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Exhibit (2)-3
EXECUTION COPY
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
This Second Amendment to Asset Purchase Agreement
("Amendment") is made as of January 10, 1997, by and between
Tele-Communications, Inc., a Delaware corporation ("Buyer"), and Xxxxxx-Xxxxxx
Cablevision, Inc., a Florida corporation ("KRC"), KRC-SNJ, Inc., a Delaware
corporation ("KRC-SNJ"), KRC-NJFT, Inc., a Delaware corporation ("KRC-NJFT") and
Xxxxxx-Xxxxxx Investment Company, a Delaware corporation ("KRIC") (with KRC,
KRC-SNJ, KRC-NJFT and KRIC referred to collectively as "Seller").
RECITALS
Buyer and Seller entered into an Asset Purchase Agreement as
of March 18, 1996, as amended by First Amendment to Asset Purchase Agreement
dated September 27, 1996 (collectively, the "Agreement"). The parties wish to
amend the Agreement as set forth in this Amendment. All capitalized terms used
but not defined in this Amendment will have the meanings set forth for such
terms in the Agreement.
AMENDMENT
For valuable consideration the parties agree as follows:
1. Bifurcation of Closing. The parties have determined that
the conditions to Closing applicable to the transfer of the TKR Partners
Interest will not be satisfied prior to the proposed Closing Date.
Consequently, the parties have agreed to consummate the transactions
contemplated by the Agreement in two separate closings, with the first closing
(the "First Closing") to apply to all of the Assets except the TKR Partners
Interest (the "First Closing Assets"), and with the second closing (the "Second
Closing") to apply only to the TKR Partners Interest. For purposes of this
Amendment, the term "First Closing Date" refers to the date of the First
Closing, and the term "Second Closing Date" refers to the date of the Second
Closing.
2. First Closing Consideration. Buyer has elected the option
included in Section 2.2.1 of the Agreement. At the First Closing, the
consideration to be delivered to Seller and KRI will be equal to $382,700,000
(the original consideration of $420,000,000 less the $37,300,000 portion of
such consideration allocable to the TKR Partners Interest pursuant to Section
2.4 of the Agreement). Subject to adjustment in accordance with the Agreement,
the $382,700,000 in consideration will be payable as follows:
a. Delivery to KRC of shares of Buyer Series A Common Stock
with an aggregate Buyer Common Stock Value equal to $140,000,000, meeting the
requirements of Section 2.2.3 of the Agreement, plus
b. Delivery to KRC of shares of Buyer Series A Common Stock
with an aggregate Buyer Common Stock Value equal to $115,133,334, meeting the
requirements of Section 2.2.4 of the Agreement, plus
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c. Delivery to Seller and KRI, as applicable, of either (i)
$127,566,666 of cash or (ii) at Buyer's option, cash and all or a portion of the
Time Warner Stock owned by TKR Cable, which together have an aggregate value of
$127,566,666 (determined as specified in the Agreement).
3. Second Closing Consideration. At the Second Closing, Buyer
will deliver to Seller consideration with an aggregate value of $37,300,000
(subject to adjustment as provided below), payable as follows:
a. Delivery to KRC of shares of Buyer Series A Common Stock
with an aggregate Buyer Common Stock Value equal to $24,866,666, meeting the
requirements of Section 2.2.4 of the Agreement, plus
b. Delivery to KRC of $12,433,334 of cash.
4. Closing Dates. The First Closing is expected to take place
on January 10, 1997, subject to satisfaction of the conditions to Closing set
forth in the Agreement with respect to the First Closing Assets. The Second
Closing will be held on a date specified by Buyer (upon five business days'
prior notice to Seller) that is within 15 days after all conditions to the
Closing with respect to the TKR Partners Interest contained in the Agreement
(other than those based on acts to be performed at the Second Closing ) have
been satisfied or waived. The Second Closing will be held at 10:00 a.m. local
time at Buyer's office located at 0000 XXX Xxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
or at such place and time as Buyer and Seller may agree. Without limiting the
generality of the foregoing, the conditions set forth in Sections 8.2.1 and
8.2.2 of the Agreement will not apply at the First Closing with respect to
representations, warranties and covenants to the extent relating to the TKR
Partners Interest, and the conditions set forth in Sections 8.2.1 and 8.2.2 of
the Agreement will not apply at the Second Closing, with respect to
representations, warranties and covenants to the extent relating to the First
Closing Assets.
5. Basic Purchase Price Adjustments. The adjustments to the
Base Purchase Price specified in Section 2.3 of the Agreement will be applied
as follows:
a. The adjustment referred to in Section 2.3.1 of the
Agreement will be made at the First Closing. Section 2.3.1 of the Agreement is
amended to read in its entirety as follows:
2.3.1 The Base Purchase Price will be decreased by an
amount equal to 50% of (a) the payments made or required to be
made to Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxxxx X. Xxxxx,
Xxxxx X. Xxxxxx and Xxxxx X. Xxxxxxxx pursuant to or in lieu
of the Management Incentive Plan (including termination
thereof as contemplated by Section 6.10), (b) deferred
compensation payable to Xxxx X. Xxxxx by any of the Owned
Entities with respect to compensation for periods prior to
January 1, 1996 plus the bonus payable in 1996 with respect to
1995 results, and (c) severance payment to Xxxx X. Xxxxx of
two years' base salary.
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b. The adjustments referred to in Section 2.3.2(i) of the
Agreement will be made at the Second Closing.
c. The adjustment of $66,207 per day referred to in Section
2.3.2(ii) of the Agreement will be made as follows: (i) $60,033 per day will be
adjusted in connection with the First Closing, and (ii) the balance of $6,174
per day will be adjusted at the Second Closing, in each case for the period from
October 1, 1996 to the First Closing Date.
d. No adjustment will be made pursuant to Section 2.3.3 of
the Agreement.
e. The Preliminary Report contemplated by Section 2.3.4(a)
of the Agreement for purposes of the First Closing is attached as SCHEDULE I to
this Amendment.
6. Adjustment Procedures. The procedures for preliminary and
final determinations of the adjustments to the Base Purchase Price will be made
separately for the First Closing and the Second Closing in accordance with
Section 2.3.4 of the Agreement.
7. Closing Date References. For purposes of determining the
"Average Trading Price" of Buyer Series A Common Stock, the reference to the
"Closing Date" will mean the First Closing Date, in the case of the Buyer
Series A Common Stock to be delivered at the First Closing, and the Second
Closing Date, in the case of the Buyer Series A Common Stock to be delivered at
the Second Closing. The references to "Closing Date" in Section 2.2.4 of the
Agreement and in Section 2(b) of the Registration Rights Agreement will mean
the First Closing Date. In addition, the reference in Section 3(b) of the
Registration Rights Agreement to "second anniversary of the Closing Date" will
mean "second anniversary of the First Closing Date." Other references to
"Closing" or "Closing Date" in the Agreement or the Registration Rights
Agreement will mean the First Closing or First Closing Date, or the Second
Closing or Second Closing Date, as applicable.
8. Assignment and Assumption. The assignment and assumption
contemplated by Section 3 of the Agreement to take place on the Closing Date
will take place at the First Closing Date with respect to the First Closing
Assets, and on the Second Closing Date with respect to the TKR Partners
Interest. At the First Closing, Buyer will assume the "First Closing Assumed
Liabilities," which will consist of all the Assumed Liabilities other than the
liabilities and obligations of KRC as a general partner of TKR Partners and
under the partnership agreement of TKR Partners. At the Second Closing, Buyer
will assume the remaining Assumed Liabilities (the "Second Closing Assumed
Liabilities"). Unless and until the Second Closing occurs, the reference to
"Assumed Liabilities" in Section 10.3(a)(iii) of the Agreement will mean "First
Closing Assumed Liabilities;" and from and after the consummation of the Second
Closing, such reference will be to "Assumed Liabilities." Unless and until the
Second Closing occurs, the indemnifications in Sections 10.2(a)(iii) and
10.3(a)(iv) of the Agreement will apply only with respect to matters relating
to or arising with respect to the First Closing Assets and related obligations
and liabilities, and from and after the consummation of the Second Closing,
such indemnifications will apply as specified in such provisions.
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9. Budget References. After the First Closing, references in
Sections 6.2 and 6.8 of the Agreement to the "1996 Budgets" will refer instead
to the then current budget of TKR Partners.
10. HSR. If a new filing prior to the Second Closing is
required under the HSR Act, the provisions of Section 6.4 of the Agreement will
apply, with each party to make such filings as soon as practicable after a
determination that such filings are necessary.
11. Waiver of Second Closing Condition. With respect to the
Second Closing, Buyer waives the condition to the Second Closing set forth in
Section 8.2.4 of the Agreement. However, Buyer does not waive any of the other
conditions to the Second Closing (including without limitation Sections 8.2.5
and 8.2.6) or any of the conditions to the First Closing.
12. First Closing Documents. At the First Closing, the
parties will sign and deliver closing documents in accordance with Section
8.2.3, 8.3.4 and 8.3.7 of the Agreement, except that the Assignment, Assumption
and Xxxx of Sale in the form attached as EXHIBIT A to the Agreement will relate
only to the First Closing Assets and the First Closing Assumed Liabilities, and
the Amendment No. 1 to Standstill, Indemnification and Contribution Agreement
in the form of EXHIBIT E to the Agreement will not be signed and delivered
until the Second Closing.
13. Second Closing Documents. At the Second Closing, the
parties will sign and deliver an Assignment, Assumption and Xxxx of Sale with
respect to the TKR Partners Interest and the Second Closing Assumed Liabilities
in the form attached as EXHIBIT A to the Agreement, the Amendment No. 1 to
Standstill, Indemnification and Contribution Agreement in the form of EXHIBIT E
to the Agreement and closing certificates and transfer instruments as may be
reasonably requested in connection with the transactions to be consummated at
the Second Closing.
14. Termination Right. If the First Closing occurs, then (a)
neither Buyer nor Seller will have any further right to terminate the Agreement
pursuant to Section 9.1(b) of the Agreement, and (b) either Buyer or Seller may
terminate the Agreement to the extent it relates to the TKR Partners Interest
if the Second Closing has not been consummated on or before December 31, 1998
for any reason, so long as the terminating party is not in default under this
Agreement in any material respect. If either party terminates the Agreement to
the extent it relates to the TKR Partners Interest pursuant to the preceding
sentence, then Section 9.2 of the Agreement will be modified to read as
follows, upon such termination:
9.2 Liabilities in Event of Termination.
(a) Upon termination of this Agreement prior to the First
Closing pursuant to SECTION 9.1, except as provided in the
following sentence: (a) this Agreement will automatically
become null and void, except the provisions of SECTION 6.19
which will continue in effect (unless this Agreement has
previously been filed with the SEC) until such time as this
Agreement is filed with the SEC, and (b) such termination will
be the sole remedy with respect to any breach of this
Agreement. Notwithstanding the preceding sentence, neither the
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Buyer nor Seller will be relieved of liability for
any willful breach of any material covenant or agreement in
this Agreement.
(b) If after the First Closing, this Agreement is
terminated with respect to the TKR Partners Interest, then
except as provided in the following sentence: (a) this
Agreement will automatically become null and void as it
relates to the TKR Partners Interest, except the provisions of
SECTION 6.19 which will continue in effect (unless this
Agreement has previously been filed with the SEC) until such
time as this Agreement is filed with the SEC, and (b) such
termination will be the sole remedy with respect to any breach
of this Agreement with respect to the TKR Partners Interest.
Notwithstanding the preceding sentence, neither the Buyer nor
Seller will be relieved of liability for any willful breach of
any material covenant or agreement in this Agreement.
15. Assignment. The third sentence of Section 11.1 of the
Agreement is amended by adding the words "except that KRC may not so assign any
of its rights and obligations hereunder with respect to the TKR Partners
Interest until the earlier of December 1, 1997, or the consummation of the
Second Closing," after the words "consent of Buyer),"
16. Exhibit D Modification. The first sentence of Section
1(a) of the Noncompetition Agreement attached as EXHIBIT D to the Agreement is
amended by the addition of the following at the end of the existing text (after
"Disqualified Person"):
; except that this Agreement will not restrict Xxxxxx-Xxxxxx
Cablevision, Inc. from continued ownership of the TKR Partners
Interest.
17. Miscellaneous.
(a) 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.
(b) This Amendment may be executed in counterparts,
each of which will be deemed an original.
(c) Except as amended by this Amendment, all terms
and provisions of the Agreement will remain unchanged and in full force.
(d) Any term or provision of this Amendment which 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.
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(e) This Amendment has been negotiated by Buyer and
Seller 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.
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The parties have executed this Second Amendment to Asset
Purchase Agreement as of the day and year first above written.
SELLER:
Xxxxxx-Xxxxxx Cablevision, Inc. KRC-NJFT, Inc.
By: /s/ Xxxx Xxxxx By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx Name: Xxxx Xxxxx
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Title: President Title: President
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KRC-SNJ, Inc. Xxxxxx-Xxxxxx Investment Company
By: /s/ Xxxx Xxxxx By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx Name: Xxxx Xxxxx
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Title: President Title: President
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BUYER:
Tele-Communications, Inc.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: Executive Vice President/General Counsel & Secretary
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SCHEDULE I
FIRST CLOSING PRELIMINARY REPORT UNDER SECTION 2.3.4(A) OF THE AGREEMENT
BASE PURCHASE PRICE CALCULATION - FIRST CLOSING FOR TKR DEAL -
ASSUMING 1/10/97 CLOSING*
$382,700,000 FIRST CLOSING STARTING VALUE PER AMENDMENT
(218,500) SEVERANCE - XXXX XXXXX
(244,743) DEFERRED COMP. - XXXX XXXXX
(1,221,500) EQ. APPREC. - TKR MANAGEMENT
6,063,333 INT. @ $60,033/DAY (10/1/96 THROUGH 1/9/97)
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$387,078,590 TOTAL BASE PURCHASE PRICE - FIRST CLOSING
CASH PAYMENT $127,566,666 STARTING VALUE PER AMENDMENT
1,459,530 1/3 OF ADJUSTMENTS
(40,976,536) TIME WARNER STOCK VALUE (SEE ATTACHED)
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$ 88,049,660 BALANCE CASH
REGISTERED STOCK $140,000,000 STARTING VALUE PER AMENDMENT
1,459,530 1/3 OF ADJUSTMENTS
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$141,459,530 TOTAL
2-YEAR STOCK $115,133,334 STARTING VALUE PER AMENDMENT
1,459,530 1/3 OF ADJUSTMENTS
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$116,592,864 TOTAL
CONSIDERATION $ 88,049,660 CASH
SUMMARY 40,976,536 TIME WARNER STOCK
141,459,530 REGISTERED STOCK
116,592,864 2-YEAR STOCK
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$387,078,590 TOTAL
NUMBER OF TCOMA 8,838,117 REGISTERED - $141,459,530/$16.00561797**
SHARES TO BE ISSUED 7,284,496 2-YEAR - $116,592,864/$16.00561797**
AT FIRST CLOSING ----------
16,122,613 TOTAL SHARES AT FIRST CLOSING
* NOTE - NUMBERS WILL CHANGE IF CLOSING DATE CHANGES
** MINIMUM VALUE OF TCOMA STOCK PER AGREEMENT FORMULA = $16.00561797
$13.35 - $1.80 = $11.55 $11.55/$13.35 * $18.50 = $16.00561797
$1.80/TCOMA SHARE = ADJUSTMENT FOR TSATA SPINOFF
TIME WARNER STOCK AVERAGE TRADING PRICE CALCULATION
Trading Date Closing
Day (Nov/Dec) Price
------- --------- -------
1 27 40.62500
2 29 40.75000
3 2 40.75000
4 3 40.50000
5 4 39.85938
6 5 40.00000
7 6 39.75000
8 9 40.00000
9 10 40.12500
10 11 39.75000
11 12 38.87500
12 13 39.00000
13 16 38.25000
14 17 38.12500
15 18 37.75000
16 19 37.87500
17 20 37.75000
18 23 37.50000
19 24 37.00000
20 26 37.37500
781.60938
AVERAGE TRADING PRICE 39.08047
VALUE OF 1,048,517 SHARES 40976536
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