Exhibit 10.1


 








 


Statement of Work


 


 


November 12, 2019


 


Patrick
Walsh,
Chairman
and CEO


Town
Sports International
Holdings,
Inc.


1001 U.S. North
Highway
1, Suite
201


Jupiter,
FL 33477


 


 


Dear Patrick:


 


This letter confirms and sets forth the terms and conditions of the
engagement between Alvarez & Marsal Corporate Performance Improvement, LLC (“A&M”) and Town
Sports International
Holdings,
Inc. (the “Company”), including the scope of the services to be performed
and the basis of compensation for those services. Upon execution of this letter by each of the parties below, this letter will
constitute an agreement between the Company and A&M (the “Agreement”).


 


This Agreement constitutes the entire understanding
and agreement between Client and A&M with respect to the Services described herein and supersedes all prior oral and written
communications and may be amended, modified or changed (including changes in scope, nature of the Services or fees as described
under Change Order Process herein) only in writing when signed by both parties.


 


I. Description of Services



 


A&M Personnel


 


In connection with this engagement, A&M shall make available
to the Company, Helen Van Ness, to serve as the interim Chief Financial Officer (the “interim CFO”). The interim CFO
shall be designated as an executive officer of the Company. Upon the mutual agreement of A&M and the Company, A&M will
provide additional employees of A&M and/or its affiliates and wholly-owned subsidiaries (“Additional Personnel”)
as required (collectively, with the interim CFO, the “Engagement Personnel”), to assist the interim CFO in the execution
of the duties set forth more fully herein.


 


The interim CFO will be supported by an A&M Director, full time
(40-45 hours/week) and A&M Manager, full time (40-45 hours/week). Helen Van Ness, Managing Director, will be the overall engagement
leader.


 






    	 



     


    

A&M Responsibilities


 


The Engagement Personnel in cooperation with the
Chief Executive Officer (the “CEO”) and/or other applicable officers of the Company, shall perform the following (“Duties”):


 


		1.	The interim CFO shall provide leadership to the Finance and Accounting staff employed by the Company and manage all aspects
of the day-to-day corporate Finance operations and support activities of the Company as well as help identify issues and efficiency
opportunities within the corporate Finance and Accounting departments;



		2.	The interim CFO will be responsible for the review and signing of required regulatory filings, quarterly and annually;



		3.	The interim CFO shall serve as an active, contributing member of the Company’s leadership team;



		4.	The Engagement Personnel shall review all in-flight Finance and Accounting related projects and initiatives including without
limitation, the renegotiation of the Company’s 2013 Senior Credit Facility, and assist in the identification and implementation
of cost reduction and operations improvement opportunities;



		5.	The Engagement Personnel shall assist the CEO and other Company engaged professionals in developing for the Board’s review
strategic alternatives and recommendations for maximizing the enterprise value of the Company’s Finance and Accounting organizations;
and



		6.	The Engagement Personnel shall perform such other services as requested or directed by the board of the directors of the Company
(the “Board”) or other Company personnel as authorized by the Board, and agreed to by A&M, that is not duplicative
of work others are performing for the Company.



 


The Engagement Personnel shall report to the CEO
or other applicable officers, as directed by the Board and, at the request of the Board, will make recommendations to and consult
with the Board. The Engagement Personnel will continue to be employed, by A&M and, while rendering services to the Company,
will continue to work with other personnel at A&M in connection with unrelated matters that will not unduly interfere with
the services rendered by the Engagement Personnel pursuant to this Agreement. With respect to the Company, however, the Engagement
Personnel shall operate under the direction of the Board and A&M shall have no liability to the Company for any acts or omissions
of the Engagement Personnel related to the performance or non-performance of services at the direction of the Board and consistent
with the requirements of the Engagement and this Agreement.


 


In connection with the services to be provided
hereunder, from time to time A&M may utilize the services of employees of its affiliates, and subsidiaries and independent
contractors as Engagement Personnel. Such affiliates and subsidiaries are wholly owned by A&M’s parent company and employees.


 






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II. Information Provided
by Company and Forward Looking Statements


 


The Company shall use all reasonable efforts to:
(i) provide the Engagement Personnel with access to management and other representatives of the Company; and (ii) to furnish all
data, material, and other information concerning the business, assets, liabilities, operations, cash flows, properties, financial
condition and prospects of the Company that Engagement Personnel reasonably request in connection with the services to be provided
to the Company. The Engagement Personnel shall rely, without further independent verification, on the accuracy and completeness
of all publicly available information and information that is furnished by or on behalf of the Company and otherwise reviewed by
Engagement Personnel in connection with the services performed for the Company. The Company acknowledges and agrees that the Engagement
Personnel are not responsible for the accuracy or completeness of such information and shall not be responsible for any inaccuracies
or omissions therein. A&M and Engagement Personnel are under no obligation to update data submitted to them or to review any
other areas unless specifically requested by the Board to do so.


 


You understand that the services to be rendered
by the Engagement Personnel may include the preparation of projections and other forward-looking statements, and numerous factors
can affect the actual results of the Company’s operations, which may materially and adversely differ from those projections.
In addition, Engagement Personnel will be relying on information provided by the Company in the preparation of those projections
and other forward-looking statements.


 


III. Limitation of Duties


 


Neither A&M, nor the Engagement Personnel make
any representations or guarantees that, inter alia, (i) an appropriate business strategy, performance improvement plan,
and/or set of recommendations can be satisfactorily formulated for the Company, (ii) any business strategy, performance improvement
plan, and/or recommendations presented to the Company’s management or the Board will be more successful than all other possible
business strategies, performance improvement plans, and/or recommendations that could have been conceived, or (iii) if formulated,
that any proposed business strategy, performance improvement plan, and/or recommendations will achieve the desired results or outcomes
anticipated by Company’s management or the Board. Further, neither A&M, nor the Engagement Personnel, assume any responsibility
for the Company’s decision to pursue, or not pursue any appropriate business strategy, performance improvement plan, and/or
set of recommendations, or to effect, or not to effect any potential transaction contemplated by the Company. The Engagement Personnel
shall be responsible for implementation only of the elements of the appropriate business strategy, performance improvement plan,
and/or set of recommendations, approved by the Board and only to the extent and in the manner authorized and directed by the Board.


 






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IV. Compensation


 


A&M will receive fees for the services of the
Engagement Personnel of $165,000 per month. The Engagement will commence on a mutually agreed upon date no later than November
18, 2019 and will continue until the earlier of (i) the termination of this Agreement by either party in accordance with Section
V or (ii) April 30, 2020.


In addition, A&M will be reimbursed for its
reasonable out-of-pocket expenses incurred in connection with this assignment, such as air and ground transportation, lodging and
meals. A&M also charges a flat rate of 3% of hourly professional fees to cover costs associated with market research, benchmarking,
collaboration tools, technology and software license fees and other internal services that A&M makes available. All fees and
expenses will be billed and payable on a monthly basis.


We will present invoices monthly from the project
start date with amounts billed in advance to reflect the estimated fees and expenses for the upcoming period.  Invoices are
due within 30 days of receipt. Differences between estimated and actual amounts will be reconciled and adjusted on the subsequent
period’s bill.  Should any invoice remain unpaid for more than 30 days after the date thereof, interest shall be paid
at the lesser of 1.5% per month or the maximum amount permissible under law per month. 


 


V. Termination


 


This Agreement will apply from the commencement
of the services referred to in Section I and may be terminated by either party without cause by written notice to the other party.
Any termination by the Company shall be effective immediately upon delivery of written notice to A&M, while any termination
by A&M, other than for Good Reason (as defined below), shall not be effective until 30 days following the date on which A&M
delivers written notice to the Company (in each case, such date shall be referred to as the “Termination Date”). “Good
Reason” shall mean the Company’s misrepresentation of or failure to disclose material facts, failure to pay fees or
expenses when due (or circumstances indicating to A&M that fees or expenses will not be paid when due), circumstances such
that it is unethical or unreasonably difficult for A&M to continue performance of the engagement, or other just cause. A&M
normally does not withdraw from an engagement unless the Company misrepresents or fails to disclose material facts, fails to pay
fees or expenses, or makes it unethical or unreasonably difficult for A&M to continue performance of the engagement, or other
just cause exists. On termination of the Agreement, any fees and expenses due to A&M shall be remitted promptly (including
fees and expenses that accrued prior to but are invoiced subsequent to the Termination Date). Upon termination of this Agreement
pursuant to this Section V, A&M shall be entitled only to the prorated portion of any fees or expenses for the billing period
in which the Agreement is terminated, calculated from the first day of the billing period through the Termination Date.


 


The provisions of this Agreement that give the
parties rights or obligations beyond its termination shall survive and continue to bind the parties.


 






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VI. Change Order Process



 


During the Project either party may request additions, deletions,
or modifications to the scope, nature or timing of the Services described in this Statement of Work (“Changes”). A&M
shall have no obligation to commence work in connection with any requested Change involving an increase or decrease in the scope
of work until the fee and/or schedule impact of the Change is agreed upon in a written change order signed by both A&M and
the Company Upon a request for a Change, A&M shall submit a proposal to the Company describing the Changes, including, as applicable,
the impact of such Changes on schedule, fees and expenses. The Company shall either indicate its acceptance of the proposed Changes
by signing the change order or advise A&M not to perform the Changes, in which event A&M shall proceed with the original
Services.


The occurrence of (1) any change in any law, rule
or regulation that materially affects the scope, nature or quantity of the Services, (2) any event or transaction that significantly
increases or decreases the size and/or nature of the operations of the Company in a manner that affects the scope, nature or quantity
of the Services, or (3) any other event or condition that significantly increases or decreases costs associated with providing
the Services shall be considered a Change, and A&M and the Company shall promptly meet to negotiate and document in writing
a reasonable, customary, and equitable adjustment in the schedule and/or fees payable to A&M.


 


VII. Other Provisions


 


No Audit


 


Company acknowledges and agrees that A&M and
Engagement Personnel are not being requested to perform an audit, review or compilation, or any other type of financial statement
reporting engagement that is subject to the rules of the AICPA, SEC or other state or national professional or regulatory body.


 


Third Party Beneficiary


 


The Company acknowledges that all advice (written
or oral) provided by A&M and the Engagement Personnel to the Company in connection with this engagement is intended solely
for the benefit and use of the Company (limited to its Board and management) in considering the matters to which this engagement
relates. The Company agrees that no such advice shall be used for any other purpose or reproduced, disseminated, quoted or referred
to at any time in any manner or for any purpose other than accomplishing the tasks referred to herein without A&M’s prior
approval (which shall not be unreasonably withheld), except as required by law.


 






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Conflicts


 


A&M is not currently aware of any relationship
that would create a conflict of interest with the Company or those parties-in-interest of which you have made us aware. Because
A&M and its affiliates and subsidiaries comprise a consulting firm (the “Firm”) that serves clients on an international
basis in numerous cases, both in and out of court, it is possible that the Firm may have rendered or will render services to, or
have business associations with, other entities or people which had or have or may have relationships with the Company, including
creditors of the Company. The Firm will not be prevented or restricted by virtue of providing the services under this Agreement
from providing services to other entities or individuals, including entities or individuals whose interests may be in competition
or conflict with the Company’s, provided the Firm makes appropriate arrangements to ensure that the confidentiality of information
is maintained.


 


Confidentiality


 


A&M and Engagement Personnel shall keep as
confidential all non-public information received from the Company in conjunction with this engagement, except: (i) as requested
by the Company or its legal counsel; (ii) as required by legal proceedings; or (iii) as reasonably required in the performance
of this engagement. All obligations as to non-disclosure shall cease as to any part of such information to the extent that such
information is, or becomes, public other than as a result of a breach of this provision.


 


Non-Solicitation


The Company, on behalf of itself and its subsidiaries
and affiliates and any person which may acquire all or substantially all of its assets agrees that, until two (2) years subsequent
to the termination of this engagement, it will not solicit, recruit, hire or otherwise engage any employee of A&M or any of
its affiliates who worked on this engagement while employed by A&M or its affiliates (“Solicited Person”). Should
the Company or any of its subsidiaries or affiliates or any person who acquires all or substantially all of its assets extend an
offer of employment to or otherwise engage any Solicited Person and should such offer be accepted, A&M shall be entitled to
a fee from the Company equal to the Solicited Person’s hourly client billing rate at the time of the offer multiplied by
4,000 hours for a Managing Director, 3,000 hours for a Senior Director and 2,000 hours for any other A&M employee. The Company
acknowledges and agrees that this fee fairly represents the loss that A&M will suffer if the Company breaches this provision.
The fee shall be payable at the time of the Solicited Person’s acceptance of employment or engagement


 






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Indemnification / Limitations on Liability.


 


The Company shall indemnify the Engagement Personnel
acting as officers (the “Indemnified Professionals”) to the same extent as the most favorable indemnification it extends
to its officers or directors, whether under the Company’s bylaws, its certificate of incorporation, by contract or otherwise,
and no reduction or termination in any of the benefits provided under any such indemnities shall affect the benefits provided to
the Indemnified Professionals. The Indemnified Professionals shall be covered as officers under the Company’s existing director
and officer liability insurance policy. As a condition of A&M accepting this engagement, a Certificate of Insurance evidencing
such coverage shall be furnished to A&M prior to the effective date of this Agreement. The Company shall give thirty (30) days’
prior written notice to A&M of cancellation, non-renewal, or material change in coverage, scope, or amount of such director
and officer liability policy. The Company shall also maintain such insurance coverage for the Indemnified Professionals for a period
of not less than six years following the date of the termination of the Indemnified Professionals’ services hereunder. The
provisions of this section are in the nature of contractual obligations and no change in applicable law or the Company’s
charter, bylaws or other organizational documents or policies shall affect the Indemnified Professionals’ rights hereunder.
The attached indemnity and limitation on liability provisions are incorporated herein and the termination of this agreement or
the engagement shall not affect those provisions, which shall remain in full force and effect.


 


Miscellaneous


 


This Agreement (together with the attached indemnity
provisions), including, without limitation, the construction and interpretation of thereof and all claims, controversies and disputes
arising under or relating thereto, shall be governed and construed in accordance with the laws of the State of New York, without
regard to principles of conflict of law that would defer to the laws of another jurisdiction. The Company and A&M agree to
waive trial by jury in any action, proceeding or counterclaim brought by or on behalf of the parties hereto with respect to any
matter relating to or arising out of the engagement or the performance or non-performance of A&M hereunder. The Company and
A&M agree, to the extent permitted by applicable law, that any Federal Court sitting within the Southern District of New York
shall have exclusive jurisdiction over any litigation arising out of this Agreement; to submit to the personal jurisdiction of
the Courts of the United States District Court for the Southern District of New York; and to waive any and all personal rights
under the law of any jurisdiction to object on any basis (including, without limitation, inconvenience of forum) to jurisdiction
or venue within the State of New York for any litigation arising in connection with this Agreement.


 


This Agreement shall be binding upon A&M and
the Company, their respective heirs, successors, and assignees, and any heir, successor, or assignee of a substantial portion of
A&M’s or the Company’s respective businesses and/or assets, including any Chapter 11 Trustee. This Agreement incorporates
the entire understanding of the parties with respect to the subject matter hereof and may not be amended or modified except in
writing executed by the Company and A&M. Notwithstanding anything herein to the contrary, A&M may reference or list the
Company’s name and/or logo and/or a general description of the services in A&M’s marketing materials, including,
without limitation, on A&M’s website.


 


_______________________________________


 





 



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 If the foregoing is acceptable to you,
kindly sign and return the enclosed copy of this letter to acknowledge your agreement with its terms.


 


	 	Very truly yours,
	 	 
	 	Alvarez & Marsal Corporate Performance Improvement, LLC
	 	 
	 	By:	
        /s/ Helen Van Ness

	 	 	Name:	Helen Van Ness
	 	 	Title:	Managing Director
	 	 	 	 
	 	 	 	600 Madison Ave., 10th floor,
	 	 	 	New York, NY 10022
	 	 	 	+1 908-313-2370
	 	 	 	hvanness@alvarezandmarsal.com


 


 


Accepted and agreed:


 


Town Sports International Holdings, Inc.


 


	
         

         

        By:
	/s/ Stuart M. Steinberg
	
         

         

        Name:
	Stuart M. Steinberg
	
         

         

        Title:
	General Counsel
	
         

         

        Date:
	November 14, 2019


 


 


Attachment: Indemnification and Limitation on Liability Agreement


 






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Indemnification and Limitation on
Liability Agreement


 


This indemnification and limitation on liability
agreement is made part of an agreement, dated November 7, 2019 (which together with any renewals, modifications or extensions thereof,
is herein referred to as the “Agreement” by and between Alvarez & Marsal Corporate Performance Improvement, LLC
(“A&M”) and Town Sports International Holdings, Inc. (the “Company”), for services to be rendered to
the Company by A&M.


 


A.       The
Company agrees to indemnify and hold harmless each of A&M, its affiliates and their respective shareholders, members, managers,
employees, agents, representatives and subcontractors (each, an “Indemnified Party” and collectively, the “Indemnified
Parties”) against any and all losses, claims, damages, liabilities, penalties, obligations and reasonable documented expenses,
including the costs for counsel or others (including employees of A&M, based on their then current hourly billing rates) in
investigating, preparing or defending any action or claim, whether or not in connection with litigation in which any Indemnified
Party is a party, or enforcing the Agreement (including these indemnity provisions), as and when incurred, caused by, relating
to, based upon or arising out of (directly or indirectly) the Indemnified Parties’ acceptance of or the performance or nonperformance
of their obligations under the Agreement; provided, however, such indemnity shall not apply to any such loss, claim, damage, liability
or expense to the extent it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to
have resulted primarily and directly from such Indemnified Party’s gross negligence or willful misconduct. The Company also
agrees that (a) no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to
the Company for or in connection with the engagement of A&M, except to the extent that any such liability for losses, claims,
damages, liabilities or expenses are found in a final judgment by a court of competent jurisdiction (not subject to further appeal)
to have resulted primarily and directly from such Indemnified Party’s gross negligence or willful misconduct and (b) in no
event will any Indemnified Party have any liability to the Company for special, consequential, incidental or exemplary damages
or loss (nor any lost profits, savings or business opportunity). The Company further agrees that it will not, without the prior
consent of an Indemnified Party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which such Indemnified Party seeks indemnification hereunder (whether or not such Indemnified
Party is an actual party to such claim, action, suit or proceedings) unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Party from all liabilities arising out of such claim, action, suit or proceeding. Notwithstanding
anything to the contrary herein in no event shall the Company be required to indemnify an Indemnified Party with respect to any
claim brought by such Indemnified Party against the Company (other than a claim seeking to enforce the terms of this Agreement
including these indemnity provisions).


 






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B.       These
indemnification provisions shall be in addition to any liability which the Company may otherwise have to the Indemnified Parties.
In the event that, at any time whether before or after termination of the engagement or the Agreement, as a result of or in connection
with the Agreement or A&M’s and its personnel’s role under the Agreement, A&M or any Indemnified Party is required
to produce any of its personnel (including former employees) for examination, deposition or other written, recorded or oral presentation,
or A&M or any of its personnel (including former employees) or any other Indemnified Party is required to produce or otherwise
review, compile, submit, duplicate, search for, organize or report on any material within such Indemnified Party’s possession
or control pursuant to a subpoena or other legal (including administrative) process, the Company will reimburse the Indemnified
Party for its documented out of pocket expenses, including the reasonable fees and expenses of its counsel, and will compensate
the Indemnified Party for the time expended by its personnel based on such personnel’s then current hourly rate.


 


C.       If
any action, proceeding or investigation is commenced to which any Indemnified Party proposes to demand indemnification hereunder,
such Indemnified Party will notify the Company with reasonable promptness; provided, however, that any failure by such Indemnified
Party to notify the Company will not relieve the Company from its obligations hereunder, except to the extent that such failure
shall have actually prejudiced the defense of such action. The Company shall promptly pay documented expenses reasonably incurred
by any Indemnified Party in defending, participating in, or settling any action, proceeding or investigation in which such Indemnified
Party is a party or is threatened to be made a party or otherwise is participating in by reason of the engagement under the Agreement,
upon submission of invoices therefor, whether in advance of the final disposition of such action, proceeding, or investigation
or otherwise. Each Indemnified Party hereby undertakes, and the Company hereby accepts its undertaking, to repay any and all such
amounts so advanced if it shall ultimately be determined that such Indemnified Party is not entitled to be indemnified therefor.
If any such action, proceeding or investigation in which an Indemnified Party is a party is also against the Company, the Company
may, in lieu of advancing the expenses of separate counsel for such Indemnified Party, provide such Indemnified Party with legal
representation by the same counsel who represents the Company, provided such counsel is reasonably satisfactory to such Indemnified
Party, at no cost to such Indemnified Party; provided, however, that if such counsel or counsel to the Indemnified Party shall
determine that due to the existence of actual or potential conflicts of interest between such Indemnified Party and the Company
such counsel is unable to represent both the Indemnified Party and the Company, then the Indemnified Party shall be entitled to
use separate counsel of its own choice, and the Company shall promptly advance its reasonable documented expenses of such separate
counsel upon submission of invoices therefor. Nothing herein shall prevent an Indemnified Party from using separate counsel of
its own choice at its own expense. The Company will be liable for any settlement of any claim against an Indemnified Party made
with the Company’s written consent, which consent shall not be unreasonably withheld.


 






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D.       In
order to provide for just and equitable contribution if a claim for indemnification pursuant to these indemnification provisions
is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification
may not be enforced in such case, even though the express provisions hereof provide for indemnification, then the relative fault
of the Company, on the one hand, and the Indemnified Parties, on the other hand, in connection with the statements, acts or omissions
which resulted in the losses, claims, damages, liabilities and costs giving rise to the indemnification claim and other relevant
equitable considerations shall be considered; and further provided that in no event will the Indemnified Parties’ aggregate
contribution for all losses, claims, damages, liabilities and expenses with respect to which contribution is available hereunder
exceed the amount of fees actually received by the Indemnified Parties pursuant to the Agreement. No person found liable for a
fraudulent misrepresentation shall be entitled to contribution hereunder from any person who is not also found liable for such
fraudulent misrepresentation.


 


E.       In
the event the Company and A&M seek judicial approval for the assumption of the Agreement or authorization to enter into a new
engagement agreement pursuant to either of which A&M would continue to be engaged by Company, the Company shall promptly pay
expenses reasonably incurred by the Indemnified Parties, including attorneys’ fees and expenses, in connection with any motion,
action or claim made either in support of or in opposition to any such retention or authorization, whether in advance of or following
any judicial disposition of such motion, action or claim, promptly upon submission of invoices therefor and regardless of whether
such retention or authorization is approved by any court. The Company will also promptly pay the Indemnified Parties for any expenses
reasonably incurred by them, including attorneys’ fees and expenses, in seeking payment of all amounts owed it under the
Agreement (or any new engagement agreement) whether through submission of a fee application or in any other manner, without offset,
recoupment or counterclaim, whether as a secured claim, an administrative expense claim, an unsecured claim, a prepetition claim
or a post petition claim.


 


F.       Neither
termination of the Agreement nor termination of A&M’s engagement nor the filing of a petition under Chapter 7 or 11 of
the United States Bankruptcy Code (nor the conversion of an existing case to one under a different chapter) shall affect these
indemnification provisions, which shall hereafter remain operative and in full force and effect.


 


G.       The
rights provided herein shall not be deemed exclusive of any other rights to which the Indemnified Parties may be entitled under
the certificate of incorporation or bylaws of the Company, any other agreements, any vote of stockholders or disinterested directors
of the Company, any applicable law or otherwise.


 









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Accepted and agreed:


 


	Town Sports International Holdings, Inc.	 	Alvarez & Marsal Corporate Performance Improvement, LLC
	
         

         

        By:
	/s/ Stuart M. Steinberg	 	
         

         

        By:
	/s/ Helen Van Ness
	
         

         

        Name:
	Stuart M. Steinberg	 	
         

         

        Name:
	Helen Van Ness
	
         

         

        Title:
	General Counsel	 	
         

         

        Title:
	Managing Director


 








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