Loading...
HomeMy WebLinkAboutFalcon Charter Comcast Transfer AgreementTRANSFER AGREEMENT This Agreement is made this I day of X2015, by and among: 1.1.1. City of Pasco, Washington, a Municipal Corporation ("City'); 1.1.2. Falcon Video Communications, L.P. ("Franchisee"); 1.1.3. Charter Communications Operating, LLC by Charter Communications, Inc., its Manager ("Charter Communications"); and 1.1.4. CCH I, LLC ("New Charter") RECITALS WHEREAS, Falcon Video Communications, L.P. ("Franchisee') currently operates a cable system ("System") under the terms and conditions of a cable franchise (the "Franchise Agreement') granted by the City pursuant to Ordinance No. 3304, as lawfully amended from time to time in accordance within the provisions in such documents (collectively, the "Franchise Documents') and applicable law; and WHEREAS, Charter Communications, Inc. ("Charter Communications') is the ultimate parent company of Franchisee; and WHEREAS, on June 18, 2014, Franchisee, Charter Communications, and Comcast Corporation ("Comcast') filed an application seeking the City's consent to a transaction ("Comcast Transaction") whereby control of Franchisee would be transferred from Charter Communications to Comcast; and WHEREAS, or on about November 25, 2014, in the context of reviewing that application and conditionally consenting to the Comcast Transaction, the City, Franchisee, Charter Communications, COO Transfers, LLC, and Comcast entered into an agreement ("Comcast Transfer Agreement'); and WHEREAS, although the City consented to the Comcast Transaction consistent with the terms of the Comcast Transfer Agreement, the Comcast Transaction was not consummated; 1 IoS7 WHEREAS, on May 23, 2015, Charter Communications, with its subsidiary CCH I, LLC ("New Charter"), entered into agreements with Advance/Newhouse Partnership ("A/N"), the ultimate parent company of Bright House Networks, LLC ("BHN"), Time Warner Cable Inc. ("TWC"), and Liberty Broadband Corporation ("Liberty") (collectively "the Agreements'), the purpose of which are to effectuate the acquisition of BHN and merger with TWC by and into New Charter ("Transaction"); and WHEREAS, if the Transaction is consummated, Charter Communications will merge with a subsidiary of New Charter, and all shares of Charter Communications will be converted into shares of New Charter, and New Charter will assume the name Charter Communications, Inc. ("Charter'); and WHEREAS, pursuant to the Agreements, A/N, TWC shareholders, and Liberty will each hold ownership interests in Charter; and WHEREAS, the City has taken the position that the Franchise Documents provide that prior approval of the City is required for the Transaction and Charter has disputed that position; and WHEREAS, on August 3 2015, Charter Communications and New Charter sent the City an FCC Form 394 (the "Transfer Application") pursuant to the federal Cable Act and FCC regulations expressly reserving its position that the Franchise Documents do not require prior approval of the City; and WHEREAS, the City and Franchisee have been engaged in an extended franchise renewal process that is not yet complete; and WHEREAS, the City and Franchisee have agreed to extend the term of the Franchise to February 1, 2016; and WHEREAS, Charter Communications and New Charter have agreed that, following the completion of the Transaction, Franchisee and New Charter will continue to be bound by and comply with, and be liable for any past failure by Franchisee to comply with, all of the commitments, duties and obligations of the Franchisee under the Franchise Documents and all applicable federal, state and local laws, to the maximum extent allowed by law; and 2 NOW, THEREFORE, in consideration of the City's consent to the Transaction, and subject to the terms and conditions of this Transfer Agreement and of the City's Resolution granting consent to the Transaction, THE PARTIES DO HEREBY AGREE as follows: TRANSFER OF THE FRANCHISEE 1.1 The City's consent to the Transfer Application through the adoption of the Transfer Resolution in substantially the form attached hereto (the "Transfer Resolution"), is a condition precedent to this Transfer Agreement becoming effective. This Transfer Agreement will be voidable if the Transaction is not consummated by November 23, 2016, or if the City Council does not consent to the Transfer Application by adopting the Transfer Resolution. AFFIRMATION OF FRANCHISE OBLIGATIONS 2.1 Charter Communications, New Charter and Franchisee (collectively, the "Companies") hereby accept, acknowledge and agree that, after consummation of the Transaction, Franchisee will continue to be bound by and responsible for all the commitments, duties, obligations, and liabilities, past, present, continuing and future, embodied in the Franchise Documents, whether those commitments, duties, obligations, or liabilities arose before or after the date of consummation of the Transaction or the date that the City Council adopts the Transfer Resolution, to the maximum extent permitted by law, and that neither consummation of the Transaction nor the City's approval of the Transfer Application will have any effect on these commitments, duties, obligations, or liabilities. 2.2 The Companies agree that neither consummation of the Transaction nor the City's approval of the Transfer Application shall in any respect relieve them of any responsibility they may have for Franchisee's past acts or omissions, known or unknown, including any liability for any and all previously accrued but unfulfilled obligations of the Franchisee to the City under the Franchise Documents and applicable law, for all purposes, including but not limited to review of past performance for purposes of determining whether the Franchise should be renewed. Neither consummation of the Transaction nor this Transfer Agreement shall modify the rights of Charter Communications, New Charter, Franchisee and/or the City under or related to the Franchise Documents as compared to the rights that could have been exercised by Franchisee and/or the City had the Transaction not occurred. This Transfer Agreement shall have no effect on the rights of the City to ensure compliance, or cure of non-compliance, by 3 Franchisee under the Franchise Documents, and the Companies shall not raise a claim to the contrary. 2.3 The City agrees that this Transfer Agreement is without prejudice to or waiver of the Franchisee's rights to defend any claim of default or non-compliance with the Franchise Documents on the basis that such default or non-compliance has not occurred, or has been cured or, except as otherwise expressly provided herein, from raising any other defense available to Franchisee. 3. ADDITIONAL CONDITIONS 3.1 In the event the Transaction described in the Transfer Application does not close by November 23, 2016, or closes on terms that are in any material respect different from the terms disclosed to the City in the Transfer Application, then any City consent to the Transfer Application shall be voidable by the City and of no force or effect if so voided, and the Transfer Application shall be deemed to have been timely denied under 47 USC § 537 and 47 CFR § 76.502 if so voided provided that the Companies do not waive and expressly reserve their position that the Franchise Documents do not require prior approval of the City for the Transaction. 3.2 The Companies waive any and all claims that they may have that any denial of the Transfer Application that may result from Subsection 3.1 fails to satisfy the deadlines established by applicable law including, without limitation, claims based on, arising out of, or relating to the time limits set forth in 47 USC § 537, as amended, or 47 CFR § 76.502(a), and agree that they shall be deemed to have agreed to an extension of time for the City to act on the Transfer Application within the meaning of 47 CFR § 76.502(c) as required to make any denial effective, provided that the Companies do not waive and expressly reserve their position that the Franchise Documents do not require prior approval of the City for the Transaction. 4. ADDITIONAL AGREEMENTS OF THE PARTIES 4.1 The City reserves all rights not expressly waived in this Transfer Agreement. In particular and without limitation: 4.1.1 Neither this Transfer Agreement, nor any other action or omission by the City at or before the execution of this Transfer Agreement, shall be construed to grant the City's consent to any future transfer of the System or control of the Franchisee, or to mean that the City's consent to any such future transfer is not required. 4.1.2 The City's consent to the Transfer Application shall not constitute a waiver or release of any of the City's rights or claims with respect to Franchisee's compliance (or non-compliance) with the terms, conditions, requirements and obligations set forth in the Franchise Documents, whether arising before or after the date of the Transfer Resolution or consummation of the Transaction. The City's approval of the Transfer Application shall in no way be deemed or construed to be an agreement or concession by the City that Franchisee is in compliance with all of its obligations under the Franchise Documents. 4.1.3 The City, in collaboration with the City of Richland (collectively "Cities"), has been engaged in a franchise renewal process with the Franchisee pursuant to 47 USC § 546 (a) — (h). On July 31, 2013, the Cities proceeded with the Cable Act's formal renewal process and issued an RFRP. On December 30, 2013, Franchisee submitted a formal renewal proposal in response to the RFRP issued by the Cities ("Renewal Proposal"). In order to permit further time for informal renewal negotiations, the parties subsequently entered into an agreement tolling the formal renewal process, which expires on February 1, 2016. 4.1.4 The Companies acknowledge receiving letters from the City related to Ordinance Nos. 4222 and 4223. If the customer account changes related to those Ordinances are not completed prior to the closing of the Transaction, Franchisee will work with the City to complete whatever changes may be required. 4.1.5 The Companies shall not contend and hereby waive any claim that the City is barred, by reason of its consent to the Transfer Application, from considering or raising any claim based on Franchisee's past or present failure to comply with any term or condition of the Franchise Documents or applicable law, including, without limitation, any unpaid franchise fees lawfully due the City from Franchisee, any known and unresolved consumer complaints, and any construction, security or facility requirements of the Franchise Documents that are unsatisfied, and regardless whether any such claim arose before or after the date of the Transfer Resolution or consummation of the Transaction. 4.1.6 The Companies agree to assume all risks associated with any future non- renewal or non -extension of the Franchise Agreement or other potential termination of the Franchise Agreement, and further agree that they will not raise any claim or defense that they are entitled to renewal of the Franchise Agreement or protected from revocation of the Franchisee Agreement by reason of the City's approval of the Transaction. 4.1.7 Except as otherwise expressly provided for herein, this section 4 is without prejudice to Companies' rights to defend any claim of default or non-compliance with the Franchise Documents on the basis that such default or non-compliance did not occur, or has been cured, or from raising any other lawful defense. 5. RATES 5.1 New Charter and Franchisee further agree that neither the Transaction, the Transfer Application consent process, the City's Resolution granting conditional consent to the Transaction, nor this Transfer Agreement, standing on its own or collectively, provides any basis for increasing the rates paid by subscribers through cost pass-through as so-called "external costs" or as new franchise requirements, and neither the City's consent process nor the City Council resolution granting conditional consent, standing on its own or collectively, provides any basis for increasing the rates paid by subscribers in any manner. 6. REPRESENTATIONS AND WARRANTIES 6.1 The Companies acknowledge that the City's consent to the Transfer Application is made in reliance upon the representations, documents, and information provided by the Companies in connection with the Transfer Application and supplemental information thereto. 6.2 The Companies represent and warrant that the Transaction is not based on any representation by the City (other than as provided by federal and state law) that the Franchise Agreement will be renewed or extended and that New Charter and Franchisee shall assume all risks associated with any future non -renewal or non -extension of the Franchise Agreement. 6.3 The City acknowledges that the Companies retain all rights, claims, and defenses they or their predecessors may have regarding the operation of the cable system under applicable law, including under 47 USC § 546. 6.4 New Charter represents and warrants that the Transaction will not in any respect adversely affect Franchisee's ability to meet the lawful and valid requirements of the Franchise Documents. 6.5 New Charter and Franchisee agree they will not file with the City a request under Section 625 of the Cable Act , 47 USC § 545, seeking modification of any existing requirements of the Franchise Documents as a result of any increase in debt service, debt service coverage or equity requirements incurred in connection with the Transaction. 6.6 The Companies acknowledge that the City has not undertaken a franchise compliance audit as a part of its review of the Transfer Application and that there may be issues related to Franchisee's possible non-compliance with the Franchise Documents that are not known to the City at this time. Pursuant to Section 2.1 of this Transfer Agreement, the Companies agree that Franchisee shall be bound by and liable for all the commitments, duties, obligations, and liabilities, past, present, continuing and future, of Franchisee embodied in the Franchise Documents, to the maximum extent permissible by law, and that the City's action to approve the Transfer Application shall not be interpreted as, or deemed to be, a waiver of the City's rights to enforce the Franchise Documents, regardless whether any claim by the City relating to any failure by Franchisee to comply with the Franchise Documents arose before or after the date of this Transfer Agreement. 7. INDEMNIFICATION 7.1 The Companies agree to indemnify and hold the City harmless against any loss, claim, damage liability or expense (including, without limitation, reasonable attorneys' fees) proximately caused by any representation or warranty made by Charter Communications, New Charter, or Franchisee herein which proves to be untrue or inaccurate in any material respect. 8. BREACHES 8.1 Any breach of this Transfer Agreement shall be deemed a breach of the Franchise Documents. 9. MISCELLANEOUS PROVISIONS 9.1 Effective Date: This Transfer Agreement shall be effective and binding upon the parties upon closing of the Transaction. 9.2 Entire Agreement: This Transfer Agreement constitutes the entire agreement of the parties with respect to the matters addressed herein. No statements, promises or inducements inconsistent with this Transfer Agreement made by any party shall be valid or 7 binding, unless in writing and executed by all parties. This Transfer Agreement may only be modified by written amendments hereto signed by all parties. 9.3 Binding Acceptance: Any purported assignment of this Transfer Agreement or the rights or privileges of any party hereunder is void without the express written consent of the other parties hereto. Subject to the foregoing, this Transfer Agreement shall bind and benefit the parties hereto and their respective and permitted heirs, beneficiaries, administrators, executors, receivers, trustees, successors and assigns, and the promises and obligations herein shall survive the expiration date hereof. 9.4 Voluntary Agreement: This Transfer Agreement is freely and voluntarily agreed to by each party, without any duress or coercion, and after each party has consulted with its counsel. Each party has carefully and completely read all of the terms and provisions of this Transfer Agreement. Neither Charter Communications, New Charter, nor Franchisee, nor any of their affiliates, nor the City, will take any action to challenge any provision of this Transfer Agreement; nor will any of them participate with any other person or entity in such action. 9.5 Drafting: This Transfer Agreement is a product of common negotiation among the parties and shall not be construed against any party on grounds relating to drafting, revision, review or recommendation by any agent or representative of such party. 9.6 Counterparts: This Transfer Agreement may be executed in several counterparts, each of which when so executed shall be deemed to be an original copy, and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all parties shall not have signed the same counterparts. 9.7 Governing Law: This Transfer Agreement shall be governed in all respects by the law of the State of Washington. 9.8 Captions and References: The captions and headings of sections throughout this Transfer Agreement are intended solely to facilitate reading and reference to the sections and provisions of this Transfer Agreement. Such captions shall not affect the meaning or interpretation of this Transfer Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Transfer Agreement as of the day and year first above written. APPROVED: City of Pasco �. ..-....- AT EST• Debbie Clark City Clerk Falcon Video Communications, L.P gy: w �i Ti e:� a/6RNM APPRO D AS TO FORM: Lee Kerr City Attorney Charter Communications Operating, LLC by Charter Communications, Inc., its Manager By: Tit�l L C4 CCH I, VLC. By: Title: ✓P M 0