Exhibit 10.12
EXHIBIT J TO THE
THIRD AMENDED AND
RESTATED CREDIT AGREEMENT
SUBSIDIARY GUARANTY
Dated December 19, 1997
From
THE PARTIES LISTED ON THE SIGNATURE PAGES HEREOF
as SUBSIDIARY GUARANTOR,
in favor of
THE SECURED PARTIES REFERRED TO IN
THE THIRD AMENDED AND RESTATED
CREDIT AGREEMENT REFERRED TO HEREIN
TABLE OF CONTENTS
Page
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SECTION 1. Subsidiary Guaranty; Limitation of Liability.......................1
SECTION 2. Subsidiary Guaranty Absolute.......................................2
SECTION 3. Waivers and Acknowledgments........................................3
SECTION 4. Subrogation........................................................3
SECTION 5. Payments Free and Clear of Taxes, Etc..............................4
SECTION 6. Representations and Warranties.....................................5
SECTION 7. Covenants..........................................................5
SECTION 8. Amendments, Etc....................................................6
SECTION 9. Notices, Etc.......................................................6
SECTION 10. No Waiver; Remedies................................................6
SECTION 11. Right of Set-off...................................................6
SECTION 12. Indemnification....................................................7
SECTION 13. Continuing Subsidiary Guaranty; Assignments under the Credit
Agreement .........................................................7
SECTION 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.............7
(i)(i)
SUBSIDIARY GUARANTY, dated __________, 1997 made by the parties
listed on the signature pages hereof (each such party, together with the
Additional Subsidiary Guarantors (as defined in Section 8(b)), a "Subsidiary
Guarantor"), in favor of the Secured Parties (as defined in the Credit Agreement
referred to below).
PRELIMINARY STATEMENT. Fitness Holdings, Inc., a Delaware
corporation, the Lender Parties, Banque Nationale de Paris, as the Existing
Issuing Bank, as Swing Line Bank, as Syndication Agent and as Administrative
Agent for the Lender Parties, Bankers Trust Company, as Documentation Agent for
the Lenders, and LaSalle National Bank and Xxxxx Fargo Bank, N.A., as Co-Agents
for the Lenders are parties to a Third Amended and Restated Credit Agreement
dated as of December 19, 1997 (said Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with 24 Hour Fitness, Inc., a California
corporation (the "Borrower"). Each Subsidiary Guarantor may receive a portion of
the proceeds of the Advances under the Credit Agreement and will derive
substantial direct and indirect benefit from the transactions contemplated by
the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, each Subsidiary Guarantor, jointly and severally with
each other Subsidiary Guarantor, hereby agrees as follows:
SECTION 1. Subsidiary Guaranty; Limitation of Liability. (a) Each
Subsidiary Guarantor hereby unconditionally and irrevocably guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of each other Loan Party now or hereafter existing
under the Loan Documents, whether for principal, interest, fees, expenses or
otherwise (such Obligations being the "Guaranteed Obligations"), and agrees to
pay any and all reasonable expenses (including reasonable counsel fees and
expenses) incurred by the Administrative Agent or any other Secured Party in
enforcing any rights under this Subsidiary Guaranty or any other Loan Document.
Without limiting the generality of the foregoing, each Subsidiary Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by any other Loan Party to the Administrative
Agent or any other Secured Party under the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Loan Party.
(b) (i) Each Subsidiary Guarantor and by its acceptance of this
Subsidiary Guaranty, the Administrative Agent and each other Secured Party,
hereby confirms that it is the intention of all such parties that this
Subsidiary Guaranty not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to this Subsidiary Guaranty. To effectuate the foregoing intention,
the Administrative Agent, the other Secured Parties and the Subsidiary
Guarantors hereby irrevocably agree that the Obligations of each Subsidiary
Guarantor under this Subsidiary Guaranty shall not exceed the
greater of (A) the net benefit realized by such Subsidiary Guarantor from the
proceeds of the Advances made from time to time by the Borrower to such
Subsidiary Guarantor or any subsidiary of such Subsidiary Guarantor and (B) the
maximum amount that will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such Subsidiary Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the Obligations of such other
Subsidiary Guarantor under this Subsidiary Guaranty, result in the Obligations
of such Subsidiary Guarantor under this Subsidiary Guaranty not constituting a
fraudulent transfer or conveyance. For purposes hereof, " Bankruptcy Law" means
Title 11, U.S. Code, or any similar Federal or state law for the relief of
debtors.
(ii) Each Subsidiary Guarantor agrees that in the event any payment
shall be required to be made to the Secured Parties under this Subsidiary
Guaranty or any other guaranty, such Subsidiary Guarantor will contribute, to
the maximum extent permitted by law, such amounts to each other Subsidiary
Guarantor and each other guarantor so as to maximize the aggregate amount paid
to the Secured Parties under the Loan Documents.
SECTION 2. Subsidiary Guaranty Absolute. Each Subsidiary Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Administrative Agent or any other Secured Party with respect
thereto (but subject, however, to the provisions of Section 1 hereof) provided,
however, that this Section 2 shall not require any Subsidiary Guarantor to make
any payment hereunder to the extent that such payment would violate any
applicable law, regulation or order now or hereafter in effect, and binding on
such Subsidiary Guarantor. The Obligations of each Subsidiary Guarantor under
this Subsidiary Guaranty are independent of the Guaranteed Obligations or any
other Obligations of any other Loan Party under the Loan Documents, and a
separate action or actions may be brought and prosecuted against such Subsidiary
Guarantor to enforce this Subsidiary Guaranty, irrespective of whether any
action is brought against the Borrower or any other Loan Party or whether the
Borrower or any other Loan Party is joined in any such action or actions. The
liability of each Subsidiary Guarantor under this Subsidiary Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Subsidiary
Guarantor hereby irrevocably waives to the fullest extent it may legally and
effectively do so any defenses it may now or hereafter have in any way relating
to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any
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increase in the Guaranteed Obligations resulting from the extension of
additional credit to any Loan Party or any of its Subsidiaries or
otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Loan Party under the Loan Documents
or any other assets of any Loan Party or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its Subsidiaries; or
(f) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the Administrative Agent or any other Secured Party that
might otherwise constitute a defense available to, or a discharge of, the
Borrower, any Subsidiary Guarantor or any other guarantor or surety.
This Subsidiary Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Secured Party or any other Person
upon the insolvency, bankruptcy or reorganization of the Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.
SECTION 3. Waivers and Acknowledgments. Each Subsidiary Guarantor
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Guaranteed Obligations and this Subsidiary Guaranty
and any requirement that the Administrative Agent, or any other Secured Party
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against any Loan Party or any other Person
or any Collateral. Each Subsidiary Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in this Section 3 are knowingly
made in contemplation of such benefits.
SECTION 4. Subrogation. No Subsidiary Guarantor will exercise any
rights that it may now or hereafter acquire against the Borrower or any other
insider guarantor that arise from the existence, payment, performance or
enforcement of such Subsidiary Guarantor's Obligations under this Subsidiary
Guaranty or any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Administrative Agent or any
other
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Secured Party against the Borrower or any other insider guarantor or any
collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Borrower or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Guaranteed Obligations and all other amounts payable under this
Subsidiary Guaranty shall have been paid in full in cash, and all Hedge
Agreements and the Commitments shall have expired or terminated. If any amount
shall be paid to any Subsidiary Guarantor in violation of the preceding sentence
at any time prior to the later of (a) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Subsidiary
Guaranty and (b) the later of (i) the Final Maturity Date and (ii) the
expiration or termination of all Hedge Agreements, such amount shall be held in
trust for the benefit of the Administrative Agent and the other Secured Parties
and shall forthwith be paid to the Administrative Agent to be credited and
applied to the Guaranteed Obligations and all other amounts payable under this
Subsidiary Guaranty, whether matured or unmatured, in accordance with the terms
of the Loan Documents, or to be held as collateral for any Guaranteed
Obligations or other amounts payable under this Subsidiary Guaranty thereafter
arising. If (i) any Subsidiary Guarantor shall make payment to the
Administrative Agent or any other Secured Party of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Subsidiary Guaranty shall be paid in full in cash and
(iii) the Final Maturity Date shall have occurred and all Hedge Agreements shall
have expired or terminated, the Administrative Agent and the other Secured
Parties will, at such Subsidiary Guarantor's request and expense, execute and
deliver to such Subsidiary Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to such Subsidiary Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Subsidiary Guarantor.
SECTION 5. Payments Free and Clear of Taxes, Etc. (a) Any and all
payments by any Subsidiary Guarantor hereunder shall be made, in accordance with
Section 2.11 of the Credit Agreement, free and clear of and without deduction
for any Taxes. If any Subsidiary Guarantor shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder to any Lender Party or
the Administrative Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 5) such Lender Party or
the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such
Subsidiary Guarantor shall make such deductions and (iii) such Subsidiary
Guarantor shall pay the full amount deducted to the relevant taxation authority
or other governmental authority in accordance with applicable law.
(b) In addition, each Subsidiary Guarantor agrees to pay any present
or future Other Taxes.
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(c) Each Subsidiary Guarantor shall indemnify the Administrative
Agent and each other Secured Party for and hold it harmless against the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section 5)
paid by the Administrative Agent or such other Secured Party (as the case may
be) and any liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date the Administrative Agent or such other
Secured Party (as the case may be) makes written demand therefor, together with
copies of any tax invoices or receipts, if any, or to the extent available, any
other appropriate evidence of payment thereof.
(d) Within 30 days after the date of any payment of Taxes, such
Subsidiary Guarantor shall furnish to the Administrative Agent, at its address
referred to in Section 8.02 of the Credit Agreement, appropriate evidence of
payment thereof. In the case of any payment hereunder by or on behalf of any
Subsidiary Guarantor through an account or branch outside the United States or
on behalf of such Subsidiary Guarantor by a payor that is not a United States
person, if such Subsidiary Guarantor determines that no Taxes are payable in
respect thereof, such Subsidiary Guarantor shall furnish, or shall cause such
payor to furnish, to the Administrative Agent, at such address, an opinion of
counsel acceptable to the Administrative Agent stating that such payment is
exempt from Taxes. For purposes of this subsection (d) and subsection (e), the
terms "United States" and "United States person" shall have the meanings
specified in Section 7701 of the Internal Revenue Code.
(e) Without prejudice to the survival of any other agreement of any
Subsidiary Guarantor hereunder, the agreements and obligations of each
Subsidiary Guarantor contained in this Section 5 shall survive the payment in
full of the Guaranteed Obligations and all other amounts payable under this
Subsidiary Guaranty.
SECTION 6. Representations and Warranties. Each Subsidiary Guarantor
hereby repeats each of the representations and warranties of the Loan Parties
contained in the Credit Agreement and makes each of the representations and
warranties below as of the date hereof.
(a) There are no conditions precedent to the effectiveness of this
Subsidiary Guaranty that have not been satisfied or waived.
(b) Such Subsidiary Guarantor has, independently and without
reliance upon the Administrative Agent or any Lender Party and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Subsidiary Guaranty, and
such Subsidiary Guarantor has established adequate means of obtaining from
any other Loan Parties on a continuing basis information pertaining to,
and is now and on a continuing basis will be completely familiar with, the
financial condition, operations, properties and prospects of such other
Loan Parties.
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SECTION 7. Covenants. Each Subsidiary Guarantor covenants and agrees
that, so long as any part of the Guaranteed Obligations shall remain unpaid, any
Letter of Credit shall be outstanding, any Bank Hedge Agreement shall be in
effect, or any Lender Party shall have any Commitment, such Subsidiary Guarantor
will at all times perform or observe, and will cause each of its Subsidiaries to
perform or observe, all of the terms, covenants and agreements that the Loan
Documents state that Loan Parties are to perform or observe or that the Borrower
is to cause such Subsidiary Guarantor or such Subsidiaries to perform or
observe.
SECTION 8. Amendments, Etc. a) (a) No amendment or waiver of any
provision of this Subsidiary Guaranty and no consent to any departure by any
Subsidiary Guarantor therefrom shall in any event be effective unless the same
shall be in writing and signed by the Administrative Agent and the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by all of
the Secured Parties, (i) reduce or limit the liability of such Subsidiary
Guarantor hereunder or release any Subsidiary Guarantor hereunder, (ii) postpone
any date fixed for payment hereunder or (iii) amend this Section 8.
(b) Upon the execution and delivery by any Person of a guaranty
supplement in substantially the form of Exhibit A hereto (each a "Guaranty
Supplement"), such Person shall be referred to as an "Additional Subsidiary
Guarantor" and shall be and become a Guarantor, and each reference in this
Agreement to "Subsidiary Guarantor" shall also mean and be a reference to such
Additional Subsidiary Guarantor.
SECTION 9. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to it, if to any Subsidiary Guarantor, to the address set forth below such
Subsidiary Guarantor's signature on the signature pages hereof, if to the
Administrative Agent or any other Lender Party, at its address specified in the
Credit Agreement, or as to any party at such other address as shall be
designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telegraphed, telecopied,
telexed or sent by courier, be effective, in respect of such notices and
communications mailed, five days after being deposited in the mails and
otherwise shall be effective when delivered to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
overnight courier, respectively. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Subsidiary
Guaranty shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 10. No Waiver; Remedies. No failure on the part of the
Administrative Agent or any other Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
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SECTION 11. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of said Section 6.01, each Lender Party and each of its
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of any Subsidiary Guarantor
against any and all of the Obligations of such Subsidiary Guarantor now or
hereafter existing under this Subsidiary Guaranty, irrespective of whether such
Lender Party shall have made any demand under this Subsidiary Guaranty and
although such Obligations may be unmatured. Each Lender Party agrees promptly to
notify such Subsidiary Guarantor after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender Party and
its respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender Party and its respective Affiliates may have.
SECTION 12. Indemnification. Without limitation on any other
Obligations of any Subsidiary Guarantor or remedies of the Secured Parties under
this Subsidiary Guaranty, each Subsidiary Guarantor shall, to the fullest extent
permitted by law, indemnify, defend and save and hold harmless each Secured
Party from and against, and shall pay on demand, any and all losses,
liabilities, damages, costs, expenses and charges (including the reasonable fees
and disbursements of such Secured Party's legal counsel) suffered or incurred by
such Secured Party as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of any Loan Party enforceable
against such Loan Party in accordance with their terms.
SECTION 13. Continuing Subsidiary Guaranty; Assignments under the
Credit Agreement. This Subsidiary Guaranty is a continuing guaranty and shall
(a) remain in full force and effect until the later of the payment in full in
cash of the Guaranteed Obligations and all other amounts payable under this
Subsidiary Guaranty and the later of the Final Maturity Date and the expiration
or termination of all Hedge Agreements, (b) be binding upon each Subsidiary
Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Administrative Agent and the other Secured Parties and their
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Secured Party may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitments, the Advances owing to
it and the Note or Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Secured Party herein or otherwise, in each case as and to the extent
provided in Section 8.07 of the Credit Agreement. No Subsidiary Guarantor shall
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Secured Parties.
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SECTION 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
(a) This Subsidiary Guaranty shall be governed by, and construed in accordance
with, the laws of the State of New York.
(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Subsidiary Guaranty or any of the
other Loan Documents to which it is or is to be a party, or for recognition or
enforcement of any judgment, and each Subsidiary Guarantor hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each Subsidiary Guarantor
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Subsidiary Guaranty shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Subsidiary Guaranty or any of the other Loan
Documents or any Hedge Agreement to which it is or is to be a party, or
otherwise to proceed against any Grantor, in the courts of any jurisdiction.
(c) Each Subsidiary Guarantor irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Subsidiary Guaranty or
any of the other Loan Documents to which it is or is to be a party in any New
York State or federal court. Each Subsidiary Guarantor hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each Subsidiary Grantor irrevocably consents to the service of
any and all process in any such action, suit or proceeding by the mailing of
copies of such process to such Subsidiary Grantor at the address set forth
below, or by any other method permitted by law. Each Subsidiary Grantor agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other Jurisdictions by suit on the judgment or in any other
manner provided by law.
(e) Each Subsidiary Guarantor hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Loan
Documents, the transactions contemplated thereby or the actions of the
Administrative Agent or any other Secured Party in the negotiation,
administration, performance or enforcement thereof.
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IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this
Subsidiary Guaranty to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.
By:
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Name:
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By:
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Name:
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By:
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