EXHIBIT 2.6
AMENDMENT TO
ASSET PURCHASE AND SALE AGREEMENT
THIS AMENDMENT TO ASSET PURCHASE AND SALE AGREEMENT (this "Amendment") is
made as of January 5, 2001, by and among TCI of Illinois, Inc., TCI of Racine,
Inc., UACC Midwest, Inc. and Insight Communications Company, L.P. (collectively,
the "Parties")
RECITALS
A. The Parties have entered into that Asset Purchase and Sale Agreement
dated as of August 15, 2000 (the "Original Agreement," and as amended by this
Amendment, the "Agreement"), pursuant to which AT&T has agreed to convey, or
cause to be conveyed, to the Partnership certain cable television assets.
B. The Parties wish to amend the Original Agreement as set forth in
this Amendment.
AGREEMENTS
In consideration of the covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties hereby agree as follows:
1. DEFINITIONS. Capitalized terms used and not defined in this Amendment will
have the meaning given to them in the Original Agreement.
2. AMENDMENTS TO SECTION 1.
(a) Section 1 of the Original Agreement is amended to add the following
definition:
"Adjustment Time" means 12:01 A.M. on January 1, 2001.
(b) Section 1.8 of the Original Agreement is hereby amended and restated
to read as follows:
1.8 Cable Business. The cable television business and other income-
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generating businesses related to the Systems conducted by AT&T through the
Systems (including the advertising sales business related to the Systems,
the AT&T Systems and the Exchange Systems (with "AT&T Systems" and
"Exchange Systems" having the definitions set forth in the Contribution
Agreement) conducted by AT&T and its Affiliates through the such systems).
(c) Section 1.10 of the Original Agreement is hereby amended and
restated to read as follows:
1.10 Closing Time. 12:01 A.M., Mountain Time, on the Closing Date.
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3. Closing Date. The Parties agree that if all of the conditions to the
Closing contained in the Agreement (other than those based on acts to be
performed at the Closing) have been satisfied or waived on or prior to January
5, 2001, then the Closing will occur on January 5, 2001, which date will be the
"Closing Date" under the Agreement.
4. Closing Adjustments.
(a) Section 3.1 of the Original Agreement is amended and restated in its
entirety as follows:
3.1 Adjustments to Value of Assets. The Base Purchase Price shall
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be adjusted as follows:
(a) Appropriate adjustments on a pro rata basis as of the
Adjustment Time will be made with respect to the Systems for all prepaid
expenses other than inventory (but only to the extent the full benefit of
such prepaid expenses will be realizable by Insight within 12 months after
the Adjustment Time), accrued expenses (including real and personal
property taxes), copyright fees and franchise or license fees or charges,
prepaid income, subscriber prepayments and, subject to paragraph (f) below,
accounts receivable related to the Cable Business to the extent specified
in Section 3.1(f), all as determined in accordance with GAAP consistently
applied and to reflect the principle that all expenses and income
attributable to the Cable Business for the period through and including the
Adjustment Time are for the account of AT&T, and all expenses and income
attributable to the Cable Business for the period after the Adjustment Time
are for the account of Insight.
(b) All advance payments to, or funds of third parties on
deposit with, AT&T as of the Adjustment Time and relating the Cable
Business, including advance payments and deposits (including any accrued
interest on such deposits) by subscribers served by the Cable Business for
converters, encoders, decoders, cable television service and related sales,
shall be assumed by, and credited to the account of, Insight.
(c) There shall be credited to Insight the economic value of
all accrued vacation time that Insight credits after the Closing Time to
the employees of AT&T that are hired by Insight pursuant to Section 7.3(f),
where economic value is the amount equal to the cash compensation that
would be payable to each such employee at his or her level of compensation
on the Closing Date for a period equal to such employee's credited accrued
vacation.
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(d) There shall be credited to AT&T the economic value of any
salary paid by AT&T for periods after the Adjustment Time to employees that
are hired by Insight pursuant to Section 7.3(f).
(e) All deposits relating to the business and operations of the
Systems that are held by Third Parties as of the Adjustment Time for the
account of AT&T or as security for AT&T's performance of its obligations,
including deposits on leases and deposits for utilities, will be credited
to the account of AT&T in their full amounts and will become the property
of Insight; provided that no adjustment will be made for any deposits the
full benefit of which for contractual or other reasons cannot be made
available to Insight within 12 months following the Adjustment Time.
(f) AT&T will not receive credit for any of its (i) accounts
receivable resulting from cable television or internet service sales any
portion of which is 60 days or more past due as of the Adjustment Time, or
(ii) accounts receivable from customers whose accounts are inactive or
whose service is pending disconnection for any reason as of the Adjustment
Time. AT&T will receive credit for its accounts receivable resulting from
cable television or internet service sales the entire portion of which are
0-59 days past due as of the Adjustment Time in an amount equal to 99% of
the face amount of such accounts receivable. For purposes of making "past
due" calculations under the foregoing sentence, the billing statements of a
System will be deemed to be due and payable on the first day of the period
during which the service to which such billing statements relate is
provided. AT&T will receive credit for its advertising accounts receivable
as follows: (i) 100% of the face amount of the advertising accounts
receivable which are outstanding 30 days or less from the invoice date,
(ii) 95% of the face amount of all advertising accounts receivable which
are outstanding more than 30 but fewer than 61 days from the invoice date,
(iii) 80% of the face amount of all advertising accounts receivable which
are outstanding more than 60 but fewer than 91 days from the invoice date,
and (iv) 50% of the face amount of all advertising accounts receivable
which are outstanding more than 90 but fewer than 121 days from the invoice
date. AT&T will not receive credit for advertising accounts receivable
which are outstanding more than 120 days from the invoice date.
Notwithstanding the foregoing, AT&T will receive credit for 100% of the
face amount of its advertising accounts receivable from national and
regional representation accounts, regardless of the age thereof.
(g) Any amounts paid, or accrued as a current liability, prior
to the Adjustment Time by AT&T or its Affiliates with respect to
retroactive franchise fees in respect of the Systems will be credited to
the account of AT&T in their full amounts to the extent that (i) such
amounts can legally be passed through to and collected from subscribers of
the Systems after Closing, and (ii) no agreement has been entered into
prohibiting the collection of such amounts, with such amounts with respect
to the Systems being assets of Insight upon collection.
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(h) The adjustments provided for in this Section 3.1 will be
made without duplication. In addition, none of the adjustments provided for
in this Section 3.1 will be made with respect to any Excluded Asset or with
respect to any item of income or expense related to an Excluded Asset.
(i) The net amount of the adjustments to the Base Purchase Price
calculated under this Section 3.1 (the "Adjustment Amount"), as
preliminarily determined pursuant to Section 3.2, shall be paid by Insight
to AT&T at the Closing by wire transfer of immediately available funds or,
if the Adjustment Amount is in favor of Insight, the Base Purchase Price
will be reduced by the Adjustment Amount.
(b) Section 3.2 of the Original Agreement is amended and restated in its
entirety to read as follows:
3.2 Calculation of Adjustments.
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(a) AT&T will estimate in good faith with respect to its
Systems, and set forth, together with a detailed statement of the
calculation thereof, the adjustments and prorations with respect to its
Cable Business prescribed by Section 3.1 (the "Pro Rata Adjustments") in a
certificate (the "Initial Adjustment Certificate") executed by an
authorized representative of AT&T and delivered to Insight at least 10
Business Days prior to the Closing. The Initial Adjustment Certificate will
be accompanied by appropriate supporting documentation, including an
accounts receivable detail with relevant aging information as of the
Adjustment Time, in summary form, supporting the determination of the Pro
Rata Adjustments proposed in such certificate. Following receipt of the
Initial Adjustment Certificate, Insight shall have five Business Days to
review such schedule and supporting information and to notify AT&T of any
disagreements with AT&T's estimates of its Pro Rata Adjustment. If Insight
provides a notice of disagreement with AT&T's estimates of such amounts
within such five Business Day period, AT&T and Insight shall negotiate in
good faith to resolve any such dispute and to reach an agreement prior to
the Closing on such estimated amounts as of the Adjustment Time. The
estimates so agreed upon by AT&T and Insight (or if the parties do not
reach such an agreement on such estimated amounts set forth in the Initial
Adjustments Certificate prior to the Closing Date or if Insight fails to
provide a notice of disagreement with AT&T's estimates of such amounts
within the time provided) the estimates of such Pro Rata Adjustments set
forth in the Initial Adjustments Certificate shall be the basis for
determining the preliminary Adjustment Amount payable pursuant to Section
3.1. All disagreements that may exist with respect to the Initial
Adjustment Certificate shall be resolved in connection with the preparation
of the Final Adjustment Certificate pursuant to paragraph (b) below.
(b) Within 90 days after the Closing, AT&T will deliver to
Insight a certificate (the "Final Adjustment Certificate") showing in full
detail its final determination of the Pro Rata Adjustment with respect to
its Systems, which certificate will be accompanied
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by appropriate documentation supporting the amounts proposed in such
certificate, including an accounts receivable detail with relevant aging
information as of the Adjustment Time, and which will be executed by an
officer of AT&T. Insight will review AT&T's Final Adjustment Certificate
and will give written notice to AT&T of any objections it has to the
calculations shown in such certificate within 30 days after its receipt
thereof. AT&T and Insight will endeavor in good faith to resolve any such
objections within 30 days after the receipt by AT&T of Insight's
objections. If any objections or disputes have not been resolved at the end
of such 30-day period, the disputed portions of the Pro Rata Adjustments
will be determined within the following 30 days by a partner in a major
accounting firm with substantial cable television audit experience which is
not the auditor of either Insight or AT&T (or any Affiliate of either of
them) and the determination of such auditor will be final and will be
binding upon all parties. If Insight and AT&T cannot agree with respect to
the selection of an auditor, Insight and AT&T will each select an auditor
and those two auditors will select a third auditor whose determination will
be final and will be binding upon all parties. Insight and AT&T will bear
equally the expenses arising in connection with an auditor's determination
of disputed amounts, and payment of the final Adjustment Amount (after
taking into account any estimated Adjustment Amount paid at Closing) will
be made by the party responsible therefor to the other party in immediately
available funds within 15 Business Days after the final determination is
made.
(c) AT&T will provide to Insight reasonable access to all
records in AT&T's possession which were used in the preparation of AT&T's
Initial Adjustment Certificate and Final Adjustment Certificate and Insight
will provide to AT&T access to all records in Insight's possession,
following the Closing, relating to the Systems as may be necessary in the
preparation of AT&T's Final Adjustment Certificate.
5. Assumed Obligations And Liabilities. Section 4.2 of the Original Agreement
is amended and restated in its entirety to read as follows:
4.2 Assumed Obligations and Liabilities. As of the Closing, Insight
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will assume and after the Closing, Insight will pay, discharge and perform
the following (the "Assumed Obligations and Liabilities"): (a) those
obligations and liabilities accruing and relating to periods after the
Closing Time under or with respect to the Assets assigned and transferred
to Insight at the Closing; (b) those obligations and liabilities of AT&T
to customers of the Cable Business for (i) subscriber deposits related to
the Systems held by AT&T as of the Adjustment Time in the amount for which
Insight received credit under Section 3.1 and (ii) customer, advertising
and other advance payments held by AT&T as of the Adjustment Time in the
amount for which Insight received credit under Section 3.1; (c) all
obligations and liabilities accruing and relating to the Cable Business
prior to the Adjustment Time in respect of which Insight received a credit
pursuant to Section 3.1; and (d) all other remaining obligations and
liabilities accruing and relating to periods after the Closing Time and
arising out of the ownership of the Assets or operation of the Systems
after the Closing Time, except to the extent that such obligations or
liabilities relate to any Excluded Asset. It is understood
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and agreed that at the closing of the Contribution, the Partnership shall
assume the Assumed Obligations and Liabilities for the benefit of AT&T and
its Affiliates and upon such assumption, Insight shall have no further
obligation or liability in respect of the same. All obligations and
liabilities, contingent, fixed or otherwise, arising out of or relating to
the Assets or the Systems other than the Assumed Obligations and
Liabilities will remain and be the obligations and liabilities solely of
AT&T including any obligation, liability or claim relating to or arising
pursuant to (x) rate refunds to subscribers of the Systems with respect to
rates charged to such subscribers during periods through and including the
Closing Time, (y) litigation commenced prior to, or related to an event
occurring at any time prior to the Closing Time or (z) any Excluded Asset,
including the Time Warner Social Contract, and, subject to Section 7.18,
the pending Settlement Agreement and Release that relates to certain of the
Systems with respect to late fees charged by them, a copy of which, in the
form submitted to the courts, has been provided to Insight by AT&T (the
"AT&T Late Fee Settlement").
6. Amended Covenants.
(a) Section 7.3(b) of the Original Agreement is amended and restated in
its entirety to read as follows:
(b) AT&T or its Affiliates will pay to all employees of its
Cable Business all compensation, including salaries, commissions, bonuses,
deferred compensation, severance (if applicable), insurance, vacation
(except for accrued vacation included in the adjustments calculated
pursuant to Section 3.1(c) to be carried over pursuant to Section 7.3(f)),
pension, profit sharing, disability payment, medical, sick pay and other
compensation or benefits to which they are entitled for periods through and
including the date of termination of the employee's employment with AT&T in
accordance with the terms and conditions of any arrangement providing for
such compensation or benefits, including, without limitation, all amounts,
if any, payable on account of the termination of their employment.
Notwithstanding the preceding, Insight will reimburse AT&T for any such
compensation paid by AT&T to the employees of the Cable Business for
periods after the Adjustment Time. AT&T shall promptly satisfy any legal
obligation with respect to continuation of group health coverage required
pursuant to Section 4980B of the Code or Section 601, et seq., of ERISA.
(b) Section 7.3(d) of the Original Agreement is amended and restated in
its entirety to read as follows:
(d) All claims and obligations under, pursuant to or in
connection with any welfare, medical, insurance, disability or other
employee benefit plans of AT&T or its Affiliates or arising under any Legal
Requirement affecting System employees of AT&T or its Affiliates incurred
through and including the Closing Time or resulting from or arising from
events, obligations or occurrences occurring or commencing through and
including the Closing Time will remain the responsibility of AT&T, whether
or not such employees are
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hired by Insight after the Closing Time. Insight will be responsible for
any such claims and obligations from and after the Closing Time. Insight
will not have nor assume any obligation or liability under or in connection
with any such plan maintained by either AT&T or its Affiliates. For
purposes of this Agreement, the following claims and liabilities shall be
deemed to be incurred as follows: (i) medical, dental and/or prescription
drug benefits when the treatment is provided, except with respect to such
benefits provided in connection with a continuous period of
hospitalization, which shall be deemed to be incurred at the time of
admission to the hospital; (ii) life, accidental death and dismemberment
and business travel accident insurance benefits and workers= compensation
benefits, upon the death, disability or accident giving rise to such
benefits; and (iii) salary continuation or other short-term disability
benefits, or long-term disability, upon commencement of the disability
giving rise to such benefit. In regard to any Employee on Leave Status,
such responsibility for benefit coverage of such employee, and liability
for payment of benefits, shall remain that of AT&T until such employee
becomes a Hired Employee of Insight after the Closing Time pursuant to
Section 7.3.(a) or is terminated by AT&T or its Affiliates.
(c) Section 7.24 of the Original Agreement is amended and restated in its
entirety to read as follows:
7.24 [Intentionally Deleted.]
(d) Section 7 of the Original Agreement is amended to add the following
Section 7.27:
7.27.Qualified Intermediary Arrangements.
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(a) Notice and Acknowledgment of Assignment to QI by UACC
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Midwest, Inc. Pursuant to Section 12.1 of this Agreement, AT&T may assign
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its rights under this Agreement but not its obligations to a qualified
intermediary within the meaning of Code Section ' 1.1031(k)-1(g)(4)(iii).
Insight hereby acknowledges that UACC Midwest, Inc. ("UACC") has entered
into a Qualified Intermediary Agreement effective as of January 3, 2000
(the "UACC Midwest QI Agreement") with Wells Fargo Bank West, National
Association ("Qualified Intermediary"), pursuant to which UACC has assigned
to the Qualified Intermediary its rights under this Agreement with respect
to the UACC Assets (as defined in the UACC Midwest QI Agreement).
Notwithstanding such assignment, at the Closing, UACC will convey title to
the UACC Assets directly to Insight pursuant to the terms and conditions of
this Agreement and the UACC Midwest QI Agreement.
At Closing, Insight agrees that $105,565,380 of the Base Purchase Price
will be paid to the Qualified Intermediary in accordance with wire transfer
instructions to be provided by AT&T as the Cash Payment for the UACC Assets
provided for in the UACC Midwest QI Agreement.
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(b) Notice and Acknowledgment of Assignment to QI by TCI of Illinois,
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Inc. Insight also acknowledges that TCI of Illinois, Inc. ("TCI Illinois")
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has entered into a Qualified Intermediary Agreement effective as of January
3, 2000 (the "TCI Illinois QI Agreement") with the Qualified Intermediary,
pursuant to which TCI Illinois has assigned to the Qualified Intermediary
its rights under this Agreement with respect to the TCI Illinois Assets (as
defined in the TCI Illinois QI Agreement). Notwithstanding such assignment,
at the Closing, TCI Illinois will convey title to the TCI Illinois Assets
directly to Insight pursuant to the terms and conditions of this Agreement
and the TCI Illinois QI Agreement.
At Closing, Insight agrees that $78,436,560 of the Base Purchase Price will
be paid to the Qualified Intermediary in accordance with wire transfer
instructions to be provided by AT&T as the Cash Payment for the TCI
Illinois Assets provided for in the TCI Illinois QI Agreement.
(e) Section 7 of the Original Agreement is amended to add the following
Section 7.28:
7.28 Advertising Sales.
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(a) Section 7.29 of the Contribution Agreement, as amended as of
the date of this Agreement, shall govern any advertising sales arrangements
between the Parties.
(f) Section 7 of the Original Agreement is amended to add the following
Section 7.29:
7.29 Real Property Transfers. AT&T will deliver to Insight, within 30
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days after Closing, any documents that AT&T has not executed and delivered
to Insight at the Closing and that are necessary for Insight to (i) record
with the appropriate Governmental Authority the deeds delivered by AT&T in
accordance with Section 9.2(b) of the Agreement and (ii) pay any Taxes or
fees associated with such recording or the conveyance of the Owned Real
Property to Insight, to the extent required by Section 7.8 of this
Agreement. The provisions in this Section 7.29 do not relieve AT&T from any
other obligations under this Agreement unless such obligations are directly
in conflict with the provisions set forth in this Section 7.29.
(g) Section 7 of the Original Agreement is amended to add the following
Section 7.30:
7.30 Lien Releases. To the extent AT&T has not delivered at Closing
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the Lien Releases required by Section 9.2(c) of the Agreement, AT&T will
each deliver to Insight, within 20 days of Closing, (i) evidence,
reasonably satisfactory to Insight of such evidence, that all Liens (other
than Permitted Liens) affecting or encumbering the Assets have been
terminated, released or waived, as appropriate, or (ii) original, executed
instruments in form reasonably satisfactory to Insight effecting such
termination, releases or waivers.
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(h) Section 7 of the Original Agreement is amended to add the following
Section 7.31:
7.31 Copyright Fees and Franchise Fees.
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(a) AT&T shall prepare and file in a timely manner all filings for
the Systems for all periods ending on or prior to the Adjustment Time that
are required to be filed after the Adjustment Time pursuant to Section 111
of the Copyright Act and the related regulations of the Copyright Office.
AT&T shall be responsible for and shall pay in a timely manner all amounts
payable pursuant to Section 111 of the Copyright Act and the related
regulations of the Copyright Office for the Systems for all periods ending
on or prior to the Adjustment Time. AT&T shall provide Insight with copies
of all filings in the form filed with the Copyright Office together with
evidence of payment of all copyright royalty fees and other amounts paid to
the Copyright Office pursuant to Section 111 of the Copyright Act and the
related regulations of the Copyright Office. AT&T shall be responsible for
and shall timely respond to all Copyright Office and third party inquiries
relating to AT&T's copyright filings and royalty fee payments for the
Systems covering all periods ending on or prior to the Adjustment Time and
shall provide Insight with copies of all such inquiries and correspondence
between AT&T, the Copyright Office or third parties related to AT&T's
copyright filings and royalty fee payments for the Systems.
(b) AT&T shall be responsible for and shall pay in a timely manner
all franchise fees and other amounts payable pursuant to the System
Franchises for all periods ending on or prior to the Adjustment Time, shall
prepare and timely submit to the applicable franchising authorities all
related reports, and shall timely respond to all inquiries from the
applicable franchising authority relating to such franchise fee payments.
AT&T shall provide Insight with evidence of payment of all such amounts and
copies of all reports and related correspondence in the form submitted to
or received from the franchising authorities.
7. Final Schedules. The Schedules delivered by AT&T on October 26, 2000
constitute the final AT&T Schedules to the Original Agreement (the "Final AT&T
Schedules"). The Final AT&T Schedules were delivered in accordance with Section
7.26 of this Agreement and are deemed to have been attached to the Original
Agreement and to have been a part thereof for all purposes as of the execution
date of the Original Agreement. Attached as Exhibit 1 are (a) copies of the
Final AT&T Schedules incorporating corrections (the "Corrected Schedules")
necessary to reflect any agreements between the parties, with respect to the
assignment or transfer of retransmission consent agreements, construction
contracts, advertising sales assets or call center services, or corrections as
to factual matters set forth in the AT&T Final Schedules that have been
discovered to be incorrect since delivery of the AT&T Final Schedules and (b)
blacklined versions of the Corrected Schedules compared to the Final Schedules.
The corrections made to the Final Schedules as described above are deemed to be
incorporated into AT&T's Final Schedules and are deemed to have been attached to
the Original Agreement and to have been a part thereof for all purposes as of
the execution date of the Original Agreement.
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8. Required Consents. Insight waives, subject to Section 7.17 of the
Original Agreement, the condition to closing set forth in Section 8.1(e) of the
Original Agreement to the extent any Required Consent described in such section
has not been received and delivered by AT&T prior to Closing.
9. Counterparts. This Amendment may be executed in counterparts, each of
which will be deemed an original. This Amendment will be binding on the parties
only upon the delivery of original, true photocopy or facsimile of manually-
executed counterparts, and may not be executed or delivered electronically
(other than delivery by facsimile).
10. Governing Law. THIS AMENDMENT AND THE RIGHTS OF THE PARTIES UNDER IT
WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES OF
DELAWARE.
11. Severability. Any term or provision of this Amendment that is invalid
or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefitted by such provision or any other
provisions of this Amendment. The provisions of this Amendment shall survive the
delivery of any deed evidencing the conveyance of the Owned Real Property in
conformance with the Agreement.
12. Construction of Amendment. This Amendment has been negotiated by the
undersigned and their respective legal counsel, and legal or equitable
principles that might require the construction of this Amendment or any
provision of this Amendment against the party drafting this Amendment will not
apply in any construction or interpretation of this Amendment. The word
"include" and derivatives of that word are used in this Amendment in an
illustrative sense rather than limiting sense.
13. Effect of Amendment. Except as amended by this Amendment, all terms
and provisions of the Agreement will remain unchanged and in full force. From
and after the date of this Amendment, each reference in the Original Agreement
to "this Agreement," "hereof," "hereunder" or words of like import, and all
references to the Original Agreement in any and all agreements, instruments,
documents, notes, certificates and other writings of every kind and nature
(other than in this Amendment or as otherwise expressly provided) shall be
deemed to mean the Original Agreement, as amended by this Amendment.
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The parties have executed this Amendment to Asset Purchase and Sale
Agreement as of the day and year first above written.
TCI OF ILLINOIS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
TCI OF RACINE, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
UACC MIDWEST, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
INSIGHT COMMUNICATIONS COMPANY, L.P.
By: Insight Communications Company, Inc., its
general partner
By:_______________________________
Name:_____________________________
Title:____________________________
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