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HomeMy WebLinkAbout01-283 (2) IF Resolution No. 01-283 RESOLUTION GRANTING CONSENT TO THE ASSIGNMENT OF THE CABLE TELEVISION FRANCHISE WITH AMERITECH NEW MEDIA, INC. TO WIDE OPEN WEST HOLDINGS, LLC WHEREAS, Ameritech New Media, Inc . ("Franchisee" ) owns, operates and maintains a cable television system (the "System" ) in the City of Elgin pursuant to a Franchise Agreement dated 28 May 1997 and as approved by the City under Resolution 97-123 (the "Franchise" ) , and Franchisee is the duly authorized holder of the Franchise; and WHEREAS, WideOpenWest Holdings, LLC ( "WOW Holdings" ) and Franchisee have entered into an Asset Purchase Agreement, dated 23 May 2001 ("Asset Purchase Agreement" ) , pursuant to which the Franchise will be assigned to the Transferee, WideOpenWest Illinois, LLC ("WOW" ) , an entity controlled by WOW Holdings (collectively, the "Transfer" ) ;and WHEREAS, Franchisee and Transferee have requested consent by the City to the Transfer as a result of the Asset Purchase Agreement, and in accordance with the requirements of the Franchise have filed an FCC Form 394 ("Transfer Application" ) with the City on 11 June 2001 requesting consent to the Transfer; and WHEREAS, the City has reviewed the Transfer Application, examined the legal, financial and technical qualifications of Transferee, followed all required procedures in order to consider and act upon the Transfer Application, and considered the comments of all interested parties; and WHEREAS, pursuant to the request of the City, the Franchisee, the Transferee and WOW Holdings ("Transfer Parties" ) have provided supplemental information in support of the Transfer Application, including representations that the Transfer is not expected to have any effect on cable television service rates or reduce the quality of customer service or cable service in the City; and WHEREAS, the City and the Transfer Parties have negotiated an agreement regarding certain conditions of this consent ( "Transfer Agreement" ) a copy of which is attached to and incorporated into this Resolution as "Exhibit A; " and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that in reliance upon the representations and information submitted in the Application and supplemental information thereto and subject to the conditions set forth in the Transfer Agreement, the City hereby consents to the Transfer of the Franchise from Franchisee to the Transferee, WOW, as described in the Application and supplemental information thereto. 11 BE IT FURTHER RESOLVED that the City' s consent is subject to the Transfer Parties executing and delivering to the City by no later than 30 days following the closing of the Asset Purchase Agreement a Transfer Agreement in the form of the attached Exhibit A. If the Transfer Parties fail to do so, the City' s consent to the Transfer shall be null and void and the Transfer Application shall be denied. BE IT FURTHER RESOLVED that the City does not agree to any renewal or extension of the Franchise . Any pending or future renewal or extension of the Franchise shall be subject to applicable federal, state and local laws, the Franchise Agreement and the Transfer Agreement . BE IT FURTHER RESOLVED that notwithstanding the provisions of the preceding paragraph hereof, WOW or WOW Holdings may, without first obtaining the City' s prior consent : (a) assign or transfer its assets, including the Franchise, to any entity that is controlled by WOW Holdings; (b) restructure or change the ownership interests in WOW or WOW Holdings, whether through private placements, an initial or secondary public offering or otherwise, so long as one or more of the existing equity owners of WOW or WOW Holdings retains control through not less that 51% of the voting equity interests in WOW or WOW Holdings; and (c) pledge or grant a security interest to any lender or creditor of WOW or WOW Holdings for the purpose of securing an indebtedness, provided that nothing in this clause (c) shall be interpreted to permit such lender or creditor to transfer or assign, or to transfer control of, the Franchise or all or any part of the underlying system, or any right or interest therein, to any person without the consent of the City. WOW shall provide the City with thirty (30) days' advance notice of any of the transactions subject to this paragraph. BE IT FURTHER RESOLVED that Joyce A. Parker, City Manager, be and is hereby authorized and directed to execute and deliver the Transfer Agreement, a copy of which is attached hereto and made a part hereof by reference. s/ Ed Schock Ed Schock, Mayor Presented: October 24 , 2001 Adopted: October 24 , 2001 Omnibus Vote : Yeas : 5 Nays : 0 Attest : s/ Dolonna Mecum Dolonna Mecum, City Clerk • CABLE TELEVISION FRANCHISE TRANSFER AGREEMENT AN AGREEMENT between the City of Elgin, Illinois, an Illinois Municipal Corporation ("City"), Ameritech New Media, Inc. ("Franchisee"), WideOpenWest Holdings, LLC ("WOW Holdings") and WideOpenWest Illinois, LLC ("WOW"). RECITALS WHEREAS, the Franchisee is the holder of a franchise to provide cable television service in the City ("Franchise"), subject to the provisions of a franchise agreement between the City and the Franchisee dated 28 May 1997 and as approved by the City under Resolution 97-123 (the Franchise Agreement and the Resolution are collectively referred to as the "Franchise Documents"); and WHEREAS, WOW Holdings and the Franchisee entered into an Asset Purchase Agreement dated 23 May 2001 in which Franchise will be transferred to WOW, an entity controlled by WOW Holdings ("Asset Purchase Agreement"); and WHEREAS, the Franchisee and WOW jointly submitted to the City their application of Federal Communications Commission Form 394, dated 6 June 2001, ("Application") requesting that the City approve the transfer of control of the Franchise to WOW (collectively, the "Transfer"); and WHEREAS, the Franchisee, WOW Holdings and WOW (collectively, the "Transfer Parties") desire that the City of Elgin grant approval of the Transfer; and WHEREAS, pursuant to the request of the City, the Transfer Parties have provided supplemental information in support of the Application, including representations that the Transfer is not expected to have any effect on cable television service rates or reduce the quality of customer service or cable service in the City; and WHEREAS, pursuant to the proposed Transfer as described in the Application and the supplemental information thereto, WOW will become the holder of the Franchise after the closing of the Asset Purchase Agreement; and WHEREAS, the City has enacted or will enact a Resolution granting its approval of the Transfer subject to the condition, inter alia, that the Transfer Parties enter into this Transfer Agreement; NOW THEREFORE, the City and the Transfer Parties agree as follows: ARTICLE I. INCORPORATION OF RECITALS 1.1 Part of Agreement. The above Recitals are incorporated into and constitute a part of this Transfer Agreement. • ARTICLE II. ACCEPTANCE OF FRANCHISE OBLIGATIONS 2.1 Acceptance. WOW hereby accepts, acknowledges, and agrees to be bound by all of the lawful commitments, duties and obligations, present, continuing and future, of the Franchisee set out in the Franchise Documents. 2.2 Compliance with Franchise. WOW agrees to fully comply with all lawful terms and conditions set out in the Franchise Documents. ARTICLE III. TRANSFER PARTIES' REPRESENTATIONS 3.1 City's Reliance on Transfer Parties' Representations. The Transfer Parties acknowledge and agree that the City's consent to the Transfer and the resulting transfer of the Franchise is made in reliance on the written representations, documents, and information provided by the Transfer Parties in connection with the Application, all of which are incorporated into this Transfer Agreement by this reference. 3.2 Consent to Transfer Limited to No Material Change. The Transfer Parties acknowledge and agree that: (i) the City's consent to the Transfer is conditioned upon there being no material change in the structure of the Transfer of the Franchise from its description as set forth in the Application and supplemental materials provided by the Transfer Parties in connection with the Application or material adverse change in the quality of cable service provided in the City; and(ii) any such change shall make the City's consent to the Transfer null and void, and the request for consent to the Transfer shall be deemed to have been timely denied. ARTICLE IV. ADDITIONAL AGREEMENTS OF THE TRANSFER PARTIES 4.1 Compliance with Franchise. Each of the Transfer Parties agrees that it will not take any action that would be, or would cause, a violation of any lawful provision of this Transfer Agreement or the Franchise Documents. 4.2 No Waiver. By its consent to the Transfer and execution of this Transfer Agreement, the City of waives none of its rights or prospective rights with respect to WOW Holding's or WOW's compliance with the lawful terms, conditions, requirements and obligations set forth in the Franchise Documents, including without limitation: (a) WOW's Compliance. The Transfer Parties acknowledge and agree that the City shall have the right to compel WOW Holdings or WOW to comply with all lawful provisions of the Franchise Documents. (b) Renewal of Franchise. The Transfer Parties acknowledge and agree that the City has made no agreement that the Franchise will be renewed or extended; any renewal or extension of the Franchise shall be subject to the review and approval of the City in accordance with applicable federal, state and local laws, the Franchise Documents, and the Transfer Agreement. 2 (c) Qualifications. The City's consent to the Transfer is made without prejudice to, or waiver of, any right of the City to fully investigate and consider WOW Holding's or WOW's financial, technical and legal qualifications and any other lawful considerations during any pending or future franchise renewal or transfer process. (d) Future Transfer/Assignments. The Transfer Parties acknowledge and agree that by its consent, the City does not approve of or consent to: (1) any other transfer of control of the Franchisee, (2) any pending or future transfer of the Franchise, or (3) any pending or future assignment or delegation of any of the Franchisee's rights or duties under the Franchise which would be subject to the consent of the City pursuant to applicable federal, state, or local law, including the Franchise Documents. Nothing in this subparagraph (d) shall prohibit WOW or WOW Holdings from, without first obtaining the City's prior consent: (a) assigning or transferring its assets, including the Franchise, to any entity that is controlled by WOW Holdings; (b) restructuring or changing the ownership interests in WOW or WOW Holdings, whether through private placements, an initial or secondary public offering or otherwise, so long as one or more of the existing equity owners of WOW or WOW Holdings retains control through not less that 51% of the voting equity interests in WOW or WOW Holdings; and (c) pledging or granting a security interest to any lender or creditor of WOW or WOW Holdings for the purpose of securing an indebtedness, provided that nothing in this clause (c) shall be interpreted to permit such lender or creditor to transfer or assign, or to transfer control of, the Franchise or all or any part of the underlying system, or any right or interest therein, to any person without the consent of the City. WOW shall provide the City with thirty (30) days' advance notice of any of the transactions subject to this subparagraph (d). (e) Past Defaults. The Transfer Parties shall not contend that the City is barred, by reason of its consent to the Transfer, from considering or raising any lawful claim based on the Franchisee's past or present failure to comply with any term or condition of the Franchise Documents or any other agreements between the Franchisee and the City or any of its departments or applicable law, including, without limitation: any unpaid franchise fees due the City from the Franchisee, any unpaid support for public, educational, or governmental access channels, any known and unresolved consumer complaints, any construction, security or facility requirements of the Franchise Documents that are unsatisfied, and any unpaid pole rental fees or charges due the City or any of its departments, subject to applicable law. (f) Franchisee's Compliance. The City's consent to the Transfer shall in no way be deemed a representation by the City that the Franchisee is in compliance with all of its obligations under the Franchise Documents or any other agreements between the Franchisee and the City or any depai Intents thereof. 4.3 Obligations are not Franchise Fees. The Transfer Parties agree: (i) any payments made by any of the Transfer Parties to reimburse the City for its costs of considering the Application do not constitute franchise fees subject to the federal 3 • franchise fee limitation; and (ii) not to raise any claim or defense to the contrary in any proceeding or forum. 4.4 Sunset. In the event the Transfer does not close, or closes on terms that are in any material respect different from the terms disclosed to the City in the Application or the supplemental information and materials supplied in response to the City's request for additional information, then any City approval of the Transfer shall be deemed revoked, and the request for consent to the Transfer shall be deemed to have been timely denied. Date: /o/as , 2001 City of Elgin By: J ce A: arker, City Manager Date: ok/Z 8 , 2001 Ameritech New Media, Inc. • By: Its Gam NSE L i- As s i. Sic. Date: , 2001 WideOpenWest Holdings, LLC (1/7:2ziL. By. Its C e CotoAsei o, ---C Date: , 2001 WideOpenWest Illinois, LLC By: Its toe_ tce, cl— 4 ,"' Item No. City of Elgin Agenda no i 4 4'PATEtab E L 'pc; September 7, 2001 G ,T TO: Mayor and Members of the City Council N RECREATIONAL LEISURE FROM: Joyce A. Parker, City Manager AND CULTURAL ALL ,TIZEN OPPORTUNITIES FOR ALL CITIZENS SUBJECT: Assignment of a Cable Television Franchise - Ameritech New Media, Inc. to WideOpenWest, LLC PURPOSE The purpose of this memorandum is to provide information to the Mayor and members of the City Council to consider providing consent to Ameritech New Media, Inc . in order to assign its cable television franchise to WideOpenWest . BACKGROUND Ameritech New Media, Inc. , d/b/a Americast, is seeking to transfer its cable television franchise agreement with the City to WideOpenWest Holdings, LLC (WOW) . The City and Americast entered into a franchise agreement on May 28, 1997 . WOW entered into an agreement to purchase Americast' s assets on May 23, 2001 . Founded in 1999, WOW seeks to provide quality cable television programming and broadband communications to the City of Elgin. The Company' s mission is to build, acquire and operate new high- capacity fiber optic networks primarily in high-density residential areas of major United States markets and to compete aggressively with incumbent cable operators, such as AT&T Broadband. According to the company, this will be accomplished through superior product offerings, attractive packaging and world-class customer service. The opportunities that WOW brings to the City of Elgin will fill a major void. Due to great delays by the incumbent providers in rolling out their high-speed internet connections, many businesses and individuals are having to go without a product which is in high-demand. WOW considers itself to be a leading edge provider of broadband services . Background research indicates that this is in fact the case. • • Assignment of Cable Television Franchise September 7, 2001 Page 2 If the City Council approves Americast' s transfer, the new franchisee (WOW) may change its programming and product offerings or realign its customer service, administrative, or billing operations provided that such changes conform with federal laws and the provisions of the existing franchise agreement . However, WOW will still be subject to various customer service standards as outlined in the current agreement with Americast . The Staff feels confident that WOW will continue to provide a high level of customer service as is the case with Americast . The City does not have a significant level of contact with the current Americast representatives due to the fact that the franchise is operated so well . In addition, WOW has an excellent track record in the other municipalities it serves due in large part to its experienced management team. COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED Technology Action Team FINANCIAL IMPACT Under the terms and conditions of the agreement with Americast, which WOW must assume, the City is entitled to 5% of the annual gross revenues derived from the operation of the cable system. Approximately $200, 000 is expected for 2002 . VIVI, GAL IMPACT Both the Federal Cable Act and the City' s franchise agreement with Americast prohibit the City from renegotiating the terms of the franchise agreement as a condition to consenting to Americast' s proposed transfer of its cable television franchise with the City. ALTERNATIVES The City Council could approve, amend, or deny the proposed agreement with WideOpenWest . • • Assignment of Cable Television Franchise September 7, 2001 Page 3 RECOMMENDATION It is recommended that the Mayor and members of City Council approve the proposed transfer agreement with WideOpen West . R ectfully submitt , Joy e A. Parker City Manager JP:srs Attachments EXHIBIT 11 Page 1 of 4 June 6, 2001 FCC Form 394 Section IV STATEMENT REGARDING TECHNICAL QUALIFICATIONS WideOpenWest Holdings, LLC, and its subsidiary affiliates (the "Company"), including Transferee (www.wideopenwest.com), bring with them extensive experience and expertise in the construction, development and operation of advanced cable television and broadband communications networks. The Company pursues opportunities presented by the exploding demand for residential cable television and broadband Internet usage, matched against the lack of quality high-speed Internet connections available to residential homes. The WideOpenWest business plan is focused on delivering cable television and other services, at the retail and wholesale level, over newly designed residential broadband networks. The systems to be acquired from Ameritech New Media, Inc. have been designed and constructed in a manner consistent with this business model. The Company's mission is to build, acquire and operate new high-capacity fiber optic networks primarily in high-density residential areas of major United States markets and to compete aggressively with incumbent cable operators and other providers for market share, via superior product offerings,•attractive packaging and world-class customer service. The Company, headquartered near Denver, Colorado, was initiated by Mark Haverkate, a 21-year veteran of the cable television industry with extensive experience in building and operating cable television systems, ISPs, and, full service residential fiber optic telecommunications networks in a competitive environment. In late November 1999, the Company completed arrangements with ABRY Broadcast Partners III, L.P. ("ABRY") and Oak Hill Capital Partners, L.P. ("Oak Hill") for $50 million in seed financing which when combined with executive management's cash investments, produced $53.5 million in initial funding for the enterprise. These funds provided the necessary capital to launch the Company and accomplish all initial key strategies including; 1) securing of cable television franchise agreements in the Denver market, 2) beginning the first stage build-out in Denver, and 3) beginning the development of additional markets for future geographic expansion. In just over a year, the Company has emerged as a leader in the competitive cable television and broadband industry. Key regulatory approvals and franchises have been granted, an experienced management team has been assembled, and initial network construction has begun. WideOpenWest now has franchise agreements in place in the Denver metropolitan area and has been providing competitive cable television, high- speed Internet and broadband telephone services to its first customers since March 2001. EXHIBIT 11 Page 2 of 4 June 6, 2001 Strategy WideOpenWest strives to be a clearly superior alternative to cable television services and other services offered by incumbent providers. The WideOpenWest business model contemplates acquiring and building networks designed and built to provide an exceptional cable television service featuring a full complement of analog and digital video services, a"best-in-market" Internet connection with unparalleled speed and reliability, and other low cost broadband services. WideOpenWest's objective is to be the market leader in customer care and the local telecommunications employer of choice. WideOpenWest took a leadership position on the national telecommunications policy issue of Open Access, being the nation's first residential broadband company to offer fair non-discriminatory access to its network to competing ISPs. This is in contrast to the "closed access" policies of most incumbent cable operators that require high-speed Internet users to first purchase the cable company's exclusive brand of Internet service. This policy seeks to make marketing allies out of the ISPs, assures continued development and innovation in broadband applications, and provides an additional revenue source to WideOpenWest, and its franchised communities, from the wholesale monthly access fees paid by the ISPs. WideOpenWest Executive Management Team Mark Haverkate, President and CEO Prior to the launch of WideOpenWest in late 1999, Mark was executive vice president of RCN Corporation (NASDAQ: RCNC) the nation's first and largest facilities-based provider of bundled phone, cable, and Internet services to residential customers. As one of RCN's founding members, Mark provided broad strategic counsel and assumed a number of critical leadership roles in city operations, business development, sales, marketing and corporate branding. Mark also served as president of Cable Michigan, Inc. and C-TEC Cable Systems as well as an officer and board member of Megacable, Mexico's largest cable company. John J. Gdovin, Executive Vice President John Gdovin brings to his role over 21 years of telecommunications experience. Prior to joining WideOpenWest, John was senior vice president of RCN. He also previously held the positions of executive vice president of Cable Michigan, Inc. and executive vice president of C-TEC Cable Systems. Joining C-TEC in 1979, John was an integral part of the team of four senior managers that began the cable operations. He was also corporate director of operations for C-TEC Cable and following a restructuring in 1995, was named vice president of operations, with responsibilities for the operations of all cable company locations. EXHIBIT 11 Page 3 of 4 June 6, 2001 Cr___:fLig Martin, General Counsel and Secretary Craig Martin has provided legal services to the cable television industry for over 20 years. Craig's various experiences range from franchise relationships in communities throughout the country to federal, state and local regulatory compliance. He has also served as chief operating officer of a law firm of over 100 attorneys. Jeff Decker, Senior Vice President, Controller Jeff Decker brings various financial and operational experiences to WideOpenWest, most recently as director of financial operations at RCN. In this capacity, Jeff was responsible for preparation of financial budgets and forecasts, financial statements, accounts payable and receivable, internal controls for numerous subsidiaries of RCN in multiple states. Jeff began his telecommunications career at C-TEC Cable Systems and was one of the first members of the team that built cable operations for C-TEC in the 1980's. Michael H. Brody, Chief Technical Officer Mike Brody brings a vast wealth of knowledge to his role as chief technical officer of WideOpenWest. He has over 23 years of telecommunications experience and another five in the electrical field. He was senior vice president of engineering at RCN and has designed and built thousands of plant miles, digital headends, Internet POP's and fiber hubs. Mike started with Commonwealth Telephone Company as an engineer and moved into the consulting division where he designed the first cable television system in Panama City, Panama. He was also one of the four senior managers who built the C-TEC Cable Systems operations in New York and New Jersey. Julia McGrath, Senior Vice President Julia McGrath brings to WideOpenWest 17 years of telecommunications experience working with DirecTV/PRIMESTAR and Time Warner Cable. Prior to joining WideOpenWest, Julia was the regional vice president for DirecTV, overseeing 21 states and 850,000 customers. From 1982 —95, Julia served as area manager, general manager and sales and marketing manager with TCl/AT&T and Time Warner. George Duffy, Senior Vice President George Duffy has over 23 years of cable television and telecommunications experience. Before taking a position as vice president and general manager of RCN's New England operations in 1996, George served as general manager of Twin County Cable in Allentown, Pennsylvania, the nation's largest competitive cable television market. In 1997, George became vice president of franchising and development for RCN. During his tenure, George secured agreements for more than 100,000 homes in the Philadelphia metropolitan area and northern New Jersey area. • EXHIBIT 11 Page 4 of 4 June 6, 2001 Mark Dineen, Senior Vice President Mark Dineen brings to WideOpenWest 15-years of cable television and telecommunications experience. Before joining WideOpenWest, Mark was vice president of operations for Cable Michigan, Inc., serving 230,000 customers. In this position, Mark was responsible for day-to-day operations, including customer service, installations and repair, marketing, sales, quality control, billing, collections, budgeting, and strategic planning. He has been directly responsible for executing both rebuild and new build business plans. During his tenure at Cable Michigan, Mark also oversaw the acquisition and operations of two Internet companies servicing over 11,000 dial-up customers. Scott Besselievre, Senior Vice President, Customer Care Scott Besselievre brings more than 20 years of customer care and information technology experience to WideOpenWest. Most recently at AT&T broadband, Scott was responsible for standardizing and consolidating customer care operations in the Salt Lake City area and the construction of a new 600-seat customer care center. Scott began his telecommunications career with CableData and has held various management positions with United Cable Television, United Artists Entertainment, and TCI. Dan Morley, Senior Vice President, Telephony Before joining WideOpenWest, Dan Morley spent 20 years working for the telephone division of AT&T. In his most recent assignment at AT&T, Dan was the area vice president and general manager for AT&T's New England business markets. Dan also has extensive experience in data communications, IP and local and wide-area networking and brings value and insight gained from managing diversified business functions for AT&T at local, regional and national levels. A CABLE TELEVISION FRANCHISE TRANSFER AGREEMENT AN AGREEMENT between the City of Elgin, Illinois, an Illinois Municipal Corporation ("City"), Ameritech New Media, Inc. ("Franchisee"), WideOpenWest Holdings, LLC ("WOW Holdings") and WideOpenWest Illinois, LLC ("WOW"). RECITALS WHEREAS, the Franchisee is the holder of a franchise to provide cable television service in the City ("Franchise"), subject to the provisions of a franchise agreement between the City and the Franchisee dated 28 May 1997 and as approved by the City under Resolution 97-123 (the Franchise Agreement and the Resolution are collectively referred to as the "Franchise Documents"); and WHEREAS, WOW Holdings and the Franchisee entered into an Asset Purchase Agreement dated 23 May 2001 in which Franchise will be transferred to WOW, an entity controlled by WOW Holdings ("Asset Purchase Agreement"); and WHEREAS, the Franchisee and WOW jointly submitted to the City their application of Federal Communications Commission Form 394, dated 6 June 2001, ("Application") requesting that the City approve the transfer of control of the Franchise to WOW (collectively, the "Transfer"); and WHEREAS, the Franchisee, WOW Holdings and WOW (collectively, the "Transfer Parties") desire that the City of Elgin grant approval of the Transfer; and WHEREAS, pursuant to the request of the City, the Transfer Parties have provided supplemental information in support of the Application, including representations that the Transfer is not expected to have any effect on cable television service rates or reduce the quality of customer service or cable service in the City; and WHEREAS, pursuant to the proposed Transfer as described in the Application and the supplemental information thereto, WOW will become the holder of the Franchise after the closing of the Asset Purchase Agreement; and WHEREAS, the City has enacted or will enact a Resolution granting its approval of the Transfer subject to the condition, inter alia, that the Transfer Parties enter into this Transfer Agreement; NOW THEREFORE, the City and the Transfer Parties agree as follows: ARTICLE I. INCORPORATION OF RECITALS 1.1 Part of Agreement. The above Recitals are incorporated into and constitute a part of this Transfer Agreement. • ARTICLE II. ACCEPTANCE OF FRANCHISE OBLIGATIONS 2.1 Acceptance. WOW hereby accepts, acknowledges, and agrees to be bound by all of the lawful commitments, duties and obligations, present, continuing and future, of the Franchisee set out in the Franchise Documents. 2.2 Compliance with Franchise. WOW agrees to fully comply with all lawful terms and conditions set out in the Franchise Documents. ARTICLE III. TRANSFER PARTIES' REPRESENTATIONS 3.1 City's Reliance on Transfer Parties' Representations. The Transfer Parties acknowledge and agree that the City's consent to the Transfer and the resulting transfer of the Franchise is made in reliance on the written representations, documents, and information provided by the Transfer Parties in connection with the Application, all of which are incorporated into this Transfer Agreement by this reference. 3.2 Consent to Transfer Limited to No Material Change. The Transfer Parties acknowledge and agree that: (i) the City's consent to the Transfer is conditioned upon there being no material change in the structure of the Transfer of the Franchise from its description as set forth in the Application and supplemental materials provided by the Transfer Parties in connection with the Application or material adverse change in the quality of cable service provided in the City; and(ii) any such change shall make the City's consent to the Transfer null and void, and the request for consent to the Transfer shall be deemed to have been timely denied. ARTICLE IV. ADDITIONAL AGREEMENTS OF THE TRANSFER PARTIES 4.1 Compliance with Franchise. Each of the Transfer Parties agrees that it will not take any action that would be, or would cause, a violation of any lawful provision of this Transfer Agreement or the Franchise Documents. 4.2 No Waiver. By its consent to the Transfer and execution of this Transfer Agreement, the City of waives none of its rights or prospective rights with respect to WOW Holding's or WOW's compliance with the lawful terms, conditions, requirements and obligations set forth in the Franchise Documents, including without limitation: (a) WOW's Compliance. The Transfer Parties acknowledge and agree that the City shall have the right to compel WOW Holdings or WOW to comply with all lawful provisions of the Franchise Documents. (b) Renewal of Franchise. The Transfer Parties acknowledge and agree that the City has made no agreement that the Franchise will be renewed or extended; any renewal or extension of the Franchise shall be subject to the review and approval of the City in accordance with applicable federal, state and local laws, the Franchise Documents, and the Transfer Agreement. 2 (c) Qualifications. The City's consent to the Transfer is made without prejudice to, or waiver of, any right of the City to fully investigate and consider WOW Holding's or WOW's financial, technical and legal qualifications and any other lawful considerations during any pending or future franchise renewal or transfer process. (d) Future Transfer/Assignments. The Transfer Parties acknowledge and agree that by its consent, the City does not approve of or consent to: (1) any other transfer of control of the Franchisee, (2) any pending or future transfer of the Franchise, or (3) any pending or future assignment or delegation of any of the Franchisee's rights or duties under the Franchise which would be subject to the consent of the City pursuant to applicable federal, state, or local law, including the Franchise Documents. Nothing in this subparagraph (d) shall prohibit WOW or WOW Holdings from, without first obtaining the City's prior consent: (a) assigning or transferring its assets, including the Franchise, to any entity that is controlled by WOW Holdings; (b) restructuring or changing the ownership interests in WOW or WOW Holdings, whether through private placements, an initial or secondary public offering or otherwise, so long as one or more of the existing equity owners of WOW or WOW Holdings retains control through not less that 51% of the voting equity interests in WOW or WOW Holdings; and (c) pledging or granting a security interest to any lender or creditor of WOW or WOW Holdings for the purpose of securing an indebtedness, provided that nothing in this clause (c) shall be interpreted to permit such lender or creditor to transfer or assign, or to transfer control of, the Franchise or all or any part of the underlying system, or any right or interest therein, to any person without the consent of the City. WOW shall provide the City with thirty (30) days' advance notice of any of the transactions subject to this subparagraph (d). (e) Past Defaults. The Transfer Parties shall not contend that the City is barred, by reason of its consent to the Transfer, from considering or raising any lawful claim based on the Franchisee's past or present failure to comply with any term or condition of the Franchise Documents or any other agreements between the Franchisee and the City or any of its departments or applicable law, including, without limitation: any unpaid franchise fees due the City from the Franchisee, any unpaid support for public, educational, or governmental access channels, any known and unresolved consumer complaints, any construction, security or facility requirements of the Franchise Documents that are unsatisfied, and any unpaid pole rental fees or charges due the City or any of its departments, subject to applicable law. (f) Franchisee's Compliance. The City's consent to the Transfer shall in no way be deemed a representation by the City that the Franchisee is in compliance with all of its obligations under the Franchise Documents or any other agreements between the Franchisee and the City or any depai linents thereof. 4.3 Obligations are not Franchise Fees. The Transfer Parties agree: (i) any payments made by any of the Transfer Parties to reimburse the City for its costs of considering the Application do not constitute franchise fees subject to the federal 3 franchise fee limitation; and (ii) not to raise any claim or defense to the contrary in any proceeding or forum. 4.4 Sunset. In the event the Transfer does not close, or closes on terms that are in any material respect different from the terms disclosed to the City in the Application or the supplemental information and materials supplied in response to the City's request for additional information, then any City approval of the Transfer shall be deemed revoked, and the request for consent to the Transfer shall be deemed to have been timely denied. Date: /0/a s" , 2001 City of Elgin Jo e A.. arker, City Manager Date: '1/213 , 2001 Ameritech New Media, Inc. By: Q. c, c --� Its J L. 4- AT. Date: , 2001 WideOpenWest Holdings, LLC B c y Its C;,etter-tu Co e_1 �� Secre Date: , 2001 WideOpenWest Illinois, LLC By: Its cat cc e_egcD 4