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(a) Definitions. In this section, the following words have the meanings indicated.
(1) “Control” means the legal or practical ability to exert actual working control over the affairs of a franchisee, either directly or indirectly, and whether by contractual agreement, majority ownership interest, a lesser ownership interest, or other means.
(2) (i) “Transfer” means a transaction in which:
1. control of a franchisee is transferred by transfer or grant of an ownership or other interest in the franchisee, directly or indirectly, from one person or group of persons to another person or group of persons; or
2. the rights held by a franchisee under the franchise are transferred or assigned to another person or group of persons.
(ii) “Transfer” does not include transfer of an ownership or other interest in a franchisee to the parent of the franchisee or to another affiliate of the franchisee; transfer of an interest in a franchise agreement or the rights held by the franchisee under the agreement to the parent of the franchisee or to another affiliate of the franchisee; or any action that is the result of a merger of the parent of the franchisee or another affiliate of the franchisee unless and to the extent the merger would result in a combination of wireline cable service competitors in the same service area.
(b) Franchise as privilege; obligations. A franchise is a privilege that is in the public trust and personal to the franchisee. A franchisee’s obligations under its franchise involve personal services whose performance involves personal credit, trust, and confidence in the franchisee.
(c) Assignment or conveyance restricted. Except for the installation of facilities for the franchisee by a subcontractor who works under the franchisee’s direct control and supervision, a franchisee may not assign or convey to any entity any right or authority granted by the franchise with respect to the use or occupation of the County’s public rights-of-way or construction in them. In particular, the franchisee may not obtain permits or construct facilities on behalf of any other affiliated or unaffiliated entity under this franchise.
(d) Application for approval of transfer.
(1) Promptly, but at least 120 calendar days before the contemplated effective date of a transfer, the franchisee shall submit to the County a written application for approval of the transfer. The application shall provide complete information on the proposed transaction, including details on the legal, financial, technical, and other qualifications of the transferee and on the potential impact of the transfer on subscriber rates and service. Except as otherwise provided in this subsection, at a minimum, the application shall include:
(i) a complete and un-redacted copy of the agreements to effectuate the proposed transaction and all schedules, exhibits, and other documents attached to them or referred to in them that are not otherwise publicly available;
(ii) information sufficient to demonstrate the legal, financial, and technical qualifications of the proposed transferee;
(iii) information sufficient to demonstrate whether the proposed transaction will have any adverse financial impact on the franchisee or the cable system, including capital investments and projected income statements and cash flow statements covering the lesser of five years or the remainder of the franchise term and clearly explaining all assumptions made in them;
(iv) a general description of the anticipated management structure of the post-transfer cable system and of any financing to be used in connection with the proposed transaction; and
(v) information sufficient to determine any potential adverse impact of the proposed transaction on subscriber rates and service.
(2) If any of the information required by subsection (d)(1) is confidential or proprietary, the franchisee shall:
(i) clearly mark those portions of the document as confidential or proprietary; or
(ii) omit those portions of the documents, substitute a specific description of the contents of the omitted material, and provide a written certification that the material is confidential or proprietary and unrelated to the County’s review of the transfer and that the County may promptly review the materials at a mutually convenient time and place.
(3) At the franchisee’s option, the franchisee may notify the County of the proposed transaction in general terms at least 150 days prior to the contemplated effective date of a transfer and request that the County waive, reduce, or modify some or all of the information requirements specified in subsection (d). To the extent consistent with applicable law, the County may grant in writing all or part of the request, without waiving any right the County may have to request that the information be provided after the initial application is filed.
(4) (i) If a franchisee clearly identifies information as confidential or proprietary, then, to the maximum extent permissible under applicable federal, State, and local laws related to public records, the County may not disclose that information to the public. If the County determines that information is not clearly identified or that information identified as confidential or proprietary is subject to public disclosure, the County shall notify the franchisee that the County intends to disclose the requested information unless ordered otherwise by a court. The County shall provide the notice to franchisee to allow sufficient time for the franchisee to seek a court order to protect such information from disclosure.
(ii) If a franchisee claims that any information submitted with respect to a transfer is confidential or proprietary, the franchisee shall make arrangements with the County for redaction, exclusion, or confidentiality, including the execution of any confidentiality agreements, prior to the filing of any FCC Form 394 or transfer application, such that all documents and information required by this section can be included in the application when it is initially filed.
(5) To determine whether to grant or deny a transfer, the County may inquire into all qualifications of the prospective transferee and any other matters the County deems necessary to determine whether the transfer should be approved or denied. The franchisee and any prospective transferee shall reasonably assist the County in any inquiry and, if they fail to do so, the request for transfer may be denied.
(6) The County shall act on a transfer application in a timely fashion.
(e) County considerations. In determining whether to grant or deny an application for a transfer, the County may consider:
(1) the legal, financial, and technical qualifications of the transferee to operate the cable system;
(2) any potential impact of the transfer on subscriber rates or services;
(3) whether the incumbent cable operator is in compliance with its franchise agreement and applicable law and, if not, whether the proposed transferee will cure any noncompliance;
(4) whether the proposed transferee owns or controls any other cable system in the County and whether the transfer may eliminate or reduce competition in the delivery of cable service in the County; and
(5) whether operation by the transferee or approval of the transfer would have other adverse effects that may lawfully be considered by the County.
(f) Consent required. A transfer of a franchise, franchisee, or cable system or of control over them, including by forced or voluntary sale, merger, consolidation, receivership, or any other means, may not occur without the prior consent of the County Council by ordinance, as required by this article. If a transfer occurs without the County’s prior written consent, the franchisee shall notify the County promptly. A transfer without the County’s prior written consent:
(1) is ineffective;
(2) shall be considered to impair the County’s assurance of due performance; and
(3) shall be, in addition to any other remedies available under the franchise agreement or applicable law, grounds for revocation pursuant to § 10-11-103.
(g) Additional liabilities. In addition to any other liability provided by law, a franchisee is liable under its franchise for a transfer that violates the terms of its franchise, whether the transfer is caused in whole or in part by the franchisee or another person, parent, or affiliated entity, in which event the franchisee is liable as if the transfer had been caused by the franchisee itself.
(h) Closing documents. Unless the County expressly waives or modifies the requirement, a franchisee shall provide the County with a complete copy of the closing documents within 14 days after the closing of a transfer.
(i) Franchisee responsibilities. A franchisee is responsible for ensuring that the intent of this section is carried out. If for any reason an event occurs that would require the County’s approval under this section, whether or not the event is directly or indirectly within the franchisee’s control, the event constitutes a transfer for purposes of the franchise agreement and applicable law.
(Bill No. 54-06)