Document:

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                                                                    EXHIBIT 4.01

                  This Note is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of the
Depository named below or a nominee of the Depository. This Note is not
exchangeable for Notes registered in the name of a Person other than the
Depository or its nominee except in the limited circumstances described herein
and in the Indenture, and no transfer of this Note (other than a transfer of
this Note as a whole by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the
Depository) may be registered except in the limited circumstances described
herein.

                  Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation (the
"Depository"), to the Company or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of the Depository (and any payment is made to Cede & Co. or to such other entity
as is requested by an authorized representative of the Depository), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

                                 CITIGROUP INC.

                      FLOATING RATE NOTES DUE MARCH 9, 2004

REGISTERED                                                         REGISTERED

                                                           CUSIP: 172967BE0
                                                         ISIN: US172967BE01
                                                     Common Code: 012629583

No. R-                                                                    $

                  CITIGROUP INC., a Delaware corporation (the "Company", which
term includes any successor Person under the Indenture), for value received,
hereby promises to pay to Cede & Co., or registered assigns, the principal sum
of $___________ on March 9, 2004 and to pay interest thereon from and including
March 9, 2001 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, monthly, on the 9th of each month,
commencing April 9, 2001, at the rate per annum for each Interest Period of
one-month LIBOR plus 0.23%, determined as provided herein, until the principal
hereof is paid or made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Note is
registered at the close of business on the Record Date for such interest, which
shall be the Business Day immediately preceding such Interest Payment Date.
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         Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the holder on such Record Date and may either
be paid to the Person in whose name this Note is registered at the close of
business on a subsequent Record Date, such subsequent Record Date to be not less
than five days prior to the date of payment of such defaulted interest, notice
whereof shall be given to holders of Notes of this series not less than 15 days
prior to such subsequent Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.

         Interest hereon will be calculated on the basis of the actual number of
days elapsed in an Interest Period and a 360-day year. Dollar amounts resulting
from such calculation will rounded to the nearest cent, with one-half cent being
rounded upward. An "Interest Period" shall be the period from and including an
Interest Payment Date (or from March 9, 2001 in the case of the first Interest
Payment Date) to and including the day immediately preceding the next Interest
Payment Date.

         If either a date for payment of principal or interest on the Notes or
the Maturity of the Notes falls on a day that is not a Business Day, the related
payment of principal or interest will be made on the next succeeding Business
Day as if made on the date the payment was due. No interest will accrue on any
amounts payable for the period from and after the date for payment of principal
or interest on the Notes or the Maturity of the Notes. For the purposes of this
Note, "Business Day" means any day that is a day on which commercial banks
settle payments and are open for general business in The City of New York.

         Payment of the principal of and interest on this Note will be made at
the office or agency of the Trustee maintained for that purpose in The City of
New York.

         Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Trustee or by an authenticating agent on behalf of the Trustee by manual
signature, this Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.

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                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.

Dated:  March 9, 2001

                                        CITIGROUP INC.

                                        By:_________________________________
                                        Title:  Treasurer

ATTEST:

By:___________________________
Assistant Secretary

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                  This is one of the Notes of the series issued under the
within-mentioned Indenture.

Dated:  March 9, 2001

                                        THE BANK OF NEW YORK,
                                        as Trustee

                                        By:_________________________________
                                           Name:
                                           Title:

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         This Note is one of a duly authorized issue of Securities of the
Company (the "Notes"), issued and to be issued in one or more series under the
Indenture, dated as of March 15, 1987 (as amended and supplemented to date, the
"Indenture"), between the Company and The Bank of New York, as Trustee (the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the holders of the Notes
and of the terms upon which the Notes are, and are to be, authenticated and
delivered. This Note is one of the series designated on the face hereof,
initially limited in aggregate principal to $1,500,000,000.

         This Note will bear interest for each Interest Period at a rate
determined by The Bank of New York, acting as Calculation Agent. The interest
rate on this Note for a particular Interest Period will be a per annum rate
equal to LIBOR as determined on the related Interest Determination Date plus
0.23%. The Interest Determination Date for an Interest Period will be the second
London business day preceding such Interest Period. Promptly upon determination,
the Calculation Agent will inform the Trustee and the Company of the interest
rate for the next Interest Period. Absent manifest error, the determination of
the interest rate by the Calculation Agent shall be binding and conclusive on
the holders of Notes, the Trustee and the Company.

         A London business day is a day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.

         On any Interest Determination Date, LIBOR will be equal to the offered
rate for deposits in U.S. dollars having an index maturity of one month for the
next Interest Period, in amounts of at least $1,000,000, as such rate appears on
Telerate Page 3750 at approximately 11:00 a.m., London time, on such Interest
Determination Date. If the Telerate Page 3750 is replaced by another service or
ceases to exist, the Calculation Agent will use the replacing service or such
other service that may be nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for U.S. dollar deposits.

         If no offered rate appears on Telerate Page 3750 on an Interest
Determination Date at approximately 11:00 a.m., London time, then the
Calculation Agent (after consultation with the Company) will select four major
banks in the London interbank market and shall request each of their principal
London offices to provide a quotation of the rate at which one-month deposits in
U.S. dollars in amounts of at least $1,000,000 are offered by it to prime banks
in the London interbank market, on that date and at that time, that is
representative of single transactions at that time. If at least two quotations
are provided, LIBOR will be the arithmetic average of the quotations provided.
Otherwise, the Calculation Agent will select three major banks in New York City
and shall request each of them to provide a quotation of the rate offered by
them at approximately 11:00 a.m., New York City time, on the Interest
Determination Date for loans in U.S. dollars to leading European banks having an
index maturity of one month for the applicable Interest Period in an amount of
at least $1,000,000 that is representative of single transactions at that time.
If three quotations are provided, LIBOR will be the arithmetic average of the

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quotations provided. Otherwise, the rate of LIBOR for the next Interest Period
will be set equal to the rate of LIBOR for the current Interest Period.

         The interest rate in effect for this Note for the first Interest Period
of March 9 to April 8, 2001 shall be 5.48875%.

         Upon request from any Noteholder, the Calculation Agent will provide
the interest rate in effect on this Note for the current Interest Period and, if
it has been determined, the interest rate to be in effect for the next Interest
Period.

         If an event of default (as defined in the Indenture) with respect to
Notes of this series shall occur and be continuing, the principal of the Notes
of this series may be declared due and payable in the manner and with the effect
provided in the Indenture.

                  The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Note upon compliance by the Company with
certain conditions set forth in Sections 11.03 and 11.04 thereof, which
provisions apply to this Note.

                  The Indenture contains provisions permitting the Company and
the Trustee, without the consent of the holders of the Securities, to establish,
among other things, the form and terms of any series of Securities issuable
thereunder by one or more supplemental indentures, and, with the consent of the
holders of not less than 66 2/3% in aggregate principal amount of Securities at
the time outstanding which are affected thereby, to modify the Indenture or any
supplemental indenture or the rights of the holders of Securities of such series
to be affected, provided that no such modification will (i) extend the fixed
maturity of any Securities, reduce the rate or extend the time of payment of
interest thereon, reduce the principal amount thereof or the premium, if any,
thereon, reduce the amount of the principal of Original Issue Discount
Securities payable on any date, change the currency in which Securities are
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the maturity thereof, without the consent of the holder of
each Security so affected, or (ii) reduce the aforesaid percentage of Securities
of any series the consent of the holders of which is required for any such
modification without the consent of the holders of all Securities of such series
then outstanding, or (iii) modify, without the written consent of the Trustee,
the rights, duties or immunities of the Trustee.

                  No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency, herein
prescribed.

                  This Note is a Global Security registered in the name of a
nominee of the Depository. This Note is exchangeable for Notes registered in the
name of a person other than the Depository or its nominee only in the limited
circumstances hereinafter described. Unless and until it is exchanged in whole
or in part for definitive Notes in certificated form, this Note may not be
transferred except as a whole by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository.

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                  The Notes represented by this Global Security are exchangeable
for definitive Notes in certificated form of like tenor as such Notes in
denominations of $1,000 and integral multiples thereof only if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for the Notes or (ii) the Depository ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, or (iii) the
Company in its sole discretion decides to allow the Notes to be exchanged for
definitive Notes in registered form. Any Notes that are exchangeable pursuant to
the preceding sentence are exchangeable for certificated Notes issuable in
authorized denominations and registered in such names as the Depository shall
direct. As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of definitive Notes in certificated form is registrable
in the register maintained by the Company in The City of New York for such
purpose, upon surrender of the definitive Note for registration of transfer at
the office or agency of the registrar, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
registrar duly executed by, the holder thereof or his attorney duly authorized
in writing, and thereupon one or more new Notes of this series and of like
tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees. Subject to the
foregoing, this Note is not exchangeable, except for a Global Security or Global
Securities of this issue of the same principal amount to be registered in the
name of the Depository or its nominee.

                  No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  Prior to due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.

         The Company will pay additional amounts ("Additional Amounts") to the
beneficial owner of any Note that is a non-United States person in order to
ensure that every net payment on such Note will not be less, due to payment of
U.S. withholding tax, than the amount then due and payable. For this purpose, a
"net payment" on a Note means a payment by the Company or a paying agent,
including payment of principal and interest, after deduction for any present or
future tax, assessment or other governmental charge of the United States. These
Additional Amounts will constitute additional interest on the Note.

         The Company will not be required to pay Additional Amounts, however, in
any of the circumstances described in items (1) through (14) below.

         (1)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the beneficial owner:

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                  (a)      having a relationship with the United States as a
                           citizen, resident or otherwise;

                  (b)      having had such a relationship in the past or

                  (c)      being considered as having had such a relationship.

         (2)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the beneficial owner:

                  (a)      being treated as present in or engaged in a trade or
                           business in the United States;

                  (b)      being treated as having been present in or engaged in
                           a trade or business in the United States in the past
                           or

                  (c)      having or having had a permanent establishment in the
                           United States.

         (3)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the beneficial owner being or having been a:

                  (a)      personal holding company;

                  (b)      foreign personal holding company;

                  (c)      foreign private foundation or other foreign
                           tax-exempt organization;

                  (d)      passive foreign investment company;

                  (e)      controlled foreign corporation or

                  (f)      corporation which has accumulated earnings to avoid
                           United States federal income tax.

         (4)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the beneficial owner owning or having owned,
                  actually or constructively, 10 percent or more of the total
                  combined voting power of all classes of stock of the Company
                  entitled to vote.

For purposes of items (1) through (4) above, "beneficial owner" means a
fiduciary, settlor, beneficiary, member or shareholder of the holder if the
holder is an estate, trust, partnership, limited liability company, corporation
or other entity, or a person holding a power over an estate or trust
administered by a fiduciary holder.

         (5)      Additional Amounts will not be payable to any beneficial owner
                  of a Note that is a:

                  (a)      fiduciary;

                  (b)      partnership;

                  (c)      limited liability company or

                  (d)      other fiscally transparent entity

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                  or that is not the sole beneficial owner of the Note, or any
                  portion of the Note. However, this exception to the obligation
                  to pay Additional Amounts will only apply to the extent that a
                  beneficiary or settlor in relation to the fiduciary, or a
                  beneficial owner or member of the partnership, limited
                  liability company or other fiscally transparent entity, would
                  not have been entitled to the payment of an Additional Amount
                  had the beneficiary, settlor, beneficial owner or member
                  received directly its beneficial or distributive share of the
                  payment.

         (6)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the failure of the beneficial owner or any other
                  person to comply with applicable certification,
                  identification, documentation or other information reporting
                  requirements. This exception to the obligation to pay
                  Additional Amounts will only apply if compliance with such
                  reporting requirements is required by statute or regulation of
                  the United States or by an applicable income tax treaty to
                  which the United States is a party as a precondition to
                  exemption from such tax, assessment or other governmental
                  charge.

         (7)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is collected or imposed by any method
                  other than by withholding from a payment on a Note by the
                  Company or a paying agent.

         (8)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld by reason of a
                  change in law, regulation, or administrative or judicial
                  interpretation that becomes effective more than 15 days after
                  the payment becomes due or is duly provided for, whichever
                  occurs later.

         (9)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld by reason of
                  the presentation by the beneficial owner of a Note for payment
                  more than 30 days after the date on which such payment becomes
                  due or is duly provided for, whichever occurs later.

         (10)     Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any:

                  (a)      estate tax;

                  (b)      inheritance tax;

                  (c)      gift tax;

                  (d)      sales tax;

                  (e)      excise tax;

                  (f)      transfer tax;

                  (g)      wealth tax;

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                  (h)      personal property tax or

                  (i)      any similar tax, assessment or other governmental
                           charge.

         (11)     Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge required to be withheld by any paying
                  agent from a payment of principal or interest on a Note if
                  such payment can be made without such withholding by any other
                  paying agent.

         (12)     Additional amounts will not be payable if a payment on a note
                  is reduced as a result of any tax, assessment or other
                  governmental charge imposed on a payment to an individual that
                  is required to be made pursuant to any European Union
                  directive on the taxation of savings implementing the
                  conclusions of the ECOFIN Council meeting of November 26-27,
                  2000 or any law implementing or complying with, or introduced
                  to conform to, such directive.

         (13)     Additional amounts will not be payable if a payment on a note
                  is reduced as a result of any tax, assessment or other
                  governmental charge required to be withheld or deducted by any
                  paying agent from any payment of the principal of, or any
                  premium or interest on, a note, if that payment can be made
                  without such withholding or deduction by at least one other
                  paying agent, including by presenting the note to another
                  paying agent in a member state of the European Union.

         (14)     Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any combination of items (1) through
                  (13) above.

         Except as specifically provided herein, the Company will not be
required to make any payment of any tax, assessment or other governmental charge
imposed by any government or a political subdivision or taxing authority of such
government.

         As used in this Note, "United States person" means:

         (a)      any individual who is a citizen or resident of the United
                  States;

         (b)      any corporation, partnership or other entity created or
                  organized in or under the laws of the United States;

         (c)      any estate if the income of such estate falls within the
                  federal income tax jurisdiction of the United States
                  regardless of the source of such income and

         (d)      any trust if a United States court is able to exercise primary
                  supervision over its administration and one or more United
                  States persons have the authority to control all of the
                  substantial decisions of the trust.

         Additionally, "non-United States person" means a person who is not a
United States person, and "United States" means the United States of America,
including the States and the District of Columbia, its territories, its
possessions and other areas within its jurisdiction.

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         Except as provided below, the Notes may not be redeemed prior to
maturity.

         (1)      The Company may, at its option, redeem the Notes if:

                  (a)      the Company becomes or will become obligated to pay
                           Additional Amounts as described above;

                  (b)      the obligation to pay Additional Amounts arises as a
                           result of any change in the laws, regulations or
                           rulings of the United States, or an official position
                           regarding the application or interpretation of such
                           laws, regulations or rulings, which change is
                           announced or becomes effective on or after March 6,
                           2001 and

                  (c)      the Company determines, in its business judgment,
                           that the obligation to pay such Additional Amounts
                           cannot be avoided by the use of reasonable measures
                           available to it, other than substituting the obligor
                           under the Notes or taking any action that would
                           entail a material cost to the Company.

         (2)      The Company may also redeem the Notes, at its option, if:

                  (a)      any act is taken by a taxing authority of the United
                           States on or after March 6, 2001, whether or not such
                           act is taken in relation to the Company or any
                           affiliate, that results in a substantial probability
                           that the Company will or may be required to pay
                           Additional Amounts as described above;

                  (b)      the Company determines, in its business judgment,
                           that the obligation to pay such Additional Amounts
                           cannot be avoided by the use of reasonable measures
                           available to it, other than substituting the obligor
                           under the Notes or taking any action that would
                           entail a material cost to the Company and

                  (c)      the Company receives an opinion of independent
                           counsel to the effect that an act taken by a taxing
                           authority of the United States results in a
                           substantial probability that the Company will or may
                           be required to pay the Additional Amounts described
                           under above, and delivers to the Trustee a
                           certificate, signed by a duly authorized officer,
                           stating that based on such opinion the Company is
                           entitled to redeem the Notes pursuant to their terms.

Any redemption of the Notes as set forth in clauses (1) or (2) above shall be in
whole, and not in part, and will be made at a redemption price equal to 100% of
the principal amount of the Notes Outstanding plus accrued interest thereon to
the date of redemption. Holders shall be given not less than 30 days nor more
than 60 days prior notice by the Trustee of the date fixed for such redemption.

                  All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture. The Notes are
governed by the laws of the State of New York.

                                       11<PAGE>   1
                                                                     Exhibit 4.8

                SECOND AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

         SECOND AMENDMENT TO REGISTRATION RIGHTS AGREEMENT, dated as of November
6, 2000 ("Agreement"), by and among TOWN SPORTS INTERNATIONAL, INC., a New York
corporation (the "Company"), BRUCKMANN, ROSSER, SHERRILL & CO., L.P., a Delaware
limited partnership ("BRS"), Richard Pyle, Mark Smith, Robert Giardina, and
Alexander Alimanestianu (collectively, the "Executives"), CANTERBURY MEZZANINE
CAPITAL, L.P., a Delaware limited partnership ("Canterbury"), CANTERBURY DETROIT
PARTNERS, L.P., a Delaware limited partnership ("Canterbury Detroit" and,
together with Canterbury, the "Canterbury Group"), FARALLON CAPITAL PARTNERS,
L.P., a California limited partnership ("FCP"), FARALLON CAPITAL INSTITUTIONAL
PARTNERS, L.P., a California limited partnership ("FCIP"), RR CAPITAL PARTNERS,
L.P., a Delaware limited partnership ("RRC"), FARALLON CAPITAL INSTITUTIONAL
PARTNERS II, L.P., a California limited partnership ("FII" and, together with
FCP, FCIP, and RRC, the "Farallon Investors", and individually, a "Farallon
Investor"), ROSEWOOD CAPITAL, L.P., a Delaware limited partnership (the
"Rosewood Investor") and CAPITALSOURCE HOLDINGS LLC, a Delaware limited
liability company ("CapitalSource").

         WHEREAS, the Company, BRS, the Executives, Canterbury, the Farallon
Investors and certain other shareholders of the Company are parties to that
certain Registration Rights Agreement, dated as of December 10, 1996 (as amended
from time to time, the "Registration Rights Agreement"; capitalized terms used
and not otherwise defined herein having the definitions provided therefor in the
Registration Rights Agreement).

         WHEREAS, CapitalSource has acquired shares of the Company's Class A
Common, pursuant to the Stock Purchase Agreement, dated as of November 6, 2000,
by and among CapitalSource and the Company (as the same may be amended, restated
or modified from time to time, the "CapitalSource Purchase Agreement").

         WHEREAS, the parties hereto wish to amend the Registration Rights
Agreement in accordance with the terms thereof as provided herein.

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:

         1. Amendments to Section 1 -- "Definitions". (a) Section 1 of the
Registration Rights Agreement is hereby amended by inserting the following
definitions in alphabetical order in such Section 1:
<PAGE>   2
              "CapitalSource Registrable Securities" means (i) any shares of
Common Stock issued or issuable to CapitalSource or its affiliates or partners
on or after the date hereof and (ii) any shares of capital stock of the Company
issued or issuable with respect to the securities referred to in clause (i) by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. For
purposes of this Agreement, a Person will be deemed to be a holder of
CapitalSource Registrable Securities whenever such Person has the right to
acquire directly or indirectly such CapitalSource Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected. Such
securities will cease to be CapitalSource Registrable Securities when sold
pursuant to Rule 144 or any offering registered under the Securities Act.
Notwithstanding the foregoing, the Series A-2 Shares (as defined in the
CapitalSource Purchase Agreement) shall not be deemed Registrable Securities
hereunder until following the Determination Date (as defined in the
CapitalSource Purchase Agreement).

              "Registrable Securities" means the BRS Registrable Securities, the
Farallon Registrable Securities, the Rosewood Registrable Securities, the
Canterbury Registrable Securities, the Executive Registrable Securities and the
CapitalSource Registrable Securities.

         2. Amendment to Section 2 - "Demand Registrations." Section 2 of the
Registration Rights Agreement is hereby amended to replace paragraph 2(c) in its
entirety as follows:

         "(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to Section 2(b), (i) the holders of BRS
Registrable Securities will be entitled to request an unlimited number of
Short-Form Registrations, (ii) the holders of Farallon Registrable Securities
will be entitled to request up to three (3) Short-Form Registrations, (iii) the
holders of Canterbury Registrable Securities will be entitled to request up to
two (2) Short-Form Registrations and (iv) the holders of CapitalSource
Registrable Securities will be entitled to request up to one (1) Short-Form
Registration, in each case, in which the Company will pay all Registration
Expenses. A registration will not count as the permitted Short Form Registration
until it has become effective and unless the holder of Registrable Securities
are able to register and sell 90% of the Registrable Securities requested to be
included in such registration; it being understood and agreed that the requisite
holders of Registrable Securities making a request for a Demand Regulation
hereunder may withdraw from such registration at any time prior to the effective
date of such Demand Registration, in which case such request will not count as
one of the permitted Demand Registrations for such holders, irrespective of
whether or not such registration is effected. Demand Registrations will be
Short-Form Registrations whenever the Company is permitted to use any applicable
short form. After the Company has become subject to the reporting requirements
of the Exchange Act, the Company will use its best efforts to make Short-Form
Registrations available for the sale of Registrable Securities. All
registrations requested pursuant to Sections 2(b) and 2(c) are referred to
herein as "Demand Registrations.""
<PAGE>   3
         3. Amendments to Section 10 -- "Notices". Section 10 of the
Registration Rights Agreement is hereby amended to insert the following address
for notices, demands and other communications to be sent to Canterbury Detroit
after such address for Canterbury:

             To Capital Source:

             Capital Source Holdings LLC
             1133 Connecticut Avenue, NW
             Suite 310
             Washington, D.C. 20036
             Fax: (202) 862-4990
             Attention: Steven A. Museles, Esq.

         4. Miscellaneous.

              (a) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

              (b) GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

              (c) Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

              (d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.

              (e) References. Any reference to the Registration Rights Agreement
contained in any notice, request, certificate, or other document executed
concurrently with or after the execution and delivery of this Agreement shall be
deemed to include this Agreement unless the context shall otherwise require.

              (e) Continued Effectiveness. Notwithstanding anything contained
herein, the terms of this Agreement are not intended to and do not serve to
effect a novation as to the Registration Rights Agreement. The parties hereto
expressly do not intend to extinguish the
<PAGE>   4
Registration Rights Agreement. Instead, it is the express intention of the
parties hereto to reaffirm the obligations created under the Registration Rights
Agreement. The Registration Rights Agreement as amended hereby remains in full
force and effect.

                                *  *  *  *
<PAGE>   5
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                       TOWN SPORTS INTERNATIONAL, INC.

                                       By:/s/ R.G. Pyle
                                          --------------------------------------
                                              Name:  Richard G. Pyle
                                              Title: Chief Financial Officer

                                       BRUCKMANN, ROSSER, SHERRILL & CO., L.P.

                                       By:    BRS Partners, Limited Partnership
                                       Its:   General Partner

                                       By:/s/ Stephen Edwards
                                          --------------------------------------
                                              Name:  Stephen Edwards
                                              Title: Managing Director

                                       CANTERBURY DETROIT PARTNERS, L.P.

                                       By:    Canterbury Detroit, LLC
                                       Its:   General Partner

                                       By: /s/ N. Dunphy
                                          --------------------------------------
                                              Name:  Nicholas Dunphy
                                              Title: Member

                                       CANTERBURY MEZZANINE CAPITAL, L.P.

                                       By:    Canterbury Capital, LLC
                                       Its:   General Partner

                                       By: /s/ N. Dunphy
                                          --------------------------------------
                                              Name:  Nicholas Dunphy
                                              Title: Member
<PAGE>   6
                                       FARALLON CAPITAL PARTNERS, L.P.

                                       By:    Farallon Partners, L.L.C.
                                       Its:   General Partner

                                       By: /s/ Jason M. Fish
                                          --------------------------------------
                                               Name:  Jason M. Fish
                                               Title: Managing Member

                                       FARALLON CAPITAL INSTITUTIONAL PARTNERS,
                                        L.P.

                                       By:      Farallon Partners, L.L.C.
                                       Its:     General Partner

                                       By: /s/ Jason M. Fish
                                          --------------------------------------
                                               Name:  Jason M. Fish
                                               Title: Managing Member

                                       RR CAPITAL PARTNERS, L.P.

                                       By:     Farallon Partners, L.L.C.
                                       Its:    General Partner

                                       By: /s/ Jason M. Fish
                                          --------------------------------------
                                               Name:  Jason M. Fish
                                               Title: Managing Member
<PAGE>   7
                                       FARALLON CAPITAL INSTITUTIONAL PARTNERS
                                        II, L.P.

                                       By:      Farallon Partners, L.L.C.
                                       Its:     General Partner

                                       By: /s/ Jason M. Fish
                                          --------------------------------------
                                               Name:  Jason M. Fish
                                               Title: Managing Member:

                                       ROSEWOOD CAPITAL, L.P.

                                       By: Rosewood Capital Associates, L.P.
                                            its General Partner

                                       By: /s/ Kyle A. Anderson
                                          --------------------------------------
                                               Name:  Kyle A. Anderson
                                               Title: Principal

                                       CAPITALSOURCE HOLDINGS LLC

                                       By: /s/ Steven A. Museles
                                          --------------------------------------
                                               Name:  Steven A. Museles
                                               Title: Senior Vice President and
                                                      General Counsel
<PAGE>   8
                            EXECUTIVE SIGNATURE PAGE

/s/ R. G. Pyle
----------------------------------
Richard Pyle

/s/ Mark Smith
----------------------------------
Mark Smith

/s/ Robert Giardina
----------------------------------
Robert Giardina

/s/ Alexander Alimanestianu
----------------------------------
Alexander Alimanestianu

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