Document:

exv10w2

 

EXHIBIT 10.2

EXECUTION FORM

SECURITY AGREEMENT

     This SECURITY AGREEMENT is made as of April 15, 2005 (the “Agreement”), by Life Time Fitness,
Inc., a Minnesota corporation, with an office at 6442 City West Parkway, Eden Prairie, MN 55344
(the “Borrower”), in favor of U. S. Bank National Association, a national banking association with
an office at U. S. Bancorp Center, 800 Nicollet Mall, Minneapolis, MN 55402, as administrative
agent (in such capacity the “Agent”) for the benefit of the “Secured Parties”(as hereinafter
defined).

RECITALS

     A. The Borrower, the banks now or hereafter parties thereto (the “Bank(s)”), the Agent, USBNA,
as Lead Arranger, and J. P. Morgan Securities Inc., as Syndication Agent, are the parties to that
certain Credit Agreement dated as of even date herewith (the Credit Agreement as it may be amended,
modified, supplemented, increased or restated from time to time being the “Credit Agreement”).

     B. As a condition to the effectiveness of the Credit Agreement and to extensions of credit
thereunder, the Banks have required that the Borrower grant a security interest in its assets in
accordance with this Agreement

     C. The Borrower has determined that the execution, delivery and performance of this Agreement
are in its best business and pecuniary interest.

     NOW, THEREFORE, for good and valuable consideration the receipt and adequacy of which are
hereby acknowledged by each of the parties hereto, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     As used herein, the following terms shall have the meanings set forth in this Section:

     “Accounts” shall have the meaning provided in the UCC.

     “Agent” shall have the meaning provided in the preamble hereto.

     “Bank(s)” shall have the meaning provided in the recitals hereto.

     “Borrower” shall have the meaning provided in the preamble hereto.

     “Chattel Paper” shall have the meaning provided in the UCC and shall include, without
limitation, all Electronic Chattel Paper and Tangible Chattel Paper.

 

 

     “Collateral” shall mean all property in which a security interest is granted
hereunder.

     “Commercial Tort Claim” shall have the meaning provided in the UCC.

     “Controlled Property” shall mean property of every kind and description in which the
Borrower has or may acquire any interest, now or hereafter at any time in the possession or control
of the Agent or any other Secured Party for any reason and all dividends and distributions on or
other rights in connection with such property.

     “Credit Agreement” shall have the meaning provided in the recitals hereto.

     “Data Processing Records and Systems” shall mean all of Borrower’s now existing or
hereafter acquired electronic data processing and computer records, software (including, without
limitation, all “Software” as defined in the UCC), systems, manuals, procedures, disks, tapes and
all other storage media and memory.

     “Default” shall have the meaning provided in the Credit Agreement.

     “Deposit Accounts” shall have the meaning provided in the UCC and shall include,
without limitation, any demand, time, savings, passbook or similar account maintained with a bank.

     “Document” shall have the meaning provided in the UCC.

     “Electronic Chattel Paper” shall have the meaning provided in the UCC.

     “Equipment” shall have the meaning provided in the UCC.

     “Event of Default” shall have the meaning specified in Article VI hereof.

     “Fixtures” shall have the meaning provided in the UCC.

     “General Intangibles” shall have the meaning provided in the UCC and shall include,
without limitation, all Payment Intangibles.

     “Goods” shall have the meaning provided in the UCC and shall include embedded
“Software” to the extent included in “Goods” as defined in the UCC.

     “Instruments” shall have the meaning provided in the UCC.

     “Insurance Proceeds” shall mean all proceeds of any and all insurance policies payable
to Borrower with respect to any Collateral, or on behalf of any Collateral, whether or not such
policies are issued to or owned by Borrower.

2

 

     “Inventory” shall have the meaning provided in the UCC.

     “Investment Property” shall have the meaning provided in the UCC.

     “Letter-of-Credit Rights” shall have the meaning provided in the UCC.

     “Obligations” shall have the meaning provided in the Credit Agreement.

     “Payment Intangibles” shall have the meaning provided in the UCC.

     “Proceeds” shall have the meaning provided in the UCC.

     “Products” shall mean any goods now or hereafter manufactured, processed or assembled
with any of the Collateral.

     “Pro Rata Share” shall mean, when calculating a Secured Party’s portion of any
distribution or amount, that amount (expressed as a percentage) equal to:

     (a) in the case of each Bank, such Bank’s Total Percentage, as adjusted pursuant to
Section 8.10 of the Credit Agreement; and

     (b) in the case of each Rate Protection Provider, the percentage equivalent of a
fraction, the numerator of which are the Rate Protection Obligations then due and payable to
such Rate Protection Provider and the denominator of which is the sum of the Revolving
Commitment Amounts (or, if the Revolving Credit Commitments have terminated, the Total
Revolving Outstandings) of all Banks and all Rate Protection Obligations then due and
payable.

     “Rate Protection Obligations” shall have the meaning provided in the Credit Agreement.

     “Secured Obligations” shall mean the Obligations.

     “Secured Party(ies)” shall mean individually or collectively, as the case may be, each
Bank, each Rate Protection Provider and the Agent.

     “Supporting Obligations” shall have the meaning provided in the UCC.

     “Tangible Chattel Paper” shall have the meaning provided in the UCC.

     “UCC” shall mean the Uniform Commercial Code as enacted in the State of Minnesota, as
amended from time to time; provided, however, that: (a) to the extent that the UCC
is used to define any term herein, and such term is defined differently in different Articles of
the UCC, the definition of such term contained in Article 9 shall govern; and (b) if, by reason of
mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies
with respect to, the Agent’s security interest in any Collateral is governed by the Uniform
Commercial Code

3

 

as enacted and in effect in a jurisdiction other than the State of Minnesota, the term “UCC” shall
mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes of the provisions thereof relating to such attachment, perfection or priority of, or
remedies with respect to, the Agent’s security interest and for purposes of definitions related to
such provisions.

     Other terms defined herein shall have the meanings ascribed to them herein. All capitalized
terms used herein, and not specifically defined herein, shall have the meaning ascribed to them in
the Credit Agreement.

ARTICLE II

LIENS

     As security for the payment of all Secured Obligations when due, at stated maturity, by
acceleration or otherwise, the Borrower hereby grants to the Agent, for itself and the pro rata use
and benefit of the other Secured Parties, a security interest in all of the Borrower’s right, title
and interest in and to the following, whether now owned or existing or hereafter acquired or
arising:

	 	 	 
	

	 	Accounts;
	

	 	Chattel Paper;
	

	 	Commercial Tort Claims, if any, described on Exhibit B attached hereto and incorporated herein by reference;
	

	 	Controlled Property;
	

	 	Deposit Accounts;
	

	 	Documents;
	

	 	Equipment and Fixtures;
	

	 	General Intangibles;
	

	 	Instruments;
	

	 	Inventory;
	

	 	Investment Property;
	

	 	Letter-of-Credit Rights;
	

	 	Proceeds (whether cash or non-cash Proceeds, including Insurance Proceeds and non-cash Proceeds of all types);
	

	 	Products of all the foregoing; and
	

	 	Supporting Obligations;

provided, that the Collateral does not include: (a) the Borrower’s membership interest in
Bloomingdale LIFE TIME Fitness, L.L.C., an Illinois limited liability company; and (b) any right,
title or interest in any lease, contract, license, license agreement or other General Intangible
covering personal or real property, or any fixture, of Borrower to the extent that under the terms
of: (i) such lease, contract, license, license agreement or other General Intangible, or applicable
law with respect thereto, the grant of a security interest or lien therein to the Agent is
prohibited and permits the other party thereto to declare Borrower in default thereunder; or (ii)
any other enforceable agreement relating to any such lease, contract, license, license agreement or
other General Intangible covering personal or real property, or any fixture, of Borrower, the grant
of a

4

 

security interest or lien therein to the Agent is prohibited or permits the other party thereto to
declare Borrower in default thereunder and, in any case described in this clause (b), such
prohibition has not been waived or the consent of the relevant other party has not been obtained,
provided further, that, in any case described in this clause (b), the foregoing exclusion shall not
apply if any such prohibition is unenforceable under the applicable UCC or other applicable law .

ARTICLE III

REPRESENTATIONS AND COVENANTS OF THE BORROWER

     The Borrower represents, warrants and covenants that:

     3.1 Authorization. The execution and performance of this Agreement have been duly
authorized by all necessary action and do not and will not: (a) require any consent or approval of
the stockholders of any entity, or the consent of any governmental entity that has not been
obtained; or (b) violate any indenture, loan or credit agreement or any Related Agreement or any
other material agreement, lease or instrument to which the Borrower is a party or by which it or
any of its properties may be bound.

     3.2 Title to Collateral. The Borrower has good and marketable title to all of the
Collateral and none of the Collateral is subject to any Lien except for the Lien created pursuant
to this Agreement or other Liens permitted by Section 6.12 of the Credit Agreement (such other
Liens being the “Permitted Liens”).

     3.3 Disposition or Encumbrance of Collateral. The Borrower will not encumber, sell or
otherwise transfer or dispose of the Collateral without the prior written consent of the Agent
except as provided in this Section, the Lien created by this Agreement or for Permitted Liens.
Until a Default or Event of Default has occurred and is continuing, the Borrower may:

     (a) sell Inventory in the ordinary course of business provided that the Borrower
receives as consideration for such sale an amount not less than the fair value of the
Inventory at the time of such sale; and

     (b) sell, transfer or otherwise dispose of Equipment and Fixtures in the ordinary
course of business to the extent permitted by Section 6.2 of the Credit Agreement.

     3.4 Validity of Accounts. The Borrower warrants that all Collateral consisting of
Accounts, Chattel Paper and Instruments included in the Borrower’s financial statements or books
and records are bona fide existing obligations created by the sale and actual delivery of Inventory
or the rendition of services to customers in the ordinary course of business, which the Borrower
owns free and clear of any Lien other than the Lien created by this Agreement or other Permitted
Liens and which are then unconditionally owing to the Borrower without defenses, offset or
counterclaim except those arising in the ordinary course of business that are immaterial in the
aggregate, and that the unpaid principal amount of any Chattel Paper or Instrument and

5

 

any security therefor is and will be as represented to the Agent on the date of the delivery
thereof to the Agent.

     3.5 Maintenance of Tangible Collateral. The Borrower will maintain the tangible
Collateral in good condition and repair, normal wear and tear excepted. At the time of attachment
and perfection of the security interest granted pursuant hereto and thereafter, all tangible
Collateral will be located and will be maintained only at the locations in which the Agent has
perfected its Lien in such tangible Collateral. Except as otherwise permitted by Section 3.3, the
Borrower will not remove such Collateral from such locations unless, prior to any such removal, the
Borrower has given written notice to the Agent of the location or locations to which the Borrower
desires to remove the Collateral, the Agent has given its written consent to such removal and the
Borrower has delivered to the Agent acknowledgment copies of financing statements filed where
appropriate to continue the perfection of the Agent’s Lien interest as a first priority lien
therein. The Agent’s Lien attaches to all of the Collateral wherever located and the Borrower’s
failure to inform the Agent of the location of any item or items of Collateral shall not impair the
Secured Parties’ security interest therein.

     3.6 Notation on Chattel Paper. For purposes of the Lien granted pursuant to this
Agreement, the Agent has been granted a direct Lien in all Chattel Paper constituting part of the
Collateral and such Chattel Paper is not claimed merely as Proceeds of Inventory. Upon the Agent’s
request, the Borrower will deliver to the Agent the original of all Chattel Paper. The Borrower
will not execute any copies of such Chattel Paper constituting part of the Collateral other than
those which are clearly marked as a copy. The Agent may stamp any such Chattel Paper with a legend
reflecting the Agent’s Lien therein.

     3.7 Instruments as Proceeds; Deposit Accounts. Notwithstanding any other provision in
this Agreement concerning Instruments, the Borrower covenants that the Borrower will deposit all
Instruments constituting cash Proceeds (for example, money and checks) in Deposit Accounts
permitted by Section 5.15 of the Credit Agreement. Borrower has granted to the Agent a direct
security interest in all Deposit Accounts constituting part of the Collateral and such Deposit
Accounts are not claimed merely as Proceeds of other Collateral.

     3.8 Protection of Collateral. All expenses of protecting, storing, warehousing,
insuring, handling and shipping of the Collateral, all costs of keeping the Collateral free of any
liens, encumbrances and security interests prohibited by this Agreement and of removing the same if
they should arise, and any and all excise, property, sales and use taxes imposed by any state,
federal or local authority on any of the Collateral or in respect of the sale thereof, shall be
borne and paid by the Borrower and if the Borrower fails to promptly pay any thereof when due, the
Agent may, at its option, but shall not be required to pay the same whereupon the same shall
constitute Secured Obligations and shall bear interest at the Default Rate applicable to Base Rate
Advances (the “Default Rate”) and shall be secured by the Lien granted hereunder.

     3.9 Insurance. The Borrower will procure and maintain, or cause to be procured and
maintained, insurance issued by responsible insurance companies insuring the Collateral against
damage and loss by theft, fire, collision (in the case of motor vehicles), and such other risks as

6

 

are usually carried by owners of similar properties or as may be requested by the Agent in an
amount equal to the replacement value thereof, and, in any event, in an amount sufficient to avoid
the application of any co-insurance provisions and payable, in the case of any loss in excess of
the amount permitted to be adjusted and collected by the Borrower pursuant to Article V of this
Agreement, to the Borrower and the Agent jointly. All such insurance shall contain an agreement by
the insurer to provide the Agent with 30 days’ prior notice of cancellation and an agreement that
the interest of the Agent shall not be impaired or invalidated by any act or neglect of the
Borrower nor by the occupation of the premises wherein such Collateral is located for purposes more
hazardous than are permitted by said policy. The Borrower will maintain, with financially sound
and reputable insurers, insurance with respect to its properties and business against such
casualties and contingencies of such types (which may include, without limitation, public and
product liability, larceny, embezzlement, business interruption or other criminal misappropriation
insurance) and in such amounts as is customary in the case of reputable similar situated companies
engaged in the same or similar businesses. The Borrower will deliver evidence of such insurance
and the policies of insurance or copies thereof to the Agent upon request.

     3.10 Compliance with Law. The Borrower will not use the Collateral, or knowingly
permit the Collateral to be used, for any unlawful purpose or in violation of any federal, state or
municipal law where such use could reasonably be expected to constitute a Material Adverse
Occurrence.

     3.11 Books and Records; Access.

     (a) The Borrower will permit the Agent, each other Secured Party and their respective
representatives to examine the Borrower’s books and records (including Data Processing
Records and Systems) with respect to the Collateral and make extracts therefrom and copies
thereof at any time and from time to time as provided in Section 5.5 of the Credit
Agreement.

     (b) The Agent shall have authority, at any time, to place, or require the Borrower to
place, upon the Borrower’s books and records relating to Accounts, Chattel Paper and other
rights to payment covered by the security interest granted hereby a notation or legend
stating that such Accounts, Chattel Paper and other rights to payment are subject to the
Agent’s Lien.

     3.12 Notice of Default. The Borrower will give notice to the Agent of the occurrence
of a Default or Event of Default in accordance with Section 5.1(e) of the Credit Agreement.

     3.13 Additional Documentation. The Borrower will execute, from time to time,
authorizes the Agent to execute from time to time as the Borrower’s attorney-in-fact, and/or file
such financing statements, assignments, and other documents covering the Collateral, including
Proceeds, as the Agent may reasonably request or require in order to create, evidence, perfect,
maintain or continue its Lien in the Collateral (including additional Collateral acquired by the
Borrower after the date hereof), and the Borrower will pay the cost of filing the same in all

7

 

public offices in which the Agent may deem filing to be appropriate; and will notify the Agent
promptly upon acquiring any additional Collateral that may require an additional filing. Upon the
Agent’s request made following the occurrence and during the continuance of an Event of Default,
the Borrower will deliver all the Borrower’s Documents, Chattel Paper and Instruments to the Agent.

     3.14 Chief Executive Office; State of Incorporation. The location of the chief
executive office of the Borrower is located in the State set forth in the preamble hereto and will
not be changed from such state without 30 days’ prior written notice to the Agent. The Borrower
warrants that its books and records concerning Accounts and Chattel Paper are located at its chief
executive office. Borrower’s State of organization is the State set forth in the preamble hereto
and such State has been its State of organization since the date of Borrower’s organization.
Borrower will not change its State of organization from such State without 30 days’ prior written
notice to Agent, Agent has given its written consent to such change, and Borrower has delivered to
Agent acknowledgment copies of financing statements filed where appropriate to continue the
perfection of Agent’s security interest as a first priority security interest therein.

     3.15 Name of the Borrower. Borrower’s exact legal name and type of legal entity is as
set forth in the preamble hereto. Borrower will not change its legal name without 30 days’ prior
written notice to the Agent, the Agent has given its written consent to such change, and Borrower
has delivered to the Agent acknowledgment copies of financing statements filed where appropriate to
continue the perfection of the Agent’s security interest as a first priority security interest in
the Collateral. The Borrower has not used any other name within the past five years except those
described on Exhibit A attached hereto. Neither the Borrower nor any predecessor in title to any
of the Collateral has executed any financing statements or security agreements presently effective
as to the Collateral except those described on Exhibit A attached hereto.

     3.16 Claims etc. After the occurrence and during the continuance of an Event of
Default, the Agent may at all times settle or adjust disputes and claims directly with the obligor
on any Collateral for amounts and upon terms which the Agent considers commercially reasonable. No
discount, credit, adjustment or allowance shall be granted by the Borrower to any obligor on any
Collateral without the Agent’s written consent other than discounts, credits adjustments or
allowances made or granted by the Borrower in the ordinary course of business prior to the
occurrence and during the continuance of an Event of Default.

     3.17 Power of Attorney. The Borrower appoints the Agent, or any other person whom the
Agent may from time to time designate, as the Borrower’s attorney with power, to: (a) endorse the
Borrower’s name on any checks, notes, acceptances, drafts or other forms of payment or security
evidencing or relating to any Collateral that may come into the Agent’s or any Secured Party’s
possession; (b) sign the Borrower’s name on any invoice or bill of lading relating to any
Collateral, on drafts against customers, on schedules and confirmatory assignments of Accounts,
Chattel Paper, Documents or other Collateral on notices of assignment, financing statements under
the UCC and other public records, on verifications of accounts and on notices to customers; (c)
notify the post office authorities to change the address

8

 

for delivery of the Borrower’s mail to an address designated by the Agent; (d) receive and
open all mail addressed to the Borrower, other than correspondence from the Borrower’s attorneys;
(e) send requests for verification of Accounts, Chattel Paper, Instruments or other Collateral to
customers; and (f) do all things necessary to carry out this Agreement; provided,
however, that the powers granted pursuant to this Section 3.17 shall be exercisable only
after the occurrence and during the continuance of an Event of Default except to the extent that
the pre-Event of Default exercise of such power of attorney is necessary to: (x) perfect, or
continue the perfection of, the Agent’s Lien in the Collateral; or (y) preserve or protect the
Collateral following the Borrower’s failure to take action reasonably requested by the Agent as
being necessary to preserve or protect the Collateral within five (5) Business Days after the Agent
has requested that Borrower take the requested action. The Borrower ratifies and approves all
acts of the attorney taken within the scope of the authority granted. Neither the Agent nor the
attorney will be liable for any acts of commission or omission nor for any error in judgment or
mistake of fact or law. This power, being coupled with an interest, is irrevocable so long as any
Secured Obligation remains unpaid. The Borrower waives presentment and protest of all instruments
and notice thereof, notice of default and dishonor and all other notices to which the Borrower may
otherwise be entitled.

     3.18 Patents and Trademarks; Etc. The Borrower agrees with the Agent that, until the
Lien granted by this Agreement has been terminated in accordance with the terms hereof:

     (a) The Borrower will perform all acts and execute all documents including, without
limitation, grants of Lien, in form suitable for filing with the United States Patent and
Trademark Office, reasonably requested by the Agent at any time to evidence, perfect,
maintain, record and enforce the Agent’s interest in the Collateral comprised of patents
(collectively the “Patents”), patent applications (collectively the “Patent Applications”),
trademarks or service marks (collectively the “Trademarks”) or of any applications therefor
(collectively the “Trademark Applications”) or otherwise in furtherance of the provisions of
this Agreement;

     (b) Except to the extent that the Agent shall consent in writing, Borrower (either
itself or through licensees) will, unless the Borrower shall reasonably determine that a
Trademark (or the use of a Trademark in connection with a particular class of goods or
products) is not of material economic value to the Borrower, (i) continue to use each
Trademark on each and every trademark class of goods in order to maintain each Trademark in
full force free from any claim of abandonment for non-use, (ii) maintain as in the past the
quality of products and services offered under each Trademark, (iii) employ each Trademark
with the appropriate notice of application or registration to the extent required by
applicable law to maintain such Trademark, (iv) not use any Trademark except for the uses
for which registration or application for registration of such Trademark has been made,
unless such use is otherwise lawful, and (v) not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby any Trademark may become
invalidated;

9

 

     (c) Except to the extent that the Agent shall consent in writing, the Borrower will not
do any act, or not to do any act, whereby any Patent may become abandoned or dedicated
unless the Borrower shall have reasonably determined that suchPatent is not of material
economic value to the Borrower;

     (d) Unless the Borrower shall reasonably determine that a Patent, Patent Application,
Trademark or Trademark Application is not of material economic value to the Borrower, the
Borrower shall notify the Agent immediately if it knows, or has reason to know, of any
reason that any Patent, Patent Application, Trademark or Trademark Application may become
abandoned or dedicated, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any proceeding
in the United States Patent and Trademark Office or any court) regarding the Borrower’s
ownership of any Patent or Trademark, its rights to register the same, or to keep and
maintain the same;

     (e) If the Borrower, either itself or through any agent, employee, licensee or
designee, shall file a Patent Application or Trademark Application for the registration of
any Trademark with the United States Patent and Trademark Office, or any similar office or
agency in any other country or any political subdivision thereof, the Borrower shall
promptly inform the Agent, and, upon request of the Agent, shall promptly execute and
deliver any and all agreements, instruments, documents and papers as Agent may reasonably
request to evidence the Agent’s Lien in such Patent or Trademark and the goodwill and
general intangibles of the Borrower relating thereto or represented thereby;

     (f) Unless the Borrower shall reasonably determine that a Patent Application or
Trademark Application is not of material economic value to the Borrower, the Borrower will
take all necessary steps, including, without limitation, in any proceeding before the United
States Patent and Trademark Office, or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each Patent Application and
Trademark Application (and to obtain the relevant registration) and to maintain each
registration of the Patents and Trademarks including, without limitation, filing of
applications for renewal and affidavits of use;

     (g) If any Patent or Trademark is infringed, misappropriated or diluted by a third
party, then, unless the Borrower shall reasonably determine that a Patent or Trademark is
not of material economic value to the Borrower, the Borrower shall either promptly sue for
such infringement, misappropriation or dilution to recover any and all damages for such
infringement, misappropriation or dilution, or take such other actions as the Borrower shall
reasonably deem appropriate under the circumstances to protect such Patent or Trademark and,
if the Borrower commences any such suit, then the Borrower shall promptly notify the Agent
of the commencement of such suit; and

     (h) The Borrower agrees that it will not enter into any agreement (for example, a
license agreement) which is inconsistent with the Borrower’s obligations under this
Agreement.

10

 

     3.19 Copyrights. The Borrower agrees with the Agent that, until the Lien granted by
this Agreement has been terminated in accordance with the terms hereof:

     (a) The Borrower will perform all acts and execute all documents including, without
limitation, grants of Lien, in form suitable for filing with the United States Copyright
Office, reasonably requested by the Agent at any time to evidence, perfect, maintain, record
and enforce the Agent’s interest in the Collateral comprised of copyrights or copyright
applications (collectively the “Copyrights”) or otherwise in furtherance of the provisions
of this Agreement;

     (b) Except to the extent that the Agent shall consent in writing, Borrower (either
itself or through licensees) will, unless the Borrower shall reasonably determine that a
Copyright is not of material economic value to the Borrower, publish the materials for which
a Copyright has been obtained (the “Works”) with any notice of copyright registration
required by applicable law to preserve the Copyright;

     (c) Unless the Borrower shall reasonably determine that a Copyright is not of material
economic value to the Borrower, the Borrower shall notify the Agent immediately if it knows,
or has reason to know, of any reason that any application or registration relating to any
Copyright may become abandoned or dedicated or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or development
in, any proceeding in the United States Copyright Office or any court) regarding the
Borrower’s ownership of any Copyright, its right to register the same, or to keep and
maintain the same;

     (d) If the Borrower, either itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Copyright with the United
States Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, the Borrower shall promptly inform the Agent, and, upon
request of the Agent, execute and deliver any and all agreements, instruments, documents and
papers as the Agent may request to evidence the Agent’s Lien in such Copyright and the Works
relating thereto or represented thereby;

     (e) Unless the Borrower shall reasonably determine that a Copyright is not of material
economic value to the Borrower, the Borrower will take all commercially reasonable steps,
including, without limitation, in any proceeding before the United States Copyright Office
or any similar office or agency in any other country or any political subdivision thereof,
to maintain and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the Copyrights;

     (f) In the event that any Copyright is infringed by a third party, then, unless the
Borrower shall reasonably determine that such Copyright is not of material economic value to
the Borrower, the Borrower shall promptly sue to recover any and all damages or take such
other actions as the Borrower shall reasonably deem appropriate under the

11

 

circumstances to protect such Copyright and, if the Borrower commences any such suit,
then the Borrower shall promptly notify the Agent of the commencement of such suit; and

     (g) The Borrower agrees that it will not enter into any agreement (for example, a
license agreement) which is inconsistent with the Borrower’s obligations under this
Agreement.

     3.20 Control. Borrower will cooperate with Agent in obtaining control with respect to
Collateral consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights, and
Electronic Chattel Paper. Without limiting the foregoing, if Borrower becomes a beneficiary of a
letter of credit, then Borrower shall promptly notify the Agent thereof and upon the request of the
Agent, enter into a tri-party agreement with the Agent and the issuer and/or confirmation bank with
respect to such letter of credit assigning the Letter-of-Credit Rights to the Agent and directing
all payments thereunder to the Agent, all in form and substance reasonably satisfactory to the
Agent.

     3.21 Further Acts. Where Collateral is in the possession of a third party, Borrower
will join with Agent in notifying such third party of Agent’s security interest and in obtaining an
acknowledgment from such third party that it is holding such Collateral for the benefit of the
Agent.

     3.22 Commercial Tort Claims. Borrower shall promptly notify the Agent of any
Commercial Tort Claim acquired by it and, unless otherwise consented to by the Agent, Borrower
shall promptly enter into a supplement to this Agreement granting to the Agent a security interest
in such Commercial Tort Claim.

ARTICLE IV

COLLECTIONS

     Except as otherwise provided in this Article IV, the Borrower shall continue to collect, at
its own expense, all amounts due or to become due the Borrower under the Accounts and all other
Collateral. In connection with such collections, the Borrower may take (and, at the Agent’s
direction following the occurrence and during the continuance of an Event of Default, shall take)
such action as the Borrower or the Agent may deem necessary or advisable to enforce collection of
the Accounts and such other Collateral; provided, however, that the Agent shall
have the right at any time following the occurrence and during the continuance of an Event of
Default, without giving notice to the Borrower of the Agent’s intention to do so, to notify the
account debtors under any Accounts or obligors with respect to such other Collateral of the
assignment of such Accounts and such other Collateral to the Agent and to direct such account
debtors or obligors to make payment of all amounts due or to become due to the Borrower thereunder
directly to the Agent and, upon such notification and at the expense of the Borrower, to enforce
collection of any such Accounts or other Collateral, and to adjust, settle or compromise the amount
or payment thereof in the same manner and to the same extent as the Borrower might have done,

12

 

but unless and until the Agent does so or gives the Borrower other instructions the Borrower
shall make all collections for the Agent. In addition to its rights under the preceding sentence
to this Section, the Agent, at any time after the occurrence and during the continuance of an Event
of Default, may require that the Borrower instruct all current and future account debtors and
obligors on other Collateral to make all payments directly to a special bank account (the
“Collateral Account”) maintained at the Agent for the benefit of the Agent and subject to
withdrawal by the Agent only. After the Agent’s exercise of its rights to direct account debtors
or other obligors on any Collateral to make payments directly to the Agent, the Borrower shall
immediately deliver all full and partial payments on any Collateral received by the Borrower to the
Agent in their original form, except for endorsements where necessary. Until such payments are so
delivered to the Agent, such payments shall be held in trust by the Borrower for and as the Agent’s
property, and shall not be commingled with any funds of the Borrower. After an Event of Default
has occurred and is continuing, the Agent shall apply all collections on Collateral in accordance
with Section 7.7. Any application of any collection to the payment of any Secured Obligation is
conditioned upon final payment of any check or other instrument.

ARTICLE V

ASSIGNMENT OF INSURANCE

     The Borrower hereby assigns to the Agent, as additional security for the payment of the
Secured Obligations, any and all monies due or to become due under, and any and all other rights of
the Borrower with respect to, any and all policies of insurance covering the Collateral, and the
Borrower hereby directs the issuer of any such policy to pay any such monies directly to the Agent
in accordance with this Article V. So long as no Event of Default has occurred and is continuing,
the Borrower may itself adjust and collect for any losses arising out of a single occurrence of up
to $500,000.00 and up to an aggregate amount of $1,000,000.00 for all occurrences during any of the
Borrower’s fiscal years; provided that the Borrower uses the resulting Insurance Proceeds to
replace, restore or repair the damaged Collateral. After the occurrence and during the continuance
of an Event of Default, or after the losses exceed the amount described in the preceding sentence,
the Agent may (but need not) in its own name or in the Borrower’s name execute and deliver proofs
of claim, receive such monies, and settle or litigate any claim against the issuer of any such
policy and the Borrower directs the issuer to pay any such monies directly to the Agent and the
Agent, at its sole discretion and regardless of whether the Agent exercises its right to collect
Insurance Proceeds under this Section, shall promptly elect to apply any Insurance Proceeds to the
payment of the Secured Obligations in accordance with Section 7.6, whether due or not, or to
permit the Borrower to use such Insurance Proceeds for the replacement, restoration or repair of
the Collateral and the Agent shall promptly notify the Borrower in writing of such election.

13

 

ARTICLE VI

EVENTS OF DEFAULT

     The occurrence of any Event of Default as defined in the Credit Agreement shall constitute an
Event of Default hereunder (“Event of Default”).

ARTICLE VII

RIGHTS AND REMEDIES ON DEFAULT

     Upon the occurrence of an Event of Default, and at any time thereafter until such Event of
Default is cured to the satisfaction of the Agent or waived in accordance with the Credit Agreement, and in addition to the rights granted to the Agent under Articles IV and V hereof, the Agent,
subject to the rights of the Majority Banks and the relevant Rate Protection Providers, may
exercise any one or more of the following rights and remedies:

     7.1 Acceleration of Secured Obligations. Declare any and all Secured Obligations to
be immediately due and payable, and the same shall thereupon become immediately due and payable
without further notice or demand.

     7.2 Right of Offset. Offset, and cause each other Secured Party to offset, any
deposits, including unmatured time deposits, then maintained by the Borrower with any Secured
Party, whether or not then due, against any Secured Obligation, whether or not then due.

     7.3 Deal with Collateral. In the name of the Borrower or otherwise, demand, collect,
receive and receipt for, compound, compromise, settle and give acquittance for and prosecute and
discontinue any suits or proceedings in respect of any or all of the Collateral.

     7.4 Realize on Collateral. Take any action which the Agent may deem necessary or
desirable in order to realize on the Collateral, including, without limitation, the power to
perform any contract, to endorse in the name of the Borrower any checks, drafts, notes, or other
instruments or documents received in payment of or on account of the Collateral. Agent may comply
with any applicable state or federal law requirements in connection with a disposition of the
Collateral and compliance will not be considered adversely to affect the commercial reasonableness
of any sale of the Collateral. Agent may sell the Collateral without giving any warranties as to
the Collateral. Agent may specifically disclaim any warranties of title or the like. This
procedure will not be considered adversely to affect the commercial reasonableness of any sale of
the Collateral.

     7.5 Access to Property. Enter upon and into and take possession of all or such part
or parts of the properties of the Borrower, including lands, plants, buildings, machinery,
equipment, Data Processing Records and Systems and other property as may be necessary or
appropriate in the judgment of the Agent, to permit or enable the Agent to store, lease, sell or
otherwise dispose of or collect all or any part of the Collateral, and use and operate said

14

 

properties for such purposes and for such length of time as the Agent may reasonably deem
necessary or appropriate for said purposes without the payment of any compensation to the Borrower
therefor. The Borrower shall provide the Agent with all information and assistance requested by
the Agent to facilitate the storage, leasing, sale or other disposition or collection of the
Collateral after an Event of Default has occurred and is continuing.

     7.6 Other Rights. Exercise any and all other rights and remedies available to it by
law, in equity, or by agreement, including rights and remedies under the UCC as adopted in the
relevant jurisdiction or any other applicable law, or under the Credit Agreement or under any other
Loan Document and, in connection therewith, the Agent may require the Borrower to assemble the
Collateral and make it available to the Agent at a place to be designated by the Agent, and any
notice of intended disposition of any of the Collateral required by law shall be deemed reasonable
if such notice is mailed or delivered to the Borrower at its address as shown on the Agent’s
records at least 10 days before the date of such disposition.

     7.7 Application of Proceeds. (a) All Proceeds of Collateral received by the Agent
or any other Secured Party shall be promptly applied in the following order:

FIRST, to each Secured Party in an amount equal to such Secured Party’s reasonable
costs and expenses incurred in connection with the enforcement of this Agreement,
the sale or other disposition of the Collateral, the delivery of the Collateral, the
collection of any such Proceeds or the collection of the Secured Obligations
(including, without limitation, reasonable attorneys’ fees and legal expenses
regardless of whether suit is commenced) to the extent that the Borrower is
obligated to reimburse such Secured Party therefor;

SECOND, to the extent of any amount remaining after application in accordance with
clause FIRST above, to the Agent for distribution to the Secured Parties for
application to the Secured Obligations then due and payable or, if such amount shall
be insufficient to pay the Secured Obligations in full, then ratably (without
priority of any one over any other) to each Secured Party in proportion to its Pro
Rata Share; and

THIRD, to the extent of any amount remaining after application in accordance with
clauses FIRST and SECOND above, to the Borrower or its successors or assigns or to
whomsoever may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.

     (b) When payments to the Secured Parties are based upon their respective Pro Rata
Shares, the amounts received by each Secured Party shall be promptly applied as follows (for
purposes of making determinations under this Section 7.7 only):

     (i) if the recipient Secured Party is a Bank, then in accordance with Section
8.10 of the Credit Agreement; or

15

 

     (ii) if the recipient Secured Party is a Rate Protection Provider, then: (A)
first, to the unpaid interest and fees constituting part of such Secured Party’s
Secured Obligations; (B) second, to the unpaid principal amount of such Secured
Party’s Secured Obligations; and (C) third, to all other Secured Obligations owed to
such Secured Party.

If any payment to any Secured Party of its Pro Rata Share of any distribution would result
in overpayment to such Secured Party, such excess amount shall instead be distributed in
respect of the unpaid Secured Obligations of the other Secured Parties entitled to such
distribution, with each such other Secured Party to receive an amount equal to such excess
amount multiplied by such Secured Party’s Pro Rata Share adjusted to exclude the
distributing Secured Party from the calculation of Pro Rata Share.

     (c) For purposes of applying payments received in accordance with this Section 7.7, the
Agent shall be entitled to rely upon each Secured Party for a determination of the
outstanding principal, interest and other Secured Obligations owed to such Secured Party.

     (d) In the event of any conflict or inconsistency between the application of Proceeds
set forth in this Section 7.7. and in the application of payments set forth in Section 8.10
of the Credit Agreement, Section 8.10 of the Credit Agreement shall control.

            7.8 Patents and Trademarks. Upon the occurrence and during the continuance of an
Event of Default:

     (a) The Agent may, at any time and from time to time, upon thirty (30) days’ prior
notice to the Borrower, license or, to the extent permitted by an applicable license,
sublicense, whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Patent or Trademark, throughout the world for such term or terms,
on such conditions, and in such manner, as the Agent shall in its sole discretion determine;

     (b) The Agent may (without assuming any obligations or liability thereunder), at any
time enforce (and shall have the exclusive right to enforce) against any licensor, licensee
or sublicensee all rights and remedies of the Borrower in, to and under any one or more
license or other agreements with respect to any Patent or Trademark and take or refrain from
taking any action under any such license or other agreement, and the Borrower hereby
releases the Agent from, and agrees to hold the Agent free and harmless from and against,
any claims arising out of, any action taken or omitted to be taken with respect to any such
license or agreement;

     (c) Any and all payments received by the Agent under or in respect of any Patent or
Trademark (whether from the Borrower or otherwise), or received by the Agent by virtue of
the exercise of the license granted to the Agent by subsection (g) below, shall be promptly
applied to the Secured Obligations in accordance with Section 7.7 hereof;

16

 

     (d) The Agent may exercise in respect of the Patents and Trademarks, in addition to
other rights and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the Uniform Commercial Code;

     (e) In order to implement the sale, lease, assignment, license, sublicense or other
disposition of any of the Patents and Trademarks pursuant to this Section 7.8, the Agent
may, at any time, execute and deliver on behalf of the Borrower one or more instruments of
assignment of the Patents and Trademarks (or any application or registration thereof), in
form suitable for filing, recording or registration in any country and the Borrower agrees
to pay when due all reasonable costs incurred in any such transfer of the Patents and
Trademarks, including any taxes, fees and reasonable attorneys’ fees;

     (f) In the event of any sale, lease, assignment, license, sublicense or other
disposition of any of the Patents or Trademarks pursuant to this Section, the Borrower shall
supply to the Agent or its designee its know-how and expertise relating to the manufacture
and sale of the products relating to any Patent or Trademark subject to such disposition,
and its customer lists and other records relating to such Patents or Trademarks and to the
distribution of said products; and

     (g) For the purpose of enabling the Agent to exercise rights and remedies under this
Agreement at such time as the Agent shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, the Borrower hereby grants to the Agent, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other compensation to the
Borrower) to use, license or sublicense at such time any Patent or Trademark, now owned or
hereafter acquired by the Borrower, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer and automatic machinery software and programs used
for the compilation or printout thereof.

            7.9 Copyrights. Upon the occurrence and during the continuance of an Event of
Default:

     (a) The Agent may, at any time and from time to time, upon thirty (30) days’ prior
notice to the Borrower, license or, to the extent permitted by an applicable license,
sublicense, whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Copyright, for such term or terms, on such conditions, and in such
manner, as the Agent shall in its sole discretion determine;

     (b) The Agent may (without assuming any obligations or liability thereunder), at any
time , enforce (and shall have the exclusive right to enforce) against any licensor,
licensee or sublicensee all rights and remedies of the Borrower in, to and under any one or
more license or other agreements with respect to any Copyright and take or refrain from
taking any action under any such license or other agreement and the Borrower

17

 

hereby releases the Agent from, and agrees to hold the Agent free and harmless from and
against, any claims arising out of, any action taken or omitted to be taken with respect to
any such license or agreement;

     (c) Any and all payments received by the Agent under or in respect of any Copyright
(whether from the Borrower or otherwise), or received by the Agent by virtue of the
exercise of the license granted to the Agent by subsection (f) below, shall be promptly
applied to the Secured Obligations in accordance with Section 7.7;

     (d) The Agent may exercise in respect of the Copyrights, in addition to other rights
and remedies provided for herein or otherwise available to it, all the rights and remedies
of a secured party on default under the Uniform Commercial Code;

     (e) In order to implement the sale, lease, assignment, license, sublicense or other
disposition of any of the Copyrights pursuant to this Section 7.9, the Agent may, at any
time, execute and deliver on behalf of the Borrower one or more instruments of assignment of
the Copyrights (or any application or registration thereof), in form suitable for filing,
recording or registration in the Copyright Office or any country where the relevant
Copyright is of material economic value to the Borrower and the Borrower agrees to pay when
due all reasonable costs incurred in any such transfer of the Copyrights, including any
taxes, fees and reasonable attorneys’ fees; and

     (f) For the purpose of enabling the Agent to exercise rights and remedies under this
Agreement at such time as the Agent shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, the Borrower hereby grants to the Agent an irrevocable,
non-exclusive license (exercisable without payment of royalty or other compensation to the
Borrower) to use, license or sublicense any Copyright, now owned or hereafter acquired by
the Borrower, and wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored and to all
computer and automatic machinery software and programs used for the compilation or printout
thereof.

ARTICLE VIII

MISCELLANEOUS

            8.1 No Liability on Collateral. It is understood that neither the Agent nor any
other Secured Party assumes, in any way, any of the Borrower’s obligations under any of the
Collateral. The Borrower hereby agrees to indemnify the Agent and each other Secured Party against
all liability arising in connection with or on account of any of the Collateral in accordance with
Section 9.11 of the Credit Agreement.

            8.2 No Waiver. The Secured Parties shall not be deemed to have waived any of their
rights hereunder or under any other agreement, instrument or paper signed by the Borrower unless
such waiver is in writing and signed by the Agent and the Banks required by Section 9.1 of the
Credit Agreement to take the relevant action. No delay or omission on the part of the

18

 

Secured Parties in exercising any right shall operate as a waiver of such right or any other
right. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion.

            8.3 Remedies Cumulative. All rights and remedies of the Secured Parties shall be
cumulative and may be exercised singularly or concurrently, at their option, and the exercise or
enforcement of any one such right or remedy shall not bar or be a condition to the exercise or
enforcement of any other.

            8.4 Governing Law/Jurisdiction. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of the State of
Minnesota, except to the extent that the perfection of the Lien hereunder, or the enforcement of
any remedies hereunder, with respect to any particular Collateral shall be governed by the laws of
a jurisdiction other than the State of Minnesota, without, in any case, giving effect to conflict
of laws principles but giving effect to the federal laws of the United States affecting national
banks. AT THE OPTION OF THE AGENT, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA
STATE COURT SITTING IN MINNEAPOLIS, OR ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT
CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER
ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE AGENT, AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

            8.5 Expenses. The Borrower agrees to pay the reasonable attorneys’ fees and legal
expenses incurred by each Secured Party in the exercise of any right or remedy available to it
under this Agreement, whether or not suit is commenced, including, without limitation, attorneys’
fees and legal expenses incurred in connection with any appeal of a lower court’s order or
judgment.

            8.6 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Borrower and each Secured Party.

            8.7 Recitals. The above Recitals are true and correct as of the date hereof and
constitute a part of this Agreement.

            8.8 Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

19

 

            8.9 No Obligation to Pursue Others. The Agent has no obligation to attempt to
satisfy the Secured Obligations by collecting them from any other person liable for them and the
Agent may release, modify or waive any Collateral provided by any other person to secure any of the
Secured Obligations, all without affecting the Agent’s rights against the Borrower. The Borrower
waives any right it may have to require the Agent to pursue any third person for any of the Secured
Obligations.

            8.10 Incorporation of Provisions Regarding Agent. The provisions set forth in Article
VIII of the Credit Agreement shall be applicable to this Agreement and are incorporated herein by
reference as if fully set forth herein.

            8.11 Termination. This Agreement will terminate and be of no further force or effect
upon the indefeasible payment and performance of all Secured Obligations and the termination of any
commitment on the part of the Banks to extend further credit to the Borrower pursuant to the Credit
Agreement, provided that, the performance of unasserted indemnification obligations under the Loan
Documents will not be required as a condition to termination of this Agreement. Upon such
termination, the Agent will reassign and redeliver (or cause to be reassigned and redelivered) to
the Borrower, or to such person as the Borrower designates, against receipt, such of the Collateral
delivered to the Agent as have not been sold or otherwise applied by the Agent pursuant to the
terms of this Agreement, and still held by it, together with appropriate instruments of
authorization to the Borrower concerning termination, reassignment and release of liens in favor of
the Agent as the Borrower may reasonably request.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

20

 

     IN WITNESS WHEREOF, Borrower and the Administrative Bank have caused this Agreement to be duly
executed as of the date and year first above written.

	 	 	 	 	 
	 	 	Life Time Fitness, Inc.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	 	 	Name: Eric J. Buss
	 	 	Its: Secretary
	 
	 	 	 	 
	 	 	U. S. Bank National Association, as Administrative Agent
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	 	 	Name: Karen E. Weathers
	 	 	Its: Vice President

21

 

EXHIBIT A

	I.  	Financing Statements on File Listing the Borrower or Any Predecessor in Title as Debtor
	 
	   	See Schedule 6.12 to the Disclosure Schedules
	 
	II.  	Prior Names

None

 

 

EXHIBIT B

COMMERCIAL TORT CLAIMS

None.exv10w21

 

Exhibit 10.21

ARGONAUT TECHNOLOGIES, INC.

AMENDED AND RESTATED CHANGE OF CONTROL SEVERANCE AGREEMENT

     This Amended and Restated Change of Control Severance Agreement (the “Agreement”) is made and
entered into effective as of August 3, 2004 (the “Effective Date”), by and between David Foster
(the “Employee”) and Argonaut Technologies, Inc., a Delaware corporation (the “Company”). Certain
capitalized terms used in this Agreement are defined in Section 1 below.

RECITALS

     A. It is expected that the Company from time to time will consider the possibility of a Change
of Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration
can be a distraction to the Employee and can cause the Employee to consider alternative employment
opportunities.

     B. The Board believes that it is in the best interests of the Company and its shareholders to
provide the Employee with an incentive to continue his employment and to maximize the value of the
Company upon a Change of Control for the benefit of its shareholders.

     C. The Board believes that it is in the best interests of the Company and its shareholders to
provide the Employee with a bonus payment upon a Change of Control that is approved by the Board.

     D. In addition, in order to provide the Employee with enhanced financial security and
sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of
Control, the Board believes that it is imperative to provide the Employee with certain severance
benefits upon the Employee’s termination of employment in certain circumstances following a Change
of Control.

     E. The Company and the Employee are parties to a Change of Control Severance Agreement dated
October 30, 2002 (the “Prior Agreement”), which agreement the parties desire to amend and restate
in its entirety.

AGREEMENT

     In consideration of the mutual covenants herein contained and the continued employment of
Employee by the Company, the parties agree that the Prior Agreement is amended and restated as
follows:

     1. Definition of Terms. The following terms referred to in this Agreement shall have
the following meanings:

          (a) Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the
Employee in connection with his responsibilities as an employee which is intended to result in
substantial personal enrichment of the Employee, (ii) Employee’s conviction of a felony which the

 

 

Board reasonably believes has had or will have a material detrimental effect on the Company’s
reputation or business, (iii) a willful act by the Employee which constitutes gross misconduct and
is materially injurious to the Company, and (iv) continued willful violations by the Employee of
the Employee’s principal duties and obligations of employment after there has been delivered to the
Employee a written demand for performance from the Company which describes the basis for the
Company’s reasonable belief that the Employee has repeatedly failed to substantially and materially
perform his duties; provided, however, that no act shall be deemed to constitute “Cause” if
committed at the direction of the Board or otherwise by Employee in good faith and in the
reasonable belief that such act is in the Company’s best interest.

          (b) Change of Control. “Change of Control” shall mean the occurrence of any of the
following events:

               (i) the approval by shareholders of the Company of a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity) more
than fifty percent (50%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or consolidation;

               (ii) the approval by the shareholders of the Company of a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or substantially all of
the Company’s assets;

               (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company representing 50% or more of the
total voting power represented by the Company’s then outstanding voting securities; or

               (iv) a change in the composition of the Board, as a result of which fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or nominated for election,
to the Board with the affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transactions described in subsections (i), (ii), or (iii)
or in connection with an actual or threatened proxy contest relating to the election of directors
of the Company.

          (c) Involuntary Termination. “Involuntary Termination” shall mean (i) without the
Employee’s express written consent, a significant reduction of the Employee’s duties, position or
responsibilities relative to the Employee’s duties, position or responsibilities in effect
immediately prior to such reduction, or the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable duties, position and
responsibilities; (ii) without the Employee’s express written consent, a substantial reduction,
without good business reasons, of the facilities and perquisites (including office space and
location) available to the Employee immediately prior to such reduction; (iii) a reduction by the
Company of the

-2-

 

 

Employee’s base salary as in effect immediately prior to such reduction; (iv) a material
reduction by the Company in the kind or level of employee benefits to which the Employee is
entitled immediately prior to such reduction with the result that the Employee’s overall benefits
package is significantly reduced; (v) without the Employee’s express written consent, the
relocation of the Employee to a facility or a location more than twenty-five (25) miles from his
current location; (vi) any purported termination of the Employee by the Company which is not
effected for Cause or for which the grounds relied upon are not valid; or (vii) the failure of the
Company to obtain the assumption of this Agreement by any successors contemplated in Section 6
below.

          (d) Negotiated Change of Control. “Negotiated Change of Control” shall mean the
occurrence of a Change of Control by virtue of clause (i), (ii) or (iii) of the definition of
“Change of Control” that is approved in advance by the Board.

          (e) Termination Date. “Termination Date” shall mean the effective date of any notice
of termination delivered by one party to the other hereunder.

          (f) Value of the Company. “Value of the Company” shall mean (i) in the case of a
Negotiated Change of Control, the value of the consideration actually received per share of common
stock of the Company (the “Price Per Share”) multiplied by the total number of common shares
(including the number of shares which would be outstanding upon exercise of any options or
warrants, or upon conversion of any securities convertible into common stock) of the Company (the
“Fully Diluted Outstanding Shares”); provided, however, that, if any portion of the consideration
received by the Company’s shareholders consists of common stock of any other company merging with
or acquiring the Company (the “Acquisition Partner”), that portion of the Price Per Share shall be
calculated using the applicable exchange ratio contained in the definitive agreement multiplied by
the average closing price of the Acquisition Partner’s common stock over the five trading day
period up to and including the trading day preceding the closing of such Negotiated Change of
Control, (ii) in all other cases where the Company’s common stock trades on an established stock
exchange or a national market system, the average closing price of the Company’s common stock over
the five trading day period up to and including the trading day preceding the occurrence of a
Negotiated Change of Control multiplied by the Fully Diluted Outstanding Shares or (iii) in all
other cases, the fair market value of the Fully Diluted Outstanding Shares on the date of the
Negotiated Change of Control, as determined in good faith by the Board concurrent with or up to
thirty (30) days in advance of such Negotiated Change of Control or, if such a timely determination
is not made, following such Negotiated Change of Control.

     2. Term of Agreement. This Agreement shall terminate upon the date that all
obligations of the parties hereto under this Agreement have been satisfied or, if earlier, on the
date, prior to a Change of Control, Employee is no longer employed by the Company.

     3. At-Will Employment. The Company and the Employee acknowledge that the Employee’s
employment is and shall continue to be at-will, as defined under applicable law. If the Employee’s
employment terminates for any reason, the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement, or as may otherwise be
established under the Company’s then existing employee benefit plans or policies at the time of
termination.

-3-

 

 

     4. Bonus Upon A Change of Control. In the event of a Negotiated Change of Control,
Employee shall be entitled to receive a cash bonus equal to 0.5% of the Value of the Company upon
the closing of such Negotiated Change of Control.

     5. Severance Benefits.

          (a) Termination Following A Change of Control. If the Employee’s employment with the
Company terminates as a result of an Involuntary Termination on, in connection with or at any time
within twelve (12) months after a Change of Control, regardless of whether Employee obtains
employment elsewhere, Employee shall be entitled, upon Employee’s execution of a general release of
claims against the Company or any of its successors or assigns, to the following severance benefits
which are in lieu of benefits (if any) as may then be established under the Employee’s then
existing severance agreement or the Company’s then existing severance and benefits plans and
policies at the time of such termination or as may be currently established under the Company’s
existing severance and benefits plans and policies at the date of execution of this Agreement:

               (i) Employee shall receive a lump sum cash payment in an amount equal to twelve (12) months of
Employee’s base salary as in effect as of the date of such termination, less applicable
withholding;

               (ii) all stock options granted by the Company to the Employee prior to the Change of Control
shall become fully vested and exercisable as of the date of the termination to the extent such
stock options are outstanding and unexercisable at the time of such termination and all stock
subject to a right of repurchase by the Company (or its successor) that was purchased prior to the
Change of Control shall have such right of repurchase lapse with respect to all of the shares;

               (iii) If (i) the Employee constitutes a qualified beneficiary, as defined in Section
4980B(g)(1) of the Internal Revenue Code of 1986, as amended and (ii) Employee elects continuation
coverage pursuant to the Consolidated Budget Reconciliation Act of 1985 (“COBRA”) within the time
period prescribed pursuant to COBRA, then the Company shall reimburse Employee for up to twelve
(12) months of coverage equivalent to the level of health, dental and life insurance coverage that
was provided to such employee immediately prior to the Termination Date (the “Company-Paid
Coverage”). If such coverage included the Employee’s dependents immediately prior to the Change of
Control, such dependents shall also be covered at Company expense. Company-Paid Coverage shall
continue until the earlier of (i) twelve (12) months from the date of the Termination Date, or (ii)
the date that the Employee and his dependents become covered under another employer’s group health,
dental or life insurance plans that provide Employee and his dependents with comparable benefits
and levels of coverage.

          (b) Transition Services. In the event of a Negotiated Change of Control, at the
surviving entity’s election, Employee will remain reasonably available to assist in the transition
for ninety (90) days following the close of such Negotiated Change of Control. Employee will
continue to receive Employee’s then current base salary and the same level of health coverage and
benefits in effect prior to the closing of the Negotiated Change of Control. Notwithstanding any
of the provisions stated herein in this Section 5(b), Employee shall be entitled to receive all of
the severance benefits stated above in Section 5(a).

-4-

 

 

          (c) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the
timing of, Employee’s termination of employment: (i) the Company shall pay the Employee any unpaid
base salary due for periods prior to the Termination Date; (ii) the Company shall pay the Employee
all of the Employee’s accrued and unused vacation through the Termination Date; and (iii) following
submission of proper expense reports by the Employee, the Company shall reimburse the Employee for
all expenses reasonably and necessarily incurred by the Employee in connection with the business of
the Company prior to the Termination Date. These payments shall be made promptly upon termination
and within the period of time mandated by law.

     6. Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to the Employee (i) constitute “parachute
payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise
tax imposed by Section 4999 of the Code (the “Excise Tax”), then Employee’s benefits under this
Agreement shall be either

          (a) delivered in full, or

          (b) delivered as to such lesser extent which would result in no portion of such benefits being
subject to the Excise Tax,

     whichever of the foregoing amounts, taking into account the applicable federal, state and
local income taxes and the Excise Tax, results in the receipt by Employee on an after-tax basis, of
the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code.

     Unless the Company and the Employee otherwise agree in writing, any determination required
under this Section shall be made in writing by the Company’s independent public accountants (the
“Accountants”), whose determination shall be conclusive and binding upon the Employee and the
Company for all purposes. For purposes of making the calculations required by this Section, the
Accountants may make reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999
of the Code. The Company and the Employee shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a determination under this
Section. The Company shall bear all costs the Accountants may reasonably incur in connection with
any calculations contemplated by this Section.

     7. Successors.

          (a) Company’s Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets shall assume the Company’s obligations
under this Agreement and agree expressly to perform the Company’s obligations under this Agreement
in the same manner and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes under this Agreement, the term
“Company” shall include any successor to the Company’s business and/or assets which executes and

-5-

 

 

delivers the assumption agreement described in this subsection (a) or which becomes bound by
the terms of this Agreement by operation of law.

          (b) Employee’s Successors. Without the written consent of the Company, Employee
shall not assign or transfer this Agreement or any right or obligation under this Agreement to any
other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights
of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee’s personal or
legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees.

     8. Notices.

          (a) General. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when personally delivered or when
mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the
case of the Employee, mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company, mailed notices shall
be addressed to its corporate headquarters, and all notices shall be directed to the attention of
its Secretary.

          (b) Notice of Termination. Any termination by the Company for Cause or by the
Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated
by a notice of termination to the other party hereto given in accordance with this Section. Such
notice shall indicate the specific termination provision in this Agreement relied upon, shall set
forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
under the provision so indicated, and shall specify the Termination Date (which shall be not more
than 30 days after the giving of such notice). The failure by the Employee to include in the
notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not
waive any right of the Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing his rights hereunder.

     9. Attorney Fees, Costs and Expenses. The Company shall promptly reimburse Employee,
on a monthly basis, for the reasonable attorney fees, costs and expenses incurred by the Employee
in connection with any action brought by Employee to enforce his rights hereunder. In the event
Employee is not the prevailing party, determined without regard to whether or not the action
results in a final judgment, employee shall repay such reimbursements.

     10. Arbitration and Equitable Relief.

          (a) Arbitration. In consideration of Employee’s employment with the Company, the
Company’s promise to arbitrate all employment-related disputes and Employee’s receipt of the
compensation, pay raises and other benefits paid to Employee by the Company, at present and in the
future, the parties agree that any and all controversies, claims, or disputes with anyone
(including the Company and any employee, officer, director, shareholder or benefit plan of the
Company in their capacity as such or otherwise) arising out of, relating to, or resulting from
Employee’s employment with the Company or the termination of Employee’s employment with the
Company, including any

-6-

 

 

breach of this Agreement, shall be subject to binding arbitration under the arbitration rules
set forth in California Code of Civil Procedure Section 1280 through 1294.2, including Section
1283.05 (the “Rules”) and pursuant to California law. Disputes which the parties agree to
arbitrate, and thereby agree to waive any right to a trial by jury, include any statutory claims
under state or federal law, including, but not limited to, claims under Title VII of the Civil
Rights Act of 1964, the Americans With Disabilities Act of 1990, the Age Discrimination in
Employment Act of 1967, the Older Workers Benefit Protection Act, the California Fair Employment
and Housing Act, the California Labor Code, claims of harassment, discrimination or wrongful
termination and any statutory claims. The parties further understand that this Agreement to
arbitrate also applies to any disputes that the Company may have with Employee.

          (b) Procedure. The parties agree that any arbitration will be administered by the
American Arbitration Association (“AAA”) and that a neutral arbitrator will be selected in a manner
consistent with its National Rules for the Resolution of Employment Disputes. The parties agree
that any arbitration under this section shall be conducted in San Mateo, California. The
arbitration proceedings will allow for discovery according to the AAA National Rules for the
Resolution of Employment Disputes, or the Rules. The parties agree that the arbitrator shall have
the power to decide any motions brought by any party to the arbitration, including motions for
summary judgment and/or adjudication and motions to dismiss and demurrers, prior to any arbitration
hearing. The parties agree that the arbitrator shall issue a written decision on the merits. The
parties also agree that the arbitrator shall have the power to award any remedies, including
attorneys’ fees and costs, available under applicable law. The parties agree that the Company will
pay for any administrative or hearing fees charged by the arbitrator or AAA except that Employee
shall pay the first $200.00 of any filing fees associated with any arbitration Employee initiates.
The parties agree that the arbitrator shall administer and conduct any arbitration in a manner
consistent with the Rules and that to the extent that the AAA’s National Rules for the Resolution
of Employment Disputes conflict with the Rules, the Rules shall take precedence.

          (c) Remedy. Except as provided by the Rules, arbitration shall be the sole, exclusive
and final remedy for any dispute between Employee and the Company. Accordingly, except as provided
for by the Rules, neither Employee nor the Company will be permitted to pursue court action
regarding claims that are subject to arbitration. Notwithstanding, the arbitrator will not have
the authority to disregard or refuse to enforce any lawful company policy, and the arbitrator shall
not order or require the Company to adopt a policy not otherwise required by law which the Company
has not adopted.

          (d) Availability of injunctive relief. In accordance with Rule 1281.8 of the
California Code of Civil Procedure, the parties agree that any party may also petition the court
for injunctive relief where either party alleges or claims a violation of the Employment,
Confidential Information, Invention Assignment Agreement between Employee and the Company or any
other agreement regarding trade secrets, confidential information, nonsolicitation or Labor Code
§2870. In the event either party seeks injunctive relief, the prevailing party shall be entitled
to recover reasonable costs and attorneys’ fees.

          (e) Administrative relief. The parties understand that this Agreement does not
prohibit Employee from pursuing an administrative claim with a local, state or federal
administrative

-7-

 

 

body such as the Department of Fair Employment and Housing, the Equal Employment Opportunity
Commission or the Workers’ Compensation Board. This Agreement does, however, preclude Employee
from pursuing court action regarding any such claim.

          (f) Voluntary nature of agreement. Employee acknowledges and agrees that Employee is
executing this Agreement voluntarily and without any duress or undue influence by the Company or
anyone else. Employee further acknowledges and agrees that Employee has carefully read this
Agreement and that Employee has asked any questions needed for Employee to understand the terms,
consequences and binding effect of this Agreement and fully understand it, including that EMPLOYEE
IS WAIVING HIS RIGHT TO A JURY TRIAL. Finally, Employee agrees that he has been provided an
opportunity to seek the advice of an attorney of his choice before signing this Agreement.

     11. Miscellaneous Provisions.

          (a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of
any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings
that the Employee may receive from any other source.

          (b) Waiver. No provision of this Agreement may be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and
by an authorized officer of the Company (other than the Employee). No waiver by either party of
any breach of, or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the same condition or
provision at another time.

          (c) Integration. This Agreement and any outstanding stock option agreements and
restricted stock purchase agreements referenced herein represent the entire agreement and
understanding between the parties as to the subject matter herein and supersede all prior or
contemporaneous agreements, whether written or oral, with respect to this Agreement (including the
Prior Agreement) and any stock option agreement or restricted stock purchase agreement.

          (d) Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules,
of the State of California.

          (e) Severability. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.

          (f) Employment Taxes. All payments made pursuant to this Agreement shall be subject
to withholding of applicable income and employment taxes.

          (g) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together will constitute one and the same instrument.

-8-

 

 

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above written.

	 	 	 	 	 
	COMPANY:

	 	 
	 	ARGONAUT TECHNOLOGIES, INC.
	 
	 	 	 	 
	

	 	 	 	By:          
                                                                           
	 
	 	 	 	 
	

	 	 	 	Name:                                                                                 
	 
	 	 	 	 
	

	 	 	 	Title:          
                                                                        
	 
	 	 	 	 
	EMPLOYEE:

	 	 
	 	                                                                                            
	

	 	 	 	Signature
	 
	 	 	 	 
	

	 	 	 	                                                                                            
	

	 	 	 	Printed Name

-9-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]