Sports Club Co Inc – ‘8-K’ for 9/29/98 – EX-20.1

As of:  Tuesday, 10/6/98   ·   For:  9/29/98   ·   Accession #:  950148-98-2281   ·   File #:  1-13290

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Form 8-K (09/29/1998)                                  8     29K 
 2: EX-20.1     Other Document or Statement to Security Holders        4     21K 
 3: EX-99.1     Miscellaneous Exhibit                                  2      8K 

EX-20.1   —   Other Document or Statement to Security Holders

EX-20.1
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Exhibit 20.1                                                                    

 SUMMARY OF THE RIGHTS

              On September 29, 1998, the Board of Directors of The Sports Club
Company, Inc. (the "Company") authorized and declared a dividend of one         
preferred stock purchase right (a "Right") for each share of common stock, par  
value $.01 per share, of the Company (the "Common Shares"). The dividend is     
payable on October 6, 1998 (the "Record Date") to the holders of record of      
Common Shares as of the close of business on such date.                         

       The following is a brief description of the Rights. It is
intended to provide a general description only and is subject to the detailed   
terms and conditions of a Rights Agreement (the "Rights Agreement") dated as of 
October 6, 1998, by and between the Company and American Stock Transfer & Trust 
Company, as Rights Agent (the "Rights Agent).                                   

1.     COMMON SHARE CERTIFICATES REPRESENTING RIGHTS            

              Until the Distribution Date (as defined in Section 2 below), (a)
the Rights shall not be exercisable, (b) the Rights shall be attached to and    
trade only together with the Common Shares and (c) the stock certificates       
representing Common Shares shall also represent the Rights attached to such     
Common Shares. Common Share certificates issued after the Record Date and prior 
to the Distribution Date shall contain a notation incorporating the Rights      
Agreement by reference.                                                         

2.     DISTRIBUTION DATE                                        

               The "Distribution Date" is the earliest of (a) the tenth business
day following the date of the first public announcement that any person (other  
than the Company or certain related entities, and with certain additional       
exceptions) has become the beneficial owner of 15% or more of the then          
outstanding Common Shares (such person is a "15% Stockholder" and the date of   
such public announcement is the "15% Ownership Date"), (b) the tenth business   
day (or such later day as shall be designated by the Board of Directors)        
following the date of the commencement of, or the announcement of an intention  
to make, a tender offer or exchange offer, the consummation of which would cause
any person to become a 15% Stockholder or (c) the first date, on or after the   
15% Ownership Date, upon which the Company is acquired in a merger or other     
business combination in which the Company is not the surviving corporation or in
which the outstanding Common Shares are changed into or exchanged for stock or  
assets of another person, or upon which 50% or more of the Company's            
consolidated assets or earning power are sold (other than in transactions in the
ordinary course of business). In calculating the percentage of outstanding      
Common Shares that are beneficially owned by any person, such person shall be   
deemed to beneficially own any Common Shares issuable upon the exercise,        
exchange or conversion of any options, warrants or other securities beneficially
owned by such person. However, Common Shares issuable upon such exercise shall  
not be deemed outstanding for the purpose of calculating the percentage of      
Common Shares that are beneficially owned by any other person.                  

             Upon the close of business on the Distribution Date, the Rights
shall separate from the                                                         

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EX-20.1
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Common Shares, separate Right certificates shall be issued and the Rights shall 
become exercisable to purchase Preferred Shares as described in Section 5 below.

         No person who is the beneficial owner of 15% or more of the
outstanding Common Shares as of September 29, 1998 shall be deemed a 15%        
Stockholder unless or until such person shall acquire, without the prior        
approval of the Board of Directors, additional Common Shares which would cause  
the percentage of the outstanding shares so owned to increase by more than 2%   
over the number of Common Shares so beneficially owned on the Record Date.      

3.     ISSUANCE OF RIGHT CERTIFICATES                           

              As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record  
of Common Shares as of the close of business on the Distribution Date, and such 
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.                                                              

4.     EXPIRATION OF RIGHTS                                     

        The Rights shall expire on October 6, 2008, unless earlier
redeemed or exchanged, unless the Distribution Date has previously occurred and 
the Rights have separated from the Common Shares, in which case the Rights will 
remain outstanding for 10 years following the Distribution Date.                

5.     EXERCISE OF RIGHTS                                       

           Unless the Rights have expired or been redeemed or exchanged,
they may be exercised, at the option of the holders, pursuant to paragraphs (a),
(b) or (c) below. No Right may be exercised more than once or pursuant to more  
than one of such paragraphs. From and after the first event of the type         
described in paragraphs (b) or (c) below, each Right that is beneficially owned 
by a 15% Stockholder or that was attached to a Common Share that is subject to  
an option beneficially owned by a 15% Stockholder shall be void.                

              (a) Right to Purchase Preferred Shares. From and after the close
of business on the Distribution Date, each Right (other than a Right that has   
become void) shall be exercisable to purchase one five-hundredth of a share of  
Series A Junior Participating Cumulative Preferred Stock, par value $0.01 per   
share, of the Company (the "Preferred Shares"), at an exercise price of $20     
dollars (the "Exercise Price"). Prior to the Distribution Date, the Company may 
substitute for all or any portion of the Preferred Shares that would otherwise  
be issuable upon exercise of the Rights, cash, assets or other securities having
the same aggregate value as such Preferred Shares. The Preferred Shares are     
nonredeemable and, unless otherwise provided in connection with the creation of 
a subsequent series of preferred stock, are subordinate to any other series of  
the Company's preferred stock whether issued before or after the issuance of the
Preferred Shares. The Preferred Shares will not be issued except upon exercise  
of Rights. The holder of a Preferred Share is entitled to receive when, as and  
if declared, the greater of (i) cash and non-cash dividends in an amount equal  
to 500 times the dividends declared on each Common Share or (ii) a preferential 
annual dividend of $1.00 per Preferred Share ($.002 per one five-hundredth of a 
Preferred Share). In the event of liquidation,                                  

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the holders of Preferred Shares shall be entitled to receive a liquidation      
payment in an amount equal to the greater of (1) $1.00 per Preferred Share      
($.002 per one five-hundredth of a Preferred Share), plus all accrued and unpaid
dividends and distributions on the Preferred Shares, or (2) an amount equal to  
500 times the aggregate amount to be distributed per Common Share. Each         
Preferred Share has 500 votes per share, voting together with the Common Shares.
In the event of any merger, consolidation or other transaction in which Common  
Shares are exchanged, the holder of a Preferred Share shall be entitled to      
receive 500 times the amount received per Common Share. The rights of the       
Preferred Shares as to dividends, voting and liquidation preferences are        
protected by antidilution provisions. It is anticipated that the value of one   
five-hundredth of a Preferred Share should approximate the value of one Common  
Share.                                                                          

          (b) Right to Purchase Common Shares of the Company. From and
after the close of business on the tenth business day following the 15%         
Ownership Date, each Right (other than a Right that has become void) shall be   
exercisable to purchase, at the Exercise Price (initially $20), Common Shares   
with a market value equal to two times the Exercise Price. If the Company does  
not have sufficient Common Shares available for all Rights to be exercised, the 
Company shall substitute for all or any portion of the Common Shares that would 
otherwise be issuable upon the exercise of the Rights, cash, assets or other    
securities (including the Preferred Shares) having the same aggregate value as  
such Common Shares.                                                             

            (c) Right to Purchase Common Stock of a Successor Corporation.
If, on or after the 15% Ownership Date, (i) the Company is acquired in a merger 
or other business combination in which the Company is not the surviving         
corporation, (ii) the Company is the surviving corporation in a merger or other 
business combination in which all or part of the outstanding Common Shares are  
changed into or exchanged for stock or assets of another person or (iii) 50% or 
more of the Company's consolidated assets or earning power are sold (other than 
in transactions in the ordinary course of business), then each Right (other than
a Right that has become void) shall thereafter be exercisable to purchase, at   
the Exercise Price (initially $20), shares of common stock of the surviving     
corporation or purchaser, respectively, with an aggregate market value equal to 
two times the Exercise Price.                                                   

6.     ADJUSTMENTS TO PREVENT DILUTION                          

          The Exercise Price, the number of outstanding Rights and the
number of Preferred Shares or Common Shares issuable upon exercise of the Rights
are subject to adjustment from time to time as set forth in the Rights Agreement
in order to prevent dilution. With certain exceptions, no adjustment in the     
Exercise Price shall be required until cumulative adjustments require an        
adjustment of at least 1%.                                                      

7.     CASH PAID INSTEAD OF ISSUING FRACTIONAL SECURITIES       

               No fractional securities shall be issued upon exercise of a Right
(other than fractions of Preferred Shares that are integral multiples of one    
five-hundredth of a Preferred Share and that may, at the election of the        
Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment
in cash shall be made based on the market price of such securities on the last  
trading date                                                                    

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prior to the date of exercise.                                                  

8.     REDEMPTION                                               

            At any time prior to the earlier of (a) the tenth business day
(or such later day as shall be designated by the Board of Directors) following  
the date of the commencement of, or the announcement of an intention to make, a 
tender offer or exchange offer, the consummation of which would cause any person
to become a 15% Stockholder, (b) the tenth business day after the 15% Ownership 
Date or (c) the first event of the type giving rise to exercise rights under    
Section 5(c) above, the Board of Directors may, at its option, direct the       
Company to redeem the Rights in whole, but not in part, at a price of $.001 per 
Right (the "Redemption Price"), and the Company shall so redeem the Rights.     
Immediately upon such action by the Board of Directors (the date of such action 
is the "Redemption Date"), the right of the holders of Rights thereafter shall  
be to receive the Redemption Price.                                             

9.     EXCHANGE                                                 

               At any time during the period of 180 days after the 15% Ownership
Date and prior to the first date thereafter upon which a 15% Stockholder shall  
be the beneficial owner of 15% or more of the outstanding Common Shares, the    
Board of Directors may, at its option, direct the Company to exchange all, but  
not less than all, of the then outstanding Rights for Common Shares at an       
exchange ratio per Right equal to that number of Common Shares which, as of the 
date of the Board of Directors' action, has a current market price equal to the 
difference between the Exercise Price and the current market price of the shares
that would otherwise be issuable upon exercise of a Right on such date (the     
"Exchange Ratio"), and the Company shall so exchange the Rights. Immediately    
upon such action by the Board of Directors, the right to exercise Rights shall  
terminate and the only right of the holders of Rights thereafter shall be to    
receive a number of Common Shares equal to the Exchange Ratio.                  

10.    NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE                  

            Until a Right is exercised, the holder thereof, as such, shall
have no rights as a stockholder of the Company (other than rights resulting from
such holder's ownership of Common Shares), including, without limitation, the   
right to vote or to receive dividends.                                          

11.    AMENDMENT OF RIGHTS AGREEMENT                            

        The Board of Directors may, from time to time, without the
approval of any holder of Rights, direct the Company and the Rights Agent to    
supplement or amend any provision of the Rights Agreement in any manner, whether
or not such supplement or amendment is adverse to any holder of Rights, and the 
Company and the Rights Agent shall so supplement or amend such provision;       
provided, however, that from and after the earliest of (a) the 15% Ownership    
Date, (b) the first event of the type giving rise to the exercise of rights     
under Section 5(c) above, or (c) the Redemption Date, the Rights Agreement shall
not be supplemented or amended in any manner that would materially and adversely
affect any holder of outstanding Rights other than a 15% Stockholder.           

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
		10/6/08		2
Filed on:		10/6/98		1					8-A12G
For Period End:		9/29/98		1		2
									List all Filings