8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): July 17, 2009 (July 15, 2009)

TOWN SPORTS INTERNATIONAL HOLDINGS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware
(State or Other Jurisdiction of
Incorporation) 000-52013
(Commission File Number) 20-0640002
(IRS Employer
Identification Number)

5 Penn Plaza (4th Floor), New York, New York 10001
(Address of Principal Executive Offices, Including Zip Code)

(212) 246-6700
(Registrant’s telephone number, including area code)


(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c))

Item 1.01 Entry into a Material Definitive Agreement.

     On July 15, 2009, Town Sports International Holdings, Inc. (the “Registrant”) and its wholly-owned subsidiary, Town Sports International, LLC, entered into the First Amendment to the Credit Agreement (the “Amendment”), dated as of July 15, 2009, among the Registrant, Town Sports International, LLC, as the borrower (the “Borrower”), the lenders from time to time party to the Credit Agreement, dated as of February 27, 2007 (the “Credit Agreement”), and Deutsche Bank Trust Company Americas, as administrative agent.

     Pursuant to the Amendment, the revolving lenders have agreed to amend the definition of “Consolidated EBITDA” to permit the Borrower, solely for purposes of determining compliance with the maximum total leverage ratio covenant, to add back the amount of non-cash charges relating to the impairment or write-down of fixed assets, intangible assets or goodwill.

     In connection with the Amendment, the Registrant agreed to reduce the total revolving loan commitment by 15%, from $75,000,000 to $63,750,000. Additionally, the Registrant incurred an aggregate of $614,500 in fees and expenses related to the Amendment.

     The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

     The Credit Agreement contains a covenant that requires the Registrant to comply with a “total leverage ratio” of not greater than 4.25 to 1.00 during any periods in which borrowings or letters of credit are outstanding under the revolving loan facility. As of December 31, 2008 and March 31, 2009, the Registrant’s total leverage ratio, as calculated under the Credit Agreement was 2.35 to 1.00 and 2.54 to 1.00, respectively. As a result of the Amendment, the total leverage ratio as of December 31, 2008 and March 31, 2009 would have been 1.93 to 1.00 and 2.03 to 1.00, respectively. See “Item 7. Management’s Discussion and Analysis of Financial Condition & Results of Operations — Liquidity and Capital Resources — 2007 Senior Credit Facility” of the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
	10.1	First Amendment to Credit Agreement, dated as of July 15, 2009, among Town Sports International Holdings, Inc., Town Sports International, LLC, as the borrower, the lenders from time to time party to the Credit Agreement, dated as of February 27, 2007, and Deutsche Bank Trust Company Americas, as administrative agent for the lenders.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TOWN SPORTS INTERNATIONAL HOLDINGS, INC. (Registrant)
Date: July 17, 2009	By:	/s/ Daniel Gallagher
		Daniel Gallagher
		Chief Financial Officer

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Exhibit Index

Exhibit No.		Description
	10.1	First Amendment to Credit Agreement, dated as of July 15, 2009, among Town Sports International Holdings, Inc., Town Sports International, LLC, as the borrower, the lenders from time to time party to the Credit Agreement, dated as of February 27, 2007, and Deutsche Bank Trust Company Americas, as administrative agent for the lenders.

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EX-10.1

Exhibit 10.1

FIRST AMENDMENT TO CREDIT AGREEMENT

     FIRST AMENDMENT TO CREDIT AGREEMENT (this “First Amendment”), dated as of July 15, 2009, among TOWN SPORTS INTERNATIONAL HOLDINGS, INC., a Delaware corporation (“Holdings”), TOWN SPORTS INTERNATIONAL, LLC, a New York limited liability company (the “Borrower”), the lenders from time to time party to the Credit Agreement referred to below (each a “Lender” and, collectively, the “Lenders”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, as administrative agent (in such capacity, the “Administrative Agent”). Unless otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement referred to below are used herein as therein defined.

W I T N E S S E T H:

     WHEREAS, Holdings, the Borrower, the Lenders and the Administrative Agent have entered into a Credit Agreement, dated as of February 27, 2007 (as amended, modified and supplemented through, but not including, the date hereof, the “Credit Agreement”); and

     WHEREAS, subject to the terms and conditions set forth herein, the parties hereto wish to amend certain provisions of the Credit Agreement as provided herein;

     NOW, THEREFORE, it is agreed;

A. Reduction of Total Revolving Loan Commitment

     On the First Amendment Effective (as defined below) (and immediately after giving effect thereto), the Borrower hereby agrees that the Total Revolving Loan Commitment shall be permanently reduced to $63,750,000 (as such amount may be further reduced from time to time in accordance with the terms of the Credit Agreement), and with such reduction to proportionately and permanently reduce the Revolving Loan Commitment of each RL Lender.

B. Amendment to the Credit Agreement

     1. The definition of “Consolidated EBITDA” appearing in Section 11.01 of the Credit Agreement is hereby deleted in its entirety and the following new definition is inserted in lieu thereof:

“Consolidated EBITDA” shall mean, for any period, Consolidated EBIT for such period, adjusted by (x) adding thereto (i) the amount of all amortization of intangibles and depreciation to the extent that same was deducted in arriving at Consolidated Net Income for such period, (ii) the amount of all Transaction Expenses to the extent that same were deducted in arriving at Consolidated Net Income for such period, (iii) the amount of all deferred rent expense to the extent that same was deducted in arriving at Consolidated Net Income for such period, (iv) the amount of all non-cash deferred compensation expense resulting from the issuance of capital stock, stock options or stock

appreciation rights to former or current directors, officers or employees of Holdings or any Subsidiary of Holdings, or the exercise of such options or rights, in each case, to the extent that same were deducted in arriving at Consolidated Net Income for such period, (v) the amount of all non-cash deferred compensation expense resulting from the repurchase of capital stock, options and rights described in preceding clause (iv) of this definition to the extent that same were deducted in arriving at Consolidated Net Income for such period, (vi) the amount of all non-cash charges resulting from discontinued operations to the extent otherwise permitted by FAS 141 to the extent that same were deducted in arriving at Consolidated Net Income for such period, (vii) solely for purposes of determining compliance with Section 9.07 for the respective period, the amount of all non-cash charges relating to the impairment or write-down of fixed assets, intangible assets or goodwill for such period and (viii) the amount of all transaction fees and expenses incurred in connection with the issuance of any Replacement Holdings Notes or Borrower Notes and the related refinancing of any Existing Holdings Notes to the extent that such fees and expenses were deducted in arriving at Consolidated Net Income for such period and were paid for with the proceeds from the issuance of such Replacement Holdings Notes or Borrower Notes, and (y) subtracting therefrom (i) the amount of any payment of rent during such period that was deferred in a previous period to the extent not otherwise deducted in arriving at Consolidated Net Income for such current period and (ii) the amount of all cash payments and cash charges made during such period relating to any non-cash charges taken in a previous period pursuant to preceding clause (x)(vi) to the extent not otherwise deducted in arriving at the Consolidated Net Income for such current period; it being understood that in determining the Total Leverage Ratio, Consolidated EBITDA for any period shall be calculated on a Pro Forma Basis to give effect to any Acquired Entity or Business acquired during such period pursuant to a Permitted Acquisition and not subsequently sold or otherwise disposed of by Holdings or any of its Subsidiaries during such period and to any Significant Asset Sale during such period.

C. Miscellaneous Provisions

     1. In order to induce the Lenders to enter into this First Amendment, Holdings and the Borrower hereby represent and warrant to each of the Lenders that (i) all of the representations and warranties contained in the Credit Agreement and in the other Credit Documents are true and correct in all material respects on and as of the First Amendment Effective Date (as defined below), both before and after giving effect to this First Amendment (unless such representations and warranties relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date), and (ii) there exists no Default or Event of Default on the First Amendment Effective Date, both before and after giving effect to this First Amendment.

     2. This First 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.

     3. This First 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

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delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent.

     4. THIS FIRST 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.

     5. This First Amendment shall become effective on the date (the “First Amendment Effective Date”) when (x) Holdings, the Borrower and the Majority Lenders holding outstanding Revolving Obligations (or Revolving Loan Commitments in respect thereof) shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of facsimile transmission) the same to White & Case LLP, 1155 Avenue of the Americas, New York, NY 10036 Attention: May Yip-Daniels (facsimile number 212-354-8113) and (y) the Administrative Agent shall have received from the Borrower by wire transfer of immediately available funds, for the account of each RL Lender who has consented to this First Amendment by signing a counterpart hereof and delivering the same as provided in preceding clause (x) on or prior to the First Amendment Effective Date, a fee equal to 0.35% of the Revolving Loan Commitment of each such RL Lender as of the First Amendment Effective Date (before giving effect to the reduction of the Total Revolving Loan Commitment pursuant to this First Amendment).

     6. From and after the First Amendment Effective Date, all references in the Credit Agreement and each of the other Credit Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as modified hereby on the First Amendment Effective Date.

* * *

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     IN WITNESS WHEREOF, the undersigned have caused this First Amendment to be duly executed and delivered as of the date first above written.

TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
By:	/s/ Daniel Gallagher
	Title: Chief Financial Officer

TOWN SPORTS INTERNATIONAL, LLC
By:	/s/ Daniel Gallagher
	Title: Chief Financial Officer

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DEUTSCHE BANK TRUST COMPANY AMERICAS, Individually and as Administrative Agent
By:	/s/ Scottye D. Lindsey
	Title: Director

By:	/s/ Erin Morrissey
	Title: Vice President

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SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT, DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG TOWN SPORTS INTERNATIONAL HOLDINGS, INC., TOWN SPORTS INTERNATIONAL, LLC, THE LENDERS FROM TIME TO TIME PARTY TO THE CREDIT AGREEMENT, AND DEUTSCHE BANK TRUST COMPANY AMERICAS, AS ADMINISTRATIVE AGENT

NAME OF INSTITUTION: BANK OF AMERICAS, N.A.
By:	/s/ Jana L. Baker
	Title: Vice President

CITIBANK, N.A.
By:	/S/ Kate Kang
	Title: Director

CREDIT SUISSE, CAYMAN ISLANDS BRANCH
By:	/s/ Nupur Kumar
	Title: Vice President
By:	/s/ Karl Studer
	Title: Director

KEYBANK, NATIONAL ASSOCIATION
By:	/S/ Thomas A. Crandell
	Title: Senior Vice President

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