EXHIBIT 10.4
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT ("Agreement"), dated as of February 4,
2004, by and among TOWN SPORTS INTERNATIONAL HOLDINGS, INC., a Delaware
corporation (the "Company"), TOWN SPORTS INTERNATIONAL, INC., a New York
corporation ("TSI"), 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, the "Canterbury Investors",
and individually, a "Canterbury Investor"), ROSEWOOD CAPITAL, L.P., a Delaware
limited partnership ("Rosewood"), ROSEWOOD CAPITAL IV, L.P., a Delaware limited
partnership ("Rosewood IV"), ROSEWOOD CAPITAL IV ASSOCIATES, L.P., a Delaware
limited partnership ("Rosewood Associates" and, collectively with Rosewood and
Rosewood IV, the "Rosewood Investors", and individually, a "Rosewood Investor"),
CAPITALSOURCE HOLDINGS LLC, a Delaware limited liability company
("CapitalSource"), XXXXX XXXXXX ("Alessi"), XXXX XXXXXX ("Xxxxxx"), and certain
stockholders 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, the Farallon Investors, the Canterbury Investors, the Rosewood
Investors, CapitalSource, Xxxxxx, Xxxxxx and the Executives are referred to
collectively herein, together with each of their respective Permitted
Transferees (as defined herein), as the "Stockholders" and, individually as a
"Stockholder"). Capitalized terms used herein but not otherwise defined shall
have the meanings assigned to such terms in Section 1.
WHEREAS, the Stockholders currently own all of the issued and
outstanding capital stock of TSI consisting of Class A Common Stock, par value
$.001 per share (the "TSI Class A Common"), Series A Preferred Stock, par value
$1.00 per share (the "TSI Series A Preferred"), and Series B Preferred Stock,
par value $1.00 per share (the "TSI Series B Preferred"), as specified for each
Stockholder on Schedule A attached hereto;
WHEREAS, the Stockholders are currently parties to that
certain Amended and Restated Shareholders Agreement, dated as of November 13,
1998, by and among TSI and the Stockholders (the "Existing TSI Shareholders
Agreement");
WHEREAS, TSI, the Company and the Stockholders have entered
into a Restructuring Agreement, dated as of the date hereof (the "Restructuring
Agreement"), pursuant to which TSI shall be reorganized as a wholly-owned
subsidiary of the Company by having (a) each of the Stockholders contribute and
deliver to the Company the shares of TSI Class A Common, TSI Series A Preferred
and TSI Series B Preferred owned by each Stockholder as specified for such
Stockholder on Schedule A attached hereto in exchange for all of the issued
and outstanding capital stock of the Company consisting of Class A Common Stock,
par value $.001 per share (the "Class A Common"), Series A Preferred Stock, par
value $1.00 per share (the "Series A Preferred"), and Series B Preferred Stock,
par value $1.00 per share (the "Series B Preferred"), as specified for each
Stockholder on Schedule A attached hereto, and (b) immediately following the
initial Stockholder contribution, the Company contribute and deliver to TSI for
cancellation the shares of TSI Class A Common, TSI Series A Preferred and TSI
Series B Preferred held by it in exchange for 1,000 shares of TSI Class A
Common, representing all of the issued and outstanding capital stock of TSI
(collectively, the "Restructuring");
WHEREAS, in conjunction with the Restructuring, TSI and the
Stockholders desire to cancel and terminate the Existing TSI Shareholders
Agreement; and
WHEREAS, the Company and the Stockholders desire to enter into
this Agreement for the purposes, among others, of (a) establishing the
composition of the Company's Board of Directors (as in effect from time to time,
the "Board"), (b) assuring continuity in the management and ownership of the
Company and (c) limiting the manner and terms by which the Stockholder 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 Stockholder 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 Common Options) with respect to holders of
Stockholder Shares, (y) per share of Preferred Stock (which shall in no event be
less than the Liquidation Value (plus accrued and unpaid dividends)) with
respect to holders of Preferred Shares, or if any holders of Stockholder Shares
or Preferred Shares are given an option as to the form and amount of
consideration received, all such holders of Stockholder Shares or Preferred
Shares, as the case
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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.
"Approved TSI Sale" means the sale of TSI, 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 TSI 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 TSI, (b)
which has been approved by the Board of Directors of TSI and holders of a
majority of the outstanding BRS Shares, voting together as a single class, and
(c) pursuant to which all holders of Stockholder Shares and Preferred Shares
receive at the same time (whether in such transaction or upon a subsequent
liquidation of TSI or the Company) 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 Common Options) with respect to
holders of Stockholder Shares, (y) per share of Preferred Stock (which shall in
no event be less than the Liquidation Value (plus accrued and unpaid dividends))
with respect to holders of Preferred Shares, or if any holders of Stockholder
Shares or Preferred Shares are given an option as to the form and amount of
consideration received, all such holders of Stockholder 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.
"BRS Shares" means Stockholder Shares owned by BRS and the BRS
Investors, or any of their respective Permitted Transferees.
"CapitalSource Shares" means Stockholder Shares owned by
CapitalSource or any of its Permitted Transferees.
"Common Options" means, collectively, the options to purchase
Class A Common (a) prior to the date hereof, granted to certain Executives
pursuant to the Town Sports International, Inc. Fourth Amended and Restated 1996
Stock Option Plan and the Common Stock Option Agreements, by and between TSI and
each of the Executives and transferred to Holdings pursuant to the Restructuring
and the documents related thereto, and (b) on or after the date hereof, granted
to certain Executives pursuant to the Town Sports International Holdings, Inc.
2004 Stock Option Plan and the Common Stock Option Agreements, by and between
the Company and each of the Executives.
"Common Stock" means, collectively, the Class A Common, the
Class B Common Stock, par value $.001 per share (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.
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"Executive Shares" means Stockholder Shares owned by the
Executives or any of their respective Permitted Transferees.
"Family Group" means, with respect to an individual
Stockholder, (i) such Stockholder'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 Stockholder 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 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 Stockholders" means, with respect to a Stockholder, all
Stockholders other than such Stockholder.
"Ownership Ratio" means, as to a Stockholder at the time of
determination, the percentage obtained by dividing the amount of shares of
Common Stock held by such Stockholder 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 Shares" means, (i) any Preferred Stock now held or
hereafter acquired by the Stockholders, and (ii) any securities issued or
issuable directly or indirectly with respect to the securities described in
clause (i) 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
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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 Stockholder 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 Stockholder Shares owned by the
Rosewood Investors or any of its Permitted Transferees.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Stockholder Shares" means (i) any Common Stock now held or
hereafter acquired by the Stockholders, including upon conversion of any shares
of Series B Preferred, (ii) Common Stock issued or issuable upon exercise of the
Common Options, and (iii) any equity securities issued or issuable directly or
indirectly with respect to the securities referred to in clauses (i) and (ii)
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 Stockholder Shares,
such shares will cease to be Stockholder 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 Stockholder Shares whenever such Person has the right to acquire directly or
indirectly such Stockholder 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.
"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.
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"Transaction Documents" means, collectively, (i) this
Agreement, (ii) the Registration Rights Agreement, dated as of the date hereof,
by and among the parties hereto, (iii) the Restructuring Agreement, (iv) the Tax
Sharing Agreement, dated the date hereof, by and between the Company, TSI and
each of TSI's subsidiaries party thereto, and (v) the Professional Services
Agreement, dated as of December 10, 1996, by and among TSI and an Affiliate of
BRS, in each case, as the same may be amended, restated or modified from time to
time.
"TSI Common Stock" means, collectively, the TSI Class A
Common, the Class B Common Stock, par value $.001 per share, of TSI, and any
other class of common stock of TSI, or if such outstanding TSI Common Stock is
hereafter changed into or exchanged for different securities of TSI, such other
securities.
"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.
2. BOARD OF DIRECTORS.
(a) Until the provisions of this Section 2 cease to be
effective, to the extent permitted by law, each Stockholder shall vote all
voting securities of the Company over which such Stockholder has voting control,
and shall take all other necessary or desirable actions within such
Stockholder's control (whether in such Stockholder's capacity as a Stockholder,
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
Stockholder 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
Stockholder 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
Stockholders 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
Stockholder Shares held by them as of the date
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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 TSI
shall be the same as the composition of the Board and the composition
of the board of directors of each of the Company's other direct or
indirect 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 Stockholder or Stockholders 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 Stockholders 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
Stockholders 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
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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 Stockholders 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 owns at least 10% of the Stockholder Shares held by it)
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 Stockholder
represents and warrants that (a) effective as of the date hereof such
Stockholder is the record owner of the number of Stockholder 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
Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, and (c) such Stockholder
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 Stockholder 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 Stockholder Shares or Preferred Shares by BRS, BRS shall deliver
a written notice (the "Sale Notice") to the Company and the Other Stockholders,
specifying in reasonable detail the identity of the prospective transferee(s)
and the terms and conditions of the Transfer. The Other Stockholders may elect
to participate in the
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contemplated Transfer by delivering written notice to BRS within 15 days after
delivery of the Sale Notice. If any Other Stockholders have elected to
participate in such Transfer, BRS and such Other Stockholders shall be entitled
to sell in the contemplated Transfer, at the same price (provided that the price
of any share of Series B Preferred Transferred by any such Stockholder pursuant
to this Section 4(a) shall equal 35% of the price of any share of Series A
Preferred specified in the Sale Notice) and on the same terms:
(x) with respect to Stockholder Shares, a number of
Stockholder Shares equal to the product of (i) the quotient determined by
dividing the number of Stockholder Shares owned by such Person by the aggregate
number of Stockholder Shares owned by all Stockholders participating in such
Transfer and (ii) the aggregate number of Stockholder Shares to be sold in the
contemplated Transfer; and
(y) (A) with respect to shares of Series A
Preferred to be so transferred by all such Stockholders, 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 (the "Preferred Base Amount"),
in each case owned by all Stockholders 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 Stockholders if such Stockholders 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;
provided, that (1) if the Sale Notice includes a Transfer of both Stockholder
Shares and Preferred Shares and any Other Stockholder elects to participate in
such Transfer, such Other Stockholder must sell the number of Preferred Shares
calculated in accordance with clause (y) (or if such Stockholder holds a lesser
number of Preferred Shares, all Preferred Shares held by such Stockholder) and
(2) it being understood that if holders of Series B Preferred 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 Stockholder Shares by any Stockholder
(other than holders of BRS Shares, Farallon Shares, or Rosewood
Shares), the Stockholder making such Transfer (the "Transferring
Stockholder") 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)
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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 Stockholder 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 Stockholder 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 Stockholder 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 Stockholder 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 Stockholder Shares by any Rosewood
Investor or any Farallon Investor, such Rosewood Investor 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 such Rosewood
Investor 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, such Rosewood Investor 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 such Rosewood Investor or such Farallon
Investor, as the case may be, rejects the offer contained in the BRS
Repurchase Notice, such Rosewood Investor 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/Rosewood 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 the applicable Rosewood Investor or the applicable
Farallon
10
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 Stockholder 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 Stockholder
Shares (or Preferred Shares, to the extent this Section 4 applies to Preferred
Shares) by any Stockholder (i) in the case of an individual Stockholder,
pursuant to applicable laws of descent and distribution or among such
Stockholder'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 any Canterbury Investor, any Rosewood
Investor, any Farallon Investor or CapitalSource and their respective Permitted
Transferees, (A) among their respective Affiliates, members and partners
(provided that in the case of a distribution to any Farallon Investor's, any
Rosewood Investor's, any Canterbury Investor's or any CapitalSource'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
or limited liability operating agreements) 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 any Canterbury Investor or
CapitalSource, 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 such Canterbury Investor or CapitalSource is required to do
so pursuant to its applicable agreement of limited partnership or limited
liability operating agreement or in connection with any dissolution of such
Person pursuant to its agreement of limited partnership or limited liability
operating agreement, or (v) in the case of any Farallon Investor, to another
Farallon Investor; provided, that in each case set forth above, the rights and
restrictions contained in this Section 4 shall continue to be applicable to such
Stockholder Shares or Preferred Shares, as the case may be, after any such
Transfer as if such Stockholder Shares or Preferred Shares, as the case may be,
were held by the transferor; and provided further, that the transferees of such
Stockholder 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
Stockholder 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 Stockholder Share or
Preferred Share until the earlier of (i) the Transfer of such Stockholder 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 Stockholder
11
Share or Preferred Share (other than to another Stockholder 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
Stockholder Shares held by it as of the date hereof
5. SALE OF THE COMPANY.
(a) In the event of an Approved Sale, each Stockholder
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 Stockholder will agree to sell its
Stockholder Shares and Preferred Shares on the terms and conditions of the
Approved Sale. Each Stockholder 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 Stockholder shall be limited to the total consideration
received by such Stockholder 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 Stockholders (other than the Canterbury
Investors, the Farallon Investors, the Rosewood Investors and CapitalSource, 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 Stockholder appoints a purchaser
representative designated by the Company, the Company will pay the fees of such
purchaser representative, but if any Other Stockholder 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 Stockholders will bear their pro rata share
(based upon the number of shares sold) of the reasonable costs of any sale of
Stockholder Shares and Preferred Shares pursuant to an Approved Sale to the
extent such costs are incurred for the benefit of all selling Stockholders and
are not otherwise paid by the Company or the acquiring party. Costs incurred by
any Stockholder 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 Common Options or upon conversion of the Series B
Preferred, 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) (the "Offeree"), the Company
will offer to sell
12
to each Stockholder, a number of such securities ("Offered Shares") so that the
Ownership Ratio immediately after the issuance of such securities for each
Stockholder would be equal to the Ownership Ratio for such Stockholder
immediately prior to such issuance of securities. The Company shall give each
Stockholder 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 Stockholder 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 Stockholder shall, if it exercises its rights
pursuant to this Section 6, purchase such securities in the same ratio as
issued. If any of the Stockholders 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 Stockholder elects not to exercise its rights pursuant to this Section 6, no
other Stockholder shall have the right to purchase the securities offered to
such Stockholder. 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 Existing TSI Shareholders Agreement
hereby waive any and all rights to which such parties were entitled under
Section 6 of the Existing TSI Shareholders Agreement with respect to the
issuance of TSI Class A Common to the Company on the date hereof as part of the
Restructuring.
7. LEGEND. In addition to any legend required by any
other Transaction Document, each certificate evidencing Stockholder Shares or
Preferred Shares and each certificate issued in exchange for or upon the
transfer of any Stockholder Shares or Preferred Shares (if such shares remain
Stockholder 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
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS
AGREEMENT DATED AS OF FEBRUARY 4, 2004 BY AND AMONG THE ISSUER
OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS 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 Stockholder
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 Stockholder Shares or Preferred Shares, as the case may be.
13
8. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Stockholder 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 Stockholder
Shares as the owner of such shares for any purpose.
9. TRANSFER OF STOCKHOLDER SHARES.
(a) Stockholder 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 Stockholder
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 Stockholder Shares may be effected without registration of such Stockholder
Shares under the Securities Act. In addition, if the holder of the Stockholder
Shares delivers to the Company an opinion of counsel that no subsequent Transfer
of such Stockholder Shares shall require registration under the Securities Act,
the Company shall promptly upon such contemplated Transfer deliver new
certificates for such Stockholder 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 Stockholder 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 Stockholder 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 Stockholder Shares,
the Company shall remove the legend set forth in Section 7 above from the
certificates for such holder's Stockholder Shares (or the eligible portion
thereof); provided, that such Stockholder 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 Stockholders unless such
modification, amendment or waiver is approved in writing by the Company or the
holders of not less than 70% of the Stockholder Shares, respectively; provided,
that no such amendment or action which materially adversely affects any one or
more Stockholder(s) (whether as holders of Stockholder Shares or Preferred
Shares) shall be effective against such Stockholder(s) without the prior written
consent of each such Stockholder. For avoidance of doubt, an amendment to add
another party to this Agreement is not an action which, in and of itself,
affects any Stockholder materially adversely. The failure of
14
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 Stockholder Shares excluding for purposes of this clause (iv) Stockholder
Shares held by such Affiliate or 5% Owner).
12. OWNERSHIP OF TSI. The Company will at all times own
100% of the issued and outstanding common voting capital stock of TSI.
13. STOCKHOLDER VOTING AT TSI. On any occasion that the
Company, as stockholder of TSI, would be required to vote the TSI Common Stock
owned by the Company to approve or not to approve any action to be taken by TSI
as recommended by the board of directors of TSI (other than in connection with
any amendment of the certificate of incorporation or bylaws of TSI (provided,
that no such amendment shall change the applicable percentage stockholder vote
under the Business Corporation Law of the State of New York (the "NYBCL")) or,
subject to subsection 2(a)(iii) above, with respect to the election of the
directors of TSI), the Board shall cause such vote to be presented to the
Stockholders for their determination and the Company shall vote the TSI Common
Stock in accordance with the outcome of such vote of the Stockholders, with the
determination of whether such vote passes or fails to pass made in accordance
with the provisions of the NYBCL; provided, that if any such vote is to consider
an Approved TSI Sale, the Board shall determine how the Company shall vote the
TSI Common Stock and shall not be required to present such vote to the
Stockholders.
14. 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, including,
15
without limitation, the Existing TSI Shareholders Agreement which is hereby
terminated in its entirety by the parties hereto and shall have no further force
and effect as of the date hereof.
(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 Stockholders and any
subsequent holders of Stockholder Shares and the respective successors and
assigns of each of them, so long as they hold Stockholder Shares; it being
understood that any transferee of Stockholder Shares or Preferred Shares
pursuant to Section 4(a) or 4(b) (other than Stockholders) 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 and any Stockholder may in
his/her/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 Holdings, 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: Rice Xxxxxxx
Facsimile No.: (000) 000-0000
16
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx Xxxx, Esq.
Facsimile No.: (000) 000-0000
To BRS or any BRS Investor:
Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Rice Xxxxxxx
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice to
BRS or any BRS Investor):
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx Xxxx, Esq.
Facsimile No.: (000) 000-0000
To any Farallon Investor:
Farallon Capital Management, L.L.C.
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice to
any Farallon Investor):
Xxxxxxxx Xxxxxx Xxxxx & Xxxx LLP
World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Jahangier Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
17
To any Rosewood Investor:
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
any Rosewood Investor):
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):
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, 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):
Loeb & Loeb LLP
18
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
To CapitalSource:
CapitalSource Holdings LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Corporate Finance Group, Managing Director
Corporate Finance Group, General Counsel
Facsimile No.: (000) 000-0000 and (000) 000-0000
To any of the Executives, Alessi or Xxxxxx:
c/o Town Sports International, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
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.
* * * * *
19
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: Chief Financial Officer
TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxxxx Xxxx
----------------------------
Name: Xxxxxxx Xxxx
Title: Chief Financial Officer
BRUCKMANN, XXXXXX, XXXXXXXX & CO., L.P.
By: BRS Partners, Limited Partnership
Its: General Partner
By: BRSE Associates, Inc.
Its: General Partner
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxx
Title: Secretary
FARALLON CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
RR CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
FARALLON CAPITAL INSTITUTIONAL PARTNERS II,
L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
CANTERBURY DETROIT PARTNERS, L.P.
By: Canterbury Detroit, LLC
Its: General Partner
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: Manager
CANTERBURY MEZZANINE CAPITAL, L.P.
By: Canterbury Capital, LLC
Its: General Partner
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxx
Title: Manager
ROSEWOOD CAPITAL, L.P.
By: /s/ Xxxxx Xxxxxx
-----------------------------
Name: Xxxxx Xxxxxx
Title: Principal
ROSEWOOD CAPITAL IV, L.P.
By: /s/ Xxxxx Xxxxxx
-----------------------------
Name: Xxxxx Xxxxxx
Title: Principal
ROSEWOOD CAPITAL IV ASSOCIATES, L.P.
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: Principal
CAPITALSOURCE HOLDINGS LLC
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: General Counsel
/s/ Xxxxx Xxxxxx
----------------------------------
XXXXX XXXXXX
/s/ Xxxx Xxxxxx
---------------------------------
XXXX XXXXXX
[BRS INVESTOR SIGNATURE PAGE]
/s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
Xxxxxxx Xxxxxxxx, as Attorney-in-Fact for
each of the following Investors:
Xxxxx Xxxxxxxxx
Xxxxxxxxx XxXxxxx
Xxxxxxx Place
X. Xxxxxxxxx
BCB Partnership
NAZ Partnership
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
Xxxx X. Xxxxxxxx
Xxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxx,
Custodian for the Benefit of Xxxx X. Xxxxxxxx
XXX
[EXECUTIVE SIGNATURE PAGE]
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx
/s/ Xxxxxx Xxxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxx
--------------------------------------------
Xxxxxxx Xxxx
/s/ X. Xxxxxxxxxxxxx
--------------------------------------------
X. Xxxxxxxxxxxxx
/s/ Xxxxxx Xxxxx
--------------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxx Xxxxxxxx
--------------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxx
--------------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxxxx
------------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxx Xxxxxxxx
--------------------------------------------
Xxx Xxxxxxxx
/s/ Xxxx Xxxxxxxx
--------------------------------------------
Xxxx Xxxxxxxx
[EXECUTIVE SIGNATURE PAGE]
/s/ Xxxxx Xxxxxxxxx
--------------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxxx
--------------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxxx Bachiccio
--------------------------------------------
Xxxxxxx Bachiccio
SCHEDULE A
STOCKHOLDER SECURITIES
STOCKHOLDER STOCKHOLDER
STOCKHOLDER TSI SECURITIES COMPANY SECURITIES
--------------------------------------------- --------------------------- -------------------------
Bruckmann, Xxxxxx, Xxxxxxxx & Co., L.P. 104,330.35 TSI Series A 104,330.35 Company
Preferred Series A Preferred
504,456.01 TSI Class A 504,456.01 Company
Common Class A Common
Xxxxx Xxxxxxxxx 2,112.63 TSI Series A 2,112.63 Company Series A
Preferred Preferred
10,214.93 TSI Class A 10,214.93 Company Class A
Common Common
Xxxxxxxxx XxXxxxx 33.08 TSI Series A 33.08 Company Series A
Preferred Preferred
159.97 TSI Class A 159.97 Company Class A
Common Common
Xxxxxxx Place 33.08 TSI Series A 33.08 Company Series A
Preferred Preferred
159.97 TSI Class A 159.97 Company Class A
Common Common
X. Xxxxxxxxx 282.92 TSI Series A 282.92 Company Series A
Preferred Preferred
1,367.96 TSI Class A 1,367.96 Company Class A
Common Common
BCB Partnership 121.71 TSI Series A 121.71 Company Series A
Preferred Preferred
588.48 TSI Class A 588.48 Company Class A
Common Common
NAZ Partnership 58.73 TSI Series A 58.73 Company Series A
Preferred Preferred
283.97 TSI Class A 283.97 Company Class A
Common Common
Xxxxxx X. Xxxxxx 424.44 TSI Series A 424.44 Company Series A
Preferred Preferred
2,052.23 TSI Class A 2,052.23 Company Class A
Common Common
Xxxxxx Xxxxxxxx 1,414.59 TSI Series A 1,414.59 Company Series A
Preferred Preferred
6,839.79 TSI Class A 6,839.79 Company Class A
Common Common
Xxxxxxx Xxxxxxxx 2,178.79 TSI Series A 2,178.79 Company Series A
Preferred Preferred
10,534.87 TSI Class A 10,534.97 Company Class A
Common Common
Xxxxx Xxxxx 84.91 TSI Series A 84.91 Company Series A
Preferred Preferred
Schedule A, Page 1
STOCKHOLDER STOCKHOLDER
STOCKHOLDER TSI SECURITIES COMPANY SECURITIES
--------------------------------------------- --------------------------- -------------------------
410.56 TSI Class A 410.56 Company Class A
Common Common
Xxxx X. Xxxxxxxx 238.47 TSI Series A 238.47 Company Series A
Preferred Preferred
1,153.04 TSI Class A 1,153.04 Company Class A
Common Common
Xxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxx Custodian 95.39 TSI Series A 95.39 Company Series A
for the Benefit of Xxxx X. Xxxxxxxx XXX Preferred Preferred
461.22 TSI Class A 461.22 Company Class A
Common Common
Farallon Capital Partners, L.P. 14,365.91 TSI Series A 14,365.91 Company Series
Preferred A Preferred
94,532.02 TSI Class A 94,532.02 Company Class A
Common Common
Farallon Capital Institutional Partners, L.P. 16,418.18 TSI Series A 16,418.18 Company Series
Preferred A Preferred
108,036.59 TSI Class A 108,036.59 Company
Common Class A Common
RR Capital Partners, L.P. 2,052.27 TSI Series A 2,052.27 Company Series A
Preferred Preferred
13,504.57 TSI Class A 13,504.57 Company Class A
Common Common
Farallon Capital Institutional Partners II, 8,209.09 TSI Series A 8,209.09 Company Series A
L.P. Preferred Preferred
54,018.30 TSI Class A 54,018.30 Company Class A
Common Common
Xxxxx Xxxxxx 591.00 TSI Series A 591.00 Company Series A
Preferred Preferred
2,857.00 TSI Class A 2,857.00 Company Class A
Common Common
Xxxx Xxxxxx 591.00 TSI Series A 591.00 Company Series A
Preferred Preferred
2,857.00 TSI Class A 2,857.00 Company Class A
Common Common
Canterbury Mezzanine Capital, L.P. 121,529.24 TSI Class A 121,529.24 Company
Common Class A Common
Canterbury Detroit Partners, L.P. 17,907.62 TSI Class A 17,907.62 Company Class A
Common Common
Rosewood Capital, L.P. 17,907.62 TSI Class A 17,907.62 Company Class A
Common Common
Rosewood Capital IV, L.P. 101,890.82 TSI Series B 101,890.82 Company Series
Preferred B Preferred
Rosewood Capital IV Associates, L.P. 7,649.86 TSI Series B 7,649.86 Company Series B
Preferred Preferred
CapitalSource Holdings, LLC 23,000.00 TSI Class A 23,000.00 Company Class A
Common Common
Schedule A, Page 2
STOCKHOLDER STOCKHOLDER
STOCKHOLDER TSI SECURITIES COMPANY SECURITIES
--------------------------------------------- --------------------------- -------------------------
Xxxx Xxxxx 66,125.00 TSI Class A 66,125.00 Company Class A
Common Common
Xxxxxx Xxxxxxxx 50,651.00 TSI Class A 50,651.00 Company Class A
Common Common
Xxxxxxx Xxxx 42,582.00 TSI Class A 42,582.00 Company Class A
Common Common
Xxxxxxxxx Xxxxxxxxxxxxx 42,011.00 TSI Class A 42,011.00 Company Class A
Common Common
Xxxxxx Xxxxx 15,908.00 TSI Class A 15,908.00 Company Class A
Common Common
Xxxxx Xxxxxxxx 13,428.00 TSI Class A 13,428.00 Company Class A
Common Common
Xxxxxx Xxxxxxx 8,091.00 TSI Class A 8,091.00 Company Class A
Common Common
Xxxxxx Xxxxx 2,857.00 TSI Class A 2,857.00 Company Class A
Common Common
Xxxxxx Xxxxxxx 2,274.00 TSI Class A 2,274.00 Company Class A
Common Common
Xxx Xxxxxxxx 1,749.00 TSI Class A 1,749.00 Company Class A
Common Common
Xxxx Xxxxxxxx 3,603.00 TSI Class A 3,603.00 Company Class A
Common Common
Xxxxx Xxxxxxxxx 2,332.00 TSI Class A 2,332.00 Company Class A
Common Common
Xxxxx Xxxxxxx 1,166.00 TSI Class A 1,166.00 Company Class A
Common Common
Xxxxxxx Bochiccio 63.33 TSI Class A 63.33 Company Class A
Common Common
Schedule A, Page 3
EXHIBIT A
FORM OF JOINDER TO
STOCKHOLDERS AGREEMENT
THIS JOINDER to the Stockholders Agreement, dated as of
[________], 2004, by and among TOWN SPORTS INTERNATIONAL HOLDINGS, INC., a
Delaware corporation (the "Company"), and certain stockholders 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
Stockholder [AND ______] for all purposes thereof. In addition, Holder hereby
agrees that all Common Stock held by Holder shall be deemed Stockholder 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 HOLDINGS, INC.
By: ______________________________
Name:
Title:
TOWN SPORTS INTERNATIONAL, INC.
By: ______________________________
Name:
Title:
[HOLDER]
By: ______________________________
