1
EXHIBIT 1
THE SPORTS CLUB COMPANY
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
December 29, 1997
C1670
Millennium Entertainment Partners, L.P.
0000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Re: THE SPORTS CLUB COMPANY, INC./INVESTMENT TERMS
Dear Xxxxx:
This letter sets forth the basic terms and conditions (the "Agreement")
under which Millennium Entertainment Partners, L.P. ("Millennium") will purchase
from The Sports Club Company, Inc. ("SCC") 625,000 shares (the "Shares") of
SCC's authorized but unissued common stock, $.01 par value per share (the
"Common Stock"), for an aggregate purchase price of Five Million Dollars, as
provided herein. SCC shall cause the Shares to be listed on the American Stock
Exchange as soon as practicable after the Closing (defined below), but in no
event later than 30 days following the Closing.
1. PURCHASE AND SALE OF STOCK; PAYMENT. Subject to the terms and
conditions of this Agreement and the simultaneous closing of the transactions
contemplated under the RBW Lease Agreement (defined below), SCC will issue and
sell to Millennium the Shares of Common Stock at $8.00 per share, for an
aggregate purchase price of Five Million Dollars (the "Stock Purchase Price").
The Stock Purchase Price will be paid by Millennium to SCC at the Closing in
same-day funds.
2. CLOSING. The closing (the "Closing") of the sale of the Shares and
all the other transactions contemplated hereunder shall be held at the offices
of Kinsella, Boesch, Fujikawa & Xxxxx, LLP, 1901 Avenue of the Stars, Xxxxxxx
Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, at 11:00 A.M., local time, on
December 31, or on such other date as may be agreed upon in writing by
Millennium and SCC (the "Closing Date").
3. REPRESENTATIONS AND WARRANTIES OF SCC. SCC hereby makes the following
representations and warranties:
(a) SCC is a corporation duly organized, validly existing and in
good standing
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Partners, L.P.
December 29, 1997
Page 2
under the laws of the State of Delaware, has all requisite corporate power and
authority to own and hold under lease the properties and assets it purports to
own and hold under lease and to carry on its business as now being conducted and
is not required to be qualified to do business as a foreign corporation in any
jurisdiction, except where so qualified or where the failure to be so qualified
would not have a material adverse effect on the business, financial condition or
properties of SCC and its Subsidiaries (as defined in Paragraph 3(b)), taken as
a whole.
(b) SCC owns a 50% or greater interest or otherwise controls each
of the corporations, limited partnerships and the general partnership listed on
Schedule 3(b) hereto (each, a "Subsidiary"), each of which is duly organized,
validly existing and, in the case of the corporations and limited partnerships,
in good standing under the laws of its state of organization, and has its
principal executive offices in Los Angeles, California (except for the
Reebok-Sports Club/NY, which has its chief executive offices in New York). Each
Subsidiary has all requisite corporate or other power and authority to own and
hold under lease the properties and assets it purports to own and hold under
lease and to carry on its businesses now being conducted and is not required to
be qualified to do business as a foreign corporation or partnership in any
jurisdiction, except where so qualified or whether failure to be so qualified
would not have a material adverse effect on the business or properties of SCC
and the Subsidiaries taken as a whole. Schedule 3(b) hereto sets forth the name
and state of organization of each Subsidiary. Except for the Subsidiaries, SCC
does not own a 50% or greater interest in, have a material economic interest in,
or otherwise control any corporation, general partnership, limited partnership,
limited liability company or other entity.
(c) The authorized capital stock of SCC consists of 40,000,000
shares of Common Stock, 13,757,621 shares of which have been duly authorized and
validly issued, and are fully paid and non-assessable, and except as set forth
on Schedule 3(c) hereto, there do not exist any other authorized or outstanding
securities, options, warrants, calls, commitments, rights to subscribe or other
instruments, agreements or rights of any character, or any pre-emptive rights,
convertible into or exchangeable for, or requiring or relating to the issuance,
transfer or sale of, any shares of capital stock or other securities of SCC
(collectively, "Equity Securities") or any Subsidiary.
(d) The execution and the delivery by SCC of this Agreement, and
the consummation of the transactions contemplated hereby, do 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 including, without
limitation, any charter, bylaw, trust instrument, indenture or evidence of
indebtedness, lease, contract or other obligation or commitment (each, a
"Contractual Obligation") binding upon SCC or any Subsidiary or any of their
properties or assets, or any law, rule, regulation, restriction, order, writ,
judgment,
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Partners, L.P.
December 29, 1997
Page 3
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 SCC or any Subsidiary or any of their properties
or assets.
(e) The issuance and sale of the Shares to Millennium and the
consummation of all other transactions contemplated hereunder have been duly
authorized and if, as and when the Shares are delivered to Millennium, the
Shares will be duly and validly issued and outstanding, fully paid and
nonassessable and will be free of any mortgage, lien, charge, security interest,
pledge or other encumbrance (each, a "Lien"), other than those imposed pursuant
to this Agreement and securities laws of general application. This Agreement
constitutes the legal, valid and binding obligation of SCC and is enforceable
against SCC 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.
(f) Attached hereto as Schedule 3(f) is a true and complete list
of SCC's Annual Report on Form 10-K for the year ended December 31, 1996, and
the Quarterly Reports on Form 10-Q for the three fiscal quarters ending
September 30, 1997, and all amendments thereto, which include the consolidated
financial statements of SCC for its fiscal year ended December 31, 1996, and for
the nine months ended September 30, 1997 (collectively, the "SCC Financial
Statements") and all Form 8-Ks filed since December 31, 1996 (collectively, the
"Reports"). Each of the Reports complied in all material respects with the rules
of the SEC applicable to such Report on the date filed with the SEC, and none of
the Reports contained, on the date of filing with the SEC, any untrue statement
of a material fact, or omitted to state any material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
materially misleading. All of the SCC Financial Statements (subject to year-end
accruals in the case of the September 30, 1997 financial statements): (i) have
been prepared from and on the basis of, and are in accordance with, the books
and records of SCC and with generally accepted accounting principles applied on
a basis consistent with prior accounting periods; (ii) fairly and accurately
present the financial condition of SCC as of the date of each such SCC Financial
Statement and the results of its operations for the periods therein specified;
and (iii) except in the case of the September 30, 1997 financial statements, are
accompanied by the audit opinion of SCC's independent public accountants. There
are no undisclosed liabilities which should be disclosed in the SCC Financial
Statements pursuant to generally accepted accounting principles.
(g) Except as set forth on Schedule 3(g), since September 30,
1997, there has not been nor is there currently pending any change in the
business, business plan, operations, commercial practices, properties, assets or
condition, financial or otherwise, of SCC and the Subsidiaries other than
changes in the ordinary course of business, none of which, singly or in the
aggregate, would have a material adverse effect on the business, financial
condition or properties of SCC and the Subsidiaries, taken as a whole (a
"Material Adverse Effect").
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Partners, L.P.
December 29, 1997
Page 4
(h) SCC and each Subsidiary have complied with all Requirements
of Law in the conduct of its business and corporate affairs, and SCC and each
Subsidiary have all governmental consents, licenses, approvals, permits or
authorizations and all other rights required for the operation of its business,
as now conducted, except where failure to comply, singly or in the aggregate,
would not have a Material Adverse Effect.
(i) Except as set forth on Schedule 3(i) there is not pending,
or, to the best knowledge of SCC, threatened, any action, suit, ruling, order,
decree, judgment, stipulation or legal, administrative, arbitration or other
proceeding or governmental investigation (each, a "Proceeding") to which SCC or
any Subsidiary is a party, which if adversely determined, would have a Material
Adverse Effect.
(j) There has been no material violation or violations by SCC or
any Subsidiary of any environmental or safety statute, law or regulation
(collectively, "Environmental Laws"). As of the Closing, no "Hazardous
Material", as defined below, is or will be present on any SCC or Subsidiary
facility in violation of any Environmental Law. There are no Hazardous Materials
present at any SCC or Subsidiary facility that would have a Material Adverse
Effect. For the purposes of this section, the term "Hazardous Material" shall
mean any material or substances which are prohibited or regulated by any
environmental law or which has been designated by any governmental authority to
be radioactive, toxic, hazardous or otherwise a danger to health, reproduction
or the environment.
(k) Subject to the accuracy of Millennium's representation set
forth in paragraph 4 hereof, the offer and sale of the Shares to Millennium will
be exempt from the Securities Act of 1933, as amended (the "Act").
(l) Neither SCC nor any Subsidiary is now, or has ever been,
subject to any pension, profit sharing or other similar plan which is or was
subject to the Employee Retirement Income Securities Act of 1974, as amended
("ERISA"); no "prohibited transaction" within the meaning of Section 406(a) of
ERISA, and no "reportable event" within the meaning of Section 4043(b) of ERISA,
has occurred with respect to any employee benefit plan of SCC or any Subsidiary;
all employee benefit plans have been established and operated in full compliance
with all Requirements of Law.
(m) SCC and the Subsidiaries have filed all income tax returns
which are required to be filed, and have paid, or made provision for the payment
of, all taxes which have become due pursuant to said returns or pursuant to any
assessment received by SCC or any Subsidiary, except such taxes, if any, as are
being contested in good faith and as to which adequate reserves have been
provided.
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Partners, L.P.
December 29, 1997
Page 5
(n) Neither this Agreement nor any exhibit hereto nor any
certificate, document, writing or other instrument furnished to Millennium by
SCC in connection with this Agreement contained or will contain any untrue
statement of material fact or omit to state any material fact necessary in order
to make the statements contained herein or therein, in light of the
circumstances they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF MILLENNIUM. Millennium hereby makes
the following representations and warranties:
(a) Millennium is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of New York.
(b) The execution and the delivery by Millennium of this
Agreement, its purchase of the Shares and consummation of all other transaction
contemplated hereunder, do 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 Millennium is a party or is otherwise
subject.
(c) The purchase of the Shares and the consummation of all other
transactions contemplated hereunder have been duly authorized by Millennium.
This Agreement constitutes the legal, valid and binding obligation of Millennium
and is enforceable against Millennium 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.
(d) Millennium is purchasing the Shares for its own account for
investment and not with a view to, or for resale in connection with, any
"distribution" thereof for purposes of the Act. Millennium is an "accredited
investor" as such term is defined in Regulation D under the Act. Millennium
acknowledges that the Shares shall be "restricted securities" within the meaning
of Rule 144 ("Rule 144") of the Securities and Exchange Commission ("SEC") under
the Act, will contain a transfer restriction legend and may only be resold
pursuant to an effective registration statement filed with the SEC under the
Act, or pursuant to Rule 144 or another valid exemption from the registration
requirements of the Act as established by an opinion of counsel reasonably
acceptable to SCC.
(e) Millennium is familiar with, and its representatives prior to
Closing will have been given full access by SCC to, all information concerning
the business and financial condition, properties, operations and prospects of
SCC that Millennium has deemed relevant for purposes of making the investment
contemplated by this Agreement. By reason of Millennium's
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Millennium Entertainment
Partners, L.P.
December 29, 1997
Page 6
knowledge and experience in financial and business matters in general, the
business of SCC and investments of the type contemplated by this Agreement in
particular, Millennium is capable of evaluating the merits and risks of making
the investment in the Shares and is able to bear the economic risk of the
investment (including a complete loss of its investment in the Shares).
5. CONDITIONS TO THE OBLIGATIONS OF SCC. The obligations of SCC to
consummate the transactions contemplated by this Agreement on the Closing Date
shall be subject to the satisfaction of each of the conditions set forth in this
Paragraph 5, unless waived by SCC, on or prior to the Closing Date:
(a) The representations and warranties of Millennium set forth in
Paragraph 4 shall be true and correct in all material respects as of the Closing
Date as though made on and as of such date; Millennium shall have performed all
obligations and complied with all covenants required to be performed or complied
with by Millennium under this Agreement on or prior to the Closing Date; and SCC
shall have received from Millennium a certificate to such effect, dated the
Closing Date, signed by an agent duly authorized to act on its behalf.
(b) No order, injunction, decree or other action or legal,
administrative, arbitration or other proceeding by any person other than SCC or
investigation by any governmental agency or authority shall be pending or, to
the knowledge of Millennium, threatened, challenging or imposing a material
limitation on the execution, delivery or performance of this Agreement, or the
consummation of any of the transactions contemplated hereby.
(c) All proceedings taken in connection with the transactions
contemplated hereby and all documents incident to such transactions shall be
reasonably satisfactory in form and substance to SCC and its counsel.
6. CONDITIONS TO THE OBLIGATIONS OF MILLENNIUM. The obligations of
Millennium to consummate the transactions under this Agreement on the Closing
Date shall be subject to the satisfaction of each of the conditions set forth in
this Paragraph 6, unless waived by Millennium, on or prior to the Closing Date.
(a) The representations and warranties of SCC set forth in
Paragraph 3 shall be true and correct in all material respects as of the Closing
Date as though made on and as of such date; SCC shall have performed all
obligations and complied with all covenants required to be performed or complied
with by SCC under this Agreement on or prior to the Closing Date; and Millennium
shall have received on the Closing Date from SCC a certificate or certificates,
dated the Closing Date, to such effect, which certificate or certificates shall
be signed by an authorized officer of SCC.
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Partners, L.P.
December 29, 1997
Page 7
(b) No order, injunction, decree or other action or legal,
administrative, arbitration or other proceeding by any person other than
Millennium or investigation by any governmental agency or authority shall be
pending or, to the knowledge of SCC, threatened, challenging or imposing a
material limitation on the execution, delivery or performance of this Agreement,
the consummation of any of the transactions contemplated hereby or the operation
by SCC of its businesses as now conducted.
(c) All proceedings taken in connection with the transactions
contemplated hereby and all documents incident to such transactions shall be
reasonably satisfactory in form and substance to Millennium and its counsel.
(d) Millennium shall have received from outside counsel to SCC an
opinion, addressed to Millennium, in form and substance reasonably satisfactory
to Millennium and its counsel, confirming certain legal matters related to SCC
and the transactions contemplated hereby.
7. REGISTRATION OF THE SHARES.
(a) Until the earlier of the second anniversary of the Closing
Date and the date Millennium shall become entitled to sell all of the Shares
pursuant to subsection (k) of Rule 144, Millennium shall have the right to
require SCC to file with the SEC, at SCC's sole cost and expense, on no more
than one occasion, a registration statement on Form S-3 (or such other form as
the SEC may from time to time prescribe for such purposes) covering as many of
the Shares as Millennium elects to include therein (the "Millennium Registration
Statement") and to cause the Millennium Registration Statement to be declared
effective by the SEC within 90 days thereafter and to maintain the effectiveness
of the Millennium Registration Statement until the earlier of (i) the completion
of the offering covered by the Millennium Registration Statement, (ii) the third
anniversary of the effectiveness of the Millennium Registration Statement and
(iii) the date Millennium shall become entitled to sell all of the Shares
pursuant to subsection (k) of Rule 144; in the event SCC proposes to register an
underwritten offering of its Common Stock for its own account under the Act, it
shall have the right to delay or suspend the filing or effectiveness of the
Millennium Registration Statement for up to an aggregate of 104 days in any
12-month period to facilitate such registration. If Millennium proposes to
effect an underwritten offering, SCC shall enter into an Underwriting Agreement
in customary form with the managing underwriter selected by Millennium.
Notwithstanding the foregoing, in the event of a material development in
the business of SCC, SCC shall advise Millennium of such event and Millennium
shall cease using the prospectus included in the Millennium Registration
Statement until forty-eight (48) hours following the public disclosure of such
event. SCC shall promptly disclose all such material developments provided that
it shall be entitled to delay such disclosure for a reasonable period of time
for valid business
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Partners, L.P.
December 29, 1997
Page 8
purposes, not to exceed five (5) business days without the consent of
Millennium, which consent shall not be unreasonably withheld.
(b) If, at any time or from time to time, SCC determines to
register any of its securities for its own account or the account of any other
shareholder, other than a registration relating to employee benefit plans (or
the resale of securities acquired pursuant thereto) or a transaction pursuant to
Rule 145 of the SEC, SCC shall include in such registration such number of the
Shares as Millennium shall request in writing within ten (10) business days
following receipt of notice of such registration, provided that, if such
registration is underwritten, it shall be a condition that Millennium
participate in such underwriting and enter into an underwriting agreement in
customary form with the managing underwriter selected by SCC. If the managing
underwriter determines that market forces require limitation of the number of
shares to be underwritten, the number of Shares owned by Millennium to be
included in the registration may be limited or eliminated, provided that,
Millennium shall be treated on at least a pari passu basis with all other
shareholders participating in such registration.
(c) All registration expenses in connection with the
registrations contemplated by this Paragraph 8 shall be borne by SCC, but all
selling expenses of Millennium (including broker fees, underwriting commissions
and the cost of any special legal counsel representing Millennium) shall be
borne by Millennium. In connection with any such registration statement,
Millennium shall promptly furnish SCC with such written representations,
information and consents regarding Millennium, the Shares and the intended
method of distribution of the Shares as shall be necessary for inclusion in the
Registration Statement.
8. CONFIDENTIALITY. Except as required by law or with the consent of the
other party, neither party hereto shall disclose to any third party the terms
hereof or the transactions contemplated hereby except to its employees,
partners, investors, prospective investors, lenders and agents; provided that,
such persons are required to maintain the confidentiality of such information.
9. 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 SCC shall indemnify and hold Millennium harmless in respect of any "Damages"
(as defined in Paragraph 10(e) hereof) arising out of any agreements,
arrangements or understandings claimed to have been made by SCC, or any person
acting on its behalf, with any third party; and Millennium shall indemnify and
hold SCC harmless in respect of any Damages arising out of any agreements,
arrangements or understandings claimed to have been made by Millennium, or any
person acting on its behalf, with any third party.
10. INDEMNIFICATION.
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Partners, L.P.
December 29, 1997
Page 9
(a) SCC shall indemnify Millennium and/or its "Affiliates" (as
hereinafter defined) (the "Millennium Indemnified Parties" and each individually
a "Millennium Indemnified Party") against, and shall hold the Millennium
Indemnified Parties harmless from, and defend the Millennium Indemnified Parties
against, any and all Damages incurred or suffered by the Millennium Indemnified
Parties arising out of any misrepresentation, inaccuracy or omission in any
representation or warranty, or any breach of any warranty, covenant or agreement
made or to be performed by SCC. 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 10,
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 hereby indemnifies SCC and/or their Affiliates
(the "SCC Indemnified Parties" and each individually a "SCC Indemnified Party")
against, and shall hold the SCC Indemnified Parties harmless from, and defend
the SCC Indemnified Parties against, any and all Damages incurred or suffered by
the SCC Indemnified Parties arising out of any misrepresentation, inaccuracy or
omission in any representation or warranty, or any breach of any warranty,
covenant or agreement made or to be performed by Millennium. Promptly after
receipt by a 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 12, notify Millennium in writing of the commencement
thereof. In case any such action is brought against a 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
involving a claim or demand made by any person against the indemnified party (a
"Third Party"), such Indemnified Party must notify the indemnifying party (the
"Indemnified 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 fifteen 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
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Partners, L.P.
December 29, 1997
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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. 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
cooperate in the defense or prosecution thereof. Such cooperation shall include
the retention and (upon the Indemnifying Party's request) the provision to the
Indemnifying Party of non-privileged records and information which are
reasonably relevant to such Third Party Claim (it being understood that the
Indemnified Party shall supply privileged and non-privileged records to counsel
for the Indemnifying Party, to the extent the Indemnifying Party's counsel has
assumed the defense of such Third Party Claim), and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. 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). If, by reason of any Third Party
Claim as to which there exists an obligation to indemnify an Indemnified Party
hereunder, a lien, attachment, garnishment or execution is placed upon any of
the property or assets of any Indemnified Party. The Indemnifying Party shall
also, promptly upon demand, furnish an indemnity bond or take other actions
satisfactory to the Indemnified Party to obtain the prompt release of such lien,
attachment, garnishment or execution. If any judgment or arbitration award is
issued or affirmed in respect of any Third Party Claim, the Indemnifying Party
shall satisfy such judgment or award within 30 days of the date it is rendered,
unless the Indemnifying Party in good faith takes all necessary actions to
appeal such judgment or award, including posting any necessary bond and taking
all other actions required in connection with such appeal on a timely basis.
(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.
(f) As used herein the term "Damages" means any and all claims,
actions, demands, losses, costs, expenses, liabilities, damages and recoveries
to the full amount of the actual damage occasioned by each deficiency,
misrepresentation, inaccuracy, omission or breach, in each
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Partners, L.P.
December 29, 1997
Page 11
case including interest, penalties or other damages (including, without
limitation, reasonable attorneys' fees and other costs and expenses reasonably
incurred in investigating or in attempting to avoid the same or oppose the
imposition thereof or of enforcing this indemnity).
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and agreements made by SCC and Millennium in this Agreement or in any
certificate or other instrument delivered pursuant hereto shall survive the
Closing and any investigation and discovery by SCC or by Millennium, as the case
may be, made at any time with respect thereto; provided, however, that neither
Millennium nor SCC shall have any liability to the other for any
misrepresentation, inaccuracy or omission in any representation or warranty, or
any breach of any representation or warranty, unless the party asserting a claim
with respect to any thereof gives to the other written notice of such claim on
or before the date which is one (1) year following the Closing Date.
12. MISCELLANEOUS PROVISIONS.
(a) SCC and Millennium hereby covenant and agree to use their
respective best efforts to perform each of their obligations hereunder, to
deliver all certificates and to satisfy all other conditions set forth in this
Agreement and to close the transactions contemplated by this Agreement on the
Closing Date.
(b) This Agreement is executed by, and shall be binding upon and
inure to the benefit of, the parties hereto and each of their respective
successors and assigns, provided that neither this Agreement nor any right
pursuant hereto nor interest herein shall be assignable by either party hereto
without the prior written consent of the other party hereto, except as expressly
permitted herein, provided that all rights hereunder may be assigned to an
Affiliate of Millennium that is controlled by Xxxxxxxxxxx X. Xxxxxxxx or jointly
controlled by Xxxxxxxxxxx X. Xxxxxxxx and Xxxxxxx Xxxxx & Co. (or its
Affiliates); except for such permitted assigns, none of the provisions of this
Agreement shall be for the benefit of or enforceable by any other person.
(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 so given or made:
If to Millennium, to:
Millennium Entertainment Partners, L.P.
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Millennium Entertainment
Partners, L.P.
December 29, 1997
Page 12
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 Buyer, 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
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
Paragraph 12(c) by giving notice to the others in accordance with the terms
hereof.
(d) This Agreement may be executed in any number of counterparts,
and each such counterpart will for all purposes be deemed an original, and all
such counterparts 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.
13
Millennium Entertainment
Partners, L.P.
December 29, 1997
Page 13
(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 and Schedules
attached hereto and all other documents referenced herein) 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.
14
Millennium Entertainment
Partners, L.P.
December 29, 1997
Page 14
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 X. Xxxxxxx
--------------------------------------
Xxxx X. Xxxxxxx, President
Agreed and accepted this 29 day of December, 1997, at New York,
New York.
MILLENNIUM ENTERTAINMENT PARTNERS L.P.
By: MILLENNIUM ENTERTAINMENT ASSOC. L.P.
By: MILLENNIUM ENTERTAINMENT CORP.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx,
Vice President
