UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Amendment No. 6
The Sports Club Company, Inc.
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
84917P10
(CUSIP Number)
Lois Barberio
The Sports Club Company, Inc.
11100 Santa Monica Blvd., Suite 300
Los Angeles, CA 90025
(310) 479-5200
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
January 2, 2005
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a Filing Person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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(1) Name of Filing Person
S.S. or I.R.S. Identification No. of Above Person
D. Michael Talla
SS# 526-74-3103
(2) Check the Appropriate Box if a Member of a Group
(See Instructions) (A) / /
(B) /X/
(3) SEC Use Only
(4) Source of Funds (See Instructions)
PF
(5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) / /
(6) Citizenship or Place of Organization
U.S.
(7) Sole Voting Power
4,016,350
Number of Shares (8) Shared Voting Power
Beneficially Owned -0-
by Each Reporting
Person With (9) Sole Dispositive Power
4,016,350
(10) Shared Dispositive Power
0
(11) Aggregate Amount Beneficially Owned by Each Filing Person
4,016,350
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) / /
(13) Percent of Class Represented by Amount in Row (11)
Approximately 20.66%(1)
(14) Type of Filing Person (See Instructions)
IN
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(1) Based on (a) 18,977,638 shares of Common Stock, par value $0.01
per share, of The Sports Club Company, Inc., a Delaware corporation
(the "Issuer"), outstanding at November 19, 2004, as reported in
the Issuer's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004; (b) option granted by Issuer to Talla to
purchase 115,000 shares of Common Stock under Issuer's stock option
plan; (c) the Issuer's issuance of 1,000 shares of Series C
Convertible Preferred Stock to Talla on September 6, 2003, which is
presently convertible into 346,365 shares of the Issuer's Common
Stock; and (d) exclusion of 30,953 shares of Common Stock owned by
Mona Talla, wife of Talla, as to which Talla disclaims beneficial
interest.
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The Schedule 13D filed with the Securities and Exchange
Commission (the "Commission") on December 1, 1994, as amended to
date, is hereby further amended as follows.
Item 1. Security and Issuer
No amendments or supplements.
Item 2. Identity and Background
(a) This Statement is being filed by D. Michael Talla
("Talla").
(b) Talla's business address is 11100 Santa Monica
Boulevard, Suite 300, Los Angeles, California 90025.
(c) Talla currently serves as Chairman of the Board of
Directors of Issuer at its principal executive offices.
(d) Talla has not, during the past five years, been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) Talla has not, during the past five years, been a party to
a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Talla is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration
The following information amends and supplements Item 3.
On February 8, 2005, an option held by Talla for the purchase
of 250,000 shares of Common Stock of Issuer expired without
exercise. On May 21, 2001, Talla was granted an option to purchase
115,000 shares of Common Stock of the Issuer, all of which will be
exercisable within sixty days.
Item 4. Purpose of Transaction
The following information amends and supplements Item 4.
Pursuant to (i) that certain Amended and Restated Promissory
Note, dated as of December 30, 1997, executed and delivered by
Talla, as maker to MDP Ventures II ("MDP"), as payee, as amended by
that certain Note Modification Agreement, dated as of March 1,
2001, by and between Talla and MDP (the "Note") and (ii) that
certain Amended and Restated Loan and Stock Pledge Agreement, dated
as of December 30, 1997, by and between Talla and MDP, as amended
by the First Amendment to the Amended and Restated Loan and Stock
Pledge Agreement, dated as of March 1, 2001, by and between Talla
and MDP (the "Loan Agreement"), Talla was obligated to pay to MDP
the principal amount of the Note, and all accrued and unpaid
interest thereon (collectively, the "Obligation"), on March 1,
2004. The Obligation was secured by 1,000,000 shares of Common
Stock of Issuer registered in the name of Talla (the "Collateral").
Talla failed to pay MDP the Obligation on March 1, 2004, which
resulted in an event of default under the Loan Agreement. Pursuant
to a Confirmation of Foreclosure and Acceptance of Collateral,
dated as of November 30, 2004, by and between Talla and MDP (the
"Confirmation of Foreclosure"), Talla consented
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to transfer the Collateral to MDP and MDP agreed to the acceptance
of the Collateral in full satisfaction of the Obligation. The
Confirmation of Foreclosure provided that the acceptance of the
Collateral would occur on January 2, 2005. Accordingly, on January
2, 2005, Talla transferred ownership of 1,000,000 shares of Common
Stock of Issuer to MDP.
On February 8, 2005, Issuer and Millennium Development
Partners VIII LLC ("Millennium") entered into a non-binding letter
of intent (the "LOI") under which Millennium, or an affiliate,
would acquire six of Issuer's nine sports and fitness complexes.
The Clubs to be sold include Issuer's three Clubs in New York City
(Reebok-Sports Club/NY, The Sports Club/LA - Rockefeller Center and
The Sports Club/LA - Upper East Side) and single Clubs in each of
Boston, Massachusetts, Washington, D.C. and San Francisco,
California. In addition, Issuer will assign the management
agreement for its Club in Miami, Florida to Millennium, or one of
its affiliates.
The LOI further contemplates that Talla, together with
certain of the Issuer's other stockholders (the "LOI Parties")
(collectively, Talla and LOI Parties are referred to as the
"Principal Stockholders") would contribute to a newly formed
corporation ("NewCo") all shares of Common and/or preferred stock
beneficially owned by the Principal Stockholders in exchange for
common and/or preferred stock of NewCo. NewCo would then be merged
with and into Issuer, with each public stockholder (other than the
Principal Stockholders) receiving $2.00 per share for each share of
Common Stock of Issuer held by them. Upon consummation of the
described transactions Issuer would continue as the surviving
corporation.
The LOI is non-binding and the transactions contemplated
thereby are subject to a number of conditions, including
satisfactory completion of due diligence investigations by certain
of the LOI Parties, the negotiation and execution of definitive
agreements, the receipt of Issuer's fairness opinion with respect
to certain of the transactions contemplated by the LOI, the
approval of the transactions contemplated by the LOI by Issuer's
Board of Directors and stockholders, and the receipt of consents to
the transfer of certain leases.
Except as set forth in this Item 4, Talla has no plans or
proposals which relate to or which would result in any of the
actions specified in clauses (a) through (j) of Item 4 of Schedule
13D.
Item 5. Interest in Securities of the Issuer
The following information amends and restates Item 5.
(a) The stockholdings of Talla have been adjusted to reflect
(i) the transfer to MDP of 1,000,000 shares of Common Stock in full
satisfaction of Talla's Obligation under the Note and the Loan
Agreement and (ii) the cancellation of Talla's option to purchase
250,000 shares of Common Stock of Issuer. No other securities of
the Issuer have been acquired or disposed of by Talla since the
acquisitions disclosed in Amendment No. 5 to this Schedule 13D.
(b) As of the date of this Amendment 6 to Schedule 13D, Talla
beneficially owns 4,016,350 shares of the Common Stock of The
Sports Club Company, Inc. (which number does not include the shares
of Common Stock beneficially owned by the LOI Parties or Talla's
spouse, which shares Talla expressly disclaims beneficial ownership
of, or approximately 20.66% of the Common Stock.
(c) See Item 4
(d) Not applicable
(e) Not applicable.
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Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the
Issuer
The following information amends and supplements Item 6.
On June 12, 2003, the Issuer replaced its credit facility with
Comerica with a new $20.0 million promissory note payable to Orange
County's Credit Union. Talla and Rex A. Licklider guarantee the
note. Pursuant to an Indemnity and Guaranty Agreement dated as of
December 1, 2003, by and among the Issuer, Irvine Sports Club, Inc.
(a wholly owned subsidiary of Issuer), and Messrs. Talla and
Licklider with respect to the note, the Issuer agreed to pay the
guarantors in consideration of their provision of such guaranty a
fee equal to three percent (3%) of their pro rata portion of the
average outstanding principal balance of the loan for each defined
three-month period. Such fees may be paid by the Issuer in cash or
Common Stock. Since January 2004, Talla has received in the
aggregate 205,725 shares of Common Stock in payment of the guaranty
fees due through the third quarter of 2004. Additional shares of
Common Stock may be issued to Talla pursuant to the terms of this
agreement.
Other than the Indemnity and Guaranty Agreement, the Series C
Preferred Stock Purchase Agreement and the Investors' Rights
Agreement entered into in connection with the prior reported
purchase of the Issuer's Series C Convertible Preferred Stock, and
the Letter Agreement joined in by Mr. Talla in connection with the
purchase by Millennium of Issuer's Common Stock, Talla does not
have any contract, arrangement, understanding or relationship
(legal or otherwise) with respect to any securities of the Issuer.
Item 7. Material to Be Filed as Exhibits
Exhibit A Certificate of Designation of Series C Convertible
Preferred Stock of The Sports Club Company, Inc.,
incorporated by reference to Exhibit 99.1 to the
Issuer's Current Report on Form 8-K filed with the
Commission on September 9, 2002.
Exhibit B Preferred Stock Purchase Agreement entered into as
of September 6, 2002 by and among The Sports Club
Company, Inc., MDP Ventures II LLC, Rex A. Licklider
as Trustee of the Licklider Living Trust and D.
Michael Talla, Trustee of the Talla Family
Irrevocable Trust, incorporated herein by reference
to Exhibit 99.3 to the Issuer's Current Report on
Form 8-K filed with the Commission on September 9,
2002.
Exhibit C Investors' Rights Agreement entered into as of
September 6, 2002 by and among The Sports Club
Company, Inc., MDP Ventures II LLC, Rex A. Licklider
as Trustee of the Licklider Living Trust, D. Michael
Talla as Trustee of the Talla Family Irrevocable
Trust, incorporated herein by reference to Exhibit
99.2 to the Issuer's Current Report on Form 8-K filed
with the Commission on September 9, 2002.
Exhibit D Letter Agreement between Millennium Entertainment
Partners, L.P., and The Sports Club Company, Inc.
joined in by D. Michael Talla and Rex A. Licklider,
dated as of March 13, 1997, incorporated herein by
reference to Exhibit 10.92 to the Issuer's Annual
Report on Form 10-K filed with the Commission on
March 31, 1997.
Exhibit E Indemnity and Guaranty Agreement entered into as of
December 1, 2003 by and my among The Sports Club
Company, Inc. and Irvine Sports Club, Inc. for the
benefit of Rex A. Licklider and D. Michael Talla.*
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*Previously filed
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and
belief, each of the undersigned certifies that the information set
forth in this statement is true, complete and correct and agrees
that this statement may be filed jointly with the other undersigned
party.
Dated: February 25, 2005 /s/ D. Michael Talla
------------------------------------
D. Michael Talla
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