EX-10.7



 







EXHIBIT 10.7




     AMENDMENT NO. 2 TO STOCKHOLDERS AGREEMENT dated as of May 30, 2006 (this
“Amendment”), among Town Sports International Holdings, Inc., a Delaware corporation (the
“Company”), Town Sports International, Inc., a New York corporation (“TSI”), and
those of the Stockholders (as defined in the Stockolders Agreement referred to below) that are
signatory hereto (the Company, TSI and such Stockholders are herein referred to collectively as the
“Parties”).



RECITALS




     A. The Parties and certain other Stockholders have entered into that certain Stockholders
Agreement dated as of February 4, 2004, and Amendment No. 1 to the Stockholders Agreement dated as
of March 23, 2006 (the “Stockholders Agreement”).



     B. Each of the persons listed on Annex A to this Amendment have either (i) entered
into an Executive Stock Agreement with the Company and certain other parties or a joinder agreement
with the Company, and pursuant to such Executive Stock Agreements or joinder agreements, each
person listed on Annex A has acknowledged and agreed that such person is a party to the
Stockholders Agreement which governs and restricts such person’s ability to transfer any shares of
the Company’s capital stock and other matters relating to such person as a shareholder of the
Company or (ii) has otherwise agreed to be bound by the terms of the Stockholders Agreement.



     C. The Company has agreed to register the shares of common stock of the Company held by the
Canterbury Investors in connection with the Company’s planned Initial Public Offering.



     D. The Farallon Investors have agreed to purchase 1,300,000 shares of the common stock of the
Company held by the Canterbury Investors from the Canterbury Investors immediately after the
consummation of the Company’s planned Initial Public Offering.



     E. The Parties desire to waive certain provisions of the Stockholders Agreement in connection
with the purchase and sale.



     F. The Parties desire to amend the Stockholders Agreement in accordance with Section 10 of the
Stockholders Agreement.



AGREEMENT




     NOW, THEREFORE, on the basis of the preceding facts, and in consideration of the mutual
agreements and covenants set forth below and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the Parties agree as follows:



     1. Definitions. Unless the context otherwise requires, all capitalized and other
defined terms not defined in this Amendment shall have the respective meanings accorded to them in
the Stockholders Agreement.



     2. Amendment.



 









 





     (a) The Stockholders Agreement is hereby amended to provide that, for all purposes of the
Stockholders Agreement, each of the persons listed on Annex A shall be deemed, for purposes
only of the Stockholders Agreement, an “Executive”, as such term is defined in the Stockholders
Agreement.



     (b) Section 4(c) of the Stockholders Agreement is hereby amended in its entirety to read as
follows following the consummation of the Company’s Initial Public Offering:



     “(c) Permitted Transfers. The restrictions contained in
this Section 4 shall not apply with respect to any Transfer of
Stockholder Shares (or Preferred Shares, to the extent this Section
4 applies to Preferred Shares) by any Stockholder (i) in the case of
an individual Stockholder, pursuant to applicable laws of descent
and distribution or among such Stockholder’s Family Group, (ii) in
the case of holders of the BRS Shares and its Permitted Transferees,
(A) among their Affiliates, partners and employees (provided that in
the case of a distribution to BRS’ partners, such distribution shall
be made pro rata to all such partners in accordance with the terms
of its agreement of limited partnership), (B) to any employee,
prospective employee, director or prospective director of the
Company or any Subsidiary of the Company as incentive compensation,
(C) to any former or prospective employee, director or prospective
director of BRS or any Affiliate of BRS or (D) to any BRS Investor
or BRS, (iii) in the case of any Canterbury Investor, any Rosewood
Investor, any Farallon Investor or CapitalSource and their
respective Permitted Transferees, (A) among their respective
Affiliates, members and partners (provided that in the case of a
distribution to any Farallon Investor’s, any Rosewood Investor’s,
any Canterbury Investor’s or any CapitalSource’s members or
partners, such distribution shall be made pro rata to all such
partners in accordance with the terms of their respective agreements
of limited partnership or limited liability operating agreements)
and (B) to any employee, director or prospective director of the
Company or any Subsidiary of the Company as incentive compensation,
(iv) in the case any Canterbury Investor or CapitalSource, in the
ordinary course of its business and in accordance with applicable
law, to an Affiliate of such Person or to one or more banks or other
financial institutions or entities which are not then in direct
competition with the Company only if such Canterbury Investor or
CapitalSource is required to do so pursuant to its applicable
agreement of limited partnership or limited liability operating
agreement or in connection with any dissolution of such Person
pursuant to its agreement of limited partnership or limited
liability operating agreement, (v) in the case of any Farallon
Investor, to another Farallon Investor; or (vi) by the Canterbury
Investors to the Farallon Investors pursuant to the terms of the
securities purchase



-2-









 






agreement by and among FCP, FCIP, FII, RRC, Canterbury Detroit
and Canterbury Mezzanine; provided, that in each case set forth
above, the rights and restrictions contained in this Section 4 shall
continue to be applicable to such Stockholder Shares or Preferred
Shares, as the case may be, after any such Transfer as if such
Stockholder Shares or Preferred Shares, as the case may be, were
held by the transferor; and provided further, that the transferees
of such Stockholder Shares or Preferred Shares, as the case may be,
shall have agreed in writing to be bound by the provisions of this
Agreement which affect the Stockholder Shares or Preferred Shares,
as the case may be, so transferred by executing a joinder in
substantially the form attached hereto as Exhibit A. All transferees
permitted under this Section 4(c) are collectively referred to
herein as “Permitted Transferees.” ”



     3. Governing Law. This Amendment shall be governed by, construed and enforced in
accordance with, the laws of the State of New York.



     4. Counterparts. This Amendment may be executed (including by facsimile transmission)
with counterpart signature pages or in any number of counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall constitute one and the
same agreement.



     5. Bound Parties. The Stockholders Agreement is being amended by this Amendment
pursuant to Section 10 of the Stockholders Agreement and the amendment to the Stockholders
Agreement shall be effective upon the execution and delivery of this Amendment by the requisite
approval of the Company and those Stockholders specified in Section 10 of the Stockholders
Agreement.



     6. No Other Amendment. Except as expressly amended by this Amendment, the
Stockholders Agreement otherwise shall remain unaffected and shall be in full force and effect.



-3-









 





     IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
Amendment as of the date first above written.



	 	 	 	 	 
	 	TOWN SPORTS INTERNATIONAL HOLDINGS, INC.

 	 
	 	By:  	/s/ Richard Pyle
 	 
	 	 	Name:  	Richard Pyle 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	TOWN SPORTS INTERNATIONAL, INC.

 	 
	 	By:  	/s/ Richard Pyle
 	 
	 	 	Name:  	Richard Pyle 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



[Signature page to Amendment No. 2 to the Stockholders Agreement]




 









 








Annex A




Bartlett, Dirk

Brinsmade, Alexandra

Brush, Vince

Bubolo, Kelley

Buckbee, Bruce

Buckley, Gerard

Calvo, Gerard

Choo, Jeanie

Corella, Jill

Dang, Long

Daniel, Matt

Derleth, Karl

DiMaggio, Anthony

Donnely, Allyson

Duncan, Rob

Fifield, Robert

Gallagher, Dan

Gerson, Susan

Gurtcheff, Chris

Hartop, David

Hatten, Doug

Haughey, Ann

Hennigan, Kate

Herbst, Robert

Hickey, Judith

Houren, Peggy

Hufcut, Lisa

Jones, Cheryl

Keightley, Tim

Kendig, Gary

Khan, Asif

Kraemer, John

Laing, Chee

Lande, Jeff

Marotta, Paul

McGovern, Maureen

Meltzer, Jodie

Napolitano, Frank

O’Hearen, Sean

Oberg, Nancy

Onofrio, Dan

Priestly, Lisa

Prue, Jenny

Rasulo, Pam




 









 





Richmond, Merrill

Rockett, Jo

Rockett, Kate

Ruta, Chris

Shane, Adam

Sherman, Seth

Sinert, Jenny

Smallwood, John

Stabile, Chris

Stephen, Randy

Sullivan, Barbara

Talty, Fred

Terlitsky, Mark

Verina, Daniel

Werner, Doug