents recording revenues received from sales of advertising and other revenues that are based on national or regional sales, where only a portion of the revenues aze attributable to the operations in the City. Each of the USWEST Parties will identify an agent within Minnesota who is subject to the jurisdiction of the Ramsey County state district court, to whom requests for information can be submitted and upon whom service of process may be rendered. The USWEST Parties each agree that the failure to produce the materials on a timely basis or otherwise comply with the requirements of this pazagraph would cause the City damage, the precise axnount of which would be difficult to ascertain, and hence each agrees that it wili pay liquidated damages of $250/day for each day (after the initia130 days provided for above) that it fails to produce the requested documents at the City Ha11. The US WEST Parties further agree that this provision shall be enfarceable against them in the state district court in Rainsey County, and hereby waive any objection to jurisdiction of that court over them, and agree to submit to the jurisdiction of the court. Provided that, the USWEST Parties' obligations under this section will ternunate on the later of (1) January 1, 2003; or (2) the date that the USWEST Parties fully respond to a docutnent request submitted on ar before January 1, 2003. Section 4. No Waiver. By its consent to the Transfer and execution of this Agreement, the City waives none of its rights or prospective rights with respect to CC-St. Paul's compliance with the terms, conditions, requirements and obligations set forth in the Franchise Documents or the Corrective Plan, or CCSP's obligations with respect to the same. Section 5. Conditions Uroon Consent S.l Reimbursement - CC - St. Paul agrees to pay the City $20,000 in conjunction with City's review of the Transfer. The payment shall be due 10 days after the passage of a City ordinance or resolution that provides for approval of the Transfer. 5.2 Conditions That Must Be Satisfied - The Transfer Parties agree that the approval granted by the City shall not become effective unless each of the following conditions is satisfied. If the conditions are not satisfied, the Transfer Parties agree that the Transfer request shall be deemed properly and timely denied prior to Closing Date. 5.2.1. Prior to the Closing Date, CC - St. Paul must have signed an unconditional acceptance of the Replacement Franchise; 5.2.2. Prior to the Closing Date, a Replacement Franchise must have been adopted by the City, and all conditions precedent to the effectiveness of the Replacement Franchise must have been satisfied except insofar as effectiveness (i) requires completion of the Transfer; or (ii) depends solely upon the passage of time. Nothing in this Agreement requires the City to adopt a Replacement Franchise; nothing in this Agreement prevents the City from rejecting or amending any Replacement Franchise as introduced; the City is not guaranteeing or representing that it will adopt a Replacement Franchise. A reference in this Agreement to the 0 �&-�� "Replacement Franchise" wiil be satisfied by any Replacement Francluse ultimately adopted by the City and accepted by CGSt. Paul. 5.23. Prior to the Closing Date, all payments required under this Agreement, and all guarantees required must have been delivered and accepted by the City. 5.2.4. Prior to the Closing Date, all required insurance, bonds and letters of credit must have been obtained and proof of the same must be provided to the City. 5.3 Oblieations not Franchise Fees - The Transfer Parties agree that none of the costs it must incur, or payments that it must make under this Transfer Agreement constitute franchise fees, and instead fall within one or more of the exceptions set out in 47 U.S.C. §542(g)(2), and each of the Transfer Parties fiu ther agrees it will not raise any claim or defense to the contrary, in any forum. Without limiring the materiality of any other provision, is agreed that the City would not have approved the Transfer without this provision. Section 6. Effect of Failure to Comply with this Aereement. The City may exercise any remedy that it has auailabie to it at law or at equity, or under the Franchise Documents ar Corrective Plan against any or all of the Transfer Parties that breach this agreement in any respect. In addition, without limiting the foregoing, if the Transfer Parties fail to comply with any requirement that requires action or prohibits a certa3n action after the Closing Date of the Transfer, the parties agree that the City may declare the City's approval of the Transfer void (in which case the obligarions of the parties shall be as if the Transfer never occurred); or may ternunate the cable francluse held far the City by any of the Transfer Parties. If any of the representations or warranties is false or misleading, the City may, at its option, revoke any approval of the Transfer which denial the parties agree shall be deemed timely, and in which case the obligations of the parties shall be as if the Transfer never occurred; or may terminate the cable franchise held for the City by any of the Transfer Parties. SeCtion 7. Indemnitv. Each of the Transfer Parties agrees to indemnify and hold the City harmless against any loss, claim, damage, liability or expense (including, without limitation, reasonable attorneys' fees) incurred as a result of any representa6on or warranty made by such party wlvch proves to be untrue or inaccurate in any respect; or azising out of any litigation in connection with the Transfer. Section 8. Sunset. In the event the Transfer does not close by April 1, 1998, or closes on terms that are in any material respect different from the terms disclosed to the City in writing, then any City consent to the Transfer shall be deemed revoked, and the Transfer timely denied. Section 9. Waiver of Claims. The Transfer Parties hereby waive any and all claims that they may have that any denial of the Transfer Application that results from Sections 1-9 fails to satisfy the deadlines established by applicable law including, without limitation, clauns based on, arising out of, or relating to section 617(e) of the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992), as amended, and agree 7 ��_�a- that they sha11 be deemed to have agreed to an extension of the time to act on the Transfer Application as required to make any denial effective. Section 10. Miscellaneous Provisions 10.1 Obli¢ations of Transfer Parties - The obligations of the Transfer Parties under Sections 1-3 aze contingent upon the City's approval of the Transfer, consistent with the promises made herein. 10.2 Acceptance of Agreement - By signing this Agreement, (i) each of the Transfer Parties accept, and agree to comply with, each provision hereof that applies to it, subject to Section 10.1; (ii) the Transfer Parties acknowledge and accept the City's right to consent to the Transfer pursuant to the Franchise Documents, and to enter into this Agreement; (iii) each of the Transfer Parties agrees that it will not, directly or ind'uectly, oppose intervention by the City in any proceeding affecfing the System except where intervention is prohibited by law; and (iv) each of the Transfer Parties agrees that the approval of the Transfer was granted pursuant to processes and procedures consistent with Applicable Law, and that it will not raise, and hereby expressly waives, all cla'uns to the contrary. 10.3 Renresentations Warranties Material - Any representations and warranties made in this Agreement are material. It is a material breach of this Agreement if any representation or warranty proves to be untrue, inaccurate or incomplete in any material respects. 10.4 Binding Agreement - This Agreement shall bind and benefit the parties hereto and their respective heirs, beneficiaries, administrators, executors, receivers, trustees, successors and assigns, and the promises and obligations herein shall survive the effective date hereof. 10.5 Governine Law - This Agreement shall be governed in a11 respects by the law of the State of Minnesota. 10.6 Draftine - This Agreement is the product of common negotiations among the parties and shall not be consttued against any party on any grounds related to drafting, revision, review, or recommendation by any agent or representative of any party. 10.7 Time of the Essence - In determiniug whether a party has compiied with this Agreement, the parties agree that time is of the essence. 10.8 Unaffected Riehts - This Agreement should not be construed to afFect any rights the US WEST Parties or Charter Parties may otherwise haue with respect to each other. 10.9 Counterparts - This docuxnent may be executed in multiple counterparts, and by the parties hereto on separate counterparts, and each counterpart, when executed and delivered, shall constitute an original agreement enforceable against all who signed it without production of, or accounting for, any other counterpart, and all separate counterparts shall constitute the same agreement. qfr�� 10.10 C�tions - The captions and headings of this Agreement aze for convenience and reference ptuposes only, and shall not afFect in any way the meaning and interpretation of any provisions of this Agreement. E��:Ix��]��7Ii]J By Mayor and By Date Director of Financial Services FOR US WEST, INC. : Its FOR CONTINENTAL CABLEVISION OF ST. PAUL, INC. : Its Date FOR MEDIAONE OF DELAWARE, INC. I� Its Date FOR CHARTER COMMi.)NICATIONS, INC. � Its Date � ��•�'� FOR CCTC HOLDINGS, INC. For itself and on behalf of Charter Comxnunications Twin Cities, Inc., Charter Communications Mivnesota, Ina and CC - King, L.L.C. I: Its FOR CHARTER COMMLTNICATIONS ST. PAUL, INC. � Its G.\client\4168\Ol\St. Paul Transfer Agreemen[ version7.doc 1� � JqN.30.1998 9�33AM j N0.176 P.3i3 . . , � q�.3a • ' , j, 10.14 Cautions - The captions and heaflin of this Agreement aze for convenience and ' ` reference purQoses only, and shall not affect in any a}� the meaning and iaterpretation of any provisions of this Agreement ; j � !� POR • CII'Y OF ST. PAUL { ._ ..._. �� i 'yor and By ' Date � ector ofFinanciai Services i I; ' FOR �S V�ST, nN � �� i� FOR I' ON�NBNTAI- CABLEVISTON OP S w PAUL, TI�tC. � ;' y � I�s Date I'OR �Nit;�IAONE,pF A�AWARE, INC. , L� C42vfMtJNICATIONS, INC. Y: � �� JAN 30 '98 10�33 PRGE.03 : . . ��' 10.10 Ca�tions - The captions and headings of this Agreement are for convenience and reference purposes only, and shall not affect in any way the meaning and interpretation of any provisions ofthis Agreement. FOR — -- BY - and By J TY OF T. UL / f�M�Q Date z-�Z'�(� of Financiai Services FOR US WEST, INC. By Its Date FOR CONTINENTAL CABLEVISION OF ST. PAUL, II�TC. By '�""'v�-'� lt�l5�—�_ Its �J�' OP�A S— M�1 Date ��b g� FOR MEDIAOI�iE OF DELAWARE, INC. By Its Date FOR CHARTER COMMUNICATIONS, 1NC. By Its Date 0 10.10 Carotions - The captions and headings of this Agreement aze for convenience and reference purposes only, and shall not affect in any way the meaning and interpretarion of any provisions of this Agreement FOR TF� CITY OF ST. PAUL B Mayor and By Date Director of Financial Services FOR L3S WEST, R�iC. � Its Date FOR CONTINENTAL CABLEVISION OF ST. PAUL, INC. � Its Date FOR MEDIAONE OF DELAWARE, INC. : Its Date FOR CHARTER COMMUN CATIONS, INC. By Its �U�dZ �lE /i�t/nf� �/�/ � �� :. G:\client\4168\OI�St Paul Transfer Agreement version7.doc FOR CCTC HOLDINGS, INC. For itself and on behatf of Charter Communications Twin Cities, Inc., Charter Communications Minnesota, Ina and CC - King, L.L.C. BY �� ^--- Its � �Bate 1 t2 � FOR CHARTER COMMUNICATIOI3S ST. PAUL, IIVC. ay Its�wtoQ V� n/16S+Q6i� ate �tt/ q� 10 qe-3a Council File # �3Z. RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented Refened To 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Date WI3EREAS, the City has granted a non-exclusive cable franchise to Co ental Cablevision of Saint Paul, Inc., as provided in Appendix H of the Legislative Cod , as amended by the Settlement Agreement of September 15, 1992 and the Transfer Agreeme of November 13, 1996, WHEREAS, Continental Cablevision of Saint Paul is now a wh y owned subsidiary of US WEST, Inc., which fact was known to the City and relied upon by it ' granting the Franchise; and WHEREAS, on July 16,1497, US WE5T, Inc. requested th onsent of the City to a transfer of corporate control from U S WEST to Charter Communicatio and WAEEREAS, the Francluse provides that every change, fer or acquisition of control shall make the Franchise subject to cancellation unless and until Counc3l shall have consented thereto, which consent will not be unreasonably withheld; and WIIEREAS, state and federal law require City c sent far said transfer to be effective; and WIIEREAS, staff identified certain detrimen consequences to the City and to the public from the proposed transfer; and WI IEREAS, the Transfer Agreement and placement Franchise, a copy of wluch is attached hereto, negotiated with Ciry staff, and executed y authorized representatives of the transfer parties, provides remedies for these detrimental con quences, NOW THEREFORE BE IT RES VED, that the Mayor and the Director of Financiai Services are hereby authorized to execut e Transfer Agreement � and, be it further RESOLVED, that staff be d hereby is directed to draft the appropriate ordinance amendments for submission for uncil consideration. Green Sheet # 62JB9 � Requested by Department oE Benanav Blakey Bostrom Coleman Hanis Lantry Reiter Adopted by Co cil: Date Adoption � by Council Secretary Approved by Mayor: Date � � Form Appr� ' Atto �y R i� _ \ �__ � Approved by Mayor foc Submission to Council � � vrrv-14-98 32:39 FROM=CHARTSR COMMUNICA710N5 Ip:3}49656640 _. CuRent C?rganizational Structure Twin Ci�ies Transac�ian �-, As of May 27, 1987 (date of agreemenf} Warburg. Pincus Ve�rtures> LP .., � - Cirarter Communicatioris, tna f`Charte�'j CCTC Hoidings, ina {"CGTC'� 100% Charter Commua"�cations Twin Cities, Vnc. {"7win Cities'� 99% xeiso & Company Equity Note held Selter Senior Bank Faciiity 99°/a PAGE 5/B �i3 „ �°�"y"� Charter 4 1 °lo �ommunications - 1 ° � - Minnesota, fic. CC - Kmg, LlC (�Minnesata7 CC - St Paut, LLC �•� ("St Paul") TWlN6XLS 7nzre7 s:oo ntn : �nn-ay-9B 12:39 FROM:GNARSER COMMUNICATIONS 1D=3}g9656640 � Organizationat Structure . Twin Cifies Transactian � Step 1- lmmediately a�ter Purchase of Assets from Seliers Warbutg, Pincus Ventures, LP Charter Comm¢nications, inc. ("ChaRef� x�� 8 Company CCTC E9'�Y tioEd'mgs. lnc. Note held ("CCTC'� Se!!er 1D0% `Fting VdEOt2bfe Sy5fem5 ' St Paul Systems Charter Communications Twin Cities, !nc ' ('Twin Ci6es") ' 99% Senior Bank Faciliiy ti06°!o ••'° Chartet � ° �O Communiptions - Minnesota, tnc. CC - Ksag, LLC ��nnesoW'� ( King") 1 PAGE 6/6 a�'�� 99% CC - SL Pauf, LLC . : C'St Pau1") �nam� 449 AM 7WINi0XlS � �.. .-�o t FROM�CHAR=ER COMMUNIGATIONS ID:3149656640 Organizationai Struci�ure f Twin Cities Transaction - Asset Purchase _ Step 2- After intemal Asset Transfers Warbur9, Pincus Velrtutes,l.P �4 cnarcer ' Commuri�cations, lnc. C�K� CCTC Hoidings, lna ("CCTC'� 740°h cr,arter Communications 7win Crfies, Inc. ('Twin Cities'� 99% Keisa & , ComPanY Equity Ndle held by Seller Senior BanK Faciliq' 99°h 1 M3nager CYYdtLEf �% COt7ttT1UtliG2UOT15 Minnesota, Inc. CC - lGng. LLC (^Minneso�'7 f'w�9'� � King Yuieoeabte sys[ems in Mirtnesota and WisCOnsin ' Northem Dakota Franchise PAGE 7/6 � � �� CC - St Paul, lLC (°St Pau47 ' St. Paui Franchise �n ��s� 9i'�AM TWItJ'1S.XL5 � ... .i ao a FROM:CHARTER COMMUNICASIONS ID:3149656640 PAGE 2/B � �� CORPORATE GTJAR.AiV'IY OP CHARTER COMMLJNICATIONS, INC. AND CCTG HOLDINGS, INC. This Cozpozate Guaruiry (this "Guarant�') is executed as of Jaavarp 1998, bp GHARTER COMMtJNICATIONS, INC. and CCTC HOLDINGS ING (colleaively, "Gnarantors") for che bene�it of the muniapalicy of tb.e Ciry of St. Pavl (r.he "Citp'). WITNESSETH: WFiERl?AS, pvssaaat to the cable television fraachise (che "F'ranchise") between rhe Authority and CGSt. Paul, LLC ("Fraachssee"), and cestain agreemenrs, understandings a,nd Franchise amendmeau zelaud thereto, Franchisee has cercain obligations relazed to tlze provisioa of cable television and relased services for the Auchoriry's ciuzeas; and �REAS, Guaraacon have pzopased an acquisiuon, pursuant to which tiieir affiliate, CGSz. Paul, LLC (`Traasfereen), will acquire the Franchise, and succeed to Franchisee's obligations thereuader, aad WHEREAS, Guarantors are providing this Guaranry w tIie Authoriry to fursher supporc the financial qualifications of 7ransferee as a pazt of xhe Franchise transfer process to comply wirh rhe requiremenu of tlze Praachue; NOW'THEREPORB, Guaranton hereby agree as follows: 1. Guarantion hereby joimly and severally, irrevocably and unconditionally guaranry to rhe Aurhozxry, iu successors and assigas prompc and sai,isfacCOry payazezet and performance bq Transfeme of che Fraachise anc! r,hose cexsain aa�reemenrs, uncierstaadina and Franchise ameadmeuu relazed thereto, and all applicable federat, state and local laws, ordiaances and regulatioru. 2. This Cruaranry shall be e$ecrive upoa the opening of bvsiness on the date when Transferee acquires rhe Frazschise, aad shall nu�. throughout the term of the Franciaise and any renewal or excension tlsereof, exceps that t4sis Cruaranty shall terminaze at such earlier time thaz GuaranLOrs lawfully transfer ownership and conuoi o£ Transferee rovith the consens of the Ciry for such sransfer aud a substitur.e of a Gnarantor for the Transferee acceptable to the Ciry. 3. Tn the aveac that Guaruxton should breach or £ail to timely perform any pro�isions of this Guaranry, Guarantors shail pay rhe Anthoriry all coscs and expenses (mcludiag coun cosu and attorneys' fees) incurred bq the Authority in the successful enforcemem hereof. ��,�a- 4. Guarantors represent and wazrara that t&e execauon, delivery and performance by Guaraaton o� this Csuasaaty, aad rhe consuassnation of the traasactions coatemplared hereuader, c!o not, and will nor, conuavene or conflia miriz any law, sKacuze or regulation whaucever co ivhich either Guarantor is subjecc, or constiturx a defaulc (or an evens which with aorice or lapse of sime or botfi would consacuce a default) undex, or result in the breach of, aaY indeatvre, mort deed of trust, chaz'ge, lien or aay cozttraa, agreemeac or other insu to which eirher Guaraator is a pany ar wbich may be agplicable co eisher Guaraacor. '�his Gua.raary is a legal and binding obli�tion of eac4� Guarantor and is enfosceable in aaordance wir,h iu terms, except as limited by baakruQcry, insolvency or other �aws of generaI applicuion relating to che enforcemeac of creditors' righu_ 5. Guarantozs liabiliry hcreunder shall be primary and not secondary, aad shall be joim and several wich that of the Transferee. �'he Ciry may psoceed againsc Guazantors under this Guaranry without initiating or exhausring iu remedy or reznedies against the Transferee, and maq proceed agaiztsc che Tiansferee and/or aay one or more of the Guaranrors seguately or concurreazly. The Guaranty does not require rhe Ciry to provide additional norice beyond r,haz it is required to �ave under rhe Franchise to the Tzans£eree, and Guaranton waive any notice requiremenc rhas might otherwue apgiy. Guaraatoss obligations are zrrevocable, uncondiuona3 and absolute (excepL az provided by paragraph 2 hereo� arsd shall not be a£fected by: a. T4ie waiver by the City of rhe performan�ce or observance by che Trans£eree or any of the Guarars�on of any of the obliyations under tkte Franchise, this Guaranty, or the Transfer A�reement dated January 14, 1998. b. I'he extension of the term of, or che egtension of ume for performance uades, or azsy other amendment so, the Francluse, or applicable law affecting che Fs�anchise (whether ma�erial or otherwise)> c- The release of aap o£ tlxe Guarantors or the Transferee or any orher person who may be ]iable vader the fraachise, or aap a�reemeat related thereto; d. The voluatary or involumary Izquidation, dissolutiion, sale of all or subscantiallq all of the assets, snarshalling of assets and liabiliues, receivership, conservacorship, iasolvency, banb;ruptcy, assegnmeac �or the benefii of creditors, reorganization, arraz�emeuc, composition or readjustmens of, or other pr oceediag a{fecting the Trans{eree, any of rhe Guazantors, or any of their assecs. 6. Gnarantors agree that no faiIure to exercise, aad ao delay in exerc; ��, on the par� of the Aushoriry, any right hereuader shall operate as a waiver r.hereof, nor sha2l any single or partial exercise �hereof preclude azzy oslter or further exezcise thereof or the rarercise oi any other righs. The rights of rhe Auchoriry heseunder sha11 be ia addirion to a11 other rig)ats provided by law_ Pdo modificacion or waiver of any provision of rhis G�aranty, nor consent to depanure therefronre, shall be ef£enive ualess agreed to in writin;, aad ao such consent or waiver shajl extend beyond the par�icular case and purpose invoIved. No aotice or demand b vea in any case shall coastitute a waiver of tl�e right to take orher action in rhe sune, similaz or other instances without such rzotice or demand JAN-14-98 12:39 FROM=CHARTER COMMUNICAIIONS ID=3149656640 PAGE 4/B q�� l 7. This Guaranry shall be govezned by and construed in accordance with the laws of che Staze of Minaesora and rhe applicable laws of the Uncited Sutes of Amezica. 8. This Guaraary may be aznended oaly by an instrssmear in wriun� executed by rhe parry oz an authorized represeivazive of the pany or paraes a whom such amendmeat is sought co be eaforced. IN WI'TNESS �Y�HEROF, Gvarantors have cavsed this Guaranry to be duly egecuted by their respeccive dvly authorized officers as of the day and year fusc above wrinen. CHARTER COMMITNICATtONS, INC. By '�'ic]e ATIEST_ CCTC HOLDINGS, INC. g Y — Title ATTEST: ��.aa GI,�_ ��- TRANSFER OF SAINT PAUL CABLE TELEVISION FRANCHISE from Continental Cablevision of St. Paul to CGSt. Paul, LLC Staff Report prepared by Gerry Strathman, Council Research Director Holly Hansen, Cable Communications Officer January 12, 1998 �� Background The City has the authority to grant a non-exclusive cable television franchise and enforce provisions of that franchise. This authority includes transfers or sales of the cable television system and is derived from and defined by local, state and £ederal laws. The City may exercise its authority to protect the interests of its citizens in areas such as public safety and consumer protection. The City may also ensure that its citizens benefit from the private commercial use of public rights of way. Although the 1996 Telecommunications Act was intended to create competition in the telecommunications industry, littie competition has occuned in local cable markets. This lack of competition heightens the importance of 1oca1 franchising authorities exercising their regulatory powers to protect public interests. Transfer Process Charter Communications filed an FCC Form 394, Annlication for Franchise Authority Consent to Assignment or Transfer of Control of Cable Television Franchise, with the City on July 16, 1997. According to federal law, the City has 120 days in which to act on the transfer application unless the parties agree to an extension. The date far City action has been extended iwice and the current date is January 21,1998. The City Council held a public hearing on the transfer September 3, 1997 and continued that hearing until Noveznber 12, 1997. The hearing was continued again until January 14, 1998 to allow time for Charter to respond to data requests made by City staff and for staff'to review the information that would be submitted by Charter. The parties will need to extend the date for final action until March 1998 to provide sufficient tune for adoption of a franchise ordinance. Issues and Analysis When considering the request for consent from the City of Saint Paul (City) to the assignment of the Saint Paul Cable Television Franchise from Con6nental Cablevison-Saint Paul, Inc. to CC- Saint Paul, LLC, the City must consider the qualifications of the proposed buyer and evaluate the impact of the proposed transfer on the City of Saint PauL The Federal Communications Commission (FCC) has determined that franchising authorifies, such as the City, may consider the legal, technical and financial qualifications of any proposed transferee when evaluating transfer requests. It is also well established in law that the City, as a party to a legal contract, has the right to protect itself from hann resulting from this proposed transfer. Legal Qualifications The current holder of the Saint Paul franchise is Confinental Cablevision-Saint Paul, Inc., a wholly owned subsidiary of US WEST. US WEST is not legally qualified to continue to hold the Saint Paul cable television franchise because federal law prohibits such ownership. Federal a�� law prohibits telephone companies such as US WEST from purchasing cable systems in their service azeas. When US WEST purchased the holdings of Continental Cablevision, Ina (now MediaOne) in 1996, it conflicted with the federal law prohibiting telephone companies from purchasing cable systems in their service azea. To aliow this national transaction to go forwazd, the FCC, over City objections, allowed U5 WEST to purchase the Saint Paul cabie system and others in their service area if it divested of these holding within a short time. The FCC gave US WEST until August 15, 1997 to enter into an agreement to divest of these in-service-area systems. US WEST has agreed to sell the cable systems in the Twin Cities area, including the Saint Paul system, to Charter. Pursuant to this agreement, Charter Communications submitted an application to transfer control of the Saint Paui cable television franchise from Continental Cablevision - Saint Paul, Inc. to CC - St. Paul, LLC. This proposed purchase is a complicated transaction involving a pazent company (Charter Communications, Inc.) two equity investors (Walburg, Pincus Ventures, LP and Kelso & Company) and a banking consortium led by Chase and Toronto-Dominion. Based on the materials submitted in the transfer application, it appeazs that all of the entities involved in this transaction are legally formed and there are no apparent illegal conflicts of interest. Further, there are no federal regulatory barriers to this transaction. Based on the representations in the transfer application, it appears that CC-St. Paul, LLC is legally qualified to assume control of the Saint Paul cable television system. Technical Qualifications The proposed transferee must have the technical knowledge and experience required to operate the cable television system in Saint Paul successfuily. The transfer application shows that CC - St. Paul, LLC will be the local operator and that they intend to ask the current employees of Continental Cablevision - St. Paul to continue with CC - St. Paul, LLC. Given that these employees are currently operating the Saint Pau1 system, it would appear that the necessary technical lrnowledge will remain with the transfer operator. Additionally, the management group, Charter Communications, owns, operates and manages cable systems in eighteen states with a total of 473 franchise agreements and serving approximately 1,100,000 subscribers. Based upon the representarions in the transfer application, it appears that CC-St. Paul, LLC is technically qualified to operate the Saint Paul cable television system. Financial Qualifications. Successful opexation of the cable television system in Saint Paul requires the operator to haue the financial resources required to meet the needs of the more than 52,Q00 subscribers in Saint Paul and the community as a whole. The applicant needs to show that it can meet the current and anticipated needs for cable television services in the City of Saint Paul. The transfer application attempts to show the proposed operator has the financial ability to meet these needs. The City has contracted with Crowe, Chizek and Company LLP to conduct a financial review of the pro formas and other financial information submitted in support of this application. (See attached) They compared the assuxnptions and resultant projected amoimts with cable industry stafistics compiled by Paul Kagan Associates, Inc. and wiffi historical data provided by the current �t�_� franchise holder. Since all business enterprises contain an element of risk, it is unportant that the citizens of Saint Paul be assured the proposed franchisee can deliver qualiry, affordable services should the company encounter f nancial difficulties. These fivaucial qualificarions are demonstrated by providing a business plan that allocates sufficient funds to meet current and future needs and contingencies and by providing finaticial guarantees. Absent serious fmancial reversals, the funds allocated for day-to-day operations seem adequate. However, the pro forma amounts for upgrade, rebuild and converters aze low. Since the Saint Paul cable system was constructed many yeazs ago, significant capital expenditures are required. The financial projecfions provided by the applicant suggest that they intend to spend millions of dollars for capital improvements in Saint Paul and show projected funds to meet the need for capital expenditures in Saint Paul. Because of the uncertain nature of the cable television industry and since this proposed transaction is highly leveraged, it is critical that there is a sound financial guarantee upon which the City can rely. US WEST is the current guarantor for the Saint Paul cable television franchise. Secause US WEST is a well established and financially secure entity, the City has a high degree of confidence in the ability of US WEST to provided fmancial support needed by the current franchisee. However, the transfer application shows that CCTC Holdings. Inc. is to be the new guarantor. CCTC Holdings, Inc. is a new entity being created as part of the overall transaction between US WEST and Charter. This transaction involves approximately 300,000 subscribers in the Twin Cities area and mare than $600M. It has no corporate history and its only assets arise from this transaction. Addifionally, CCTC Holdings, Inc. is obligated to repay a Seller Note to MediaOne for $60M. While this note is not immediately due, it is a corporate liability that fiu weakens CCTC Holdings, Inc. as a credible guarantor. Given the limited assets of CCTC Holding, Inc. and its considerable financial obligations, the substitution of CCTC Holdings, Inc. far US WEST as a guarantor represents a significant reduction in the quality of the financial guarantee to the City of Saint Paul. While there is some concern regarding the fmancial projections of with respect to capital expenditures and a d'uninishinent in the financiai strength of the financial guarantor, we find that, taken as a whole, CC-Saint Paul, LLC is financially qualified to operate the Saint Paul cable television system. Recommendation. CC-Saint Paul, LLC has shown that it has the qualifications to fulfill the present and anticipated requirements to own and operate the cable television franchise in Saint Paul. It is, therefare, the recommendation of City Staff that the proposed transfer of the Saint Paul cable television franchise from Continental Cablevision-Saint Paul, Inc. to CGSaint Paul, LLC be approved. J�;;. -i)y' y81FR11 ll �it, December 31, 1997 TEL:�,�Oa P. ii�t3 �`~,�` CROWE CHIZCK Ms. Holly Hansen Cable Communications Officer City of Saint Pau7 15 West Kellogg Boulevard b8 City Hall SaintPaul,?�'finriesota 55102 INTRODUCTION This report presents information resuiring from our analysis of data contained in the document eniitled 'Transferee's Application to Ci;y of Saint Pau1 for Con�ent to Assignment of Communit}' Anienna Television Franchise 4om Continental Cablavision of $t. Paul, Inc. to CC• St. Paul, LLC, dated July 1997" ("Applicztion"), and other related documentation subrn;tted in support af the Application. The Application and other related documentation contain finanr.ai projections (pro formas) Ior the years �9a3 - 2fl06 wftic3� are based upon ceriain assumpti�r, We provide no assurance as to the like!ihood that any projected a77}o�u�ts or assumptions will be realized. Where applicable we compared the assumptions and resultant pro}ected amoiu�ts w�th cab}e industry statistics compiled by Pau1 Kagan Associates, Inc. {PK), and with historical d..ta provided by d1e current franchise holder_ The term "consistent" as used in t}us report mea�; within ten percent of projections and Mstorical datz. OPERATL'�'G ItEVEi��i.iES, EXPENSES, AND CASH FLOWS Subscriber Gro�+�th and Penetralion The pro forma aznounts aze consistent wiih PK projections. Qperatin� Revenues and Rates The pro forma amounts zre consistent with PK projections and with historical da�i of ti� turrent franchise hulder. i at�- "�� 9 J;";. -li�i• ��81FF1I I 1 � 18 TEL b�{��dinuS P.iru.� ��,�� OPERATIIvG REVENLJL-,;, EXPFIVSFS, Ai`'D CASH FLOWS (Continued) Operating Exqenses The pro forma amounts are consistent with PK projections and historical data of the nurr_nt franchise holder. Opera6ng Cash Flow iOCFI and OCF % The pro forma amounks and percentages are consistent with PK projections. CAPITAL EXl'ENDiTiJRES Ll�grade & Rebuild & Converters The pro forrna amounts were low in that Saint Paul specific iterns for upgradefrebuild and I- . Net expendihues �vere not adequate when compared to the City's enguieering estimates_ Maintenance Capital The pro forma zmounts wese consistent �vsth lustorical data. FI'�i IANCII�'G Borrowings ar+d Repay-menis The Applicarion stated that Charter Communications TH�in Cities, Ine. (CC7C) would borro:v funds in the form of t}vee senior secured credit facilities, and in the form of a seller's nou. Principa] repayment terms would be structured so as to allow CCTC to meet its debt covenanM. The pro forma reflects repay�ments consistent �+�d1 the teruu indicated in the AppIIcaton. Interest I2a tes The Application discloses several opHons available to the borrower. The pro forma reflecis average interest rates coruistent x>ith the options available as listed in tihe Application. 5uch average rztes �vere consistent with market conditions as of November 1597. Hox�ever, we provide no zssurance that the ,lpplicant can obtain such raies. Debt per Subscriber The pro forma amounts ;or debt pec subscriber are higher than PK projections &om ]��3 throvgh 2002, and lower hom 20a3 through 2�06. 2 J-'.'!. -iiy' 981FR1I 1 I 19 FLT�Pu'�TC�?G {Continued) Debt to Operating Cash F1ow (OCF) The pro foraia amounis for Debt to OCF are higher than PK projections from 1998 through 1999, and lower from 2000 through 2006. FREE CASH FLOW Free Czsh Flow {Ooerating Cash F1o�v less Canital Ex�endihues and Prindpal and Interest) The original pro forma and the revised pro forma (aRer additional capital expen�itures) shov��ed positive cash flows for the years 1998 through 2006. . . . . . 1Ne are pleased to provide our observations and comments on the Application and other related documentation. If you should have any questions or would like to discuss any matters fzrtr�cr, please contact us. Tltis report is intended solely for t},e use of the City of Saint Paul, Minnesota. However, this report is a matter of pnblic record and its distribution is not limited. 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O � e0 d r In '�` (p 7` �� 0 00 � 00 0 00 � �� N N M £J3 V3 EiR S v.ru s e., - ��y � 9 g RESOLUTION CITY OF SAlN7 PAUL, MINNESOTA Presented Refened To Committee Date 1 2 WF�REAS, the City has granted a non-exclusive cable franchise to Continental Cablevision 3 of Saint Paul, Inc., as provided in Appendix H of the Legislative Code, as amended by the 4 Settlement Agreement of September 15, 1942 and the Transfer Agreement of November 13, 1446, 6 7 10 11 12 13 14 15 16 17 18 19 20 21 WI3EREAS, Continental Cablevision of Saint Paui is now a whoily owned subsidiary of US WEST, Tnc., which fact was known to the City and relied upon by at itt granting the Franchise; and WI�REAS, on Ju1y 16, 1997, Continental Cablevision of St. Paul, as transferor, and CC-St. Paul, LCC, as transferee requested the consent of the City to a transfer of the franchise cable system assets from the transferor to the transferee WHEREAS, the Franchise provides that every change, transfer or acquisifion of control shall make the Franchise subject to cancellation unless and until the Council shall have consented thereto, which consent will not be unreasonably withheld; and Council File # 9g-3 Green Sheet # �� WHEREAS, state and federal law require City consent for said transfer to be effecrive; and WHEREAS, staff identified certain detrimental consequences to the City and to the public from the proposed transfer; and 22 WHEREAS, the Transfer Agreement, a copy of which is attached hereto, negotiated with 23 City staff, and executed by authorized representatives of the transfer parties, provides remedies for 24 these detrimental consequences, now, therefore, be it further 25 26 27 28 29 30 31 32 33 34 35 36 37 38 RESOLVED, that the transfer is approved subject to each and every one of the conditions specified in the Transfer Agreement; and now therefore be it furdier RESOLVED, that if any of the conditions aze not satisfied, or if the Transfer Agreement is not fully executed by January 31, 1998, or the transactions which constitute the Transfer do not close by April 1, 1998, the request for approval shall be deemed denied as of the effective date of this Resolution, now therefore be it RESOLVED, that the Mayor and the Director of Financial Services are hereby authorized to execute the Transfer Agreement and, be it further RESOLVED, that stafF be and hereby is directed to draft the appropriate ordinance amendments for submission for Council consideration. °�8-3a. By: Approved by Mayor: Requested by Department of: � Porm Approved by City Attorney � Approved by Mayor for Submission to Council � Adopted by Council: Date � Adoption Certified by Council S�retary � 98-3z Council Strathman 14, 1998 1/8/98 RqRING TOTAL # OF SIGNATURE PAGES GREEN SHEET No 62189 u �.,,�,�,*� u ��„�— ❑ �,,,,� ❑ a,,,� ❑ n,,wuatsErsxeFSOUt ❑ nux�uaonn.cerc ❑ W`f011(ORllbffiSNRI ❑ (CLIP ALL LOCATIONS FOR SIGNATURE) Approving tfie transfer of Saint Paul Cable Television Franchise from US West to Charter Communications. PLANNING CAMMISSION CIB COMMITTEE CNIL SERVICE COMMISSION I111r2 CT3�:7�!�a.3SiC7'J Fles ihis pe�soNfiim everworked untler a eonhact for thie departmeM? VES NO Hea this Pe�Nfirtn ever been a cdY empbyee4 VES NO Does �his PersoNfirtn possess a Skll r� normallypOSeessed bY arry wrreM �Y emPluYee7 VES NO Is tA� persoNfirm a targHed ventloYt YES NO COS71RE4ENUE BUDGETFA fCIRCLE Gt1E� YE8 HO SOURCE ACTNITY ttU1d8ER INFDRMAliON (O(PWN] TRANSFER AGREEMENT DATED JANTJARY 12, 1997 Am��nd�d Vers �'oN - �8"�� j�y �98 THE CITY OF ST. PAUL, MINNESOTA ("CITY"), CON'ITNENTAL CABLEVISION OF ST. PAUL, INC. ("CCSP"), MEDIAONE OF DELAWARE, INC. ("MEDIAONE") US WEST, INC.(USWEST), CHARTER COMMiJNICATIONS, INC. ("CIIARTER"), CCTC HOLDINGS, INC. ON ITS OWN BEHALF AND ON BEIIALF OF CERTAIN SUBSIDIARIES ("CCTC") AND CIIARTER COMMiJNICATIONS ST PAUL, INC. ("CC-ST. PAUL") DO HEREBY AGREE AS FOLLOWS: WFIEREAS, CCSP is the holder of a franchise to provide cable service in the City of St. Paul, subject to the provisions of that certain franchise agreement between the City and Company dated November 10, 1983, as amended, including by that certain Settlement Agreement dated September 15, 1992, and that certain Transfer and Franchise Modification Agreement dated November 13, 1996, all of which are subject further to Chapter 430 of the St. Paul Legislative Code (collecfively, the "Franchise Documents"); and subject fiu�ther to that certain Correcfive Plan Agreement and Corrective Plan, dated December 22, 1997 and such amendments to the Franchise Documents as may be made pursuant to that Corrective Plan Agreement (collectively the agreement, plan and amandments are refened to as the "Corrective Plan"); and WHEREAS, since 1996 CCSP has been owned and controlled by MediaOne, which in turn is owned and controlled by USWEST; and WAEREAS, USWEST was under an obligation to divest itself of its interests in the cable system in St. Paul (IJSWEST, CCSP and MediaOne aze collecfively referred to as the "U5 WEST Parties"); WHEREAS, on May 27, 1997 CCSP, King Videocable Company-Minnesota (King, Inc.), and MediaOne of Delaware, Inc. entered into a contract with CCTC Holdings, Inc. ("CCTC") to sell those assets which comprise the franchise to operate a cable system within the City; WHEREAS, CCTC is controlled by Charter Communications, Ina ("Charter"); WHEREAS, CCTC owns 100% of the newly formed Charter Communications Twin Cities, Ina (Twin Cities), which in turn owns 100% of Charter Communications Minnesota, Inc. (CCMT). Twin Ciries owns 99% of each of CC - King, LLC (CC - King) and CC - St. Paul, LLC (CC - St. Paul) while CCMI owns 1% of each of CC - King and CC - St. Paul (these entifies, along with Charter, are refened to collectively as the "Charter Parties") and as their pazent, CCTC entered into the agreement with CCSP, King, Inc. and MediaOne; and WHEREAS, a request for assignment of the franchise, the cable system, and the assets thereof, from CCSP to CC - St. Paul has been filed with the City (the transactions which shall c��-32 coilectively result in the sales and assignments, as described in the Form 394 and the aitackunents thereto aze refened to collectively below as the "Transfer"); and WI�REAS, by agreement of US West and Charter Parties (collectively referred to as the "Transfer Parties"), the City has until January 22 , 1998 to introduce the necessary resolutions or ordinances required to act upon that request for approval of the Transfer; and WHEREAS, at the time the request was filed, there were certain substantial outstanding issues with respect to the e�sting franchise, and the obligations owed to the City thereunder and as a result of negotiations with the USWEST parties, those certain issues were to be resolved pursuant to the Corrective Plan; and WIIEREAS, the City has determined that, in light of the facts available to it, it would not be appropriate to approve the transfer absent certain guarantees and agreements, binding upon the parties to the Transfer, including certain promises to ensure compliance with the provisions of the Franchise Documents, and Conecfive Plan; and WHEREAS, among other things, the City has determined that, given the length of time remaining on the existing franchise under which CCSP provides service to the City, there must be an agreement on the terms of a franchise defining the financial and technical obligations that CC - St. Paul would have to the City; and WHEREAS, the Transfer Parties agree that it is appropriate to make such guarantees and agreements, subject to the City's approval of the Transfer; and WHEREAS, CC - St. Paul has agreed to the terms of a franchise that would govern its operations once adopted and effective (the "Replacement Franchise"); NOW THEREFORE, IN CONSIDERATION OF THE FOREGOING AND THE MUTUAL CONSENTS SET FORTH HEREIN, THE PARTIES AGREE AS FOLLOWS: Section 1. Assumption of Franchise Obligations; General Representations and Warranties. 1.1 Acceptance - CC - St. Paul hereby accepts, acknowledges, and agrees to be bound by all of the commitments, duties and obligafions, present, continuing and future (a) of CCSP as set forth in the Franchise Documents; (b) of CCSP as set forth in the Correcrive Plan, (and as amended by the Replacement Franchise once it becomes effective); and (c) as set forth in the Replacement Franchise, once it becomes effective. The Replacement Fzanchise, once it becomes effective, will become the franchise agreement that governs operations within the CiTy from and after its effective date, and from and after the effective date of the Replacement Franchise, CC - St. Pau1 shall be deemed to have surrendered its franchise rights under the Franchise Documents. 1.2 Assum�tion of Obli�ations - CC - St. Paul agrees that as between itself and the City neither the Transfer nor the City's approval of the Transfer shall in any respect relieve it of � ��-�� responsibility for past acts or omissions, lmown ar unknown of CCSP; and CGSt. Paul hereby reaffiruis that, from and after the time of closing of the Transfer (the "Closing Date"), it shall be liable for and accepts the consequences of, any such acts and omissions, known and uulniown, including liability for any and all previously accrued but mifulfilled obligations to the Ciry under the Francluse Documents, the Corrective Plan and applicable law, for all purposes. By way of example and not limitation, tius shaIl require CC - St. Paul to pay franchise fees to the City for any period prior to the effective daxe of the Replacement Franchise for which revenues had been coilected but fees not paid and to conect past underpayments, if any. By way of further example and not limitation, the payments that would be due under Article III, Section 6 on Februaiy i 5, 1998, sha11 be owed by CC - St. Paul if the payment has not been made as of the Closing Date; and in addition, CC- St. Paul will owe a pro rata shaze of the payment that would be owed under Appendix H for 1998, calculated by dividing the total payment owed for 1998 by 12 and multiplying the result times the number of months between the first of the yeaz and the effective date of the Replacement Franchise (partial months coun6ng as whole months for pwpose of this catculation). This liability shall be joint and several with the liability of US WEST and CCSP to the extent ptovided below. 13 Conflictina Provisions Disallowed - The City, by its approval of this Transfer, is not approving or endorsing the terms of any documeni related to the Transfer. Without limiting the foregoing, to the extent there is a conflict between (1) the terms and conditions of this Agreement, the Franchise Documents, the Corrective Plan or the Replacement Franchise, or applicable federal, state or local laws; and (2) any contract (other than an contract with the City) related to the Transfer, or any contract that may affect St. Paul as a result of the Transfer, the Transfer Parties agree that the terms of the latter shall be expressly subordinate to the terms and conditions of the former. 1.4 Citv's Reliance Upon Companies' ReUresentations - The Transfer Parties acknowledge and agree that: the City's consent to the Transfer is made in reliance upon the representations, documents, and information provided by the Transfer Parties in connection with the Transfer Application; each of the Transfer Parties is liable for its representations and warranties and jointly and severally liable far joint representations and warranties; and that the representations and warranties include, without limitation the following: 1.41 The Transfer Parties represent and warrant that CGSt. Paul will succeed CCSP as lessee at the. Union Depot. The transfer requires the priar approval of the landlord of the Union Depot but that approval has been obtained so that consummafion o£the Transfer will not in any respect affect the lease ar leases for the Union Depot including any lease for any properiy in that building occupied by Cable Access St. Paul, Inc., d!b/a St. Paul Neighborhood Network; 1.4.2 The Transfer Parties represent and warrant that they understand that, in approving this Transfer, St. Paul is only agreeing to approve the Transfer set forth in the Form 394 as it is to be completed at closing, with CC - St. Paul becoming the franchisee and as fixrther shown on E�ibit A hereto; the City is not agreeing to approve any future transfer, whether 3 ° � contemplated in connection with the Transfer or not, and any agreement or option that would permit a transfer to occur without the approval of the City is disallowed. 1.43 The Charter Parties represent and warrant that they will not in any respect reduce the level of customer service in St. Paul, either by reducing the number of customer service representatives, technicians or technical managers serving St. Paul, or by consolidating the St. Paul customer service operations with other customer service operations. If CGSt. Paul does consolidate its customer service operations, it shall ensure that at least seventeen (17) percent of its work force is located within the City of St. Paul. 1.4.4 The Charter Parties represent and warrant that there will not be an increase in subscriber rates, as a result of any cost associated with compiiance with the Corrective Plan, including costs associated with the amendments to the Corrective Plan provided far under the Replacement Franchise). The Charter Parties further agree that any costs associated with complying with this Transfer Agreement are not external costs. The Charter parties further stipulate that for purposes of any rate proceeding, the Transfer does not result in a cognizable increase in good will, intangibles or tangible assets of the cable system serving St. Paul, above the level that could have been reflected in rates prior to the Transfer. 1.4.5 Each of the Transfer Parties each hereby represent and warrant that as to it: (a) the execution and delivery of this Agreement does not contra�ene, result in a breach of, or constitute a default under, any contract or agreement to which it is a party or by which it or any of its properties may be bound (nor would such execution and delivery consritute such a default with the passage of time or the giving of notice or both), and does not violate or contravene any law, order, decree, rule, regulation or restricfion to which it is subject; (b) each of the Transfer Parties is duly organized, legally existing and in good standing under the laws of the states of their respective organization; (c) the terms of this Agreement which apply to it constitute legat, valid and binding obligations of it, enforceable in accordance with such terms; and (d) the execution and delivery of, and performance under, this Agreement is within its respective power and authority without the joinder or consent of any other party and have been duly authorized by all requisite action and are not in contravention of its respective charters, bylaws, or other organizational documents, or of any indenture, agreement ar undertaking to which it is a pariy or by which its is bound. Section 2. Promise of Charter Parties Each of the Charter Parties (other than CC- St. Paul) agrees that, from and after the consuinmation of the Transfer, it will not take any action inconsistent with the promises contained in the Franchise Documents, the Conective Plan (as amended once the Replacement Franchise becomes effective), or the Replacement Franchise. CC - St. Paul agrees that it will sign an acceptance of the Replacement Franchise before the Closing Date and will not take any action to prevent the Replacement Franchise from going into effect and becoming a binding obligation of the company. Charter agrees that it shall guarantee the performance of CC - St. Paul. Charter agrees that, prior to the Closing Date, it shall deliver an unconditional guarantee, in a form substantially similar to E�ibit B to this Agreement, guaranteeing each and every � °1�-� � obligaUon of CC - St. Paul under the Franchise Docuxnents, this Agreement (when executed and delivered), the Conective Plan (as amended by the Replacement Franchise when it becomes effective) and the Replacement Franchise, when it becomes effective. CC-St. Paul, in addition to obtaining all the bonds, letters of credit and satisfying other conditions of the Franchise Documents and the Replacement Franchise that are to be sa6sfied prior to Closing, shall obtain the letter of credit required of the Company under the Corrective Plan Agreement Secrion 9. The release of US WEST and CCSP from liability shall not act to release any of the Charter Parties from their liability under any provision of this Agreement, the Franchise Documents or the Conective Plan (as amended once the Replacement Franchise becomes effective). Section 3. Promise of the US WEST Parties 31. The US WEST Parties agree that, after the Closing Date, the Charter Parties shall be responsible for implementing the Correcfive Plan (as it may be amended by the Replacement Pranchise once the Replacement Franchise becomes effective). On the Closing Date, the US WEST Parties will provide Charter all documents related to work performed on the Corrective Plan, through and including the Closing Date, including any materials in an electronic format. The US WEST Parties also agree to respond to questions from the Charter Parties regarding the work performed. The US WEST Parties shall act at all rimes so that work on the insritutional network can be completed properly and in a timely manner. However, while Charter is responsible for implementing the Corrective Plan as it may be amended, the US VJEST Parties remain liable for the costs associated with implementing the Corrective Plan as dated December 22, 1997. The letter of credit required of the Company under Section 9 of the Corrective Plan Agreement must be maintained by CCSP. Each of US WEST, as guarantor, and CCSP as the signatory to Appendix H and the Conecrive Plan, shall remain liable for any breach or costs associated with complying with the Corrective Plan as it existed on December 22, 1997, until all obligations to construct and test the institutional network upgrade required by the Corrective Plan, (as amended by the Replacement Franchise, once it becomes effective) aze satisfactorily dischazged. This liability shall be joint and several with CC - ST. Paul and Charter. The release of CC - St. Paul or Gharter from liability shall not act to release any of the US WEST Parties fiom their liability hereunder. The US WEST Parties promise that they will no nothing to interfere with or delay the timely completion of the Corrective Plan (as amended by the Replacement Franchise once it becomes effective), or to interfere with or delay Charter's ability to comply with this Agreement, the Franchise Documents, or the Replacement Franchise once it becomes effective. They further agree, that the Corrective Pian is hereby amended so that, if the Replacement Franchise goes into effect, Section 8 of the Conecrive Plan Agreement shall not operate to release them from any ongoing obligations under the Corrective Plan, or allow them or anyone else to chazge for the use of the institutional network, except as provided in the Replacement Franchise. The Conective Plan as it e�sted on December 22, 1997 is not breached by compliance with the Corrective Plan as amended, and the US WEST Parties are not ]iable for a breach of atnendments to the Conective Plan to which they aze not a party. 3.2. Each of the USWEST Parties agrees that, except to the extent the same are transferred to the Charter Parties, it will retain all documents related to the cable system, including a11 documents that show or record revenues derived from the operation of the cable ��-�� system in the City. These documents wiil be made auailable to the City for inspection at the St. Paul City Hall within 30 days of a request therefor. The obligation under ttus section estends to retanring and producing documents recording revenues received from sales of advertising and other revenues that are based on national or regional sales, where only a portion of the revenues aze attributable to the operations in the City. Each of the USWEST Parties will identify an agent within Minnesota who is subject to the jurisdiction of the Ramsey County state district court, to whom requests for information can be submitted and upon whom service of process may be rendered. The USWEST Parties each agree that the failure to produce the materials on a timely basis or otherwise comply with the requirements of this pazagraph would cause the City damage, the precise axnount of which would be difficult to ascertain, and hence each agrees that it wili pay liquidated damages of $250/day for each day (after the initia130 days provided for above) that it fails to produce the requested documents at the City Ha11. The US WEST Parties further agree that this provision shall be enfarceable against them in the state district court in Rainsey County, and hereby waive any objection to jurisdiction of that court over them, and agree to submit to the jurisdiction of the court. Provided that, the USWEST Parties' obligations under this section will ternunate on the later of (1) January 1, 2003; or (2) the date that the USWEST Parties fully respond to a docutnent request submitted on ar before January 1, 2003. Section 4. No Waiver. By its consent to the Transfer and execution of this Agreement, the City waives none of its rights or prospective rights with respect to CC-St. Paul's compliance with the terms, conditions, requirements and obligations set forth in the Franchise Documents or the Corrective Plan, or CCSP's obligations with respect to the same. Section 5. Conditions Uroon Consent S.l Reimbursement - CC - St. Paul agrees to pay the City $20,000 in conjunction with City's review of the Transfer. The payment shall be due 10 days after the passage of a City ordinance or resolution that provides for approval of the Transfer. 5.2 Conditions That Must Be Satisfied - The Transfer Parties agree that the approval granted by the City shall not become effective unless each of the following conditions is satisfied. If the conditions are not satisfied, the Transfer Parties agree that the Transfer request shall be deemed properly and timely denied prior to Closing Date. 5.2.1. Prior to the Closing Date, CC - St. Paul must have signed an unconditional acceptance of the Replacement Franchise; 5.2.2. Prior to the Closing Date, a Replacement Franchise must have been adopted by the City, and all conditions precedent to the effectiveness of the Replacement Franchise must have been satisfied except insofar as effectiveness (i) requires completion of the Transfer; or (ii) depends solely upon the passage of time. Nothing in this Agreement requires the City to adopt a Replacement Franchise; nothing in this Agreement prevents the City from rejecting or amending any Replacement Franchise as introduced; the City is not guaranteeing or representing that it will adopt a Replacement Franchise. A reference in this Agreement to the 0 �&-�� "Replacement Franchise" wiil be satisfied by any Replacement Francluse ultimately adopted by the City and accepted by CGSt. Paul. 5.23. Prior to the Closing Date, all payments required under this Agreement, and all guarantees required must have been delivered and accepted by the City. 5.2.4. Prior to the Closing Date, all required insurance, bonds and letters of credit must have been obtained and proof of the same must be provided to the City. 5.3 Oblieations not Franchise Fees - The Transfer Parties agree that none of the costs it must incur, or payments that it must make under this Transfer Agreement constitute franchise fees, and instead fall within one or more of the exceptions set out in 47 U.S.C. §542(g)(2), and each of the Transfer Parties fiu ther agrees it will not raise any claim or defense to the contrary, in any forum. Without limiring the materiality of any other provision, is agreed that the City would not have approved the Transfer without this provision. Section 6. Effect of Failure to Comply with this Aereement. The City may exercise any remedy that it has auailabie to it at law or at equity, or under the Franchise Documents ar Corrective Plan against any or all of the Transfer Parties that breach this agreement in any respect. In addition, without limiting the foregoing, if the Transfer Parties fail to comply with any requirement that requires action or prohibits a certa3n action after the Closing Date of the Transfer, the parties agree that the City may declare the City's approval of the Transfer void (in which case the obligarions of the parties shall be as if the Transfer never occurred); or may ternunate the cable francluse held far the City by any of the Transfer Parties. If any of the representations or warranties is false or misleading, the City may, at its option, revoke any approval of the Transfer which denial the parties agree shall be deemed timely, and in which case the obligations of the parties shall be as if the Transfer never occurred; or may terminate the cable franchise held for the City by any of the Transfer Parties. SeCtion 7. Indemnitv. Each of the Transfer Parties agrees to indemnify and hold the City harmless against any loss, claim, damage, liability or expense (including, without limitation, reasonable attorneys' fees) incurred as a result of any representa6on or warranty made by such party wlvch proves to be untrue or inaccurate in any respect; or azising out of any litigation in connection with the Transfer. Section 8. Sunset. In the event the Transfer does not close by April 1, 1998, or closes on terms that are in any material respect different from the terms disclosed to the City in writing, then any City consent to the Transfer shall be deemed revoked, and the Transfer timely denied. Section 9. Waiver of Claims. The Transfer Parties hereby waive any and all claims that they may have that any denial of the Transfer Application that results from Sections 1-9 fails to satisfy the deadlines established by applicable law including, without limitation, clauns based on, arising out of, or relating to section 617(e) of the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992), as amended, and agree 7 ��_�a- that they sha11 be deemed to have agreed to an extension of the time to act on the Transfer Application as required to make any denial effective. Section 10. Miscellaneous Provisions 10.1 Obli¢ations of Transfer Parties - The obligations of the Transfer Parties under Sections 1-3 aze contingent upon the City's approval of the Transfer, consistent with the promises made herein. 10.2 Acceptance of Agreement - By signing this Agreement, (i) each of the Transfer Parties accept, and agree to comply with, each provision hereof that applies to it, subject to Section 10.1; (ii) the Transfer Parties acknowledge and accept the City's right to consent to the Transfer pursuant to the Franchise Documents, and to enter into this Agreement; (iii) each of the Transfer Parties agrees that it will not, directly or ind'uectly, oppose intervention by the City in any proceeding affecfing the System except where intervention is prohibited by law; and (iv) each of the Transfer Parties agrees that the approval of the Transfer was granted pursuant to processes and procedures consistent with Applicable Law, and that it will not raise, and hereby expressly waives, all cla'uns to the contrary. 10.3 Renresentations Warranties Material - Any representations and warranties made in this Agreement are material. It is a material breach of this Agreement if any representation or warranty proves to be untrue, inaccurate or incomplete in any material respects. 10.4 Binding Agreement - This Agreement shall bind and benefit the parties hereto and their respective heirs, beneficiaries, administrators, executors, receivers, trustees, successors and assigns, and the promises and obligations herein shall survive the effective date hereof. 10.5 Governine Law - This Agreement shall be governed in a11 respects by the law of the State of Minnesota. 10.6 Draftine - This Agreement is the product of common negotiations among the parties and shall not be consttued against any party on any grounds related to drafting, revision, review, or recommendation by any agent or representative of any party. 10.7 Time of the Essence - In determiniug whether a party has compiied with this Agreement, the parties agree that time is of the essence. 10.8 Unaffected Riehts - This Agreement should not be construed to afFect any rights the US WEST Parties or Charter Parties may otherwise haue with respect to each other. 10.9 Counterparts - This docuxnent may be executed in multiple counterparts, and by the parties hereto on separate counterparts, and each counterpart, when executed and delivered, shall constitute an original agreement enforceable against all who signed it without production of, or accounting for, any other counterpart, and all separate counterparts shall constitute the same agreement. qfr�� 10.10 C�tions - The captions and headings of this Agreement aze for convenience and reference ptuposes only, and shall not afFect in any way the meaning and interpretation of any provisions of this Agreement. E��:Ix��]��7Ii]J By Mayor and By Date Director of Financial Services FOR US WEST, INC. : Its FOR CONTINENTAL CABLEVISION OF ST. PAUL, INC. : Its Date FOR MEDIAONE OF DELAWARE, INC. I� Its Date FOR CHARTER COMMi.)NICATIONS, INC. � Its Date � ��•�'� FOR CCTC HOLDINGS, INC. For itself and on behalf of Charter Comxnunications Twin Cities, Inc., Charter Communications Mivnesota, Ina and CC - King, L.L.C. I: Its FOR CHARTER COMMLTNICATIONS ST. PAUL, INC. � Its G.\client\4168\Ol\St. Paul Transfer Agreemen[ version7.doc 1� � JqN.30.1998 9�33AM j N0.176 P.3i3 . . , � q�.3a • ' , j, 10.14 Cautions - The captions and heaflin of this Agreement aze for convenience and ' ` reference purQoses only, and shall not affect in any a}� the meaning and iaterpretation of any provisions of this Agreement ; j � !� POR • CII'Y OF ST. PAUL { ._ ..._. �� i 'yor and By ' Date � ector ofFinanciai Services i I; ' FOR �S V�ST, nN � �� i� FOR I' ON�NBNTAI- CABLEVISTON OP S w PAUL, TI�tC. � ;' y � I�s Date I'OR �Nit;�IAONE,pF A�AWARE, INC. , L� C42vfMtJNICATIONS, INC. Y: � �� JAN 30 '98 10�33 PRGE.03 : . . ��' 10.10 Ca�tions - The captions and headings of this Agreement are for convenience and reference purposes only, and shall not affect in any way the meaning and interpretation of any provisions ofthis Agreement. FOR — -- BY - and By J TY OF T. UL / f�M�Q Date z-�Z'�(� of Financiai Services FOR US WEST, INC. By Its Date FOR CONTINENTAL CABLEVISION OF ST. PAUL, II�TC. By '�""'v�-'� lt�l5�—�_ Its �J�' OP�A S— M�1 Date ��b g� FOR MEDIAOI�iE OF DELAWARE, INC. By Its Date FOR CHARTER COMMUNICATIONS, 1NC. By Its Date 0 10.10 Carotions - The captions and headings of this Agreement aze for convenience and reference purposes only, and shall not affect in any way the meaning and interpretarion of any provisions of this Agreement FOR TF� CITY OF ST. PAUL B Mayor and By Date Director of Financial Services FOR L3S WEST, R�iC. � Its Date FOR CONTINENTAL CABLEVISION OF ST. PAUL, INC. � Its Date FOR MEDIAONE OF DELAWARE, INC. : Its Date FOR CHARTER COMMUN CATIONS, INC. By Its �U�dZ �lE /i�t/nf� �/�/ � �� :. G:\client\4168\OI�St Paul Transfer Agreement version7.doc FOR CCTC HOLDINGS, INC. For itself and on behatf of Charter Communications Twin Cities, Inc., Charter Communications Minnesota, Ina and CC - King, L.L.C. BY �� ^--- Its � �Bate 1 t2 � FOR CHARTER COMMUNICATIOI3S ST. PAUL, IIVC. ay Its�wtoQ V� n/16S+Q6i� ate �tt/ q� 10 qe-3a Council File # �3Z. RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented Refened To 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Date WI3EREAS, the City has granted a non-exclusive cable franchise to Co ental Cablevision of Saint Paul, Inc., as provided in Appendix H of the Legislative Cod , as amended by the Settlement Agreement of September 15, 1992 and the Transfer Agreeme of November 13, 1996, WHEREAS, Continental Cablevision of Saint Paul is now a wh y owned subsidiary of US WEST, Inc., which fact was known to the City and relied upon by it ' granting the Franchise; and WHEREAS, on July 16,1497, US WE5T, Inc. requested th onsent of the City to a transfer of corporate control from U S WEST to Charter Communicatio and WAEEREAS, the Francluse provides that every change, fer or acquisition of control shall make the Franchise subject to cancellation unless and until Counc3l shall have consented thereto, which consent will not be unreasonably withheld; and WIIEREAS, state and federal law require City c sent far said transfer to be effective; and WIIEREAS, staff identified certain detrimen consequences to the City and to the public from the proposed transfer; and WI IEREAS, the Transfer Agreement and placement Franchise, a copy of wluch is attached hereto, negotiated with Ciry staff, and executed y authorized representatives of the transfer parties, provides remedies for these detrimental con quences, NOW THEREFORE BE IT RES VED, that the Mayor and the Director of Financiai Services are hereby authorized to execut e Transfer Agreement � and, be it further RESOLVED, that staff be d hereby is directed to draft the appropriate ordinance amendments for submission for uncil consideration. Green Sheet # 62JB9 � Requested by Department oE Benanav Blakey Bostrom Coleman Hanis Lantry Reiter Adopted by Co cil: Date Adoption � by Council Secretary Approved by Mayor: Date � � Form Appr� ' Atto �y R i� _ \ �__ � Approved by Mayor foc Submission to Council � � vrrv-14-98 32:39 FROM=CHARTSR COMMUNICA710N5 Ip:3}49656640 _. CuRent C?rganizational Structure Twin Ci�ies Transac�ian �-, As of May 27, 1987 (date of agreemenf} Warburg. Pincus Ve�rtures> LP .., � - Cirarter Communicatioris, tna f`Charte�'j CCTC Hoidings, ina {"CGTC'� 100% Charter Commua"�cations Twin Cities, Vnc. {"7win Cities'� 99% xeiso & Company Equity Note held Selter Senior Bank Faciiity 99°/a PAGE 5/B �i3 „ �°�"y"� Charter 4 1 °lo �ommunications - 1 ° � - Minnesota, fic. CC - Kmg, LlC (�Minnesata7 CC - St Paut, LLC �•� ("St Paul") TWlN6XLS 7nzre7 s:oo ntn : �nn-ay-9B 12:39 FROM:GNARSER COMMUNICATIONS 1D=3}g9656640 � Organizationat Structure . Twin Cifies Transactian � Step 1- lmmediately a�ter Purchase of Assets from Seliers Warbutg, Pincus Ventures, LP Charter Comm¢nications, inc. ("ChaRef� x�� 8 Company CCTC E9'�Y tioEd'mgs. lnc. Note held ("CCTC'� Se!!er 1D0% `Fting VdEOt2bfe Sy5fem5 ' St Paul Systems Charter Communications Twin Cities, !nc ' ('Twin Ci6es") ' 99% Senior Bank Faciliiy ti06°!o ••'° Chartet � ° �O Communiptions - Minnesota, tnc. CC - Ksag, LLC ��nnesoW'� ( King") 1 PAGE 6/6 a�'�� 99% CC - SL Pauf, LLC . : C'St Pau1") �nam� 449 AM 7WINi0XlS � �.. .-�o t FROM�CHAR=ER COMMUNIGATIONS ID:3149656640 Organizationai Struci�ure f Twin Cities Transaction - Asset Purchase _ Step 2- After intemal Asset Transfers Warbur9, Pincus Velrtutes,l.P �4 cnarcer ' Commuri�cations, lnc. C�K� CCTC Hoidings, lna ("CCTC'� 740°h cr,arter Communications 7win Crfies, Inc. ('Twin Cities'� 99% Keisa & , ComPanY Equity Ndle held by Seller Senior BanK Faciliq' 99°h 1 M3nager CYYdtLEf �% COt7ttT1UtliG2UOT15 Minnesota, Inc. CC - lGng. LLC (^Minneso�'7 f'w�9'� � King Yuieoeabte sys[ems in Mirtnesota and WisCOnsin ' Northem Dakota Franchise PAGE 7/6 � � �� CC - St Paul, lLC (°St Pau47 ' St. Paui Franchise �n ��s� 9i'�AM TWItJ'1S.XL5 � ... .i ao a FROM:CHARTER COMMUNICASIONS ID:3149656640 PAGE 2/B � �� CORPORATE GTJAR.AiV'IY OP CHARTER COMMLJNICATIONS, INC. AND CCTG HOLDINGS, INC. This Cozpozate Guaruiry (this "Guarant�') is executed as of Jaavarp 1998, bp GHARTER COMMtJNICATIONS, INC. and CCTC HOLDINGS ING (colleaively, "Gnarantors") for che bene�it of the muniapalicy of tb.e Ciry of St. Pavl (r.he "Citp'). WITNESSETH: WFiERl?AS, pvssaaat to the cable television fraachise (che "F'ranchise") between rhe Authority and CGSt. Paul, LLC ("Fraachssee"), and cestain agreemenrs, understandings a,nd Franchise amendmeau zelaud thereto, Franchisee has cercain obligations relazed to tlze provisioa of cable television and relased services for the Auchoriry's ciuzeas; and �REAS, Guaraacon have pzopased an acquisiuon, pursuant to which tiieir affiliate, CGSz. Paul, LLC (`Traasfereen), will acquire the Franchise, and succeed to Franchisee's obligations thereuader, aad WHEREAS, Guarantors are providing this Guaranry w tIie Authoriry to fursher supporc the financial qualifications of 7ransferee as a pazt of xhe Franchise transfer process to comply wirh rhe requiremenu of tlze Praachue; NOW'THEREPORB, Guaranton hereby agree as follows: 1. Guarantion hereby joimly and severally, irrevocably and unconditionally guaranry to rhe Aurhozxry, iu successors and assigas prompc and sai,isfacCOry payazezet and performance bq Transfeme of che Fraachise anc! r,hose cexsain aa�reemenrs, uncierstaadina and Franchise ameadmeuu relazed thereto, and all applicable federat, state and local laws, ordiaances and regulatioru. 2. This Cruaranry shall be e$ecrive upoa the opening of bvsiness on the date when Transferee acquires rhe Frazschise, aad shall nu�. throughout the term of the Franciaise and any renewal or excension tlsereof, exceps that t4sis Cruaranty shall terminaze at such earlier time thaz GuaranLOrs lawfully transfer ownership and conuoi o£ Transferee rovith the consens of the Ciry for such sransfer aud a substitur.e of a Gnarantor for the Transferee acceptable to the Ciry. 3. Tn the aveac that Guaruxton should breach or £ail to timely perform any pro�isions of this Guaranry, Guarantors shail pay rhe Anthoriry all coscs and expenses (mcludiag coun cosu and attorneys' fees) incurred bq the Authority in the successful enforcemem hereof. ��,�a- 4. Guarantors represent and wazrara that t&e execauon, delivery and performance by Guaraaton o� this Csuasaaty, aad rhe consuassnation of the traasactions coatemplared hereuader, c!o not, and will nor, conuavene or conflia miriz any law, sKacuze or regulation whaucever co ivhich either Guarantor is subjecc, or constiturx a defaulc (or an evens which with aorice or lapse of sime or botfi would consacuce a default) undex, or result in the breach of, aaY indeatvre, mort deed of trust, chaz'ge, lien or aay cozttraa, agreemeac or other insu to which eirher Guaraator is a pany ar wbich may be agplicable co eisher Guaraacor. '�his Gua.raary is a legal and binding obli�tion of eac4� Guarantor and is enfosceable in aaordance wir,h iu terms, except as limited by baakruQcry, insolvency or other �aws of generaI applicuion relating to che enforcemeac of creditors' righu_ 5. Guarantozs liabiliry hcreunder shall be primary and not secondary, aad shall be joim and several wich that of the Transferee. �'he Ciry may psoceed againsc Guazantors under this Guaranry without initiating or exhausring iu remedy or reznedies against the Transferee, and maq proceed agaiztsc che Tiansferee and/or aay one or more of the Guaranrors seguately or concurreazly. The Guaranty does not require rhe Ciry to provide additional norice beyond r,haz it is required to �ave under rhe Franchise to the Tzans£eree, and Guaranton waive any notice requiremenc rhas might otherwue apgiy. Guaraatoss obligations are zrrevocable, uncondiuona3 and absolute (excepL az provided by paragraph 2 hereo� arsd shall not be a£fected by: a. T4ie waiver by the City of rhe performan�ce or observance by che Trans£eree or any of the Guarars�on of any of the obliyations under tkte Franchise, this Guaranty, or the Transfer A�reement dated January 14, 1998. b. I'he extension of the term of, or che egtension of ume for performance uades, or azsy other amendment so, the Francluse, or applicable law affecting che Fs�anchise (whether ma�erial or otherwise)> c- The release of aap o£ tlxe Guarantors or the Transferee or any orher person who may be ]iable vader the fraachise, or aap a�reemeat related thereto; d. The voluatary or involumary Izquidation, dissolutiion, sale of all or subscantiallq all of the assets, snarshalling of assets and liabiliues, receivership, conservacorship, iasolvency, banb;ruptcy, assegnmeac �or the benefii of creditors, reorganization, arraz�emeuc, composition or readjustmens of, or other pr oceediag a{fecting the Trans{eree, any of rhe Guazantors, or any of their assecs. 6. Gnarantors agree that no faiIure to exercise, aad ao delay in exerc; ��, on the par� of the Aushoriry, any right hereuader shall operate as a waiver r.hereof, nor sha2l any single or partial exercise �hereof preclude azzy oslter or further exezcise thereof or the rarercise oi any other righs. The rights of rhe Auchoriry heseunder sha11 be ia addirion to a11 other rig)ats provided by law_ Pdo modificacion or waiver of any provision of rhis G�aranty, nor consent to depanure therefronre, shall be ef£enive ualess agreed to in writin;, aad ao such consent or waiver shajl extend beyond the par�icular case and purpose invoIved. No aotice or demand b vea in any case shall coastitute a waiver of tl�e right to take orher action in rhe sune, similaz or other instances without such rzotice or demand JAN-14-98 12:39 FROM=CHARTER COMMUNICAIIONS ID=3149656640 PAGE 4/B q�� l 7. This Guaranry shall be govezned by and construed in accordance with the laws of che Staze of Minaesora and rhe applicable laws of the Uncited Sutes of Amezica. 8. This Guaraary may be aznended oaly by an instrssmear in wriun� executed by rhe parry oz an authorized represeivazive of the pany or paraes a whom such amendmeat is sought co be eaforced. IN WI'TNESS �Y�HEROF, Gvarantors have cavsed this Guaranry to be duly egecuted by their respeccive dvly authorized officers as of the day and year fusc above wrinen. CHARTER COMMITNICATtONS, INC. By '�'ic]e ATIEST_ CCTC HOLDINGS, INC. g Y — Title ATTEST: ��.aa GI,�_ ��- TRANSFER OF SAINT PAUL CABLE TELEVISION FRANCHISE from Continental Cablevision of St. Paul to CGSt. Paul, LLC Staff Report prepared by Gerry Strathman, Council Research Director Holly Hansen, Cable Communications Officer January 12, 1998 �� Background The City has the authority to grant a non-exclusive cable television franchise and enforce provisions of that franchise. This authority includes transfers or sales of the cable television system and is derived from and defined by local, state and £ederal laws. The City may exercise its authority to protect the interests of its citizens in areas such as public safety and consumer protection. The City may also ensure that its citizens benefit from the private commercial use of public rights of way. Although the 1996 Telecommunications Act was intended to create competition in the telecommunications industry, littie competition has occuned in local cable markets. This lack of competition heightens the importance of 1oca1 franchising authorities exercising their regulatory powers to protect public interests. Transfer Process Charter Communications filed an FCC Form 394, Annlication for Franchise Authority Consent to Assignment or Transfer of Control of Cable Television Franchise, with the City on July 16, 1997. According to federal law, the City has 120 days in which to act on the transfer application unless the parties agree to an extension. The date far City action has been extended iwice and the current date is January 21,1998. The City Council held a public hearing on the transfer September 3, 1997 and continued that hearing until Noveznber 12, 1997. The hearing was continued again until January 14, 1998 to allow time for Charter to respond to data requests made by City staff and for staff'to review the information that would be submitted by Charter. The parties will need to extend the date for final action until March 1998 to provide sufficient tune for adoption of a franchise ordinance. Issues and Analysis When considering the request for consent from the City of Saint Paul (City) to the assignment of the Saint Paul Cable Television Franchise from Con6nental Cablevison-Saint Paul, Inc. to CC- Saint Paul, LLC, the City must consider the qualifications of the proposed buyer and evaluate the impact of the proposed transfer on the City of Saint PauL The Federal Communications Commission (FCC) has determined that franchising authorifies, such as the City, may consider the legal, technical and financial qualifications of any proposed transferee when evaluating transfer requests. It is also well established in law that the City, as a party to a legal contract, has the right to protect itself from hann resulting from this proposed transfer. Legal Qualifications The current holder of the Saint Paul franchise is Confinental Cablevision-Saint Paul, Inc., a wholly owned subsidiary of US WEST. US WEST is not legally qualified to continue to hold the Saint Paul cable television franchise because federal law prohibits such ownership. Federal a�� law prohibits telephone companies such as US WEST from purchasing cable systems in their service azeas. When US WEST purchased the holdings of Continental Cablevision, Ina (now MediaOne) in 1996, it conflicted with the federal law prohibiting telephone companies from purchasing cable systems in their service azea. To aliow this national transaction to go forwazd, the FCC, over City objections, allowed U5 WEST to purchase the Saint Paul cabie system and others in their service area if it divested of these holding within a short time. The FCC gave US WEST until August 15, 1997 to enter into an agreement to divest of these in-service-area systems. US WEST has agreed to sell the cable systems in the Twin Cities area, including the Saint Paul system, to Charter. Pursuant to this agreement, Charter Communications submitted an application to transfer control of the Saint Paui cable television franchise from Continental Cablevision - Saint Paul, Inc. to CC - St. Paul, LLC. This proposed purchase is a complicated transaction involving a pazent company (Charter Communications, Inc.) two equity investors (Walburg, Pincus Ventures, LP and Kelso & Company) and a banking consortium led by Chase and Toronto-Dominion. Based on the materials submitted in the transfer application, it appeazs that all of the entities involved in this transaction are legally formed and there are no apparent illegal conflicts of interest. Further, there are no federal regulatory barriers to this transaction. Based on the representations in the transfer application, it appears that CC-St. Paul, LLC is legally qualified to assume control of the Saint Paul cable television system. Technical Qualifications The proposed transferee must have the technical knowledge and experience required to operate the cable television system in Saint Paul successfuily. The transfer application shows that CC - St. Paul, LLC will be the local operator and that they intend to ask the current employees of Continental Cablevision - St. Paul to continue with CC - St. Paul, LLC. Given that these employees are currently operating the Saint Pau1 system, it would appear that the necessary technical lrnowledge will remain with the transfer operator. Additionally, the management group, Charter Communications, owns, operates and manages cable systems in eighteen states with a total of 473 franchise agreements and serving approximately 1,100,000 subscribers. Based upon the representarions in the transfer application, it appears that CC-St. Paul, LLC is technically qualified to operate the Saint Paul cable television system. Financial Qualifications. Successful opexation of the cable television system in Saint Paul requires the operator to haue the financial resources required to meet the needs of the more than 52,Q00 subscribers in Saint Paul and the community as a whole. The applicant needs to show that it can meet the current and anticipated needs for cable television services in the City of Saint Paul. The transfer application attempts to show the proposed operator has the financial ability to meet these needs. The City has contracted with Crowe, Chizek and Company LLP to conduct a financial review of the pro formas and other financial information submitted in support of this application. (See attached) They compared the assuxnptions and resultant projected amoimts with cable industry stafistics compiled by Paul Kagan Associates, Inc. and wiffi historical data provided by the current �t�_� franchise holder. Since all business enterprises contain an element of risk, it is unportant that the citizens of Saint Paul be assured the proposed franchisee can deliver qualiry, affordable services should the company encounter f nancial difficulties. These fivaucial qualificarions are demonstrated by providing a business plan that allocates sufficient funds to meet current and future needs and contingencies and by providing finaticial guarantees. Absent serious fmancial reversals, the funds allocated for day-to-day operations seem adequate. However, the pro forma amounts for upgrade, rebuild and converters aze low. Since the Saint Paul cable system was constructed many yeazs ago, significant capital expenditures are required. The financial projecfions provided by the applicant suggest that they intend to spend millions of dollars for capital improvements in Saint Paul and show projected funds to meet the need for capital expenditures in Saint Paul. Because of the uncertain nature of the cable television industry and since this proposed transaction is highly leveraged, it is critical that there is a sound financial guarantee upon which the City can rely. US WEST is the current guarantor for the Saint Paul cable television franchise. Secause US WEST is a well established and financially secure entity, the City has a high degree of confidence in the ability of US WEST to provided fmancial support needed by the current franchisee. However, the transfer application shows that CCTC Holdings. Inc. is to be the new guarantor. CCTC Holdings, Inc. is a new entity being created as part of the overall transaction between US WEST and Charter. This transaction involves approximately 300,000 subscribers in the Twin Cities area and mare than $600M. It has no corporate history and its only assets arise from this transaction. Addifionally, CCTC Holdings, Inc. is obligated to repay a Seller Note to MediaOne for $60M. While this note is not immediately due, it is a corporate liability that fiu weakens CCTC Holdings, Inc. as a credible guarantor. Given the limited assets of CCTC Holding, Inc. and its considerable financial obligations, the substitution of CCTC Holdings, Inc. far US WEST as a guarantor represents a significant reduction in the quality of the financial guarantee to the City of Saint Paul. While there is some concern regarding the fmancial projections of with respect to capital expenditures and a d'uninishinent in the financiai strength of the financial guarantor, we find that, taken as a whole, CC-Saint Paul, LLC is financially qualified to operate the Saint Paul cable television system. Recommendation. CC-Saint Paul, LLC has shown that it has the qualifications to fulfill the present and anticipated requirements to own and operate the cable television franchise in Saint Paul. It is, therefare, the recommendation of City Staff that the proposed transfer of the Saint Paul cable television franchise from Continental Cablevision-Saint Paul, Inc. to CGSaint Paul, LLC be approved. J�;;. -i)y' y81FR11 ll �it, December 31, 1997 TEL:�,�Oa P. ii�t3 �`~,�` CROWE CHIZCK Ms. Holly Hansen Cable Communications Officer City of Saint Pau7 15 West Kellogg Boulevard b8 City Hall SaintPaul,?�'finriesota 55102 INTRODUCTION This report presents information resuiring from our analysis of data contained in the document eniitled 'Transferee's Application to Ci;y of Saint Pau1 for Con�ent to Assignment of Communit}' Anienna Television Franchise 4om Continental Cablavision of $t. Paul, Inc. to CC• St. Paul, LLC, dated July 1997" ("Applicztion"), and other related documentation subrn;tted in support af the Application. The Application and other related documentation contain finanr.ai projections (pro formas) Ior the years �9a3 - 2fl06 wftic3� are based upon ceriain assumpti�r, We provide no assurance as to the like!ihood that any projected a77}o�u�ts or assumptions will be realized. Where applicable we compared the assumptions and resultant pro}ected amoiu�ts w�th cab}e industry statistics compiled by Pau1 Kagan Associates, Inc. {PK), and with historical d..ta provided by d1e current franchise holder_ The term "consistent" as used in t}us report mea�; within ten percent of projections and Mstorical datz. OPERATL'�'G ItEVEi��i.iES, EXPENSES, AND CASH FLOWS Subscriber Gro�+�th and Penetralion The pro forma aznounts aze consistent wiih PK projections. Qperatin� Revenues and Rates The pro forma amounts zre consistent with PK projections and with historical da�i of ti� turrent franchise hulder. i at�- "�� 9 J;";. -li�i• ��81FF1I I 1 � 18 TEL b�{��dinuS P.iru.� ��,�� OPERATIIvG REVENLJL-,;, EXPFIVSFS, Ai`'D CASH FLOWS (Continued) Operating Exqenses The pro forma amounts are consistent with PK projections and historical data of the nurr_nt franchise holder. Opera6ng Cash Flow iOCFI and OCF % The pro forma amounks and percentages are consistent with PK projections. CAPITAL EXl'ENDiTiJRES Ll�grade & Rebuild & Converters The pro forrna amounts were low in that Saint Paul specific iterns for upgradefrebuild and I- . Net expendihues �vere not adequate when compared to the City's enguieering estimates_ Maintenance Capital The pro forma zmounts wese consistent �vsth lustorical data. FI'�i IANCII�'G Borrowings ar+d Repay-menis The Applicarion stated that Charter Communications TH�in Cities, Ine. (CC7C) would borro:v funds in the form of t}vee senior secured credit facilities, and in the form of a seller's nou. Principa] repayment terms would be structured so as to allow CCTC to meet its debt covenanM. The pro forma reflects repay�ments consistent �+�d1 the teruu indicated in the AppIIcaton. Interest I2a tes The Application discloses several opHons available to the borrower. The pro forma reflecis average interest rates coruistent x>ith the options available as listed in tihe Application. 5uch average rztes �vere consistent with market conditions as of November 1597. Hox�ever, we provide no zssurance that the ,lpplicant can obtain such raies. Debt per Subscriber The pro forma amounts ;or debt pec subscriber are higher than PK projections &om ]��3 throvgh 2002, and lower hom 20a3 through 2�06. 2 J-'.'!. -iiy' 981FR1I 1 I 19 FLT�Pu'�TC�?G {Continued) Debt to Operating Cash F1ow (OCF) The pro foraia amounis for Debt to OCF are higher than PK projections from 1998 through 1999, and lower from 2000 through 2006. FREE CASH FLOW Free Czsh Flow {Ooerating Cash F1o�v less Canital Ex�endihues and Prindpal and Interest) The original pro forma and the revised pro forma (aRer additional capital expen�itures) shov��ed positive cash flows for the years 1998 through 2006. . . . . . 1Ne are pleased to provide our observations and comments on the Application and other related documentation. If you should have any questions or would like to discuss any matters fzrtr�cr, please contact us. Tltis report is intended solely for t},e use of the City of Saint Paul, Minnesota. However, this report is a matter of pnblic record and its distribution is not limited. TEL.+,�pa P.i1U; � $ .'J � G�,�,, C� � � � Crowe, Chizek and Company LLY 3 � � 1"' L � c � C 0 ll7 m � r d w d y t U C � � o O o Q O O � � � � < U c� d a�.� � a tif d T � � E d � R a O T T R 7 C C N O O O O O N � � C d 3 � d 7 C > `f N � m O i R d � ti) w O 0 0 O O O � ffT d � .Q y O � .+ � � � w 3 y N � ; O � o C � �p `-.' c— o f4 U a Y 0 o � � C r .� 3 R a C .� � C .` � � L � � � Z L � .Q � ' Y, N _ � O � ti y N 2 � 0 � t .. o E d � ZS M R � � t � 3 C) � 7 a � � d � d N d N d C C R � � ti � y d U V Q C d � � d > O C� 'a c � R C O R U � � w � Y N 7 f� d � � 3 v= Q, T � + � w E � o � C ++ � 3 ,O CI � @ � r r r � e � � L 3 �.+ � Z � � � � � � C N C O Y � N C v s 7 Q L 0 � U R Q m U � 0 � N O w � � � U ai U � � Q w w V C C 16 R t6 C L L O y V U 4 � � � R Y � M � R G N C C R C O O � = = o q�:o O 7 R R �A Q < r C d e a O > � � w U O Y O a O 0 � V3 � w �_ R � U a � � R � � w N � � � Y �+ y � Y d � a_ L O � o � o '� 0 3 � y a � Z y i = Y {O R y N N � � � N T 0 � r ° � '� N � � o � � N �a ° � a� o y ,� � �a 'C � Q� O�, a G�i T Q m R L T S L � V a � � c�a m «° ° Q > �' a� �, 7 '� � O O 7 � (� :. t � O O C V w a � � M C� C � 9 t � � W M i� �� c�7 � c a ' ow° � c c c c°�, c o � 0 0 0 0 � . _ 0 0 0 0 o Q c ;, 0 0 00�,°.� �� 0 0 0 0 �n �n �n �n cc � s v� fn v� f» Frs U..� • • . . • • � � � � x W � L L O O '� W L L l3 �N � l9 �' t N L V � U t6 � � � O � O � O i R O 10 t6 .t. O � e0 d r In '�` (p 7` �� 0 00 � 00 0 00 � �� N N M £J3 V3 EiR S v.ru s e., - ��y � 9 g RESOLUTION CITY OF SAlN7 PAUL, MINNESOTA Presented Refened To Committee Date 1 2 WF�REAS, the City has granted a non-exclusive cable franchise to Continental Cablevision 3 of Saint Paul, Inc., as provided in Appendix H of the Legislative Code, as amended by the 4 Settlement Agreement of September 15, 1942 and the Transfer Agreement of November 13, 1446, 6 7 10 11 12 13 14 15 16 17 18 19 20 21 WI3EREAS, Continental Cablevision of Saint Paui is now a whoily owned subsidiary of US WEST, Tnc., which fact was known to the City and relied upon by at itt granting the Franchise; and WI�REAS, on Ju1y 16, 1997, Continental Cablevision of St. Paul, as transferor, and CC-St. Paul, LCC, as transferee requested the consent of the City to a transfer of the franchise cable system assets from the transferor to the transferee WHEREAS, the Franchise provides that every change, transfer or acquisifion of control shall make the Franchise subject to cancellation unless and until the Council shall have consented thereto, which consent will not be unreasonably withheld; and Council File # 9g-3 Green Sheet # �� WHEREAS, state and federal law require City consent for said transfer to be effecrive; and WHEREAS, staff identified certain detrimental consequences to the City and to the public from the proposed transfer; and 22 WHEREAS, the Transfer Agreement, a copy of which is attached hereto, negotiated with 23 City staff, and executed by authorized representatives of the transfer parties, provides remedies for 24 these detrimental consequences, now, therefore, be it further 25 26 27 28 29 30 31 32 33 34 35 36 37 38 RESOLVED, that the transfer is approved subject to each and every one of the conditions specified in the Transfer Agreement; and now therefore be it furdier RESOLVED, that if any of the conditions aze not satisfied, or if the Transfer Agreement is not fully executed by January 31, 1998, or the transactions which constitute the Transfer do not close by April 1, 1998, the request for approval shall be deemed denied as of the effective date of this Resolution, now therefore be it RESOLVED, that the Mayor and the Director of Financial Services are hereby authorized to execute the Transfer Agreement and, be it further RESOLVED, that stafF be and hereby is directed to draft the appropriate ordinance amendments for submission for Council consideration. °�8-3a. By: Approved by Mayor: Requested by Department of: � Porm Approved by City Attorney � Approved by Mayor for Submission to Council � Adopted by Council: Date � Adoption Certified by Council S�retary � 98-3z Council Strathman 14, 1998 1/8/98 RqRING TOTAL # OF SIGNATURE PAGES GREEN SHEET No 62189 u �.,,�,�,*� u ��„�— ❑ �,,,,� ❑ a,,,� ❑ n,,wuatsErsxeFSOUt ❑ nux�uaonn.cerc ❑ W`f011(ORllbffiSNRI ❑ (CLIP ALL LOCATIONS FOR SIGNATURE) Approving tfie transfer of Saint Paul Cable Television Franchise from US West to Charter Communications. PLANNING CAMMISSION CIB COMMITTEE CNIL SERVICE COMMISSION I111r2 CT3�:7�!�a.3SiC7'J Fles ihis pe�soNfiim everworked untler a eonhact for thie departmeM? VES NO Hea this Pe�Nfirtn ever been a cdY empbyee4 VES NO Does �his PersoNfirtn possess a Skll r� normallypOSeessed bY arry wrreM �Y emPluYee7 VES NO Is tA� persoNfirm a targHed ventloYt YES NO COS71RE4ENUE BUDGETFA fCIRCLE Gt1E� YE8 HO SOURCE ACTNITY ttU1d8ER INFDRMAliON (O(PWN] TRANSFER AGREEMENT DATED JANTJARY 12, 1997 Am��nd�d Vers �'oN - �8"�� j�y �98 THE CITY OF ST. PAUL, MINNESOTA ("CITY"), CON'ITNENTAL CABLEVISION OF ST. PAUL, INC. ("CCSP"), MEDIAONE OF DELAWARE, INC. ("MEDIAONE") US WEST, INC.(USWEST), CHARTER COMMiJNICATIONS, INC. ("CIIARTER"), CCTC HOLDINGS, INC. ON ITS OWN BEHALF AND ON BEIIALF OF CERTAIN SUBSIDIARIES ("CCTC") AND CIIARTER COMMiJNICATIONS ST PAUL, INC. ("CC-ST. PAUL") DO HEREBY AGREE AS FOLLOWS: WFIEREAS, CCSP is the holder of a franchise to provide cable service in the City of St. Paul, subject to the provisions of that certain franchise agreement between the City and Company dated November 10, 1983, as amended, including by that certain Settlement Agreement dated September 15, 1992, and that certain Transfer and Franchise Modification Agreement dated November 13, 1996, all of which are subject further to Chapter 430 of the St. Paul Legislative Code (collecfively, the "Franchise Documents"); and subject fiu�ther to that certain Correcfive Plan Agreement and Corrective Plan, dated December 22, 1997 and such amendments to the Franchise Documents as may be made pursuant to that Corrective Plan Agreement (collectively the agreement, plan and amandments are refened to as the "Corrective Plan"); and WHEREAS, since 1996 CCSP has been owned and controlled by MediaOne, which in turn is owned and controlled by USWEST; and WAEREAS, USWEST was under an obligation to divest itself of its interests in the cable system in St. Paul (IJSWEST, CCSP and MediaOne aze collecfively referred to as the "U5 WEST Parties"); WHEREAS, on May 27, 1997 CCSP, King Videocable Company-Minnesota (King, Inc.), and MediaOne of Delaware, Inc. entered into a contract with CCTC Holdings, Inc. ("CCTC") to sell those assets which comprise the franchise to operate a cable system within the City; WHEREAS, CCTC is controlled by Charter Communications, Ina ("Charter"); WHEREAS, CCTC owns 100% of the newly formed Charter Communications Twin Cities, Ina (Twin Cities), which in turn owns 100% of Charter Communications Minnesota, Inc. (CCMT). Twin Ciries owns 99% of each of CC - King, LLC (CC - King) and CC - St. Paul, LLC (CC - St. Paul) while CCMI owns 1% of each of CC - King and CC - St. Paul (these entifies, along with Charter, are refened to collectively as the "Charter Parties") and as their pazent, CCTC entered into the agreement with CCSP, King, Inc. and MediaOne; and WHEREAS, a request for assignment of the franchise, the cable system, and the assets thereof, from CCSP to CC - St. Paul has been filed with the City (the transactions which shall c��-32 coilectively result in the sales and assignments, as described in the Form 394 and the aitackunents thereto aze refened to collectively below as the "Transfer"); and WI�REAS, by agreement of US West and Charter Parties (collectively referred to as the "Transfer Parties"), the City has until January 22 , 1998 to introduce the necessary resolutions or ordinances required to act upon that request for approval of the Transfer; and WHEREAS, at the time the request was filed, there were certain substantial outstanding issues with respect to the e�sting franchise, and the obligations owed to the City thereunder and as a result of negotiations with the USWEST parties, those certain issues were to be resolved pursuant to the Corrective Plan; and WIIEREAS, the City has determined that, in light of the facts available to it, it would not be appropriate to approve the transfer absent certain guarantees and agreements, binding upon the parties to the Transfer, including certain promises to ensure compliance with the provisions of the Franchise Documents, and Conecfive Plan; and WHEREAS, among other things, the City has determined that, given the length of time remaining on the existing franchise under which CCSP provides service to the City, there must be an agreement on the terms of a franchise defining the financial and technical obligations that CC - St. Paul would have to the City; and WHEREAS, the Transfer Parties agree that it is appropriate to make such guarantees and agreements, subject to the City's approval of the Transfer; and WHEREAS, CC - St. Paul has agreed to the terms of a franchise that would govern its operations once adopted and effective (the "Replacement Franchise"); NOW THEREFORE, IN CONSIDERATION OF THE FOREGOING AND THE MUTUAL CONSENTS SET FORTH HEREIN, THE PARTIES AGREE AS FOLLOWS: Section 1. Assumption of Franchise Obligations; General Representations and Warranties. 1.1 Acceptance - CC - St. Paul hereby accepts, acknowledges, and agrees to be bound by all of the commitments, duties and obligafions, present, continuing and future (a) of CCSP as set forth in the Franchise Documents; (b) of CCSP as set forth in the Correcrive Plan, (and as amended by the Replacement Franchise once it becomes effective); and (c) as set forth in the Replacement Franchise, once it becomes effective. The Replacement Fzanchise, once it becomes effective, will become the franchise agreement that governs operations within the CiTy from and after its effective date, and from and after the effective date of the Replacement Franchise, CC - St. Pau1 shall be deemed to have surrendered its franchise rights under the Franchise Documents. 1.2 Assum�tion of Obli�ations - CC - St. Paul agrees that as between itself and the City neither the Transfer nor the City's approval of the Transfer shall in any respect relieve it of � ��-�� responsibility for past acts or omissions, lmown ar unknown of CCSP; and CGSt. Paul hereby reaffiruis that, from and after the time of closing of the Transfer (the "Closing Date"), it shall be liable for and accepts the consequences of, any such acts and omissions, known and uulniown, including liability for any and all previously accrued but mifulfilled obligations to the Ciry under the Francluse Documents, the Corrective Plan and applicable law, for all purposes. By way of example and not limitation, tius shaIl require CC - St. Paul to pay franchise fees to the City for any period prior to the effective daxe of the Replacement Franchise for which revenues had been coilected but fees not paid and to conect past underpayments, if any. By way of further example and not limitation, the payments that would be due under Article III, Section 6 on Februaiy i 5, 1998, sha11 be owed by CC - St. Paul if the payment has not been made as of the Closing Date; and in addition, CC- St. Paul will owe a pro rata shaze of the payment that would be owed under Appendix H for 1998, calculated by dividing the total payment owed for 1998 by 12 and multiplying the result times the number of months between the first of the yeaz and the effective date of the Replacement Franchise (partial months coun6ng as whole months for pwpose of this catculation). This liability shall be joint and several with the liability of US WEST and CCSP to the extent ptovided below. 13 Conflictina Provisions Disallowed - The City, by its approval of this Transfer, is not approving or endorsing the terms of any documeni related to the Transfer. Without limiting the foregoing, to the extent there is a conflict between (1) the terms and conditions of this Agreement, the Franchise Documents, the Corrective Plan or the Replacement Franchise, or applicable federal, state or local laws; and (2) any contract (other than an contract with the City) related to the Transfer, or any contract that may affect St. Paul as a result of the Transfer, the Transfer Parties agree that the terms of the latter shall be expressly subordinate to the terms and conditions of the former. 1.4 Citv's Reliance Upon Companies' ReUresentations - The Transfer Parties acknowledge and agree that: the City's consent to the Transfer is made in reliance upon the representations, documents, and information provided by the Transfer Parties in connection with the Transfer Application; each of the Transfer Parties is liable for its representations and warranties and jointly and severally liable far joint representations and warranties; and that the representations and warranties include, without limitation the following: 1.41 The Transfer Parties represent and warrant that CGSt. Paul will succeed CCSP as lessee at the. Union Depot. The transfer requires the priar approval of the landlord of the Union Depot but that approval has been obtained so that consummafion o£the Transfer will not in any respect affect the lease ar leases for the Union Depot including any lease for any properiy in that building occupied by Cable Access St. Paul, Inc., d!b/a St. Paul Neighborhood Network; 1.4.2 The Transfer Parties represent and warrant that they understand that, in approving this Transfer, St. Paul is only agreeing to approve the Transfer set forth in the Form 394 as it is to be completed at closing, with CC - St. Paul becoming the franchisee and as fixrther shown on E�ibit A hereto; the City is not agreeing to approve any future transfer, whether 3 ° � contemplated in connection with the Transfer or not, and any agreement or option that would permit a transfer to occur without the approval of the City is disallowed. 1.43 The Charter Parties represent and warrant that they will not in any respect reduce the level of customer service in St. Paul, either by reducing the number of customer service representatives, technicians or technical managers serving St. Paul, or by consolidating the St. Paul customer service operations with other customer service operations. If CGSt. Paul does consolidate its customer service operations, it shall ensure that at least seventeen (17) percent of its work force is located within the City of St. Paul. 1.4.4 The Charter Parties represent and warrant that there will not be an increase in subscriber rates, as a result of any cost associated with compiiance with the Corrective Plan, including costs associated with the amendments to the Corrective Plan provided far under the Replacement Franchise). The Charter Parties further agree that any costs associated with complying with this Transfer Agreement are not external costs. The Charter parties further stipulate that for purposes of any rate proceeding, the Transfer does not result in a cognizable increase in good will, intangibles or tangible assets of the cable system serving St. Paul, above the level that could have been reflected in rates prior to the Transfer. 1.4.5 Each of the Transfer Parties each hereby represent and warrant that as to it: (a) the execution and delivery of this Agreement does not contra�ene, result in a breach of, or constitute a default under, any contract or agreement to which it is a party or by which it or any of its properties may be bound (nor would such execution and delivery consritute such a default with the passage of time or the giving of notice or both), and does not violate or contravene any law, order, decree, rule, regulation or restricfion to which it is subject; (b) each of the Transfer Parties is duly organized, legally existing and in good standing under the laws of the states of their respective organization; (c) the terms of this Agreement which apply to it constitute legat, valid and binding obligations of it, enforceable in accordance with such terms; and (d) the execution and delivery of, and performance under, this Agreement is within its respective power and authority without the joinder or consent of any other party and have been duly authorized by all requisite action and are not in contravention of its respective charters, bylaws, or other organizational documents, or of any indenture, agreement ar undertaking to which it is a pariy or by which its is bound. Section 2. Promise of Charter Parties Each of the Charter Parties (other than CC- St. Paul) agrees that, from and after the consuinmation of the Transfer, it will not take any action inconsistent with the promises contained in the Franchise Documents, the Conective Plan (as amended once the Replacement Franchise becomes effective), or the Replacement Franchise. CC - St. Paul agrees that it will sign an acceptance of the Replacement Franchise before the Closing Date and will not take any action to prevent the Replacement Franchise from going into effect and becoming a binding obligation of the company. Charter agrees that it shall guarantee the performance of CC - St. Paul. Charter agrees that, prior to the Closing Date, it shall deliver an unconditional guarantee, in a form substantially similar to E�ibit B to this Agreement, guaranteeing each and every � °1�-� � obligaUon of CC - St. Paul under the Franchise Docuxnents, this Agreement (when executed and delivered), the Conective Plan (as amended by the Replacement Franchise when it becomes effective) and the Replacement Franchise, when it becomes effective. CC-St. Paul, in addition to obtaining all the bonds, letters of credit and satisfying other conditions of the Franchise Documents and the Replacement Franchise that are to be sa6sfied prior to Closing, shall obtain the letter of credit required of the Company under the Corrective Plan Agreement Secrion 9. The release of US WEST and CCSP from liability shall not act to release any of the Charter Parties from their liability under any provision of this Agreement, the Franchise Documents or the Conective Plan (as amended once the Replacement Franchise becomes effective). Section 3. Promise of the US WEST Parties 31. The US WEST Parties agree that, after the Closing Date, the Charter Parties shall be responsible for implementing the Correcfive Plan (as it may be amended by the Replacement Pranchise once the Replacement Franchise becomes effective). On the Closing Date, the US WEST Parties will provide Charter all documents related to work performed on the Corrective Plan, through and including the Closing Date, including any materials in an electronic format. The US WEST Parties also agree to respond to questions from the Charter Parties regarding the work performed. The US WEST Parties shall act at all rimes so that work on the insritutional network can be completed properly and in a timely manner. However, while Charter is responsible for implementing the Corrective Plan as it may be amended, the US VJEST Parties remain liable for the costs associated with implementing the Corrective Plan as dated December 22, 1997. The letter of credit required of the Company under Section 9 of the Corrective Plan Agreement must be maintained by CCSP. Each of US WEST, as guarantor, and CCSP as the signatory to Appendix H and the Conecrive Plan, shall remain liable for any breach or costs associated with complying with the Corrective Plan as it existed on December 22, 1997, until all obligations to construct and test the institutional network upgrade required by the Corrective Plan, (as amended by the Replacement Franchise, once it becomes effective) aze satisfactorily dischazged. This liability shall be joint and several with CC - ST. Paul and Charter. The release of CC - St. Paul or Gharter from liability shall not act to release any of the US WEST Parties fiom their liability hereunder. The US WEST Parties promise that they will no nothing to interfere with or delay the timely completion of the Corrective Plan (as amended by the Replacement Franchise once it becomes effective), or to interfere with or delay Charter's ability to comply with this Agreement, the Franchise Documents, or the Replacement Franchise once it becomes effective. They further agree, that the Corrective Pian is hereby amended so that, if the Replacement Franchise goes into effect, Section 8 of the Conecrive Plan Agreement shall not operate to release them from any ongoing obligations under the Corrective Plan, or allow them or anyone else to chazge for the use of the institutional network, except as provided in the Replacement Franchise. The Conective Plan as it e�sted on December 22, 1997 is not breached by compliance with the Corrective Plan as amended, and the US WEST Parties are not ]iable for a breach of atnendments to the Conective Plan to which they aze not a party. 3.2. Each of the USWEST Parties agrees that, except to the extent the same are transferred to the Charter Parties, it will retain all documents related to the cable system, including a11 documents that show or record revenues derived from the operation of the cable ��-�� system in the City. These documents wiil be made auailable to the City for inspection at the St. Paul City Hall within 30 days of a request therefor. The obligation under ttus section estends to retanring and producing documents recording revenues received from sales of advertising and other revenues that are based on national or regional sales, where only a portion of the revenues aze attributable to the operations in the City. Each of the USWEST Parties will identify an agent within Minnesota who is subject to the jurisdiction of the Ramsey County state district court, to whom requests for information can be submitted and upon whom service of process may be rendered. The USWEST Parties each agree that the failure to produce the materials on a timely basis or otherwise comply with the requirements of this pazagraph would cause the City damage, the precise axnount of which would be difficult to ascertain, and hence each agrees that it wili pay liquidated damages of $250/day for each day (after the initia130 days provided for above) that it fails to produce the requested documents at the City Ha11. The US WEST Parties further agree that this provision shall be enfarceable against them in the state district court in Rainsey County, and hereby waive any objection to jurisdiction of that court over them, and agree to submit to the jurisdiction of the court. Provided that, the USWEST Parties' obligations under this section will ternunate on the later of (1) January 1, 2003; or (2) the date that the USWEST Parties fully respond to a docutnent request submitted on ar before January 1, 2003. Section 4. No Waiver. By its consent to the Transfer and execution of this Agreement, the City waives none of its rights or prospective rights with respect to CC-St. Paul's compliance with the terms, conditions, requirements and obligations set forth in the Franchise Documents or the Corrective Plan, or CCSP's obligations with respect to the same. Section 5. Conditions Uroon Consent S.l Reimbursement - CC - St. Paul agrees to pay the City $20,000 in conjunction with City's review of the Transfer. The payment shall be due 10 days after the passage of a City ordinance or resolution that provides for approval of the Transfer. 5.2 Conditions That Must Be Satisfied - The Transfer Parties agree that the approval granted by the City shall not become effective unless each of the following conditions is satisfied. If the conditions are not satisfied, the Transfer Parties agree that the Transfer request shall be deemed properly and timely denied prior to Closing Date. 5.2.1. Prior to the Closing Date, CC - St. Paul must have signed an unconditional acceptance of the Replacement Franchise; 5.2.2. Prior to the Closing Date, a Replacement Franchise must have been adopted by the City, and all conditions precedent to the effectiveness of the Replacement Franchise must have been satisfied except insofar as effectiveness (i) requires completion of the Transfer; or (ii) depends solely upon the passage of time. Nothing in this Agreement requires the City to adopt a Replacement Franchise; nothing in this Agreement prevents the City from rejecting or amending any Replacement Franchise as introduced; the City is not guaranteeing or representing that it will adopt a Replacement Franchise. A reference in this Agreement to the 0 �&-�� "Replacement Franchise" wiil be satisfied by any Replacement Francluse ultimately adopted by the City and accepted by CGSt. Paul. 5.23. Prior to the Closing Date, all payments required under this Agreement, and all guarantees required must have been delivered and accepted by the City. 5.2.4. Prior to the Closing Date, all required insurance, bonds and letters of credit must have been obtained and proof of the same must be provided to the City. 5.3 Oblieations not Franchise Fees - The Transfer Parties agree that none of the costs it must incur, or payments that it must make under this Transfer Agreement constitute franchise fees, and instead fall within one or more of the exceptions set out in 47 U.S.C. §542(g)(2), and each of the Transfer Parties fiu ther agrees it will not raise any claim or defense to the contrary, in any forum. Without limiring the materiality of any other provision, is agreed that the City would not have approved the Transfer without this provision. Section 6. Effect of Failure to Comply with this Aereement. The City may exercise any remedy that it has auailabie to it at law or at equity, or under the Franchise Documents ar Corrective Plan against any or all of the Transfer Parties that breach this agreement in any respect. In addition, without limiting the foregoing, if the Transfer Parties fail to comply with any requirement that requires action or prohibits a certa3n action after the Closing Date of the Transfer, the parties agree that the City may declare the City's approval of the Transfer void (in which case the obligarions of the parties shall be as if the Transfer never occurred); or may ternunate the cable francluse held far the City by any of the Transfer Parties. If any of the representations or warranties is false or misleading, the City may, at its option, revoke any approval of the Transfer which denial the parties agree shall be deemed timely, and in which case the obligations of the parties shall be as if the Transfer never occurred; or may terminate the cable franchise held for the City by any of the Transfer Parties. SeCtion 7. Indemnitv. Each of the Transfer Parties agrees to indemnify and hold the City harmless against any loss, claim, damage, liability or expense (including, without limitation, reasonable attorneys' fees) incurred as a result of any representa6on or warranty made by such party wlvch proves to be untrue or inaccurate in any respect; or azising out of any litigation in connection with the Transfer. Section 8. Sunset. In the event the Transfer does not close by April 1, 1998, or closes on terms that are in any material respect different from the terms disclosed to the City in writing, then any City consent to the Transfer shall be deemed revoked, and the Transfer timely denied. Section 9. Waiver of Claims. The Transfer Parties hereby waive any and all claims that they may have that any denial of the Transfer Application that results from Sections 1-9 fails to satisfy the deadlines established by applicable law including, without limitation, clauns based on, arising out of, or relating to section 617(e) of the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992), as amended, and agree 7 ��_�a- that they sha11 be deemed to have agreed to an extension of the time to act on the Transfer Application as required to make any denial effective. Section 10. Miscellaneous Provisions 10.1 Obli¢ations of Transfer Parties - The obligations of the Transfer Parties under Sections 1-3 aze contingent upon the City's approval of the Transfer, consistent with the promises made herein. 10.2 Acceptance of Agreement - By signing this Agreement, (i) each of the Transfer Parties accept, and agree to comply with, each provision hereof that applies to it, subject to Section 10.1; (ii) the Transfer Parties acknowledge and accept the City's right to consent to the Transfer pursuant to the Franchise Documents, and to enter into this Agreement; (iii) each of the Transfer Parties agrees that it will not, directly or ind'uectly, oppose intervention by the City in any proceeding affecfing the System except where intervention is prohibited by law; and (iv) each of the Transfer Parties agrees that the approval of the Transfer was granted pursuant to processes and procedures consistent with Applicable Law, and that it will not raise, and hereby expressly waives, all cla'uns to the contrary. 10.3 Renresentations Warranties Material - Any representations and warranties made in this Agreement are material. It is a material breach of this Agreement if any representation or warranty proves to be untrue, inaccurate or incomplete in any material respects. 10.4 Binding Agreement - This Agreement shall bind and benefit the parties hereto and their respective heirs, beneficiaries, administrators, executors, receivers, trustees, successors and assigns, and the promises and obligations herein shall survive the effective date hereof. 10.5 Governine Law - This Agreement shall be governed in a11 respects by the law of the State of Minnesota. 10.6 Draftine - This Agreement is the product of common negotiations among the parties and shall not be consttued against any party on any grounds related to drafting, revision, review, or recommendation by any agent or representative of any party. 10.7 Time of the Essence - In determiniug whether a party has compiied with this Agreement, the parties agree that time is of the essence. 10.8 Unaffected Riehts - This Agreement should not be construed to afFect any rights the US WEST Parties or Charter Parties may otherwise haue with respect to each other. 10.9 Counterparts - This docuxnent may be executed in multiple counterparts, and by the parties hereto on separate counterparts, and each counterpart, when executed and delivered, shall constitute an original agreement enforceable against all who signed it without production of, or accounting for, any other counterpart, and all separate counterparts shall constitute the same agreement. qfr�� 10.10 C�tions - The captions and headings of this Agreement aze for convenience and reference ptuposes only, and shall not afFect in any way the meaning and interpretation of any provisions of this Agreement. E��:Ix��]��7Ii]J By Mayor and By Date Director of Financial Services FOR US WEST, INC. : Its FOR CONTINENTAL CABLEVISION OF ST. PAUL, INC. : Its Date FOR MEDIAONE OF DELAWARE, INC. I� Its Date FOR CHARTER COMMi.)NICATIONS, INC. � Its Date � ��•�'� FOR CCTC HOLDINGS, INC. For itself and on behalf of Charter Comxnunications Twin Cities, Inc., Charter Communications Mivnesota, Ina and CC - King, L.L.C. I: Its FOR CHARTER COMMLTNICATIONS ST. PAUL, INC. � Its G.\client\4168\Ol\St. Paul Transfer Agreemen[ version7.doc 1� � JqN.30.1998 9�33AM j N0.176 P.3i3 . . , � q�.3a • ' , j, 10.14 Cautions - The captions and heaflin of this Agreement aze for convenience and ' ` reference purQoses only, and shall not affect in any a}� the meaning and iaterpretation of any provisions of this Agreement ; j � !� POR • CII'Y OF ST. PAUL { ._ ..._. �� i 'yor and By ' Date � ector ofFinanciai Services i I; ' FOR �S V�ST, nN � �� i� FOR I' ON�NBNTAI- CABLEVISTON OP S w PAUL, TI�tC. � ;' y � I�s Date I'OR �Nit;�IAONE,pF A�AWARE, INC. , L� C42vfMtJNICATIONS, INC. Y: � �� JAN 30 '98 10�33 PRGE.03 : . . ��' 10.10 Ca�tions - The captions and headings of this Agreement are for convenience and reference purposes only, and shall not affect in any way the meaning and interpretation of any provisions ofthis Agreement. FOR — -- BY - and By J TY OF T. UL / f�M�Q Date z-�Z'�(� of Financiai Services FOR US WEST, INC. By Its Date FOR CONTINENTAL CABLEVISION OF ST. PAUL, II�TC. By '�""'v�-'� lt�l5�—�_ Its �J�' OP�A S— M�1 Date ��b g� FOR MEDIAOI�iE OF DELAWARE, INC. By Its Date FOR CHARTER COMMUNICATIONS, 1NC. By Its Date 0 10.10 Carotions - The captions and headings of this Agreement aze for convenience and reference purposes only, and shall not affect in any way the meaning and interpretarion of any provisions of this Agreement FOR TF� CITY OF ST. PAUL B Mayor and By Date Director of Financial Services FOR L3S WEST, R�iC. � Its Date FOR CONTINENTAL CABLEVISION OF ST. PAUL, INC. � Its Date FOR MEDIAONE OF DELAWARE, INC. : Its Date FOR CHARTER COMMUN CATIONS, INC. By Its �U�dZ �lE /i�t/nf� �/�/ � �� :. G:\client\4168\OI�St Paul Transfer Agreement version7.doc FOR CCTC HOLDINGS, INC. For itself and on behatf of Charter Communications Twin Cities, Inc., Charter Communications Minnesota, Ina and CC - King, L.L.C. BY �� ^--- Its � �Bate 1 t2 � FOR CHARTER COMMUNICATIOI3S ST. PAUL, IIVC. ay Its�wtoQ V� n/16S+Q6i� ate �tt/ q� 10 qe-3a Council File # �3Z. RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented Refened To 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Date WI3EREAS, the City has granted a non-exclusive cable franchise to Co ental Cablevision of Saint Paul, Inc., as provided in Appendix H of the Legislative Cod , as amended by the Settlement Agreement of September 15, 1992 and the Transfer Agreeme of November 13, 1996, WHEREAS, Continental Cablevision of Saint Paul is now a wh y owned subsidiary of US WEST, Inc., which fact was known to the City and relied upon by it ' granting the Franchise; and WHEREAS, on July 16,1497, US WE5T, Inc. requested th onsent of the City to a transfer of corporate control from U S WEST to Charter Communicatio and WAEEREAS, the Francluse provides that every change, fer or acquisition of control shall make the Franchise subject to cancellation unless and until Counc3l shall have consented thereto, which consent will not be unreasonably withheld; and WIIEREAS, state and federal law require City c sent far said transfer to be effective; and WIIEREAS, staff identified certain detrimen consequences to the City and to the public from the proposed transfer; and WI IEREAS, the Transfer Agreement and placement Franchise, a copy of wluch is attached hereto, negotiated with Ciry staff, and executed y authorized representatives of the transfer parties, provides remedies for these detrimental con quences, NOW THEREFORE BE IT RES VED, that the Mayor and the Director of Financiai Services are hereby authorized to execut e Transfer Agreement � and, be it further RESOLVED, that staff be d hereby is directed to draft the appropriate ordinance amendments for submission for uncil consideration. Green Sheet # 62JB9 � Requested by Department oE Benanav Blakey Bostrom Coleman Hanis Lantry Reiter Adopted by Co cil: Date Adoption � by Council Secretary Approved by Mayor: Date � � Form Appr� ' Atto �y R i� _ \ �__ � Approved by Mayor foc Submission to Council � � vrrv-14-98 32:39 FROM=CHARTSR COMMUNICA710N5 Ip:3}49656640 _. CuRent C?rganizational Structure Twin Ci�ies Transac�ian �-, As of May 27, 1987 (date of agreemenf} Warburg. Pincus Ve�rtures> LP .., � - Cirarter Communicatioris, tna f`Charte�'j CCTC Hoidings, ina {"CGTC'� 100% Charter Commua"�cations Twin Cities, Vnc. {"7win Cities'� 99% xeiso & Company Equity Note held Selter Senior Bank Faciiity 99°/a PAGE 5/B �i3 „ �°�"y"� Charter 4 1 °lo �ommunications - 1 ° � - Minnesota, fic. CC - Kmg, LlC (�Minnesata7 CC - St Paut, LLC �•� ("St Paul") TWlN6XLS 7nzre7 s:oo ntn : �nn-ay-9B 12:39 FROM:GNARSER COMMUNICATIONS 1D=3}g9656640 � Organizationat Structure . Twin Cifies Transactian � Step 1- lmmediately a�ter Purchase of Assets from Seliers Warbutg, Pincus Ventures, LP Charter Comm¢nications, inc. ("ChaRef� x�� 8 Company CCTC E9'�Y tioEd'mgs. lnc. Note held ("CCTC'� Se!!er 1D0% `Fting VdEOt2bfe Sy5fem5 ' St Paul Systems Charter Communications Twin Cities, !nc ' ('Twin Ci6es") ' 99% Senior Bank Faciliiy ti06°!o ••'° Chartet � ° �O Communiptions - Minnesota, tnc. CC - Ksag, LLC ��nnesoW'� ( King") 1 PAGE 6/6 a�'�� 99% CC - SL Pauf, LLC . : C'St Pau1") �nam� 449 AM 7WINi0XlS � �.. .-�o t FROM�CHAR=ER COMMUNIGATIONS ID:3149656640 Organizationai Struci�ure f Twin Cities Transaction - Asset Purchase _ Step 2- After intemal Asset Transfers Warbur9, Pincus Velrtutes,l.P �4 cnarcer ' Commuri�cations, lnc. C�K� CCTC Hoidings, lna ("CCTC'� 740°h cr,arter Communications 7win Crfies, Inc. ('Twin Cities'� 99% Keisa & , ComPanY Equity Ndle held by Seller Senior BanK Faciliq' 99°h 1 M3nager CYYdtLEf �% COt7ttT1UtliG2UOT15 Minnesota, Inc. CC - lGng. LLC (^Minneso�'7 f'w�9'� � King Yuieoeabte sys[ems in Mirtnesota and WisCOnsin ' Northem Dakota Franchise PAGE 7/6 � � �� CC - St Paul, lLC (°St Pau47 ' St. Paui Franchise �n ��s� 9i'�AM TWItJ'1S.XL5 � ... .i ao a FROM:CHARTER COMMUNICASIONS ID:3149656640 PAGE 2/B � �� CORPORATE GTJAR.AiV'IY OP CHARTER COMMLJNICATIONS, INC. AND CCTG HOLDINGS, INC. This Cozpozate Guaruiry (this "Guarant�') is executed as of Jaavarp 1998, bp GHARTER COMMtJNICATIONS, INC. and CCTC HOLDINGS ING (colleaively, "Gnarantors") for che bene�it of the muniapalicy of tb.e Ciry of St. Pavl (r.he "Citp'). WITNESSETH: WFiERl?AS, pvssaaat to the cable television fraachise (che "F'ranchise") between rhe Authority and CGSt. Paul, LLC ("Fraachssee"), and cestain agreemenrs, understandings a,nd Franchise amendmeau zelaud thereto, Franchisee has cercain obligations relazed to tlze provisioa of cable television and relased services for the Auchoriry's ciuzeas; and �REAS, Guaraacon have pzopased an acquisiuon, pursuant to which tiieir affiliate, CGSz. Paul, LLC (`Traasfereen), will acquire the Franchise, and succeed to Franchisee's obligations thereuader, aad WHEREAS, Guarantors are providing this Guaranry w tIie Authoriry to fursher supporc the financial qualifications of 7ransferee as a pazt of xhe Franchise transfer process to comply wirh rhe requiremenu of tlze Praachue; NOW'THEREPORB, Guaranton hereby agree as follows: 1. Guarantion hereby joimly and severally, irrevocably and unconditionally guaranry to rhe Aurhozxry, iu successors and assigas prompc and sai,isfacCOry payazezet and performance bq Transfeme of che Fraachise anc! r,hose cexsain aa�reemenrs, uncierstaadina and Franchise ameadmeuu relazed thereto, and all applicable federat, state and local laws, ordiaances and regulatioru. 2. This Cruaranry shall be e$ecrive upoa the opening of bvsiness on the date when Transferee acquires rhe Frazschise, aad shall nu�. throughout the term of the Franciaise and any renewal or excension tlsereof, exceps that t4sis Cruaranty shall terminaze at such earlier time thaz GuaranLOrs lawfully transfer ownership and conuoi o£ Transferee rovith the consens of the Ciry for such sransfer aud a substitur.e of a Gnarantor for the Transferee acceptable to the Ciry. 3. Tn the aveac that Guaruxton should breach or £ail to timely perform any pro�isions of this Guaranry, Guarantors shail pay rhe Anthoriry all coscs and expenses (mcludiag coun cosu and attorneys' fees) incurred bq the Authority in the successful enforcemem hereof. ��,�a- 4. Guarantors represent and wazrara that t&e execauon, delivery and performance by Guaraaton o� this Csuasaaty, aad rhe consuassnation of the traasactions coatemplared hereuader, c!o not, and will nor, conuavene or conflia miriz any law, sKacuze or regulation whaucever co ivhich either Guarantor is subjecc, or constiturx a defaulc (or an evens which with aorice or lapse of sime or botfi would consacuce a default) undex, or result in the breach of, aaY indeatvre, mort deed of trust, chaz'ge, lien or aay cozttraa, agreemeac or other insu to which eirher Guaraator is a pany ar wbich may be agplicable co eisher Guaraacor. '�his Gua.raary is a legal and binding obli�tion of eac4� Guarantor and is enfosceable in aaordance wir,h iu terms, except as limited by baakruQcry, insolvency or other �aws of generaI applicuion relating to che enforcemeac of creditors' righu_ 5. Guarantozs liabiliry hcreunder shall be primary and not secondary, aad shall be joim and several wich that of the Transferee. �'he Ciry may psoceed againsc Guazantors under this Guaranry without initiating or exhausring iu remedy or reznedies against the Transferee, and maq proceed agaiztsc che Tiansferee and/or aay one or more of the Guaranrors seguately or concurreazly. The Guaranty does not require rhe Ciry to provide additional norice beyond r,haz it is required to �ave under rhe Franchise to the Tzans£eree, and Guaranton waive any notice requiremenc rhas might otherwue apgiy. Guaraatoss obligations are zrrevocable, uncondiuona3 and absolute (excepL az provided by paragraph 2 hereo� arsd shall not be a£fected by: a. T4ie waiver by the City of rhe performan�ce or observance by che Trans£eree or any of the Guarars�on of any of the obliyations under tkte Franchise, this Guaranty, or the Transfer A�reement dated January 14, 1998. b. I'he extension of the term of, or che egtension of ume for performance uades, or azsy other amendment so, the Francluse, or applicable law affecting che Fs�anchise (whether ma�erial or otherwise)> c- The release of aap o£ tlxe Guarantors or the Transferee or any orher person who may be ]iable vader the fraachise, or aap a�reemeat related thereto; d. The voluatary or involumary Izquidation, dissolutiion, sale of all or subscantiallq all of the assets, snarshalling of assets and liabiliues, receivership, conservacorship, iasolvency, banb;ruptcy, assegnmeac �or the benefii of creditors, reorganization, arraz�emeuc, composition or readjustmens of, or other pr oceediag a{fecting the Trans{eree, any of rhe Guazantors, or any of their assecs. 6. Gnarantors agree that no faiIure to exercise, aad ao delay in exerc; ��, on the par� of the Aushoriry, any right hereuader shall operate as a waiver r.hereof, nor sha2l any single or partial exercise �hereof preclude azzy oslter or further exezcise thereof or the rarercise oi any other righs. The rights of rhe Auchoriry heseunder sha11 be ia addirion to a11 other rig)ats provided by law_ Pdo modificacion or waiver of any provision of rhis G�aranty, nor consent to depanure therefronre, shall be ef£enive ualess agreed to in writin;, aad ao such consent or waiver shajl extend beyond the par�icular case and purpose invoIved. No aotice or demand b vea in any case shall coastitute a waiver of tl�e right to take orher action in rhe sune, similaz or other instances without such rzotice or demand JAN-14-98 12:39 FROM=CHARTER COMMUNICAIIONS ID=3149656640 PAGE 4/B q�� l 7. This Guaranry shall be govezned by and construed in accordance with the laws of che Staze of Minaesora and rhe applicable laws of the Uncited Sutes of Amezica. 8. This Guaraary may be aznended oaly by an instrssmear in wriun� executed by rhe parry oz an authorized represeivazive of the pany or paraes a whom such amendmeat is sought co be eaforced. IN WI'TNESS �Y�HEROF, Gvarantors have cavsed this Guaranry to be duly egecuted by their respeccive dvly authorized officers as of the day and year fusc above wrinen. CHARTER COMMITNICATtONS, INC. By '�'ic]e ATIEST_ CCTC HOLDINGS, INC. g Y — Title ATTEST: ��.aa GI,�_ ��- TRANSFER OF SAINT PAUL CABLE TELEVISION FRANCHISE from Continental Cablevision of St. Paul to CGSt. Paul, LLC Staff Report prepared by Gerry Strathman, Council Research Director Holly Hansen, Cable Communications Officer January 12, 1998 �� Background The City has the authority to grant a non-exclusive cable television franchise and enforce provisions of that franchise. This authority includes transfers or sales of the cable television system and is derived from and defined by local, state and £ederal laws. The City may exercise its authority to protect the interests of its citizens in areas such as public safety and consumer protection. The City may also ensure that its citizens benefit from the private commercial use of public rights of way. Although the 1996 Telecommunications Act was intended to create competition in the telecommunications industry, littie competition has occuned in local cable markets. This lack of competition heightens the importance of 1oca1 franchising authorities exercising their regulatory powers to protect public interests. Transfer Process Charter Communications filed an FCC Form 394, Annlication for Franchise Authority Consent to Assignment or Transfer of Control of Cable Television Franchise, with the City on July 16, 1997. According to federal law, the City has 120 days in which to act on the transfer application unless the parties agree to an extension. The date far City action has been extended iwice and the current date is January 21,1998. The City Council held a public hearing on the transfer September 3, 1997 and continued that hearing until Noveznber 12, 1997. The hearing was continued again until January 14, 1998 to allow time for Charter to respond to data requests made by City staff and for staff'to review the information that would be submitted by Charter. The parties will need to extend the date for final action until March 1998 to provide sufficient tune for adoption of a franchise ordinance. Issues and Analysis When considering the request for consent from the City of Saint Paul (City) to the assignment of the Saint Paul Cable Television Franchise from Con6nental Cablevison-Saint Paul, Inc. to CC- Saint Paul, LLC, the City must consider the qualifications of the proposed buyer and evaluate the impact of the proposed transfer on the City of Saint PauL The Federal Communications Commission (FCC) has determined that franchising authorifies, such as the City, may consider the legal, technical and financial qualifications of any proposed transferee when evaluating transfer requests. It is also well established in law that the City, as a party to a legal contract, has the right to protect itself from hann resulting from this proposed transfer. Legal Qualifications The current holder of the Saint Paul franchise is Confinental Cablevision-Saint Paul, Inc., a wholly owned subsidiary of US WEST. US WEST is not legally qualified to continue to hold the Saint Paul cable television franchise because federal law prohibits such ownership. Federal a�� law prohibits telephone companies such as US WEST from purchasing cable systems in their service azeas. When US WEST purchased the holdings of Continental Cablevision, Ina (now MediaOne) in 1996, it conflicted with the federal law prohibiting telephone companies from purchasing cable systems in their service azea. To aliow this national transaction to go forwazd, the FCC, over City objections, allowed U5 WEST to purchase the Saint Paul cabie system and others in their service area if it divested of these holding within a short time. The FCC gave US WEST until August 15, 1997 to enter into an agreement to divest of these in-service-area systems. US WEST has agreed to sell the cable systems in the Twin Cities area, including the Saint Paul system, to Charter. Pursuant to this agreement, Charter Communications submitted an application to transfer control of the Saint Paui cable television franchise from Continental Cablevision - Saint Paul, Inc. to CC - St. Paul, LLC. This proposed purchase is a complicated transaction involving a pazent company (Charter Communications, Inc.) two equity investors (Walburg, Pincus Ventures, LP and Kelso & Company) and a banking consortium led by Chase and Toronto-Dominion. Based on the materials submitted in the transfer application, it appeazs that all of the entities involved in this transaction are legally formed and there are no apparent illegal conflicts of interest. Further, there are no federal regulatory barriers to this transaction. Based on the representations in the transfer application, it appears that CC-St. Paul, LLC is legally qualified to assume control of the Saint Paul cable television system. Technical Qualifications The proposed transferee must have the technical knowledge and experience required to operate the cable television system in Saint Paul successfuily. The transfer application shows that CC - St. Paul, LLC will be the local operator and that they intend to ask the current employees of Continental Cablevision - St. Paul to continue with CC - St. Paul, LLC. Given that these employees are currently operating the Saint Pau1 system, it would appear that the necessary technical lrnowledge will remain with the transfer operator. Additionally, the management group, Charter Communications, owns, operates and manages cable systems in eighteen states with a total of 473 franchise agreements and serving approximately 1,100,000 subscribers. Based upon the representarions in the transfer application, it appears that CC-St. Paul, LLC is technically qualified to operate the Saint Paul cable television system. Financial Qualifications. Successful opexation of the cable television system in Saint Paul requires the operator to haue the financial resources required to meet the needs of the more than 52,Q00 subscribers in Saint Paul and the community as a whole. The applicant needs to show that it can meet the current and anticipated needs for cable television services in the City of Saint Paul. The transfer application attempts to show the proposed operator has the financial ability to meet these needs. The City has contracted with Crowe, Chizek and Company LLP to conduct a financial review of the pro formas and other financial information submitted in support of this application. (See attached) They compared the assuxnptions and resultant projected amoimts with cable industry stafistics compiled by Paul Kagan Associates, Inc. and wiffi historical data provided by the current J�;;. -i)y' y81FR11 ll �it, December 31, 1997 TEL:�,�Oa P. ii�t3 �`~,�` CROWE CHIZCK Ms. Holly Hansen Cable Communications Officer City of Saint Pau7 15 West Kellogg Boulevard b8 City Hall SaintPaul,?�'finriesota 55102 INTRODUCTION This report presents information resuiring from our analysis of data contained in the document eniitled 'Transferee's Application to Ci;y of Saint Pau1 for Con�ent to Assignment of Communit}' Anienna Television Franchise 4om Continental Cablavision of $t. Paul, Inc. to CC• St. Paul, LLC, dated July 1997" ("Applicztion"), and other related documentation subrn;tted in support af the Application. The Application and other related documentation contain finanr.ai projections (pro formas) Ior the years �9a3 - 2fl06 wftic3� are based upon ceriain assumpti�r, We provide no assurance as to the like!ihood that any projected a77}o�u�ts or assumptions will be realized. Where applicable we compared the assumptions and resultant pro}ected amoiu�ts w�th cab}e industry statistics compiled by Pau1 Kagan Associates, Inc. {PK), and with historical d..ta provided by d1e current franchise holder_ The term "consistent" as used in t}us report mea�; within ten percent of projections and Mstorical datz. OPERATL'�'G ItEVEi��i.iES, EXPENSES, AND CASH FLOWS Subscriber Gro�+�th and Penetralion The pro forma aznounts aze consistent wiih PK projections. Qperatin� Revenues and Rates The pro forma amounts zre consistent with PK projections and with historical da�i of ti� turrent franchise hulder. i at�- "�� 9 J;";. -li�i• ��81FF1I I 1 � 18 TEL b�{��dinuS P.iru.� ��,�� OPERATIIvG REVENLJL-,;, EXPFIVSFS, Ai`'D CASH FLOWS (Continued) Operating Exqenses The pro forma amounts are consistent with PK projections and historical data of the nurr_nt franchise holder. Opera6ng Cash Flow iOCFI and OCF % The pro forma amounks and percentages are consistent with PK projections. CAPITAL EXl'ENDiTiJRES Ll�grade & Rebuild & Converters The pro forrna amounts were low in that Saint Paul specific iterns for upgradefrebuild and I- . Net expendihues �vere not adequate when compared to the City's enguieering estimates_ Maintenance Capital The pro forma zmounts wese consistent �vsth lustorical data. FI'�i IANCII�'G Borrowings ar+d Repay-menis The Applicarion stated that Charter Communications TH�in Cities, Ine. (CC7C) would borro:v funds in the form of t}vee senior secured credit facilities, and in the form of a seller's nou. Principa] repayment terms would be structured so as to allow CCTC to meet its debt covenanM. The pro forma reflects repay�ments consistent �+�d1 the teruu indicated in the AppIIcaton. Interest I2a tes The Application discloses several opHons available to the borrower. The pro forma reflecis average interest rates coruistent x>ith the options available as listed in tihe Application. 5uch average rztes �vere consistent with market conditions as of November 1597. Hox�ever, we provide no zssurance that the ,lpplicant can obtain such raies. Debt per Subscriber The pro forma amounts ;or debt pec subscriber are higher than PK projections &om ]��3 throvgh 2002, and lower hom 20a3 through 2�06. 2 J-'.'!. -iiy' 981FR1I 1 I 19 FLT�Pu'�TC�?G {Continued) Debt to Operating Cash F1ow (OCF) The pro foraia amounis for Debt to OCF are higher than PK projections from 1998 through 1999, and lower from 2000 through 2006. FREE CASH FLOW Free Czsh Flow {Ooerating Cash F1o�v less Canital Ex�endihues and Prindpal and Interest) The original pro forma and the revised pro forma (aRer additional capital expen�itures) shov��ed positive cash flows for the years 1998 through 2006. . . . . . 1Ne are pleased to provide our observations and comments on the Application and other related documentation. If you should have any questions or would like to discuss any matters fzrtr�cr, please contact us. Tltis report is intended solely for t},e use of the City of Saint Paul, Minnesota. However, this report is a matter of pnblic record and its distribution is not limited. 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