HomeMy WebLinkAboutItem 13 - Cable Franchise Transfermim0 .,...../
MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: BRUNO RUMBELOW, ACTING CITY MANAGER
MEETING DATE: NOVEMBER 15, 2005
SUBJECT: CABLE FRANCHISE TRANSFER
RECOMMENDATION:
City Council to consider and ordinance transferring a cable franchise from Comcast to
Time Warner, Inc.
FUNDING SOURCE:
BACKGROUND:
Earlier this year Comcast filed the necessary paperwork to transfer the Grapevine system
to C -Native Exchange III, a subsidiary of Time Warner as a part of the acquisition of
Adelphia Communications. Connie Canady has reviewed the transfer on behalf of many
of the local Comcast cities and finds the filing satisfactory. None of the basic premises of
the franchise will change, including our rate of compensation, which is 5% of gross
revenues.
Our review of the franchise transfer is generally limited to the review of the transferee's
financial capacity to take over the system. Council has specifically discussed our ability to
request programming changes from the digital to the analog tier. We do not have the
ability to force that issue, as Congress has passed a digital mandate that all programming
be digitally transmitted by 2008. This will include non -cable television. By enacting this
requirement, Congress will free up space on the analog system for public safety
communication. When this changeover occurs, there will no longer be an analog tier of
service and non -cable viewers will have to have a special adapter for their television sets if
they are not digitally equipped.
This franchise will be relatively unaffected by the new statewide franchise law until its
expiration on July 31, 2009. The only burden that Time Warner will be relieved of is in-
kind services. In our case, that only consists of cable drops in City and GCISD buildings.
In 2008, the Company can begin charging incremental cost (their actual cost) for providing
those services.
Staff recommends approval.
JCH
November 10, 2005 (10:04AM)
TWC
October 26, 2005
GUARANTEE
GUARANTEE, dated as of , made by TIME WARNER
CABLE INC., a Delaware corporation ("Guarantor"), in favor of
(`Beneficiary").
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and to induce Beneficiary to timely consent to the transfer of
(the "Franchise") to ("Transferee") in accordance with
the Federal Communications Commission Form 394 filed by Transferee, Guarantor
agrees as follows:
Interpretive Provisions.
(a) The words "hereof," "herein" and "hereunder" and words
of similar import, when used in this Guarantee, shall refer to this Guarantee as a whole
and not to any particular provision of this Guarantee, and section and paragraph
references are to this Guarantee unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Guarantee.
(a) Guarantor unconditionally and irrevocably guarantees to
Beneficiary the timely and complete performance of all Transferee obligations under the
Franchise as the same may be amended from time to time, and all Transferee obligations
set forth in the transfer ordinance/resolution dated , subject to applicable
law (the "Guaranteed Obli atg ions"). The Guarantee is an irrevocable, absolute,
continuing guarantee of payment and performance, and not a guarantee of collection. If
Transferee fails to pay any of its monetary Guaranteed Obligations in full when due in
accordance with the terms of the Franchise, Guarantor will promptly pay the same to
Beneficiary or procure payment of same to Beneficiary. Anything herein to the contrary
notwithstanding, Guarantor shall be entitled to assert as a defense hereunder any defense
that is or would be available to Transferee under the Franchise or otherwise.
(b) This Guarantee shall remain in full force and effect until
the earliest to occur of: (i) performance in full of all Guaranteed Obligations at a time
when no additional Guaranteed Obligations remain outstanding or will accrue to
Transferee under the Franchise and (ii) direct or indirect transfer of the Franchise from
Transferee to (or direct or indirect acquisition of Transferee or any successor thereto by
(whether pursuant to a sale of assets or stock or other equity interests, merger or
otherwise)) any other person or entity a majority of whose equity and voting interests are
not beneficially owned and controlled, directly or indirectly, by Guarantor. Upon
termination of this Guarantee in accordance with this Section 2(b), all contingent liability
of Guarantor in respect hereof shall cease and Guarantor shall remain liable solely for
Guaranteed Obligations accrued prior to the date of such termination.
(c) This Guarantee shall apply to the Franchise, any extension or
renewal thereof and to any holdover term following the expiration of the Franchise or
renewal thereof.
3. Waiver. Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof
of reliance by Beneficiary upon this Guarantee or acceptance of this Guarantee.
Guarantor waives diligence, presentment, protest and demand for payment to Transferee
or Guarantor with respect to the Guaranteed Obligations; provided, however, that
Guarantor shall be furnished with a copy of any notice of or relating to default under the
Franchise to which Transferee is entitled or which is served upon Transferee at the same
time such notice is sent to or served upon Transferee. Guarantor waives all rights of a
guarantor or surety under Chapter 34 of the Texas Business and Commerce Code.
Guarantor agrees that Beneficiary may, without notice to or consent by
Guarantor, and without in any way releasing or impairing or otherwise affecting any
liability or obligation of Guarantor hereunder (i) modify, amend, supplement, add, or
otherwise change any provision of the Franchise to the extent permitted under the terms
of the Franchise, (ii) grant extensions or renewals of the Franchise, or effect any release,
compromise or settlement in connection therewith, (iii) consent to the assignment or
other transfer or conveyance by Transferee off its rights and interest under the Franchise,
and (iv) deal in all respects with Transferee and the Guaranteed Obligations as if this
Guarantee were not in effect.
4. Representations and Warranties. Each of Guarantor and
Beneficiary represents and warrants that: (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization; (ii) the
execution, delivery and performance by it of this Guarantee is within its corporate,
limited liability company or other powers, have been duly authorized by all necessary
corporate, limited liability company or other action, and do not contravene any law,
order, decree or other governmental restriction , or any agreement or instrument, binding
on or affecting it and (ii) no authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for the due
execution, delivery and performance by it of this Guarantee except as may have been
obtained or made, other than, in the case of clauses (i) and (ii), contraventions or lack of
authorization, approval, notice, filing or other action that would not, individually or in the
aggregate, impair or delay in any material respect such party's ability to perform its
obligations hereunder.
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5. Binding Effect; Other Matters. This Guarantee, when executed
and delivered by Beneficiary, will constitute a valid and legally binding obligation of
Guarantor, and its successor and assigns,—enforceable against it in accordance with its
terms, and shall inure to the benefit of Beneficiary and its successors and assigns. except
as such enforcement may be limited by applicable bankruptcy, insolvency or other
similar laws applicable to creditors' rights generally and by equitable principles (whether
enforcement is sought in equity or at law).
Beneficiary shall not be required, before invoking the benefits of this
Guarantee, to institute suit against or exhaust its remedies with respect to Transferee or
any other person liable for the Guaranteed Obligations or to enforce its rights with respect
to any security which shall have ever been given to secure the payment and performance
of the Guaranteed Obligations; and the obligations of Guarantor hereunder shall not be
released or impaired in any way by any neglect, delay, omission, failure or refusal of
Beneficiary to take or prosecute any action for the collection or enforcement of the
Guaranteed Obligations, or any failure of Beneficiary to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection with the
Guaranteed Obligations. Suit may be brought and maintained against Guarantor without
the joinder of Transferee or any other person, and in the event that there is more than one
guarantor of the Guaranteed Obligations, Beneficiary may (i) bring suit against all
guarantors jointly and severally or against any one or more of them, (ii) compound or
settle with any one or more of such guarantors for such consideration as Beneficiary may
deem proper, and (iii) release one or more of the guarantors from liability without
impairing the liability of the guarantors not so released; and no action brought by
Beneficiary against any one guarantor of the Guaranteed Obligations shall impair the
right of Beneficiary to bring suit against any remaining guarantor or guarantors.
In addition to and without limiting the foregoing or any other provision of
this Guarantee, Guarantor's liability under this Guarantee shall in no way be affected by
(i) the release or discharge of Transferee in any process initiated by or on behalf of
Transferee which assigns Transferee's assets to the benefit of its creditors, or in any
receivership, bankruptcy or other similar proceedings, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Transferee or its assets, or any
resulting release or discharge of any obligation of the Transferee; (ii) the impairment,
limitation or modification of the liability of Transferee or the estate of Transferee in
bankruptcy, or of any remedy for the enforcement of Transferee's said liability under the
Franchise, resulting from the operation of any present or future provision of the United
States Bankruptcy Code or other statute or from the decision in any court, whether state
or federal; (iii) the rejection or disaffirmance of the Franchise in any such proceedings;
(iv) the assignment or transfer or other conveyance of the Franchise by Transferee except
as otherwise provided for herein; (v) any disability of Transferee, except as provided for
herein; (vi) the existence of any claim, setoff or other rights, which the Guarantor may
have at any time against the Transferee, whether in connection herewith or any unrelated
transactions, except as provided for herein; or (vii) any change in the existence, structure
or ownership of the Transferee.
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Guarantor shall remain liable for the Guaranteed Obligations, even though
the Guaranteed Obligations shall be unenforceable against the Transferee because of lack
of power or authority on the part of the Transferee.
6. Notices. All notices, requests, demands, approvals, consents and
other communications hereunder shall be in writing and shall be deemed to have been
duly given and made if served by personal delivery upon the party for whom it is
intended or delivered by registered or certified mail, return receipt requested, or if sent by
telecopier, provided that the telecopy is promptly confirmed by telephone confirmation
thereof, to the party at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such party:
To Guarantor and Transferee:
Time Warner Cable Inc.
290 Harbor Drive
Stamford, CT 06902-6732
Telephone: (203) 328-0631
Telecopy: (203) 328-4094
Attention: General Counsel
To Beneficiary:
Telephone:
Telecopy:
Attention:
7. Integration. This Guarantee represents the agreement of Guarantor
with respect to the subject matter hereof and there are no promises or representations by
Guarantor or Beneficiary relative to the subject matter hereof other than those expressly
set forth herein.
8. Amendments in Writing. None of the terms or provisions of this
Guarantee may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by Guarantor and Beneficiary, provided that any right, power
or privilege of Beneficiary arising under this Guarantee may be waived by Beneficiary in
a letter or agreement executed by Beneficiary.
9. Section Headings. The section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction hereof or be taken
into consideration in the interpretation hereof.
10. No Assignment or Benefit to Third Parties. This Agreement shall
be binding upon and inure to the benefit of the parties hereto. Nothing in this Agreement,
express or implied, is intended to confer upon anyone other than Guarantor and
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Beneficiary and their respective permitted assigns, any rights or remedies under or by
reason of this Guarantee.
11. Expenses. All costs and expenses incurred in connection with this
Guarantee and the transactions contemplated hereby shall be borne by the party incurring
such costs and expenses.
12. Counterparts. This Guarantee may be executed by Guarantor and
Beneficiary on separate counterparts (including by facsimile transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same instrument.
13. GOVERNING LAW. THIS GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS AND COURT DECISIONS OF THE STATE OF TEXAS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE
OBLIGATIONS OF THE PARTIES TO THIS AGREEMENT ARE
PERFORMABLE IN , COUNTY, TEXAS, AND IF LEGAL ACTION
IS NECESSARY TO ENFORCE SAME, EXCLUSIVE VENUE SHALL LIE IN A
STATE OR FEDERAL COURT HAVING JURISDICTION FOR ,
COUNTY, TEXAS.
14. WAIVER OF JURY TRIAL. EACH PARTY HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
TIME WARNER CABLE INC.
By: _
Name:
Title:
BENEFICIARY
By: _
Name:
Title:
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF GRAPEVINE, TEXAS,
PROVIDING CONDITIONAL APPROVAL OF CONSENT OF
THE TRANSFER OF A CABLE FRANCHISE AGREEMENT
FROM COMCAST CABLE OF TEXAS 11, INC. TO
C -NATIVE EXCHANGE 11, L. P. ; PROVIDING FOR THIS
ORDINANCE TO BECOME NULL AND VOID IN CERTAIN
CIRCUMSTANCES AS SET FORTH HEREIN; PROVIDING
A SEVERABILITY CLAUSE; DECLARING AN
EMERGENCY AND PROVIDING AN EFFECTIVE DATE
WHEREAS, Comcast Cable of Texas 11, Inc. (hereinafter referred to as
"Franchisee") is currently a franchisee for cable services in the City of Grapevine, Texas
(the "City") pursuant to Ordinance No. 97-62 of the City (the "Franchise") and is
thereafter amended; and
WHEREAS, Franchisee is a wholly owned subsidiary of Comcast Corporation
("Comcast"); and
WHEREAS, pursuant to an Exchange Agreement between Time Warner Cable,
Inc. ("Time Warner Cable"), Comcast and certain related entities, Comcast will cause
the Franchisee to transfer the cable system owned and operated by Franchisee within
the City and the Franchise to C -Native Exchange III, L.P., a limited partnership
authorized to conduct business in the State of Texas ("New Franchisee"), which will
become an indirect subsidiary (but subject to the direction and control) of Time Warner
Cable (the "Transaction"); and
WHEREAS, Franchisee and Time Warner Cable have requested the City's
consent to transfer of the Franchise and have filed a FCC Form 394 with the City
requesting such consent; and
WHEREAS, C -Native Exchange III, L.P., agrees to abide by all the terms,
conditions, standards, duties, responsibilities, and obligations of the franchisee under
the Franchise upon the closing of the Transaction; and
WHEREAS, C -Native Exchange III, L.P., agrees that, upon the closing of the
Transaction, it shall be the successor entity to the incumbent cable service provider, the
Franchisee, pursuant to Texas law, including, without limitation, Chapter 66, Texas
Utilities Code, [Sec. 66.004 (a) and (c)] as adopted by S.B. 5, 79th Texas Legislature,
2nd Called Session„ and as such will be operating under the Franchise being
transferred from the current incumbent cable provider in the City and will be the
incumbent cable provider in the City under applicable law as if it were the incumbent
cable provider in the City under the Franchise as of September 1, 2005 and had at all
times been the incumbent cable provider in the City thereunder since that date
regardless of the actual date of the Franchise transfer; and
WHEREAS, the City is willing to consent to the proposed transfer as detailed in
the FCC Form 394, pursuant and subject to the conditions set forth herein.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF GRAPEVINE, TEXAS:
Section 1. All matters stated in the above preamble to this Ordinance are found
to be true and correct and are incorporated herein as if copied in their entirety.
Section 2. Time Warner Cable and New Franchisee agree that upon the
closing of the Transaction, New Franchisee will abide by all terms of the Franchise and
its amendments, and all other ordinances of the City of Grapevine.
Section 3. New Franchisee agrees that it will provide service pursuant to the
requirements of the Franchise and its amendments after the closing of the Transaction.
Section 4. Subject to the closing of the Transaction and Time Warner Cable
and the New Franchisee's compliance with the provisions contained herein, the City of
Grapevine accepts the transfer of the Franchise to C -Native Exchange 111, L.P. Such
acceptance does not preclude further investigation and action by the City of any
potential Franchise violations or non-compliance issues, including those occurring prior
to the closing of the Transaction. With respect to any violation or non-compliance
issues that are not extinguished prior to closing of the Transaction, the City will have all
rights following the closing of the Transaction to continue investigation of such matters
and to pursue action as determined by the City in connection therewith under the terms
set forth in the Franchise.
Section 5. Time Warner Cable and New Franchisee acknowledge that the City
has certain Franchise fee audit rights pursuant to the Franchise. Time Warner Cable
and New Franchisee assure that they do not have any contractual or other restrictions
that will limit the ability of the New Franchisee to remit Franchise fees as provided in the
Franchise or limit the New Franchisee's ability to provide all relevant information
concerning the payment of Franchise fees as required by the Franchise. The first
payment of Franchise fees after Time Warner Cable and New Franchisee assume
control of the Franchise will be accompanied by a statement itemizing the revenue
categories by account on which Franchise fees are being paid with a statement as to
any differences between the calculations by Time Warner Cable and the Franchisee.
Section 6. Any actions which have the effect of circumventing payment of any
lawfully required ordinance fees and/or evasion of payment of the ordinance fees by
non -collection or non -reporting of gross receipts, bartering, or any other means which
evade the actual collection of revenues for businesses authorized by New Franchisee
are prohibited. Pursuant to the Texas Constitution, the City is prohibited from granting
ORD. NO. 2
anything of value without compensation. The City has the right to audit all records
relating to the calculation of the Franchise fee as provided in the Franchise.
Section 7. Time Warner Cable will provide to the City within 45 calendar days
following the date of closing of the Transaction at the City's discretion one of the
following: 1) a guarantee in the form attached hereto, guaranteeing the performance of
the New Franchisee under the terms of the Franchise and that all such terms of the
Franchise, as noted in the original document and all amendments and transfers, will be
fulfilled; or 2) a guarantee consistent with the most favorable such guarantee agreed to
by Time Warner Cable in the State of Texas guaranteeing the performance of the New
Franchisee under the terms of the Franchise. Failure to provide such guarantee within
the specified time frame will result in the automatic and immediate repeal of this
Ordinance without any further action by the City Council of the City of Grapevine, and
this Ordinance shall thereafter be deemed null and void.
Section 8. By granting consent to the transfer of the Franchise, the City does
not waive and specifically retains any right to regulate and receive compensation as
allowed by law for all Cable Services offered over the Cable System. Upon request and
if the City is lawfully allowed to make such a request, Franchisee shall inform the City of
any uses of the Cable System by persons who are not Cable Operators.
Section 9. In the event that the Transaction is not closed by October 1, 2006,
this Ordinance will become and shall be deemed to be null and void. Until the closing of
the Transaction, the Franchisee (Comcast Cable of Texas III, Inc.) will continue to be
responsible for the performance of the terms of the Franchise. Also in the event that the
Transaction does not close by October 1, 2006, Time Warner Cable will reimburse the
City for all out-of-pocket costs incurred in review of the Form 394 and related actions up
to the amount of $500.00.
Section 10. The provisions of this Ordinance are severable, and if any section,
paragraph, subdivision, clause, phrase, provision or word of this Ordinance shall be
judged, by a final, non -appealable judicial order or judgment, to be invalid or
unconstitutional, such order or judgment shall not affect the remainder of this
Ordinance.
Section 11. If any word, sentence, paragraph, subdivision, clause, phrase or
section of this Ordinance be adjudged or held to be void or unconstitutional, the same
shall not affect the validity of the remaining portions of said Ordinance which shall
remain in full force and effect.
Section 12. The fact that the present ordinances and regulations of the City of
Grapevine, Texas, are inadequate to properly safeguard the health, safety, morals,
peace, and general welfare of the public creates an emergency which requires that this
ordinance become effective from and after the date of its passage, and it is accordingly
so ordained.
ORD. NO. 3
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS on this the 15th day of November, 2005.
ATTEST:
ORD. NO. 4