Resolution 1998-57
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RESOLUTION NO. 98-57
RESOLUTION OF THE CITY OF GILROY
APPROVING TRANSFER OF CABLE TELEVISION FRANCHISE
WHEREAS, Falcon Cable Systems Company II, L.P. ("FCS" or "Franchisee"), a
California limited partnership, is an authorized holder of a franchise (which franchise,
and all amendments to date are referred to herein as the "Franchise") authorizing the
operation and maintenance of a cable television system ("System") and authorizing
Franchisee to serve the City of Gilroy ("City") with cable services; and
WHEREAS, the Franchise was issued on April 2, 1984, with a term of 15 years; and
WHEREAS, Falcon Holding Group, L.P. ("FHGLP"), a Delaware limited partnership and
the current ultimate general partner of FCS, and affiliates of Tele-Communications, Inc.
("TCI") have formed a limited partnership, called Falcon Communications, L.P. (The
"Falcon/TCI Partnership"), which will be the new ultimate parent company of FCS; and
WHEREAS, FHGLP and TCI have entered into a Contribution and Purchase Agreement
dated December 30, 1997 (the "Contribution Agreement"), pursuant to which TCI has
agreed to transfer the assets of certain of its cable systems to the Falcon/TCI
Partnership and FHGLP has agreed to transfer its interests in FCS and its interests in
other entities owning cable systems to the Falcon/TCI Partnership (the "Transfer" or the
"Transaction": and
WHEREAS, upon consummation of the Transaction (the "Closing Date"), FHGLP will
have approximately a 53% ownership interest in, and will control and manage the day-
today operations of the Falcon/TCI Partnership, and the TCI affiliates will have
approximately a 47% ownership interest in the Falcon/TCI Partnership; and
WHEREAS, the City and Franchisee are negotiating the Franchise renewal; and
WHEREAS, FCS, FHGLP, and Falcon/TCI Partnership have requested consent by the
City to the Falcon/TCI Partnership Transaction and, as part of this corporate
restructuring, to a transfer of direct ownership of FCS to Falcon Cable Communications,
LLC, a wholly owned subsidiary of the Falcon/TCI Partnership, to the extent that such
consent is required under the Franchise, applicable law, or other agreements with the
City; and
WHEREAS, the City has substantial concerns with regard to, among other things, the
technical performance of FCS and with regard to the quality of service provided to
citizens and franchise compliance while it has held the Franchise; and it is not able at
this time to determine that any entity involved in the Transaction is technically or
otherwise qualified such that the Transaction should be approved, unless the Franchise
is renewed, and the City has not concluded that renewal is appropriate; and
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WHEREAS, FCS, Falcon/TCI Partnership, FCLLC and FHGLP are willing to agree to
terms and conditions to address these and other issues, and
WHEREAS, the City finds that, so long as those conditions are satisfied, but only if the
conditions are satisfied, approving the Transfer would be appropriate.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY OF GILROY AS FOLLOWS:
SECTION 1. The City hereby approves the transfer request, effective as of the
date all of the conditions in Sections 2-4 are fully satisfied. If the conditions are not fully
satisfied on or before December 31, 1998, then the transfer of ownership to the
Falcon/TCI Partnership and immediately thereafter to FCLLC will be deemed denied as
of the date hereof. If the conditions are fully satisfied, then the transfer will be deemed
granted as of the date hereof.
SECTION 2. FCS as Franchise holder, Falcon/TCI Partnership as the new
ultimate parent, FHGLP as the managing general partner of the Falcon/TCI partnership,
and FCLLC as the direct parent of FCS guarantee that the ongoing renewal
negotiations will not be adversely affected due to the nature of the above referenced
Transaction, and to that end: (a) shall provide the City with continuity of negotiations; (b)
agree that renewal terms set forth in Exhibit A to the Transfer Agreement may be
binding on them and their lawful successor transferees at the discretion of the City; and
(c) shall continue to maintain with the City a performance bond, as required by the
franchise agreement, in a form acceptable to the City, to ensure good faith renewal
negotiations and performance of all provisions of the Franchise. This guarantee shall
be provided in substantially the form attached as Exhibit 1, and must be signed by FCS,
Falcon/TCI Partnership, FHGLP and FCLLC by the effective date of this Resolution.
SECTION 3. By the effective date of this Resolution, FCS, FCLLC, Falcon/TCI
Partnership, and FHGLP (collectively, the "Companies") must sign the Transfer
Agreement, in substantially the form attached as Exhibit 2, and must have made all
payments required thereunder.
SECTION 4. The Transaction described in the WHEREAS clauses must be
completed by December 31, 1998.
SECTION 5. The fact that the conditions in Sections 2-4 are satisfied, so that the
transfer request is deemed approved, is not a determination that any of the Companies,
individually or collectively, is financially, legally, or technically qualified to hold a
franchise, and the City has reserved consideration of those issues to the franchise
renewal proceeding. City approval of this Transfer is not in any way a representation or
guarantee that the City will issue a renewal franchise to FCS or the Falcon/TCI
Partnership, nor is it a representation that FCS is in compliance with provisions of its
Franchise. Should any of the representations or warranties made in the attached
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agreement prove to be untrue in any material respect, then the transfer request will be
deemed to be denied as of the effective date hereon. If any condition of the transfer is
not satisfied, the transfer request will be deemed denied as of the effective date hereon.
SECTION 6. This Resolution shall be deemed effective as of the effective date
of this Resolution.
PASSED AND ADOPTED this 21st day of September, 1998 by the following vote:
AYES:
COUNCILMEMBERS: ARELLANO, ROWLISON, SPRINGER,
GILROY
NOES:
COUNCILMEMBERS: GIFFORD, SUDOL
ABSENT: COUNCILMEMBERS: MORALES
APPROVED:
ATTEST:
~jf.( t2~h~
Rhonda Pelli~ City Clerk
RESOLUTION NO. 98-57
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EXHIBIT 1
AGREEMENT AMONG THE
CITY OF GILROY,
FALCON CABLE SYSTEMS 1/, L.P.,
FALCON HOLDING GROUP, L.P,
FALCON COMMUNICA TIONS, L.P., and
FALCON CABLE COMMUNICA TlONS,. L.L. C.
WHEREAS, Falcon Holding .Group, L.P. ("FHGLP"), Falcon Cable Systems II, L.P.
("FCS"), Falcon Communications, L.P. ("FalconITCI Partnership") have asked the City
of Gilroy to approve a transaction, which would result in a transfer of the ownership of
Falcon Cable systems Company II, L.P. ("FCS") to Falcon Cable Communications, LLC
. ("FCLLC"), a wholly owned subsidiary of the FalconlTCI Partnership; and
WHEREAS, the City of Gilroy is willing to consent to the Transaction and the
. transfer, but only if certain conditions are met that will ensure that the Transaction and
transfer do not harm the City of Gilroy or its citizens;
NOW THEREFORE for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
FCS as Franchise holder, FHGLP as the current ultimate general partner of the
Franchise holder, FalconlTCI Partnership as the new ultimate parent of the Franchise
holder, and FCLLC as the new parent of FCS guarantee that the ongoing negotiations
to consider renewing the Franchise now held by FCS will not be adversely affected due
to the nature of the above referenced Transaction, and to that end: (a) shall provide the
City with continuity of negotiations; (b) agree that renewal terms set forth in Exhibit A to
the Transfer Agreement may be binding on them and their lawful successor transferees
at the discretion of the City; and (c) shall continue to maintain with the City a
performance bond, as required by the franchise agreement, in a form acceptable to the
City, to ensure good faith renewal negotiations and performance of all provisions of the
Franchise.
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Falcon Holding Group, L.P "
a Delaware limited partnership
By:
By:
Title:
Date:
Falcon Holding Group, Inc.,
a California corporation
its general partner
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Falcon Communications, L.P "
a California limited partnership
By: Falcon Holding Group., L.P.,
a Delaware limited partnership
its managing general partner
By:
By:
Title:
Date:
Falcon Holding Group, Inc.,
a California corporation
its general partner
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Falcon Cable Communications, L.L.C.
a California limited partnership
By: ~A~.~~~L ~~
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Falcon Cable Systems Company II,
L.P., a California limited partnership
By:
Falcon Investors Group, LTD.,
a California limited partnership,
its managing general partner
By:
Falcon Holding Group, Inc.,
a California corporation,
its managing general p~
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By:
Title:
Date:
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EXHIBIT 2
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AN AGREEMENT REGARDING THE TRANSFER OF
THE CABLE TELEVISION SYSTEM
BY AND AMONG
FALCON CABLE SYSTEMS COMPANY II, L.P.,
FALCON HOLDING GROUP, L.P.
FALCON COMMUNICATIONS, L.P.,
FALCON CABLE COMMUNICATIONS, L.L.C.
AND
THE CITY OF GilROY, CALIFORNIA
DATED AS OF
September 21 , 1998
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TABLE OF CONTENTS
1. Acceptance of Franchise Obligations.. ........................................................ ..........4
1.1 Acceptance ....................... .............. ............ .............................. .................4
1 .2 Compliance with Franchise........................................................................4
1.3 Assumption of Obligations......................... .......................... ............ ..........5
1.4 City's Reliance Upon Companies' Representations ................................... 6
2. Compliance and Qualifications ............................................................................. 6
3. Rates . . .. . . . . . . .. . . . . . . . . . . . . . .. . . .. . . . . . . .. . .. .. . .. . . . . . . . . . . . .. . . . . . . .. . .. . .. .. . . . .. . . . . .. . . . . . . . . .. . .. . . . . . . . . . . .. ... 7
4. Other Representations and Warranties................................................................. 8
4.1 Representations and Warranties of the FCS .............................................. 8
4.2 Representati.ons and Warranties of the Falcon/TCI Partnership ................ 8
4.3 Representations, Warranties and Guarantees of the FHGLP .................... 9
4.4 Representations, Warranties and Guarantees of FCLLC.........................10
. 5. .Future Transfers............................................. .......................... .......................... 10
6. [RESERVED]........................................... ....... ................................................ ..... 11
7. Consent Subject to Conditions............................................................................ 11
7.1 Agreement.................................................................................. .............. 11
7.2 Waiver of Claims ......... ................................... ..................................... ..... 12
8. Miscellaneous Provisions..... ........... .................................................................... 13
8.1 Representations Warranties Material......................................................~ 13
8.2 Binding Agreement.................................... ............................................... 13
8.3 Governing Law.............................. ........................................................... 13
8.4 Drafting .................................................................................................... 14
8.5' Severability and Enforceability................................................................. 14
8.6 Time of the Essence............................ .................................................... 14
8.7 Counterparts ........................... ................................................................. 14
8.8 Captions.................................................................................................... 14
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1 TRANSFER AGREEMENT
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3 This Transfer Agreement ("Agreement") is effective as af Sept. 21, 1998, and is
4 made and entered into. by and amang FALCON CABLE SYSTEMS COMPANY II, L.P., a
5 Califarnia limited partnership ("FCS"), Falcan Holding Graup, L.P. ("FHGLP"), Falcon
6 Cammunicatians, L.P. ("FalconlTCI Partnership"), Falcon Cable Cammunicatians, LLC
7 ("FCLLC") and the City af Gilroy ("City"). FCS, Falcon/TCI Partnership, FCLLC and
8 FHGLP are sametimes callectively referred to. as the "Companies".
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10 WITNESSETH
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12 A. FCS is the halder af a franchise to. provide cable televisian service in the
13 City. The franchise was issued an April 2, 1984, with a term af 15 years. Said franchise,
14 and all amendments thereto. to. date are referred to. herein as the "Franchise." FHGLP is
15 the managing general partner af FCS, and directly cantrols FCS. FHGLP and affiliates af
16 Tele-Cammunications, Inc. ("TCI") have farmed the Falcan/TCI Partnership, which will be
17 the new ultimate parent af FCS, through its 100% awnership af FCS's new direct parent,
18 FCLLC. FHGLP and TCI have entered into. a Cantributian and Purchase Agreement
19 dated December 30, 1997 (the "Cantributian Agreement"), pursuant to which Tel has
20 agreed to. transfer the assets af certain af its cable systems to. the Falcan/TCI Partnership.
21 FCS, FCLLC, FHGLP and Falcan Cammunicatians, L.P. have represented that upan the
22 cansummatian af the Transaction cantemplated under the Cantributian Agreement,
23 FHGLP will have appraximately a 53% awnership interest in, and will control and manage
24 the day-to-day aperatians af the Falcon/TCI Partnership, and the TCI affiliates will have
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1 approximately a 47% ownership interest in the FalconrrCI Partnership, and will not in any
2 respect (with the exception of TCl's authority to approve the sale of systems) control the
3 FalconrrCI Partnership or manage the day-to-day operations. The Transaction described
4 above is referred to in this Agreement as the 'Transaction." The Companies represent
5 that after the Transaction, FCS will remain the Franchisee, but for financing and business
6 reasons, FCS will be owned 99.99% by FCLLC, which in turn will be owned 100% by the
7 FalconrrCI partnership, which' in turn will be owned by FHGLP (53%) and a TCI entity
8 (47%). FCLLC will be the new parent of FCS and the FalconrrCI Partnership will be the
9 new ultimate parent of FCS.
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11 B. It is the City's position that the Transaction constitutes a transfer within the
12 meaning of the Franchise and/or requires the prior approval of the City. However, among
13 other things, the City has substantial concerns with regard to the technical and financial
14 performance of FCS and the quality of service provided by FCS while it has held the
15- Franchise. The City has determined that in order to protect the public interest given the
16 impending expiration of the franchise, the ongoing franchise renewal process, and the
17 City's concerns with regard to the past performance of FCS, approval of any Transaction
18 would need to be strictly conditioned in order to be approved. While the Companies do
19 not agree to the City's view of the Transaction, they are willing to enter into an Agreement
20 to address certain of the City's concerns.
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22 C. The City, FCS, FalconrrCI Partnership, FCLLC and FHGLP, have mutually
23 negotiated an agreement that is intended to protect the public, to ensure that no rights of
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1 the City nor the public are lost or.in any way diminished by the Transaction, and to ensure
2 that neither the City nor the public are in any way worse off than had FHGLP continued to
3 control the Franchisee directly, and the City is willing to approve the Transaction if, but
4 only if, that agreement is strictly enforceable according to its terms.
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6 D. The City has enacted or will enact a Resolution (''Transfer Resolution")
7 granting its approval of the Transaction subject to the condition, inter alia, that the parties
8 enter into this Agreement.
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10 NOW, THEREFORE, for good and adequate consideration, the receipt and
11 sufficiency of which are hereby acknowledged, the parties hereby agree:
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1 AGREEMENT
2 1. Acceptance of Franchise Obligations.
3 1.1 Acceptance - FCS and FHGLP hereby continue to accept, acknowledge,
4 and agree to be bound by all of the commitments, duties and obligations accruing prior to
5 the Transaction which are set forth in the Franchise, the. Transfer Agreement dated
6 October 21, 1996, and all applicable I~ws, regulations, and practices of the City
7 (collectively, the Franchise Documents). Neither FCS nor FHGLP is relieved of any
8 obligation it had under the Franchise Documents by virtue of this Agreement or approval of
9 the Transaction.
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11 1.2 Compliance with Franchise - FCS agrees to fully comply with all of the
12 terms and conditions set forth in the Franchise Documents. FHGLP, FCLLC and
13 FalconrrCI Partnership each agree that they will not take any action, fail to take any
14 action, or assert any claim or defense inconsistent with those obligations including, by way
15 of example and not limitation, a claim that as a result of the Transaction, any of the
16 Companies is relieved of liability for past acts or omissions. To the extent that any
17 provisions of any document associated with the Transaction or approval of the Transaction
18 between the Companies (including but not limited to financing documents, mortgages and
19 other instruments) conflicts with the Franchise Documents (other than the express
20 provisions of this Agreement), the parties agree they are not approved, and the approval of
21 the Transaction is subject to the condition that such provisions, if any, shall be of no force
22 or effect with respect to the Cable System serving the City.
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1 1.3 Assumption of Obliaations - From and after the Transaction, FCLLC shall be
2 jointly and severally liable with FCS and FHGLP for the past acts and omissions and
3 FCLLC and FCS shall be jointly and severally liable for the future acts and omissions of
4 FCS or any of its direct and' indirect parents and predecessors, known and unknown.
5 Without limiting the foregoing, FCLLC hereby assumes joint and several liability for, and
. 6 accepts the consequences of, any such acts and omissions, known and unknown; and'
7 assumes liability for any and all of FCS's and FHGLP's previously accrued but unfulfilled
8 obligations to the City under the Franchise Documents, unless and until such obligations
9 are expressly released by mutual agreement. The City's approval of the Transaction does
10 not in any way release any obligation related to any past actions, omissions, practices, or
11 system operations (including charges to subscribers) of FCS or FHGLP or any of their
12 direct and indirect parents or predecessors or any obligation arising out of any failure to
13 comply with California or federal law; and FCS, FHGLP and FCLLC shall be jointly and
14 severally responsible for paying any amounts owed to any entity as a result of FCS's past
15 acts and omissions with respect to the same. Further, these acts and omissions of FCS
16 may' be considered the acts of FCS, FHGLP, FCLLC and Falcon/TCI Partnership for
17 purposes of determining whether a renewal of the existing franchise should be granted;
18 and any sufficient notice and opportunity to cure that may have been given to FCS, its
19 direct or indirect parents. or predecessors shall be considered to have been given to
20 FHGLP; FCLLC and Falcon/TCI Partnership and be sufficient as to them as well. The City
21 may vindicate its rights by action brought against any or all of FCS, FCLLC, Falcon/TCI
22 Partnership or FHGLP, to the extent consistent with the assumptions of obligations in this
23 paragraph.
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1 1 .4 City's Reliance Upon Companies' Representations - The Companies
2 acknowledge and agree that the consent to the Transaction is made in reliance upon the
3 representations, documents, and information provided by FCS, FCLLC, FHGLP and
4 Falcon/TCI Partnership in connection with the Transaction, all of which are incorporated
5 into this Agreement by this reference. Without limiting the foregoing, the Companies have
6 warranted that the City may rely on the Form 394 submitted to the City of San Juan
7 Bautista in connection with the Transaction. The Companies represent and warrant that:
8 (1) the Transaction will not result in an entity holding the Franchise or controlling the
9 Franchise which is in any respect in a materially more adverse position than the entity
10 . which previously held the franchise; (2) the Transaction will not materially adversely affect
.11 the costs of the entity holding the Franchise, so that the Franchisee's ability to satisfy the
12 cable-related needs and interests of the City will not be affected; (3) the Franchisee will
13 continue to be controlled by FHGLP; (4) FHGLP will be the sole managing partner of
14 Falcon/TCI partnership and will solely control the operations of the system; (5) with the
15 exception of TCI's authority to approve the sale of systems, TCI will not directly or
16 indirectly control or manage the operation of the partnership or FCS; and (6) there is
17 nothing in . any agreement related to the Transaction that would prevent or in any way
18 inhibit FCS from agreeing to a renewal franchise as proposed by the City, or from settling
19 past compliance issues as proposed by the City.
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21 2. Compliance and Qualifications. By its consent to the Transaction, and execution of
22 this Agreement, the City waives none of its rights or prospective rights with respect to
23 FCS's, FHGLP's, FCLLC's or Falcon/TCI Partnership's compliance with the terms,
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1 conditions, requirements and obligations set forth in the Franchise Documents. The
2 Companies acknowledge and agree that the City is not, by' approving the Transaction,
3 agreeing that any past practice or course of conduct by FCS or FHGLP complied with the
4 Franchise Documents. The Companies agree that the City is not deciding that any of the
5 Companies is financially, legally, or technically qualified to hold the franchise; and the
6 parties hereto agree that the City may and has properly reserved consideration of those
7 issues to any renewal proceeding. Further, the approval of the Transaction is not in any
8 respect a representation that the City will renew the Franchise.
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10 3. Rates.
11 3.1 FCS represents, warrants, and stipulates as a factual matter that,
12 considering all relevant factors, the rates that it may charge under applicable law are no
13 higher than the rates that could have been charged had the Transaction not occurred.
14 FCS further stipulates that it will not seek to recover any cost, or to impose any rate
15 increase that is inconsistent with that representation, stipulation and warranty. Should a
16 change in the valuation of the cable system occur as a result of the Transaction, such
17 change in valuation shall not result in an increase in subscriber rates. Nothing herein
18 prevents FCS from aggregating equipment costs merely because, as a result of
19 differences in the franchises controlled by FCS, the costs which may be subject to
20 aggregation are different than the costs, in accordance with 47 U.S.C. Sec. 543 (a) (7),
21 that would have been subject to aggregation by FCS.
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1 3.2 Except as provided in the following sentence, no expenses (such as
2 attorneys' fees) incurred or amounts expended by the Companies in connection with the
3 Transaction, including any such expenditures to comply with the terms of this Agreement,
4 may be passed through to subscribers to the System in any form, or itemized on
5 . subscriber bills. Notwithstanding the foregoing, it is recognized that to the extent permitted
6 by Federal Law, the Companies are permitted to pass through to subscribers to the
7 System an allocable share of all costs paid pursuant to Section 7.1(iii), below.
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9 4. Other Representations and Warranties.
10 4.1 Representations and Warranties of FCS - FCS hereby represents and
11 warrants that: (a) FCS is duly organized and legally existing under the laws of the state of
12 its organization and is duly qualified to do business in the state of California; (b) this
13 Agreement and the Franchise Documents constitute legal, valid and binding obligations of
14 FCS enforceable in accordance with their terms; and (c) the execution and delivery of, and
15 performance under, this Agreement and the Franchise Documents are within FCS's power
16 and authority without the joind$r or consent of any other party and have been duly
17 authorized by all requisite action and are not in contravention of FCS's contracts, charter,
18 bylaws and/or other organizational documents, including its partnership agreement.
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20 4.2 Representations and Warranties of FalconrrCI Partnership - FalconrrCI
21 Partnership hereby represents and warrants that now or upon consummation of the
22 partnership transaction: (a) FalconrrCI Partnership is duly organized and legally existing
23 under the laws of the state of its organization and is duly qualified to do business as a
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1 foreign corporation in the State of Califomia; (b) this Agreement and, upon the
2 consummation of the Transaction, the Franchise Documents will constitute, legal, valid
3 and binding obligations of FalconrrCI Partnership enforceable in accordance with their
4 terms; and (c) the execution and delivery of, and performance under, this Agreement and
5 the Franchise Documents are within FalconrrCI Partnership's power and authority without
6 the joinder or consent of any other party and have been duly authorized by all- requisite
7 action and are not in contravention of FalconrrCI Partnership's contracts, charter, bylaws
8 and/or other organizational documents, including its partnership agreement.
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10 4.3 Representations. Warranties and Guarantees of FHGLP - FHGLPhereby
11 guarantees the performance of FCLLC and FCS under this Agreement and under the
12 Franchise Documents, as the same now exist or may be amended in the future.
13 Notwithstanding the foregoing, FHGLP's liability as a guarantor under this section shall be
14 contingent upon the prior exercise and enforcement by the City of whatever remedies it
15 may have against FCS and FCLLC. The City shall not be entitled to pursue any remedy
16 against FHGLP as guarantor under this section until it has first pursued and exhausted all
17 available administrative, legal, and equitable remedies against FCS and FCLLC. During
18 the time the City may be pursuing such remedies against FCS and FCLLC, the statute of
19 limitations against FHGLP shall be tolled. Further, any release which may be given as to
20 FCS or FCLLC shall also apply to and release FHGLP. FHGLP represents and warrants
21 that: (a) it is duly organized and legally existing under the laws of the state of its
22 organization and is duly qualified to do business as a foreign corporation in the State of
23 California; (b) this Agreement and the guarantee provided hereunder will constitute, legal,
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valid and binding obligations of FHGLP enforceable in accordance with their terms; and (c)
the execution and delivery of this Agreement and the guarantee, and the consummation of
the transactions among the Companies contemplated hereby are within FHGLP's power
and authority without the joinder or consent of any other party and have been duly
authorized by all requisite action and are not in contravention of FHGLP's contracts,
charter, bylaws and/or other. organizational documents, including its partnership
agreement.
4.4 Representations. Warranties and Guarantees of FCLLC - FCLLC hereby
guarantees the performance of FCS under this Agreement and under the Franchise
Documents, as the same now exist or may be amended in the future. FCLLC represents
and warrants that: (a) it is duly organized and legally existing under the laws of the state of
its organization and is duly qualified to do business as a foreign limited liability Corporation
in the State of California; (b) this Agreement and the guarantee provided hereunder will
constitute, legal, valid and binding obligations of FCLLC enforceable in accordance with
their terms; and (c) the execution and delivery of this Agreement and the guarantee, and
the consummation' of the transactions among the Companies contemplated hereby are
within FCLLC's power and authority without the joinder or consent of any other party and
have been duly authorized by all requisite action and are not in contravention of FCLLC's
contracts, charter, bylaws and/or other organizational documents, including its partnership
agreement.
5. Future Transfers.
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The Companies hereby agree that any future transfer of the Franchise and/or the System,
or transfer of control of the Franchise and/or the System including, without limitation, any
subsequent transfer to an affiliate of the FalconfTCI Partnership, are subject to the review
and approval of the City in accordance with applicable federal, state and local laws
including, without limitation, 47 U.S.C. 9537, and the Franchise Documents.
6. [RESERVED]
7. Consent Subiect to Conditions.
7.1 Agreement - The City's consent to the transactions is subject to the following
conditions:
(i) This Agreement must be in full force and effect, and the
Companies must have complied with the provisions of Section 7.1.
(ii) The Transaction contemplated herein must be completed by
December 31,1998.
(iii) FCS, FHGLP, and FalconfTCI Partnership must pay all costs
associated with this transfer process that have been incurred by the Cities of
Hollister, Gilroy and San Juan Bautista ("Cities"). The Cities shall prescribe the
manner by which such payments are to be made. A check (or checks) in the total
amount of $6,415.64, reimbursing the Cities for all costs incurred to date, will be
provided upon the signing of this Agreement. All costs incurred thereafter by the
Cities, a total amount not to exceed $13,500.00, will be billed to FCS within 60 days
of the effective date of this Agreement, and FCS will make the payment (or
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1 payments) in the manner prescribed by the Cities within 35 days of receipt of the
2 invoice. FCS, FHGLP, and FalconrrCI Partnership, also agree that they will
3 continue renewal negotiations with the City and, by the date of City Council actions
4 on this resolution, sign a document substantially in the form of Exhibit A as attached
5 hereto.
6 If these conditions are not satisfied, any City consent to the transactions
7 shall be deemed null and void, and the City will be deemed to have timely denied the
8 request for approval of the transactions.
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10 7.2 Waiver of Claims.
. 11 (i) The Companies hereby agree that should they fail to satisfy the
12 conditions of the Transfer Resolution, the City will be deemed to have denied its approval
13 and the Franchise may be revoked.
14 (ii) The Companies waive all rights to assert any defense as to the
15 enforceability of this Transfer Agreement, based on, arising out of, or relating to section
16 617(e) of the Cable Television Consumer Protection and Competition Act of 1992, Pub. L.
17 No. 102-385, 106 Stat. 1460 (1992), as amended. This waiver is knowingly, willingly and
18 voluntarily made by the Companies and they each hereby represent that no
19 representations of fact or opinion have been made by the City or any individual to induce
20 this waiver of claims, and that each party has been represented in the signing of this
21 agreement and in the making of this waiver by independent legal counsel, or has had the
22 opportunity to be represented by independent legal counsel selected of its own free will,
23 and that it has had the opportunity to discuss this waiver with counsel. Except with respect
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to claims under section 617(e) of the Cable Television Consumer Protection and
Competition Act of 1992, this paragraph is not intended to ptohibit the Companies from
raising a defense based upon a change in Federal Law after the effective date of this
Agreement.
(Hi) Upon failure to satisfy conditions of the transfer resolution being
approved, or the breach of any material representation or warranty, the City may revoke
the Franchise by providing written notice of its intent to revoke, and providing FCS 30 days
to show cause why the franchise should not be revoked. The failure to satisfy the
conditions pursuant to which the Transaction is being approved, or the breach of any
material warranty or representation made hereunder shall be deemed incurable.
8. Miscellaneous Provisions.
8.1 Representations Warranties Material - It is a material breach of this
Agreement if any representation or warranty proves to be untrue, inaccurate or incomplete
in any material respect. Without limiting any of its other remedies, the City may revoke the
Franchise, following the procedures set out in Section 7.2 (iii) for this material breach.
8.2 Binding Agreement - This Agreement shall bind and benefit the parties
hereto and their respective heirs, beneficiaries, administrators, executors, receivers,
trustees, successors and assighs, and the promises and obligations herein shall survive
the effective date hereof.
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1 8.3 Governing Law - This Agreernent shall be governed in all respects by the
2 law of the State of California and applicable federal and local laws.
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1 8.4 Drafting - This Agreement is the product of common negotiations among the
2 parties and shall not be construed against any party on any grounds related to drafting,
3 revision, review, or recommendation by any agent or representative of any party.
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5 8.5 Severability and Enforceability - In the event of a determination in any
6 judicial or administrative proceeding that any provision of this Agreement is unenforceable
7 or invalid, the parties shall enter into good faith negotiations with the intent of reaching an
8 agreement that would place the City, the Companies, and the subscribers substantially in
9 the same position as if this Agreement were fully enforceable.
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11 8.6 Time of the Essence - In determining whether a party has complied with this
12 Agreement, the parties agree that time is of the essence.
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14 8.7 Counterparts - This document may be executed in multiple counterparts,
15 and by the parties hereto on separate counterparts, and each counterpart, when executed
16 and delivered, shall constitute an original agreement enforceable against all who signed it
17 without production of, or accounting for, any other counterpart, and all separate
18 counterparts shall constitute the same agreement.
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20 8.8 Captions - The captions and headings of this Agreement are for
21 convenience and reference purposes only, and shall not affect in any way the meaning
22 and interpretation of any provisions of this Agreement.
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1 IN WITNESS WHEREOF, the parties hereto have executed this Transfer
2 Agreement as of the day and year first above written.
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Falcon Holding Group, L.P.,
a Delaware limited partnership
By: Falcon Holding Group, Inc.,
a California corporation
its general partner
By: ~~~~~
Title: VI p, -
Date: 0; (f 8' (1 f
Falcon Communications, L.P.,
a California limited partnership
By: Falcon Holding Group., L.P.,
a Delaware limited partnership
its managing general partner
By: Falcon Holding Group, Inc.,
a California corporation
its general partner
~fi . r--/I.
By: <.... ~~v"'- ~"'---
Title: . l~PI .
Date: q /It /1t
Falcon Cable Communications, L.L.C.
a California limited partne';!:
By: ~~$~ '---
l/, p,
1(lt/1rt
Title:
Date:
Falcon Cable Systems Company II,
L.P., a California limited partnership
By: Falco~ Investors Group, LTD..,
a California limited partnership, .
its managing general partner
By: Falcon Holding Group, Inc.,
a California corporation,
its managing general partner
By: ~'lk.1~c::;)j .v--
VrP.
q/(~/1f
Title:
Date:
.
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. EXHIBIT A
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FRANCHISE RENEWAL KEY POINTS OF AGREEMENT
The purpose of this document is to identify those areas of agreement between Falcon
and the Cities of Gilroy, Hollister, and San Juan Bautista (the "Cities"), which heretofore
have been areas of contention. Falcon and the Cities acknowledge and agree that they
have previously reached preliminary agreement in many other areas, which are not
included in this documerit.
1. System Rebuild. As proposed by Falcon, a fiber optic rebuild with fiber
integration of major system elements and fiber to the neighborhood node
implementation. The rebuilt system will have the following characteristics: .
a. 750 MHz on all active components
b. System two-w~y activated
c. Microwave replaced with fiber optic facilities (except for such microwave
equipment used for reception of "over air" broadcast signals)
2. PEG Access Fundina Support. The Cities and Falcon agree that the initial
capital equipment and facilities funding to be provided by Falcon for PEG access
shall be $700,000. The Cities agree that such support may be provided in two or
three payments over the first two years of the franchise agreement and shall be
in addition to the franchise fee of 5% of gross revenues. The amount of each
payment is subject to continued discussion between the parties.
In addition, the ongoing support for PEG access to be provided by Falcon shall
total either (1) $2,097,823 or (2) 3% of gross revenues over the life of the ten-
year franchise agreement, whichever amount is less. Such funds will be
provided to the City or to the nonprofit PEG access Management Corporation
specified by the City, through annual PEG access support payments. The
amount of each annual payment is subject to continued discussion between the
parties.
The language to be included in the franchise agreements regarding the manner
in which these funds are to be collected and distributed shall be structured in a
manner similar to the language in the Monterey, California franchise agreement,
and shall be in addition to the franchise fees of 5% of gross revenues. The Cities
agree in concept to that language and recognize that Falcon and the Cities must
reach agreement with regard to the specific language that will be contained in the
franchise agreement between Falcon and the Cities.
Nothing in this section requires or shall be deemed to require the Grantee to
make any payment which constitutes a Franchise Fee under 47 U.S.C. 9542.
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3. Institutional Network (I-Net). The Cities and Falcon agree that Falcon will provide
$250,000 of funding support for the construction, equipment, and/or maintenance
costs associated with an institutional network. The Cities and Falcon agree that
the I-Net funding support described above is intended to be used for those
incremental additional costs which will be incurred by Falcon to provide an
institutional network which are over and above the costs associated with the
rebuild/upgrade of the subscriber system as described in Section 1 of this
document. The funding support for the I-Net 'shall be in addition to the franchise
fees of 5% of gross revenues. The parties agree that the specific details with
regard to the institutional network are subject to continuing negotiations'between
the parties.
Nothing in this section requires or shall be deemed to require the Grantee to
make any payment which constitutes a Franchise Fee under 47 U.S.C. 9 542.
Timeline for Completina Negotiations. The Cities and Falcon have been in informal
franchise renewal negotiations for 24 months. As a result, the City Council of each
community has directed their staff and consultant to prepare an RFP for Cable
Communications Systems to be issued pursuant to Federal Law. However, given
Falcon's agreement to the terms of this document, the Cities will agree to toll the
issuance of the RFP until after November 15, 1998 if Falcon commits to pursue
franchise renewal negotiations with all due diligence and to make its personnel available
as necessary in an effort to ensure completion of negotiations by November 15, 1998.
The City reserves all rights to issue an RFP, if necessary, after November 15,1998.
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I, RHONDA PELLIN, City Clerk of the City of Gilroy, do hereby certify that the attached
Resolution No. 98-57 is an original resolution, duly adopted by the Council of the City of Gilroy
at a regular meeting of said Council held on the 21 st day of September, 1998, at which meeting a
quorum was present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of
the City of Gilroy this 20th day of October, 1998.
~^
City Clerk of the City of Gilroy
(Seal)