STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("AGREEMENT"), dated as of November
13, 1998, by and among TOWN SPORTS INTERNATIONAL, INC., a New York corporation
(the "COMPANY"), CANTERBURY MEZZANINE CAPITAL, L.P., a Delaware limited
partnership ("CANTERBURY MEZZANINE"), and CANTERBURY DETROIT PARTNERS, L.P., a
Delaware limited partnership ("CANTERBURY DETROIT" and, together with Canterbury
Mezzanine, the "INVESTORS"; and individually, an "INVESTOR"). Capitalized terms
used herein but not otherwise defined shall have the meanings assigned to such
terms in Section 1.
WHEREAS, the Company and the Investors desire to entire into
an agreement pursuant to which each Investor will purchase from the Company, and
the Company will sell to each such Investor (i) the number of shares of the
Company's Senior Preferred Stock, par value $1.00 per share, corresponding to
such Investor on SCHEDULE A attached hereto (the "PREFERRED STOCK") and (ii) a
number of stock purchase warrants (the "WARRANTS") exercisable for 49,882.68
shares of the Company's Class A Common Stock, par value $.001 per share (the
"CLASS A COMMON"), as adjusted pursuant to the terms of such Warrants,
corresponding to such Investor on Schedule A.
NOW THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement agree
as follows:
1. DEFINITIONS. As used herein, the following terms shall have
the following meanings:
"ACCREDITED INVESTOR" has the meaning ascribed to such term in
Regulation D of the Securities Act, as amended.
"AFFILIATE" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"AMENDED REGISTRATION RIGHTS AGREEMENT" means the First
Amendment to Registration Rights Agreement, dated as of the date hereof, by and
among the Company and certain shareholders of the Company, as the same may be
amended, restated or modified from time to time.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, any other entity or a government
entity (or any department, agency or political subdivision thereof.)
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of December 10, 1996, by and among the Company and certain
other parties thereto, as the same may be amended, restated or modified from
time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDERS AGREEMENT" means the Amended and Restated
Shareholders Agreement, dated as of the date hereof, by and among the Company,
the Investors and certain shareholders of the Company, as the same may be
amended, restated or modified from time to time.
"UNDERLYING STOCK" means (i) the Class A Common issued or
issuable upon exercise of the Warrants, and (ii) with respect to such shares of
Class A Common, all shares issued with respect to, or as a result of, a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, or other reorganization.
"WARRANT AGREEMENT" means the Warrant Agreement, dated as of
the date hereof, by and among Canterbury Mezzanine, Canterbury Detroit and the
Company (as the same may be amended, restated or modified from time to time).
2. AUTHORIZATION AND CLOSING.
(a) AUTHORIZATION. The Company shall authorize the issuance
and/or sale to (i) Canterbury Mezzanine of 10,000 shares of Preferred Stock (the
"MEZZANINE PREFERRED") and 33,255.12 Warrants (the "MEZZANINE WARRANTS") and
(ii) Canterbury Detroit of 5,000 shares of Preferred Stock (the "DETROIT
PREFERRED") and 16,627.56 Warrants (the "DETROIT WARRANTS"). The Preferred Stock
shall have the terms and conditions set forth in EXHIBIT A attached hereto. The
Warrants shall be in the form of EXHIBIT B attached hereto.
(b) PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, at the Closing, (i) Canterbury Mezzanine agrees to purchase from
the Company, and the Company agrees to sell to Canterbury Mezzanine (x) the
Mezzanine Preferred at a price of $1,000 per share and (y) the Mezzanine
Warrants, for an aggregate purchase price of $10,000,000 (the "MEZZANINE
PURCHASE PRICE"), and (ii) Canterbury Detroit agrees to purchase from the
Company, and the Company agrees to sell to Canterbury Detroit (x) the Detroit
Preferred at a price of $1,000 per share and (y) the Detroit Warrants, for an
aggregate purchase price of $5,000,000 (the "DETROIT PURCHASE PRICE").
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(c) CLOSING. The closing of the purchase and sale of the
Mezzanine Preferred and the Detroit Preferred and the issuance of the Mezzanine
Warrants and the Detroit Warrants to Canterbury Mezzanine and Canterbury
Detroit, as the case may be, (the "CLOSING") shall take place at the offices of
Xxxxxxxx & Xxxxx, Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000 on the date hereof or at such other place or such other time or date as
the Company may designate. At the Closing, the Company shall deliver to
Canterbury Mezzanine and Canterbury Detroit, certificates evidencing the
Mezzanine Preferred and the Detroit Preferred, respectively, and the Mezzanine
Warrants and the Detroit Warrants, respectively, each registered in the name of
Canterbury Mezzanine or Canterbury Detroit, respectively, or its nominee, upon
payment of the Mezzanine Purchase Price or the Detroit Purchase Price,
respectively, by a cashier's or certified check, or by wire transfer of
immediately available funds to an account designated by the Company.
3. RESTRICTIONS ON TRANSFER.
(a) SHAREHOLDERS AGREEMENT. Each Investor hereby acknowledges
and understands that such Investor is a party to the Shareholders Agreement
which governs and restricts the Investor's ability to transfer any Common Stock
(including the Underlying Stock when issued) and other matters relating to the
Investor as a shareholder of the Company.
(b) LEGEND. The certificates representing the Preferred Stock
and the Underlying Stock (upon the issuance of such Underlying Stock) will bear
the legend set forth in Section 7 of the Shareholders Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
material inducement to the Investors to enter into this Agreement and purchase
the Common Stock, the Company hereby represents and warrants to the Investors as
follows:
(a) ORGANIZATION. It is a corporation duly organized, validly
existing and in good standing under the laws of New York.
(b) AUTHORIZATION. It has full corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by it and constitutes the valid and binding
agreement of it, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable principles and
the discretion of courts in granting equitable remedies.
(c) NO CONFLICT. The execution, delivery and performance by it
of this Agreement, the performance by it of the transactions contemplated
thereby and the fulfillment by it of and compliance by it with the terms and
conditions hereof does not and will not, violate or conflict with any terms or
provisions of (i) its articles of incorporation, bylaws or other organizational
documents, (ii) any contract, deed, lease or other agreement to which it is a
party or
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to which any of its assets are subject or (iii) any judgment, decree, order,
statute, rule or regulation applicable to it or any of its assets, except for
such violations which could not reasonably be expected to materially impair or
delay its ability to consummate the transactions contemplated hereby. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any government agency or public or regulatory unit, agency, body or
authority with respect to it is required in connection with its execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby other than any of the foregoing, the failure of
which to receive or make, as the case may be, could not reasonably be expected
to materially impair or delay its ability to consummate the transactions
contemplated hereby.
(d) CAPITALIZATION. The Warrants and Preferred Stock acquired
hereunder and the capitalization of the Company as set forth on SCHEDULE B
attached hereto (which is, as of the date hereof, true and correct as to all
outstanding equity securities of the Company outstanding on a fully diluted
basis) have been validly authorized, issued and are fully paid and
nonassessable.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. As a
material inducement to the Company to enter into this Agreement and sell the
Preferred Stock and issue the Warrants to the Investors, each Investor,
severally and not jointly, hereby represents and warrants to the Company as
follows:
(a) CAPACITY AND POWER. The Investor has full capacity, power
and authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Investor and
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency and other similar
laws affecting the enforceability of creditors' rights generally, general
equitable principles and the discretion of courts in granting equitable
remedies.
(b) NO CONFLICT. The execution, delivery and performance by
the Investor of this Agreement and the transactions contemplated hereby and the
fulfillment by it of and compliance by it with the terms and conditions of this
Agreement do not and will not, violate or conflict with any terms or provisions
of (i) any contract, deed, lease or other agreement to which its is a party or
to which any of it assets are subject or (ii) any judgment, decree, order,
statute, rule or regulation applicable to, it or any of its assets, except for
such violations which could not reasonably be expected to materially impair or
delay its ability to consummate the transactions contemplated hereby. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any government agency or public or regulatory unit, agency, body or
authority with respect to its is required in connection with its execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby other than any of the foregoing, the failure of
which to receive or make, as the case may be, could not reasonably be expected
to materially impair or delay its ability to consummate the transactions
contemplated hereby.
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(c) INVESTMENT. The Investor (a) understands that the
Preferred Stock and the Warrants have not been, and will not be, registered
under the Securities Act, or under any state securities laws, and are being
offered and sold in reliance upon federal and state exemptions for transactions
not involving any public offering, (b) is acquiring the Preferred Stock and the
Warrants solely for its own account for investment purposes, and not with a view
to the distribution thereof, (c) is a sophisticated investor with knowledge and
experience in business and financial matters, (d) has received certain
information concerning the Company and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding the Preferred Stock and the Warrants, (e) is able to bear
the economic risk and lack of liquidity inherent in holding the Preferred Stock
and the Warrants, and (f) is an Accredited Investor.
6. CLOSING FEES. As a material inducement to the Investors to
enter into this agreement and purchase the Preferred Stock and receive the
Warrants, the Company agrees to pay to the Investors on the Closing Date (i)
reasonable attorneys' fees and out-of-pocket expenses of legal counsel to the
Investors, and (ii) a closing fee of $25,000.00 in the aggregate.
7. CONDITIONS TO CLOSING. The obligations of each of
Canterbury Mezzanine and Canterbury Detroit to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing of each of the following conditions, any and all of which may be
waived in whole or in part by Canterbury Mezzanine or Canterbury Detroit, as the
case may be, to the extent permitted by applicable law:
(a) CLOSING DELIVERIES. The Company shall have delivered to
each of Canterbury Mezzanine and Canterbury Detroit the following closing
documents in form and substance reasonably acceptable to its counsel:
(i) a certificate of the Secretary of the Company,
dated the Closing Date, as to the incumbency of any officer of the Company,
executing this Agreement or any document related thereto and covering such other
matters as Canterbury Mezzanine or Canterbury Detroit may reasonably request;
(ii) certified copies of the resolutions of the
Company's Board of Directors authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereunder;
(iii) a good standing certificate with respect to the
Company, together with certified charter documents of the Company from the
Secretary of State of the Company=s jurisdiction of incorporation, together with
certified copies of the bylaws of the Company;
(iv) certificates evidencing the Mezzanine Preferred,
the Detroit Preferred, the Mezzanine Warrants, and the Detroit Warrants;
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(v) executed copies of (A) this Agreement, (B) the
First Amendment to Warrant Agreement, dated as of the date hereof, by and
between the Company and Canterbury Mezzanine, (C) the Warrant Agreement, dated
as of the date hereof, by and among the Company, Xxxxxxxxxx Xxxxxxxxx, xxx
Xxxxxxxxxx Xxxxxxx, (X) executed certificates evidencing the Warrants, (E) the
Amended Registration Rights Agreement, and (F) the Shareholders Agreement; and
(vi) an opinion of Xxxxxxxx & Xxxxx, counsel to the
Company, dated as of the date hereof, in form and substance reasonably
acceptable to counsel for the Investors.
8. MISCELLANEOUS.
(a) SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement, the Shareholders Agreement, the Registration Rights
Agreement, the Amended Registration Rights Agreement, and the Warrant Agreement
embody the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns. No party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other. Notwithstanding anything herein to the
contrary, each of Canterbury Mezzanine and Canterbury Detroit may, in the
ordinary course of its business and in accordance with applicable law, at any
time assign to an Affiliate of such Person or to one or more banks or other
financial institutions or entities which are not then in direct competition with
the Company, all or any part of its rights and obligations under this Agreement;
PROVIDED, that each of Canterbury Mezzanine and Canterbury Detroit may make any
such assignment only if it is required to do so pursuant to its limited
partnership agreement or in connection with any dissolution of such Person
pursuant to its limited partnership agreement.
(d) COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
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(e) REMEDIES. The Company acknowledges that the Preferred
Stock and Warrants are unique and recognizes and affirms that in the event of a
breach of this Agreement by the Company or any of the Investors, money damages
may be inadequate and the Investor, or the Company, as the case may be, may have
no adequate remedy at law. Accordingly, the Company and each of the Investors
agrees that such Investor or the Company, as the case may be, shall have the
right, in addition to any other rights and remedies existing in its favor at law
or in equity, to enforce its rights and the obligations of the Company or such
Investor (as the case may be) hereunder not only by an action or actions for
damages but also by an action or actions for specific performance, injunctive
and/or other equitable relief (without posting of bond or other security).
(f) NOTICES. All notices, demands, or other communications
to be given or delivered under or by reason of the provision of this Agreement
will be in writing and will be deemed given when delivered personally, mailed by
certified or registered mail, return receipt requested, postage prepaid, or sent
via nationally recognized overnight courier, or sent via facsimile to the
recipient. Such notices, demands and other communications will be sent to the
address indicated below:
If to the Company, to:
Town Sports International, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxxxxxx
Facsimile No.: (000) 000-0000
with copies (which shall not constitute notice to the
Company) to:
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
AND
Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
If to Canterbury Mezzanine:
Canterbury Mezzanine Capital, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
0
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X.X. Xxxxxx
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice to
Canterbury Mezzanine) to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Canterbury Detroit:
Canterbury Detroit Partners, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice to
Canterbury Detroit) to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party.
(G) GOVERNING LAW. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(h) AMENDMENT AND WAIVER. The provisions of this Agreement
may be amended and waived only with the prior written consent of the parties. No
waiver by either party of any default, misrepresentation, or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
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(i) TIME OF THE ESSENCE; COMPUTATION OF TIME. Time is of the
essence for each and every provision of this Agreement. Whenever the last day
for the exercise of any privilege or the discharge of any duty hereunder shall
fall upon a Saturday, Sunday, or any date on which banks in New York, New York
are authorized to be closed, the party having such privilege or duty may
exercise such privilege or discharge such duty on the next succeeding day which
is a regular business day.
(j) WAIVER OF JURY TRIAL. Each of the parties hereto waives
any right it may have to trial by jury in respect of any litigation based on,
arising out of, under or in connection with this Agreement or any course of
conduct, course of dealing, verbal or written statement or action of any party
hereto.
(k) DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Stock
Purchase Agreement on the date first above written.
TOWN SPORTS INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: CFO
CANTERBURY MEZZANINE CAPITAL, L.P.
By: Canterbury Capital, LLC
Its: General Partner
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Member
CANTERBURY DETROIT PARTNERS, L.P.
By: Canterbury Detroit, LLC
Its: General Partner
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Member
Schedule A
INVESTOR PREFERRED STOCK WARRANTS PURCHASE PRICE
-------- --------------- --------- --------------
Canterbury Mezzanine Capital, L.P. 10,000 33,255.12 $10,000,000.00
Canterbury Detroit Partners, L.P. 5,000 16,627.56 $ 5,000,000.00
--------- --------- --------------
Total: 15,000 49,882.68 $15,000,000.00
SCHEDULE B
[CAPITALIZATION OF THE COMPANY]
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EXHIBIT A
[PREFERRED STOCK TERMS]
EXHIBIT B
[FORM OF WARRANT]
