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EXHIBIT 10.71
Separation From Employment Agreement dated as of February 11,
2000 by and between Registrant and Xxxx X. Xxxxxxx.
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SEPARATION FROM EMPLOYMENT AGREEMENT
THIS SEPARATION FROM EMPLOYMENT AGREEMENT is made and entered into as of
February 11, 2000 (the "AGREEMENT"), by and between The Sports Club Company,
Inc., a Delaware corporation (the "COMPANY") and Xxxx X. Xxxxxxx (the
"EXECUTIVE").
R E C I T A L S
A. Executive serves as President and Chief Executive Officer of Company
pursuant to an Employment Contract dated October 16, 1998, as amended to date
(the "Employment Agreement").
B. Executive and Company have agreed to terminate Executive's employment
with Company on the terms and conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, based on the preceding facts and in consideration of the
agreements of the parties set forth below, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT. Company and Executive hereby terminate the
Employment Agreement and the employment relationship between them as of February
11, 2000 (the "Termination Date"). Executive hereby resigns from the Board of
Directors effective as of the Termination Date.
2. CONSULTING RELATIONSHIP. Executive shall serve as a consultant to the
Company as requested by the Chief Executive Officer of Company on terms mutually
acceptable to Company and Executive. Company shall pay to Executive all
reasonable expenses incurred by Executive in rendering services requested by
Company, and Executive shall provide documentation of such expenses in
accordance with Company policies.
3. SEVERANCE PAYMENTS. Executive shall be entitled to the following
payments:
(a) Executive shall be entitled to receive (i) payments at the
rate of $250,000 per year (the "Current Rate") as set forth in Section 4(f) of
the Employment Agreement for a period of twelve months following the Termination
Date (paid in the manner the Company pays salary to its executive employees),
provided that if Executive engages in any Designated Activity (as defined
below), then the Company's obligation to make payments pursuant to this Section
3(a) (i) shall terminate; and (ii) a payout of unused vacation pay in the amount
of $22,160.91, representing 184.38 hours of unused vacation time which Executive
agrees and acknowledges constitutes payment in full for all of Executive's
unused vacation time at the Current Rate. As used herein, Executive shall be
deemed to be engaged in a Designated Activity if Executive shall knowingly,
directly or indirectly, and whether as a principal, agent, employee or
otherwise, or alone or in association with any individual or other entity, carry
on, be engaged or employed by or take part in, consult, or advise for personal
gain, or own, share in the earnings of, or finance, whether as a lender,
investor or otherwise, Brentwood Associates, Racquetball and Fitness Clubs, Inc.
or any of their affiliates (the "Spectrum Operators") in connection with (a) the
acquisition, management or operation of health and fitness clubs, or (b) the
performance of obligations under the Transition Services Agreement entered into
in connection with the sale of the Spectrum Clubs to the Spectrum Operators.
Executive agrees that the foregoing restrictions are reasonable in light of (x)
the nature and extent of the Company's proprietary information provided to the
Spectrum Operators in connection with the sale of the Spectrum Clubs, and (y)
the Company's legitimate interest in preventing the Spectrum Operators from
acquiring additional information regarding the operation of the Company.
(b) Executive shall be entitled to a bonus payment of $70,000
with respect to services rendered in 1999, payable at the same time bonuses are
paid to other executive officers of the Company with respect to 1999.
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Except as set forth above or as required by the U.S. Comprehensive Omnibus
Budget Reconciliation Act of 1985 ("COBRA") or other applicable law, Executive
shall have no right to additional compensation or benefits from the Company
following the Termination Date.
4. INDEMNIFICATION AGREEMENT; STOCK OPTIONS. The Indemnification
Agreement dated October 7, 1994, and all stock options previously granted to
Executive shall remain in effect in accordance with their terms, provided that
all such stock options shall terminate 90 days following the Termination Date.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY. Company hereby makes the
following representations and warranties:
(a) Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) All corporate and other actions required to be taken by or
on the part of Company to authorize Company to execute and deliver this
Agreement and to perform its obligations hereunder have been duly and validly
taken.
(c) The execution and the delivery by Company of this Agreement
does not and will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in a
violation of, or (iv) require any authorization, consent or approval not
heretofore obtained pursuant to, any binding written or oral agreement or
instrument, charter document, trust instrument, indenture or evidence of
indebtedness, lease, contract or other obligation or commitment (each, a
"CONTRACTUAL OBLIGATION") binding upon Company or any of its properties or
assets, or any law, rule, regulation, restriction, order, writ, judgment, award,
determination, injunction or decree of any court or government, or any decision
or ruling of any arbitrator (each, a "REQUIREMENT OF LAW") binding upon or
applicable to Company or any of its properties or assets.
(d) This Agreement constitutes the legal, valid and binding
obligation of Company and is enforceable against Company in accordance with its
terms, subject to applicable bankruptcy, insolvency or other similar laws or
proceedings limiting creditors' rights generally and to general equitable
principles.
6. REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. Executive hereby makes
the following representations and warranties:
(a) The execution and the delivery by Executive of this
Agreement does not and will not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in a violation of, or (iv) require any authorization, consent or approval
not heretofore obtained pursuant to, any Contractual Obligation or Requirement
of Law to which Executive is a party or is otherwise subject.
(b) This Agreement constitutes the legal, valid and binding
obligation of Executive and is enforceable against Executive in accordance with
its terms, subject to applicable bankruptcy, insolvency or other similar laws or
proceedings affecting creditors rights generally and to general equitable
principles.
7. RELEASE OF CLAIMS.
(a) RELEASED MATTERS. Except for obligations set forth in this
Agreement (including the Company's obligations under COBRA, the Indemnification
Agreement, and the stock options referred to in sections 3 and 4), each of
Company and Executive releases and discharges the other and the other's
shareholders, agents and sureties, both in individual and corporate capacities,
from any and all claims, demands, promises, controversies, actions, differences,
disputes, causes of action, suits, debts, liabilities, obligations, rights,
allegations of misconduct and complaints of whatever character, nature or kind,
in law or equity, known or unknown, suspected or unsuspected
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(collectively, the "CLAIMS") that may exist between them, relating to or arising
out of any matter, cause or thing whatsoever, including, without limitation, any
Claims in any way relating to or arising out of Executive's employment by
Company (collectively, the "RELEASED MATTERS").
(b) UNKNOWN CLAIMS. Company and Executive recognize and
acknowledge that they may discover facts other than, different from or in
addition to the facts now known or believed by them to be true, and on the basis
of which they have executed and delivered this Agreement and given and granted
the waivers and releases provided for herein, which Company and Executive may
not have given or granted had such other, different or additional facts been
known by such party. Notwithstanding such possibility, each of Company and
Executive nevertheless intends that this Agreement, and the waivers and releases
provided for herein, shall remain effective in all respects and particulars and
for all purposes notwithstanding any such other, different or additional facts
and shall constitute an absolute bar to each and every obligation, liability,
claim, demand or cause of action with respect to which the waivers and releases
provided for herein are given. Without limiting the generality of the foregoing,
and in furtherance of the intention of the parties as set forth above, the
parties hereby irrevocably and forever relinquish all rights and benefits under
Section 1542 of the California Civil Code, which provides as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
Each party acknowledges that the foregoing waiver of the provisions of Section
1542 of the California Civil Code was separately bargained for. Each party
expressly consents that this Agreement shall be given full force and effect in
accordance with each and all of its express terms and provisions to the same
effect as those terms and provisions relating to any other claims, demands and
causes of action hereinabove specified. Each party is aware that he or its
attorney may hereafter discover facts different from or in addition to the facts
which he or its attorney now believes to be true with respect to the subject
matter of this Agreement, but that it is such party's intention hereby to settle
fully, finally, absolutely and forever any and all Claims relating to the
Released Matters which now or in the future may exist, or which heretofore have
existed.
(c) Without limiting the generality of the foregoing, the Claims
shall include any Claims arising out of or in any manner related to Executive's
hiring by, employment with, or termination from employment with Company,
including but not limited to any lawsuit, complaint, claim, petition or cause of
action of any kind whatsoever under common law or under any federal or state law
or regulation alleging breach of contract, express or implied, quasi-contract,
promissory estoppel, wrongful termination, constructive discharge, breach of
implied covenant of good faith and fair dealing, intentional or negligent
infliction of emotional distress, defamation, fraud, deceit, violation of any
statute or public policy, intentional or negligent misrepresentation, any other
intentional or negligent act or omission, or any discrimination or harassment on
the basis of race, color, religion, age, sex, pregnancy, sexual preference,
national origin or ancestry, immigration status, union status, disability,
physical handicap, medical condition, or marital status, including, but not
limited to, any alleged violation of the U.S. Fair Labor Standards Act of 1938,
as amended, 29 U.S.C. Section 201, et seq.; the U.S. Equal Pay Act, as amended,
29 U.S.C. Section 206(d); the U.S. Rehabilitation Acts, as amended, 29 U.S.C.
Section 701, et seq.; the U.S. Americans With Disabilities Act ("ADA"), as
amended, 42 U.S.C. Section 12,101; the U.S. Executive Retirement Income Security
Act of 1974 ("ERISA"), as amended, 29 U.S.C. Section 1001, et seq.; the U.S.
Comprehensive Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended,
originally enacted as P.L. 99-272, signed into law on April 7, 1986; the U.S.
Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. Section 621,
et seq.; Title VII of the U.S. Civil Rights Act of 1964 ("TITLE VII"), as
amended, 42 U.S.C. Section 2000e, et seq.; the U.S. Reconstruction Era Civil
Rights Acts, as amended, 42 U.S.C. Sections 1981-1988, inclusive; regulations of
the U.S. Office of Federal Contract Compliance Programs, as amended, 41 C.F.R.
Section 60, et seq.; the California Workers' Compensation Act, as amended, Labor
Code Section 3600, et seq.; the California Fair Employment and Housing Act
("FEHA"), as amended, Government Code Section 12,900 et seq.; the California
Xxxxx Civil Rights Act, as amended, Civil Code Section 51, et seq.; the
California Labor Code, Sections 132(a), 970-973, 976-977, 1020-1054, 1101-1105,
and 1197.5-1199.5, inclusive; the wage and hour orders of the California
Industrial Welfare Commission, enforced by the Division of Labor Standards
Enforcement; the respective Constitutions of the United States of America and
the State of California; and any claim for any attorney's or attorneys' fees,
costs or expenses
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of any kind or nature whatsoever, whether now known or unknown, fixed or
contingent, of as well as any now known or unknown personal injuries or damages
of every kind and nature whatsoever resulting, or that may result, therefrom.
(d) Each of the parties represents and warrants that (i) in
executing this Agreement, such party has sought legal advice from California
legal counsel of his or its choice; (ii) such party has read the contents of
this Agreement; (iii) the terms of this Agreement and its consequences have been
completely read by, and satisfactorily explained to such party by such party's
counsel; (iv) such party fully understands the terms and consequences of this
Agreement and voluntarily accepts the terms and consequences of this Agreement;
and (v) hereafter such party shall not deny the validity of this Agreement on
the ground that he or it did not fully understand the legal consequences of this
Agreement or was not fully apprised of such legal consequences by such party's
counsel.
8. DISCLAIMER OF LIABILITY. Each of Company and Executive acknowledges
that (a) Section 7 of this Agreement reflects a release and waiver of all Claims
relating to the Released Matters; (b) neither the matters contained in this
Agreement, nor the negotiation of this Agreement, should be considered
admissions of any liability whatsoever by any party to this Agreement; and (c)
no past or present wrongdoing on the part of any party shall be implied from the
negotiation or execution of this Agreement.
9. NON-INTERFERENCE. For a period of one (1) year from the date of this
Agreement, Executive agrees that he will not directly or indirectly, as an
Executive, employer, agent, principal, proprietor, general partner, ten percent
(10%) or more stockholder or owner, consultant, director, corporate officer,
whether alone or in association with others:
(a) Induce or influence (or seek to induce or influence) any
person who is engaged (as an Executive, agent, independent contractor, or
otherwise) by Company to terminate his or her employment or engagement.
(b) Induce or influence (or seek to induce or influence) any
customer or patron of Company to terminate his or her relationship with Company;
provided that, the foregoing shall not prevent Executive from working with
competitors of Company.
(c) Induce (or attempt to induce) any of Company's suppliers,
vendors or contractors to cease doing business with Company; provided that, the
foregoing shall not prevent Executive from working with competitors of Company.
(d) Otherwise disparage the Company, its officers, directors,
shareholders or other agents.
Executive acknowledges that his breach of any of the terms of this Section 9
would cause Company irreparable harm and injury that could not be compensated
adequately by an award of monetary damages. Accordingly, if any such breach
should occur, Executive acknowledges that Company shall be entitled to equitable
relief (including temporary restraining orders, preliminary and permanent
injunction and specific performance) in addition to any other remedies available
to it at law.
10. RETURN OF CORPORATE PROPERTY. Upon the Termination Date, Executive
shall (except as otherwise required in connection with consulting services
requested by Company) turn over to Company all property, writings or documents
then in his possession or under his control, belonging to or relating to the
affairs of Company or comprising or relating to Company's proprietary
information, provided, that Executive shall be entitled to copies of his
personal correspondence.
11. COMPLETE RELEASE; INDEMNITY. Executive warrants and represents to
Company that he has not heretofore assigned, transferred, or purported to assign
or transfer, to any person or entity, any claim, or any portion thereof, or any
interest therein arising from, based upon or relating to the Released Claims, to
any other person or
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entity, and agrees to indemnify, defend and hold harmless each and all of the
Released Parties from and against any and all claims based on or arising out of
any such assignment, transfer or purported assignment or transfer of the claims
arising from, based upon or relating to the Released Claims. Executive further
agrees that this Agreement may be pleaded as a full and complete defense to, and
Executive hereby consents that it may be used as the basis for an injunction
against any action, suit or other proceeding based upon any claims, demands,
liabilities, suits, debts, liens, contracts, agreements, promises, damages,
obligations, losses, costs, expenses or actions and causes of action of every
kind, released by this Agreement.
12. MISCELLANEOUS.
(a) SEVERABILITY. If any paragraph, or part of any paragraph, of
this Agreement is rendered void, invalid or unenforceable by any court of law
for any reason, such invalidity or unenforceability shall not void or render
invalid or unenforceable any other paragraph (or part of any paragraph) of this
Agreement.
(b) WAIVER AND AMENDMENT. Any of the terms or provisions of this
Agreement may be waived at any time by the party which is entitled to the
benefit thereof, but only by a written instrument executed by such party. This
Agreement may be amended, supplemented or modified only by an agreement in
writing executed by Company and Executive.
(c) NOTICES. All notices, requests, demands, deliveries and
other communications required or permitted hereunder shall be in writing and,
except as otherwise specifically provided in this Agreement, shall be deemed to
have been duly given, upon receipt, if delivered personally or via fax, or three
(3) business days after deposit in the U.S. mail, if mailed, first class with
postage prepaid to the parties at the following addresses:
If to Company:
The Sports Club Company, Inc.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
Fax: 000-000-0000
with a copy to:
Xxxxxxxx, Xxxxxx, Xxxxxxxx & Xxxxx, XXX
0000 Avenue of the Stars, Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
If to Executive to:
Xxxx X. Xxxxxxx
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx
Price Xxxxxx & Parma
X.X. Xxx 00
Xxxxx Xxxxxxx, XX 00000-0000
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Fax: (000) 000-0000
Any party hereto may, from time to time, change its address for receiving
notices by giving written notice thereof to the other(s) in accordance with the
terms hereof.
(d) COUNTERPARTS. 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) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous written and oral negotiations,
discussions and agreements between the parties with respect to such subject
matter.
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(f) SUCCESSORS. This Agreement shall be binding on, and shall
inure to the benefit of and be enforceable by, the parties hereto and their
respective successors and permitted assigns.
(g) HEADINGS. The section headings contained in this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
(h) GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of California
applicable to agreements to be entered into and entirely performed within such
State.
(i) DELAY, ETC. No delay or omission to exercise any right,
power or remedy accruing to any party hereto shall impair any such right, power
or remedy of such party nor be construed to be a waiver of any such right, power
or remedy nor constitute any course of dealing or performance hereunder.
(j) COSTS AND ATTORNEYS' FEES. If any action, suit, arbitration
proceeding or other proceeding is instituted arising out of this Agreement, the
prevailing party shall recover all of such party's costs, including, without
limitation, the court costs and attorneys' fees incurred therein, including any
and all appeals or petitions therefrom. As used herein, "attorneys' fees" shall
mean the full and actual costs of any legal services actually rendered in
connection with the matters involved, calculated on the basis of the usual fee
charged by the attorneys performing such services.
(k) ASSIGNMENT. Neither this Agreement nor any right pursuant
hereto or interest herein shall be assignable by either of the parties hereto
without the prior written consent of the other party hereto, except as expressly
permitted herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
THE SPORTS CLUB COMPANY, INC. EXECUTIVE
By: /s/ D. Xxxxxxx Xxxxx /s/ Xxxx X. Xxxxxxx
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Chairman of the Board of Directors and Xxxx X. Xxxxxxx
Co-Chief Executive Officer
