RESTRICTED STOCK AGREEMENT
PURSUANT TO THE
TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
2006 STOCK INCENTIVE PLAN
(as amended and restated effective as of March 26, 2008)
     THIS AGREEMENT (this “Agreement”) made as of the ___ day
of                     , 2008, by and between Town Sports International
Holdings, Inc. (the “Company”) and                      (the “Participant”).
WITNESSETH:
     WHEREAS, the Company has adopted the Town Sports International Holdings,
Inc. 2006 Stock Incentive Plan, as amended and restated effective as of
March 26, 2008 (the “Plan”), which is administered by a Committee appointed by
the Company’s Board of Directors (the “Committee”); and
     WHEREAS, pursuant to Section 8.1 of the Plan, the Committee may grant to
Eligible Employees shares of its common stock, par value $0.001 per share
(“Common Stock”), in the amount set forth below; and
     WHEREAS, the Shares (as defined below) are to be subject to certain
restrictions;
     NOW, THEREFORE, for and in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
     1. Grant of Shares. Subject to the restrictions, terms and conditions of
this Agreement, the Company awarded the Participant [•] shares of validly issued
Common Stock (the “Shares”) on                      , 2008 (the “Grant Date”).
Pursuant to Section 2 hereof, the Shares are subject to certain restrictions,
which restrictions relate to the passage of time as an employee of the Company
or its Affiliates. While such restrictions are in effect, the Shares subject to
such restrictions shall be referred to herein as “Restricted Stock.”
     2. Restrictions on Transfer. The Participant shall not sell, transfer,
pledge, hypothecate, assign or otherwise dispose of the Shares, except as set
forth in the Plan or this Agreement. Any attempted sale, transfer, pledge,
hypothecation, assignment or other disposition of the Shares in violation of the
Plan or this Agreement shall be void and of no effect and the Company shall have
the right to disregard the same on its books and records and to issue “stop
transfer” instructions to its transfer agent.
     3. Restricted Stock.
          (a) Retention of Certificates. Promptly after the date of this
Agreement, the Company shall issue stock certificates representing the
Restricted Stock unless, to the extent permitted under applicable law, it elects
to issue the Shares in the form of uncertificated shares and recognize such
ownership through an uncertificated book entry account maintained by the Company
(or its designee) on behalf of the Participant or through another similar
method. The stock certificates shall be registered in the Participant’s name and
shall bear any legend required under the Plan or Section 4(a) hereof Unless held
in uncertificated book entry form, such stock certificates shall be held in
custody by the Company (or its designated agent) until the restrictions thereon
shall have lapsed. Upon the Company’s request, the Participant shall deliver to
the Company a duly signed stock power, endorsed in blank, relating to the
Restricted Stock. If the Participant receives a stock dividend on the Restricted
Stock or the shares of

 

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Restricted Stock are split or the Participant receives any other shares,
securities, moneys or property representing a dividend on the Restricted Stock
(other than cash dividends on or after the date of this Agreement) or
representing a distribution or return of capital upon or in respect of the
Restricted Stock or any part thereof, or resulting from a split-up,
reclassification or other like changes of the Restricted Stock, or otherwise
received in exchange therefor, or any warrants, rights or options issued to the
Participant in respect of the Restricted Stock (collectively “RS Property”), the
Participant will also immediately deposit with and deliver to the Company any of
such RS Property, including, without limitation, any certificates representing
shares duly endorsed in blank or accompanied by stock powers duly executed in
blank, and such RS Property shall be subject to the same restrictions,
including, without limitation, the restrictions in this Section 3(a) hereof, as
the Restricted Stock with regard to which they are issued and shall herein be
encompassed within the term “Restricted Stock.”
          (b) Rights with Regard to Restricted Stock. Subject to Section 8, the
Participant will have the right to vote the Restricted Stock, to receive and
retain any dividends payable to holders of record of Restricted Stock on and
after the transfer of the Restricted Stock (although such dividends shall be
treated, to the extent required by applicable law, as additional compensation
for tax purposes if paid on Restricted Stock and stock dividends will be subject
to the restrictions provided in Section 3(a)), and to exercise all other rights,
powers and privileges of a holder of Common Stock with respect to the Restricted
Stock set forth in the Plan, except that: (i) the Participant shall not be
entitled to delivery of the stock certificate or certificates representing the
Restricted Stock until the Restriction Period shall have expired; (ii) the
Company (or its designated agent) shall retain custody of the stock certificate
or certificates representing the Restricted Stock and the other RS Property
during the Restriction Period; (iii) no RS Property shall bear interest or be
segregated in separate accounts during the Restriction Period; and (iv) the
Participant shall not sell, assign, transfer, pledge, exchange, encumber or
dispose of the Restricted Stock during the Restriction Period.
          (c) Vesting. The Restricted Stock shall become vested and cease to be
Restricted Stock (but shall remain subject to Section 5) pursuant to the
following schedule, which shall be cumulative; provided that the Participant has
not had a Termination any time prior to the applicable vesting date:

          Vesting Date   Number of Shares
First Anniversary of Grant Date
    [25%]  
Second Anniversary of Grant Date
    [25%]  
Third Anniversary of Grant Date
    [25%]  
Fourth Anniversary of Grant Date
    [25%]  

     There shall be no proportionate or partial vesting in the periods prior to
each vesting date and all vesting shall occur only on the appropriate vesting
date; provided, however, that no Termination has occurred prior to such date.
     The Restricted Stock will become fully vested on a Change in Control.
     The provisions of the second paragraph of Section 8.1 of the Plan regarding
Detrimental Activity shall apply to the Restricted Stock.
     When any shares of Restricted Stock become vested, the Company shall
promptly issue and deliver, unless the Company is using book entry, to the
Participant a new stock certificate registered in the

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name of the Participant for such shares of Restricted Stock without the legend
set forth in Section 4(a) and deliver to the Participant any related other RS
Property, subject to applicable withholding.
          (d) Forfeiture. The Participant shall forfeit to the Company, without
compensation, other than repayment of any par value paid by the Participant for
the Shares (if any), any and all Restricted Stock (but no vested Shares) and RS
Property upon the Participant’s Termination of Employment for any reason.
          (e) Withholding. Participant shall pay, or make arrangements to pay,
in a manner satisfactory to the Company, an amount equal to the amount of all
applicable federal, state and local or foreign taxes that the Company is
required to withhold at any time. In the absence of such arrangements, the
Company or one of its Affiliates shall have the right to withhold such taxes
from the Participant’s normal pay or other amounts payable to the Participant,
including, but not limited to, the right to withhold any of the Shares otherwise
deliverable to the Participant hereunder. In addition, any statutorily required
withholding obligation may be satisfied, in whole or in part, at the
Participant’s election, in the form and manner prescribed by the Committee, by
delivery of shares of Common Stock (including, without limitation, the Shares
issued under this Agreement).
          (f) Section 83(b). If the Participant properly elects (as required by
Section 83(b) of the Code) within 30 days after the issuance of the Restricted
Stock to include in gross income for federal income tax purposes in the year of
issuance the fair market value of such shares of Restricted Stock, the
Participant shall pay to the Company or make arrangements satisfactory to the
Company to pay to the Company upon such election, any federal, state or local
taxes required to be withheld with respect to the Restricted Stock. If the
Participant shall fail to make such payment, the Company shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
otherwise due to the Participant any federal, state or local taxes of any kind
required by law to be withheld with respect to the Restricted Stock, as well as
the rights set forth in Section 3(e). The Participant acknowledges that it is
the Participant’s sole responsibility, and not the Company’s, to file timely and
properly the election under Section 83(b) of the Code and any corresponding
provisions of state tax laws if the Participant elects to utilize such election.
          (g) Delivery Delay. The delivery of any certificate representing the
Restricted Stock or other RS Property may be postponed by the Company for such
period as may be required for it to comply with any applicable federal or state
securities law, or any national securities exchange listing requirements and the
Company is not obligated to issue or deliver any securities if, in the opinion
of counsel for the Company, the issuance of the Shares shall constitute a
violation by the Participant or the Company of any provisions of any applicable
federal or state law or of any regulations of any governmental authority or any
national securities exchange.
          (h) Legend. All certificates representing the Restricted Stock shall
have endorsed thereon the following legends:
“The anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge of the shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of the Town Sports International
Holdings, Inc. (the “Company”) 2006 Stock Incentive Plan (as the same may be
amended or amended and restated from time to time, the “Plan”), and an agreement
entered into between the registered owner and the Company evidencing the award
under the Plan. Copies of such Plan and agreement are on file at the principal
office of the Company.”

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          (i) Any legend required to be placed thereon by applicable blue sky
laws of any state.
     Notwithstanding the foregoing, in no event shall the Company be obligated
to deliver to the Participant a certificate representing the Restricted Stock
prior to the vesting dates set forth above.
     4. Securities Representations. The Shares are being issued to the
Participant and this Agreement is being made by the Company in reliance upon the
following express representations and warranties of the Participant.
          The Participant acknowledges, represents and warrants that:
          (a) The Participant has been advised that the Participant may be an
“affiliate” within the meaning of Rule 144 under the Securities Act of 1933, as
amended (the “Act”) and in this connection the Company is relying in part on the
Participant’s representations set forth in this Section 5.
          (b) If the Participant is deemed an affiliate within the meaning of
Rule 144 of the Act, the Shares must be held indefinitely unless an exemption
from any applicable resale restrictions is available or the Company files an
additional registration statement (or a “re-offer prospectus”) with regard to
the Shares and the Company is under no obligation to register the Shares (or to
file a “re-offer prospectus”).
          (c) If the Participant is deemed an affiliate within the meaning of
Rule 144 of the Act, the Participant understands that the exemption from
registration under Rule 144 will not be available unless (i) a public trading
market then exists for the Common Stock of the Company, (ii) adequate
information concerning the Company is then available to the public, and
(iii) other terms and conditions of Rule 144 or any exemption therefrom are
complied with; and that any sale of the Shares may be made only in limited
amounts in accordance with such terms and conditions.
     5. No Obligation to Continue Employment. This Agreement is not an agreement
of employment. This Agreement does not guarantee that the Company or its
Affiliates will employ or retain, or continue to employ or retain, the
Participant during the entire, or any portion of the, term of this Agreement,
including, but not limited to, any period during which the Restricted Stock is
outstanding, nor does it modify in any respect the Company’s or its Affiliate’s
right to terminate or modify the Participant’s employment or compensation.
     6. Power of Attorney. The Company, its successors and assigns are hereby
appointed the attorneys-in-fact, with full power of substitution, of the
Participant for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instruments which such attorneys-in-fact may
deem necessary or advisable to accomplish the purposes of this Agreement, which
appointment as attorneys-in-fact is irrevocable and coupled with an interest.
The Company, as attorney-in-fact for the Participant, may in the name and stead
of the Participant, make and execute all conveyances, assignments and transfers
of the Shares and property provided for in this Agreement, and the Participant
hereby ratifies and confirms all that the Company, as said attorney-in-fact,
shall do by virtue hereof. Nevertheless, the Participant shall, if so requested
by the Company, execute and deliver to the Company all such instruments as may,
in the judgment of the Company, be advisable for such purpose.
     7. Rights as a Stockholder. The Participant shall have no rights as a
stockholder with respect to any Restricted Stock unless and until the
Participant has become the holder of record of the Shares, whether the Shares
are represented by a certificate or through book entry or another similar

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method, and no adjustments shall be made for dividends in cash or other
property, distributions or other rights in respect of any Shares, except as
otherwise specifically provided for in the Plan or this Agreement.
     8. Provisions of Plan Control. This Agreement is subject to all the terms,
conditions and provisions of the Plan, including, without limitation, the
amendment provisions thereof, and to such rules, regulations and interpretations
relating to the Plan as may be adopted by the Committee and as may be in effect
from time to time. The Plan is incorporated herein by reference. Capitalized
terms in this Agreement that are not otherwise defined shall have the respective
meanings set forth in the Plan. If and to the extent that this Agreement
conflicts or is inconsistent with the terms, conditions and provisions of the
Plan, the Plan shall control, and this Agreement shall be deemed to be modified
accordingly. This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and supersedes any prior agreements
between the Company and the Participant with respect to the subject matter
hereof.
     9. Amendment. To the extent applicable, the Board or the Committee may at
any time and from time to time amend, in whole or in part, any or all of the
provisions of this Agreement to comply with Section 409A of the Code and the
regulations thereunder or any other applicable law and may also amend, suspend
or terminate this Agreement subject to the terms of the Plan. The award of
Restricted Stock pursuant to this Agreement is not intended to be considered
“deferred compensation” for the purposes of Section 409A of the Code.
     10. 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
regular United States mail, first class and prepaid, to the appropriate party at
the address set forth below:
If to the Company, to:
Town Sports International Holdings, Inc.
5 Penn Plaza — 4th Floor
New York, NY 10001
Attention.: General Counsel
          If to the Participant, to the address of the Participant on file with
the Company
          ; 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 shall
only be given and effective upon actual receipt (or refusal of receipt).
     11. Acceptance. As required by Section 8.2(b) of the Plan, the Participant
shall forfeit the Restricted Stock if the Participant does not execute this
Agreement within a period of 60 days from the date the Participant receives this
Agreement (or such other period as the Committee shall provide).
     12. Non-Compete; Nonsolicitation.
          (a) (i) As an inducement to the Company to enter into this Agreement
and to grant the Shares, the Participant agrees that (A) during the
Participant’s period of employment with the Company or any of its Affiliates,
and (B) if the Participant resigns or the Participant’s employment is terminated
by the Company or any of its Affiliates for any reason, during the period which
the Company or any of its Affiliates is paying the Participant severance
compensation (which shall be at a rate and an amount equal to the Participant’s
base salary received by the Participant immediately prior to the

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Participant’s Termination of Employment), such period not to exceed one year
(the “Noncompete Period”), the Participant 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 or any of its Affiliates during the
Participant’s period of employment with the Company or any of its Affiliates or
at the time of the Participant’s Termination of Employment or with any other
business that is the logical extension of the Company’s and its Affiliates’
business during the Participant’s period of employment with the Company or any
of its Affiliates or at the time of the Participant’s Termination of Employment,
within any metropolitan area in which the Company or any of its Affiliates
engages or has definitive plans to engage in such business; provided, however,
that (1) the Participant shall not be precluded from purchasing or holding
publicly traded securities of any entity so long as the Participant shall hold
less than 2% of the outstanding units of any such class of securities and has no
active participation in the business of such entity, and (2) the Company shall
have notified the Participant of its agreement to provide (or cause to be
provided) such severance compensation (x) in the event of resignation, within
five days following the date of the Participant’s Termination of Employment, or
(y) in the event of termination, on or before the date of the Participant’s
Termination of Employment. Notwithstanding anything contained herein to the
contrary, the Participant’s agreement set forth in clause (B) above shall not
apply if the date of the Participant’s Termination of Employment occurs after
the fifth anniversary of the Grant Date.
          (ii) During the Noncompete Period, the Participant shall not directly
or indirectly (A) induce or attempt to induce any employee of the Company or any
of its Affiliates to leave the employ of the Company or any of its Affiliates,
or in any way interfere with the relationship between the Company or any of its
Affiliates and any employee thereof, (B) hire any person who was an employee of
the Company or any of its Affiliates at any time during the Participant’s
employment period except for such employees who have been terminated for at
least six months, or (C) induce or attempt to induce any customer, supplier,
licensee, franchisor or other business relation of the Company or any of its
Affiliates to cease doing business with such member, 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 or any of its Affiliates,
on the other hand.
          (iii) The provisions of this Section 13(a) shall survive any
expiration or termination of this Agreement, any Termination of Employment of
the Participant, or any forfeiture of the shares of Restricted Stock.
          (iv) If it is determined by a court of competent jurisdiction that any
of the provisions of this Section 13(a) 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.
          (b) The Participant acknowledges that the Participant may have access
to certain confidential, non-public and proprietary information (the
“Confidential Information”), concerning the Company and its Affiliates and their
respective officers, directors, stockholders, employees, agents and
representatives and agrees that: (i) unless pursuant to prior written consent by
the Company, the Participant shall not disclose any Confidential Information to
any Person for any purpose whatsoever unless compelled by court order or
subpoena; (ii) the Participant shall treat as confidential all Confidential
Information and shall take reasonable precautions to prevent unauthorized access
to the Confidential Information; (iii) the Participant shall not use the
Confidential Information in any way detrimental to the Company or any of its
Affiliates and shall use the Confidential Information for the exclusive purpose
of effecting the Participant’s duties of employment with the Company or any of
its Affiliates; and (iv) the Participant agrees that the Confidential
Information obtained during the Participant’s employment with the Company shall
remain the exclusive property of the Company and its Affiliates, and the
Participant

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shall promptly return to the Company all material which incorporates, or is
derived from, all such Confidential Information upon termination of the
Participant’s employment with the Company or any of its Affiliates. 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 the Participant or obtained from a source not bound by a
confidentiality agreement with the Company or any of its Affiliates.
          (c) The Participant hereby agrees that all inventions, innovations or
improvements in the method of conducting the business (including, without
limitation, improvements, ideas and discoveries, whether patentable or not) of
the Company or any of its Affiliates, whether prior to the date hereof or
thereafter, in each case conceived or made by the Participant in the course of
the Participant’s employment with the Company or any of its Affiliates, belong
to the Company and its Affiliates, except for such inventions, innovations and
improvements that have become part of the public domain other than through the
disclosure thereof by or through the Participant and are not entitled to
statutory or common law protection. The Participant will promptly disclose such
inventions, innovation or improvements to the Company and perform all actions
reasonably requested by the Company to establish and confirm such ownership by
the Company or any of its Affiliates.
     13. 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.
     14. Miscellaneous.
          (a) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, legal representatives, successors
and assigns.
          (b) 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.
          (c) In the event of any dispute, controversy or claim between the
Company or any Affiliate and the Participant in any way concerning, arising out
of or relating to the Plan or this Agreement (a “Dispute”), including without
limitation any Dispute concerning, arising out of or relating to the
interpretation, application or enforcement of the Plan or this Agreement, the
parties hereby (i) 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, (ii)
agree that those courts in the Agreed Venue, and only those courts, shall have
exclusive jurisdiction to determine any Dispute, including, without limitation,
any appeal, and (iii) 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 (A) submit to the
jurisdiction of any competent court in the Agreed Venue (and of the appropriate
appellate courts therefrom), (B) 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 (C) consent to

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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 that service of process on such party pursuant to a notice as provided in
Section 11 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 enforced in any competent court in the Agreed Venue or in any
other court of competent jurisdiction.
          (d) This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one contract.
          (e) The failure of any party hereto at any time to require performance
by another party of any provision of this Agreement shall not affect the right
of such party to require performance of that provision, and any waiver by any
party of any breach of any provision of this Agreement shall not be construed as
a waiver of any continuing or succeeding breach of such provision, a waiver of
the provision itself, or a waiver of any right under this Agreement.
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     IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

            TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
      By:           Name:           Title:        

          PARTICIPANT
        Signature