Exhibit 10.4
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("AGREEMENT"), dated as of November
30,1998, by and among TOWN SPORTS INTERNATIONAL, INC., a New York corporation
(the "COMPANY"), FARALLON CAPITAL PARTNERS, L.P. ("FCP"), FARALLON CAPITAL
INSTITUTIONAL PARTNERS, L.P. ("FCIP"), FARALLON CAPITAL INSTITUTIONAL PARTNERS
II, L.P. ("FCIP II") and RR CAPITAL PARTNERS, L.P. ("RR", and together with FCP,
FCIP and FCIP II, the "FARALLON INVESTORS", and individually, a "FARALLON
INVESTOR") and ROSEWOOD CAPITAL, L.P. (the "ROSEWOOD INVESTOR", and together
with the Farallon Investors, the "INVESTORS", and individually, an "INVESTOR").
Capitalized terms used herein but not otherwise defined shall have the meanings
assigned to such terms in Section 1.
WHEREAS, the Company and the Investors desire to entire into
an agreement pursuant to which each Investor will purchase from the Company, and
the Company will sell to each such Investor (i) the number of shares of the
Company's Senior Preferred Stock, par value $1.00 per share, corresponding to
such Investor on SCHEDULE A attached hereto (the "PREFERRED STOCK") and (ii) a
number of stock purchase warrants (the "WARRANTS") exercisable for 89,538.10
shares of the Company's Class A Common Stock, par value $.001 per share (the
"CLASS A COMMON"), as adjusted pursuant to the terms of such Warrants,
corresponding to such Investor on SCHEDULE A attached hereto.
NOW THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement agree
as follows:
1. DEFINITIONS. As used herein, the following terms shall have
the following meanings:
"ACCREDITED INVESTOR" has the meaning ascribed to such term in
Regulation D of the Securities Act, as amended.
"AFFILIATE" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"AMENDED REGISTRATION RIGHTS AGREEMENT" means the First
Amendment to Registration Rights Agreement, dated as of November 13, 1998, by
and among the Company and
certain shareholders of the Company, as the same may be amended, restated or
modified from time to time.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, any other entity or a government
entity (or any department, agency or political subdivision thereof.)
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of December 10, 1996, by and among the Company and certain
other parties thereto, as the same may be amended, restated or modified from
time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDERS AGREEMENT" means the Amended and Restated
Shareholders Agreement, dated as of November 13, 1998, by and among the Company,
the Investors and certain shareholders of the Company, as the same may be
amended, restated or modified from time to time.
"UNDERLYING STOCK" means (i) the Class A Common issued or
issuable upon exercise of the Warrants, and (ii) with respect to such shares of
Class A Common, all shares issued with respect to, or as a result of, a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, or other reorganization with respect to
such Class A Shares.
"WARRANT AGREEMENT" means the Warrant Agreement, dated as of
the date hereof, by and among the Investors and the Company (as the same may be
amended, restated or modified from time to time).
2. AUTHORIZATION AND CLOSING.
1. AUTHORIZATION. The Company shall authorize the issuance
and/or sale to the Investors of 25,000 shares of Preferred Stock and 89,538.10
Warrants, in the amounts set forth for each Investor on Schedule A. The
Preferred Stock shall have the terms and conditions set forth in EXHIBIT A
attached hereto. The Warrants shall be in the form of EXHIBIT B attached hereto.
2. PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, at the Closing, each of the Investors, severally, and not
jointly and severally, agrees to purchase from the Company, and the Company
agrees to sell to such Investor, that number of (i) shares of Preferred Stock
and (ii) Warrants, in each case, set forth opposite such Investor's name on
Schedule A, for the aggregate purchase price set forth opposite such Investor's
name on SCHEDULE A (the "PURCHASE PRICE").
3. CLOSING. The closing of the purchase and sale of the
Preferred Stock and the issuance of the Warrants to the Investors, as the case
may be, (the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ on the date
hereof or at such other place or such other time or date as the Company may
designate. At the Closing, the Company shall deliver to the Investors
certificates evidencing the Preferred Stock and Warrants, each registered in the
name of the applicable Investor or
its nominee, upon payment of the Purchase Price, by a cashier's or certified
check, or by wire transfer of immediately available funds to an account
designated by the Company.
3. RESTRICTIONS ON TRANSFER.
1. SHAREHOLDERS AGREEMENT. Each Investor hereby acknowledges
and understands that such Investor is a party to the Shareholders Agreement
which governs and restricts the Investor's ability to transfer any Common Stock
(including the Underlying Stock when issued) and other matters relating to the
Investor as a shareholder of the Company.
2. LEGEND. The certificates representing the Preferred Stock
and the Underlying Stock (upon the issuance of such Underlying Stock) will bear
the legend set forth in Section 7 of the Shareholders Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
material inducement to the Investors to enter into this Agreement and purchase
the Common Stock, the Company hereby represents and warrants to the Investors as
follows:
1. ORGANIZATION. It is a corporation duly organized, validly
existing and in good standing under the laws of New York.
2. AUTHORIZATION. It has full corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by it and constitutes the valid and binding agreement of
it, enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency and other similar laws affecting the enforceability of
creditors' rights generally, general equitable principles and the discretion of
courts in granting equitable remedies.
3. NO CONFLICT. The execution, delivery and performance by it
of this Agreement, the performance by it of the transactions contemplated
thereby and the fulfillment by it of and compliance by it with the terms and
conditions hereof does not and will not, violate or conflict with any terms or
provisions of (i) its articles of incorporation, bylaws or other organizational
documents, (ii) any contract, deed, lease or other agreement to which it is a
party or to which any of its assets are subject or (iii) any judgment, decree,
order, statute, rule or regulation applicable to it or any of its assets, except
for such violations which could not reasonably be expected to materially impair
or delay its ability to consummate the transactions contemplated hereby. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any government agency or public or regulatory unit, agency, body or
authority with respect to it is required in connection with its execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby other than any of the foregoing, the failure of
which to receive or make, as the case may be, could not reasonably be expected
to materially impair or delay its ability to consummate the transactions
contemplated hereby.
4. CAPITALIZATION. The Warrants and Preferred Stock acquired
hereunder and the capitalization of the Company as set forth on SCHEDULE B
attached hereto (which is, as of the date hereof, true and correct as to all
outstanding equity securities of the Company outstanding on a fully diluted
basis) have been validly authorized, issued and are fully paid and
nonassessable.
5. TAX RETURNS, PAYMENTS AND ELECTIONS. The Company has filed
all tax returns and reports as required by law. These returns and reports are
true and correct in all material respects. The Company has paid all taxes and
other material assessments due. The provision for taxes of the Company shown on
the Company's financial statements is adequate for taxes due or accrued as of
the date thereof. The Company has not elected pursuant to the Internal Revenue
Code of 1986, as amended ("CODE"), to be treated as an S corporation, nor has it
made any other elections pursuant to the Code (other than elections which relate
solely to methods of accounting, depreciation or amortization) which would have
a material adverse affect on the Company, its financial condition, its business
as presently conducted or proposed to be conducted or any of its material
properties or material assets. The Company has never had a corporate, income or
payroll tax deficiency or audit and the Company has made all withholdings for
all income tax of its employees.
6. LEASES. The Company has not received written notice that
the Company is in default under any leases under which the Company is a lessee
(the "LEASES"), except as set forth on EXHIBIT C attached hereto and, to the
Company's best knowledge, there is no event which, with the giving of notice or
the passage of time, or both, will constitute a default by the Company under any
other material terms, covenants or conditions of any Lease. There is no
litigation pending against the Company by the Landlord under any Lease seeking
to terminate or otherwise disturb the Company's peaceful possession of the
premises demised under such Lease to the extent possession of the premises so
demised has been delivered to, and accepted by the Company pursuant to the terms
of the applicable Lease. Assuming the due authorization, execution and delivery
of any Leases to which the Company is a party by parties other than the Company,
such leases constitute legal, valid and binding obligations of such respective
parties thereto, in accordance with the material terms, covenants and conditions
of the respective Leases, as such terms, covenants and conditions may be
interpreted pursuant to applicable law and equitable principles.
7. LITIGATION. There are no actions, suits, proceedings or
investigations ("ACTIONS") pending (or, to the best of the Company's knowledge,
any basis therefor or threat thereof) against the Company, which, either in any
case or in the aggregate, might have a material adverse affect on the business,
operations, properties or condition (financial or otherwise) of the Company,
which might result in any material impairment of the right or ability of the
Company to carry on its business as now conducted or proposed to be conducted,
and none which questions the validity of this Agreement or any action taken or
to be taken in connection herewith. There is no Action by the Company currently
pending or which the Company currently intends to initiate. All existing Actions
against the Company are set forth on EXHIBIT D attached hereto.
8. PERMITS AND LICENSES. The Company has obtained or is in the
process of obtaining all franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it (the
"Permits"), the lack of any would materially and adversely affect the business,
properties, prospects or financial condition of the Company. The Company is not
in default in any material respect under any of such existing Permits.
9. INSURANCE. The Company has insurance policies in amounts
customary for companies similarly situated, which, in the Company's belief, is
adequate to protect the Company and its financial condition against the risks
involved in the business conducted and proposed to be conducted by the Company.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. As a
material inducement to the Company to enter into this Agreement and sell the
Preferred Stock and issue the Warrants to the Investors, each Investor,
severally and not jointly, hereby represents and warrants to the Company as
follows with respect to itself only:
1. CAPACITY AND POWER. The Investor has full capacity, power
and authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Investor and
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency and other similar
laws affecting the enforceability of creditors' rights generally, general
equitable principles and the discretion of courts in granting equitable
remedies.
2. NO CONFLICT. The execution, delivery and performance by the
Investor of this Agreement and the transactions contemplated hereby and the
fulfillment by it of and compliance by it with the terms and conditions of this
Agreement do not and will not, violate or conflict with any terms or provisions
of (i) any contract, deed, lease or other agreement to which it is a party or to
which any of its assets are subject or (ii) any judgment, decree, order,
statute, rule or regulation applicable to, it or any of its assets, except for
such violations which could not reasonably be expected to materially impair or
delay its ability to consummate the transactions contemplated hereby. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any government agency or public or regulatory unit, agency, body or
authority with respect to it is required in connection with its execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby other than any of the foregoing, the failure of
which to receive or make, as the case may be, could not reasonably be expected
to materially impair or delay its ability to consummate the transactions
contemplated hereby.
3. INVESTMENT. The Investor (a) understands that the Preferred
Stock and the Warrants have not been, and will not be, registered under the
Securities Act, or under any state securities laws, and are being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (b) is acquiring the Preferred Stock and the
Warrants solely for its own account for investment purposes, and not with a view
to the distribution thereof, (c) is a sophisticated investor with knowledge and
experience in business and financial matters, (d) has received certain
information concerning the Company and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding the Preferred Stock and the Warrants, (e) is able to bear
the economic risk and lack of liquidity inherent in holding the Preferred Stock
and the Warrants, and (f) is an Accredited Investor.
6. CLOSING FEES. As a material inducement to the Investors to
enter into this agreement and purchase the Preferred Stock and receive the
Warrants, the Company agrees to pay to the Investors on the Closing Date (i)
reasonable attorneys' fees and out-of-pocket expenses of legal counsel to the
Investors, and (ii) a closing fee of $41,666.00 in the aggregate.
7. CONDITIONS TO CLOSING. The obligations of each of the
Investors to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions, any and all of which may be waived in whole or in part by the
Investors to the extent permitted by applicable law:
(a) CLOSING DELIVERIES. The Company shall have delivered to
each of the Investors the following closing documents in form and substance
reasonably acceptable to its counsel:
(i) a certificate of the Secretary of the Company,
dated the Closing Date, as to the incumbency of any officer of the Company,
executing this Agreement or any document related thereto and covering such other
matters as the Investors may reasonably request;
(ii) certified copies of the resolutions of the
Company's Board of Directors authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereunder;
(iii) a good standing certificate with respect to the
Company, together with certified charter documents of the Company from the
Secretary of State of the Company's jurisdiction of incorporation, together with
certified copies of the bylaws of the Company;
(iv) certificates evidencing the Preferred Stock and
the Warrants;
(v) executed copies of (A) this Agreement, (B) the
Warrant Agreement, dated as of the date hereof, by and among the Company and
each of the Investors, (C) executed certificates evidencing the Warrants, (D)
the Amended Registration Rights Agreement, and (E) the Shareholders Agreement;
and;
(vi) an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to
the Company, dated as of the date hereof, in form and substance reasonably
acceptable to counsel for the Investors.
8. MISCELLANEOUS.
1. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
2. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement, the Shareholders Agreement, the Registration Rights
Agreement, the Amended Registration Rights Agreement, and the Warrant Agreement
embody the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
3. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other. Notwithstanding anything herein to the contrary, each of
the Investors may, in the ordinary course of its business and in accordance with
applicable law, at any time assign to an Affiliate of such Person or to one or
more banks or other financial institutions or entities which are not then in
direct competition with the Company, all or any part of its rights and
obligations under this Agreement; PROVIDED, that each of the Investors may make
any such assignment only if it is required to do so pursuant to its limited
partnership agreement or in connection with any dissolution of such Person
pursuant to its limited partnership agreement.
4. 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.
5. REMEDIES. The Company acknowledges that the Preferred Stock
and Warrants are unique and recognizes and affirms that in the event of a breach
of this Agreement by the Company or any of the Investors, money damages may be
inadequate and the Investor, or the Company, as the case may be, may have no
adequate remedy at law. Accordingly, the Company and each of the Investors
agrees that such Investor or the Company, as the case may be, shall have the
right, in addition to any other rights and remedies existing in its favor at law
or in equity, to enforce its rights and the obligations of the Company or such
Investor (as the case may be) hereunder not only by an action or actions for
damages but also by an action or actions for specific performance, injunctive
and/or other equitable relief (without posting of bond or other security).
6. NOTICES. All notices, demands, or other communications to
be given or delivered under or by reason of the provision of this Agreement will
be in writing and will be deemed given when delivered personally, mailed by
certified or registered mail, return receipt requested, postage prepaid, or sent
via nationally
recognized overnight courier, or sent via facsimile to the recipient. Such
notices, demands and other communications will be sent to the address indicated
below:
If to the Company, to:
Town Sports International, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not constitute notice to the
Company) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
AND
Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Farallon Investors, to:
Farallon Capital Management, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice to the
Farallon Investors), to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
To the Rosewood Investor:
Rosewood Capital Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice to
Rosewood), to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. Low, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party.
7. 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.
8. AMENDMENT AND WAIVER. The provisions of this Agreement may
be amended and waived only with the prior written consent of the parties. No
waiver by either party of any default, misrepresentation, or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
9. TIME OF THE ESSENCE; COMPUTATION OF TIME. Time is of the
essence for each and every provision of this Agreement. Whenever the last day
for the exercise of any privilege or the discharge of any duty hereunder shall
fall upon a Saturday, Sunday, or any date on which banks in New York, New York
are authorized to be closed, the party having such privilege or duty may
exercise such privilege or discharge such duty on the next succeeding day which
is a regular business day.
10. WAIVER OF JURY TRIAL. Each of the parties hereto waives
any right it may have to trial by jury in respect of any litigation based on,
arising out of, under or in connection with this Agreement or any course of
conduct, course of dealing, verbal or written statement or action of any party
hereto.
11. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement on the date first above written.
TOWN SPORTS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: CFO
FARALLON CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Principal
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Principal
FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Principal
RR CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Principal
ROSEWOOD CAPITAL, L.P.
By: Rosewood Capital Associates, L.P.
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Principal
SCHEDULE A
INVESTOR PREFERRED STOCK WARRANTS PURCHASE PRICE
-------- --------------- -------- --------------
Farallon Capital Partners, L.P. 7,000 25,070.67 $7,000,000.00
Farallon Capital Institutional Partners, L.P. 8,000 28,652.19 $8,000,000.00
Farallon Capital Institutional Partners II, L.P. 4,000 14,326.10 $4,000,000.00
RR Capital Partners, L.P. 1,000 3,581.52 $1,000,000.00
Rosewood Capital, L.P. 5,000 17,907.62 $5,000,000.00
--------- ----------- --------------
Total: 25,000 89,538.10 $25,000,000.00
SCHEDULE B
[CAPITALIZATION OF THE COMPANY]
EXHIBIT A
[PREFERRED STOCK TERMS]
EXHIBIT B
[FORM OF WARRANT]
EXHIBIT C
With respect to the lease, dated as of July 15, 1998, by and between Capital
Plaza Associates, LLC, as landlord, and TSI Weymouth, Inc., as tenant,
concerning premises in the Capitol Plaza, 551-553 Washington Street, Weymouth,
Massachusetts, the landlord has claimed (but is not currently seeking
enforcement), and the Company grievously opposes, a breach of said lease as a
result of the nonpayment of certain additional rent (currently totaling
approximately $9,000). The Company has suspended payment of said additional rent
and claims that the lease term has not commenced as a result of a Declaration of
State of Water Supply Emergency issued August 20, 1998 by the Commonwealth of
Massachusetts Department of Environment Protection, which declaration has
prevented the tenant from obtaining building and other permits, and being able
to take occupancy of the premises.
EXHIBIT D
▇▇▇▇▇▇▇ ▇▇▇▇▇ ET AL. VS. TOWN SPORTS INTERNATIONAL, INC.
Plaintiffs allege breach of contract, unfair trade practices, unfair trade
competition, unjust enrichment, and a violation of their right to privacy, all
arising out of the Company's alleged unauthorized use of photographs taken by
the plaintiff-photographer of plaintiff-models in promotional advertising. The
plaintiffs seek an unspecified amount of damages, including the Company's
profits attributable to the photographs, exemplary damages, and attorney's fees.
The suit was originally filed in federal court on a claim of copyright
infringement on June 10, 1996. It was dismissed in February 1998 because
plaintiff had not registered copyrights to the photographs. It was refiled in
New York State Supreme Court on April 15, 1998. During the pendency of the
federal suit, the Company made an offer of judgment of $15,000, which offer was
rejected. No discovery has been conducted and, as a result, any assessment of
the outcome is preliminary. Based on the Company's preliminary assessment of the
case, however, a material adverse result appears remote.
The Company plans to contest this matter vigorously. No specific damage figure
is requested in the complaint. Some measure of damage is provided by the fact
that the photographs at issue were licensed to the Company for $4,000 for one
year from 1991-92. Plaintiffs seek compensation damages based in, INTER ALIA,
profits derived from photographs.
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ VS. TOWN SPORTS
INTERNATIONAL, INC.
In these suits, plaintiffs filed complaints on February 3, 1994 with the State
of New York Division of Human Rights, charging discrimination of the basis of
national origin by dismissing or reducing work hours. In addition, complaints
were filed with the Equal Employment Opportunity Commission.
On January 5, 1995, the New York State Division of Human Rights found that there
was probable cause to believe that the respondent had, or was at the time of the
finding, engaged in the unlawful discriminatory practice complained of, and
recommended the matters for public hearing. No hearing has yet been scheduled.
The Company plans to contest these matters vigorously. Due to the variability of
the law on back pay and compensatory damage awards, and the absence of any
discovery to date, an estimate of the amount or range of potential loss in the
event of a finding of liability cannot be made at this time. A material adverse
result, however, appears remote, based upon the Company's assessment.
