Exhibit 10.1

February 25, 2015

Robert Giardina

c/o Town Sports International, LLC

5 Penn Plaza

New York, NY 10001

Dear Bob:

This letter agreement (the “Agreement”) sets forth the terms of your continued
employment through a transition period and your resignation in all capacities
(except as otherwise specified in Section 1) from Town Sports International
Holdings, Inc. (“TSI”) and its subsidiaries and affiliates (collectively, the
“Company”). Effective February 25, 2015, you will become Executive Chairman of
the Board of Directors of TSI (the “Board”). TSI is entering into this Agreement
in order to induce you to serve as Executive Chairman, perform the duties
described below and remain an employee of the Company through September 30, 2015
(such date, as it may be extended or accelerated pursuant to Section 3 below,
being referred to herein as the “Departure Date”). The period from the date
hereof through the Departure Date is referred to as the “Retention Period.”

1. Retention Period. As Executive Chairman, you will focus on exploring and
evaluating strategic alternatives, which may include the potential sale of the
Company. You and the Company acknowledge that you will no longer be expected to
devote your full business time to the performance of your duties, but that you
will spend sufficient time (at least 40% of your business time) to perform the
required duties and responsibilities. After the Departure Date, you will remain
as a member of the Board with the fiduciary duties associated with such position
and will receive the same compensation as other non-employee members for their
service on the Board.

2. Compensation, Benefits and Bonus. For the period from March 1, 2015 through
April 30, 2015, your annual base salary will be $706,825, but will be reduced to
$500,000 as of May 1, 2015 for the remainder of the Retention Period. Your base
salary will be payable in accordance with the Town Sports International, LLC’s
standard payroll practices and subject to all applicable tax withholdings.
During the Retention Period, you will remain eligible for the Company’s benefit
plans to the extent you are eligible under the general terms thereof. As of the
2015 fiscal year, you will no longer participate in the Company’s performance
bonus plan or any other compensation arrangement, except as contemplated in this
Agreement.

3. Retention Payment.

(a) Subject to Section 5, you shall receive a payment (the “Retention Payment”)
equal to $1.1 million, less all applicable taxes and withholdings, so long as
you remain employed in the role of Executive Chairman through September 30,
2015; provided that such date (i) may be extended to no later than December 31,
2015 by the Company if the Company is in the midst of a process (e.g.,
negotiations on a letter of intent, term sheet or

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purchase or merger agreement) with a potential acquirer that may result in a
Change in Control (as defined below) and (ii) shall be accelerated to (A) the
date on which the Company executes a definitive agreement that contemplates a
transaction that, if consummated, would result in a Change in Control or (B) the
date on which a Board Change (as defined below) occurs or (C) thirty (30) days
after the Board determines to terminate the strategic review process, whichever
is earlier.

(b) Notwithstanding the foregoing, in the event that your employment ends
earlier than September 30, 2015 (or the extended date pursuant to
Section 3(a)(i)) as a result of a termination by the Company without Cause, your
death or Disability, you shall be entitled to the Retention Payment.

(c) Subject to Sections 5 and 18(b), the Retention Payment shall be paid within
sixty (60) days of the Departure Date, except in the event that the termination
occurs as a result of a Board Change in which event the Retention Payment will
be made in a manner consistent with the Executive Severance Agreement dated
March 2010 between you and Town Sports International, LLC (the “Prior
Agreement”) as follows: (i) that portion of the Retention Payment equal to that
portion of severance under the Prior Agreement that would have been exempt from
Section 409A of the Code shall be paid in a lump sum within sixty (60) days of
the Departure Date and (ii) the remainder will be paid in monthly installments
as provided in the Prior Agreement and, if applicable, subject to the six
(6) month delay described in that Prior Agreement and Section 18(b) below.

(d) In the event of any other termination, including a resignation or a
termination by the Company with Cause, you shall not be entitled to the
Retention Payment or the other benefits described in Section 6 below (the
“Transition Benefits”).

4. Definitions. As used herein, the terms identified below shall have the
meanings indicated:

(a) “Board Change” means when individuals who, as of the date of this Agreement,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by TSI stockholders, was approved or recommended by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person (as defined
below) other than the Board;

(b) “Cause” means the Company’s termination of your employment with the Company
as a result of: (i) your willful failure to perform any material portion of your
duties, which has not been cured (if curable) by you within thirty (30) days of
your receipt of written notice from the Company specifying in reasonable detail
the circumstances giving rise to such failure, which notice must be delivered to
you within thirty (30) days following the occurrence of such failure; (ii) your
commission of any fraud, misappropriation or misconduct that causes

 

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demonstrable injury, monetarily or otherwise, to the Company; (iii) the
conviction of, or pleading guilty or no contest to, a felony involving moral
turpitude; (iv) any material breach of your fiduciary duties to the Company as
an employee or officer; (v) your material violation of the Town Sports
International Code of Ethics and Business Conduct, as amended from time to time,
and such material policies and procedures of the Company; or (vi) any material
breach of the terms of any agreement between you and the Company, including any
of the restrictive covenants imposed pursuant to the TSI stock option and
similar incentive plans and the related stock option agreement issued
thereunder, if such breach is reasonably likely to result in a material injury
to the Company.

(c) “Change in Control” means:

(i) The acquisition by any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), of beneficial ownership (within the meaning of Rules 13d-3 and
13d-5 promulgated under the Exchange Act) of at least a majority of either
(A) the then outstanding shares of common stock of TSI (the “Outstanding TSI
Common Stock”), or (B) the combined voting power of the then outstanding voting
securities of TSI entitled to vote generally in the election of directors (the
“Outstanding TSI Voting Securities”);

(ii) Consummation of a reorganization, merger or consolidation involving TSI (a
“Business Combination”), in each case, unless, following such Business
Combination, all or substantially all of the Persons who were the beneficial
owners, respectively, of the Outstanding TSI Common Stock and Outstanding TSI
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, at least a majority of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the Person resulting from such Business
Combination (including, without limitation, a Person which as a result of such
transaction owns TSI or all or substantially all of TSI’s assets either directly
or through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination, of the
Outstanding TSI Common Stock and Outstanding TSI Voting Securities, as the case
may be; or

(iii) Sale or other disposition of all or substantially all the assets of TSI or
Town Sports International, LLC;

(d) “Code” means the Internal Revenue Code of 1986, as amended, and the
regulations and other guidance promulgated by the Treasury Department and the
Internal Revenue Service thereunder.

(e) “Disability” means any medically determinable physical or mental impairment
resulting in your inability to perform the duties of your position or any
substantially similar position, where such impairment is expected to result in
death or is expected to last for a continuous period of not less than six (6)
months.

(f) “Person” means any individual, firm, corporation, partnership, limited
liability company, trust, joint venture, governmental entity or other entity.

 

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5. Separation Release Agreement. Your eligibility for receipt of the Retention
Payment and the Transition Benefits is expressly conditioned upon the following:
(i) your signing of a release in which you release and/or waive any and all
claims you may have against the Company within the time specified therein, but
in no event later than fifty (50) days of the Departure Date and (ii) the
release becoming effective. The Company shall provide to you the release no
later than three (3) days following the Departure Date. If you do not timely
execute and deliver to the Company such release, or if you execute such release
but revoke it, no Retention Payment or Transition Benefits shall be paid.

6. Additional Transition Benefits.

(a) To the extent permitted by law and subject to Section 18(b), the Company
shall continue your health, dental and disability coverage that you currently
have (or provide comparable substitute coverage), and continue to pay that
portion of the premium that it pays for active employees (grossed up for taxes,
if applicable) at such times as the Company makes such payments for its active
employees on a monthly basis until the earlier of (i) the fifth anniversary of
the Departure Date (the “Coverage Period”) and (ii) the date on which you are
eligible for comparable coverage under another group health and dental insurance
plan or another disability plan by a successor employer; provided however, that
the such coverage shall immediately terminate, and no further amounts shall be
due pursuant to this Section 6(a) in the event you materially breached any of
the terms and conditions of this Agreement, including Section 7 or 8 hereunder.
You agree to promptly notify the Company in writing in the event that you are
eligible for coverage under another such plan. If not otherwise covered by a
group health or dental plan at the end of the Coverage Period, you shall be
eligible for COBRA continuation coverage on such date on the same terms and
conditions as offered to other eligible plan participants, and, if you elect
such coverage, you shall be fully responsible for the associated premiums.

(b) For your lifetime, you and your immediate family will continue to have
Passport Memberships (or its equivalent) at no cost to you; provided however,
that such memberships shall cease in the event you have materially breached the
terms and conditions of this Agreement, including Section 7 or 8 hereunder. The
aforementioned memberships are subject to all of the Company’s membership rules,
regulations and policies currently in effect and as may be amended from time to
time.

7. Non-Compete and Non-Solicitation.

(a) As an inducement to the Company to enter into this Agreement, you agree that
(i) during your period of employment with the Company, and (ii) during the
twelve (12) month period following the Departure Date (the “Non-compete
Period”), you shall not, directly or indirectly, own, manage, control,
participate in, consult with, render services for, or in any manner engage in,
any business competing directly or indirectly with the business as conducted by
the Company during your period of employment with the Company or at the time of
the Departure Date or with any other business that is the logical extension of
the Company’s

 

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business during your period of employment with the Company or at the Departure
Date, within any metropolitan area in which the Company engages or has
definitive plans to engage in such business; provided, however, that you shall
not be precluded from purchasing or holding publicly traded securities of any
entity so long as you shall hold less than 2% of the outstanding units of any
such class of securities and have no active participation in the business of
such entity and this restriction is not intended to include territories of a
strategic buyer with whom the Company has engaged in discussions or expansions
that have been discussed with a strategic buyer. You agree that the following
entities are examples of competitive businesses and are not exclusive: Crunch,
24 Hour, Equinox, NY Health and Racquet Club, LA Fitness, Planet Fitness,
Lifetime and Bally’s.

(b) As an inducement to the Company to enter into this Agreement, you agree that
during the Non-compete Period, you shall not directly or indirectly (i) induce
or attempt to induce any employee of the Company to leave the employ of the
Company, or in any way interfere with the relationship between the Company and
any employee thereof, (ii) hire any person who was an employee of the Company at
any time during your employment period, except for such employees who have been
terminated for at least three (3) months, or (iii) induce or attempt to induce
any customer, supplier, licensee, franchisor or other business relation of the
Company to cease doing business with such Company, or in any way interfere with
the relationship between any such customer, supplier, licensee, franchisor or
business relation, on the one hand, and the Company, on the other hand.

(c) The provisions of this Section 7 and Section 8 shall survive any expiration
or termination of this Agreement.

(d) If it is determined by a court of competent jurisdiction that any of the
provisions of this Section 7 or 8 is excessive in duration or scope or otherwise
is unenforceable, then such provision may be modified or supplemented by the
court to render it enforceable to the maximum extent permitted by law.

(e) You acknowledge and agree that the restrictions imposed upon you by the
terms, conditions and provisions of this Section 7 and 8 are reasonably
necessary to protect the legitimate business interests of the Company (which for
the avoidance of doubt includes its subsidiaries and affiliates), and that any
violation of any of the restrictions will result in immediate and irreparable
injury to the Company for which monetary damages will not be an adequate remedy.
You further acknowledge and agree that if any such restriction is violated, the
Company will be entitled to (i) stop paying the Retention Payment and Transition
Benefits, and to the extent paid, recoup such Retention Payment and Transition
Benefits and (ii) immediate relief enjoining such violation (including, without
limitation, temporary and permanent injunctions, a decree for specific
performance, and an equitable accounting of earnings, profits, and other
benefits arising from such violation) in any court having jurisdiction over such
claim, without the necessity of showing any actual damage or posting any bond or
furnishing any other security, and that the specific enforcement of the
provisions of this Section will not diminish your ability to earn a livelihood
or create or impose any undue hardship on you. You also agree that any request
for such relief by the Company shall be in addition to, and without prejudice
to, any claim for monetary damages that the Company may elect to assert. You
further acknowledge and agree that if any provision of this Section 7 or 8 is
found by a court of

 

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competent jurisdiction to be unenforceable or unreasonable as written, you
authorize and request said court to revise the unenforceable or unreasonable
provision in a manner that shall result in the provision being enforceable while
remaining as similar as legally possible to the purpose and intent of the
original. You further acknowledge and agree that any period of time during which
you are in violation of the covenants set forth in this Section 7 shall be added
to the applicable restricted period.

8. Confidential Information. You expressly recognize and acknowledge that during
your employment with the Company and during your service as a member of the
Board, you are entrusted with, have access to, or gain possession of
confidential and proprietary information, data, documents, records, materials,
and other trade secrets and/or other proprietary business information of the
Company (which for the avoidance of doubt includes its subsidiaries and
affiliates) that is not readily available to competitors, outside third parties
and/or the public, including without limitation, information about (i) current
or prospective customers, suppliers, licensees and/or franchisors
(ii) employees, research, goodwill, production, and prices, (iii) business
methods, processes, practices or procedures, (iv) computer software and
technology development, and (v) business strategy, including acquisition, merger
and/or divestiture strategies, (collectively or with respect to any of the
foregoing, the “Confidential Information”). You agree, by acceptance of the
right to receive compensation and benefits under this Agreement, including,
without limitation, the Retention Payment and Transition Benefits, that:
(i) unless pursuant to prior written consent by the Company, you shall not
disclose any Confidential Information for any purpose whatsoever unless
compelled by court order or subpoena, (ii) you shall treat as confidential all
Confidential Information and shall take reasonable precautions to prevent
unauthorized access to the Confidential Information, (iii) you shall not use the
Confidential Information in any way detrimental to the Company, and (iv) you
agree that the Confidential Information shall remain the exclusive property of
the Company, and you shall promptly return to the Company all material which
incorporates, or is derived from, all such Confidential Information upon
termination of your employment with the Company, or termination of your service
as a member of the Board, or upon demand from the Company. It is hereby agreed
that Confidential Information does not include information generally available
and known to the public other than through the disclosure thereof by or through
you or obtained from a source not bound by a confidentiality agreement with the
Company or any of its affiliates.

9. Notices. Any notice or communication given hereunder (each a “Notice”) shall
be in writing and shall be sent by personal delivery, by courier or by United
States mail (registered or certified mail, postage prepaid and return receipt
requested), to the appropriate party at the address set forth below, or such
other address or to the attention of such other person as a party shall have
specified by prior Notice to the other party. Each Notice will be deemed given
and effective upon actual receipt (or refusal of receipt).

If to the Company, to:

Town Sports International Holdings, Inc.

5 Penn Plaza (4th Floor)

New York, New York 10001

Attention: President

 

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With a copy to: General Counsel

If to you, to:

The address for you on file with the Company.

10. No Obligation to Continue Employment. This Agreement is not an agreement of
continued employment. This Agreement does not guarantee that the Company will
employ, retain or continue to, employ or retain you, nor does it modify in any
respect any right of the Company to terminate or modify your employment or
compensation, subject to the consequences described in this Agreement.

11. 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.

12. Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement will 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.

13. Consent to Jurisdiction. In the event of any dispute, controversy or claim
between the Company and you in any way concerning, arising out of or relating to
this Agreement (a “Dispute”), including without limitation any Dispute
concerning, arising out of or relating to the interpretation, application or
enforcement of this Agreement, the parties hereby agree and consent to the
Arbitration Policy of the Company to the extent it applies to the Dispute. If
enforcement of the arbitration award is required or the Dispute is not covered
by the Company’s arbitration policy, the parties hereby (a) agree and consent to
the personal jurisdiction of the courts of the State of New York located in New
York County and/or the Federal courts of the United States of America located in
the Southern District of New York (collectively, the “Agreed Venue”) for
resolution of any such Dispute, (b) agree that those courts in the Agreed Venue,
and only those courts, shall have exclusive jurisdiction to determine any
Dispute, including any appeal, and (c) agree that any cause of action arising
out of this Agreement shall be deemed to have arisen from a transaction of
business in the State of New York. The parties also hereby irrevocably
(i) submit to the jurisdiction of any competent court in the Agreed Venue (and
of the appropriate appellate courts therefrom), (ii) to the fullest extent
permitted by law, waive any and all defenses the parties may have on the grounds
of lack of jurisdiction of any such court and any other objection that such
parties may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court (including without limitation any defense
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum), and (iii) consent to service of process in
any such suit, action or proceeding, anywhere in the world, whether within or
without the jurisdiction of any such court, in any manner provided by applicable
law. Without limiting the foregoing, each party agrees

 

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that service of process on such party pursuant to a Notice shall be deemed
effective service of process on such party. Any action for enforcement or
recognition of any judgment obtained in connection with a Dispute may be
enforced in any competent court in the Agreed Venue or in any other court of
competent jurisdiction.

14. Counterparts. This Agreement may be executed (including by facsimile
transmission) with counterpart signature pages or in separate counterparts each
of which shall be an original and all of which taken together shall constitute
one and the same agreement.

15. Waiver. The failure of the Company to enforce at any time any of the
provisions of this Agreement, or to require at any time performance of any of
the provisions of this Agreement, shall in no way be construed to be a waiver of
these provisions, nor in any way to affect the validity of this Agreement or any
part thereof, or the right of the Company thereafter to enforce every provision.

16. Severability and Interpretation. Whenever possible, each provision of this
Agreement and any portion hereof shall be interpreted in such a manner as to be
effective and valid under applicable law, rules and regulations. If any covenant
or other provision of this Agreement (or portion thereof) shall be held to be
invalid, illegal, or incapable of being enforced, by reason of any rule of law,
rule, regulation, administrative order, judicial decision or public policy, all
other conditions and provisions of this Agreement shall, nevertheless, remain in
full force and effect, and no covenant or provision shall be deemed dependent
upon any other covenant or provision (or portion) unless so expressed herein.
The parties hereto desire and consent that the court or other body making such
determination shall, to the extent necessary to avoid any unenforceability, so
reform such covenant or other provision or portions of this Agreement to the
minimum extent necessary so as to render the same enforceable in accordance with
the intent herein expressed.

17. Entire Agreement. This Agreement is the entire agreement (together with any
equity plan and related award agreement currently in effect between you and TSI)
between the parties with respect to your employment and service as a director of
TSI and supersedes all prior agreements, whether verbal or in writing, including
without limitation the Prior Agreement (except to the extent incorporated in
this Agreement in Section 3).

18. Section 409A.

(a) Separation of Service. The change in your position to Executive Chairman is
not intended to be a “separation of service” as defined in Section 409A of the
Code and Treasury Regulations Section 1.409A-1(h) without regard to the optional
alternative definitions available thereunder. The termination of your employment
on the Departure Date is so intended. Your entitlement to the payments of the
Retention Payment and Transition Benefits shall be treated as the entitlement to
a series of separate payments for purposes of Section 409A of the Code.

(b) Potential Delay of Payment. Notwithstanding any other provisions of this
Agreement, any payment under this Agreement that the Company reasonably
determines is subject to Section 409(a)(2)(B)(i) of the Code shall not be paid
or payment commenced until six

 

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(6) months after the Departure Date or your death. On the earliest date on which
such payments can be made or commenced without violating the requirements of
Section 409(a)(2)(B)(i) of the Code, you shall be paid, in a single cash lump
sum, an amount equal to the aggregate amount of all payments delayed pursuant to
the preceding sentence.

(c) Section 409A Savings Clause. It is intended that any amounts payable under
this Agreement shall either be exempt from Section 409A of the Code or shall
comply with Section 409A (including Treasury regulations and other published
guidance related thereto) so as not to subject you to payment of any additional
tax, penalty or interest imposed under Section 409A of the Code. The provisions
of this Agreement shall be construed and interpreted to avoid the imputation of
any such additional tax, penalty or interest under Section 409A of the Code yet
preserve (to the nearest extent reasonably possible) the intended benefit
payable to you. Notwithstanding the foregoing, the Company makes no
representations regarding the tax treatment of any payments hereunder, and you
shall be responsible for any and all applicable taxes, other than the Company’s
share of employment taxes on the Retention Payment and the gross up for taxes
that may arise out of your participation in benefits to the extent provided in
Section 6 above.

IN WITNESS WHEREOF, the parties have executed this agreement, effective as of
the date and year first above written.

 

TOWN SPORTS INTERNATIONAL HOLDINGS, INC. By:

/s/ David Kastin

Name: David Kastin Title: Senior Vice President

/s/ Robert Giardina

Robert Giardina

 

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