LIMITED WAIVER AND FORBEARANCE AGREEMENT
Exhibit 10.2
LIMITED WAIVER AND FORBEARANCE AGREEMENT, dated as of May 14, 2007 (this “Agreement”),
by and between Bally Total Fitness Holding Corporation, a corporation organized under the laws of
Delaware (the “Company”), and the Persons listed on Exhibit A hereto (each, a
“Holder” and collectively, the “Holders”). Capitalized terms used and not
otherwise defined herein shall have the meanings ascribed to them in Article VI hereof.
WHEREAS, the Holders are the beneficial owners of the 9 7/8% Senior Subordinated Notes due
2007 of the Company (the “Notes”) issued pursuant to an Indenture, dated as of December 16,
1998 (as amended or supplemented, the “Indenture”), between the Company and U.S. Bank
National Association, as trustee (the “Trustee”), and consequently, the Holders are the
beneficial owners of a majority of the aggregate principal amount of Notes outstanding;
WHEREAS, pursuant to Sections 5.13 and 10.19 of the Indenture, the Company desires to seek
waivers from holders of the Notes from the Effective Date (as defined in Section 5.1 hereof) to,
but not including, the Forbearance and Waiver Expiration Date (as defined in Section 6.1 hereof) of
any Default or Event of Default (as such terms are defined in the Indenture) arising from the
failure to (i) file timely such reports as the Company is or may be required to file with the SEC
pursuant to Sections 13(a) or 15(d) of the Exchange Act and furnish such reports to the Trustee and
holders of the Notes in accordance with Sections 7.4 and 10.17 of the Indenture (the “Reporting
Obligations”) and (ii) provide notice to the Trustee of a Default or Event of Default arising
in connection with the Reporting Obligations in accordance with Section 10.18 of the Indenture (the
“Notice Obligations” and, together with the Reporting Obligations and the Sale and
Leaseback Matters (as defined in Section 7.1 hereof), the “Waived Matters”);
WHEREAS, a default has occurred and is continuing (the “Credit Agreement Default”)
under Section 8.15 of the Amended and Restated Credit Agreement, dated as of October 16, 2006 (as
amended, the “Credit Agreement”), among the Company, as Borrower, the several banks and
other financial institutions parties thereto (the “Lenders”), JPMorgan Chase Bank, N.A., as
Agent (the “Agent Lender”), Xxxxxx Xxxxxxx Senior Funding, Inc., as Syndication Agent (the
“Syndication Agent”), and JPMorgan Securities Inc., as Sole Lead Arranger and Sole
Bookrunner, due to the Company’s failure to deliver to the Lenders when due (i) a copy of its
audited financial statements for the year ended December 31, 2006, as required by Section 6.03(b)
of the Credit Agreement, and the certificate of KPMG LLC or other independent public accountant of
national reputation certifying that such accountants have not obtained knowledge of any event or
act which would constitute an default or event of default with respect to financial covenant and
certain computations under the Credit Agreement, and (ii) a copy of its updated financial
projections through its fiscal year ended December 31, 2010, as required by Section 6.03(f) of the
Credit Agreement, which defaults will ripen into events of default following notice from the Agent
Lender as required by the Majority Lenders (as defined in the Credit Agreement) pursuant to Section
8.15 of the Credit Agreement;
WHEREAS, as a result of the Credit Agreement Default, the Company and the Lenders entered into
a Forbearance Agreement, dated as of April 5, 2007 (the “Credit Agreement Forbearance
Agreement”), among the Company, the Lenders party thereto, the Agent Lender and the Syndication
Agent, pursuant to which the Lenders agreed, subject to certain conditions, to
forbear from exercising any remedies under the Credit Agreement in connection with the Credit
Agreement Default;
WHEREAS, pursuant to Sections 5.12 and 9.2 of the Indenture, the Holders desire to consent to
the execution and delivery of, and to direct the Trustee to execute and deliver, a supplement to
the Indenture, in the form attached hereto as Exhibit B (the “Supplemental
Indenture”), in order to amend certain provisions of the Indenture to provide a waiver of the
Waived Matters from the Effective Date to, but not including, the Waiver and Forbearance Expiration
Date; and
WHEREAS, pursuant to Section 5.12 of the Indenture, the Holders desire to forbear, and to
direct the Trustee to forbear, at all times from the Effective Date to, but not including, the
Forbearance and Waiver Expiration Date, from taking or exercising any Enforcement Action in
connection with (i) the Waived Matters and (ii) the Company’s failure to make a scheduled payment
of interest on the Notes as due on April 16, 2007 in accordance with Section 10.1 of the Indenture
(the “Interest Payment Default”).
NOW, THEREFORE, in consideration of the promises and the representations, warranties,
covenants and agreements herein contained, and intending to be legally bound hereby, the Company
and the Holders hereby agree as follows:
ARTICLE I.
AGREEMENT TO WAIVE AND FORBEAR
AGREEMENT TO WAIVE AND FORBEAR
Section 1.1 Waiver. (a) Pursuant to Sections 5.13 and 10.19 of the Indenture,
each Holder hereby waives, from the Effective Date to, but not including, the Forbearance and
Waiver Expiration Date, any Default or Event of Default that has arisen or may arise prior to the
Forbearance and Waiver Expiration Date in connection with the Waived Matters.
(b) The Company acknowledges and agrees that, notwithstanding the agreement of the Holders to
grant a limited waiver in respect of the Waived Matters, (i) such limited waiver shall not
constitute a waiver of the occurrence and continuance of any Waived Matter constituting a Default
or Event of Default at any time on or after the Forbearance and Waiver Expiration Date, if such
Default or Event of Default has not been cured or otherwise waived, (ii) such limited waiver shall
not constitute a waiver of the occurrence or continuance of any Default or Event of Default that is
not a Waived Matter and (iii) nothing contained in this Agreement shall be construed to limit or
affect the right of the Trustee and the Holders to take any action to enforce or interpret any
provision of this Agreement through the Forbearance and Waiver Expiration Date.
(c) The Company acknowledges and agrees that any Default in connection with the Waived Matters
that arose prior to the Forbearance and Waiver Expiration Date and that would not otherwise ripen
into an Event of Default without delivery of a notice of default under Section 5.1(c) of the
Indenture (a “Default Notice”) shall constitute an Event of Default on the Forbearance and
Waiver Expiration Date, in which event the Company acknowledges that the execution of this
Agreement shall constitute a Default Notice for this purpose, unless such
Default has been cured or otherwise waived.
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Section 1.2 Supplemental Indenture. Pursuant to Sections 5.12 and 9.2 of the
Indenture, each Holder hereby directs the Trustee to execute and deliver, and hereby consents to
the execution and delivery of, the Supplemental Indenture in order to amend certain provisions of
the Indenture in connection with the Waived Matters.
Section 1.3 Forbearance. (a) Pursuant to Section 5.12 of the Indenture, each
Holder hereby agrees to forbear, and directs the Trustee to forbear, at all times from the
Effective Date to, but not including, the Forbearance and Waiver Expiration Date, from taking or
exercising any Enforcement Action in connection with (i) the Waived Matters and (ii) the Interest
Payment Default (the “Forbearance”); provided, however, that no Holder agrees hereby to
expend any funds or indemnify the Trustee in connection with the Forbearance or any related
direction to the Trustee. Each Holder hereby agrees that its instruction pursuant to this Section
1.3 shall be effective notwithstanding any notice to the contrary delivered to the Trustee by any
holder of the Notes.
(b) The Company acknowledges and agrees that, notwithstanding the Forbearance, (i) the
Forbearance shall not constitute a waiver of the occurrence and continuance of any Default or Event
of Default that is not a Waived Matter or the Interest Payment Default, (ii) the Interest Payment
Default shall continue to exist unless cured or waived by all holders of the Notes under the
Indenture and (iii) nothing contained in this Agreement shall be construed to limit or affect the
right of the Trustee and the Holders to take any action to enforce or interpret any provision of
this Agreement through the Forbearance and Waiver Expiration Date.
Section 1.4 Further Action by Holders. (a) As soon as practicable after the date
hereof, each Holder shall (i) execute the consent letter attached hereto as Exhibit C (the
“Consent Letter”) and deliver the Consent Letter to the DTC Participant(s) that act as
custodian(s) for the Notes beneficially owned by such Holder (the “Custodian”), which
Consent Letter authorizes the Trustee to execute and deliver the Supplemental Indenture and (ii)
instruct the Custodian to execute the Consent Letter and deliver the Consent Letter to the Trustee.
Each Holder further agrees to instruct the Custodian to execute and deliver such documents as may
be necessary or appropriate, and to take all such further action, to facilitate or further
effectuate the waiver of the Waived Matters and the Forbearance on behalf of such Holder and the
other obligations and agreements of such Holder, including the execution and delivery of the
Supplemental Indenture.
(b) Each Holder hereby agrees to deliver, and directs the Trustee to deliver, to the Company a
copy of any notice of default provided by any holder of the Notes to such Holder or to the Trustee
in connection with the Waived Matters or the Interest Payment Default promptly upon receipt. In
the event that any holder of the Notes provides any notice of default to the Trustee in connection
with the Waived Matters or the Interest Payment Default prior to the Forbearance and Waiver
Expiration Date, each Holder hereby agrees to execute and deliver, promptly upon the written
request of the Company, a direction to the Trustee confirming the terms of the Forbearance pursuant
to Section 5.12 of the Indenture.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Holders as follows:
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Section 2.1 Organization and Standing of the Company. The Company is duly organized,
validly existing and in good standing under the laws of Delaware and has all requisite power and
authority to own and operate its properties, to carry on its business as now conducted and to enter
into and, as applicable, perform its obligations hereunder.
Section 2.2 Due Authorization and Enforceability. This Agreement has been duly and
validly authorized by the Company, has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by the Holders or any counterparty other than
the Company, is a valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’
rights generally.
Section 2.3 Non-Contravention. The execution and delivery by the Company of this
Agreement do not and will not, with or without the giving of notice or the lapse of time, or both
(i) result in any violation of any terms of the charter documents of the Company; (ii) conflict
with or result in a breach by the Company or any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the
Company is a party or by which the Company or any of its properties or assets is bound or affected;
or (iii) violate or contravene any applicable law, rule or regulation or any decree, judgment or
order of any court or Governmental Body having jurisdiction over the Company or any of its
properties or assets, except for such conflicts, breaches, defaults or violations as would not have
a material adverse effect on the financial condition of the Company and its subsidiaries, taken as
a whole.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE HOLDERS
REPRESENTATIONS AND WARRANTIES OF THE HOLDERS
Each Holder, solely on its own behalf, represents and warrants to the Company as follows:
Section 3.1 Ownership. Each Holder is the beneficial owner of the aggregate principal
amount of Notes as set forth opposite such Holder’s name on Exhibit A hereto.
Section 3.2 Terms of Agreement. The terms of this Agreement were the result of
negotiations between each Holder, the Company, and representatives of the Company and the Holders,
and each Holder was given the opportunity to review and comment upon the proposed terms of this
Agreement.
ARTICLE IV.
CERTAIN COVENANTS AND AGREEMENTS OF THE PARTIES
CERTAIN COVENANTS AND AGREEMENTS OF THE PARTIES
Section 4.1 Publicity. Neither the Company nor any Holder shall, nor shall they
permit their respective Agents to, issue or cause the publication of any press release or make any
other public statement, filing or announcement with respect to this Agreement and the transactions
contemplated hereby without the prior approval of the other party; provided, however, that, subject
to any applicable confidentiality agreement between the Company and any Holder, the Company and
each Holder shall be entitled, without the prior approval of the other
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party, to make any press
release or other public disclosure with respect to this Agreement and the transactions contemplated
hereby as may required by applicable law or regulation of any Governmental Body or the New York
Stock Exchange. The Company and each Holder shall cooperate in issuing press releases or otherwise
making public statements with respect to this Agreement and the transactions contemplated hereby,
which cooperation shall include first consulting the other party hereto concerning the requirement
for, and timing and content of, such public announcements. Notwithstanding anything to the
contrary in this Agreement, the Company may not disclose the aggregate principal amount of Notes
held individually by any Holder or the identity of any Holder.
Section 4.2 Delivery of Information. To the extent that any of the Trustee, a Holder
Representative or a Holder has executed a binding confidentiality agreement with the Company, the
Company shall deliver to such party copies of the documents referred to in Sections 5.1(a), (b) and
(c) of the Credit Agreement Forbearance Agreement contemporaneously with the delivery of such
documents to the Agent Lender.
ARTICLE V.
CONDITIONS PRECEDENT TO EFFECTIVENESS
CONDITIONS PRECEDENT TO EFFECTIVENESS
Section 5.1 This Agreement shall become effective on the date on which the following
conditions precedent shall have been satisfied or waived, as determined by the Holders (the
“Effective Date”):
(a) The Company, the Trustee and the Agent Lender shall have received this Agreement, duly
executed and delivered by each of the Company and the holders of a majority of the aggregate
principal amount outstanding of the Notes.
(b) The Senior Notes Forbearance Agreement shall have terms substantially identical to this
Agreement (other than the treatment of the Interest Payment Default under the Indenture) and shall
become effective contemporaneously with this Agreement.
(c) The Credit Agreement Forbearance Agreement has not been amended or terminated since the
date of the execution and delivery thereof by all the parties thereto, and shall be in full force
and effect on the Effective Date.
(d) The Trustee shall have acknowledged its willingness to execute and deliver the
Supplemental Indenture upon the authorization of Holders or delivery of valid consents from
Custodian(s) representing a majority of the aggregate principal amount of Notes outstanding.
(e) All reasonable and documented out-of-pocket costs and expenses of the Holder
Representatives, the Trustee and one counsel to the Trustee in connection with the transactions
contemplated by this Agreement or otherwise due and payable under the Indenture shall have been
paid by the Company.
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ARTICLE VI.
DEFINITIONS
DEFINITIONS
Section 6.1 Definitions. As used in this Agreement, in addition to the terms defined
elsewhere, the following terms shall have the meanings set forth below, unless the context
otherwise requires. Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Indenture.
(a) “Agent” means, with respect to any Person, any officer, director, employee,
stockholder, controlling person (within the meaning of the Securities Act), affiliate or authorized
agent of such Person.
(b) “DTC” means The Depository Trust Company, a limited purpose trust company.
(c) “DTC Participant” means a participating organization in DTC.
(d) “Enforcement Action” means any default-related right, remedy or other action
available to the Holders or the Trustee or aiding and abetting, assisting, cooperating with or
otherwise supporting any other Person in taking or exercising any default-related right, remedy or
other action available to such Person.
(e) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(f) “Forbearance and Waiver Expiration Date” means the earliest to occur of:
(A) July 13, 2007;
(B) June 28, 2007, if the Company fails to deliver, before or on such date, copies of the
documents referred to in Section 5.1(b) of the Credit Agreement Forbearance Agreement to the
Trustee, each Holder Representative and each Holder, with delivery only required to each such party
that has executed a binding confidentiality agreement with the Company; or
(C) the date on which (i) a Default or Event of Default that is not a Waived Matter or the
Interest Payment Default occurs and such Default or Event of Default has not been cured or waived,
(ii) (a) the Agent Lender or any Lender commences any enforcement action under the Credit Agreement
or (b) the trustee or the requisite holders under the Senior
Notes Indenture issue any enforcement notice under Section 5.2 of the Senior Notes Indenture,
including with regard to the acceleration of the Senior Notes, (iii) to the extent applicable, a
breach by any of the parties thereto of the Senior Notes Forbearance Agreement or the Credit
Agreement Forbearance Agreement (which has not been cured or waived by the requisite parties in
accordance with the terms of such agreements) occurs, (iv) the Company takes any action to
challenge the validity or enforceability of the Indenture, this Agreement or any provision hereof
(including by asserting such a challenge in writing) or (v) the Company is no longer working in
good faith on the terms of a consensual restructuring with the Holder Representatives and the
Restricted Holders.
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(g) “Governmental Body” means any government or political subdivision thereof, whether
federal, state, local or foreign, or any agency or instrumentality of any such government or
political subdivision thereof, or any federal or state court or arbitrator.
(h) “Holder Representatives” means Akin Gump Xxxxxxx Xxxxx & Xxxx LLP and Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx Capital, Inc.
(i) “Holders” shall have the definition set forth in the first paragraph of this
Agreement, and shall include any Holder’s successors and assigns, including any transferee of any
Holder.
(j) “Person” means any individual, corporation, partnership, joint venture, trust,
estate, limited liability company, unincorporated organization or governmental agency.
(k) “Restricted Holders” means the Holders that have executed a binding
confidentiality agreement with the Company.
(l) “SEC” means the Securities and Exchange Commission.
(m) “Securities Act” means the Securities Act of 1933, as amended.
(n) “Senior Notes” means the 10 1/2% Senior Notes due 2011 issued by the Company
pursuant to the Senior Notes Indenture.
(o) “Senior Notes Forbearance Agreement” means the Limited Waiver and Forbearance
Agreement, dated as of the date hereof, among the Company and the holders of the Senior Notes party
thereto.
(p) “Senior Notes Indenture” means the Indenture, dated as of July 2, 2003, as amended
or supplemented, by and among the Company, as issuer, the Guarantors party thereto and the Trustee,
as trustee.
ARTICLE VII.
MISCELLANEOUS
MISCELLANEOUS
Section 7.1 Sale and Leaseback Matters. The Company acknowledges that it has
consummated a transaction pursuant to (i) the Purchase and Sale Agreement, dated October 13, 2006,
for the sale of 0000 Xxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxx and (ii) the Escrow Holdback
Agreement, dated October 24, 2006, as amended (the “Escrow Agreement”), concerning
Escrow Trust #06-0806, in connection with which the Company received cash proceeds, a portion of
which were deposited in an escrow account (the “Escrowed Funds”) in accordance with the
terms of the Escrow Agreement (pending receipt of a governmental approval) (the “Sale and
Leaseback Transaction”). The Company acknowledges the Escrowed Funds have been released to the
Company pursuant to the Escrow Agreement as of the date hereof. The Company acknowledges that it
does not believe that the consummation of the Sale and Leaseback Transaction constitutes a breach
of Section 10.12(a)(i) of the Indenture (which requires 75% of the consideration from an Asset Sale
(as defined in the Indenture) to be received in cash) or that the Company’s failure to provide a
notice to the Trustee in connection with the Sale and
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Leaseback Transaction pursuant to Section
10.18 of the Indenture constitutes a breach of Section 10.18 of the Indenture. As defined herein,
the term “Sale and Leaseback Matters” shall mean, collectively, (i) the consummation of the
Sale and Leaseback Transaction and (ii) any or all actual or asserted breaches of Sections
10.12(a)(i) and 10.18 of the Indenture (and any actual or asserted Defaults or Event of Defaults)
arising from any of the matters described in clause (i) or from any failure by the Company to
provide a notice to the Trustee in connection with any such matters. Out of an abundance of
caution, to the extent any of the Sale and Leaseback Matters constitutes or is deemed to constitute
an actual Default or Event of Default, the Company hereby requests, and the Holders hereby agree,
that the Sale and Leaseback Matters shall constitute a Waived Matter for purposes of this Agreement
and shall be subject to all of the waiver and forbearance provisions hereof.
Section 7.2 Costs, Expenses and Taxes. Each party hereto shall bear its own costs and
expenses in connection with the preparation, execution and delivery of this Agreement; provided,
however, that the Company will pay for the reasonable and documented fees and expenses of one
counsel to the Holders in connection with this Agreement and the transactions contemplated hereby.
The Company shall pay any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement.
Section 7.3 Survival of Representations. The representations, warranties, covenants
and agreements of each Holder and the Company contained in this Agreement shall survive the
consummation and termination of this Agreement.
Section 7.4 Prior Agreements. This Agreement and the other agreements contemplated
hereby constitute the entire agreement between the parties concerning the subject matter hereof and
supersedes any prior representations, understandings or agreements. There are no representations,
warranties, agreements, conditions or covenants, of any nature whatsoever (whether express or
implied, written or oral) between the parties hereto with respect to such subject matter except as
expressly set forth herein and in the other agreements contemplated hereby.
Section 7.5 Severability. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision or the validity and
enforceability of this Agreement in any other jurisdiction.
Section 7.6 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving effect to applicable
choice of law principles to the extent that the application of the laws of another jurisdiction
would result thereby.
Section 7.7 Waiver of Jury Trial. Each of the parties hereto irrevocably and
unconditionally waives trial by jury in any legal action or proceeding relating to this Agreement
or the transactions contemplated hereby and for any counterclaim therein.
Section 7.8 Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of, or affect the interpretation of,
this Agreement.
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Section 7.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and each of
the parties hereto may execute this Agreement by signing any such counterpart. A facsimile or
electronic mail transmission of this Agreement bearing a signature on behalf of a party hereto
shall be legal and binding on such party.
Section 7.10 Assignment; Binding Effect. The Company shall not convey, assign or
otherwise transfer any of its rights or obligations under this Agreement without the express
written consent of each Holder. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. Nothing in this
Agreement will limit or otherwise restrict the ability of the Holder to transfer its Notes.
Section 7.11 Waiver; Remedies. No delay on the part of any Holder or the Company in
exercising any right, power or privilege under this Agreement shall operate as a waiver thereof,
nor shall any waiver on the part of any Holder or the Company of any right, power or privilege
under this Agreement operate as a waiver of any other right, power or privilege of such party under
this Agreement, nor shall any single or partial exercise of any right, power or privilege under
this Agreement preclude any other or further exercise thereof or the exercise of any other right,
power or privilege under this Agreement.
Section 7.12 Amendment. This Agreement may be modified or amended, and any term
hereof waived, only by written agreement of all of the parties to this Agreement.
Section 7.13 Liability. The obligations hereunder of each of the Holders shall be
several, and not joint.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this
Agreement to be executed by their respective duly authorized officers, as of the date first above
written.
| BALLY TOTAL FITNESS HOLDING CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
SIGNATURE OF BENEFICIAL HOLDER
By: |
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Name (please print): |
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Title: |
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Address (including zip code): |
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Telephone Number (including area code): |
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Fax Number (including area code): |
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Tax Identification or Social Security Number: |
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Aggregate Principal Amount of Notes Held: |
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EXHIBIT A
| Aggregate Principal Amount | ||||
| Name of Holder | of Notes Held Beneficially | |||
A-1
EXHIBIT B
Form of Supplemental Indenture
SUPPLEMENTAL INDENTURE, dated as of [•], 2007, among Bally Total Fitness Holding Corporation,
a corporation organized under the laws of Delaware (the “Company”), and U.S. Bank National
Association, as trustee (the “Trustee”).
WHEREAS, the Company has duly issued its 9 7/8% Senior Subordinated Notes due 2007 in the
aggregate principal amount of $299,764,000 (the “Notes”) pursuant to an Indenture, dated as
of December 16, 1998, between the Company and the Trustee (as amended or supplemented, the
“Indenture”), and the Notes are outstanding on the date hereof;
WHEREAS, the Company has received consents pursuant to the Limited Waiver and Forbearance
Agreement, dated [•], 2007 (the “Limited Waiver and Forbearance Agreement”), in the form
attached hereto as Schedule A, among the Company and the holders of the Notes listed on Exhibit A
thereto, from holders of the Notes representing at least a majority in aggregate principal amount
of the outstanding Notes to certain waivers of Defaults or Events of Default and amendments to the
Indenture described therein;
WHEREAS, pursuant to the Limited Waiver and Forbearance Agreement and Sections 5.13 and 10.19
of the Indenture, holders representing at least a majority in aggregate principal amount of the
outstanding Notes have executed and delivered to the Trustee waivers certain Defaults or Events of
Default under and prospective compliance with Sections 7.4, 10.12(a)(i), 10.17 and 10.18 of the
Indenture from [•], 2007 to, but not including, the Fourth Waiver Expiration Date (as defined in
Section 1.1 hereof);
WHEREAS, Section 9.2 of the Indenture provides that, with the consent of the Holders of at
least a majority in aggregate principal amount of the outstanding Notes, the Company and the
Trustee may enter into an indenture supplemental to the Indenture for the purpose of amending,
modifying or changing certain provisions of the Indenture or the Notes;
WHEREAS, to waive compliance with Section 7.4 of the Indenture from [•], 2007 to, but not
including, the Fourth Waiver Expiration Date, the Indenture requires the Company and the Trustee to
enter into an indenture supplemental to the Indenture in accordance with Section 9.2 of the
Indenture;
WHEREAS, Section 9.4 of the Indenture provides that a supplemental indenture becomes effective
in accordance with its terms and thereafter binds every Holder of the Notes;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1.1 Acknowledgements. (a) The Trustee acknowledges that the holders of the
Notes listed on Exhibit A to the Limited Waiver and Forbearance Agreement represent at least a
majority in aggregate principal amount of the outstanding Notes as of the date hereof, and that
pursuant to and subject to the terms of the Limited Waiver and Forbearance Agreement, such holders
have waived, from [•], 2007 to, but not including, the Fourth Waiver Expiration Date, the Company’s
obligation to (i) file with the SEC such reports as the Company is or may be required
B-1
to file with the SEC pursuant to Sections 13(a) or 15(d) of the Exchange Act and furnish such
reports to the Trustee and holders of the Notes in accordance with Sections 7.4 and 10.17 of the
Indenture (the “Reporting Obligations”), (ii) comply with Section 10.12(a)(i) of the
Indenture in connection with the Purchase and Sale Agreement, dated October 13, 2006, for the sale
of 0000 Xxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxx and the Escrow Holdback Agreement, dated
October 24, 2006, as amended, concerning Escrow Trust #06-0806 (the “Sale and Leaseback
Matters”), and (iii) provide notice to the Trustee of a Default or Event of Default arising in
connection with any or all of the Reporting Obligations or the Sale and Leaseback Matters in
accordance with Section 10.18 of the Indenture (the “Notice Obligations” and, together with
the Reporting Obligations and the Sale and Leaseback Matters, the “Waived Matters”), on the
terms set forth in the Waiver and Forbearance Agreement.
(b) Subject to the terms of the Limited Waiver and Forbearance Agreement and the Indenture,
the Trustee acknowledges the effectiveness of the limited waiver of the Waived Matters contained in
the Limited Waiver and Forbearance Agreement.
(c) The Company acknowledges and agrees that, notwithstanding the agreement of the holders
listed on Exhibit A to the Limited Waiver and Forbearance Agreement to grant a limited waiver in
respect of the Waived Matters, (i) such limited waiver shall not constitute a waiver of the
occurrence and continuance of any Waived Matter constituting a Default or Event of Default at any
time on or after the Fourth Waiver Expiration Date, if such Default or Event of Default has not
been cured or otherwise waived, (ii) such limited waiver shall not constitute a waiver of the
occurrence or continuance of any Default or Event of Default that is not a Waived Matter and (iii)
nothing contained in the Limited Waiver and Forbearance Agreement shall be construed to limit or
affect the right of the Trustee and the holders listed on Exhibit A to the Limited Waiver and
Forbearance Agreement to take any action to enforce or interpret any provision of the Limited
Waiver and Forbearance Agreement through the Fourth Waiver Expiration Date.
Section 2.1 Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to them in the Indenture or any supplemental indenture related
thereto.
Section 3.1 Amendment to Section 1.1. The following defined terms are hereby inserted
into Section 1.1 of the Indenture in their respective correct alphabetical order. To the extent the
defined terms are already included in the Indenture, such terms are replaced in their entirety by
the defined terms set forth below.
“Credit Agreement” means the Amended and Restated Credit Agreement, dated as of October 16,
2006 (as amended), among the Company, as Borrower, the several banks and other financial
institutions parties thereto, JPMorgan Chase Bank, N.A., as Agent, Xxxxxx Xxxxxxx Senior Funding,
Inc., as Syndication Agent, and JPMorgan Securities Inc., as Sole Lead Arranger and Sole
Bookrunner.
“Credit Agreement Forbearance Agreement” means the Forbearance Agreement, dated as of April 5,
2007, among the Company, the Lenders party thereto, JPMorgan Chase Bank. N.A., as Agent, and Xxxxxx
Xxxxxxx Senior Funding, Inc., as Syndication Agent.
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“Fourth Waiver Expiration Date” means the earliest to occur of (A) July 13, 2007, (b) June 28,
2007, if the Company fails to deliver, before or on such date, copies of the documents referred to
in Section 5.1(b) of the Credit Agreement Forbearance Agreement to the Trustee, each Holder
Representative and each Holder (each as defined in the Limited Waiver and Forbearance Agreement),
with delivery only required to each such party that has executed a binding confidentiality
agreement with the Company, or (C) the date on which (i) a Default or Event of Default that is not
a Waived Matter occurs and such Default or Event of Default has not been cured or waived, (ii) (a)
the Agent Lender or any Lender commences any enforcement action under the Credit Agreement or (b)
the trustee or the requisite holders under the Senior Notes Indenture issue any enforcement notice
under Section 5.2 of the Senior Notes Indenture, including with regard to the acceleration of the
Senior Notes, (iii) to the extent applicable, a breach by any of the parties thereto of the Senior
Notes Forbearance Agreement or the Credit Agreement Forbearance Agreement (which has not been cured
or waived by the requisite parties in accordance with the terms of such agreements) occurs, (iv)
the Company takes any action to challenge the validity or enforceability of the Indenture, the
Limited Waiver and Forbearance Agreement or any provision thereof (including by asserting such a
challenge in writing) or (v) the Company is no longer working in good faith on the terms of a
consensual restructuring with the Holder Representatives and the Restricted Holders (each as
defined in the Limited Waiver and Forbearance Agreement).
“Limited Waiver and Forbearance Agreement” means the Limited Waiver and Forbearance Agreement,
dated as of [•], 2007, among the Company and the holders of the Notes listed on Exhibit A thereto,
as amended and supplemented.
“Senior Notes” means the 10 1/2% Senior Notes due 2011 issued by the Company pursuant to the
Senior Notes Indenture.
“Senior Notes Forbearance Agreement” means the Limited Waiver and Forbearance Agreement, dated
as of [•], 2007, among the Company and the holders of the Senior Notes party thereto.
“Senior Notes Indenture” means the Indenture, dated as of July 2, 2003, as amended or
supplemented, by and among the Company, as issuer, the Guarantors party thereto and the Trustee, as
trustee.
Section 4.1 Amendment to Section 5.1(c). Section 5.1(c) of the Indenture is hereby
amended by inserting the following at the end thereof:
“provided, however, that any Default in connection with the Waived Matters (as defined in the
Limited Waiver and Forbearance Agreement) that arose prior to the Fourth Waiver Expiration Date and
that would not otherwise ripen into an Event of Default without delivery of a notice of default
hereunder shall constitute an Event of Default on the Fourth Waiver Expiration Date, in which event
the Company acknowledges that the execution of the Limited Waiver and Forbearance Agreement shall
constitute a notice of default for this purpose, unless such Default has been cured or otherwise
waived;”
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Section 4.2 Amendment to Section 7.4. Section 7.4 of the Indenture is hereby amended
by inserting the following at the end of the last paragraph thereof:
“Notwithstanding any of the foregoing, and subject to the terms of the Limited Waiver and
Forbearance Agreement, including Section 4.2 thereof, the Company shall not be required to comply
with this Section 7.4 during the period beginning on [•], 2007 and ending on the Fourth Waiver
Expiration Date.”
Section 5.1 Miscellaneous.
(a) Governing Law. This Supplemental Indenture shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving effect to applicable
choice of law principles to the extent that the application of the laws of another jurisdiction
would result thereby.
(b) Headings. Section headings in this Supplemental Indenture are included herein for
convenience of reference only and shall not constitute a part of, or affect the interpretation of,
this Supplemental Indenture.
(c) Counterparts. This Supplemental Indenture may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and each of
the parties hereto may execute this Supplemental Indenture by signing any such counterpart. A
facsimile or electronic mail transmission of this Supplemental Indenture bearing a signature on
behalf of a party hereto shall be legal and binding on such party.
(d) Trustee Disclaimer. The Trustee has accepted the amendment of the Indenture
effected by this Supplemental Indenture and agrees to execute the trust created by the Indenture as
hereby amended, but only upon the terms and conditions set forth in the Indenture, including the
terms and provisions defining and limiting the liabilities and responsibilities of the Trustee.
Except as expressly set forth in this Supplemental Indenture, nothing in the Limited Waiver and
Forbearance Agreement shall modify the terms of the Indenture or affect, limit or impair the rights
of any person not party to the Limited Waiver and Forbearance Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
B-4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed by their respective duly authorized officers, as of the date first above written.
| BALLY TOTAL FITNESS HOLDING CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| U.S. BANK NATIONAL ASSOCIATION, as Trustee | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
B-5
SCHEDULE A
Limited Waiver and Forbearance Agreement
B-6
EXHIBIT C
Consent Letter
May ___, 2007
U.S. Bank National Association, as Trustee
Attn: Corporate Finance
000 Xxxx 0xx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attn: Corporate Finance
000 Xxxx 0xx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
| Re: | 9 7/8% Senior Subordinated Notes due 2007 (the “Notes”) of Bally Total Fitness Holding Corporation (the “Company”), issued pursuant to the Indenture, dated as of December 16, 1998 (as amended or supplemented, the “Indenture”), between the Company and U.S. Bank National Association, as Trustee |
Ladies and Gentlemen:
Each of the undersigned holders (the “Holder(s)”) hereby represents and warrants that
it is the beneficial owner of the Notes on the records of the undersigned DTC Participant (the
“Custodian”) in the respective principal amounts stated below. The Custodian is the
registered holder on behalf of such Holder(s) of such Notes on the records of The Depository Trust
Company (“DTC”). Cede & Co., as the nominee of DTC (collectively, “DTC/Cede”), is
the registered holder on behalf of the Custodian of such Senior Notes.
Pursuant to the terms of the Indenture, each of the Holder(s), Custodian and DTC/Cede, at the
request of the Custodian, on behalf of the Holder(s) holding the principal amounts of Notes stated
below, hereby consents to the amendments to the Indenture that are substantially in the form
attached hereto as Exhibit B.
While DTC/Cede is furnishing this notice as the holder of record of the Notes, it does so at
the request of Custodian and only as a nominal party for the true parties in interest, the
Holder(s). DTC/Cede has no interest in this matter other than to take those steps which are
necessary to ensure that Holder(s) are not denied their rights regarding the Notes, and Cede & Co.
assumes no further responsibility in this matter.
In addition to acknowledging that this request is subject to the indemnification provided for
in DTC Rule 6, the undersigned certifies to DTC/Cede, that the information and facts set forth in
this Consent Letter are true and correct, including the principal amount of Notes credited to the
Custodian’s DTC Participant account that are beneficially owned by the Holder(s).
C-1
This Consent Letter may be executed by the Holder(s), the Custodian and DTC/Cede in one or
more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, and may be delivered to the Company and the Trustee without
copies of the applicable signature page executed by the Holder(s).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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9 7/8% Senior Subordinated Notes due 2007 of Bally Total Fitness Holding Corporation
EXECUTION BY HOLDER(S)
The undersigned Holder(s) hereby execute this Consent Letter pursuant to the Indenture.
Very truly yours,
(Insert name of Holder)
By: |
||
Name (please print): |
||
Title: |
||
Address (including zip code): |
||
Telephone Number (including area code):
Fax Number (including area code):
Tax Identification or Social Security Number:
$
Aggregate Principal Amount of Notes Held
Aggregate Principal Amount of Notes Held
Please return this completed and executed signature page to:
| Bally Total Fitness Holding Corporation | Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital | |
| 0000 Xxxx Xxxx Xxxx Xxxxxx | 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 | |
| Xxxxxxx, Xxxxxxxx 00000 | Xxxxxxxxxxx, XX 00000-0000 | |
| Attention: Xxxx Xxxxx | Attention: Xxxx Xxxx | |
| Telephone Number: (000) 000-0000 | Telephone Number: (000) 000-0000 | |
| Fax Number: (000) 000-0000 | Fax Number: (000) 000-0000 |
C-3
9 7/8% Senior Subordinated Notes due 2007 of Bally Total Fitness Holding Corporation
EXECUTION BY CUSTODIAN
The undersigned Custodian (DTC Participant) hereby executes this Consent Letter pursuant to
the instructions set forth above by the
Holder(s):
Very truly yours,
(Insert name of Custodian/DTC Participant)
By: |
||||||||
| Name (please print): | ||||||||
Title: |
||||||||
| Address (including zip code): | ||||||||
Telephone Number (including area code):
Fax Number (including area code):
DTC Participant Account Number:
$
Principal Amount of the Senior Notes
Principal Amount of the Senior Notes
Insert Custodian’s
Medallion Stamp
Medallion Stamp
Please return this completed and executed signature page to:
| Bally Total Fitness Holding Corporation | Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital | |
| 0000 Xxxx Xxxx Xxxx Xxxxxx | 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 | |
| Xxxxxxx, Xxxxxxxx 00000 | Xxxxxxxxxxx, XX 00000-0000 | |
| Attention: Xxxx Xxxxx | Attention: Xxxx Xxxx | |
| Telephone Number: (000) 000-0000 | Telephone Number: (000) 000-0000 | |
| Fax Number: (000) 000-0000 | Fax Number: (000) 000-0000 |
C-4
9 7/8% Senior Subordinated Notes due 2007 of Bally Total Fitness Holding Corporation
EXECUTION BY REGISTERED HOLDER
The undersigned Registered Holder hereby executes this Consent Letter pursuant to the
instructions of the Custodian (DTC Participant).
Very truly yours,
CEDE & CO.
By:
Name:
Title:
Name:
Title:
Total Principal Amount of Notes with Respect to which this Notice of Consent is Given:
$
Please return this completed and executed signature page to:
| Bally Total Fitness Holding Corporation 0000 Xxxx Xxxx Xxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000 Attention: Xxxx Xxxxx Telephone Number: (000) 000-0000 Fax Number: (000) 000-0000 |
Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 Xxxxxxxxxxx, XX 00000-0000 Attention: Xxxx Xxxx Telephone Number: (000) 000-0000 Fax Number: (000) 000-0000 |
C-5
