Exhibit 10.11
EXHIBIT D TO THE
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT AS SEPARATELY EXECUTED
THIRD AMENDED AND RESTATED
SECURITY AGREEMENT
Dated December 19, 1997
From
THE GRANTORS NAMED HEREIN,
as Grantors,
to
BANQUE NATIONALE DE PARIS,
as Administrative Agent
TABLE OF CONTENTS
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SECTION 1. Grant of Security..................................................3
SECTION 2. Security for Obligations...........................................5
SECTION 3. Grantors Remain Liable.............................................6
SECTION 4. Delivery of Security Collateral and Account Collateral.............6
SECTION 5. Maintaining the L/C Cash Collateral Account........................6
SECTION 6. Investing of Amounts in the L/C Cash Collateral Account............7
SECTION 7. Representations and Warranties.....................................7
SECTION 8. Further Assurances.................................................9
SECTION 9. As to Equipment and Inventory.....................................10
SECTION 10. Insurance........................................................10
SECTION 11. Place of Perfection; Records; Collection of Receivables..........11
SECTION 12. Voting Rights; Dividends; Etc....................................12
SECTION 13. As to the Assigned Agreements....................................13
SECTION 14. Transfers and Other Liens; Additional Shares.....................14
SECTION 15. Administrative Agent Appointed Attorney-in-Fact..................14
SECTION 16. Administrative Agent May Perform.................................15
SECTION 17. The Agent's Duties...............................................15
(i)
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SECTION 18. Remedies.........................................................15
SECTION 19. Registration Rights..............................................16
SECTION 20. Indemnity and Expenses...........................................17
SECTION 21. Security Interest Absolute.......................................18
SECTION 22. Amendments; Waivers; Etc.........................................18
SECTION 23. Addresses for Notices............................................19
SECTION 24. Continuing Security Interest, Assignments under the
Credit Agreement.................................................19
SECTION 25. Release and Termination..........................................20
SECTION 26. The Mortgages....................................................20
SECTION 27. Governing Law; Submission to Jurisdiction, Waiver of
Jury Trial; Etc..................................................20
(ii)
THIRD AMENDED AND RESTATED SECURITY AGREEMENT, dated December 19,
1997, made by 24 Hour Fitness, Inc., a California corporation (the "Borrower"
and, together with the Additional Collateral Grantors (as defined in Section
22(c)), the "Grantors"), to BANQUE NATIONALE DE PARIS ("BNP"), as Administrative
Agent (together with any successor agent appointed pursuant to Article VII of
the Credit Agreement, the "Administrative Agent") for the lender parties (the
"Lender Parties") and other Agents party to the Credit Agreement (as hereinafter
defined), and as custodian for the Hedge Banks (as hereinafter defined).
PRELIMINARY STATEMENTS:
(1) 24 Hour Fitness, Inc., a California corporation (the
"Borrower"), is the borrower under a Second Amended and Restated Credit
Agreement dated as of March 14, 1997 (as amended, supplemented or otherwise
modified, the "Existing Credit Agreement") with the lenders named therein (the
"Existing Lenders") and BNP as issuing bank and agent (the "Existing Agent").
Pursuant to a Second Amended and Restated Security Agreement dated March 14, 199
(the "Existing Security Agreement"), the Grantors assigned and pledged to the
Existing Agent for its benefit and the benefit of the issuing bank party to the
Existing Credit Agreement and the ratable benefit of the Existing Lenders and
certain hedge lenders to secure the payment of all Obligations (as defined in
the Existing Credit Agreement) of the Borrower under, among other things, the
Existing Credit Agreement, a security interest in certain property.
(2) The Borrower has entered into a Third Amended and Restated
Credit Agreement dated as of December 19, 1997 (as amended, supplemented or
otherwise modified, the "Credit Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined) with Fitness
Holdings, Inc., a Delaware corporation, the Lender Parties, Banque Nationale de
Paris, as syndication agent and as administrative agent (the "Administrative
Agent"), for the Lender Parties, Bankers Trust Company, as documentation agent
for the Lenders and LaSalle National Bank and Xxxxx Fargo Bank, N.A., as
co-agents for the Lenders.
(3) Each Grantor is the owner of the shares of stock, and of the
warrants, rights and options to acquire the shares of stock (collectively, the
"Pledged Shares"), described opposite such Grantor's name on Part A of Schedule
I hereto and issued by the corporations named therein and of the indebtedness
(the "Pledged Indebtedness") described opposite such Grantor's name on Part B of
Schedule I hereto and issued by the obligors named therein.
(4) The Borrower may from time to time invest in Hedge Agreements
with one or more Lenders in connection with the Credit Agreement (all such
Lenders being, collectively, the "Hedge Banks") to obtain the protection
permitted by Section 5.02(b)(i)(C) of the Credit Agreement against fluctuations
in certain interest rates. Such Hedge Agreements, copies of which shall be
provided to the Agent, are hereinafter referred to as the "Secured Hedge
Agreements".
(5) The Borrower has opened a non-interest bearing cash collateral
account (the "L/C Cash Collateral Account") with BNP at its offices at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Account No. 20183600114, in the name of the
Borrower but under the sole dominion and control of the Administrative Agent and
subject to the terms of this Agreement.
(6) It is a condition precedent to the making of Advances by the
Lenders and the Swing Line Bank under the Credit Agreement and the issuance of
Letters of Credit by the Issuing Bank under the Credit Agreement, and the
entering into of the Secured Hedge Agreement by the Hedge Banks, that the
Grantors shall have granted the assignment and security interest and made the
pledge contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders and the Swing Line Bank to make Advances under the Credit
Agreement, the Issuing Bank to issue Letters of Credit under the Credit
Agreement and the Hedge Banks to enter into Secured Hedge Agreements, each
Grantor hereby agrees with the Administrative Agent for its benefit and the
benefit of the Issuing Bank and the Swing Line Bank and the ratable benefit of
the Lenders and the Hedge Banks as follows:
SECTION 1. Grant of Security. Each Grantor hereby assigns and
pledges to the Administrative Agent for its benefit and the benefit of the
Issuing Bank and the Swing Line Bank and the ratable benefit of the Lenders and
the Hedge Banks, and hereby grants to the Administrative Agent for its benefit
and the benefit of the Issuing Bank and the Swing Line Bank and the ratable
benefit of the Lenders and the Hedge Banks, a security interest in the following
(collectively, the "Collateral"):
(a) all of such Grantor's right, title and interest, whether now
owned or hereafter acquired, in and to all equipment in all of its forms,
wherever located, now or hereafter existing, all fixtures and all parts
thereof and all accessions thereto (any and all such equipment, fixtures,
parts and accessions being the "Equipment");
(b) all of such Grantor's right, title and interest, whether now
owned or hereafter acquired, in and to all inventory in all of its forms,
wherever located, now or hereafter existing (including, but not limited
to, (i) all raw materials and work in process therefor, finished goods
thereof and materials used or consumed in the manufacture or production
thereof, (ii) goods in which such Grantor has an interest in mass or a
joint or other interest or right of any kind (including, without
limitation, goods in which such Grantor has an interest or right as
consignee) and (iii) goods that are returned to or repossessed by such
Grantor), and all accessions thereto and products thereof and documents
therefor (any and all such inventory, accessions, products and documents
being the "Inventory");
(c) all of such Grantor's right, title and interest, whether now
owned or hereafter acquired, in and to all accounts, contract rights,
chattel paper, instruments, deposit accounts, general intangibles and
other obligations of any kind, now or hereafter
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existing, whether or not arising out of or in connection with the sale or
lease of goods or the rendering of services, and all rights now or
hereafter existing and to the extent assignable without consent in and to
all security agreements, leases and other contracts securing or otherwise
relating to any such accounts, contract rights, chattel paper,
instruments, deposit accounts, general intangibles or obligations (any and
all such accounts, contract rights, chattel paper, instruments, deposit
accounts, general intangibles and obligations, to the extent not referred
to below in clause (d), (e) or (f) below, being the "Receivables", and any
and all such leases, security agreements and other contracts being the
"Related Contracts");
(d) all of the following (collectively, the "Security Collateral"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other
property and assets from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
the Pledged Shares;
(ii) the Pledged Indebtedness and the instruments evidencing
the Pledged Indebtedness, and all interest, cash, instruments and
other property and assets from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
the Pledged Indebtedness;
(iii) all additional shares of stock, and all additional
warrants, rights or options to acquire shares of stock, from time to
time acquired by such Grantor in any manner, and the certificates
representing such additional shares and such additional warrants,
rights or options and all dividends, cash, instruments and other
property and assets from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
such additional shares or such additional warrants, rights or
options provided, however that, in respect of such additional shares
of stock issued by a Person which is not organized under the laws of
any State of the United States of America, no such assignment, grant
or pledge shall be effective if, as a result of such assignment,
grant or pledge, the Administrative Agent would be entitled
hereunder upon the occurrence of an Event of Default to exercise, in
the aggregate, greater than 66% of the votes entitled to be cast by
holders of common stock of such Person at any shareholders' meeting
thereof; and
(iv) all additional indebtedness from time to time owed to
such Grantor in any manner and the instruments evidencing such
additional indebtedness, and all interest, cash, instruments and
other property and assets from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
such additional indebtedness;
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(e) all of such Grantor's right, title and interest in and to each
agreement set forth beneath such Grantor's name on Schedule II hereto and
each Secured Hedge Agreement to which such Grantor is now or may hereafter
become a party, in each case as such agreement may be amended,
supplemented or otherwise modified from time to time (collectively, the
"Assigned Agreements"), including, without limitation, (i) all rights of
such Grantor to receive moneys due and to become due under or pursuant to
the Assigned Agreements, (ii) all rights of such Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to
the Assigned Agreements or any instruments, opinions or documents
delivered pursuant thereto, (iii) all rights of such Grantor in and to all
mortgages, security agreements, leases or other contracts securing or
otherwise relating to the Assigned Agreements, (iv) all claims of such
Grantor for damages arising out of or for breach of or default under the
Assigned Agreements and (v) all rights of such Grantor to terminate the
Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder (all such Collateral being the
"Agreement Collateral");
(f) all of the following (collectively, the "Account Collateral"):
(i) the L/C Cash Collateral Account, all funds held therein
and all certificates and instruments, if any, from time to time
representing or evidencing the L/C Cash Collateral Account;
(ii) all other deposit accounts of such Grantor, all funds
held therein and all certificates and instruments, if any, from time
to time representing or evidencing such deposit accounts;
(iii) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time
to time representing or evidencing the Collateral Investments;
(iv) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered
to or otherwise possessed by the Administrative Agent for or on
behalf of such Grantor in substitution for or in addition to any or
all of the then existing Account Collateral; and
(v) all interest, dividends, cash, instruments and other
property and assets from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
the then existing Account Collateral; and
(g) all proceeds of any and all of the foregoing Collateral to the
extent assignable without consent (including, without limitation, proceeds
that constitute property of the types described in clauses (a) through (f)
of this Section 1) and, to the extent not otherwise included, all (i)
payments under insurance (whether or not the Administrative Agent is the
loss payee thereof), or any indemnity, warranty or guaranty,
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payable by reason of loss or damage to or otherwise with respect to any of
the foregoing Collateral and (ii) cash.
SECTION 2. Security for Obligations. The pledge, assignment and
security interest granted under this Agreement by each Grantor secure the
payment of all Obligations of such Grantor now or hereafter existing under this
Agreement and each other Loan Document and under the Secured Hedge Agreements,
whether for principal, interest, premiums, fees, expenses or otherwise (all such
Obligations being the "Secured Obligations"). Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts that constitute
part of the Secured Obligations and would be owed by any Grantor to the
Administrative Agent or any Lender Party under the Loan Documents or the Hedge
Banks under the Secured Hedge Agreements but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Grantor.
SECTION 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Administrative Agent of
any of the rights hereunder shall not release any Grantor from any of its duties
or obligations under the contracts and agreements included in the Collateral,
and (c) none of the Agent, the Lenders Parties or the Hedge Banks shall have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Agent, any Lender Party or
any Hedge Bank be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 4. Delivery of Security Collateral and Account Collateral.
All certificates and instruments representing or evidencing Security Collateral
or Account Collateral shall be delivered to and held by or on behalf of the
Administrative Agent pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Agent. After the occurrence and during the continuance of any Event of Default,
the Administrative Agent shall have the right, at any time in its discretion and
without notice to any Grantor, to transfer to or register in the name of the
Administrative Agent or any of its nominees any or all of the Security
Collateral and the Account Collateral, subject only to the revocable rights
specified in Section 12(a). In addition, after the occurrence and during the
continuance of an Event of Default, the Administrative Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing Security Collateral or Account Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 5. Maintaining the L/C Cash Collateral Account. So long as
any Advance shall remain unpaid, any Letter of Credit shall be outstanding, any
Lender Party shall
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have any Commitment under the Credit Agreement or any Hedge Bank shall have any
obligation under any Secured Hedge Agreement:
(a) The Borrower shall maintain the L/C Cash Collateral Account with
BNP.
(b) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to the L/C Cash Collateral Account, and except as
otherwise provided in Section 18, that no amount (including, without
limitation, interest on Collateral Investments) shall be paid or released
to or for the account of, or withdrawn by or for the account of, the
Borrower or any other Person from the L/C Cash Collateral Account.
(c) Except for the L/C Cash Collateral Account, the Borrower shall
maintain each of its deposit and other bank accounts in the State of
California and shall promptly (i) notify the Administrative Agent of any
such accounts not listed on Schedule V hereto and (ii) notify any bank not
so listed of the security interest therein granted hereunder, with a copy
of such notice to the Agent.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as are in
effect from time to time.
SECTION 6. Investing of Amounts in the L/C Cash Collateral Account.
If requested by the Borrower, the Administrative Agent shall, subject to the
provisions of Section 18, from time to time invest:
(a) amounts on deposit in the L/C Cash Collateral Account in
certificates of deposit of BNP or other overnight funds in the name of the
Administrative Agent as the Borrower may select and the Administrative
Agent may approve, which approval shall not be unreasonably withheld; and
(b) interest paid on such certificates of deposit of BNP or such
overnight funds referred to in subsection (a) above, and reinvest other
proceeds of any such certificates of deposit of BNP or such overnight
funds that may mature or be sold, in each case in such certificates of
deposit of BNP or such overnight funds in the name of the Administrative
Agent as the Borrower may select and the Administrative Agent may approve,
which approval shall not be unreasonably withheld (the certificates of
deposit of BNP or such overnight funds referred to in subsection (a) above
and in this subsection (b) being, collectively, "Collateral Investments").
Interest and proceeds that are not invested or reinvested in Collateral
Investments as provided above shall be deposited and held in the L/C Cash
Collateral Account.
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SECTION 7. Representations and Warranties. Each Grantor represents
and warrants as to itself and its Collateral as follows:
(a) All of the Equipment and Inventory are located at one or more of
the locations specified beneath such Grantor's name on Schedule III
hereto. The principal place of business of such Grantor or, if such
Grantor has more than one principal place of business, the chief executive
office of such Grantor, and the office where such Grantor keeps its
records concerning the Receivables, the original copies of each Assigned
Agreement to which it is a party and all originals of all chattel paper
that evidence its Receivables, are located at the address listed below the
name of such Grantor on the signature pages hereof or, in the case of any
Additional Collateral Grantor, at the address listed below the name of
such Additional Collateral Grantor on its Security Agreement Supplement
(each as defined in Section 22(c)). A complete copy of each Assigned
Agreement has been delivered to the Agent. None of the Receivables or
Agreement Collateral is represented or evidenced by a promissory note or
other instrument.
(b) Such Grantor is the legal and beneficial owner of the Collateral
(or, in the case of any consigned goods comprising Collateral, such
Grantor is the legal and beneficial owner of its rights and interest in
such consigned goods) in which it is granting a security interest free and
clear of any Lien, except for the Permitted Liens and Other Liens
permitted under Section 5.02(a) of the Credit Agreement. No effective
financing statement or other instrument similar in effect covering all or
any part of the Collateral is on file in any recording office, except such
as may have been filed in favor of the Administrative Agent relating to
this Agreement, the other Collateral Documents, the Existing Security
Agreement or the other "Collateral Documents" (as defined in the Existing
Credit Agreement), except for the Permitted Liens and Other Liens
permitted under Section 5.02(a) of the Credit Agreement. All of the trade
names of such Grantor are set forth below its name on Schedule IV hereto.
(c) Such Grantor has exclusive possession and control of the
Equipment and Inventory.
(d) All of the shares of stock that constitute Pledged Shares have
been duly authorized and validly issued and are fully paid and
nonassessable. The Pledged Indebtedness has been duly authorized,
authenticated or issued and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(e) The Pledged Shares constitute the percentage of the issued and
outstanding shares of stock, and/or warrants, rights or options to acquire
shares of stock, of the issuers thereof indicated on Part A of Schedule I
hereto. The Pledged Indebtedness is outstanding in the principal amount
indicated on Part B of Schedule I hereto.
(f) The Assigned Agreements, true and complete copies of which have
been furnished to each Lender Party, (i) have been duly authorized,
executed and delivered by
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each Grantor party thereto and, to the best of each such Grantor's
knowledge, by all other parties thereto, (ii) have not been amended,
supplemented or otherwise modified and are in full force and effect, and
(iii) are binding upon and enforceable against each such Grantor party
thereto and, to the best of each such Grantor's knowledge, each of the
other parties thereto in accordance with their terms. There exists no
violation or default under any Assigned Agreement by any Grantor party
thereto or, to the best of each such Grantor's knowledge, by any other
party thereto. Each party to any Assigned Agreement, other than any Loan
Party thereto and any Lender party to the Secured Hedge Agreements, has
executed and delivered to such Grantor a consent, in substantially the
form of Exhibit B hereto (or otherwise in form and substance satisfactory
to the Collateral Agent), to the assignment of the Agreement Collateral to
the Administrative Agent pursuant to this Agreement.
(g) Such Grantor has no deposit accounts with more than $5,000 other
than the deposit accounts set forth opposite such Grantor's name on
Schedule V hereto.
(h) This Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Agreement Collateral and the
Account Collateral pursuant hereto create a valid and perfected first
priority security interest in the Collateral (subject to the Liens
expressly permitted under Section 5.02(a) of the Credit Agreement),
securing the payment of the Secured Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security
interest have been duly made or taken.
(i) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or any other third party is required for (i)
the grant by such Grantor of the assignment and security interest granted
hereby, the pledge by such Grantor of the Security Collateral pursuant
hereto or the execution, delivery or performance of this Agreement by such
Grantor, (ii) the perfection or maintenance of the pledge, assignment and
security interest created hereby (including the first priority nature of
such pledge, assignment or security interest) or (iii) the exercise by the
Administrative Agent of its voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement (except as may be required in connection with the disposition of
any portion of the Security Collateral by laws affecting the offering and
a sale of securities generally), in each case other than the filing of
financing and continuation statements under the Uniform Commercial Code,
which financing statements have been duly filed.
SECTION 8. Further Assurances. (a) Each Grantor agrees that from
time to time, at its own expense, it shall promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary, or that the Administrative Agent may deem desirable and may
reasonably request, in order to perfect and protect any pledge, assignment or
security interest granted or purported to be granted hereby (including, without
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limitation, the first priority nature thereof) or to enable the Administrative
Agent to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, each Grantor
shall promptly after an Event of Default: (i) xxxx conspicuously each chattel
paper included in the Receivables, each Related Contract, each Assigned
Agreement and, at the reasonable request of the Agent, each of its records
pertaining to the Collateral with a legend, in form and substance satisfactory
to the Agent, indicating that such document, chattel paper, Related Contract,
Assigned Agreement or other Collateral is subject to the security interest
granted hereby; (ii) if any Collateral shall be represented or evidenced by a
promissory note or other instrument or chattel paper, deliver and pledge to the
Administrative Agent hereunder such note, instrument or chattel paper duly
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Agent; and (iii) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or as the Administrative Agent may
deem desirable and may reasonably request, in order to perfect and preserve the
pledge, assignment and security interest granted or purported to be granted
hereby.
(b) Each Grantor hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of such
Grantor where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(c) Each Grantor shall furnish to the Agent, upon the Agent's
request at any time after the occurrence and during the continuance of an Event
of Default or, in any event, once annually, statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.
SECTION 9. As to Equipment and Inventory. (a) Each Grantor shall
keep its Equipment and Inventory (other than Inventory sold in the ordinary
course of business) at the locations specified therefor in Section 7(a) or, upon
30 days' prior written notice to the Agent, at such other locations in a
jurisdiction where all action required by Section 8 shall have been taken with
respect to such Equipment and Inventory.
(b) Each Grantor shall cause the Equipment to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and shall forthwith, or in the case of any loss or
damage to any of the Equipment as quickly as practicable after the occurrence
thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Each Grantor shall promptly furnish to the Administrative Agent a statement
respecting any material loss or damage to any of the Equipment.
(c) Each Grantor shall pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including,
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without limitation, claims for labor, materials and supplies) against, the
Equipment and Inventory other than to the extent not required to be paid under
Section 5. 01 (b) of the Credit Agreement.
(d) In producing the Inventory, if any, such Grantor shall comply
with all requirements of the Fair Labor Standards Act.
(e) Upon the Agent's reasonable request at any time after the
occurrence and during the continuance of an Event of Default or, in any event,
once annually, each Grantor shall furnish to the Agent, each Lender Party and
each Hedge Bank a report detailing material changes in the amount and condition
of the Equipment, including purchases, depreciation, sales and losses.
(f) Not more than once each year or during any Default promptly upon
the reasonable request of the Agent, each Grantor shall deliver to the
Administrative Agent such warehouse receipts, bills of lading and other
documents of title with respect to Inventory and Equipment as are requested,
together with copies of all invoices with respect to the Inventory and
Equipment.
SECTION 10. Insurance. (a) Each Grantor shall, at its own expense,
maintain insurance with respect to the Equipment and Inventory in such amounts,
against such risks, in such form and with such insurers, as shall be reasonably
satisfactory to the Administrative Agent from time to time. Each such policy
shall in addition (i) name such Grantor and the Administrative Agent as insured
parties thereunder (without any representation or warranty by or obligation upon
the Agent) as their interests may appear, (ii) provide that there shall be no
recourse against the Administrative Agent for payment of premiums or other
amounts with respect thereto and (iii) provide that at least ten days' prior
written notice of cancellation or of lapse shall be given to the Administrative
Agent by the insurer. Each Grantor shall, if so requested by the Agent, deliver
to the Administrative Agent original or duplicate policies of such insurance
and, upon the Agent's request at any time after the occurrence and during the
continuance of an Event of Default and, in any event, once annually, a report of
a reputable insurance broker with respect to such insurance. Further, each
Grantor shall, at the request of the Agent, duly execute and deliver instruments
of assignment of such insurance policies to comply with the requirements of
Section 8.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 10 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to any Equipment or Inventory when Section 10(c) is not applicable, such
Grantor shall make or cause to be made the necessary repairs to or replacements
of such Equipment or Inventory, and any proceeds of insurance maintained by such
Grantor pursuant to this Section 10 shall be paid to such Grantor as
reimbursement for the costs of such repairs or replacements.
(c) Upon the occurrence and during the continuance of any Event of
Default, or the actual or constructive total loss (in excess of $100,000 per
occurrence) of any Equipment
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or Inventory, all insurance payments in respect of such Equipment or Inventory
shall be paid to and applied by the Administrative Agent as specified in Section
18(b).
SECTION 11. Place of Perfection; Records; Collection of Receivables.
(a) Each Grantor shall keep its principal place of business and its chief
executive office, and the office where it keeps its records concerning the
Collateral and the original copies of the Assigned Agreements to which it is a
party, and all originals of all chattel paper that evidence its Receivables, at
the location therefor specified in Section 7(a) or, upon 30 days' prior written
notice to the Agent, at such other locations in a jurisdiction where all actions
required by Section 8 shall have been taken with respect to the Collateral. Each
Grantor shall hold and preserve such records, Assigned Agreements and chattel
paper and shall permit representatives of the Administrative Agent at any time
during normal business hours to inspect and make abstracts from such records and
chattel paper in accordance with Section 5.01(f) of the Credit Agreement.
(b) Except as otherwise provided in this Section 11(b), each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
such Grantor under the Receivables. In connection with such collections, each
Grantor may take (and, at the Agent's direction, shall take) such action as such
Grantor or the Administrative Agent may deem necessary or advisable to enforce
collection of the Receivables; provided, however, that the Administrative Agent
shall have the right at any time after the occurrence and during the continuance
of an Event of Default, upon written notice to such Grantor of its intention to
do so, to notify the account debtors or obligors under any Receivables of the
assignment of such Receivables to the Administrative Agent and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Administrative Agent and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by any Grantor of the notice from the Administrative Agent
referred to in the proviso to the immediately preceding sentence, (i) all
amounts and proceeds (including instruments) received by such Grantor in respect
of the Receivables shall be received in trust for the benefit of the
Administrative Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Administrative Agent in the same
form as so received (with any necessary indorsement or assignment) to be held as
cash collateral and applied as provided by Section 18(b), and (ii) such Grantor
shall not adjust, settle or compromise the amount or payment of any Receivable,
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
SECTION 12. Voting Rights; Dividends; Etc. (a) So long as no Event
of Default shall have occurred and be continuing and no foreclosure proceedings
shall have been commenced:
(i) Each Grantor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights pertaining to
the Security Collateral or any part
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thereof for any purpose not prohibited by the terms of this Agreement, the
other Loan Documents or the Secured Hedge Agreements.
(ii) Each Grantor shall be entitled to receive and retain any and
all dividends, distributions and interest paid in respect of the Security
Collateral; provided, however, that any and all
(A) dividends and interest paid or payable other than in cash
in respect of, and instruments and other property and assets received or
receivable or otherwise distributed in respect of, or in exchange for, any
Security Collateral,
(B) dividends and other distributions paid or payable in cash
in respect of any Security Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus and
(C) cash paid or payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any Security
Collateral shall be, and shall be forthwith delivered to the
Administrative Agent to hold as, Security Collateral and, if received by
such Grantor, shall be received in trust for the benefit of the Agent,
shall be segregated from other property and assets or funds of such
Grantor and shall be forthwith delivered to the Administrative Agent as
Security Collateral in the same form as so received (with any necessary
indorsement or assignment). Each Grantor, promptly upon the request of the
Agent, shall execute such documents and do such acts as may be necessary
or desirable in the judgment of the Administrative Agent to give effect to
this clause (ii).
(iii) The Administrative Agent shall execute and deliver (or cause
to be executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may request for the purpose of enabling such
Grantor to exercise the voting and other consensual rights that it is
entitled to exercise pursuant to subparagraph (i) of this Section 12(a)
and to receive the dividends, distributions or interest payments that it
is authorized to receive and retain pursuant to clause (ii) of this
Section 12(a).
(b) Upon the occurrence and during the continuance of an Event of
Default and upon exercise of foreclosure remedies by the Administrative Agent
under Section 18 hereof:
(i) All rights of each Grantor to (A) exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to subparagraph (i) of Section 12(a)
shall, upon notice to such Grantor by the Agent, cease and (B) receive the
dividends, interest payments and other distributions that it would
otherwise be authorized to receive and retain pursuant to subparagraph
(ii) of Section 12(a) shall automatically cease, and all such rights shall
thereupon become vested in the Agent, which shall thereupon have the sole
right to exercise or refrain from
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exercising such voting and other consensual rights and to receive and
retain as Security Collateral such dividends, interest payments and other
distributions.
(ii) All dividends, interest payments and other distributions that
are received by any Grantor contrary to the provisions of clause (i) of
this Section 12(b) shall be received in trust for the benefit of the
Agent, shall be segregated from other property and assets or funds of such
Grantor and shall be forthwith paid over to the Administrative Agent as
Security Collateral in the same form as so received (with any necessary
indorsement or assignment).
SECTION 13. As to the Assigned Agreements. (a) Each Grantor shall,
at its own expense:
(i) perform and observe all the terms and provisions of each
Assigned Agreement to be performed or observed by it, maintain such
Assigned Agreement in full force and effect and enforce each such Assigned
Agreement in accordance with its terms, and take all such action to such
end as may be from time to time reasonably requested by the Agent; and
(ii) furnish to the Agent, promptly upon receipt thereof, copies of
all material notices, requests and other documents required under or
requested in accordance with Section 5.03(m) that are received by such
Grantor under or pursuant to any Assigned Agreement and, from time to
time, (A) furnish to the Administrative Agent such information and reports
regarding the Collateral as the Administrative Agent may reasonably
request and (B) upon the reasonable request of the Agent, make to each
other party to any Assigned Agreement such demands and requests for
information and reports or for action as such Grantor is entitled to make
under such Assigned Agreement.
(b) Each Grantor agrees not
(i) to cancel or terminate any Assigned Agreement or consent to or
accept any cancellation or termination thereof without the consent of the
Agent, which consent shall not be unreasonably withheld,
(ii) to amend, modify or otherwise change in any manner any material
term or material condition of any Assigned Agreement or give any consent,
waiver or approval thereunder without the consent of the Agent, which
consent shall not be unreasonably withheld, or
(iii) to waive any material default under or any material breach of
any material term or material condition of any Assigned Agreement without
the consent of the Agent, which consent shall not be unreasonably
withheld.
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SECTION 14. Transfers and Other Liens; Additional Shares. (a) Each
Grantor agrees not (i) to sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, except for dispositions of property and assets permitted under
Section 5.02(d) of the Credit Agreement, or (ii) to create or suffer to exist
any Lien upon or with respect to any of the Collateral, except for (A) the
pledge, assignment and security interest created by this Agreement and (B) Liens
expressly permitted under Section 5.02(a) of the Credit Agreement.
(b) Each Grantor shall (i) cause each issuer of the Pledged Shares
not to issue any stock or other securities in addition to or in substitution for
the Pledged Shares issued by such issuer, except to such Grantor, and (ii)
subject to Section l(d)(iii), pledge to the Administrative Agent hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of each issuer of the Pledged
Shares.
SECTION 15. Administrative Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, upon the occurrence and continuance of
an Event of Default, to take any action and to execute any instrument that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to Section 10,
(b) to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts, instruments, chattel
paper and other documents in connection with Section 15(a) or 15(b) above
(including, without limitation, all instruments representing any dividend,
interest payment or other distribution in respect of the Security
Collateral or any part thereof) and give full discharge for the same, and
(d) to file any claims, to take any action or to institute any
proceedings that the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce
compliance with the terms and conditions of any Assigned Agreement or to
enforce the rights of the Administrative Agent with respect to any of the
Collateral.
SECTION 16. Administrative Agent May Perform. If any Grantor fails
to perform any agreement contained herein, the Administrative Agent may upon
notice to such Grantor perform, or cause the performance of, such agreement, and
the expenses of the
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Administrative Agent incurred in connection therewith shall be payable by such
Grantor under Section 20(b).
SECTION 17. The Agent's Duties. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the exercise of reasonable care in the safe custody and preservation
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Administrative Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Security Collateral, whether or not the Agent, any Lender Party or any Hedge
Bank has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which BNP accords its own property of like tenor.
SECTION 18. Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party upon default under the Uniform Commercial Code in effect in the
State of New York at such time (the "Code") (whether or not the Code
applies to the affected Collateral), and also may (i) require each Grantor
to, and each Grantor hereby agrees that it shall at its own expense and
upon request of the Administrative Agent forthwith, assemble all or part
of the Collateral as directed by the Administrative Agent and make it
available to the Administrative Agent at a place to be designated by the
Administrative Agent that is reasonably convenient to both parties and
(ii) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any
exchange or broker's board or at any of the Agent's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as
the Administrative Agent may deem commercially reasonable. Each Grantor
agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to such Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Any cash held by the Administrative Agent as Collateral and all
cash proceeds received by the Administrative Agent in respect of any sale
of, collection from,
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or other realization upon all or any part of the Collateral may, in the
discretion of the Agent, be held by the Administrative Agent as collateral
for, and/or then or at any time thereafter applied (after payment of any
amounts payable to the Administrative Agent pursuant to Section 20) in
whole or in part by the Administrative Agent for its benefit, the benefit
of the Issuing Bank and the Swing Line Bank and the ratable benefit of the
Lenders and the Hedge Banks against, all or any part of the Secured
Obligations in such order as the Administrative Agent shall elect. In
determining the amounts owing to the Hedge Banks under the Secured Hedge
Agreements, the Administrative Agent shall be entitled to rely, and be
fully protected in relying, upon the Agreement Values of the Secured Hedge
Agreements. The term "Agreement Value" means, with respect to any Secured
Hedge Agreement at any date of determination, the amount, if any, that
would be payable to the Hedge Bank in respect of any "agreement value"
under such Secured Hedge Agreement as though such Secured Hedge Agreement
were terminated on such date, calculated as provided in the International
Swap Dealers Association, Inc. Standard Form of Interest Rate and Currency
Exchange Agreement, 1987 Edition. Each determination of Agreement Value
shall be made by the Administrative Agent in good faith and in reliance on
any information (including information provided by such Hedge Bank) that
it believes accurate, but without any obligation to verify such
information. Any surplus of such cash or cash proceeds held by the
Administrative Agent and remaining after payment in full of all of the
Secured Obligations shall be paid over to the Grantors or to whomsoever
may be lawfully entitled to receive such surplus.
(c) The Administrative Agent may exercise any and all rights and
remedies of the Grantors under or in connection with the Assigned
Agreements or otherwise in respect of the Collateral, including, without
limitation, any and all rights of any Grantor to demand or otherwise
require payment of any amount under, or performance of any provision of,
any Assigned Agreement or any other Collateral.
(d) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Agent, shall be segregated from
other funds of such Grantor and shall be forthwith paid over to the
Administrative Agent in the same form as so received (with any necessary
indorsement or assignment).
(e) The Administrative Agent may, without notice to any Guarantor,
except as required by law, and at any time or from time to time, charge,
set off and otherwise apply all or any part of the Secured Obligations
against the L/C Cash Collateral Account, or any part thereof.
SECTION 19. Registration Rights. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant to
Section 18, each Grantor agrees that, upon request of the Agent, such Grantor
will, at its own expense:
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(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of the Agent,
advisable to register such Collateral under the provisions of the Securities Act
of 1933, as from time to time amended (the "Securities Act"), to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be furnished,
and to make all amendments and supplements thereto and to the related prospectus
that, in the opinion of the Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "blue sky" laws and to obtain all necessary governmental approvals
for the sale of the Collateral, as reasonably requested by the Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations
thereunder;
(d) provide the Administrative Agent with such other information and
projections as may be necessary or, in the opinion of the Agent, advisable to
enable the Administrative Agent to effect the sale of such Collateral; and
(e) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid and
binding and in compliance with applicable law.
The Administrative Agent is authorized, in connection with any sale of the
Collateral pursuant to Section 18, to deliver or otherwise disclose to any
prospective purchaser of the Collateral (i) any registration statement or
prospectus, and all supplements and amendments thereto, prepared pursuant to
subsection (a) above, (ii) any information and projections provided to it
pursuant to subsection (d) above and (iii) any other information in its
possession relating to the Collateral.
SECTION 20. Indemnity and Expenses. (a) Each of the Grantors jointly
and severally agrees to indemnify the Agent, each Lender Party and each Hedge
Bank and each of their respective officers, directors, employees, agents and
advisors (each an "Indemnified Party") from, and hold each of them harmless
against, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and reasonable expenses of
counsel) arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent that such claims, damages, losses, liabilities and expenses are found in
a final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
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(b) Each Grantor jointly and severally agrees to pay to the Agent,
upon demand, the amount of any and all expenses (including, without limitation,
the reasonable fees and expenses of its counsel and of any experts and agents)
that the Administrative Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of the
Agent, any Lender Party or the Hedge Bank hereunder or (iv) the failure by such
Grantor to perform or observe any of the provisions hereof.
SECTION 21. Security Interest Absolute. The obligations of each
Grantor under this Agreement are independent of the Secured Obligations, and a
separate action or actions may be brought and prosecuted against such Grantor to
enforce this Agreement, irrespective of whether any action is brought against
the other Grantors or whether the other Grantors are joined in any such action
or actions. All rights of the Administrative Agent and the pledge, assignment
and security interest hereunder, and all obligations of each Grantor hereunder,
shall be absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of any Loan Document, any
Secured Hedge Agreement or any other agreement or instrument relating
thereto;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any Loan
Document or any Secured Hedge Agreement, including, without limitation,
any increase in the Secured Obligations resulting from the extension of
additional credit to any Grantor or any of its Subsidiaries or otherwise;
(iii) any taking, exchange, release or nonperfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(iv) any manner of application of collateral, or proceeds thereof,
to all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of the Borrower or any of its Subsidiaries;
(v) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its Subsidiaries; or
(vi) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, such Grantor or a third-party
grantor of a security interest.
SECTION 22. Amendments; Waivers; Etc. (a) No amendment or waiver of
any provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in
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any event be effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No failure on the part of the Agent, any Lender Party or any
Hedge Bank to exercise, and no delay in exercising, any right, power or
privilege hereunder shall operate as a waiver thereof or consent thereto; nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
(c) Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A hereto (each a
"Security Agreement Supplement"), (i) such Person shall be referred to as an
"Additional Collateral Grantor" and shall be and become a Grantor, and each
reference in this Agreement to "Grantor" shall also mean and be a reference to
such Additional Collateral Grantor and (ii) the supplements attached to each
Security Agreement Supplement shall be incorporated into and become a part of
and supplement Schedules I through V hereto, as appropriate, and the
Administrative Agent may attach such supplements to such Schedules, and each
reference to such Schedules shall mean and be a reference to such Schedules, as
supplemented pursuant hereto.
SECTION 23. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic or telex communication) and mailed, telecopied, telegraphed,
telexed, cabled or delivered, if to any Grantor, addressed to it at the address
set forth below the name of such Grantor on the signature pages hereof (or, in
the case of any Additional Collateral Grantor, at the address set forth below
the name of such Additional Collateral Grantor on the signature page of its
Security Agreement Supplement), and if to the Administrative Agent or any Lender
Party addressed to it at its address set forth in Section 8.02 of the Credit
Agreement, or, as to any Hedge Bank or any other party, at such other address as
shall be designated by such party in a written notice to the each other party
complying as to delivery with the terms of this Section 23. All such notices and
other communications shall, when mailed, telecopied, telegraphed or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively,
addressed as aforesaid.
SECTION 24. Continuing Security Interest; Assignments under the
Credit Agreement. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the latest of
(i) the payment in full in cash of the Secured Obligations and all other amounts
payable under this Agreement, (ii) the Termination Date and (iii) the
termination or expiration of all Secured Hedge Agreements, (b) be binding upon
each Grantor, its successors and assigns, and (c) inure to the benefit of, and
be enforceable by, the Agent, the Lender Parties, the Hedge Banks and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), any Lender Party may assign or otherwise transfer
all or any portion of its rights and obligations under the Credit Agreement
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(including, without limitation, all or any portion of its Commitment or
Commitments, the Advances owing to it and any Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case as provided in Section 8.07 of the Credit Agreement. Upon the later of
(i) the payment in cash in full of the Secured Obligations and all other amounts
payable under this Agreement, (ii) the Termination Date and (iii) the
termination or expiration of all Secured Hedge Agreements, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the Grantor. Upon any such termination, the Administrative Agent will, at the
Grantor's expense, execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination.
SECTION 25. Release and Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral in accordance with the
terms of the Loan Documents (other than sales of Inventory and Equipment in the
ordinary course of business), the Administrative Agent shall, at the appropriate
Grantor's expense, execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence the release of such item of
Collateral from the assignment and security interest granted hereby; provided,
however, that (i) at the time of such request and such release, no Default shall
have occurred and be continuing, (ii) such Grantor shall have delivered to the
Agent, at least ten Business Days prior to the date of the proposed release, a
request for release describing the item of Collateral and the terms of the sale,
lease, transfer or other disposition in reasonable detail (including, without
limitation, the price thereof and any expenses in connection therewith),
together with a form of release for execution by the Administrative Agent and a
certification by such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Administrative Agent may request and (iii) the proceeds of any such sale, lease,
transfer or other disposition required to be applied in accordance with Section
2.06(b) of the Credit Agreement shall be paid to, or in accordance with the
instructions of, the Administrative Agent at the closing thereof.
(b) Upon the later of (i) the cash payment in full of the Secured
Obligations, (ii) the Termination Date and (iii) the termination or expiration
of all Secured Hedge Agreements, the pledge, assignment and security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the appropriate Grantor. Upon any such termination and reversion, the
Administrative Agent shall, at the appropriate Grantor's expense, return to such
Grantor such of the Collateral of such Grantor in its possession as shall not
have been sold or otherwise applied pursuant to the terms of the Loan Documents
and execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination and reversion.
SECTION 26. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then, with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and leases,
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letting and licenses of, and contracts and agreements relating to, the real
property, and the terms of this Agreement shall be controlling in the case of
all other Collateral.
SECTION 27. Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial, Etc. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Unless otherwise defined
herein or in the Credit Agreement, terms used in Article 9 of the Code are used
herein as therein defined.
(b) Each Grantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or any other Loan Document or Secured Hedge
Agreement to which it is or is to be a party, or for recognition and enforcement
of any judgment, and such Grantor hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such New York State or, to the extent permitted by law, in
such federal court. Each Grantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection or defense
that it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents to which it is or is to be a party in any New York State or federal
court. Each Grantor hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court. Each Grantor agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing herein shall affect the right that any party may otherwise have to
commence or participate in any action, suit or proceeding relating to this
Agreement, any of the other Loan Documents or any Secured Hedge Agreement to
which it is or is to be a party, or otherwise to proceed against any Grantor, in
any other jurisdiction.
(c) Each Grantor irrevocably consents to the service of any and all
process in any such action, suit or proceeding by the mailing of copies of such
process to such Grantor at the address set forth below its name on the signature
page hereof, or by any other method permitted by law. Each Grantor agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(d) To the extent that any Grantor has or hereafter may acquire
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
Grantor hereby irrevocably waives such immunity in respect of its Obligations
under this Agreement, any other Loan Document and any Secured Hedge Agreement to
which it is or is to be a party.
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(e) Each Grantor irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement, any other Loan Document
or any Secured Hedge Agreement, the transactions contemplated hereby or thereby
or the actions of the Agent, any Lender Party or any Hedge Bank in the
negotiation, administration, performance or enforcement thereof.
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
24 HOUR FITNESS, INC.
By:
------------------------------
Name:
Title:
Address:
SCHEDULES
Schedule I - Pledged Shares and Pledged Indebtedness
Schedule II - Assigned Agreements
Schedule III - Location of Equipment and Inventory
Schedule IV - Trade Names
Schedule V - Deposit Accounts
EXHIBITS
Exhibit A - Security Agreement Supplement
Exhibit B - Form of Consent and Agreement
