UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Amendment No. 4
The Sports Club Company, Inc.
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
84917P10
(CUSIP Number)
Lois Barberio
The Sports Club Company, Inc.
11100 Santa Monica Blvd., Suite 300
Los Angeles, CA 90025
(310) 479-5200
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
February 19, 2004
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box |_|.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a Filing Person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
1
(1) Name of Filing Person
S.S. or I.R.S. Identification No. of Above Person
D. Michael Talla
(2) Check the Appropriate Box if a Member of a Group (See Instructions) (A) |X|
(B) |_|
(3) SEC Use Only
(4) Source of Funds (See Instructions)
PF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) |_|
(6) Citizenship or Place of Organization
U.S.
(7) Sole Voting Power
0
Number of Shares (8) Shared Voting Power
Beneficially Owned 6,423,258
by Each Reporting
Person With (9) Sole Dispositive Power
5,037,769
(10) Shared Dispositive Power
0
(11) Aggregate Amount Beneficially Owned by Each Filing Person
6,423,258
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) |_|
(13) Percent of Class Represented by Amount in Row (11)
Approximately 34.87%(1)
(14) Type of Filing Person (See Instructions)
IN
--------
(1) Based on 18,418,714 outstanding shares as reported in the Issuer's Report
on Form 10-Q filed on November 12, 2003.
2
(1) Name of Filing Person
S.S. or I.R.S. Identification No. of Above Person
Mark S. Spino
(2) Check the Appropriate Box if a Member of a Group (See Instructions) (A) |X|
(B) |_|
(3) SEC Use Only
(4) Source of Funds (See Instructions)
PF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) |_|
(6) Citizenship or Place of Organization
U.S.
(7) Sole Voting Power
0
Number of Shares (8) Shared Voting Power
Beneficially Owned 6,423,258
by Each Reporting
Person With (9) Sole Dispositive Power
430,725
(10) Shared Dispositive Power
0
(11) Aggregate Amount Beneficially Owned by Each Filing Person
6,423,258
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) |_|
(13) Percent of Class Represented by Amount in Row (11)
Approximately 34.87%(1)
(14) Type of Filing Person (See Instructions)
IN
--------
(1) Based on 18,418,714 outstanding shares as reported in the Issuer's Report
on Form 10-Q filed on November 12, 2003.
3
(1) Name of Filing Person
S.S. or I.R.S. Identification No. of Above Person
Philip J. Swain
(2) Check the Appropriate Box if a Member of a Group (See Instructions) (A) |X|
(B) |_|
(3) SEC Use Only
(4) Source of Funds (See Instructions)
PF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) |_|
(6) Citizenship or Place of Organization
U.S.
(7) Sole Voting Power
0
Number of Shares (8) Shared Voting Power
Beneficially Owned 6,423,258
by Each Reporting
Person With (9) Sole Dispositive Power
324,920
(10) Shared Dispositive Power
0
(11) Aggregate Amount Beneficially Owned by Each Filing Person
6,423,258
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) |_|
(13) Percent of Class Represented by Amount in Row (11)
Approximately 34.87%(1)
(14) Type of Filing Person (See Instructions)
IN
--------
(1) Based on 18,418,714 outstanding shares as reported in the Issuer's Report
on Form 10-Q filed on November 12, 2003.
4
(1) Name of Filing Person
S.S. or I.R.S. Identification No. of Above Person
Nanette Pattee Francini
(2) Check the Appropriate Box if a Member of a Group (See Instructions) (A) |X|
(B) |_|
(3) SEC Use Only
(4) Source of Funds (See Instructions)
PF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) |_|
(6) Citizenship or Place of Organization
U.S.
(7) Sole Voting Power
0
Number of Shares (8) Shared Voting Power
Beneficially Owned 6,423,258
by Each Reporting
Person With (9) Sole Dispositive Power
458,863
(10) Shared Dispositive Power
0
(11) Aggregate Amount Beneficially Owned by Each Filing Person
6,423,258
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) |_|
(13) Percent of Class Represented by Amount in Row (11)
Approximately 34.87%(1)
(14) Type of Filing Person (See Instructions)
IN
--------
(1) Based on 18,418,714 outstanding shares as reported in the Issuer's Report
on Form 10-Q filed on November 12, 2003.
5
(1) Name of Filing Person
S.S. or I.R.S. Identification No. of Above Person
Mona Talla
(2) Check the Appropriate Box if a Member of a Group (See Instructions) (A) |X|
(B) |_|
(3) SEC Use Only
(4) Source of Funds (See Instructions)
PF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) |_|
(6) Citizenship or Place of Organization
U.S.
(7) Sole Voting Power
0
Number of Shares (8) Shared Voting Power
Beneficially Owned 6,423,258
by Each Reporting
Person With (9) Sole Dispositive Power
30,953
(10) Shared Dispositive Power
0
(11) Aggregate Amount Beneficially Owned by Each Filing Person
6,423,258
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) |_|
(13) Percent of Class Represented by Amount in Row (11)
Approximately 34.87%(1)
(14) Type of Filing Person (See Instructions)
IN
--------
(1) Based on 18,418,714 outstanding shares as reported in the Issuer's Report
on Form 10-Q filed on November 12, 2003.
6
(1) Name of Filing Person
S.S. or I.R.S. Identification No. of Above Person
The Jared R. Talla Irrevocable Trust dated January 4, 1993
IRS ID# 95-6974331
(2) Check the Appropriate Box if a Member of a Group (See Instructions) (A) |X|
(B) |_|
(3) SEC Use Only
(4) Source of Funds (See Instructions)
PF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) |_|
(6) Citizenship or Place of Organization
U.S.
(7) Sole Voting Power
0
Number of Shares (8) Shared Voting Power
Beneficially Owned 6,423,258
by Each Reporting
Person With (9) Sole Dispositive Power
0
(10) Shared Dispositive Power
70,114
(11) Aggregate Amount Beneficially Owned by Each Filing Person
6,423,258
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) |_|
(13) Percent of Class Represented by Amount in Row (11)
Approximately 34.87%(1)
(14) Type of Filing Person (See Instructions)
00
--------
(1) Based on 18,418,714 outstanding shares as reported in the Issuer's Report
on Form 10-Q filed on November 12, 2003.
7
(1) Name of Filing Person
S.S. or I.R.S. Identification No. of Above Person
The Brett M. Talla Irrevocable Trust dated January 4, 1993
IRS ID# 95-6974329
(2) Check the Appropriate Box if a Member of a Group (See Instructions) (A) |X|
(B) |_|
(3) SEC Use Only
(4) Source of Funds (See Instructions)
PF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) |_|
(6) Citizenship or Place of Organization
U.S.
(7) Sole Voting Power
0
Number of Shares (8) Shared Voting Power
Beneficially Owned 6,423,258
by Each Reporting
Person With (9) Sole Dispositive Power
0
(10) Shared Dispositive Power
69,914
(11) Aggregate Amount Beneficially Owned by Each Filing Person
6,423,258
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) |_|
(13) Percent of Class Represented by Amount in Row (11)
Approximately 34.87%(1)
(14) Type of Filing Person (See Instructions)
00
--------
(1) Based on 18,418,714 outstanding shares as reported in the Issuer's Report
on Form 10-Q filed on November 12, 2003.
8
The Schedule 13D filed with the Securities and Exchange Commission (the
"Commission") on December 1, 1994, as amended to date, is hereby further amended
as follows.
Item 1. Security and Issuer
This statement relates to the common stock, par value $0.01 per share (the
"Common Stock"), of The Sports Club Company, Inc., a Delaware corporation (the
"Issuer"). The principal executive offices of the Issuer are located at 11100
Santa Monica Blvd., Suite 300, Los Angeles, California 90025.
Item 2. Identity and Background
(a) This Statement is being filed jointly by D. Michael Talla ("Talla"),
Mark S. Spino ("Spino"), Philip J. Swain ("Swain"), Nanette Pattee Francini
("Francini"), Mona Talla, The Jared R. Talla Irrevocable Trust dated January 4,
1993 ("Jared Talla Trust"), and The Brett M. Talla Irrevocable Trust dated
January 4, 1993 ("Brett Talla Trust"), (Talla, Spino, Swain, Francini, Mona
Talla, Jared Talla Trust, and Brett Talla Trust are herein collectively referred
to as the "Filing Persons"). Effective September 14, 1994, the Filing Persons
entered into that certain Stockholders Voting Agreement and Conditional
Irrevocable Proxy (the "Voting Agreement") pursuant to which each of them agreed
to vote their shares of the Common Stock of the Issuer in the manner directed by
holders of a majority of the shares of Common Stock held by such persons; as a
result of the Voting Agreement, the Filing Persons may be considered a group
pursuant to Rule 13d-5.
(b), (c) and (f) The name, address, principal occupation, and citizenship
of each of the Filing Persons are set forth below:
Citizenship/
Principal Jurisdiction
Name and Address Occupation of Organization
---------------- ---------- ---------------
Talla Co-Chief Executive United States
11100 Santa Monica Blvd. Officer of Issuer
Los Angeles, California 90025
Spino Senior Vice President United States
11100 Santa Monica Blvd. of Issuer
Los Angeles, California 90025
Swain President and Chief United States
11100 Santa Monica Blvd. Operating Officer of
Los Angeles, California 90025 Issuer
Francini Director and Executive United States
11100 Santa Monica Blvd. Vice President
Los Angeles, California 90025 of Issuer
Mona Talla Spouse of Talla United States
11100 Santa Monica Blvd.
Los Angeles, California 90025
9
Jared Talla Trust Trust for the benefit California
c/o Ronald Resch, Trustee of minor child of Talla
10390 Santa Monica Blvd., 4th Flr.
Los Angeles, California 90025
Brett Talla Trust Trust for the benefit California
c/o Ronald Resch, Trustee of minor child of Talla
10390 Santa Monica Blvd., 4th Flr.
Los Angeles, California 90025
(d) The Filing Persons have not, during the past five years, been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) The Filing Persons have not, during the past five years, been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding as or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
The following information amends and supplements Item 3.
On March 18, 2003, Mr. Talla purchased 3,500 shares for cash, from personal
funds, in the amount of $3.00 per share.
Between April of 2003 and January 2004, Mr. Talla was issued the following
shares as compensation for his guarantee of certain loans to the Issuer:
Date Number of Shares
---- ----------------
April 25, 2003 54,653
November 3, 2003 16,355
January 29, 2004 28,509
The Filing Persons listed below, each have options exercisable within 60
days of the date hereof to purchase the number of shares of the Issuer's Common
Stock pursuant to employee stock options set forth opposite their name.
Filing Persons Number of Option Shares
-------------- -----------------------
Talla 326,667
Spino 202,756
Swain 212,756
Francini 202,756
Item 4. Purpose of Transaction
The following information amends and supplements Item 4.
10
On March 31, 2003, Mr. Talla executed a term sheet and on April 9, 2003,
Mr. Talla entered into an amended and restated term sheet (the "Term Sheet")
with Millennium Partners LLC and its affiliates ("Millennium"), Palisade
Concentrated Equity Partnership, L.P. ("Palisade"), Rex Licklider ("Licklider")
and Kayne Anderson Capital Advisors L.P. ("Kayne," and, together with
Millennium, Licklider and Palisade, the "Other Parties"). Mr. Talla and the
Other Parties are referred to herein as the "Term Sheet Parties." Millennium,
Licklider and Kayne are significant beneficial owners of the Issuer's Common
Stock and have filed either a Schedule 13D or Schedule 13G pursuant to the Act.
The Term Sheet sets forth a non-binding preliminary plan for the Term Sheet
Parties to consummate a "going private transaction" whereby Palisade, Licklider
and Millennium would fund the acquisition of all of the Issuer's outstanding
Common Stock, other than Common Stock held by the Term Sheet Parties and certain
other specified stockholders.
The Term Sheet Parties have abandoned the "going private transaction"
contemplated by the Term Sheet.
Except as set forth in this Item 4, the Filing Persons have no plans or
proposals which relate to or which would result in any of the actions specified
in clauses (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) As of the date of this Amendment 4 to Schedule 13D, the Filing Persons
directly or indirectly own in the aggregate 6,423,258 shares of the Common Stock
of The Sports Club Company, Inc., or approximately 34.87% of the Common Stock
outstanding based on 18,418,714 shares of the Common Stock outstanding, as set
forth in the Form 10-Q filed by The Sports Club Company, Inc. with the
Securities and Exchange Commission on November 12, 2003.
(b) All shares are subject to the Voting Agreement and thus the ability to
vote such shares is shared by all parties to the Voting Agreement. As of the
close of business on February 26, 2004, the Filing Persons have direct ownership
of (and power of disposition with respect to) shares of Common Stock as follows:
Number of Approximate Percentage
Filing Persons Shares of Shares Outstanding
Talla 5,037,769 27.35%
Spino 430,725 2.34%
Swain 324,920 1.76%
Francini 458,863 2.49%
Mona Talla 30,953 *
Jared Talla Trust 70,114 *
Brett Talla Trust 69,914 *
---------------- -------------
Filing Persons as
A Group 6,333,975 34.87%
_______________________
* Less than 1%
11
In addition, on April 8, 2003, Mr. Swain disposed of 12,000 shares of
Common Stock in an open market transaction.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer
The following information amends and restates Item 6.
In connection with the Issuer's renewal and extension of its $15,000,000
credit facility with Comerica Bank - California ("Comerica") in July 2001, Mr.
Talla and certain other parties guaranteed up to $5,000,000 of any amounts drawn
under the facility. Pursuant to an Indemnification and Contribution Agreement
dated as of July 3, 2001, by and among the Issuer, Mr. Talla and the other
guarantors with respect to the facility, the Issuer agreed to pay to the
guarantors in consideration of their provision of such guaranty: (i) a
commitment fee equal to 1% of their pro rata portion (33.33%) of its maximum
permitted borrowing under the facility, and (ii) a usage fee equal to 2% of
their pro rata portion of the average annual outstanding advances under the
facility, which fees may be paid by the Issuer in cash or Common Stock. On April
25, 2003, the Issuer issued 54,653 shares of Common Stock to Mr. Talla in
payment of the commitment fee due at that time; and on November 3, 2003, 16,355
additional shares were issued to Mr. Talla in payment of the commitment fees.
On June 12, 2003, the Issuer replaced its credit facility with Comerica
with a new $20.0 million promissory note payable to Orange County's Credit
Union. The note is guaranteed by Mr. Talla and Rex A. Licklider. Pursuant to an
Indemnity and Guaranty Agreement dated as of December 1, 2003, by and among the
Issuer, Irvine Sports Club, Inc. (a wholly owned subsidiary of Issuer), and
Messrs. Talla and Licklider with respect to the note, the Issuer agreed to pay
the guarantors in consideration of their provision of such guaranty a fee equal
to three percent (3%) of their pro rata portion of the average outstanding
principal balance of the loan for each defined three-month period. Such fees may
be paid by the Issuer in cash or Common Stock. On January 29, 2004, the Issuer
issued 28,509 shares of Common Stock to Mr. Talla in payment of the guaranty fee
due September 30, 2003.
Other than the Stockholders' Voting Agreement and Irrevocable Proxy, as
amended, the Indemnification and Contribution Agreement, a Preferred Stock
Purchase Agreement, an Investors' Rights Agreement, the Indemnity and Guaranty
Agreement, and the Letter Agreement joined in by Mr. Talla in connection with
the purchase by Millennium of Issuer's Common Stock, the Filing Persons do not
have any contract, arrangement, understanding or relationship (legal or
otherwise) with respect to any securities of the Issuer.
Item 7. Material to Be Filed as Exhibits
Exhibit A Stockholders Voting Agreement and Conditional Irrevocable Proxy dated
September 14, 1994.*
Exhibit B Amendment to Stockholders Agreement and Irrevocable Proxy dated
September 14, 1994.*
12
Exhibit C Agreement Regarding the Joint Filing of Schedule 13D.*
Exhibit D Indemnification and Contribution Agreement entered into as of July 3,
2001 by and among The Sports Club Company, Inc., Rex A. Licklider, D.
Michael Talla and MDP Ventures II LLC, incorporated herein by reference to
Exhibit 2 to the Issuer's Current Report on Form 8-K filed with the
Commission on July 17, 2001.
Exhibit E Certificate of Designation of Series C Convertible Preferred Stock of
The Sports Club Company, Inc., incorporated by reference to Exhibit 99.1 to
the Issuer's Current Report on Form 8-K filed with the Commission on
September 9, 2002.
Exhibit F Preferred Stock Purchase Agreement entered into as of September 6,
2002 by and among The Sports Club Company, Inc., MDP Ventures II LLC, Rex
A. Licklider as Trustee of the Licklider Living Trust and D. Michael Talla,
Trustee of the Talla Family Irrevocable Trust, incorporated herein by
reference to Exhibit 99.3 to the Issuer's Current Report on Form 8-K filed
with the Commission on September 9, 2002.
Exhibit G Investors' Rights Agreement entered into as of September 6, 2002 by
and among The Sports Club Company, Inc., MDP Ventures II LLC, Rex A.
Licklider as Trustee of the Licklider Living Trust, D. Michael Talla as
Trustee of the Talla Family Irrevocable Trust, incorporated herein by
reference to Exhibit 99.2 to the Issuer's Current Report on Form 8-K filed
with the Commission on September 9, 2002.
Exhibit H Letter Agreement between Millennium Entertainment Partners, L.P., and
The Sports Club Company, Inc. joined in by D. Michael Talla and Rex A.
Licklider, dated as of March 13, 1997, incorporated herein by reference to
Exhibit 10.92 to the Issuer's Annual Report on Form 10-K filed with the
Commission on March 31, 1997.
Exhibit I Indemnity and Guaranty Agreement entered into as of December 1, 2003
by and among The Sports Club Company, Inc. and Irvine Sports Club, Inc. for
the benefit of Rex A. Licklider and D. Michael Talla.
*Previously filed
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
13
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, each
of the undersigned certifies that the information set forth in this statement is
true, complete and correct and agrees that this statement may be filed jointly
with the other undersigned party.
Dated: March 2, 2004
/s/ D. Michael Talla
--------------------------------------------
D. Michael Talla
/s/ Mona Talla
--------------------------------------------
Mona Talla
/s/ Nanette Pattee Francini
--------------------------------------------
Nanette Pattee Francini
/s/ Mark S. Spino
--------------------------------------------
Mark S. Spino
/s/ Philip J. Swain
--------------------------------------------
Philip J. Swain
The Jared R. Talla Irrevocable Trust
dated January 4, 1993
By: /s/ Ronald M. Resch
-----------------------------------------
Ronald M. Resch, Trustee
The Brett M. Talla Irrevocable Trust
dated January 4, 1993
By: /s/ Ronald M. Resch
-----------------------------------------
Ronald M. Resch, Trustee
14
Exhibit I
Indemnity and Guaranty Agreement
15
INDEMNITY AND GUARANTY
THIS INDEMNITY AND GUARANTY is made and entered into this 1st day of
December, 2003, by THE SPORTS CLUB COMPANY, INC., a Delaware corporation
("Guarantor") and IRVINE SPORTS CLUB, INC., a California corporation
("Borrower") for the benefit of REX A. LICKLIDER and D. MICHAEL TALLA as their
interests may appear (the "Beneficiaries").
RECITALS
A. Borrower borrowed the sum of Twenty Million Dollars ($20,000,000) from
Orange County's Credit Union ("Lender") in a borrowing (the "Loan") secured by
real and personal property of Borrower and personal property of Guarantor,
pursuant to the terms of which, among other things, Beneficiaries guaranteed
performance of all obligations of Borrower to Lender as described in Section 2
of the Beneficiaries' Guaranty in favor of Lender ("Beneficiaries' Guaranty") a
copy of which is attached hereto as Exhibit A (the "Guaranteed Obligations").
B. As a condition to the making of the Loan, Lender required that
Beneficiaries personally guarantee performance of all obligations of Borrower to
Lender undertaken in connection with the Loan.
C. Guarantor is the parent corporation of Borrower, owning one hundred
percent (100%) of the equity securities of Borrower.
D. The proceeds of the Loan were for the direct benefit of Guarantor.
E. As a condition to giving the Beneficiaries' Guaranty, Beneficiaries
required this Indemnity and Guaranty. Prior to delivery by Beneficiaries of the
Beneficiaries' Guaranty, Guarantor agreed to give this Indemnity and Guaranty.
INDEMNITY AND GUARANTY
NOW, THEREFORE, as an inducement to Beneficiaries to make the
Beneficiaries' Guaranty in favor of Lender and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Guarantor and Borrower agree as follows:
ARTICLE I
NATURE AND SCOPE OF INDEMNITY AND GUARANTY
Section 1.1 Guaranty of Obligations. Guarantor hereby absolutely and
unconditionally guarantees to Beneficiaries the prompt and unconditional payment
and full and prompt performance when due by Borrower of the Guaranteed
Obligations. It is expressly understood and agreed that this is an unconditional
guaranty and that the obligations of Guarantor hereunder are and shall be
absolute and irrevocable under any and all circumstances, without regard to the
validity, regularity or enforceability of the Beneficiaries' Guaranty.
Section 1.2 Nature of Guaranty. This Guaranty is an irrevocable, absolute
guarantee of payment and, to the extent of the Guaranteed Obligations, of
performance, and is not merely a guarantee of collection. This Guaranty may not
be revoked by Guarantor and shall continue to be effective with respect to any
Guaranteed Obligations of Borrower arising or created after any attempted
revocation by Guarantor. The fact that at any time or from time to time the
Guaranteed Obligations of Borrower may be increased or reduced shall not release
or discharge the obligation of
16
Guarantor to Beneficiaries with respect to the Guaranteed Obligations of
Borrower. This Guaranty may be enforced by Beneficiaries or either of them. This
Guaranty is an unsecured obligation of Guarantor.
Section 1.3 Indemnification. Guarantor hereby indemnifies and agrees to
defend and save Beneficiaries (and each of them) safe and harmless from and
against any liability, loss, cost, damage or expense, including, without
limitation, attorneys' fees and costs of litigation, arising in any way from or
under the Beneficiaries' Guaranty. Obligations of Guarantor hereunder shall be
in addition to and not in lieu of Guarantor's obligations under other provisions
of this Indemnity and Guaranty.
Section 1.4 Payment by Guarantor. Upon any claim being made by Lender under
or by reason of the Beneficiaries' Guaranty against any Beneficiary, such
Beneficiary or Beneficiaries may, at his or their option, proceed directly and
at once, without notice, against Guarantor to collect and recover the full
amount of the liability hereunder or any portion thereof, without proceeding
against Borrower or any other person.
Section 1.5 Guaranteed Obligations of Borrower Not Reduced by Offset. The
Guaranteed Obligations and the liabilities and obligations of Guarantor to
Beneficiaries hereunder shall not be reduced, discharged or released because or
by reason of any existing or future offset, claim or defense of Borrower, or any
other party, against Lender, any Beneficiary, or against payment of the
Guaranteed Obligations, whether such offset, claim or defense arises in
connection with the Guaranteed Obligations of Borrower (or the transactions
creating the Guaranteed Obligations of Borrower) or otherwise; provided,
however, that Beneficiaries shall be entitled only to amounts for which
Beneficiaries are liable from time to time under Beneficiaries' Guaranty.
Section 1.6 Payment of Expenses. Guarantor agrees that, with or without
notice or demand, Guarantor will reimburse Beneficiaries for all expenses
(including counsel fees) incurred by Beneficiaries in connection with the
collection of the Guaranteed Obligations or any portion thereof or with the
enforcement of this Indemnity and Guaranty.
ARTICLE II
BENEFICIARIES' FEES
Section 2.1 Fees. In consideration of each Beneficiary executing the
Beneficiaries' Guaranty in connection with the Loan, Guarantor shall pay to each
Beneficiary a fee (the "Guaranty Fee") equal to three percent (3%) of such
Beneficiaries' pro rata portion of the average outstanding principal balance of
the Loan for each Loan Period (as hereinafter defined), or partial Loan Period,
during which the Loan is in effect. The Guaranty Fee shall be payable to each
Guarantor within thirty (30) days of the end of each Loan Period until the
earlier of (i) the Lender's release of the Beneficiaries under the
Beneficiaries' Guaranty (the "Beneficiaries' Release"), and (ii) the date (A)
the Borrower's obligations under the Loan are terminated and (B) all amounts
borrowed by the Borrower under the Loan (including accrued interest) have been
repaid (such date being referred to as the "Loan Termination"). If the
Beneficiaries' Release or Loan Termination occurs at any time prior to the last
date of a Loan Period, the Fees for such partial Loan Period shall be paid not
more than thirty (30) days after the applicable event. Each three-month period
ending on September 30, December 31, March 31 and June 30, commencing with the
period ending on September 30, 2003 is referred to herein as a "Loan Period," it
being understood that the first Loan Period is, in fact, one hundred eight (108)
days. The pro rata portion for each Beneficiary shall mean fifty percent (50%)
of the total amount in question.
Section 2.2 Payment. At the Guarantor's option, the Fees may be paid in
cash, restricted shares of the Guarantor's Common Stock, $.01 par value (the
"Common Stock"), or a combination thereof. The Guarantor shall accrue the Fees
for each Loan Period during which any portion of the Loan is outstanding. If the
Guarantor elects to pay, in whole or in part, in Common Stock, within thirty
(30) days following the end of each Loan Period during which
17
the Loan is (or was) outstanding, the Guarantor shall calculate, and shall
notify Beneficiaries, of that number of shares of Common Stock issuable to each
Beneficiary in respect of the Fees payable to such Beneficiary for such Loan
Period (the "Fee Shares"). In the event Guarantor elects to pay any portion of
the fees in Common Stock, to the extent the federal and state income tax payable
by either Beneficiary attributable to such payment exceeds any cash paid by
Guarantor (the "Tax Deficiency"), either Beneficiary or both Beneficiaries may
require such Tax Deficiency (as adjusted for the reduction in the number of
shares of Common Stock) to be paid in cash in lieu of Common Stock. For purposes
of calculating such Tax Deficiency, Beneficiaries shall be presumed to pay taxes
at the maximum marginal rates and to give effect to a deduction for state income
taxes. Such election by Beneficiaries shall be made by notice given to Guarantor
within ten (10) days following Guarantor's notice of its election to
Beneficiaries. All payments of cash, or delivery of Common Stock, shall be made
within fifteen (15) days following Beneficiaries' notice, or, if Beneficiary
does not give such a notice, within twenty (20) days following Guarantor's
notice, or if Guarantor does not give such a notice, within thirty (30) days
following the end of such Loan Period. For purposes of calculating the number of
Fee Shares issuable to each Beneficiary in respect of his portion of the Fees,
the value of the Common Stock shall be the average closing price for the most
recent thirty (30) calendar days prior to the end of the appropriate Loan Period
as reported on the American Stock Exchange. The Fee Shares will not be
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or under state securities (or Blue Sky) laws, but will be issued to each
Guarantor in reliance on the non-public offering exemptions under Section 4(2)
of the Securities Act and Regulation D promulgated thereunder. As a condition to
the issuance of the Fee Shares for any Loan Period, each Beneficiary shall
execute and deliver to Guarantor an investment representation agreement. In
calculating the number of Fee Shares issuable to each Beneficiary, fractional
shares will be disregarded, and the number of such Shares will be rounded down
to the next lowest whole number. The Guarantor shall ensure the availability of
a sufficient number of shares of Common Stock to enable it to fulfill its
obligations under this Agreement.
ARTICLE III
OTHER AGREEMENTS
Section 3.1 Deferment of Rights. Any indebtedness of Guarantor to Borrower
now or hereafter existing, whether in connection with the Loan or otherwise (the
"Subordinated Obligations"), shall be, and such indebtedness is, hereby
deferred, postponed and subordinated to the prior payment in full of all amounts
owed hereunder until payment in full of the Loan; provided, however, that
payment may be made if such payment is applied to payment of the Loan. Borrower
agrees not to accept any payment or satisfaction of any kind of indebtedness of
Guarantor to Borrower unless such indebtedness is applied to payment of the
Loan. Borrower shall not be entitled to enforce or receive payment of any
Subordinated Obligations until all of the Loan obligations have been paid and
performed in full, unless payment of such indebtedness is applied to payment of
the Loan, and any such sums received in violation of this Indemnity and Guaranty
shall be received by Borrower in trust for Beneficiaries.
Section 3.2 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
following and agrees that Guarantor's obligations under this Indemnity and
Guaranty shall not be released, diminished, impaired or adversely affected by
any of the following, and waives any common law, equitable, statutory or other
rights (including, without limitation, rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:
(a) Modifications. Any modification of all or any part of the Guaranteed
Obligations or any document, instrument, contract or understanding between
Borrower and Lender, or any other parties, pertaining to the Guaranteed
Obligations or any failure of Beneficiaries to notify Guarantor of any such
action.
(b) Adjustment. Any adjustment, indulgence, forbearance or compromise that
might be granted or given by Lender to Borrower or Guarantor.
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(c) Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution or
lack of power of Borrower, Guarantor or any other party at any time liable for
the payment of all or part of the Guaranteed Obligations, or any dissolution of
Borrower or Guarantor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the shareholders of Borrower
or Guarantor, or any reorganization of Borrower or Guarantor. Guarantor hereby
assumes full responsibility for due diligence, as well as for keeping informed
of all matters which may affect Borrower's ability to pay and perform its
obligations to Lender. Except for any fiduciary duties Beneficiaries may have by
reason of their positions as officers or directors, Beneficiaries have no duty
to disclose to Guarantor any information which they or either of them may have
or may receive about Borrower's financial condition or business operations, the
condition or uses of Borrower's assets, or any other circumstances bearing on
Borrower's ability to perform.
(d) Invalidity of Guaranteed Obligations of Borrower. The invalidity,
illegality or unenforceability of all or any part of the Guaranteed Obligations,
or any document or agreement executed in connection with the Guaranteed
Obligations, for any reason whatsoever, including, without limitation, any of
the following: (a) the Guaranteed Obligations, or any part thereof, exceed the
amount permitted by law, (b) the act of creating the Guaranteed Obligations or
any part thereof is ultra vires, (c) the officers or representatives executing
Loan documents or otherwise creating the Guaranteed Obligations acted in excess
of their authority, (d) the Guaranteed Obligations violate applicable usury
laws, (e) Borrower has valid defenses, claims or offsets (whether at law, in
equity or by agreement) which render the Guaranteed Obligations wholly or
partially uncollectible, (f) the creation, performance or repayment of the
Guaranteed Obligations (or the execution, delivery and performance of any
document or instrument representing part of the Guaranteed Obligations or
executed in connection with the Guaranteed Obligations, or given to secure the
repayment of the Guaranteed Obligations) is illegal, uncollectible or
unenforceable, or (g) any of the Loan documents are irregular or not genuine or
authentic, it being agreed that Guarantor shall remain liable hereon regardless
of whether Borrower or any other person be found not liable on the Guaranteed
Obligations or any part thereof for any reason; provided, however, that
Beneficiaries shall be entitled only to amounts for which Beneficiaries are
liable from time to time under Beneficiaries' Guaranty.
(e) Release of Collateral. Any release, surrender, exchange, subordination,
deterioration, waste, loss or impairment (including, without limitation,
negligent, willful, unreasonable or unjustifiable impairment) of any collateral,
property or security, at any time existing in connection with, or assuring or
securing payment of, all or any part of the Guaranteed Obligations.
(f) Unenforceability. The fact that any collateral, security, security
interest or lien contemplated or intended to be given, created or granted as
security for the repayment of the Guaranteed Obligations, or any part thereof,
shall not be properly perfected or created, or shall prove to be unenforceable
or subordinate to any other security interest or lien, it being recognized and
agreed by Guarantor that Guarantor is not entering into this Indemnity and
Guaranty in reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the security or collateral for
the Guaranteed Obligations.
(g) Other Actions Taken or Omitted. Any other action taken or omitted to be
taken with respect to the Loan, the Guaranteed Obligations, or the security or
collateral therefor, whether or not such action or omission prejudices Guarantor
or increases the likelihood that Borrower will be unable to pay the Guaranteed
Obligations pursuant to the terms thereof.
19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce Beneficiaries to enter into the Beneficiaries' Guaranty, Borrower
and Guarantor represent and warrant to Beneficiaries as follows:
Section 4.1 Legality. The execution, delivery and performance by Borrower
and Guarantor of this Indemnity and Guaranty and the consummation of the
transactions contemplated hereunder do not, and will not, contravene or conflict
with any law, statute or regulation whatsoever to which either Borrower or
Guarantor is subject or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, or result in the breach
of, any indenture, mortgage, deed of trust, charge, lien, or any contract,
agreement or other instrument to which either Borrower or Guarantor is a party
or which may be applicable to either of them. This Indemnity and Guaranty is a
legal and binding obligation of, respectively, Borrower and Guarantor and is
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to the enforcement of
creditors' rights and by general principals of equity.
Section 4.2 Litigation. Except as otherwise disclosed to Beneficiaries,
there are no proceedings pending or, so far as Borrower or Guarantor know,
threatened before any court or administrative agency which, if decided adversely
to Borrower or Guarantor, would materially adversely affect the financial
condition of Borrower or Guarantor or the authority of either of them to enter
into, or the validity or enforceability of, this Indemnity and Guaranty.
ARTICLE V
WAIVERS
Section 5.1 Waivers.
(a) Guarantor hereby waives notice of the acceptance hereof, presentment,
demand for payment, protest, notice of protest, or any and all notice of
nonpayment, nonperformance or nonobservance, or other proof, or notice or
demand, whereby to charge Guarantor therefor.
(b) Guarantor further agrees that the validity of this Indemnity and
Guaranty and the obligations of Guarantor hereunder shall in no way be
terminated, affected or impaired (a) by reason of the assertion by Lender of any
rights or remedies which it may have under or with respect to the Loan
documents, or (b) by reason of any failure to file or record any instruments or
to take or perfect any security intended to be provided thereby, or (c) by
reason of the release or exchange of any property constituting security or
collateral for the Loan, or (d) by reason of Lender's failure to exercise, or
delay in exercising, any such right or remedy or any right or remedy Lender may
have, or (e) by reason of the commencement of a case under the Bankruptcy Code
by or against any person obligated under the Loan documents, or (f) by reason of
any payment made on or by reason of the Loan, whether made by Borrower or
Guarantor or any other person, which is required to be refunded pursuant to any
bankruptcy or insolvency law; it being understood that no payment so refunded
shall have the effect of reducing the liability of Guarantor hereunder. It is
further understood that Guarantor shall remain liable hereunder if Borrower
shall have taken advantage of, or be subject to the protection of, any provision
in the Bankruptcy Code, the effect of which is to prevent or delay Lender from
taking any remedial action against Borrower, including the exercise of any
option Lender has to declare the Loan due and payable.
(c) Guarantor hereby waives: (i) all statutes of limitations as a defense
to any action or proceeding brought against Guarantor by Beneficiaries, to the
fullest extent permitted by law; (ii) any right Guarantor may have to require
20
Beneficiaries to proceed against Borrower, proceed against or exhaust any
security for the Loan provided to Lender by Borrower or any other person
(including Guarantor), or pursue any other remedy in Beneficiaries' power to
pursue; (iii) any defense based on any claim that Guarantor's obligations exceed
or are more burdensome than those of Borrower; (iv) any defense based on (A) any
legal disability of Borrower, (B) any release, discharge, modification,
impairment or limitation of the liability of Borrower to Lender from any cause,
whether consented to by Lender or arising by operation of law or from any
bankruptcy or other voluntary or involuntary proceeding, in or out of court, for
the adjustment of debtor-creditor relationships (an "Insolvency Proceeding"),
and (C) any rejection or disaffirmance of the Loan, or any part of it, or any
security held for it, in any such Insolvency Proceeding; (v) any defense based
on any action taken or omitted by Lender in any Insolvency Proceeding involving
Borrower, including any election to have Lender's claim allowed as being
secured, partially secured or unsecured, any extension of credit by Lender to
Borrower in any Insolvency Proceeding, and the taking and holding by Lender of
any security for any such extension of credit; (vi) all presentments, demands
for performance, notices of nonperformance, protests, notices of protest,
notices of dishonor, notices of acceptance of this Indemnity and Guaranty and of
the existence, creation, or incurring of new or additional indebtedness, and
demands and notices of every kind except for any demand or notice by Lender to
Guarantor expressly provided for herein; (vii) any defense based on or arising
out of any defense that Borrower may have to the payment or performance of the
Debt and other Loan obligations or any part of them; and (viii) any defense
based on or arising out of any action of Lender described herein.
(d) Waivers of subrogation and other rights and defenses.
(i) Regardless of whether Guarantor may have made any payments to
Beneficiaries, Guarantor hereby waives (A) all rights of subrogation,
indemnification, contribution and any other rights to collect reimbursement
from Borrower or any other party for any sums paid to Beneficiaries,
whether contractual or arising by operation of law (including the
Bankruptcy Code or any successor or similar statute) or otherwise, (B) all
rights to enforce any remedy that Beneficiaries may have against Borrower,
and (C) all rights to participate in any security now or later to be held
by Lender for the Loan. The foregoing waivers shall be effective until the
Loan obligations have been paid and performed in full, or Beneficiaries are
otherwise absolved of any further obligations under Beneficiaries'
Guaranty.
(ii) Guarantor understands and acknowledges that if Lender forecloses
judicially or nonjudicially against any real property security for the
Loan, that foreclosure could impair or destroy any ability that
Beneficiaries or Guarantor may have to seek reimbursement, contribution or
indemnification from Borrower or others based on any right Guarantor or
Beneficiaries may have of subrogation, reimbursement, contribution or
indemnification for any amounts paid by Guarantor under this Guaranty.
Guarantor further understands and acknowledges that in the absence of this
Section, such potential impairment or destruction of Guarantor's rights, if
any, may entitle Guarantor to assert a defense to this Indemnity and
Guaranty based on Section 580d of the California Code of Civil Procedure.
By executing this Indemnity and Guaranty, Guarantor freely, irrevocably and
unconditionally (A) waives and relinquishes that defense and agrees that
Guarantor will be fully liable under this Indemnity and Guaranty even
though Lender may foreclose judicially or nonjudicially against any real
property security for the Loan, (B) agrees that Guarantor will not assert
that defense in any action or proceeding which Beneficiaries may commence
to enforce this Indemnity and Guaranty, (C) acknowledges and agrees that
the rights and defenses waived by Guarantor under this Indemnity and
Guaranty include any right or defense that Guarantor may have or be
entitled to assert based upon or arising out of any one or more of Sections
580a, 580b, 580d or 726 of the California Code of Civil Procedure or
Sections 2787, 2848, 2855 and 2856 of the California Civil Code, and (D)
acknowledges and agrees that Beneficiaries are relying on this waiver in
guaranteeing the Loan, and that this waiver is a material part of the
consideration which Beneficiaries are receiving for guaranteeing the Loan.
21
(iii) As provided in Civil Code Section 2856, Guarantor makes the
following waivers of specific rights afforded under California law:
"The Guarantor waives all rights and defenses that the Guarantor
may have because the debtor's debt is secured by real property. This
means, among other things:
(1) The creditor may collect from the Guarantor without first
foreclosing on any real or personal property collateral pledged by the
debtor.
(2) If the creditor forecloses on any real property collateral
pledged by the debtor:
(A) The amount of the debt may be reduced only by the price
for which that collateral is sold at the foreclosure sale, even
if the collateral is worth more than the sale price.
(B) The creditor may collect from the Guarantor even if the
creditor, by foreclosing on the real property collateral, has
destroyed any right the Guarantor may have to collect from the
debtor.
This is an unconditional and irrevocable wavier of any rights and
defenses the Guarantor may have because the debtor's debt is
secured by real property. These rights and defenses include, but
are not limited to, any rights or defenses based on Section 580a,
580b, 580d, or 726 of the Code of Civil Procedure."
(iv) In addition, Guarantor waives all rights and defenses arising out
of an election of remedies by Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Guarantor's rights of subrogation and
reimbursement against Borrower by the operation of Section 580d of the
California Code of Civil Procedure or otherwise.
(A) Guarantor hereby waives any right or defense it may have at law or
equity, including California Code of Civil Procedure Section 580a, to
a fair market value hearing or action to determine a deficiency
judgment after a foreclosure.
(B) No provision or waiver in this Indemnity and Guaranty shall be
construed as limiting the generality of any other provision or waiver
contained in this Indemnity and Guaranty. It is the intention of the
parties that Guarantor shall not be deemed to be a "creditor" or
"creditors" (as defined in Section 101 of the Bankruptcy Code) of
Borrower by reason of the existence of this Indemnity and Guaranty. If
Borrower becomes a debtor in any proceeding under the Bankruptcy Code,
Guarantor hereby waives any such right as a "creditor" under the
Bankruptcy Code.
ARTICLE VI
MISCELLANEOUS
Section 6.1 No Waiver. No failure to exercise, and no delay in exercising,
on the part of Beneficiaries, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right. The rights of
Beneficiaries hereunder shall be in addition to all other rights provided by
law. No modification or waiver of any provision of this Indemnity and Guaranty,
nor consent to departure therefrom, shall be effective unless in writing, and no
such consent or waiver shall extend beyond
22
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.
Section 6.2 Applicable Law. This Indemnity and Guaranty shall be deemed to
be a contract entered into pursuant to the laws of the State of California and
shall in all respects be governed, construed, applied and enforced in accordance
with applicable federal law and the laws of such state, without reference to or
giving effect to any choice of law doctrine.
Section 6.3 Notices. All acceptances, approvals, consents, demands,
notices, requests, waivers and other communications required or permitted to be
given under this Indemnity and Guaranty must be in writing and (a) delivered
personally by a process server providing a sworn declaration evidencing the date
of service, the individual served, and the address where the service was made;
(b) sent by certified mail, return receipt requested; or (c) delivered by a
nationally recognized overnight delivery service that provides evidence of the
date of delivery, with all charges prepaid (for next morning delivery if sent by
overnight delivery service), addressed to the appropriate party at its address
listed below:
If to Beneficiaries: Rex A. Licklider
c/o The Sports Club Company, Inc.
11100 Santa Monica Boulevard
Suite 300
Los Angeles, California 90025
D. Michael Talla
c/o The Sports Club Company, Inc.
11100 Santa Monica Boulevard
Suite 300
Los Angeles, California 90025
With a copy to:
R. Joseph De Briyn, Esq.
Musick, Peeler & Garrett LLP
624 South Grand Avenue
Suite 2000
Los Angeles, California 90017
If to Guarantor: The Sports Club Company, Inc.
11100 Santa Monica Boulevard
Suite 300
Los Angeles, California 90025
Attention: Chief Financial Officer
With a copy to:
Ronald K. Fujikawa, Esq.
Greenberg Glusker Fields Claman
Machtinger & Kinsella LLP
1900 Avenue of the Stars
Suite 2100
Los Angeles, California 90067
23
If to Borrower: Irvine Sports Club, Inc.
11100 Santa Monica Boulevard
Suite 300
Los Angeles, California 90025
Attention: Chief Financial Officer
With a copy to:
Ronald K. Fujikawa, Esq.
Greenberg Glusker Fields Claman
Machtinger & Kinsella LLP
1900 Avenue of the Stars
Suite 2100
Los Angeles, California 90067
Section 6.4 Entire Agreement. All prior understandings, representations and
agreements with respect to this Indemnity and Guaranty are merged into this
Indemnity and Guaranty which alone fully and completely expresses the agreement
of the parties.
Section 6.5 No Oral Amendment. This Indemnity and Guaranty may not be
modified, amended, waived, extended, changed, discharged or terminated orally or
by any act or failure to act on the part of any party hereto, but only by an
agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
Section 6.6 Successors and Assigns. Each reference herein to
"Beneficiaries" shall be deemed to include their respective successors and
assigns, to whose favor the provisions of this Indemnity and Guaranty shall also
inure. Each reference herein to "Guarantor" shall be deemed to include the
successors and assigns of Guarantor, all of whom shall be bound by the
provisions of this Indemnity and Guaranty. The term "Guarantor" shall also
include any new successor entity formed as a result of any merger,
reorganization, sale or transfer of Guarantor or any interest in Guarantor, and
Guarantor and its constituents shall not thereby be released from any obligation
or liability hereunder. The term "Borrower" as used herein shall include any new
or successor entity formed as a result of any merger, reorganization, sale or
transfer of Borrower or any interest in Borrower.
Section 6.7 Headings. The article, section and subsection headings are for
convenience of reference only and shall in no way affect the interpretation of
this Indemnity and Guaranty.
24
IN WITNESS WHEREOF, Guarantor has executed this Indemnity and Guaranty as
of the date first above set forth.
GUARANTOR:
THE SPORTS CLUB COMPANY, INC.
By: /s/ Timothy O'Brien
----------------------------------------
Name: Timothy M. O'Brien
Its: Chief Financial Officer
By: /s/ Lois J. Barberio
----------------------------------------
Name: Lois J. Barberio
Its: Secretary
BORROWER:
IRVINE SPORTS CLUB, INC.
By: /s/ Timothy O'Brien
----------------------------------------
Name: Timothy M. O'Brien
Its: Chief Financial Officer
By: /s/ Lois J. Barberio
----------------------------------------
Name: Lois J. Barberio
Its: Secretary