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HomeMy WebLinkAbout1993-383RESOLUTION NO. 93-383 RESOLUTION OF THE CITY OF SAN BERNARDINO APPROVING THE TRANSFER OF CABLE TELEVISION FRANCHISE FROM CHAMBERS CABLE OF SOUTHERN CALIFORNIA, INC., TO THE MARKS PARTNERS, L.P. WHEREAS, Chambers Cable of Southern California, Inc., ["Seller"] is a duly authorized holder of a franchise authorizing the operation and maintenance of a cable television system within the City of San Bernardino, pursuant to City of San Bernardino Ordinances No. MC-2395, as amended, and an assignment dated 8-30- 83 ["the Franchise"]; and, WHEREAS, Seller and the Marks Group, Inc., ["Purchaser"] are parties to that certain Asset Purchase and Sale Agreement dated August 6, 1993 ["the Agreement"] wherein Seller and Purchaser agree that Purchaser will acquire all of the assets used in the ownership and operation of the cable television system; and, WHEREAS, the Agreement provides that Purchaser has the right to assign all of its right, title and interest in the Agreement to to The Marks Partners, L.P. ["Partnership"J, a Delaware limited partnership which is 79% owned by Purchaser; and, WHEREAS, the Partnership desires to acquire from Seller all the rights and privileges of the Franchise and assume all of the obligations of Seller under the Franchise accruing from the date of closing under the Agreement; and, WHEREAS, the Franchise, as amended in 1968, authorizes the transfer and assignment of the Franchise by Seller, provided that the net worth of purchaser at the time of such transfer is not less than $250,000.00 (adjusted to include increases in the Cost of Living Index for Southern California over the then current Cost of Living Index), as shown by a statement of net worth certified 1 93-383 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION OF THE CITY OF SAN BERNARDINO APPROVING THE TRANSFER OF CABLE TELEVISION FRANCHISE FROM CHAMBERS CABLE OF SOUTHERN CALIFORNIA, INC., TO THE MARKS PARTNERS, L.P. to by a licensed certified publoic accountant; and, WHEREAS, the City has received such evidence of financial responsibility submitted by the Purchaser and its affiliates and has found that Purchaser and its affiliates have the financial managerial ability to operate the system in a proper manner; and, WHEREAS, the Purchaser has agreed, by letter (a copy of which is attached hereto as Exhibit "A" and incorporated herein) in response to the City's request, to continue with a fiber optic rebuild of half of the City which was originally commenced by Seller two years ago, and thereby increase the number of channels from 36 to approximately 54; and, WHEREAS, the Purchaser has further agreed by letter (Exhibit "A") to abide by any previous agreement between the City and Seller, including, but not limited to, the franchise ordinances and any attachments or amendments thereto, which includes the Judgment and Settlement Agreement in the case of City of San Bernardino v. Liberty T.V. CabLe, Inc., Case No. 82-6876 WMB(Gx), U.S. District Court, Central District of California; and, WHEREAS, Seller has requested the approval of the City for the transfer and assignment of the Franchise by the Seller to the Purchaser; BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: SECTION 1. The Mayor and Common Council of the City of San Bernardino hereby approve the assignment of the Franchise and 2 93-383'1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION OF THE CITY OF SAN BERNARDINO APPROVING THE TRANSFER OF CABLE TELEVISION FRANCHISE FROM CHAMBERS CABLE OF SOUTHERN CALIFORNIA, INC., TO THE MARKS PARTNERS, L.P. related assets of the cable televsion system by Seller to the Purchaser. SECTION 2. The Mayor and Common Council hereby affirm that: (a) the Franchise was properly granted; (b) the Franchise is in full force and effect; (c) the Franchise is scheduled to expire on December 31, 2003; and (d) to the City's knowledge there exists no fact or circumstance which constitutes or which, with the passage of time or giving of notice or both, would constitute a default under the Franchise or will entitle the City to cancel or terminate the rights thereunder, except upon the expiration of the full term thereof. SECTION 3. The authorization of the transfer and assignment of the franchise from Seller to the Purchaser is expressly conditioned upon, and shall be deemed effective upon, the consummation of the sale to the Purchaser of the Franchise and related assets and the closing of the transactions under the Agreement. / / / / / / / / / / / / / / / / / / / / / / / / 3 93-383 1 RESOLUTION OF THE CITY OF SAN BERNARDINO APPROVING THE TRANSFER OF CABLE TELEVISION FRANCHISE FROM CHAMBERS CABLE OF SOUTHERN 2 CALIFORNIA, INC., TO THE MARKS PARTNERS, L.P. 3 4 I HEREBY CERTIFY that the foregoing resolution was duly 5 adopted by the Mayor and Common Council of the City of 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 San Bernardino at a regular meeting thereof, held on the October, 1993, by the following vote, to wit: Q~~ Ci.'t~~lerk The foregoing resolution is hereby approved this ~ day October , 1993. day of 4th Council Members: AYES NAYS ABSTAIN NEGRETE x CURLIN --'L- HERNANDEZ --'L- OBERHELMAN ---1L- DEVLIN ---1L- POPE-LUDLAM --..X-... MILLER --..X-... of _____------ .) 7/, ' / c/;;vl/\ L / "(..A~{ Tom Minor" Mayor City of San Bernardino Approved as to form and legal content: JAMES F. PENMAN, City Attorney c;~) 4 ABSENT Mr. Frank Keller CATV Manager City of San Bernardino 300 North D Street San Bernardino, CA 92418 HE ARKS ROUP 1836 Union Street San Francisco, CA 94133 (415) 563-2288 FAX: 563-2351 93_38.2337 30th Avenue NE, Suite 1 -;eattle, Washington 98125 206) 440-9030 FAX: 440-9032 Dear Mr. Keller, It was a pleasure to meet with you last week and to hear about some of the future plans and desires regarding telecommunications in the City of San Bernardino. Our company is extremely excited about providing cable television service to such a progressive city. Because of The Marks Group's commitment to civic involvement and visions of advanced cable telecommunications for the City of San Bernardino, we strongly believe that together we will make a good match. I am writing this letter to confirm to you our company's desire to start on day one of our ownership of the cable system, to progress toward the next century of communications. We intend to continue with a fiber optic rebuild of half of the city, that was originally started by Chambers two years ago, so that soon, we will be able to increase the number of channels on the system. We expect that upon completion of the rebuild, we will be able to increase the number of channels being offered from 36 to about 54. Also, please understand that our company will abide by any previous agreement between the City and Chambers Communications, including, but not limited to, the franchise ordinance and any attachments thereto. We recognize that in order to grow a business we must look at the franchising authority as a partner, as opposed to an adversary. We both know that in order to achieve all of the great things that are possible for both of us, we must be able to at least agree on what has already been established. I trust by now you have had the opportunity to check references of our firm and hope that they have been positive. The City of San Bernardino, through our joint efforts, should be the telecommunication paradigm that many other cities strive for. We were thoroughly impressed by your ambitions and hope that soon we can work together to make them a reality. Sincerely, f2M~:~ President WDM/clb b)(!I/,d/ T It/J' h .----___u_ 1 93-383 RECE'\lf~n r."[', .~I E~'I '.!.' ':c)--',,[,' ',_-i._i'i' SETTLEMENT AGREEMENT .C5 ~rrJ 20 ".'Q'1 'J ';) ,___,_, r-"" . (,.. PARTIES: CITY OF SAN BERNARDINO, a Municipal Corporation ("City"), and CHAMBERS CABLE OF SOUTHERN CAL., INC., an Oregon Corporation ("Chambers"). RECITALS: Chambers provides cable television service to subscribers within the City of San Bernardino under the terms of a franchise from the City of San Bernardino granted pursuant to Municipal Ordinance No. 2395, as amended, and an assignment dated 8-30-83. In 1983, when Chambers acquired the San Bernardino cable television system and the franchise, the City was involved in litigation with the previous franchisee, Liberty T.V. Cable, Inc. As part of the obligations assumed by Chambers in the acquisition of the cable television system, Chambers agreed to become a party to and to be bound by the terms of a final judgment in the case of City of San Bernardino v. Liberty T.V. Cable, Inc., Case No. 82-6876 WMB(Gx), U.S. District Court, Central District of California, a copy of which is attached hereto as Exhibit A hereto (hereinafter referred to as the "Final Judgment"). In addition to providing all parties with certain benefits, the Final Judgment imposed upon Chambers specific obligations which are set forth in paragraph 4 of that Final Judgment. Among those obligations was the duty set forth in paragraph 4.(c) which required Chambers to provide to the City "notice, facilities and training necessary for use of said community service channels." The City and Chambers have disagreed over the meaning of that provision and the extent of the unfulfilled obligation, if any, that Chambers has under that provision. During 1991, the City conducted an audit of the payment of franchise fees by Chambers during the years 1988 to 1990 (hereinafter referred to as the "Audit"), and concluded based upon its interpretation of certain provisions of the franchise agreement, that Chambers had failed to pay franchise fees on certain types of revenue, and that Chambers had failed to pay franchise fees at an increased rate of 5 % of its gross revenues. When Chambers acquired the franchise, the franchise fee was fixed at 4 % . Chambers disputed the City's interpretations of the franchise agreement, and disputed the right of the City to unilaterally increase the franchise fee rate. Settlement Agreement - 1 RMS\Chambers.SA 93-383 The parties have now concluded that it is in the best interest of all concerned to resolve their differences and enter into a comprehensive settlement agreement of all issues relating to the Final Judgment and the audit of franchise fees. AGREEMENT: FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is acknowledged, the parties agree as follows: 1. Final Judgment: Final Judgment. The parties agree as follows with respect to the a. The obligation of Chambers under paragraph 4.(a) of the Final Judgment to pay to the City a sum of money equal to the number of current subscribers multiplied by 50 cents for each calendar year is satisfied. No further obligation exists with respect to this portion of the Final Judgment. b. The obligation of Chambers to provide "notice, facilities and training necessary for use of said community service channels," as set forth in paragraph 4.(c) of the Final Judgment is satisfied. No further obligation exists with respect to this portion of the Final Judgment. c. The City shall assume responsibility for administering the PEG access channels, including notice, facilities and training necessary for their use by the public. d. Chambers shall provide channel space for PEG access, as provided in paragraph 4.(b) of the Final Judgment, and shall maintain the system, at no cost to the City, including any necessary hard or soft inner-connects, as well as maintain those channels on its system. e. All provisions of the Final Judgment not specifically modified by this Settlement Agreement shall remain the same. 2. Settlement Regarding Audit Issues. The parties agree to modify the franchise ordinance to which Chambers is subject as follows: a. The franchise fee is 5%, effective August 1989. City agrees not to increase the fee in the future without the consent of Chambers. City acknowledges that Chambers has paid all franchise fees owing for all periods prior to January 1, 1992. Settlement Agreement - 2 RMS\Chambers.SA 93-383 b. The parties agree that the definition of "gross revenues" under Chambers' franchise agreement does not and shall not include revenue from the following sources: (1) installation charges and converter box and other equipment charges; (2) trip charges; (3) advertising revenues; (4) leased access/home shopping revenues. c. All of the above modifications to the franchise ordinance shall apply throughout the balance of the current term of Chambers' franchise, and during the entirety of the renewal term of the franchise, which the parties acknowledge has been extended through and including December 31, 2003. 3. Payment to City. Upon execution of this Agreement, Chambers shall pay to City the sum of $130,000.00. 4. Miscellaneous Provisions. a. Except for the obligations set forth in this Settlement Agreement, City and Chambers and each of them hereby fully and completely release and discharge one another and each and all of one another's past and present officers, employees, agents, and attorneys from any and all claims, demands, causes of action or liabilities now are asserted, which have been asserted or which could have been asserted against anyone or more of them, which arise out of the controversy concerning the interpretation of the Final Judgment and the Audit. b. This Settlement Agreement shall govern the course and conduct of the parties in the future with respect to the subject matter specifically described herein. Any inconsistency between this Settlement Agreement and the Final Judgment or the franchise ordinance shall be governed by this Settlement Agreement. c. No rights are created in any person or entity by this Settlement Agreement, aside from the parties hereto. Nothing contained in this Settlement Agreement or the negotiations leading up to this Settlement Agreement constitutes an admission of fault or wrongdoing by any party hereto. Settlement Agreement - 3 RMS\Chambers.SA ,------ 93-383 d. City agrees to adopt appropriate modifications to the franchise ordinance that are consistent with the provisions of this Settlement Agreement, subject to approval by Chambers. The parties hereto shall execute any and all other and further documents necessary to implement this Settlement Agreement. e. This Settlement Agreement shall inure to and be binding upon the assigns and successors in interest in each of the parties hereto. f. Each party acknowledges that it has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. " Each party, being aware of this section, hereby expressly waives and relinquishes all rights and benefits it may have thereunder, as well as any other statutes or common law principles of similar effects as to any claims arising out of facts existing prior to January 1, 1992. DATED "'" O?!" d" of ~_~. .. 'J..-.t993 CITY OF SAN BERNARDINO CHAMBERS CABLE OF SOUTHERN CAL., INC. By: (Li~_~A~LJ ./ Carolyn S. Cha ers Its President Approved as to form and legal content. JAMES F. PENMAN, CITY ATTORNEY f' Xc? ettIement Agreement - 4 RMS\Charnbers.SA c/ ~A.\' ,.' 93-383 .' 1 2 3 4 5 6 7 8 9 10 II 12 13 14 U 16 17 18 19 20 21. 22 23 24 25 26 27 28 """ ( *'"\ 1',/' . - RALPHH. PRINCE, City Atto6QPGED JOANNE FENTON, Deputy City Attorne~ and FEB 2. - bC4 BURKE, WILLIAMS & SORENSEN . RICHARD R. TERZIAN ~'[RI~ U.S. DISTRICT CO' SCOTT F. FIELD -"c;' DIS1R!Cl OF CA"r" 707 Wilshire Blvd., Suite 3300 Los Angeles, California 90017 s - 3(q ../. / . F..ILED FEB 29 1984 ClERK, U. S. DIS1RICl COURl CENTRAL DIS1RICl OF CALIFORNIA BY DEPUTY Telephone: (213) 485-0101 .~...~.. ~. .,........ EN1'EREP Attorneys for Plaintiff and Counterdefendant HI1 ~ 9 i.9?li UNITED STATES DISTRICT COURT 1l','i,W,ICI C()Il"~. . t' <..~ U.S. O' c'\.\fO"',\I, .~t:-,\nl Vt'1 r r. ...... CENTRAL DISTRICT OF CALIFORNldt\1W.\. \1',0,1 ,'. ' rF ,,~ CITY OF SAN BERNARDINO ) No. 82-6876 WMB (Gx) a municipal corporation, ) ) Plaintiff, ) ) v. ) FINAL JUDGMENT ) LIBERTY T.V. CABLE, INC., ) a Delaware corporation; and ) DOES I through X, Inclusive, ) ) Defendants. ) ) I ) LIBERTY T.V. CABLE, INC., a ) Delaware corporation, ) ) Countercomplainant, ) ) v. ) ) CITY OF SAN BERNARDINO, a ) municipal corporation, ) ) Counterdefendant. ) ) ~ Plaintiff and counterdefendant City of San Bernardino ("City"), having commenced this action in the 17/'///8/ r '/J I' . ... 93-383 1 2 :5 4 5 6 7 8 9 10 II 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 20 21. 22 23 24 25 25 27 28 superior Court of San Bernardino County (No. 193743), and said action having been duly removed thereafter to the above- entitled Court and denominated as set forth above and defendant and countercomplainant Liberty T.V. Cable, Inc., a Delaware corporation ("Liberty"), having appeared and filed its answer and counterclaim and, subsequent to the filing of this action but prior to date of this Final Judgment, Liberty having transferred and assigned certain rights with respect to providing of cable television services within City, as more particularly described below, to Chambers Cable of Southern Cal., Inc., an Oregon corporation ("Chambers") which is to become a party hereto and be bound by the terms of this Final Judgment and said parties by their attorneys having severally consented to the entry of this Final Judgment without trial or adjudication of any issue of ~act or law herein, without taking of evidence, and without this Final Judgment constituting any evidence or admission by any party in respect to any issue of fact or law herein, it is hereby ORDERED, ADJUDGED and DECREED as follows: 1. This Court has the jurisdiction of the subject matter of this action and of the parties hereto. 2. For the purpose of this Final Judgment: (a) "Franchise Ordinance" shall mean Ordinance No. 2395 of City, as amended to date; (b) "Franchise" shall mean the non-exclusive ~ right to provide cable television services within City pursuant to the -2- . , ., 93-383, . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Franchise Ordinance now held by Chambers as successor in interest to Liberty; (c) "Cable Television Services" shall mean signals provided by Liberty or Chambers, for its subscribers within City, whether over cable, wire or otherwise for the purpose of transmitting television or other information; (d) "Subscribers" shall mean persons within City heretofore, now or hereafter having agreed with Liberty or Chambers to receive cable television services; (e) "Rates" shall mean fees or charges of any kind imposed by Liberty or Chambers upon its subscribers for cable television services. (f) "Companion Case" means that certain action entitled Liberty T.V. Cable y..:. City of San Bernardino (No. CV 82-5432 WMB) now pending in the above-entitled Court; (g) "Preliminary Injunction" shall mean the preliminary injunction heretofore filed in the Companion Case, on December I, 1982. (h) "Escrow Fund" shall mean that certain ~ 26 27 28 escrow No. 196-16202 held by Bank of America National Trust & Savings -3- 93-383 1 2 :5 4 5 6 7 8 9 10 II 12 13 14 - 15 16 17 18 19 20 21 22 23 24 25 25 27 281 ~ i Association as escrow agent at its main branch in City, (No. 196) into which certa,in sums collected by Liberty and Chambers from its subscribers have been deposited December 1, 1982, since pursuant to the preliminary Injunction, and which now contains a sum in excess of One Hundred and Fifty Thousand Dollars ($150,000) . 3. City will not hereafter regulate or control rates for cable television services provided by Chambers under the franchise and the consent of City to any increase or decrease of rates by Chambers need not be obtained. This paragraph 3 shall supersede the provisions of Section Seventeen of the Franchise Ordinance and similar provisions of any other City ordinance regulating rates for cable television services with respect to the parties hereto. 4. Chambers shall provide to City hereafter: (a) A sum of money equal to the number of current subscribers multiplied by fifty cents (50~) for each calendar year commencing January 1, 1984 and determined by the number of subscribers appearing on the books and records of Chambers as of the first day of each year. Said amount - shall be paid by Chambers on or before January 31 of each calendar year, -4- . 93-383 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 J.9 20 21 22 23 24 25 26 27 28 '. ...... ::) accompanied by its certification under penalty of perjury as to the number of subscribers. Said sum shall be used exclusively for the purpose of maintaining a fund benefiting all persons receiving cable television services in City; (b) Up to three community service channels for use by City and its residents subject to the condition that a second channel will not be provided unless the first channel is used not less than 80% of the weekdays for 80% of the time during any consecutive l3-hourperiod for ten consecutive weeks, and the' third channel will not be provided unless the second channel is used to the same extent. The first such channel shall be available on or before September I, 1984. (c) Notice, facilities and training necessary for use of said community service channels. 5. Upon entry of this Final Judgment, the Companion Case shall be dismissed with prejudice and the Preliminary Injunction dissolved forthwith. 6. Upon dissolution of the Preliminary Injunction the Escrow Fund shall immediately be distributed as follows: -5- , , , . 93-383 1 (a) The first One Hundred and Fifty Thousand Dollars ($150,000.00) to City to be used for the purpose of (i) 2 :5 4 5 6 7 8 9 reimbursing itself for attorneys' fees and costs incurred herein and in the Companion Case and (ii) to provide cultural or communication services to City residents or other benefits to subscribers in such manner and at such times as may be solely and exclusively determined in the discretion of the City Council. (b) Any funds in excess of One Hundred and 10 Fifty Thousand Dollars ($150,000.00) in the Escrow Fund shall 11 be distributed to Chambers free of any restrictions or 12 obligations thereon except for fees and expenses of the Escrow 13 Fund as provided in the escrow instructions. 14 Except for the obligations set forth in this 7 . 15 Final Judgment, Liberty and Chambers and each of them hereby 16 fully and completely release and discharge City and each and 17 all of City's past and present officers, employees, agents and 18 l}ttorneys from any and all claims, demands, causes of action or 19 liabilities now asserted, have been asserted, or could have 20 been asserted against anyone or more of them, whether pl;;aded 21 in the above-entitled action, in the Companion Case or 22 otherwise. 23 Except for the obligations set forth in this 8. 24 Final Judgment, City does hereby fully and completely release 25 and discharge Liberty and Chambers and~each of them and each 26 and every past and present director, officer, employee, agent 27 and attorney of Liberty and Chambers from any and all claims 28 -6- , 1 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 U 18 19 20 21 22 23 24 25 26 27 28 '\ 93-383 demands, causes of action, or liabilities now asserted, have been asserted, or could have been asserted against anyone or more of them whether pleaded in the above-entitled action, in the Companion Case or otherwise. 9. This Final Judgment shall govern the course of conduct of the parties in the future with respect to the subject matter specifically described herein. Any inconsistency between this Final Judgment and the Franchise Ordinance shall be governed by this Final Judgment. 10. No rights are created in any person or entity by this Final Judgment, aside from the parties hereto. 11. The parties hereto Shall execute any and all other and further documents necessary to implement this Final Judgment. 12. This Final Judgment shall inure to and be binding upon the assigns and successors in interest of each of the parties hereto. 13. Each party hereto shall bear its own respective attorney's fees and costs. 14. Jurisdiction is retained for the purpose of enabling any of the parites to this Final Judgment to apply to this Court at any time for such further orders and direction as may be necessary or appropriate to construe, carry out, modify, ~ -7- . , , . ) - 93-383 1. terminate. or enforce anyone or more of the provisions hereof 2. and for the punishment of violations thereof. 8 Dated: 1-)( . 1984 By :3 4 5 6 'I Dated: {l-13-$ . 1984 9 10 11 12 Dated: 4../0 '1 13 14 J.5 J.6 J.7 18 J.9 20 2J. 22 23 24 25 26 27 28 . 1984 CHAMBERS CABLE OF SOUTHERN CAL., INC. By ~}~~~LJ -8- . 93-383 1 2 :5 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ( APPROVED AND ORDERED Dated: ~~l \ . 1984 "'1. l':1l.T'J'AE'i) IriL.':Z. J;. United States District Judge Presented by: BURKE, \o1lLL1Al~EN By <:fJ I ~ Richard R. Terzia CAS~OODS & SMITH By } ~ Phf.~ass, Jr. (;., "'--st Broadway Suite 200 ~, , Eugene, Oregon 97404 (503) 687-1515 Of Attorneys for Chambers Cable of Southern Cal., Inc.. . Successor to Liberty TV Cable, Inc. LAWLER, FELIX & HALL By Ri~~ti. ~1u~ ~ - Attorneys for Liberty T.V. Cable, Inc. ~ I I I I I I _0_ - . , ,-