Filing Details

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Item 3 of the Schedule 13D is supplemented and superseded, as the case may be, as follows:

On December 28, 2020 (the “Closing Date”), Town Sports International Holdings, Inc. (the “Issuer”) entered into a credit agreement (the “Credit Agreement”) with the several lenders party thereto (the “Lenders”) and Alter Domus (US) LLC, as administrative agent pursuant to which the Lenders agreed to provide senior secured first lien term loans in an aggregate principal amount of up to $100.0 million to the Company consisting of (a) initial senior secured first lien term loans in an aggregate principal amount of $5.0 million (the “Initial Loans”), which Initial Loans were drawn at closing, and (b) senior secured first lien delayed draw term loans in an aggregate principal amount of up to $95.0 million.

As compensation for the Lenders providing the Loans and related commitments, on the Closing Date, affiliates of Kennedy Lewis Investment Management, LLC (the “KLIM Funds”) received approximately 41,535,483 shares of Common Stock (the “Consideration Shares”), equal to 51% of the fully diluted outstanding Common Stock as of December 28, 2020.

In connection with the entry into the Credit Agreement, the Issuer amended, effective as of the Closing Date, the Town Sports International Holdings, Inc. 2006 Stock Incentive Plan (the “Incentive Plan”) to reserve an additional 10,180,265 shares of Common Stock for issuance as awards under the Incentive Plan.  In addition, the Issuer approved a grant, on the Closing Date, of 8,144,212 shares of restricted Common Stock to Mr. Walsh under the Incentive Plan.  The restricted Common Stock was issued to Mr. Walsh as compensation for services to the Company and Mr. Walsh did not pay for the Restricted Stock.  One third (1/3) of the award of Common Stock vested on the Closing Date, with another one third (1/3) vesting on December 31, 2021, and the final one third (1/3) vesting on December 31, 2022, subject to continued service through each vesting date.

In connection with the transactions, Mr. Walsh and the KLIM Funds agreed that in the event that the KLIM Funds’ ownership of Common Stock decreases below fifty percent (50%) of the issued and outstanding Common Stock as a result of equity awards and other investment rights provided to Mr. Walsh, Mr. Walsh will enter into a customary voting agreement with the KLIM Funds with respect to his shares of Common Stock pursuant to which Mr. Walsh would vote in accordance with the direction of the Adviser on behalf of the Funds.

Registration Rights Agreement

In connection with the issuance of the Consideration Shares, on the Closing Date, the Issuer entered into a registration rights agreement (the “Registration Rights Agreement”) with the Lenders and Mr. Walsh, under which the Issuer agreed to register the Common Stock held by the Lenders and Mr. Walsh with the Securities and Exchange Commission under the Securities Act of 1933, as amended.  The Issuer also agreed to provide certain piggy-back and demand registration rights to the parties to the Registration Rights Agreement in respect of the Common Stock held by each of them.

The foregoing descriptions of the Credit Agreement and Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Credit Agreement and Registration Rights Agreement, respectively, each of which are incorporated by reference as Exhibit 99.1 and Exhibit 99.2, and are incorporated herein by reference.

Item 4 of the Schedule 13D is supplemented and superseded, as the case may be, as follows:

The information concerning the Credit Agreement, the Registration Rights Agreement and the agreement to enter into a voting agreement between Mr. Walsh and the KLIM Funds is incorporated herein by reference.