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HomeMy WebLinkAboutMINUTES - 03082005 - SD.3 CONTRA w _ COSTA TO: BOARD OF SUPERVISORS r. COUNTY FROM: John Sweeten, County Administrator DATE: February 24, 2006 SUBJECT: Approve the Transfer of Control of AT&T Systems to Comcast Corporation SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION(S): HOLD a public hearing to approve the Transfer of Control of Comcast of California IX, Inc. (formerly known as TCI Cablevision of California, Inc.); Comcast of California IV, Inc. (formerly known as Televents of East County); Comcast of California 1, Inc. (formerly known as Televents, Inc.); Comcast of California/Colo rado/TexasMashington, Inc. (formerly known as Tele-Vue Systems, Inc.); Comcast of California/Colorado, Inc. (formerly known as AT&T Broadband HC of Delaware, LLC); Comcast ofCalifornia/ Massachusetts/Michigan/Utah, Inc. (formerly known as UACC Midwest, Inc.); Comcast of East San Fernando Valley, LP (formerly known as TCI of East San Fernando Valley, LP); Comcast of Contra Costa, Inc. (formerly known as Contra Costa Cable Company); and Comcast of California VIII, Inc. (formerly known as. Crockett Cable Systems, Inc,),( hereinafter jointly referred to as the "FRANCHISEES")., APPROVE the "Settlement Agreement and Release" with the FRANCHISEES; APPROVE "Agreement relating to the consent of Contra Costa County, California to the change of control of the FRANCHISEES to Comcast Corporation. FINANCIAL IMPACT: Comcast will provide the sura of eighteen thousand dollars ($18,000.00) to the Office of Communications & Media for reimbursement for legal expenses incurred in the transfer process and the sum of thirty-six thousand dollars ($36,000.00) in consideration of the settlement and release of all Claims and other matters as set fort 'n the "Settlem nt A reement and Release". CONTINUED ON ATTACHMENT; YES SIGNATURE: "RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATUREM: ACTION OF BOARD ON MARM 8,, 2005 APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A . ..UNANIMOUS(ABSENT *�,W TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ABSENT: ABSTAIN: ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. ATTESTED MAIM 8,_ JOHN SWEETEN,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR cc: Director,Office of communications&Media comcast __1 /.,DEPUl l BACKGROUNDIREASON(S) FOR RECOMMENDATION(S): SETTLEMENT AGREEMENT AND RELEASE This Agreement ("Agreement") is made and entered into this 8th day of, MARCS. 2005 by and among the County of Contra Costa, California, (the "County"), and Comcast of California IX, Inc. (formerly known as TCI Cablevision of California, Inc.); Comcast of California IV, Inc. (formerly known as Televents of East County); Comcast of California I, Inc. (formerly known as Televents, Inc.); Comcast of California/Colorado/Texas/Washington, Inc. (formerly known as Tele-Vue Systems, Inc.); Comcast of California/Colorado, Inc. (formerly known as AT&T Broadband HC of Delaware, LLC); Comcast of California/ Massachusetts/Michigan/Utah, Inc. (formerly known as UACC Midwest, Inc.); Comcast of East San Fernando Valley, LP (formerly known as TCI of East San Fernando Valley, LP); Comcast of Contra Costa, Inc. (formerly known as Contra Costa Cable Company); and Comcast of California VIII, Inc. (formerly known as Crockett Cable Systems, Inc,), hereinafter jointly referred to as the "Franchisees" RECITALS WHEREAS, the Franchisees are duly authorized holders of cable television franchises granted by the County, respectively (the "Franchises"); and WHEREAS, the Franchisees had filed an application(s) with the County to approve the transfer of control of the Franchisees from AT&T Corp. to AT&T Comcast Corporation (the "Transfers of Control"); and WHEREAS, the County denied its consent as a result of the Companies unwillingness to agree to comply with certain conditions that the Companies determined were beyond the scope of the County's authority; and WHEREAS, in November, 2002, after notice to the County, AT&T Comcast Corporation n/k/a Comcast Corporation acquired control of TCI Cablevision of California, Inc., Televents of East County; Televents, Inc.; Tele-Vue Systems, Inc.; AT&T Broadband HC of Delaware, LLC; UACC Midwest, Inc.; TCI of East San Fernando Valley, LP Contra Costa Cable Company; and Crockett Cable Systems, Inc, and subsequently changed the names of such entities as evidenced in the caption to this Settlement Agreement; and WHEREAS, the County and the Companies now desire to (i) settle and compromise all claims that the County has or may have against the Companies in connection with transactions and circumstances described above, and (ii) provide for the County's consent to the Transfers of Control. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration the sufficiency of which are hereby acknowledged, the parties agree as follows: TERMS 1. Payments to the County. The Franchisees shall make the following payments to the County within thirty (30) days of the Effective Date of this Agreement: a. The sum of eighteen thousand dollars ($18,000.00) in consideration for reimbursement for legal expenses incurred by the County in the transfer process. b. The sum of thirty-six thousand dollars ($36,000.00) in consideration of the settlement and release of all Claims and other matters set forth in Section 5 herein. 2. Cable System Upgrade. a. Within sixty (60) days of the Effective Date of this Agreement, the Franchisees agree to certify, in writing, that the upgrade of the cable systems in the unincorporated areas of the County surrounding the City of Richmond that are served by a common headend is complete, such that the cable systems will satisfy the following minimum requirements: 1. Utilization of hybrid fiber-coaxial cable with minimum bandwidth of 750 MHz; 2. Active components having a minimum capacity of 860 MHz; 3. Passive components having a minimum capacity of 1 GHz; 4. Two-way capability upon activation; 5. Construction at a maximum of 1200 homes per node, utilizing a scalable architecture capable of segmentation to 300 homes per node; and 6. Pass all lawful residential dwelling units existing and identified in the County's property records as of January 1, 2004 within the unincorporated area that meet the existing line extension policy. b. The County acknowledges that that portion of the cable systems in unincorporated areas of the County that are served by the headend also serving the City of Walnut Creek cannot be upgraded until the City of Walnut Creek permits construction to proceed on the upgrade of that cable system. C. The Franchisees shall offer materially the same Cable Services over the Cable System serving the unincorporated areas of the County surrounding the City of Richmond that are served by a common headend. Nothing in this provision shall impose any obligation upon the Franchisees to deploy any particular technology, equipment, facilities or software for use with the Cable System. 3. Additional Benefits to County . a. Within 90 days of the Effective Date of this Agreement, Franchisees will provide a fiber four-strand connection from a point specified at the County Office of Emergency Services building at 50 Glacier Drive in Martinez to the CCTV office at 10 Douglas Drive in Martinez. Franchisees agree to pay liquidated damages to the County for failure to complete the fiber connection within the agreed upon time, at a daily rate of $750.00 up to a maximum amount of $7,500.00. Franchisees obligation to pay hereunder is joint and several, but the total obligation of all the Franchisees, combined under this section shall not exceed $750.00 per day, up to a maximum amount of $7,500.00 b. Franchisees will meet FCC telephone response standards for time, call abandonment, and busy signals. Within 45 days from the end of a calendar quarter, Franchisees shall provide to the County detailed reporting of telephone performance in the call centers serving the County. The reports shall provide the same level of detail as reported to the City of Berkeley. For violations of this Subsection b the notice, opportunity to correct and penalty provisions in the applicable County Ordinance shall apply. 4. Consent to Change of Control This Agreement is contingent upon the execution of the Change of Control Agreement attached hereto as Exhibit A and made a part hereof by all the parties thereto. 5. The County's Release of Claims a. Subject to the County's receipt of the payments required under subsection 1, the County hereby releases, relinquishes, abandons and waives all claims, causes of action, demands, liabilities, damages and costs (collectively, the "Claims"), whether now known or unknown, that it has, or might have as of the Effective Date against the Franchisees, their affiliates, agents, directors, employees, attorneys, and other representatives. b. The releases, relinquishments, abandonments and waivers of paragraph a, above, do not apply to (1) County's current franchise fee audit; and (2) those specific unresolved issues identified in the County's written notice dated January 20, 2005. 6. No Waiver of Rights. Neither the County nor any of the Franchisees shall be deemed to have waived any rights it may have under applicable federal, state, or local laws, including, without limitation, the Constitutions of the United States of America or the State of Georgia, except as expressly stated in the Franchises and this Agreement. 7. Breach of this Agreement. The County may elect to treat any material breach of Franchisees' obligations contained in this Agreement as a breach of a material term of the Franchises, and may subject the Franchisees to any remedies the County may have for such breach consistent with applicable federal and state or local law. 8. Entire Agreement. This Agreement contains the entire understanding and agreement between the parties, each of which has participated and cooperated in the drafting of this Agreement. This Agreement may not be modified, amended or waived, in whole or in part, except in a writing signed by both of the parties. 9. Titles and Captions. All titles, captions, headings and similar items are provided for the purpose of reference and convenience and are not intended to affect the meaning of the contents or scope of this Agreement. 10. Neeotiated Settlement. This Agreement has been negotiated at arm's length and between persons sophisticated and knowledgeable in the matters dealt with herein and shall be interpreted to achieve the intents and purposes of the parties, without any presumption against the party responsible for drafting any part of this Agreement. 11. Severabilit . If any part of this Agreement is held invalid, the remainder of this Agreement shall not be affected thereby and shall continue in full force anal effect unless enforcement as so modified would be unreasonable or grossly inequitable under the circumstances or would frustrate the purposes hereof. To this end, provisions of this Agreement are severable. 12. Notices. Any notice or request required or authorized to be made under the terms of this Agreement shall be given in writing and shall be deemed to be properly given if delivered personally, sent by facsimile transmission, or sent by United States mail, postage prepaid, to the persons set forth below: If to County: Contra Costa County 651 Pine Street, 11th floor Martinez, CA 94553 Attn: County Administrator With a copy to: Office of Communications and Media 10 Douglas Drive, Suite 210 Martinez, CA 94553 Attn: Patricia Burke, Director If to the Companies: Comcast Cable Communications, Inc. 2500 Bates Avenue Concord, CA 94520 Attn: Marty Robinson With a copy to: Comcast Cable Communications, Inc. 1500 Market Street, 34th Floor Philadelphia PA 19103 Attn: General Counsel 13. Authorization to Execute Agreement. Each party represents and warrants to the other parties that the person executing this Agreement on its behalf has the authority to sign and, by signing,to bind that party to the terms and conditions of this Agreement. 14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original. 15. Effective Date. The Effective Date of this Agreement is Contra Costa County, C LIFO IA Comcast of California IX, Inc. By: --w- JoA Sweeten By: Title: ounty Administrator APPROVED AS TO FORM: Title • SILVANO B. MARCHESI COUNTY COUNSEL By: Deputy County Counsel Comcast of California IV, Inc. By: Title Comcast of California I. Inc. By: Title: Comcast of California/Colorado/Texas/Washington, Inc. By• Title: Comcast of California/Colorado, Inc. By• Title: Comcast of California/ Massachusetts/Michigan/Utah, Inc. By. Title: Comcast of East San Fernando Valley, LP By. Title: Comcast of Contra Costa, Inc. By. Title: Comcast of California VIII, Inc By• Title: EXHIBIT A AGREEMENT RELATING TO THE CONSENT OF CONTRA COSTA COUNTY, CALIFORNIA TO THE CHANGE OF CONTROL OF Comcast of California IX, Inc; Comcast of California IV, Inc.; Comcast of California I, Inc.; Comcast of California/Colorado/Texas/Washington, Inc.; Comcast of California/Colorado, Inc.; Comcast of California/Massachusetts/Michigan/Utah, Inc.; Comcast of East San Fernando Valley, LP; Comcast of Contra Costa, Inc.; and Comcast of California VIII, Inc. THIS AGREEMENT (the "Change of Control Agreement" or "Agreement") is entered into as of the latter of the dates set forth in the signature section, by and among Contra Costa County, California (the "County"), and Comcast of California IX, Inc. (formerly known as TCI Cablevision of California, Inc.); Comcast of California IV, Inc. (formerly known as Televents of East County); Comcast of California I, Inc. (formerly known as Televents, Inc.); Comcast of California/Colorado/Texas/Washington, Inc. (formerly known as Tele-Vue Systems, Inc.); Comcast of California/Colorado, Inc. (formerly known as AT&T Broadband HC of Delaware, LLC); Comcast of California/ Massachusetts/Michigan/Utah, Inc. (formerly known as UACC Midwest, Inc.); Comcast of East San Fernando Valley, LP (formerly known as TCI of East San Fernando Valley, LP); Comcast of Contra Costa, Inc. (formerly known as Contra Costa Cable Company); and Comcast of California VIII, Inc. (formerly known as Crockett Cable Systems, Inc.), hereinafter collectively the "Franchisees", and Comcast Corporation, formerly known as AT&T Comcast Corporation (the "Transferee"). The obligations and liabilities of the Transferee under this Agreement are limited to those expressly stated herein as applying to the Transferee. WHEREAS, Franchisees are each duly authorized holders of franchises (the "Franchises") authorizing the installation, operation and maintenance of cable television systems (the"Systems")within the County; and WHEREAS, Franchisees formerly were indirect subsidiaries of AT&T Corp. ("Transferor"); and WHEREAS, Transferor has merged its subsidiary, AT&T Broadband Corp., with Comcast Holdings Corporation (formerly known as Comcast Corporation) to create a new company known as Comcast Corporation (formerly known as AT&T Comcast Corporation), pursuant to the terms of an Agreement and Plan of Merger dated December 19, 2001, by and between Transferor, AT&T Broadband Corp. and Transferee, and certain of their respective affiliates (the "Merger Agreement") and a Separation and Distribution Agreement dated December 195 20015 by and between Transferor and AT&T Broadband Corp. (the "Merger"); and WHEREAS, following the Merger the Franchisees have remained in place and continue to hold and operate under the Franchises; and WHEREAS, the Franchisees, Transferor and Transferee filed written applications with the County (the "Applications") wherein they requested the consent of the County to the Change of Control of the Franchisees to Transferee (the "Change of Control"); and WHEREAS, the Board of Supervisors of the County has reviewed the Applications as well as all relevant documents, staff reports and recommendations; and WHEREAS, based upon the evidence presented to the Board of Supervisors, it has determined that it would be in the public interest to conditionally approve the Change of Control. NOW, THEREFORE, it is agreed by and between the parties as follows; 1. The Board of Supervisors of the County hereby gives its consent to and approval of the Change of Control of the Franchisees. 2. The granting of this consent to the Change of Control does not waive the right of the County to consent to any subsequent change in control. 3. Franchisees agree that this Change of Control Agreement and approving resolution is not a new franchise agreement, the granting of a franchise, or the renewal of the existing franchise, but rather is exclusively an agreement consenting to a change of control of the Franchisee and said Change of Control Agreement neither affects nor prejudices in any way the rights of the County or, the Franchisee under the Franchise. Franchisees and Transferee further agree that (i) in adjudging whether particular obligations are commercially impracticable, as that term is used and defined under Section 625 of the Cable Communications Policy Act of 1984, as amended (the "Cable Act"), or (ii) in any proceeding relating to the approval or establishment of a rate subject to the jurisdiction of the County, the parties will not consider the economic burden of debt service and equity requirements incurred directly or indirectly to fund the Change of Control to the extent such debt service and equity exceeds the debt service and equity requirements of Franchisees as they existed prior to the closing of the Merger. 4. The Franchisees and the County acknowledge and agree that the Change of Control will not alter their respective commitments, duties and obligations present, continuing and future embodied in the Franchises, any prior Change of Control or Transfer Agreements between them relating to the Systems, (collectively, the "Franchise Documents") and any lawful orders or directives of any administrative agency relating to the Franchise or the System including, but not limited to, the Federal Communications Commission (the "Commission"). The County's consent to the Change of Control shall not in any respect relieve Franchisees or any of their respective successors-in-interest of the responsibility for past acts or omissions, known or unknown, or for any obligations or liabilities pursuant to the Franchise Documents. Franchisees agree to cooperate and furnish relevant information as required by the Franchises in relation to any audit and/or investigation relative to any breaches and/or defaults that may accrue subsequent to the Change of Control. To the extent that the Franchisees or Transferee, or any related person or entity, challenges the validity or interpretation of the Franchise Documents in the future in any administrative proceeding or court of law, such a challenge shall be subject to all defenses which -2- would have been available to the County had the Transferor, Franchisees or any related person or entity, brought said challenge(s), as well as any and all defenses independently available against Transferee, to the extent applicable. Transferee acknowledges that the Change of Control will not affect, diminish, impair or supersede the binding nature of the Franchises and any other existing ordinances, resolutions, and agreements applicable to the operation of the System and that the Franchisees shall comply with all applicable requirements of the Franchises. 5. The parties acknowledge and recognize that none of the Change of Control, the consent process, or this Agreement provide any basis for increasing the amounts paid by subscribers through cost pass-throughs as so-called "external costs" or as new requirements and that the foregoing do not provide any basis for increasing the rates paid by subscribers in any manner. 6. In regard to any payment made or service provided to the County pursuant to this Change of Control Agreement, neither the Franchisee nor any affiliated party will pass through, externalize, or otherwise attempt to add such costs to any regulated rate including, but not limited to, the addition of said payment or service as a separate line item to Subscriber bills. Nothing in this paragraph shall be construed so as to limit Grantee's rights under applicable law. 7. Franchisees represent that any letter of credit, insurance and bonding required by the Franchise Documents have been obtained, and that there will be no gaps in required coverages or liabilities. Franchisees will continue to maintain the letter of credit and bonds, if any,that are required under the Franchises notwithstanding the Change of Control. 8. Transferee and Franchisees represent and warrant that the Change of Control of the Franchisees complied with and was not in violation of any applicable federal, state, or local law, statute, and/or regulation. Franchisees agree to defend, indemnify and hold the County harmless against any loss, claim, costs, damage, liability or expense (including, without limitation, reasonable attorney's fees) arising out of this Change of Control Agreement, and/or incurred as a result of(i) any representation made by Transferor, Transferee or Franchisees in the Application or in connection with the County's review of the Change of Control which proves to be untrue or inaccurate in any material respect or (ii) any violation of any applicable federal or state law or regulation relative to Transferee's ownership or control of the Franchisees. In the event the County receives any such notice of a loss, claim, damage, liability or expense, the County shall promptly notify Franchisees which shall, at the request of the County, assume direct responsibility for defending against any such loss, claim, damage, liability or expense. The County shall reasonably cooperate in such defense. 9. This consent is not affirmation that Franchisees are currently in compliance with the Franchise Documents. Any consent given by the County in this Change of Control Agreement and any resolution approving this Change of Control Agreement is not a finding that, after the Change of Control, Franchisees or Transferee is financially, technically or legally qualified, and no inference will be drawn, positively or negatively, as a result of the absence of a finding on this issue. Any consent is therefore made without prejudice to, or waiver of any right the County may have to fully investigate and consider Franchisees' or Transferee's financial, technical and legal qualifications and any other relevant considerations during any subsequent -3- proceeding including by way of example and not limitation any future change of control, transfer or renewal proceeding. Without limiting the foregoing, the County's consent to the Change of Control is not a finding or representation by the County that the Franchises will be renewed or extended (and approval shall not create an obligation to renew or extend the Franchise that does not otherwise exist); that Franchisees or Transferee is "financially, technically or legal" qualified to hold a renewed franchise; or that any other renewal issue that has or may arise with respect to past performance or future cable-related needs and interests will be resolved in a manner favorable to Franchisees. Nothing in this Change of Control Agreement shall constitute a waiver of any of Transferor's, Transferee's, Franchisee's, or County's rights or remedies under federal, state, or local law. 10. The Franchisees and Transferee expressly agree that any litigation arising among the County, Franchisees and Transferee relating to the Franchise Agreement, this Agreement, or any other agreements directly relating to the regulation, franchising, refranchising, operation and maintenance of the System shall be filed and litigated exclusively in the County of Contra Costa, State of California or, if jurisdictional requirements are otherwise met, the Federal District Court for the Northern District, California. Transferee agrees to accept service of process by way of service upon: Comcast Corporation, 1500 Market Street, Attention: Legal Department, Philadelphia, Pennsylvania 19102. 11. The Transferee shall comply with all applicable financial disclosure requirements under applicable law, including without limitation, the regulations promulgated by the Security and Exchange Commission, including, but not limited to, regulations regarding "off-balance sheet" borrowing. If (i) Transferee has been found by a court of competent jurisdiction, or governing agency having enforcement powers with respect to such disclosure requirements, to have violated any applicable and material financial disclosure requirements under applicable law, and (ii) related to such finding the bond rating of Transferee as listed by Standard & Poor's is reduced to BB or below and by Moody's is reduced to Ba2 or below, the County, at its election, may infer that Franchisees lack financial qualifications for the purpose of franchise renewal under the provisions of Section 626 of the Cable Act subject to the County having provided the Franchisees written notice of and an opportunity to be heard at any hearing or other proceeding at which such action is taken by the County. Thereafter, the County shall permit the Franchisee to submit written evidence, as reasonably required by the County, that adequate funding exists for continued operation of the Franchises, including the fulfillment of all Franchise requirements on a timely and uninterrupted basis, which funding would not be adversely affected by any bankruptcy of the Transferee or any affiliated party or the default by Transferee on any Financing Agreement as defined in Paragraph 13. Such written evidence shall be submitted within fifteen(15) business days of the County's request. 12. Transferee and Franchisees agree that Franchisees will not, directly or indirectly, be an obligor for any debt that may be incurred by Transferee to meet cash funding requirements of the Merger or any future acquisition or improvement of cable properties not located in the County. Further, during the thirty-six (36) months following the close of the Merger, if(i) the bond rating of Transferee as listed by Standard & Poor's is reduced to BB or below and by Moody's to Ba2 or below, or (ii) Transferee is in material default under any loan, indenture, or financing arrangement ("Financing Documents") material to the financing of Transferee's -4- operations, Franchisees shall immediately provide notice to the County and shall, within ten (10) days, of the first of a drop in credit rating or a default in any Financing Documents, secure and provide to the County an Irrevocable Letter of Credit, in a form and from a company approved by the County, in the amount of$500,000, in addition to any security currently required under the terms of the Franchise Documents, as security for any default under the Franchise Agreement. Franchisees further agree that the Letter of Credit may be drawn upon by the County to reimburse the County for any reasonable and actual expenses, including attorney's fees, incurred in any bankruptcy proceeding involving the Franchisees or the Transferee. In the event Transferee subsequently meets the foregoing minimum standards (i.e., bond rating and no default on Financing Documents), the Transferee may cancel the above-referenced additional Irrevocable Letter of Credit. County shall not be required to repay or replenish any amounts drawn thereunder. 13. Franchisees agree to provide a customer service staffing (utilizing internal or external resources) at levels sufficient to meet the federal customer service standards. Franchisees further agree that in the event Franchisees fail to materially satisfy federal customer service standards, Franchisees shall, within thirty (3 0) days from its receipt of written notice from the County, provide the County with a specific plan (including details as to staffing, training, and other technical resources) which Franchisee will undertake to remedy such failure the "Plan"). Nothing herein shall prevent the County from adopting customer service standards in excess of federal standards and enforcing those higher standards through methods available to it under applicable law. 14. Any violation of this Change of Control Agreement shall be deemed to be a violation of the Ordinance and the Franchise. 15. The County hereby gives Franchisees notice that the Change of Control may create a taxable possessory interest upon which the Franchisee may be liable for the payment of certain property taxes. Franchisees hereby acknowledge that it has received actual notice as provided by California Revenue and Taxation Code Section 107.6. 16. This Change of Control Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. The parties agree that this Change of Control Agreement will be considered signed when the signature of a party is delivered by facsimile transmission. Such facsimile signature shall be treated in all respects as having the same effect of an original signature. 17. This Change of Control Agreement shall be deemed effective upon execution.