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1999-010-Consenting To The Merger Of TCI And AT&T Corporation Pursuant To Code Of The Town Section 7.20.030RESOLUTION 1999 - 10 RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS CONSENTING TO THE MERGER OF TCI AND AT &T CORPORATION PURSUANT TO CODE OF THE TOWN OF LOS GATOS SECTION 7.20.030 WHEREAS: A. The Los Gatos Cable Television Franchise Ordinance (Chapter 7, Code of the Town of Los Gatos, hereafter referred to as "Ordinance ") sets forth the terms and conditions under which the Town may grant a non - exclusive franchise to provide cable television services within the Town. B. Section 7.20.030 of the Ordinance governs transfers of franchises, stating the requirement that the Town consent to transfers and changes of ownership or control, setting forth the procedure for obtaining such consent, and defining "transfers" to include "mergers." C. On January 20, 1990, the Town granted a non - exclusive franchise to Hearst Cablevision of California (the "Franchise Agreement "), and thereafter consented to the transfer of the franchise from Hearst Cablevision of California to Brenmor Cable Partners., L.P., dba South Bay CableVision. D. On March 4, 1996, the Town consented to the transfer of the franchise from Brenmor to TCI of Cleveland, Inc. (the "Franchisee ") pursuant to section 7.20.030 of the Ordinance, said consent having been made in conjunction with a guarantee provided to the Town by TCI Development Corporation covering Franchisee's obligations to the Town. E. On September 4, 1998, Franchisee notified the Town of its intention to merge with AT &T, the specifics of that transaction being described in the FCC Form 394 regarding the 1 Agreement and Plan of Restructuring and Merger among AT &T Corp. ( "AT &T "), a newly formed wholly owned subsidiary of AT &T ( "Merger Sub "), and Telecommunications, Inc., the parent of Franchisee ( "TCI "), dated as of June 23, 1998 (the "Merger Agreement "). According to the Merger Agreement, Merger Sub wifl merge with and into TCI with TCI as the surviving corporation in the merger, and as a result of the transactions contemplated by the Merger Agreement, TCI will become a wholly owned subsidiary of AT &T. Franchisee will continue to exist as a separate wholly owned corporate entity and would continue to hold the franchise after consummation of the merger. F. On September 8, 1998, Franchisee paid to the Town TWENTY -FIVE THOUSAND DOLLARS ($25,000), the application fee required pursuant to subsection (g) of section 7.20.030 of the Ordinance. G. On December 2, 1998, the Town Manager's Cable Television Advisory Committee held a noticed public meeting and received comments from the community on the proposed merger. H. On January 26, 1999, Franchisee submitted to the Town a Systems and Services Review pursuant to subsection (a) of section 7.20.030 and section 7.30.040 of the Ordinance. I. TCI has agreed to provide the Town with a guarantee of all of Franchisee's obligations to the Town arising under the Franchise Agreement and the Ordinance (Exhibit "A ") J. AT &T has accepted, acknowledged and agreed that, from and after the consummation of the proposed merger, it will not take any action inconsistent with the promises contained in the franchise agreement, or cause Franchisee to take-any action contrary to its lawful obligations under the franchise agreement (Exhibit "B") RESOLVED: The Town Council of the Town of Los Gatos hereby consents to and approves the 2 Merger pursuant to section 7.20.030 of the Ordinance. 2. This Resolution shall be deemed effective in accordance with applicable law. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California held on the 1 st day of February, 1999, by the following vote: COUNCIL MEMBERS: AYES: Randy Attaway, Steven Blanton, Linda Lubeck, Joe Pirzynski, Mayor Jan Hutchins NAYS: None ABSENT: None ABSTAIN: None SIGNED: TOS, CALIFORNIA ATTEST: CLERK OF THE TOWN OF L- S GATOS LOS GATOS, CALIFORNIA LOS GATOS 3 CVMCE OF THE -i'CNtN Ct.ERV CERTIFICATION OF TRANSFEREE (re: Town of Los Gatos) :Iaa s�� >- �- WHEREAS: AT &T CORP., a New York Corporation, has agreed to acquire TELE - COMMUNICATIONS, INC. ( "TCI ") pursuant to an Agreement and Plan of Merger dated June 24, 1998 (the "Proposed Transaction "). 2. TCI currently owns and controls TCI.of Cleveland, Inc., a Tennessee Corporation, the Grantee of a non - exclusive Cable television franchise ( "Franchise ") in the Town of Los Gatos ( "Town "). 3. TCI and AT &T have filed FCC Form 394 pursuant to the 1992 Cable Act and FCC Regulations, and have requested that the Town approve the Application for Change of Control of the Franchisee from TCI to AT &T. 4. The Town is unwilling to consent to the change of control of the Franchisee unless AT &T certifies it will not take any action inconsistent with the promises contained in the Franchise and will cause Franchisee to perform the Franchise obligations. NOW, THEREFORE, as a material inducement for the Town's consent, AT &T hereby certifies as follows: 1. AT &T Corp., a New York Corporation, hereby accepts, acknowledges and agrees that, from and after the consummation of the Proposed Transaction, it will not take any action inconsistent with the promises contained in the franchise agreement, or which would cause the Franchisee to take any action contrary to its lawful obligations under the franchise agreement. AT &T CORP. Name: David P. Condit Title: L &GA Vice President Date: 1/29/99 PAWD \72 \7233 \026 \Los Gatos\ Certification1.doc EXHIBIT 1 GUARANTY THIS GUARANTY ( "Guaranty ") is made this day of 1999 by TELE - COMMUNICATIONS, INC. a Delaware Corporation ( "Guarantor "), to, ii favor of and for the benefit of the TOWN OF LOS GATOS, CALIFORNIA, a municipal corporation ( "Town "). WITNESSETH WHEREAS: 1. AT &T CORP., a New York Corporation, has agreed to acquire TELE - COMMUNICATIONS, INC. ( "TCI ") pursuant to an Agreement and Plan of Merger dated June 24, 1998 (the "Proposed Transaction "). 2. TCI currently owns and controls TCI of Cleveland, Inc., a Tennessee Corporation, the Grantee of a non - exclusive cable television franchise ( "Franchise ") in the Town. 3. TCI and AT &T have filed FCC Form 394 pursuant to the 1992 Cable Act and FCC Regulations, and have requested that the Town approve the Application for Change of Control of the Franchisee from TCI to AT &T. 4. The Town is unwilling to consent to the change of control of the Franchisee unless the Town receives Guarantor's unconditional guarantee of Grantee's performance of its obligations and Grantee's observance of the terms and conditions of the Franchise. NOW, THEREFORE, in consideration of the above recitals and the mutual covenants and agreements contained herein, and as a material inducement for the Town's case, it is hereby agreed as follows: 1. Guarantor hereby guarantees unconditionally and absolutely to the Town, its successors and assigns, the full and faithful performance and observance by Grantee of all the terms, obligations and conditions contained in the Franchise to be performed and observed by Grantee. 2. This Guaranty shall not be affected by any deviation from or alteration of t1 terms, covenants or conditions of the Franchise including but not limited to any extension of the Franchise term. If the Franchise is modified in any respect by agreement between Town and Grantee, the obligations hereunder of Guarantor shall extend and apply with respect to the full and faithful performance and observance of all of the covenants, terms, and conditions of the Franchise and of any such modification thereof. 3. It shall not be necessary for Town to institute suit or exhaust any of its legal remedies against Grantee in order to enforce this Guaranty. This Guaranty may be immediately enforced against Guarantor upon any default by Grantee. Guarantor waives all rights that it may have under Section 2845 of the California Civil Code, subject only to defenses otherwise available to Franchisee. 4. Failure of Town to insist upon strict performance and observance of any of the terms, provisions and covenants of the Franchise or to exercise any right therein contained shall not be construed as a waiver or relinquishment for the future of any term, provision or covenant thereof, but, as to Guarantor, the same shall continue to remain in full force and effect. 5. If any provision of this Guaranty shall be invalid, unenforceable or ineffective for any reason whatsoever, all other provisions hereof shall be and remain in full force and effect. 6. This Guaranty, and all of the terms hereof, shall inure to the benefit of Town, its successors and assigns, and shall be binding upon Guarantor. No assignment of this Guaranty shall be effective without the prior written consent of Town. 7. This Guaranty shall be interpreted in accordance with, and governed by, the substantive and procedural law of the State of California. Guarantor hereby consents to jurisdiction of the courts of the State of California in resolving any dispute arising under or concerning this Guaranty. 8. Guarantor irrevocably appoints Grantee as its agent for service of process related to this Guaranty. 9. Guarantor represents and warrants that this Guaranty has been duly authorized by all necessary corporate action on Guarantor's part, has been duly executed and delivered by a duly authorized officer, and constitutes Guarantor's valid and legally binding agreement in accordance with this term. 2 IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date and year first written above. TELE -COM UNICATIONS, INC. By: Name: Steph n M. Brett Title: Executive Vice President ACCEPTED BY THE TOWN OF LOS GATOS on Z . 2 , 1999 By: Its: ATTEST: P MARIAN S VE, TOWN CLERK- PAWD \72 \7233 \026\Los Gatos \Guarantyldoc 3