EXHIBIT 1.1
TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
$213,000,000
11% SENIOR DISCOUNT NOTES DUE 2014
PURCHASE AGREEMENT
January 28, 2004
DEUTSCHE BANK SECURITIES INC.
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Ladies and Gentlemen:
Town Sports International Holdings, Inc., a Delaware
corporation (the "Company"), hereby confirms its agreement with you (the
"Initial Purchaser"), as set forth below.
1. THE SECURITIES. Subject to the terms and conditions
herein contained, the Company proposes to issue and sell to the Initial
Purchaser $213,000,000 aggregate principal amount at maturity of its 11% Senior
Discount Notes due 2014 (the "Notes"). The Notes are to be issued under an
indenture (the "Indenture") to be dated as of February 4, 2004 by and between
the Company and The Bank of New York, as Trustee (the "Trustee").
The Notes will be offered and sold to the Initial Purchaser
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has
prepared a preliminary offering memorandum dated January 23, 2004 (the
"Preliminary Memorandum") and a final offering memorandum dated January 28, 2004
(the "Final Memorandum"; the Preliminary Memorandum and the Final Memorandum
each herein being referred to as a "Memorandum") setting forth or including a
description of the terms of the Notes, the terms of the offering of the Notes, a
description of the Company and any material developments relating to the Company
occurring after the date of the most recent historical financial statements
included therein.
The Initial Purchaser and its direct and indirect transferees
of the Notes will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company has agreed,
among other things, to file a registration statement with the Securities and
Exchange Commission (the "Commission") registering the Notes or the Exchange
Notes (as defined in the Registration Rights Agreement) under the Act.
2. REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to and agrees with the Initial Purchaser that:
(a) Neither the Preliminary Memorandum as of the date
thereof nor the Final Memorandum nor any amendment or supplement
thereto as of the date thereof and at all times subsequent thereto up
to the Closing Date (as defined in Section 3 below) contained or
contains any untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this
Section 2(a) do not apply to statements or omissions made in reliance
upon and in conformity with information relating to the Initial
Purchaser furnished to the Company in writing by the Initial Purchaser
for use in the Preliminary Memorandum, the Final Memorandum or any
amendment or supplement thereto.
(b) As of the Closing Date, the Company will have the
authorized, issued and outstanding capitalization set forth in the
Final Memorandum; all of the subsidiaries of the Company are listed in
Schedule 1 attached hereto (each, a "Subsidiary" and collectively, the
"Subsidiaries"); all of the outstanding shares of capital stock of the
Company and the Subsidiaries have been, and as of the Closing Date will
be, duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights; all of the outstanding shares of capital stock of the
Company and of each of the Subsidiaries will be free and clear of all
liens, encumbrances, equities and claims or restrictions on
transferability (other than those imposed by the Act, the securities or
"Blue Sky" laws of certain jurisdictions and the senior secured
revolving credit facility, dated as of April 16, 2003 and as amended
from time to time) or voting; except as set forth in the Final
Memorandum, there are no (i) options, warrants or other rights to
purchase, (ii) agreements or other obligations to issue or (iii) other
rights to convert any obligation into, or exchange any securities for,
shares of capital stock of or ownership interests in the Company or any
of the Subsidiaries outstanding. Except for the Subsidiaries or as
disclosed in the Final Memorandum, the Company does not own, directly
or indirectly, any shares of capital stock or any other equity or
long-term debt securities or have any equity interest in any firm,
partnership, joint venture or other entity.
(c) Each of the Company and the Subsidiaries is duly
incorporated or otherwise organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization
and has all requisite corporate or limited liability company power and
authority to own its properties and conduct its business as now
conducted and as described in the Final Memorandum; each of the Company
and the Subsidiaries is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a material
adverse effect on the general affairs, management, business, condition
(financial or otherwise), prospects or results of
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operations of the Company and the Subsidiaries, taken as a whole (any
such event, a "Material Adverse Effect").
(d) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Notes, the Exchange Notes (as defined in the Registration Rights
Agreement) and the Private Exchange Notes (as defined in the
Registration Rights Agreement). The Notes, when issued, will be in the
form contemplated by the Indenture. The Notes, the Exchange Notes and
the Private Exchange Notes, have each been duly and validly authorized
by the Company and, when duly executed by the Company and authenticated
by the Trustee in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchaser in accordance with
the terms of this Agreement (or issued in accordance with the
Registration Rights Agreement, in the case of the Exchange Notes and
the Private Exchange Notes), will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the Indenture,
and enforceable against the Company in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought.
(e) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture. The Indenture meets the requirements for qualification under
the Trust Indenture Act of 1939, as amended (the "TIA"). The Indenture
has been duly and validly authorized by the Company and, when executed
and delivered by the Company (assuming the due authorization, execution
and delivery by the Trustee), will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought.
(f) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Registration Rights Agreement. The Registration Rights Agreement has
been duly and validly authorized by the Company and, when executed and
delivered by the Company (assuming the due authorization, execution and
delivery by the Initial Purchaser), will constitute a valid and legally
binding agreement of the Company enforceable against the Company in
accordance with its terms, except that (A) the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought and (B) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and
public policy considerations.
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(g) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. This
Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the
Company. This Agreement has been duly executed and delivered by the
Company.
(h) No consent, approval, authorization or order of any
court or governmental agency or body, or third party is required for
the issuance and sale by the Company of the Notes to the Initial
Purchaser or the consummation by the Company of the other transactions
contemplated hereby, except such as have been obtained and such as may
be required under state securities or "Blue Sky" laws in connection
with the purchase and resale of the Notes by the Initial Purchaser and
except with respect to the registration of the Exchange Notes and the
Private Exchange Notes (if applicable) and the qualification of the
Indenture under the TIA. Neither the Company nor any of the
Subsidiaries is (i) in violation of its certificate of incorporation or
bylaws (or similar organizational document), (ii) in breach or
violation of any statute, judgment, decree, order, rule or regulation
applicable to any of them or any of their respective properties or
assets, except for any such breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect, or
(iii) in breach of or default under (nor has any event occurred that,
with notice or passage of time or both, would constitute a default
under) or in violation of any of the terms or provisions of any
indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, permit, certificate, contract or other
agreement or instrument to which any of them is a party or to which any
of them or their respective properties or assets is subject
(collectively, "Contracts"), except for any such breach, default,
violation or event that would not, individually or in the aggregate,
have a Material Adverse Effect.
(i) The execution, delivery and performance by the
Company of this Agreement, the Indenture and the Registration Rights
Agreement and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and sale of the Notes to the Initial Purchaser) will not
conflict with or constitute or result in a breach of or a default under
(or an event which with notice or passage of time or both would
constitute a default under) or violation of any of (i) the terms or
provisions of any Contract, except for any such conflict, breach,
violation, default or event which would not, individually or in the
aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws (or similar organizational document) of the
Company or any of the Subsidiaries or (iii) (assuming compliance with
all applicable state securities or "Blue Sky" laws and assuming the
accuracy of the representations and warranties of the Initial Purchaser
in Section 8 hereof) any statute, judgment, decree, order, rule or
regulation applicable to the Company or any of the Subsidiaries or any
of their respective properties or assets, except for any such conflict,
breach or violation which would not, individually or in the aggregate,
have a Material Adverse Effect.
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(j) The audited consolidated financial statements of the
Company included in the Final Memorandum present fairly in all material
respects the financial position, results of operations and cash flows
of the Company and the Subsidiaries at the dates and for the periods to
which they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except as
otherwise stated therein. The summary and selected financial and
statistical data in the Final Memorandum present fairly in all material
respects the information shown therein and have been prepared and
compiled on a basis consistent with the audited financial statements
included therein, except as otherwise stated therein.
PricewaterhouseCoopers, LLP (the "Independent Accountants") is an
independent public accounting firm within the meaning of the Act and
the rules and regulations promulgated thereunder.
(k) The pro forma financial information included in the
Final Memorandum (i) comply as to form in all material respects with
the applicable requirements of Regulation S-X promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii)
have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and (iii)
have been properly computed on the bases described therein; the
assumptions used in the preparation of the pro forma financial data
included in the Final Memorandum are reasonable and the adjustments
used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(l) Except as described in the Final Memorandum, there is
not pending or, to the knowledge of the Company, threatened any action,
suit, proceeding, inquiry or investigation to which the Company or any
of the Subsidiaries is a party, or to which the property or assets of
the Company or any of the Subsidiaries are subject, before or brought
by any court, arbitrator or governmental agency or body that, if
determined adversely to the Company or any of the Subsidiaries, would,
individually or in the aggregate, have a Material Adverse Effect or
which seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Notes to be sold
hereunder or the consummation of the other transactions described in
the Final Memorandum.
(m) Each of the Company and the Subsidiaries possesses
all licenses, permits, certificates, consents, orders, approvals and
other authorizations from, and has made all declarations and filings
with, all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals,
presently required or necessary to own or lease, as the case may be,
and to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as set forth in the Final
Memorandum ("Permits"), except where the failure to obtain such Permits
would not, individually or in the aggregate, have a Material Adverse
Effect; each of the Company and the Subsidiaries has fulfilled and
performed all of its obligations with respect to such Permits and no
event has occurred that allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit;
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and none of the Company or the Subsidiaries has received any notice of
any proceeding relating to revocation or modification of any such
Permit, except as described in the Final Memorandum and except where
such revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect.
(n) Since the date of the most recent financial
statements appearing in the Final Memorandum, and except as described
therein, (i) none of the Company or the Subsidiaries has incurred any
liabilities or obligations, direct or contingent, or entered into or
agreed to enter into any transactions or contracts (written or oral)
not in the ordinary course of business, which liabilities, obligations,
transactions or contracts would, individually or in the aggregate, be
material to the general affairs, management, business, condition
(financial or otherwise), prospects or results of operations of the
Company and its Subsidiaries, taken as a whole, (ii) none of the
Company or the Subsidiaries has purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock (other than with respect
to any of such Subsidiaries, the purchase of, or dividend or
distribution on, capital stock owned by the Company) and (iii) there
shall not have been any change in the capital stock or long-term
indebtedness of the Company or the Subsidiaries.
(o) Each of the Company and the Subsidiaries has filed
all necessary federal, state and foreign income and franchise tax
returns, except where the failure to so file such returns would not,
individually or in the aggregate, have a Material Adverse Effect, and
has paid all taxes shown as due thereon; and other than tax
deficiencies which the Company or any Subsidiary is contesting in good
faith and for which the Company or such Subsidiary has provided
adequate reserves, there is no tax deficiency that has been asserted
against the Company or any of the Subsidiaries that would have,
individually or in the aggregate, a Material Adverse Effect.
(p) The statistical and market-related data included in
the Final Memorandum are based on or derived from sources which the
Company and the Subsidiaries believe to be reliable and accurate.
(q) None of the Company, the Subsidiaries or any agent
acting on their behalf has taken or will take any action that might
cause this Agreement or the sale of the Notes to violate Regulation T,
U or X of the Board of Governors of the Federal Reserve System, in each
case as in effect, or as the same may hereafter be in effect, on the
Closing Date.
(r) Each of the Company and the Subsidiaries has good and
marketable title to all real property and good title to all personal
property described in the Final Memorandum as being owned by it and
good and marketable title to a leasehold estate in the real and
personal property described in the Final Memorandum as being leased by
it free and clear of all liens, charges, encumbrances or restrictions,
except as described in the Final Memorandum or to the extent the
failure to have such title or the existence of such liens, charges,
encumbrances or restrictions would not, individually
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or in the aggregate, have a Material Adverse Effect. All leases,
contracts and agreements to which the Company or any of the
Subsidiaries is a party or by which any of them is bound are valid and
enforceable against the Company or such Subsidiary, and are valid and
enforceable against the other party or parties thereto and are in full
force and effect with only such exceptions as would not, individually
or in the aggregate, have a Material Adverse Effect. The Company and
the Subsidiaries own or possess adequate licenses or other rights to
use all patents, trademarks, service marks, trade names, copyrights and
know-how necessary to conduct the businesses now or proposed to be
operated by them as described in the Final Memorandum, and none of the
Company or the Subsidiaries has received any notice of infringement of
or conflict with (or knows of any such infringement of or conflict
with) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how that, if
such assertion of infringement or conflict were sustained, would have a
Material Adverse Effect.
(s) There are no legal or governmental proceedings
involving or affecting the Company or any Subsidiary or any of their
respective properties or assets that would be required to be described
in a prospectus pursuant to the Act that are not described in the Final
Memorandum, nor are there any material contracts or other documents
that would be required to be described in a prospectus pursuant to the
Act that are not described in the Final Memorandum.
(t) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, (A) each of the Company and
the Subsidiaries is in compliance with and not subject to liability
under applicable Environmental Laws (as defined below), (B) each of the
Company and the Subsidiaries has made all filings and provided all
notices required under any applicable Environmental Law, and has and is
in compliance with all Permits required under any applicable
Environmental Laws and each of them is in full force and effect, (C)
there is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter or request for information pending or, to the
knowledge of the Company or any of the Subsidiaries, threatened against
the Company or any of the Subsidiaries under any Environmental Law, (D)
no lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property
owned, operated, leased or controlled by the Company or any of the
Subsidiaries, (E) none of the Company or the Subsidiaries has received
notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") or any comparable state
law, (F) no property or facility of the Company or any of the
Subsidiaries is (i) listed or proposed for listing on the National
Priorities List under CERCLA or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA, or on any comparable list maintained by
any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or
regulations, codes, orders,
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decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection of public or
employee health and safety or the environment, including, without
limitation, laws relating to (i) emissions, discharges, releases or
threatened releases of hazardous materials into the environment
(including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), (ii) the manufacture,
processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of hazardous materials, and (iii)
underground and above ground storage tanks and related piping, and
emissions, discharges, releases or threatened releases therefrom.
(u) There is no strike, labor dispute, slowdown or work
stoppage with the employees of the Company or any of the Subsidiaries
that is pending or, to the knowledge of the Company or any of the
Subsidiaries, threatened.
(v) Each of the Company and the Subsidiaries carries
insurance in such amounts and covering such risks as is adequate for
the conduct of its business and the value of its properties.
(w) None of the Company or the Subsidiaries has any
liability for any prohibited transaction or funding deficiency or any
complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which
the Company or any of the Subsidiaries makes or ever has made a
contribution and in which any employee of the Company or of any
Subsidiary is or has ever been a participant. With respect to such
plans, the Company and each Subsidiary is in compliance in all material
respects with all applicable provisions of ERISA.
(x) Each of the Company and the Subsidiaries (i) makes
and keeps accurate books and records and (ii) maintains internal
accounting controls which provide reasonable assurance that (A)
transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(y) None of the Company or the Subsidiaries will be an
"investment company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended, and the rules and regulations
thereunder.
(z) The Notes, the Indenture and the Registration Rights
Agreement will conform in all material respects to the descriptions
thereof in the Final Memorandum.
(aa) No holder of securities of the Company or any
Subsidiary will be entitled to have such securities registered under
the registration statements required to be
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filed by the Company pursuant to the Registration Rights Agreement
other than as expressly permitted thereby.
(bb) None of the Company or the Subsidiaries (each on a
consolidated basis) is, nor will any of the Company or the Subsidiaries
(each on a consolidated basis) be, after giving effect to the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, (a) left with
unreasonably small capital with which to carry on its business as it is
proposed to be conducted, (b) unable to pay its debts (contingent or
otherwise) as they mature or (c) otherwise insolvent.
(cc) None of the Company, the Subsidiaries or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under
the Act) has directly, or through any agent, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of,
any "security" (as defined in the Act) which is or could be integrated
with the sale of the Notes in a manner that would require the
registration under the Act of the Notes or (ii) engaged in any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the
Notes or in any manner involving a public offering within the meaning
of Section 4(2) of the Act. Assuming the accuracy of the
representations and warranties of the Initial Purchaser in Section 8
hereof, it is not necessary in connection with the offer, sale and
delivery of the Notes to the Initial Purchaser in the manner
contemplated by this Agreement to register any of the Notes under the
Act or to qualify the Indenture under the TIA.
(dd) No securities of the Company or any Subsidiary are of
the same class (within the meaning of Rule 144A under the Act) as the
Notes and listed on a national securities exchange registered under
Section 6 of the Exchange Act, or quoted in a U.S. automated
inter-dealer quotation system.
(ee) None of the Company or the Subsidiaries has taken,
nor will any of them take, directly or indirectly, any action designed
to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Notes.
(ff) None of the Company, the Subsidiaries, any of their
respective Affiliates or any person acting on its or their behalf
(other than the Initial Purchaser) has engaged in any directed selling
efforts (as that term is defined in Regulation S under the Act
("Regulation S")) with respect to the Notes; the Company, the
Subsidiaries and their respective Affiliates and any person acting on
its or their behalf (other than the Initial Purchaser) have complied
with the offering restrictions requirement of Regulation S.
Any certificate signed by any officer of the Company or any
Subsidiary and delivered to the Initial Purchaser or to counsel for the Initial
Purchaser shall be deemed a joint and several representation and warranty by the
Company and each of the Subsidiaries to the Initial Purchaser as to the matters
covered thereby.
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3. PURCHASE, SALE AND DELIVERY OF THE NOTES. On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the Initial Purchaser, and the Initial Purchaser
agrees to purchase all of the Notes from the Company at 57.13% of their
principal amount at maturity. One or more certificates in definitive form for
the Notes that the Initial Purchaser has agreed to purchase hereunder, and in
such denomination or denominations and registered in such name or names as the
Initial Purchaser requests upon notice to the Company at least 36 hours prior to
the Closing Date, shall be delivered by or on behalf of the Company to the
Initial Purchaser, against payment by or on behalf of the Initial Purchaser of
the purchase price therefor by wire transfer (same day funds), net of the
overnight cost of such funds, to such account or accounts as the Company shall
specify prior to the Closing Date, or by such means as the parties hereto shall
agree prior to the Closing Date. Such delivery of and payment for the Notes
shall be made at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 A.M., New York time, on February 4, 2004, or at such
other place, time or date as the Initial Purchaser, on the one hand, and the
Company, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Company will
make such certificate or certificates for the Notes available for checking and
packaging by the Initial Purchaser at its offices in New York, New York, or at
such other place as the Initial Purchaser may designate, at least 24 hours prior
to the Closing Date.
4. OFFERING BY THE INITIAL PURCHASER. The Initial
Purchaser proposes to make an offering of the Notes at the price and upon the
terms set forth in the Final Memorandum, as soon as practicable after this
Agreement is entered into and as in the judgment of the Initial Purchaser is
advisable.
5. COVENANTS OF THE COMPANY. The Company covenants and
agrees with the Initial Purchaser that:
(a) The Company will not amend or supplement the Final
Memorandum or any amendment or supplement thereto of which the Initial
Purchaser shall not previously have been advised and furnished a copy
for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchaser shall not have given
its consent. The Company will promptly, upon the reasonable request of
the Initial Purchaser or counsel for the Initial Purchaser, make any
amendments or supplements to the Preliminary Memorandum or the Final
Memorandum that may be necessary or advisable in connection with the
resale of the Notes by the Initial Purchaser.
(b) The Company will cooperate with the Initial Purchaser
in arranging for the qualification of the Notes for offering and sale
under the securities or "Blue Sky" laws of which jurisdictions as the
Initial Purchaser may designate and will continue such qualifications
in effect for as long as may be necessary to complete the resale of the
Notes; provided, however, that in connection therewith, none of the
Company shall be required to qualify as a foreign corporation or to
execute a general consent to
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service of process in any jurisdiction or subject itself to taxation in
excess of a nominal dollar amount in any such jurisdiction where it is
not then so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchaser of the Notes or the Private
Exchange Notes (if applicable), any event occurs or information becomes
known as a result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material fact, or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, or if for any other reason it is necessary at any time to
amend or supplement the Final Memorandum to comply with applicable law,
the Company will promptly notify the Initial Purchaser thereof and will
prepare, at the expense of the Company, an amendment or supplement to
the Final Memorandum that corrects such statement or omission or
effects such compliance.
(d) The Company will, without charge, provide to the
Initial Purchaser and to counsel for the Initial Purchaser as many
copies of the Preliminary Memorandum and the Final Memorandum or any
amendment or supplement thereto as the Initial Purchaser may reasonably
request.
(e) The Company will apply the net proceeds from the sale
of the Notes as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For so long as any of the Notes remain outstanding,
the Company will furnish to the Initial Purchaser copies of all reports
and other communications (financial or otherwise) furnished by the
Company to the Trustee or to the holders of the Notes and, as soon as
available, copies of any reports or financial statements furnished to
or filed by the Company with the Commission or any national securities
exchange on which any class of securities of the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish
to the Initial Purchaser, as soon as they have been prepared, a copy of
any unaudited interim financial statements of the Company and the
Subsidiaries for any period subsequent to the period covered by the
most recent financial statements appearing in the Final Memorandum.
(h) None of the Company or any of the Subsidiaries or any
of their respective Affiliates will sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any "security" (as
defined in the Act) which could be integrated with the sale of the
Notes in a manner that would require the registration under the Act of
the Notes.
(i) The Company will not, and will not permit its
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Notes or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.
-11-
(j) For so long as any of the Notes remain outstanding,
the Company will make available at its expense, upon request, to any
holder of such Notes and any prospective purchasers thereof the
information specified in Rule 144A(d)(4) under the Act, unless the
Company is then subject to Section 13 or 15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit
the Notes to be designated PORTAL securities in accordance with the
rules and regulations adopted by the NASD relating to trading in the
Private Offerings, Resales and Trading through Automated Linkages
market (the "PORTAL Market") and (ii) permit the Notes to be eligible
for clearance and settlement through The Depository Trust Company.
(l) In connection with Notes offered and sold in an off
shore transaction (as defined in Regulation S) the Company will not
register any transfer of such Notes not made in accordance with the
provisions of Regulation S and will not, except in accordance with the
provisions of Regulation S, if applicable, issue any such Notes in the
form of definitive securities.
6. EXPENSES. The Company agrees to pay all costs and
expenses incident to the performance of its obligations under this Agreement,
whether or not the transactions contemplated herein are consummated or this
Agreement is terminated pursuant to Section 11 hereof, including all costs and
expenses incident to (i) the printing, word processing or other production of
documents with respect to the transactions contemplated hereby, including any
costs of printing the Preliminary Memorandum and the Final Memorandum and any
amendment or supplement thereto, and any "Blue Sky" memoranda, (ii) all
arrangements relating to the delivery to the Initial Purchaser of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company, (iv)
preparation (including printing), issuance and delivery to the Initial Purchaser
of the Notes, (v) the qualification of the Notes under state securities and
"Blue Sky" laws, including filing fees and fees and disbursements of counsel for
the Initial Purchaser relating thereto, (vi) expenses in connection with any
meetings with prospective investors in the Notes, (vii) fees and expenses of the
Trustee including fees and expenses of counsel, (viii) all expenses and listing
fees incurred in connection with the application for quotation of the Notes on
the PORTAL Market and (ix) any fees charged by investment rating agencies for
the rating of the Notes. If the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchaser
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder (other than solely by reason of a default by
the Initial Purchaser of its obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the Company agrees to
promptly reimburse the Initial Purchaser upon demand for all out-of-pocket
expenses (including fees, disbursements and charges of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, counsel for the Initial Purchaser) that shall have been incurred by the
Initial Purchaser in connection with the proposed purchase and sale of the
Notes.
-12-
7. CONDITIONS OF THE INITIAL PURCHASER'S OBLIGATIONS.
The obligation of the Initial Purchaser to purchase and pay for the Notes shall,
in its sole discretion, be subject to the satisfaction or waiver of the
following conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have
received the opinion, in form and substance satisfactory to counsel for
the Initial Purchaser, dated as of the Closing Date and addressed to
the Initial Purchaser, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the
Company, substantially in the form of Exhibit A hereto. In rendering
such opinion, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP shall have received and may rely
upon such certificates and other documents and information as it may
reasonably request to pass on such matters.
(b) On the Closing Date, the Initial Purchaser shall have
received the opinion, in form and substance satisfactory to the Initial
Purchaser, dated as of the Closing Date and addressed to the Initial
Purchaser, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Initial
Purchaser, with respect to certain legal matters relating to this
Agreement and such other related matters as the Initial Purchaser may
reasonably require. In rendering such opinion, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP shall have received and may rely upon such certificates and other
documents and information as it may reasonably request to pass upon
such matters.
(c) The Initial Purchaser shall have received from the
Independent Accountants a comfort letter or letters dated the date
hereof and the Closing Date, in form and substance satisfactory to
counsel for the Initial Purchaser.
(d) The representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of the
date hereof and on and as of the Closing Date as if made on and as of
the Closing Date; the statements of the Company's officers made
pursuant to any certificate delivered in accordance with the provisions
hereof shall be true and correct on and as of the date made and on and
as of the Closing Date; the Company shall have performed all covenants
and agreements and satisfied all conditions on their part to be
performed or satisfied hereunder at or prior to the Closing Date; and,
except as described in the Final Memorandum (exclusive of any amendment
or supplement thereto after the date hereof), subsequent to the date of
the most recent financial statements in such Final Memorandum, there
shall have been no event or development, and no information shall have
become known, that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect.
(e) The sale of the Notes hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(f) Other than as disclosed in the Final Memorandum,
subsequent to the date of the most recent financial statements in the
Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), none of the Company or any of the Subsidiaries
shall have sustained any loss or interference with respect to its
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business or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any strike,
labor dispute, slow down or work stoppage or from any legal or
governmental proceeding, order or decree, which loss or interference,
individually or in the aggregate, has or would be reasonably likely to
have a Material Adverse Effect.
(g) The Initial Purchaser shall have received a
certificate of the Company, dated the Closing Date, signed on behalf of
the Company by its Chairman of the Board, President or any Senior Vice
President and the Chief Financial Officer, to the effect that:
(i) The representations and warranties of the
Company contained in this Agreement are true and correct on
and as of the date hereof and on and as of the Closing Date,
and the Company has performed all covenants and agreements and
satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof
or since the date of the most recent financial statements in
the Final Memorandum, except as disclosed in the Final
Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), no event or development has occurred,
and no information has become known, that, individually or in
the aggregate, has had or would be reasonably likely to have a
Material Adverse Effect; and
(iii) The sale of the Notes hereunder has not been
enjoined (temporarily or permanently).
(h) On the Closing Date, the Initial Purchaser shall have
received the Registration Rights Agreement executed by the Company and
such agreement shall be in full force and effect at all times from and
after the Closing Date.
(i) The Company shall have delivered to counsel for the
Initial Purchaser executed copies of the amendment to the senior
secured revolving credit facility, dated as of the Closing Date, on the
terms described in the Final Memorandum, by and among Town Sports
International, Inc., Deutsche Bank Trust Company Americas and the other
lenders listed therein (the "Credit Facility Amendment"), which Credit
Facility Amendment shall be in full force and effect as of the Closing
Date, and shall have taken all other actions necessary to consummate
the "other refinancing transactions" (as defined in the Final
Memorandum).
On or before the Closing Date, the Initial Purchaser and
counsel for the Initial Purchaser shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Company and the
Subsidiaries as they shall have heretofore reasonably requested from the
Company.
-14-
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchaser and counsel for the Initial Purchaser. The
Company shall furnish to the Initial Purchaser such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchaser shall reasonably request.
8. OFFERING OF NOTES; RESTRICTIONS ON TRANSFER. (a) The
Initial Purchaser represents and warrants that it is a qualified institutional
buyer as defined in Rule 144A promulgated under the Act (a "QIB"). The Initial
Purchaser agrees with the Company that (i) it has not and will not solicit
offers for, or offer or sell, the Notes by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the Act) or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act; and (ii) it has and will solicit offers for the Notes only from, and
will offer the Notes only to (A) in the case of offers inside the United States,
(x) persons whom the Initial Purchaser reasonably believes to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchaser that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A, and, in
each case, in transactions under Rule 144A or (y) a limited number of other
institutional investors reasonably believed by the Initial Purchaser to be
Accredited Investors that, prior to their purchase of the Notes, deliver to the
Initial Purchaser a letter containing the representations and agreements set
forth in Annex A to the Final Memorandum and (B) in the case of offers outside
the United States, to persons other than U.S. persons ("foreign purchasers,"
which term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); provided, however, that, in the case of this clause (B),
in purchasing such Notes such persons are deemed to have represented and agreed
as provided under the caption "Transfer Restrictions" contained in the Final
Memorandum (or, if the Final Memorandum is not in existence, in the most recent
Memorandum).
(b) The Initial Purchaser represents and warrants with
respect to offers and sales outside the United States that (i) it has and will
comply with all applicable laws and regulations in each jurisdiction in which it
acquires, offers, sells or delivers Notes or has in its possession or
distributes any Memorandum or any such other material, in all cases at its own
expense; (ii) the Notes have not been and will not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Act or pursuant to an exemption from the
registration requirements of the Act; (iii) it has offered the Notes and will
offer and sell the Notes (A) as part of its distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the offering and
the Closing Date, only in accordance with Rule 903 of Regulation S and,
accordingly, neither it nor any persons acting on its behalf have engaged or
will engage in any directed selling efforts (within the meaning of Regulation S)
with respect to the Notes, and any such persons have complied and will comply
with the offering restrictions requirement of Regulation S; and (iv) it agrees
that, at or prior to confirmation of sales of the Notes, it will have sent to
each distributor, dealer or person receiving a selling concession, fee or other
remuneration
-15-
that purchases Notes from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Notes covered hereby have not been registered under the United
States Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of the distribution of the Notes
at any time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date of the offering,
except in either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the meaning
given to them in Regulation S."
Terms used in this Section 8 and not defined in this Agreement
have the meanings given to them in Regulation S.
9. INDEMNIFICATION AND CONTRIBUTION. (a) The Company
agrees to indemnify and hold harmless the Initial Purchaser, and each person, if
any, who controls the Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which the Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
(i) any untrue statement or alleged untrue statement of
any material fact contained in any Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
the written information furnished by or on behalf of the Company filed
in any jurisdiction in order to qualify the Notes under the securities
or "Blue Sky" laws thereof or filed with any securities association or
securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, the Initial Purchaser and each such controlling
person for any legal or other expenses incurred by the Initial Purchaser or such
controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, the Company will not be liable
in any such case to the extent that any such loss, claim, damage, or liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in any Memorandum or any amendment or
supplement thereto or any Application in reliance upon and in conformity with
written information concerning the Initial Purchaser furnished to the Company by
the Initial Purchaser for use therein. This indemnity agreement will be in
addition to any liability that the Company may otherwise have to the indemnified
parties. The Company shall not be liable under this Section 9 for any settlement
of
-16-
any claim or action effected without its prior written consent, which shall not
be unreasonably withheld.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Company, its directors, its officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities to which
the Company or any such director, officer or controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement thereto
or any Application, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated in any Memorandum or any amendment
or supplement thereto or any Application, or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
concerning the Initial Purchaser, furnished to the Company by the Initial
Purchaser for use therein; and subject to the limitation set forth immediately
preceding this clause, will reimburse, as incurred, any legal or other expenses
incurred by the Company or any such director, officer or controlling person in
connection with investigating or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
that the Initial Purchaser may otherwise have to the indemnified parties. The
Initial Purchaser shall not be liable under this Section 9 for any settlement of
any claim or action effected without its consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of the Initial Purchaser, effect any settlement or compromise of any pending or
threatened proceeding in respect of which the Initial Purchaser is or could have
been a party, or indemnity could have been sought hereunder by the Initial
Purchaser, unless such settlement (A) includes an unconditional written release
of the Initial Purchaser, in form and substance reasonably satisfactory to the
Initial Purchaser, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of the Initial Purchaser.
(c) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action for which such
indemnified party is entitled to indemnification under this Section 9, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party of the
commencement thereof in writing; but the omission to so notify the indemnifying
party (i) will not relieve it from any liability under paragraph (a) or (b)
above unless and to the extent such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraphs (a) and
(b) above. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory
-17-
to such indemnified party; provided, however, that if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, or
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Initial Purchaser
in the case of paragraph (a) of this Section 9 or the Company in the case of
paragraph (b) of this Section 9, representing the indemnified parties under such
paragraph (a) or paragraph (b), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the prior written consent of the indemnifying party (which consent shall
not be unreasonably withheld), unless such indemnified party waived in writing
its rights under this Section 9, in which case the indemnified party may effect
such a settlement without such consent.
(d) In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Notes or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company on
the one hand
-18-
and the Initial Purchaser on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (before deducting expenses)
received by the Company bear to the total discounts and commissions received by
the Initial Purchaser. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand, or the Initial
Purchaser on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Initial Purchaser agree
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), the Initial Purchaser shall not be obligated to
make contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by the Initial Purchaser under this
Agreement, less the aggregate amount of any damages that the Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph (d),
each person, if any, who controls the Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Initial Purchaser, and each director of the
Company, each officer of the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as the Company.
10. SURVIVAL CLAUSE. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company, its officers and the Initial Purchaser set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, the Initial Purchaser or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Notes. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6, 9 and 15 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
11. TERMINATION. (a) This Agreement may be terminated in
the sole discretion of the Initial Purchaser by notice to the Company given
prior to the Closing Date in the event that the Company shall have failed,
refused or been unable to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder at or prior thereto or, if at or
prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or any legal or governmental proceeding,
-19-
which loss or interference, in the sole judgment of the Initial
Purchaser, has had or has a Material Adverse Effect, or there shall
have been, in the sole judgment of the Initial Purchaser, any event or
development that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including without
limitation a change in control of the Company or the Subsidiaries),
except in each case as described in the Final Memorandum (exclusive of
any amendment or supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or
the NASDAQ National Market shall have been suspended or minimum or
maximum prices shall have been established on any such exchange or
market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation
of hostilities between the United States and any foreign power, or (B)
an outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Notes as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been
downgraded or placed on any "watch list" for possible downgrading by
any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this
Section 11 shall be without liability of any party to any other party except as
provided in Section 10 hereof.
12. INFORMATION SUPPLIED BY THE INITIAL PURCHASER. The
statements set forth in the last paragraph on the front cover page and in the
second and third sentences of the third paragraph under the heading "Private
Placement" in the Final Memorandum (to the extent such statements relate to the
Initial Purchaser) constitute the only information furnished by the Initial
Purchaser to the Company for the purposes of Sections 2(a) and 9 hereof.
13. NOTICES. All communications hereunder shall be in
writing and, if sent to the Initial Purchaser, shall be mailed or delivered to
the Initial Purchaser at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Finance Department, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.; if
sent to the Company, shall be mailed or delivered to the Company at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇; with a copy to
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, Citigroup Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
-20-
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
14. SUCCESSORS. This Agreement shall inure to the benefit
of and be binding upon the Initial Purchaser, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 9 of this Agreement shall
also be for the benefit of any person or persons who control the Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Initial Purchaser contained in
Section 9 of this Agreement shall also be for the benefit of the directors of
the Company, its officers and any person or persons who control the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of Notes from the Initial Purchaser will be deemed a successor
because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF
THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO
ANY PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
-21-
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company and the Initial Purchaser.
Very truly yours,
TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
By: /s/ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Development Officer,
Office of President, and
Secretary
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
DEUTSCHE BANK SECURITIES INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Director
-22-
SCHEDULE 1
Subsidiaries of the Company
Jurisdiction of
Name Ownership Organization
--------------------------------- ---------------------------------------- ---------------
Town Sports International, Inc. Town Sports International Holdings, Inc. New York
TSI Alexandria, LLC TSI Holdings (VA), Inc. Delaware
TSI Allston, Inc. Town Sports International, Inc. Delaware
TSI Andover, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Ardmore, LLC TSI Holdings (PA), Inc. Delaware
TSI Arthro-Fitness Services, Inc. Town Sports International, Inc. New York
TSI ▇▇▇▇▇▇▇▇▇▇, Inc. Town Sports International, Inc. New York
TSI Battery Park, Inc. Town Sports International, Inc. New York
TSI Bethesda, LLC TSI Holdings (MD), Inc. Delaware
TSI Broadway, Inc. Town Sports International, Inc. New York
TSI 217 Broadway, Inc. Town Sports International, Inc. New York
TSI Brooklyn Belt, Inc. Town Sports International, Inc. New York
TSI Brunswick, Inc. Town Sports International, Inc. Delaware
TSI Washington, LLC TSI Holdings (NJ), LLC Delaware
TSI Bulfinch, Inc. Town Sports International, Inc. Delaware
TSI Cash Management, Inc. Town Sports International, Inc. New York
TSI Central Square, Inc. Town Sports International, Inc. Delaware
TSI Centreville, LLC TSI Holdings (VA), Inc. Delaware
TSI Cherry Hill, LLC TSI Holdings (NJ), LLC Delaware
TSI Chevy Chase, Inc. TSI Holdings (DC), Inc. Delaware
TSI Clarendon, LLC TSI Holdings (VA), Inc. Delaware
TSI Cobble Hill, Inc. Town Sports International, Inc. New York
TSI Colonia, LLC TSI Holdings (NJ), LLC Delaware
TSI Commack, Inc. Town Sports International, Inc. New York
TSI Connecticut Avenue, Inc. TSI Holdings (DC), Inc. Delaware
TSI ▇▇▇▇▇▇, Inc. Town Sports International, Inc. Delaware
TSI Court Street, Inc. Town Sports International, Inc. New York
Jurisdiction of
Name Ownership Organization
--------------------------------- ---------------------------------------- ---------------
TSI Croton, Inc. Town Sports International, Inc. New York
TSI Danbury, Inc. Town Sports International, Inc. Delaware
TSI Danvers, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Downtown Crossing, Inc. Town Sports International, Inc. Delaware
TSI Dupont Circle, Inc. TSI Holdings (DC), Inc. Delaware
TSI Dupont II, Inc. TSI Holdings (DC), Inc. Delaware
TSI East Cambridge, Inc. Town Sports International, Inc. Delaware
TSI East Meadow, Inc. Town Sports International, Inc. New York
TSI East 23, Inc. Town Sports International, Inc. New York
TSI East 31, Inc. Town Sports International, Inc. New York
TSI East 34, Inc. Town Sports International, Inc. New York
TSI East 36, Inc. Town Sports International, Inc. New York
TSI East 41, Inc. Town Sports International, Inc. New York
TSI East 51, Inc. Town Sports International, Inc. New York
TSI East 59, Inc. Town Sports International, Inc. New York
TSI East 76, Inc. Town Sports International, Inc. New York
TSI East 86, LLC Town Sports International, Inc. New York
TSI East 91, Inc. Town Sports International, Inc. New York
TSI F Street, Inc. TSI Holdings (DC), Inc. Delaware
TSI Fairfax, LLC TSI Holdings (VA), Inc. Delaware
TSI Fenway, Inc. Town Sports International, Inc. Delaware
TSI Fifth Avenue, Inc. Town Sports International, Inc. New York
TSI First Avenue, Inc. Town Sports International, Inc. New York
TSI Forest Hills, Inc. Town Sports International, Inc. New York
TSI Fort ▇▇▇, LLC TSI Holdings (NJ), LLC Delaware
TSI Framingham, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Franklin (MA), Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Franklin Park, LLC TSI Holdings (NJ), LLC Delaware
TSI Freehold, LLC TSI Holdings (NJ), LLC Delaware
TSI Gallery Place, Inc. TSI Holdings (DC), Inc. Delaware
TSI Garden City, Inc. Town Sports International, Inc. New York
TSI Germantown, LLC TSI Holdings (MD), Inc. Delaware
TSI ▇▇▇▇▇▇, Inc. TSI Holdings (DC), Inc. Delaware
TSI Grand Central, Inc. Town Sports International, Inc. New York
Jurisdiction of
Name Ownership Organization
--------------------------------- ---------------------------------------- ---------------
TSI Great Neck, Inc. Town Sports International, Inc. New York
TSI Greenwich, Inc. Town Sports International, Inc. Delaware
TSI Herald, Inc. Town Sports International, Inc. New York
TSI Highpoint, LLC TSI Holdings (PA), Inc. Delaware
TSI Hoboken, LLC TSI Holdings (NJ), LLC Delaware
TSI Holdings (CIP), Inc. Town Sports International, Inc. Delaware
TSI Holdings (DC), Inc. Town Sports International, Inc. Delaware
TSI Holdings (IP), LLC TSI Insurance, Inc. Delaware
TSI Holdings (MA), Inc. Town Sports International, Inc. Massachusetts
TSI Holdings (MD), Inc. Town Sports International, Inc. Delaware
TSI Holdings (NJ), LLC Town Sports International, Inc. Delaware
TSI Holdings (PA), Inc. Town Sports International, Inc. Delaware
TSI Holdings (VA), Inc. Town Sports International, Inc. Delaware
TSI Huntington, Inc. Town Sports International, Inc. New York
TSI Insurance, Inc. Town Sports International, Inc. New York
TSI International, Inc. Town Sports International, Inc. Delaware
TSI Irving Place, Inc. Town Sports International, Inc. New York
TSI Jersey City, LLC TSI Holdings (NJ), LLC Delaware
TSI Larchmont, Inc. Town Sports International, Inc. New York
TSI Lexington (MA), Inc. TSI Holdings (MA), Inc. Massachusetts
TSI Lincoln, Inc. Town Sports International, Inc. New York
TSI Long Beach, Inc. Town Sports International, Inc. New York
TSI Lynnfield, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI M Street, Inc. TSI Holdings (DC), Inc. Delaware
TSI Madison, Inc. Town Sports International, Inc. New York
TSI Mahwah, LLC TSI Holdings (NJ), LLC Delaware
TSI Mamaroneck, Inc. Town Sports International, Inc. New York
TSI Market Street, LLC TSI Holdings (PA), Inc. Delaware
TSI Marlboro, LLC TSI Holdings (NJ), LLC Delaware
TSI Matawan, LLC TSI Holdings (NJ), LLC Delaware
TSI K Street TSI Holdings (DC), Inc. Delaware
TSI Montclair, LLC TSI Holdings (NJ), LLC Delaware
TSI ▇▇▇▇▇▇ ▇▇▇▇, Inc. Town Sports International, Inc. New York
TSI Nanuet, Inc. Town Sports International, Inc. New York
Jurisdiction of
Name Ownership Organization
--------------------------------- ---------------------------------------- ---------------
TSI Nashua, LLC TSI Holdings (MA), Inc. Delaware
TSI Natick, Inc. Town Sports International, Inc. Delaware
TSI Newark, LLC TSI Holdings (NJ), LLC Delaware
TSI Newbury Street, Inc. Town Sports International, Inc. Delaware
TSI North Bethesda, LLC TSI Holdings (MD), Inc. Delaware
TSI Norwalk, Inc. Town Sports International, Inc. Delaware
TSI Oceanside, Inc. Town Sports International, Inc. New York
TSI Old Bridge, LLC TSI Holdings (NJ), LLC Delaware
TSI Parsippany, LLC TSI Holdings (NJ), LLC Delaware
TSI Plainsboro, LLC TSI Holdings (NJ), LLC Delaware
TSI Princeton, LLC TSI Brunswick, Inc. Delaware
TSI ▇▇▇▇▇▇, LLC TSI Holdings (NJ), LLC Delaware
TSI Reade Street, Inc. Town Sports International, Inc. New York
TSI Ridgewood, LLC TSI Holdings (NJ), LLC Delaware
TSI ▇▇▇▇▇▇▇▇▇▇▇, LLC TSI Holdings (PA), Inc. Delaware
TSI Rodin Place, LLC TSI Holdings (PA), Inc. Delaware
TSI Rye, Inc. Town Sports International, Inc. New York
TSI Scarsdale, Inc. Town Sports International, Inc. New York
TSI Seaport, Inc. Town Sports International, Inc. New York
TSI Sheridan, Inc. Town Sports International, Inc. New York
TSI Silver Spring, LLC TSI Holdings (MD), Inc. Delaware
TSI Society Hill, LLC TSI Holdings (PA), Inc. Delaware
TSI Soho, Inc. Town Sports International, Inc. New York
TSI Somerset, LLC TSI Holdings (NJ), LLC Delaware
TSI South Park Slope, Inc. Town Sports International, Inc. New York
TSI Springfield, LLC TSI Holdings (NJ), LLC Delaware
TSI Stamford Downtown, Inc. Town Sports International, Inc. Delaware
TSI Stamford Post, Inc. Town Sports International, Inc. Delaware
TSI Stamford Rinks, Inc. Town Sports International, Inc. Delaware
TSI Staten Island, Inc. Town Sports International, Inc. New York
TSI Sterling, LLC TSI Holdings (VA), Inc. Delaware
TSI Supplements, Inc. Town Sports International, Inc. Delaware
TSI Syosset, Inc. Town Sports International, Inc. New York
TSI Wall Street, Inc. Town Sports International, Inc. New York
Jurisdiction of
Name Ownership Organization
--------------------------------- ---------------------------------------- ---------------
TSI Waltham, LLC TSI Holdings (MA), Inc. Delaware
TSI Washington, Inc. TSI Holdings (DC), Inc. Delaware
TSI Water Street, Inc. Town Sports International, Inc. New York
TSI Wellesley, Inc. TSI Holdings (MA), Inc. Massachusetts
TSI West ▇▇▇▇▇▇▇▇, LLC TSI Holdings (NJ), Inc. Delaware
TSI West ▇▇▇▇▇▇, Inc. Town Sports International, Inc. Delaware
TSI West Nyack, Inc. Town Sports International, Inc. New York
TSI West Springfield, LLC TSI Holdings (VA), Inc. Delaware
TSI West 14, Inc. Town Sports International, Inc. New York
TSI West 16, Inc. Town Sports International, Inc. New York
TSI West 23, Inc. Town Sports International, Inc. New York
TSI West 38, Inc. Town Sports International, Inc. New York
TSI West 41, Inc. Town Sports International, Inc. New York
TSI West 44, Inc. Town Sports International, Inc. New York
TSI West 48, Inc. Town Sports International, Inc. New York
TSI West 52, Inc. Town Sports International, Inc. New York
TSI West 73, Inc. Town Sports International, Inc. New York
TSI West 76, Inc. Town Sports International, Inc. New York
TSI West 80, Inc. Town Sports International, Inc. New York
TSI West 94, Inc. Town Sports International, Inc. New York
TSI West 125, Inc. Town Sports International, Inc. New York
TSI Westport, Inc. Town Sports International, Inc. Delaware
TSI Westwood, LLC TSI Holdings (NJ), Inc. Delaware
TSI Weymouth, Inc. Town Sports International, Inc. Delaware
TSI White Plains, Inc. Town Sports International, Inc. New York
TSI Whitestone, Inc. Town Sports International, Inc. New York
TSI Woodmere, Inc. Town Sports International, Inc. New York