Exhibit 10.6
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
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AMENDED AND RESTATED SHAREHOLDERS AGREEMENT ("AGREEMENT"),
dated as of November 13, 1998, by and among TOWN SPORTS INTERNATIONAL, INC., a
New York corporation (the "COMPANY"), BRUCKMANN, XXXXXX, XXXXXXXX & CO., L.P., a
Delaware limited partnership ("BRS"), the individuals and entities listed on the
BRS Investor Signature Pages hereto (each, a "BRS INVESTOR", and collectively,
the "BRS INVESTORS"), FARALLON CAPITAL PARTNERS, L.P., a California limited
partnership ("FCP"), FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P., a California
limited partnership ("FCIP"), RR CAPITAL PARTNERS, L.P., a Delaware limited
partnership ("RRC"), and FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P., a
California limited partnership ("FII" and, together with FCP, FCIP, and RRC, the
"FARALLON INVESTORS", and individually, a "FARALLON INVESTOR"), CANTERBURY
DETROIT PARTNERS, L.P., a Delaware limited partnership ("CANTERBURY DETROIT"),
CANTERBURY MEZZANINE CAPITAL, L.P., a Delaware limited partnership ("CANTERBURY
MEZZANINE" and, together with Canterbury Detroit, "CANTERBURY"), ROSEWOOD
CAPITAL, L.P., a Delaware limited partnership ("ROSEWOOD"), and certain
shareholders of the Company listed on the Executive Signature Page hereto,
including those Persons who have executed joinders to the Original Shareholders
Agreement (each, an "EXECUTIVE", collectively, the "EXECUTIVES") (BRS, the BRS
Investors, Farallon, Canterbury Detroit, Canterbury Mezzanine, Rosewood and the
Executives are referred to collectively herein, together with each of their
respective Permitted Transferees (as defined herein), as the "SHAREHOLDERS").
Capitalized terms used herein but not otherwise defined shall have the meanings
assigned to such terms in Section 1.
WHEREAS, the parties hereto desire to amend and restate in its
entirety the Shareholders Agreement, dated as of December 10, 1996, by and among
the Company and certain other parties thereto (the "ORIGINAL SHAREHOLDERS
AGREEMENT") in accordance with its terms.
WHEREAS, BRS, the BRS Investors and the Farallon Investors
have acquired shares of the Company's Class A Common Stock, par value $.001 per
share (the "CLASS A COMMON"), and shares of the Company's Series A Preferred
Stock, par value $1.00 per share (the "SERIES A PREFERRED"), pursuant to Stock
Purchase Agreements, dated as of December 10, 1996, with the Company (in each
case, as the same may be amended, restated or modified from time to time, the
"INVESTOR AGREEMENTS").
WHEREAS, the Executives hold shares of the Company's Class A
Common pursuant to Executive Stock Agreements, with the Company (in each case,
as the same may be amended, restated or modified from time to time, the
"EXECUTIVE AGREEMENTS") and/or have been granted options to purchase shares of
the Class A Common, pursuant to Common Stock Option Agreements, by and between
the Company and each of the Executives (in each case, as the same may be
amended, restated or modified from time to time, the "COMMON OPTION
AGREEMENTS").
WHEREAS, certain of the Executives have acquired shares of the
Company's Series B Preferred Stock, par value $1.00 per share (the "SERIES B
PREFERRED"), pursuant to the Executive
Agreements and/or have been granted options to purchase shares of the Series B
Preferred pursuant to Preferred Stock Option Agreements, dated as of December
10, 1996, by and between the Company and each such Executive (as the same may be
amended, restated or modified from time to time, the "PREFERRED OPTION
AGREEMENTS").
WHEREAS, Canterbury Mezzanine has acquired a warrant (together
with all warrants issued in substitution or replacement therefor, the "WARRANT")
exercisable for shares of Class A Common pursuant to the Warrant Agreement,
dated as of December 10, 1996, by and between Canterbury Mezzanine and the
Company (as the same may be amended, restated or modified from time to time, the
"MEZZANINE WARRANT AGREEMENT").
WHEREAS, each of Canterbury Mezzanine and Canterbury Detroit
has acquired shares of the Company=s Senior Preferred Stock, par value $1.00 per
share (the "SENIOR PREFERRED STOCK"), pursuant to the Stock Purchase Agreement,
dated as of the date hereof, by and among the Company, Canterbury Mezzanine and
Canterbury Detroit (as the same may be amended, restated or modified from time
to time, the "SENIOR PREFERRED STOCK PURCHASE AGREEMENT").
WHEREAS, Canterbury Detroit has acquired a warrant (together
with all warrants issued in substitution or replacement therefor, the "DETROIT
WARRANT") exercisable for shares of Class A Common, pursuant to the Warrant
Agreement, dated as of the date hereof, by and among the Company, Canterbury
Detroit and Canterbury Mezzanine (as the same may be amended, restated or
modified from time to time, the "SECOND WARRANT AGREEMENT").
WHEREAS, Canterbury Mezzanine has acquired a warrant (together
with all warrants issued in substitution or replacement therefor, the "MEZZANINE
WARRANT") exercisable for shares of Class A Common, pursuant to the Second
Warrant Agreement.
WHEREAS, (i) the Farallon Investors intend to acquire warrants
(together with all warrants issued in substitution or replacement therefor, the
"FARALLON WARRANT") exercisable for shares of Class A Common, and (ii) Rosewood
intends to acquire a warrant (together with all warrants issued in substitution
or replacement therefor, the "ROSEWOOD WARRANT") exercisable for shares of Class
A Common, in each case, pursuant to the Warrant Agreements to be entered into by
and among the Farallon Investors, Rosewood and the Company substantially in the
same form as the Second Warrant Agreement (as the same may be amended, restated
or modified from time to time, the "THIRD WARRANT AGREEMENTS").
WHEREAS, the Farallon Investors and Rosewood intend to acquire
shares of the Company's Senior Preferred Stock pursuant to the Second Senior
Preferred Stock Purchase Agreement to be entered into by and among the Company,
the Farallon Investors, and Rosewood substantially in the same form as the
Senior Preferred Stock Purchase Agreement (as the same may be amended, restated
or modified from time to time, the "SECOND SENIOR PREFERRED STOCK PURCHASE
AGREEMENT").
WHEREAS, the Company and the Shareholders desire to enter into
this Agreement for the purposes, among others, of (i) establishing the
composition of the Company's Board of Directors (as in effect from time to time,
the "BOARD"), (ii) assuring continuity in the management and ownership of the
Company and (iii) limiting the manner and terms by which the Shareholder Shares
may be transferred.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have
the following meanings:
"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).
"APPROVED SALE" means the sale of the Company, in a single
transaction or a series of related transactions, to an Unaffiliated Third Party
(a) pursuant to which such Unaffiliated Third Party proposes to acquire all of
the outstanding Common Stock (whether by merger, consolidation,
recapitalization, reorganization, purchase of the outstanding Common Stock or
otherwise) or all or substantially all of the consolidated assets of the
Company, (b) which has been approved by the Board and holders of a majority of
the outstanding BRS Shares, voting together as a single class, and (c) pursuant
to which all holders of Shareholder Shares and Preferred Shares receive at the
same time (whether in such transaction or, with respect to an asset sale, upon a
subsequent liquidation) the same form and amount of consideration (x) per share
of Common Stock (as adjusted for any consideration payable by such holders in
connection with the exercise of any Shareholder Warrants or Options) with
respect to holders of Shareholder Shares, (y) per share of Preferred Stock
(which shall in no event be less than the Liquidation Value (plus accrued and
unpaid dividends) as adjusted for any consideration payable by, or special
accrual payable to, such holders in connection with the exercise of any
Preferred Options) with respect to holders of Preferred Shares (provided that in
any Approved Sale, the holders of Senior Preferred Stock shall receive at least
the full Liquidation Value (plus accrued and unpaid dividends) thereof, it being
understood and agreed that the Senior Preferred Stock is senior in priority to
the Preferred Stock and Common Stock in connection with an Approved Sale), or if
any holders of Shareholder Shares or Preferred Shares are given an option as to
the form and amount of consideration received, all such holders of Shareholder
Shares or Preferred Shares, as the case may be, are given the same option;
PROVIDED, that such consideration shall be deemed to include any other
consideration paid or payable by such Unaffiliated Third Party to any holder of
Stockholder Shares in connection with such transaction, or otherwise directly or
indirectly related to such transaction, which is not in exchange for or
attributable to securities of the Company held by such holder.
"BRS SHARES" means Shareholder Shares owned by BRS and the BRS
Investors, or any of their respective Permitted Transferees.
"COMMON OPTIONS" means, collectively, the options to purchase
Class A Common granted to certain Executives pursuant to the Town Sports
International, Inc. Amended and Restated 1996 Stock Option Plan and the Common
Option Agreements.
"COMMON STOCK" means, collectively, the Class A Common, the
Class B Common, and any other class of common stock of the Company, or if such
outstanding Common Stock is hereafter changed into or exchanged for different
securities of the Company, such other securities.
"EXECUTIVE SHARES" means Shareholder Shares owned by the
Executives or any of their respective Permitted Transferees.
"FAMILY GROUP" means, with respect to an individual
Shareholder, (i) such Shareholder's spouse, former spouse and descendants
(whether natural or adopted), parents and their descendants, descendants of such
brothers and sisters and any spouse of the foregoing individuals or (ii) any
trust solely for the benefit of any of the individuals listed in clause (i)
above.
"FARALLON SHARES" means Shareholder Shares owned by the
Farallon Investors or their respective Permitted Transferees.
"INITIAL PUBLIC OFFERING" means the sale, in the initial
underwritten public offering registered under the Securities Act, of shares of
the Company's Common Stock where, after such offering, the Common Stock sold in
such offering is subject to being traded on the NASDAQ National Market or a
national securities exchange.
"INVESTORS" means, collectively, BRS and the Farallon
Investors.
"LIQUIDATION VALUE" means, with respect to any share of Senior
Preferred Stock or any share of any series of Preferred Stock, the "Liquidation
Value" for such shares or series as defined and determined in accordance with
the Company's Certificate of Incorporation, as in effect from time to time.
"OTHER SHAREHOLDERS" means, with respect to a Shareholder, all
Shareholders other than such Shareholder.
"OWNERSHIP RATIO" means, as to a Shareholder at the time of
determination, the percentage obtained by dividing the amount of shares of
Common Stock held by such Shareholder on a fully diluted basis at such time by
the aggregate amount of shares of Common Stock outstanding on a fully diluted
basis at such time.
"PERMITTED TRANSFEREES" has the meaning set forth in
Section 4(c).
"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
governmental entity (or any department, agency or political subdivision
thereof).
"PREFERRED OPTIONS" means, collectively, the options to
purchase Series B Preferred granted to certain Executives pursuant to the
Preferred Option Agreements.
"PREFERRED SHARES" means, (i) any Preferred Stock or Senior
Preferred Stock now held or hereafter acquired by the Shareholders, (ii) any
Preferred Stock issued or issuable upon exercise of the Preferred Options, and
(iii) any securities issued or issuable directly or indirectly with respect to
the securities described in clauses (i) and (ii) above by way of stock dividend,
stock split, or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular shares
constituting Preferred Shares, such shares will cease to be Preferred Shares
when they have been sold in an Approved Sale, transferred pursuant to Section
4(a) or 4(b) hereof, or upon the consummation of an Initial Public Offering. For
purposes of this Agreement, a Person will be deemed a holder of Preferred Shares
whenever such Person has the rights to acquire directly or indirectly such
Preferred Shares (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected.
"PREFERRED STOCK" means, collectively, the Series A Preferred,
the Series B Preferred and any other class of preferred stock of the Company, or
if such outstanding Preferred Stock is hereafter changed into or exchanged for
different securities of the Company, such other securities.
"PUBLIC SALE" means any sale of Shareholder Shares to the
public pursuant to an offering registered under the Securities Act or to the
public effected through a broker, dealer or market maker pursuant to the
provisions of Rule 144 under the Securities Act.
"ROSEWOOD SHARES" means Shareholder Shares owned by Rosewood
or any of its Permitted Transferees.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SHAREHOLDER SHARES"means (i) any Common Stock now held or
hereafter acquired by the Shareholders, including upon conversion of any shares
of Senior Preferred Stock, (ii) any Common Stock issued or issuable upon
exercise of any Shareholder Warrants, (iii) Common Stock issued or issuable upon
exercise of the Common Options, and (iv) any equity securities issued or
issuable directly or indirectly with respect to the securities referred to in
clauses (i), (ii), and (iii) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular shares constituting Shareholder
Shares, such shares will cease to be Shareholder Shares when they have been sold
or acquired in a Public Sale or in an Approved Sale, transferred pursuant to
Section 4(a) or 4(b) hereof or upon the consummation of an Initial Public
Offering. For purposes of this Agreement, a Person will be deemed to be a holder
of Shareholder Shares whenever such Person has
the right to acquire directly or indirectly such Shareholder Shares (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected.
"SHAREHOLDER WARRANTS" means the Warrant, the Mezzanine
Warrant, the Detroit Warrant, the Farallon Warrant (when and if issued), and the
Rosewood Warrant (when and if issued).
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a partnership, association
or other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed to
have a majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be or
control the managing director or a general partner of such partnership,
association or other business entity.
"TRANSACTION DOCUMENTS" means, collectively, (i) this
Agreement, (ii) the Registration Rights Agreement, dated as of December 10,
1996, by and among the parties hereto, (iii) the First Amendment to Registration
Rights Agreement, dated as of the date hereof, by and among the Company and
certain shareholders of the Company (iv) the Senior Preferred Stock Purchase
Agreement, (v) the Investor Agreements, (vi) the Warrant Documents, (vii) the
Second Senior Preferred Stock Purchase Agreement (when and if executed and
delivered by the parties thereto), (viii) the Executive Agreements, (ix) the
Common Option Agreements, (x) the Preferred Option Agreements and (xi) the
Professional Services Agreement, dated as of December 10, 1996, by and among the
Company and an Affiliate of BRS, in each case, as the same may be amended,
restated or modified from time to time.
"UNAFFILIATED THIRD PARTY" means any Person who, immediately
prior to the contemplated transaction (i) does not own in excess of 5% of the
Common Stock on a fully diluted basis (a "5% OWNER"), (ii) is not controlling,
controlled by or under common control with any such 5% Owner and (iii) is not
the spouse or descendent (by birth or adoption) of any such 5% Owner or a trust
for the benefit of such 5% Owner and/or such other Persons.
"WARRANT DOCUMENTS" means the Mezzanine Warrant Agreement, the
First Amendment to Warrant Agreement, dated as of the date hereof, by and among
the Company and Canterbury Mezzanine, the Second Warrant Agreement, and the
Third Warrant Agreements (when and if executed and delivered by the parties
thereto).
"WARRANT HOLDERS" means Canterbury Mezzanine, Canterbury
Detroit, the Farallon Investors, Rosewood (when and if Rosewood receives the
Rosewood Warrant), and any other Shareholder to whom the Company issues
Shareholder Warrants after the date hereof.
2. BOARD OF DIRECTORS.
(a) Until the provisions of this Section 2 cease to be
effective, to the extent permitted by law, each Shareholder shall vote all
voting securities of the Company over which such Shareholder has voting control,
and shall take all other necessary or desirable actions within such
Shareholder's control (whether in such Shareholder's capacity as a Shareholder,
director, member of a board committee or officer of the Company or otherwise,
and including, without limitation, attendance at meetings in Person or by proxy
for purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company shall take all necessary and desirable actions within
its control (including, without limitation, calling special board and
Shareholder meetings), so that:
(i) the authorized number of directors on the Board shall be
established at six directors;
(ii) the following Persons shall be elected to the Board:
(A) for so long as BRS holds at least 10% of the
Shareholder Shares held by it as of the date hereof, two (2)
representatives designated by BRS determined by a vote or
consent of the holders of a majority of the BRS Shares (the
"BRS DIRECTORS");
(B) Xxxx Xxxxx, for so long as he is then acting and
duly elected Chief Executive Officer of the Company and
willing and capable to serve as a director, and after such
time, one individual determined by the vote or consent of
Shareholders owning a majority of the Executive Shares, voting
together as a single class (the "EXECUTIVE DIRECTOR");
(C) for so long as the Farallon Investors hold, in
the aggregate, at least 10% of the aggregate number of
Shareholder Shares held by them as of the date hereof, one (1)
representative designated by the Farallon Investors determined
by a vote or consent of the holders of a majority of the
Farallon Shares (the "FARALLON DIRECTOR"); and
(D) two (2) representatives designated by the holders
of the Class A Common, determined by the vote or consent of
the holders of a majority of the Class A Common, who shall
initially be Xxxx X. Xxxxxx and Xxxxx Xxxxxx (each, an
"INDEPENDENT DIRECTOR").
(iii) the composition of the board of directors of each of the
Company's Subsidiaries (a "SUB BOARD") shall be as determined by the
Board;
(iv) the Board shall create a Compensation Committee, which
shall consist of two BRS Directors and the Executive Director, which
shall have the duties and functions set forth in the Company's by-laws;
(v) any committees of the Board or a Sub Board (other than the
Compensation Committee) shall be created only upon the approval of a
majority of the members of the Board and the composition of each such
committee (if any) shall consist of at least one BRS Director;
(vi) any BRS Director, Executive Director, Farallon Director
or Independent Director shall be removed from the Board, a Sub Board or
any committee thereof (with or without cause) at the written request of
the Shareholder or Shareholders which have the right to designate such
director hereunder, but only upon such written request and under no
other circumstances (in each case, determined on the basis of a vote or
consent of the Shareholders referred to in clause (ii)(A), (ii)(B),
(ii)(C) or (ii)(D) as the case may be);
(vii) in the event that any representative designated
hereunder for any reason ceases to serve as a member of the Board or a
Sub Board or any committee thereof during such representative's term of
office, the resulting vacancy on the Board or such Sub Board or
committee shall be filled by a representative designated by the
Shareholders referred to in clause (ii)(A), (ii)(B), (ii)(C), or
(ii)(D), as the case may be; and
(b) The Company shall pay the reasonable out-of-pocket
expenses incurred by each director or observer in connection with attending the
meetings of the Board or any Sub Board and any committee thereof. In addition,
the Company shall pay such additional compensation to directors who are not
employees of the Company or any of its Subsidiaries as the Board so determines.
(c) The provisions of this Section 2 shall terminate
automatically and be of no further force and effect upon the consummation of an
Initial Public Offering.
(d) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this Section 2, the election of a Person
to such directorship shall be accomplished in accordance with the Company's
bylaws and applicable law (provided that such party may subsequently remove and
replace such Person). In the event that any provision of the Company's bylaws or
articles of incorporation is inconsistent with any provision of this Section 2,
the Shareholders shall take such action as may be necessary to amend any such
provision in the Company's bylaws or certificate of incorporation to remedy such
inconsistency.
(e) The Company shall give (i) each of Xxxxxx Xxxxxxxx,
Xxxxxxxxx Xxxxxxxxxxxxx, and Xxxxxxx Xxxx (all of whom are Executives, each, an
"OBSERVER") (for so long as each such Observer owns at least 10% of the
Stockholder Shares held by him as of the date
hereof) and (ii) Canterbury Mezzanine and Canterbury Detroit (so long as each of
Canterbury Mezzanine and Canterbury Detroit holds any Preferred Shares or
Warrants) written notice of each meeting of the Board, at the same time and in
the same manner as notice is given to the directors, and the Company shall
permit each Observer and a representative of Canterbury Mezzanine and Canterbury
Detroit, taken as a group, to attend, as an observer, all such meetings unless
attendance at such meeting, in the Board's reasonable judgment, would create a
conflict of interest for such representative or Observer; PROVIDED, that in the
case of telephonic meetings, such representative or Observer need receive only
actual notice thereof at the same time and in the same manner as notice is given
to the directors, and such representative or Observer shall be given the
opportunity to listen to such telephonic meetings. The representative of
Canterbury Mezzanine and Canterbury Detroit and each Observer shall be entitled
to receive all written materials and other information (including, without
limitation, copies of meeting minutes) given to directors of the Company in
connection with such meetings at the same time such materials and information
are given to such directors unless, in the Board's reasonable judgment, receipt
of such materials would create a conflict of interest by such representative or
Observer. The Company shall give written notice of any action by written consent
in lieu of a meeting of directors to such representative or Observer prior to
the effective date of such consent describing in reasonable detail the nature
and substance of such action.
3 REPRESENTATIONS AND WARRANTIES. Each Shareholder represents
and warrants that (a) effective as of the date hereof such Shareholder is the
record owner of the number of Shareholder Shares and Preferred Shares set forth
opposite its name on SCHEDULE A attached hereto (assuming all such shares and
options therefor have become fully vested), (b) this Agreement has been duly
authorized, executed and delivered by such Shareholder and constitutes the valid
and binding obligation of such Shareholder, enforceable in accordance with its
terms, and (c) such Shareholder has not granted and is not a party to any proxy,
voting trust or other agreement which is inconsistent with, conflicts with or
violates any provision of this Agreement. No holder of Shareholder Shares shall
grant any such proxy or become party to any such voting trust or other agreement
which is inconsistent with, conflicts with or violates any provision of this
Agreement.
4 RESTRICTIONS ON TRANSFER.
(a) TAG ALONG RIGHTS. Subject to Sections 4(c) and 4(d) and
other than in connection with a Public Sale or Approved Sale, at least 30 days
prior to any sale, transfer, assignment, pledge or other disposal (a "TRANSFER")
of Shareholder Shares or Preferred Shares by BRS, BRS shall deliver a written
notice (the "SALE NOTICE") to the Company and the Other Shareholders, specifying
in reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of the Transfer. The Other Shareholders may elect to participate
in the contemplated Transfer by delivering written notice to BRS within 15 days
after delivery of the Sale Notice. If any Other Shareholders have elected to
participate in such Transfer, BRS and such Other Shareholders shall be entitled
to sell in the contemplated Transfer, at the same price (provided that the price
of any share of Series B Preferred or Senior Preferred Stock Transferred by any
such Shareholder pursuant to this Section 4(a) shall equal 35% and 1,000%,
respectively, of the price of any share of Series A Preferred specified in the
Sale Notice) and on the same terms:
(x), with respect to Shareholder Shares, a number of
Shareholder Shares equal to the product of (i) the quotient determined by
dividing the number of Shareholder Shares owned by such Person by the aggregate
number of Shareholder Shares owned by all Shareholders participating in such
Transfer and (ii) the aggregate number of Shareholder Shares to be sold in the
contemplated Transfer;
(y), (A) with respect to shares of Series A Preferred to be so
transferred by all such Shareholders, a number of shares of Series A Preferred
equal to the product of (i) the quotient determined by dividing (1) the number
of shares of Series A Preferred owned by such Person by (2) the sum of the
aggregate number of shares of Series A Preferred plus .35 times the number of
shares of Series B Preferred plus ten times the number of shares of Senior
Preferred Stock (the "PREFERRED BASE AMOUNT"), in each case owned by all
Shareholders participating in such Transfer and (ii) the aggregate number of
Preferred Shares to be sold in the contemplated Transfer;
(B) with respect to shares of Series B Preferred, a number of
shares of Series B Preferred to be so Transferred by all such Shareholders if
such Shareholders do not hold any share of Series A Preferred equal to the
product of (1) the quotient determined by dividing (A) the number of shares of
Series B Preferred owned by such Person by (2) the Preferred Base Amount and
(ii) the aggregate number of Preferred Shares to be sold in the contemplated
Transfer; and
(C) with respect to shares of Senior Preferred Stock to be so
transferred by all such Shareholders if such Shareholders so elect to Transfer
Senior Preferred Stock in lieu of, or in addition to, shares of Series A
Preferred, a number of shares of Senior Preferred Stock equal to the product of
(i) the quotient determined by dividing the number of shares of Senior Preferred
Stock owned by such Person by (B) the Preferred Base Amount, and (ii) the
aggregate number of Preferred Shares to be sold in the contemplated Transfer;
PROVIDED, that (1) if the Sale Notice includes a Transfer of both Shareholder
Shares and Preferred Shares (whether shares of Preferred Stock, Senior Preferred
Stock, or both) and any Other Shareholder elects to participate in such
Transfer, such Other Shareholder must sell the number of Preferred Shares
calculated in accordance with clause (y) (or if such Shareholder holds a lesser
number of Preferred Shares, all Preferred Shares held by such Shareholder) and
(2) it being understood that if holders of Series B Preferred and/or Senior
Preferred Stock participated in any Transfer of Preferred Shares as a result of
the formulae set forth in clause (y) above, the aggregate number of Preferred
Shares so Transferred will not equal the number of Preferred Shares specified in
the Sale Notice.
(b) FIRST OFFER RIGHTS.
(i) Subject to Sections 4(c) and 4(d) and other than
in connection with a Public Sale or Approved Sale, at least thirty (30) days
prior to any Transfer of Shareholder Shares by any Shareholder (other than
holders of BRS Shares, Farallon Shares, or Rosewood Shares), the Shareholder
making such Transfer (the "TRANSFERRING SHAREHOLDER") shall deliver a written
notice (the
"TRANSFER NOTICE") to the Company and the Investors specifying in reasonable
detail the number of shares proposed to be transferred (the "TRANSFER Shares"),
the proposed purchase price and the other terms and conditions of the Transfer.
The Company may elect to purchase all (but not less than all) of the Transfer
Shares upon the same terms and conditions as those set forth in the Transfer
Notice, by delivering a written notice of such election to the Transferring
Shareholder within fifteen (15) days after the Transfer Notice has been
delivered to the Company. If the Company has not elected to purchase all of the
Transfer Shares, the Investors (or their designees) may elect to purchase all
(but not less than all) of the Transfer Shares, upon the same terms and
conditions as those set forth in the Transfer Notice, by giving written notice
of such election to the Transferring Shareholder within 15 days after the
Transfer Notice has been given to the Investors. If each of the Investors elects
to purchase the Transfer Shares, the Transfer Shares to be purchased by each
Investor shall be allocated among the Investors based upon the relative number
of Shareholder Shares then held by each such Investor unless otherwise agreed
upon by the Investors. If neither the Company nor the Investors elects to
purchase all of the Transfer Shares specified in the Transfer Notice, then the
Transferring Shareholder may transfer the Transfer Shares specified in the
Transfer Notice at a price and on terms in the aggregate not materially more
favorable to the transferee(s) thereof than specified in the Transfer Notice
during the 90-day period immediately following the date on which the Transfer
Notice has been given to the Company and the Investors. Any Transfer Shares not
transferred within such 90-day period will continue to be subject to the
provisions of this Section 4(b)(i) upon any subsequent proposed Transfer.
(ii) Subject to Sections 4(c) and 4(d) and other than
in connection with a Public Sale or Approved Sale, at least thirty (30) days
prior to Transfer of any Shareholder Shares by Rosewood or any Farallon
Investor, Rosewood or such Farallon Investor shall deliver written notice (any
such notice, the "FARALLON/ROSEWOOD SALE NOTICE") to BRS specifying in
reasonable detail the number of shares proposed to be transferred (the "PROPOSED
SHARES"). Upon receipt of the Farallon/Rosewood Sale Notice, BRS shall within
thirty (30) days deliver a written offer to Rosewood or such Farallon Investor,
as the case may be, to purchase the Proposed Shares specifying in reasonable
detail the amount and type of consideration to be offered for the Proposed
Shares and the other terms and conditions of such offer (the "BRS REPURCHASE
NOTICE"). Upon receipt of the BRS Repurchase Notice, Rosewood or such Farallon
Investor, as the case may be, shall within ten (10) days deliver to BRS a
written acceptance or rejection of the offer contained in the Repurchase Notice.
If Rosewood or such Farallon Investor, as the case may be, rejects the offer
contained in the BRS Repurchase Notice, Rosewood or such Farallon Investor, as
the case may be, may transfer the Proposed Shares specified in the applicable
Farallon/Rosewood Sale Notice at a price and on terms in the aggregate
materially not more favorable to the transferee(s) thereof than specified in the
BRS Repurchase Notice during the 90-day period immediately following the date on
which the Farallon Sale Notice has been given to BRS. Any Proposed Shares not
transferred within such 90-day period will continue to be subject to the
provisions of this Section 4(b)(ii) upon any subsequent proposed Transfer.
(iii) Any purchase by the Company and/or the
Investors pursuant to this Section 4(b) shall be closed at the Company's
executive offices within (x) 45 days after the Transfer Notice (in the case of
purchase pursuant to Section 4(b)(i)) or (y) 30 days after the acceptance by
Rosewood or the applicable Farallon Investor, as the case may be, of the offer
set forth in the BRS Repurchase Notice pursuant to Section 4(b)(ii). At the
closing, the purchaser or purchasers shall pay the purchase price by certified
check or wire transfer of immediately available funds, and the seller or sellers
shall deliver the certificate or certificates (or duly executed affidavits of
lost certificates in accordance with the Certificate of Incorporation)
representing the Shareholder Shares and/or Preferred Shares, as the case may be,
to such purchaser or purchaser or their nominees, accompanied by duly executed
stock powers.
(c) PERMITTED TRANSFERS. The restrictions contained in this
Section 4 shall not apply with respect to any Transfer of Shareholder Shares (or
Preferred Shares, to the extent this Section 4 applies to Preferred Shares) by
any Shareholder (i) in the case of an individual Shareholder, pursuant to
applicable laws of descent and distribution or among such Shareholder's Family
Group, (ii) in the case of holders of the BRS Shares and its Permitted
Transferees, (A) among their Affiliates, partners and employees (provided that
in the case of a distribution to BRS' partners, such distribution shall be made
PRO RATA to all such partners in accordance with the terms of its agreement of
limited partnership), (B) to any employee, prospective employee, director or
prospective director of the Company or any Subsidiary of the Company as
incentive compensation, (C) to any former or prospective employee, director or
prospective director of BRS or any Affiliate of BRS or (D) to any BRS Investor
or BRS, (iii) in the case of Canterbury Detroit, Canterbury Mezzanine, Rosewood,
any Farallon Investor and their respective Permitted Transferees, (A) among
their respective Affiliates, members and partners (provided that in the case of
a distribution to Farallon's, Rosewood's, Canterbury Detroit's or Canterbury
Mezzanine's members or partners, such distribution shall be made PRO RATA to all
such partners in accordance with the terms of their respective agreements of
limited partnership) and (B) to any employee, director or prospective director
of the Company or any Subsidiary of the Company as incentive compensation, (iv)
in the case of each of Canterbury Mezzanine or Canterbury Detroit, in the
ordinary course of its business and in accordance with applicable law, 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 only if
either Canterbury Mezzanine or Canterbury Detroit is required to do so pursuant
to its agreement of limited partnership or in connection with any dissolution of
such Person pursuant to its agreement of limited partnership, or (v) in the case
of any Farallon Investor, to another Farallon Investor; PROVIDED, that the
rights and restrictions contained in this Section 4 shall continue to be
applicable to such Shareholder Shares or Preferred Shares, as the case may be,
after any such Transfer as if such Shareholder Shares or Preferred Shares, as
the case may be, were held by the transferor; and PROVIDED FURTHER, that the
transferees of such Shareholder Shares or Preferred Shares, as the case may be,
shall have agreed in writing to be bound by the provisions of this Agreement
which affect the Shareholder Shares or Preferred Shares, as the case may be, so
transferred by executing a joinder in substantially the form attached hereto as
EXHIBIT A. All transferees permitted under this Section 4(c) are collectively
referred to herein as "PERMITTED TRANSFEREES."
(d) TERMINATION OF RESTRICTIONS. The restrictions set forth
in this Section 4 shall continue with respect to each Shareholder Share or
Preferred Share until the earlier of (i) the Transfer of such Shareholder
Share or Preferred Share in a Public Sale or an Approved Sale, (ii) the
consummation of a an Initial Public Offering or (iii) the Transfer of such
Shareholder Share or
Preferred Share (other than to another Shareholder or the Company) pursuant to
Section 4(a) or 4(b) hereof. In addition, the provisions of this Section 4 shall
terminate on the date on which BRS holds less than 10% of the Shareholder Shares
held by it as of the date hereof
5 SALE OF THE COMPANY.
(a) In the event of an Approved Sale, each Shareholder will
(i) consent to and raise no objections against the Approved Sale or the process
pursuant to which the Approved Sale was arranged, (ii) waive any dissenter's
rights and other similar rights, and (iii) if the Approved Sale is structured as
a sale of stock, each Shareholder will agree to sell its Shareholder Shares and
Preferred Shares on the terms and conditions of the Approved Sale. Each
Shareholder will take all reasonably necessary and desirable actions as directed
by the Board and the holders of a majority of the BRS Shares in connection with
the consummation of any Approved Sale, including, without limitation, executing
the applicable purchase agreements, which shall include customary and reasonable
representations, warranties, indemnities and contribution rights (provided that
any such indemnification or contribution obligations of any Shareholder shall be
limited to the total consideration received by such Shareholder in connection
with such Approved Sale).
(b) If the Company or the holders of the Company's securities
enter into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) under the Securities Act may be available with respect to
such negotiation or transaction (including a merger, consolidation or other
reorganization), the Other Shareholders (other than Canterbury Mezzanine,
Canterbury Detroit and Farallon, who shall act on their own behalf) will, at the
request of the Company, appoint a purchaser representative (as such term is
defined in Rule 501) reasonably acceptable to the Company. If any Other
Shareholder appoints a purchaser representative designated by the Company, the
Company will pay the fees of such purchaser representative, but if any Other
Shareholder declines to appoint the purchaser representative designated by the
Company such holder will appoint another purchaser representative (reasonably
acceptable to the Company), and such holder will be responsible for the fees of
the purchaser representative so appointed.
(c) All Shareholders will bear their PRO RATA share (based
upon the number of shares sold) of the reasonable costs of any sale of
Shareholder Shares and Preferred Shares pursuant to an Approved Sale to the
extent such costs are incurred for the benefit of all selling Shareholders and
are not otherwise paid by the Company or the acquiring party. Costs incurred by
any Shareholder on its own behalf will not be considered costs of the
transaction hereunder.
(d) This Section 5 shall automatically terminate upon the
earlier of (i) the consummation of a Initial Public Offering or (ii) the date on
which BRS hold less than 20% of the Common Stock on a fully diluted basis.
6 PREEMPTIVE RIGHTS. Except for issuances of Common Stock upon
exercise of any Shareholder Warrants or any Common Options or upon conversion of
the Preferred Stock or Senior Preferred Stock, if the Company issues any equity
securities or any securities containing options or rights to acquire any equity
securities or any securities convertible or exchangeable for
equity securities in each case, after the date hereof to any Person (other than
the Executives or, the issuance of the Farallon Warrant and the Rosewood
Warrant) (the "OFFEREE"), the Company will offer to sell to each Shareholder, a
number of such securities ("OFFERED SHARES") so that the Ownership Ratio
immediately after the issuance of such securities for each Shareholder would be
equal to the Ownership Ratio for such Shareholder immediately prior to such
issuance of securities; PROVIDED, that if the antidilution provisions set forth
in Section 12 of any Warrant Document adjust the terms of such Warrant Document
as a result of such issuance, the Company shall not be required to offer the
applicable Warrant Holder the Offered Shares with respect to the Shareholder
Shares attributable to the applicable Shareholder Warrant. The Company shall
give each Shareholder at least 30 days prior written notice of any proposed
issuance, which notice shall disclose in reasonable detail the proposed terms
and conditions of such issuance (the "ISSUANCE NOTICE"). Each Shareholder will
be entitled to purchase such securities at the same price, on the same terms,
and at the same time as the securities are issued to the Offeree by delivery of
written notice to the Company of such election within 15 days after delivery of
the Issuance Notice (the "ELECTION NOTICE"); PROVIDED, that if more than one
type of security was issued, each Shareholder shall, if it exercises its rights
pursuant to this Section 6, purchase such securities in the same ratio as
issued. If any of the Shareholders have elected to purchase any Offered Shares,
the sale of such shares shall be consummated as soon as practical (but in any
event within 10 days) after the delivery of the Election Notice. In the event
any Shareholder elects not to exercise its rights pursuant to this Section 6, no
other Shareholder shall have the right to purchase the securities offered to
such Shareholder. This Section 6 will terminate automatically, and be of no
further force and effect, upon the consummation of a Initial Public Offering.
The parties hereto that were party to the Original Shareholders Agreement hereby
waive any and all rights to which such parties were entitled under Section 6 of
the Original Shareholders Agreement with respect to the issuance of the
Shareholder Warrants on the date hereof.
7 LEGEND. In addition to any legend required by any other
Transaction Document, each certificate evidencing Shareholder Shares or
Preferred Shares and each certificate issued in exchange for or upon the
transfer of any Shareholder Shares or Preferred Shares (if such shares remain
Shareholder Shares or Preferred Shares, as the case may be, as defined herein
after such transfer) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON [DATE], AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
REPRE-SENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AMENDED AND
RESTATED SHAREHOLDERS AGREEMENT DATED AS OF NOVEMBER __, 1998
BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND
CERTAIN OF THE COMPANY'S SHAREHOLDERS. A COPY OF SUCH AMENDED
AND RESTATED SHAREHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT
CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
REQUEST."
The Company shall imprint such legend on certificates evidencing Shareholder
Shares or Preferred Shares outstanding prior to the date hereof. The legend set
forth above shall be removed from the certificates evidencing any shares which
cease to be Shareholder Shares or Preferred Shares, as the case may be.
8 TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Shareholder Shares in violation of any provision of
this Agreement shall be null and void, and the Company shall not record such
Transfer on its books or treat any purported transferee of such Shareholder
Shares as the owner of such shares for any purpose.
9 TRANSFER OF SHAREHOLDER SHARES.
(a) Shareholder Shares are transferable only pursuant to (i)
public offerings registered under the Securities Act, (ii) subject to the
provisions of Section 4 above, Rule 144, Rule 144A or Rule 701 (or any similar
rule or rules then in effect) of the Securities and Exchange Commission if such
rule is available, (iii) Section 4(c), and (iv) subject to Section 4 and Section
9(b) below, any other legally available means of Transfer.
(b) In connection with the Transfer of any Shareholder Shares
other than a Transfer described in clause (i) or (ii) of Section 9(a) above, the
holder thereof shall deliver written notice to the Company describing in
reasonable detail the Transfer or proposed Transfer, together with an opinion of
counsel reasonably acceptable to the Company to the effect that such Transfer of
Shareholder Shares may be effected without registration of such Shareholder
Shares under the Securities Act. In addition, if the holder of the Shareholder
Shares delivers to the Company an opinion of counsel that no subsequent Transfer
of such Shareholder Shares shall require registration under the Securities Act,
the Company shall promptly upon such contemplated Transfer deliver new
certificates for such Shareholder Shares which do not bear the legend set forth
in Section 6 above. If the Company is not required to deliver new certificates
for such Shareholder Shares not bearing such legend, the holder thereof shall
not Transfer the same until the prospective transferee has confirmed to the
Company in writing its agreement to be bound by the conditions contained in this
Section 9 and Section 7 above.
(c) Upon the request of a holder of Shareholder Shares, the
Company shall promptly supply to such Person or its prospective transferees all
information regarding the Company required to be delivered in connection with a
Transfer pursuant to Rule 144A (or any similar rule or rules then in effect) of
the Securities and Exchange Commission.
(d) Upon the request of any holder of Shareholder Shares, the
Company shall remove the legend set forth in Section 7 above from the
certificates for such holder's Shareholder Shares (or the eligible portion
thereof); PROVIDED, that such Shareholder Shares have been either registered
under the Securities Act or are eligible for sale pursuant to Rule 144 (or any
similar rule or rules then in effect) of the Securities and Exchange Commission.
10 AMENDMENT AND WAIVER. Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Shareholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of not
less than 70% of the Shareholder Shares, respectively; PROVIDED, that no such
amendment or action which materially adversely affects any one or more
Shareholder(s) (whether as holders of Shareholder Shares or Preferred Shares)
shall be effective against such Shareholder(s) without the prior written consent
of each such Shareholder. For avoidance of doubt, an amendment to add another
party to this Agreement is not an action which, in and of itself, affects any
Shareholder materially adversely. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
11 AFFILIATE TRANSACTIONS. The Company will not, and will not
permit any of its Subsidiaries, to enter into any transaction or series of
transactions after the date hereof, whether or not in the ordinary course of
business with any Affiliate or 5% Owner (or any Affiliate of such 5% Owner);
PROVIDED, that the foregoing shall not apply to (i) the declaration and payment
of dividends approved by the Board, (ii) employment arrangements with any
Executive or employees of the Company entered into in the ordinary course of
business, (iii) any transactions expressly permitted or contemplated by any
Transaction Document, or (iv) any transaction consented to by not less than 70%
of the Shareholder Shares excluding for purposes of this clause (iv) Shareholder
Shares held by such Affiliate or 5% Owner).
12 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 and the other Transaction Documents 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. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and the Shareholders and any
subsequent holders of Shareholder Shares and the respective successors and
assigns of each of them, so long as they hold Shareholder Shares; it being
understood that any transferee of Shareholder Shares or Preferred Shares
pursuant to Section
4(a) or 4(b) (other than Shareholders) shall not succeed to the rights or
obligations of the transferor hereunder.
(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.
(e) REMEDIES. The parties hereto shall be entitled to enforce
their rights under this Agreement specifically to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company, BRS, the BRS Investors, Farallon, Rosewood,
Canterbury Detroit, Canterbury Mezzanine, and any Executive may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief (without posting a bond or other
security) in order to enforce or prevent any violation of the provisions of this
Agreement.
(f) NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally, mailed by certified or registered mail, return receipt requested and
postage prepaid, or sent via a 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:
To the Company:
Town Sports International, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxxxxxx
Facsimile No.: (000) 000-0000
With copies to (which shall not constitute notice to
the Company):
Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
To BRS:
Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice to
BRS):
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
To Farallon:
Farallon Capital Management, L.L.C.
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice to
Farallon):
Richards, Spears, Xxxxx & Orbe
One Chase Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
To Rosewood:
Rosewood Capital Partners, L.P.
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice to
Rosewood):
Xxxxxxx Xxxxx & Xxxxx, LLP
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Low, Esq.
Facsimile No.: (000) 000-0000
To Canterbury Mezzanine:
Canterbury Mezzanine Capital, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. X. Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice to
Canterbury Mezzanine):
Xxxxxxx Xxxxxx & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
To Canterbury Detroit:
Canterbury Detroit Partners, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. X. Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice to
Canterbury Detroit):
Xxxxxxx Xxxxxx & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
To any of the Executives:
[EXECUTIVE'S NAME]
Town Sports International, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
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) 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.
(H) 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.
(i) TIME IS 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) DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(k) JOINDER BY ROSEWOOD. The parties to this Agreement
acknowledge and agree that Rosewood shall not have any rights, duties or
obligations under this Agreement unless and until Rosewood actually acquires
shares of Senior Preferred Stock or the Shareholder Warrants to be issued to it
pursuant to the terms and conditions of the Second Senior Preferred Stock
Purchase Agreement. Effective upon such issuance, Rosewood shall automatically
become bound by the terms and provisions of this Agreement as indicated herein.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
TOWN SPORTS INTERNATIONAL, INC.
By:___/S/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: CFO
BRUCKMANN, XXXXXX, XXXXXXXX & CO., L.P.
By: BRS Partners, Limited Partnership
Its: General Partner
By:___/S/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Principal
CANTERBURY DETROIT PARTNERS, L.P.
By: Canterbury Detroit, LLC
Its: General Partner
By:__/S/Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Member
CANTERBURY MEZZANINE CAPITAL, L.P.
By: Canterbury Capital, LLC
Its: General Partner
By:__/S/Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Member
FARALLON CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By:____/S/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Principal
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By:___/S/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Principal
RR CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By:___/S/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Principal
FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By:____/S/Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Principal
ROSEWOOD CAPITAL, L.P.
By: Rosewood Capital Associates, L.P.,
its General Partner
By:__/S/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Principal
EXECUTIVE SIGNATURE PAGE
/s/ Xxxxxxx Xxxx
-------------------------------
Xxxxxxx Xxxx
/s/ Xxxx Xxxxx
-------------------------------
Xxxx Xxxxx
/s/ Xxxxxx Xxxxxxxx
-------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxxxxxxx
-------------------------------
Xxxxxxxxx Xxxxxxxxxxxxx
SCHEDULE A
----------
EXHIBIT A
FORM OF JOINDER TO
SHAREHOLDERS AGREEMENT
THIS JOINDER to the Amended and Restated Shareholders
Agreement, dated as of November __, 1998 by and among Town Sports International,
Inc., a New York corporation (the "COMPANY"), and certain shareholders of the
Company (the "AGREEMENT"), is made and entered into as of _____________, ____ by
and between the Company and ____________ ("HOLDER"). Capitalized terms used
herein but not otherwise defined shall have the meanings set forth in the
Agreement.
WHEREAS, Holder has acquired certain shares of Common Stock
("HOLDER STOCK"), and the Agreement and the Company requires Holder, as a holder
of Common Stock, to become a party to the Agreement, and Holder agrees to do so
in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Joinder hereby
agree as follows:
1. AGREEMENT TO BE BOUND. Holder hereby agrees that upon
execution of this Joinder, it shall become a party to the Agreement and shall be
fully bound by, and subject to, all of the covenants, terms and conditions of
the Agreement as though an original party thereto and shall be deemed a
Shareholder [AND ______] for all purposes thereof. In addition, Holder hereby
agrees that all Common Stock held by Holder shall be deemed Shareholder Shares
for all purposes of the Agreement.
2. SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Joinder shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and Holder and any subsequent
holders of Holder Stock and the respective successors and assigns of each of
them, so long as they hold any shares of Holder Stock.
3. COUNTERPARTS. This Joinder 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.
4. NOTICES. For purposes of Section 12(f) of the Agreement,
all notices, demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Facsimile Number]
5. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS JOINDER 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.
6. DESCRIPTIVE HEADINGS. The descriptive headings of this
Joinder are inserted for convenience only and do not constitute a part of this
Joinder.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this
Joinder as of the date first above written.
TOWN SPORTS INTERNATIONAL, INC.
By:
----------------------------
Name:
Title:
[HOLDER]
By:
----------------------------
