UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 2, 2005
THE SPORTS CLUB COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-13290 95-4479735
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11100 Santa Monica Boulevard, Suite 300, Los Angeles, California 90025
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 479-5200
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Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13 e-4(c))
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Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on June 2, 2005, the Company was notified by U.S. Bank,
Trustee for the holders of the Company's 11 3/8% Senior Secured Notes due in
March 2006, that the Company was in default under Section 4.3 of the Indenture
dated April 1, 1999 (the "Indenture"), since the Company had not yet filed its
Form 10-K for the year ended December 31, 2004.
On August 2, 2005, the Company amended the Indenture, effective as of July 21,
2005, by entering into the Fifth Supplemental Indenture. The only material
changes to the arrangement were:
(i) the extension of the date for the negotiation and delivery
of definitive transaction documents in connection with the
previously announced sale of certain of the Company's
assets to a principal shareholder without triggering the
change of control provisions of the Indenture from June 30
to December 31, 2005;
(ii) waiver of Defaults under Sections 4.3 and 4.4 of the
Indenture and Section 314 of the Trust Indenture Act,
provided that the Company complete and file the 2004 Form
10-K, the First Quarter 2005 10-Q and the Second Quarter
2005 10-Q on or before September 30, 2005, respectively,
and deliver to the Trustee the requisite Officers'
Certificate, CPA Statement and Annual Opinion on or before
September 30, 2005. Failure to meet the September 30, 2005
deadline shall constitute an Event Of Default as of
October 1, 2005; and
(iii) in consideration of the Noteholders consent to the Fifth
Supplemental Indenture and waiver of the Default the
Company agreed to pay the Noteholders the aggregate sum of
$250,000.
Other terms of the agreement remain the same.
The information set forth above is qualified in its entirety by reference to the
Fifth Supplemental Indenture, which is attached hereto as Exhibit 99.1 and
incorporated, herein by reference.
Section 2 - Financial Information
Item 2.03 Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
The description of the amendment to the Indenture and the obligatory payment
thereunder set forth above in Item 1.01 is incorporated herein by reference.
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Item 2.04 Triggering Events That Accelerate or Increase Financial Obligations or
an Obligation under an Off-Balance Sheet Arrangement.
The description of the amendment to the Indenture and the waiver of Default
provided certain filing and delivery requirements are met by September 30, 2005
set forth above in Item 1.01 is incorporated herein by reference.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired. None.
(b) Pro form financial information. None
(c) Exhibits.
99.1 Fifth Supplemental Indenture dated as of July 21, 2005
Signatures
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: August 5, 2005 THE SPORTS CLUB COMPANY, INC.
By: /s/ Timothy M. O'Brien
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Timothy M. O'Brien
Chief Financial Officer
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EXHIBIT 99.1
FIFTH SUPPLEMENTAL INDENTURE
This Supplemental Indenture (the "Fifth Supplemental
Indenture") is made and entered into as of this 21st day of July, 2005, by and
among The Sports Club Company, Inc., a Delaware corporation (the "Company"), the
Subsidiary Guarantors (as defined in the Indenture (defined below)), and U.S.
Bank Trust National Association, a national banking association, now known as
U.S. Bank National Association, as trustee (the "Trustee"), with reference to
the following:
A. The Company, the Subsidiary Guarantors and the Trustee are
parties to an Indenture dated as of April 1, 1999 (the "Indenture"), pursuant to
which the Company issued $100,000,000 principal amount of its 11 3/8% Senior
Secured Notes due 2006 (the "Notes"). The Notes are held by a number of Holders;
the largest group of Holders consists of various funds and accounts managed by
Post Advisory Group, LLC and its affiliates ("Post") and Canyon Capital Advisors
LLC ("Canyon"). Funds and accounts managed by Post and Canyon own more than
fifty percent (50%) of the aggregate principal amount of outstanding Notes.
B. The Company's Board of Directors approved the creation of a
special committee (the "Special Committee") to investigate various strategic
alternatives, including the possibility of a sale of certain assets of the
Company to an affiliate of one of the Company's principal stockholders.
C. The Company and certain of the Company's principal
stockholders have commenced negotiations on the terms and conditions under which
the Company would sell certain of its sports fitness complexes to an affiliate
of Millennium Partners, a principal stockholder of the Company ("Millennium"),
for $65,000,000, subject to certain adjustments. As part of that transaction,
the Company intends to tender for shares of its common stock held by
stockholders other than its four principal stockholders and their affiliates
(specifically, Millennium, Rex A. Licklider, D. Michael Talla and Kayne Anderson
Capital Advisors L.P. [the "Principal Stockholders"]) at a price of $2.00 per
share. Finally, as part of the foregoing transactions, the Company would
refinance its facility in West Los Angeles and use the proceeds of the asset
sale and refinancing to retire the Notes. The fairness of the asset sale and
tender offer described in this Recital C (the "Proposed Transactions") would be
evaluated by the Special Committee and its independent financial advisor,
Barnett & Partners LLC.
D. In order to permit the Company, Millennium and the
Principal Stockholders to engage in negotiations with respect to, and execute
and deliver definitive documentation governing, the Proposed Transactions
without arguably constituting a Change of Control (as defined in the Indenture),
the Company wishes to amend the Indenture to modify the Change of Control
provisions as they apply to the Proposed Transactions, and the Trustee is
willing to amend the Indenture to allow for such modification and amendment,
subject to the terms and conditions set forth in this Fifth Supplemental
Indenture.
E. The Company has failed to timely file with the Commission,
and furnish the Trustee and the Holders of the Notes with, the Company's Annual
Report on Form 10-K for
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the fiscal year ended December 31, 2004 (the "2004 10-K"), and its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2005 (the "First Quarter
2005 10-Q"), as required by Section 4.3 of the Indenture and applicable
provisions of the Exchange Act, and will likely be unable to timely file its
Quarterly Report Form 10-Q for the quarter ended June 30, 2005 (the "Second
Quarter 2005 10-Q"). In addition, the Company has failed (a) to deliver to the
Trustee the Officers' Certificate (the "Officers' Certificate") and the written
statement of the Company's independent public accountants (the "CPA Statement")
which must accompany the 2004 10-K as required by Sections 4.4(a) and 4.4(b),
respectively, of the Indenture, and (b) the opinion of counsel required by
Section 11.1(d) of the Indenture (the "Annual Opinion").
F. Section 6.4 of the Indenture provides that, upon the
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding by written notice to the Trustee, the Trustee may, on behalf of
the Holders of all the Notes, waive any existing Default or Event of Default and
its consequences under the Indenture. Further, pursuant to Section 9.2 of the
Indenture, the Trustee, the Subsidiary Guarantors and the Company have the right
to amend the Indenture as described in Recital D above if such amendment is
approved or consented to by Holders of at least a majority of the principal
amount of the Notes outstanding. Post and Canyon (which, through funds and
accounts managed by them, hold more than 50% of the principal amount of
outstanding Notes) are willing to waive such Defaults and Events of Default and
consent to this Fifth Supplemental Indenture, subject to and upon the terms and
conditions set forth herein.
A G R E E M E N T
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In consideration of the recitals, and the mutual covenants and
agreements hereinafter set forth, the Company, the Subsidiary Guarantors and the
Trustee mutually covenant and agree for the benefit of the Holders of the Notes
as follows:
1. Effect. This Fifth Supplemental Indenture (a) is
supplemental to the Indenture, (b) is hereby deemed and construed as a part
thereof for all purposes, and (c) shall be effective immediately upon its
execution by the Trustee, the Company and the Subsidiary Guarantors.
2. Recitals; Definitions. The terms and conditions set forth
in the Recitals shall be deemed a part of this Fifth Supplemental Indenture as
if set forth in a numbered paragraph hereof. Unless otherwise defined herein,
capitalized words or terms appearing in this Fifth Supplemental Indenture shall
have the meanings given to them in the Indenture.
3. Term. The term of this Fifth Supplemental Indenture shall
commence on the date hereof and shall terminate and expire as of 11:59 p.m.,
P.S.T., on December 31, 2005 (the "Term"). Upon the expiration of the Term,
except for its application to events which occurred during the Term, this Fifth
Supplemental Indenture shall be of no further force or effect, and the terms and
provisions of the Indenture shall continue to apply as if this Fifth
Supplemental Indenture were never effective.
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4. Modification of Change of Control Provision.
(a) Subject to the terms of subsection (b) hereof, the
following events which may occur during the Term shall not be deemed to be a
Change of Control under the Indenture: (i) any discussions, understandings or
agreements by and among one or more of the Principal Stockholders relating to or
in contemplation of the Proposed Transactions, whether or not such discussions,
understandings or agreements involve other Persons or whether such Stockholders
(including any such other Persons) file, or are required to file, with the
Commission a Schedule 13D or 14D in connection therewith, (ii) the preparation
and submission to the Company of a term sheet, letter of intent or other written
proposal setting forth the terms and conditions under which one or more of the
Principal Stockholders (or any Affiliates thereof) are prepared to consummate
the Proposed Transactions, or (iii) the negotiation, execution and delivery of a
definitive asset purchase agreement, tender offer documents and any and all
other related agreements and instruments by the Company and/or one or more of
the Principal Stockholders (or any Affiliates thereof) relating to the Proposed
Transactions; provided that, this Section 4(a) shall not be effective if any
such definitive asset purchase agreement, tender offer documents or related
agreements or instruments contain any provision that would result in an adverse
consequence to the Company in the event the Proposed Transactions are not
consummated due to the failure of the Holders of the Notes to waive or modify
the Change of Control provisions of the Indenture with respect to such
Transaction.
(b) Anything in subsection 4(a) to the contrary
notwithstanding, the Change of Control provisions of the Indenture shall not be
deemed to be waived or modified with respect to the consummation of the Proposed
Transactions or any aspect thereof. Without limiting the generality of the
foregoing and for purposes of clarification, in the event the consummation of
the Proposed Transactions or any aspect thereof constitutes a Change of Control
under the Indenture, all of the provisions of the Indenture shall apply as if
this Fifth Supplemental Indenture were not effective, including the obligation
to make a Change of Control Offer pursuant to Section 4.14 of the Indenture.
5. Waiver of Defaults. The Company, the Trustee and the
Subsidiary Guarantors hereby acknowledge and agree that the following proviso
shall be added to Section 6.1(a)(iv) of the Indenture:
"provided however, that the failure of the Company to comply
with Sections 4.3 and 4.4 hereof or Section 314 of the Trust Indenture Act as a
result of the failure to (A) timely file with the Commission, and furnish the
Trustee and the Holders of the Notes with, the 2004 10-K and First Quarter 2005
10-Q and the Second Quarter 2005 10-Q, or (B) deliver to the Trustee the
Officers' Certificate, CPA Statement and Annual Opinion, respectively, in each
case, prior to 11:59 p.m., P.S.T., on September 30, 2005 (the "Deadline"), shall
not constitute an Event of Default; provided further, that any failure to comply
with Sections 4.3 and 4.4 hereof or Section 314 of the Trust Indenture Act as a
result of the failure to timely file with the Commission, and furnish the
Trustee and the Holders of the Notes with, the 2004 10-K and the First Quarter
and Second Quarter 10-Q's, respectively, and deliver to the Trustee the
Officers'
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Certificate, CPA Statement and Annual Opinion on or before the Deadline shall
constitute an Event of Default as of 12:00 a.m., P.D.T., on October 1, 2005."
6. Consent Fee. In consideration of the Holders of Notes
consenting to the terms of this Fifth Supplemental Indenture and waiver of the
Defaults described in Section 5 above, the Company shall pay to such Holders, as
of the record date of July 12, 2005, the aggregate sum of $250,000, payable by
wire transfer of same day funds to the account of the Trustee, for the benefit
of all Holders pro rata among all such Holders in the ratio that the principal
amount of Notes held by each Holder bears to the aggregate principal amount of
all Notes outstanding on such record date. The foregoing consent payment shall
be transmitted to the Trustee not later than 5:00 p.m., EDT, on July __, 2005.
The Trustee shall provide wire transfer instructions to the Company as soon as
reasonably practicable to facilitate the Company's timely payment of such fee.
7. No Other Changes. Except as expressly set forth in this
Fifth Supplemental Indenture, the terms of the Indenture, as amended and
supplemented prior to the date hereof, shall continue in full force and effect
in accordance with its terms.
8. Miscellaneous. This Fifth Supplemental Indenture (together
with the Indenture, as previously amended and supplemented) represents the
entire agreement and understanding between the parties hereto with respect to
this Fifth Supplemental Indenture and supersedes all prior and contemporaneous
written and oral negotiations, discussions and agreements; shall be binding on,
and inure to the benefit of, the parties hereto and their respective successors,
assigns and legal representatives; and may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Fifth Supplemental Indenture on the date first written above.
"TRUSTEE"
U.S. BANK NATIONAL
ASSOCIATION
By: _____/s/ R Prokosch____
Name: _____Richard Prokosch____
Title: _____Vice President____
"COMPANY"
THE SPORTS CLUB COMPANY, INC.
By: ______/s/ Timothy O'Brien____
Name: ______Timothy O'Brien____
Title: ______Chief Financial Officer____
"SUBSIDIARY GUARANTORS"
(see signature pages attached hereto)
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SCC DEVELOPMENT COMPANY LA/IRVINE SPORTS CLUBS, LTD.
By: Sports Club, Inc. of California,
its General partner
By: __/s/ Timothy O'Brien_________
Name: Timothy O'Brien
Title: Chief Financial Officer By: __/s/ Timothy O'Brien___
Name: Timothy O'Brien
Title: Chief Financial Officer
SCC NEVADA, INC.
PONTIUS REALTY, INC.
By: __/s/ Timothy O'Brien____
Name: Timothy O'Brien
Title: Chief Financial Officer By: _ /s/ Timothy O'Brien_____
Name: Timothy O'Brien
Title: Chief Financial Officer
HFA SERVICES, INC.
By: __/s/ Timothy O'Brien______ SCC SPORTS CLUB, INC.
Name: Timothy O'Brien
Title: Chief Financial Officer
By: __/s/ Timothy O'Brien____
Name: Timothy O'Brien
IRVINE SPORTS CLUB, INC. Title: Chief Financial Officer
By: __/s/ Timothy O'Brien_____
Name: Timothy O'Brien
Title: Chief Financial Officer
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SEPULVEDA REALTY AND TVE, INC.
DEVELOPMENT COMPANY, INC.
By: __/s/ Timothy O'Brien________
By: __/s/ Timothy O'Brien _______ Name: Timothy O'Brien
Name: Timothy O'Brien Title: Chief Financial Officer
Title: Chief Financial Officer
SCC CALIFORNIA, INC.
SF SPORTS CLUB, INC.
By: __/s/ Timothy O'Brien________
By: __/s/ Timothy O'Brien ________ Name: Timothy O'Brien
Name: Timothy O'Brien Title: Chief Financial Officer
Title: Chief Financial Officer
THE SPORTS CONNECTION HOLDING COMPANY
SCC REALTY COMPANY
By: __/s/ Timothy O'Brien________
Name: Timothy O'Brien
By: __/s/ Timothy O'Brien ________ Title: Chief Financial Officer
Name: Timothy O'Brien
Title: Chief Financial Officer
THE SPORTSMED COMPANY, INC.
SPORTS CLUB, INC. OF CALIFORNIA
By: __/s/ Timothy O'Brien________
Name: Timothy O'Brien
By: __/s/ Timothy O'Brien________ Title: Chief Financial Officer
Name: Timothy O'Brien
Title: Chief Financial Officer
WASHINGTON D.C. SPORTS CLUB, INC.
TALLA NEW YORK, INC.
By: __/s/ Timothy O'Brien________
Name: Timothy O'Brien
By: __/s/ Timothy O'Brien________ Title: Chief Financial Officer
Name: Timothy O'Brien
Title: Chief Financial Officer
NY SPORTS CLUB, INC.
By: __/s/ Timothy O'Brien________
Name: Timothy O'Brien
Title: Chief Financial Officer
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