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EXHIBIT 10.1
THE SPORTS CLUB COMPANY, INC.
$100,000,000 11 3/8% Senior Secured Notes due 2006
PURCHASE AGREEMENT
March 29, 1999
XXXXXXXXX & COMPANY, INC.
CIBC OPPENHEIMER CORP.
c/o JEFFERIES & COMPANY, INC.
00000 Xxxxx Xxxxxx Xxxxxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Each of The Sports Club Company, Inc., a Delaware corporation
(the "ISSUER"), and each other Sports Club Entity (as defined below) hereby
agrees with you as follows:
1. ISSUANCE OF SECURITIES. The Issuer proposes to issue and sell to
Xxxxxxxxx & Company, Inc. ("Jefferies") and CIBC Xxxxxxxxxxx Corp. (together
with Jefferies, the "INITIAL PURCHASERS"), and the Initial Purchasers propose to
purchase $100,000,000 aggregate principal amount of the Issuer's 11 3/8% Senior
Secured Notes due 2006, Series A (the "SERIES A NOTES"). The Series A Notes will
be issued pursuant to an indenture (the "Indenture"), to be dated as of April 1,
1999, among the Issuer, the guarantors named therein (the "GUARANTORS") and U.S.
Bank Trust National Association, as trustee (the "TRUSTEE"). The Guarantors will
unconditionally guarantee the obligations under the Notes (defined below) and
the Indenture (collectively, the "GUARANTY"). The obligations under the Notes
and the Guaranty will be secured by security interests in or pledges of (the
"SECURITY INTERESTS") certain assets (the "COLLATERAL") of the Issuer and
certain of its subsidiaries (collectively, the "GRANTORS") as set forth in the
Offering Circular (defined below).
The Series A Notes will be offered and sold to the Initial
Purchasers pursuant to an exemption from the registration requirements under the
Securities Act of 1933, as amended (the "ACT"). The Issuer has prepared a
preliminary offering circular, dated March 12, 1999 (the "PRELIMINARY OFFERING
CIRCULAR"), and a final offering circular, dated March 29, 1999 (the "OFFERING
CIRCULAR"), relating to the offer and sale of the Series A Notes (the
"OFFERING").
Upon original issuance thereof, and until such time as the same
is no longer required under the applicable requirements of the Act, the Series A
Notes shall bear the following legend:
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE THAT
IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED
UNDER RULE 144(k) AS PERMITTING RESALES BY NON-AFFILIATES OF RESTRICTED
SECURITIES WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE SPORTS CLUB COMPANY, INC.
(THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) EXCEPT (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
PURCHASING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (E) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions hereof, the Issuer shall issue and sell to the Initial
Purchasers (and, in order to induce the Initial Purchasers to purchase the
Notes, the Guaran-
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tors shall Guaranty and the Grantors shall grant the Security Interests)
$100,000,000 aggregate principal amount of Series A Notes, and each Initial
Purchaser severally and not jointly agrees to purchase from the Issuer, the
respective principal amount of Series A Notes set forth opposite such Initial
Purchaser's name on Annex A hereto. The purchase price for the Series A Notes
shall be 95.817% of the principal amount thereof.
3. TERMS OF OFFERING. The Initial Purchasers have advised the Issuer
that the Initial Purchasers will make offers to sell (the "EXEMPT RESALES") some
or all of the Series A Notes purchased by the Initial Purchasers hereunder on
the terms set forth in the Offering Circular, as amended or supplemented, solely
to (i) Persons (as defined below) whom the Initial Purchasers reasonably believe
to be "qualified institutional buyers" as defined in Rule 144A under the Act
("QIBS"), and (ii) a limited number of institutional "accredited investors," as
defined in Rule 501(a)(1), (2), (3) or (7) under the Act ("ACCREDITED INVESTORS"
and, together with QIBs, "ELIGIBLE INITIAL PURCHASERS"). "PERSON" means any
individual, corporation, partnership, joint venture, association, joint stock
company, unincorporated organization, government or any agency or political
subdivision thereof, or any other entity.
Holders of the Series A Notes (including subsequent transferees)
will have the registration rights set forth in the registration rights agreement
(the "REGISTRATION RIGHTS AGREEMENT"), to be executed on and dated as of the
Closing Date (as defined below). Pursuant to the Registration Rights Agreement,
the Issuer and the Guarantors will agree, among other things, to file with the
Securities and Exchange Commission (the "COMMISSION") (i) a registration
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to, among other things, the 11?% Senior Secured Notes due 2006, Series B, of the
Issuer (the "SERIES B NOTES" and, together with the Series A Notes, each with
the Guaranty endorsed thereon, the "NOTES"), identical in all material respects
to the Series A Notes (except that the Series B Notes shall have been registered
pursuant to such registration statement) to be offered in exchange for the
Series A Notes (such offer to exchange being referred to as the "REGISTERED
EXCHANGE OFFER") and/or (ii) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Act (the "SHELF REGISTRATION
STATEMENT") relating to the resale by certain holders of the Series A Notes.
On the Closing Date, the Grantors will enter into certain
security and pledge agreements, mortgages and certain other documents, including
(without limitation) a cash collateral and disbursement agreement (collectively,
the "SECURITY DOCUMENTS"), that will provide for the grant of the Security
Interests in the Collateral to the Trustee, as collateral agent (in such
capacity, the "COLLATERAL AGENT"), for the benefit of the holders of the Notes.
The Security Interests will secure the payment and performance when due of all
of the obligations of the Issuer, the Guarantors and the Grantors under the
Indenture, the Notes, and the Security Documents.
In connection with the offering of the Series A Notes
contemplated hereby, the Issuer is amending and restating (the "AMENDMENT") the
Third Amended and Restated Loan Agreement, dated as of February 1, 1999, among
the Issuer, The Spectrum Club Company, Inc., Xxxxxxx Realty, Inc., Sports Club,
Inc. of California, Irvine Sports Club, Inc., The SportsMed Company, Inc.,
L.A./Irvine Sports Clubs, Ltd., Talla New York, Inc., SCC Sports Club, Inc.,
Spectrum Club/Anaheim Hills, Inc., Green Valley Spectrum Club, Inc. and Comerica
Bank-California (the "LOAN AGREEMENT").
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This Agreement, the Indenture, the Guaranty, the Registration
Rights Agreement, the Security Documents, the Notes, the Amendment, the
Intercreditor and Subordination Agreement, to be dated the Closing Date, among
the Issuer, the Trustee and the Agent under the Loan Agreement (the
"INTERCREDITOR AGREEMENT") and all other documents or instruments executed by
the Issuer or any of the Subsidiaries (as defined below) in connection with the
transactions contemplated hereby and thereby are referred to herein as the
"DOCUMENTS." The Issuer, the Guarantors and the Grantors are collectively
referred to herein as the "SPORTS CLUB ENTITIES." The transactions contemplated
by the Documents, including without limitation, the Offering and the use of the
proceeds therefrom as described in the Offering Circular, are collectively
referred to herein as the "TRANSACTIONS."
4. DELIVERY AND PAYMENT. Delivery to the Initial Purchasers of and
payment for the Series A Notes shall be made at a Closing (the "CLOSING") to be
held at 10:00 a.m., New York City time, on April 1, 1999 (the "CLOSING DATE") at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000. The Closing Date and the location of delivery of
and the form of payment for the Series A Notes may be varied by agreement
between the Initial Purchasers and the Issuer.
The Issuer shall deliver to the Initial Purchasers one or more
certificates, respectively, representing the Series A Notes (the "GLOBAL
SECURITIES"), each in definitive form, registered in the name of Cede & Co., as
nominee of The Depository Trust Company ("DTC"), or such other names as the
Initial Purchasers may request upon at least one business day's notice to the
Issuer, in an amount corresponding to the aggregate principal amount of the
Series A Notes sold pursuant to Exempt Resales to QIBs and to Accredited
Investors, respectively, in each case against payment by the Initial Purchasers
of the purchase price therefor by immediately available Federal funds bank wire
transfer to such bank account as the Issuer shall designate at least two
business days prior to the Closing. In consideration of delivery of payment by
the Initial Purchasers in same day funds, the Issuer hereby acknowledges that
the Initial Purchasers will deduct from the purchase price an amount equal to
the Initial Purchasers' cost of funds with respect thereto.
The Global Securities in definitive form shall be made available
to the Initial Purchasers for inspection at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP (or such other place as shall be acceptable to the Initial
Purchasers) not later than 9:30 a.m. one business day immediately preceding the
Closing Date.
5. AGREEMENTS OF THE SPORTS CLUB ENTITIES. Each Sports Club Entity,
jointly and severally, hereby agrees:
(a) To (i) advise the Initial Purchasers promptly after obtaining
knowledge (and, if requested by the Initial Purchasers, confirm such advice in
writing) of (A) the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification of any of the
Notes for offer or sale in any jurisdiction, or the initiation of any proceeding
for such purpose by any state securities commission or other regulatory
authority, or (B) the happening of any event that makes any statement of a
material fact made in the Offering Circular untrue or that requires the making
of any
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additions to or changes in the Offering Circular in order to make the statements
therein, in the light of the circumstances under which they are made, not
materially misleading, (ii) use its best efforts to prevent the issuance of any
stop order or order suspending the qualification or exemption from qualification
of any of the Notes under any state securities or Blue Sky laws, and (iii) if at
any time any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from qualification of
any of the Notes under any such laws, use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) To (i) furnish the Initial Purchasers, without charge, as
many copies of the Offering Circular, and any amendments or supplements thereto,
as the Initial Purchasers may request and (ii) promptly prepare, upon the
Initial Purchasers' request, any amendment or supplement to the Offering
Circular that the Initial Purchasers deem may be reasonably necessary in
connection with Exempt Resales (and the Sports Club Entities hereby consent to
the use of the Preliminary Offering Circular and the Offering Circular, and any
amendments and supplements thereto, by the Initial Purchasers in connection with
Exempt Resales).
(c) Not to amend or supplement the Offering Circular prior to the
Closing Date unless the Initial Purchasers shall previously have been advised
thereof and shall not have objected thereto within five business days after
being furnished a copy thereof.
(d) So long as the Initial Purchasers shall hold any Notes, (i)
if any event shall occur as a result of which, in the reasonable judgment of the
Issuer or the Initial Purchasers, it becomes necessary or advisable to amend or
supplement the Offering Circular in order to make the statements therein, in the
light of the circumstances under which they were made, not materially
misleading, or if it is necessary to amend or supplement the Offering Circular
to comply with Applicable Law (as defined below), forthwith to prepare an
appropriate amendment or supplement to the Offering Circular (in form and
substance satisfactory to the Initial Purchasers) so that (A) as so amended or
supplemented the Offering Circular will not include an untrue statement of
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (B) the Offering Circular will comply with Applicable
Law, and (ii) if it becomes necessary or advisable to amend or supplement the
Offering Circular so that the Offering Circular will contain all of the
information specified in, and meet the requirements of, Rule 144A(d)(4) of the
Act, forthwith to prepare an appropriate amendment or supplement to the Offering
Circular (in form and substance satisfactory to the Initial Purchasers) so that
the Offering Circular, as so amended or supplemented, will contain the
information specified in, and meet the requirements of, such Rule.
(e) To cooperate with the Initial Purchasers and the Initial
Purchasers' counsel in connection with the qualification of the Notes under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may
request and continue such qualification in effect so long as reasonably required
for Exempt Resales; provided, that no Sports Club Entity shall be required in
connection therewith to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction where it is not now so
qualified or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
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(f) Whether or not any of the Transactions are consummated or
this Agreement is terminated, to pay (i) all costs, expenses, fees and taxes
incident to and in connection with: (A) the preparation, printing and
distribution of the Preliminary Offering Circular and the Offering Circular and
all amendments and supplements thereto (including, without limitation, financial
statements and exhibits), and all preliminary and final Blue Sky memoranda and
all other agreements, memoranda, correspondence and other documents prepared and
delivered in connection herewith, (B) the printing, processing and distribution
(including, without limitation, word processing and duplication costs) and
delivery of, and performance under, each of the Documents, (C) the issuance and
delivery of the Notes, including the fees of the Trustee and the cost of its
personnel, (D) the qualification of the Notes for offer and sale under the
securities or Blue Sky laws of the several states (including, without
limitation, the fees and disbursements of the Initial Purchasers' counsel
relating to such registration or qualification), (E) furnishing such copies of
the Preliminary Offering Circular and the Offering Circular, and all amendments
and supplements thereto, as may reasonably be requested for use by the Initial
Purchasers, and (F) the preparation of the Notes, (ii) all fees and expenses of
the counsel and accountants of the Sports Club Entities, (iii) all expenses and
listing fees in connection with the application for quotation of the Notes in
the National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL"), (iv) all fees and expenses (including fees
and expenses of counsel) of the Sports Club Entities in connection with approval
of the Notes by DTC for "book-entry" transfer, (v) all fees charged by rating
agencies in connection with the rating of the Notes and (vi) all fees and
expenses (including reasonable fees and expenses of counsel) in excess of
$100,000 incurred by the Initial Purchasers in connection with the preparation,
negotiation and execution of the Documents and the consummation of the
Transactions.
(g) To use the proceeds from the sale of the Series A Notes in
the manner described in the Offering Circular under the caption "Use of
Proceeds."
(h) To the extent it may lawfully do so, not to insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension, usury or other law, wherever enacted, now or at any time
hereafter in force, that would prohibit or forgive the payment of all or any
portion of the principal of or interest on the Notes, or that may affect the
covenants or the performance of the Indenture (and, to the extent it may
lawfully do so, each Sports Club Entity hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power granted to the
Trustee in the Indenture or the Collateral Agent in the Security Documents but
shall suffer and permit the execution of every such power as though no such law
had been enacted).
(i) To do and perform all things required to be done and
performed under the Documents prior to and after the Closing Date (including,
without limitation, (1) all things necessary or advisable to obtain, on the
Closing Date, all termination statements, mortgage releases and other documents
necessary to terminate the Liens (as defined in the Indenture) of record with
respect to Indebtedness (as defined in the Indenture) that is being repaid with
the net proceeds of the Offering; and (2) subject to the terms of the
Intercreditor Agreement, using its best efforts to obtain any consent necessary
to grant a first priority Lien on such Sports Club Entity's interest in the
Collateral (as defined in the Offering Circular) and to the foreclosure by the
Collateral Agent thereon following an Event of Default (as defined in the
Indenture) as promptly as practicable following the Closing Date).
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(j) Not to, and to ensure that no affiliate (as defined in Rule
501(b) of the Act) of any of them will, sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any "security" (as defined in the
Act) that would be integrated with the sale of the Series A Notes in a manner
that would require the registration under the Act of the sale to the Initial
Purchasers or to the Eligible Initial Purchasers of the Series A Notes.
(k) For so long as any of the Notes remain outstanding, during
any period in which any of them is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to make
available, upon request, to any owner of the Notes in connection with any sale
thereof and any prospective Eligible Initial Purchasers of such Notes from such
owner, the information required by Rule 144A(d)(4) under the Act.
(l) To comply with the representation letter of the Issuer to DTC
relating to the approval of the Notes by DTC for "book entry" transfer.
(m) To use its best efforts to effect the inclusion of the Notes
in PORTAL.
(n) For so long as the Notes are outstanding, and whether or not
required to do so by the rules and regulations of the Commission, (1) to file
with the Commission, in a timely manner, all reports required by the Securities
Exchange Act of 1934, as amended, including all rules and regulations thereunder
(collectively, the "EXCHANGE ACT"), so long as the Commission will accept such
filings, and (2) if not required under the Exchange Act, and prior to the time
the Exchange Offer Registration Statement or the Shelf Registration Statement
(or such other registration statement with respect to the Notes) is filed with
the Commission, to furnish to the Trustee and deliver or cause to be delivered
to the holders of the Notes and the Initial Purchasers (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Issuer were required to file
such Forms, including for each a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Issuer's independent certified public
accountants and (ii) all reports that would be required to be filed with the
Commission on Form 8-K if the Issuer were required to file such reports.
(o) Except in connection with the Registered Exchange Offer or
the filing of the Shelf Registration Statement, not to, and not to authorize or
permit any Person acting on its behalf to, (i) distribute any offering material
in connection with the offer and sale of the Notes other than the Preliminary
Offering Circular and the Offering Circular and any amendments and supplements
to the Offering Circular complying with Section 5(c) hereof, or (ii) solicit any
offer to buy or offer to sell the Notes by means of any form of general
solicitation or general advertising (including, without limitation, as such
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.
(p) Not to, directly or indirectly, without the prior consent of
the Initial Purchasers, offer, sell, grant any option to purchase, or otherwise
dispose (or announce any offer, sale, grant of any option
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to purchase or other disposition) of any debt securities of any of them for a
period of six months after the date of the Offering Circular, except as
contemplated by the Registration Rights Agreement.
(q) For so long as the Initial Purchasers shall hold any Notes,
to notify the Initial Purchasers promptly in writing if any Sports Club Entity
or any of their Affiliates becomes a party in interest or a disqualified person
with respect to any employee benefit plan. The terms "ERISA," "Affiliates,"
"party in interest," "disqualified person" and "employee benefit plan" shall
have the meanings as set forth in Section 6(x) hereof.
(r) Following the Closing, the Company and the Subsidiaries, as
applicable, will take all actions listed on Schedule 5(r) hereto.
6. REPRESENTATIONS AND WARRANTIES OF THE SPORTS CLUB ENTITIES. The Sports
Club Entities, jointly and severally, represent and warrant to the Initial
Purchasers that:
(a) The Preliminary Offering Circular as of its date did not, and
the Offering Circular, as of its date does not, and as of the Closing Date will
not, and each supplement or amendment thereto as of its date will not, contain
any untrue statement of a material fact or omit to state any material fact
(except, in the case of the Preliminary Offering Circular, for pricing terms and
other financial terms intentionally left blank) necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. No injunction or order has been issued that either (i)
asserts that any of the Transactions is subject to the registration requirements
of the Act or (ii) would prevent or suspend the issuance or sale of the Notes or
the use of the Preliminary Offering Circular, the Offering Circular, or any
amendment or supplement thereto, in any jurisdiction. Each of the Preliminary
Offering Circular and the Offering Circular, as of their respective dates
contained, and the Offering Circular as amended or supplemented as of the
Closing Date will contain, all the information specified in, and meet the
requirements of, Rule 144A(d)(4) under the Act. Except as adequately disclosed
in the Offering Circular, there are no related party transactions that would be
required to be disclosed in the Offering Circular if the Offering Circular were
a prospectus included in a registration statement on Form S-1 filed under the
Act.
(b) Other than the Issuer's common stock, par value $.01 per
share, there are no securities of any Sports Club Entity registered under the
Exchange Act or listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a United States automated
inter-dealer quotation system. The Series A Notes are eligible for resale
pursuant to Rule 144A.
(c) Each of the Issuer and each Subsidiary (defined below) (i)
has been duly organized, is validly existing and is in good standing under the
laws of its jurisdiction of organization, (ii) has all requisite power and
authority to carry on its business and to own, lease and operate its properties
and assets as described in the Offering Circular and (iii) is duly qualified or
licensed to do business and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of such
businesses or the ownership or leasing of such properties requires such
qualification, except where the failure to be so qualified could not, singly or
in the aggregate, have a material adverse effect on (i) the properties,
business, prospects, operations, earnings, assets, liabilities or condition
(financial or
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otherwise) of the Issuer and the Subsidiaries, taken as a whole, (ii) the
ability of any Sports Club Entity to perform its obligations under any of the
Documents or (iii) the perfection or priority of any Security Interest in any
portion of the Collateral (each, a "MATERIAL ADVERSE EFFECT").
(d) Immediately following the Closing, (i) the only direct or
indirect subsidiaries of the Issuer (collectively, the "SUBSIDIARIES") will be
the entities identified on Schedule 6(d), and (ii) except as set forth on
Schedule 6(d), the Issuer will directly or indirectly beneficially own 100% of
the outstanding shares of capital stock or other equity interests of each
Subsidiary, free and clear of Liens, except for Liens securing the Notes, and
all of such shares of capital stock or other equity interests will be duly
authorized and validly issued, fully paid and nonassessable and not issued in
violation of, or subject to, any preemptive or similar rights. Except as
adequately disclosed in the Offering Circular, there are no outstanding (x)
securities convertible into or exchangeable for any capital stock of the Issuer
or any of the Subsidiaries, (y) options, warrants or other rights to purchase or
subscribe to capital stock of the Issuer or any of the Subsidiaries or
securities convertible into or exchangeable for capital stock of the Issuer or
any of the Subsidiaries or (z) contracts, commitments, agreements,
understandings, arrangements, calls or claims of any kind relating to the
issuance of any capital stock of the Issuer or any of the Subsidiaries, any such
convertible or exchangeable securities or any such options, warrants or rights.
Except as adequately disclosed in the Offering Circular, immediately following
the Closing, the Issuer will not directly or indirectly own any capital stock or
other equity interest in any Person other than the Subsidiaries.
(e) All of the outstanding shares of capital stock of the Issuer
have been duly authorized and validly issued, are fully paid and nonassessable,
and were not issued in violation of, and are not subject to, any preemptive or
similar rights. The table under the caption "Capitalization" in the Offering
Circular (including the footnotes thereto) sets forth, as of its date, (i) the
capitalization of the Issuer and its Subsidiaries on a consolidated basis, and
(ii) the pro forma as adjusted capitalization of the Issuer and its Subsidiaries
on a consolidated basis after giving effect to the Transactions. Except as set
forth in such table, immediately following the Closing, neither the Issuer nor
any of the Subsidiaries will have any liabilities, absolute, accrued, contingent
or otherwise other than (x) liabilities that are reflected in the Financial
Statements (defined below), or (y) liabilities incurred subsequent to the date
thereof in the ordinary course of business, consistent with past practice, that
could not, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(f) Except for this Agreement and the Registration Rights
Agreement, and except as disclosed in the Offering Circular, neither the Issuer
nor any of the Subsidiaries has entered into any agreement (i) to register its
securities under the Act or (ii) to purchase or offer to purchase any securities
of the Issuer, any of the Subsidiaries or any of their respective affiliates.
(g) Each Sports Club Entity has all requisite power and authority
to enter into, deliver and perform its obligations under the Documents to which
it is a party and to consummate the Transactions. Each of the Documents has been
duly and validly authorized by each Sports Club Entity that is, or will be, a
party hereto or thereto, and this Agreement is, and when executed and delivered
on the Closing Date each other Document will be, a legal, valid and binding
obligation of each Sports Club Entity that is a party hereto or thereto,
enforceable against each such Person in accordance with its terms. When executed
and delivered, each Document will conform in all material respects to the
description thereof in the
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Offering Circular. The Guaranty ranks and will rank on a parity with all senior
Indebtedness of the applicable Guarantor that is outstanding on the date hereof
or that may be incurred hereafter, and senior to all other Indebtedness of the
applicable Guarantor that is outstanding on the date hereof or that may be
incurred hereafter. On the Closing Date, the Indenture will conform to the
requirements of the Trust Indenture Act of 1939, as amended (the "TIA"),
applicable to an indenture that is required to be qualified under the TIA.
(h) The Series A Notes have been duly and validly authorized by
the Issuer for issuance and sale to the Initial Purchasers pursuant to this
Agreement and, when executed and authenticated in accordance with the terms of
the Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms hereof, will be legal, valid and binding obligations
of the Issuer, enforceable against the Issuer in accordance with their terms.
The Series B Notes have been duly and validly authorized by the Issuer and, when
executed, authenticated and delivered in accordance with the terms of the
Indenture and the Registration Rights Agreement, will be legal, valid and
binding obligations of the Issuer, enforceable against the Issuer in accordance
with their terms. Each Guaranty has been duly and validly authorized by the
applicable Guarantor and, when issued in accordance with the terms of the
Indenture, will be a legal, valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms. The Notes rank
and will rank on a parity with all senior Indebtedness of the Issuer that is
outstanding on the date hereof or that may be incurred hereafter, and senior to
all other indebtedness of the Issuer that is outstanding on the date hereof or
that may be incurred hereafter.
(i) Neither the Issuer nor any of the Subsidiaries is (i) in
violation of its respective charter or by-laws (collectively, "CHARTER
DOCUMENTS"), (ii) in violation of any federal, state, local or foreign statute,
law or ordinance, or any judgment, decree, rule, regulation or order
(collectively, "APPLICABLE LAW") of any government, governmental or regulatory
agency or body, court, arbitrator or self-regulatory organization, domestic or
foreign (each, a "GOVERNMENTAL AUTHORITY"), other than violations that could
not, singly or in the aggregate, result in a Material Adverse Effect, or (iii)
in breach of or default under any bond, debenture, note or other evidence of
indebtedness, indenture, mortgage, deed of trust, lease or any other agreement
or instrument to which any such Person is a party or by which any of them or
their respective property is bound (collectively, "APPLICABLE AGREEMENTS"),
other than breaches or defaults that could not, singly or in the aggregate,
result in a Material Adverse Effect. There exists no condition that, with the
passage of time or otherwise, would constitute a violation of such Charter
Documents or Applicable Laws or a breach of or default under any Applicable
Agreement or result in the imposition of any penalty or the acceleration of any
indebtedness, other than breaches, violations, penalties, defaults or conditions
which could not, singly or in the aggregate, result in a Material Adverse
Effect. All Applicable Agreements are in full force and effect and are legal,
valid and binding obligations, and no default has occurred or is continuing
thereunder, other than such defaults that could not, singly or in the aggregate,
have a Material Adverse Effect.
(j) Neither the execution, delivery or performance of the
Documents nor the consummation of the Transactions shall conflict with, violate,
constitute a breach of or a default (with the passage of time or otherwise)
under, require the consent of any Person (other than consents already obtained)
under, result in the imposition of a Lien on any assets of the Issuer or any of
the Subsidiaries (except pursuant to the Documents), or result in an
acceleration of indebtedness pursuant to (i) the Charter Documents of the
11
Issuer or any of the Subsidiaries, (ii) any Applicable Agreement, other than
such breaches, violations or defaults that could not, singly or in the
aggregate, result in a Material Adverse Effect or (iii) any Applicable Law.
After giving effect to the Transactions, no Default (as defined in the
Indenture) or Event of Default will exist.
(k) No permit, certificate, authorization, approval, consent,
license or order of, or filing, registration, declaration or qualification with,
any Governmental Authority (collectively, "Permits") and no approval or consent
of any other Person, is required in connection with, or as a condition to, the
execution, delivery or performance of any of the Documents or the consummation
of any of the Transactions, other than such Permits (i) as have been made or
obtained on or prior to the Closing Date, (ii) as are not required to be made or
obtained on or prior to the Closing Date that will be made or obtained when
required, or (iii) the failure of which to make or obtain could not, singly or
in the aggregate, result in a Material Adverse Effect.
(l) Except as disclosed in the Offering Circular, there is no
action, claim, suit, demand, hearing, notice of violation or deficiency, or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), domestic or foreign (collectively,
"PROCEEDINGS"), pending or to the Issuer's knowledge threatened, that either (i)
seeks to restrain, enjoin, prevent the consummation of, or otherwise challenge
any of the Documents or any of the Transactions, or (ii) could, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Neither the
Issuer nor any of the Subsidiaries is subject to any judgment, order, decree,
rule or regulation of any Governmental Authority that could, singly or in the
aggregate, have a Material Adverse Effect.
(m) The Issuer and each of the Subsidiaries has, and is in
compliance with the terms and conditions of, all Permits necessary or advisable
to own, lease and operate the properties and to conduct the businesses described
in the Offering Circular other than those the failure of which to have could
not, singly or in the aggregate, result in a Material Adverse Effect. All such
Permits are valid and in full force and effect. No event has occurred which
allows, or after notice or lapse of time would allow, the imposition of any
material penalty, revocation or termination by the issuer thereof or which
results, or after notice or lapse of time would result, in any material
impairment of the rights of the holder of any such Permits. Neither the Issuer
nor any of the Subsidiaries has any reason to believe that any issuer is
considering limiting, conditioning, suspending, modifying, revoking or not
renewing any such Permit.
(n) Immediately following the Closing, the Issuer and the
Subsidiaries (i) will have good and marketable title, free and clear of all
Liens (except for Permitted Liens (as defined in the Indenture)), to all
property and assets described in the Offering Circular as being owned by them
and (ii) will enjoy peaceful and undisturbed possession under all leases to
which any of them is a party as lessee.
(o) The Issuer and the Subsidiaries maintain insurance covering
their properties, operations, personnel and businesses against such losses and
risks as they reasonably deem adequate in accordance with customary industry
practice. All such insurance is outstanding and duly in force.
(p) Upon execution and delivery of the Security Documents and the
issuance of the Notes, the Security Documents will create, in favor of the
Collateral Agent, for the benefit of the holders
12
of the Notes, a valid security interest in the Collateral and the proceeds
thereof and, upon the filings or the recording required by the Security
Documents, the Collateral Agent will have a first priority perfected security
interest in the Collateral (other than the Shared Collateral (as defined in the
Intercreditor Agreement)).
(q) All tax returns required to be filed by the Issuer and the
Subsidiaries in any jurisdiction (including foreign jurisdictions) have been
filed and, when filed, all such returns were accurate in all material respects,
and all taxes, assessments, fees and other charges (including, without
limitation, withholding taxes, penalties and interest) due or claimed to be due
from such entities have been paid, other than those being contested in good
faith by appropriate proceedings, or those that are currently payable without
penalty or interest and, in each case, for which an adequate reserve or accrual
has been established on the books and records of the Issuer in accordance with
generally accepted accounting principles of the United States, consistently
applied ("GAAP"). There are no actual or proposed additional tax assessments for
any fiscal period against the Issuer or any of the Subsidiaries that could,
singly or in the aggregate, have a Material Adverse Effect. The Issuer believes
that the charges, accruals and reserves on the books of each of the Issuer and
the Subsidiaries in respect of any income and other tax liability for any years
not finally determined are adequate to meet any assessments or re-assessments
for additional income tax for any years not finally determined.
(r) The Issuer and the Subsidiaries own, or are licensed under,
and have the right to use, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "INTELLECTUAL
PROPERTY") currently used in, or necessary for the conduct of, their businesses,
free and clear of all Liens, other than Permitted Liens. No claims have been
asserted by any Person challenging the use of any such Intellectual Property by
the Issuer or any of the Subsidiaries or questioning the validity or
effectiveness of any license or agreement related thereto, to the Issuer's
knowledge there is no valid basis for any such claim (other than any claims that
could not, singly or in the aggregate, have a Material Adverse Effect), and the
use of such Intellectual Property by the Issuer and the Subsidiaries will not
infringe on the Intellectual Property rights of any other Person.
(s) Each of the Issuer and the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
material transactions are executed in accordance with management's general or
specific authorization, (ii) material transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP, and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
material differences.
(t) The audited consolidated financial statements and related
notes of the Issuer contained in the Offering Circular (the "FINANCIAL
STATEMENTS") present fairly the consolidated financial position, results of
operations and cash flows of the applicable Person (and in the case of the
Issuer, its Subsidiaries), as of the respective dates and for the respective
periods to which they apply, and have been prepared in accordance with GAAP and
the requirements of Regulation S-X that would be applicable if
13
the Offering Circular were a prospectus included in a registration statement on
Form S-1 filed under the Act (the "S-X Requirements"). The summary historical
financial data included in the Offering Circular have been prepared on a basis
consistent with that of the Financial Statements and present fairly the
consolidated financial position and results of operations of the Issuer and its
Subsidiaries as of the respective dates and for the respective periods
indicated. The summary pro forma financial information included in the Offering
Circular present fairly the pro forma consolidated financial position and
results of operation of the Issuer and its Subsidiaries as of the respective
dates and for the respective periods indicated. All other financial and
statistical data included in the Offering Circular are fairly and accurately
presented. KPMG LLP are independent public accountants with respect to the
Issuer and the Subsidiaries.
(u) Subsequent to the respective dates as of which information is
given in the Offering Circular, except as disclosed in the Offering Circular,
(i) neither the Issuer nor any of the Subsidiaries has incurred any liabilities,
direct or contingent, that are material, singly or in the aggregate, to any of
them, or has entered into any material transactions not in the ordinary course
of business, (ii) there has not been any decrease in the capital stock or any
increase in long-term indebtedness or any material increase in short-term
indebtedness of any of them, or any payment of or declaration to pay any
dividends or any other distribution with respect to any of them, and (iii) there
has not been any material adverse change in the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or otherwise)
of the Issuer and the Subsidiaries taken as a whole (each of clauses (i), (ii)
and (iii), a "MATERIAL ADVERSE CHANGE"). There is no event that is reasonably
likely to occur, which if it were to occur, could, singly or in the aggregate,
have a Material Adverse Effect, except such events that have been disclosed in
the Offering Circular.
(v) Immediately following the Closing, after giving effect to the
Transactions, (i) the present fair salable value of the assets of each Sports
Club Entity will exceed the amount that will be required to be paid on or in
respect of the then existing debts and other liabilities (including contingent
liabilities) of such Person as they become absolute and matured and (ii) no
Sports Club Entity will have unreasonably small capital to carry out its
businesses as conducted or as proposed to be conducted. Neither the Issuer nor
any of the Subsidiaries intends to, or believes that it will, incur debts beyond
its ability to pay such debts as they mature.
(w) Neither the Issuer nor any of its affiliates has (i) taken,
directly or indirectly, any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of any of them to
facilitate the sale or resale of any of the Notes, (ii) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, any of
the Notes or (iii) except as disclosed in the Offering Circular, paid or agreed
to pay to any Person any compensation for soliciting another to purchase any
other securities of any of them.
(x) Without limiting clause (k) above, no registration under the
Act, and no qualification of the Indenture under the TIA, is required for the
sale of the Series A Notes to the Initial Purchasers as contemplated hereby or
for the Exempt Resales, assuming (i) that the purchasers in the Exempt Resales
are Eligible Initial Purchasers, (ii) the accuracy of the Initial Purchasers'
representations contained herein regarding the absence of general solicitation
in connection with the sale of the Series A Notes to the Initial Purchasers and
in the Exempt Resales, and (iii) the accuracy of the representations made by
each Ac-
14
credited Investor who purchases the Series A Notes pursuant to an Exempt Resale
as set forth in the letters of representation in the form of Annex A to the
Offering Circular. No form of general solicitation or general advertising was
used by the Issuer or any of its affiliates or any of their representatives in
connection with the offer and sale of any of the Series A Notes or in connection
with Exempt Resales. No securities of the same class as any of the Notes have
been offered, issued or sold by the Issuer or any of its affiliates within the
six-month period immediately prior to the date hereof.
(y) Neither the Issuer nor any of its "Affiliates" is a "party in
interest" or a "disqualified person" with respect to any employee benefit plans.
No condition exists or event or transaction has occurred in connection with any
employee benefit plan that could result in the Issuer or any such "Affiliate"
incurring any liability, fine or penalty that could, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect. With respect to any
employee pension benefit plan that is subject to Title IV of the Employee
Retirement Income Act of 1974, as amended, or the rules and regulations
promulgated thereunder ("ERISA"), (i) the fair market value of the assets of
such employee pension benefit plan equals or exceeds the present value of the
liabilities of such pension plan (as determined in accordance with the actuarial
methods and assumptions set forth in the latest actuarial report for such
employee pension benefit plan), except where the failure to so equal or exceed
would not, singly or in the aggregate, have a Material Adverse Effect and (ii)
there exists no accumulated funding deficiency which could, singly or in the
aggregate, have a Material Adverse Effect. The terms "employee benefit plan,"
"employee pension benefit plan," and "party in interest" shall have the meanings
assigned to such terms in Section 3 of ERISA. The term "Affiliate" shall have
the meaning assigned to such term in Section 407(d)(7) of ERISA, and the term
"disqualified person" shall have the meaning assigned to such term in section
4975 of the Internal Revenue Code of 1986, as amended, or the rules, regulations
and published interpretations promulgated thereunder (the "CODE").
(ab) None of the Transactions will violate or result in a
violation of Section 7 of the Exchange Act (including, without limitation,
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System). Neither the Issuer nor any of the Subsidiaries is subject to
regulation, or shall become subject to regulation upon the consummation of the
Transactions, under the Investment Company Act of 1940, as amended, and the
rules and regulations and interpretations promulgated thereunder, the Public
Utility Holding Company Act of 1935, as amended, the Federal Power Act, the
Interstate Commerce Act, the Commodity Exchange Act or any Federal or state
statute or regulation limiting its ability to incur or assume indebtedness for
borrowed money.
(ac) Neither the Issuer nor any of the Subsidiaries has dealt
with any broker, finder, commission agent or other Person (other than the
Initial Purchasers in connection with the Transactions) and neither the Issuer
nor any of the Subsidiaries is under any obligation to pay any broker's fee or
commission in connection with such Transactions (other than commissions and fees
to the Initial Purchasers as set forth in the Offering Circular).
(ad) Neither the Issuer nor any Subsidiary is engaged in any
unfair labor practice. Except as disclosed in the Offering Circular, there is
(i) no unfair labor practice complaint or other proceeding pending or, to the
knowledge of the Issuer after due inquiry, threatened against the Issuer or any
of the
15
Subsidiaries before the National Labor Relations Board or any state, local or
foreign labor relations board or any industrial tribunal, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending or to the Issuer's knowledge threatened, (ii) no strike,
labor dispute, slowdown or stoppage pending or, to the knowledge of the Issuer
after due inquiry, threatened against the Issuer or any of the Subsidiaries, and
(iii) no union representation question existing with respect to the employees of
the Issuer or any of the Subsidiaries, and, to the Issuer's knowledge after due
inquiry, no union organizing activities are taking place that, singly or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(ae) In the ordinary course of their businesses, the Issuer and
each of the Subsidiaries conduct a periodic review of the effect of
Environmental Laws (as defined below) on the business, operations and properties
of the Issuer and each of the Subsidiaries in the course of which they identify
and evaluate associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for cleanup, closure of
properties or compliance with Environmental Laws or any Permit, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Issuer and the Subsidiaries have
reasonably concluded that such associated costs and liabilities could not
reasonably be expected, singly or in the aggregate, to have a Material Adverse
Effect. Except as disclosed in the Offering Circular or as otherwise could not
reasonably be expected, singly or in the aggregate, to have a Material Adverse
Effect:
(1) each of the Issuer and the Subsidiaries (i) has obtained all
Permits that are required with respect to the operation of its business,
property and assets under the Environmental Laws (as defined below) and
are in compliance with all terms and conditions of such required
Permits, and (ii) is in compliance with all Environmental Laws
(including, without limitation, compliance with standards, schedules and
timetables therein);
(2) no real property or facility owned, used, operated, leased,
managed or controlled by the Issuer or any of the Subsidiaries, or any
predecessor in interest, is listed or proposed for listing on the
National Priorities List or the Comprehensive Environmental Response,
Compensation, and Liability Information System, both promulgated under
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), or on any other state or local list
established pursuant to any Environmental Law, and neither the Issuer
nor any of the Subsidiaries has received any notification of potential
or actual liability or request for information under CERCLA or any
comparable state or local law;
(3) no underground storage tank or other underground storage
receptacle, or related piping, is located on a facility or property
currently owned, operated, leased, managed or controlled by the Issuer
or any of the Subsidiaries in violation of any Environmental Law;
(4) there have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping,
on-site or, to the knowledge of the Issuer and the Subsidiaries after
due inquiry, off-site) of Hazardous Materials (as defined below) by the
Issuer, any of the Subsidiaries or any predecessor in interest or any
Person whose liability for any release of Hazardous Materials, the
16
Issuer or any of the Subsidiaries has retained or assumed either
contractually or by operation of law at, on, under, from or into any
facility or real property owned, operated, leased, managed or controlled
by any such Person;
(5) neither the Issuer, the Subsidiaries nor any Person whose
liability the Issuer or any of the Subsidiaries has retained or assumed
either contractually or by operation of law has any liability, absolute
or contingent, under any Environmental Law, and there is no Proceeding
pending or threatened against any of them under any Environmental Law;
and
(6) there are no events, activities, practices, incidents or actions
or conditions, circumstances or plans that may interfere with or prevent
compliance by the Issuer or any of the Subsidiaries with any
Environmental Law, or that may give rise to any liability under any
Environmental Laws.
"ENVIRONMENTAL LAWS" means all Applicable Laws, now or hereafter
in effect, relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous constituents,
substances or wastes, including, without limitation, asbestos or
asbestos-containing materials, polychlorinated biphenyls, petroleum or
any constituents relating to or arising out of any oil production
activities, including crude oil or any fraction thereof, or any
petroleum product or other wastes, chemicals or substances regulated by
any Environmental Law (collectively referred to as "HAZARDOUS
MATERIALS"), into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of
Hazardous Materials and (iii) underground storage tanks, and related
piping, and emissions, discharges, releases or threatened releases
therefrom.
(af) No statement, representation or warranty made by the Issuer,
any of the Subsidiaries, or any other Person in any of the Documents or in any
certificate or document required by any of the Documents to be delivered to the
Initial Purchasers was or will be, when made, inaccurate, untrue or incorrect in
any material respect. Each certificate signed by any officer of the Issuer or
any Guarantor and delivered to the Initial Purchasers or counsel for the Initial
Purchasers in connection with the Transactions shall be deemed to be a
representation and warranty by the Issuer and such Guarantor to each Initial
Purchaser as to the matters covered thereby.
7. REPRESENTATIONS AND WARRANTIES OF THE INITIAL PURCHASERS. Each
Initial Purchaser represents and warrants with respect to itself that:
(a) It is a QIB.
(b) It (i) is not acquiring the Series A Notes with a view to any
distribution thereof that would violate the Act or the securities laws of any
state of the United States or any other applicable jurisdiction and (ii) will be
soliciting offers for the Series A Notes only from, and will be reoffering and
re-
17
selling the Series A Notes only to, (A) Persons in the United States whom it
reasonably believes to be QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A or (B) a limited
number of Accredited Investors that execute and deliver to the Issuer and the
Initial Purchasers a letter containing certain representations and agreements in
the form attached as Annex A to the Offering Circular.
(c) No form of general solicitation or general advertising in
violation of the Securities Act has been or will be used by such Initial
Purchaser or any of its representatives in connection with the offer, sale and
resale of any of the Series A Notes.
(d) In connection with the Exempt Resales, it will solicit offers
to buy the Series A Notes only from, and will offer and sell the Series A Notes
only to, Eligible Initial Purchasers who, in purchasing such Series A Notes,
will be deemed to have represented and agreed (i) if such Eligible Initial
Purchasers are QIBs, that they are purchasing the Series A Notes for their own
accounts or accounts with respect to which they exercise sole investment
discretion and that they or such accounts are QIBs, (ii) that such Series A
Notes will not have been registered under the Act and may be resold, pledged or
otherwise transferred only (A) inside the United States to a Person whom the
seller reasonably believes is a QIB in a transaction meeting the requirements of
Rule 144A, in a transaction meeting the requirements of Rule 144 or in
accordance with another exemption from the registration requirements of the Act,
(B) to the Issuer, (C) pursuant to an effective registration statement and (D)
outside the United States to a foreign Person in a transaction meeting the
requirements of Regulation S under the Act and, in each case, in accordance with
any applicable securities laws of any state of the United States or any other
applicable jurisdiction, and (iii) that the holder will, and each subsequent
holder is required to, notify any Initial Purchaser from it of the security
evidenced thereby of the resale restrictions set forth in (ii) above.
(e) It has all requisite power and authority to enter into,
deliver and perform its obligations under this Agreement and the Registration
Rights Agreement and each of this Agreement and the Registration Rights
Agreement has been duly and validly authorized by it.
18
8. INDEMNIFICATION.
(a) Each Sports Club Entity shall, jointly and severally, without
limitation as to time, indemnify and hold harmless each Initial Purchaser and
each Person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act) each Initial Purchaser (any of such
Persons being hereinafter referred to as a "controlling person"), and the
respective officers, directors, partners, employees, representatives and agents
of each Initial Purchaser and any such controlling person (collectively, the
"INDEMNIFIED PARTIES"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, costs (including, without limitation,
costs of preparation and reasonable attorneys' fees) and expenses (including,
without limitation, costs and expenses incurred in connection with
investigating, preparing, pursuing or defending against any of the foregoing)
(collectively, "LOSSES"), as incurred, directly or indirectly caused by, related
to, based upon, arising out of or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Circular or the Offering Circular (or any amendment or supplement
thereto), or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading or
(ii) any act, omission, transaction or event contemplated by the Documents;
provided, that neither the Issuer nor any other Sports Club Entity shall be
liable to any Indemnified Party for any Losses that arise solely from the gross
negligence or willful misconduct of such Indemnified Party. The Issuer shall
notify each Initial Purchaser promptly of the institution, threat or assertion
of any Proceeding of which the Issuer or any Subsidiary is aware in connection
with the matters addressed by this Agreement which involves the Issuer, any of
the Subsidiaries or any of the Indemnified Parties.
(b) If any Proceeding shall be brought or asserted against any
Person entitled to indemnification hereunder, such Indemnified Party shall give
prompt written notice to the Issuer; provided, that the failure to so notify the
Issuer shall not relieve any Sports Club Entity from any obligation or liability
except to the extent (but only to the extent) that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal) that such Sports Club Entity has been prejudiced materially
by such failure.
Neither the Issuer nor any of its Subsidiaries shall consent to
entry of any judgment in or enter into any settlement of any pending or
threatened Proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not any Indemnified Party is a party thereto)
unless such judgment or settlement includes, as an unconditional term thereof,
the giving by the claimant or plaintiff to each Indemnified Party of a release,
in form and substance satisfactory to each Initial Purchaser, from all Losses
that may arise from such Proceeding or the subject matter thereof (whether or
not any Indemnified Party is a party thereto).
(c) If the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party or is insufficient to hold such Indemnified
Party harmless for any Losses in respect of which this Section 8 would otherwise
apply by its terms (other than by reason of exceptions provided in this Section
8), then each indemnifying party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Losses (i) in such proportion as is
19
appropriate to reflect the relative benefits received by the Sports Club
Entities, on the one hand, and the Initial Purchasers, on the other hand, from
the offering of the Series A Notes or (ii) if the allocation provided by clause
(i) above is not permitted by Applicable Law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Sports Club Entities, on the one hand,
and the Initial Purchasers, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. The relative benefits received by the Sports
Club Entities, on the one hand, and the Initial Purchasers, on the other hand,
shall be deemed to be in the same proportion as the total net proceeds from the
Offering (before deducting expenses) received by the Sports Club Entities, and
the total discounts and commissions received by the Initial Purchasers, bear to
the total price of the Series A Notes in Exempt Resales in each case as set
forth in the table on the cover page of the Offering Circular. The relative
fault of the Sports Club Entities, on the one hand, and the Initial Purchasers,
on the other hand, shall be determined by reference to, among other things,
whether any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Sports Club Entities, on the one hand, or the Initial Purchasers, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by an Indemnified Party as a result of any Losses shall be deemed to
include any legal or other fees or expenses incurred by such party in connection
with any Proceeding, to the extent such party would have been indemnified for
such fees or expenses if the indemnification provided for in this Section 8 was
available to such party.
Each party hereto agrees that it would not be just and equitable
if contribution pursuant to this Section 8(c) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(c), neither of the Initial
Purchasers shall be required to contribute any amount in excess of the amount by
which the total discounts and commissions received by such Initial Purchaser
with respect to the Series A Notes purchased by it exceeds the amount of any
damages that such Initial Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(d) The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that the Sports Club Entities may
otherwise have to the Indemnified Parties.
9. CONDITIONS.
(a) The respective obligations of each Initial Purchaser to
purchase the Series A Notes under this Agreement is subject to the satisfaction
or waiver of each of the following conditions:
(i) All the representations and warranties of each Sports Club
Entity in each of the Documents to which it is a party shall be true and correct
at and as of the Closing Date after giving effect to the Transactions with the
same force and effect as if made on and as of such date. On or prior to the
Closing Date, each of the Sports Club Entities and, to the knowledge of the
Issuer after due inquiry, each
20
other party to the Documents (other than the Initial Purchasers) shall have
performed or complied in all material respects with all of the agreements and
satisfied in all material respects all conditions on their respective parts to
be performed, complied with or satisfied pursuant to the Documents.
(ii) The Offering Circular shall have been printed and copies
made available to the Initial Purchasers not later than 12:00 noon, New York
City time, on the first business day following the date of this Agreement or at
such later date and time as the Initial Purchasers may approve.
(iii) No injunction, restraining order or order of any nature by
a Governmental Authority shall have been issued as of the Closing Date that
would prevent or interfere with the consummation of any of the Transactions; and
no stop order suspending the qualification or exemption from qualification of
any of the Series A Notes in any jurisdiction shall have been issued and no
Proceeding for that purpose shall have been commenced or be pending or
contemplated.
(iv) No action shall have been taken and no Applicable Law shall
have been enacted, adopted or issued that would, as of the Closing Date, prevent
the consummation of any of the Transactions. No Proceeding shall be pending or
threatened other than Proceedings that (A) if adversely determined could not,
singly or in the aggregate, adversely affect the issuance or marketability of
the Series A Notes and (B) could not reasonably be expected to have a Material
Adverse Effect.
(v) Since the date as of which information is given in the
Offering Circular, there shall not have been any Material Adverse Change.
(vi) The Notes shall have (A) been designated PORTAL securities
in accordance with the rules and regulations adopted by the NASD relating to
trading in the PORTAL market, and (B) received a rating of at least B1 and B
from Standard & Poor's Corporation and Xxxxx'x Investors Services, Inc.,
respectively.
(vii) The Initial Purchasers shall have received on the Closing
Date (A) certificates dated the Closing Date, signed by (1) the Chief Executive
Officer and (2) the principal financial or accounting officer of the Issuer, on
behalf of the Issuer, (x) confirming the matters set forth in paragraphs (i)
through (v) of this Section 9(a) and (y) certifying as to such other matters as
the Initial Purchasers may reasonably request, (B) a certificate, dated the
Closing Date, signed by the Secretary of each Sports Club Entity, certifying
such matters as the Initial Purchasers may reasonably request and (C) a
certificate of solvency, dated the Closing Date, signed by the principal
financial or accounting officer of the Issuer substantially in the form
previously approved by the Initial Purchasers.
(viii) The Initial Purchasers shall have received:
(1) an opinion (in form and substance satisfactory to the
Initial Purchasers and counsel to the Initial Purchasers) of Kinsella,
Boesch, Xxxxxxxx and Xxxxx, LLP, special counsel to the Issuer, dated
the Closing Date, in the form of Exhibit A hereto;
21
(2) reliance letters from each counsel or special counsel to any
Sports Club Entity (in form and substance satisfactory to the Initial
Purchasers and counsel to the Initial Purchasers), dated the Closing
Date, permitting the Initial Purchasers to rely on all other opinions
rendered by such counsel in connection with the Transactions; and
(3) an opinion, dated the Closing Date, of Xxxxxxx, Arps, Slate,
Xxxxxxx & Xxxx LLP, in form and substance reasonably satisfactory to the
Initial Purchasers covering such matters as are customarily covered in
such opinions.
(ix) The Initial Purchasers shall have received from KPMG LLP
with respect to the Issuer and its Subsidiaries (A) a customary comfort letter,
dated the date of the Offering Circular, in form and substance reasonably
satisfactory to the Initial Purchasers, with respect to the financial statements
and certain financial information contained in the Offering Circular, and (B) a
customary comfort letter, dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, to the effect that they
reaffirm the statements made in the letter furnished pursuant to clause (A),
except that the specified date referred to shall be a date not more than five
days prior to the Closing Date.
(x) The Documents shall have been executed and delivered by all
parties thereto and the Initial Purchasers shall have received a fully executed
original of each Document.
(xi) On or prior to the Closing Date, the Transactions shall have
been duly consummated. The Initial Purchasers shall have received copies of all
opinions, certificates, letters and other documents delivered under or in
connection with the Transactions.
(xii) The Initial Purchasers shall have received copies of duly
executed payoff letters, UCC-3 termination statements, mortgage releases and
other collateral releases and terminations, each in form and substance
satisfactory to the Initial Purchasers, evidencing (1) the repayment of (x) all
amounts outstanding under the Credit Facility, (y) the note issued in connection
with the acquisition of the Spectrum Club - Agoura Hills and (z) the note issued
in connection with the acquisition of The Sports Club/Irvine; (2) the
termination of each agreement or instrument relating thereto; and (3) the
release of each item of Collateral securing such Indebtedness and the
termination of all Liens created thereunder, and each such payoff letter,
release and termination shall be in full force and effect.
(xiii) The Collateral Agent shall have received (A) executed
copies of each UCC-1 financing statement signed by the Issuer and each Grantor,
naming the Collateral Agent as secured party and filed in such jurisdictions as
the Initial Purchasers may reasonably require, (B) bailee letters, in form and
substance reasonably satisfactory to the Initial Purchasers, executed by the
Issuer or the appropriate Grantors for delivery to each of the Persons
identified in the Security Documents as holding Collateral, and (C) the original
stock certificates pledged to the Collateral Agent pursuant to the Documents,
together with undated stock powers or endorsements duly executed in blank in
connection therewith.
(xiv) Counsel to the Initial Purchasers shall have been furnished
with such documents as they may reasonably require for the purpose of enabling
them to review or pass upon the matters re-
22
ferred to in this Section 9 and in order to evidence the accuracy, completeness
or satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.
(b) The obligation of the Issuer to sell the Series A Notes under
this Agreement is subject to the satisfaction or waiver of each of the following
conditions:
(i) The Initial Purchasers shall have delivered payment to the
Issuer for the Series A Notes pursuant to Sections 2 and 4 of this Agreement.
(ii) All of the representations and warranties of the Initial
Purchasers in this Agreement shall be true and correct in all material respects
at and as of the Closing Date, with the same force and effect as if made on and
as of such date.
(iii) No injunction, restraining order or order of any nature by
a Governmental Authority shall have been issued as of the Closing Date that
would prevent or interfere with the issuance and sale of the Series A Notes; and
no stop order suspending the qualification or exemption from qualification of
any of the Series A Notes in any jurisdiction shall have been issued and no
Proceeding for that purpose shall have been commenced or be pending or
contemplated as of the Closing Date.
10. TERMINATION. The Initial Purchasers may terminate this Agreement
at any time prior to the Closing Date by written notice to the Issuer if any of
the following has occurred:
(a) since the date as of which information is given in the
Offering Circular, any Material Adverse Effect or development involving a
prospective adverse effect on the properties, business, prospects, operations,
earnings, assets, liabilities or condition (financial or otherwise), of the
Issuer or any Subsidiary, whether or not arising in the ordinary course of
business, that could, in Jefferies' judgment, (i) make it impracticable or
inadvisable to proceed with the Offering or delivery of the Series A Notes on
the terms and in the manner contemplated in the Offering Circular or (ii)
materially impair the investment quality of any of the Notes;
(b) the failure of the Issuer to satisfy the conditions contained
in Section 9(a) hereof on or prior to the third business day following the date
of this Agreement;
(c) any outbreak or escalation of hostilities or other national
or international calamity or crisis or material adverse change in economic
conditions in the financial markets of the United States or elsewhere, if the
effect of such outbreak, escalation, calamity, crisis or material adverse change
in the economic conditions in or in the financial markets of the United States
or elsewhere could make it, in Jefferies' judgment, impracticable or inadvisable
to market or proceed with the offering or delivery of the Series A Notes on the
terms and in the manner contemplated in the Offering Circular or to enforce
contracts for the sale of any of the Series A Notes;
(d) the suspension or limitation of trading generally in
securities on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ National Market or any setting of limitations on prices for securities on
any such exchange or NASDAQ National Market;
23
(e) the enactment, publication, decree or other promulgation
after the date hereof of any Applicable Law that in Jefferies' opinion could
have a Material Adverse Effect;
(f) any securities of any Sports Club Entity shall have been
downgraded or placed on any "watch list" for possible downgrading by any
"nationally recognized statistical rating organization", as such term is defined
for purposes of Rule 431(g)(2) under the Act; or
(g) the declaration of a banking moratorium by any Governmental
Authority; or the taking of any action by any Governmental Authority after the
date hereof in respect of its monetary or fiscal affairs that in Jefferies'
opinion could have a material adverse effect on the financial markets in the
United States or elsewhere.
The indemnities and contribution and expense reimbursement
provisions and other agreements, representations and warranties of the Sports
Club Entities set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Initial Purchasers, (ii) acceptance of the Notes, and payment for them
hereunder, and (iii) any termination of this Agreement (including, without
limitation, any termination pursuant to this Section 10 or Section 11 below.
Without limiting the foregoing, notwithstanding any termination of this
Agreement, the Sports Club Entities shall be jointly and severally liable (i)
for all expenses that they have agreed to pay pursuant to Section 5(f) hereof,
and (ii) pursuant to Section 8 hereof.
Default by Initial Purchaser. If either Initial Purchaser shall
fail or refuse to purchase the Series A Notes that it has agreed to purchase
hereunder on the Closing Date and arrangements for purchase of such Series A
Notes are not made within 36 hours of such default, this Agreement shall
terminate without liability on the part of the Issuer, except as otherwise
provided in Section 10 hereof, or the non-defaulting Initial Purchaser. Nothing
herein shall relieve the defaulting Initial Purchaser from liability for its
default.
11. MISCELLANEOUS.
(a) Notices given pursuant to any provision of this Agreement
shall be addressed as follows: (i) if to the Issuer, 00000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Chief Executive
Officer, with a copy to Kinsella, Boesch, Fujikawa and Xxxxx, LLP, 0000 Xxxxxx
xx xxx Xxxxx, 0xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X.
Xxxxxxxx, Esq. and (ii) if to the Initial Purchasers, to Xxxxxxxxx & Company,
Inc., 00000 Xxxxx Xxxxxx Xxxxxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxx X. Xxxxx, Esq., with a copy to Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxxx, Esq. (provided that any notice pursuant to
Section 8 hereof will be mailed, delivered, telegraphed or telecopied and
confirmed to the party to be notified and its counsel), or in any case to such
other address as the Person to be notified may have requested in writing.
24
(b) This Agreement has been and is made solely for the benefit of
and shall be binding upon the Issuer, the Initial Purchasers and, to the extent
provided in Section 8 hereof, the controlling persons, officers, directors,
partners, employees, representatives and agents referred to in Section 8 and
their respective heirs, executors, administrators, successors and assigns, all
as and to the extent provided in this Agreement, and no other Person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of any of the Series A
Notes from the Initial Purchasers merely because of such purchase.
Notwithstanding the foregoing, it is expressly understood and agreed that each
purchaser who purchases Series A Notes from the Initial Purchasers is intended
to be a beneficiary of the Issuer's covenants contained in the Registration
Rights Agreement to the same extent as if the Notes were sold and those
covenants were made directly to such purchaser by the Issuer, and each such
purchaser shall have the right to take action against the Issuer to enforce, and
obtain damages for any breach of, those covenants.
(c) THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS
OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH SPORTS CLUB ENTITY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH SPORTS CLUB ENTITY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH SPORTS CLUB
ENTITY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SPORTS CLUB ENTITY AT THE
ADDRESS SET FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE INITIAL PURCHASERS TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY SPORTS CLUB ENTITY IN ANY OTHER
JURISDICTION.
(d) This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
(e) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
25
(f) If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(g) This Agreement may be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may be given,
provided that the same are in writing and signed by each of the signatories
hereto.
(h) The indemnities and contribution and expense reimbursement
provisions set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any party hereto, (ii) acceptance
of the Series A Notes, and payment for them hereunder, and (iii) any termination
of this Agreement.
26
Please confirm that the foregoing correctly sets forth the
agreement between the Issuer and the Initial Purchasers.
Very truly yours,
THE SPORTS CLUB COMPANY, INC.
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
CANOGA AGOURA SPECTRUM CLUB, INC. LA/IRVINE SPORTS CLUBS, LTD.
By: Sports Club, Inc. of California,
its general partner
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
GREEN VALLEY SPECTRUM CLUB, INC. Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx NY SPORTS CLUB, INC.
Title: Chief Financial Officer
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
HFA SERVICES, INC. Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx XXXXXXX REALTY, INC.
Title: Chief Financial Officer
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
IRVINE SPORTS CLUB, INC. Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
1
27
SCC SPORTS CLUB, INC. By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx SPORTS CLUB, INC. OF CALIFORNIA
Title: Chief Financial Officer
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
DEVELOPMENT COMPANY, INC. Title: Chief Financial Officer
TALLA NEW YORK, INC.
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Xxxxx: Chief Financial Officer
SF SPORTS CLUB, INC.
TVE, INC.
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
SPECTRUM CLUB ANAHEIM
THE SPECTRUM CLUB COMPANY, INC.
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
Xxxxx: Chief Financial Officer
SPECTRUM LIQUIDATING CORP.
THE SPORTSMED COMPANY, INC.
THE SPORTS CONNECTION HOLDING
COMPANY
By: /s/ Xxxxxxx X'Xxxxx
-------------------------------
Name: Xxxxxxx X'Xxxxx
By: /s/ Xxxxxxx X'Xxxxx Title: Chief Financial Officer
-------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
2
28
Accepted and Agreed to:
WASHINGTON D.C. SPORTS CLUB, INC. XXXXXXXXX & COMPANY, INC.
By: /s/ Xxxxxxx X'Xxxxx By: /s/ Xxxxxx Xxxxx
------------------------------- -------------------------------
Name: Xxxxxxx X'Xxxxx Name: Xxxxxx Xxxxx
Title: Chief Financial Officer Title: Senior Vice President
CIBC XXXXXXXXXXX CORP.
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title:
3
