EX-10.3



 





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




 




 









 





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	 






i









 






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






ii









 








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




1









 








          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



2









 








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.




3









 








          “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.




4









 








          “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.




5









 








          “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.




6









 








          “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



7









 







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;



8









 






     (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


9









 







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



10









 






     (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


11









 







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


12









 







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


13









 







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





14









 







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





15









 







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


16









 









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,



17









 








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;



18









 






     (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


19









 







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





20









 







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


21









 







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


22









 







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









 







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





24









 







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









 







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









 











     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	 	 






27









 






	 	 	 
	 

	 	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	 	 






28









 






	 	 	 
	 

	 	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	 	 






29









 






	 	 	 
	 

	 	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	 	 






30









 






	 	 	 
	 

	 	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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