<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THE SPORTS CLUB COMPANY, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
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<PAGE> 2
[THE SPORTS CLUB COMPANY LOGO]
June 26, 2000
Dear Fellow Stockholders:
It is our pleasure to invite you to our 2000 Annual Meeting of
Stockholders.
We will hold the meeting on Wednesday, August 9, 2000, at 10:00 a.m. at The
Sports Club/LA - Los Angeles, 1835 Sepulveda Boulevard, Los Angeles, California.
In addition to the formal items of business, we will review recent major
developments and answer your questions.
This booklet includes the Notice of Annual Meeting and the Proxy Statement
of the Board of Directors of the Company. The Proxy Statement describes the
business that we will conduct at the meeting and provides information about The
Sports Club Company, Inc.
Your vote is important. Whether you plan to attend the meeting or not,
please complete, date, sign and return the enclosed proxy card promptly. If you
attend the meeting and prefer to vote in person, you may do so.
We look forward to seeing you at the meeting.
Sincerely,
<TABLE>
<S> <C>
/s/ D. MICHAEL TALLA /s/ REX A. LICKLIDER
D. Michael Talla Rex A. Licklider
Chairman of the Board and Vice Chairman of the Board and
Co-Chief Executive Officer Co-Chief Executive Officer
</TABLE>
<PAGE> 3
[THE SPORTS CLUB COMPANY LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<S> <C>
DATE: AUGUST 9, 2000
TIME: 10:00 A.M.
PLACE: THE SPORTS CLUB/LA - LOS ANGELES
1835 SEPULVEDA BOULEVARD
LOS ANGELES, CA 90025
</TABLE>
NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING OF STOCKHOLDERS OF THE SPORTS
CLUB COMPANY, INC. WILL BE HELD AT 10:00 A.M. ON AUGUST 9, 2000, AT THE SPORTS
CLUB/LA - LOS ANGELES. AT OUR ANNUAL MEETING, WE WILL ASK YOU TO:
1. ELECT TWO DIRECTORS FOR THREE-YEAR TERMS, AND
2. TRANSACT ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING.
This Notice and the accompanying Proxy Statement and Proxy Card are being
mailed, beginning June 26, 2000 to owners of shares of the Common Stock of The
Sports Club Company, Inc. in connection with the solicitation of proxies by the
Board of Directors for the 2000 Annual Meeting of Stockholders. This proxy
procedure is necessary to permit all Sports Club Company stockholders, many of
whom live outside of the Los Angeles area and are unable to attend the meeting,
to vote.
Only stockholders owning Sports Club Company shares on June 15, 2000 are
entitled to attend and vote at the meeting. A complete list of these
stockholders will be available at both our corporate office and the meeting site
beginning July 24, 2000. There were 17,776,215 shares of Company Common Stock
outstanding on June 15, 2000.
The Proxy Statement contains important information for you to consider when
deciding how to vote on the matters brought before the meeting. PLEASE READ IT
CAREFULLY AND TAKE THIS OPPORTUNITY TO VOTE. Your shares can only be voted at
the Annual Meeting if you are present or represented by proxy. Whether or not
you plan on attending the meeting you are encouraged to vote by proxy to ensure
that your shares will be represented. If you receive more than one proxy card
because your shares are registered in different names or addresses, each proxy
card should be completed and returned. The Company's Annual Report for 1999 is
enclosed herewith.
By Order of the Board of Directors
/s/ LOIS BARBERIO
Lois Barberio
Secretary
Los Angeles, California
June 26, 2000
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Questions and Answers About the Annual Meeting and Voting... 1
Proposals Recommended by the Board.......................... 3
Proposal 1. -- Election of Two Directors............... 3
Biographies of Directors and Executive Officers............. 4
Information Regarding Our Board of Directors................ 6
Number of Directors and Terms.......................... 6
Committees............................................. 6
Attendance at Board and Committee Meetings............. 6
How We Compensate Directors............................ 6
Executive Compensation...................................... 7
How We Compensate Executive Officers................... 7
Option Grants, Exercises and Year-End Values........... 8
Unexercised Stock Options and Fiscal Year-End Option
Values................................................ 8
Employment Agreements.................................. 8
Committee Report on Executive Compensation.................. 10
Stock Ownership............................................. 12
Section 16 Compliance....................................... 13
Description of Transactions with Our Directors, Officers and
Principal Stockholders.................................... 13
How Our Stock Has Performed Over the Past Several Years..... 15
Other Information........................................... 16
</TABLE>
i
<PAGE> 5
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Q: WHY DID YOU SEND ME THIS PROXY STATEMENT?
A: We sent you this Proxy Statement and the enclosed proxy card because our
Board of Directors is soliciting your proxy to vote at the 2000 Annual Meeting
of Stockholders. This Proxy Statement summarizes the information you need to
know to vote intelligently at the Annual Meeting. However, you do not need to
attend the Annual Meeting to vote your shares. Instead, you may simply complete,
sign and return the enclosed proxy card.
We will begin sending this Proxy Statement, the attached Notice of Annual
Meeting and the enclosed proxy card on June 26, 2000 to all stockholders
entitled to vote. Stockholders who owned Sports Club Company Common Stock at the
close of business on June 15, 2000 are entitled to vote. On this record date,
there were 17,776,215 shares of Sports Club Company Common Stock outstanding.
Sports Club Company Common Stock is our only class of voting stock. We are also
sending with this Proxy Statement, The Sports Club Company, Inc. 1999 Annual
Report, which includes our financial statements.
A list of stockholders eligible to vote will be available at the offices of The
Sports Club Company, Inc., 11100 Santa Monica Blvd., Suite 300, Los Angeles,
California and at the meeting site, 1835 Sepulveda Blvd., Los Angeles,
California, beginning July 24, 2000. Stockholders may examine these lists during
normal business hours for any purpose related to the Annual Meeting.
Q: WHAT AM I VOTING ON?
A: There is one proposal.
- The election of two directors for three-year terms.
Q: HOW MANY VOTES DO I HAVE?
A: Each share of Sports Club Company Common Stock that you own entitles you to
one vote. The proxy card indicates the number of shares of Sports Club Company
Common Stock that you own.
Q: HOW DO I VOTE BY PROXY?
A: Whether you plan to attend the Annual Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the Annual Meeting and vote in person.
If you properly fill in your proxy card and send it to us in time to vote, your
"proxy" (one of the individuals named as proxies on your proxy card) will vote
your shares as you have directed. Unless otherwise directed in the proxy card,
your proxy will vote your shares "FOR" the election of both nominees for
director as recommended by the Board. If any other matter is presented, your
proxy will vote in accordance with his/her best judgement. At the time this
Proxy Statement went to press, we knew of no matters which needed to be acted on
at the Annual Meeting other than those discussed in this Proxy Statement.
Q: WHAT IF I VOTE AND THEN CHANGE MY MIND?
A: You can revoke your proxy by writing to us, by sending in another proxy with
a later date, or by attending the meeting and casting your vote in person.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It indicates that your shares are held in more than one account, such as two
brokerage accounts registered in different names. You should vote each of the
proxy cards to ensure that all of your shares are voted. We encourage you to
register all of your brokerage accounts in the same name and address for better
stockholder service. You may do this by contacting our transfer agent, American
Stock Transfer & Trust Company, at 40 Wall Street, 46th Floor, New York, New
York 10005, Telephone: (718) 921-8200.
Q: WILL MY SHARES BE VOTED IF I DO NOT SIGN AND RETURN MY PROXY CARD?
A: If your shares are held in street name, your brokerage firm, under certain
circumstances, may vote your shares.
Brokerage firms have authority under American Stock Exchange rules to vote
customers' unvoted shares on certain "routine" matters, including the election
of directors.
1
<PAGE> 6
If you do not vote your proxy, your brokerage firm may either:
- vote your shares on routine matters, or
- leave your shares unvoted.
We encourage you to provide instructions to your brokerage firm by voting your
proxy. This ensures your shares will be voted at the meeting.
When a brokerage firm votes its customers' unvoted shares on routine matters,
these shares are counted for purposes of establishing a quorum to conduct
business at the meeting. A brokerage firm cannot vote customers' shares on
non-routine matters. Accordingly, shares which are not voted are considered not
entitled to vote on non-routine matters, rather than as a vote against the
matter.
You may have granted to your stockbroker discretionary voting authority over
your account.
Your stockbroker may be able to vote your shares under the terms of the
agreement you have with your stockbroker.
Q: HOW DO I VOTE IN PERSON?
A: If you plan to attend the Annual Meeting and vote in person, we will give you
a ballot when you arrive. However, if your shares are held in the name of your
broker, bank or other nominee, you must bring an account statement or letter
from the nominee indicating that you were the beneficial owner of the shares on
June 15, 2000, the record date for voting.
Q: WHO WILL COUNT THE VOTE?
A: The Sports Club Company's transfer agent, American Stock Transfer & Trust
Company, will tally the vote, which will be certified by an Inspector of
Election.
Q: IS MY VOTE CONFIDENTIAL?
A: The Sports Club Company has a policy of vote confidentiality. Proxies,
ballots and voting tabulations are available for examination only by the
Inspector of Election and tabulators. Your vote cannot be disclosed to the Board
or management of the Company except as may be required by law and in other
limited circumstances.
Q: HOW MANY VOTES DO YOU NEED TO HOLD THE MEETING?
A: Shares are counted as present at the meeting if the stockholder either:
- is present and votes in person at the meeting, or
- has properly submitted a proxy card, or
- stockholder's broker votes the shares as described above.
A majority of the Company's outstanding shares as of the record date must be
present at the meeting in order to hold the meeting and conduct business. This
is called a quorum.
Q: HOW MANY VOTES MUST THE NOMINEES HAVE TO BE ELECTED?
A: We use the phrase "For" vote to mean a vote for a director. Directors will be
elected by a plurality of votes, meaning that the directors with the greatest
number of "For" votes in the election for directors will be elected.
Q: WHO DO I CONTACT IF I HAVE A QUESTION?
A: Any questions should be directed to Investor Relations, The Sports Club
Company, Inc., 11100 Santa Monica Blvd., Suite 300, Los Angeles, California
90025, Telephone: (310) 479-5200, Fax: (310) 479-8879.
Q: HOW ARE PROXIES SOLICITED?
A: Proxies may be solicited by mail, telephone, or other means by officers,
directors and other employees of the Company. No additional compensation will be
paid to these individuals in connection with proxy solicitations. The Company
pays for distributing and soliciting proxies and reimburses banks, brokers and
other custodians their reasonable fees and expenses for forwarding proxy
materials to stockholders.
2
<PAGE> 7
PROPOSALS RECOMMENDED BY THE BOARD
PROPOSAL 1: ELECTION OF TWO DIRECTORS
Our Board of Directors is divided into three equal classes. One class is
elected at each annual meeting to serve for a three-year term. The number of
directors constituting the whole Board is currently six with two directors
standing for re-election at this Annual Meeting. At the Annual Meeting, the two
candidates receiving the highest number of votes in the election of Class III
directors will be elected. The Board of Directors' nominees for re-election this
year are Rex A. Licklider and D. Michael Talla. Each has consented to serve for
a three-year term. See page 4 for biographies of both nominees. The other four
directors will continue to serve their current terms.
We have no reason to believe that either of the nominees will be unable to
act as director. However, if any director is unable to stand for re-election,
the Board may either reduce the size of the Board or designate a substitute. If
a substitute nominee is named, the proxies may be voted for the election of the
substitute.
If any director resigns, dies or is otherwise unable to serve out their
term, or the Board increases the number of directors, the Board may appoint a
director to fill the vacancy until the expiration of the term of such director.
DIRECTORS WILL BE ELECTED BY A PLURALITY OF VOTES, MEANING THAT THE TWO
NOMINEES WITH THE GREATEST NUMBER OF "FOR" VOTES WILL BE ELECTED AS CLASS III
DIRECTORS. THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF BOTH
NOMINEES.
3
<PAGE> 8
BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERS
CLASS III DIRECTORS
REX A. LICKLIDER
Age 57
Director since 1994
Term expires 2000 Mr. Licklider has served as Vice Chairman of
the Board since 1994 and was appointed Co-Chief
Executive Officer in February 2000. Previously,
Mr. Licklider served as a consultant to us for
strategic and financial planning. He founded
Com Systems, Inc., a publicly traded
long-distance telecommunications company, and
at various times between 1975 and April 1992
served as its Chairman, President and Chief
Executive Officer. Mr. Licklider is a founder
and director of Pentium Investments, Inc. and a
director of Deckers Outdoor Corporation. He
also serves on the Board of Directors of The
Children's Bureau of Southern California, Los
Angeles Youth Programs, Inc. and Marymount High
School in Los Angeles, California. Mr.
Licklider holds a Bachelor of Arts Degree in
Business Administration from the University of
Arizona and a Masters in Business
Administration from the University of
California at Los Angeles.
D. MICHAEL TALLA
Age 53
Director since 1994
Term expires 2000 Mr. Talla began developing sports and fitness
clubs in 1977. He has served as Chairman of the
Board since our inception in 1994. Until July
1999, Mr. Talla served as our Chief Executive
Officer. In February 2000, he assumed the
position of Co-Chief Executive Officer with Mr.
Licklider. He has been in the sports and
fitness industry for more than 20 years and has
developed or participated in the development of
more than 25 sports and fitness clubs in the
United States, including all of our Clubs. Mr.
Talla holds a Bachelor of Arts Degree in
Business Administration from the University of
Arizona.
CLASS I DIRECTORS
BRIAN J. COLLINS
Age 40
Director since 1997
Term expires 2001 From December 1996 to May 1999, Mr. Collins
served as Vice President and Chief Financial
Officer of Millennium Partners Management LLC,
an affiliate of Millennium Entertainment
Partners L.P., which is a real estate developer
of mixed use urban entertainment projects. In
June 1997 he became a principal of Millennium
Partners Management LLC and in June 1999 was
named Chief Operating Officer. From March 1993
to November 1996, Mr. Collins was Senior Vice
President at Carol Management Corp., an owner
and operator of real estate and hotel
properties. Mr. Collins holds a Bachelor of
Arts Degree from Colgate University and a
Masters of Science from New York Graduate
School of Business. For so long as Millennium
maintains at least a 12% interest in our equity
securities, we and certain of our stockholders
have agreed with Millennium to cause a nominee
of Millennium to be appointed or elected to our
Board of Directors. Mr. Collins is currently
serving as Millennium's nominee pursuant to
this agreement. See "Description of
Transactions with Our Directors, Officers and
Principal Stockholders."
ANDREW L. TURNER
Age 53
Director since 1994
Term expires 2001 Mr. Turner has been Chairman of the Board of
Directors and Chief Executive Officer of Sun
Healthcare Group, Inc., a publicly traded
long-term health care services provider, since
its formation in 1989. From 1986 to 1989, Mr.
Turner served as Chief Operating
4
<PAGE> 9
Officer of Horizon Health Care Corporation, a
publicly traded health care services provider.
Mr. Turner is also a director of Watson
Pharmaceuticals, Inc. a publicly traded
pharmaceutical manufacturing company.
CLASS II DIRECTORS
NANETTE PATTEE FRANCINI
Age 51
Director since 1994
Term expires 2002 Ms. Pattee Francini began developing sports and
fitness clubs in 1977 and has served as our
Executive Vice President and has been
principally responsible for overseeing all
marketing activities since our inception in
1994. Ms. Pattee Francini has been in the
sports and fitness industry for more than 20
years and has developed or participated in the
development of more than 25 sports and fitness
clubs, including all of our Clubs. Ms. Pattee
Francini holds a Bachelor of Arts Degree from
the University of Arizona.
DENNISON T. VERU
Age 39
Director since 1996
Term expires 2002 Mr. Veru has been a Director since 1996. In
March 2000, Mr. Veru became Executive Vice
President of Palisade Capital Management, LLC.
From November 1992 until December 1999, he
served as President and Director of Research of
Awad & Associates, a money management division
of Raymond James Financial. From November 1990
to November 1992, Mr. Veru served as Executive
Vice President, Investments of Smith Barney,
Inc., specializing in small and medium
capitalization stocks. He is a graduate of
Franklin and Marshall College.
OTHER EXECUTIVE OFFICERS
TIMOTHY M. O'BRIEN
Age 48
Chief Financial Officer Mr. O'Brien has been our Chief Financial
Officer since February 1995 and since June 1995
has also served as Assistant Secretary. From
July 1993 until February 1995, he was employed
as Vice President/Controller of WCT
Communications, Inc., a publicly traded
long-distance telecommunications company. From
May 1989 until July 1993, Mr. O'Brien was
Controller for Com Systems, Inc., a publicly
traded long-distance telecommunications company
located in Westlake Village, California. Mr.
O'Brien has a Bachelor of Business
Administration Degree from the University of
Wisconsin-Madison and is a Certified Public
Accountant.
PHILIP J. SWAIN
Age 42
Sr. Vice President
of Operations Mr. Swain served as Vice President of
Operations from our inception in 1994 and was
appointed Senior Vice President in 2000. Mr.
Swain has been in the sports and fitness
industry for more than 20 years and has
developed or participated in the development of
more than 20 sports and fitness clubs in the
United States, including many of our current
Clubs.
MARK S. SPINO
Age 46
Sr. Vice President
of Development Mr. Spino served as our Vice President of
Development from our inception in 1994 and was
appointed Senior Vice President in 2000. Mr.
Spino has been in the sports and fitness
industry for more than 20 years and has
developed or participated in the development of
more than 20 sports and fitness clubs in the
United States, including many of our current
Clubs. Mr. Spino holds a Bachelor of Arts
Degree and a Masters of Arts in physical
education from the University of Southern
California.
5
<PAGE> 10
INFORMATION REGARDING OUR BOARD OF DIRECTORS
NUMBER OF DIRECTORS AND TERMS
Our Board of Directors currently has six directors. Two directors are
nominees for re-election this year. The remaining four will continue to serve
the terms described in their biographies included in pages 4 - 5 under
"Biographies of Directors and Executive Officers." The Board is divided into
three equal classes. The classes serve staggered three-year terms.
COMMITTEES
The Board has two permanent committees: the Audit Committee and the
Compensation Committee. The Board does not have a nominating committee or a
committee performing similar functions.
The Audit Committee
- Reviews audit and control functions,
- Reviews accounting principals, policies and practices,
- Confers with independent accountants and management personnel regarding
the scope of our audit examination,
- Reviews reports of our independent accountants and our management's
response thereto, and
- Recommends selection of independent accountants to the Board.
Messrs. Collins, Turner and Veru currently serve as members of the
Committee with Mr. Veru acting as Chairman. The Committee met once during 1999.
The Compensation Committee
- Reviews and recommends salaries and bonuses for executive officers, and
- Administers our 1994 Stock Incentive Plan, as amended, with authority to
grant options and other equity awards.
Messrs. Collins, Turner and Veru currently serve as members of the
Committee with Mr. Turner acting as Chairman. The Committee met once during
1999.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The Board of Directors held 7 meetings in 1999. Except for Mr. Licklider,
during 1999 each director attended 75% or more of all meetings of the Board and
all meetings of committees of which such director was a member. Mr. Licklider
attended 71% of such meetings.
HOW WE COMPENSATE DIRECTORS
Directors' fees, paid only to directors who are not employees of the
Company, are as follows:
- Annual retainer fee of $12,000,
- $1,000 for each Board and committee meeting attended,
- Expenses of attending Board and committee meetings, and
- Automatic annual award of 2,000 shares of Common Stock of The Sports Club
Company granted under the Amended and Restated 1994 Stock Compensation
Plan each November 15th.
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<PAGE> 11
EXECUTIVE COMPENSATION
HOW WE COMPENSATE EXECUTIVE OFFICERS
The table below shows, for the last three fiscal years, the amount of
compensation earned by the Chief Executive Officer and the next five most highly
compensated executive officers (the "Named Executive Officers"). The current
salaries of such executive officers are described below under "Employment
Agreements."
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION SHARES ALL OTHER
-------------------------- UNDERLYING COMPENSATION
NAME & POSITION YEAR SALARY($)(A) BONUS($) OPTION AWARDS ($)(B)
--------------- ---- ------------ -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
D. Michael Talla............... 1999 243,000(c) 60,000 -- 3,168
Co-Chief Executive Officer 1998 243,000(c) 45,000 30,000 3,168
and Chairman of the Board 1997 239,250(c) -- -- 3,135
Nanette Pattee Francini........ 1999 159,993 45,000 50,000 1,980
Executive Vice President 1998 154,800 35,000 30,000 825
and Director 1997 145,100 10,000 15,000 --
John M. Gibbons................ 1999 304,508(d) 55,000 -- 2,534
President, Chief Operating 1998 264,108(d) 42,000 30,000 2,534
Officer and Director 1997 245,883(d) 25,000 -- 2,637
(Resigned February 2000)
Mark S. Spino.................. 1999 150,000 45,000 50,000 3,168
Senior Vice President of 1998 145,000 35,000 30,000 2,775
Development 1997 134,125 10,000 15,000 --
Philip J. Swain................ 1999 160,000 45,000 50,000 1,980
Senior Vice President of 1998 155,000 35,000 30,000 2,063
Operations 1997 146,031 15,000 15,000 908
Timothy M. O'Brien............. 1999 150,000 45,000 50,000 3,168
Chief Financial Officer 1998 146,300 35,000 30,000 3,168
and Assistant Secretary 1997 137,667 10,000 15,000 2,807
</TABLE>
---------------
(a) Includes automobile allowance.
(b) Represents value of our Common Stock contributed for the benefit of the
Named Executive Officer, under the 401-K Profit Sharing Plan, based upon the
December 31 closing market price each year, on the American Stock Exchange.
(c) Mr. Talla also receives, on an annual basis, 49.9% of the first $300,000 of
The Sports Club/LA - Los Angeles' net cash flow. This amount is not included
in Mr. Talla's compensation. See "Description of Transactions with Our
Directors, Officers and Principal Stockholders."
(d) Includes an allowance for living expenses paid to Mr. Gibbons under the
terms of his employment agreement.
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<PAGE> 12
OPTION GRANTS, EXERCISES AND YEAR-END VALUES
The following table describes option grants to the Named Executive Officers
during the last fiscal year.
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
SHARES GRANTED PRICE APPRECIATION FOR
UNDERLYING TO EXERCISE OPTION TERM(B)
OPTIONS EMPLOYEES PRICE EXPIRATION -----------------------
NAME GRANTED(#)(A) FOR 1999 ($/SH) DATE 5%($) 10%($)
---- ------------- --------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
D. Michael Talla.............. -- -- -- -- -- --
Nanette Pattee Francini....... 50,000 23.81 3.9375 2/9/2009 123,815 313,770
John M. Gibbons............... -- -- -- -- -- --
Mark S. Spino................. 50,000 23.81 3.9375 2/9/2009 123,815 313,770
Philip J. Swain............... 50,000 23.81 3.9375 2/9/2009 123,815 313,770
Timothy M. O'Brien............ 50,000 23.81 3.9375 2/9/2009 123,815 313,770
</TABLE>
---------------
(a) All grants are incentive stock options granted under the terms of our 1994
Stock Incentive Plan, as amended, at an exercise price equal to the fair
market value of our Common Stock on the date of grant. All of these options
expire ten years from the date of grant and vest in 33 1/3% increments on
the first three anniversaries of the grant.
(b) The dollar amounts listed are the result of calculations at the 5% and 10%
annual rates of stock appreciation prescribed by the SEC and are not
intended to forecast possible future appreciation, if any, of our Common
Stock. If our Common Stock does not appreciate, the Named Executive Officers
will receive no benefit from the options.
UNEXERCISED STOCK OPTIONS AND FISCAL YEAR-END OPTION VALUES
None of the Named Executive Officers exercised stock options during the
last fiscal year. The following table provides information with respect to
unexercised stock options outstanding as of December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF IN-THE-MONEY
UNEXERCISED OPTIONS AT FISCAL UNEXERCISED OPTIONS AT FISCAL
YEAR-END(A) YEAR-END(B)
------------------------------ ------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) (#) ($) ($)
---- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
D. Michael Talla........................... 10,000 20,000 -- --
Nanette Pattee Francini.................... 35,000 75,000 17,812 --
John M. Gibbons............................ 235,000 20,000 196,875 --
Mark S. Spino.............................. 35,000 75,000 17,812 --
Philip J. Swain............................ 45,000 75,000 29,687 --
Timothy M. O'Brien......................... 65,000 75,000 23,437 --
</TABLE>
---------------
(a) All options were granted under our 1994 Stock Incentive Plan, as amended.
(b) The in-the-money options had exercise prices of less than $3.875, the
closing price of our Common Stock on the American Stock Exchange on December
31, 1999. The calculations of value assume a fair market value of our Common
Stock on December 31, 1999 at the price of $3.875 per share.
EMPLOYMENT AGREEMENTS
In August 1994, we entered into employment agreements with D. Michael
Talla, as Chief Executive Officer, and Nanette Pattee Francini, as Executive
Vice President, each of which, as amended to date, expire on December 31, 2000
and currently provide for annual compensation of $250,000 payable to Mr. Talla,
and $200,000 payable to Ms. Pattee Francini, subject to upward adjustment in the
discretion of the Board of Directors. We may terminate either employment
agreement for cause without penalty.
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<PAGE> 13
The employment agreements with Mr. Talla and Ms. Pattee Francini entitle
each employee to annual performance bonuses in the discretion of the Board of
Directors. The employment agreements also include severance provisions which
entitle each executive officer to severance pay if his or her employment is
terminated by us without cause; if the employee dies or is disabled; or if the
employee terminates the agreement as a result of our material breach of our
obligations thereunder (up to six months' pay for Ms. Pattee Francini and up to
twelve months' pay for Mr. Talla). In addition, the employment agreements
provide Mr. Talla and Ms. Pattee Francini with additional severance benefits
upon termination of employment following the occurrence of any one of the
following events (each, a "Change in Control") without the approval of a
majority of the Board of Directors: (i) the consolidation or merger of us with
any other corporation or other entity; (ii) the sale or other transfer of all or
substantially all of our assets; (iii) the approval by our stockholders of a
plan of liquidation or dissolution; (iv) any person becomes the beneficial owner
directly or indirectly of 25% or more of our outstanding Common Stock; or (v) a
change occurs in the composition of a majority of our Board of Directors (unless
approved by two-thirds of our Board of Directors). If at any time within two
years after the occurrence of any one of the foregoing events Mr. Talla's or Ms.
Pattee Francini's employment is terminated (other than for cause, incapacity or
death), or Mr. Talla or Ms. Pattee Francini elects to terminate his or her
employment for "good reason" (as that term is defined in the agreements), he or
she is entitled to receive severance compensation equal to the lesser of: (i)
the maximum amount which does not constitute a "parachute payment" as defined in
Section 28OG of the Internal Revenue Code of 1986, as amended; or (ii) an amount
equal to three times the aggregate of (A) his or her base annual salary then in
effect, (B) the car allowance, Club memberships and insurance benefits paid for
the employee during the one-year period immediately prior to termination, and
(C) bonuses accrued but unpaid through the date of termination of employment.
Under the agreements, "good reason" includes the relocation of the executive
officer's place of employment, the assignment of any duties inconsistent with
the employee's position or any other action which diminishes the employee's
position, authority or duties, which determination shall be made in good faith
by the employee. If the employment of Mr. Talla or Ms. Pattee Francini were
terminated within two years following a Change in Control as a result of the
occurrence of any of the foregoing events (assuming that neither would be
entitled to any accrued bonus), the aggregate approximate amounts payable to Mr.
Talla and Ms. Pattee Francini, based on their current compensation, would be
$821,936 and $621,000, respectively.
Effective June 1, 1998, we entered into an employment agreement with Mr.
Gibbons which remained in effect until terminated as described below. The
agreement provided for an annual base salary of $250,000, subject to annual
review and upward adjustment in the discretion of the Board of Directors.
Additionally, Mr. Gibbons received $40,000 for living expenses each year and a
car allowance. The Board, in its discretion, could also award him a bonus. The
Board awarded Mr. Gibbons a bonus of $42,000 in 1998 (relating to services
provided in 1997) and a 1999 bonus of $55,000 (for services provided in 1998).
Effective February 11, 2000, Mr. Gibbons resigned from the Company and we
entered into a Separation from Employment Agreement pursuant to which Mr.
Gibbons is to receive a payment of $250,000 prorated over a twelve-month period.
Our obligation to make such monthly payments terminates should Mr. Gibbons
accept employment with, consult with or advise certain of our competitors.
Additionally, the Board in its discretion awarded Mr. Gibbons a bonus of
$70,000.
We do not have an employment agreement with Mr. Licklider, who has served
as our Co-Chief Executive Officer since February 2000. In May of this year the
Compensation Committee awarded him an annual salary of $250,000. We also provide
Mr. Licklider with health insurance under our group insurance plan.
We do not have written employment agreements with Messrs. Spino, Swain and
O'Brien, who each currently receive annual base salaries of $200,000.
COMPENSATION OF DIRECTORS
Non-employee directors are entitled to receive an annual fee of $12,000 and
a fee of $1,000 for each meeting attended. Non-employee directors who are
members of the Audit Committee or Compensation
9
<PAGE> 14
Committee are entitled to receive $1,000 for each meeting they attend. In
addition, non-employee directors receive 2,000 shares of our Common Stock each
year pursuant to our Amended and Restated 1994 Stock Compensation Plan. Messrs.
Collins, Turner and Veru currently serve on the Board as non-employee directors.
Until assuming the position of Co-Chief Executive Officer, Mr. Licklider also
received amounts due to non-employee directors. All directors receive
reimbursement of reasonable out-of-pocket expenses incurred in connection with
meetings of the Board. Amounts paid to directors were $48,783 during 1997,
$53,320 during 1998 and $69,240 during 1999. Under the Amended and Restated 1994
Stock Compensation Plan an aggregate of 24,000 shares of Common Stock were
issued to non-employee directors through December 31, 1999.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed entirely of non-employee members of
our Board of Directors. Currently Messrs. Collins, Turner and Veru serve on the
Committee. The Committee reviews and approves each of the elements of our
executive compensation program and assesses both the competitiveness and
effectiveness of the program. In addition, the Committee administers the 1994
Stock Incentive Plan, as amended.
COMPENSATION PHILOSOPHY
Our overall executive compensation philosophy is intended to achieve the
following three goals:
- To reward the achievement of our strategic goals and the creation of
stockholder value,
- To maintain a close relationship between compensation and stockholder
value, and
- To secure, develop, motivate and retain a high quality management team.
This philosophy is used not only in determining executive compensation, but
is also evident in our overall salary structure.
The Committee is aware of the limitations imposed by Section 162(m) of the
Internal Revenue Code of 1986, as amended, on the deductibility of compensation
paid to certain senior executives to the extent it exceeds $1 million per
executive. We currently intend to recommend compensation amounts and plans which
will result in all compensation payments being fully deductible pursuant to
Section 162(m) of the Internal Revenue Code.
COMPONENTS OF EXECUTIVE COMPENSATION
Base Salaries
Base salary levels for all executive officers are reviewed annually. As
part of this process, we review the compensation packages offered by other
companies. We also give consideration to the experience, responsibilities,
management and leadership abilities of our executive officers and their actual
performance on behalf of the Company, as well as compensation policies
prevailing generally within the industry and within the Peer Group described
under "How Our Stock Has Performed Over the Past Several Years."
Incentive Compensation
The Committee also supplements base compensation through discretionary
performance-based bonuses and in February of this year approved the following
bonuses:
<TABLE>
<S> <C>
D. Michael Talla............................................ $70,000
John M. Gibbons............................................. 70,000
Nanette Pattee Francini..................................... 60,000
Timothy M. O'Brien.......................................... 60,000
Philip J. Swain............................................. 60,000
Mark S. Spino............................................... 60,000
</TABLE>
10
<PAGE> 15
Stock Options
The Committee believes that long-term incentive compensation in the form of
stock options will motivate officers and key employees to improve the long-term
performance of the Common Stock and thus directly increase stockholder value.
Stock options may also be used to attract new executives. The 1994 Stock
Incentive Plan, as amended, provides a means by which executive officers and
other key employees can build an investment in the Company which will align such
employees' economic interests with the interests of the stockholders. Such
options are generally granted at the prevailing market price of the Common Stock
and will only have value if the market price increases. Generally, stock options
vest over a period of time from the date of grant, and the optionee must be
associated with the Company at the time of vesting in order to exercise the
option. In addition to providing performance incentives to employees, stock
options provide us with a form of non-cash compensation which allows us to
provide benefits to employees without making cash expenditures. Accordingly, the
Committee views the grant of options as an effective component of the over-all
executive compensation program.
In determining an option grant the Committee also takes into account the
outstanding options held by each individual executive officer and the projected
value of the options based on historical and assumed appreciation rates for the
Common Stock.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee is responsible for recommending the compensation of the
Co-Chief Executive Officers and bases such recommendations upon the same factors
as those employed by the Committee for other executive officers. In determining
salary the Committee focuses on the achievement of earnings and growth goals.
During 1998 and 1999, Mr. Talla's base salary was $225,000. In February of
this year (upon his appointment as Co-Chief Executive Officer), the Board of
Directors increased his salary to $250,000 and awarded Mr. Talla options to
purchase 250,000 shares at a price of $8.00 per share. (Mr. Talla now holds in
the aggregate options to purchase 280,000 shares of the Company's Common Stock.)
The Board awarded Mr. Talla a bonus of $65,000 in 1999 (for services provided in
1998) and a bonus of $70,000 in 2000 (for services provided in 1999.) The
Committee may in the future establish additional specific quantitative and/or
qualitative goals, the accomplishment of which will be considered in fixing Mr.
Talla's compensation. In addition, the Committee will take into account amounts
received by Mr. Talla in respect of his interest in The Sports Club/LA - Los
Angeles' net cash flow as described in "Description of Transactions with Our
Directors, Officers and Principal Stockholders."
The Board of Directors appointed Mr. Licklider Co-Chief Executive Officer
in February 2000 and in May awarded him an annual base salary of $250,000. Mr.
Licklider holds no stock options.
Compensation Committee
Brian J. Collins
Andrew L. Turner
Dennison T. Veru
11
<PAGE> 16
STOCK OWNERSHIP
The following table shows the shares of our Common Stock beneficially owned
as of June 15, 2000 by our directors, the Named Executive Officers, all
directors and executive officers as a group and stockholders that beneficially
owned more than 5% of the shares of our Common Stock then outstanding.
<TABLE>
<CAPTION>
TOTAL AND PERCENT OF
SHARES OPTIONS SHARES HELD STOCK OUTSTANDING
NAME AND ADDRESS OWNED EXERCISABLE UNDER ---------------------
OF BENEFICIAL OWNER(A) DIRECTLY(B) WITHIN 60 DAYS(C) 401-K PLAN NUMBER PERCENT
---------------------- ----------- ----------------- ----------- --------- -------
<S> <C> <C> <C> <C> <C>
D. Michael Talla.............. 5,050,815 20,000 1,962 5,933,395(d) 33.38%(d)
Nanette Pattee Francini....... 256,107 66,667 721 5,933,395(d) 33.38%(d)
Mark S. Spino................. 227,969 66,667 1,523 5,933,395(d) 33.38%(d)
Philip J. Swain............... 163,164 76,667 1,133 5,933,395(d) 33.38%(d)
John M. Gibbons............... 90,500 -- 1,583 92,083 *
Timothy M. O'Brien............ 3,000 96,667 1,926 101,593 *
The Licklider Living Trust
Dated May 2, 1986........... 1,594,862 -- -- 1,594,862 8.97%
Andrew L. Turner.............. 77,000 -- -- 77,000 *
Dennison T. Veru.............. 25,000 -- -- 25,000 *
Brian J. Collins.............. 35,001 -- -- 35,001 *
All Directors and Executive
Officers as a Group (10
persons).................... 7,523,418 326,668 8,848 7,858,934 44.21%
Millennium(e)................. 5,017,613 -- -- 5,007,613 28.23%
</TABLE>
---------------
* Less than 1%
(a) The address of all directors and executive officers is c/o The Sports Club
Company, Inc. at 11100 Santa Monica Blvd., Suite 300, Los Angeles,
California 90025.
(b) Includes shares for which the named person is considered the owner because:
1. the named person has sole voting or investment power, or
2. the shares are held by other members of the named person's immediate
family.
(c) Includes shares that can be acquired through stock option exercises through
September 15, 2000.
(d) The named persons are parties to a voting agreement relating to our Common
Stock that requires each party to vote his or her shares in the manner
determined by holders of a majority of the shares held by all parties. The
agreement is effective until October 20, 2004 or until terminated by persons
holding 66 2/3% of the shares subject to the agreement. The parties to the
voting agreement in effect each control the voting of all shares held by the
parties to the agreement and under SEC rules each is deemed to be the
beneficial owner of all shares subject to the agreement. The total number of
shares of our Common Stock held by the parties without giving effect to
beneficial ownership resulting from the voting agreement is:
<TABLE>
<CAPTION>
SHARES TOTAL SHARES
HELD HELD
NAMED PERSON DIRECTLY (SEE ABOVE TABLE)
------------ --------- -----------------
<S> <C> <C>
D. Michael Talla:
Individually..................................... 4,880,434
Spouse........................................... 30,953
Trusts for two minor children.................... 139,428
---------
Total............................................... 5,050,815
Nanette Pattee Francini....................................... 256,107
Mark S. Spino................................................. 227,969
Philip J. Swain............................................... 163,164
---------
All Parties to Voting Agreement.......................... 5,698,055
=========
</TABLE>
12
<PAGE> 17
(e) The Millennium shares are held by the following affiliates:
1. Millennium Partners LLC owns 2,253,863 shares
2. Millennium Development Partners L.P. owns 978,900 shares
3. MDP Ventures I LLC owns 72,100 shares
4. MDP Ventures II LLC owns 1,087,750 shares
5. Millennium Entertainment Partners L.P. owns 625,000 shares
The address of all such entities is c/o Millennium Partners Management LLC,
1995 Broadway, New York, New York, 10023.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and greater-than-10% stockholders to file reports
with the Securities and Exchange Commission and the American Stock Exchange on
changes in their beneficial ownership of our Common Stock and to provide the
Company with copies of the reports. Based on our review of these reports and
certifications furnished to us, we believe that all required 1999 filings were
made.
DESCRIPTION OF TRANSACTIONS WITH OUR DIRECTORS,
OFFICERS AND PRINCIPAL STOCKHOLDERS
From time to time we have entered into transactions with our officers,
directors and stockholders. We believe that each of the following transactions
has been on terms no less favorable to us than could have been obtained from
unaffiliated third parties. All transactions between us and any of our directors
or officers are subject to the approval of the disinterested directors.
Messrs. Talla and Licklider. We have a 50.1% interest in the partnership
that owns The Sports Club/ LA - Los Angeles and Mr. Talla beneficially owns the
remaining 49.9%. The partnership agreement provides that, on an annual basis,
the partners will share in the first $300,000 of the Club's net cash flow in
proportion to their percentage interests. The next $35.0 million of net cash
flow will be distributed to us. All distributions of net cash flow thereafter,
if any, will be made to the partners in proportion to their percentage
interests. Under certain circumstances, we have an option to purchase Mr.
Talla's interest in the partnership for an amount equal to four times the amount
of his most recent annual distribution from the partnership.
In January 1998, Messrs. Talla and Licklider purchased a 7,000 square foot
parcel of land adjacent to property owned and used by The Sports Club/LA - Los
Angeles. In February 1999, we acquired the property from them for $637,422, such
price being equal to the purchase price paid by Messrs. Talla and Licklider,
minus rental income received by them, plus an interest credit on their
investment at an annual rate of 6.56%. The acquired property is currently leased
to a non-affiliated third party.
In September 1999, we sold the property on which The Spectrum
Club - Thousand Oaks is located for a purchase price of $12.0 million. Under the
terms of the sale, the sum of $10.0 million was paid at the close of the sale
and the remaining $2.0 million will be paid upon the fulfillment of certain
conditions by us. We entered into a sale and leaseback agreement for the
property under a long-term lease with an initial annual base rent of $1.1
million, until such time as we receive the final $2.0 million of the purchase
price, at which time the annual rent will increase to $1.3 million. The Thousand
Oaks property consists of the Spectrum Club - Thousand Oaks, unimproved office
space and a parking area. We are currently subleasing the Spectrum Club space to
another club operator. Mr. Licklider owns approximately a 4.6% interest in the
purchaser of the property and trusts for the benefit of Mr. Talla's minor
children own approximately a 5.2% interest in the purchaser of the property.
Millennium. Millennium is a partner in the Reebok-Sports Club/NY
partnership as well as the landlord of the building in which Reebok Sports
Club/NY is located. The Reebok-Sports Club/NY partnership pays
13
<PAGE> 18
rent to Millennium in the amount of $2.0 million per year, and the partnership
agreement provides for a first priority annual distribution of $3.0 million to
Millennium.
In June 1997, we issued to Millennium 2,105,263 shares of our Common Stock
in exchange for $10.0 million, consisting of $5.0 million in cash and certain
interests of Millennium in the Reebok-Sports Club/NY partnership, including a
9.9% interest in the partnership and a $2.5 million promissory note issued by
the partnership. We also granted to Millennium certain registration and
preemptive rights regarding its shares. In addition, for so long as Millennium
maintains at least a 12% interest in our equity securities, we and certain of
our stockholders have agreed to cause a nominee of Millennium to be appointed or
elected to the Board of Directors. Pursuant to this agreement Brian J. Collins,
an officer of Millennium, is currently serving as a member of our Board of
Directors.
In December 1997, we sold 625,000 shares of Common Stock to Millennium for
$5.0 million, which we used to fund the cash portion of the acquisition of four
Spectrum Clubs. In addition, Millennium acquired properties underlying two of
the Clubs for $10.0 million and leased these properties to us under a financing
lease agreement. The lease had a term of twenty years and provided for an annual
rent of $1.0 million for the first ten years and $1.2 million per year
thereafter. In 1999, we purchased the leased property from Millennium for a
price equal to $10.3 million.
We have entered into leases with Millennium relating to the development of
our The Sports Club/LA Club in San Francisco, Washington, D.C. and Boston. The
leases for the San Francisco and Washington, D.C. developments provide for base
rental payments of $3.0 million per year, for a term of 20 years, and for three
14 year renewal options. In addition, once we have received a management fee
equal to 6% of all revenues, an amount equal to our investment in the Club plus
an 11% annual return on our investment and an additional distribution sufficient
to reduce our average base rental payment for each Club to $2.75 million per
year, Millennium is entitled to receive 20% of all additional cash flows from
each Club as additional rent. The lease for the Boston development has similar
terms, except that the base rental payment is $2.75 million per year.
14
<PAGE> 19
HOW OUR STOCK HAS PERFORMED OVER THE PAST SEVERAL YEARS
The chart below sets forth line graphs comparing the performance of our
stock against the American Stock Exchange ("AMEX") market index and a peer group
of eight companies.
The peer group is composed of:
- Callaway Golf Company
- Carnival Corp
- Ben & Jerry's Homemade, Inc.
- Bally Total Fitness Holding Corporation
- Cedar Fair LP, Family Golf Centers, Inc.
- National Golf Properties, Inc.
- U.S. Physical Therapy, Inc.
- Family Golf Centers, Inc.
We believe the peer group is an accurate representation of entities engaged
in the sports and fitness business.
The graph shows a comparison of cumulative total returns for our Common
Stock, all AMEX listed companies and the peer group, each of which assumes an
initial value of $100 on October 13, 1994, the date of our initial public
offering. These indexes are included for comparative purposes only and do not
necessarily reflect management's opinion that such indexes are an appropriate
measure of the relative performance of the stock involved. The graph is not
intended to forecast or be indicative of possible future performance of our
Common Stock.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG THE SPORTS CLUB COMPANY, INC.,
THE AMEX MARKET VALUE INDEX AND A PEER GROUP
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
THE SPORTS CLUB
COMPANY, INC. PEER GROUP AMEX MARKET VALUE
--------------- ---------- -----------------
<S> <C> <C> <C>
12/94 100.00 100.00 100.00
3/95 94.44 105.26 107.50
6/95 75.93 106.93 115.89
9/95 77.78 111.30 127.63
12/95 46.30 122.19 128.68
3/96 48.15 138.72 132.12
6/96 39.81 149.81 133.38
9/96 39.81 159.22 130.07
12/96 42.59 162.31 130.73
3/97 68.52 174.75 129.55
6/97 79.63 199.84 143.17
9/97 126.85 219.60 163.13
12/97 137.04 248.19 163.50
3/98 137.04 304.04 180.61
6/98 111.11 330.78 179.58
9/98 92.59 259.73 152.76
12/98 58.33 376.81 175.49
3/99 75.00 376.07 179.21
6/99 61.11 382.06 202.42
9/99 74.07 341.99 196.25
12/99 57.41 375.70 224.19
</TABLE>
* $100 INVESTED ON 12/31/94 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
The lines represent index levels derived from closing stock prices on the
last trading day of the month indicated.
15
<PAGE> 20
OTHER INFORMATION
This section describes other information that you should read before you
vote.
SUBMISSION OF STOCKHOLDER PROPOSALS
If you want to submit proposals for possible inclusion in the Company's
proxy materials for the 2001 Annual Meeting of Stockholders, you must do so on
or before February 22, 2001. Proposals must be received by the Secretary of the
Company at its principal office (11100 Santa Monica Boulevard, Suite 300, Los
Angeles, California 90025). It is suggested that any such proposal be submitted
by certified mail, return receipt requested.
If you wish to present a proposal before the 2001 Annual Meeting, but do
not wish to have the proposal considered for inclusion in the Company's Proxy
Statement and proxy card, you must give written notice to the Secretary of the
Company at the address noted above. The Secretary must receive such notice by
May 13, 2001. If you fail to provide timely notice of a proposal to be presented
at the 2001 Annual Meeting, the proxies designated by the Board of Directors of
the Company will have discretionary authority to vote on such proposal.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Our Board has selected the firm of KPMG LLP as the Company's independent
public accountants for the 2000 fiscal year. During 1999 KPMG LLP provided
audited services which included examination of the Company's annual consolidated
financial statements. Representatives of KPMG LLP are expected to attend the
meeting in order to respond to stockholder questions. They will also have an
opportunity to make a statement to the stockholders.
FINANCIAL STATEMENTS
This Proxy Statement does not contain financial statements. However,
financial statements for the fiscal year ended December 31, 1999 are included in
the 1999 Annual Report, enclosed with this Proxy Statement. The Annual Report is
not to be regarded as proxy soliciting material or as a communication by which
any solicitation is made.
By Order of the Board of Directors,
/s/ LOIS BARBERIO
Lois Barberio
Secretary
Los Angeles, California
June 26, 2000
16
<PAGE> 21
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE SPORTS CLUB COMPANY, INC.
I/We hereby appoint Nanette Pattee Francini, Lois Barberio and Timothy
O'Brien, or any one of them acting alone in the absence of the others, as
proxyholders, each with the power to appoint his/her substitute, and hereby
authorize them to represent and to vote, as designated on the reverse side, all
the shares of Common Stock of The Sports Club Company, Inc. held of record by
me/us on June 15, 2000, at the Annual Meeting of Stockholders to be held on
August 9, 2000, or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON
THE REVERSE SIDE. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF
THE NOMINEES LISTED ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE
DISCRETION OF THE PROXYHOLDERS UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OF STOCKHOLDERS OR ANY ADJOURNMENT THEREOF.
(PLEASE VOTE AND SIGN ON THE OTHER SIDE)
<PAGE> 22
(Arrow) Please Detach and Mail in the Envelope Provided (Arrow)
Please mark your
A [X] votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:
<TABLE>
<CAPTION>
WITHHOLD
FOR AUTHORITY
<S> <C> <C> <C>
1. Election of 2 [ ] [ ] The undersigned hereby acknowledges receipt of the Proxy Statement
Class III dated June 26, 2000 and hereby revokes any proxy or proxies
Directors heretofore given to vote shares at said meeting or any
adjournment thereof.
NOMINEES: Class III: Rex A. Licklider and D. Michael Talla
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL,
WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED:)
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE
_______________________________________________________________ ENCLOSED SELF-ADDRESSED, POSTAGE PAID ENVELOPE.
SIGNATURE __________________________________________ DATE ____________ ____________________________________ DATE ______________
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON SIGNATURE IF HELD JOINTLY
Note: Both should sign if shares are held in joint tenancy; if signing as attorney, executor, administrator, trustee or guardian,
give full title; if a corporation, sign full corporate name by President or authorized officer; if a partnership, sign
partnership name by authorized person.
</TABLE>
