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Exhibit 10.40
FALCON HOLDING GROUP, L.P.
PARTNERSHIP OPTION AGREEMENT
This Agreement is made and entered into as of July 15, 1996, by and
among Xxxx Xxxxxxxxx, Trustee of the Falcon Cable Trust ("Xxxxxxxxx") and
Falcon Holding Group, L.P., a Delaware limited partnership ("FHGLP").
WHEREAS, Xxxxxxxxx is currently a limited partner in FHGLP pursuant
to the Third Amended and Restated Agreement of Limited Partnership of FHGLP
dated as of December 28, 1995 (the "Partnership Agreement");
WHEREAS, Xxxxxxxxx desires to acquire an option to purchase additional
FHGLP partnership interests from FHGLP; and
WHEREAS, FHGLP desires to cause Xxxxxxxxx, under certain terms and
conditions to purchase such partnership interests.
NOW, THEREFORE, the parties hereby agree as follows:
1. Defined Terms. Capitalized terms defined in the Partnership
Agreement are used herein with the meanings so defined.
2. Option. In consideration of the receipt of $5,000 and for
other good and valuable consideration, FHGLP on the date hereof, irrevocably
grants to the Xxxxxxxxx the option to purchase partnership interests (the
"Partnership Interests") of the Company represented by a Percentage Interest of
0.4429% which will have an Adjusted Capital Contribution Account equal to the
Purchase Price (as defined below) (the "Optioned Interests") upon the terms and
conditions set forth in this Agreement.
3. Purchase Price. The purchase price for the Optioned Interests
(the "Purchase Price") shall be the applicable Purchase Price on the date of
exercise. The initial Purchase Price for the Optioned Interests for the first
twelve months of this Agreement shall be $1,685,000. On each anniversary date
of this Agreement, the Purchase Price for the next succeeding year shall be
equal to 105% of the Purchase Price for the preceding year. The consideration
received for the option shall be applied against the Purchase Price upon
exercise of this option.
4. Adjustments and Option. In the event that the outstanding
Partnership Interests of FHGLP are changed into or exchanged for a different
number or kind of units or partnership interests or any other securities of
FHGLP by reasons of merger, consolidation, recapitalization or
reclassification, or otherwise, the Optioned Interests subject to this option
shall be appropriately and equitably adjusted in number and kind to the extent
that after such event Xxxxxxxxx'x proportionate interest in
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FHGLP as represented by the Optioned Interests shall be maintained as before
the occurrence of such event.
5. Expiration of the Option. This option may be exercised at any
time until the first of the following events: (a) the expiration of ten (10)
years from the date the option is granted, or (b) the effective date of (i) a
merger or consolidation of FHGLP with another person, (ii) the acquisition by
another person of all or substantially all the assets or a majority of the then
outstanding partnership interests of FHGLP, or (iii) the dissolution and
liquidation of FHGLP (collectively, the "Dissolution Events"). At least thirty
(30) days prior to the effective date of any Dissolution Event, FHGLP shall
give Xxxxxxxxx'x notice of such event if this option has then not been
exercised.
6. FHGLP's Rights to Require Exercise of the Option. In the
event this option has not been exercised on or before fifteen (15) days prior
to a Dissolution Event, then FHGLP may require Xxxxxxxxx to purchase the
Optioned Interests prior to the date of such Dissolution Event. FHGLP may
exercise its right to require Xxxxxxxxx to exercise this option by delivery to
Xxxxxxxxx a notice in writing signed on behalf of FHGLP stating that Xxxxxxxxx
is required pursuant to this Paragraph 6 to exercise the option and upon the
receipt of such notice by Xxxxxxxxx, Xxxxxxxxx shall be considered to have
provided the requisite notice under Paragraph 7 and to have exercised this
option.
7. Manner of Exercise. This option may be exercised by Xxxxxxxxx
by delivery to FHGLP by a notice in writing signed by Xxxxxxxxx stating that
the option is thereby exercised. In the case of any exercise other than in
connection with a Dissolution Event, the Purchase Price shall be paid either by
(i) cash or check of the Purchase Price for the Optioned Interests or (ii) the
transfer by Xxxxxxxxx of other Partnership Interests of FHGLP owned by
Xxxxxxxxx at their then fair market value on the date the option is exercised
in an amount equal to the Purchase Price of the Optioned Interests. In the
case of an exercise in connection with a Dissolution Event, the obligation to
pay the Purchase Price shall be non-recourse to Xxxxxxxxx and the Purchase
Price shall be paid solely out of distributions otherwise payable to Xxxxxxxxx
by FHGLP with respect to the Optioned Interests and any other Partnership
Interests in FHGLP then held by Xxxxxxxxx. FHGLP is expressly authorized to
withhold distributions with respect to the Optioned Interests and any other
Partnership Interests of Xxxxxxxxx and to apply such withholdings to the
Purchase Price of the Optioned Interests.
8. Rights as a Partner. Xxxxxxxxx shall not be nor have any
rights and privileges of a Partner in FHGLP with respect to the Optioned
Interests until this option is fully exercised.
9. Investment Representation.
9.1 Unregistered Securities. Xxxxxxxxx understands that
neither the option granted by this Agreement the Partnership
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Interests covered thereby have been registered under the Securities Act of
1933, as amended (the "Act") on the ground that the offer and sale of
securities provided for in this Agreement is exempt from the registration
requirements of the Act pursuant to Section 4(2) of the Act and Regulation D
promulgated thereunder, and that the Company's reliance on such exemption is
predicated in part on Xxxxxxxxx'x representations set forth herein.
9.2 Qualified Investor. Xxxxxxxxx is an "accredited
investor" as defined in Regulation D promulgated under the Act and by reason of
the business or financial experience of its control persons has the capacity to
protect its own interest in an investment in the Partnership Interests.
Xxxxxxxxx has had the opportunity to ask questions of the Company and to obtain
any information requested concerning the Company and the accuracy of the
information supplied, and all questions which have been asked on behalf of
Xxxxxxxxx have been answered by the Company to the satisfaction of Xxxxxxxxx.
9.3 Investment Intent. The rights under this Agreement
and the Partnership Interests covered hereby are being or will be acquired by
Xxxxxxxxx for investment, for his own account, and not directly or indirectly
for the account of any other person, and not with a view to or for sale in
connection with any distribution of the Partnership Interests. Xxxxxxxxx has
no present intention of selling, granting participation in, or otherwise
distributing the Partnership Interests. Xxxxxxxxx does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer, or
grant participations, to such person or to any other third person, with respect
to the Partnership Interests. Xxxxxxxxx understands and acknowledges that this
Agreement is being executed by the Company in reliance upon the foregoing
representations and warranties.
9.4 No Public Market. Xxxxxxxxx has been advised that no
public market now exists for the Partnership Interests, that a public market
may never exist and that each of the Purchasers therefore may have to hold the
Partnership Interests indefinitely.
9.5 Restrictions on Transfer. Xxxxxxxxx understands that
if the Company does not register with the Securities and Exchange Commission
(the "SEC"), pursuant to Section 12 or 15 of the Securities Exchange Act of
1934 (the "1934 Act"), or if a registration statement covering the securities
under the Act is not in effect when Xxxxxxxxx desires to sell the Partnership
Interests, Xxxxxxxxx may be required to hold the Partnership Interests for an
indeterminate period. Xxxxxxxxx also understands that any sale of the
Partnership Interests which might be made by Xxxxxxxxx in reliance upon Rule
144 under the Act may be made only in limited amounts in accordance with the
terms and conditions of that rule.
10. Amendments. The provisions of this Agreement may be waived,
offered, amended, modified or appealed in whole or in part only by the written
consent of all parties to this Agreement.
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11. Successors and Assigns. This Agreement shall be binding on
and enforceable by and against the parties to it and their respective heirs,
legal representatives and successors.
12. Notices. Any notice under or pursuant to this Agreement shall
be in writing and shall be delivered either by personal delivery, by telecopier
or similar electronic medium or by overnight courier addressed as follows:
If to FHGLP: Falcon Holding Group, L.P.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
If to Xxxxxxxxx: Xxxx X. Xxxxxxxxx, Trustee
Falcon Cable Trust
00000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxxxxx, Xx 00000
All such notices shall be effective when delivered or received at the office or
by the party receiving such notice.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
FALCON HOLDING GROUP, L.P., a
Delaware limited partnership
By Falcon Holding Group, Inc.
its general partner
By /s/ XXXXXXX X. XXXXXXXXXX
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Xxxxxxx X. Xxxxxxxxxx
Executive Vice President
FALCON CABLE TRUST
By /s/ XXXX XXXXXXXXX
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Xxxx Xxxxxxxxx, Trustee
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