Document:

exh10-2_empagmt.htm

 

 

 

 

 

 

 

 

 

EXHIBIT 10.2

 

Employment Agreement with Brent E. Timmons

dated October 26, 2011

 

 

 

 

 

 

 

 

 

 

  

  

  

EMPLOYMENT AGREEMENT

              THIS AGREEMENT (“Agreement”) is effective as of October 26, 2011

BY AND BETWEEN:

Calais Resources Inc.

P.O. Box 620247

Littleton, CO 80162

                                                (the “Company”)

and

                                                Brent E. Timmons

12188 Elton Way

Parker, CO 80138

(the “Executive”)

 

RECITALS

WHEREAS the Company and Executive desire that the agreements and understandings pursuant to which the Company has agreed to hire Executive and Executive has agreed to serve be set forth in writing for the benefit of both parties:

NOW THEREFORE in consideration of the promises and mutual covenants herein contained, the parties hereto agree as follows:

1.           Defined Terms

	
  

	
(a)

	
“Board” means the Board of Directors of the Company;

	
  

	
(b)

	
“Business” means the business presently or hereafter carried on by the Company in the area of mineral resource exploration, development and production;

 

 

  

  

  

 

	
  

	
(c)

	
“Disability” means the inability of the Executive as a result of illness or injury to perform his responsibilities as an employee of the Company for a period of 180 consecutive days or 200 days out of 400 days;

	
  

	
(d)

	
“Effective Change of Control” means the occurrence, within a single transaction or series of related transactions occurring within the same 12-month period, of a change in the identity of persons who individually or collectively hold rights to elect, or to approve the election of, a majority of the members of the Board, including, without limitation, transactions consisting of one or more sales or other transfers of assets or equity securities, mergers, consolidations, amalgamations, reorganizations, or any similar transactions (Also see “Reverse Merger” which also falls under the “Effective Change of Control”.);

	
  

	
(e)

	
“Reverse Merger” means a merger or other business combination where Calais is the surviving company and is still in control of greater than 50% of the company stock, and there is a top Executive management change requested that would also constitute a control change and be handled the same as an “Effective Change of Control” for the Executive; and

	
  

	
(f)

	
“Stock Grant Plan” means the incentive stock grant plan of the Company for directors, officers, employees and other service providers of the Company.

	
2.

	
Employment

	
  

	
(a)

	
The Company (directly or through its United States and other subsidiaries) shall employ the Executive, and the Executive shall serve the Company and its subsidiaries as, Vice President of Finance and Chief Financial Officer or in such other capacity or capacities as may be determined by the Board from time to time.

	
  

	
(b)

	
The Executive represents that he has the required skills and experience to perform the duties required of him and agrees to be bound by the terms and conditions of this Agreement.

	
  

	
(c)

	
The Executive will be employed by the Company on a full-time basis and will devote himself exclusively to the Business and will not be employed or engaged in any capacity in any other business that is in competition with the Business of the Company, without the prior written approval of the Company.

	
  

	
(d)

	
The Executive acknowledges that in carrying out his duties and responsibilities:

	
  

	
i)

	
the Executive shall comply with all lawful and reasonable instructions as may be given by the Board;

	
  

	
ii)

	
the Executive will perform his duties with the highest level of integrity and in a manner which shall engender the Company’s complete confidence in the Executive’s relationship with other employees of the 

 

 

  

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Company and with all persons dealt with by the Executive in the course of employment; and

 

	
  

	
iii)

	
the Executive will perform his duties in a diligent, loyal, productive and efficient manner and use his best efforts to advance the Business and goodwill of the Company.

	
  

	
(e)

	
The Executive understands that the hours required to meet the objectives of his employment will vary and be irregular.

	
  

	
(f)

	
The location of the Executive’s employment under this Agreement shall be in the State of Colorado.

	
3.

	
Compensation and Benefits

As compensation for the services to be rendered by the Executive to the Company, the Company agrees to provide the remuneration and benefits set out in this paragraph 3.

	
  

	
(a)

	
Base Salary and Discretionary Bonus

	
  

	
The Executive shall be paid a minimum annual base salary of US$225,000.  The Board shall review the amount of such salary annually.  Said salary shall be subject to all deductions required by law or required by company policy and shall be paid monthly, in arrears, by check or deposit, or such other periodic installments as may be from time to time agreed.  In addition, the Executive may be entitled to receive a discretionary performance bonus in such amount, if any, as the Board in its sole discretion may determine.

	
  

	
(b)

	
Stock Grant

	
  

	
The Executive shall be eligible to receive stock grants, granted pursuant to the Stock Grant Plan, on such terms and conditions as the Board in its discretion may determine.

	
  

	
(c)

	
Automobile Allowance

	
  

	
The Executive shall be entitled to receive an automobile allowance of $10,000 per annum.

  

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(d)           Health (Medical and Vision), Dental, Long Term Disability and Life Insurance

The Executive shall be entitled to receive and participate in health (medical and vision), dental, long-term disability and life insurance programs offered by the Company to other executive employees and entitled, at his option, to continue to receive and participate in the health (medical and vision), dental insurance programs which the Company makes available as of the date of this Agreement.

(e)           Indemnification and D&O Liability Insurance

	
  

	
To assure that Executive will be in a position to perform his duties to the Company without concern over unwarranted liability, the Company shall indemnify and advance reasonable defense expenses to the Executive to the full extent permitted by the state of Colorado.  The Company shall also use its best efforts to purchase, at the earliest time practicable, one or more policies of directors and officer liability insurance in an amount adequate to protect Executive against claims made against him for actions taken or not taken in the conduct of his duties to the Company.  (Note: The Company will hold the Executive harmless for any legal actions and / or lawsuits that may arise after the executives employment starts and are specifically due to any and all legal actions that may arise due to previous financials that were not filed from 2005 - 2011 fiscal years and the first two quarters of fiscal year 2012 that may affect the Company and / or due to Halt Trade orders by the BCSC and / or the Securities and Exchange Commission.)

4.           Vacation

The Executive will be entitled to twenty five (25) days of vacation during each twelve- (12) month period calculated from January 1, 2011 plus usual statutory and other public holidays, the timing of such vacation to be mutually agreed upon between the Executive and the Company.  Vacation entitlement not used in any 12-month period may be carried forward, provided that, if it is not used in the next 12-month period, the Executive shall be paid the cash equivalent of any unused vacation entitlement.

5.           Expenses

The Executive shall be reimbursed by the Company for business expenses incurred as a result of his work on behalf of the Company.  The Company shall reimburse the Executive for such expenses upon presentation of supporting documentation satisfactory to the Company in accordance with the tax principles applicable in the United States for such reimbursement and the Company’s established reimbursement policies, as those policies may be modified from time to time in the Company’s discretion.

  

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6.           Terms of the Agreement and Termination

	
  

	
(a)

	
This Agreement shall commence on the date hereof and shall be of indefinite term unless terminated pursuant to the provisions hereof.

	
  

	
(b)

	
The Executive may terminate his employment pursuant to this Agreement by giving at least one (1) month’s advance notice in writing to the Company.  The Company may waive such notice, in whole or in part, and, if it does so, the Executive’s entitlement to remuneration and benefits pursuant to this Agreement will cease on the date such notice is waived.

	
  

	
(c)

	
The Executive’s employment shall terminate upon the death of the Executive, whereupon all stock options granted to the Executive shall immediately vest and shall be exercisable by the Executive’s heirs, executors, administrators or personal representatives in accordance with the terms of the Stock Grant Plan.

	
  

	
(d)

	
The Executive’s employment shall be terminated upon the Disability of the Executive.

	
  

	
(e)

	
In the event of an Effective Change of Control, the Executive’s employment shall be deemed to have been terminated without cause, and: (i) the Company shall be obligated to pay the Executive the severance payments calculated in accordance with subparagraph 6(f) hereof; and (ii) any stock options granted to Executive, to the extent unvested, immediately and fully vest and be exercisable by Executive at will in accordance with the remaining terms provided therein.

	
  

	
(f)

	
The Executive’s employment may be terminated without cause by majority vote of the Board.  In the event that the Executive’s employment is so terminated, or is deemed to have been terminated pursuant to subparagraph 6(e) hereof, any stock options granted but not vested shall immediately vest, and the Company shall pay to the Executive 36 months salary, in compensation for the Executive’s loss of employment, together with a payment equal to 50% of any bonus entitlement of the Executive for each year in such 36 month period, plus any other compensation which the Executive is entitled to receive.  Any stock options or warrants granted to the Executive but not vested shall be deemed to have immediately vested as of the Executive’s termination date and the Executive will have 12 months to option or execute.  Health (medical and vision), dental, long term disability and life insurance plan coverage in effect on the last day of employment shall continue, without material change, for a period of 36 months. The Executive shall not have the duty to mitigate damages.  For the purpose of calculating payments due to the Executive pursuant to this subparagraph 6(f), all Federal and State taxes and Federal excise taxes (parachute taxes) shall be grossed-up.  Such payment shall be paid to the Executive within fifteen days following the date of his Separation from Service (as such term is defined in Section 18); and

 

  

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(g)

	
The Company may terminate the Executive’s employment without notice or payment in lieu of such employment, for cause.  For the purposes of this Agreement “cause” shall mean (i) the failure to follow written policies or directions of the Board not inconsistent with this Agreement or contrary to applicable law, (ii) neglect of responsibilities after the receipt of written notice setting forth the performance deficiencies and providing 45 days to cure such deficiencies, (iii) acts of dishonesty, fraud, misrepresentation, insubordination, harassment or employment discrimination, and (iv) indictment for a felony.

	
  

	
(h)

	
The corporate office is in the Denver area and will remain there unless the board votes otherwise.  If in the event of a reverse merger or other business combination and the corporate office is moved by board vote or any newly appointed senior Executives to another city or state more than 75 miles from its current location and the Executive is directed to move locations this then is also considered that the Executive’s employment to be terminated without cause by majority vote of the Board.  In the event that the Executive’s employment is terminated pursuant to section 6(f), in compensation for the Executive’s loss of employment, the Executive shall become entitled to receive the same benefits and payments as per 6(f), and the Executive shall not have the duty to mitigate damages.

	
7.

	
Notices

	
  

	
(a)

	
Any notice required or permitted to be given to the Executive shall be sufficiently given if delivered to the Executive personally or mailed by registered mail to the Executive’s home address.

	
  

	
(b)

	
Any notice required or permitted to be given to the Company shall be sufficiently given if delivered to the Secretary of the Company personally or if mailed by registered mail to the Company’s principal office, attention Corporate Secretary.

	
  

	
(c)

	
Any notice given by registered mail shall be deemed to have been given forty-eight hours after the time it is posted.

8.           Entire Agreement

This Agreement terminates, replaces and supersedes all prior agreements, oral or written, between the parties hereto.  This Agreement contains the final and entire understanding and agreement between the parties hereto with respect to the subject matter hereof, and they shall not be bound by any terms, conditions, statements, covenants, representations, or warranties, oral or written, with respect to the subject matter hereof not contained in this Agreement.

  

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9.           Headings

The headings in this Agreement are for convenience of reference only, and under no circumstances should they be construed as being a substantive part of this Agreement nor shall they limit or otherwise affect the meaning hereof.

10.           Warranty

Each of the parties hereto represents and warrants that there are no restrictions, agreements or limitations on such party’s right or ability to enter into and perform the terms of this Agreement.

11.           Severability

If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable by a court of competent jurisdiction for any reason whatsoever (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

12.           Modification

Any modification of this Agreement must be in writing and signed by both the Executive on the one hand and by the Company acting through an officer duly authorized to execute such modification on behalf of the Company or such modification shall have no effect and shall be void.

13.           Waiver

The wavier by either party of any breach or violation of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach or violation. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

14.           Assignment of Rights

The rights that accrue to the Company under this Agreement shall pass to its successors or assigns.  The rights of the Executive under this Agreement are not assignable or transferable in any manner.

  

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15.           Independent Legal Advice

The Executive acknowledges that he has read and understands this Agreement, and acknowledges that he has had the opportunity to obtain independent legal advice with respect to it.

16.           Time of Essence

Time shall be of the essence of this Agreement.

17.           Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado.  Any dispute between the Company and Executive shall be brought exclusively in the State or Federal Courts located in Denver, Colorado.  In the event of such dispute, the prevailing party shall be entitled to recover its reasonable attorney’s fees and costs.

18.           Code Section 409A

 

The parties intend that the provisions of this Agreement either (i) are grandfathered from the requirements of Section 409A of the Code or (ii) comply with the requirements of the short-term deferral exception of Section 409A of the Code and Treasury Regulations Section 1.409A-1(b)(4).  Accordingly, to the extent there is any ambiguity as to whether one or more provisions of this Agreement would otherwise contravene the requirements or limitations of Code Section 409A applicable to the grandfather rules or the short-term deferral exception, then those provisions shall be interpreted and applied in a manner that does not result in a violation of the requirements or limitations of Code Section 409A and the Treasury Regulations thereunder that apply to such rules or such exception.”

 

If and to the extent this Agreement may be deemed to create an arrangement subject to the requirements of Section 409A, then no amounts which become payable by reason of the Executive’s cessation of service shall actually be issued or distributed to the Executive prior to the earlier of (i) the first day of the seventh (7th) month following the date of his Separation from Service due to such cessation of service or (ii) the date of the Executive’s death, if the Executive is deemed at the time of such Separation from Service to be a specified employee under Section 1.409A-1(i) of the Treasury Regulations issued under Code Section 409A, as determined by the Company in accordance with consistent and uniform standards applied to all other Code Section 409A arrangements of the Company, and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Sectio409A(a)(2).  The deferred payments shall be paid in a lump sum on the first day of the seventh (7th) month following the date of the Executive’s Separation from Service or, if earlier, the first day of the month immediately following the date the Company receives proof of the Executive’s death.

  

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IN WITNESS WHEREOF the parties have duly executed this Agreement effective as of the date first written above.

CALAIS RESOURCES, INC.

By:    /s/ David Russell                                                     

R. David Russell

Chairman of the Board

     EXECUTIVE

       /s/ Brent E. Timmons                                                    

       Brent E. Timmons

 

 

 

 

9exv10w1

Exhibit 10.1

	 	 	 

	 

	 	Deutsche Bank AG New York Branch
	 

	 	60 Wall Street
	 

	 	New York, NY 10005
	 

	 	Telephone: 212-250-9425
	 

	 	Facsimile: 212-797-0779

	 	 	 
	Date:

	 	July 8, 2011
	 
	 	 
	To:

	 	Town Sports International, LLC
	Attention:

	 	Dan Gallagher
	Facsimile no.:

	 	(212) 246-8422
	 
	 	 
	Our Reference:

	 	Global No. NI317383N
	 
	 	 
	Re:

	 	Interest Rate Swap Transaction

Ladies and Gentlemen:

The purpose of this letter agreement is to set forth the terms and conditions of the
Transaction entered into between Deutsche Bank AG (“DBAG”)
and Town Sports International, LLC (“Counterparty”) on the Trade Date specified below (the “Transaction”). This letter agreement
constitutes a “Confirmation” as referred to in the Agreement specified below.

The definitions and provisions contained in the 2006 ISDA Definitions (the “Definitions”) as
published by the
International Swaps and Derivatives Association, Inc. are incorporated by reference hereto.
In the event of any inconsistency between the Definitions and this Confirmation, this
Confirmation will govern.

For the
purpose of this Confirmation, all references in the Definitions or
the Agreement to a
“Swap Transaction” shall be deemed to be references to this Transaction.

1. This Confirmation, together with the Agreement, evidences a complete and binding
agreement between DBAG (“Party A”) and Counterparty (“Party B”) as to the terms of the
Transaction to which this Confirmation relates. This Confirmation, together with all other
documents referring to the ISDA Master Agreement (Multicurrency-Cross Border) as amended from
time to time (the “ISDA Form”) (each a “Confirmation”) confirming Transactions (each a
“Transaction”) entered rote between us (notwithstanding anything to the contrary in a
Confirmation), shall supplement, form a part of, and be subject to an agreement in the form of
the ISDA Form as if Party A and Party B had executed an agreement on the Trade Date of the first
such Transaction between us in such form with any amendments thereto mentioned in this
Confirmation, with the Schedule thereto (i) specifying only that (a) the governing law is the
laws of the State of New York, provided, that such choice of law shall be superseded by any
choice of law provision specified in the Agreement upon its execution, and (b) the
Termination Currency Is U.S Dollars and (ii) incorporating the addition to the definition of
“Indemnifiable Tax” contained in (page 48 of) the ISDA “User’s Guide to the 1992 ISDA Master
Agreements” (the “Agreement”). In the event of any inconsistency between the terms of this
Confirmation, and the terms of the Agreement, this Confirmation will prevail for the purpose
of the Transaction.

	 	 	 

	Chairman of the Supervisory Board
Clemens Börsig
Management Board’ Josel Ackermann
(Chairman), Hugo Bänziger,
Stefan Krause, Hermann-Josef Lamberti,
Jorgen Fitschon,
Anshuman Jain, Rainer Neske

	 	Deutsche Bank AG is authorised
under German Banking Law
(competent
authority: BaFin — Federal
Financial Supervising Authority)
and regulated by the
Financial Services Authority for
the conduct of UK business, a
member of the
London Stock Exchange Deutsche
Bank AG Is a Joint stock
corporation with
limited liability incorporated
in the Federal Republic of
Germany HRB No 30 000
District Court of Frankfurt am
Main, Branch Registration In
England and Wales
BR000005, Registered address,
Winchester House, 1 Great
Winchester Street,
London EC2N 2DB
Deutsche Bank Group online
http://www.deutsche bank.com

 

 

2. The
terms of the particular Transaction to which this Confirmation relates are as follows:

	 	 	 	 	 

	 

	 	Notional Amount;
	 	USD 150,000,000
	 
	 	 	 	 
	 

	 	Trade Date:
	 	July l, 2011
	 
	 	 	 	 
	 

	 	Effective Date:
	 	July 13, 2011
	 
	 	 	 	 
	 

	 	Termination Date:
	 	July 13, 2014, subject to adjustment in accordance with the
Modified Following Business Day Convention

Fixed A mounts:

	 	 	 	 	 

	 
	 	Fixed Rate Payer:	 	Counterparty
	 
	 	 	 	 
	 
	 	Fixed Rate Payer Period End Dates:	 	The 13th Business Day of each month of each year, commencing
	 
	 	 	 	August 13, 2011, through and including the Termination Date,
	 
	 	 	 	subject to adjustment in accordance with the Modified
	 
	 	 	 	Following Business Day Convention
	 
	 	 	 	 
	 
	 	Fixed Rate Payer Payment Dates:	 	The 13th Business Day of each month of each year, commencing
	 
	 	 	 	August 13, 2011, through and including the Termination Date,
	 
	 	 	 	subject to adjustment in accordance with the Modified
	 
	 	 	 	Following Business Day Convention
	 
	 	 	 	 
	 
	 	Fixed Rate:	 	1.983%
	 
	 	 	 	 
	 
	 	Fixed Rate Day Count Fraction:	 	Actual/360
	 
	 	 	 	 
	 
	 	Fixed Rate Payer Business Days:	 	New York, London
	 
	 	 	 	 
	 
	 	Fixed Rate Payer Business	 	 
	 
	 	Day Convention:	 	Modified Following

Floating Amounts:

	 	 	 	 	 

	 

	 	Floating Rate Payer:
	 	DBAG
	 
	 	 	 	 
	 

	 	Floating Rate Payer Period End Dates’
	 	The 13th Business Day of each month of each year, commencing
August 13, 2011, through and including the Termination Date,
subject to adjustment in accordance with the Modified
Following Business Day Convention
	 
	 	 	 	 
	 

	 	Floating Rate Payer Payment Dates:
	 	The 13th Business Day of each month of each year, commencing
August 13, 2011, through and including the Termination Date,
subject to adjustment in accordance with the Modified
Following Business Day Convention
	 
	 	 	 	 
	 

	 	Floating Rate Option:
	 	The greater of 1.5% or USD-LIBOR-BBA
	 
	 	 	 	 
	 

	 	Designated Maturity:
	 	1 month
	 
	 	 	 	 
	 

	 	Spread:
	 	None
	 
	 	 	 	 
	 

	 	Floating Rate Day	 	 
	 

	 	Count Fraction:
	 	Actual/360
	 
	 	 	 	 
	 

	 	Reset Dates
	 	The first Business Day in each Calculation Period.
	 
	 	 	 	 
	 

	 	Compounding:
	 	Inapplicable
	 
	 	 	 	 
	Business Days:	 	New York and London

2

 

3. Additional Provision

1) CROSS DEFAULT

The
“Cross Default” provisions of Section 5(a)(vi) of the ISDA Form will apply to DBAG
and Counterparty; provided however, that,
Section 5(a)(vi)(1) is amended by deleting in the
seventh line thereof the words “, or becoming capable at such
time of being declared,”; provided
further, that, with respect to Section 5(a)(vi)(2), “Cross Default” shall not include any default
that. (A) is the result of mistake, administrative or back
office error, wire transfer
difficulties or an error, omission or problem of an administrative or operational nature, and
such default is cured within three (3) Local Business Days of such party’s receipt of written
notice of its default; or (B) was caused solely because such party was precluded from performing
its obligations under the relevant Specified Indebtedness, or was
unable to so per form, using
reasonable means, directly or through the office of the party through which it was acting for
purposes of the relevant Specified Indebtedness, by reason of force majeure, act of state,
illegality or impossibility and such default was cured within three (3) Local Business Days of
the termination of such force majeure, act of state, illegality or impossibility; provided,
however, in either case the party availing itself of such provision to excuse a default for the
grace period so provided had, in the case era payment default, the necessary funds on hand to
effect any such payment that is excused for the grace period specified above.

“Threshold
Amount” means in relation to Counterpart),, USD 10,000,000 and in relation to
DBAG, 3 percent of the ordinary shareholders’ funds of DBAG appearing as such on its most
recently published audited accounts,

2) ADDITIONAL TERMINATION EVENTS

Each of the following shall constitute on Additional Termination Event:

A. Counterparty’s obligations to DBAG under this Agreement:

(i) cease to be secured pursuant to the Security Documents (as such term is defined
in the Credit Agreement) at any time for any reason; or

(ii) cease to be equally and ratably secured with Counterparty’s obligations to the Lender
(as such term is defined in the Credit Agreement) under the Credit Agreement pursuant
to the relevant Security Documents at any time for any reason, or

(iii) cease to be guaranteed by the Subsidiary Guarantors (as such term is defined in
the Credit Agreement) at any time for any reason.

For the purpose of the foregoing Termination Events, the Affected Party shall be Counterpart),.

B. Any collateral under Credit Support Documents is released at any time when DBAG,
or an Affiliate of DBAG is not a party to the Credit Agreement, unless such release will
not have a material adverse effect on DBAG in respect of this Agreement or the release of
such collateral was provided for pursuant to the terms of the Credit Agreement in
effect when DBAG or an Affiliate of DBAG was a party to such Credit Agreement or DBAG
shall have consented in writing prior to such release (such consent not to be unreasonably
withheld).

As used herein and throughout this Agreement. “Credit Agreement” means that USD
300,000,000 Credit and Guarantee Agreement dated as of May 11, 2011 among Town Sports
International Holdings, Inc, Town Sports International, LLC, as the Borrower, Various Lenders and
Deutsche Bank Trust Company Americas, as Administrative Agent, Deutsche Bank Securities Inc. and
Keybank National Association, as Joint Lead Arrangers and Joint Book Running Managers, and
Keybank National Association as Syndication Agent as may be amended, modified, restated or
replaced from time to time

3)
CREDIT SUPPORT DOCUMENTS / PROVIDER

Credit Support Document: The Security Documents referenced in the Credit Agreement and herein
shall be deemed to be Credit Support Documents, with respect to the Counterparty for the purposes
of this Agreement.

Credit Support Provider: The Subsidiary Guarantors as defined in the Credit Agreement and herein
shall be deemed to be Credit Support Providers, with respect to the Counterparty for the purposes
of this Agreement.

3

 

4) AGREEMENT TO DELIVER DOCUMENTS

For the purpose of Section 4(a)(ii) of this Agreement, Party B agrees to deliver true
and complete copies of all documents delivered to the Lenders under the Credit Agreement if
DBAG or an Affiliate of DBAG is not a party to such Credit Agreement. This delivery obligation
will be covered by the representation of Party B as described in Section 3(d).

5) SET-OFF

Section 6(f) of the Agreement is deleted in its entirety and replaced with the following:

“(f)
Upon the designation of any Early Termination Date, the party that is not the Defaulting Party
or Affected Party (“X”) may, without prior notice to the Defaulting or Affected Party (“Y”),
set off any sum or obligation (whether or not arising under thin Agreement, whether matured or
unmatured, whether or not contingent and irrespective of the currency, place of payment or booking
office of the sum or obligation) owed by Y to X (the “X Set Off Amount”) against any sum or
obligation (whether or not arising under this Agreement, whether matured or unmatured, whether or
not contingent and irrespective of the currency, place of payment or booking office of the sum
or obligation) owed by X to Y (the “Y Set Off Amount”). X will give notice to the other party of
any set off effected under this Section 6(1).

For this purpose, either the X Set Off Amount or the Y Set Off Amount (or the relevant
portion of such set off amounts) may be converted by X into the currency in which the other
set off amount is denominated at the rate of exchange at which X would be able, acting in a
reasonable manner and in good faith, to purchase the relevant amount of such currency.

If a sum or obligation is unascertained, X may in good faith estimate that obligation
and set-off in respect of the estimate, subject to the relevant party accounting to the
other when the obligation is ascertained.

Nothing in this Section 6(1) will be effective to create a charge or other security
interest. This Section 6(f) will be without prejudice and in addition to any right of
set-off, combination of accounts, lien or other rights to which any party is at any time
otherwise entitled (whether by operation of law, contract or otherwise).”

6) General Conditions to Payment.

Without limiting the rights of a Non-defaulting Party under Section 6, if an Event of
Default with respect to a party has occurred and is continuing and consequently the
Non-defaulting Party does not make a scheduled payment or delivery by reason of the
condition specified in Section 2(a)(iii)(l), the Non-defaulting Party shall have the tight
to suspend performance (including payments and deliveries) under any Transaction; provided
that the Non-defaulting Party shall provide written notice to the Defaulting Party within
five (5) Local Business Day of its exercising its right to suspend performance under
Section 2(a)(iii); and provided that in no event shall any such suspension continue for longer
than ninety (90) Local Business Days with respect to such Transaction unless an Early
Termination Date shall have been declared and notice provided to the Defaulting Party thereof.

7) Illegality. The parties agree that for the avoidance of doubt, for purposes of Section
5(b)(i) of the Agreement, “any applicable law” shall include the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010, any rules and regulations promulgated thereunder and any
similar law or regulation, without regard to Section 739 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 or any similar legal certainty provision in any legislation
enacted, or rule or regulation promulgated, on or after the date hereof, and the consequences
specified in the Agreement, including without limitation, the consequences specified in Section 6
of the Agreement, shall apply to any Illegality arising from any such act, rule or regulation.

8) Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010: In connection with
Section 739 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any
similar legal certainty provision in any legislation enacted, or rule or regulation
promulgated, on or after the Trade Date, the parties hereby specifically reserve the right to
terminate, renegotiate, modify, amend or supplement the Transaction to the extent that the
enactment of the Dodd-Frank Wall Street Transparency and Accountability Act of 2010 or any
similar legislation, rule or regulation (the “Applicable Act”), or any requirement under the
Applicable Act or an amendment made by the Applicable Act, constitutes a Termination Event or
other similar event under the Transaction that would give rise to such a right to terminate,
renegotiate, modify, amend or supplement the Transaction in accordance with its terms.

4

 

9. No Waiver of Rights.

	 	(i)	 	Without limiting Section 9(d) or (f) of the Agreement, the parties hereby agree that
no payment or delivery by a party made pursuant this Confirmation shall be presumed to
preclude such party’s right to challenge the determination of the amount of such payment or
delivery obligation at a later date or be deemed to be a waiver of any Event of Default or
Termination Event that exists as of the date of any such payment or delivery and no failure of a
party to invoke any dispute resolution procedures that may otherwise
be available to such party
in connection with any such payment or delivery shall be deemed to constitute a waiver of such
party’s right to assert that the demand for such payment or delivery constitutes a breach of this
Agreement or to constitute a waiver of such party’s right to bring a suit or proceeding in
respect thereof.”

(ii) Section 9(f) of this Agreement shall be amended by the addition of the following at
the end of the provision:

“(1) Failure by a party to expressly reserve any right, power or privilege it has under
this Agreement, and/or (2) continued performance by a party of its obligations or enjoyment of
any rights under this Agreement shall not in any way undermine or prejudice the effectiveness
of this Section.”

10. Account Details:

     Account Details for DBAG:

	 	 	 
	USD DBAG Payment Instructions:
	 	 
	Account With:

	 	DB Trust Co. Americas, New York
	SWIFT Code:

	 	BKTRUS33
	Favor Of:

	 	Deutsche Bank AG, New York
	Account Number:

	 	01 473 969

     Account Details for Counterparty:

	 	 	 

	Payment instructions:

	 	Please provide

11. Offices:

     The Office for DBAG for this Transaction is New York, New York

     The Office of Counterparty for this Transaction New York, New York

	 	 	 
	12. Calculation Agent:

	 	DBAG, provided that if an Event of Default or a
Potential Event of Default has occurred and is
continuing with respect to DBAG, the Calculation
Agent shall be a recognized dealer in the relevant
derivatives market designated by Counterparty. The
Calculation Agent shall act in good faith and
in a commercially reasonable manner. The
Calculation Agent shall, upon request by
Counterparty, provide a written explanation of any
calculation, determination or adjustment made by it
including, where applicable, a description of
the methodology and the basis for such
calculation, determination or adjustment in
reasonable detail.

5

 

13. Representations

Each party will be deemed to represent to the other party on the date on which it enters
into this Transaction that (absent a written agreement between the parties that expressly imposes
affirmative obligations to the contrary for this Transaction):

(A) Non-Reliance. It is acting for its own account, and it has made its own independent
decisions to enter into this Transaction and as to whether this Transaction is appropriate or
proper for it based upon its own judgment and upon advice from such advisers as it has deemed
necessary. It is not relying on any communication (written or oral) of the other party as
investment advice or as a recommendation to enter into this Transaction; it being understood that
information and explanations related to the terms and conditions of this Transaction shall not
be considered investment advice or a recommendation to enter into this Transaction. No
communication (written or oral) received from the other party shall be deemed to be an assurance
or guarantee as to the expected results of this Transaction

(B) Assessment and Understanding. It is capable of assessing the merits of and understanding
(on its own behalf or through independent professional advice), and understands and accepts, the
terms, conditions and risks of this Transaction. It is also capable of assuming, and assumes,
tile risks of this Transaction,

(C) Status
of Parties. The other party is not acting as a fiduciary for, or an adviser to it in
respect of this Transaction.

(D) Eligible Contract Participant. It is an “eligible contract participant” within the meaning of
the Commodity Exchange Act, Section 1a(12),

14. Tax Matters

	(A)	 	Payer Tax Representations. For the purpose of Section
3(e) of the Agreement, each of Party A
and Party B makes the following representation:
	 
	 	 	It is not required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, of any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment (other than interest under
Section 2(e), 6(d)(ii) or 6(e) of the Agreement) to be made by it to the other party under
the Agreement. In making this representation, it may rely on (i) the accuracy of any
representation made by the other party pursuant to Section 3(f)
of the Agreement; (ii) the
satisfaction of the agreement of the other party contained in
Section 4(a)(i) or 4(a)(iii) of
the Agreement and the accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement; and (iii) the satisfaction of the
agreement of the other party contained in Section 4(d) of the Agreement, provided that it
shall not be a breach of this representation where reliance is placed
on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) of the Agreement by
reason of material prejudice to its legal or commercial position.
	 
	(B)	 	Payee Tax Representations. For the purpose of Section 3(f) of the Agreement, Party A and
Party B will make the following representation specified below.
	 
	(i)	 	Party A. It is a “foreign person” (as that term is
used in Section 1.6041-4(a)(4) of the
United States Treasury Regulations) for U.S. federal income tax purposes, and each payment
received or to be received by it will be effectively connected with its conduct of a trade or
business in the United States.

(ii) Party
B. It is a “U.S. person” (as that term is used in Section
1.144 1-4(a)(3)(ii) of
the United States Treasury Regulations) for U.S. federal income tax purposes (or, if Party B
is disregarded entity for U.S. federal income tax purposes, its beneficial owner is).

6

 

(C) Tax
Forms. For the purposes of Section 4(a)(i) and (ii) of the Agreement, each party
agrees to deliver the following documents, as applicable:

	 	 	 	 	 
	Party required to
deliver document

	 	Form/Document/Certificate
	 	Date by which to be delivered
	 
	 	 	 	 
	Party A

	 	Internal Revenue Service
Form W-8ECI.
	 	Upon execution and delivery
of this Confirmation,
promptly upon reasonable
demand by Party B; and
promptly upon learning that
any such form previously
provided by Party A has
become obsolete or
incorrect.
	 
	 	 	 	 
	Party B

	 	Internal Revenue Service Form W-9.
	 	Upon execution and delivery
of this Confirmation,
promptly upon reasonable
demand by Party A; and
promptly upon learning that
any such form previously
provided by Party B has
become obsolete or
incorrect.

7

 

15. Please confirm that the foregoing correctly sets forth the terms of our agreement
by having an authorized officer sign this Confirmation and return it via facsimile or e-mail
to:

     Attention. Derivative Documentation

     Telephone: 44 20 7547 4755

     Facsimile: 44 20 7545 9761

     E-mail:
Derivative.Documentation@db.com

This message will be the only form of Confirmation dispatched by us. If you wish to exchange
hard copy forms of this Confirmation, please contact us.

Yours sincerely,

Deutsche Bank AG New York

	 	 	 	 	 
	 	 	 
	 	By:  	DB Services New Jersey, Inc., as Agent
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	BY:  	/s/ Remi Adedoyin	 
	 	 	Name: Remi Adedoyin	 
	 	 	Title:   Manager Rates Drafting	 
	 
	 	 	 
	 	BY:  	/s/
Larisa Besrayeva	 
	 	 	Name: Larisa Besrayeva	 
	 	 	Title:   Manager Equity Drafting	 
	 

	 	 	 	 	 
	 	Confirmed as of the date first written above: 

Town Sports International LLC

 	 
	 	By:  	/s/
Daniel Gallagher	 
	 	 	Name:  	Daniel Gallagher 	 
	 	 	Title:  	CFO 	 
	 

8

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