Exhibit 10.1

TOWN SPORTS INTERNATIONAL, LLC

5 PENN PLAZA

NEW YORK, NY 10001

February 27, 2012

Mr. Martin J. Annese

c/o Town Sports International, LLC

5 Penn Plaza

4th Floor

New York, NY 10001

Dear Marty:

This letter agreement (the “Agreement”) confirms the terms that Town Sports
International, LLC (the “Company”) is offering you in connection with your
departure from the employ of the Company and its affiliates and from all
officer, director and other positions that you currently hold with the Company
and its affiliates, including Town Sports International Holdings, Inc. (“TSI
Holdings”).

1. Separation Date.

(a) The employment relationship between you and the Company and its subsidiaries
and affiliates, as applicable, will end on May 11, 2012 (the “Separation Date”),
provided, however, that in the event that you do not execute and return this
Agreement prior to the end of the Review Period (as described in Section 12 of
the Agreement), the Company reserves the right to terminate your employment
earlier (such earlier date becoming the “Separation Date”). During the period
through the Separation Date, you shall continue to perform your duties in a
satisfactory manner and assist with any transition as requested by the Chief
Executive Officer, and be in compliance with the policies and procedures of the
Company. You shall not, however, have any authority to act on the Company’s
behalf or otherwise bind the Company (and you shall not give any third person
the appearance that you have any such authority) unless the Company instructs
you in writing. You hereby resign as a director or manager of the Company or of
any affiliate thereof, effective as of the Separation Date. A smooth transition
is a material inducement for the Company to enter into this Agreement.

(b) You will be paid your regular wages through and including the Separation
Date. You shall no longer be eligible to participate in the Company’s benefit
programs after the Separation Date, except as set forth below in Section 2 of
this Agreement. Information regarding the Company’s 401(k) Plan will be sent to
you separately by the plan administrator following the Separation Date.

(c) You will remain eligible to receive your annual bonus for the year ending
December 31, 2011 under the terms of the 2006 Annual Performance Bonus Plan,
subject to its terms.

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2. Separation Benefits. In return for your execution of, and your compliance
with, this Agreement, as well as your execution (and non-revocation) of a Second
Release in substantially the same form set forth in Annex A hereto, which Second
Release shall be provided to you no later than the third day following the
Separation Date, and subject to the terms and conditions set forth in this
Agreement and the Second Release:

(a) You shall receive a payment equal to $18,477 payable within 10 business days
of the effective date of the Second Release.

(b) You may continue your participation in the Company’s medical, dental and
vision programs on behalf of yourself and your eligible dependents at the same
or substantially equivalent level as in effect immediately prior to the
Separation Date, through December 31, 2012 (or, if earlier, until you are
eligible for comparable coverage with a subsequent employer). During such
period, the Company will continue to pay that portion of the premiums that it
would have paid if you remained an active employee. Thereafter, you will be
eligible to continue your health insurance coverage pursuant to federal COBRA
law. Information regarding COBRA will be sent to you separately by the Company’s
COBRA administrator.

(c) Each of you and the members of your immediate family will receive, for one
(1) year from the Separation Date, a Premium Passport Membership (or its
equivalent) at no cost, and be entitled to receive Personal Training sessions at
employee rates (provided that such memberships and such treatment shall cease in
the event you (or such immediate family member) commence employment or a
consulting role with a competitor or in the event of your breach of this
Agreement or the Second Release). 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.

If you do not execute the Agreement and the Second Release within the time
periods provided therein, or if you revoke such Second Release, no payment or
benefits will be due under this Section 2.

3. Release.

(a) In consideration of the Company’s obligations contained in Section 1(a) of
this Agreement, you (for yourself, your heirs, legal representatives, executors
or administrators (collectively, your “Representatives”)) hereby release and
forever discharge the Company, TSI Holdings, their respective subsidiaries and
affiliates and each of their respective officers, employees, directors and
agents (in both their official and personal capacities, collectively, the
“Released Parties”) from any and all claims and rights which you may have
against them, and you hereby specifically release, waive and forever hold them
harmless from and against any and all such claims, liability, causes of action,
compensation, benefits, damages, attorney fees, costs or expenses, of whatever
nature or kind and whether known or unknown, fixed or contingent, and by reason
of any matter, cause, charge, claim, right or action whatsoever, which have
arisen at any time up to and including the day you execute this Agreement,
including, but not limited to, those arising during or in any manner out of your
employment with the Company or the termination of such employment or anything
else that may have happened up to and including

 

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the day you execute this Agreement. The rights, claims, causes of action, and
liabilities that you are releasing and waiving include, but are not limited to,
those that concern, relate to, or might arise out of the following: salary,
overtime, bonuses, equity and severance arrangements, benefit plans;
commissions; breach of express or implied contract or promise; harassment,
intentional injury or intentional tort, fraud, misrepresentation, battery,
assault, defamation, breach of fiduciary duty, tort or public policy claims,
whistleblower claims, negligence (including negligent hiring, retention and/or
supervision), wrongful or retaliatory discharge, infliction of emotional injury,
or any other facts or claims; retirement or any other benefits; discrimination
or retaliation under federal, state, or local law; any claims for costs or
attorney fees; and any other federal, state, city, county or other common law,
law, or ordinance, including but not limited to those where you work and/or
reside. You are not releasing any rights or claims that arise following the date
on which you execute this Agreement.

(b) Notwithstanding the foregoing, the release set forth in Section 3(a) of this
Agreement, will not apply to (i) the obligations of the Company under Section 1
of this Agreement, (ii) your vested benefits under the Company’s 401(k) Plan,
(iii) the Company’s obligations under the Equity Plan (as described below in
Section 4 of this Agreement), and any related equity agreement or vested
benefit(s) to which you are legally entitled, or (iv) your rights as a
stockholder of TSI Holdings. You further agree that the payments and benefits
described in this Agreement will be in full satisfaction of any and all claims
for payments or benefits, whether express or implied, that you may have against
the Company, TSI Holdings or any of their respective subsidiaries or affiliates
arising out of your employment relationship, your service as an employee,
officer or director of the Company, TSI Holdings or any of their respective
subsidiaries or affiliates and your termination therefrom. You hereby
acknowledge and confirm that you are providing the release set forth in this
Section 3 only in exchange for consideration in addition to anything of value to
which you are already entitled.

(c) You expressly understand and acknowledge that it is possible that unknown
losses or claims exist or that present losses may have been underestimated in
amount or severity, and that you explicitly took that into account in
determining the amount of consideration to be paid for the giving of this
release and discharge, and a portion of said consideration and the mutual
covenants contained herein, having been agreed between the parties with the
knowledge of the possibility of such unknown claims, were given in exchange for
a full satisfaction and discharge of all such claims.

(d) Nothing in the release set forth in this Section 3 will affect the Company
and TSI Holdings’ obligation to indemnify, defend and hold you harmless to the
fullest extent allowable by applicable law and their respective charter and
by-laws with respect to your acts or omissions in your capacity as an officer or
director of the Company, TSI Holdings and their respective subsidiaries and
affiliates. The Company will continue to maintain directors’ and officers’
liability insurance with respect to actions or omissions by you as an officer of
TSI Holdings, the Company (or any of its subsidiaries) in the same manner that
it maintains such insurance for other officers and directors.

4. Equity. Your separation pursuant to this Agreement will be treated as a
“Termination Without Cause” under the TSI Holdings’ 2006 Stock Incentive Plan
(the “Equity Plan”). As a result, your options granted to you pursuant to the
Equity Plan, to extent vested as of the

 

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Separation Date, will remain outstanding for the post-termination exercise
period specified in the applicable Equity Plan (which is 90 days from the
Separation Date). Any vested stock options will expire at the conclusion of such
post-termination exercise period to the extent not previously exercised, and
that portion of the stock options that remain unvested as of the Separation Date
and any shares of restricted Common Stock will be forfeited on the Separation
Date without any payment.

5. No Other Compensation or Benefits. Except as otherwise specifically provided
herein, you will not be entitled to any compensation or benefits or to
participate in any past, present or future employee benefit programs or
arrangements of the Company, TSI Holdings or any of their respective
subsidiaries or affiliates on or after the Separation Date, except as set forth
in Section 2 of this Agreement.

6. Return of Company Property. No later than the Separation Date, you hereby
covenant and agree that you will deliver to the Company all Company property and
equipment in your possession or control, including, but not limited to, any and
all records, manuals, customer lists, notebooks, computers, computer programs
and files, Company credit cards, papers, electronically stored information and
documents kept or made by you in connection with your employment and you will
not retain any copies thereof[, except that you may retain the Company’s
blackberry, and the Company will assist in transferring your mobile telephone
number to your personal telephone]. You also represent that you have left intact
all electronic Company documents or files, including those that you developed or
helped develop. You are required to return all such property whether or not you
sign this Agreement.

7. Nondisclosure of Confidential Information.

(a) You acknowledge and agree that in the course of your employment with the
Company, you have acquired certain confidential company information which you
knew or understood was confidential or proprietary to the Company and which, as
used in this Agreement, means: information belonging to or possessed by the
Company which is not available in the public domain or not released by some
third-party through no fault of yours, including, without limitation
(i) information received from the customers, suppliers, vendors, employees or
agents of the Company under confidential conditions; (ii) customer and prospect
lists, and details of agreements and communications with customers and
prospects; (iii) sales plans and projections, product pricing information,
acquisition, expansion, marketing, financial and other business information and
existing and future products and business plans of the Company; (iv) the
Company’s confidential accounting, tax, or financial information, results,
procedures and methods; (v) information relating to existing claims, charges and
litigations; (vi) sales proposals, demonstrations systems, sales material; and
(vii) employee information (including, but not limited to, personnel, payroll,
compensation and benefit data and plans), including all such information
recorded in manuals, memoranda, projections, reports, minutes, plans, drawings,
sketches, designs, formula books, data, specifications, software programs and
records, whether or not legended or otherwise identified by the Company as
confidential information, as well as such information that is the subject of
meetings and discussions and not recorded. You understand that such confidential
company information has been disclosed to you for the Company’s use only. You
understand and agree that you (i) will not disclose or communicate confidential
information to any person or persons; and (ii) will not make use of

 

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confidential information on your own behalf, or on behalf of any other person or
persons. You will give immediate notice to the Company if you are ordered by a
court or otherwise compelled by law to reveal any confidential information to
any third party.

(b) In view of the nature of your employment and the nature of the confidential
information to which you have had access to, you acknowledge and agree that any
unauthorized disclosure to any person or persons of confidential information, or
other violation or threatened violation of this Agreement (including, without
limitation, Section 7(a) of this Agreement), will cause irreparable damage to
the Company and that, therefore, the Company will, in addition to any other
available remedy, be entitled to an injunction prohibiting you from any further
disclosure, attempted disclosure, violation or threatened violation of this
Agreement and the Company will be entitled to recover the reasonable attorneys’
fees and costs incurred in enforcing its rights, to the extent permitted by law.

(c) The obligations described in this Section 7 are in addition to, and in no
way limit, your obligations regarding the protection of confidential information
as described in any stock option or other equity award agreement between you and
the Company, which provisions are incorporated by reference herein. In the event
of a conflict between the provisions of this Section 7 and the obligations
described in any such award agreement, the provisions that are more restrictive
upon you will govern. For the sake of clarity, the Company is not electing to
invoke the Non-Compete and Non-Solicitation provisions provided for under any
award agreement.

8. Non-Disparagement; Cooperation.

(a) You understand and agree that as a condition for payment to you of the
consideration herein described, you, on your behalf and on behalf of your
Representatives, will not (and your Representatives will not) at any time,
except as may be required by law, engage in any form of conduct, or make any
statements or representations that disparage or otherwise impair the reputation,
goodwill, or commercial interests of the Company, its management, stockholders,
subsidiaries, parent, and/or other affiliates. The Company agrees that its
Senior Officers (as hereinafter defined) will not, except as may be required by
law, make any oral or written negative, disparaging or adverse statements,
suggestions or representations of or concerning you. As used in this
Section 8(a), the term “Senior Officer” means the President and Chief Executive
Officer, Chief Financial Officer, Chief Information Officer, Senior Vice
President- Human Resources and Senior Vice President - General Counsel.

(b) From and after the Separation Date, you will (i) cooperate in all reasonable
respects with the Company and its affiliates and their respective directors,
officers, attorneys and experts in connection with the conduct of any dispute,
action, proceeding, investigation or litigation involving the Company or any of
its affiliates, including, without limitation, any such dispute, action,
proceeding, investigation or litigation in which you are called to testify and
(ii) promptly respond to all requests by the Company and its affiliates relating
to information concerning the Company which may be in your possession. The
Company will, as a condition to your obligations under this Section 8(b),
reimburse you for any reasonable out of pocket expenses and costs incurred as a
result of such cooperation (including all reasonable, out-of-pocket attorney
fees), provided that such expenses have been approved in writing in advance by
an executive officer of the Company.

 

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(c) You hereby consent to the disclosure of information about you that TSI
Holdings is required to disclose in its Annual Report on Form 10-K, its Proxy
Statement and in any other report(s) required to be filed with the Securities
and Exchange Commission under the Securities Act of 1933, the Securities
Exchange Act of 1934, and the rules and regulations promulgated thereunder.

9. Waiver of Rights. No delay or omission by the Company in exercising any right
under this Agreement (including Annex A) will operate as a waiver of that or any
other right. A waiver or consent given by the Company on any one occasion will
be effective only in that instance and will not be construed as a bar or waiver
of any right on any other occasion.

10. Applicable Law. This Agreement (including Annex A) will be interpreted and
construed by the laws of the State of New York, without regard to conflict of
laws provisions. You hereby irrevocably submit to and acknowledge and recognize
the jurisdiction of the courts of the State of New York, or, if appropriate, a
federal court within New York (which courts, together with all applicable
appellate courts, for purposes of this Agreement, are the only courts of
competent jurisdiction), over any suit, action or other proceeding arising out
of, under or in connection with this Agreement or the subject matter hereof.

11. Entire Agreement/Severability. This Agreement (including Annex A)
constitutes the sole and complete understanding and agreement between the
parties with respect to the matters set forth herein, and there are no other
agreements or understandings, whether written or oral and whether made
contemporaneously or otherwise. You agree and acknowledge that this Agreement
shall not in any way affect, modify, or nullify any agreement(s) that you may
have entered into with the Company that obligate you to take or refrain from
taking any action subsequent to your last day of employment, including without
limitation, the agreement to protect the Company’s confidential information, and
that any such obligations contained in those agreement(s) remain in full force
and effect. No term, condition, covenant, representation or acknowledgment
contained in this Agreement may be amended unless in writing signed by both
parties. If any section of this Agreement is determined to be void, voidable or
unenforceable, it will have no effect on the remainder of the Agreement which
will remain in full force and effect.

12. Review Period and Acceptance. You will have seven (7) days from the day you
receive this Agreement to consider the terms of this Agreement (the “Review
Period”). In order to receive the benefits and payments provided for by
Section 1(a) of this Agreement, (and Section 2 of this Agreement, upon execution
and non-revocation of the Second Release as provided therein), you must execute
this Agreement and return the executed Agreement to the Company, addressed to
the Company, Attention: General Counsel, at the address specified in Section 20
of this Agreement so that it is received any time on or before the expiration of
the seven (7) day Review Period. In the event you do not accept this Agreement
before the expiration of the Review Period, the obligations of the Company under
Sections 1 and 2 of this Agreement will automatically be deemed null and void
and the Company reserves the right to terminate your employment earlier.
Moreover, no payments or benefits will be paid or provided under Section 2 of
this Agreement, until you have signed this Agreement and the Second Release, had
your signatures notarized, and not revoked the Second Release as provided
therein.

13. Voluntary Assent. By your signature on this Agreement, you affirm and
acknowledge that:

(a) you have read this Agreement, and understand all of its terms, including the
release and discharge of claims set forth in Section 3 above;

 

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(b) you have voluntarily entered into this Agreement and that you have not
relied upon any representation or statement, written or oral, not set forth in
this Agreement;

(c) the only consideration for signing this Agreement is as set forth herein and
that the consideration received for executing this Agreement is greater than
that to which you may otherwise be entitled;

(d) you have been given the opportunity and you have been advised by the Company
to have this Agreement reviewed by your attorney and/or tax advisor; and

(e) you have been given up to seven (7) days to consider this Agreement.

14. No Admission. Nothing contained in this Agreement, or the fact of its
submission to you, will constitute or be construed as an admission of liability
or wrongdoing by either party.

15. Counterparts. The Agreement may be executed in two (2) signature
counterparts, each of which will constitute an original, but all of which taken
together will constitute but one and the same instrument.

16. Taxes; Section 409A.

(a) All payments described in this Agreement will be subject to deduction for
all required income and payroll taxes.

(b) It is intended that the payments provided for in this Agreement are intended
to comply with, or be exempt from, the terms of Section 409A (“Section 409A”) of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder. In the event, however, that any such payments are determined to be
subject to Section 409A, then the Company may make such adjustments as are
reasonably required to comply with such section. The termination of your
employment is intended to be a “separation of service” for purposes of
Section 409A. In addition, any expense reimbursement under this Agreement will
be made on or before the last day of the taxable year following the taxable year
in which such expense was incurred by you, and no such reimbursement or the
amount of expenses eligible for reimbursement in any taxable year will in any
way affect the expenses eligible for reimbursement in any other taxable year.
Notwithstanding any of the preceding, the Company makes no representations
regarding the tax treatment of any payments hereunder, and you will be
responsible for any and all applicable taxes.

17. Breach of Agreement. In the event of any breach by you of any provision of
this Agreement (including, without limitation, Section 7 or 8 (and including the
agreements referenced and incorporated therein), which breach, if susceptible to
cure, is not so cured within 10 business days of the Company providing notice to
you, in addition to any other remedy available to it, the Company will cease to
have any obligation to make payments or provide benefits to you under this
Agreement, and any continued exercisability of your stock options will cease.
You agree that in the event you bring a claim covered by the release in
Section 3 of this Agreement in which you seek damages against the Company or in
the event you seek to recover

 

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against any of such entities in any claim brought by a governmental agency on
your behalf, this Agreement shall serve as a complete defense to such claims. In
the event of any breach by the Company, you will provide the Company with notice
of such breach, and, if such breach is susceptible to cure, the Company will
have 10 business days to cure such breach.

18. Third Party Beneficiaries. You acknowledge and agree that TSI Holdings and
all its direct and indirect subsidiaries (other than the Company) are third
party beneficiaries of this Agreement. Without limiting the foregoing sentence,
TSI Holdings and such subsidiaries may enforce this Agreement against you. This
Agreement may be assigned by the Company to a person or entity which is an
affiliate, and will be assigned to any successor in interest to substantially
all of the business operations of the Company. Upon such assignment, the rights
and obligations of the Company hereunder will become the rights and obligations
of such affiliate or successor person or entity. This Agreement will be binding
upon the successors, and assigns of the Company. If you shall die, all amounts
then payable to you hereunder shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there be no such
devisee, legatee or designee, to Executive’s estate.

19. Notices. Any notices required or made pursuant to this Agreement will be in
writing and will be deemed to have been given when delivered or mailed by United
States certified mail, return receipt requested, postage prepaid, as follows: if
to you, to the address in the Company’s payroll records; if to the Company, at 5
Penn Plaza, 4th Floor, New York, NY 10001, Attn: General Counsel, or to such
other address as either party may furnish to the other in writing in accordance
with this Section 19. Notices of change of address will be effective only upon
receipt.

Acknowledged and accepted by:

 

/s/ Martin Annese

Martin Annese TOWN SPORTS INTERNATIONAL, LLC By:  

/s/ Scott Milford

Name:   Scott Milford Title:   SR. VP HR

 

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ANNEX A

Second Release

Pursuant to the Agreement between you and the Company dated February 27, 2012,
the following is the Second Release referenced therein, (capitalized terms used
herein without definition have the meanings specified in the Agreement).

1. Release.

(a) In consideration of the Company’s obligations contained in Section 2 of the
Agreement, you and your Representatives hereby release and forever discharge the
Released Parties from any and all claims and rights which you may have against
them, and you hereby specifically release, waive and forever hold them harmless
from and against any and all such claims, liability, causes of action,
compensation, benefits, damages, attorney fees, costs or expenses, of whatever
nature or kind and whether known or unknown, fixed or contingent, and by reason
of any matter, cause, charge, claim, right or action whatsoever, which have
arisen at any time up to and including the day you execute this Second Release,
including, but not limited to, those arising during or in any manner out of your
employment with the Company or the termination of such employment or anything
else that may have happened up to and including the day you execute this Second
Release. The rights, claims, causes of action, and liabilities that you are
releasing and waiving include, but are not limited to, those that concern,
relate to, or might arise out of the following: salary, overtime, bonuses,
equity and severance arrangements, benefit plans; commissions; breach of express
or implied contract or promise; harassment, intentional injury or intentional
tort, fraud, misrepresentation, battery, assault, defamation, breach of
fiduciary duty, tort or public policy claims, whistleblower claims, negligence
(including negligent hiring, retention and/or supervision), wrongful or
retaliatory discharge, infliction of emotional injury, or any other facts or
claims; retirement or any other benefits; the Equal Pay Act (29 U.S.C. §206(d),
et seq.); the Age Discrimination in Employment Act (ADEA) (29 U.S.C. §621, et
seq.); Title VII of the Civil Rights Act of 1964 (42 U.S.C. §2000e, et seq.);
ERISA (the Employee Retirement Income Security Act of 1974 (29 U.S.C. §1001, et
seq.) other than any vested ERISA benefit; COBRA (the Consolidated Omnibus
Budget Reconciliation Act of 1986, 29 U.S.C. §21161, et seq.); the federal and
NY WARN Act; the American with Disabilities Act (42 U.S.C. §12101, et seq.); the
National Labor Relations Act and the Labor Management Relations Act, 29 U.S.C.
§141 et seq.; the Family and Medical Leave Act (29 U.S.C. §2601, et seq.); the
United States Constitution; the Civil Rights Act of 1991; the Civil Rights Acts
of 1866 or 1871 (42 U.S.C. §§1981,1983,1985, et seq.); retaliation under any
federal, state, or local law; any claims for costs or attorney fees; the fair
employment practices (FEP) laws and employment-related laws of any federal,
state, or local jurisdiction (including the New York State Human Rights Law, New
York Administrative Code, New York Equal Pay Law, New York Whistleblower
Protection Law, New York Law for the Protection of Persons with a Disability,
New York Military Family Leave Law, New Jersey Law Against Discrimination, New
Jersey Family Leave Act, New Jersey Paid Family Leave Law, New Jersey
Conscientious Employee Protection Act, New Jersey Equal Pay Act, New Jersey
Civil Rights Act), and any other federal, state, city, county or other common
law, law, or ordinance, including but not limited to those where you work and/or
reside. You are not releasing any rights or claims that arise following the
Effective Date (as defined in Section 2 below) of this Second Release.

 

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(b) Notwithstanding the foregoing, the release set forth in Section 1(a) of this
Second Release, will not apply to (i) the obligations of the Company under the
Agreement, (ii) your vested benefits under the Company’s 401(k) Plan, (iii) the
Company’s obligations under the Equity Plan, and any related equity agreement or
vested benefit(s) to which you are legally entitled, or (iv) your rights as a
stockholder of TSI Holdings, (v) your right to challenge the validity of this
Second Release under the Older Workers Benefit Protection Act (“OWBPA”), (vi)
your right to continue healthcare insurance under COBRA; (vii) your right to
receive benefits for occupational illness or injury under the Workers’
Compensation Law; (viii) your right to receive unemployment benefits; and
(ix) any other claims that, under controlling law, may not be released by
private settlement. You further agree that the payments and benefits described
in Sections 1 and 2 of the Agreement will be in full satisfaction of any and all
claims for payments or benefits, whether express or implied, that you may have
against the Company, TSI Holdings or any of their respective subsidiaries or
affiliates arising out of your employment relationship, your service as an
employee, officer or director of the Company, TSI Holdings or any of their
respective subsidiaries or affiliates and your termination therefrom. You hereby
acknowledge and confirm that you are providing the release set forth in this
Second Release only in exchange for consideration in addition to anything of
value to which you are already entitled.

(c) You and your Representatives represent and agree that you have not filed any
lawsuits against any Released Party, or filed or caused to be filed any charges
or complaints against any Released Party with any municipal, state or federal
agency charged with the enforcement of any law. Pursuant to and as a part of
your release of the Released Parties, you and your Representatives agree, except
for your right, if any, to bring a proceeding pursuant to the Older Workers
Benefit Protection Act to challenge the validity of the release of claims
pursuant to the Age Discrimination in Employment Act contained in Section 1(a)
of this Second Release, and consistent with the EEOC Enforcement Guidance On
Non-Waivable Employee Rights Under EEOC-Enforced Statutes dated April 11,1997,
and otherwise to the maximum extent permitted by applicable law, not to sue or
file a charge or complaint against any Released Party in any forum or assist or
otherwise participate willingly or voluntarily in any claim, suit, action,
investigation or other proceeding of any kind which relates to any matter that
involves any Released Party, and that occurred up to and including the day of
your execution of this Second Release, unless as required to do so by court
order, subpoena or other directive by a court, administrative agency or
legislative body, other than to enforce the Agreement. With respect to the
claims you are waiving herein, you are waiving any right to receive money or any
other relief in any action instituted on your behalf by any other person, entity
or government agency.

(d) You expressly understand and acknowledge that it is possible that unknown
losses or claims exist or that present losses may have been underestimated in
amount or severity, and that you explicitly took that into account in
determining the amount of consideration to be paid for the giving of this Second
Release, and a portion of said consideration and the mutual covenants contained
herein, having been agreed between the parties with the knowledge of the
possibility of such unknown claims, were given in exchange for a full
satisfaction and discharge of all such claims.

 

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(e) Nothing in this Second Release will affect the Company and TSI Holdings’
obligation to indemnify, defend and hold you harmless to the fullest extent
allowable by applicable law and their respective charter and by-laws with
respect to your acts or omissions in your capacity as an officer or director of
the Company, TSI Holdings and their respective subsidiaries and affiliates.

2. Period for Review and Acceptance. You will have twenty-one (21) days from the
day you receive this Second Release to consider the terms of this Second Release
(the “Review Period”). In order to receive the benefits and payments provided
for by Section 2 of the Agreement, you must execute this Second Release, have
your signature notarized and return the executed Second Release to the Company,
addressed to the Company, Attention: General Counsel, at the address specified
in Section 20 of the Agreement so that it is received any time on or before the
expiration of the twenty-one (21) day period. After executing the Second
Release, you will have seven (7) days (the “Revocation Period”) to revoke it by
indicating your desire to do so in writing addressed to and received by the
General Counsel at the address set forth in Section 19 of the Agreement no later
than the seventh (7th) day following the day you executed the Second Release. In
the event you do not accept the Second Release prior to the expiration of the
21-day Review Period, or in the event you revoke the Second Release during the
Revocation Period, the obligations of the Company to make the payments and
provide the benefits set forth in Section 2 of the Agreement will automatically
be deemed null and void. No payments or benefits will be paid or provided under
Section 2 of the Agreement, until you have signed the Second Release (and
previously, the Agreement), and not revoked the Second Release during the
Revocation Period. The “Effective Date” of this Second Release shall be the day
following the expiration of the Revocation Period, so long as you have not
revoked this Second Release during the Revocation Period.

3. Voluntary Assent. By your signature on this Second Release, you affirm and
acknowledge that:

(a) you have read the Agreement and the Second Release, and understand all of
their terms;

(b) you have voluntarily entered into this Second Release and that you have not
relied upon any representation or statement, written or oral, not set forth in
the Agreement or this Second Release;

(c) the only consideration for signing this Second Release is as set forth in
Section 2 of the Agreement and that the consideration received for executing
this Second Release is greater than that to which you may otherwise be entitled;

(d) you have been given the opportunity and you have been advised by the Company
to have this Second Release reviewed by your attorney and/or tax advisor; and

(e) you have been given up to twenty-one (21) days to consider this Second
Release and that you understand that you have seven (7) days after executing it
to revoke it in writing, and that, to be effective, such written revocation must
be received by the Company within the seven (7) day Revocation Period.

 

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4. Counterparts. This Second Release may be executed in two (2) signature
counterparts, each of which will constitute an original, but all of which taken
together will constitute but one and the same instrument.

5. Breach of Agreement. In the event of any breach by you of any provision of
the Agreement or this Second Release, which breach, if susceptible to cure, is
not so cured within 10 business days of the Company providing notice to you, in
addition to any other remedy available to it, the Company will cease to have any
obligation to make payments or provide benefits to you under the Agreement, and
any continued exercisability of your stock options will cease. You agree that in
the event you bring a claim covered by the release set forth in Section 1 of
this Second Release in which you seek damages against the Company or in the
event you seek to recover against any of such entities in any claim brought by a
governmental agency on your behalf, this Second Release shall serve as a
complete defense to such claims. In the event of any breach by the Company of
the Agreement, you will provide the Company with notice of such breach, and, if
such breach is susceptible to cure, the Company will have 10 business days to
cure such breach.

6. Third Party Beneficiaries. You acknowledge and agree that TSI Holdings and
all its direct and indirect subsidiaries (other than the Company) are third
party beneficiaries of this Second Release. Without limiting the foregoing
sentence, TSI Holdings and such subsidiaries may enforce this Second Release
against you. This Second Release may be assigned by the Company to a person or
entity which is an affiliate, and will be assigned to any successor in interest
to substantially all of the business operations of the Company. Upon such
assignment, the rights and obligations of the Company hereunder will become the
rights and obligations of such affiliate or successor person or entity. This
Second Release will be binding upon the successors, and assigns of the Company.

 

Acknowledged and accepted by: TOWN SPORTS INTERNATIONAL, LLC By:  

 

  Name:     Title:    

/s/ Martin Annese

  Martin Annese

 

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