Document:

EX-10.35

 

Exhibit 10.35      

July 23, 2007

Mr. David M. Kastin

24 Jarombek Drive

Towaco, NJ 07087

Dear David:

This letter will confirm an offer of employment to you by Town Sports
International, LLC (the “Company” or “Town Sports International”), a subsidiary
of Town Sports Holdings Inc. (“TSI Holdings”).

Your initial assignment will be as Senior Vice President/General Counsel and
Corporate Secretary,
reporting directly to Mr. Alex Alimanestianu, President/ Chief Development
Officer. You will be based at our headquarters office located at 5 Penn Plaza,
New York, NY. Your initial salary will be $275,000.00 per/year, ($10,576.93
Bi-Weekly). Future salary increases will be based on demonstrated job
performance. Your performance will be reviewed each year in accordance to
Company policy and practice. Your first formal review will be scheduled for
January 2009.

You will be eligible to join the company’s executive benefit program on the
first of the month following the completion of ninety (90) days of employment.
You will be eligible to join the Company’s 401K program on the first of the
month of the quarter following your one (1) year anniversary. You will be
eligible for vacation, holidays and time off in accordance to the Company’s
personal time off policy (PTO) consistent with all other Executives. Please be
aware that Town Sports International’s PTO does not allow carryover from year
to year. Therefore, if the time is not taken it is forfeited each year.

You will be reimbursed for all normal business expenses in accordance to
Company policy.

In order to induce you to commence employment with us, you will be paid a bonus
of $20,000 within 30 days of your start date. If you resign from the employ
of the Company or your employment is terminated by the Company for Cause (as
defined below) within six months of your start date, you will be required to
repay such amount in full and if such an event occurs during the following six
months, you will be required to repay 50% of such bonus.

You will be eligible for a performance bonus of Sixty Thousand Dollars
($60,000.00), prorated for 2007 in accordance to the Officer Performance Bonus
Program. The program is based on the attainment of company performance towards
EBITDA targets and can be increased or decreased based on the actual company
results. Actual incentive payments will be paid yearly, usually in the first
quarter of each following year, after Board approval.

It was also committed that you will be eligible to receive, subject to approval
of the Compensation Committee of the Board, a nonqualified option to purchase
ten thousand (10,000) shares of TSI Town Sports International Holdings (or any
successor entity) non-qualified stock options common stock. Such options are,
expected to be granted in August 2007. If the current Stock Option program
survives, twenty-five percent (25%) of the shares will vest at the end of each
anniversary of your employment with Town Sports International.

Your employment with the Company will be “at will,” meaning that either you or
the Company will be entitled to terminate your employment at any time and for
any reason, with or without cause. Except as set forth in the following
sentence, in the event of termination other than for “cause,” you will be paid
severance equal to one year salary at your then current salary. For purposes
of this Agreement “cause”

 

 

shall mean termination for: (1) a repeated refusal to comply with a lawful
directive of the President/Chief Development Officer, (2) serious misconduct,
dishonesty or disloyalty directly related to the performance of duties for the
Company, which results from a willful act or omission and which is materially
injurious to the operations, financial condition or business reputation of the
Company or any significant subsidiary thereof; (3) being convicted (or entering
into a plea bargain admitting criminal guilt) in any criminal proceeding that
may have an adverse impact on the Company’s reputation and standing in the
community; (4) willful and continued failure to substantially perform your
duties under this Agreement; or (5) any other material breach of this
Agreement. In the event of termination for cause, you will be entitled to any
unpaid salary through the date of termination. You will not be entitled to any
other compensation from the Company, including, without limitations, severance
pay.

You will be required to sign and return the Confidentiality Agreement attached
to this offer letter. In addition, you represent that the execution by you of
this letter and the performance by you of your contemplated duties does not
conflict with, or result in a violation or breach of, any other agreement or
arrangement to which you are bound. In your work for the Company, you will be
expected not to use or disclose any confidential information, including trade
secrets, of any former employer or other person to whom you have an obligation
of confidentiality. You agree you will not bring onto Company premises any
unpublished documents or property belonging to any former employer or other
person to whom you have any obligation of confidentiality.

 

We are required by law to confirm your eligibility for employment in the United
States. Thus, you will be asked to provide proof of your eligibility to work
in the U.S. on your start date.

This offer letter together with the Confidentiality Agreement sets forth the
entire agreement and understanding between TSI and you relating to your
employment and supersedes all prior verbal discussions between us.

All payments pursuant to this offer letter will be subject to applicable
withholding taxes.
Please acknowledge and confirm your acceptance hereof by, signing and returning
one copy of this letter and the Confidentiality Agreement to me at the address
above.

I believe this covers everything. We all look forward to you joining our
Executive team in the near future. Please do not hesitate to contact Alex or
me if you have any questions.

 

Sincerely,

/s/ Jim Rizzo

_____________________________

Jim Rizzo

Senior Vice President

Human Resources

/s/ David M. Kastin

_____________________________

David M. Kastin/Date

CC:  Mr. Alex Alimanestianui — President/C.D.O.

         Mr. Richard Pyle — Chief Financial OfficerEX-10.37

 

Exhibit 10.37

January 22, 2008

Mr. Richard Pyle

c/o Town Sports International Holdings, Inc.

5 Penn Plaza — 4th Floor

New York, NY 10001

Dear Richard:

     This letter agreement (the “Agreement”) confirms the terms that Town Sports International, LLC
(the “Company”) is offering you in connection with your resignation from the employ of the Company
and its affiliates from all officer and other positions that you currently hold with the Company
and its affiliates, including Town Sports International Holdings, Inc. (“TSI Holdings”). The
payments and benefits offered to you under this Agreement are made in consideration for the
promises and obligations you undertake by signing this Agreement, specifically the non-solicitation
and non-compete obligations set forth in Section 12 of this Agreement.

     1. Resignation Date. The effective date of your resignation from the employ of the
Company and its affiliates in all capacities shall occur on March 31, 2008 (the “Resignation
Date”). During the period from the date hereof through the Resignation Date, you shall continue to
be an employee of the Company having such duties and responsibilities as determined by the Chief
Executive Officer and you shall receive your base salary at the rate in effect on the date hereof,
participate in the Company’s benefit plans in accordance with their terms and your options to
purchase TSI Holdings common stock shall remain outstanding and continue to vest. You shall be
paid for any accrued, but not taken, PTO (personal time off) days in accordance with the Company’s
prevailing payroll practices.

     2. Separation Benefits. In return for your agreement to and compliance with your
commitments and obligations set forth in this Agreement following your execution and delivery of
this Agreement, and subject to the terms of this Agreement:

     (a) The Company shall continue to pay you the equivalent of your base salary pay rate (at the
rate in effect on the Resignation Date) for a period commencing on the Resignation Date and ending
on August 31, 2008 (the “Transition Period”), payable in accordance with the Company’s prevailing
payroll practices and subject to deduction for all required income and payroll taxes.

     (b) You shall be entitled to receive an amount equivalent to a pro rata portion of your annual
bonus (based upon the percentage of the fiscal year that shall have elapsed through the Resignation
Date under the terms of the Company’s Bonus Plan for 2008 that you would have been entitled to
receive had you remained in the employ of the Company through the payment date of such 2008 bonus
based upon the Company’s actual results for 2008, which amount shall be payable at such time as
bonuses are paid to the Company’s employees generally. This bonus

 

 

payment shall be subject to all other terms of the Company’s Bonus Plan for 2008 and shall be
and subject to deduction for all required income and payroll taxes

     (c) The Company shall continue your health and dental coverage (or provide comparable
substitute coverage), and continue to pay that portion of the premium that it pays for active
employees at such times as the Company makes such payments for its active employees on a monthly
basis until the earlier of March 31, 2013 and the date on which you are eligible for coverage under
another comparable plan. You agree to promptly notify the Company in writing in the event that you
are eligible for coverage under another such plan. You agree that this period of coverage shall
run concurrently with the Company’s obligations pursuant to COBRA and the Company may require you
to elect COBRA for the applicable period.

     (d) During the Transition Period, each of you, your wife and children may continue Passport
Memberships (or its equivalent) at no cost (provided however that such memberships shall cease in
the event you commence employment or a consulting role with a competitor of the Company or in the
event of your material breach of this Agreement). 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 (the “Rules”).

     (e) During the Transition Period, you agree to be available to the Company to provide certain
consulting and advisory services at such times as may be reasonably requested by the Company. The
Company will reimburse you for any reasonable out-of-pocket expenses incurred by you in connection
with the performance of such services; provided that such expenses shall not be required to be
incurred by you, and shall not be reimbursed, unless such expenses have been approved in writing in
advance by the Chief Executive Officer or Chief Financial Officer of the Company.

     3. Consulting Engagement.

     (a) You hereby agree to serve, and the Company hereby agrees to retain you, as a consultant to
the Company for the period (the “Consulting Period”) beginning September 1, 2008 through and
including August 31, 2009, provided that the Consulting Period may be terminated prior to the
aforementioned expiration date by either party upon 30 days prior written notice without any
further liability. Your services hereunder during the Consulting Period will consist of such
consulting and advisory services, and will be provided at such times, as may be reasonably
requested from time to time by the Company. The Company will reimburse you for any reasonable
out-of-pocket expenses incurred by you in connection with the performance of such consulting and
advisory services; provided that such expenses shall not be required to be incurred by you, and
shall not be reimbursed, unless such expenses have been approved in writing in advance by the Chief
Executive Officer or Chief Financial Officer of the Company.

     (b) In consideration for the consulting services to be performed hereunder and for entering in
the Release set forth in Section 4, below, the Company will pay you a monthly fee of five thousand
dollars ($5,000). Such payments shall commence on September 30, 2008 and shall be payable in
arrears on the last day of each month, pro rated for the number of days elapsed in any month in
which the Consulting Period is earlier terminated. In addition, during the Consulting

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Period, each of you, your wife and children may continue Passport Memberships (or its equivalent)
at no cost (provided however that such memberships shall cease in the event you commence employment
or a consulting role with a competitor of the Company or in the event of your material breach of
this Agreement). The aforementioned memberships are subject to all of the Rules.

     (c) You understand that, as a consultant, you will not be entitled to receive benefits
available to Company employees, including, but not limited to, health, dental, life and disability
insurance and participation in any 401(k) plan except by virtue of Section 2 above. In addition,
you shall be responsible for the payment of taxes and the Company shall not withhold any amounts in
satisfaction of such taxes, unless required to do so by law. You further agree that if any portion
of the consulting fee is deemed by the Internal Revenue Service, or any other federal or state
governmental agency, to be taxable and to have been subject to withholding, you will pay all taxes,
as well as all penalties and interest, the Company is found to owe and you will indemnify, defend
and hold the Company harmless with respect to any claims, demands, actions or causes of action
relating to liability for, and/or collection of, any such taxes, penalties and/or interest.

     (d) Nothing contained in this Agreement shall be construed as creating an agency relationship
between you and the Company and, without the Company’s prior written consent, you shall have no
authority hereunder to bind the Company or make any commitments on the Company’s behalf. You shall
not take any action in connection with the rendering of your services hereunder which you
reasonably believe would cause any third party to assume that you have such authority.

     4. Release.

     (a) In consideration of the obligations contained in Section 2 of this Agreement and for other
valuable consideration, 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 (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 date of execution
of this Agreement, including, but not limited to, those arising during or in any manner out of your
employment with, or your resignation from, the Company, or anything else that may have happened up
to and including the day you sign 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; and commissions; tort; 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

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supervision), wrongful or retaliatory discharge, infliction of emotional injury, or any other facts
or claims; retirement, stock option 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
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), 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.

     (b) Notwithstanding the foregoing, the release set forth in Section 4(a) and the release
referenced in Section 4(e), shall not apply to (i) the obligations of the Company under this
Agreement, (ii) your vested benefits under the Company’s 401(k) plan, and (iii) the Company’s
obligations under the Option Plans (as defined and set forth below in Section 5), and any related
option agreement. You further agree that the payments and benefits described in this Agreement
shall 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
or officer of the Company, TSI Holdings or any of their respective subsidiaries or affiliates and
your resignation therefrom. You hereby acknowledge and confirm that you are providing the release
and discharge set forth in this Section 4 only in exchange for consideration in addition to
anything of value to which you are already entitled.

     (c) You 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 and discharge of the Released Parties, you agree, 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 date of your execution of this Agreement,
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 this 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) Nothing in this release shall 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 of the Company, TSI Holdings and their respective subsidiaries and affiliates. The

4

 

Company shall 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)
to the fullest extent permitted by law in the same manner that it maintains such insurance for
other officers and directors.

     (e) As a further condition to the payments under Section 2, on or subsequent to the
Resignation Date. you shall execute a release of claims covering the period through the Resignation
Date in substantially the form of this Section 4.

     5. Options. Your options to purchase TSI Holdings common stock granted pursuant to
the 2004 Stock Option Plan, as amended, and the 2006 Stock Option Incentive Plan, as amended
(collectively, the “Option Plans”) to the extent vested as of the Resignation Date, shall remain
outstanding for the post-termination exercise period specified in Option Plans and the applicable
option agreements. Such vested options will expire at the conclusion of such post-termination
exercise period to the extent not previously exercised. That portion of the stock options that
remain unvested as of the Resignation Date shall be forfeited on the Resignation Date without any
payment.

     6. Club Membership. Commencing at the conclusion of the Consulting Period, each of
you, your wife and children may continue a lifetime Passport Membership at no cost (provided
however that such memberships shall cease in the event you commence employment or a consulting role
with a competitor of the Company or in the event of your material breach of this Agreement). The
aforementioned membership is subject to all of the Rules.

     7. No Other Compensation or Benefits. Except as otherwise specifically
provided herein, you shall 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 Resignation Date.

     8. Return of Company Property. On or prior to the Resignation Date, you agree to
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 shall not retain any copies thereof.
You also agree to leave 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. Notwithstanding the foregoing, you shall be permitted to retain the cell phone
(and number) provided by the Company, at your expense after the Resignation Date if you so choose.

     9. Breach. You acknowledge and agree that, notwithstanding any other provision of
this Agreement, in the event you breach this Agreement, including without limitation your
commitments within Sections 11 and 12 of this Agreement, the Company is entitled to appropriate
injunctive relief (which shall also apply to threatened breaches of this Agreement) and retains the
right to recoup any and all payments and benefits provided for in this Agreement, any damages
suffered by the Company, plus reasonable attorneys’ fees incurred in connection with such recovery
and, to the extent that such payments and/or benefits have not been fully

5

 

made to you, the Company reserves its rights to stop all such future payments and/benefits.
You agree that in the event you bring a claim covered by the release in Section 4 (including the
release described in Section 4(e)) in which you seek damages against the Company or any other
Released Party 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 Agreement shall serve as a complete defense
to such claims.

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

     11. Nondisclosure of Confidential Information. 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, 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) shall not disclose or communicate
Confidential Company Information to any person or persons; and (ii) shall not make use of Company
Confidential Information on your own behalf, or on behalf of any other person or persons. You
shall give immediate notice to the Company if you are ordered by a court or otherwise compelled by
law to reveal any Confidential Company Information to any third party. In view of the nature of
your employment and the nature of the Company Confidential Information to which you have had access
to (and shall continue to have access to through the Consulting Period), you acknowledge and agree
that any unauthorized disclosure to any person or persons of Company Confidential Information, or
other violation or threatened violation of this Agreement shall cause irreparable damage to the
Company and that, therefore, the Company shall, 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.

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     12. Non-Compete and Non-Solicitation.

     (a) In consideration of the monetary payments and other benefits received pursuant to Section
2 above, you agree that from the date hereof through two years following the end of the Consulting
Period (the “Restricted Period”), you shall not directly or indirectly own, manage, control,
participate in, consult with, be employed by, render services for, or in any manner engage in, any
business competing directly or indirectly with the business as now or hereafter conducted by the
Company or the businesses which are logical extensions of the Company’s current business, within
any metropolitan area in which the Company engages or has definitive plans to engage in such
business during the Consulting Period (a, “Competitor”); provided, that you shall not be precluded
from purchasing or holding publicly traded securities of any such entity so long as you hold less
than 2% of the outstanding units of any such class of securities and have no active participation
in the business of such entity. Notwithstanding the foregoing, you hereby agree that you shall not
directly or indirectly own, manage, control, participate in, consult with, be employed by, render
services for any Competitor in the United States that had revenues during the preceding year of at
least $30 million or any of the following entities: Crunch, 24 Hour, Equinox, NY Health and Racquet
Club, LA Fitness, Sport & Health, Lifetime Fitness or Bally’s Total Fitness (or any of their
successors) for three years following the end of the Consulting Period.

     (b) In consideration of the payments and benefits received pursuant to this Agreement, you
agree that through the Restricted Period, you shall not: (i) induce or attempt to induce any
employee or consultant of the Company to leave the employ or services of the Company, or in any way
interfere with the relationship between the Company and any employee or consultant thereof; or (ii)
hire any person who was an employee of the Company at any time during your employment period for a
position which would compete with the business of the Company in the Company’s markets as of the
date hereof, except for such employees who have been terminated for at least six months.

     (c) In consideration of the payments and benefits received pursuant to this Agreement, you
agree that through the Restricted Period, you shall not, directly or indirectly: (i) solicit or
attempt to enter into a contractual relationship with any customer, supplier, vendor, licensee,
franchisee or other business relation of the Company, which relationship will have an adverse
impact on the Company in a market in which the Company does business during the Consulting Period,
without prior approval from the Company; or (ii) induce or attempt to induce any customer,
supplier, vendor, licensee, franchisor or other business relation of the Company to cease doing
business with the Company, or in any way interfere with the relationship between any such customer,
supplier, vendor, licensee, franchisor or business relation, on the one hand, and the Company, on
the other hand.

     13. 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, shall not (and your
Representatives shall not) at any time engage in any form of conduct, or make any statements or
representations that disparage or otherwise impair the reputation, goodwill, or

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commercial interests of the Company, its management, stockholders, subsidiaries, parent,
and/or other affiliates.

     (b) From and after the Resignation Date, you shall (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 reasonable requests by the Company and its affiliates relating to
information concerning the Company which may be in your possession. The Company shall, as a
condition to your obligations under this Section 13(b), reimburse you for any reasonable out of
pocket expenses incurred as a result of such cooperation, provided that such expenses have been
approved in writing in advance by an executive officer of the Company.

     14. Applicable Law. This Agreement shall 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.

     15. Entire Agreement/Severability. You understand and agree that this Agreement
contains the entire understandings and agreements between the parties hereto with respect to the
subject matter hereof. For avoidance of doubt, nothing contained herein shall have any effect on
your rights and obligations under the Registration Rights Agreement, dated February 4, 2004, as
amended. The parties agree that this Agreement may not be modified, altered or changed except by a
written agreement signed by the parties, hereto. If any provision of this Agreement is held by a
Court to be invalid, the remaining provisions shall remain in full force and effect.

     16. Acceptance. You shall have twenty-one (21) days from the date set forth above to
consider the terms of this Agreement. In order to receive the benefits and payments provided for
by Section 2 of this Agreement and for the Company to retain you as a consultant, you must execute
this Agreement, have your signature notarized and return the executed Agreement to the Company,
addressed to the Company, Attention: General Counsel, at the address specified in Section 22 so
that it is received any time on or before the expiration of the 21-day period. After executing the
Agreement, you shall 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 22 no later than the seventh (7th) day following the date you executed
the Agreement. In the event you do not accept this Agreement or in the event you revoke this
Agreement during the Revocation Period, the obligations of the Company to make the payments and
provide the benefits set forth herein shall automatically be deemed null and void. No payments or
benefits shall be paid or provided under Section 2 of this Agreement until the Resignation Date,
provided that you signed this Agreement, and the Revocation Period has expired without a
revocation by you.

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

          (i) you have read this Agreement, and understand all of its terms, including the full and
final release of claims set forth in Section 4;

          (ii) 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;

          (iii) 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;

          (iii) 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

          (iv) you have been given up to twenty-one (21) days to consider this Agreement 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.

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

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

     20. Taxes; Section 409A. It is intended that the payments provided for herein are
intended to comply with 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, including delaying any such payments that
would have been required to be paid to you pursuant to this Agreement during the first six months
following the Resignation Date until the end of such six-month period in accordance with the
requirements of Section 409A. In addition, any expense reimbursement under Section 2(e), 3(a) or
13(b) hereof shall 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 shall in any way affect the expenses eligible for
reimbursement in any other taxable year. The resignation of your employment on March 31, 2008 is
intended to constitute a “separation of service” for purposes of Section 409A. Without limiting
the generality of the foregoing, the amount of time that you will provide in your capacity as a
consultant to the Company shall not exceed 40% of the time spent by you in performing services for
TSI Holdings and the Company for the thirty-six months preceding the Resignation Date.
Notwithstanding any of the preceding, the Company makes no representations regarding the tax
treatment of any payments hereunder,

9

 

and you shall be responsible for any and all applicable taxes, other than the Company’s share
of employment taxes on the payments during the Transition Period described in Section 2.

     21. 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
letter agreement. Without limiting the foregoing sentence, TSI Holdings and such subsidiaries may
enforce this letter agreement against you.

     22. 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 22. Notices of change of address will be effective only
upon receipt.

     Acknowledged and accepted by:.

	 	 	 	 	 
	 	TOWN SPORTS INTERNATIONAL, LLC

 	 
	 	By:  	/s/ Alex
Alimanestianu	 
	 	 	Name:  	Alex Alimanestianu 	 
	 	 	Title:  	Chief Executive Officer and President 	 
	 
	 	 	 
	 	/s/ Richard
Pyle	 
	 	Richard Pyle 	 
	 	 	 	 
	 

	 	 	 	 	 	 	 
	STATE OF NEW YORK

	 	 	)	 	 	 
	 

	 	: ss.:
	 	 
	COUNTY OF

	 	 	)	 	 	 

     On
the 22nd day of January, 2008, personally came Richard Pyle and being duly sworn,
acknowledged that he is the person described in and who executed the foregoing Agreement and
acknowledged that he executed same.

	 	 	 	 	 
	 	 	 
	 	/s/ David
M. Kastin	 
	 	Notary Public 	 
	 	 	 	 
	 

10

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