EXHIBIT 10.1
Execution Copy
SECOND AMENDMENT TO
PURCHASE AND SALE AGREEMENT
THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (this
"Amendment") is made as of October 29, 1999, among ASCENT ENTERTAINMENT GROUP,
INC., a Delaware corporation ("AEG"), ASCENT SPORTS HOLDINGS, INC., a Delaware
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corporation ("HC" and, together with AEG, "Seller"), LIBERTY DENVER ARENA LLC, a
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Delaware limited liability company ("LDA"), XXXXX AVALANCHE, LLC, a Delaware
limited liability company (Xxxxx Avalanche"), XXXXX NUGGETS, LLC, a Delaware
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limited liability company ("Xxxxx Nuggets"), XXXXX ARENA, LLC, a Delaware
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limited liability company ("Xxxxx Arena"), and COLORADO SPORTS AND
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ENTERTAINMENT, INC., a Delaware corporation ("Colorado Sports" and collectively
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with Xxxxx Avalanche, Xxxxx Nuggets and Xxxxx Arena, "Purchasers"). All
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capitalized terms used herein but not otherwise defined herein have the meanings
given to such terms in the Agreement (as herein defined).
RECITALS
A. The parties hereto are the parties to that certain Purchase and
Sale Agreement, dated as of July 27, 1999, as amended by First Amendment to
Purchase and Sale Agreement, dated as of October 14, 1999 (the "Agreement").
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B. The parties to the Agreement desire to amend the Agreement as set
forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing recitals, and for
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Elimination of Closing Period Payment and Establishment of
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Escrows. (A) Section 2.6 of the Agreement is hereby deleted in its
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entirety and replaced with the following:
2.6 Construction Claims Escrow; AEG Escrow. (a) Immediately after the
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Closing, AEG shall establish an interest bearing escrow account (which
interest shall be for the benefit of AEG) in favor of Purchasers in an
initial amount equal to $1,500,000 (the "Construction Claims Escrow"),
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which escrow account shall be subject to the terms and conditions of an
escrow agreement in a form reasonably acceptable to Purchasers (the
"Construction Claims Escrow Agreement"). The Construction Claims Escrow
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Agreement shall provide that (i) the Construction Claims Escrow shall be a
source of payment for aggregate costs for the initial financing and the
development and completion of construction of the Pepsi Center in
accordance with the final as-built plans and specifications currently being
prepared by the Architect and agreements existing as of the date hereof
(including the costs and expenses (including reasonable attorneys' fees) in
connection with any dispute relating to such costs) in excess of
$191,083,765, which consists of the amounts set forth in detail on Exhibit
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A attached hereto (any amounts in excess of such amount expended for
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substantially similar purposes as set forth on Exhibit A are referred to
herein as "Overrun Amounts") and (ii) that Seller and Purchasers shall
cooperate in the settlement of any such Overrun Amounts. Purchasers and
Seller agree that their cooperation provided for in clause (ii) of the
preceding sentence will be facilitated by the retention of the current
senior executives of Ascent Arena Company for the purpose of settling any
Overrun Amounts. Purchasers and Seller agree that all amounts paid to
Xxxxxxx X. Xxxxxx if he elects to terminate his employment agreement as a
result of the transactions contemplated by the Agreement (whether in
settlement of such agreements or otherwise) (but not to exceed the amount
due under such agreement) shall be deemed to be Overrun Amounts (such
payments collectively referred to as "Executive Payments"). If there are
Overrun Amounts which AEG and Purchasers have agreed must be paid and are,
in the aggregate, less than $3,000,000, then Purchasers shall deposit into
the Construction Claims Escrow an amount equal to one-half of such Overrun
Amount(s) and the escrow agent shall be instructed by Purchasers and AEG
(or representatives thereof) to pay from the Construction Claims Escrow the
Overrun Amount to the payee thereof. If there are additional Overrun
Amounts which AEG and Purchasers have agreed must be paid, then AEG and
Purchasers shall each deposit into the Construction Claims Escrow an amount
equal to one-half of such Overrun Amount(s) and the escrow agent shall be
instructed by Purchasers and AEG (or representatives thereof) to pay from
the Construction Claims Escrow the Overrun Amount to the payee thereof.
Any amount remaining in the Construction Claims Escrow after the earlier of
(i) the final settlement of all claims related to the financing,
development and construction of the Pepsi Center and (ii) the second
anniversary of the Closing Date, shall be distributed to AEG; provided that
such escrow arrangement shall remain until the final settlement of claims
not resolved that were asserted prior to such second anniversary, except
that such escrow arrangement shall remain until any claims or disputes for
Executive Payments are resolved. Through the second anniversary of the
Closing, the Purchasers, on the one hand, and AEG, on the other hand, agree
to bear equally all Overrun Amounts in excess of the amount of the
Construction Claims Escrow or fund the Construction Claims Escrow. In the
event there is a dispute between Seller and Purchasers regarding the
settlement of any Overrun Amount, the parties agree to cooperate for a
reasonable period to resolve such dispute, including, if requested by
Seller, negotiation of such dispute between Xxxxxx X. Xxxxx and the most
senior executive officer of AEG. If as a result of such cooperation and
negotiation no agreement is reached, Purchasers' determination as to how
such claim should be resolved shall control.
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(b) Immediately after the Closing, AEG shall establish and fund an
interest bearing escrow account in favor of Purchasers in an amount equal
to $5,000,000 (the "AEG Escrow"), which escrow account shall be subject to
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the terms and conditions of an escrow agreement in a form reasonably
acceptable to AEG and Purchasers (the "AEG Escrow Agreement"). The AEG
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Escrow Agreement shall provide that any of the Purchasers may withdraw at
any time or from time to time from the AEG Escrow for the following
purposes: (a) payment of aggregate costs for the financing, development and
construction of the Pepsi Center in excess of $191,083,765; and (b) payment
of certain costs and/or recovery of certain revenue shortfalls suffered by
Purchasers in the operations of the Pepsi Center, Nuggets or Avalanche.
Seller agrees not to challenge the validity, appropriateness or timing of
any withdrawals by Purchasers from the AEG Escrow and hereby waive any
claim with respect thereto. Purchasers agree not to make any claims
pursuant to Sections 8.1 or 8.3 of this Agreement against any of the
Sellers or LDA until such time as the AEG Escrow has been reduced to zero,
after which the provisions of the Agreement shall govern any such further
claims.
(B) The last sentence of Section 2.5 of the Agreement is hereby
deleted. The words, "plus the Closing Period Payment, if any" are hereby
deleted from the first sentence of Section 2.5 of the Agreement. The
words, "and the portion of any Closing Period Payment apportioned to AEG
pursuant to Section 2.5" in Section 4.3(a)(iii) are hereby deleted. The
words, "and the portion of any Closing Period Payment apportioned to LDA
pursuant to Section 2.5" in Section 4.3(b)(i) are hereby deleted.
2. Amendment Regarding Closing. Section 4.1 is hereby amended (i) by
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inserting the words "or receipt of reasonably acceptable assurances that
such conditions will be satisfied on or prior to such second Business Day"
immediately prior to the clause, "or at such other place or at such other
time or on such other date as the parties may mutually agree upon in
writing . . ."; and (ii) by adding the following sentence at the end of
Section 4.1: "Seller and Purchasers agree to use their reasonable best
efforts to ensure that reasonable assurances will have been received in a
timely manner for the Closing to occur at noon Denver time on November 3,
1999."
3. Amendments Regarding Certain Conditions. (a) Section 7.1(i) of
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the Agreement is hereby deleted in its entirety and replaced with the
following:
The City Consent shall have been obtained; provided that if the terms
of such consent include a requirement that Xxxxxx X. Xxxxx and/or any of
the Purchasers provide a guaranty to the City that such guaranty (and any
related terms and conditions) be in a form that is acceptable to Xxxxxx X.
Xxxxx and the Purchasers in their sole and absolute discretion; provided
further, that guaranties by Xxxxxx X. Xxxxx and Xxxxx Sports Holdings, LLC
in the form of Exhibit E to the Arena Agreement shall be deemed acceptable
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to Xxxxxx X. Xxxxx and the Purchasers.
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(b) Section 7.1(l) of the Agreement is hereby deleted in its entirety
and replaced with the following:
(l) Purchaser must have received (i) reissues to the existing
title insurance policies on the Arena Land (fee and leasehold)
substantially in the form of Proforma Policies reasonably acceptable
to Purchasers; provided that such policies shall be acceptable so long
as such fee and leasehold are insured and any encumbrances set forth
in such policies would not, in Purchasers' reasonable judgment, have a
material and adverse effect on the value or use of the Arena Land, and
(ii) a title insurance policy covering the Development Property
substantially in the form of a Proforma Policy reasonably acceptable
to Purchasers; provided that such policy shall be acceptable so long
as the Purchasers' interests in the Development Property are insured
and any encumbrances set forth in such policy would not, in
Purchasers' reasonable judgment, have a material and adverse effect on
the value, current use or proposed use of the Development Property.
(c) Section 7.2(f) of the Agreement is hereby amended by adding
Purchaser's acknowledgment and agreement that, in order to satisfy Seller's
condition contained therein, Xxxxxx X. Xxxxx and Xxxxx Sports Holdings, LLC
agree to enter into guaranties to the City in a form that is acceptable to
Xxxxxx X. Xxxxx and the Purchasers in their sole and absolute discretion;
provided further, that a guaranty in the form of Exhibit E to the Arena
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Agreement shall be deemed acceptable to Xxxxxx X. Xxxxx and the Purchasers.
(d) Section 7.2(k) of the Agreement is hereby deleted in its entirety and
replaced with the following:
The City Consent shall have been obtained; provided that if the terms
of such consent include a requirement that Xxxxxx X. Xxxxx and/or any
of the Purchasers provide a guaranty to the City that such guaranty
(and any related terms and conditions) be in a form that is acceptable
to Xxxxxx X. Xxxxx and the Purchasers in their sole and absolute
discretion; provided further, that guaranties by Xxxxxx X. Xxxxx and
Xxxxx Sports Holdings, LLC in the form of Exhibit E to the Arena
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Agreement shall be deemed acceptable to Xxxxxx X. Xxxxx and the
Purchasers.
4. Amendments to Indemnity Baskets. Section 8.1(b) of the Agreement
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is hereby amended by deleting the first two sentences of such Section
8.1(b) and replacing them with the following:
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"Notwithstanding any other provisions of this Section 8.1 and except
as otherwise set forth herein, Seller shall not be required to make any
indemnification payment for Losses unless and until the aggregate amount of
all Losses arising under Section 8.1 exceed $500,000 with respect to
Avalanche LLC and $1,500,000 with respect to Nuggets LP, Ascent Sports, the
Development Property, Mountain Mobile and the Ascent Arena Entities, taken
as a whole (each, a "Basket"), at which point Seller shall indemnify the
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Purchaser Indemnitees for all Losses in excess of the Basket; provided,
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however, that (i) only individual claims in excess of $20,000 will be
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counted toward the Basket amounts, and (ii) Purchasers shall not be
entitled to indemnification hereunder for any claims under $20,000, whether
or not the Basket has been exceeded. Except as otherwise set forth herein,
the maximum aggregate liability of Seller to all Purchaser Indemnitees for
all Losses shall be limited to $13,500,000 with respect to the Avalanche,
and $31,500,000 with respect to Nuggets LP, the Development Property,
Mountain Mobile and the Ascent Arena Entities, in the latter case without
giving effect to any amounts paid from the Construction Claims Escrow."
5. Drop Dead Date. Section 9.2 of the Agreement is hereby amended
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by replacing the reference to "October 31, 1999" therein with "November 10,
1999".
6. Deposits. Sellers agree that the $806,639 previously paid by AEG
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to CEAVCO as deposits on behalf of the Purchased Entities, that are (a)
repayable by CEAVCO to AEG under the relevant agreements and (b) included
in the intercompany payable from such entities to AEG shall be offset by
Purchasers at Closing; provided, however, that if CEAVCO fails to repay any
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such amounts to AEG and instead credits such amounts to the benefit of the
Acquired Entities, the Purchasers shall be obligated to pay such amounts to
AEG. AEG also agrees that the deposit in the amount of $92,500 paid by AEG
to the Arena Company with respect to AEG's suite license with the Arena
Company that is being assigned to Purchasers shall not be refunded to AEG.
7. AEG Indemnification for Certain Prior Agreements. AEG agrees to
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indemnify and hold harmless the Purchaser Indemnitees from any and all
Losses, including, but not limited to, liabilities to the NHL or NBA,
arising out of (a) any agreements between AEG or any of its affiliates and
Xxxxxxx and Xxxxx Xxxxxx or any entities that they control, and (b) any
claims by Xxxxx Xxx in connection with the Arena Company's agreement with
Xxxx Xxxxxxx to perform at the Pepsi Center on December 31, 1999. The AEG
indemnification set forth in the previous sentence shall not be subject to
the first two sentences of Section 8.1(b) of the Agreement.
8. Vesting of Employees of the Acquired Entities. Sellers agree that
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all employees of the Acquired Entities immediately after the Closing who
participated in employee benefit plans of the Sellers immediately prior to
the Closing shall be fully
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vested in all such plans as of the Closing, including, without limitation,
the 1995 Ascent Entertainment Group Key Employee Stock Plan. AEG shall give
all such employees written notice of such vesting promptly after the
Closing, but in no event later than November 30, 1999.
9. Employee Benefits Matters. Seller hereby acknowledges and agrees
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that the employee benefit plans established by Purchasers as previously
disclosed to Seller, including, without limitation, with respect to the
changes to the Acquired Entities' benefit plans that will occur on November
1, 1999 and the changes to the policies of certain Acquired Entities with
respect to provision of sporting event tickets, shall not constitute a
breach of the obligations of Purchasers contained in Section 10.6(b) of the
Agreement.
10. NHL Sphere of Influence Issue. Seller shall cooperate with
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Purchasers in connection with, and take all reasonable efforts to support
in favor of the Avalanche and Purchasers, the resolution of the Avalanche's
pending appeal to the Commissioner of the NHL regarding the Avalanche's
television rights sphere of influence, as recognized by the NHL.
Purchasers agree to be bound by the final decision of the Commissioner of
the NHL and waive any rights that Purchasers might otherwise be able to
claim under the Agreement with respect thereto, including, without
limitation, with respect to any diminution in the value of the Avalanche's
broadcast rights as a result thereof.
11. Interest on Post-Closing Funds. Purchasers acknowledge that
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Seller has held certain of the Post-Closing Funds for the benefit of the
Acquired Entities in Seller's interest bearing accounts since June 30,
1999, the deemed date of Closing, as a result of which Seller agrees to pay
Purchasers at Closing interest on such Post-Closing Funds at a rate of 6%
per annum.
12. No Interest on Inter-Company Debt. Notwithstanding anything
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contained in the Agreement to the contrary, Purchasers shall not be
obligated to pay Seller interest on any debts or other obligations payable
to or receivable from or among the Purchased Entities.
13. Certain Tax Matters. AEG will cause a Section 754 election to
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be made pursuant to the Code in all final partnership tax returns for the
Purchased Entities. AEG agrees to recognize as taxable income in such
final tax returns 100% of the pre-paid season ticket revenues for the 1999-
2000 seasons; provided, however, that such recognition shall not be
required if the Seller would incur additional federal income tax liability
or potential penalties as a result thereof.
14. Seller Security for Claims. Seller will not be required to
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provide any security for its performance under the Agreement; provided,
however, that in the event of (i) a sale or disposition by Seller of all or
substantially all of its assets, (ii)
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the merger or other transaction pursuant to which the shareholders which
currently have voting control of Seller no longer have such control, or
(iii) a plan of dissolution or liquidation is approved by the Board or
stockholders of Seller, Seller will provide security for the benefit of
Purchaser (in the form of escrow, letter of credit, or other similar
arrangement) in an amount reasonably agreed by the parties that is
sufficient to cover all current and reasonably foreseeable claims, which
security will remain in place until there are no claims reasonably
foreseeable by Purchasers remaining against Seller under the terms and
conditions of the Agreement, including applicable survival periods;
provided, however, that Purchasers acknowledge that such amount, together
with all amounts that AEG has previously funded into the Construction Claim
Account, shall not exceed $3,500,000 unless such excess amounts are
reasonably required in respect of then existing claims or claims that
Purchaser then reasonably anticipates may be asserted. Notwithstanding the
foregoing, if (i) or (ii) above occurs Seller will not be required to
provide any security hereunder if a successor or other entity, the credit-
worthiness of which as reasonably determined by Purchasers is no worse than
the credit-worthiness of AEG immediately following the Closing, agrees to
assume or guaranty Seller's obligation under the Agreement pursuant to an
agreement reasonably acceptable to Purchaser.
15. Captions. The captions in this Amendment are included for
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convenience of reference only and shall be ignored in the construction or
interpretation hereof.
16. Severability. If any provision of this Amendment, or the
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application thereof to any Person, place or circumstance, shall be held by
a court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Amendment and such provisions as applied to other
Persons, places or circumstances shall remain in full force and effect only
if, after excluding the portion deemed to be unenforceable, the remaining
terms shall provide for the consummation of the transactions contemplated
hereby in substantially the same manner as originally set forth at the
later of the date this Amendment was executed or last amended.
17. Governing Law. This Amendment shall be construed in accordance
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with and governed by the internal laws (without reference to choice or
conflict of laws) of the State of Colorado.
18. Counterparts; Effectiveness. This Amendment may be signed in
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any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. Except as expressly amended hereby, the terms and conditions of
the Agreement shall remain in full force and effect. The Agreement, as
amended by this Amendment, shall be binding upon the parties hereto and
their successors and permitted assigns. This Amendment shall be effective
as of the date first written above.
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Except as expressly set forth herein, the terms and conditions of the
Agreement shall remain in full force and effect.
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COUNTERPART SIGNATURE PAGE TO SECOND AMENDMENT
TO PURCHASE AND SALE AGREEMENT AMONG ASCENT
ENTERTAINMENT GROUP, INC., ASCENT SPORTS HOLDINGS,
INC., LIBERTY DENVER ARENA LLC, XXXXX AVALANCHE,
LLC, XXXXX NUGGETS, LLC, XXXXX ARENA, LLC AND
COLORADO SPORTS AND ENTERTAINMENT, INC.
DATED AS OF OCTOBER __ 1999
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers or managers as of the
day and year first above written.
AEG:
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ASCENT ENTERTAINMENT GROUP, INC.,
a Delaware corporation
By:__________________________________
Name:________________________________
Title:_________________________________
HC:
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ASCENT SPORTS HOLDINGS, INC.,
a Delaware corporation
By:__________________________________
Name:________________________________
Title:_________________________________
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COUNTERPART SIGNATURE PAGE TO SECOND AMENDMENT
TO PURCHASE AND SALE AGREEMENT AMONG ASCENT
ENTERTAINMENT GROUP, INC., ASCENT SPORTS HOLDINGS,
INC., LIBERTY DENVER ARENA LLC, XXXXX AVALANCHE,
LLC, XXXXX NUGGETS, LLC, XXXXX ARENA, LLC AND
COLORADO SPORTS AND ENTERTAINMENT, INC.
DATED AS OF OCTOBER __ 1999
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers or managers as of the
day and year first above written.
XXXXX AVALANCHE::
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XXXXX AVALANCHE, LLC,
a Delaware limited liability company:
By: Xxxxx Sports Holdings, LLC
By:____________________________
Xxxxxx X. Xxxxx,
Managing Member
XXXXX NUGGETS::
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XXXXX NUGGETS, LLC,
a Delaware limited liability company
By: Xxxxx Sports Holdings, LLC
By: ________________________
Xxxxxx X. Xxxxx,
Managing Member
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COUNTERPART SIGNATURE PAGE TO SECOND AMENDMENT
TO PURCHASE AND SALE AGREEMENT AMONG ASCENT
ENTERTAINMENT GROUP, INC., ASCENT SPORTS HOLDINGS,
INC., LIBERTY DENVER ARENA LLC, XXXXX AVALANCHE,
LLC, XXXXX NUGGETS, LLC, XXXXX ARENA, LLC AND
COLORADO SPORTS AND ENTERTAINMENT, INC.
DATED AS OF OCTOBER __ 1999
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers or managers as of the
day and year first above written.
XXXXX ARENA::
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XXXXX ARENA, LLC.
a Delaware limited liability company
By: Xxxxx Sports Holdings, LLC
By: __________________________
Xxxxxx X. Xxxxx,
Managing Member
COLORADO SPORTS:
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COLORADO SPORTS AND
ENTERTAINMENT, INC.,
a Delaware corporation
By:___________________________________
Xxxxxx X. Xxxxx,
President and Chief Executive Officer
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COUNTERPART SIGNATURE PAGE TO SECOND AMENDMENT
TO PURCHASE AND SALE AGREEMENT AMONG ASCENT
ENTERTAINMENT GROUP, INC., ASCENT SPORTS HOLDINGS,
INC., LIBERTY DENVER ARENA LLC, XXXXX AVALANCHE,
LLC, XXXXX NUGGETS, LLC, XXXXX ARENA, LLC AND
COLORADO SPORTS AND ENTERTAINMENT, INC.
DATED AS OF OCTOBER __ 1999
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers or managers as of the
day and year first above written.
LDA:
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LIBERTY DENVER ARENA, LLC,
a Delaware limited liability company
By: LMC Denver Arena, Inc.,
a Delaware corporation, its sole member
By:_______________________________
Name:____________________________
Title: _____________________________
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Exhibit A
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[This Exhibit would consist of column A on the attached status report.]
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