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EXHIBIT 10.69
2ND AMENDMENT
TO VERTICAL CLUB LEASE
APRIL 15, 1998
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SECOND AMENDMENT TO
AMENDED AND RESTATED
NET OPERATING LEASE
This SECOND AMENDMENT TO AMENDED AND RESTATED NET OPERATING LEASE (this
"AMENDMENT") is made and entered into as of April 15, 1998, by and among
▇▇▇▇▇▇▇▇▇▇ REALTY CLUB CORPORATION and 328 E. 61 CORP. (collectively,
"LANDLORD"), and THE SPORTS CLUB COMPANY, INC., a Delaware corporation
("TENANT"), with reference to the following recitals:
RECITALS:
A. Landlord and Vertical Fitness and Racquet Club, Ltd. Entered into
that certain Amended and Restated Net Operating Lease (the "RESTATED LEASE")
dated as of March 26, 1985, as amended by that certain Lease Modification
Agreement (the "FIRST AMENDMENT") dated as of July 1, 1990 (as so amended, the
"LEASE"), wherein Tenant leased from Landlord premises commonly known as ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, and more
particularly described in the Lease.
B. Concurrently herewith, Tenant is accepting an assignment of the Lease
from Hilton Hotels Corporation, which is the successor by merger to Bally
Entertainment Corporation, successor to the tenant named in the Restated Lease.
C. Landlord and Tenant desire to amend the Lease as more particularly
set forth below.
NOW THEREFORE, in consideration of the mutual covenants made herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. DEFINITIONS. All terms defined in the Lease shall have the same
meaning when used in this Amendment, unless otherwise specified.
2. REFERENCES TO LEASE. Unless the context requires otherwise, all
references to the "Lease" in the Lease shall hereafter be deemed to mean the
Lease as amended by this Amendment.
3. FIRST AMENDMENT VOID. The First Amendment is hereby nullified and
voided. As a result thereof, all space originally demised pursuant to the
Restated Lease is demised to Tenant.
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4. TERM. Section 1/01 of the Restated Lease is hereby amended to delete
"September 30, 2001" therefrom, and to substitute therefor: "December 31, 2020."
5. MEMORANDUM. Simultaneously with the execution hereof, Landlord and
Tenant shall each duly execute and acknowledge an amendment to the existing
memorandum of lease, in the form of Exhibit 1 to this Amendment (the "Memorandum
Amendment").
6. RENT.
(i) The first grammatical paragraph of Section 2.01 of the
Restated Lease is hereby deleted in its entirety, and the following is
substituted therefor:
"2.01 Tenant agrees to pay Landlord a fixed rental ("Fixed
Rent") (a) with respect to the period from and after the date
hereof and until September 30, 2000, (i) at the rate of
$1,008,000 per annum plus (ii) at the rate of an additional
$180,000 per annum for the garage plus (iii) a monthly amount
equal to the monthly base rent payable by Scores Entertainment,
Inc. ("Scores"), including any escalations thereof, under its
sublease for a portion of the Demised Premises, whether or not
such monthly subrent is actually paid by Scores to Tenant, and
(b) with respect to the period from and after October 1, 2000
and until December 31, 2000, (i) at the rate of $1,080,000 per
annum plus (ii) at the rate of an additional $180,000 per annum
for the garage plus (iii) a monthly amount equal to the monthly
base rent payable by Scores, including any escalations thereof,
under its sublease for a portion of the Demised Premises,
whether or not the such monthly subrent is actually paid by
Scores to Tenant, and (c) with respect to the period from and
after January 1, 2001 and until December 31, 2001, at the rate
of $2,800,000.00 per annum, and (d) with respect to the period
from and after January 1, 2002 and until December 31, 2002, at
the rate of $3,000,000.00 per annum, and (e) with respect to the
period from and after January 1, 2003 and until December 31,
2003, at the rate of $3,200,000.00 per annum, and (f) with
respect to the period from and after January 1, 2004 and until
December 31, 2004, at the rate of $3,400,000.00 per annum, and
(g) with respect to the period from and after January 1, 2005
and until December 31, 2005, at the rate of $3,400,000.00 per
annum, and (h) with respect to the period from and after January
1, 2006 and until December 31, 2010, at the rate of
$3,720,000.00 per annum, and (i) with respect to the period from
and after January 1, 2011 and until December 31, 2015, at the
rate of $4,072,000.00 per annum and (j) with respect to the
period from and after January 1, 2016 and until December 31,
2020, at the rate of $4,110,720.00 per annum. No rent shall be
payable for the garage from and after January 1, 2001. No rent
shall be payable with respect to the monthly base rent payable
by Scores, including any escalations thereof, under its sublease
for a portion of the Demised Premises from and after January 1,
2001."
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(ii) Section 2.03 of the Restated Lease is hereby deleted in its
entirety.
7. USE OF DEMISED PREMISES. The first sentence of Section 3.01 of
the Restated Lease is hereby deleted in its entirety, and the
following is substituted therefor:
"3.01 Subject to and in accordance with all applicable rules,
regulations, laws, zoning and other ordinances, statutes and
requirements of all governmental authorities and the Fire
Insurance Rating Organization and Board of Fire Insurance
Underwriters, and any similar bodies, having jurisdiction
thereof, Tenant is authorized to and shall be permitted to use
the Demised Premises for any lawful purpose, including, without
limitation, as a tennis and sport complex, health spa, office
space, restaurant, nightclub, cabaret, garage and for the sale
of sports and fitness equipment, health foods, vitamins and
juices; provided, however, that the use of the Demised Premises
shall at all times continue to be commensurate with, at least
comparable in quality to and harmonious with the uses made of
buildings and improvements in the vicinity of the Demises
Premises."
8. CHANGES AND ALTERATIONS. Subsection (i) of Section 6.04 of the
Restated Lease is hereby amended to delete "One Hundred Thousand ($100,000)
Dollars"; therefrom and to substitute therefor "Two Hundred Thousand ($200,000)
Dollars"; and the second sentence of Subsection (vi) of Section 6.04 of the
Restated Lease is hereby deleted in its entirety.
9. THE 328 EASEMENT. By its execution hereof, ▇▇▇ ▇. ▇▇ Corp.
acknowledges and agrees that the 328 Easement Agreement continues in full force
and effect for the benefit of Tenant throughout the term of the Lease as
extended hereby, and shall continue throughout the term of each duly exercised
Renewal Option. Simultaneously with the execution hereof, ▇▇▇ ▇. ▇▇ Corp. shall
execute, acknowledge and deliver to Tenant for recordation in the City
Register's Office an amendment to the 328 Easement Agreement acknowledging the
foregoing.
10. ZONING RIGHTS. Article 8 of the Restated Lease is hereby deleted in
its entirety, and the following is substituted therefor:
"8.01 To the full extent that they may used with respect to the
Demised Premises, Landlord hereby transfers to Tenant all excess
floor area and/or development rights (collectively, the "Excess
Zoning Rights") determined pursuant to the Zoning Resolution of
the City of New York, effective as December 15, 1961, as amended
on August 17, 1977 (as so amended, or as the same may heretofore
have been or hereafter be amended, the "Zoning Resolution") that
are appurtenant to the Demised Premises and based upon the
Improvements existing thereon as of the date hereof, and
Landlord shall have no entitlement thereto during the term of
this Lease. Landlord shall, upon reasonable request by Tenant,
but at no cost to Landlord, take such
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actions and execute such documents as Tenant may reasonably deem
necessary or desirable in order to confirm the ownership by
Tenant of the Excess Zoning Rights."
11. NON-DISTURBANCE. Landlord shall use reasonable efforts to deliver to
Tenant a non-disturbance agreement duly executed and acknowledged by the Fee
Mortgagee, and/or by any and all mortgagees of Landlord's interest in the
Demised Premises, with respect to the estate of Tenant under the Lease, in
substantially the form of Exhibit H to the Restated Lease. It shall be a
condition to Tenant's obligation pursuant hereto that it receive either all of
said non-disturbance agreements or Tenant is otherwise reasonable satisfied as
to the priority of the Lease. Landlord hereby represents and warrants that as of
the date hereof there is , and on the date of recordation of the Memorandum
Amendment there shall be, no Fee Mortgagee or any mortgagee of Landlord's
interest in the Demised Premises,
12. RENEWAL OPTIONS. Article 25 of the Restated Lease is hereby deleted
in its entirety, and the following is substituted therefor:
"25.01 Tenant shall have the option (the "First Renewal Option")
to extend the term of this Lease for an additional period (the
"First Renewal Term") of five years commencing on the day
immediately succeeding the Expiration Date and termination on
the fifth anniversary of the Expiration Date. The First Renewal
Option must be exercised by written notice (the "First Renewal
Notice") sent by Tenant to Landlord by certified or registered
mail, return receipt requested, not later than twelve months
prior to the Expiration Date. Any termination, cancellation or
surrender of Tenant's interest in this Lease during the original
term hereof shall terminate Tenant's right to exercise the First
Renewal Option, Tenant's right to exercise the First Renewal
Option shall not apply upon the occurrence and/or during the
continuance of an Event of Default on the part of Tenant
hereunder.
"Upon delivery of the First Renewal Notice by Tenant in
accordance with the terms hereof, this Lease shall thereupon be
deemed renewed for the First Renewal Term with the same force
and effect as if the First Renewal Term had originally been
included in the term of this Lease, and this Lease, as extended,
shall be upon the same terms, covenants and conditions as are
contained herein, except that the amount of the Fixed Rent
payable during the First Renewal Term shall be $4,501,792.00 per
annum.
"Upon Tenant's exercise of this option to extend the term of
this Lease for the First Renewal Term, Landlord and Tenant, upon
demand by either
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party, shall execute and deliver an instrument in recordable
form, setting forth the new expiration date of the term of this
Lease.
"25.02 If the term of this Lease shall have been duly extended for the
First Renewal Term, Tenant shall have the option (the "Second
Renewal Option") to extend the term of this Lease for an
additional period (the "Second Renewal Term," and together with
the First Renewal Term, being hereinafter sometimes collectively
referred to as the "Renewal Terms") of five years commencing on
the day immediately succeeding the Expiration Date of the First
Renewal Term, and terminating on the fifth anniversary of the
Expiration Date of the First Renewal Term. The Second Renewal
Option must be exercised by written notice (the "Second Renewal
Notice") delivered by Tenant to Landlord by certified or
registered mail, return receipt requested, not later than twelve
months prior to the Expiration Date of the First Renewal Term.
Any termination, cancellation or surrender of Tenant's interest
in this Lease during the original term (or First Renewal Term)
hereof shall terminate Tenant's right to exercise the Second
Renewal Option. Tenant's right to exercise the Second Renewal
Option shall not apply upon the occurrence and/or during the
continuance of an Event of Default on the part of Tenant
hereunder.
"Upon delivery of the Second Renewal Notice by Tenant in
accordance with the terms hereof, this Lease shall thereupon be
deemed renewed for the Second Renewal Term with the same force
and effect as if the Second Renewal Term had originally been
included in the term of this Lease, and this Lease, as extended,
shall be upon the same terms, covenants and conditions as are
contained herein, except that the amount of Fixed Rent payable
during the Second Renewal Term shall be $4,931,971.00 per annum.
"Upon Tenant's exercise of its option to extend the term of this
Lease for the Second Renewal Term, Landlord and Tenant, upon
demand by either party, shall execute and deliver to each other
an instrument in recordable form, setting forth the new
expiration date of the term of this Lease.
13. SIGNS AND PLAQUES. The following is hereby added to Article 27 of
the Restated Lease:
"Tenant shall have the right of selection of the location, design and
size of signage on the interior areas of the Demised Premises and on the
exterior areas of the Demised Premises fronting upon Sixtieth and/or Sixty-first
Streets. Landlord shall have the right of selection of the location, design and
size of signage on the exterior areas of the Demised Premises fronting upon both
or either eastern and western exterior exposures. All signage shall be subject
to local law. Tenant signage shall be approved by Landlord; Landlord signage
shall be approved by Tenant.
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Neither such approval shall be unreasonably withheld. Landlord agrees that no
eastern or western signage will depict or advertise in any fashion any competing
or exogenous health club, sports club or athletic club, or any sports or
athletic company, or any similar enterprise, or any logo thereof. Landlord and
Tenant shall each bear the cost of installation, maintenance and utilities
relating to its sign(s), shall at all times maintain them in good condition and
repair, and shall promptly repair any damage caused by their removal."
"Tenant shall cause plaques honoring ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ to be displayed
(one) near the main exterior entry and (one) in the main lobby identifying
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ as the founder, designer and builder of the Demised
Premises."
14. NOTICES. Section 29.01 of the Restated Lease is hereby modified to delete
all addresses contained therein, and to substitute therefor the following:
To Tenant: The Sports Club Company, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
with copies to: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
To Landlord: ▇▇▇▇▇▇▇▇▇▇ Realty Club Corporation
c/▇ ▇▇▇▇▇▇▇▇▇▇ Realty, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and to: 328 E. 61 Corp.
c/▇ ▇▇▇▇▇▇▇▇▇▇ Realty, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇. IMPROVEMENT ALLOWANCE. Landlord shall pay 50% of the hard costs of
the construction of such alterations and improvements tot he Demised Premises as
Tenant may elect to undertake as Tenant's initial improvements, provided,
however, that the aggregate cost of Landlord's share thereof shall in no event
exceed $4,000,000.00; within a reasonable time after the execution hereof Tenant
shall provide to Landlord a description of its intended scope of said initial
improvements (but Tenant shall not be precluded from modifying or expanding the
scope
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thereof). Landlord shall disburse such payments from time to time within fifteen
days after Tenant's request therefor, accompanied by conditional lien releases
with respect to all invoices to be paid from such disbursement, and
unconditional lien releases with respect to all prior disbursements (except to
the extent that such unconditional lien releases have theretofore been provided
to Landlord).
16. LANDLORD PARKING PRIVILEGES. Landlord shall retain two parking
spaces in the Garage, at no charge to Landlord, to be located as Tenant shall
from time to time designate.
17. COMPLIMENTARY MEMBERSHIPS. Throughout the term of the Lease, so long
as Tenant operates a health and/or fitness club (the "Club") open to the general
public for membership at the Demised Premises, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and all of his
descendants (and their spouses), but not exceeding a total of 20 persons, shall
receive nontransferable complimentary memberships at the Club, at the highest
level of membership available, including without limitation complimentary locker
usage, at no charge for monthly dues but otherwise subject to Tenant's rules and
regulations for Club membership and the general operations of the Club applied
on a non-discriminatory basis, and subject to charges for ancillary services on
the same basis that other highest-level Club members are charged therefor.
Subject to the terms and conditions of this Section 17, each of the memberships
described in this Section 17 shall remain valid so long as such membership is
kept in good standing in accordance with the rules of the Club consistently
applied. Nothing in this Section 17 shall give any recipient of a membership
described in this Section 17 any rights against Tenant if Tenant shall, from
time to time, either cease operating the Club or change the manner of its
operations, in any such instance for any reason whatsoever. All such memberships
shall automatically terminate upon (a) termination of the Lease, (b) any sale of
other transfer of the Club by Tenant in any arms'-length transaction, or (c) any
sale or other transfer of the Demised Premises by Landlord (or any sale or other
transfer of interest in the entities constituting Landlord such that ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ or his descendants do not own a controlling interest therein).
18. MISCELLANEOUS CLUB MATTERS.
(a) In any public relations releases of Tenant's wherein the
history of "The Vertical Club" is recalled or recited, Tenant shall recognize
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ as the founder.
(b) Tenant shall not use the name "Vertical Club" with respect
to any location other than the Demised Premises without first obtaining the
Approval of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇; such approval shall not be unreasonably
withheld; it being agreed that the Vertical Club is recognized by many
newspapers and the media as one of the 7 wonders of the world and, therefore,
any additional "Vertical Club" may remove that dignity.
(c) After Tenant has completed its contemplated initial
improvement to the Demised Premises to be undertaken after the date hereof,
Tenant contemplates hosting a party commemorating such completion. Landlord
shall have the right to bear 50% of the cost thereof
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and thereby be a co-host of such party; if Landlord exercises such right, then
Tenant shall hold such party and shall also therein commemorate the twentieth
anniversary of the original opening of the Club.
19. BROKER. Landlord agrees to pay a brokerage commission to Invescorp
International Ltd., and to indemnify, defend and hold Tenant harmless against
and from any and all losses, damages, costs and expenses (including, but not
limited to, attorneys' fees and costs) incurred by Tenant by reason of any claim
for a broker's or finder's fee, owing to Invescorp International Ltd., but no
other. Tenant agrees to indemnify, defend and hold Landlord harmless against and
from any and all losses, damages, costs and expenses (including, but not limited
to, attorneys' fees and costs) incurred by Landlord by reason of any claim for a
broker's or finder's fee, if any, owing to The Weatherby Company, but no other.
20. COUNTERPARTS; TIME. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute but one and the same instrument. Time is of the
essence of each and every provision hereof.
21. AUTHORIZATION. Each individual and entity executing this Amendment
hereby represents and warrants that it has the capacity set forth on the
signature pages hereof with full power and authority to bind to the terms hereof
the party on whose behalf it is executing this Amendment.
22. APPLICABILITY OF LEASE. Landlord and Tenant intend to effect a
novation of the Lease hereby. As an intended consequence thereof, Tenant shall
not be responsible for any act, event, occurrence, or non-performance of any
obligation on or with respect to the Lease, occurring or accruing prior to the
date hereof, and no predecessor of Tenant's with respect to the Demised Premises
shall have any liability on or with respect to the Lease after the date hereof.
[intentionally left blank]
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IN WITNESS WHEREOF, Landlord and Tenant have caused their duly
authorized representatives to execute this Amendment as of the date first above
written.
LANDLORD: ▇▇▇▇▇▇▇▇▇▇ REALTY CLUB CORPORATION,
a New York corporation,
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Its
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▇▇▇ ▇. ▇▇ ▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ corporation,
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Its
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TENANT: THE SPORTS CLUB COMPANY, INC.
a Delaware corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its CEO
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