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EXHIBIT 10.5
FOURTH AMENDMENT
FOURTH AMENDMENT (this "Amendment"), dated as of March 1, 2000, among
TOWN SPORTS INTERNATIONAL, INC., a New York corporation (the "Borrower"), the
various lending institutions party to the Credit Agreement referred to below
(the "Banks"), and BANKERS TRUST COMPANY, as administrative agent (the
"Administrative Agent"). All capitalized terms used herein and not otherwise
defined shall have the respective meanings provided such terms in the Credit
Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and the Administrative Agent are
parties to an Amended and Restated Credit Agreement, dated as of October 16,
1997 as amended through the date hereof, (the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
NOW, THEREFORE, it is agreed that as of the Fourth Amendment Effective
Date (as defined below):
1. Section 1.01(a) of the Credit Agreement is hereby amended by
deleting Section 1.01(a) in its entirety and inserting the following new Section
1.01(a) in lieu thereof:
"(a) Subject to and upon the terms and conditions set forth herein,
each Bank severally agrees to make, at any time and from time to time on and
after the Fourth Amendment Effective Date and prior to the Maturity Date, a loan
or loans to the Borrower, which loans (i) shall, at the option of the Borrower,
be denominated in (x) U.S. Dollars (each a "U.S. Dollar Revolving Loan" and,
collectively, the "U.S. Dollar Revolving Loans") or (y) Swiss Francs (each a
"Swiss Franc Revolving Loan" and, collectively, the "Swiss Franc Revolving
Loans" and together with the U.S. Dollar Revolving Loans, the "Revolving
Loans"), (ii) except as hereinafter provided, shall, at the option of the
Borrower, in the case of U.S. Dollar Revolving Loans, be maintained as either
Base Rate Loans or Eurodollar Loans (subject to the option to convert pursuant
to Section 1.06(a) into Loans of the other Type) or, in the case of Swiss Franc
Revolving Loans, be maintained as Swiss Franc Base Rate Loans or Eurofranc Loans
(subject to the option to convert pursuant to Section 1.06(b)), provided that
all Revolving Loans pursuant to the same Borrowing shall be of the same Type and
shall be denominated in the same currency, (iii) may be repaid and re-borrowed
in accordance with the provisions hereof and (iv) shall not exceed for any Bank
at any time that aggregate principal amount (determined for this purpose by
taking the principal amount of all U.S. Dollar Revolving Loans and the U.S.
Dollar Equivalent of all Swiss Franc Revolving Loans) which, when combined with
the aggregate outstanding principal amount of all other Revolving Loans of such
Bank and with such Bank's Adjusted Percentage, if any, of the sum of (I) the
Letter of Credit Outstandings (exclusive of Unpaid
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Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time and
(II) the outstanding principal amount of Swingline Loans (exclusive of Swingline
Loans which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time,
equals (1) if such Bank is a Non-Defaulting Bank, the Adjusted Commitment, if
any, of such Bank at such time and (2) if such Bank is a Defaulting Bank, the
Commitment, if any, of such Bank at such time. Notwithstanding anything to the
contrary contained above, no more than an aggregate principal amount of Swiss
Franc Revolving Loans with a U.S. Dollar Equivalent equal to $1,500,000 may be
incurred at any time.
2. Section 1.02 of the Credit Agreement is hereby amended by
deleting the last sentence contained therein and inserting the following new
sentence in lieu thereof:
"More than one Borrowing may be incurred on any day, provided, that at
no time shall there be outstanding more than an aggregate of ten Borrowings of
Eurodollar Loans and Eurofranc Loans"
3. Section 1.04(a) of the Credit Agreement is hereby amended by
deleting the first two sentences contained therein and inserting the following
two sentences in lieu thereof:
"No later than 1:00 P.M. (New York time) on the date specified in each
Notice of Borrowing, each Bank will make available its pro rata share of each
Borrowing requested to be made on such date in U.S. Dollars or Swiss Francs, as
the case may be, in the manner provided below, provided, that all Swingline
Loans shall be made available by BTCo no later than 3:00 P.M. (New York time) on
the date so requested. All such amounts shall be made available to the
Administrative Agent in U.S. Dollars or Swiss Francs, as the case may be, and
immediately available funds at the Payment Office and the Administrative Agent
promptly will make available to the Borrower by depositing to its account at the
Payment Office the aggregate of the amounts so made available in the type of
funds received."
4. Section 1.06 of the Credit Agreement is hereby amended by
deleting it in its entirety and inserting the following new Section 1.06 in lieu
thereof:
"1.06 Conversions. (a) The Borrower shall have the option to convert
on any Business Day occurring on or after the Fourth Amendment Effective Date,
all or a portion at least equal to the applicable Minimum Borrowing Amount of
the outstanding principal amount of the U.S. Dollar Revolving Loans owing by the
Borrower into a Borrowing or Borrowings of another Type of Loan (other than
Swingline Loans, which at all times shall be maintained as Base Rate Loans);
provided, that (i) except as otherwise provided in Section 1.10(b), Eurodollar
Loans may be converted into Base Rate Loans only on the last day of an Interest
Period applicable thereto and no partial conversion of a Borrowing of Eurodollar
Loans shall reduce the outstanding principal amount of the Eurodollar Loans made
pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Base Rate Loans may not be converted into Eurodollar Loans if a
violation of Sections 9.01 or 9.05 or an Event of Default is in existence on the
date of the conversion and the Administrative Agent or the Required Banks have
determined that such conversion at such time would be disadvantageous to the
Banks and (iii) Borrowings of
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Eurodollar Loans resulting from this Section 1.06(a) shall be limited in number
as provided in Section 1.02.
(b) The Borrower shall have the option to convert on any Business
Day occurring on or after the Fourth Amendment Effective Date, all or a portion
at least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of the Swiss Franc Revolving Loans, owing by the Borrower into
a Borrowing or Borrowings of another Type of Loan; provided, that (i) except as
otherwise provided in Section 1.10(b), Eurofranc Loans may be converted into
Swiss Franc Base Rate Loans only on the last day of an Interest Period
applicable thereto and no partial conversion of a Borrowing of Eurofranc Loans
shall reduce the outstanding principal amount of the Eurofranc Loans made
pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Swiss Franc Base Rate Loans may not be converted into Eurofranc
Loans if a violation of Sections 9.01 or 9.05 or an Event of Default is in
existence on the date of the conversion and the Administrative Agent or the
Required Banks have determined that such conversion at such time would be
disadvantageous to the Banks and (iii) Borrowings of Eurofranc Loans resulting
from this Section 1.06(b) shall be limited in number as provided in Section
1.02.
(c) Each conversion pursuant to this Section 1.06 shall be effected
by the Borrower giving the Administrative Agent at its Notice Office, prior to
11:00 A.M. (New York time), at least three Business Days' (or two Business
Days', in the case of a conversion into Base Rate Loans or Swiss Franc Base Rate
Loans, as the case may be) prior written notice (or telephonic notice promptly
confirmed in writing) (each a "Notice of Conversion") specifying the Loans to be
so converted, the Type of Loans to be converted into and, if to be converted
into a Borrowing of Eurodollar Loans or Eurofranc Loans, as the case may be, the
Interest Period to be initially applicable thereto. The Administrative Agent
shall give each Bank prompt notice of any such proposed conversion affecting any
of its Loans.
5. Section 1.08 of the Credit Agreement is hereby amended by (i)
deleting each reference to "Base Rate Loan" and inserting "Base Rate Loan or
Swiss Franc Base Rate Loan, as the case may be," in lieu thereof and (ii)
deleting each reference to "Eurodollar Loan" and inserting "Eurodollar Loan or
Eurofranc Loan, as the case may be," in lieu thereof.
6. Section 1.09 of the Credit Agreement is hereby amended by (i)
deleting each reference to "Base Rate Loan" and inserting "Base Rate Loan or
Swiss Franc Base Rate Loan, as the case may be," in lieu thereof and (ii)
deleting each reference to "Eurodollar Loan" and inserting "Eurodollar Loan or
Eurofranc Loan, as the case may be," in lieu thereof.
7. Section 1.10 (a) of the Credit Agreement is hereby amended by
(i) deleting clause (x) contained in the first sentence of such Section and
inserting "(x) in the case of clauses (i) and (iv) below, the Administrative
Agent or" in lieu thereof and (ii) deleting the paragraph immediately following
Section 1.10(a) (iii) appearing therein and inserting the following new Section
(iv) and additional text in lieu thereof:
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"(iv) at any time that Swiss Francs are not available in
sufficient amounts, as determined in good faith by the Administrative Agent,
to fund any Borrowing of Swiss Franc Revolving Loans requested pursuant to
Section 1.01;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clauses (i) or (iv) above) shall (x) on such date and (y) as promptly as
practicable (and in any event within ten Business Days) after the date on which
such event no longer exists give notice (by telephone confirmed in writing) to
the Borrower and to the Administrative Agent of such determination (which notice
the Administrative Agent shall promptly transmit to each of the other Banks).
Thereafter (w) in the case of clause (i) above, in the event Eurodollar Loans
are so affected, Eurodollar Loans shall no longer be available until such time
as the Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by the Borrower, (x) in the case of
clause (ii) above, the Borrower shall pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank shall
reasonably determine) as shall be required to compensate such Bank for such
increased costs or reductions in amounts received or receivable hereunder (a
written notice as to the additional amounts owed to such Bank, showing the basis
for the calculation thereof, submitted to the Borrower by such Bank in good
faith shall, absent demonstrable error, be final and conclusive and binding on
all the parties hereto, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(a) upon the subsequent receipt of such notice),
(y) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Section 1.10(b) as promptly as possible and, in any event,
within the time period required by law and (z) in the case of clause (iv) above,
Swiss Franc Revolving Loans (exclusive of any such Swiss Franc Revolving Loans
which have theretofore been funded) shall no longer be available until such time
as the Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to such Swiss Franc Revolving Loans which have not been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower. Each
of the Administrative Agent and each Bank agrees that if it gives notice to the
Borrower of any of the events described in clause (i), (ii), (iii) or (iv)
above, it shall promptly notify the Borrower and, in the case of any such Bank,
the Administrative Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Bank, the obligations of
such Bank to make Eurodollar Loans and/or Eurofranc Loans and to convert Base
Rate Loans into Eurodollar Loans or Swiss Franc Base Rate Loans into Eurofranc
Loans, as the case may be, on the terms and conditions contained herein shall be
reinstated immediately upon such cessation."
8. Section 1.10 of the Credit Agreement is hereby further amended
by inserting the following new Section 1.10 (d) immediately following Section
1.10 (c):
"(d) In the event that any Bank shall in good faith determine (which
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto) at any time
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that such Bank is required to maintain reserves (including, without limitation,
any marginal, emergency, supplemental, special or other reserves required by
applicable law) which have been established by any federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body with jurisdiction over such Bank (including any branch, Affiliate or
funding office thereof) in respect of any Swiss Franc Revolving Loans or any
category of liabilities which includes deposits by reference to which the
interest rate on any Swiss Franc Revolving Loan is determined or any category of
extensions of credit or other assets which includes loans by a non-United States
office of any Bank to non-United States residents, then, unless such reserves
are included in the calculation of the interest rate applicable to such Swiss
Franc Revolving Loans or in Section 1.10(a)(ii), such Bank shall promptly notify
the Borrower and the Administrative Agent in writing specifying the additional
amounts required to indemnify such Bank against the cost of maintaining such
reserves (such written notice to provide in reasonable detail a computation of
such additional amounts) and the Borrower shall pay to such Bank such specified
amounts as additional interest at the time that the Borrower is otherwise
required to pay interest in respect of such Swiss Franc Revolving Loan or, if
later, on written demand therefor by such Bank."
9. Section 4.01 of the Credit Agreement is hereby amended by
inserting the following parenthetical immediately following (i) the number
$500,000, and (ii) the number $50,000 appearing therein:
"(or the Swiss Franc Equivalent thereof in the case of the Eurofranc
Loans)"
10. Section 4.03 of the Credit Agreement is hereby amended by
deleting such section in its entirety and inserting the following new section
4.03 as follows:
"4.03 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to the Administrative Agent for the account of the Bank or Banks
entitled thereto not later than 1:00 P.M. (local time in the city in which the
Payment Office for the respective payments is located) on the date when due and
shall be made in (x) Dollars in immediately available funds at the appropriate
Payment Office of the Administrative Agent in respect of any obligation of the
Borrower under this Agreement except as otherwise provided in the immediately
following clause (y) and (y) Swiss Francs in immediately available funds at the
appropriate Payment Office of the Administrative Agent, if such payment is made
in respect of (i) principal of or interest on Swiss Franc Revolving Loans, or
(ii) any increased costs, indemnities or other amounts owing with respect to
Swiss Franc Revolving Loans (or Commitments relating thereto). The
Administrative Agent will thereafter cause to be distributed on the same day (if
payment was actually received by the Administrative Agent prior to 1:00 P.M.
(local time in the city in which such payments are to be made) like funds
relating to the payment of principal, interest or Fees ratably to the Banks
entitled thereto. Any payments under this Agreement which are made later than
1:00 P.M. (local time in the city in which such payments are to be made) shall
be deemed to have been made on the next succeeding Business Day. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension."
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11. Section 10 of the Credit Agreement is hereby amended to insert
the following new definitions in appropriate alphabetical order:
"Applicable Currency" shall mean with respect to any Loan, the
currency in which such Loan was incurred.
"Eurofranc Loan" shall mean each Swiss Franc Revolving Loan bearing
interest at the rates provided in Section 1.08(b).
"Fourth Amendment" shall mean the Fourth Amendment, dated as of
February __, 2000, to this Agreement.
"Fourth Amendment Effective Date" shall have the meaning provided in
the Fourth Amendment.
"Judgment Currency Conversion Date" shall have the meaning provided in
Section 12.17(a).
"Judgment Currency Conversion Date" shall have the meaning provided in
Section 12.17(a).
"Obligation Currency" shall have the meaning provided in Section
12.17(a).
"Swiss Franc Base Rate Loan" shall mean each Swiss Franc Revolving
Loan bearing interest at the rates provided in Section 1.08(a).
"Swiss Franc Equivalent" shall mean, at any time for the determination
thereof, the amount of Swiss Francs which could be purchased with the amount of
Dollars involved in such computation at the spot rate of exchange therefor as
quoted by the Administrative Agent as of 11:00 A.M. (Zurich time) on the date
two Business Days prior to the date of any determination thereof for purchase on
such date.
"Swiss Franc Revolving Loans" shall have the meaning provided in
Section 1.01(a).
"Swiss Francs" shall mean shall each mean the freely transferable
lawful money of the Swiss Confederation.
"U.S. Dollar Equivalent" shall mean, at any time for the computation
thereof, the amount of U.S. Dollars which could be purchased with the amount of
Swiss Francs involved in such computation at the spot exchange rate therefor as
quoted by the Administrative Agent as of 12:00 P.M. (New York time) on the date
one Business Day prior to the date of any determination thereof for purchase on
such date. If for any reason the U.S. Dollar Equivalent cannot be calculated as
provided above, the Administrative Agent shall calculate the U.S. Dollar
Equivalent on such basis as it deems fair and equitable.
"U.S. Dollar Revolving Loan" shall have the meaning provided in
Section 1.01.
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12. Section 10 of the Credit Agreement is hereby further amended by
deleting the definitions of "Base Rate Loan", "Eurodollar Loan", "Interest
Period" and "Minimum Borrowing Amount" contained therein and inserting the
following new definitions of "Base Rate Loan", "Eurodollar Loan", "Interest
Period" and "Minimum Borrowing Amount" in lieu thereof:
"Base Rate Loan" shall mean each U.S. Dollar Revolving Loan bearing
interest at the rates provided in Section 1.08(a).
"Eurodollar Loan" shall mean each U.S. Dollar Revolving Loan bearing
interest at the rates provided in Section 1.08(b).
"Interest Period" with respect to any Eurodollar Loan or Eurofranc
Loan shall mean the interest period applicable thereto, as determined pursuant
to Section 1.09.
"Minimum Borrowing Amount" shall mean (i) for U.S. Dollar Revolving
Loans maintained as Base Rate Loans, $250,000, (ii) for U.S. Dollar Revolving
Loans maintained as Eurodollar Loans, $500,000, (iii) for Swiss Franc Revolving
Loans maintained as Swiss Franc Base Rate Loans, the Swiss Franc Equivalent of
$250,000 and (iv) for Swiss Franc Revolving Loans maintained as Eurofranc Loans,
the Swiss Franc Equivalent of $500,000.
13. Section 12 of the Credit Agreement is hereby amended by
inserting the following new Section 12.17 immediately following Section 12.16
appearing therein:
12.17 Judgment Currency. (a) The Borrower's obligations hereunder and
under the other Credit Documents to make payments in the respective Applicable
Currency (the "Obligation Currency") shall not be discharged or satisfied by any
tender or recovery pursuant to any judgment expressed in or converted into any
currency other than the Obligation Currency, except to the extent that such
tender or recovery results in the effective receipt by the Administrative Agent,
the Collateral Agent or the respective Lender of the full amount of the
Obligation Currency expressed to be payable to the Administrative Agent, the
Collateral Agent or such Lender under this Agreement or the other Credit
Documents. If for the purpose of obtaining or enforcing judgment against any
Credit Party in any court or in any jurisdiction, it becomes necessary to
convert into or from any currency other than the Obligation Currency (such other
currency being hereinafter referred to as the "Judgment Currency") an amount due
in the Obligation Currency, the conversion shall be made, at the U.S. Dollar
Equivalent thereof, as the case may be, and, in the case of other currencies,
the rate of exchange (as quoted by the Administrative Agent or if the
Administrative Agent does not quote a rate of exchange on such currency, by a
known dealer in such currency designated by the Administrative Agent)
determined, in each case, as of the day on which the judgment is given (such
Business Day being hereinafter referred to as the "Judgment Currency Conversion
Date").
(b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrower covenants and agrees to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount), as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce
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the amount of the Obligation Currency which could have been purchased with the
amount of Judgment Currency stipulated in the judgment or judicial award at the
rate or exchange prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the U.S. Dollar Equivalent or any
other rate of exchange for this Section, such amounts shall include any premium
and costs payable in connection with the purchase of the Obligation Currency.
14. Notwithstanding anything to the contrary contained in this
Amendment or in the Credit Agreement, the parties hereto hereby agree that
wherever the context requires (such determination to be made by the
Administrative Agent in its reasonable judgment), (i) references to "Eurodollar
Loan" in the Credit Agreement shall be interpreted to mean "Eurodollar Loan or
Eurofranc Loan, as the case may be" and (ii) references to "Base Rate Loan" in
the Credit Agreement shall be interpreted to mean "Base Rate Loan or Swiss Franc
Base Rate Loan, as the case may be".
15. In order to induce the Banks to enter into this Amendment, the
Borrower hereby represents and warrants that on the Fourth Amendment Effective
Date, both before and after giving effect to this Amendment, (i) no Default or
Event of Default shall exist and (ii) all of the representations and warranties
contained in the Credit Documents shall be true and correct in all material
respects, with the same effect as though such representations and warranties had
been made on and as of the Fourth Amendment Effective Date (it being understood
that any representation or warranty made as of a specific date shall be true and
correct in all material respects as of such specific date).
16. This Amendment is limited as specified and shall not constitute
a modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
17. This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.
18. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
19. This Amendment shall become effective as of the date hereof
(the "Fourth Amendment Effective Date") when the Borrower, the Required Banks
(including each Bank whose Commitment is increased pursuant hereto) and the
Administrative Agent shall have signed a copy hereof (whether the same or
different copies) and shall have delivered (including by way of telecopier) the
same to the Administrative Agent.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
TOWN SPORTS INTERNATIONAL, INC.
By: /S/ ▇. ▇. ▇▇▇▇
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Name: ▇. ▇. ▇▇▇▇
Title: CFO
BANKERS TRUST COMPANY, Individually
and as Administrative Agent
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
BANK OF SCOTLAND
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
