CONSENT AGREEMENT
Exhibit 10.3
EXECUTION
COPY
This Consent Agreement (“Agreement”) is dated as of March 22, 2006, and is made by and
between Bally Total Fitness Holding Corporation, a Delaware corporation (“Bally” or the
“Company”), and the Person listed on the signature page attached hereto (the
“Holder”). Certain capitalized terms used herein and not otherwise defined have the
meanings set forth in Article VI hereof.
WHEREAS, the Holder is the beneficial owner of $10,500,000 in aggregate principal
amount of 9 7/8% Senior Subordinated Notes due 2007 of the Company (the “Notes”) issued
pursuant to the Indenture, dated as of December 16, 1998, between the Company and U.S. Bank
National Association, as trustee (as amended and supplemented, the “Indenture”);
WHEREAS, the Company desires to seek waivers (the “Waivers”) through the Waiver
Expiration Dates (as defined below) of any Default or Event of Default (as such terms are defined
in the Indenture) arising from the failure to timely comply with the covenants set forth in
Sections 7.4 and 10.17 of the Indenture with respect to the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2005 and the Company’s Quarterly Reports on Form 10-Q for
the fiscal periods ended March 31 and June 30, 2006 (the “Waived Matters”), which require
Bally to file with the SEC, and furnish to the Trustee and holders of Notes, the reports required
to be filed by the Company pursuant to the Exchange Act;
WHEREAS, the Company will be undertaking a solicitation of consents (the “Consent
Solicitation”) with respect to the Notes to obtain the Waivers; and
WHEREAS, the Holder has agreed with the Company to give its consent to the Waivers in the
Consent Solicitation, subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the representations, warranties,
covenants and agreements herein contained and intending to be legally bound hereby, Bally and the
Holder hereby agree as follows:
ARTICLE I
AGREEMENT TO GIVE CONSENT TO WAIVERS AND RELATED MATTERS
AGREEMENT TO GIVE CONSENT TO WAIVERS AND RELATED MATTERS
Section 1.1 (a) Acknowledgement. The Holder acknowledges that Bally may fail
to timely file with the SEC, and may fail to timely furnish to holders of Notes and the Trustee
certain of the reports and notices required by Sections 7.4 and 10.17 of the Indenture and
applicable provisions of the Exchange Act.
(b) Agreement to Give Consent. In accordance with Section 1.2 below, the Holder
hereby agrees to give its consent to the Waivers in the Consent Solicitation. The Waivers will
provide that any Default or Event of Default arising from a failure to comply with the covenants
set forth in Sections 7.4 and 10.17 of the Indenture, which require Bally to file with the SEC, and
furnish to the Trustee and holders of Notes, the reports required to be filed pursuant to the
Exchange Act, will be waived through the Waiver Expiration Dates. The Waivers will also provide
that any Notice of Default in respect of the Waived Matters delivered by the Holder or the Trustee
prior to the earlier of the termination of this Agreement and effectiveness of the
Supplemental Indenture (as defined below) shall automatically be rescinded and withdrawn and shall
no longer be effective. In addition, the Waivers will provide that any Default by Bally as a
result of its failure to provide notice to the Trustee of a Default with respect to the Waived
Matters under Section 10.18(b) of the Indenture will be waived through the Waiver Expiration Dates.
The “Waiver Expiration Dates” will be: (i) 5:00 pm, New York City time, on July 10, 2006,
with respect to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2005 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006; and (ii)
5:00 pm, New York City time, on September 11, 2006 (as may be extended by 30 days), with respect to
the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006. By giving its
consent to the Waivers in the Consent Solicitation, the Holder will authorize the Trustee to enter
into a Supplemental Indenture in form and substance satisfactory to the Trustee for purposes of
implementing the Waivers (the “Supplemental Indenture”).
Section 1.2 Further Action by Holder. As soon as practicable after
commencement of the Consent Solicitation, the Holder shall instruct the DTC Participant(s) that act
as custodian(s) for the Notes it beneficially owns to execute and deliver a letter of consent form,
which will accompany the consent solicitation materials, and shall instruct such DTC Participant(s)
to take all such further action as may be necessary to effect the consent of the Holder in the
Consent Solicitation on behalf of such Holder. In addition, the Holder shall, at the written
request of Bally, at any time and from time to time following the execution of this Agreement,
execute and deliver to Bally all such further instruments and take all such further action as may
be reasonably necessary or appropriate in order to confirm or carry out its obligations under this
Agreement and the transactions contemplated hereby.
Section 1.3 Delivery of Consent to Waivers; Consent Payment. When (i) Bally
receives sufficient consents so that it has received consents from a majority in aggregate
principal amount of Notes outstanding under the Indenture and (ii) the other conditions set forth
in the consent solicitation materials (which are identified in, and limited to, those contained in
Article V hereof) are satisfied, Bally will enter into the Supplemental Indenture with the Trustee
as soon as practicable thereafter; provided, that the continued effectiveness of the
Supplemental Indenture will be contingent upon payment of the Consent Fee on the terms set forth in
the Consent Solicitation. In consideration of the Waivers and subject to Article V hereof, Bally
will offer to pay or deliver (directly or through an agent) and shall pay or deliver (directly or
through an agent) to all beneficial owners participating in the Consent Solicitation, including the
Holder, at their election: (i) $10.00; or (ii) 4.4444 shares of the Company’s common stock, par
value $0.01 per share (the “Common Stock”), in each case per $1,000 in principal amount of
Notes (the “Consent Fee”). In addition, if Bally does not comply with the covenants set
forth in Sections 7.4 and 10.17 of the Indenture with respect to the Company’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006 by September 11, 2006, Bally will have the option to
extend the Waiver Expiration Date with respect to such Quarterly Report to October 11, 2006 for an
additional payment of: (i) $3.33; or (ii) 1.4815 shares of Common Stock, in each case per $1,000 in
principal amount of Notes (the “Additional Fee”). Only beneficial owners that certify to
the Company that they are “Accredited Investors” as that term is defined in Rule 501 under the
Securities Act will be offered the ability to elect to receive shares of Common Stock offered in
the Consent Solicitation. In connection with its consent delivered pursuant to the Consent
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Solicitation, the Holder will elect to receive shares of Common Stock in respect of the Notes
it beneficially owns.
Section 1.4 Restricted Securities. The Holder understands that the shares of
Common Stock to be issued to it pursuant to this Agreement (the “Shares”) will be issued
only in a transaction not involving any public offering in the United States within the meaning of
the Securities Act, the Shares have not been registered under the Securities Act or any other
applicable securities law, that the Shares will be “restricted securities” within the meaning of
Rule 144 under the Securities Act and that (A) prior to the expiration of the holding period
applicable to sales of restricted securities pursuant to Rule 144 under the Securities Act, the
Shares may be offered, resold, pledged or otherwise transferred only in accordance with any
applicable securities laws of any state of the United States or any other applicable jurisdiction
(i) (a) in a transaction meeting the requirements of Rule 144 under the Securities Act, (b) outside
the U.S. to a foreign purchaser in a transaction meeting the requirements of Regulation S, or (c)
pursuant to a transaction that is otherwise exempt from the registration requirements of the
Securities Act and state securities laws, (ii) to Bally or (iii) pursuant to an effective
registration statement under the Securities Act and (B) the Holder will notify any subsequent
purchaser from it of the resale restrictions set forth in (A) above, if then applicable. The
Holder agrees that the certificates representing the Shares shall bear a restrictive legend in
substantially the following form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ACQUIRED IN A
TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION THEREFROM TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR LAWS.”
Section 1.5 Voting Agreement. Upon satisfaction of the conditions precedent
set forth in Article V hereof, the Holder further agrees for a period from the date hereof
through December 31, 2006 that at any meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of capital stock of the Company, however called, or
in connection with any written consent of the holders of capital stock of the Company solicited by
the Board of Directors, the Holder will appear at the meeting or otherwise cause the Shares to be
counted as present at such meeting for purposes of establishing a quorum and vote or consent (or
cause to be voted or consented) the Shares (i) in favor of any proposed strategic transaction
(including a merger or consolidation of the Company with another entity or the sale of
substantially all of the Company’s assets) approved by the Board of Directors (a
“Board-Approved Transaction”) and (ii) against any merger, consolidation, combination, sale
of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other acquisition proposal (other than a Board-Approved Transaction);
provided, that the Holder holds the Shares on the record date for such meeting or as of the date of
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such written consent; provided, further, that this Section 1.5 will not apply to (x) the
extent any Person has formally initiated (whether by tender offer, proxy solicitation or other
filing that has been or will be mailed directly to holders of the Company’s Common Stock) a bona
fide potential strategic transaction that is fully financed or reasonably capable of being financed
and not a Board-Approved Transaction and such transaction would, if consummated, result in a
transaction more favorable to the holders of the Company’s Common Stock from a financial point of
view than the Board-Approved Transaction and (y) any shares of Common Stock which are owned,
directly or indirectly, by the Holder or any of its affiliates other than the Shares issued
pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BALLY
REPRESENTATIONS AND WARRANTIES OF BALLY
The Company represents and warrants to the Holder as follows:
Section 2.1 Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority (i) to own, lease and operate its
properties, to carry on its business as now being conducted and (ii) to execute, deliver and
perform its obligations under this Agreement, including entering into the Supplemental Indenture,
and the other agreements to be executed by the Company in connection herewith and to consummate the
transactions contemplated hereby and thereby. The Company and its Subsidiaries are duly qualified
to do business and are in good standing in all jurisdictions wherein such qualification is
necessary and where failure so to qualify would have a material adverse effect on their business,
properties, operations, condition (financial or other), results of operations or prospects of the
Company and its Subsidiaries, taken as a whole. The Company has no equity investment in any person
other than its Subsidiaries.
Section 2.2 Issuance of the Shares. The Shares will be duly authorized and
when issued in accordance with the terms hereof will be validly issued, fully paid and
nonassessable. There are no preemptive or similar rights of any stockholder of the Company or any
other person to acquire the Shares.
Section 2.3 Consent Agreement and Other Transaction Documents. This Agreement
and the other agreements and instruments contemplated hereby have been duly and validly authorized
by the Company, this Agreement has been, and each of the other agreements contemplated by this
Agreement will be, duly executed and delivered by the Company and this Agreement is, and each of
the other agreements contemplated by this Agreement will be, a valid and binding obligation of the
Company enforceable 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 2.4 Non-Contravention. The execution and delivery by the Company of
this Agreement and the other agreements and transactions contemplated hereby to which the Company
is a party, 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
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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 (other than provisions of the Credit Agreement that may prohibit the
Waivers and similar waivers under the Senior Note Indenture and the related consent payments) or
(iii) violate or contravene any applicable law, rule or regulation or any applicable decree,
judgment or order of any court or Governmental Body having jurisdiction over the Company or any of
its properties or assets.
Section 2.5 Certain Securities Law Matters. Assuming the accuracy of the
representations and warranties of the Holder set forth in Article III hereof, the Shares may be
issued to the Holder pursuant to this Agreement without registration under the Securities Act by
reason of Section 4(2) thereof and similar provisions under applicable state securities laws.
Section 2.6 Capitalization. The authorized capital stock of the Company is
(a) 60,200,000 shares of Common Stock and (b) 10,000,000 shares of preferred stock, par value $.01
per share (the “Preferred Stock”). All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and nonassessable, have no
preemptive rights and, to its knowledge, have been issued in accordance with applicable securities
laws. As of March 17, 2006, there were: (a) 38,529,964 shares of Common Stock outstanding; and (b)
there were no shares of Preferred Stock outstanding. As of March 17, 2006, without giving effect
to the Company’s stockholder rights plan pursuant to which each outstanding share of Common Stock
is accompanied by the right to purchase one one-thousandth (1/1000th) of a share of Series B Junior
Participating Preferred Stock (the “Rights Plan”), the Company had outstanding options,
warrants and similar rights entitling the holders to purchase or acquire 4,829,792 shares of Common
Stock and 54,500 shares of Common Stock reserved for future grants under the Company’s equity
incentive plans. Other than as set forth in the preceding sentence and with respect to the Rights
Plan, the Company does not have outstanding any securities (or obligation to issue any such
securities) convertible into, exchangeable for or otherwise entitling the holders thereof to
acquire shares of Common Stock. The Company has duly reserved from its authorized and unissued
shares of Common Stock the full number of shares required for (a) all options, warrants,
convertible securities and other rights to acquire shares of Common Stock which are outstanding and
(b) all shares of Common Stock and options and other rights to acquire shares of Common Stock which
may be issued or granted under the stock option and similar plans which have been adopted by the
Company or any of its Subsidiaries.
Section 2.7 Rights Agreement and DGCL 203.
(a) Subject to the accuracy of Section 3.4(b), the execution, delivery and performance of this
Agreement by the Company and the Holder does not in any way trigger, or raise any rights or
obligations under, that certain stockholder rights plan adopted by the Board of Directors of the
Company on October 18, 2005 and evidenced by that certain Rights Agreement, dated as of October 18,
2005, between the Company and LaSalle Bank National Association, as rights agent (the “Rights
Agreement”), including without limitation by reason of the fact that other Persons may be
entering into consent agreements with the Company similar to this Agreement. The Board of
Directors of the Company has approved this Agreement and determined that the Holder and its
affiliates shall not be or be deemed to be the beneficial owner
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(within the meaning of Section 1.3 of the Rights Agreement) of any of the shares of Common
Stock issued by the Company to any other Person pursuant to a consent agreement that is similar to
this Agreement and the transactions contemplated hereby.
(b) Subject to the accuracy of Section 3.4(b), this Agreement and the transactions
contemplated hereby will not result in the Holder or any of its affiliates becoming an Interested
Stockholder (as such term is defined in Section 203 of the Delaware General Corporation Law (the
“DGCL”).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE HOLDER
REPRESENTATIONS AND WARRANTIES OF THE HOLDER
The Holder represents and warrants to the Company as follows:
Section 3.1 Organization and Standing of the Holder. The Holder is duly
organized, validly existing and in good standing under the laws of its jurisdiction of its
incorporation or formation 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 3.2 Consent Agreement and Other Transaction Documents. This Agreement
and each other agreement contemplated hereby to which the Holder is a party have been duly and
validly authorized on behalf of the Holder. This Agreement has been, and each of the other
agreements contemplated by this Agreement will be, duly executed and delivered by the Holder and
assuming due authorization, execution and delivery by the Company, this Agreement is, and each of
the other agreements contemplated by this Agreement will be, a valid and binding obligation of the
Holder enforceable in accordance with their 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 3.3 Non-Contravention. The execution and delivery by the Holder of
this Agreement and the transactions contemplated hereby to which the Holder is a party, 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 organizational documents of the Holder; (ii) conflict with or result
in a breach by the Holder 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 Holder is a party
or by which the Holder or any of its properties or assets is bound or affected or (iii) violate or
contravene any applicable law, rule or regulation or any applicable decree, judgment or order of
any court or Governmental Body having jurisdiction over the Holder or any of its properties or
assets.
Section 3.4 Ownership.
(a) The Holder is the beneficial owner of the aggregate principal amount of Notes as set forth
under Holder’s name on the signature page hereto. There are no outstanding agreements,
arrangements or understandings under which such Holder or its nominee may be obligated to Transfer
any of the Notes.
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(b) Without giving effect to the transactions contemplated by this Agreement, as of the date
hereof the Holder is the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act)
of 5,555,555 shares of Common Stock.
Section 3.5 Investor Representations. The Holder is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in the acquisition of
the Shares, including investments in securities issued by the Company. The Holder is acquiring the
Shares in the ordinary course of its business and for its own account for investment (as defined
for purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976 and the regulations
thereunder) only, and has no present intention of distributing any of the Shares nor any
arrangement or understanding with any other persons regarding the distribution of such Shares
within the meaning of Section 2(11) of the Securities Act. The Holder is an “accredited investor”
within the meaning of Rule 501 of Regulation D promulgated under the Securities Act. The Holder
understands that the Shares are being issued to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and that the Company
is relying upon the truth and accuracy of, and the Holder’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Holder set forth herein in order
to determine the availability of such exemptions and the eligibility of the Holder to acquire the
shares of Common Stock.
Section 3.6 Information Provided. The Holder has been afforded the
opportunity to ask questions of the Company and has received satisfactory answers to any such
inquiries; and the Holder understands that its investment in the Shares involves a high degree of
risk and that no Governmental Body has passed on or made any recommendation or endorsement of the
Shares.
Section 3.7 Terms of Consent. The terms of this Agreement were the result of
negotiations between the Holder, the Company, and representatives of the Company and the Holder and
the 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 Further Action by Bally. Bally shall, at the written request of
the Holder, at any time and from time to time following the execution of this Agreement, execute
and deliver to the Holder all such further instruments and take all such further action as may be
reasonably necessary or appropriate in order to confirm or carry out its obligations under this
Agreement and the transactions contemplated hereby.
Section 4.2 Publicity. Neither the Company nor the 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 both the Company and the Holder shall be entitled, without the prior approval
of the Holder, to make any press release or other public disclosure with respect to such
transactions as is required by
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applicable law or the NYSE. The Company and the 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 announcement.
Section 4.3 Registration of Shares. (a) Promptly after the execution of this
Agreement, the Company will enter into a registration rights agreement for the benefit of the
holders that will be issued shares of Common Stock in exchange for the Waivers (the “Eligible
Holders”), in the form attached hereto as Exhibit A.
(b) All expenses incident to the Company’s performance of or compliance with its obligations
under the registration rights agreement will be borne by the Company, including, without
limitation, the reimbursement of the Eligible Holders for the reasonable expenses of one legal
counsel incurred relating to the registration of the Shares and the Additional Shares as set forth
above.
Section 4.4 Approval Right. Without the prior approval of each Holder,
Bally will not: increase the consideration payable to the holders of the Senior Notes for similar
waivers under the Senior Notes Indenture with respect to Bally’s failure to comply with its
reporting obligations thereunder in excess of the Consent Fee and the Additional Fee.
ARTICLE V
CONDITIONS PRECEDENT TO EFFECTIVENESS
CONDITIONS PRECEDENT TO EFFECTIVENESS
The effectiveness of: (i) the Waivers provided by the Holder pursuant to the Consent
Solicitation and the obligation of the Company to pay the Consent Fee and the Additional Fee
pursuant to the Consent Solicitation; and (ii) the provisions set forth in Section 1.5
hereof, will be subject to the following conditions to be set forth in the consent solicitation
materials:
Section 5.1 Consents. Bally having received: (i) requisite consents having
been received (and not revoked) from holders of its Senior Notes in order to effect proposed
waivers under the Senior Note Indenture similar to the Waivers; (ii) requisite consents from the
necessary lenders under the Credit Agreement in order to effect proposed waivers under the Credit
Agreement similar to the Waivers; and (iii) consents relating to the Waivers and the similar
waivers under the Senior Note Indenture and the related consent payments having been received from
the necessary lenders under the Credit Agreement.
Section 5.2 No Violations. In the reasonable judgment of the Company, there
shall not be any law or regulation, any injunction or action or other proceeding (pending or
threatened) that (in the case of any action or proceeding if adversely determined) would make
unlawful, invalid or enjoin the implementation of the Waivers or payment of the Consent Fee or the
Additional Fee or that would question the legality or the validity thereof.
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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:
“Agent” shall mean, 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.
“Credit Agreement” shall mean the Credit Agreement, dated as of November 18, 1997 (as
amended and restated as of October 14, 2004 and as further amended and supplemented from time to
time), among Bally Total Fitness Holding Corporation, as Borrower, the Several Banks and Other
Financial Institutions Parties Thereto, JPMorgan Chase Bank, as Agent, Deutsche Bank Securities
Inc., as Syndication Agent, LaSalle Bank National Association, as Documentation Agent, and JPMorgan
Securities Inc., as Sole Lead Arranger and Sole Bookrunner.
“DTC” shall mean The Depository Trust Company, a limited purpose trust company.
“DTC Participant” shall mean a participating organization in DTC.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Governmental Body” shall mean 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.
“Holder” shall have the definition set forth in the first paragraph of this Agreement
and all of its successors and assigns.
“Person” means any individual, corporation, partnership, joint venture, trust, estate,
limited liability company, unincorporated organization or governmental agency.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Senior Note Indenture” means the Indenture, dated as of July 2, 2003 (as supplemented
on July 22, 2003, December 7, 2004 and September 2, 2005), by and among Bally Total Fitness Holding
Corporation, as Issuer, the Guarantors party thereto and U.S. Bank National Association, as
Trustee.
“Senior Notes” means the 10 1/2% Senior Notes due 2011 of Bally Total Fitness Holding
Corporation.
“Trustee” shall mean U.S. Bank National Association.
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ARTICLE VII
MISCELLANEOUS
MISCELLANEOUS
Section 7.1 Costs, Expenses and Taxes. Each party shall bear its own costs
and expenses in connection with the preparation, execution and delivery of this Agreement and the
issuance of the Shares and payment of the cash consideration; provided, however, that the Company
will pay for the reasonable fees and expenses of counsel to the Holder in connection with this
Agreement and the transactions contemplated hereby, including, without limitation, any actions
requested by the Company pursuant to Section 1.2. 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 and the delivery of consent for the cash and Shares.
Section 7.2 Survival of Representations. The representations, warranties,
covenants and agreements of the Holder and the Company contained in this Agreement shall survive
the execution of the Supplemental Indenture.
Section 7.3 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 7.4 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 7.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CHOICE OF
LAW RULES.
Section 7.6 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.
Section 7.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and either
of the parties hereto may execute this Agreement by signing any such counterpart. A facsimile
transmission of this Agreement bearing a signature on behalf of a party hereto shall be legal and
binding on such party.
Section 7.8 Assignment; Binding Effect. The Holder shall not convey, assign
or otherwise transfer any of its rights or obligations under this Agreement without the express
written consent of Bally, and Bally shall not convey, assign or otherwise transfer any of its
rights and obligations under this Agreement without the express written consent of the 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
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restrict the ability of the Holder to transfer its Notes, but the agreement of the Holder to
give its consent to the Waivers will bind every subsequent holder of the Notes.
Section 7.9 Waiver; Remedies. No delay on the part of any Holder or Bally in
exercising any right, power or privilege under this Agreement shall operate as a wavier thereof,
nor shall any waiver on the part of any Holder or Bally 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 7.10 Amendment. This Agreement may be modified or amended only by
written agreement of all of the parties to this Agreement.
Section 7.11 Termination. This Agreement shall automatically terminate without
any action by the parties hereto if the Supplemental Indenture implementing the Waivers has not
been executed and become effective by 6:00 pm Eastern Daylight Time on May 15, 2006.
Section 7.12 Liability. The obligations hereunder of each of the entities on
the signature pages hereto that comprise the Holder shall be several, and not joint, and each such
entity shall only be obligated with respect to its pro rata portion of any such obligation based on
its percentage ownership of the aggregate principal amount of Notes reflected on the signature
pages hereto.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, 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: | /s/ Xxxx X. Xxxxxxxxx | |||||
| Name: | ||||||
| Title: | ||||||
| PARDUS EUROPEAN SPECIAL OPPORTUNITIES MASTER FUND L.P. | ||||||
| By: | Pardus Capital Management L.P., its investment manager | |||||
| By: | Pardus Capital Management LLC, its general partner | |||||
| By: | /s/ Xxxxx Xxxxx | |||||
| Name: Xxxxx Xxxxx | ||||||
| Title: Sole Member | ||||||
Date: March 22, 2006
