SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 0-27192
ASCENT ENTERTAINMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1930707
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Tabor Center
1200 Seventeenth Street, Suite 1000
Denver, Colorado 80202
(Address of principle executive office)
(303) 572-0381
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve (12) months (or for such
shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes __ No X
The number of shares outstanding of the Registrant's Common Stock as
of May 10, 1996 was 29,752,000 shares.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ASCENT ENTERTAINMENT GROUP, INC.
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
1996 1995
---- ----
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents................... $ 2,300 $ 11,012
Receivables, net ........................... 36,071 41,331
Other ...................................... 12,118 15,255
---------- ---------
Total current assets.................... 50,489 67,598
---------- ---------
Property and equipment, net ..................... 236,911 220,602
Franchise rights, net............................ 106,757 107,962
Goodwill, net.................................... 48,718 49,803
Investments...................................... 15,059 6,628
Other assets..................................... 53,742 52,420
---------- ---------
Total Assets .................................... $511,676 $505,013
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt ............................ $31,500 $ -
Accounts payable and accrued liabilities.... 46,333 43,172
Payable to COMSAT........................... 1,950 7,217
Deferred income............................. 8,666 35,435
Other ...................................... 262 207
--------- ---------
Total current liabilities............... 88,711 86,031
--------- ---------
Long-term debt................................... 72,000 70,000
Deferred income taxes............................ 7,616 4,436
Other long-term liabilities...................... 13,668 13,843
--------- ---------
Total liabilities...................... 181,995 174,310
--------- ---------
Minority interest................................ 28,019 27,867
--------- ---------
Stockholders' equity:
Common stock................................ 297 297
Additional paid-in capital.................. 303,771 303,771
Accumulated deficit......................... (5,574) (1,232)
Unrealized gain on available for
sale securities, net of taxes............... 3,168 -
--------- ---------
Total stockholders' equity............. 301,662 302,836
--------- ---------
Total Liabilities and Stockholders' equity........ $511,676 $505,013
========= =========
See accompanying notes to these condensed consolidated financial
statements.
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ASCENT ENTERTAINMENT GROUP, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Quarter Ended March 31,
1996 1995
Revenues......................................... $69,510 $47,375
Operating expenses:
Cost of services............................ 55,503 37,057
Depreciation and amortization............... 15,835 11,976
General and administrative.................. 2,220 2,286
------- -------
Total operating expenses.................... 73,558 51,319
------- -------
Operating loss................................... (4,048) (3,944)
Other income (expense), net...................... (308) (1,480)
Interest expense................................. (1,632) (52)
------- -------
Loss before taxes and minority interest.......... (5,988) (5,476)
Income tax benefit............................... 1,788 1,731
------- -------
Loss before minority interest.................... (4,200) (3,745)
Minority interest................................ (142) 274
------- -------
Net loss......................................... $(4,342) $(3,471)
======= =======
Net loss per share............................... $ (0.15) $ (0.14)
======= =======
Weighted Average number of
common shares outstanding........................ 29,752 24,000
======= =======
See accompanying notes to these condensed consolidated financial
statements.
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ASCENT ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Cash Flow Statements
(Unaudited)
(In thousands)
Quarter ended March 31,
1996 1995
Cash flows from operating activities:
Net loss...................................... $(4,342) $(3,471)
Adjustment for depreciation and amortization.. 15,835 11,976
Changes in operating assets and liabilities... (16,498) (1,937)
Other......................................... 494 44
------- -------
Net cash (used in) provided by operating
activities.................................. (4,511) 6,612
------- -------
Cash flows from investing activities:
Purchase of property and equipment............ (28,971) (22,347)
Investments in unconsolidated businesses...... (4,125) -
Other......................................... - (143)
------- -------
Net cash used in investing activities......... (33,096) (22,490)
------- -------
Cash flows from financing activities:
Repayment of long-term debt................... (120) (253)
Net short-term borrowings..................... 29,000 -
Net transfers from COMSAT and its subsidiaries - 17,618
Other......................................... 15 -
------- -------
Net cash provided by financing activities..... 28,895 17,365
------- -------
Net increase (decrease) in cash and cash equivalents (8,712) 1,487
Cash and cash equivalents, beginning of period..... 11,012 3,358
------- -------
Cash and cash equivalents, end of period........... $2,300 $4,845
======= =======
See accompanying notes to these condensed consolidated financial
statements.
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ASCENT ENTERTAINMENT GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. General
The accompanying unaudited condensed consolidated financial statements
have been prepared by Ascent Entertainment Group, Inc. ("Ascent" or the
"Company") pursuant to the rules and regulations of the Securities and
Exchange Commission (the "Commission"). These financial statements should
be read in the context of the financial statements and notes thereto filed
with the Commission in the Company's 1995 Annual Report on Form 10-K.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such regulations. The
accompanying condensed consolidated financial statements reflect all
adjustments and disclosures which are, in the opinion of management,
necessary for a fair presentation. All such adjustments are of a normal
recurring nature. The results of operations for the interim periods are not
necessarily indicative of the results of the entire year. Certain December
31, 1995 balance sheet amounts have been reclassified to conform with the
March 31, 1996 presentation.
2. Organization and Basis of Presentation
The accompanying financial statements include the accounts of Ascent
and its majority-owned subsidiaries which include On Command Video
Corporation ("OCV"), Ascent Network Services, Inc.("ANS")(formerly COMSAT
Video Enterprises, Inc.), the Denver Nuggets Limited Partnership
(the"Nuggets"), Beacon Communications Corp. ("Beacon") and since July 1,
1995 the Colorado Avalanche LLC ("Avalanche"). Intercompany transactions
have been eliminated.
Ascent executed an initial public offering (the"Offering") of its
common stock on December 18, 1995. Prior to the Offering, Ascent was a
wholly owned subsidiary of COMSAT Corporation ("COMSAT"). As of March 31,
1996, COMSAT continues to own a majority (80.67%) of Ascent's common stock
and continues to control Ascent. In addition, Ascent's relationship with
COMSAT is governed by agreements entered into in connection with the
Offering, including an intercompany services agreement, a corporate
agreement and a tax allocation and indemnity agreement. (See Note 5 to the
Company's 1995 financial statements.)
3. Investments and Denver Arena Development Project
As discussed in Note 15 to the Company's 1995 financial statements, on
March 28, 1996, the Company entered into an agreement with The Anschutz
Corporation ("TAC") pursuant to which the Company purchased all of TAC's
interests in the proposed arena development project in Denver and related
goodwill, rights, plans, specifications, drawings, contracts, relationships,
approvals, permits and other work product of every kind that had been generated
by the efforts of TAC and Ascent with respect to the proposed arena (the "Arena
Assets"), and TAC agreed to use reasonable efforts to facilitate the
development and construction of the proposed arena. Ascent and TAC had worked
together on the proposed arena development from early 1994 until September
1995. In consideration for TAC's interest in the Arena Assets and its
agreement to facilitate development of
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the proposed arena, Ascent paid TAC $6,600,000 in cash. On a contingent and
non-interest bearing basis Ascent agreed to pay an additional $5,000,000
and grant a paid-up suite license, both linked to the construction and
occupancy of the proposed arena. This obligation, net of discount, has been
accrued and is included in the accompanying balance sheet in short-term
debt ($2,500,000) and long-term debt ($2,000,000) at March 31, 1996.
Also pursuant to the agreement with TAC, as of March 31, 1996, Ascent
purchased all of TAC's interests in New Elitch Gardens, Ltd. ("Elitch
Gardens"), a company which owns and operates an amusement park in downtown
Denver, for $4,100,000 in cash. This purchase increased Ascent's interest
in Elitch from 13% to 26% of the outstanding partnership units.
On March 28, 1996, the Company entered into a Land Purchase Agreement
with Southern Pacific Transportation Company ("SPT") pursuant to which the
Company would purchase approximately 49 acres in Denver as the site for the
proposed arena for $20,000,000. Consummation of the transaction is subject
to several conditions, including obtaining satisfactory financing and
reaching agreements with the City and County of Denver regarding the
construction of the proposed arena and the release of the Nuggets and the
Avalanche from their current leases at McNichols Arena. The Land Purchase
Agreement also provides for SPT to effect a state-approved environmental
clean-up plan on the site, and provide continuing indemnification with
regard to certain environmental liabilities.
4. Contingencies
As discussed in Note 7 to the Company's 1995 financial statements, the
Company is party to certain legal proceedings through its ownership of the
Nuggets and Avalanche along with other NBA and NHL owners incidental to the
operations of the two professional sports leagues. Management of the
Company believes the ultimate disposition of these legal matters will not
have a material adverse effect on the financial statements of the Company.
5. Restructuring
During the third quarter of 1995, management of the Company decided to
discontinue the Satellite Cinema scheduled movie operations. As a result of
this decision, a restructuring charge of $10,866,000 was recorded in the
third quarter of 1995. The components of this restructuring charge included
a write-down of property and equipment of $5,140,000 to their estimated
salvage value, an accrual for severance costs of $1,010,000 and a charge of
$4,716,000 for costs related to contractual commitments that will not be
fulfilled. Through March 31, 1996, the Company has made total cash payments
for severance costs and contractual commitment costs totalling $2,403,000.
In December 1995, the assets and contracts relating to approximately
100,000 Satellite Cinema rooms were sold for a $4,000,000 note receivable
due in June 1996. The assets sold consisted principally of installed video
systems and related equipment inventory. Payment of the note will depend on
the buyer's ability to deploy the purchased assets profitably. Accordingly,
Ascent has not recorded the note receivable, has included the net book
value of the assets sold of $1,689,000 in
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Other Long Term Assets in the accompanying balance sheets and has not
reflected the sold assets as a disposal during the three-month period ended
March 31, 1996.
Although subject to future adjustment, management of Ascent believes
it has adequate reserves as of March 31, 1996, to complete the
restructuring plan of Satellite Cinema's operations.
During the first quarter of 1996, the Company recognized no revenues
or expenses related to Satellite Cinema operations. During the first quarter
of 1995, Satellite Cinema operations reflected revenues of $6,982,000 and an
operating loss, before allocation of general and administrative expenses, of
$1,166,000.
6. Subsequent Events
On April 19, 1996, Ascent and OCV entered into an agreement with
SpectraVision, Inc.(SpectraVision), which is currently operating under
Chapter 11 bankruptcy protection, and SpectraVision's Creditors Committee.
Pursuant to the agreement, Ascent would combine its 85 percent owned
subsidiary OCV with SpectraVision's assets, and certain of its liabilities,
to form a new company which would be 72.5 percent owned by Ascent and the
current minority shareholders of OCV. The new company would provide
pay-per-view entertainment and information services to approximately one
million hotel rooms worldwide.
The SpectraVision bankruptcy estate would receive 27.5 percent of the
new company's stock, which would be distributed through a bankruptcy plan
to SpectraVision's estate. The new company would also issue warrants to be
distributed by Ascent to purchase 13 percent of the new company's common
stock and warrants to SpectraVision's estate to purchase another 7 percent
of the stock. The transaction is subject to bankruptcy court approval, the
expiration or termination of the applicable antitrust waiting period and
other conditions.
7. New Accounting Pronouncements
As discussed in Note 1 to the Company's 1995 financial statements,
Statement of Financial Accounting Standard (SFAS) No. 123, "Accounting for
Stock-Based Compensation" was issued in 1995 and was effective beginning
January 1, 1996. SFAS No. 123 requires expanded disclosures of stock-based
compensation arrangements with employees and encourages (but does not
require) compensation cost to be measured based on the fair value of the
equity instrument awarded. Companies are permitted, however, to continue to
apply APB Opinion No. 25, "Accounting for Stock Issued to Employees", which
recognizes compensation based on the intrinsic value of the equity
instrument awarded. The Company has elected to apply APB No. 25 to its
stock based compensation awards to employees and will disclose the required
proforma effect on net income and earnings per share in the Company's 1996
annual financial statements.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Quarter Ended March 31, 1996.
ANALYSIS OF OPERATIONS
Consolidated Operations
Revenues for the first quarter of 1996 were $69.5 million, an increase
of $22.2 million or 47% over the $47.3 million in revenues for the first
quarter of 1995. While the Company's business segments both reported solid
growth in revenues during the first quarter of 1996, the significant
increase is attributable to the Entertainment segment and the inclusion of
the Avalanche, which was acquired in July 1995 and was not included in the
consolidated results until the second half of last year.
Cost of services for the first quarter of 1996 was $55.5 million, an
increase of $18.5 million or 50% over the first quarter of 1995. The
significant increase is attributable to the inclusion of the Avalanche, the
overall increase in the number of pay-per-view rooms served and the
amortization of film costs at Beacon. These increases were partially offset
by a decline in costs from the termination in 1995 of the Satellite Cinema
pay-per-view operations. The decline in margin is attributable to the
negative operating margin of Beacon and the Avalanche.
Depreciation and amortization for the first quarter of 1996 was $15.8
million, an increase of $3.9 million or 33% over the first quarter of 1995.
This increase reflects a higher installed room base and the resulting
increase in depreciation and the amortization of the intangible assets
created by the Avalanche acquisition in July 1995.
General and Administrative expenses for the first quarter of 1996 were
$2.2 million, which is consistent with general and administrative expenses
of $2.2 million for the first quarter of 1995.
Other income (expense) improved by $1.2 million in the first quarter
of 1996, as compared to the same period last year. The first quarter of
1995 included a $.9 million charge for settlement of a lawsuit brought by a
former employee of OCV.
Interest expense increased $1.6 million in the first quarter of 1996,
as compared to the first quarter of 1995. This increase is the result of
the borrowings incurred in conjunction with the Offering in December 1995
(see Note 5 to the Company's 1995 financial statements) and the additional
borrowings incurred by the Company during the first quarter of 1996 to meet
capital expenditure and investment requirements.
Income tax benefit for the first quarter of 1996 and 1995 remained
constant at $1.7 million. The decline in the effective income tax rate,
from 32% in fiscal 1995 to 30% in fiscal 1996, is primarily attributable to
the increase in taxable income of OCV during the first quarter of 1996 as
compared to the first quarter of 1995.
Minority interest reflects the (earnings) losses attributable to the
Company's 85% owned subsidiary, OCV. During the first quarter of 1996, OCV
reported earnings as compared to a loss during the first quarter of 1995.
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Segment Operating Results
As discussed in Note 12 to the Company's 1995 financial statements,
Ascent reports operating results in two segments: multimedia distribution
and entertainment. Results by segment and certain information regarding the
pay-per-view customer base and certain statistical data affecting pay-per-
view rooms follows:
Quarter Ended March 31,
(dollars in millions)
1996 1995
---- ----
Income Statement Data:
Revenues:
Multimedia Distribution...................... $32.5 $31.2
Entertainment................................ 37.0 16.1
----- -----
Total Revenues................................ 69.5 47.3
Operating Income (Loss):
Multimedia Distribution...................... 2.2 .6
Entertainment ............................... (4.0) (2.2)
----- -----
Total Segment Operating Loss.............. (1.8) (1.6)
Other Corporate........................... (2.2) (2.3)
----- -----
Total Operating Loss......................... $(4.0) $(3.9)
===== =====
Other Data:
EBITDA (1):
Multimedia Distribution.................... $13.5 $9.3
Entertainment.............................. (1.7) (1.2)
----- -----
$11.8 $ 8.1
===== =====
Capital Expenditures:
Multimedia Distribution.................... $22.0 $21.6
Entertainment.............................. 6.9 .7
----- -----
$28.9 $22.3
===== =====
OCV installed rooms On Demand Service (2).... 386,000 277,000
OCV On Demand backlog rooms (2).............. 106,000 111,000
(1) Earnings before interest expense, income taxes, depreciation and
amortization (EBITDA) is presented because it is a widely accepted
financial indicator used by certain investors and analysts to
analyze and compare companies on the basis of operating
performance. EBITDA is not intended to represent cash flows for
the period, nor has it been presented as an alternative to
operating income as an indicator of operating performance and
should not be
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considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted
accounting periods.
(2) OCV installed rooms with on demand service represents the
approximate number of hotel rooms served by OCV's on demand
pay-per-view movie system as of the end of the period. OCV backlog
represents the approximate number of hotel rooms under contract as
of the end of the period which are awaiting installation of OCV
equipment.
Multimedia Distribution
The Multimedia Distribution segment includes the results of OCV and
ANS. OCV's first quarter revenues for 1996 increased $7.4 million over last
year's first quarter. This increase was primarily attributable to growth in
total rooms served, approximately 386,000 rooms on March 31, 1996 versus
approximately 277,000 rooms one year earlier. OCV's higher revenues were
offset by a $6.9 million revenue loss due to the termination in 1995 of the
unprofitable Satellite Cinema scheduled pay-per- view operation. ANS's
revenues grew by $.8 million over the first quarter of 1995 due to an
increase in support services for network customers.
Operating Income for the segment in the first quarter of 1996 increased
by $1.6 million over that for last year's first quarter. The improvement in
operating income is primarily attributable to the elimination of Satellite
Cinema's operations, which incurred a $1.2 million operating loss in the
first quarter of 1995.
EBITDA of the Multimedia Distribution segment for the first quarter of
1996 increased by $4.2 million over EBITDA for the same quarter last year.
This increase reflects a higher installed room base and the resulting
increase in depreciation, the elimination of the Satellite Cinema
operations and the overall improvement in operating income during the first
quarter of 1996.
Capital expenditures for the segment during the first quarter of 1996
remained constant with the first quarter of 1995. OCV continued to install
approximately 8,000-10,000 rooms per month during the first quarter of
1996.
Entertainment
The Entertainment segment includes the results of the Nuggets, the
Avalanche, and Beacon. Revenues of the Entertainment segment for the first
quarter of 1996 increased by $20.9 million over the same quarter last year.
This increase is primarily due to the inclusion of the Avalanche in the
first quarter of 1996. The Avalanche, acquired in July 1995, generated
revenues of $14.8 million during the first quarter of 1996. The balance of
the increase is attributed to ticket price increases for the Nuggets
1995/1996 playing season, an increase in the number of home games played by
the Nuggets in the first quarter of 1996 as compared to the first quarter
of 1995, and the video release of The Baby-Sitters Club to the home video
market in March 1996.
Operating losses for this segment increased by $1.8 million as compared
to the losses in the first quarter of 1995. This decline is primarily
attributable to the losses incurred by the Avalanche during the first
quarter of 1996.
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EBITDA for the Entertainment segment declined by $.5 million during the
first quarter of 1996 as compared to the first quarter of 1995. This
decline primarily reflects the operating loss incurred by the Avalanche.
Capital expenditures for the Entertainment segment during the first
quarter of 1996 increased by $6.2 million over the same quarter last year.
This increase is attributable to the purchase in March 1996 of The Anschutz
Corporation interest's in the proposed arena and development project in
Denver (see Note 3 to Part I, Item I of this Form).
LIQUIDITY AND CAPITAL RESOURCES
The primary source of cash during the first quarter of 1996 was
short-term borrowings under Ascent's Credit Facility (see Note 5 of the
Company's 1995 financial statements). Cash was expended primarily for
property and equipment, including capital expenditures for the continuing
installation by OCV of on-demand systems and development of the proposed
arena in Denver. In addition, cash was expended for the additional
investment in Elitch Gardens.
The Company's working capital deficit increased by $19.8 million from
December 31, 1995 to March 31, 1996. This is attributable to a decrease in
current assets of $17.1 million. The decrease in current assets is due to
the use of cash for capital expenditures and collections of receivables.
Current liabilities, increased $2.7 million from December 31, 1995 to March
31, 1996. Significant changes in the components of current liabilities
included a reduction in deferred revenue related to both the Nuggets and
the Avalanche offset by increases in short-term borrowings under the
Company's credit facility. Receipts for season tickets and sponsorship
agreements are recorded by the Nuggets and Avalanche as deferred revenues
and recognized as games are played.
The Company has access to short-term and long-term financing at
favorable rates under its Credit Facility. At March 31, 1996, the Company
has available short-term borrowings of $76.0 million under the Credit
Facility.
As a consolidated subsidiary of COMSAT, Ascent is subject to
restrictions on its debt structure as a result of Federal Communications
Commission regulations application to COMSAT. Pursuant to the Corporate
Agreement with COMSAT, the Company has agreed not to incur any
indebtedness, other than that under the Credit Facility (and refinancings
thereof) and indebtedness incurred in the ordinary course of business which
together shall not exceed $175 million in the aggregate, without COMSAT's
consent. Further, the Company has agreed, for so long as COMSAT owns at
least 50% of the outstanding Common Stock, to utilize reasonable cash
management procedures and to use its reasonable best efforts to minimize
the Company's excess cash holdings.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Change in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
(A) On May 13, 1996, the 1996 Annual meeting of
Stockholders of Ascent was held for the following
purposes:
1. Election of two Class III Directors; and
2. Appointment of independent public accountants.
(B) The Class III Directors which were elected at the meeting
are as follows:
Robert M. Kavner
C.J. Silas
Other directors of the Company, whose term of office
continued after the meeting are as follows:
Edwin I. Colodny
Bruce L. Crockett
Charles Lyons
Charles M. Neinas
Robert G. Schwartz
(C) In connection with the matters voted on at the Annual
meeting, the following results were obtained:
Votes Cast
------------------------------------
With-
For Against held Abstentions
------------------------------------
(i) Election of Directors
Robert M. Kavner 28,793,391 0 1 0
C. J. Silas 28,793,391 0 1 0
(ii) Appointment of Deloitte & Touche, LLP as Independent
Public Accountants
28,793,391 0 0 1
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Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
No. 10 - Material Contracts
(a) 10.20 - Agreement between The Registrant and The
Anschutz Corporation.
(b) 10.21 - Land Purchase Agreement between The
Registrant and Southern Pacific
Transportation Company.
No. 27 - Financial Data Schedule
(B) Reports on Form 8-K
The Registrant filed with Commission on April 19, 1996
a Form 8-K, describing an acquisition agreement
pursuant to which Ascent, subject to certain
conditions, would combine the assets and certain
liabilities of SpectraVision, Inc. with OCV.
SIGNATURES
Pursuant to the requirements on the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Ascent Entertainment Group, Inc.
By: /s/ Wesley D. Minami
Wesley D. Minami, Vice President
Chief Financial Officer & Treasurer
By: /s/ David A. Holden
David A. Holden
Controller
Date: May 15, 1996
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AGREEMENT
AGREEMENT, dated as of March 26, 1996, between THE ANSCHUTZ
CORPORATION ('TAC"), a Kansas corporation, and ASCENT ENTERTAINMENT GROUP,
INC. ("ASCENT"), a Delaware corporation.
1. Recitals.
(a) Ascent is a subsidiary of COMSAT Corporation ("COMSAT"), and
is directly or through its subsidiaries, the owner of the Denver Nuggets
National Basketball Association franchise (the "Nuggets") and the Colorado
Avalanche National Hockey League franchise (the "Avalanche"), both of which
currently play in the McNichols Sports Arena ("McNichols") pursuant to
agreements with the City and County of Denver ("Denver") which owns and
operates McNichols.
(b) TAC is an affiliate of Southern Pacific Transportation
Corporation ("SPT") and of the owner of the Los Angeles Kings National
Hockey League franchise (the "Kings").
(c) From early 1994 through September 1995, TAC and Ascent,
either directly or through their respective affiliates, worked together for
the purpose of developing an entertainment complex in downtown Denver which
would include an arena in which the Nuggets and Avalanche would play, and a
related broadcast facility
<PAGE>
(the "Arena Complex"). On August 9, 1994, TAC and COMSAT entered
into a letter agreement (the "Letter") concerning the proposed formation of
a 50%/50% joint venture between them for the purpose of developing the
Arena Complex, describing the conditions under which the proposed joint
venture would be formed, and covering certain related matters, including
the proposed purchase from SPT of land for the Arena Complex, certain
management arrangements and proposed options for TAC to acquire interests
in a National Hockey League team to play in the Arena Complex and in the
Denver Nuggets under certain circumstances and subject to certain
conditions.
(d) Prior to the date of the Letter and, notwithstanding their
inability to satisfy all of the conditions contained in the Letter, also
subsequent to the date of the Letter, TAC and Ascent worked together to
transform the concept of an Arena Complex on the SPT land from a mere idea
which they had jointly developed to a stage at which the actual development
and construction of the Arena Complex on financially viable terms was a
real possibility. This was accomplished through several actions, including,
but not limited to, (i) forming a limited liability company called "The
Denver Arena Company, LLC" (the "LLC") by the filing of Articles of
Organization with the Secretary of State of Colorado which did enter into
agreements related to the Arena Complex, (ii) negotiating with SPT for the
acquisition of an Arena site, (iii) cooperating with SPT in developing an
environmental voluntary clean-up plan under Colorado law for the
prospective site, (iv) developing and obtaining approval from Denver for a
site plan for the Arena Complex in the Platte River Valley District, (v)
developing plans and specifications for the construction of the Arena
Complex; (vi) ascertaining the probable
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costs of the Arena Complex, working through architects,
contractors and estimators, and developing a preliminary budget, (vi)
negotiating and entering into a letter of intent with Pepsi-Cola Company
for naming rights and developing a marketing plan for corporate
sponsorships, (vii) negotiating and entering into agreements with
landowners adjoining the Arena Complex site, (viii) creating a project
budget and negotiating with prospective lenders for the Arena Complex, (ix)
negotiating with Denver for termination of the existing agreement between
Denver and the Nuggets at McNichols and for arrangements applicable to the
new proposed Arena, (x) obtaining certain rights, subject to certain
obligations, relating to parking, an exhibition site and a pedestrian
bridge as set out in an Agreement dated May 25, 1994 among TAC, COMSAT,
Elitch Gardens Company and Hensel Phelps Construction Co. (the "Elitch
Parking Agreement"), and (xi) taking other actions to facilitate the
development, financing and construction of the Arena and its related
facilities. All of the goodwill, rights, plans, specifications, drawings,
contracts, relationships, approvals, permits, and other work product of
every kind generated by the efforts of TAC and Ascent with respect to the
Arena, either taken jointly or singly, subject to the related obligations,
are referred to herein as the "Arena Assets" and are more fully described
on Exhibit A attached hereto.
(e) In a series of related transactions commencing May 25, 1994
and continuing to the date hereof, TAC and Ascent, either directly or
through their respective affiliates, have each acquired 16.5 limited
partnership units ("Elitch Units"), collectively 33 units, in Elitch
Gardens Company, a limited partnership which owns an amusement park and
parking area immediately adjacent to the site planned for the Arena.
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(f) Ascent now wishes to acquire, and TAC is willing to sell,
assign and transfer, all of TAC's right, title and interest in and to the
Arena Assets and the Elitch Units, and TAC is willing to assist Ascent in
Ascent's development and construction of the Arena Complex. However, in
light of the acquisition of the Kings and a related arena development in
Los Angeles undertaken by an affiliate of TAC, the parties want to clarify
in this Agreement that TAC's future efforts to facilitate the development
and construction of the Arena Complex will be solely in exchange for the
consideration set forth in this Agreement, and TAC shall not acquire any
future ownership interests of any nature in the Arena Assets, the Arena
Complex or any rights, interests or assets related thereto.
2. Purchase and Sale of Arena Assets; Future Services by TAC.
(a) For the consideration described herein, TAC hereby agrees to
sell, assign and transfer to Ascent, and Ascent agrees to purchase and pay
for, all of TAC's right, title and interest in and to the Arena Assets, and
TAC hereby agrees to use reasonable efforts for a period of 24 months from
the Closing Date (as defined herein) to facilitate the development and
construction of the Arena Complex by providing to Ascent such assistance
and support as Ascent reasonably requests, in writing and upon reasonable
advance notice, based on TAC's involvement prior to the date of this
Agreement, to preserve, develop and finalize the Arena Assets.
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(b) Ascent agrees at Closing to pay and provide to TAC as
consideration for all of TAC's right, title and interest in the Arena
Assets and the agreement set forth in Section 2(a), the aggregate of the
following:
(i) $6,600,000 in immediately available funds at the Closing;
(ii) $5,000,000 by Ascent's executing and delivering at Closing a
promissory note in the form attached as Exhibit B, payable to TAC in two
installments, without interest until default, as follows:
(A) $2,500,000 when and if construction of an arena to
accommodate play by the Nuggets and/or the Avalanche is commenced anywhere
in the City and County of Denver or the greater Denver metropolitan area, as
evidenced by the issuance of a building permit by the applicable governmental
entity for all or any portion of such construction; and
(B) $2,500,000 when the construction of such arena has been
completed, as evidenced by the issuance of a temporary or permanent
certificate of occupancy for such arena by the applicable governmental
entity, or the performance of a basketball or hockey game in such arena,
whichever shall first occur.
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(iii) An Agreement, in the form attached as Exhibit C, executed
by Ascent and delivered to TAC at Closing, obligating Ascent to provide to TAC
the ownership of a luxury suite, as and when the arena described in
Sections 2(b)(ii)(A) and (B) above is constructed, having no fewer than 12
permanent seats, on the lowest level of such suites constructed in such
arena and situated between the blue lines on the hockey playing surface,
fully equipped, furnished and maintained to the same standard as the
highest priced suites in the arena, excluding corporate sponsors' suites to
the extent such suites contain or receive special treatments as a result of
their owners' sponsorship of the Arena, free of all construction,
acquisition, maintenance and refurbishing costs and annual charges, for a
term equal to the greater of the longest term of any other party buying a
suite in the Arena or twenty-five years, together with season and playoff
tickets for all persons accommodated by the suite for all National Hockey
League and National Basketball Association games and other events at the
Arena for which any other suite owners receive tickets in connection with
their purchase of a suite for the term.
(iv) An Agreement, in the form attached as Exhibit D, executed by
Ascent and delivered to TAC at Closing, in which Ascent assumes and agrees
to: (A) pay all obligations and liabilities of Ascent and TAC, and each of
them and their affiliates, incurred after the Closing Date in connection
with the Arena Assets, (B) pay all obligations of Ascent and its affiliates
incurred prior to the Closing Date in connection with the Arena Assets, and
(C) pay those obligations,
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if any, incurred prior to the Closing Date by either Ascent or TAC
or their respective affiliates for the benefit of the Arena Complex and
which have not been previously paid by either Ascent or TAC or their
respective affiliates; and hold harmless and indemnify TAC against any such
liabilities. Notwithstanding the foregoing, each party shall bear its own
costs as set forth in Section 9 of this Agreement.
3. Sale and Purchase of Elitch Units.
(a) TAC agrees to sell, assign and transfer to Ascent, and Ascent
agrees to purchase and pay for 16.5 Elitch Units, subject to (A) a Partner
Pledge Agreement made as of May 1, 1995 by TAC in favor of Banque Nationale
de Paris, Los Angeles Branch, to secure in part a loan made by such bank to
Elitch Gardens Company, and (B) the terms and conditions of the partnership
agreement for Elitch Gardens Company governing transfers of limited partner
units.
(b) Ascent shall pay TAC for the Elitch Units the price of
$4,125,000 in immediately available funds at Closing.
(c) Ascent shall pay all obligations and liabilities relating to
the Elitch Units, excluding any losses of Elitch Gardens Company which may
be allocable for tax purposes for periods prior to March 31, 1996 to the
interest of TAC's affiliate in the
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Elitch Units as a limited partner under the terms of the partnership agreement
for Elitch Gardens Company, and shall indemnify TAC and hold it harmless from
such expenses.
4. Representations and Warranties of TAC. TAC represents and warrants to
Ascent as of the date of this Agreement as follows:
(a) TAC is a corporation duly organized, validly existing, and in
good standing under laws of the State of Kansas, and is duly qualified to
carry on its business in the State of Colorado.
(b) TAC has all requisite power and authority to enter into this
Agreement to sell, assign, and transfer its right, title and interest in
the Arena Assets and the Elitch Units on the terms contained in this
Agreement and to perform its other obligations under this Agreement. The
consummation of the transactions contemplated by this Agreement will not
violate, nor be in conflict with, any provision of TAC's governing
documents, or any agreement or instrument to which TAC is a party or is
bound, or any judgment, decree, order, statute, rule or regulation
applicable to TAC, violation or conflict with which would have a materially
adverse effect upon Ascent's ownership or acquisition of the Arena Assets
or the Elitch Units, or upon any of the transactions contemplated by this
Agreement; provided, however, that the transfer of the Elitch Units is
subject to the terms of the limited partnership agreement for Elitch
Gardens Company.
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly authorized
by all requisite action required under TAC's Articles of Incorporation or
Bylaws, or under any statute, ruling, law or agreement affecting the
business operations of TAC with respect to the Arena Assets or the
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Elitch Units, or by which TAC is bound, except the terms of the
limited partnership agreement for Elitch Gardens Company relating to a
transfer of the Elitch Units.
(d) This Agreement has been duly executed and delivered on behalf
of TAC, and at the Closing all documents and instruments required hereunder
to be executed and delivered by TAC shall have been duly executed and
delivered. This Agreement does, and such documents and instruments shall,
constitute legal, valid and binding obligations of TAC enforceable in
accordance with their terms, subject to the effects of bankruptcy,
insolvency, reorganization, moratorium and other laws for the protection of
creditors, as well as general principles of equity.
(e) TAC has paid those obligations incurred prior to the Closing
Date by it or its affiliates for the benefit of the Arena Complex.
5. Representations and Warranties of Ascent. Ascent represents and
warrants to TAC as of the date of this Agreement as follows:
(a) Ascent is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware, and is duly
qualified to carry on its business in the State of Colorado.
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(b) Ascent has all requisite power and authority to enter into
this Agreement to purchase and acquire the Arena Assets and the Elitch
Units on the terms contained in this Agreement and to perform its other
obligations under this Agreement. The consummation of the transactions
contemplated by this Agreement will not violate, nor be in conflict with,
any provision of Ascent's governing documents, or any agreement or
instrument to which Ascent is a party or is bound, or any judgment, decree,
order, statute, rule or regulation applicable to Ascent, violation or
conflict with which would have a materially adverse effect upon Ascent's
right to acquire the Arena Assets and the Elitch Units, or upon any of the
transactions contemplated by this Agreement; provided, however, that the
acquisition of the Elitch Units is subject to the terms of the limited
partnership agreement for Elitch Gardens Company.
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly authorized
by all requisite action required under Ascent's Certificate of
Incorporation or Bylaws, or under any statute, ruling, law or agreement
affecting the business operations of Ascent, or by which Ascent is bound,
except for the terms of the limited partnership agreement for Elitch
Gardens Company relating to transfers of Elitch Units.
(d) This Agreement has been duly executed and delivered on behalf
of Ascent, and at the Closing all documents and instruments required
hereunder to be executed and delivered by Ascent shall have been duly
executed and delivered. This Agreement does, and such documents and
instruments shall, constitute legal, valid and binding obligations of
Ascent
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enforceable in accordance with their terms, subject to the effects
of bankruptcy, insolvency, reorganization, moratorium and other laws for
the protection of creditors, as well as general principles of equity.
6. Date of Closing.
(a) Subject to the conditions stated in this Agreement, the
closing (the "Closing") of the transactions contemplated hereby shall take
place at 10:00 a.m. on March 26, 1996 (the "Closing Date").
(b) The Closing shall be held at the offices of Holme Roberts &
Owen LLC, 1700 Lincoln, Suite 4100, Denver, Colorado, or at such other
place as the parties may agree.
(c) At the Closing, the following events shall occur, each being a
condition precedent to the others and each being deemed to have occurred
simultaneously with the others:
(i) TAC shall execute and deliver to Ascent an assignment of
TAC's right, title and interest in the Arena Assets and shall cause its
affiliate, Anschutz Arena Corporation ("AAC"), to execute and deliver to
Ascent, or to such other entity as may be designated by Ascent prior to or
at Closing under the provisions of Section 7(b) hereof, an assignment of
all of the right, title and interest of AAC in the LLC.
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(ii) TAC shall execute and deliver to Ascent an assignment of
TAC's right, title and interest in the Elitch Parking Agreement.
(iii) TAC shall execute and deliver to Ascent an assignment of
TAC's right, title and interest in the Elitch Units with an effective date
of March 31, 1996.
(iv) Ascent shall deliver to TAC the consideration to be paid in
cash at Closing by wire transfer in immediately available funds to a bank
and account designated by TAC.
(v) Ascent shall execute and deliver to TAC the promissory note
in the form attached as Exhibit B.
(vi) Ascent shall execute and deliver to TAC the Agreement for a
suite at the new arena in the form attached as Exhibit C.
(vii) Ascent shall execute and deliver to TAC the Agreement
providing an assumption and indemnification in the form attached as Exhibit
D.
(viii) Ascent shall deliver to TAC an opinion of its outside
counsel in form and substance reasonably satisfactory to TAC with respect
to the due authorization and enforceability of the promissory note of
Ascent referred to above.
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(ix) Ascent, COMSAT and TAC shall execute and deliver to each
other a mutual release in the form attached as Exhibit E.
7. Further Assurances; Continuation of LLC; Limitation.
(a) After the Closing, TAC and Ascent shall execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
instruments, conveyances and documents and take such other action as may be
reasonably necessary or advisable to carry out their obligations under this
Agreement and under any exhibit, document, certificate, or other instrument
delivered pursuant hereto, or to consummate the transactions contemplated
hereby.
(b) The parties intend that Ascent's acquisition of the Arena
Assets upon Closing will not result in a termination of the LLC by
operation of law, and that Ascent shall designate at or prior to the
Closing a successor which shall irrevocably succeed to all business,
titles, rights and benefits conducted, held or enjoyed by TAC or AAC as a
member of the LLC prior to the Closing Date. Ascent may execute,
acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, conveyances and documents, and take any action
reasonably necessary on behalf of Ascent and TAC or AAC to effect the
foregoing, and TAC or AAC agrees to cooperate in such actions by Ascent
including by executing, acknowledging and delivering, or causing to be
executed, acknowledged and delivered such instruments, conveyances and
documents, and taking such other action as Ascent reasonably determines is
necessary or advisable to effect the foregoing. Ascent shall prepare,
subject to
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TAC's approval, a final income tax return for the LLC for all
periods prior to the Closing Date and file same in a timely manner. From
and after the Closing Date, TAC or AAC shall have no further rights or
obligations with respect to the LLC.
(c) Except as may be expressly provided herein, TAC makes no
representations or warranties with respect to the Arena Assets and Elitch
Units to be assigned and conveyed hereunder.
8. Exhibits. The Exhibits referred to in this Agreement are hereby
incorporated in this Agreement by reference and constitute an integral part of
this Agreement.
9. Expenses. All fees, costs and expenses incurred by TAC or
Ascent or their respective affiliates in negotiating this Agreement or in
consummating the transactions contemplated by this Agreement (excluding
out-of-pocket costs incurred by TAC after the Closing Date in providing the
assistance contemplated by Section 2(a) above which shall be paid by
Ascent) shall be paid by the party incurring the same, including, without
limitation, legal and accounting fees, costs and expenses.
10. Notices. All notices and communications required or permitted
under this Agreement shall be in writing and any communication or delivery
hereunder shall be effective upon receipt, and may be personally delivered,
sent by registered or certified mail, postage prepaid, addressed as
follows, or may be transmitted by facsimile as follows:
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If to TAC:
The Anschutz Corporation
555 17th Street, Suite 3320
Denver, Colorado 80202
Attn.: Mr. Robert J. Sanderman
Facsimile No.: (303) 299-1503
With a copy to:
Holme Roberts & Owen LLC
1700 Lincoln, Suite 4100
Denver, Colorado 80203
Attn: G. Kevin Conwick, Esq. and
Richard G. Wohlgenant, Esq.
Facsimile No.: (303) 866-0200
If to Ascent:
Mr. Charlie Lyons
President and Chief Executive Officer
Ascent Entertainment Group, Inc.
1200 Seventeenth Street, Suite 1000
Denver, Colorado 80202
Facsimile No.: (303) 446-9111
With a copy to:
Arthur M. Aaron, Esq.
Vice President, Business and Legal Affairs
Ascent Entertainment Group, Inc.
6560 Rock Spring Drive
Bethesda, Maryland 20817
Facsimile No.: (301) 214-7084
And a copy to:
Warren Y. Zeger, Esq.
Vice President and General Counsel
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20817
Facsimile No.: (301) 214-7128
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Any party may, by written notice so delivered to the other, change the
address or facsimile number to which delivery shall thereafter be made.
11. Amendment. This Agreement may not be amended nor any rights
hereunder be waived, except by an instrument in writing signed by the party
or parties to be charged with such amendment or waiver.
12. Assignment. Neither party may assign its rights in this
Agreement without the prior written consent of the other, except that,
prior to the Closing Date, either party, on five days' written notice to
the other party, may assign part or all of its rights under this Agreement
to a wholly-owned subsidiary without the consent of the other party. No
such assignment by any party shall release such party from its obligations
hereunder.
13. Performance by Subsidiaries. Either TAC or Ascent as the
primary obligor may cause one or more of its subsidiaries to perform part
or all of such party's obligations hereunder; provided, however, that no
such substitution of a subsidiary shall release such party from its primary
obligations hereunder and such party shall be jointly and severally liable
with its subsidiary for the full performance of the obligations contained
herein, including, but not limited to, Ascent's obligation to deliver its
promissory note, suite agreement and assumption and indemnification
described in Section 2(b) hereof, and TAC's obligation to use reasonable
efforts to facilitate the development and construction of the Arena Complex
as provided herein, and the documents to be delivered hereunder shall so
provide and shall so bind the primary obligor.
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14. Announcements; Books and Records; Confidentiality.
(a) TAC and Ascent shall consult with each other with regard to
all press releases and other announcements concerning this Agreement or the
transactions contemplated hereby and, except as required by law or
applicable National Association of Securities Dealers ("NASD") by-law or
regulation, neither party shall issue any such press release or
announcement without the prior written consent of the other party, such
consent not to be unreasonably withheld.
(b) TAC shall, on or promptly after the Closing Date, deliver to
Ascent all books, records, documents and information relating primarily to
the Arena Assets, including, by way of example and not limitation,
contracts to which the LLC is a party, plans, appraisals, architectural and
engineering reports, environmental information, financing proposals, maps,
surveys, drawings, analyses and other data relating to the Arena Assets and
the Elitch Units. TAC may retain copies of such materials to the extent
reasonably necessary to permit TAC to perform its obligations hereunder.
(c) Prior to and after the Closing Date, without the written
consent of each party, the parties shall not disclose the existence of or
terms of this Agreement to any third party (excluding the parties'
attorneys and accountants who have a need to know the terms and conditions
of this Agreement) by any means, except (i) as provided in Subsection(a),
(ii) as may
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be required to obtain consent or approval of the transfer of the
Elitch Units, (iii) as may be required for any disclosure to a governmental
agency or the public which is required by applicable law, regulation, or
stock exchange or NASD by-law, regulation or rule, (iv) by Ascent in
connection with obtaining financing or the financial participation of
another party to acquire TAC's interest in the Arena Assets or the Elitch
Units; or (v) as may be required to comply with a lawful subpoena or other
judicial process; provided, that the disclosing party first provides the
other party with reasonable notice of the subpoena or other judicial
process prior to the disclosure. The restrictions contained in this section
shall not apply if either party initiates litigation seeking enforcement of
this Agreement or the documents delivered hereunder, or for recovery of
damages for breach of this Agreement or such documents.
15. Headings. The headings of the Sections of this Agreement are
for guidance and convenience of reference only and shall not limit or
otherwise affect any of the terms or provisions of this Agreement.
16. Governing Law. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and governed by,
the laws of the State of Colorado, excluding conflicts of laws principles
and excluding Ascent's promissory note which shall be governed by Maryland
law. Ascent hereby consents to venue and jurisdiction in the District Court
for the City and County of Denver, State of Colorado, and in the United
States District Court for the District of Colorado, in any action commenced
to enforce or declare obligations, or recover damages accruing under or
with respect to this Agreement.
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17. Entire Agreement. This Agreement, when executed by the parties
(including the Exhibits hereto), constitutes the entire understanding
between the parties with respect to the subject matter hereof.
18. Parties in Interest. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
permitted successors and assigns; and nothing contained in this Agreement,
express or implied, is intended to confer upon any other person or entity
any benefits, rights or remedies.
19. Attorneys' Fees. In any litigation or other proceedings
between the parties, or persons claiming under them, resulting from,
arising out of, or in connection with, this Agreement or the construction
or enforcement thereof, the substantially prevailing party shall be
entitled to recover all reasonable attorneys' and expert witness fees, and
other costs of suit incurred by it in connection with such litigation or
other proceedings, including such costs, expenses and fees incurred in
preparation for the litigation or other proceedings, any appeals, and
collection or enforcement of any final judgment entered therein. If a party
substantially prevails on some aspects of such litigation or other
proceedings but not on others, the court may apportion any award of costs
and attorneys' fees in such manner as it deems equitable.
20. Enforcement and Performance. Every right or duty arising
hereunder imposes an obligation of good faith and reasonableness in its
enforcement or performance.
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21. Survival. The representations, warranties, covenants,
agreements and indemnities contained herein and in documents delivered at
Closing shall survive the Closing.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original instrument, and
all of which together shall constitute one and the same document.
EXECUTED as of the day and year first above written.
THE ANSCHUTZ CORPORATION, a
Kansas corporation
By: /s/ Douglas L. Polson
Title: Vice President
ASCENT ENTERTAINMENT
GROUP, INC., a Delaware corporation
By: /s/ Charles Lyons
Title: President
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Exhibit A
Description of Arena Assets
All of the goodwill, rights, plans, specifications, drawings,
contracts, relationships, approvals, permits and other work product of
every kind generated by the efforts and activities of TAC and Ascent, or
their respective affiliates, with respect to the Arena, either taken
jointly or singly, subject to the related obligations, (the "Arena Assets")
including, but not limited to, Arena Assets arising out of the following
described efforts and activities:
1. Securing a naming rights agreement with Pepsi Cola Company
generating approximately $30 million over the 20-year term.
2. Securing an exclusive food and beverage concessionaire agreement
with Ogden Entertainment Services generating $11 million in up-front
capital, with an estimated $6 million to be used to purchase and install
concession equipment.
3. Facilitating and negotiating an agreement with the Southern Pacific
Railroad for the acquisition of an arena site at a fair market value of $20
million.
4. Facilitating and negotiating with the Southern Pacific Railroad
toward their generating an environmental voluntary clean-up plan,
submitting an application for approval of the plan, and securing approval
from the Colorado Environmental Protection Agency for the plan. These
negotiations also resulted in the Southern Pacific Railroad providing a
satisfactory indemnity against future environmental liabilities.
5. Facilitating and negotiating with the Southern Pacific Railroad
toward their mitigating the costs associated with the flood plain
improvements necessary to construct the arena and ancillary facilities.
6. Facilitating and negotiating with the City and County of Denver to
release the Denver Nuggets from their existing lease at McNichols Sports
Arena, a City-owned building, and providing for (i) the development of a
new arena in downtown Denver, and (ii) the framework for a sale/leaseback
and management agreement for the operation of the new arena.
7. Creating a concept and master plan for a mixed use fully integrated
and complementary development anchored by a 19,000 seat arena.
8. Preparing and submitting a zoning and PUD application for a total
of 54.2 acres net of public roadways that will permit the construction of
(i) an arena of approximately 620,000 square feet, (ii) a production
studio/office facility of approximately 150,000 square feet, (iii) a
specialty retail and restaurant development of approximately 64,000 square
feet, and (iv) a convenience store/gas station of approximately 5,000
square feet.
A-1
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9. Engaging in extensive and exhaustive negotiations with the various
agencies within the City and County government toward securing all
planning, permitting and code approvals to permit the construction of the
arena.
10. Performing market research and preparing feasibility documentation
for the successful financial operations of a new arena including a complete
pro-forma incorporating projections relating the number of events, ticket
pricing, sponsorship and advertising revenues, concessions and parking
receipts, and all arena operating and financing costs.
11. Identifying and exploring the most state-of-the-art audio,
scoreboard and video replay technology to be incorporated into the arena.
Also, conceptualizing the direct connection to the production studio which
gives the arena unequaled opportunities to capitalize on the most
sophisticated video up-linking capabilities in the industry.
12. Developing a unique founding partner concept that will maximize
arena specific sponsorship opportunities far beyond anything existing
today.
13. Negotiating and securing a shared parking agreement with Elitch
Gardens to provide for direct arena access from an additional 2,200 parking
spaces which could generate as much as $2 million in incremental parking
revenues with no additional capital costs or fees.
14. Developing a concept for and incorporating, as part of the Ogden
Concession agreement, an arena club restaurant to be open in conjunction
with all arena events and possibly year round which could generate as much
as $600,000 in gross revenues.
15. Generating a financial structure and outlining financial
requirements for the arena project and soliciting numerous proposals from
lending institutions that will likely lead to the successful placement of
more than $80 million in bank loans and/or private placement debt.
16. Creating a comprehensive financing volume fully documenting and
explaining every aspect of the project from concept to completion to be
utilized throughout the project for planning, structuring, financing and
implementation.
17. Preparing for and executing numerous presentations necessary to
the creation of public support and political policy-making which were and
are critical to the success of the arena project.
18. Creating the concept and identifying potential tenants toward the
development of a multi-tenant office building in connection with an
integrated production facility.
19. Conceptualized a gondola people-moving system to link the various
entertainment facilities currently existing and being developed in the
Central Platte Valley.
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20. Providing expertise and financial planning toward the preparation
of a project budget and cash flow analysis.
21. Providing expertise toward securing all contractually obligated
income streams for the successful financing of the project.
22. Preparing a project schedule setting forth the numerous milestones
that must be achieved for the successful and timely completion of the arena
project.
23. Recruiting and securing a professional services contract with the
HOK Sports Facilities Group, the preeminent sports architectural firm in
the world, to provide the design and construction oversight for the arena.
24. Recruiting and securing the M.A. Mortenson Company, a premier
general contracting firm, to provide for the construction of the arena on a
Guaranteed Maximum Price, management fee basis.
25. Conceptualizing and preparing a comprehensive and fully integrated
marketing plan toward pre-selling 84 luxury suites, 1854 club seats,
securing founding partners and coordinating ticket campaigns, special
events and merchandizing efforts all aimed at maximizing the economic
impact of the arena.
26. Conceptualizing and creating separate arena development and arena
operating companies to secure the requisite control over the facility
critical to the overall financial success of the arena.
27. Negotiating agreements with adjacent property owners to facilitate
the planning and zoning processes for the arena development.
28. Proving title and survey documentation necessary for the
acquisition of land for the arena site.
29. Planning and preparing for the zoning of complementary commercial
developments on three separate tracts within the broad arena development
site.
A-3
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Exhibit B
Form of Promissory Note
PROMISSORY NOTE
$5,000,000 Dated: March 26, 1996
FOR VALUE RECEIVED, ASCENT ENTERTAINMENT GROUP, INC., a Delaware
corporation ("Maker"), whose address is 6560 Rock Springs Drive, Bethesda,
Maryland 20817, promises to pay to the order of THE ANSCHUTZ CORPORATION, a
Kansas corporation ("Payee"), the aggregate principal sum of FIVE MILLION
DOLLARS ($5,000,000), without interest except upon default, as follows: (a)
the principal sum of Two Million Five Hundred Thousand Dollars ($2,500,000)
when and if construction of an arena to accommodate play by the Colorado
Avalanche National Hockey League franchise and the Denver Nuggets National
Basketball Association franchise is commenced anywhere in the City and
County of Denver or the greater Denver metropolitan area, as evidenced by
the issuance of a building permit by the applicable governmental entity for
all or any portion of such construction; and (b) the principal sum of Two
Million Five Hundred Thousand Dollars ($2,500,000) when the construction of
such arena has been completed, as evidenced by the issuance of a temporary
or permanent certificate of occupancy for such arena by the applicable
governmental entity, or the performance of a professional basketball or
hockey game in such arena, whichever shall first occur, together with
interest thereon (if at all) as hereinafter provided.
All payments of principal and interest (if any) hereunder shall be
made in lawful money of the United States of America at Payee's offices at
555 17th Street, Suite 3320, Denver, Colorado 80202, or at such other place
as Payee shall have designated to Maker in writing.
Time is of the essence hereof. In the event of any default in any
payment of the principal of this Note when due and payable as hereinabove
provided, which default is not cured within two business days after written
notice by Payee to Maker, then (a) the whole principal sum of this Note and
all other obligations of Maker to holder, direct or indirect, absolute or
contingent, now existing or hereafter arising, shall, at the option of the
holder of this Note, become immediately due and payable without notice or
demand, and whether or not such option has been exercised, the outstanding
principal balance of this Note shall thereafter bear interest at such
fluctuating rate, adjustable the day of any change in such rate, that is
equal to five percent (5.0%) per annum above the annual rate publicly
announced or published from time to time by Norwest Bank of Denver,
Colorado as its prime rate, from the date of such default until such
outstanding principal balance and such accrued interest is paid, and (b)
the holder of this Note shall have and may exercise any and all rights and
remedies available at law or in equity, including, without limitation,
those provided herein.
A-4
<PAGE>
It is not intended hereby to charge interest (if applicable) at a rate
in excess of the maximum rate of interest that Payee may charge to Maker
under applicable usury and other laws, but if, notwithstanding, interest in
excess of such rate shall be paid hereunder, the excess shall be retained
by the holder of this Note as additional cash collateral for the payment of
the indebtedness evidenced hereby, unless such retention is not permitted
by law, in which case the interest rate on this Note shall be adjusted to
the maximum permitted under applicable law during the period or periods
that the interest rate otherwise provided herein would exceed such rate.
If Maker fails to pay any amount due under this Note after written
notice from Payee as described above and Payee has to take any action to
collect the amount due, including, without limitation, retaining attorneys
for collection of this Note, or if any suit or proceeding is brought for
the recovery of all or any part of or for protection of the indebtedness,
then Maker agrees to pay on demand all reasonable costs and expenses of any
such action to collect, suit or proceeding, or any appeal of any such suit
or proceeding, incurred by Payee, including, but not limited to, the
reasonable fees and disbursements of Payee's attorneys and their staff.
Maker waives presentment, notice of dishonor, notice of acceleration
and protest, and assents to any extension of time with respect to any
payment due under this Note, to any substitution or release of collateral
(if any) and to the addition or release of any party.
If any provision in this Note shall be held invalid, illegal or
unenforceable in any jurisdiction, the validity, legality or enforceability
of any defective provisions shall not be in any way affected or impaired in
any other jurisdiction.
No delay or failure of the holder of this Note in the exercise of any
right or remedy provided for hereunder shall be deemed a waiver of such
right or remedy by the holder hereof, and no exercise of any right or
remedy shall be deemed a waiver of any other right or remedy that the
holder may have.
All notices to Maker given hereunder shall be in writing and shall be
given in the manner set forth in that certain Agreement dated as of March
26, 1996, by and between Maker and Payee.
At the option of the holder hereof, an action may be brought to
enforce this Note in the District Court in and for the City and County of
Denver, State of Colorado, in the United States District Court for the
District of Colorado or in any other court in which venue and jurisdiction
are proper. Maker and all signers or endorsers hereof consent to venue and
jurisdiction in the District Court in and for the City and County of
Denver, State of Colorado and in the United States District Court for the
District of Colorado and to service of process under Sections
13-1-124(1)(a) and 13-1-125, Colorado Revised Statutes as currently in
effect, in any action commenced to enforce this Note, and waive any right
to jury trial of any claim, cross- claim or counter-claim relating to,
arising out of or in connection with this Note.
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<PAGE>
This Note is to be governed by and construed according to the laws of
the State of Maryland.
ASCENT ENTERTAINMENT GROUP, INC.,
a Delaware corporation
By:
Name:
Title:
A-6
<PAGE>
Exhibit C
Form of Suite Agreement
SUITE LICENSE AGREEMENT
This Suite License Agreement, dated as of this 26th day of March,
1996 ("License Agreement"), is by and between ASCENT ENTERTAINMENT GROUP,
INC., a Delaware corporation ("Licensor"), and THE ANSCHUTZ CORPORATION, a
Kansas corporation ("Licensee").
1. RECITALS.
WHEREAS, Licensor and/or its affiliates are seeking to construct
a multipurpose arena in downtown Denver to accommodate play by a National
Hockey League team or a National Basketball Association team or both (the
"Arena");
WHEREAS, Licensor and Licensee are parties to an Agreement, dated
as of March 26, 1996 (the "Arena Agreement"), pursuant to which Licensor
has agreed to purchase certain assets from Licensee related to the
development of the Arena;
WHEREAS, Licensor has agreed in the Arena Agreement to license an
executive suite in the Arena to Licensee, at no charge to Licensee, if and
when the Arena is constructed; and
WHEREAS, it is a condition to closing under the Arena Agreement
that Licensor and Licensee enter into this License Agreement.
2. SUITE LICENSE.
Subject to Section 5, Licensor hereby agrees to license (the
"License") an executive suite in the Arena (the "Suite") to Licensee on the
terms and conditions set forth below. Licensee shall have an exclusive
license to use the Suite, and a non-exclusive license to use the Common
Areas. The "Common Areas" are concourse areas that provide access to the
Suite and other areas so designated by Licensor.
The Suite, the precise location of which shall be determined by
Licensor prior to the Commencement of the term of the License (as described
in Section 3), shall be located on the lowest level of executive suites
constructed in the Arena and shall be situated between the blue lines on
the hockey playing surface of the Arena.
The Suite shall be equipped, furnished and maintained in a manner
comparable to the highest priced suites in the Arena, excluding corporate
sponsors' suites to the extent such suites confer or receive special
treatment as a result of their owners' sponsorship of the Arena. The Suite
shall have no fewer than 12 seats.
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"Events" mean all professional hockey and basketball games played
in the Arena and other Arena events for which any other suite owner
receives tickets in connection with its purchase of a suite, except
Excluded Activities. "Excluded Activities" are extraordinary events whose
organizers require, as a condition of use of the Arena, exclusive use of
substantially all of the Suites, which may include, for example, national
political conventions. The Suite may be used by others during any Excluded
Activities without any restriction, but Licensor shall use reasonable
efforts to provide alternative seating at no charge to Licensee as well as
accommodations for hospitality in the Arena. Licensor shall clean the Suite
and prepare it for Licensee's use after each Excluded Activities event.
3. TERM; RENEWAL OPTION.
The term of the License shall commence upon the later of (i) the
availability of the Arena for Events or (ii) the availability of the Suite
for occupancy, which in no event shall be later than 30 days after the date
described in paragraph (i) ("Commencement"). The term of the License shall
expire upon the later of (i) the twenty-fifth anniversary of the
Commencement of the term or (ii) the last day of the longest term granted
to any entity for the lease of a suite in the Arena, or upon the earlier
termination of this License Agreement in accordance with its terms.
Licensee shall have an option to renew this License upon the
expiration of the term on such terms and conditions as are then being made
available generally by Licensor to licensees of suites in the Arena.
Licensor shall provide notice of the applicable terms and conditions and
the opportunity to exercise the option to Licensee within the same time
periods as are made available generally by Licensor to licensees of suites
in the Arena.
4. LICENSE FEE.
There shall be no acquisition or license fee or, except as
expressly provided for herein, no construction, maintenance, refurbishing
or annual fee payable by Licensee in connection with the License.
5. DEFINITIVE LICENSE AGREEMENT.
Prior to Commencement of the term of the License, the parties
shall, if requested by Licensor or Licensee, enter into a definitive
License Agreement (the "Definitive License Agreement"). The Definitive
License Agreement shall identify the leased Suite and include the standard
terms and conditions of Licensor's then standard form license for the
leasing of executive suites, but only to the extent that such terms and
conditions are consistent in all material respects with the terms and
conditions of this License Agreement. Licensee may substitute a wholly
owned subsidiary for itself as a party to the Definitive License Agreement
provided that it remains jointly and severally liable with its subsidiary
for the full performance of the obligations contained in the Definitive
License Agreement. Licensor shall have the right to substitute a party for
itself as a party to the Definitive License Agreement, provided that such
substituted entity is the owner or long-term lessee of the Arena and
assumes the obligations of
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the Licensor hereunder, and provided further that, in such event, Licensor
shall be released from all obligations hereunder.
6. FURNISHINGS, DECOR AND ALTERATIONS.
In order to maintain a uniform appearance, Licensee shall not
make any additions to or changes or alterations in the interior or exterior
of the Suite or the fixtures, furnishings and equipment or the decor of the
Suite, except that, with Licensor's prior written consent, Licensee may
supply articles of appointment, such as pictures or other wall hangings or
plants, provided that no damage is done to the Suite. Anything which is to
be attached to the walls, ceiling or floor of the Suite, including
pictures, must be approved by Licensor and installed only by Licensor's
personnel upon the request of Licensee.
Except for a nameplate of tasteful design, no signs or other
advertising may be placed on the outside of the Suite, nor shall any signs
or advertising in the interior of the Suite be visible from the interior of
the Arena.
7. POSSESSION AND USE.
Licensee's use of the Suite shall be governed by and subject to
Licensor's rules and regulations pertaining to executive suites, as
published and modified from time to time by Licensor (the "Suite Rules").
Licensee and all of Licensee's guests shall comply with the Suite Rules.
Licensor shall provide Licensee with a copy of the Suite Rules prior to
November 1 of each year of the term, and when amended from time to time.
Tickets or passes will be required for entry into the Arena and
the Suite (the "Suite Tickets"). Licensee shall receive without charge
Suite Tickets for each Event for the number of persons accommodated by the
Suite. Licensee shall also have a preferential right to purchase Suite
Tickets for other events not coming within the definition of Events, except
Excluded Activities, for the number of persons accommodated by the Suite at
the price made available to Suite licensees generally. Licensee shall abide
by all agreements and restrictions on use and transfer of the Suite Tickets
which may be set forth in or referenced by the Suite Rules or the Suite
Tickets.
Licensee shall keep and maintain the Suite in good repair, order
and condition, except for normal wear and tear, and shall reimburse
Licensor for costs incurred by Licensor to repair any damage caused by
Licensee or Licensee's guests to the Suite or the Arena.
Licensee and Licensee's guests shall abide by the rules of the
National Basketball Association, the National Hockey League, and other
Event sponsors.
Licensee and Licensee's guests shall at all times maintain proper
decorum while using the Suite.
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Licensee and Licensee's guests shall comply with all laws,
ordinances, orders, rules and regulations relating to the use of the Suite,
and shall not permit any use or manner of use of the Suite in violation
thereof.
Alcoholic beverages may be present, served or consumed only in
accordance with the Suite Rules and applicable laws and regulations.
Licensee shall not permit any liens or charges to attach to its
interest in the Suite and remain so attached for more than 30 days, without
removal or bonding over for the protection of Licensor.
8. SERVICES.
During the term of the License, Licensor shall provide to the
Suite amenities comparable to those provided to the highest priced suites
in the Arena, excluding corporate sponsorship suites. Amenities may
include: (i) concierge services; (H) during Events, food and beverage
catering and in-suite bartending services at rates and on terms established
from time to time by Licensor; (iii) light, electricity, water, heat, air
conditioning and ventilation during Events and Daily Use; (iv) ordinary
repair and maintenance of the interior and exterior of the Suite and Common
Areas made necessary by normal wear and tear; (v) dusting, sweeping and
cleaning the Suite and Common Areas, and rubbish removal and disposal; and
(vi) security services for the Arena and Common areas.
9. SPECIAL PARKING.
At all times during which the Suite is in use by Licensee,
Licensee shall have use of six (6) unassigned parking spaces in the area
within the parking areas adjacent to the Arena dedicated to suite licensees
and their guests. The location and use of such parking spaces shall be
subject to the Suite Rules. Admission to the parking areas shall be by
permits or passes issued to Licensee.
10. TRANSFER OF RIGHTS IN LICENSE.
Except as provided in Section 5, Licensee shall not transfer any
interest in the Suite or the License. Any transfer of Suite Tickets, for
value, to the same third party for more than five Events during a License
Year, or to more than one third party for more than 10 Events during a
License Year, shall be deemed a transfer under this Section.
11. RELEASE OF LIABILITY; INDEMNIFICATION.
Licensor shall not be liable for any personal injury or damage to
or loss of property of Licensee or Licensee's guests in or upon the Suite
or the Arena or adjacent grounds or structures resulting from any cause
whatsoever, unless due to willful misconduct or gross negligence of
Licensor. Licensee shall defend, indemnify and hold Licensor and other
Event sponsors and participants harmless from any liability for damages
arising out of personal injury
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<PAGE>
or property, loss or damage due to the act, omission or negligence of Licensee
or Licensee's guests arising from use of the Suite or the Arena or adjacent
grounds or structures, or the breach of this License or violation of the Suite
Rules by Licensee or its guests. Licensee shall maintain the insurance
described below.
12. INSURANCE.
During the term of the License, Licensee shall maintain with an
insurer acceptable to Licensor comprehensive general liability insurance
with respect to the Suite in an amount of not less than $1,000,000 bodily
injury and property damage combined single limit, which minimum amount may
be increased upon notice from Licensor as Licensor may reasonably deem
necessary. The policy shall name Licensor as an additional insured.
Licensee shall provide a certificate of such insurance to Licensor not
later than October 1 of each year of the term, which certificate provides
that the coverage will not be cancelled unless 30 days prior notice is
given to Licensor and which waives the insurer's rights of subrogation
against Licensor.
13. DEFAULT AND TERMINATION.
Licensee shall be deemed to be in default under this License
Agreement upon the occurrence of any one or more of the following events
("Event of Default"):
(i) Licensee fails to perform or observe any of its material
duties, obligations or covenants under this License Agreement and such
failure continues after written notice thereof is given to Licensee. If
immediate cure of such failure is not reasonable, Licensee may have a
period to cure which may be reasonably necessary under the circumstances,
not to exceed 30 days; or
(ii) Licensee or any of its guests engages in any illegal
activity or in any repeated or continued material violation of the Suite
Rules.
In the Event of Default, Licensor may, at its option and with
written notice to Licensee, terminate the right of Licensee to use the
Suite and all other rights or privileges of Licensee under this License
Agreement. If the right of Licensee to use the Suite is terminated,
Licensee's liability to Licensor for damages shall survive such
termination, and Licensor may reenter, take possession of the Suite, and
remove any persons or property by legal action or self-help with the use of
reasonable force and without liability for damages. Following reentry or
abandonment, Licensor may, at its option, relicense the Suite to another
party in accordance with the then existing customary terms and practices of
Licensor for the licensing of Suites.
Licensor shall be entitled to recover from Licensee the cost of
reentry and the cost of any clean up, refurbishing, removal of Licensee's
property and fixtures, and any other expense occasioned by Licensee's
failure to vacate the Suite upon termination and to leave it in the
required condition, including attorneys' fees, and court costs.
C-5
<PAGE>
The foregoing remedies of Licensor shall not be to the exclusion
of any other right or remedy set forth herein or otherwise available to
Licensor in law or in equity. No waiver by Licensor of any default or
breach by Licensee of its obligations hereunder shall be construed to be a
waiver or release of any other or subsequent default or breach by Licensee
hereunder, and no failure or delay by owner in the exercise of any remedy
provided for herein shall be construed to constitute a forfeiture or waiver
thereof or any other right or remedy available to Licensor.
If Licensor shall default in the performance or observance of any
of its obligations hereunder, Licensee shall have such remedies as are set
forth herein or are otherwise available in law or in equity, including
specific performance.
14. ARBITRATION.
Any dispute or claim which arises out of or which relates to this
License Agreement, or to the interpretation or breach of this License
Agreement, shall be resolved in accordance with the then effective
Commercial Arbitration Rules of the American Arbitration Association. The
venue for any such arbitration shall be Denver, Colorado.
15. ACCESS BY LICENSOR.
Licensor and its officers, agents, employees, and
representatives, shall have access to the Suite on such occasions and to
such extent as Licensor shall in its reasonable discretion deem necessary
or appropriate for the proper performance of the duties and obligations
required or contemplated to be performed by Licensor or to ensure
performance of the duties and obligations required or contemplated to be
performed by Licensee under this License. Licensor shall have access to and
use of the Suite during Excluded Activities. Licensee shall not change the
locks or place any additional locks on, or otherwise restrict or impede
Licensor's access to, the Suite or the storage closets and cabinets
therein.
16. DESTRUCTION OF SUITE OR ARENA.
In the event of any damage or destruction of the Suite caused by
the negligence or willful acts or omissions of Licensee, its employees,
agents or guests, Licensor shall restore the Suite at Licensee's expense to
as good a condition as existed prior to such damage or destruction and this
License Agreement shall continue in effect.
In the event of any damage or destruction of the Suite not caused
by the negligence or willful acts or omissions of Licensee, its employees,
agents or guests, Licensor shall, at its expense, restore the Suite to as
good a condition as existed previously provided Licensor receives insurance
proceeds sufficient to pay the costs.
Notwithstanding the foregoing, if the Arena is significantly
damaged or substantially destroyed, and Licensor shall elect not to restore
or rebuild the Arena, by written notice to Licensee within 60 days after
the date of such damage or destruction, Licensor may terminate this License
Agreement. As used in this License Agreement, "substantially destroyed"
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<PAGE>
means the damage or destruction of 25 percent or more of the value of the
Arena based upon the replacement cost thereof.
17. TERMINATION.
In the event that Licensor does not complete construction of the
Arena on the proposed site, or on any other site in the City or County of
Denver or in the greater Denver metropolitan area, within ten years from
the date hereof, for any reason, Licensor may terminate this License
Agreement by written notice to Licensee, and Licensor and Licensee shall
have no further rights or obligations hereunder.
18. MISCELLANEOUS.
(a) Condition Upon Surrender. Upon the expiration of the term of
the License or earlier termination of this License Agreement, Licensee
shall surrender possession of the Suite to Licensor in the condition in
which originally delivered to Licensee, except for normal wear and tear and
damage caused by casualty or force beyond the control of Licensee.
(b) Mortgage, Pledge, Assignment. Licensor may mortgage, pledge,
assign or otherwise encumber the Suite and/or this License Agreement as
security for financing the Arena, the Suite or for other purposes of
Licensor. In such event, this License Agreement and the rights and
interests of Licensee hereunder shall be subordinate thereto. Licensee
shall execute any documentation required by such lender to establish such
subordination within 10 days after request and hereby appoints Licensor as
its attorney-in-fact to execute such documentation in the event Licensee
fails to do so; provided that any such mortgagee, pledgee, assignee or the
holder of any such lien shall agree to recognize this License and the
rights and interests of Licensee hereunder in the event of foreclosure or
enforcement if Licensee is not then in default hereunder.
(c) Nature of Interest. The nature of the interest granted herein
to Licensee is a license only. The parties do not intend that this License
Agreement create a tenancy, leasehold estate or easement.
(d) Notices. All notices and communications required or permitted
under this License Agreement shall be in writing and any communication or
delivery hereunder shall be effective upon receipt, and may be personally
delivered, sent by registered or certified mail, postage prepaid, addressed
as follows, or may be transmitted by facsimile as follows:
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<PAGE>
to Licensor:
Mr. Charlie Lyons
President and Chief Executive Officer
Ascent Entertainment Group, Inc.
1200 Seventeenth Street
Suite 1000
Denver, Colorado 80202
Facsimile No.: (303) 446-9111
with a copy to:
Arthur M. Aaron, Esq.
Vice President, Business and Legal Affairs
Ascent Entertainment Group, Inc.
6560 Rock Spring, Drive
Bethesda, Maryland 20817
facsimile No.: (301) 214-7084
and a copy to:
Warren Y. Zeger, Esq.
Vice President and General Counsel
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20817
Facsimile No.: (301) 214-7128
to Licensee:
The Anschutz Corporation
555 17th Street, Suite 3320
Denver, Colorado 80202
Attn: Mr. Robert J. Sanderman
Facsimile No.: (303) 299-1503
with a copy to:
Holme Roberts & Owen LLC
1700 Lincoln, Suite 4100
Denver, Colorado 80203
Attn: G. Kevin Conwick, Esq. and
Richard G. Wohlgenant, Esq.
Facsimile No.: (303) 866-0200
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<PAGE>
Either party may, by written notice so delivered to the other, change
the address or facsimile number to which delivery shall thereafter be made.
(e) Amendment. This License Agreement may not be amended nor any
rights hereunder be waived, except by an instrument in writing signed by
the party or parties to be charged with such amendment or waiver.
(f) Assignment. Except as provided below, Licensee may not assign
its rights or obligations under this License Agreement, except that it may
assign its rights and obligations to a wholly owned subsidiary provided
that it remains jointly and severally liable with its subsidiary for the
full performance of the obligations contained in this License Agreement.
(g) Headings. The headings of the Sections of this License
Agreement are for guidance and convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions of this License
Agreement.
(h) Governing Law. This License Agreement shall be construed in
accordance with, and governed by, the laws of the State of Colorado,
excluding conflicts of laws principles.
(i) Entire Agreement. This License Agreement, together with the
Arena Agreement, constitutes the entire understanding between the parties
with respect to the subject matter hereof.
(j) Parties in Interest. This License Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective permitted successors and assigns; nothing contained in this
License Agreement, express or implied, is intended to confer upon any other
person or entity any benefits, rights or remedies.
(k) Attorneys' Fees. In any litigation or other proceedings
between the parties, or persons claiming under them, resulting from or
arising out of or in connection with this License Agreement, or the
construction or enforcement thereof, the substantially prevailing party
shall be entitled to recover all reasonable attorneys' and expert witness
fees, and other costs of suit incurred by it in connection with such
litigation or other proceedings, including such costs, expenses and fees
incurred in preparation for the litigation or other proceedings, any
appeals, and collection or enforcement of any final judgment entered
therein. If a party substantially prevails on some aspects of such
litigation or other proceedings but not on others, the court may apportion
any award of costs and attorneys' fees in such manner as it deems
equitable.
(l) Counterparts. This License Agreement may be executed in two
or more counterparts, each of which shall constitute an original
instrument, and all of which together shall constitute one and the same
document.
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<PAGE>
EXECUTED as of the day and year first above written.
LICENSOR: ASCENT ENTERTAINMENT
GROUP, INC.
By:
Its:
LICENSEE: THE ANSCHUTZ CORPORATION
By:
Its:
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Exhibit D
Form of Assumption and Indemnification
ASSUMPTION AND INDEMNITY AGREEMENT
This Assumption and Indemnity Agreement, dated as of this 26th day of
March, 1996 ("Assumption Agreement"), is by and between ASCENT
ENTERTAINMENT GROUP, INC., a Delaware corporation ("ASCENT") and THE
ANSCHUTZ CORPORATION, a Kansas corporation ("TAC").
Recitals
WHEREAS, ASCENT and/or its affiliates are seeking to construct a
multi-purpose arena in downtown Denver to accommodate play by the Colorado
Avalanche National Hockey League franchise and the Denver Nuggets National
Basketball Association franchise, and other facilities (the "Arena
Complex");
WHEREAS, ASCENT and TAC are parties to an Agreement, dated as of March
26, 1996 (the "Arena Agreement"), pursuant to which ASCENT has agreed to
purchase certain assets from TAC (the "Arena Assets"), and TAC has agreed
to provide certain services to ASCENT, in connection with the Arena
Complex;
WHEREAS, ASCENT has agreed in the Arena Agreement to make certain
payments to TAC and to indemnify it against certain liabilities;
WHEREAS, it is a condition to closing under the Arena Agreement that
ASCENT and TAC enter into this Assumption and Indemnity Agreement; and
WHEREAS, any capitalized terms that are not otherwise defined in this
Assumption Agreement shall have the meanings assigned to them in the Arena
Agreement.
NOW THEREFORE, for and in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Assumption of Liabilities. ASCENT hereby acknowledges and agrees
that it and its affiliates are responsible for all liabilities incurred by
ASCENT and its affiliates in connection with the Arena Assets. Ascent
assumes and agrees to: (A) pay all obligations and liabilities of Ascent
and TAC, and each of them and their affiliates, incurred after the date
hereof in connection with the Arena Assets, (B) pay all obligations of
Ascent and its affiliates incurred prior to the date hereof in connection
with the Arena Assets, and (C) pay those obligations, if any, incurred
prior to the date hereof by either Ascent or TAC or their respective
affiliates for the benefit of the Arena Assets and which have not been
previously paid by either Ascent or TAC or their respective affiliates. TAC
acknowledges and agrees that ASCENT does not assume any
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responsibility for, and is released from any liability for, any
obligations incurred by TAC or its affiliates prior to the date hereof, and
previously paid by TAC or an affiliate thereof.
2. Indemnification.
(a) ASCENT shall indemnify and hold harmless TAC and its affiliates,
and any director, officer, employee or agent of TAC or its affiliates, who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding by reason of any acts or
omissions or alleged acts or omissions arising out of such person's
activities in connection with the Arena Assets, against any and all loss,
cost, liability, damage and expense, including attorneys' fees and related
expenses, provided that such acts or omissions occurred in good faith and
in furtherance of the interests of ASCENT and TAC in developing the Arena,
and provided further that such acts or omissions did not constitute gross
negligence or intentional misconduct on such person's part.
(b) Promptly after receipt of notice of any loss, cost, liability,
damage or expense for which a party seeks indemnification hereunder
("Claim"), such party shall give written notice thereof to the indemnifying
party, but such notification shall not be a condition to indemnification
hereunder except to the extent of actual prejudice to the indemnifying
party. The notice shall state the information then available regarding the
amount and nature of such Claim. If within 30 days after receiving such
notice the indemnifying party gives written notice to the indemnified party
stating that it intends to defend against such Claim at its own cost and
expense, then defense of such matter, including selection of counsel
(subject to the consent of the indemnified party which consent shall not be
unreasonably withheld), shall be by the indemnifying party and the
indemnified party shall make no payment on such Claim as long as the
indemnifying party is conducting a good faith and diligent defense.
Notwithstanding the foregoing, the indemnified party shall at all times
have the right to fully participate in such defense at its own expense
directly or through counsel; provided, however, if the named parties to the
action or proceeding include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel
would be inappropriate under applicable standards of professional conduct,
the expense of separate counsel for the indemnified party shall be paid by
the indemnifying party. If no such notice of intent to dispute and defend
is given by the indemnifying party, or if such diligent good faith defense
is not being or ceases to be conducted, the indemnified party shall, at the
expense of the indemnifying party, undertake the defense of such Claim with
counsel selected by the indemnified party, and shall have the right to
compromise or settle the same exercising reasonable business judgment. The
indemnified party shall make available all information and assistance that
the indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense.
4. Miscellaneous.
(a) Notices. All notices and communications required or permitted
under this Assumption Agreement shall be in writing and any communication
or delivery hereunder shall be effective upon receipt, and may be
personally delivered, sent by registered or certified mail, postage
prepaid, addressed as follows, or may be transmitted by facsimile as
follows:
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<PAGE>
to ASCENT:
Mr. Charlie Lyons
President and Chief Executive Officer
Ascent Entertainment Group, Inc.
1200 Seventeenth Street
Suite 1000
Denver, Colorado 80202
Facsimile No.: (303) 446-9111
with a copy to:
Arthur M. Aaron, Esq.
Vice President, Business and Legal Affairs
Ascent Entertainment Group, Inc.
6560 Rock Spring Drive
Bethesda, Maryland 20817
Facsimile No.: (301) 214-7084
and a copy to:
Warren Y. Zeger, Esq.
Vice President and General Counsel
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20817
Facsimile No.: (301) 214-7128
to TAC:
The Anschutz Corporation
555 17th Street, Suite 3320
Denver, Colorado 80202
Attn: Mr. Robert J. Sanderman
Facsimile No.: (303) 299-1503
with a copy to:
Holme Roberts & Owen LLC
1700 Lincoln, Suite 4100
Denver, Colorado 80203
Attn: G. Kevin Conwick, Esq. and
Richard G. Wohlgenant, Esq.
Facsimile No.: (303) 866-0200
D-3
<PAGE>
Either party may, by written notice so delivered to the other, change
the address or facsimile number to which delivery shall thereafter be made.
(b) Amendment. This Assumption Agreement may not be amended nor any
rights hereunder be waived, except by an instrument in writing signed by
the party or parties to be charged with such amendment or waiver.
(c) Assignment. Neither party may assign its rights or obligations
under this Assignment without the prior written consent of the other party.
(d) Headings. The headings of the Sections of this Assumption
Agreement are for guidance and convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions of this Assumption
Agreement.
(e) Governing Law. This Assumption Agreement shall be construed in
accordance with, and governed by, the laws of the State of Colorado,
excluding conflicts of laws principles.
(f) Entire Agreement. This Assumption Agreement, together with the
Arena Agreement, constitutes the entire understanding between the parties
with respect to the subject matter hereof.
(g) Parties in Interest. This Assumption Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective permitted successors and assigns; nothing contained in this
Assumption Agreement, express or implied, is intended to confer upon any
other person or entity any benefits, rights or remedies.
(h) Counterparts. This Assumption Agreement may be executed in two or
more counterparts, each of which shall constitute an original instrument,
and all of which together shall constitute one and the same document.
EXECUTED as of the day and year first above written.
ASCENT: ASCENT ENTERTAINMENT GROUP, INC.
By:________________________________
Its:________________________________
TAC: THE ANSCHUTZ CORPORATION
By:________________________________
Its:________________________________
D-4
<PAGE>
Exhibit E
Form of Mutual Release
MUTUAL RELEASE
The Anschutz Corporation ("TAC"), COMSAT Corporation ("COMSAT") and
Ascent Entertainment Group, Inc. ("Ascent"), for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, covenant and agree as follows:
1. Release by TAC. TAC, on behalf of its affiliates, directors,
officers, employees, shareholders, successors and assigns, hereby fully
releases and discharges Ascent and COMSAT, their respective affiliates,
directors, officers, employees, shareholders, attorneys, successors and
assigns, from any and all claims, demands, obligations, actions,
liabilities or damages of every kind or nature whatsoever, in law or in
equity, whether known or unknown, arising at or prior to the date of this
Mutual Release, based upon any act or omission in connection with the
Letter, Arena, Arena Assets and Elitch Units, as defined in that certain
Agreement dated as of March 26, 1996 between TAC and Ascent relating to a
sale and assignment of the Arena Assets and Elitch Units (the "Agreement").
2. Release by Ascent and COMSAT. Ascent and COMSAT, each on behalf of
itself, its affiliates, directors, officers, employees, shareholders,
successors and assigns, hereby fully release and discharge TAC, its
affiliates, directors, officers, employees, shareholders, attorneys,
successors and assigns, from any and all claims, demands, obligations,
actions, liabilities or damages of every kind or nature whatsoever, in law
or in equity, whether known or unknown, arising at or prior to the date of
this Mutual Release, based upon any act or omission in connection with the
Letter, Arena, Arena Assets and Elitch Units, as defined in the Agreement.
3. Agreement and Closing Documents Unaffected. This Mutual Release is
not intended to release, nor does it release, TAC, COMSAT and/or Ascent
from: (a) either the continuing obligations they owe to each other under
the Agreement or the Closing Documents delivered thereunder; or (b)
liabilities or claims that arise after the date of this Mutual Release as
the result of breach(es) of the Agreement or the Closing Documents
delivered thereunder.
4. No Admission of Liability. It is specifically stated and understood
that TAC, COMSAT and Ascent do not hereby admit any liability, one to
another, all liability being expressly denied, except for liability under
the Agreement and the Closing Documents delivered thereunder that arises
after the date of the Mutual Release.
5. Non-Disparagement. None of the parties hereto shall disparage or
discredit the Arena, Arena Assets or Elitch Units as defined in the
Agreement or any actions taken by any other party or parties in working
together to develop the Arena Complex as defined in the Agreement.
E-1
<PAGE>
DATED this 26th day of March, 1996.
THE ANSCHUTZ CORPORATION,
a Kansas Corporation
By:__________________________________
Title:________________________________
COMSAT CORPORATION, a District of
Columbia corporation
By:__________________________________
Title:________________________________
ASCENT ENTERTAINMENT GROUP, INC., a
Delaware corporation
By:__________________________________
Title:________________________________
E-2
<PAGE>
PURCHASE AND SALE AGREEMENT
between
SOUTHERN PACIFIC TRANSPORTATION COMPANY
and
THE DENVER ARENA COMPANY, LLC
March 27, 1996
<PAGE>
TABLE OF CONTENTS
Page
PURCHASE AND SALE AGREEMENT............................................... 1
RECITALS ................................................................. 1
PURCHASE AND SALE AGREEMENT............................................... 1
ARTICLE 1: PURCHASE AND SALE............................................. 1
1.1 Purchase and Sale................................................ 1
1.2 Purchase Price; Earnest Money Deposit............................ 2
1.3 Adjustments and Costs............................................ 2
ARTICLE 2: TITLE......................................................... 4
2.1 Permitted Exceptions............................................. 4
2.2 Title Report and Documents; Title Policy......................... 5
2.3 Title Conveyed................................................... 7
2.4 Title Warranty................................................... 7
2.5 Breach of Warranties............................................. 7
ARTICLE 3: INFORMATION, INSPECTION, AND DEVELOPMENT
APPROVALS............................................................ 8
3.1 Information...................................................... 8
3.2 Buyer's Rights to Enter the Property............................. 8
3.3 Zoning and Development Approvals................................. 10
3.4 Confidentiality.................................................. 11
ARTICLE 4: CONDITIONS TO CLOSING......................................... 12
4.1 Buyer's Conditions............................................... 12
4.2 Seller's Conditions.............................................. 13
4.3 Termination for Failure of Condition............................. 14
4.4 Effect of Default................................................ 14
4.5 Environmental Responsibility Agreement........................... 14
ARTICLE 5: REPRESENTATIONS AND WARRANTIES; COVENANTS..................... 14
5.1 Seller's Representations and Warranties.......................... 14
5.2 No Other Warranties.............................................. 18
5.3 Buyer's Representations and Warranties........................... 18
5.4 Pre-Closing Covenants of Seller.................................. 19
5.5 Compliance with NCP.............................................. 20
5.6 Insurance; Indemnities........................................... 20
5.7 Hart-Scott-Rodino................................................ 21
ARTICLE 6: CLOSING....................................................... 21
6.1 Closing.......................................................... 21
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<PAGE>
Page
6.2 Closing Obligations of the Parties............................... 21
ARTICLE 7: RISK OF LOSS.................................................. 24
ARTICLE 8: DEFAULT AND REMEDIES.......................................... 25
8.1 Remedies......................................................... 25
8.2 Costs of Enforcement............................................. 26
8.3 Termination...................................................... 26
ARTICLE 9: POST CLOSING COVENANTS........................................ 26
9.1 Further Assurances............................................... 26
9.2 Removal of Railroad Tracks....................................... 26
ARTICLE 10: ENVIRONMENTAL CLEANUP MATTERS................................ 27
10.1 Contamination.................................................... 27
ARTICLE 11: FLOOD PLAIN MATTERS.......................................... 27
11.1 Flood Plain...................................................... 27
11.2 Grading Plan..................................................... 27
11.3 Allocation of Costs Under the Grading Plan....................... 27
ARTICLE 12: INDEMNIFICATION.............................................. 28
12.1 Indemnity by Seller.............................................. 28
12.2 Indemnification by Buyer......................................... 28
12.3 Access and Cooperation........................................... 29
12.4 Definitions...................................................... 29
12.5 Defense of Indemnified Claims.................................... 29
ARTICLE 13: INTERPRETATION OF AGREEMENT.................................. 30
13.1 Governing Law.................................................... 30
13.2 Headings......................................................... 30
13.3 Effect of Agreement.............................................. 30
13.4 Survival......................................................... 30
ARTICLE 14: MISCELLANEOUS................................................ 30
14.1 Time............................................................. 30
14.2 No Brokers....................................................... 30
14.3 No Assignment.................................................... 31
14.4 Notices.......................................................... 31
14.5 No Recording..................................................... 33
14.6 Days............................................................. 33
14.7 Entire Agreement................................................. 33
14.8 Execution........................................................ 33
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<PAGE>
INDEX OF DEFINED TERMS
Page
"Affiliate"................................................................29
"Agreement".................................................................1
"Approval Processes".......................................................10
"business day".............................................................33
"Buyer Environmental Surveys"...............................................8
"Buyer".....................................................................1
"Buyer's Agents"............................................................8
"Buyer's Representatives"...................................................8
"CDPHE"....................................................................13
"CERCLA"...................................................................16
"Closing Date".............................................................21
"Closing Documents"........................................................21
"Closing"..................................................................21
"Deed".....................................................................21
"Deposit"...................................................................2
"Environmental Responsibility Agreement"...................................14
"Flood Plain Costs"........................................................27
"Flood Plain"..............................................................27
"Grading Plan".............................................................27
"Hart-Scott-Rodino"........................................................21
"Identified Exceptions".....................................................5
"Improvements"..............................................................2
"Indemnitee"...............................................................29
"Indemnitees"..............................................................28
"Indemnitor"...............................................................29
"Land"......................................................................1
"Leases"....................................................................2
"Lenders"...................................................................8
"Lenders' Agents"...........................................................8
"Losses"...................................................................29
"NCP"......................................................................20
"Other Agreements"..........................................................2
"Permitted Exceptions"......................................................4
"Planning Documents".......................................................10
"Project"...................................................................1
"Property"..................................................................1
"PUD Application"...........................................................1
"Purchase Price"............................................................2
"Railroad Improvements".....................................................2
"Retained Property Removal Date"...........................................26
"Retained Property".........................................................2
"Seller Environmental Reports"..............................................8
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<PAGE>
Page
"Seller"....................................................................1
"Seller's Knowledge".......................................................16
"Solid Waste Disposal Act".................................................16
"Survey"....................................................................5
"Termination Date".........................................................21
"Title Company".............................................................5
"Title Exception Documents".................................................5
"Title Report"..............................................................5
"Undertaking"...............................................................6
"VCUP".....................................................................13
"wetland"..................................................................17
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<PAGE>
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (the "Agreement"), dated March 27,
1996, is entered into by and between SOUTHERN PACIFIC TRANSPORTATION COMPANY, a
Delaware corporation ("Seller"), and THE DENVER ARENA COMPANY, LLC, a Colorado
limited liability company ("Buyer").
RECITALS
A. Seller owns certain real property and related improvements located in
the City and County of Denver, State of Colorado, further described as
the "Property" in Article 1 of this Agreement.
B. Seller desires to sell the Property, and Buyer desires to purchase the
Property from Seller, free and clear of all liens, encumbrances,
liabilities, duties and obligations except those specifically assumed
or consented to by Buyer as set forth in this Agreement.
C. Buyer is purchasing the Property to construct a sports and
entertainment complex consisting of an arena, production facilities,
retail facilities and parking lot and other uses (the "Project"), all
as described in the City and County of Denver, Application for Zone
Map Amendment, a copy of which is attached hereto as Exhibit "A"
(together with the map submitted therewith and described in Exhibit A,
the "PUD Application").
NOW, THEREFORE, in consideration of the promises and agreements contained
herein, the sufficiency of which is hereby acknowledged by both parties, Seller
and Buyer hereby agree as follows:
PURCHASE AND SALE AGREEMENT
ARTICLE 1: PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, Seller shall sell and convey, and Buyer shall purchase and
pay for, all of Seller's interest in the following described property
(all of which are referred to herein collectively as the "Property"):
(a) the parcels of land comprising approximately 48.7101 acres
located in the City and County of Denver, State of Colorado,
which are more particularly described on Exhibit "B" attached
hereto and by this reference made a part hereof (the "Land");
(b) all strips and gores of land belonging, relating or appertaining
to the Land;
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<PAGE>
(c) all buildings and structures located on the Land, including all
permanent fixtures and equipment located thereon and permanently
affixed to and forming an integral part of such buildings and
structures (the "Improvements");
(d) all easements and other appurtenances to or benefitting the Land
and Improvements;
(e) all leases listed on Exhibit "C" attached hereto (the "Leases");
(f) to the extent the same are related to the Land and may be
transferred by Seller to Buyer, any licenses, permits, and
similar agreements benefitting the Property to which Seller is a
party, and Seller's interest as licensor in all licenses and
agreements granted for use of the Land for utility lines and
similar purposes, including those not of record, including
without limitation those licenses, permits, and similar
agreements and those licenses and agreements burdening the
Property listed on Exhibit "D" attached hereto ("Other Agreements");
and
(g) any prepaid rents under the Leases for periods occurring after
the Closing Date and all security deposits made by tenants under
the Leases, if any.
Notwithstanding the foregoing, the Improvements and the Property shall
not include the following property (collectively called the "Retained
Property"): (x) all railroad tracks located on the Land (which
railroad tracks include, for purposes hereof, all appurtenances
thereto and all rails and fastenings, switches and frogs, bumpers,
ties, and signalling devices (collectively called the "Railroad
Improvements"), (y) all buildings and structures (including related
fixtures, equipment, and appurtenances) which Seller is obligated to
remove as provided for herein, and (z) all personal property,
including all fixtures and equipment, located on the Land which are
not part of the Improvements.
1.2 Purchase Price; Earnest Money Deposit. The purchase price for the
Property (the "Purchase Price") shall be Twenty Million Dollars
($20,000,000). Simultaneously herewith, Buyer shall pay to Seller Five
Hundred Thousand Dollars ($500,000) as an earnest money deposit for
the purchase of the Property (the "Deposit"). The Deposit shall be
credited against the Purchase Price at the Closing, and the balance of
the Purchase Price shall be payable by Buyer to Seller at the Closing
as provided in Article 6, after credit for the adjustments set forth
in Section 1.3, by immediately available funds delivered by wire
transfer as directed by Seller. Except as provided in Section 8.3, the
Deposit shall be non-refundable in the event the Closing does not
occur.
1.3 Adjustments and Costs. The amount of the Purchase Price due at Closing
shall be subject to the following adjustments and prorations:
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<PAGE>
(a) Real Property Taxes and Assessments. Seller shall pay all real
property taxes and special assessments (including penalties and
interest) allocable to the Property for tax years prior to the
year of Closing. Real property taxes and assessments for the
current tax year shall be prorated between the parties as of the
Closing Date, with the amount of such taxes to be based upon
taxes for the current year or, if not then known, taxes for the
prior year. Buyer shall receive a credit against the Purchase
Price for Seller's share of any unpaid taxes and assessments.
Real property taxes and assessments for the current year and all
subsequent tax years shall be paid by the Buyer. If such taxes
and assessments for a subsequent tax year are levied against
Seller, Seller shall forward the tax bill to Buyer for payment
directly by Buyer.
To the extent that the Property has previously been taxed by the
State of Colorado under a unified system applicable to railroad
properties, and the City of Denver subsequently taxes the
Property separately, such taxes shall be payable by Buyer only to
the extent attributable to periods after Closing.
In the event there is any supplemental assessment that relates to a
time period prior to the Closing Date, it shall be paid by Seller
unless, and only to the extent that, it is attributable to a
change in use by Buyer after the Closing Date, in which case
Buyer shall pay the incremental amount of any such taxes that are
assessed and attributable to such change in use.
(b) Rents. All rents and other income, if any, from the Property and
expenses, if any, relating to the Leases on the Property shall be
prorated between Buyer and Seller as of the Closing Date. Seller
shall retain the right to collect rents for periods prior to the
Closing Date, and if Buyer collects any rents due under the
Leases for periods prior to the Closing Date, Buyer shall
promptly remit to Seller all such amounts. All security deposits
and advance rents attributable to periods subsequent to the
Closing Date received by Seller under any Leases as of the
Closing Date shall be transferred by Seller to Buyer at Closing.
Buyer shall assume any obligations relating to, and indemnify and
hold Seller harmless from and against any claims made against
Seller for, such security deposits and advance rents actually
transferred to Buyer.
(c) Utilities Charges. Seller shall pay all utility charges and other
operating expenses for the Property attributable to the period
prior to the Closing Date and Buyer shall pay all of the same
attributable to all periods thereafter. All accounts for water,
sewer, gas, electrical, telephone and other public utilities
payable by Seller affecting the Property shall be closed
effective as of the Closing Date.
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<PAGE>
(d) Insurance. Insurance policies shall not be assigned to Buyer, and
Seller may cancel the coverage provided thereby at the Closing.
Each party shall be responsible for carrying any insurance
coverage it deems to be appropriate for the period during which
such party owns the Property and otherwise.
(e) Personal Property Taxes. Because no personal property is included
in the Property, the parties believe that no sales or use tax
will be payable on the sale of the Property. Buyer shall be
responsible for the payment of any such tax which is payable.
(f) Recording and Related Fees. Buyer shall pay all recording fees,
filing fees, and documentary fees, and similar fees and taxes
payable in connection with transfer of the Property.
(g) Normal Closing Costs. Seller and Buyer shall each pay any fees,
costs and expenses incurred by such party in connection with the
transaction contemplated by this Agreement and not otherwise
adjusted or allocated as set forth in this Section 1.3 or as
otherwise provided in this Agreement.
The obligations of the parties under this Section 1.3 shall survive
the Closing.
ARTICLE 2: TITLE
2.1 Permitted Exceptions. For purposes of this Agreement, "Permitted
Exceptions" shall mean:
(a) a lien for real property taxes and assessments for the current
year, not yet due and payable;
(b) the Leases;
(c) liens or encumbrances arising out of any activity of Buyer or its
agents with respect to the Land;
(d) easements, dedications and other matters of record granted or
created or proposed to be granted or created pursuant to the PUD
Application or any other document filed or submitted by Buyer in
connection with obtaining any governmental approvals necessary
for construction of the Project;
(e) the Other Agreements (to the extent the same create burdens on
the Land or restrict the use thereof);
(f) those exceptions to title listed in the Title Report (as defined
in Section 2.2);
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<PAGE>
(g) all encroachments, easements, and other matters shown on the
Survey (as defined in Section 2.2), regardless of whether the
same are of record or are otherwise evidenced by any document of
record; and
(h) the claim of Alpen Construction Company and/or Anthony Brake to
an adverse possessory interest in a portion the part of the
Property described in Exhibit "B" under the heading "Parcel 3";
(i) such other exceptions as Buyer shall from time to time accept or
be deemed to have accepted as hereinafter provided.
Those Permitted Exceptions referred to in Subsections (a) through (h)
of this Section 2.1 are hereinafter called the "Identified Exceptions."
2.2 Title Report and Documents; Title Policy.
(a) Title Report. Prior to the date hereof, Seller, at its expense,
has delivered to Buyer a Commitment for Title Insurance (File No.
8288 CM C2) (as the same may be amended or supplemented, the
"Title Report") for the Property issued by North American Title
Company of Colorado (the "Title Company"), as agent for First
American Title Insurance Company, together with legible copies of
all documents evidencing exceptions to title shown therein or
otherwise affecting the Property referred to in such Title Report
(the "Title Exception Documents"). On or before Closing, Seller
shall cause the Title Report to be endorsed or reissued so as to
change the effective date to a date not earlier than ten (10)
business days prior to Closing, and to conform to the
requirements set forth in Paragraphs 1, 2, and 5 of Exhibit "E"
hereto. Seller and Buyer shall cooperate together to try to cause
the Title Policy, when issued, to limit Exception 30, as listed
in the Title Report, to those leases then in effect which affect
the Property. Seller and Buyer shall cooperate together to try to
cause the Title Company to issue endorsements to the Title Report
or to reissue the Title Report to effect the remaining changes in
the Title Report proposed by Exhibit "E"; provided that, in the
event that the Title Company refuses to issue endorsements or to
reissue the Title Report to effect such changes on or before
April 15, 1996, Buyer may terminate this Agreement with the
effect provided in Section 8.3.
(b) Survey. Seller has, prior to the date hereof, provided Buyer with
a copy of a survey of the Property prepared by Benchmark
Surveying, Ltd. and identified as Job No. 3531, dated October 1,
1994, and revised November 16, 1994, November 30, 1994, and
December 19, 1994 (the "Survey"). The Title Report includes all
additional exceptions required on account of the encroachments,
easements and other matters shown in the Survey. Seller shall
deliver an update of the Survey within 30 days of the date
hereof.
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<PAGE>
(c) Increase of Coverage. Seller shall cooperate with Buyer as Buyer
reasonably requests to obtain from the Title Company (at Buyer's
expense), endorsements and other additions to the Title Report,
pursuant to which:
(i) The Title Report is supplemented to provide for the
increase of the amount of the Title Policy from time to
time as construction proceeds on the Project and
providing for the increase of the amount of the Title
Policy from time to time in effect to the sum of (y)
$20,000,000 plus (z) the amount expended by Buyer from
time to time in the construction of the Project.
(ii) The Title Report is supplemented by the addition of
such coinsurors and reinsurers acceptable to Buyer, as
shall be necessary so that none of the Title Company
and such reinsurers and coinsurors is committed to a
portion of the risk under the Title Policy (as
ultimately increased) which exceeds such title
company's normal, self-imposed insurance limits as to
any single policy.
(d) Periodic Updates. Seller shall, from time to time, provide Buyer
with updates of the Title Report, which shall show the status of
the title to the Property as of a current date. In the event that
any update of the Title Report shall show any exception to title
to the Property which is not an Identified Exception and which
has not previously been accepted by Buyer as a Permitted
Exception, Buyer may give notice to Seller objecting thereto
within ten business days after receipt of the updated Title
Report first disclosing such exception. If Buyer fails to object
to any exception by notice given within such period of ten
business days, Buyer shall be deemed to have accepted the same as
an additional Permitted Exception. In the event that Buyer timely
objects to any such new or newly disclosed title exception,
Seller shall at its expense and in a manner and form acceptable
to Buyer, cure any such title exception that arises from a
monetary lien (provided, that Seller may, at its option, defer
the cure of any such monetary lien to the date of the Closing
Date or any prior date) or mechanic's lien, and all other such
title exceptions that can be cured by an expenditure of $50,000
or less in the aggregate. If any such title exceptions cannot be
cured by an expenditure of $50,000 or less in the aggregate,
Buyer and Seller will attempt to agree on a time and manner for
curing such title exception, but in the event that they do not
agree, Buyer shall have the right to terminate this Agreement
with the effect provided in Section 8.3.
(e) Undertaking. At Closing, Seller, at its expense, shall cause the
Title Company to deliver its written undertaking (the
"Undertaking"),
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<PAGE>
unconditionally agreeing to issue the Title Policy to Buyer, insuring
good and marketable title to the Property in Buyer in the amount
of $20,000,000, subject only to the Permitted Exceptions, in the
form provided for herein and with such endorsements as shall be
necessary to commit the Title Company to the increases of the
amount of the insurance and to the reinsurance and coinsurance
provisions provided in Section 2.2(c) and which have been agreed
to by the Title Company, and such additional endorsements that
Buyer or the Buyer's lenders may reasonably request and which
have been agreed to by the Title Company.
(f) Payment of Premium. At the Closing, Seller shall pay the premium
for the Title Policy to the Title Company; provided that Seller
shall be responsible for the premium only for $20,000,000 of
coverage, and Buyer shall be responsible for all costs of
coverage in excess of $20,000,000 and for the costs of any
endorsements not required in connection with the cure of any
title exception under Section 2.2(d).
(g) Tax Certificate. Seller has delivered a certificate or
certificates of taxes due covering the Property and issued by the
Treasurer of the City and County of Denver, Colorado, and, upon
request of Buyer prior to Closing, shall deliver updated
certificates of taxes due.
(h) No Further Title Exceptions. So long as this Agreement continues
in effect, Seller shall not, without the prior written consent of
Buyer, sell, transfer, convey, lease, or create easements or
other exceptions to title to the Property, or otherwise cloud
title to the Property.
2.3 Title Conveyed.
At the Closing, Seller shall convey and Buyer shall accept good and
marketable title to the Property subject only to the Permitted
Exceptions.
2.4 Title Warranty.
(a) Seller hereby warrants to Buyer that it has good and marketable
title to the Property, free and clear of all liens, interests and
encumbrances, created by or through it, other than the Permitted
Exceptions.
(b) The warranty set forth in this Section 2.4 is for the benefit of
Buyer and its successors in title to the Property, and shall not
inure by right of subrogation or assignment to the benefit of any
title insurance company under the Title Policy or any other third
party.
2.5 Breach of Warranties. Should the warranty of title set forth in Section
2.4 be breached for any reason, Seller shall cure the breach in one of
the following manners, as selected by Buyer:
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<PAGE>
(a) Seller shall restore Buyer to quiet possession of the Property,
at Seller's expense, including any reasonable legal fees or costs
incurred by Buyer; or
(b) Buyer shall restore itself to quiet possession of the Property at
Seller's expense, including any reasonable legal fees or costs
incurred by Buyer;
provided, that Buyer shall be required first to use its best efforts
to recover from the Title Company for any losses arising from
matters against which Buyer was insured under the Title Policy,
and Buyer may proceed against Seller only in the event that Buyer
does not recover from the Title Company due to its insolvency and
then only for the amount that would otherwise have been payable
under the Title Policy.
ARTICLE 3: INFORMATION, INSPECTION, AND DEVELOPMENT APPROVALS
3.1 Information. Prior to the execution of this Agreement, Seller has
delivered to Buyer:
(a) a true and correct copy of the Leases, the Other Agreements, the
Title Report, the Title Exception Documents, and the Survey, and
all amendments and/or supplements thereto; and
(b) all environmental studies and reports in the possession or under
the control of Seller relating to the Property, all of which are
listed on Exhibit "F" attached hereto (collectively, the "Seller
Environmental Reports").
3.2 Buyer's Rights to Enter the Property.
Prior to Closing, Buyer's rights to enter onto the Property shall be
governed by the following provisions:
(a) Entry for Testing and Inspection. Subject to the provisions of
any of the Leases, upon and subject to making prior arrangements
with Seller (which Seller may not delay beyond the second
business day after request to Seller is made), Buyer's
Representatives (as defined below) may enter onto the Property at
all reasonable times to make tests, surveys, studies and
inspections in connection with the purchase of the Property by
Buyer and in connection with preparations for construction of the
Project which will occur after the Closing. Seller or Seller's
agents or employees shall be entitled to accompany Buyer's
Representatives onto the Property pursuant to this Section
3.2(a). Any entry by Buyer's Representatives pursuant to this
Section 3.2(a) shall be made in a manner that results in the
least interference with the use of the Property by Seller or any
third party and with any activities on the Property by Seller or
any third party. "Buyer's
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Representatives" means Buyer; Buyer's agents, advisers, contractors,
consultants and other representatives (collectively, "Buyer's
Agents"); potential lenders to Buyer ("Lenders"); and
representatives of, or advisers or consultants for, Lenders
("Lenders' Agents").
(b) Extent of Buyer's Investigations. Buyer or Lenders shall have the
right, at Buyer's sole cost and expense except and to the extent,
if any, as otherwise specifically provided in this Agreement, to
conduct such studies, evaluations, audits or surveys as Buyer or
Lenders deem appropriate (collectively, the "Buyer Environmental
Surveys"), subject to the other provisions of this Agreement and
to the following terms and conditions:
(i) Seller shall have the right to approve, review and monitor
any and all physical tests, studies and procedures in or
about the Property which are made or implemented in
connection with any Buyer Environmental Surveys, including,
without limitation, the review and approval of the number,
type, extent and location of any test or monitoring wells or
drillings.
(ii) Except as required by law, Buyer's Representatives shall not
make any contacts or communications to any governmental
agency, department, district or board in connection with any
Buyer Environmental Surveys without the prior written
approval of Seller, such approval not to be unreasonably
withheld or delayed.
(iii) Prior to the issuance of any final report by any consultant
to Buyer or Lenders, Seller shall be given the opportunity
to make comments, question and offer recommendations to the
Buyer's consultants or Lenders preparing such reports.
(iv) Buyer shall provide all of Buyer's Agents, Lenders and
Lenders' Agents with a copy of this Section 3.2 and obtain
the agreement of each such person or entity to abide by the
terms and conditions hereof.
Buyer's obligations under this Section 3.2(b) shall survive
the Closing and the termination of this Agreement.
(c) Entry for Site Preparation Work. Seller shall not unreasonably
withhold its approval of any request by Buyer for Buyer and its
contractors to enter onto the Land for purposes of commencing
site preparation for construction of the sports arena, including
without limitation, excavation and filling necessary for
construction of the floor underlying the ice rink in the arena,
and implementation of the Grading Plan (as defined in
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Section 11.2). Seller hereby approves Buyer's entry for purposes of
performing the activities described on Exhibit "G" attached
hereto.
(d) Insurance. Prior to any entry by Buyer's Representatives, Buyer
shall (i) arrange for and cause to be maintained in full force
and effect a policy of comprehensive general liability insurance,
with broad form liability endorsement, having a combined single
limit of not less than Two Million Dollars ($2,000,000) per
occurrence, and (ii) furnish to Seller a certificate of such
insurance which names Seller as an additional insured and
provides that such policy shall not be canceled or amended
without thirty (30) days' prior written notice to Seller. Buyer's
obligations under this Section 3.2(d) shall survive the Closing
and any termination of this Agreement.
(e) Buyer's Costs. Except as otherwise expressly provided in this
Agreement, all costs incurred in connection with tests, surveys,
studies, inspections, reviews, approvals, determinations,
applications, site work, and any other work made by Buyer or
Buyer's Representatives under this Agreement or otherwise shall
be the sole responsibility of and be paid by Buyer. In the event
of the recordation of any claim or lien against the Property for
materials supplied or labor or professional services performed on
behalf of Buyer, Buyer shall promptly discharge such lien at
Buyer's sole cost and expense. Buyer's obligations under this
Section 3.2(e) shall survive the Closing and the termination of
this Agreement. Nothing contained in this paragraph shall be
interpreted as modifying or otherwise affecting the provisions of
the Environmental Responsibility Agreement (as hereinafter
defined).
(f) Copies of all Reports. Buyer shall provide to Seller a copy of
each technical report, study, survey, and any similar document
obtained by Buyer in connection with its investigation of the
Property prior to the Closing (whether preliminary, interim, or
final in nature), all of which shall be provided to Seller
promptly after the same have been received by Buyer at no cost to
Seller. Buyer's obligations under this Section 3.2(f) shall
survive the Closing and any termination of this Agreement.
(g) Indemnification of Seller. Buyer shall indemnify and defend
Seller against, and hold Seller and the Property harmless from
and against, any and all costs, expenses (including, without
limitation, reasonable attorneys' fees), damages, claims,
liabilities, liens, encumbrances and charges arising out of the
entry of Buyer's Representatives upon the Property, unless and to
the extent that any such matters arise from the negligence of
Seller or Seller's agents. The obligations of Buyer under this
Section 3.2(g) shall survive the Closing and the termination of
this Agreement.
(h) Restoration of Property. In the event that the Closing does not
occur for any reason, Buyer shall at its expense fill any wells,
test drillings or other
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holes created by Buyer's Representatives, and shall flatten and rough
grade the surface of the Land disturbed by the Buyer's entry or
tests. The obligations of Buyer under this Section 3.2(h) shall
survive the Closing and the termination of this Agreement.
3.3 Zoning and Development Approvals. Buyer anticipates that the Property
will need to be rezoned and that other development approvals will be
required for the Project. In order to proceed timely with the Project,
Buyer has, jointly with Seller, submitted the PUD Application and also
anticipates that prior to Closing Buyer will want to proceed with
additional applications, for example, for the vacation of existing
streets and alleys on the Property and for the replatting of the
Property. The PUD Application, any additional applications, and
amendments or supplements to any of the foregoing and any commitments
made in connection with any of the foregoing are referred to
collectively as the "Planning Documents" and the rezoning, replatting,
and other approval processes are hereinafter called the "Approval
Processes."
Buyer shall be permitted, prior to Closing, to proceed with the
Planning Documents and Approval Processes as required for the Project,
subject to the following provisions:
(a) If reasonably requested in any instance by Buyer or Seller,
Seller as well as Buyer shall be named as the applicant on the
Planning Documents and in all Approval Processes.
(b) No Planning Document shall be submitted to any government entity
until approved in writing by Seller as to form and content, which
approval shall not be unreasonably withheld or delayed.
(c) Prior to the Closing, no Planning Document shall be permitted to
be completed, so as to be binding on the Property without
Seller's written approval, which may be withheld in Seller's
discretion. Subject to the foregoing, Seller shall cooperate with
Buyer in obtaining necessary approvals of the Planning Documents.
(d) Buyer and Seller shall each keep the other informed of any
material developments in connection with the Planning Documents
of which such party becomes aware.
(e) Except as otherwise specifically provided in this Agreement or
the Environmental Responsibility Agreement, Buyer shall pay for
all of the costs of preparing, submitting and processing the
Planning Documents, and all costs incurred in connection with the
Approval Processes, including, without limitation, application
fees, professional fees, and any required bonds, letters of
credit, dedications, and improvements. Seller shall not
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have any responsibility for such costs, and Buyer shall
indemnify Seller from and against any such costs.
(f) In the event that the Closing does not occur, except to the
extent otherwise requested by Seller, Buyer shall, at no cost to
Seller, take all measures necessary to withdraw all of the
Planning Documents and terminate the Approval Processes. Buyer
shall indemnify Seller against all costs incurred in doing so and
against any changes or damages to the Property (excluding any
changes to the real property tax status of the Property) which
cannot be reversed by withdrawing the Planning Documents and
terminating the Approval Processes.
The obligations of Buyer under this Section 3.3 shall survive the
Closing and any termination of this Agreement.
3.4 Confidentiality. Except as required by law, Buyer shall and shall cause
Buyer's Representatives to maintain in confidence any and all
information, reports, evaluations and surveys generated in connection
with their investigation of the Property and Buyer shall not and shall
cause Buyer's Representatives not to make any disclosure of any such
information, reports, evaluations and surveys to any other person or
entity without the prior written approval of Seller, such approval not
to be unreasonably withheld or delayed; provided, however, Buyer may
disclose such information to representatives of the City and County of
Denver, other governmental organizations or Lenders, if relevant, in
the reasonable judgment of Buyer, to negotiations regarding
construction, use or financing of the Project. In the event the sale of
the Property from Seller to Buyer contemplated hereby is not, for any
reason, closed, Buyer shall, upon request from Seller, return to Seller
or cause to be destroyed all information Buyer has received from Seller
with respect to the Property (including any such information which
Buyer has provided to Buyer's Representatives), and shall not retain
any copies thereof or permit any such person to retain any copies
thereof. The provisions of this Section 3.4 shall survive the Closing
and any termination of this Agreement. Buyer shall provide all of
Buyer's Representatives with a copy of this Section 3.4 and obtain the
agreement of each such Buyer's Representative to comply with the terms
and conditions hereof.
ARTICLE 4: CONDITIONS TO CLOSING
4.1 Buyer's Conditions. Buyer's obligation to purchase the Property is
expressly conditioned upon satisfaction of each of the following
conditions prior to Closing:
(a) Financial. Buyer shall have obtained financing for the
construction of the Project on terms and conditions satisfactory
to Buyer in its sole discretion, provided that Buyer has used
good faith efforts to obtain such financing.
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(b) Consents. Seller shall have delivered to Buyer evidence of the
consent of any person or entity whose consent is required for the
purchase of the Property by Buyer from Seller.
(c) No Material Adverse Change. There shall have been no material and
adverse change in the physical condition of the Property between
the date hereof and Closing.
(d) Performance. Seller shall have performed and observed all of its
covenants, agreements and obligations contained in this
Agreement.
(e) Warranties and Representations Correct. All the representations
and warranties of Seller contained in this Agreement shall have
been true and correct when made and shall be true and correct on
and as of Closing as if then made or given.
(f) Release of Nuggets. The City and County of Denver shall have
released The Denver Nuggets Limited Partnership from its
obligations under the Basketball Agreement dated July 15, 1992 on
terms and conditions satisfactory to Buyer in its sole
discretion.
(g) Rezoning. Buyer shall have obtained final approvals of all the
Planning Documents.
(h) City Approvals. Buyer shall have obtained all necessary approvals
and consents from the City and County of Denver, and all agencies
and departments thereof, and from all other governmental entities
and non-governmental entities and persons whose consent is
required to commence construction of the Project, all on terms
and conditions satisfactory to Buyer in its sole discretion.
(i) City Agreement. The City and County of Denver shall have agreed
to acquire the arena to be constructed as a portion of the
Project from Buyer and shall have agreed to enter into a use
agreement permitting Buyer to operate the Project, all on terms
and conditions satisfactory to Buyer in its sole discretion.
(j) Environmental Approvals. The voluntary environmental management
plan for the Project ("VCUP") submitted to the Colorado
Department of Public Health and the Environment ("CDPHE") by
application dated February 21, 1995, as amended and supplemented
and approved by CDPHE by letter dated May 12, 1995, shall be in
full force and effect and shall not have been amended or modified
in any respect, except for an extension of the time for
completion of the VCUP (which shall have been obtained prior to
Closing) and for other changes approved by Buyer and Seller. The
letter from the Environmental Protection Agency dated June 8,
1995, shall be in
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full force and effect and shall not have been amended and
modified in any respect, except as approved by Buyer and
Seller.
(k) Approval of Grading Plan. All governmental approvals of the
Grading Plan necessary to permit construction of the sports arena
on the Property shall have been obtained.
(l) Delivery of Documents. Seller shall have delivered the documents
required to be delivered by it pursuant to Section 6.2(a).
Buyer may, at its option, waive any of such conditions. In the event
that the condition set forth in Section 4.1(e) is not satisfied (except
for matters not within Seller's control), Buyer may elect to close and
pursue any right of indemnification under Section 12.1.
4.2 Seller's Conditions. Seller's obligation to sell the Property is
expressly conditioned upon satisfaction of the following conditions prior
to Closing:
(a) Warranties and Representations Correct. All the representations
and warranties of Buyer contained in this Agreement shall have
been true and correct when made and shall be true and correct on
and as of Closing as if then made or given.
(b) Buyer's Performance. Buyer shall have performed and observed all
of its covenants, agreements and obligations contained in this
Agreement.
(c) Environmental Approvals. The VCUP shall be in full force and
effect and shall not have been amended or modified in any
respect, except for an extension of the time for completion of
the VCUP (which shall have been obtained prior to Closing) and
for other changes approved by Buyer and Seller. The letter from
the Environmental Protection Agency dated June 8, 1995, shall be
in full force and effect and shall not have been amended and
modified in any respect, except as approved by Buyer and Seller.
(d) Delivery of Documents. Buyer shall have delivered the documents
required to be delivered by it pursuant to Section 6.2(b).
Seller may, at its option, waive any of such conditions.
4.3 Termination for Failure of Condition. In the event any of the
conditions provided in Sections 4.1 and 4.2 have not occurred and have
not been waived by the appropriate party by the Termination Date, then,
subject to Section 4.4, this Agreement shall automatically terminate
with the effect provided in Section 8.3.
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4.4 Effect of Default. Notwithstanding anything to the contrary contained in
Section 4.3, if the failure of any condition listed in Section 4.1 or
Section 4.2 also constitutes a default under any other Section in this
Agreement, the non-defaulting party shall have the remedies set forth in
Article 8.
4.5 Environmental Responsibility Agreement. In the event that Buyer and
Seller shall have not have agreed upon the form of an Environmental
Responsibility Allocation Agreement containing the terms set forth in
Exhibit "H" (the "Environmental Responsibility Agreement"), by April
15, 1996, as such date may be extended by agreement of Buyer and
Seller, Buyer or Seller may terminate this Agreement with the effect
provided in Section 8.3.
ARTICLE 5: REPRESENTATIONS AND WARRANTIES; COVENANTS
5.1 Seller's Representations and Warranties. Seller hereby represents and
warrants to Buyer as follows:
(a) Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has full power and authority to enter into this
Agreement and to fulfill its obligations hereunder.
(b) Corporate Approvals. Seller's board of directors has approved the
transaction contemplated by this Agreement, and Seller has taken
all corporate action necessary to authorize the execution and
delivery by Seller of this Agreement and other documents
contemplated hereby and the performance of its obligations
hereunder.
(c) Due Execution; Binding Agreements. This Agreement has been duly
executed and delivered by Seller and all other documents
contemplated hereby to which Seller is a party have been or will
be duly executed (and acknowledged where necessary) and delivered
by Seller, and are or when duly executed and delivered, will be,
valid, binding and enforceable obligations of Seller.
(d) No Conflict. The execution and performance of this Agreement and
the documents contemplated hereby, and consummation of the
transactions contemplated hereby, do not conflict with, with or
without notice or the passage of time or both, do not result in
the breach of, and do not constitute a default under or violation
of the terms and provisions of any contract, lease, agreement or
obligation to which Seller is a party or by which Seller may be
bound or of any law, rule, license, regulation, judgment, order
or decree governing or affecting Seller or the Property.
(e) No Pending Litigation or Governmental Action. There is no pending
or, to Seller's knowledge, threatened litigation, administrative
action,
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condemnation by any federal or state authority, governmental
investigation, or similar governmental action relating to the
Property or the transactions contemplated by this Agreement,
except as set forth on Exhibit "I" attached hereto.
(f) No Notice of Violation; Licenses. Seller has not received any
notice of and has no knowledge of the assertion of any violation
of any law, rule, regulation, order or other legal action of any
kind involving the Property which now exists or is claimed now to
exist. Seller has all licenses, permits, certificates, orders,
approvals and authority from all governmental agencies that are
necessary for the ownership and operation of the Property as it
is presently operated.
(g) Leases. There are no tenancy or other agreements that affect
Seller's current use or Buyer's intended use of the Property
(other than agreements made by Buyer), or that otherwise burden
the Property, other than the Leases and the Other Agreements
listed on Exhibits "C" and "D". All of the Leases are in full
force and effect and were entered into by Seller in the ordinary
course of its business. No material violation by any party under
any Lease has occurred, no tenant has paid rent for more than
thirty (30) days in advance of the due date therefor, and no
tenant has paid any security deposit except as disclosed on
Exhibit "C".
(h) Historic Designations. No Improvements on the Property have been
listed on the National Register of Historic Places or any
comparable Colorado list, and, to Seller's knowledge, no claim
has been made that any Improvements should be so listed.
(i) Environmental. Except as previously disclosed in the Seller
Environmental Reports delivered by Buyer pursuant to Section 3.1
above, or otherwise disclosed on Exhibit "F", to the actual
knowledge of S. David Steel, Kathleen M. Snead, and Gary H. Hunt,
all of whom are employees or agents of Seller on the date hereof
("Seller's Knowledge"):
(i) The Property does not contain asbestos or material
containing asbestos;
(ii) The Property does not contain PCBs or PCB Items, as those
terms are defined in 40 C.F.R. Part 761;
(iii) The Property does not contain underground storage tanks, as
those terms are defined in 42 U.S.C. ss. 6991 et seq.
("Solid Waste Disposal Act"), or above-ground storage tanks;
(iv) There is no and has been no release of petroleum into the
environment from an above ground or underground storage tank
at
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the Property, as those terms are defined in the Solid Waste
Disposal Act, nor is any petroleum otherwise present on the
Property;
(v) There is, and has been, no release or threatened release,
other than federally permitted releases, of hazardous
substances or pollutants or contaminants into the
environment from or through the Property as those terms are
defined in 42 U.S.C. ss. 9601 et seq. ("CERCLA");
(vi) The Property is not used, and has not been used, for the
generation, transportation, treatment, storage or disposal
of hazardous substances, pollutants, or contaminants, as
those terms are defined in CERCLA. As to those hazardous
substances, pollutants, or contaminants disposed of on, in,
or at the Property, the hazardous substances, pollutants, or
contaminants disposed of are not the subject of a release or
threatened release;
(vii) The Property is in compliance with all applicable federal,
state and local environmental statutes, regulations,
ordinances, and any permits, approvals, or judicial or
administrative orders issued thereunder. All existing
federal, state and local environmental permits and approvals
applicable to the Property are listed on Exhibit "J"
attached hereto;
(viii) The Property contains no conditions that could result in a
recovery by any governmental or private party of remedial or
removal costs, natural resource damages, property damages,
damages for personal injuries, other costs, expenses or
damages, or could result in injunctive relief, arising from
any alleged injury or threat of injury to health, safety, or
the environment relating to the Property;
(ix) Any prior administrative and judicial litigation or
proceedings, or threats of administrative and judicial
litigation or proceedings, regarding environmental issues
have been finally resolved and there are no commitments or
agreements that were entered into to resolve any such
litigation or proceedings;
(x) Except for the VCUP, there have been no orders or documents
issued by any court or administrative agency that impose
environmental requirements or interpret environmental
requirements under any environmental statute or regulation
relating to the Property;
(xi) All appropriate inquiry into the previous ownership and uses
of the Property consistent with good commercial or customary
practice has been undertaken in an effort to minimize
liability. The inquiry is adequate in light of commonly
known or reasonably ascertainable
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information about the Property; the obviousness of the presence
or likely presence of contamination, assuming there is
contamination at the Property; and the ability to detect any
contamination by appropriate inspection; and
(xii) Neither the Property nor any portion of the Property
constitutes a "wetland" subject to regulation pursuant to
Section 402 or Section 404 of the Federal Water Pollution
Control Act, or any comparable state or local law or
regulation.
(j) No Special District or Governmental Commitments. Except as
disclosed on Exhibit "K" attached hereto, the Property is not
situated within any special assessment district other than the
districts disclosed by the most recent statement for real
property taxes for the Property, nor is the Property subject to
any special assessments except for those relating to such
districts. To Seller's Knowledge, there is no proposal under
which the Property is to be placed in any other special
assessment district except for proposals relating to flood plain
improvement work. Except as listed on Exhibit "K" and except for
any commitments or agreements entered into by the Buyer in
connection with the Project, there are no existing commitments or
agreements with any federal, state or local government authority
or agency affecting the Property.
(k) Ordinary Course. The sale of the Property contemplated hereby is
a sale in the ordinary course of Seller's business.
(l) No Misstatement. This Agreement (including the exhibits hereto)
contains no material misstatement of fact or omits to state any
material fact necessary to make the statements contained therein
not misleading.
Seller shall from time to time notify Buyer as to any change in the
status of any of the foregoing warranties and representations which are
within Seller's Knowledge, promptly after the same becomes Seller's
Knowledge. Seller will not take any actions that would cause any of the
foregoing representations and warranties not to be true and correct as
of Closing. No suit may be brought on account of any claimed breach or
violation of any provision of this Section 5.1 unless filed and served
on or before the third anniversary of the date of Closing.
5.2 No Other Warranties. Buyer hereby acknowledges that, except for the
warranties and representations set forth in Sections 2.4 and 5.1 or in
any document delivered pursuant to this Agreement, Seller is making no
warranty or representation of any kind or nature whatsoever regarding
the Property. Buyer hereby acknowledges that Seller disclaims any and
all express and implied warranties regarding the Property or the
condition thereof except as set forth in Sections 2.4 and 5.1 or in any
document delivered pursuant to this Agreement.
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5.3 Buyer's Representations and Warranties. Buyer hereby represents and
warrants to Seller as follows:
(a) Organization. Buyer is a limited liability company, organized,
validly existing and in good standing under the laws of the State
of Colorado. Buyer has full power and authority to enter into
this Agreement and to fulfill its obligations hereunder.
(b) Authorization. Buyer has taken all action necessary to authorize
the execution and delivery of this Agreement by it and the
performance of its obligations hereunder.
(c) Due Execution; Binding Agreements. This Agreement has been duly
executed and delivered by Buyer and all other documents
contemplated hereby to which Buyer is a party have been or will
be duly executed (and acknowledged where necessary) and delivered
by Buyer, and are or when duly executed and delivered, will be,
valid, binding and enforceable obligations of Buyer.
(d) No Conflict. The execution and performance of this Agreement and
the documents contemplated hereby do not violate or conflict
with, or, with or without notice or the passage of time or both,
result in the breach of, or constitute a default under or
violation of the terms or provisions of any, and are not
restricted by any, other agreement, lease, contract, or
obligation, court order or law to which Buyer or any of its
members is a party or by which Buyer or any of its members is
bound or of any law, rule, license, regulation, judgment, order
or decree governing or affecting Buyer or any of its members.
No suit may be brought on account of any claimed breach or violation of
any provision of this Section 5.3 unless filed and served on or before
the third anniversary of the date of Closing.
5.4 Pre-Closing Covenants of Seller. Following execution of this Agreement
and prior to Closing, Seller shall, except as otherwise expressly provided
in this Agreement:
(a) Ordinary Course. Conduct any business on and operate the Property
in the ordinary course consistent with past operations of the
Property.
(b) Casualty Insurance. Maintain in effect any casualty insurance
policies insuring the Property or obtain suitable replacements
thereof; provided that nothing contained herein shall prohibit
Seller from self-insuring as to any casualty risk associated with
the Property, consistent with its current practice.
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(c) Leases. Not cancel, terminate or modify any existing Lease in any
respect adverse to the lessor's interest (except in accordance
with and as required by the provisions of any such Lease and
except in accordance with Seller's normal business practice)
without Buyer's prior written consent (which shall not
unreasonably be withheld), not enter into new Leases without
Buyer's prior written consent (which shall not be unreasonably
withheld) except any Lease which may be terminated on not more
than 30 days' notice, not accept rents under the Leases more than
one month in advance of the date due, and perform the lessor's
obligations under the Leases in accordance with Seller's
established practice.
(d) Taxes. Pay all taxes and assessments affecting the Property prior
to the date such taxes and assessments are delinquent.
(e) Compliance with Agreements. Comply in all material respects with
all terms, conditions and provisions of all agreements affecting
the Property and make all payments due thereunder and suffer no
material default by Seller thereunder.
(f) Termination of Leases. At Buyer's request as to any of the Leases
(i) which affect the part of the Property on which the Project
will be constructed and (ii) which Leases can be terminated with
the giving of notice by the lessor thereunder, send a notice of
termination as to such Lease; provided that in the event that the
Closing does not occur hereunder, as to any Lease terminated
before Closing at the request of Buyer (including any leases
required to be terminated in order for Buyer to perform its other
obligations hereunder required to be performed prior to the
Closing), Buyer shall reimburse Seller for the amount of the rent
that would have been payable under that Lease through the balance
of the term of the Lease (or if the Lease was on a month-to-month
basis or year- to-year basis, for six months). If any such notice
is given by Seller at Buyer's request in accordance with the
terms of a particular Lease and the tenant thereunder
nevertheless asserts a claim against Seller arising out of the
giving of such notice by Seller at Buyer's direction, Buyer shall
indemnify and hold Seller harmless from any and all loss,
liability, cost or expense sustained by Seller as a result
thereof, including reasonable attorneys' fees. Buyer's
obligations under this Section 5.4(f) shall survive the Closing
and the termination of this Agreement.
(g) Demolition and Clearing. In order to facilitate site preparation
for construction of the sports arena by the Buyer, Seller, at its
sole cost and expense, (i) shall, subject to obtaining any
necessary permits, take the actions listed on Exhibit "L" to
initiate work required by the VCUP; and (ii) shall, promptly upon
request from Buyer and subject to obtaining any necessary permits
(A) remove all Railroad Improvements located on the Land which
are located northeast of Ninth Street; (B) remove any fences
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from the Property and remove from the Land, stock pile on the Land,
or destroy all concrete docks, and curbs not lying in dedicated
street or alley right-of-ways, located on the Land which are
located northeast of Ninth Street; and (C) demolish the ESCO
warehouse located along Auraria Parkway between 9th Street and
11th Street, remove any foundations and cap any underground
utilities; provided, that if Closing does not occur for any
reason other than breach of this Agreement by Seller, Buyer shall
reimburse Seller for the costs incurred in taking the actions
required by this Section 5.4(g). The obligations of Buyer under
this Section 5.4(g) shall survive the termination of this
Agreement.
5.5 Compliance with NCP. Seller and Buyer recognize that certain measures
will be required to ensure that contaminant removal activities
performed under the VCUP are substantially in compliance with
applicable National Contingency Plan ("NCP") procedures, involving
public involvement and related matters, established under CERCLA. Buyer
and Seller intend that all contaminant removal activities will be
substantially in compliance with the NCP. Seller shall plan and
implement public involvement and related programs as appropriate to
ensure substantial compliance with the NCP, and Buyer shall cooperate
with such activities by Seller.
The obligations of the parties under this Section 5.5 shall survive the
Closing and any termination of this Agreement.
5.6 Insurance; Indemnities.
(a) Buyer shall use its reasonable efforts (at no additional cost to
Buyer) to require Buyer's contractors for the Project and any
subcontractors and subsubcontractors of such contractors, which
are required to carry liability insurance naming Buyer as an
additional insured, also to name Seller as an additional insured.
(b) Seller shall use its reasonable efforts (at no additional cost to
Seller) to require Seller's contractors for any work on the
Property and any subcontractors and subsubcontractors of such
contractors, which are required to carry liability insurance
naming Seller as and additional insured, also to name Buyer as an
additional insured.
(c) To the extent Buyer obtains indemnities from liability for itself
from any contractors, subcontractors, and subsubcontractors
described in Section 5.6(a), Buyer shall use its reasonable
efforts (at no additional cost to Buyer) to cause Seller to be
named as an additional indemnitee under such indemnities.
(d) To the extent Seller obtains indemnities from liability for
itself from any contractors, subcontractors, and
subsubcontractors described in Section 5.6(b), Seller shall use
its reasonable efforts (at no additional cost
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to Seller) to cause Buyer to be named as an additional indemnitee
under such indemnities.
5.7 Hart-Scott-Rodino. Buyer and Seller have satisfied themselves that they
are not required to make a filing before the Closing under the
provisions of Hart-Scott- Rodino Antitrust Improvements Act of 1976, as
amended ("Hart-Scott-Rodino") because the Property is primarily vacant
land and is being sold by Seller in the ordinary course of Seller's
business. In the event of any change in circumstances or in the law
that causes them to change this determination, Seller and Buyer shall
cooperate in making any filing they determine to be required under
Hart-Scott-Rodino.
ARTICLE 6: CLOSING
6.1 Closing. The closing of the transaction contemplated by this Agreement
(the "Closing") shall occur at the offices of Holme Roberts & Owen LLC,
1700 Lincoln, Suite 4100, Denver, Colorado, or such other place agreed
by the parties, at 10:00 a.m. on a date specified by Buyer (the
"Closing Date") in a written notice to Seller, which date shall be no
earlier than fourteen (14) days after the date of receipt of such
notice, but in no event later than June 28, 1996 (the "Termination
Date").
6.2 Closing Obligations of the Parties. At the Closing, the parties shall
execute and deliver the following documents (the "Closing Documents")
and otherwise cause the following events to occur, each being a
condition precedent to the others but all being deemed to have occurred
simultaneously:
(a) Seller shall deliver or cause to be delivered to Buyer the
following:
(i) Deed. A special warranty deed in the form attached hereto as
Exhibit "M" (the "Deed"), conveying to Buyer title to the
Property, subject only to the Permitted Exceptions.
(ii) Assignment and Assumption. An assignment and assumption
agreement, substantially in the form of Exhibit "N" attached
hereto, transferring to Buyer all of Seller's interests in
and to the Leases and the Other Agreements, indemnifying and
holding harmless Buyer from and against any and all claims
from any tenants or other parties thereunder arising prior
to the Closing Date, and requiring Buyer to indemnify and
hold harmless Seller from and against any such claims
arising after the Closing Date.
(iii) Original Documents. The original Leases and Other
Agreements (in the possession of Seller), together with
copies of all memoranda and/or drafts relating to pending
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negotiations relating to the Leases and Other Agreements in the
possession of Seller, and any security deposits and prepaid
rents made by the tenants under the Leases for periods
occurring after the Closing Date.
(iv) Rent Roll. A rent roll updated to within ten (10) business
days of the Closing Date and certified as true and complete
by Seller, showing, for each Lease, the name of the tenant,
the rent payable, the date through which rent has been paid,
and the term and the expiration date thereof (including any
renewal options), together with copies of all notices of
default sent (or received) by Seller as lessor under such
Lease that remain uncured.
(v) Notice to Tenants. A notice to the tenants under the Leases
of the assignment to Buyer of the lessor's interest under
the Leases.
(vi) Good Standing Certificate. A certificate of the Secretary of
State of Delaware, dated not earlier than thirty days prior
to the Closing Date, showing that the Seller is a validly
existing corporation in good standing under the laws of such
state.
(vii) Incumbency Certificate. An incumbency certificate setting
forth the officer(s) of Seller authorized to execute and
deliver the Closing Documents certified by Seller's
secretary or an assistant secretary.
(viii) FIRPTA Affidavit. A non-foreign affidavit of Seller,
substantially in the form of Exhibit "O" attached hereto, to
assure compliance with Section 1445 of the Internal Revenue
Code of 1986, as amended.
(ix) Board Resolution. A certified copy of resolutions of
Seller's board of directors approving and authorizing the
execution, delivery and performance of this Agreement and
the documents to be delivered by Seller pursuant to this
Agreement.
(x) Legal Opinion. An opinion of Seller's legal counsel,
satisfactory in form and substance to Buyer, that the
documents to be delivered by Seller pursuant to this
Agreement have been duly authorized by Seller, that this
Agreement and such documents are the valid, binding and
enforceable obligations of Seller, and opining as to such
other matters as Buyer may reasonably request.
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(xi) Title Assurance. The Undertaking of the Title Company.
(xii) Environmental Responsibility Agreement. The Environmental
Responsibility Agreement executed by Seller.
(xiii) Other Documents. Such other documents as may be reasonably
required by Buyer to effect the consummation of the
transaction contemplated hereby.
(b) Buyer shall deliver or cause to be delivered to Seller the following:
(i) Payment. The Purchase Price, as adjusted pursuant to Section
1.3, in immediately available funds delivered by wire
transfer as specified by Seller.
(ii) Assignment and Assumption. A copy of the assignment and
assumption referred to in Section 6.2(a)(ii), executed by
Buyer.
(iii) Legal Opinion. An opinion of Buyer's legal counsel,
satisfactory in form and substance to Seller, that Buyer is
a duly organized Colorado limited liability company in good
standing in Colorado, that the documents to be delivered by
Buyer pursuant to this Agreement have been duly authorized
by Buyer, that this Agreement and, when executed and
delivered by Buyer, such other documents are the valid,
binding, and enforceable obligations of Buyer, and opining
as to such other matters as Seller may reasonably request.
(iv) Certificate Regarding Buyer. A certificate of the Secretary
of State of Colorado, dated not earlier than thirty days
prior to the Closing Date, showing that Buyer is a validly
existing limited liability company in good standing under
the laws of that state.
(v) Certificates Regarding the Members. Certificates from their
respective states of organization, dated not earlier than
fourteen days prior to the Closing Date, showing that each
of the members of Buyer is validly existing and in good
standing under the laws of that state and a certificate from
the Secretary of State of Colorado dated not earlier than
thirty days prior to the Closing Date showing that each
member is qualified to do business in Colorado.
(vi) Environmental Responsibility Agreement. The Environmental
Responsibility Agreement executed by Buyer.
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(vii) Additional Documents. Such affidavits and other documents
as may be required or reasonably requested by Seller to
effect the consummation of the transaction contemplated
hereby.
(c) Buyer and Seller shall each execute settlement statements showing
adjustments to the Purchase Price and payments of the costs of
Closing. Prorated items and costs shall be charged or credited to
Seller and Buyer as provided in Section 1.3.
(d) Seller shall surrender possession of the Property to Buyer.
ARTICLE 7: RISK OF LOSS
If, between the date of this Agreement and the Closing Date, either (i)
any part of the Property is damaged or destroyed by fire or other
casualty which, in the reasonable judgment of Buyer, would render the
Property unsuitable for Buyer's use thereof, or (ii) any material part
of the Property is taken in condemnation or under the right of eminent
domain, or proceedings for such taking shall be pending or threatened
and, in the reasonable judgment of Buyer, such taking renders or would
render the Property unsuitable for Buyer's use thereof, Buyer shall
have the right to terminate this Agreement by notice given to Seller
within ten (10) days after receiving notice thereof. Any such
termination shall be governed by Section 8.3. Seller shall promptly
notify Buyer of each occurrence of the kind specified above which
comes within Seller's Knowledge and shall give Buyer such information
relating thereto as Buyer may thereafter reasonably request. If Buyer
fails to give notice of termination within such ten-day period as to
any damage or taking, Buyer's right to terminate on account of such
damage or taking shall be deemed to have been waived and this
Agreement shall continue in full force and effect, notwithstanding the
damage or taking, without any diminution of the Purchase Price, in
such case Seller shall, on the Closing Date, deliver to Buyer any
insurance proceeds or condemnation awards received by Seller as a
result of any occurrence specified herein, assign to Buyer all of
Seller's right, title and interest in and to any insurance proceeds or
condemnation awards resulting from any such occurrence that have not
yet been received by Seller on that date, and cooperate with and
assist Buyer in collecting any such proceeds or awards, at Buyer's
sole cost and expense.
ARTICLE 8: DEFAULT AND REMEDIES
8.1 Remedies.
(a) Pre-Closing. In the event of any default at or before the Closing:
(i) Seller's Remedies. In the event of a material default by
Buyer (including a material breach in any of Buyer's
warranties or
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representations but not including the failure to close on the
Closing Date) which occurs at or before the Closing and
continues for 14 days after Buyer receives notice of such
default from Seller, or in the event Buyer defaults on its
obligation to close the purchase of the Property on the
Closing Date, Seller shall be entitled to terminate this
Agreement and retain the Deposit as liquidated damages, in
which event both parties shall be relieved of all further
obligations hereunder; provided that no such termination or
retention shall relieve Buyer of any obligation for the
performance of its obligations under any of the provisions
of this Agreement which provide that they will survive the
termination of this Agreement, all of which shall continue
in full force and effect until fully performed and as to
which Seller shall have all remedies normally available at
law or in equity.
(ii) Buyer's Remedies. In the event of a default by Seller at or
before the Closing (including any breach of Seller's
warranties and representations but not including the failure
to close on the Closing Date), which continues for 14 days
after Seller receives notice of such default from Buyer, or
in the event Seller defaults on its obligation to close the
purchase of the Property on the Closing Date, Buyer shall
have all remedies available at law or equity, including
damages and specific performance, which remedies shall be
cumulative and non-exclusive. Seller acknowledges that, if
Seller fails to close the transaction provided for herein as
a result of its breach of its obligations hereunder, Buyer
shall, in addition to other remedies available at law or in
equity, be entitled to specific performance of this
Agreement because the Property is unique and possession
thereof cannot be duplicated, and that any remedy at law is
inadequate.
(b) Post-Closing Defaults. In the event that, after the Closing has
occurred, Buyer or Seller (i) fails to perform or comply with any
of its obligations or the terms contained in this Agreement or
(ii) breaches any of its representations and warranties made
herein, the injured party shall have all rights and remedies
available at law or in equity, including damages, specific
performance and termination of this Agreement, which remedies
shall be cumulative and not exclusive, except for circumstances
where an exclusive remedy is otherwise specified in this
Agreement.
8.2 Costs of Enforcement. In any action to interpret or enforce this
Agreement, to collect damages as a result of a breach of its
provisions, or to collect any indemnity provided for herein, the
prevailing party shall also be entitled to collect all its costs in
such action, including the costs of investigation, expert witnesses
and reasonable attorneys' and consultants' fees and disbursements,
together with all additional costs incurred in enforcing or collecting
any judgment rendered.
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8.3 Termination. In the event of the termination as provided for in this
Agreement or for any reason other than default as set forth in Section
8.1, (i) Buyer shall pay all amounts to Seller which Buyer is
obligated to pay hereunder; (ii) Buyer shall perform its other
obligations under any provisions hereof which specifically survive the
termination of this Agreement; (iii) Buyer shall comply with the
provisions of Sections 3.2 and 3.3.; (iv) Buyer shall execute and
deliver to Seller any instruments which Seller from time to time
reasonably requests relinquishing any interest Buyer may have in the
Property under this Agreement or under any documents given pursuant to
this Agreement; (v) Seller shall apply the Deposit against any amounts
Buyer is obligated to pay under Section 8.3(i), and shall return the
balance of the Deposit, unless this Agreement has been terminated as a
result of the failure of Buyer's conditions set forth in Sections
4.1(a), (f), (g), (h), (i) or (k), in which event Seller may retain
the balance of the Deposit; and (vi) the parties shall be relieved of
all further obligations hereunder.
ARTICLE 9: POST CLOSING COVENANTS
9.1 Further Assurances. From time to time after the Closing Date, each of
Seller and Buyer shall execute and deliver such other instruments
(including instruments of conveyance, assignment and transfer), and
shall take such other actions in addition to those expressly provided
for herein, as the other party may from time to time reasonably
request in order to effect and confirm the transactions provided for
herein. Each of Seller and Buyer also shall provide such cooperation
and furnish such information to the other party as that party may from
time to time reasonably request for purposes of necessary and
voluntary filings, related to the transactions contemplated hereby,
with any governmental entity.
9.2 Removal of Railroad Tracks.
(a) Seller Obligation and Right to Remove. Seller shall remove all
remaining Retained Property located on the Land by no later than
thirty (30) days after the Closing (the "Retained Property
Removal Date") and shall, except to the extent that Buyer
requests otherwise, rough grade, substantially at the present
level, the portions of the Land disturbed by the removal of the
Retained Property by Seller.
(b) Buyer's Remedy. If Seller shall fail to remove the remaining
Retained Property on or before the Retained Property Removal
Date, Buyer may give Seller notice thereof within ten days after
the Retained Property Removal Date, and Buyer shall be entitled,
but shall not be obligated, to remove and dispose of such
Retained Property, at the sole cost and expense of Seller and
Seller shall reimburse Buyer, promptly upon demand, for all costs
reasonably incurred by Buyer in connection with the removal and
disposal of the Retained Property. Seller shall not have any
obligation with respect to any Retained Property not removed by
the
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Retained Property Removal Date and not identified in a notice given
by Buyer to Seller within ten days after the Retained Property
Removal Date.
(c) Access for Removal. Buyer shall provide Seller with access to the
Property for thirty (30) days after the Closing for purposes of
removing the Retained Property as provided for herein.
ARTICLE 10. ENVIRONMENTAL CLEANUP MATTERS
10.1 Contamination. The parties' agreement with respect to environmental
cleanup matters relating to the Property will be set forth in the
Environmental Responsibility Agreement.
ARTICLE 11: FLOOD PLAIN MATTERS
11.1 Flood Plain. The Survey reveals that the Property is located in the
flood plain for a 100-year storm (the "Flood Plain").
11.2 Grading Plan. Based on a study of surface water drainage on the
Property, Buyer's civil engineer has developed a grading plan, as set
forth on plans No. C2.1-3 and C2.1-4, Project No. 93-382-221, dated
July 1, 1995, as revised by the Buyer with the consent of Seller,
which consent shall not be unreasonably withheld (the "Grading Plan").
The Grading Plan provides for raising the land underlying the floor of
the arena to a level 18 inches higher than the flood level during a
100-year storm and other resulting grading requirements.
11.3 Allocation of Costs Under the Grading Plan. Seller shall be solely
responsible for paying any and all expenses and costs associated with
grading the Land to the levels specified in the Grading Plan plus or
minus 1/10 of a foot, including the costs of preparing the Grading
Plan and related surface water drainage reports. Based on preliminary
bids, such expenses (all such expenses and costs are herein referred
to as "Flood Plain Costs") are expected to be in the range of
$400,000, plus or minus, but Seller's obligation for Flood Plain Costs
shall not exceed $500,000. In the event that such work is commenced
prior to Closing and the Closing does not occur for any reason other
than Seller's breach of this Agreement, notwithstanding the foregoing
provisions of this Section 11.3, Buyer shall reimburse Seller for all
Flood Plain Costs Seller incurs. Buyer and Seller shall cooperate with
one another in obtaining competitive bids for such grading. Buyer
shall contract and pay for the costs for such grading, and Seller
shall reimburse Buyer for such costs; provided that, if Seller is not
satisfied with the bids obtained for such grading, Seller shall have
the right to perform the grading directly or through its own
contractors, in which event Buyer shall permit Seller and its
contractors access to the Property for such purposes. Seller shall
cooperate with Buyer in obtaining any necessary permits for the
Grading Plan. The obligations of the parties under this Section 11.3
shall survive the Closing or the termination of this Agreement. Seller
shall have the right to monitor
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completion of the Grading Plan to ensure that work is proceeding in
accordance with such Plan.
ARTICLE 12: INDEMNIFICATION
12.1 Indemnity by Seller.
(a) Seller, to the fullest extent permitted by law but subject to the
limitations set forth in this Section, shall defend, indemnify,
and hold harmless Buyer, its Affiliates and their respective
officers, directors, employees, agents, successors and assigns
(the "Indemnitees") from and against all Losses of such
Indemnitees, directly or indirectly, relating to, resulting from
or arising out of:
(i) The breach by Seller of any representation or warranty made
by Seller and contained in this Agreement; and
(ii) The failure of Seller to fulfill, satisfy, and discharge any
of its obligations or covenants under this Agreement.
(b) No suit may be brought pursuant to this Section 12.1 unless filed
and served on or before the third anniversary of the Closing
Date, except in the case of any claim made under Section 2.5,
which must be filed and served on or before the sixth anniversary
of the Closing Date, or if a claim has been asserted against the
Title Company and is pending on such sixth anniversary which
either has not been finally resolved or collected, the 90th day
after the claim is finally resolved or is determined to be
uncollectable due to the insolvency of the Title Company.
12.2 Indemnification by Buyer.
(a) Buyer shall, to the fullest extent permitted by law, defend,
indemnify and hold harmless Seller, its Affiliates and their
respective officers, directors, employees, agents, successors and
assigns (the "Indemnitees") directly or indirectly, relating to,
resulting from or arising out of, from and against the following:
(i) The breach by Buyer of any representation or warranty made
by Buyer and contained in this Agreement; or
(ii) The failure of Buyer to fulfill, satisfy, and discharge any
of its obligations or covenants under this Agreement.
(b) No suit may be brought pursuant to this Section 12.2 unless filed
and served on or before the third anniversary of the Closing
Date.
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12.3 Access and Cooperation. Both Seller and Buyer shall make available to
each other as reasonably requested all information, records and
documents relating to all Losses and shall preserve all such
information, records and documents until the termination of any claim
and the resolution of any issue with respect to indemnification
hereunder relating to such claim. Each of Seller and Buyer shall also
make available to the other, as reasonably requested, its personnel
(including technical personnel), agents and other representatives who
are responsible for preparing or maintaining information, records or
other documents, or who may have particular knowledge, with respect to
any claim. Each of Buyer and Seller shall also cooperate with the
other in attempting to minimize the Losses subject to indemnification
by pursuing and/or assigning to the other any rights of contribution
or right to reimbursement through contractual or other arrangements.
12.4 Definitions. As used in this Agreement, the following terms shall have
the following meanings:
(a) "Affiliate" means, as to Buyer or Seller, any person or entity
that controls, is controlled by, or is under common control with,
Buyer or Seller, respectively.
(b) "Indemnitee" shall mean any Person which may be entitled to seek
indemnification pursuant to the provisions of Sections 12.1 or
12.2 hereof.
(c) "Indemnitor" shall mean any Person which may be obligated to
provide indemnification pursuant to Sections 12.1 or 12.2 hereof.
(d) "Losses" shall mean any and all direct or indirect demands,
claims, payments, obligations, actions or causes of action,
assessments, administrative fines or penalties, damages, losses,
liabilities, costs and expenses paid or incurred (whether or not
known or asserted prior to the date hereof, fixed or unfixed,
conditional or unconditional, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent
or otherwise), including without limitation any legal or other
expenses reasonably incurred in connection with investigating or
defending any such claims or actions; provided, however, that
Losses shall be net of any insurance proceeds received by an
Indemnitee from an insurance company on account of such Losses,
and net of any reimbursement of Losses received by an Indemnitee
pursuant to a right of contribution or to a contractual or other
arrangement.
12.5 Defense of Indemnified Claims. In the event that an Indemnitee seeks
indemnification pursuant to this Article 12, it shall give written
notice to the Indemnitor within ten (10) days of becoming aware that
an event or circumstance would give rise to the claim of
indemnification; provided, that failure to give such notice shall not
bar the Indemnitee's rights of indemnification if the Indemnitor
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does not suffer actual prejudice from such failure. Except as provided
below, in the event that the claim for indemnification arises from a
claim of a third party asserted against the Indemnitee, the Indemnitor
may assume the defense of such claim upon delivering to the Indemnitee
a written notice acknowledging that it will indemnify the Indemnitee
against the claim pursuant to this Article; provided that, in the
event that Indemnitee reasonably believes there exists a conflict
between it and Indemnitor in any such litigation, Indemnitee may be
represented by counsel at its own expense. The Indemnitor may settle
such third-party claim unless the settlement involves the entry of
injunctive relief against the Indemnitee or the Property, in which
case such settlement is subject to the Indemnitee's consent.
ARTICLE 13: INTERPRETATION OF AGREEMENT
13.1 Governing Law. The validity and effect of this Agreement shall be
governed by the laws of the State of Colorado.
13.2 Headings. The article and section headings in this Agreement are for
convenience only and shall not be used in its interpretation or
considered part of this Agreement.
13.3 Effect of Agreement. No provision of this Agreement shall be altered,
amended, revoked or waived except by an instrument in writing signed
by the party to be charged with such amendment, revocation or waiver.
This Agreement shall be binding upon and shall inure to the benefit of
the parties and their respective successors and assigns.
13.4 Survival. The provisions of this Agreement which are specifically
provided to survive the Closing and/or the termination of this
Agreement, respectively, shall survive the Closing and/or termination
of this Agreement.
ARTICLE 14: MISCELLANEOUS
14.1 Time. Time is of the essence of this Agreement. If any of the
conditions or obligations in this Agreement are not fulfilled timely
by Buyer or Seller (including but not limited to the execution and
delivery of the Closing Documents on or before the Closing Date), then
Buyer or Seller, as the case may be, shall be deemed to be in default
hereunder, and the non-defaulting party may, at its option, exercise
its rights under this Agreement, including without limitation, Article
8.
14.2 No Brokers. Seller hereby represents and warrants to Buyer that it has
not been represented or assisted by any broker or similar person in
connection with the transaction contemplated herein. Seller shall
indemnify and hold harmless Buyer from and against any and all claims
for commissions, fees, or other compensation payable to any real
estate broker, agent, salesman, finder, or other person on
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account of any implied or express commitment or undertaking made by Seller
as a result of the consummation of the transaction contemplated
herein.
Buyer hereby represents and warrants to Seller that it has not been
represented or assisted by any broker or similar person in connection
with the transaction contemplated herein. Seller acknowledges that The
Anschutz Corporation has provided advice and assistance in connection
with the transactions contemplated by this Agreement. Buyer's
arrangements with The Anschutz Corporation are covered by a separate
agreement, and Buyer is responsible for any payments thereunder. Buyer
shall indemnify and hold harmless Seller from and against any and all
claims for commissions, fees, or other compensation payable to any
real estate broker, agent, salesman, finder, or other person on
account of any implied or express commitment or undertaking made by
Buyer as a result of the consummation of the transaction contemplated
herein.
14.3 No Assignment. The qualifications and reputation of Buyer are material
inducements to Seller in entering into this Agreement. Therefore,
Buyer may not assign its rights or delegate its duties under this
Agreement without the prior written consent of Seller. Seller's
consent hereunder shall not be unreasonably withheld.
14.4 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given when
actually received if delivered personally, by commercial carrier, by
successful telecopy transmission, or by first class mail, registered
or certified, return receipt requested. Notices to Seller shall be
given at the following three addresses:
Southern Pacific Transportation Company
1860 Lincoln, 14th Floor
Denver, Colorado 80295
Attention: Mr. S. David Steel
Telephone No.: 303-812-5020
Telecopy No.: 303-812-5094
and
Southern Pacific Transportation Company
One Park Central
1515 Arapahoe Street, Suite 986
Denver, Colorado 80202
Attention: Kathleen M. Snead, Esq.
Telephone No.: 303-812-5785
Telecopy No.: 303-634-2318
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and
DAVIS, GRAHAM & STUBBS LLP
370 Seventeenth Street, Suite 4700
Denver, Colorado 80201-0185
Attention: James E. Culhane, Esq.
Telephone No.: 303-892-7397
Telecopy No. 303-893-1379
Notices to Buyer shall be given at the following four
addresses:
The Denver Arena Company, LLC
One Tabor Center, Suite 1000
1200 Seventeenth Street
Attention: Project Executive
Telephone No.: 303-572-0381
Telecopy No.: 303-572-0396
and
Ascent Entertainment Group, Inc.
6560 Rock Spring Drive
Bethesda, Maryland 20817
Attention: President
Telephone No.: 301-214-3000
Telecopy No.: 301-214-7084
and
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20817
Attention: General Counsel
Telephone No.: 301-214-3610
Telecopy No.: 301-214-7128
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and
WILMER, CUTLER & PICKERING
2445 M Street, N.W.
Washington, D.C. 20037
Attention: Thomas W. White, Esquire
Telephone No.: 202-663-6000
Telecopy No.: 202-663-6363
Either party may change its addresses for notices from time to time by
notice to the other party.
14.5 No Recording. Buyer shall not record this Agreement or any evidence
thereof. Recording this Agreement or any evidence hereof shall
constitute a material default by Buyer entitling Seller to all
remedies available at law or in equity. In the event that this
Agreement is terminated without the Closing occurring hereunder, Buyer
shall, upon Seller's request, promptly execute and deliver to Seller a
quitclaim deed conveying to Seller any interest Buyer may have in any
of the Property hereunder and any additional documents that Seller
shall from time to time reasonably request hereunder to relinquish any
interest in the Property which Buyer may have hereunder. Buyer shall
be liable to Seller for any damages suffered by Seller on account of
any recording of this Agreement and on account of any failure of Buyer
to execute and deliver such quitclaim deed and other documents
required hereby, including consequential damages. Buyer's obligations
under this Section 14.5 shall survive the termination of this
Agreement.
14.6 Days. As used herein, the term "business day" shall mean any day which
is not a Saturday, Sunday, or other day on which banks in Denver,
Colorado are not open for the regular transaction of business. In the
event that any act, event, or performance provided for herein is
scheduled or permitted to occur on a day which is not a business day,
the time for the act, event, or performance to occur shall be extended
to the next business day.
14.7 Entire Agreement. This Agreement (together with the Exhibits hereto,
and any additional written agreements entered into contemporaneously
and which provide that they are intended to be in addition to this
Agreement) constitute the entire understanding and agreement of the
parties with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral,
between the parties with respect hereto, including without limitation,
that letter agreement between Buyer and Seller dated February 16,
1995.
14.8 Execution. This Agreement may be executed in counterparts and, when
counterparts of this Agreement have been executed and delivered by
both Buyer and Seller, this Agreement shall be fully binding and
effective, just as if both Buyer and Seller had executed and delivered
a single counterpart hereof.
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Without limiting the manner in which execution of this Agreement may
otherwise be effected hereunder, execution by either of the parties
may be effected by facsimile transmission of a signature page hereof
executed by such party. If any party effects execution in such manner,
such party shall also promptly deliver to the other party the
counterparts physically signed by such party, but the failure of such
party to do so shall not invalidate the execution hereof effected by
facsimile transmission.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of this day and year first above written.
SELLER:
SOUTHERN PACIFIC TRANSPORTATION
COMPANY, a Delaware corporation
By: /s/ David Steele
Title: Vice President
BUYER:
THE DENVER ARENA COMPANY, LLC, a
Colorado limited liability company
By: COMSAT Arena Corporation, a
Delaware corporation, a Member
By: /s/ Charlie Lyons
Title: President
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<PAGE>
EXHIBIT "H"
TERMS SHEET
Environmental Terms
Southern Pacific Transportation Company ("SP") and
Denver Arena Company, LLC ("DAC")
1. Contamination. Proposal relates to contamination now existing on the
Property (the "Existing Contamination"). Contamination caused by activities
after the closing (the "New Contamination") will be the responsibility of DAC.
The Existing Contamination includes any part of the existing tar and related
contamination lying on the Elitch's property, immediately across the mainline
from the Arena footprint, which hereafter migrates onto the Property. The New
Contamination includes contamination from any source other than the Existing
Contamination.
2. Construction under VCUP.
a. Incremental Costs. SP pays for incremental
costs of construction of Arena and the other improvements
specifically provided for in the VCUP to the extent that the
incremental costs are attributable to Existing Contamination.
SP has no obligation for incremental costs incurred in connection
with any other construction.
b. Other Liabilities. SP will indemnify DAC against
liabilities arising from Existing Contamination as a result of
construction of Arena and other improvements specifically provided
for in the VCUP.
c. Time Limits. SP's obligation for incremental costs and
other liabilities arising from construction of Arena ends on first to
occur of (i) completion of Arena and (ii) three years after Closing
(as extended by force majeure affecting physical construction). SP's
obligation for incremental costs and other liabilities for construction
on other buildings provided for in the VCUP ends on first to occur of
(i) completion of each building and (ii) two years after completion of
Arena.
d. Cost Determination. Determination of incremental
costs will be through allocation arrangement. SP and DAC will
together select environmental project manager responsible for making
those environmental determinations affecting construction and
allocating costs of construction as provided above. SP and DAC will
work together to
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<PAGE>
determine most efficient and cost-effective means for integrating
environmental work with regular construction work and to provide
guidelines, where applicable, for the allocation of costs.
e. Extension of VCUP. SP will be responsible to obtain
extension for completion of construction under VCUP for the period
required for the completion of the Arena, as reasonably estimated by
DAC and SP, or if a longer period is available, for such longer period.
DAC will cooperate with SP's efforts to get extension. Extensions
thereafter will be responsibility of DAC. SP will cooperate with DAC's
efforts to get subsequent extensions.
f. Expiration of VCUP. SP's obligations under Paragraph 2
shall survive the expiration of the VCUP; provided that if the VCUP
expires before SP's obligations would otherwise end pursuant to
Paragraph 2c, the SP shall not be responsible for any increased
incremental costs which result from the expiration of the VCUP.
3. Other Costs and Liabilities Arising from Existing
Contamination. These obligations may be applicable at the same
time that Paragraph 2 obligations are applicable. To the extent
of any such overlap, the Paragraph 2 obligations will control.
a. Groundwater Monitoring. Paid by DAC after initial
round of sampling, which will be paid by SP. Monitoring costs not
included as shared costs under Paragraph 3b.
b. Shared Costs. Response costs and third party liability
are shared by parties through 2023. First $25,000 in any year paid by
DAC. Sharing ratio is 80% SP--20% DAC through 2003. Thereafter, SP's
percentage goes down, and DAC's percentage goes up, 3% per year. E.g.,
2004 is 77% SP--23% DAC, 2005 is 74% SP--26% DAC. $25,000 deductible
paid by DAC is credited against DAC's share for that year but SP will
not have any responsibility for any part of $25,000 deductible. Sharing
ratio, including $25,000 deductible, for any year applies to all costs
incurred in that year, except that, if a ground water remediation
program is ordered by CDPHE, EPA, or other governmental agency or by a
court or is agreed to by SP and DAC, the sharing ratio and deductible
for the costs of the ground water remediation program shall be
determined as if all of the costs of the ground water remediation
program were incurred in the year the order is issued or the agreement
is signed.
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<PAGE>
c. After 2023. SP relieved of all further costs
and liability.
d. Change of Use. SP's responsibilities have been
determined on the assumption that the Property will be used as
provided in the VCUP. If the use of the Property for the Arena
terminated, SP's obligations end. If there is any change in use that
increases environmental costs or liability, DAC will be responsible
for the increase in the environmental costs and liability resulting
from the change in use (including both the costs and liability
specifically attributable to the changed use and any increase in costs
and liability attributable to the part of the Property not included in
the changed use but which result from the changed use). SP would
continue to be responsible (in accordance with Paragraph 3b) for its
share of the costs of the project described in the VCUP to the extent
such costs were not an incremental cost attributable to the change in
use.
e. Construction after Time Limits. SP will have no
responsibility for the incremental environmental costs of construction
of improvements provided for in the VCUP to the extent that the
construction occurs after the time limits provided in Paragraph 2c. Any
such construction done in accordance with the VCUP will not be a change
in use under Paragraph 3d.
f. Management. DAC will manage responses to
environmental events. SP will have sign-off right on
any response and will have right to be involved.
g. Insurance. SP will cooperate with DAC at no
cost or obligation to SP in exploring possible insurance coverage
against these costs and liabilities. Any insurance will waive
subrogation against SP.
4. Liability of PSCo.
a. Parties will cooperate with each other in
connection with actions they or either of them may
bring against PSCo or any other PRP.
b. SP free to bring suit against PSCo after all building
permits required for the Arena have been issued and foundation work has
been completed.
c. In any joint suit to recover against PSCo (or other
PRP), parties will share recovery (in excess of litigation expenses)
first to SP to reimburse SP for costs of VCUP and VCUP compliance and
then in proportion in which parties bore costs.
-38-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for the quarter ended March 31, 1996 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 1002666
<NAME> Ascent Entertainment Group, Inc.
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
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0
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</TABLE>
