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EXHIBIT 10.82
THE SPORTS CLUB COMPANY, INC.
00000 XXXXX XXXXXX XXXXXXXXX, XXXXX 000
XXX XXXXXXX, XXXXXXXXXX 00000
March 26, 1998
VIA FACSIMILE; ORIGINAL BY FEDERAL EXPRESS
Xx. Xxxxx X. Xxxxxxx
MDP Ventures II LLC
0000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: THE SPORTS CLUB COMPANY, INC./PURCHASE OF LAND
Dear Xxxxx:
This letter agreement ("AGREEMENT") sets forth the basic terms
and conditions under which MDP Ventures II LLC ("MILLENNIUM") will purchase
certain undeveloped land located in Houston, Texas, more particularly described
in Exhibit "A" attached hereto (the "LAND"). The Sports Club Company, Inc.
("SCC") executed a purchase agreement on March 5, 1998 (the "PURCHASE
AGREEMENT"), under which it agreed, subject to the terms and conditions thereof,
to purchase and acquire fee title to the Land for a purchase price of
approximately Three Million One Hundred Thousand Dollars ($3,100,000)(the
"PURCHASE PRICE") on or before the closing date provided under the Purchase
Agreement (the "PURCHASE DEADLINE"). A copy of the Purchase Agreement is
attached hereto as Exhibit "B".
1. OBLIGATION TO PURCHASE OF LAND; PAYMENT OF PURCHASE PRICE.
(a) Subject to the terms and conditions of this Agreement,
Millennium shall purchase and acquire the Land from the seller in accordance
with the terms and conditions of the Purchase Agreement. Anything herein to the
contrary notwithstanding, Millennium's obligation to purchase the Land hereunder
is subject to the condition precedent that SCC is unable to obtain financing, on
terms acceptable to it, necessary to enable it to purchase the Land on or before
the Purchase Deadline in accordance with the terms of the Purchase Agreement.
(b) SCC shall keep Millennium apprised of its efforts to obtain
financing on terms acceptable to it, and shall advise Millennium not less than
ten (10) days prior to the Purchase Deadline if it is unable to consummate an
acceptable financing arrangement prior to the Purchase Deadline. In such event
and upon notice that such acceptable financing cannot be obtained by SCC prior
to the Purchase Deadline, Millennium's obligation to purchase and acquire the
Land shall arise. If the terms of the Purchase Agreement do not permit SCC to
assign its rights thereunder to Millennium without the imposition of any
monetary payment or other penalty, then
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March 26, 1998
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Millennium will, on or prior to the Purchase Deadline, provide SCC with the
funds necessary to pay the Purchase Price for the Land, as well as any other
costs and expenses for which SCC is obligated thereunder; in such event, SCC
shall transfer and convey to Millennium fee title to the Land simultaneously
with the consummation of SCC's acquisition of the Land. If SCC is able to assign
to Millennium the former's purchase rights under the Purchase Agreement, then
Millennium shall complete the purchase of the Land in accordance with the terms
thereof, and SCC shall have no liabilities or obligations with respect to such
transaction.
(c) If Millennium purchases and acquires the Land, Millennium may
not sell all or any portion of the Land (including any improvements thereon, if
the Land shall have been developed by Millennium or any other person or entity)
for the six (6)-month period following the date (the "CLOSING DATE") the
transaction contemplated by the Purchase Agreement shall have been consummated
(the "STANDSTILL PERIOD"); except that, if SCC determines not to develop a
health/fitness facility on the Land at any time prior to the expiration of the
six-month period referred to in Paragraph 2(a) hereof, then the Standstill
Period shall terminate and expire on the date of such determination.
(d) During the Standstill Period, Millennium and SCC shall
jointly investigate the feasibility of developing a Sports Club on the Land (the
"SPORTS CLUB HOUSTON"), including, without limitation, reviewing proposed
architectural plans, construction budgets and schedules, zoning issues,
environmental impact report issues and the like. In this regard, Millennium and
SCC will analyze and discuss development strategies and alternatives, including
the sale of the Land to a third party developer; development of the Land by
Millennium (with or without a development partner) and leasing the Land and all
improvements thereon (collectively, "PROPERTY"), to SCC on a "triple-net" lease
basis; or financing the development of the Land by another person or entity
(whether or not in conjunction with SCC and/or Millennium). To the extent
financing or lease arrangements between Millennium and SCC are investigated, the
parties shall negotiate the terms and conditions of such arrangements in good
faith. However, both SCC and Millennium acknowledge and agree that no
representations, warranties, promises or commitments have been made or relied
upon by either party with respect to the feasibility of developing a
health/fitness facility on the Land, or the availability of financing sources to
fund any such development (if Millennium elects not to proceed with the
development of a health/fitness facility on the Land).
(e) In the event that SCC does not exercise the repurchase option
pursuant to Paragraph 2(a) below (or following exercise defaults on its
obligation to so repurchase) or enter into a transaction with Millennium to
develop the Land during the Standstill Period, then
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Millennium shall be free to own, hold, sell or develop the Land in its sole and
absolute discretion without any duty or obligation owing to SCC.
(f) Anything herein to the contrary notwithstanding, from and
after the date hereof up to the Closing Date, SCC shall furnish Millennium with
copies of all correspondence, agreements and other documentation which shall be
transmitted or received by SCC in connection with the Purchase Agreement, and
SCC shall consult with Millennium prior to SCC's entering into any commitments
or otherwise taking any action with respect to any matters relating to the
transaction contemplated by the Purchase Agreement; provided that, Millennium's
right of consultation shall not imply or confer any right of approval or consent
with respect to any matters as to which Millennium shall have been consulted.
2. REPURCHASE OPTION.
(a) Anything herein to the contrary notwithstanding, from and
after the date hereof up to and including the expiration of the Standstill
Period, SCC shall retain the right, exercisable in its sole discretion, to
purchase and acquire from Millennium the Land or the Property (if development of
the Land shall have been undertaken by Millennium or any third party), for a
purchase price equal to the sum of (i) all costs and expenses paid or incurred
by Millennium to purchase, acquire and carry the Land and, if applicable, to
develop and construct thereon all improvements (collectively, "MILLENNIUM
COSTS"), plus (ii) a twelve percent (12%) return computed on all Millennium
Costs, compounded annually (collectively, the "PROPERTY PURCHASE PRICE"). If SCC
elects to exercise its repurchase right, in its sole discretion, then SCC shall
notify Millennium of such fact prior to the expiration of the six-month period
described in the first sentence hereof, which notice shall be binding and
irrevocable.
(b) Any notice by which SCC elects to purchase the Property shall
specify a closing date, which shall be a business day not less than sixty (60)
nor more than ninety (90) days after the date of such notice, and as to which
time shall be of the essence as to SCC's obligation to close the transaction
contemplated thereunder. Such transfer and conveyance shall be by grant deed,
without covenant, and shall be subject to all exceptions to title then affecting
the Property except for monetary financing liens placed upon Millennium's
interest in the Property. The conveyance shall be completely "AS IS, WITH ALL
FAULTS", and Millennium shall make no representation or warranty in connection
with such conveyance (including, for purposes of this Paragraph 2(b), that it is
the understanding of the parties that SCC, and not Millennium, shall deliver any
Title Affidavit required by SCC's title insurance company).
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(c) SCC shall be responsible for paying any transfer taxes (as
well as any title charges or other miscellaneous closing expenses) payable in
connection with any conveyance by Millennium to SCC pursuant to this Paragraph
2. Upon the conveyance of the Property to SCC pursuant to this Paragraph 2, SCC
shall accept the Property in its then "as is" condition, and Millennium shall
not be deemed to have made any representation or warranty, or to have assumed
any ongoing responsibility of any kind whatsoever, in connection with any such
conveyance.
3. BROKERS AND FINDERS. Neither Millennium nor SCC, nor any
person acting on behalf of either of them, has employed any broker, agent or
finder, or incurred any liability for any brokerage fees, agents' commissions,
finders' fees or advisory fees in connection with the transactions contemplated
hereby; and each party shall indemnify and hold the other harmless in respect of
any "Damages" (as defined in Paragraph 4(a) hereof) arising out of any
agreements, arrangements or understandings claimed to have been made by such
party, or any person acting on its behalf, with any third party.
4. INDEMNIFICATION.
(a) SCC shall indemnify and hold Millennium and/or its
"Affiliates" (as hereinafter defined) (the "Millennium Indemnified Parties" and
each individually a "Millennium Indemnified Party") harmless from and against
any and all claims, losses, causes of action, expenses, losses, damages and/or
liabilities, including reasonable attorney's fees and out-of-pocket
disbursements (collectively, "DAMAGES") incurred or suffered by any Millennium
Indemnified Party, relating to or arising out of (i) the breach by SCC of any
term or provision of this Agreement; (ii) the breach by SCC of any term or
provision of the Purchase Agreement prior to the date hereof; and/or (iii) if
Millennium purchases the Land, any matters relating to title (including liens or
encumbrances affecting the Land and any easements or recorded documents
affecting the Land) and/or all liability and actions resulting therefrom due to
environmental contamination on or about the Land. Promptly after receipt by a
Millennium Indemnified Party of notice of the commencement of any action, such
party will, if a claim in respect thereof is to be made against SCC under this
Paragraph 4(a), notify SCC in writing of the commencement thereof. In case any
such action is brought against any Millennium Indemnified Party and such
Millennium Indemnified Party notifies SCC of the commencement thereof, SCC will
be entitled to participate therein.
(b) Millennium shall indemnify and hold SCC and/or their
Affiliates (the "SCC Indemnified Parties" and each individually a "SCC
Indemnified Party") harmless from and against any and all Damages incurred or
suffered by any SCC Indemnified Party arising out of
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March 26, 1998
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the breach by Millennium of any term or provision of this Agreement and/or of
the Purchase Agreement. Promptly after receipt by an SCC Indemnified Party of
notice of the commencement of any action, such party will, if a claim in respect
thereof is to be made against Millennium under this Paragraph 4(b), notify
Millennium in writing of the commencement thereof. In case any such action is
brought against an SCC Indemnified Party and such SCC Indemnified Party notifies
Millennium of the commencement thereof, Millennium will be entitled to
participate therein.
(c) In order for a party (the "INDEMNIFIED PARTY") to be entitled
to any indemnification provided for under this Agreement arising out of or
involving a claim or demand made by any person or entity (a "THIRD PARTY CLAIM")
against the Indemnified Party, such Indemnified Party must notify the
indemnifying party (the "Indemnifying Party") in writing, and in reasonable
detail, of the Third Party Claim as promptly as reasonably possible after
receipt by such Indemnified Party of written notice of the Third Party Claim,
and shall deliver to the Indemnifying Party, within five (5) business days after
the Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the Third
Party Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such
failure.
(d) If a Third Party Claim is made against an Indemnified Party,
the Indemnifying Party will be entitled to participate in the defense thereof
(provided no actual or potential conflict of interest exists with respect to
such assumption) and, if it so chooses and acknowledges its obligation to
indemnify the Indemnified Party therefor, to assume the defense thereof with
counsel selected by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party. If such counsel shall determine that a conflict exists
between the Indemnifying and Indemnified Parties, or that one or more defenses
are available to one and not to the other, then the Indemnified Party shall have
the right to engage counsel of its choice, at the Indemnifying Party's expense,
subject to the Indemnifying Party's prior approval of such counsel. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party will not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnified
Party shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party shall be
liable for the fees and expenses of counsel employed by the Indemnified Party
for any period during which the Indemnifying Party has not assumed the defense
thereof. If the Indemnifying Party chooses to defend any Third Party Claim, all
the parties hereto shall
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cooperate in the defense or prosecution thereof. Whether or not the Indemnifying
Party shall have assumed the defense of a Third Party Claim, the Indemnified
Party shall not admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the Indemnifying Party's prior written
consent (which consent shall not be unreasonably withheld).
(e) As used herein the term "Affiliate" means, with respect to
any person: (i) any person who is an "affiliate" of such person as defined in
Rule 12b-2 of the SEC under the Securities and Exchange Act of 1934, as amended,
(ii) any family member of such person, and (iii) any person who is a director,
officer or partner or holds a similar position with such entity or any entity in
which such person has a 10% or greater equity or profit interest.
5. MISCELLANEOUS PROVISIONS.
(a) SCC and Millennium hereby covenant and agree to use their
respective best efforts to perform each of their obligations hereunder, to
execute and deliver any and all agreements, instruments, certificates and other
documents and to satisfy all other conditions set forth in this Agreement in
order to effectuate the purpose and intent of this Agreement.
(b) This Agreement is binding on, and shall inure to the benefit
of and be enforceable by, the parties hereto and their respective successors,
permitted assigns and legal representatives; provided that, neither this
Agreement, nor any right, duty or interest therein, may be assigned by either
party hereto without the prior written consent of the other party, except that,
Millennium shall have the right to assign its right and duties hereunder to an
Affiliate of Millennium that is controlled by Xxxxxxxxxxx X. Xxxxxxxx or jointly
controlled by Xxxxxxxxxxx X. Xxxxxxxx and Xxxxxxx Xxxxx & Co. (or any of its
Affiliates). Except as set forth herein, this Agreement is for the benefit of
the parties hereto, and no other person or entity shall have any rights or
interest in this Agreement.
(c) All notices, requests, demands and other communications which
are required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered in person or upon receipt when
transmitted by telecopy, messenger or air courier, or seventy two (72) hours
after deposit in the U.S. Mails, mailed by certified or registered first class
mail, postage prepaid, return receipt requested, and duly addressed to the party
to whom the same is to be given or made:
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If to Millennium, to:
MDP Ventures II LLC
0000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attn: Xxxxx Xxxxxxx
With a copy to:
Xxxx Xxxxxx, Esq.
Battle Xxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
If to SCC, to:
The Sports Club Company, Inc.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxx Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx, President
Telecopier No.: (000)000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Kinsella, Boesch, Fujikawa & Xxxxx LLP
1901 Avenue of the Stars, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000)000-0000
Any party may change its address or facsimile number for purposes of this
Section 5(c) by giving notice to the others in accordance with the terms hereof.
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(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
(e) This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts entered into and to be wholly performed therein.
(f) If either party should institute any action to enforce or
interpret any term or provision of this Agreement, the party prevailing in such
action shall be entitled to its attorneys' fees, out-of-pocket disbursements and
all other expenses from the non-prevailing party in such action.
(g) This Agreement (together with all Exhibits attached hereto,
which are incorporated herein by this reference) constitutes the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous written and
oral negotiations, discussions, agreements and understandings with respect to
such subject matter.
(h) Except as otherwise specifically provided herein, each party
shall bear its own costs in connection with the transactions contemplated
hereby.
(i) Each of Millennium and SCC have participated in the
negotiation and drafting of this Agreement. Accordingly, each of the parties
hereby waives any statutory provision, judicial precedent or other rule of law
to the effect that contractual ambiguities are to be construed against the party
who shall have drafted the same.
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If the foregoing is acceptable to you, please date and sign the
enclosed copy of this letter and return it to me.
Very truly yours,
THE SPORTS CLUB COMPANY, INC.
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Xxxx Xxxxxxx, President
Agreed and accepted on the date of this letter at New York, New
York.
MDP VENTURES II LLC
By: MILLENNIUM DEVELOPMENT PARTNERS L.P.
By: MILLENNIUM DEVELOPMENT ASSOCIATES L.P.
By: MILLENNIUM DEVELOPMENT CORP.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx,
Authorized Officer
