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EXHIBIT 10.3
AMENDMENT NO. 2
TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT (this "Amendment") is
entered into as of March 30, 2001, among The Basketball Club of Seattle, LLC, a
Washington limited liability company ("Buyer"), The Xxxxxxxx Group, Inc., a
Delaware corporation ("Xxxxxxxx"), Xxxxxxxx Media Group, Inc. (formerly AK Media
Group, Inc.), a Washington corporation ("AK Media"), SSI, Inc., a Washington
corporation ("SSI"), Full House Sports & Entertainment, Inc., a Washington
corporation ("FHSE") (Xxxxxxxx, AK Media, SSI and FHSE, collectively, the
"Sellers") and Xxxxxxxx Seattle Storm, Inc., a Washington corporation.
BACKGROUND
A. Buyer and the Sellers are parties to that certain Asset Purchase
Agreement dated as of January 11, 2001, as amended pursuant to that certain
Amendment No. 1 to Asset Purchase Agreement dated as of March 22, 2001 (the
"Agreement"), pursuant to which Buyer will buy from the Sellers certain assets
more particularly described therein. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Agreement.
B. Buyer and Sellers wish to make certain modifications to the Agreement
as hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. Addition of Xxxxxxxx Seattle Storm, Inc. as a Party. The Parties agree
that Xxxxxxxx Seattle Storm, Inc. shall be a party to the Agreement as amended
by this Amendment and included in the definition of "Sellers" thereunder, the
same as if Xxxxxxxx Seattle Storm, Inc. had executed the Agreement on the
original date of execution of the Agreement.
2. Amendment of Schedule 6.1(s). Schedule 6.1(s) is amended to remove all
items listed thereon except the lien of First Union National Bank, as agent, and
any other references to such liens (such removed items, the "Office Equipment
Lease Liens").
3. Amendment of Section(b)(v) of Schedule 1.1 to the Agreement (Assumed
Contracts). Buyer and the Sellers agree that Section (b)(v) of Schedule 1.1 to
the Agreement is hereby amended to remove the Contract for Professional Services
between City of Tacoma and Full House Sports and Entertainment, Inc. dated as of
December 14, 1999 ("Tacoma Dome Contract"). The Agreement is hereby amended to
remove any and all other references to the Tacoma Dome Contract. Buyer and the
Sellers agree that Section (b)(v) of Schedule 1.1 to the Agreement is hereby
amended to add to subsection (b)(v)(7) thereof the lease agreements relating to
the Office Equipment Lease Liens.
4. Prorations Schedule and Accounts Receivable Schedule. The Schedule of
Prorations attached hereto as EXHIBIT A is hereby substituted as Schedule 1.3(b)
to the Agreement. The
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Schedule of Accounts Receivable attached hereto as EXHIBIT B is hereby
substituted as Schedule 5.3 to the Agreement.
5. Addition of List of Tangible Personal Property to Schedule 1.1.
Schedule 1.1 to the Agreement is hereby amended to add to Section (b)(ii) of
Schedule 1.1 the tangible personal property listed on EXHIBIT C hereto.
6. Xxxxxx Advertising Contract Settlement Letter. Whereas, AK Media and
SSI have entered into a letter agreement with Xxxxxx Brewing Company ("Xxxxxx"),
dated as of March 22, 2001 (the "Xxxxxx Letter Agreement") which sets forth the
agreement among the parties thereto regarding resolution of certain shortfalls
in the television ratings performance delivered by AK Media and SSI relative to
the ratings performance guarantees for the 1999-2000 and 2000-2001 NBA seasons
set forth in that certain Advertising Rights Agreement, dated September 1, 1998,
among Xxxxxx, AK Media and SSI (the "Xxxxxx Advertising Agreement"). Section (v)
of Schedule 1.1 to the Agreement is hereby amended to add the Xxxxxx Letter
Agreement. The parties agree that, pursuant to Section 1.3(b) of the Agreement,
the obligations under the Xxxxxx Letter Agreement shall be prorated between the
Buyer and the Sellers such that the only obligations under the Xxxxxx Letter
Agreement that will be allocated to Buyer in such proration shall be obligations
which relate to any shortfall of the 2000-2001 NBA season's ratings below the
revised ratings guarantee of 3.0 MMA-34 set forth in the Xxxxxx Letter
Agreement, but only such obligations which are attributable to that portion of
the 2000-2001 NBA season which falls after the Closing (as defined in the
Agreement).
7. Excise Taxes. Buyers shall promptly file the Washington Real Estate
Excise Tax Affidavit Return and pay the tax due of $77,324.98, which amount
shall be deducted from the Purchase Price.
8. Interest Payment. Buyer agrees that, as soon as practicable following
the transfer by Buyer to Sellers of the Cash Consideration (as defined in the
Agreement), Buyer shall pay to Sellers the amount of interest that accrued on
the Equity cash (as defined below) for the period of time from 12:01 a.m.
Seattle time on Sunday April 1, 2001 until the time that the Equity Cash is wire
transferred to the Sellers. "Equity Cash" means the portion of the Cash
Consideration that is being funded by equity investments received by Buyer from
its members, and which is approximately $128,241,670.58.
9. Governing Law; Counterparts. The internal laws of the State of
Washington (irrespective of its choice of law principles) will govern the
validity of this Amendment, and this Amendment may be executed in counterparts
each of which shall be deemed an original and all of which shall constitute one
instrument.
10. No Other Modifications. Except as otherwise expressly set forth in
this Amendment, the Agreement shall remain in full force and effect without any
modification thereto. This Amendment shall be deemed a part of the Agreement for
all purposes.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.
BUYER: THE BASKETBALL CLUB OF SEATTLE, LLC
By: /s/ Xxxxxx Xxxxxxx
------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman of the Board
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
SELLERS:
THE XXXXXXXX GROUP, INC. XXXXXXXX MEDIA GROUP, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
------------------------------- ---------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Co-President Title: President
FULL HOUSE SPORTS & ENTERTAINMENT, INC. XXXXXXXX SEATTLE STORM, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
------------------------------- ---------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: President Title: President
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SSI, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
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Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: President
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EXHIBIT A
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FULL HOUSE SPORTS & ENTERTAINMENT
PLAYER COMPENSATION
ESTIMATED AT 3/31/2001 0.85
CURRENT YEAR A/C 61660/61690 AMOUNT PAID
CONTRACT EXPENSE THRU THROUGH
Name AMOUNT 03/31/01 03/31/01
----------------------------------- ------------ --------------- -----------
Xxx Xxxxx 9,315,000.00 7,951,829.27 7,762,500.00
Xxxxx Xxxxx 4,320,000.00 3,687,804.88 3,600,000.00
Xxxxxxx Xxxxx 611,000.00 521,585.37 509,166.70
Xxxxxx Xxxxxxx 1,000,000.00 291,693.02 291,693.02
Xxxxxxx Xxxxx 11,500,000.00 9,817,073.17 9,583,333.40
Cash Trade to Phoenix 2,000,000.00 1,707,317.07 2,000,000.00
Xxxxxxx Xxxxx 3,923,000.00 3,348,902.44 3,923,000.00
Xxxx Xxxxx 29,324.00 29,324.00 29,324.00
Xxxxxxx Xxxxx 1,074,720.00 917,443.90 912,266.70
Xxxxxx XxXxx 1,250,000.00 1,067,073.17 1,062,500.00
Xxxxxxx Xxxxxxx 316,969.00 270,583.29 264,140.90
Xxxxx Xxxxxxxxx 990,000.00 845,121.95 838,750.00
Xxxx Xxxxxx 10,000,000.00 8,536,585.37 8,333,333.40
Xxxxxxxx Xxxxxxxx 550,000.00 469,512.20 458,333.40
Xxxxx Xxxxxxx 1,000,000.00 853,658.54 833,333.40
Xxxxx Xxxxxxxxxx 316,969.00 270,583.29 264,140.90
-----------------------------------------------------
48,196,982.00 40,586,090.92 40,665,815.82
Xxxxxx'x Xxxxx 00-00 149,843.13 127,914.87 75,324.63
Xxxxxx signing bonus 1,071,429.00 914,634.51 7,500,000.00
Xxxxxx Xxxxxxx Trade 638,500.00 545,060.98
Minimum Player Salary Funding 425,000.00 362,804.88
Minimum Player Salary Reimbursement (451,500.00) (385,426.83)
Xxxx Xxxxxx bonus 1,000,000.00 853,658.54
Xxx Xxxxx bonus 810,000.00 691,463.41
Xxxxx Xxxxxx agreement
-----------------------------------------------------
Total 51,840,254.13 43,696,201.28 48,241,140.45
=====================================================
FULL HOUSE SPORTS & ENTERTAINMENT
PLAYER COMPENSATION
ESTIMATED AT 3/31/2001
A/C 11910 A/C 31480 A/C 14120 A/C 31690
PREPAID AT ACCRUED AT PREPAID AT ACCRUED AT
Name 03/31/01 03/31/01 03/31/01 03/31/01
----------------------------------- ---------- ---------- ---------- ----------
Xxx Xxxxx -- (189,329.27)
Xxxxx Xxxxx -- (87,804.88)
Xxxxxxx Xxxxx -- (12,418.67)
Xxxxxx Xxxxxxx -- --
Xxxxxxx Xxxxx -- (233,739.77)
Cash Trade to Phoenix 292,682.93 --
Xxxxxxx Xxxxx 574,097.56 --
Xxxx Xxxxx -- --
Xxxxxxx Xxxxx -- (5,177.20)
Xxxxxx XxXxx -- (4,573.17)
Xxxxxxx Xxxxxxx -- (6,442.39)
Xxxxx Xxxxxxxxx -- (6,371.95)
Xxxx Xxxxxx -- (203,251.97)
Xxxxxxxx Xxxxxxxx -- (11,178.80)
Xxxxx Xxxxxxx -- (20,325.14)
Xxxxx Xxxxxxxxxx -- (6,442.39)
-------------------------------------------------------------------------
866,780.49 (787,055.59) -- --
Xxxxxx'x Suite 00-01 -- (52,590.24)
Xxxxxx signing bonus 1,071,429.00 -- 1,228,220.51
Xxxxxx Xxxxxxx Trade -- (545,060.98)
Minimum Player Salary Funding -- (362,804.88)
Minimum Player Salary Reimbursement -- 385,426.83
Xxxx Xxxxxx bonus -- (853,658.54)
Xxx Xxxxx bonus -- (691,463.41)
Xxxxx Xxxxxx agreement (1,536,249.40)
-------------------------------------------------------------------------
Total 1,938,209.49 (2,362,145.83) 1,228,220.51 (2,081,310.38)
=========================================================================
A ----------------------------------------------------------->
SUM OF A = (1,277,026.21)
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EXHIBIT B
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SCHEDULE 5.3
RECEIVABLES COLLECTABLE BY BUYER AND PAYABLE TO SELLER FROM
COLLECTIONS (ESTIMATED AT MARCH 31, 2001)
Sponsorship receivables, billed 4,968,455.20
Sponsorship receivables, unbilled (clearing account) (432,952.19)
Suite receivables, gross 133,923.85
Catering receivables 18,685.10
1995-1999 State B&O Tax audit receivable 200,000.00
NBA Properties, Inc. receivables 824,680.00
Concession receivable 553,861.90
National Broadcast Contract receivable:
Balance due 9/30/2000 1,000,000.00
2000-2001 Season due (58% of NBC&Turner) 13,324,920.00
Payments from 10/1/2000 to 3/31/2001 (12,733,000.00) 1,591,920.00
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7,858,573.86
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