SUBSIDIARIES
GUARANTY, dated as of February 27, 2007 (as amended, modified
or supplemented from time to time, this “ Guaranty
”), made by each of the undersigned guarantors (each a
“ Guarantor ” and, together with any other
entity that becomes a guarantor hereunder pursuant to
Section 26 hereof, the “ Guarantors
”). Except as otherwise defined herein, capitalized terms
used herein and defined in the Credit Agreement (as defined below)
shall be used herein as therein defined.
WHEREAS, Town
Sports International Holdings, Inc., Town Sports International, LLC
(the “Borrower”), the lenders from time to time party
thereto (the “ Lenders ”) and Deutsche Bank
Trust Company Americas, as administrative agent (together with any
successor administrative agent, the “ Administrative
Agent ”), have entered into a Credit Agreement, dated as
of February 27, 2007 (as amended, modified, restated and/or
supplemented from time to time, the “ Credit Agreement
”), providing for the making of Loans to, and the issuance
of, and participation in, Letters of Credit for the account of, the
Borrower as contemplated therein (the Lenders, the Collateral
Agent, the Issuing Lenders and the Administrative Agent are herein
called the “ Lender Creditors ”);
WHEREAS, the
Borrower and/or one or more of its Subsidiaries may at any time and
from time to time enter into one or more Interest Rate Protection
Agreements or Other Hedging Agreements with one or more Lenders or
any affiliate thereof (each such Lender or affiliate, even if the
respective Lender subsequently ceases to be a Lender under the
Credit Agreement for any reason, together with such Lender’s
or affiliate’s successors and assigns, if any, collectively,
the “ Other Creditors ” and, together with the
Lender Creditors, the “ Secured Creditors
”);
WHEREAS, each
Guarantor is a direct or indirect Subsidiary of the
Borrower;
WHEREAS, it is a
condition precedent to the making of Loans to the Borrower, and the
issuance of, and participation in, Letters of Credit for the
account of the Borrower under the Credit Agreement and to the Other
Creditors entering into Interest Rate Protection Agreements and
Other Hedging Agreements that each Guarantor shall have executed
and delivered to the Administrative Agent this Guaranty;
and
WHEREAS, each
Guarantor will obtain benefits from the incurrence of Loans to the
Borrower, and the issuance of, and participation in, Letters of
Credit for the account of the Borrower under the Credit Agreement
and the entering into by the Borrower and/or one or more of its
Subsidiaries of Interest Rate Protection Agreements or Other
Hedging Agreements and, accordingly, desires to execute this
Guaranty in order to satisfy the condition described in the
preceding paragraph;
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NOW, THEREFORE, in
consideration of the foregoing and other benefits accruing to each
Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following
representations and warranties to the Secured Creditors and hereby
covenants and agrees with each Secured Creditor as
follows:
1. Each
Guarantor, jointly and severally, irrevocably, absolutely and
unconditionally guarantees as a primary obligor and not merely as a
surety: (i) to the Lender Creditors the full and prompt
payment when due (whether at the stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise) of
(x) the principal of, premium, if any, and interest on the
Notes issued by, and the Loans made to, the Borrower under the
Credit Agreement, and all reimbursement obligations and Unpaid
Drawings with respect to Letters of Credit and (y) all other
obligations (including, without limitation, obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code,
would become due), liabilities and indebtedness owing by the
Borrower to the Lender Creditors under the Credit Agreement and
each other Credit Document to which the Borrower is a party
(including, without limitation, indemnities, Fees and interest
thereon (including, without limitation, any interest accruing after
the commencement of any bankruptcy, insolvency, receivership or
similar proceeding at the rate provided for in the Credit
Agreement, whether or not such interest is an allowed claim in any
such proceeding), whether now existing or hereafter incurred under,
arising out of or in connection with the Credit Agreement and any
such other Credit Document and the due performance and compliance
by the Borrower with all of the terms, conditions, covenants and
agreements contained in all such Credit Documents (all such
principal, premium, interest, liabilities, indebtedness and
obligations under this clause (i), except to the extent consisting
of obligations or liabilities with respect to Interest Rate
Protection Agreements and Other Hedging Agreements, being herein
collectively called the “ Credit Document Obligations
”); and (ii) to each Other Creditor the full and prompt
payment when due (whether at the stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise) of all
obligations (including, without limitation, obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code,
would become due), liabilities and indebtedness (including, without
limitation, any interest accruing after the commencement of any
bankruptcy, insolvency, receivership or similar proceeding at the
rate provided for in the respective Interest Rate Protection
Agreements or Other Hedging Agreements, whether or not such
interest is an allowed claim in any such proceeding) owing by the
Borrower and/or one or more of its Subsidiaries under any Interest
Rate Protection Agreement or Other Hedging Agreement, whether now
in existence or hereafter arising, and the due performance and
compliance by the Borrower and such Subsidiaries with all of the
terms, conditions, covenants and agreements contained in each
Interest Rate Protection Agreement and Other Hedging Agreement to
which it is a party (all such obligations, liabilities and
indebtedness being herein collectively called the “ Other
Obligations ” and, together with the Credit Document
Obligations, the “ Guaranteed Obligations ”). As
used herein, the term “ Guaranteed Party ” shall
mean the Borrower and each Subsidiary thereof party to any Interest
Rate Protection Agreement or Other Hedging Agreement with an Other
Creditor. Each Guarantor understands, agrees and confirms that the
Secured Creditors may enforce this Guaranty up to the full amount
of the Guaranteed Obligations against such Guarantor without
proceeding against any other Guarantor, the Borrower, any other
Guaranteed Party, against any security for the Guaranteed
Obligations, or under any other guaranty covering all or a portion
of the Guaranteed Obligations.
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2. Additionally,
each Guarantor, jointly and severally, unconditionally, absolutely
and irrevocably, guarantees the payment of any and all Guaranteed
Obligations whether or not due or payable by the Borrower or any
other Guaranteed Party upon the occurrence in respect of the
Borrower or any such other Guaranteed Party of any of the events
specified in Section 10.05 of the Credit Agreement, and
unconditionally, absolutely and irrevocably, jointly and severally,
promises to pay such Guaranteed Obligations to the Secured
Creditors, or order, on demand. This Guaranty shall constitute a
guaranty of payment and performance, and not of
collection.
3. The
liability of each Guarantor hereunder is primary, absolute, joint
and several, and unconditional and is exclusive and independent of
any security for or other guaranty of the indebtedness of the
Borrower or any other Guaranteed Party whether executed by such
Guarantor, any other Guarantor, any other guarantor or by any other
party, and the liability of each Guarantor hereunder shall not be
affected or impaired by any circumstance or occurrence whatsoever,
including, without limitation: (a) any direction as to
application of payment by the Borrower or any other Guaranteed
Party or by any other party, (b) any other continuing or other
guaranty, undertaking or maximum liability of a Guarantor or of any
other party as to the Guaranteed Obligations, (c) any payment
on or in reduction of any such other guaranty or undertaking,
(d) any dissolution, termination or increase, decrease or
change in personnel by the Borrower or any other Guaranteed Party,
(e) the failure of a Guarantor to receive any benefit from or
as a result of its execution, delivery and performance of this
Guaranty, (f) any payment made to any Secured Creditor on the
indebtedness which any Secured Creditor repays the Borrower or any
other Guaranteed Party pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief
proceeding, and each Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such
proceeding, (g) any action or inaction by the Secured
Creditors as contemplated in Section 6 hereof or
(h) any invalidity, recission, irregularity or
unenforceability of all or any part of the Guaranteed Obligations
or of any security therefor.
4. The
obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor, the
Borrower or any other Guaranteed Party, and a separate action or
actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor, any
other guarantor, the Borrower or any other Guaranteed Party and
whether or not any other Guarantor, any other guarantor, the
Borrower or any other Guaranteed Party be joined in any such action
or actions. Each Guarantor waives, to the fullest extent permitted
by applicable law, the benefits of any statute of limitations
affecting its liability hereunder or the enforcement thereof. Any
payment by the Borrower or any other Guaranteed Party or other
circumstance which operates to toll any statute of limitations as
to the Borrower or any other Guaranteed Party shall operate to toll
the statute of limitations as to each Guarantor.
5. Each
Guarantor hereby waives (to the fullest extent permitted by
applicable law) notice of acceptance of this Guaranty and notice of
the existence, creation or incurrence of any new or additional
liability to which it may apply, and waives promptness, diligence,
presentment, demand of payment, demand for performance, protest,
notice of dishonor or nonpayment of any such liabilities, suit or
taking of other action by the Administrative Agent or any other
Secured Creditor against, and any other notice to, any party liable
thereon (including
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such Guarantor,
any other Guarantor, any other guarantor, the Borrower or any other
Guaranteed Party) and each Guarantor further hereby waives any and
all notice of the creation, renewal, extension or accrual of any of
the Guaranteed Obligations and notice or proof of reliance by any
Secured Creditor upon this Guaranty, and the Guaranteed Obligations
shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended, modified, supplemented or
waived, in reliance upon this Guaranty.
6. Any
Secured Creditor may (except as shall be required by applicable
statute and cannot be waived) at any time and from time to time
without the consent of, or notice to, any Guarantor, without
incurring responsibility to such Guarantor, without impairing or
releasing the obligations or liabilities of such Guarantor
hereunder, upon or without any terms or conditions and in whole or
in part:
(a) change
the manner, place or terms of payment of, and/or change, increase
or extend the time of payment of, renew, increase, accelerate or
alter, any of the Guaranteed Obligations (including, without
limitation, any increase or decrease in the rate of interest
thereon or the principal amount thereof), any security therefor, or
any liability incurred directly or indirectly in respect thereof,
and the guaranty herein made shall apply to the Guaranteed
Obligations as so changed, extended, increased, accelerated,
renewed or altered;
(b) take and
hold security for the payment of the Guaranteed Obligations and
sell, exchange, release, surrender, impair, realize upon or
otherwise deal with in any manner and in any order any property or
other collateral by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, the Guaranteed Obligations or any
liabilities (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and/or any offset there
against;
(c) exercise
or refrain from exercising any rights against the Borrower, any
other Guaranteed Party, any other Credit Party, any Subsidiary
thereof, any other guarantor of the Guaranteed Obligations or
others or otherwise act or refrain from acting;
(d) release
or substitute any one or more endorsers, Guarantors, other
guarantors, the Borrower, any other Guaranteed Party, or other
obligors;
(e) settle or
compromise any of the Guaranteed Obligations, any security therefor
or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment
of any liability (whether due or not) of the Borrower or any other
Guaranteed Party to creditors of the Borrower or such other
Guaranteed Party other than the Secured Creditors;
(f) apply any
sums by whomsoever paid or howsoever realized to any liability or
liabilities of the Borrower or any other Guaranteed Party to the
Secured Creditors regardless of what liabilities of the Borrower or
such other Guaranteed Party remain unpaid;
(g) consent
to or waive any breach of, or any act, omission or default under,
any of the Interest Rate Protection Agreements or Other Hedging
Agreements, the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend,
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modify or
supplement any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of such other
instruments or agreements;
(h) act or
fail to act in any manner referred to in this Guaranty which may
deprive such Guarantor of its right to subrogation against the
Borrower or any other Guaranteed Party to recover full indemnity
for any payments made pursuant to this Guaranty; and/or
(i) take any
other action or omit to take any other action which would, under
otherwise applicable principles of common law, give rise to a legal
or equitable discharge of such Guarantor from its liabilities under
this Guaranty.
No invalidity,
illegality, irregularity or unenforceability of all or any part of
the Guaranteed Obligations, the Credit Documents, the Interest Rate
Protection Agreements and Other Hedging Agreements or any other
agreement or instrument relating to the Guaranteed Obligations or
of any security or guarantee therefor shall affect, impair or be a
defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any
event or the existence of any other circumstances which might
constitute a legal or equitable discharge of a surety or guarantor
except payment in full in cash of the Guaranteed
Obligations.
7. This
Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or
delay on the part of any Secured Creditor in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights
and remedies herein expressly specified are cumulative and not
exclusive of any rights or remedies which any Secured Creditor
would otherwise have. No notice to or demand on any Guarantor in
any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver
of the rights of any Secured Creditor to any other or further
action in any circumstances without notice or demand. It is not
necessary for any Secured Creditor to inquire into the capacity or
powers of the Borrower or any other Guaranteed Party or the
officers, directors, partners or agents acting or purporting to act
on its or their behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
8. Any
indebtedness of the Borrower or any other Guaranteed Party now or
hereafter held by any Guarantor is hereby subordinated to the
indebtedness of the Borrower or such other Guaranteed Party to the
Secured Creditors, and such indebtedness of the Borrower or such
other Guaranteed Party to any Guarantor, if the Administrative
Agent or the Collateral Agent, after the occurrence and during the
continuance of an Event of Default, so requests, shall be
collected, enforced and received by such Guarantor as trustee for
the Secured Creditors and be paid over to the Secured Creditors on
account of the indebtedness of the Borrower or the other Guaranteed
Parties to the Secured Creditors, but without affecting or
impairing in any manner the liability of such Guarantor under the
other provisions of this Guaranty. Prior to the transfer by any
Guarantor of any note or negotiable instrument evidencing any
indebtedness of the Borrower or any other Guaranteed Party to such
Guarantor, such Guarantor shall mark such note or negotiable
instrument with a legend that the same is subject to this
subordination. Without
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limiting the
generality of the foregoing, each Guarantor hereby agrees with the
Secured Creditors that it will not exercise any right of
subrogation which it may at any time otherwise have as a result of
this Guaranty (whether contractual, under Section 509 of the
Bankruptcy Code or otherwise) until all Guaranteed Obligations have
been irrevocably paid in full in cash (other than contingent
indemnification obligations that are not then due and payable);
provided , that if any amount shall be paid to such
Guarantor on account of such subrogation rights at any time prior
to the irrevocable payment in full in cash of all the Guaranteed
Obligations, such amount shall be held in trust for the benefit of
the Secured Creditors and shall forthwith be paid to the Secured
Creditors to be credited and applied upon the Guaranteed
Obligations, whether matured or unmatured, in accordance with the
terms of the Credit Documents or, if the Credit Documents do not
provide for the application of such amount, to be held by the
Secured Creditors as collateral security for any Guaranteed
Obligations thereafter existing.
9. a) Each
Guarantor waives any right (except as shall be required by
applicable law and cannot be waived) to require the Secured
Creditors to: (i) proceed against the Borrower, any other
Guaranteed Party, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party; (ii) proceed
against or exhaust any security held from the Borrower, any other
Guaranteed Party, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party; or (iii) pursue any
other remedy in the Secured Creditors’ power whatsoever. Each
Guarantor waives any defense based on or arising out of any defense
of the Borrower, any other Guaranteed Party, any other Guarantor,
any other guarantor of the Guaranteed Obligations or any other
party other than payment in full in cash of the Guaranteed
Obligations in accordance with the terms thereof, including,
without limitation, any defense based on or arising out of the
disability of the Borrower, any other Guaranteed Party, any other
Guarantor, any other guarantor of the Guaranteed Obligations or any
other party, or the unenforceability of the Guaranteed Obligations
or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower or any other Guaranteed Party
other than payment in full of the Guaranteed Obligations in cash.
The Secured Creditors may, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or
the other Secured Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially
reasonable, or exercise any other right or remedy the Secured
Creditors may have against the Borrower, any other Guaranteed Party
or any other party, or any security, without affecting or impairing
in any way the liability of any Guarantor hereunder except to the
extent the Guaranteed Obligations have been paid in full in cash in
accordance with the terms thereof. Each Guarantor waives any
defense arising out of any such election by th
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