EXHIBIT 10.3
 
BORROWER/SUB PLEDGE AGREEMENT
among
TOWN SPORTS INTERNATIONAL, LLC,
VARIOUS SUBSIDIARIES OF TOWN SPORTS INTERNATIONAL, LLC
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as PLEDGEE
Dated as of February 27, 2007
 

 

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Table Of Contents

         
1. SECURITY FOR OBLIGATIONS
    2  
 
       
2. DEFINITIONS
    3  
 
       
3. PLEDGE OF SECURITIES, ETC.
    7  
 
       
3.1 Pledge
    7  
3.2 Procedures
    9  
3.3 Subsequently Acquired Collateral
    11  
3.4 Transfer Taxes
    12  
3.5 Definition of Pledged Notes
    12  
3.6 Certain Representations and Warranties Regarding the Collateral
    12  
 
       
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC
    12  
 
       
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT
    12  
 
       
6. DIVIDENDS AND OTHER DISTRIBUTIONS
    13  
 
       
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT
    13  
 
       
8. REMEDIES, CUMULATIVE, ETC
    14  
 
       
9. APPLICATION OF PROCEEDS
    15  
 
       
10. PURCHASERS OF COLLATERAL
    15  
 
       
11. INDEMNITY
    15  
 
       
12. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER
    16  
 
       
13. FURTHER ASSURANCES; POWER-OF-ATTORNEY
    16  
 
       
14. THE PLEDGEE AS COLLATERAL AGENT
    17  
 
       
15. TRANSFER BY THE PLEDGORS
    17  
 
       
16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS
    17  
 
       
17. LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION
AND/OR A TRANSMITTING UTILITY); JURISDICTION OF ORGANIZATION; LOCATION;
ORGANIZATIONAL IDENTIFICATION NUMBERS; CHANGES THERETO; ETC
    19    
18. PLEDGORS’ OBLIGATIONS ABSOLUTE, ETC
    20  
 
       
19. REGISTRATION, ETC
    20  
 
       
20. TERMINATION; RELEASE
    21  

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Table Of Contents (continued)

         
21. NOTICES, ETC
    23  
 
       
22. WAIVER; AMENDMENT
    23  
 
       
23. MISCELLANEOUS
    23  
 
       
24. HEADINGS DESCRIPTIVE
    24  
 
       
25. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL
    24  
 
       
26. PLEDGOR’S DUTIES
    25  
 
       
27. COUNTERPARTS
    25  
 
       
28. SEVERABIILTY
    25  
 
       
29. RECOURSE
    25  
 
       
30. ADDITIONAL PLEDGORS
    25  
 
       
31. LIMITED OBLIGATIONS
    25  
 
       
32. RELEASE OF PLEDGORS
    26  

         
ANNEX A
  -   SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION, JURISDICTION OF
ORGANIZATION, LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS
ANNEX B
  -   SCHEDULE OF SUBSIDIARIES
ANNEX C
  -   SCHEDULE OF STOCK
ANNEX D
  -   SCHEDULE OF NOTES
ANNEX E
  -   SCHEDULE OF LIMITED LIABILITY COMPANY INTERESTS
ANNEX F
  -   SCHEDULE OF PARTNERSHIP INTERESTS
ANNEX G
  -   SCHEDULE OF CHIEF EXECUTIVE OFFICES
ANNEX H
  -   FORM OF AGREEMENT REGARDING UNCERTIFICATED SECURITIES, LIMITED LIABILITY
COMPANY INTERESTS AND PARTNERSHIP INTERESTS

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BORROWER/SUB PLEDGE AGREEMENT
          BORROWER/SUB PLEDGE AGREEMENT (as amended, modified or supplemented
from time to time, this “Agreement”), dated as of February 27, 2007, among each
of the undersigned pledgors (each, a “Pledgor” and, together with any other
entity that becomes a pledgor hereunder pursuant to Section 30 hereof, the
“Pledgors”) and Deutsche Bank Trust Company Americas, as collateral agent
(together with any successor collateral agent, the “Pledgee”), for the benefit
of the Secured Creditors (as defined below). Except as otherwise defined herein,
all capitalized terms used herein and defined in the Credit Agreement (as
defined below) shall be used herein as therein defined.
W I T N E S S E T H:
          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, all as
contemplated therein (the Lenders, each Issuing Lender, the Administrative Agent
and the Pledgee are herein called the “Lender Creditors”);
          WHEREAS, pursuant to the Subsidiaries Guaranty, each Pledgor (other
than the Borrower) has jointly and severally guaranteed the payment and
performance when due of all Guaranteed Obligations as described (and defined)
therein;
          WHEREAS, the Borrower and/or one or more of the other Pledgors may
have entered into, or may at any time and from time to time after the date
hereof enter into, or guaranty the obligations of one or more other Pledgors or
Subsidiaries thereof under, one or more Interest Rate Protection Agreements or
Other Hedging Agreements with one or more Lender Creditors or any affiliate
thereof (each such Lender Creditor or affiliate, even if the respective Lender
Creditor subsequently ceases to be a Lender under the Credit Agreement for any
reason, together with such Lender Creditor’s or affiliate’s successors and
assigns, if any, collectively, the “Other Creditors” and, together with the
Lender Creditors, the “Secured Creditors”);
          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 Pledgor shall have executed and delivered to the Pledgee this
Agreement; and

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          WHEREAS, each Pledgor will obtain benefits from the incurrence of
Loans by 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 enter into this Agreement in order to satisfy the conditions described in the
preceding recital and to induce the Lenders to make Loans to the Borrower and
issue, and/or participate in, Letters of Credit for the account of the Borrower
and the Other Creditors to enter into Interest Rate Protection Agreements or
Other Hedging Agreements with the Borrower and/or one or more of its
Subsidiaries;
          NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Pledgor, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor hereby makes the following representations and
warranties to the Pledgee for the benefit of the Secured Creditors and hereby
covenants and agrees with the Pledgee for the benefit of the Secured Creditors
as follows:
          1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor
for the benefit of the Secured Creditors to secure:
     (i) the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, principal, premium, interest, reimbursement
obligations (both actual and contingent) under Letters of Credit, fees, costs,
and indemnities (including in each case, without limitation, all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of any
Pledgor or any Subsidiary thereof at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding) of such Pledgor to the Lender Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with, the
Credit Agreement and the other Credit Documents to which such Pledgor is a party
(including, in the case of each Pledgor that is a Subsidiary Guarantor, all such
obligations, liabilities and indebtedness of such Pledgor under the Subsidiaries
Guaranty) and the due performance and compliance by such Pledgor with all of the
terms, conditions and agreements contained in the Credit Agreement and in such
other Credit Documents (all such obligations, liabilities and indebtedness under
this clause (i), except to the extent consisting of obligations, liabilities or
indebtedness with respect to Interest Rate Protection Agreements or Other
Hedging Agreements, being herein collectively called the “Credit Document
Obligations”);
     (ii) the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, in each case, without limitation, all interest that accrues after
the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar proceeding of any Pledgor or
any of its Subsidiaries at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding) owing by such Pledgor to the Other Creditors under, or with
respect to (including, in the case of each Pledgor that is a Subsidiary
Guarantor, all such

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obligations, liabilities and indebtedness of such Pledgor under the Subsidiaries
Guaranty), each Interest Rate Protection Agreement and Other Hedging Agreement,
whether such Interest Rate Protection Agreement or Other Hedging Agreement is
now in existence or hereafter arising and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements contained therein
(all such obligations, liabilities and indebtedness described in this clause
(ii) being herein collectively called the “Other Obligations”);
     (iii) any and all sums advanced by the Pledgee in order to preserve the
Collateral (as hereinafter defined) or preserve its security interest in the
Collateral;
     (iv) in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations or liabilities of such Pledgor referred to in
clauses (i) and (ii) above, after an Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Pledgee of its rights hereunder, together with reasonable
attorneys’ fees and court costs; and
     (v) all amounts paid by any Secured Creditor as to which such Secured
Creditor has the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (v) of this Section 1 being herein collectively called the
“Obligations,” it being acknowledged and agreed that the “Obligations” shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
          2. DEFINITIONS. (a) Reference to singular terms shall include the
plural and vice versa.
          (b) The following capitalized terms used herein shall have the
definitions specified below:
          “Administrative Agent” shall have the meaning set forth in the
recitals hereto.
          “Adverse Claim” shall have the meaning given such term in
Section 8-102(a)(1) of the UCC.
          “Agreement” shall have the meaning set forth in the first paragraph
hereof.
          “Borrower” shall have the meaning set forth in the recitals hereto.
          “Certificated Security” shall have the meaning given such term in
Section 8-102(a)(4) of the UCC.
          “Clearing Corporation” shall have the meaning given such term in
Section 8-102(a)(5) of the UCC.

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          “Collateral” shall have the meaning set forth in Section 3.1 hereof.
          “Collateral Accounts” shall mean any and all accounts established and
maintained by the Pledgee in the name of any Pledgor to which Collateral may be
credited.
          “Credit Agreement” shall have the meaning set forth in the recitals
hereto.
          “Credit Document Obligations” shall have the meaning set forth in
Section 1(i) hereof.
          “Equity Interest” of any Person shall mean any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interest in (however designated) equity of such Person,
including, without limitation, any common stock, preferred stock, any limited or
general partnership interest and any limited liability company membership
interest.
          “Event of Default” shall mean any Event of Default (or similar term)
under, and as defined in, the Credit Agreement or in any Interest Rate
Protection Agreement or Other Hedging Agreement entered into with an Other
Creditor and shall in any event include, without limitation, any payment default
on any of the Obligations after the expiration of any applicable grace period.
          “Exempted Foreign Entity” shall mean any Foreign Subsidiary of the
Borrower that is treated as a corporation or an association taxable as a
corporation for U.S. Federal income tax purposes.
          “Financial Asset” shall have the meaning given such term in
Section 8-102(a)(9) of the UCC.
          “Foreign Subsidiary” shall have the meaning provided in the Credit
Agreement.
          “Indemnitees” shall have the meaning set forth in Section 11 hereof.
          “Instrument” shall have the meaning given such term in
Section 9-102(a)(47) of the UCC.
          “Investment Property” shall have the meaning given such term in
Section 9-102(a)(49) of the UCC.
          “Lender Creditors” shall have the meaning set forth in the recitals
hereto.
          “Lenders” shall have the meaning set forth in the recitals hereto.
          “Limited Liability Company Assets” shall mean all assets, whether
tangible or intangible and whether real, personal or mixed (including, without
limitation, all limited liability company capital and interest in other limited
liability companies), at any time owned by any Pledgor or represented by any
Limited Liability Company Interest.

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          “Limited Liability Company Interests” shall mean the entire limited
liability company membership interest at any time owned by any Pledgor in any
limited liability company.
          “Location” of any Pledgor shall mean such Pledgor’s “location” as
determined pursuant to Section 9-307 of the UCC.
          “Non-Voting Equity Interests” shall mean all Equity Interests of any
Foreign Subsidiary of the Borrower which are not Voting Equity Interests.
          “Notes” shall mean (x) all intercompany notes at any time issued to
each Pledgor and (y) all other promissory notes from time to time issued to, or
held by, each Pledgor.
          “Obligations” shall have the meaning set forth in Section 1 hereof.
          “Other Creditors” shall have the meaning set forth in the recitals
hereto.
          “Other Obligations” shall have the meaning set forth in Section 1(ii)
hereof.
          “Partnership Assets” shall mean all assets, whether tangible or
intangible and whether real, personal or mixed (including, without limitation,
all partnership capital and interest in other partnerships), at any time owned
or represented by any Partnership Interest.
          “Partnership Interest” shall mean the entire general partnership
interest or limited partnership interest at any time owned by any Pledgor in any
general partnership or limited partnership.
          “Person” means any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
          “Pledged Notes” shall have the meaning set forth in Section 3.5
hereof.
          “Pledgee” shall have the meaning set forth in the first paragraph
hereof.
          “Pledgor” shall have the meaning set forth in the first paragraph
hereof.
          “Proceeds” shall have the meaning given such term in
Section 9-102(a)(64) of the UCC and, in any event, shall also include, but not
be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to the Pledgee or any Pledgor from time to time with respect to
any of the Collateral, (ii) any and all payments (in any form whatsoever) made
or due and payable to any Pledgor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any Person acting under
color of governmental authority), and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.

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          “Registered Organization” shall mean a “registered organization” as
such term is defined in Section 9-102 (a) (70) of the UCC.
          “Required Lenders” shall have the meaning given such term in the
Credit Agreement.
          “Required Secured Creditors” shall have the meaning provided in the
Security Agreement.
          “Secured Creditors” shall have the meaning set forth in the recitals
hereto.
          “Secured Debt Agreements” shall mean and include (x) this Agreement,
(y) the other Credit Documents, and (z) the Interest Rate Protection Agreements
and Other Hedging Agreements entered into with any Other Creditor.
          “Securities Account” shall have the meaning given such term in
Section 8-501(a) of the UCC.
          “Securities Act” shall mean the Securities Act of 1933, as amended, as
in effect from time to time.
          “Securities Intermediary” shall have the meaning given such term in
Section 8-102(14) of the UCC.
          “Security” and “Securities” shall have the meaning given such term in
Section 8-102(a)(15) of the UCC and shall in any event also include all Stock
and all Notes.
          “Security Entitlement” shall have the meaning given such term in
Section 8-102(a)(17) of the UCC.
          “Stock” shall mean all of the issued and outstanding shares of capital
stock at any time owned by any Pledgor of any corporation.
          “Subsidiary” means, as to any Person, (i) any corporation more than
50% of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person, and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person and/or
one or more Subsidiaries of such Person has more than a 50% equity interest at
the time.
          “Termination Date” shall have the meaning set forth in Section 20
hereof.
          “Transmitting Utility” shall mean a “transmitting utility” as such
term is defined in Section 9-102(a)(80) of the UCC.

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          “UCC” shall mean the Uniform Commercial Code as in effect in the State
of New York from time to time; provided that all references herein to specific
sections or subsections of the UCC are references to such sections or
subsections, as the case may be, of the Uniform Commercial Code as in effect in
the State of New York on the date hereof.
          “Uncertificated Security” shall have the meaning given such term in
Section 8-102(a)(18) of the UCC.
          “Voting Equity Interests” of any Foreign Subsidiary of the Borrower
shall mean all classes of Equity Interests of such Foreign Subsidiary entitled
to vote.
          3. PLEDGE OF SECURITIES, ETC.
          3.1 Pledge. To secure the Obligations now or hereafter owed or to be
performed by such Pledgor, each Pledgor does hereby grant, pledge and assign to
the Pledgee for the benefit of the Secured Creditors, and does hereby create a
continuing security interest in favor of the Pledgee for the benefit of the
Secured Creditors in, all of its right, title and interest in and to the
following, whether now existing or hereafter from time to time acquired
(collectively, the “Collateral”):
          (a) each of the Collateral Accounts, including any and all assets of
whatever type or kind deposited by such Pledgor in each such Collateral Account,
whether now owned or hereafter acquired, existing or arising, including, without
limitation, all Financial Assets, Investment Property, monies, checks, drafts,
Instruments, Securities or interests therein of any type or nature deposited or
required by the Credit Agreement or any other Secured Debt Agreement to be
deposited in each such Collateral Account, and all investments and all
certificates and other Instruments (including depository receipts, if any) from
time to time representing or evidencing the same, and all dividends, interest,
distributions, cash and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
foregoing;
          (b) all Securities owned or held by such Pledgor from time to time and
all options and warrants owned by such Pledgor from time to time to purchase
Securities;
          (c) all Limited Liability Company Interests owned by such Pledgor from
time to time and all of its right, title and interest in each limited liability
company to which each such interest relates, whether now existing or hereafter
acquired, including, without limitation, to the fullest extent permitted under
the terms and provisions of the documents and agreements governing such Limited
Liability Company Interests and applicable law:
     (A) all the capital thereof and its interest in all profits, income,
surpluses, losses, Limited Liability Company Assets and other distributions to
which such Pledgor shall at any time be entitled in respect of such Limited
Liability Company Interests;
     (B) all other payments due or to become due to such Pledgor in respect of
Limited Liability Company Interests, whether under any limited liability company

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agreement or otherwise, whether as contractual obligations, damages, insurance
proceeds or otherwise;
     (C) all of its claims, rights, powers, privileges, authority, options,
security interests, liens and remedies, if any, under any limited liability
company agreement or operating agreement, or at law or otherwise in respect of
such Limited Liability Company Interests;
     (D) all present and future claims, if any, of such Pledgor against any such
limited liability company for monies loaned or advanced, for services rendered
or otherwise;
     (E) all of such Pledgor’s rights under any limited liability company
agreement or operating agreement or at law to exercise and enforce every right,
power, remedy, authority, option and privilege of such Pledgor relating to such
Limited Liability Company Interests, including any power to terminate, cancel or
modify any such limited liability company agreement or operating agreement, to
execute any instruments and to take any and all other action on behalf of and in
the name of any of such Pledgor in respect of such Limited Liability Company
Interests and any such limited liability company, to make determinations, to
exercise any election (including, but not limited to, election of remedies) or
option or to give or receive any notice, consent, amendment, waiver or approval,
together with full power and authority to demand, receive, enforce, collect or
receipt for any of the foregoing or for any Limited Liability Company Asset, to
enforce or execute any checks, or other instruments or orders, to file any
claims and to take any action in connection with any of the foregoing; and
     (F) all other property hereafter delivered in substitution for or in
addition to any of the foregoing, all certificates and instruments representing
or evidencing such other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all thereof;
          (d) all Partnership Interests owned by such Pledgor from time to time
and all of its right, title and interest in each partnership to which each such
interest relates, whether now existing or hereafter acquired, including, without
limitation, to the fullest extent permitted under the terms and provisions of
the documents and agreements governing such Partnership Interests and applicable
law:
     (A) all the capital thereof and its interest in all profits, income,
surpluses, losses, Partnership Assets and other distributions to which such
Pledgor shall at any time be entitled in respect of such Partnership Interests;
     (B) all other payments due or to become due to such Pledgor in respect of
Partnership Interests, whether under any partnership agreement or otherwise,
whether as contractual obligations, damages, insurance proceeds or otherwise;

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     (C) all of its claims, rights, powers, privileges, authority, options,
security interests, liens and remedies, if any, under any partnership agreement
or operating agreement, or at law or otherwise in respect of such Partnership
Interests;
     (D) all present and future claims, if any, of such Pledgor against any such
partnership for monies loaned or advanced, for services rendered or otherwise;
     (E) all of such Pledgor’s rights under any partnership agreement or
operating agreement or at law to exercise and enforce every right, power,
remedy, authority, option and privilege of such Pledgor relating to such
Partnership Interests, including any power to terminate, cancel or modify any
partnership agreement or operating agreement, to execute any instruments and to
take any and all other action on behalf of and in the name of any of such
Pledgor in respect of such Partnership Interests and any such partnership, to
make determinations, to exercise any election (including, but not limited to,
election of remedies) or option or to give or receive any notice, consent,
amendment, waiver or approval, together with full power and authority to demand,
receive, enforce, collect or receipt for any of the foregoing or for any
Partnership Asset, to enforce or execute any checks, or other instruments or
orders, to file any claims and to take any action in connection with any of the
foregoing; and
     (F) all other property hereafter delivered in substitution for or in
addition to any of the foregoing, all certificates and instruments representing
or evidencing such other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all thereof;
     (e) all Security Entitlements owned by such Pledgor from time to time in
any and all of the foregoing;
     (f) all Financial Assets and Investment Property owned by such Pledgor from
time to time; and
     (g) all Proceeds of any and all of the foregoing;
provided that (x) except in the circumstances and to the extent provided by
Section 8.13 of the Credit Agreement (in which case this clause (x) shall no
longer be applicable), no Pledgor shall be required at any time to pledge
hereunder more than 65% of the total combined voting power of all classes of
Voting Equity Interests of any Exempted Foreign Entity, and (y) each Pledgor
shall be required to pledge hereunder 100% of the Non-Voting Equity Interests of
each Exempted Foreign Entity at any time and from time to time acquired by such
Pledgor, which Non-Voting Equity Interests shall not be subject to the
limitations described in preceding clause (x).
          3.2 Procedures. (a) To the extent that any Pledgor at any time or from
time to time owns, acquires or obtains any right, title or interest in any
Collateral, such Collateral shall

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automatically (and without the taking of any action by the respective Pledgor)
be pledged pursuant to Section 3.1 of this Agreement and, in addition thereto,
the respective Pledgor shall (to the extent provided below) take the following
actions as set forth below (as promptly as practicable and, in any event, within
10 Business Days after it obtains such Collateral) for the benefit of the
Pledgee and the other Secured Creditors:
     (i) with respect to a Certificated Security (other than a Certificated
Security credited on the books of a Clearing Corporation or Securities
Intermediary), the respective Pledgor shall physically deliver such Certificated
Security to the Pledgee, endorsed to the Pledgee or endorsed in blank;
     (ii) with respect to an Uncertificated Security (other than an
Uncertificated Security credited on the books of a Clearing Corporation or
Securities Intermediary), the respective Pledgor shall cause the issuer of such
Uncertificated Security (or, in the case of an issuer that is not a Subsidiary
of such Pledgor, will use its reasonable efforts to cause such issuer) to duly
authorize and execute, and deliver to the Pledgee, an agreement for the benefit
of the Pledgee and the other Secured Creditors substantially in the form of
Annex H hereto (appropriately completed to the reasonable satisfaction of the
Pledgee and with such modifications, if any, as shall be reasonably satisfactory
to the Pledgee) pursuant to which such issuer agrees to comply with any and all
instructions originated by the Pledgee without further consent by the registered
owner and not to comply with instructions regarding such Uncertificated Security
originated by any other Person other than a court of competent jurisdiction;
     (iii) with respect to a Certificated Security, Uncertificated Security,
Partnership Interest or Limited Liability Company Interest credited on the books
of a Clearing Corporation or Securities Intermediary (including a Federal
Reserve Bank, Participants Trust Company or The Depository Trust Company), the
respective Pledgor shall promptly notify the Pledgee thereof and shall promptly
take all actions required (x) to comply with the applicable rules of such
Clearing Corporation or Securities Intermediary, and (y) to perfect the security
interest of the Pledgee under applicable law (including, in any event, under
Sections 9-314(a) and (c), 9-106 and 8-106(d) of the UCC). The Pledgor further
agrees to take such actions as the Pledgee deems reasonably necessary or
desirable to effect the foregoing;
     (iv) with respect to a Partnership Interest or a Limited Liability Company
Interest (other than a Partnership Interest or Limited Liability Company
Interest credited on the books of a Clearing Corporation or Securities
Intermediary), (x) if such Partnership Interest or Limited Liability Company
Interest is represented by a certificate and is a Security for purposes of the
UCC, the procedure set forth in Section 3.2(a)(i) hereof, and (y) if such
Partnership Interest or Limited Liability Company Interest is not represented by
a certificate or is not a Security for purposes of the UCC, the procedure set
forth in Section 3.2(a)(ii) hereof;
     (v) with respect to any Note, physical delivery of such Note to the
Pledgee, endorsed to the Pledgee or endorsed in blank; and

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     (vi) with respect to cash proceeds from any of the Collateral described in
Section 3.1 hereof for which the Pledgee is entitled to retain pursuant to the
terms of this Agreement, (i) establishment by the Pledgee of a cash account in
the name of such Pledgor over which the Pledgee shall have “control” within the
meaning of the UCC and at any time any Default or an Event of Default is in
existence no withdrawals or transfers may be made therefrom by any Person except
with the prior written consent of the Pledgee and (ii) deposit of such cash in
such cash account.
     (b) In addition to the actions required to be taken pursuant to
Section 3.2(a) hereof, each Pledgor shall take the following additional actions
with respect to the Securities and Collateral:
     (i) with respect to all Collateral of such Pledgor whereby or with respect
to which the Pledgee may obtain “control” thereof within the meaning of
Section 8-106 of the UCC (or under any provision of the UCC as same may be
amended or supplemented from time to time, or under the laws of any relevant
State other than the State of New York), the respective Pledgor shall take all
actions as may be reasonably requested from time to time by the Pledgee so that
“control” of such Collateral is obtained and at all times held by the Pledgee;
and
     (ii) each Pledgor shall from time to time cause appropriate financing
statements (on Form UCC-1 or other appropriate form) under the Uniform
Commercial Code as in effect in the various relevant States, covering all
Collateral hereunder (with the form of such financing statements to be
satisfactory to the Pledgee), to be filed in the relevant filing offices so that
at all times the Pledgee has a security interest in all Investment Property and
other Collateral which is perfected by the filing of such financing statements
(in each case to the maximum extent perfection by filing may be obtained under
the laws of the relevant States, including, without limitation, Section 9-312(a)
of the UCC).
          3.3 Subsequently Acquired Collateral. If any Pledgor shall acquire (by
purchase, stock dividend or similar distribution or otherwise) any additional
Collateral at any time or from time to time after the date hereof, such
Collateral shall automatically (and without any further action being required to
be taken) be subject to the pledge and security interests created pursuant to
Section 3.1 hereof and, furthermore, the respective Pledgor will promptly
thereafter take (or cause to be taken) all action with respect to such
Collateral in accordance with the procedures set forth in Section 3.2 hereof,
and will promptly thereafter deliver to the Pledgee (i) a certificate executed
by an authorized officer of such Pledgor describing such Collateral and
certifying that the same has been duly pledged in favor of the Pledgee (for the
benefit of the Secured Creditors) hereunder, and (ii) such supplements to
Annexes A through G hereto as are reasonably necessary to cause such annexes to
be complete and accurate at such time. Without limiting the foregoing, each
Pledgor shall be required to pledge hereunder the Equity Interests of any
Exempted Foreign Entity at any time and from time to time after the date hereof
acquired by such Pledgor, provided that (x) except in the circumstances and to
the extent provided by Section 8.13 of the Credit Agreement, no Pledgor shall be
required at any time to pledge hereunder more than 65% of the total combined
voting power of all classes of Voting Equity Interests of any Exempted Foreign
Entity and (y) each Pledgor shall be required to pledge hereunder 100% of the
Non-Voting

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Equity Interests of each Exempted Foreign Entity at any time and from time to
time acquired by such Pledgor.
          3.4 Transfer Taxes. Each pledge of Collateral under Section 3.1 or
Section 3.3 hereof shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.
          3.5 Definition of Pledged Notes. All Notes at any time pledged or
required to be pledged hereunder are hereinafter called the “Pledged Notes.”
          3.6 Certain Representations and Warranties Regarding the Collateral.
Each Pledgor represents and warrants that on the date hereof: (i) the exact
legal name of such Pledgor, the type of organization of such Pledgor, whether or
not such Pledgor is a Registered Organization, the jurisdiction of organization
of such Pledgor, such Pledgor’s Location, the organizational identification
number (if any) of such Pledgor, and whether or not such Pledgor is a
Transmitting Utility, is listed on Annex A hereto; (ii) each Subsidiary of such
Pledgor, and the direct ownership thereof, is listed in Annex B hereto;
(iii) the Stock (and any warrants or options to purchase Stock) held by such
Pledgor consists of the number and type of shares of the stock (or warrants or
options to purchase any stock) of the corporations as described in Annex C
hereto; (iv) such Stock constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex C
hereto; (v) the Notes held by such Pledgor consist of the promissory notes
described in Annex D hereto where such Pledgor is listed as the lender; (vi) the
Limited Liability Company Interests held by such Pledgor consist of the number
and type of interests of the Persons described in Annex E hereto; (vii) each
such Limited Liability Company Interest constitutes that percentage of the
issued and outstanding equity interest of the issuing Person as set forth in
Annex E hereto; (viii) the Partnership Interests held by such Pledgor consist of
the number and type of interests of the Persons described in Annex F hereto;
(ix) each such Partnership Interest constitutes that percentage or portion of
the entire partnership interest of the Partnership as set forth in Annex F
hereto; (x) the exact address of the chief executive office of such Pledgor is
listed on Annex G hereto; (xi) the Pledgor has complied with the respective
procedure set forth in Section 3.2(a) hereof with respect to each item of
Collateral described in Annexes B through F hereto; and (xi) on the date hereof,
such Pledgor owns no other Securities, Stock, Notes, Limited Liability Company
Interests or Partnership Interests.
          4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. If and to the extent
necessary to enable the Pledgee to perfect its security interest in any of the
Collateral or to exercise any of its remedies hereunder, the Pledgee shall have
the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Collateral, which may be held (in the discretion of
the Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank
or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee.
          5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing an Event of Default, each Pledgor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Collateral owned by it, and to give consents, waivers or ratifications in
respect thereof; provided that, in each case, no

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vote shall be cast or any consent, waiver or ratification given or any action
taken or omitted to be taken which would violate, result in a breach of any
covenant contained in, or be inconsistent with any of the terms of any Secured
Debt Agreement, or which could reasonably be expected to have the effect of
impairing the value of the Collateral or any part thereof or the position or
interests of the Pledgee or any other Secured Creditor in the Collateral, unless
expressly permitted by the terms of the Secured Debt Agreements. All such rights
of each Pledgor to vote and to give consents, waivers and ratifications shall
cease in case an Event of Default has occurred and is continuing, and Section 7
hereof shall become applicable.
          6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there shall
have occurred and be continuing an Event of Default, all cash dividends, cash
distributions, cash Proceeds and other cash amounts payable in respect of the
Collateral shall be paid to the respective Pledgor. The Pledgee shall be
entitled to receive directly, and to retain as part of the Collateral:
     (i) all other or additional stock, notes, certificates, limited liability
company interests, partnership interests, instruments or other securities or
property (including, but not limited to, cash dividends other than as set forth
above) paid or distributed by way of dividend or otherwise in respect of the
Collateral;
     (ii) all other or additional stock, notes, certificates, limited liability
company interests, partnership interests, instruments or other securities or
property (including, but not limited to, cash (although such cash may be paid
directly to the respective Pledgor so long as no Event of Default then exists))
paid or distributed in respect of the Collateral by way of stock-split,
spin-off, split-up, reclassification, combination of shares or similar
rearrangement; and
     (iii) all other or additional stock, notes, certificates, limited liability
company interests, partnership interests, instruments or other securities or
property (including, but not limited to, cash but only if an Event of Default
then exists) which may be paid in respect of the Collateral by reason of any
consolidation, merger, exchange of stock, conveyance of assets, liquidation or
similar corporate or other reorganization.
               Nothing contained in this Section 6 shall limit or restrict in
any way the Pledgee’s right to receive the proceeds of the Collateral in any
form in accordance with Section 3 of this Agreement. All dividends,
distributions or other payments which are received by any Pledgor contrary to
the provisions of this Section 6 or Section 7 hereof shall be received in trust
for the benefit of the Pledgee, shall be segregated from other property or funds
of such Pledgor and shall be forthwith paid over to the Pledgee as Collateral in
the same form as so received (with any necessary endorsement).
          7. REMEDIES IN CASE OF AN EVENT OF DEFAULT. If there shall have
occurred and be continuing an Event of Default, then and in every such case, the
Pledgee shall be entitled to exercise all of the rights, powers and remedies
(whether vested in it by this Agreement, any other Secured Debt Agreement or by
law) for the protection and enforcement of its rights in respect of the
Collateral, and the Pledgee shall be entitled to exercise all the rights and
remedies of a secured party under the UCC as in effect in any relevant
jurisdiction and also

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shall be entitled, without limitation, to exercise the following rights, which
each Pledgor hereby agrees to be commercially reasonable:
     (i) to receive all amounts payable in respect of the Collateral otherwise
payable under Section 6 hereof to the respective Pledgor;
     (ii) to transfer all or any part of the Collateral into the Pledgee’s name
or the name of its nominee or nominees;
     (iii) to accelerate any Pledged Note which may be accelerated in accordance
with its terms, and take any other lawful action to collect upon any Pledged
Note (including, without limitation, to make any demand for payment thereon);
     (iv) to vote (and exercise all rights and powers in respect of voting) all
or any part of the Collateral (whether or not transferred into the name of the
Pledgee) and give all consents, waivers and ratifications in respect of the
Collateral and otherwise act with respect thereto as though it were the outright
owner thereof (each Pledgor hereby irrevocably constituting and appointing the
Pledgee the proxy and attorney-in-fact of such Pledgor, with full power of
substitution to do so);
     (v) at any time and from time to time to sell, assign and deliver, or grant
options to purchase, all or any part of the Collateral, or any interest therein,
at any public or private sale, without demand of performance, advertisement or,
notice of intention to sell or of the time or place of sale or adjournment
thereof or to redeem or otherwise purchase or dispose (all of which are hereby
waived by each Pledgor), for cash, on credit or for other property, for
immediate or future delivery without any assumption of credit risk, and for such
price or prices and on such terms as the Pledgee in its absolute discretion may
determine, provided that at least 10 days’ written notice of the time and place
of any such sale shall be given to the respective Pledgor. The Pledgee shall not
be obligated to make any such sale of Collateral regardless of whether any such
notice of sale has theretofore been given. Each Pledgor hereby waives and
releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, and all rights, if any, of marshalling the Collateral and any other
security or the Obligations or otherwise. At any such sale, unless prohibited by
applicable law, the Pledgee on behalf of the Secured Creditors may bid for and
purchase all or any part of the Collateral so sold free from any such right or
equity of redemption. Neither the Pledgee nor any other Secured Creditor shall
be liable for failure to collect or realize upon any or all of the Collateral or
for any delay in so doing nor shall any of them be under any obligation to take
any action whatsoever with regard thereto; and
     (vi) to set-off any and all Collateral against any and all Obligations, and
to withdraw any and all cash or other Collateral from any and all Collateral
Accounts and to apply such cash and other Collateral to the payment of any and
all Obligations.
          8. REMEDIES, CUMULATIVE, ETC. Each and every right, power and remedy
of the Pledgee provided for in this Agreement or in any other Secured Debt
Agreement, or now

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or hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee or any other Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or any other Secured Debt Agreement or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. No notice to or demand on any
Pledgor in any case shall entitle it to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of
the Pledgee or any other Secured Creditor to any other or further action in any
circumstances without notice or demand. The Secured Creditors agree that this
Agreement may be enforced only by the action of the Pledgee, in each case,
acting upon the instructions of the Required Secured Creditors, and that no
other Secured Creditor shall have any right individually to seek to enforce or
to enforce this Agreement or to realize upon the security to be granted hereby,
it being understood and agreed that such rights and remedies may be exercised by
the Pledgee for the benefit of the Secured Creditors upon the terms of this
Agreement and the Security Agreement.
          9. APPLICATION OF PROCEEDS. (a) All monies collected by the Pledgee
upon any sale or other disposition of the Collateral pursuant to the terms of
this Agreement, together with all other monies received by the Pledgee
hereunder, shall be applied in the manner provided in the Security Agreement.
          (b) It is understood and agreed that each Pledgor shall remain jointly
and severally liable with respect to its Obligations to the extent of any
deficiency between the amount of the proceeds of the Collateral pledged by it
hereunder and the aggregate amount of such Obligations.
          10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making such sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
          11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee and each other Secured Creditor (in
their capacity as such) and their respective successors, assigns, employees,
advisors, agents and affiliates (individually an “Indemnitee,” and collectively,
the “Indemnitees”) from and against any and all obligations, damages, injuries,
penalties, claims, demands, losses, judgments and liabilities (including,
without limitation, liabilities for penalties) of whatsoever kind or nature, and
(ii) to reimburse each Indemnitee for all reasonable costs, expenses and
disbursements, including reasonable attorneys’ fees and expenses, in each case
arising out of or resulting from this Agreement or the exercise by any
Indemnitee of any right or remedy granted to it hereunder (but excluding any
obligations, damages, injuries, penalties, claims, demands, losses, judgments
and liabilities (including, without limitation, liabilities for penalties) or
expenses of whatever kind or nature to

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the extent incurred or arising by reason of gross negligence or willful
misconduct of such Indemnitee (as determined by a court of competent
jurisdiction in a final and non-appealable decision)). In no event shall the
Pledgee hereunder be liable, in the absence of gross negligence or willful
misconduct on its part, for any matter or thing in connection with this
Agreement other than to account for monies actually received by it in accordance
with the terms hereof. If and to the extent that the obligations of any Pledgor
under this Section 11 are unenforceable for any reason, such Pledgor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law. The indemnity obligations
of each Pledgor contained in this Section 11 shall continue in full force and
effect notwithstanding the full payment of all the Notes issued under the Credit
Agreement, the termination of all Interest Rate Protection Agreements and Other
Hedging Agreements and Letters of Credit, and the payment of all other
Obligations and notwithstanding the discharge thereof.
          12. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER.
(a) Nothing herein shall be construed to make the Pledgee or any other Secured
Creditor liable as a member of any limited liability company or as a partner of
any partnership and neither the Pledgee nor any other Secured Creditor by virtue
of this Agreement or otherwise (except as referred to in the following sentence)
shall have any of the duties, obligations or liabilities of a member of any
limited liability company or as a partner in any partnership. The parties hereto
expressly agree that, unless the Pledgee shall become the absolute owner of
Collateral consisting of a Limited Liability Company Interest or a Partnership
Interest pursuant hereto and is admitted as a member or partner of the
respective Limited Liability Company or Partnership, this Agreement shall not be
construed as creating a partnership or joint venture among the Pledgee, any
other Secured Creditor, any Pledgor and/or any other Person.
          (b) Except as provided in the last sentence of paragraph (a) of this
Section 12, the Pledgee, by accepting this Agreement, did not intend to become a
member of any limited liability company or a partner of any partnership or
otherwise be deemed to be a co-venturer with respect to any Pledgor, any limited
liability company, partnership and/or any other Person either before or after an
Event of Default shall have occurred. The Pledgee shall have only those powers
set forth herein and the Secured Creditors shall assume none of the duties,
obligations or liabilities of a member of any limited liability company or as a
partner of any partnership or any Pledgor except as provided in the last
sentence of paragraph (a) of this Section 12.
          (c) The Pledgee and the other Secured Creditors shall not be obligated
to perform or discharge any obligation of any Pledgor as a result of the pledge
hereby effected.
          (d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Pledgee or any other Secured Creditor to appear in or
defend any action or proceeding relating to the Collateral to which it is not a
party, or to take any action hereunder or thereunder, or to expend any money or
incur any expenses or perform or discharge any obligation, duty or liability
under the Collateral.
          13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees
that it will join with the Pledgee in executing and, at such Pledgor’s own
expense, file and

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refile under the UCC or other applicable law such financing statements,
continuation statements and other documents, in form reasonably acceptable to
the Pledgee, in such offices as the Pledgee may deem reasonably necessary or
appropriate and wherever required or permitted by law in order to perfect and
preserve the Pledgee’s security interest in the Collateral hereunder and hereby
authorizes the Pledgee to file financing statements and amendments thereto
relative to all or any part of the Collateral (including, without limitation,
(x) financing statements which list the Collateral specifically and/or “all
assets” as collateral and (y) “in lieu of” financing statements) without the
signature of such Pledgor where permitted by law, and agrees to do such further
acts and things and to execute and deliver to the Pledgee such additional
conveyances, assignments, agreements and instruments as the Pledgee may
reasonably require or deem reasonably necessary to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee its
rights, powers and remedies hereunder or thereunder.
          (b) Each Pledgor hereby constitutes and appoints the Pledgee its true
and lawful attorney-in-fact, irrevocably, with full authority in the place and
stead of such Pledgor and in the name of such Pledgor or otherwise, from time to
time solely after the occurrence and during the continuance of an Event of
Default, in the Pledgee’s reasonable discretion, to act, require, demand,
receive and give acquittance for any and all monies and claims for monies due or
to become due to such Pledgor under or arising out of the Collateral, to endorse
any checks or other instruments or orders in connection therewith and to file
any claims or take any action or institute any proceedings and to execute any
instrument which the Pledgee may deem necessary or advisable to accomplish the
purposes of this Agreement, which appointment as attorney is coupled with an
interest.
          14. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood, acknowledged and agreed by
each Secured Creditor that by accepting the benefits of this Agreement, each
such Secured Creditor acknowledges and agrees (i) that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement and in Section 12 of the Credit Agreement.
The Pledgee shall act hereunder on the terms and conditions set forth herein and
in Section 12 of the Credit Agreement.
          15. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein.
          16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
(a) Each Pledgor represents, warrants and covenants as to itself and each of its
Subsidiaries that:
     (i) it is the legal, beneficial and record owner of, and has good and
marketable title to, all of its Collateral consisting of one or more Securities,
Partnership Interests and Limited Liability Company Interests and that it has
sufficient interest in all of its Collateral in which a security interest is
purported to be created hereunder for such security interest to attach (subject,
in each case, to no pledge, lien, mortgage, hypothecation,

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security interest, charge, option, Adverse Claim or other encumbrance
whatsoever, except the liens and security interests created by this Agreement);
     (ii) it has full power, authority and legal right to pledge all the
Collateral pledged by it pursuant to this Agreement;
     (iii) this Agreement has been duly authorized, executed and delivered by
such Pledgor and constitutes a legal, valid and binding obligation of such
Pledgor enforceable against such Pledgor in accordance with its terms, except to
the extent that the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors’ rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law);
     (iv) except to the extent already obtained or made, no consent of any other
party (including, without limitation, any stockholder, partner, member or
creditor of such Pledgor or any of its Subsidiaries) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is required
to be obtained by such Pledgor in connection with (a) the execution, delivery or
performance of this Agreement by such Pledgor, (b) the validity or
enforceability of this Agreement against such Pledgor (except as set forth in
clause (iii) above), (c) the perfection or enforceability of the Pledgee’s
security interest in such Pledgor’s Collateral, or (d) except for compliance
with or as may be required by applicable securities laws, the exercise by the
Pledgee of any of its rights or remedies provided herein;
     (v) neither the execution, delivery or performance by such Pledgor of this
Agreement, nor compliance by it with the terms and provisions hereof nor the
consummation of the transactions contemplated herein: (i) will contravene any
provision of any applicable law, statute, rule or regulation, or any applicable
order, writ, injunction or decree of any court, arbitrator or governmental
instrumentality, domestic or foreign, applicable to such Pledgor; (ii) will
conflict or be inconsistent with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien (except pursuant to the Security Documents) upon any of the properties or
assets of such Pledgor or any of its Subsidiaries pursuant to the terms of any
indenture, lease, mortgage, deed of trust, credit agreement, loan agreement or
any other material agreement, contract or other instrument to which such Pledgor
or any of its Subsidiaries is a party or is otherwise bound, or by which it or
any of its properties or assets is bound or to which it may be subject; or
(iii) will violate any provision of the certificate of incorporation, by-laws,
certificate of partnership, partnership agreement, certificate of formation or
limited liability company agreement (or equivalent organizational documents), as
the case may be, of such Pledgor or any of its Subsidiaries;
     (vi) all of such Pledgor’s Collateral (consisting of Securities, Limited
Liability Company Interests or Partnership Interests) has been duly and validly
issued and acquired, is fully paid and non-assessable and is subject to no
options to purchase or similar rights;

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     (vii) each of such Pledgor’s Pledged Notes constitutes, or when executed by
the obligor thereof will constitute, the legal, valid and binding obligation of
such obligor, enforceable in accordance with its terms, except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally affecting
creditors’ rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law);
     (viii) the pledge, collateral assignment and delivery to the Pledgee of
such Pledgor’s Collateral consisting of Certificated Securities and Pledged
Notes pursuant to this Agreement creates a valid and perfected first priority
security interest in such Certificated Securities and Pledged Notes, and the
proceeds thereof, subject to no prior Lien or encumbrance or to any agreement
purporting to grant to any third party a Lien or encumbrance on the property or
assets of such Pledgor which would include the Securities and the Pledgee is
entitled to all the rights, priorities and benefits afforded by the UCC or other
relevant law as enacted in any relevant jurisdiction to perfect security
interests in respect of such Collateral; and
     (ix) “control” (as defined in Section 8-106 of the UCC) has been obtained
by the Pledgee over all of such Pledgor’s Collateral consisting of Securities
(including, without limitation, Notes which are Securities) with respect to
which such “control” may be obtained pursuant to Section 8-106 of the UCC except
to the extent that the obligation of the applicable Pledgor to provide the
Pledgee with “control” of such Collateral has not yet arisen under this
Agreement; provided that in the case of the Pledgee obtaining “control” over
Collateral consisting of a Security Entitlement, such Pledgor shall have taken
all steps in its control so that the Pledgee obtains “control” over such
Security Entitlement.
          (b) Each Pledgor covenants and agrees that it will defend the
Pledgee’s right, title and security interest in and to such Pledgor’s Collateral
and the proceeds thereof against the claims and demands of all persons
whomsoever; and each Pledgor covenants and agrees that it will have like title
to and right to pledge any other property at any time hereafter pledged to the
Pledgee by such Pledgor as Collateral hereunder and will likewise defend the
right thereto and security interest therein of the Pledgee and the other Secured
Creditors.
          (c) Each Pledgor covenants and agrees that it will take no action
which would violate any of the terms of any Secured Debt Agreement.
          17. LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED
ORGANIZATION AND/OR A TRANSMITTING UTILITY); JURISDICTION OF ORGANIZATION;
LOCATION; ORGANIZATIONAL IDENTIFICATION NUMBERS; CHANGES THERETO; ETC. The exact
legal name of each Pledgor, the type of organization of such Pledgor, whether or
not such Pledgor is a Registered Organization, the jurisdiction of organization
of such Pledgor, such Pledgor’s Location, the organizational identification
number (if any) of such Pledgor, and whether or not such Pledgor is a
Transmitting Utility, is listed on Annex A hereto for such Pledgor. No Pledgor
shall change its legal name, its type of organization (including without
limitation its status as (x) a Registered Organization, in the case of each
Registered Organization or (y) a Transmitting Utility or a Person which is not a

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Transmitting Utility, as the case may be), its jurisdiction of organization, its
Location or its organizational identification number (if any) from that listed
on Annex A hereto for such Pledgor or those that may have been established after
the date of this Agreement in accordance with the immediately succeeding
sentence of this Section 17. No Pledgor shall change its legal name, its type of
organization, its status as a Registered Organization (in the case of a
Registered Organization), its status as a Transmitting Utility or as a Person
which is not a Transmitting Utility, as the case may be, its jurisdiction of
organization, its Location, or its organizational identification number (if
any), except that any such changes shall be permitted (so long as not in
violation of the applicable requirements of the Secured Debt Agreements and so
long as same do not involve (x) a Registered Organization ceasing to constitute
same or (y) any Pledgor changing its jurisdiction of organization or Location
from the United States or a State thereof to a jurisdiction of organization or
Location, as the case may be, outside the United States or a State thereof) if
(i) it shall have given to the Pledgee not less than 15 days’ prior written
notice of each change to the information listed on Annex A (as adjusted for any
subsequent changes thereto previously made in accordance with this sentence),
together with a supplement to Annex A which shall correct all information
contained therein for the respective Pledgor, and (ii) in connection with such
respective change or changes, it shall have taken all action reasonably
requested by the Pledgee to maintain the security interests of the Pledgee in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect. In addition, to the extent that any Pledgor does not have
an organizational identification number on the date hereof and later obtains
one, such Pledgor shall promptly thereafter notify the Pledgee of such
organizational identification number and shall take all actions reasonably
satisfactory to the Pledgee to the extent necessary to maintain the security
interest of the Pledgee in the Collateral intended to be granted hereby fully
perfected and in full force and effect.
          18. PLEDGORS’ OBLIGATIONS ABSOLUTE, ETC. Prior to the Termination
Date, the obligations of each Pledgor under this Agreement shall be absolute and
unconditional and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by any circumstance or occurrence whatsoever, including, without limitation:
(i) any renewal, extension, amendment or modification of or addition or
supplement to or deletion from any Secured Debt Agreement or any other
instrument or agreement referred to therein, or any assignment or transfer of
any thereof (except to the extent that any such modification expressly and
directly relates to such Pledgor’s obligations under this Agreement); (ii) any
waiver, consent, extension, indulgence or other action or inaction under or in
respect of any such agreement or instrument including, without limitation, this
Agreement; (iii) any furnishing of any additional security to the Pledgee or its
assignee or any acceptance thereof or any release of any security by the Pledgee
or its assignee; (iv) any limitation on any party’s liability or obligations
under any such instrument or agreement or any invalidity or unenforceability, in
whole or in part, of any such instrument or agreement or any term thereof; or
(v) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to any Pledgor or any
Subsidiary of any Pledgor, or any action taken with respect to this Agreement by
any trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
          19. REGISTRATION, ETC. (a) If there shall have occurred and be
continuing an Event of Default then, and in every such case, upon receipt by any
Pledgor from the Pledgee a

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written request or requests that such Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Collateral consisting of
Securities, Limited Liability Company Interests or Partnership Interests of, or
owned by, such Pledgor, such Pledgor as soon as practicable and at its expense
will cause such registration to be declared effected (and be kept effective) and
will cause such qualification and compliance to be declared effected (and be
kept effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Collateral including, without limitation,
registration under the Securities Act, as then in effect (or any similar statute
then in effect), appropriate qualifications under applicable blue sky or other
state securities laws and appropriate compliance with any other governmental
requirements; provided, that the Pledgee shall furnish to such Pledgor such
information regarding the Pledgee as such Pledgor may reasonably request in
writing and as shall be required in connection with any such registration,
qualification or compliance. The respective Pledgor will cause the Pledgee to be
kept reasonably advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion thereof, will furnish to
the Pledgee such number of prospectuses, offering circulars or other documents
incident thereto as the Pledgee from time to time may reasonably request, and
will indemnify the Pledgee, each other Secured Creditor and all others
participating in the distribution of such Collateral against all claims, losses,
damages and liabilities caused by any untrue statement (or alleged untrue
statement) of a material fact contained therein (or in any related registration
statement, notification or the like) or by any omission (or alleged omission) to
state therein (or in any related registration statement, notification or the
like) a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same may have been
caused by an untrue statement or omission based upon information furnished in
writing to such Pledgor by the Pledgee or such other Secured Creditor expressly
for use therein.
          (b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Collateral consisting of Securities,
Limited Liability Company Interests or Partnership Interests pursuant to
Section 7 hereof, and the Collateral or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under the Securities Act,
as then in effect, the Pledgee may, in its sole and absolute discretion, sell
such Collateral, as the case may be, or part thereof by private sale in such
manner and under such circumstances as the Pledgee may deem reasonably necessary
or advisable in order that such sale may legally be effected without such
registration. Without limiting the generality of the foregoing, in any such
event the Pledgee, in its sole and absolute discretion (i) may proceed to make
such private sale notwithstanding that a registration statement for the purpose
of registering such Collateral or part thereof shall have been filed under such
Securities Act, (ii) may approach and negotiate with a single possible purchaser
to effect such sale, and (iii) may restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment, and not with a view to the distribution or sale of such Collateral
or part thereof. In the event of any such sale, the Pledgee shall incur no
responsibility or liability for selling all or any part of the Collateral at a
price which the Pledgee, in its sole and absolute discretion, in good faith
deems reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
          20. TERMINATION; RELEASE. (a) After the Termination Date, this
Agreement and the security interest created by hereby shall automatically
terminate (provided

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that all indemnities set forth herein including, without limitation, in
Section 11 hereof shall survive any such termination), and the Pledgee, at the
request and expense of such Pledgor, will execute and deliver to any Pledgor a
proper instrument or instruments (including UCC termination statements)
acknowledging the satisfaction and termination of this Agreement (including,
without limitation, UCC termination statements and instruments of satisfaction,
discharge and/or reconveyance), and will duly release from the security interest
created hereby and, and will duly assign, transfer and deliver to such Pledgor
(without recourse and without any representation or warranty) such of the
Collateral as may be in the possession of the Pledgee and as has not theretofore
been sold or otherwise applied or released pursuant to this Agreement, together
with any moneys at the time held by the Pledgee or any of its sub-agents
hereunder and, with respect to any Collateral consisting of an Uncertificated
Security, a Partnership Interest or a Limited Liability Company Interest (other
than an Uncertificated Security, Partnership Interest or Limited Liability
Company Interest credited on the books of a Clearing Corporation or Securities
Intermediary), a termination of the agreement relating thereto executed and
delivered by the issuer of such Uncertificated Security pursuant to
Section 3.2(a)(ii) or by the respective partnership or limited liability company
pursuant to Section 3.2(a)(iv)(2). As used in this Agreement, “Termination Date”
shall mean the date upon which the Total Commitment under the Credit Agreement
has been terminated and all Interest Rate Protection Agreements and Other
Hedging Agreements entered into with any Other Creditors have been terminated,
no Note under (and as defined in) the Credit Agreement is outstanding and all
Loans thereunder have been repaid in full, all Letters of Credit issued under
the Credit Agreement have been terminated, and all other Obligations (other than
indemnities described in Section 11 hereof and described in Section 13.01 of the
Credit Agreement, and any other indemnities set forth in any other Security
Documents, in each case which are not then due and payable) then due and payable
have been paid in full in cash in accordance with the terms thereof.
          (b) In the event that any part of the Collateral is sold or otherwise
disposed of (to a Person other than a Credit Party) (x) at any time prior to the
time at which all Credit Document Obligations have been paid in full and all
Commitments and Letters of Credit under the Credit Agreement have been
terminated, in connection with a sale or other disposition permitted by Section
9.02 of the Credit Agreement or is otherwise released at the direction of the
Required Lenders (or all the Lenders if required by Section 13.12 of the Credit
Agreement) or (y) at any time thereafter, to the extent permitted by the other
Secured Debt Agreements, and in the case of clauses (x) and (y), the proceeds of
such sale or disposition (or from such release) are applied in accordance with
the terms of the Credit Agreement or such other Secured Debt Agreement, as the
case may be, to the extent required to be so applied, the Pledgee, at the
request and expense of such Pledgor, will duly release from the security
interest created hereby (and will execute and deliver such documentation,
including termination or partial release statements and the like in connection
therewith) and assign, transfer and deliver to such Pledgor (without recourse
and without any representation or warranty) such of the Collateral as is then
being (or has been) so sold or released and as may be in the possession of the
Pledgee (or, in the case of Collateral held by any sub-agent designated pursuant
to Section 4 hereto, such sub-agent) and has not theretofore been released
pursuant to this Agreement.
          (c) At any time that any Pledgor desires that Collateral be released
as provided in the foregoing Section 20(a) or (b), it shall deliver to the
Pledgee (and the relevant sub-agent, if any, designated pursuant to Section 4
hereof) a certificate signed by an authorized

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officer of such Pledgor stating that the release of the respective Collateral is
permitted pursuant to Section 20(a) or (b) hereof.
          (d) The Pledgee shall have no liability whatsoever to any other
Secured Creditor as the result of any release of Collateral by it in accordance
with this Section 20.
          21. NOTICES, ETC. All notices and communications hereunder shall be in
writing and sent or delivered by mail, telegraph, telex, telecopy, cable or
overnight courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier, except that notices and communications to the Pledgee or
any Pledgor shall not be effective until received by the Pledgee or such
Pledgor, as the case may be. All such notices and other communications shall be
in writing and addressed as follows:
          (a) if to any Pledgor, at:
c/o Town Sports International, LLC
888 Seventh Avenue
25th Floor
New York, New York 10106
Attention: Richard Pyle
Telephone No.: (212) 246-6700
Telecopier No.: (212) 664-8906
          (b) if to the Pledgee, at:
60 Wall Street
New York, New York 10005
Attention: Carin Keegan
Telephone No.: (212) 250-6083
Telecopier No.: (212) 797-5690
          (c) if to any Lender Creditor, at such address as such Lender Creditor
shall have specified in the Credit Agreement;
          (d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to the Borrower and the Pledgee;
or at such other address or addressed to such other individual as shall have
been furnished in writing by any Person described above to the party required to
give notice hereunder.
          22. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
except in accordance with the requirements specified in Section 10.2 of the
Security Agreement.
          23. MISCELLANEOUS. This Agreement shall and shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of and be

23

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enforceable by each of the parties hereto and their respective successors and
assigns, provided that no Pledgor may assign any of its rights or obligations
except in accordance with the terms of the other Secured Debt Agreements.
          24. HEADINGS DESCRIPTIVE. The headings of the several Sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
          25. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN
EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. EACH PLEDGOR HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH
PLEDGOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE
AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH
PLEDGOR. EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
ANY SUCH PLEDGOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 21 ABOVE,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH PLEDGOR HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF
PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE PLEDGEE UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANY PLEDGOR IN ANY OTHER JURISDICTION.
          (b) EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY

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SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
          (c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
          26. PLEDGOR’S DUTIES. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Pledgor shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Pledgee shall not have any obligations or liabilities with
respect to any Collateral by reason of or arising out of this Agreement, nor
shall the Pledgee be required or obligated in any manner to perform or fulfill
any of the obligations of any Pledgor under or with respect to any Collateral.
          27. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with each Pledgor and the
Pledgee.
          28. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
          29. RECOURSE. This Agreement is made with full recourse to each
Pledgor and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of such Pledgor contained herein and in the other
Secured Debt Agreements and otherwise in writing in connection herewith or
therewith.
          30. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement or any other
Credit Document shall become a Pledgor hereunder by (x) executing a counterpart
hereof or a Joinder Agreement and delivering the same to the Pledgee,
(y) delivering supplements to Annexes A through G hereto as are necessary to
cause such annexes to be complete and accurate with respect to such additional
Pledgor on such date and (z) taking all actions as specified in this Agreement
as would have been taken by such Pledgor had it been an original party to this
Agreement, in each case with all documents required above to be delivered to the
Pledgee and with all documents and actions required above to be taken to the
reasonable satisfaction of the Pledgee.
          31. LIMITED OBLIGATIONS. It is the desire and intent of each Pledgor
and the Secured Creditors that this Agreement shall be enforced against each
Pledgor to the fullest extent permissible under the laws applied in each
jurisdiction in which enforcement is sought.

25

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Notwithstanding anything to the contrary contained herein, in furtherance of the
foregoing, it is noted that the obligations of each Pledgor constituting a
Subsidiary Guarantor have been limited as provided in the Subsidiaries Guaranty.
          32. RELEASE OF PLEDGORS. If at any time all of the Equity Interests of
any Pledgor owned by the Borrower or any of its Subsidiaries are sold to a
Person other than a Credit Party in a transaction permitted pursuant to the
Credit Agreement (and which does not violate the terms of any other Secured Debt
Agreement then in effect), then, such Pledgor shall be released as a Pledgor
pursuant to this Agreement without any further action hereunder (it being
understood that the sale of all of the Equity Interests in any Person that owns,
directly or indirectly, all of the Equity Interests in any Pledgor shall be
deemed to be a sale of all of the Equity Interests in such Pledgor for purposes
of this Section), and the Pledgee is authorized and directed to execute and
deliver such instruments of release as are reasonably satisfactory to it. At any
time that the Borrower desires that a Pledgor be released from this Agreement as
provided in this Section 32, the Borrower shall deliver to the Pledgee a
certificate signed by a principal executive officer of the Borrower stating that
the release of such Pledgor is permitted pursuant to this Section 32. If
requested by Pledgee (although the Pledgee shall have no obligation to make any
such request), the Borrower shall furnish legal opinions (from counsel
reasonably acceptable to the Pledgee) to the effect set forth in the immediately
preceding sentence. The Pledgee shall have no liability whatsoever to any other
Secured Creditor as a result of the release of any Pledgor by it in accordance
with, or which it believes to be in accordance with, this Section 32.
* * * *

26

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     IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement
to be executed by their duly elected officers duly authorized as of the date
first above written.

             
 
  TOWN SPORTS INTERNATIONAL, LLC, as a Pledgor  
 
           
 
  By:   /s/ Richard Pyle
 
Name: Richard Pyle    
 
      Title: Chief Financial Officer    

     
 
  TSI 217 BROADWAY, LLC
 
  TSI ALEXANDRIA, LLC
 
  TSI ALLSTON, LLC
 
  TSI ANDOVER, LLC
 
  TSI ARDMORE, LLC
 
  TSI ARTHRO-FITNESS SERVICES, LLC
 
  TSI ASTORIA, LLC
 
  TSI BATTERY PARK, LLC
 
  TSI BETHESDA, LLC
 
  TSI BAY RIDGE 86TH STREET, LLC
 
  TSI BAYRIDGE, LLC
 
  TSI BOYLSTON, LLC
 
  TSI BROADWAY, LLC
 
  TSI BROOKLYN BELT, LLC
 
  TSI BRUNSWICK, LLC
 
  TSI BULFINCH, LLC
 
  TSI BUTLER, LLC
 
  TSI CARMEL, LLC
 
  TSI CASH MANAGEMENT, LLC
 
  TSI CENTRAL SQUARE, LLC
 
  TSI CHERRY HILL, LLC
 
  TSI CHEVY CHASE, LLC
 
  TSI CLARENDON, LLC
 
  TSI CLIFTON, LLC
 
  TSI COBBLE HILL, LLC
 
  TSI COLONIA, LLC
 
  TSI COLUMBIA HEIGHTS, LLC
 
  TSI COMMACK, LLC,
      each as a Pledgor

             
 
  By:   /s/ Richard Pyle
 
Name: Richard Pyle    
 
      Title: Chief Financial Officer    

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  TSI CONNECTICUT AVENUE, LLC
 
  TSI COURT STREET, LLC
 
  TSI CROTON, LLC
 
  TSI DANBURY, LLC
 
  TSI DOBBS FERRY, LLC
 
  TSI DAVIS SQUARE, LLC
 
  TSI DOWNTOWN CROSSING, LLC
 
  TSI DUPONT CIRCLE, INC.
 
  TSI DUPONT II, INC.
 
  TSI EAST MEADOW, LLC
 
  TSI EAST 23, LLC
 
  TSI EAST 31, LLC
 
  TSI EAST 34, LLC
 
  TSI EAST 36, LLC
 
  TSI EAST 41, LLC
 
  TSI EAST 48, LLC
 
  TSI EAST 51, LLC
 
  TSI EAST 59, LLC
 
  TSI EAST 76, LLC
 
  TSI EAST 86, LLC
 
  TSI EAST 91, LLC
 
  TSI ENGLEWOOD, LLC
 
  TSI F STREET, LLC
 
  TSI FAIRFAX, LLC
 
  TSI FENWAY, LLC
 
  TSI FIFTH AVENUE, INC.
 
  TSI FIRST AVENUE, LLC
 
  TSI FOREST HILLS, LLC
 
  TSI FORT LEE, LLC
 
  TSI FRAMINGHAM, LLC
 
  TSI FRANKLIN (MA), LLC
 
  TSI FRANKLIN PARK, LLC
 
  TSI FREEHOLD, LLC
 
  TSI GALLERY PLACE, LLC
 
  TSI GARDEN CITY, LLC
 
  TSI GEORGETOWN, LLC
 
  TSI GERMANTOWN, LLC
 
  TSI GLENDALE, LLC
 
  TSI GLOVER, LLC
 
  TSI GRAND CENTRAL, LLC
 
  TSI GREAT NECK, LLC,
      each as a Pledgor

             
 
  By:   /s/ Richard Pyle
 
Name: Richard Pyle    
 
      Title: Chief Financial Officer    

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  TSI GREENWICH, LLC
 
  TSI HARTSDALE, LLC
 
  TSI HAWTHORNE, LLC
 
  TSI HERALD, LLC
 
  TSI HICKSVILLE, LLC
 
  TSI HIGHPOINT, LLC
 
  TSI HOBOKEN, LLC
 
  TSI HOBOKEN NORTH, LLC
 
  TSI HOLDINGS (CIP), LLC
 
  TSI HOLDINGS (DC), LLC
 
  TSI HOLDINGS (IP), LLC
 
  TSI HOLDINGS (MA), LLC
 
  TSI HOLDINGS (MD), LLC
 
  TSI HOLDINGS (NJ), LLC
 
  TSI HOLDINGS (PA), LLC
 
  TSI HOLDINGS (VA), LLC
 
  TSI HUNTINGTON, LLC
 
  TSI INSURANCE, INC.
 
  TSI INTERNATIONAL, INC.
 
  TSI IRVING PLACE, LLC
 
  TSI JERSEY CITY, LLC
 
  TSI K STREET, LLC
 
  TSI LARCHMONT, LLC
 
  TSI LEXINGTON (MA), LLC
 
  TSI LINCOLN, LLC
 
  TSI LIVINGSTON, LLC
 
  TSI LONG BEACH, LLC
 
  TSI LYNNFIELD, LLC
 
  TSI M STREET, LLC
 
  TSI MADISON, INC.
 
  TSI MAHWAH, LLC
 
  TSI MAMARONECK, LLC
 
  TSI MARKET STREET, LLC
 
  TSI MARLBORO, LLC
 
  TSI MATAWAN, LLC
 
  TSI MERCER STREET, LLC
 
  TSI MIDWOOD, LLC
 
  TSI MONTCLAIR, LLC
 
  TSI MORRIS PARK, LLC
 
  TSI MURRAY HILL, LLC,
      each as a Pledgor

             
 
  By:   /s/ Richard Pyle
 
Name: Richard Pyle    
 
      Title: Chief Financial Officer    

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  TSI NANUET, LLC
 
  TSI NATICK, LLC
 
  TSI NEW ROCHELLE, LLC
 
  TSI NEWARK, LLC
 
  TSI NEWBURY STREET, LLC
 
  TSI NEWTON, LLC
 
  TSI NO SWEAT, LLC
 
  TSI NORTH BETHESDA, LLC
 
  TSI NORWALK, LLC
 
  TSI OCEANSIDE, LLC
 
  TSI OLD BRIDGE, LLC
 
  TSI PARSIPPANY, LLC
 
  TSI PLAINSBORO, LLC
 
  TSI PORT JEFFERSON, LLC
 
  TSI PRINCETON, LLC
 
  TSI PRINCETON NORTH, LLC
 
  TSI RADNOR, LLC
 
  TSI RAMSEY, LLC
 
  TSI READE STREET, LLC
 
  TSI REGO PARK, LLC
 
  TSI RIDGEWOOD, LLC
 
  TSI RODIN PLACE, LLC
 
  TSI RYE, INC.
 
  TSI SCARSDALE, LLC
 
  TSI SEAPORT, LLC
 
  TSI SHERIDAN, LLC
 
  TSI SILVER SPRING, LLC
 
  TSI SMITHTOWN, LLC
 
  TSI SOCIETY HILL, LLC
 
  TSI SOHO, LLC
 
  TSI SOMERS, LLC
 
  TSI SOMERSET, LLC
 
  TSI SOUTH BETHESDA, LLC
 
  TSI SOUTH END, LLC
 
  TSI SOUTH PARK SLOPE, LLC
 
  TSI SOUTH STATION, LLC
 
  TSI SPRINGFIELD, LLC
 
  TSI STAMFORD DOWNTOWN, LLC
 
  TSI STAMFORD POST, LLC
 
  TSI STAMFORD RINKS, LLC
 
  TSI STATEN ISLAND, LLC,
      each as a Pledgor

             
 
  By:   /s/ Richard Pyle
 
Name: Richard Pyle    
 
      Title: Chief Financial Officer    

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  TSI STERLING, LLC
 
  TSI SYOSSET, LLC
 
  TSI UNIVERSITY MANAGEMENT, LLC
 
  TSI VARICK STREET, LLC
 
  TSI WALL STREET, LLC
 
  TSI WALTHAM, LLC
 
  TSI WASHINGTON, INC.
 
  TSI WATER STREET, LLC
 
  TSI WATERTOWN, LLC
 
  TSI WELLESLEY, LLC
 
  TSI WELLINGTON CIRCLE, LLC
 
  TSI WEST CALDWELL, LLC
 
  TSI WEST NEWTON, LLC
 
  TSI WEST NYACK, LLC
 
  TSI WEST SPRINGFIELD, LLC
 
  TSI WEST 14, LLC
 
  TSI WEST 16, LLC
 
  TSI WEST 23, LLC
 
  TSI WEST 38, LLC
 
  TSI WEST 41, LLC
 
  TSI WEST 44, LLC
 
  TSI WEST 48, LLC
 
  TSI WEST 52, LLC
 
  TSI WEST 73, LLC
 
  TSI WEST 76, LLC
 
  TSI WEST 80, LLC
 
  TSI WEST 94, LLC
 
  TSI WEST 115TH STREET, LLC
 
  TSI WEST 125, LLC
 
  TSI WEST 145TH STREET, LLC
 
  TSI WESTPORT, LLC
 
  TSI WESTWOOD, LLC
 
  TSI WEYMOUTH, LLC
 
  TSI WHITE PLAINS CITY CENTER, LLC
 
  TSI WHITE PLAINS, LLC
 
  TSI WHITESTONE, LLC
 
  TSI WOODMERE, LLC,
      each as a Pledgor

             
 
  By:   /s/ Richard Pyle
 
Name: Richard Pyle    
 
      Title: Chief Financial Officer    

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          Accepted and Agreed to:    
 
        DEUTSCHE BANK TRUST COMPANY AMERICAS,
      as Collateral Agent    
 
       
By:
  /s/ Carin Keegan    

 
 
 Name: Carin Keegan    
 
   Title:   Vice President    
 
       
By:
  /s/ May Kay Coyle    
 
 
 
Name: May Kay Coyle    
 
  Title:   Managing Director    

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