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EXHIBIT 2.2
AMENDMENT NUMBER ONE
to the
PURCHASE AGREEMENT
AMENDMENT NUMBER ONE (the "Amendment") to the Purchase Agreement, dated
as of March 4, 1998 (the "Agreement"), among OpTel, Inc., Interactive Cable
Systems, Inc. and ICS Licenses, Inc. Capitalized terms used without definition
herein shall have the meanings provided in the Agreement.
1. From and after the date hereof, Seller shall use its best efforts to
obtain all of the consents required to be obtained in order to transfer to Buyer
the Purchased Assets free and clear of all Liens (other than Liens associated
with the Assumed Liabilities), including but not limited to all consents
required to transfer all of the Required Consents relating to the Rights of
Entry. The parties hereto agree that Rights of Entry that provide, in substance,
that no consent is required in the context of a sale of all or substantially all
of the assets of Seller, shall be deemed for all purposes relating to the
Agreement and the transactions contemplated therein to require consent (without
prejudice to any position or claim that may be made against any Person not a
party hereto). In addition, Seller shall not be deemed to have obtained any
Required Consents obtained after the Closing Date unless the consent received is
substantially in the form of Exhibit A hereto.
2. With respect to Required Consents received by Seller on or prior to
the Closing Date that do not contain the estoppel language contained in Exhibit
A (representing approximately 5,500 Subscribers), the parties hereto agree that
such Required Consents shall be deemed to have been obtained by Seller for
purposes of satisfying conditions to Closing pursuant to Section 4.2.8 ,
provided,
(a) Seller shall indemnify, defend and hold harmless the Buyer
Indemnified Parties from and against any and all Losses arising from or relating
in any way to any actual or alleged pre-Closing defaults by Seller or any of its
affiliates under the Rights of Entry relating to the 5,500 Subscribers described
above (without limit as to time or amount, and in addition to all other remedies
available, the Buyer Indemnified Parties shall have recourse against the
Additional Escrow Amount, as defined below, to satisfy such claims, in the
manner provided below);
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(b) at the Closing, Buyer and Seller shall execute and deliver an
escrow agreement substantially in the form of Exhibit B hereto (the "Additional
Escrow Agreement") under which Kronish, Lieb, Weiner & Hellman LLP shall act as
escrow agent (the "Additional Escrow Agent"). At the Closing Buyer shall deposit
with the Additional Escrow Agent an amount of the Purchase Price equal to
$2,000,000 (in shares of Series B Preferred and Class A Common in the ratio
described in Section 2.2 of the Agreement) (the "Additional Escrow Amount"),
which shall be withheld from the Purchase Price payable to Seller at the
Closing.
(c) Subject to the terms of the Additional Escrow Agreement, the
Additional Escrow Amount shall be released to Seller as follows:
(i) On the 90th day following the Closing, an amount (the "First
Reduction Amount") equal to (1) the Basket (as the Basket is finally determined
pursuant to the Agreement as amended hereby) minus (2) the amount of any claims
paid or pending for indemnification under Section 10.1 of the Agreement as of
such date, and minus the amount of any claims paid or pending for
indemnification under this Section 2 of this Amendment, in each case made by the
Buyer Indemnified Parties, shall be released to Seller, provided that the First
Reduction Amount shall not exceed the Additional Escrow Amount then held by the
Additional Escrow Agent. The Basket thereupon shall be reduced by the First
Reduction Amount for all purposes under the Agreement (but in no event shall the
Basket be reduced below zero).
(ii) On the 180th day following the Closing, an amount (the "Second
Reduction Amount") equal to the remaining Additional Escrow Amount, if any,
minus the amount of any claims pending for indemnification under this Section 2
of the Amendment, shall be released to Seller. At such time the Basket shall be
increased by an amount equal to the amount released to Seller. Upon final
determination of the amount of claims for indemnification under this Section 2,
the balance of the Additional Escrow Amount remaining after payment of such
claims to the Buyer Indemnified Parties under this Section 2 (which shall be
paid to Buyer), shall be paid to Seller (and the Basket shall be further
increased by any additional amounts released to Seller upon such final
determination).
3. Exhibit C hereto is a list of all signal feed agreements that
Buyer shall assume at the Closing and all other signal feed agreements relating
to the Business (the "Other Signal Agreements"). On or prior to the 60th day
following the Closing Date, Buyer shall notify Seller as to which of the Other
Signal Feed Agreements it wishes to assume (in which case Buyer and Seller as
promptly as practicable shall execute such
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documents of assumption necessary for Buyer to assume such agreements). For up
to 90 days after such notice (subject to Buyer's right to terminate such license
at any time), Seller shall license to Buyer the right to use all Other Signal
Agreements not assumed by Buyer pursuant hereto, subject to Buyer assuming all
payment obligations, if any, with respect to such Other Signal Agreements, which
payments shall be made to Seller and Seller shall pay over such amounts to the
Person entitled to such payments under such Other Signal Agreements. Seller
shall use its reasonable best efforts to maintain its rights under the
underlying agreements during such period. If an underlying Other Signal
Agreement is terminated other than due to a failure by Seller to make payments
under such agreement, then this license shall terminate in respect of such
agreement. Buyer acknowledges that it has received copies of the Other Signal
Agreements from Seller.
4. The parties hereto agree that notwithstanding the terms of the
Agreement, the adjustments to the Purchase Price described in Section
1.3(b)(iii) of the Agreement shall be completed after the Closing Date. The
parties shall use their best efforts to complete all actions provided in such
Section 1.3(b)(iii) on or prior to the 30th day following the Closing Date, and
in any event the parties shall complete all such actions (and the related
adjustment to the Purchase Price and/or the Basket) on or prior to the 90th day
following the Closing Date.
5. The parties agree that with respect to all Required Consents
(other than those relating to Rights of Entry or to vehicle leases), from and
after the Closing Seller shall grant Buyer an irrevocable, perpetual,
royalty-free license, coupled with an interest, to use any of the Purchased
Assets for which consents to transfer have not been received until such time as
such consents are received, upon terms that provide Buyer with all economic
rights and benefits of actual ownership of such assets, and with no associated
pre-Closing liabilities (but Buyer shall assume all payment obligations, if any,
and the risk of loss with respect to the Purchased Assets in question, which
payments shall be made to Seller, and Seller shall pay over such amounts to the
Person entitled to such payment under the associated agreement requiring the
Required Consent). From and after the Closing, Seller shall indemnify, defend
and hold harmless the Buyer Indemnified Parties from and against any and all
Losses arising from, or relating to, Seller's failure to obtain such Required
Consents.
6. The parties agree that with respect to Required Consents
relating to vehicle leases, from and after the Closing Seller shall grant to
Buyer an irrevocable, perpetual, royalty free license, coupled with an interest,
to use the vehicles
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subject to such leases until such time as such Required Consents are received,
upon terms that provide Buyer with all the economic rights and benefits of
Seller with respect to such vehicles, and with no associated pre-Closing
liabilities (but Buyer shall assume all payment obligations under such leases in
the manner provided in paragraph 5, above and risk of loss). Seller shall use
its reasonable best efforts to maintain its rights under the underlying leases
during such period. If an underlying lease is terminated other than due to a
failure by Seller to make payments under such leases, then this license shall
terminate in respect of such agreement. From and after the Closing, Seller shall
indemnify, defend and hold harmless the Buyer Indemnified Parties from and
against any and all Losses arising from, or relating to, failure to obtain such
Required Consents.
7. Seller acknowledges that the Required Consents must include a
waiver of a property owner's first refusal rights for the following properties
(in accordance with the terms of the associated Reports of Entry): Manchester
(Franchise 80) and Watergate (Franchise 77).
8. Seller acknowledges that a Required Consent in the form attached
as Exhibit A is required for River Crest (Franchise 7R).
9. Seller shall use its best efforts to make such additional UCC
filings as Buyer may reasonably request to effectuate the release of Liens on
the Purchased Assets that, under the Agreement, were to have been released at
the Closing but were not in fact released. With respect to UCC-3 forms that do
not set forth the correct Seller address, such forms shall be prepared and filed
by Seller with the proper Seller addresses within 10 Business Days after the
Closing.
10. Seller shall promptly notify Buyer in writing after Seller has
obtained a Required Consent for a Right of Entry which is part of the Consent
Escrow. At the end of each two week period following Closing, with the first two
week period ending on April 17, 1998, Buyer and Seller shall use all reasonable
efforts to complete the release and transfer to Buyer of all Rights of Entry for
which Required Consents have been obtained, subject to satisfaction of the
requirements set forth in the following paragraph.
Prior to the release of a Right of Entry from the Consent Escrow,
each of the following documents with respect to such Right of Entry shall have
been executed and delivered to Buyer: (a) a Bill of Sale, (b) an Assumption
Agreement, (c) all documentation necessary to release all Liens against such
Right of Entry and related Purchased Assets, and (d) a certificate setting forth
the amount to be disbursed to Seller from the
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Consent Escrow Amount with a copy to the Consent Escrow Agent. Upon such
deliveries stock certificates and stock powers reflecting the new amounts of
Series B Preferred Stock and Class A Common Stock to remain with the Consent
Escrow Agent shall be delivered to the Consent Escrow Agent in exchange for
certificates then held and certificates reflecting the Consent Escrow Amount to
be released to Seller shall be delivered to Seller, all in accordance with the
terms of the Consent Escrow Agreement.
Seller and Buyer agree that with respect to each Right of Entry
transferred to Buyer in accordance herewith, Seller will provide reasonable
accommodations and information to Buyer, including, without limitation,
transition billing services, so that there is minimum disruption of billing and
customer service associated with each such Right of Entry.
11. Seller and Buyer agree that Purchased Assets include, for no
further consideration, the proceeds of any insurance received or receivable by
Seller with respect to any claim made after March 4, 1998 (whether or not the
claim accrued before or after March 4,1998) relating to Purchased Assets.
12. (a) With respect to the properties described in the grid below (the
"Upgrade Properties"), the parties acknowledge that Oxford Properties ("Oxford")
requires upgrade of channel capacity as described in the grid (the "Upgrades")
by the dates shown under Required Completion Date in the grid. Seller agrees
that it retains the absolute obligation to timely perform the Upgrades so as to
at all times protect Buyer's good standing with respect to Oxford properties
identified under that certain Consent dated April 9, 1998 among Seller, Buyer
and Oxford (the "Oxford Consent"). To secure and protect and as a source of
indemnification to Buyer in respect of such obligations of Seller, Buyer shall
have recourse against the Upgrade Escrow Amount (as defined below) all in the
manner provided below.
(b) Pursuant to the terms of the Oxford Consent, Seller shall, at its
sole expense, complete the following system upgrades by the required completion
dates set forth below:
Property Increase Required Seller's Associated
- -------- -------- -------- -------- ----------
Channels Completion Required Subscribers
-------- ---------- -------- -----------
From To Date Completion
---- -- ---------- ----------
Date
----------
Reflections 36 45 May 9, 1998 April 23, 1998 191
(Franchise
5J)
Verandah 36 45 July 9, 1998 July 2, 1998 161
Hunt Club
(Franchise
22)
Windrift 37 45 June 9, 1998 June 2, 1998 170
(Franchise
7H)
Stone Creek 26 45 May 9, 1998 May 2, 1998 124
(Franchise
28)
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In completing such upgrades, Seller shall have an employee (and not
just a contractor) of Seller on-site on a continuous full-time basis during any
periods of construction work for the upgrades at Verandah Hunt Club and
Windrift. Additionally, Seller and its contractors shall promptly follow Buyer's
and Buyer's representatives' instructions at all times so as to minimize
customer disruption and property owner inconveniences. Seller shall complete the
upgrade in a good and workmanlike manner and shall use equipment, materials and
components reasonably acceptable to Buyer. Seller shall begin such upgrades
immediately upon Closing and thereafter diligently and continuously continue
construction until completion. Within 3 Business Days following Closing and
thereafter as they are prepared, Seller shall submit for Buyer's reasonable and
timely approval, plans, specifications and copies of all contracts entered into
with subcontractors. In the event that Seller fails promptly to commence
completion of the Upgrades, or fails to diligently pursue completion of the
Upgrades, or has not completed an Upgrade for a property to Buyer's and Oxford's
satisfaction by the applicable "Seller's Required Completion Date", Buyer may at
its option complete Upgrades with the right to claim all related costs and
expenses from the Upgrade Escrow Amount as described below and without relieving
Seller of its obligation to have the Upgrade timely completed, and without
limiting in any respect Buyer's right to claim against the Upgrade Escrow Amount
under Section 12(d)(ii) below.
In all cases, Seller shall at all times be solely responsible for its
own expenses and amounts owed to contractors and shall indemnify, defend and
hold harmless the Buyer Indemnified Parties from and against any and all Losses
arising from or relating in any way to Seller's completion of such upgrades
(without limit as to time or amount, and in addition to all other remedies
available). Further, Seller shall promptly cause all Liens, if any, on the
properties and Purchased Assets relating thereto to be released in their
entirety.
(c) At the Closing, Buyer and Seller shall execute and
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deliver an escrow agreement substantially in the form of Exhibit E hereto (the
"Upgrade Escrow Agreement") under which Kronish, Lieb, Weiner & Hellman LLP
shall act as escrow agent (the "Upgrade Escrow Agent"). At the Closing Buyer
shall deposit with the Upgrade Escrow Agent an amount of the Purchase Price
equal to Per Subscriber Amount multiplied by 646 (being the total of the
Associated Subscribers identified on the grid) (in shares of Series B Preferred
and Class A Common in the ratio described in Section 2.2 of the Agreement) (the
"Upgrade Escrow Amount"), which shall be withheld from the Purchase Price
payable to Seller at the Closing.
(d) Subject to the terms of the Upgrade Escrow Agreement, the Upgrade
Escrow Amount shall be released as follows:
(i) upon receipt by the Upgrade Escrow Agent at any time of a statement
executed by Buyer, to Buyer an amount of the Upgrade Escrow Amount equal to the
costs, expenses and Losses of Buyer in respect of the Upgrade, including any of
the same arising in connection with Buyer's completing such Upgrade, all as
identified on such statement;
(ii) upon receipt by the Upgrade Escrow Agent of a statement executed
by Buyer that Oxford is terminating the related service agreement with respect
to an Upgrade Property on the basis of a failure to timely complete an Upgrade,
an amount equal to the Per Subscriber Amount multiplied by the number of
Subscribers identified with respect to such Upgrade Property (with no obligation
of Buyer to defend against such termination);
(iii) upon receipt by the Upgrade Escrow Agent of a statement executed
by both Buyer and Seller that (A) Seller has timely completed an Upgrade of an
Upgrade Property to Buyer's reasonable satisfaction, (B) all subcontractors have
been paid (and have released or received waivers with respect to any and all
Liens relating to such property) and (C) Oxford has accepted in writing that
such Upgrade has been completed to its satisfaction, the Upgrade Escrow Agent
will release to Seller the portion of the Upgrade Escrow Amount that the
Subscribers at such property bears to the aggregate of the Subscribers shown on
the above chart, less any amounts theretofore claimed by or paid to Buyer in
connection with completing such Upgrade.
(iv) upon receipt by the Upgrade Escrow Agent of a certificate executed
by Buyer that all amounts due to Buyer have been paid and/or that the Upgrades
have been satisfactorily performed, the Upgrade Escrow Agent shall release the
balance of the Upgrade Escrow Amount to Seller.
(e) The parties agree that the prevailing party in any
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litigation or arbitration arising under or with respect to the Upgrade Escrow
Agreement shall have all of its attorneys costs and expenses paid by the
opposing party.
13. Except as amended hereby, the provisions of the Agreement shall
remain in full force and effect. This Amendment shall not constitute a waiver or
amendment of any other provision of the Agreement not referred to herein.
14. This Amendment may be executed in counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
15. This Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on this day of April, 1998.
OPTEL, INC.
By: /s/ MICHAEL E. KATZENSTEIN
----------------------------------------------
Name: Michael E. Katzenstein
Title: Vice President Legal
Affairs, General Counsel
and Secretary
By: /s/ STEPHEN DUBE
----------------------------------------------
Name: Stephen Dube
Title: Vice President
Operations
INTERACTIVE CABLE SYSTEMS, INC.
By: /s/ KEVIN SCHOTTLAENDER
----------------------------------------------
Name: Kevin Schottlaender
Title: President
ICS LICENSES, INC.
By: /s/ KEVIN SCHOTTLAENDER
----------------------------------------------
Name: Kevin Schottlaender
Title: President