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EXHIBIT 2.4
AMENDMENT NUMBER ONE
TO THE
PURCHASE AGREEMENT
Amendment Number One (the "Amendment") to the Purchase Agreement,
dated as of August 13, 1997 (the "Agreement"), among OpTel, Inc., Phonoscope,
Ltd., Phonoscope Management L.C., Lee Cook, Alton Cook and the Lee Cook Family
Trust. Capitalized terms used without definition herein shall have the meanings
provided in the Agreement.
1. Section 1.3(b) of the Agreement is hereby amended and restated
in its entirety as follows:
(b) MDU Adjustments. Schedule 1.3(b)(i) sets forth a list of the
standard labor and materials costs ("Standard Costs") to be used by
Buyer and the Sellers to estimate the cost of wiring and other upgrades
required to enable each MDU property (other than the properties listed
in Schedule 1.3(b)(ii)) to meet the "550 MHz Performance Standard"
described in Schedule 1.3(b)(i) (the "Upgrade") and Schedule
1.3(b)(iii) sets forth a list of all MDU locations relating to the
Business as of the date hereof. On or prior to September 22, 1997, the
Sellers shall deliver to Buyer a design (a "Redesign") and estimated
costs (based upon the Standard Costs) for the Upgrade of five of the 25
MDU locations indicated on Schedule 1.3(b)(iv). On or prior to
September 29, 1997, the Sellers shall deliver to Buyer a Redesign and
estimated costs (based upon the Standard Costs) for the Upgrade of ten
additional of the 25 MDU locations indicated on Schedule 1.3(b)(iv). On
or prior to October 6, 1997, the Sellers shall deliver to Buyer a
Redesign and estimated costs (based upon the Standard Costs) for the
Upgrade of the remaining MDU locations indicated on Schedule
1.3(b)(iv). The Redesigns (i) wherever possible shall incorporate all
existing coaxial cables leading from the Conveyed Network to the
network at the related MDU locations, (ii) shall assume in calculating
RF signal levels that the Conveyed Network amplifier feeding each
property will operate at rated output levels and that coaxial cable and
coupler losses are nominal, (iii) shall set forth clearly, by "before"
and "after" designs, all changes and shall indicate all cable routes
and footages, and (iv) shall incorporate the least expensive approach
consistent with the Approach Priorities (as defined below) necessary to
meet the 550 MHz Performance Standard at the drop connection of every
tap/splitter network. For purposes of this Section 1.3(b),
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the Approach Priorities shall be, in order of preference, (A) changing
existing passive devices, including taps and splitter networks, to
utilize all available ports, (B) relocating existing on-premises
amplifiers, (C) adding additional on-premises amplifiers and, if
necessary, power supplies, and (D) changing and/or adding new
underground coaxial cables to reduce signal loss. Buyer may review the
Redesigns and cost calculations and within five Business Days after
delivery by the Sellers may deliver to the Seller alternative Redesigns
and/or cost calculations ("Alternatives"). Unless Buyer so delivers
such Alternatives to the Sellers, the Redesigns (and associated cost
calculations) shall be deemed to have been accepted by Buyer. If Buyer
delivers Alternatives, the parties, within five Business Days, shall
commence negotiations in good faith to resolve any differences and to
agree upon a reasonable and appropriate Redesign and associated costs
prior to the Closing. In addition to the conditions set forth in
Article 4, the obligations of each party to consummate the transactions
contemplated by this Agreement at the Closing shall be subject to
agreement by the parties on the Redesigns (or Alternatives, as the case
may be). Notwithstanding the delivery of any Alternatives, Buyer may,
at any time, withdraw any Alternatives and accept the original
Redesigns proposed by the Sellers. The aggregate of the estimated costs
relating to the Redesigns (and/or Alternatives, if the parties agree
upon Alternatives) shall be the "Final Redesign Costs". 80% of the
Final Redesign Costs for the locations indicated on Schedule 1.3(b)(iv)
(the "Costed Locations") shall be divided by the number of units in the
Costed Locations to determine the "Per Unit Adjustment." The Purchase
Price shall be reduced by an amount equal to the Per Unit Adjustment
multiplied by the total number of all MDU locations relating to the
Business (other than the locations listed in Schedule 1.3(b)(ii)).
2. Schedule 1.3(b)(iv) is amended and restated in its entirety as
set forth in Attachment A hereto.
3. Section 2(b) of Exhibit G to the Agreement is hereby amended and
restated in its entirety as follows:
(b) As an accommodation to Phonoscope, the Buyer hereby provides to
Phonoscope, upon the terms and subject to the conditions set forth
herein, for a period from the Closing Date until the 180th day after
the Closing Date (such period, as it may be shortened as provided
below, the "Term"), access to OpTel's existing "head end" (the
"Temporary Head End") located at [insert address], without cost to
Phonoscope except that Phonoscope shall be solely responsible for all
operating costs, fees, maintenance
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costs, licensing or permit fees or any other expenses associated with
Phonoscope's use of the Temporary Head End. After October 13, 1997, and
prior, and as a condition precedent, to the Closing, Phonoscope shall
be entitled at reasonable times and upon reasonable advance notice to
the Buyer, to inspect and test the Temporary Head End to confirm its
conformity in all material respects with the specifications set forth
in Exhibit II hereto and that the Temporary Head End is in good
operating condition. Prior to October 13, 1997, the Buyer shall (i)
change the channel lineup of the Temporary Head End to match
Phonoscope's channel lineup (as set forth in a notice delivered by
Phonoscope to the Buyer no later than September 29, 1997) except that
pay-per-view services on Channel 1 and 99 will be excluded, (ii) obtain
and provide any necessary head end equipment to receive and provide
such programming, (iii) install two-way couplers into all off-air and
satellite feeds in order to provide signal services from both the
Buyer's new and existing head-ends and (iv) combine all the head end
signals and provide a single RF output for Phonoscope's use. Phonoscope
shall be solely responsible for all connections and attachments to the
Temporary Head End, including, but not limited to, all fiber
connections, optical electronics, passives, hardware, labor, splicing,
amplifiers, couplers, and equipment and connections necessary to
combine high-speed data services with the head end signals. In
addition, Phonoscope shall provide a "prevue guide" signal for
insertion at the Temporary Head End by either providing an RF feed over
the fiber from Phonoscope's head end site to the Temporary Head End or
providing satellite receiver and ancillary equipment necessary to
supply baseband signals into the RF modulators at the Temporary Head
End for this channel. The parties hereto shall cooperate to coordinate
an orderly cut over of signals to take place between October 20 and
October 24, 1997 during such evening or early morning hours as the
parties may agree. Wherever practicable, the parties will exchange
authorized VCRS and digicypher cards in order to effect the cutover.
Not later than October 19, 1997, each of Phonoscope and the Buyer shall
notify the other of which VCRS and digicypher cards will be exchanged
as part of the cutover. During the Term, the Buyer shall afford to
Phonoscope's employees set forth on a list of authorized employees
delivered to the Buyer prior to the Closing Date (and updated from time
to time by Phonoscope by delivery of a revised list) reasonable access
to the Temporary Head End in order to maintain and repair the Temporary
Head End and the equipment and fibers attached thereto, upon prior
notice, at such times as Phonoscope may reasonably request, provided,
that prior to the Closing Date the parties shall agree upon procedures
for assuring access at any and all
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times by Phonoscope to the Temporary Head End including during such
time as the Buyer's premises (at which the Temporary Head End is
located) is not staffed. Phonoscope shall obtain and maintain all
consents, permits, licenses (including programming licenses and
authorizations for VCRS and digicypher cards) and approvals necessary
for the operation of the Temporary Head End and shall operate the
Temporary Head End in accordance with all applicable laws and
regulations. If Phonoscope fails to comply in any material respect with
any term or condition set forth in this Section 2(b), the Buyer, after
delivery to Phonoscope of written notice of such non-compliance and
Phonoscope's failure to cure such non-compliance within five Business
Days after receipt of such notice, may terminate the Term and
Phonoscope's rights under this Section 2(b). In addition, Phonoscope
may terminate the Term upon 10 Business Days' written notice to the
Buyer. The Buyer and its affiliates shall have no obligation or
liability whatsoever to Phonoscope, its subscribers or any other Person
for any interruption of service or programming (or the content or
quality of any signal or programming) resulting from the use of the
Temporary Head End, provided such interruption is not the result of the
gross negligence of the Buyer. Aside from conformity to the
specifications set forth in Exhibit I, the Buyer makes no
representation and warranty as to the Temporary Head End. As promptly
as practical after the end of the Term, Phonoscope shall disconnect any
lines, cables, fibers and equipment ("Attached Equipment") from the
Temporary Head End and shall remove the Attached Equipment from the
vicinity of the Temporary Head End, and upon Phonoscope's failure to do
so and the Buyer's delivery to Phonoscope of written notice of
Phonoscope's failure to remove the Attached Equipment, within five
Business Days after receipt of such notice, the Buyer may do so (and
may retain or dispose of such Attached Equipment in any manner at its
sole discretion) without any liability to Phonoscope. In its removal of
the Attached Equipment, Phonoscope shall assure that the Temporary Head
End is left in its condition on the date hereof, ordinary wear and tear
excepted.
4. Section 2(c) of Exhibit G to the Agreement is hereby amended and
restated in its entirety as follows:
(c) The Buyer shall not be liable for any Losses suffered by
Phonoscope in connection with its use of the Buyer's Temporary Head
End, and each Seller, jointly and severally, shall indemnify, defend
and hold harmless the Buyer from and against all Losses incurred by the
Buyer in connection with the Buyer's permitting Phonoscope to use the
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Temporary Head End, except where such Losses result solely from an act
of gross negligence or willful misconduct by the Buyer.
5. Exhibit I to Exhibit G to the Agreement is hereby deleted.
6. This Amendment shall not constitute a waiver or amendment of any
other provision of the Agreement not referred to herein. Except as amended
hereby, the provisions of the Agreement are and shall remain in full force and
effect.
7. This Amendment may be executed in counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
8. This Amendment shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed on this day of September, 1997.
OPTEL, INC.
By:
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Name:
Title:
PHONOSCOPE, LTD.
By:
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Name:
Title:
PHONOSCOPE MANAGEMENT L.C.
By:
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Name:
Title:
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Lee Cook
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LEE COOK FAMILY TRUST
By:
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Lee Cook
Sole Trustee
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Alton Cook
COMMUNICATIONS EQUITY ASSOCIATES
By:
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Name:
Title:
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