EXECUTION VERSION
INVESTMENT AGREEMENT
by and among
BALLY TOTAL FITNESS HOLDING CORPORATION, as debtor and debtor-in-possession,
and
HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD., and
HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P.,
as Investors
Dated as of August 15, 2007
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS....................................................................2
Section 1.1 Definitions.....................................................2
ARTICLE II
PURCHASE AND SALE OF SHARES...................................................10
Section 2.1 Issuance and Sale of New Investor Shares.......................10
Section 2.2 Payment of the New Investor Share Purchase Price...............10
Section 2.3 Investor Share Notice..........................................10
ARTICLE III
THE CLOSING...................................................................11
Section 3.1 The Closing....................................................11
Section 3.2 Deliveries.....................................................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................12
Section 4.1 Organization...................................................12
Section 4.2 Due Authorization, Execution and Delivery; Enforceability......12
Section 4.3 Capitalization.................................................12
Section 4.4 Consents.......................................................12
Section 4.5 No Conflicts...................................................12
Section 4.6 No Registration................................................13
Section 4.7 Financial Statements...........................................13
Section 4.8 No Fiduciary Representation....................................13
Section 4.9 Title to Property..............................................14
Section 4.10 Litigation.....................................................14
Section 4.11 ERISA..........................................................14
Section 4.12 Copyrights, Patents, Trademarks and Licenses, etc..............14
Section 4.13 Environmental..................................................14
Section 4.14 Compliance with Laws...........................................15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS...............................15
Section 5.1 Organization...................................................15
Section 5.2 Due Authorization..............................................16
Section 5.3 Consents and Approvals.........................................16
Section 5.4 No Violations..................................................16
Section 5.5 Financing......................................................17
Section 5.6 Investment Representations.....................................17
Section 5.7 Dollar Revenues................................................17
ARTICLE VI
COVENANTS.....................................................................17
Section 6.1 Conduct of Business Pending the Closing........................17
Section 6.2 No Solicitation of Alternative Proposals.......................20
Section 6.3 Cooperation; Access to Information.............................23
Section 6.4 HSR Act........................................................23
Section 6.5 Further Actions; Reasonable Efforts............................24
Section 6.6 Use of Proceeds................................................24
Section 6.7 Notification of Certain Matters................................24
Section 6.8 Compliance with Other Agreements...............................25
Section 6.9 Information....................................................25
ARTICLE VII
CONDITIONS....................................................................25
Section 7.1 Conditions to the Obligations of the Investors.................25
Section 7.2 Conditions to the Obligations of the Company...................26
ARTICLE VIII
TERMINATION; BREAK-UP FEE; FEES AND EXPENSES..................................27
Section 8.1 Termination....................................................27
Section 8.2 Break-Up Fee; Fees and Expenses................................29
ARTICLE IX
INDEMNIFICATION...............................................................30
Section 9.1 Indemnification................................................30
Section 9.2 Notice; Assumed Defense........................................31
Section 9.3 Settlements....................................................31
Section 9.4 Limitation on Liability........................................32
ARTICLE X
SUBSIDIARY GUARANTEE..........................................................32
Section 10.1 Guarantee......................................................32
ARTICLE XI
MISCELLANEOUS.................................................................32
Section 11.1 Certain Matters................................................32
Section 11.2 Governing Law..................................................32
Section 11.3 Jurisdiction; Forum; Service of Process; Waiver of Jury Trial..32
Section 11.4 Successors and Assigns.........................................33
Section 11.5 Entire Agreement; Amendment....................................33
Section 11.6 Notices........................................................33
Section 11.7 Delays or Omissions............................................35
Section 11.8 Several Obligations of Investors...............................35
Section 11.9 Counterparts...................................................35
Section 11.10 Severability...................................................35
Section 11.11 Construction...................................................35
Section 11.12 Headings.......................................................35
Section 11.13 Public Announcement............................................36
Section 11.14 Consummation; Specific Performance.............................36
Section 11.15 Non-Survival of Representations and Warranties.................36
Section 11.16 Third Party Beneficiaries......................................36
Exhibits
Exhibit I - Amended Plan of Reorganization
Exhibit II - Form of Investor Share Notice
Exhibit III - NAICS Industry Codes
Schedules
Schedule A - Litigation Schedule
INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (as it may be amended, restated,
supplemented or otherwise modified from time to time, this "Agreement") is made
as of August 15, 2007, by and among Bally Total Fitness Holding Corporation, a
Delaware corporation, in its capacity as debtor and debtor in possession (the
"Company"), the subsidiary guarantors set forth on the signature pages hereto
(the "Subsidiary Guarantors"), as guarantors, and Harbinger Capital Partners
Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P.
(collectively, including any affiliates thereof, the "Investors").
RECITALS
WHEREAS, the Company and certain of its direct and indirect
subsidiaries (as more particularly defined in the Plan (as defined below), the
"Debtors") have filed chapter 11 petitions under Chapter 11 of Title 11 of the
United States Code, 11 U.S.C. xx.xx. 101-1330 (as amended, the "Bankruptcy
Code") in the United States Bankruptcy Court for the Southern District of New
York (the "Bankruptcy Court"), Case No. 07-12395 (BRL) July 31, 2007) in order
to effectuate a financial and corporate restructuring of the Debtors through the
Initial Plan (as defined below) (such chapter 11 cases, as more particularly
defined in the Plan, the "Chapter 11 Cases");
WHEREAS, the Company desires to undertake the Restructuring (as
hereinafter defined) in accordance with the Plan (as hereinafter defined);
WHEREAS, in connection with the Restructuring, the Investors desire to
make a significant new investment in Reorganized Bally (as hereinafter defined)
in exchange for newly issued equity of Reorganized Bally;
WHEREAS, to implement such investment, the Investors desire to acquire
from the Reorganized Bally, and the Company desires to issue to the Investors,
upon the terms and subject to the conditions set forth herein, the New Investor
Shares (as hereinafter defined);
WHEREAS, prior to the entry into this Agreement, the Company filed (i)
a motion for an order authorizing Company to enter into the Restructuring
Support Agreement (as defined below) and this Agreement, including, without
limitation, the Break-Up Fee and Expenses set forth in Section 8.2 hereof (the
"Approval Motion"), and (ii) a motion for an order authorizing the Company
pursuant to Section 1127(a) of the Bankruptcy Code and Bankruptcy Rule 3019 (the
"Section 1127(a) Motion") to modify their Initial Plan in the form of the Plan,
without the need to resolicit the votes of any creditor with respect to the
Plan, and finding that the Plan does not adversely affect any class of creditors
whose votes were solicited for the Initial Plan and that the Plan is deemed
accepted by all creditors who have previously accepted the Initial Plan.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For the purposes of this Agreement, the
following terms shall have the following meanings:
"Action" shall mean any litigation, suit, claim, action,
administrative, arbitral or other proceeding, inquiry, audit, hearing, petition,
grievance, complaint, challenge or governmental or regulatory investigation.
"Affiliate" shall, with respect to any Person, mean any other Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. For the
purposes of this Agreement, (i) the Company and its subsidiaries shall not be
deemed to be Affiliates of either the Investors or the Excluded Parties, and
neither the Investors nor the Excluded Parties shall be deemed to be Affiliates
of the Company and its subsidiaries, and (ii) neither of the Investors shall be
deemed to be Affiliates of the Excluded Parties, and none of the Excluded
Parties shall be deemed to be Affiliates of the Investors.
"Agreement" shall have the meaning ascribed thereto in the Preamble.
"Alternative Proposal" shall have the meaning ascribed thereto in
Section 6.2.
"Assumed Contract" shall mean any contract of the Debtors that is not
set forth on Exhibit E to the Plan, as amended from time to time.
"Assumption Orders" shall mean the order or orders entered by the
Bankruptcy Court (which may include the Confirmation Order) approving the
assumption of the Assumed Contracts, in form and substance reasonably
satisfactory to the Investors.
"Bankruptcy Code" shall have the meaning ascribed thereto in the
Recitals.
"Bankruptcy Court" shall have the meaning ascribed thereto in the
Recitals.
"Board of Directors" shall mean (i) the Board of Directors of the
Company (or Reorganized Bally, as the case may be) or (ii) to the extent the
Board of Directors of the Company determines in good faith (after consultation
with its legal counsel) that it must constitute a special committee consisting
of only disinterested directors (as such term is used in Section 144 of the
Delaware General Corporation Law) to consider a particular action with respect
to which certain of its members are interested directors (as such term is used
in Section 144 of the Delaware General Corporation Law), such duly constituted
special committee of the Board of Directors of the Company so long as it
consists of all members of the Board of Directors of the Company that are
disinterested directors with respect to such action.
"Break-Up Fee" shall have the meaning ascribed thereto in Section
8.2(a).
"Business Day" shall mean any day excluding Saturday, Sunday, or any
other day on which banking institutions located in New York, New York are
required or authorized to be closed.
"Business Plan" shall mean that 2007-2011 business plan of the
Company, dated June 27, 2007.
"Cash Collateral Order" shall mean, collectively, (i) any and all cash
collateral orders entered by the Bankruptcy Court in any of the Chapter 11 Cases
with respect to the use of cash collateral pursuant the Old Credit Agreement or
(ii) any other cash collateral order entered by the Bankruptcy Court in any of
the Chapter 11 Cases, which, with respect to each of (i) and (ii), shall be
reasonably acceptable to the Investors.
"Chapter 11 Cases" shall have the meaning ascribed thereto in the
Recitals.
"Closing" shall have the meaning ascribed thereto in Section 3.1.
"Closing Date" shall have the meaning ascribed thereto in Section 3.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning ascribed thereto in the Preamble.
"Company Securities" shall mean (x) shares of capital stock or other
voting securities of the Company, (y) securities of the Company convertible into
or exchangeable for shares of capital stock or other voting securities of the
Company or (z) options (including cash settlement options), warrants or other
rights to acquire shares of capital stock or other voting securities of the
Company.
"Confirmation Order" shall have the meaning ascribed thereto in the
Plan.
"Consenting Noteholders" shall mean the Excluded Parties and the Other
Consenting Noteholders.
"Debtors" shall have the meaning ascribed thereto in the Recitals.
"DIP Loan Facility" shall have the meaning ascribed thereto in the
Plan, as it may be amended, restated, supplemented and otherwise modified from
time to time in accordance with the terms thereof and, if such amendment,
restatement, supplement or other modification would be materially adverse to any
of the Debtors, with the consent of the Investors and the Excluded Parties, such
consent not to be unreasonably withheld or delayed.
"Effective Date" shall have the meaning ascribed thereto in the Plan.
"Employee Benefit Plan" shall mean, at any date, any employee pension
benefit plan (as defined in Section 3(2) of ERISA) which is subject to Title IV
of ERISA (other than a Multiemployer Plan) and to which Borrower or any ERISA
Affiliate may have any liability, including any liability by reason of having
been a substantial employer within the meaning of Section 4063 of ERISA at any
time during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA
"Encumbrance" shall mean any lien, encumbrance, security interest,
option, pledge, mortgage, deed of trust, hypothecation, conditional sale or
restriction on transfer of title or voting, whether imposed by agreement,
understanding, law, equity or otherwise, except for any restrictions on transfer
generally arising under any applicable federal or state securities laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means any corporation, trade or business that is,
along with Borrower, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Section 414 of the
Code or Section 4001 of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include reference to the comparable
section, if any, of such successor federal statute.
"Excluded Parties" shall mean each of Anschutz Investment Company,
Xxxxxxx, Xxxxx & Co., Special Value Opportunities Fund, LLC, Special Value
Expansion Fund, LLC, Special Value Continuation Partners, LP, Xxxxxxxxxx
Opportunities Partners V, LP. and Xxxxxxxxxx Capital Partners, LLC.
"Excluded Restructuring" shall mean (i) the financial and corporate
restructuring of the Debtors contemplated by the Plan or (ii) any other
financial and corporate restructuring of the Debtors funded by one or more of
the Excluded Parties so long as such restructuring is not a Superior
Transaction.
"Expenses" shall have the meaning ascribed thereto in Section 8.2(b).
"Final Order" shall mean an order of the Bankruptcy Court as to which
the time to appeal, petition for certiorari, or move for reargument or rehearing
has expired and as to which no appeal, petition for certiorari, or other
proceedings for reargument or rehearing shall then be pending or as to which any
right to appeal, petition for certiorari, reargument, or rehearing shall have
been waived in writing in form and substance satisfactory to the Investors, or,
in the event that an appeal, writ of certiorari or reargument, or rehearing
thereof has been sought, such order of the Bankruptcy Court shall have been
determined by the highest court to which such order was appealed, or certiorari,
reargument or rehearing shall have been denied and the time to take any further
appeal, petition for certiorari, or move for reargument or rehearing shall have
expired; provided, however, that the possibility that a motion under Rule 60 of
the Federal Rules of Civil Procedure, or any analogous rule under the rules
promulgated under the Bankruptcy Code, may be filed with respect to such order
shall not preclude such order from being a Final Order.
"GAAP" shall mean generally accepted accounting principles in the
United States, as in effect from time to time, consistently applied.
"Governmental Approvals" shall mean (i) the filing of a new or amended
and restated certificate of incorporation, or other applicable organizational
filings, for one or more of the Reorganized Debtors with the Secretary of State
(or similar state authority) of such Reorganized Debtor's state of incorporation
or organization, (ii) any required filings under the HSR Act and the expiration
or termination of the applicable waiting period (and any extension thereof)
under the HSR Act, (iii) the Confirmation Order, (iv) the Assumption Order, (v)
an order of the Bankruptcy Court approving this Agreement and the Restructuring
Support Agreement, (vi) any filings with, motions before, orders, approvals or
other actions of the Bankruptcy Court as contemplated by this Agreement, the
Plan or the Restructuring Support Agreement, and (vii) any authorization
pursuant to Section 363 of the Bankruptcy Code in accordance with the Plan, the
Confirmation Order and/or the Assumption Order.
"Governmental Entity" shall mean any supranational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"Governmental Requirement" shall mean all consents, approvals,
authorizations of, declarations, filings, or registrations with, any
Governmental Entity required to be made or obtained by either the Company or any
of its subsidiaries in connection with the execution, delivery, and performance
of this Agreement or any of the other Transaction Documents and the transactions
contemplated hereby and thereby, including, without limitation, the Governmental
Approvals.
"Hazardous Materials" means any (i) "hazardous substance" or "toxic
substances," as those terms are defined by the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq.
and the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802, all as
amended or hereafter amended; (ii) "hazardous waste", as defined by the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., as amended
or hereafter amended; (iii) pollutant or contaminant or hazardous, dangerous or
toxic chemical, material, or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance, or requirement
(including consent decrees and administrative orders) relating to protection of
health, safety or the environment, as amended or hereafter amended; (iv) crude
oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch
absolute); (v) any radioactive material, including any source, special nuclear
or by-product material as defined at 42 U.S.C. ss. 2011 et seq., as amended or
hereafter amended; (vi) asbestos or asbestos containing material ("ACM") in any
form or condition and (vii) polychlorinated biphenyls ("PCBs") or substances or
compounds containing PCBs.
"Hazardous Materials Laws" means any federal, state or local statute,
regulation, ordinance or other legal requirement (including consent decrees and
administrative orders) relating to protection of health, safety or environment,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq.; the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq.; the
Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Clean Water Act, 33 U.S.C. ss.
1251 et seq.; the Occupational Safety and Health Act ("OSHA"), 29 U.S.C. ss. 651
et seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. ss. 2601 et seq.;
any similar state or local laws; any regulations promulgated pursuant to any of
the foregoing; and all of the foregoing as amended or hereafter amended.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Initial Plan" shall mean the plan of reorganization of the Company
previously filed with the Bankruptcy Court on the Petition Date.
"Intellectual Property" shall mean collectively, all rights,
priorities and privileges of the Company or any of its subsidiaries relating to
intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses and trade secrets and all rights
to xxx at law or in equity or any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.
"Investment" shall have the meaning ascribed thereto in Section 2.2.
"Investors" shall have the meaning ascribed thereto in the Preamble.
"Investor Share Notice" shall have the meaning ascribed thereto in
Section 2.3.
"Knowledge" of the Company shall mean the knowledge, after due
inquiry, of Xxx X. Xxxxxxxxx and Xxxx X. Xxxxxxxxx.
"Law" shall mean any law, statute, ordinance, rule, regulation, order,
judgment, decree or body of law of any Governmental Entity.
"Liberation" shall mean Liberation Investments, L.P. and Liberation
Investments, Ltd.
"Material Adverse Effect" shall mean a change, effect, event,
occurrence, development, circumstance or state of facts that, either alone or in
combination, has had or would reasonably be expected to have a materially
adverse effect on the business, properties, operations, financial condition,
prospects or results of operations of the Debtors or Reorganized Bally (as the
case may be) and their subsidiaries (including foreign subsidiaries and their
respective businesses) taken as a whole, or which would or would reasonably be
expected to materially impair its ability to perform its obligations under this
Agreement or have a materially adverse effect on or prevent or materially delay
the consummation of the transactions contemplated by the Plan; provided, that in
no event shall (i) any effect directly resulting from the public announcement of
this Agreement or the Plan or the commencement of the Chapter 11 Cases or (ii)
any changes in financial condition reflected in the Updated Financial
Information be taken into account in determining whether there has been, or
would reasonably likely be, a Material Adverse Effect for purposes of this
Agreement.
"Material Contract" shall mean any of the following, other than in
connection with the purchase of inventory in the Ordinary Course of Business:
(i) any (x) lease for real property, or (y) lease for personal property, in each
case, which requires aggregate payments by the Debtors of $500,000 or more in
any calendar year; (ii) any contract for the purchase of materials, supplies,
goods, services, equipment or other assets that has a term of at least one year
following the Closing and which requires aggregate payments by the Debtors of
$2,000,000 or more in any calendar year; (iii) any contract that requires annual
aggregate payments by the Debtors after Closing of $2,000,000 or more; (iv) any
sales, distribution or other similar contracts not entered into in the Ordinary
Course of Business providing for the sale by the Debtors of materials, supplies,
goods, services, equipment or other assets that requires annual aggregate
payments after Closing of $2,000,000 or more; (v) any partnership, joint venture
or other similar contract to which any of the Debtors is a party; (vi) any
employment agreements or amendments to employment agreements pursuant to which
any employee will receive over $750,000 in either cash or securities; or (vii)
any other contract, the loss of which would be reasonably likely to result in a
Material Adverse Effect.
"Multiemployer Plan" has the meaning ascribed to it in Section 3(37)
of ERISA.
"New Common Shares" shall mean shares of New Common Stock.
"New Common Stock" shall have the meaning ascribed thereto in the
Plan.
"New Credit Agreement" shall have the meaning ascribed thereto in the
Plan.
"New Investor Purchase Price" shall have the meaning ascribed thereto
in Section 2.2.
"New Investor Shares" shall mean New Common Shares to be issued by
Reorganized Bally to the Investors under the Plan and as provided in Article II
hereto.
"Old Credit Agreement" shall mean that certain Amended and Restated
Credit Agreement, dated as of October 16, 2006, by and among, Bally Total
Fitness Holding Corporation, as Borrower, the several banks and other financial
institutions parties thereto, JPMorgan Chase Bank, N.A., as Agent, and Xxxxxx
Xxxxxxx Senior Funding, Inc., as Syndication Agent (as amended).
"Ordinary Course of Business" shall mean the ordinary course of
business of the Debtors consistent with past custom and practice as of August 1,
2007 (including with respect to frequency and amount).
"Other Consenting Noteholders" shall mean those Persons, other than
the Excluded Parties, set forth on Exhibit A and Exhibit B to the Restructuring
Support Agreement.
"Outside Date" shall mean (i) if the Section 1127(a) Order is entered
and remains in full force and effect, October 15, 2007, and (ii) if the Section
1127(a) Order has not been entered or otherwise is not in full force and effect,
November 30, 2007.
"Permitted Encumbrances" shall mean any Encumbrance (i) permitted
under the DIP Loan Facility or the Old Credit Agreement, as the case may be;
(ii) included in the definition of "Permitted Encumbrance" in the Old Credit
Agreement; or (iii) arising in the Ordinary Course of Business that are not
incurred in connection with the borrowing of money and that would not materially
interfere with the conduct of the business of the Company or any of its
subsidiaries.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Petition Date" shall mean July 31, 2007.
"Plan" shall mean the amended plan of reorganization in substantially
the form attached hereto as Exhibit I and with such further changes as may be
reasonably acceptable to the Debtors, the Investors and the Excluded Parties,
together with all schedules and exhibits thereto.
"Prepetition Management Incentive Plan" shall have the meaning
ascribed thereto in the Plan.
"Reorganized Bally" shall mean the Reorganized Debtor whose New Common
Shares will be issued pursuant to the Plan.
"Reorganized Debtors" shall mean the entities, which may include one
or more new holding companies and operating companies to be formed pursuant to
the Plan, that will carry out the business of the Company and its subsidiaries
upon emergence from bankruptcy under chapter 11 of the Bankruptcy Code.
"Representatives" shall, with respect to any Person, mean the
directors, officers, employees, representatives, agents and advisors (including
any investment banker, financial advisor, attorney, accountant or other
representative retained by any of them or acting on their behalf) of such
Person.
"Required Consent" shall mean any consent under an Assumed Contract
required so that the execution, delivery and/or performance by the Company of
this Agreement, the consummation of the transactions contemplated by this
Agreement, and the assumption and/or continued enforcement thereof by the
Company or a subsidiary or any of the Reorganized Debtors will not result in any
breach of or constitute a default (or an event which with or without notice or
lapse of time or both would become a default) under, or give to others any right
of termination, amendment, acceleration or cancellation of, such Assumed
Contract, or result in the creation of an Encumbrance, other than a Permitted
Encumbrance, on any property or asset of the Company or any subsidiary except
where the failure to obtain any such consent or consents would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
For all purposes of this Agreement, the Company or any subsidiary shall be
deemed to have obtained a Required Consent if, and to the extent that, pursuant
to the Plan, the Confirmation Order and/or the Assumption Orders the Company (or
the applicable subsidiary) is authorized to assume the Assumed Contracts
pursuant to section 365 of the Bankruptcy Code.
"Restructuring" shall mean the consummation of the financial and
corporate restructuring of the Company and its subsidiaries contemplated under
the Plan to occur on the Effective Date.
"Restructuring Support Agreement" shall mean (i) that certain
Restructuring Support Agreement, dated as of the date hereof, by and among the
Debtors, the Investors and the Consenting Noteholders, and (ii) that certain
Restructuring Support Agreement, dated as of the date hereof, by and among the
Debtors and Liberation.
"SEC" shall mean the United States Securities and Exchange Commission
and any successor Governmental Entity.
"SEC Reports" shall mean any and all proxy statements, annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
any other documents filed by the Company under the Exchange Act.
"Section 1127(a) Order" shall mean an order of the Bankruptcy Court,
in form and substance reasonably acceptable to Harbinger and the Company,
granting the Section 1127(a) Motion.
"Section 1127(a) Motion" shall have the meaning ascribed thereto in
the Recitals.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"Significant Subsidiary" shall have the meaning assigned to it under
Rule 1-02 of Regulation S-X promulgated under the Exchange Act.
"Subscription Payment Date" shall have the meaning ascribed thereto in
the Plan.
"subsidiary" of any Person means, on any date, any Person (i) the
accounts of which would be consolidated with and into those of the applicable
Person in such Person's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date or (ii) of
which securities or other ownership interests representing more than fifty
percent of the equity or more than fifty percent of the ordinary voting power
or, in the case of a partnership, more than fifty percent of the general
partnership interests or more than fifty percent of the profits or losses of
which are, as of such date, owned, controlled or held by the applicable Person
or one or more subsidiaries of such Person.
"Subsidiary Guarantors" shall have the meaning ascribed thereto in the
Preamble.
"Superior Proposal" shall have the meaning ascribed thereto in Section
6.2.
"Tax" shall mean all taxes of any kind, charges, fees, customs,
duties, imposts, levies or other assessments, including, without limitation, all
net income, gross receipts, ad valorem, value added, transfer, gains, franchise,
profits, inventory, net worth, capital stock, asset, sales, use, license,
estimated withholding, payroll, transaction, capital, employment, social
security, workers compensation, unemployment, excise, any interest and any
penalties, additions to tax or additional amounts, imposed by any taxing
authority (domestic or foreign) and shall include any transferee liability in
respect of Taxes.
"Tax Return" shall mean all returns, declarations, reports, forms,
estimates, information returns and statements required to be filed in respect of
any Taxes or to be supplied to a taxing authority in connection with any Taxes.
"Transaction Documents" shall mean this Agreement, the Restructuring
Support Agreement and such other contracts, agreements, schedules, certificates,
orders and other documents as the parties mutually agree in writing.
"Trigger Event" shall mean any of Sections 8.1(b)(i), 8.1(b)(ii),
8.1(b)(iii), 8.1(b)(v)(C), 8.1(b)(vii) or 8.1(c)(ii).
"Updated Financial Information" shall mean the updated financial
information of the Company dated May 3, 2007 or June 13, 2007, which has
previously been delivered to representatives of the Investors.
"WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act of 1988, as amended from time to time.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Issuance and Sale of New Investor Shares. Upon the terms
and subject to the conditions set forth herein, including that the Effective
Date of the Plan will occur contemporaneously with the Closing Date, Reorganized
Bally agrees to issue, sell and deliver to the Investors and the Investors
agree, severally and not jointly, to acquire from Reorganized Bally the number
of New Investor Shares to be set forth in the Investor Share Notice, the total
number of such New Investor Shares to equal 100% of the New Common Shares
(subject only to dilution with respect to the Prepetition Management Incentive
Plan), to be authorized, issued and outstanding by Reorganized Bally on the
Closing Date in exchange for the payment of the New Investor Purchase Price.
Section 2.2 Payment of the New Investor Share Purchase Price. The
aggregate purchase price for the New Investor Shares will be $233.6 million (the
"New Investor Share Purchase Price"). At the Closing, in consideration of the
issuance of the New Investor Shares to the Investors pursuant to Section 2.1,
each Investor shall pay to Reorganized Bally the portion of the New Investor
Share Purchase Price set forth in the Investor Share Notice, payable in cash by
wire transfer of immediately available funds to an account designated in writing
by the Debtors at least three (3) Business Days prior to the Closing Date. The
payment of the consideration set forth in this Section 2.2, in whole or in part,
shall sometimes be referred to herein as the "Investment."
Section 2.3 Investor Share Notice. No later than two (2) Business Days
prior to the Closing, the Investors shall deliver a written notice to the
Company specifying the number of New Investor Shares to be issued to each
Investors, substantially in the form attached hereto as Exhibit II (the
"Investor Share Notice").
ARTICLE III
THE CLOSING
Section 3.1 The Closing. The closing of the purchase and sale of the
New Investor Shares hereunder and the other transactions contemplated hereby
(the "Closing") shall take place on the Effective Date (such date, the "Closing
Date"). The Closing shall take place at the offices of Xxxxxx & Xxxxxxx LLP,
located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. (EST) on
the Closing Date, or at such other place or on such other date and time as may
be mutually agreed upon by the Company and the Investors. At the Closing and
subject to the terms and conditions hereof, the acquisition of equity
contemplated by Article II hereof shall be deemed to have occurred.
Section 3.2 Deliveries. At the Closing:
(a) Reorganized Bally shall deliver certificates to each Investor,
evidencing the aggregate number of New Investor Shares (as set forth in the
Investor Share Notice) being indefeasibly issued to each such Investor herewith
and registered in the name of such Investor or, to the extent designated by such
Investor to the Debtors at least three (3) Business Days prior to the Closing
Date, to an Affiliate thereof, as its nominee or designee (with the individual
certificates in such amounts as the each Investor shall specify to Debtors at
least three (3) Business Days prior to the Closing Date);
(b) The Investors shall pay to Reorganized Bally the New Investor
Purchase Price;
(c) To the extent not previously executed and/or delivered, the
Company (and/or Reorganized Bally, as the case may be) shall execute and/or
deliver, or cause to be executed and/or delivered, to the Investors (i) each of
the Transaction Documents and any other document, certificate or other
instrument required to be executed and/or delivered by the Company (and/or
Reorganized Bally, as the case may be) under this Agreement, and (ii) a
certificate, dated as of the Closing Date and signed by the Chief Restructuring
Officer or, in the event of the Chief Restructuring Officer's unavailability,
the Senior Vice President, Secretary and General Counsel of the Company,
certifying as to the matters set forth in Section 7.1(f).
(d) To the extent not previously executed and/or delivered, each
Investor shall execute and/or deliver, or cause to be executed and/or delivered,
to the Company (or Reorganized Bally, as the case may be) (i) each of the
Transaction Documents and any other document, certificate or other instrument
required to be executed and/or delivered by such Investor under this Agreement,
and (ii) a certificate, dated as of the Closing Date and signed by such
Investor, certifying as to the matters set forth in Section 7.2(e).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Investor that all of the
statements contained in this Article IV are true and correct as of the date of
this Agreement (or, if made as of a specified date, as of such date).
Section 4.1 Organization.
(a) Each of the Company and its Significant Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
(b) Each of the Company and its subsidiaries (i) is duly qualified or
licensed to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction where the nature of the property owned or leased
by it or the nature of the business conducted by it makes such qualification or
license necessary, except where any such failure to be so qualified or licensed,
individually in the aggregate, would not result in a Material Adverse Effect;
and (ii) has all corporate power and authority to own and operate its
properties, to lease the property it operates under lease and to conduct its
business, except where any such failure to own and/or operate, individually in
the aggregate, would not result in a Material Adverse Effect.
Section 4.2 Due Authorization, Execution and Delivery; Enforceability.
The Company has the requisite corporate power and authority to enter into,
execute and deliver this Agreement and the other Transaction Documents and,
subject to the Governmental Approvals, to perform its obligations hereunder,
including the issuance of the New Investor Shares, and has taken all necessary
corporate action required for the due authorization, execution, delivery and,
subject to the Governmental Approvals, performance by it of this Agreement and
the other Transaction Documents. Subject to the Governmental Approvals, this
Agreement constitutes the legally valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
Section 4.3 Capitalization. Except as disclosed in the SEC Reports,
all issued and outstanding shares of capital stock or other ownership interests
of each subsidiary are owned by the Company or a wholly-owned subsidiary free
and clear of any Encumbrance other than Permitted Encumbrances. At the Closing,
all of the outstanding shares of capital stock each of the Company's
subsidiaries will be duly authorized and validly issued, fully paid and
non-assessable.
Section 4.4 Consents. Subject to, and after giving effect to, the
Governmental Approvals, none of the execution, delivery or performance of this
Agreement and the other Transaction Documents by the Company, including the
issuance of the New Investor Shares by it, will require any consent of,
authorization by, exemption from, filing with, or notice to any Governmental
Entity or any other Person.
Section 4.5 No Conflicts. Except for, and after giving effect to, the
Governmental Approvals, and subject to the occurrence of the Effective Date, the
execution, delivery and performance of this Agreement by the Company, including
the issuance of the New Investor Shares, and the consummation of the
transactions contemplated hereby, does not and will not (a) conflict with or
result in any breach of any provision of its certificate of incorporation or
bylaws as in effect on the Effective Date, (b) conflict with or result in the
breach of the terms, conditions or provisions of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give rise to any right of termination, acceleration or cancellation under,
any material agreement, lease, mortgage, license, indenture, instrument or other
contract to which it or any of its subsidiaries is a party or by which any of
its or any of its subsidiaries' properties or assets are bound as in effect on
the Effective Date, or (c) result in a violation of any law, rule, regulation,
order, judgment or decree (including, without limitation, federal and state
securities laws and regulations) applicable to it or any of its subsidiaries or
by which any of its or its subsidiaries' properties or assets are bound or
affected as in effect on the Effective Date, except in the case of clauses (b)
and (c), as would not, individually or in the aggregate, result in a Material
Adverse Effect.
Section 4.6 No Registration. Assuming the accuracy of the
representations and warranties of the Investors set forth in this Agreement, no
registration of the New Investor Shares under the Securities Act is required for
the purchase of the New Investor Shares by the Investors in the manner
contemplated by this Agreement.
Section 4.7 Financial Statements. The Company has heretofore delivered
to the Investors an unaudited consolidated balance sheet as of March 31, 2007
(the "First Quarter 2007 Balance Sheet"). The First Quarter 2007 Balance Sheet
was prepared in conformity with GAAP (except as provided below in this Section
4.7), is complete and correct in all material respects and fairly presents in
all material respects the assets and liabilities of the Company and its
subsidiaries as of March 31, 2007; provided, however, that the Investors
acknowledge that (i) the Company's method of recognition of deferred revenue is
uncertain as of the date hereof and may not have been conducted in accordance
with GAAP and (ii) the Company's reserves in respect of worker's compensation,
general liability and health insurance as reflected on the First Quarter 2007
Balance Sheet do not include the Company's estimates of potential recoveries for
such liabilities. Except as described in this Section 4.7, neither the Company
nor any of its subsidiaries has any contingent obligation, contingent liability,
or liability for taxes, long term lease or unusual forward of long term
commitment or other material liability, liquidated or unliquidated, that could
reasonably be expected to have a Material Adverse Effect and is not reflected on
the First Quarter 2007 Balance Sheet.
Section 4.8 No Fiduciary Representation. Notwithstanding anything
herein to the contrary, the Company acknowledges and agrees that (a) the
transactions contemplated hereby are arm's length commercial transactions
between the Company, on the one hand, and the Investors, on the other, (b) in
connection therewith and with the processes leading to such transactions, each
Investor is acting solely as a principal and not the agent or fiduciary of the
Company or its debtor estate, (c) no Investor has assumed an advisory or
fiduciary responsibility in favor of the Company or its debtor estate with
respect to any legal, tax, investment, accounting, regulatory or other matters
involving the transactions contemplated herein or the processes leading thereto
(irrespective of whether such Investor has advised or is currently advising the
Company on other matters), and (d) the Company has consulted its own legal and
financial advisors to the extent it deemed appropriate. The Company agrees that
it will not claim that any Investor has rendered advisory services of any nature
or respect, or owes a fiduciary or similar duty to the Company or its
shareholders or estate, in connection with the transactions contemplated herein
or the processes leading thereto.
Section 4.9 Title to Property. The Company and its subsidiaries have
good title to their respective owned personal properties and assets, and good
and marketable title to their respective owned real properties which, in each
case are necessary to the conduct of its business, free and clear of all
Encumbrances, except for Permitted Encumbrances on such properties and assets,
except where the failure to have such title does not, or would not reasonably
to, have a Material Adverse Effect. Except as created hereby, the execution,
delivery or performance of this Agreement and the other Transaction Documents
does not and will not result in the creation of any Encumbrances other than
Permitted Encumbrances.
Section 4.10 Litigation. Except as disclosed in the SEC Reports or as
set forth on Schedule A hereto, there are no suits, proceedings, claims or
disputes pending or, to the Knowledge of the Company, threatened in writing
against or affecting the Company or any subsidiary or their respective property,
which have a reasonable likelihood of adverse determination and such
determination could reasonably be expected to have a Material Adverse Effect.
Section 4.11 ERISA. Except as would not have, or reasonably be
expected to have, a Material Adverse Effect, (i) each Employee Benefit Plan is
in compliance in all respects with the applicable provisions of ERISA, the Code
and any other applicable federal or state law, and (ii) no event or condition is
occurring nor is there any present intent to cause any such event or condition
to occur with respect to any Employee Benefit Plan. The Company is not a party
to any Multiemployer Plan.
Section 4.12 Copyrights, Patents, Trademarks and Licenses, etc. The
Company and its subsidiaries own or are licensed or otherwise have the right to
use all of the Intellectual Property that is reasonably necessary for the
operations of their respective businesses as currently conducted, without
material conflict with the rights of any other Person with respect thereto,
except where the failure to be in compliance with this sentence would not have a
Material Adverse Effect. To the Knowledge of the Company, except as would not
have a Material Adverse Effect, (i) no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any of its Subsidiaries infringes
upon any rights obtained by any other Person, and (ii) no claim or litigation
regarding any of the foregoing is pending or threatened in writing.
Section 4.13 Environmental.
(a) The property, assets and operations of the Company and its
subsidiaries comply in all material respects with all applicable Hazardous
Materials Laws and all governmental permits required thereunder relating to the
use and/or operation thereof (except in each case to the extent that failure to
comply with such Hazardous Materials Laws or applicable permits would not
reasonably be expected to have a Material Adverse Effect).
(b) To the Knowledge of the Company, (i) none of the real properties
currently or formerly owned, leased or operated by the Company or any subsidiary
(including groundwater under such real properties) (the "Properties") of the
Company and its subsidiaries related thereto, is the subject of federal or state
investigation mandating any remedial action, involving expenditures, which is
needed to respond to a release of any Hazardous Materials into the environment
where such expenditures could reasonably be expected to have a Material Adverse
Effect, (ii) there are no underground storage tanks present on or under any of
the Properties the presence of which could reasonably be expected to have a
Material Adverse Effect, and (iii) there are no pending or threatened in
writing: (A) actions or proceedings from any governmental agency or any other
person or entity regarding the disposal of Hazardous Materials, or regarding any
Hazardous Materials Laws or evaluation, or (B) liens or governmental actions,
notices of violations, notices of noncompliance or other proceedings of any kind
relating to any of the Hazardous Materials Laws with respect to the Properties
where such actions, proceedings or liens could reasonably be expected to have a
Material Adverse Effect.
(c) Neither the Company nor any of its subsidiaries has any liability
in connection with any release of any Hazardous Materials into the environment,
except where such liability would not have, or reasonably be expected to have, a
Material Adverse Effect.
Section 4.14 Compliance with Laws. Except as disclosed in the SEC
Reports, the Company and its subsidiaries are in compliance in all material
respects with all Laws, and neither the Company nor any of its subsidiaries has
received any notice of any such alleged material violation of Law, in each case,
except where such failures to comply or violations would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. The
Company and its subsidiaries hold all licenses, franchises, permits, consents,
registrations, certificates, and other material governmental or regulatory
permits, authorizations or approvals necessary or required for the operation of
the business as presently conducted and for the ownership, lease or operation of
the assets of the Company and its subsidiaries ("Material Licenses and
Permits"), except for failures to hold or have such Material Licenses and
Permits would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor, severally and not jointly, hereby represents and
warrants to the Company that all of the statements contained in this Article V
are true and correct with respect to itself as of the date of this Agreement
(or, if made as of a specified date, as of such date) and shall be true and
correct with respect to itself as of the Closing Date (or, if made as of a
specified date, as of such date).
Section 5.1 Organization. Such Investor is a corporation or other
legal entity duly organized, validly existing and (in the jurisdictions
recognizing the concept) in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate or other power and
authority to own, lease and operate its properties and to conduct its business
as it is now being conducted.
Section 5.2 Due Authorization.
(a) Such Investor has all right, power and authority to execute and
deliver this Agreement and the other Transaction Documents to which it is a
party, to consummate the transactions contemplated hereby and thereby and to
comply with the terms, conditions and provisions hereof and thereof applicable
to such Investor.
(b) The execution, delivery and performance by such Investor of this
Agreement and each of the other Transaction Documents to which it is a party,
the compliance by such Investor with each of the provisions of this Agreement
and each of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, are within the power and authority of such
Investor, have been duly authorized and approved by the requisite actions of
such Investor and do not require any further authorization or consent of such
Investor or its beneficial owners. This Agreement is the legal, valid and
binding agreement of such Investor, enforceable against such Investor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws from time to time affecting the enforcement of creditors' rights generally.
Section 5.3 Consents and Approvals. To the knowledge of such Investor,
no consent, approval, or authorization of, declaration, filing, or registration
with, any Governmental Entity is required to be made or obtained by it in
connection with the execution, delivery, and performance of this Agreement or
any of the other Transaction Documents contemplated hereby, except for the
Governmental Approvals.
Section 5.4 No Violations. Assuming that the Governmental Approvals
and Required Consents will be satisfied, made or obtained and will remain in
full force and effect and the conditions set forth in Article VII will be
satisfied, neither the execution, delivery or performance by such Investor of
this Agreement or any of the other Transaction Documents to which it is a party
and the consummation of the transactions contemplated hereby and thereby, will:
(i) conflict with, or result in a breach or a violation of, any provision of the
certificate of incorporation or bylaws or other organizational documents of such
Investor or (ii) constitute, with or without notice or the passage of time or
both, a breach, violation or default, create an Encumbrance (other than any
Permitted Encumbrance) or give rise to any right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
under any Law or any provision of any agreement or other instrument to which
such Investor is a party or pursuant to which such Investor or any of its
respective assets or properties is subject, except for breaches, violations,
defaults, Encumbrances (other than Permitted Encumbrances), or rights of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration which, individually or in the aggregate, are not
material and would not materially adversely affect the ability of such Investor
to perform its obligations under this Agreement or any of the Transaction
Documents.
Section 5.5 Financing. Such Investor has, and at the Closing will
have, available to it funds in amounts sufficient to pay its portion of the New
Investor Share Purchase Price.
Section 5.6 Investment Representations.
(a) Such Investor understands that the New Investor Shares have not
been registered under the Securities Act.
(b) Such Investor has substantial experience in evaluating and
investing in private placement transactions of securities so that it is capable
of evaluating the merits and risks of its investment in Reorganized Bally and
has the capacity to protect its own interests, and can afford the loss of its
investment in the New Investor Shares.
(c) Such Investor is acquiring its portion of the New Investor Shares
for its own account for investment only, and not with a view towards their
distribution. Such Investors agree that New Investor Shares may not be sold or
transferred unless such New Investor Shares have subsequently been registered
under the Securities Act or an exemption from registration is available and such
shares are sold or otherwise transferred in accordance therewith.
(d) Such Investor represents that it is an accredited investor within
the meaning of Regulation D under the Securities Act.
Section 5.7 Dollar Revenues. None of the entities included within such
Investor's ultimate parent entity (as such term is understood under the HSR Act)
derives any dollar revenues from operations in industries within any 6-digit
NAICS industry code set forth on Exhibit III hereto.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business Pending the Closing. Except as
otherwise expressly contemplated by this Agreement and the Plan or any of the
other Transaction Documents or as consented to by the Investors in writing, such
consent not to be unreasonably withheld or delayed, or as required by the
Bankruptcy Code, during the period from the date of this Agreement through and
including the Closing Date, the Company shall, and shall cause each of its
subsidiaries and Affiliates to, (a) conduct its operations and business in the
Ordinary Course of Business, including, without limitation, paying its vendors,
trade creditors and other creditors, in a manner consistent with the Business
Plan; (b) use commercially reasonable efforts to preserve intact its business
relationships with third parties; and (c) confer with the Investors on
operational matters of a material nature. The Company shall give the Investors
prompt notice of any event, condition or circumstance occurring from the date
hereof through the Closing Date that would constitute a violation or breach of
(i) any representation or warranty, whether made as of the date hereof or as of
the Closing Date or (ii) any covenant of the Company in either case contained in
this Agreement or any other Transaction Document. Without limiting the
generality of the foregoing, except as otherwise expressly contemplated by this
Agreement and the Plan or any of the other Transaction Documents or as consented
to by the Investors, such consent not to be unreasonably withheld or delayed,
the Company shall not, and shall not permit any of its subsidiaries or
Affiliates, to:
(a) amend its charter, bylaws or other comparable organizational
documents other than in accordance with this Agreement or as contemplated by the
Plan;
(b) acquire any "business", as defined in Rule 3-05(a)(2) of
Regulation S-X (whether by merger, consolidation, purchase of assets or
otherwise) or acquire any, or increase any existing, equity interest in any
Person not a subsidiary (whether through a purchase of stock or other ownership
interest, establishment of a joint venture or otherwise);
(c) after the Petition Date, (i) assume pursuant to Section 365 of the
Bankruptcy Code any contract set forth in Exhibit E to the Plan, or (ii) fail to
promptly file and diligently prosecute a motion to reject pursuant to Section
365 of the Bankruptcy Code any contract designated in writing by any Investor
for rejection, provided that such written designation is agreed upon by the
parties hereto and the Excluded Parties no less than 10 days prior to the
Debtors' scheduled confirmation hearing or any other deadline provided in the
Plan or set by the Bankruptcy Court with respect to the rejection of executory
contracts or unexpired leases, and provided further that unless the parties
hereto and the Excluded Parties otherwise agree, any such rejection shall be
subject to, and effective upon, the occurrence of the Effective Date of the
Plan;
(d) other than in the Ordinary Course of Business, enter into, amend
or terminate any Material Contract;
(e) adopt a plan of complete or partial liquidation, dissolution,
merger (except for mergers between or among the Company and/or its
subsidiaries), consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries;
(f) change any material Tax, pension, regulatory or, except in
accordance with GAAP or the suggestion of the Company's independent registered
public accounting firm, financial accounting policies, procedures, practices,
methods or principles used by it;
(g) make, change or rescind any material Tax election; fail to duly
and timely file any material Tax Return or other documents required to be filed
with any Governmental Entity, subject to timely extensions permitted by
applicable Law;
(h) other than in the Ordinary Course of Business, extend the statute
of limitations with respect to any Tax or settle or compromise any material
federal, state, local or foreign Tax liability or audit;
(i) (A) enter into any waiver, release, assignment, settlement or
compromise of any pending or threatened Action (i) that requires the payment by
the Company or Reorganized Bally, as the case may be, of any monetary amount in
excess of $37,500 individually or $750,000 in the aggregate, (ii) which is
reasonably likely to have the effect of materially delaying the Effective Date
or materially impairing the Company's ability to consummate the transactions
contemplated by this Agreement or the Plan, or (iii) is brought by any current,
former or purported holder of any Company Securities in such capacity and such
agreement, settlement or consent to judgment requires the payment by the Company
or Reorganized Bally, as the case may be, of any monetary amount in excess of
$100,000 in the aggregate, (B) enter into any waiver, release, assignment,
settlement or compromise of any pending or threatened Action that (i) does not
include an unconditional release of the Company, Reorganized Bally and/or any
subsidiaries of either of them (as applicable) from all liability arising out of
such proceeding, (ii) includes any admission of fault or guilt by the Company,
Reorganized Bally and/or any subsidiaries of either of them (as applicable) with
respect to the subject matter of such Action, or (iii) includes any operational
covenants, or (C) enter into any deferred prosecution agreement;
(j) enter into any agreement, settlement or consent to judgment with
any Governmental Entity relating to any Action (i) that requires the payment by
the Company or Reorganized Bally, as the case may be, of any monetary amount in
excess of $100,000 in the aggregate, or (ii) that admits any fault or guilt;
(k) take any action that would give rise to a claim under the WARN Act
or any similar state law or regulation because of a "plant closing" or "mass
layoff" (each as defined in the WARN Act);
(l) other than as set forth in the Plan, (i) establish, modify or
increase, in any material respect, the benefits under, or promise to establish,
modify or increase in any material respect the benefits under, any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan; (ii) enter into any
severance agreement outside of the Ordinary Course of Business; (iii) enter into
any employment agreement outside of the Ordinary Course of Business where the
dollar amount per annum payable under any such agreement exceeds $100,000
individually or $1,000,000 in the aggregate; (iv) otherwise increase, in any
material respect, the compensation payable to any directors, or officers, or
employees of the Company; or (v) establish, adopt or enter into any collective
bargaining agreement; provided that, with respect to clauses (i) and (iii)
hereof, any such increase in compensation or benefits is (A) pursuant to an
existing agreement or plan, is in amount or value of benefits consistent with
the past practices of the Company and does not exceed $50,000 per annum in each
case, or (B) required by applicable Law;
(m) other than in the Ordinary Course of Business, (i) sell, exchange,
license or otherwise dispose of any of its real properties or other material
assets, (ii) enter into any new joint ventures or similar projects or (iii)
mortgage any of its real property or grant any security interest in any of its
other assets except for Permitted Encumbrances;
(n) (i) incur any additional indebtedness for borrowed money or in
connection with capital leases or sale-leaseback transactions, in each case
other than as permitted by the DIP Loan Facility, the Old Credit Agreement, the
Cash Collateral Order or the Plan, (ii) other than in the Ordinary Course of
Business, incur any indemnification obligations or other material liabilities,
except as permitted by the DIP Loan Facility, the Old Credit Agreement or the
Cash Collateral Order or as contemplated by the Plan, (iii) other than in the
Ordinary Course of Business, make any loans, advances, restricted payments or
capital contributions to, or investments in, any Person (excluding any
subsidiary), except as permitted by the DIP Loan Facility, the Old Credit
Agreement or the Cash Collateral Order or as contemplated by the Plan; (iv)
other than in the Ordinary Course of Business, pay any pre-Petition Date
liabilities, claims, obligations, costs or expenses except for the repayment of
indebtedness under the Old Credit Agreement or as may otherwise be permitted to
be paid by a Bankruptcy Court order entered (or pursuant to a motion made, so
long as the amount provided for in any pending motion is not materially in
excess of the amounts reflected in the Business Plan), (v) pay any post-Petition
Date liabilities, claims, obligations, costs or expenses, other than those
incurred in the Ordinary Course of Business or permitted to be paid by any
covenant contained herein or pursuant to a Bankruptcy Court order, in each case
so long as such amounts are not materially in excess of the amounts reflected in
the Business Plan, or (vi) amend or otherwise modify any agreements or
instruments governing the Debtors' financing arrangements in any material
respect other than as contemplated by the Plan;
(o) enter into any new agreement or amend any existing agreement
containing a non-competition, geographical restriction or similar covenant, in
each case in a manner materially adverse to the Investors or Reorganized Bally;
(p) fail to maintain in full force and effect insurance policies
covering the Company and/or any of its subsidiaries and their respective
properties, assets and businesses in a form and amount consistent with the
current insurance program applicable to the Company and/or any of its
subsidiaries (except in the Ordinary Course of Business to the extent any such
policies expire in accordance with their terms and they are replaced with
policies consistent with good practice for multi-site fitness club companies,
subject to insurance market conditions);
(q) enter into any new consulting, retention or executive employment
agreements or arrangements that individually exceed $35,000 per month, or
terminate or replace any member of the Company's senior management; or
(r) agree to take any of the foregoing actions.
Section 6.2 No Solicitation of Alternative Proposals.
(a) Commencing on the date hereof, the Company shall (and shall cause
its subsidiaries, Affiliates, Representatives, and subsidiaries' and Affiliates'
Representatives to) (i) immediately cease and terminate all existing discussions
or negotiations, if any, with any Persons conducted prior to the date of this
Agreement with respect to or that could reasonably be expected to lead to an
Alternative Transaction (as hereinafter defined), (ii) use its commercially
reasonable to obtain the destruction of, in accordance with the terms of any
applicable confidentiality agreement, any nonpublic information previously
furnished by the Company, its subsidiaries or Affiliates, or any of their
respective Representatives to any third-party (other than the Excluded Parties)
in connection with any Alternative Proposal or any discussions, correspondence
or negotiations relating to a potential Alternative Transaction, and prevent any
such third-party (other than the Excluded Parties) from accessing any online
data rooms containing nonpublic information regarding the Company, and (iii)
comply with this Section 6.2.
(b) During the period commencing on the date of this Agreement and
continuing until the earlier of (x) the Closing Date and (y) the termination of
this Agreement in accordance with Section 8.1 (the "No-Shop Period"), the
Company shall not (and shall cause its subsidiaries, Affiliates,
Representatives, and subsidiaries' and Affiliates' Representatives not to)
directly or indirectly (i) solicit, initiate, encourage or take any other action
designed to solicit an Alternative Transaction, (ii) participate in any written
correspondence, discussions or negotiations regarding any Alternative
Transaction, (iii) enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Alternative
Transaction or (iv) furnish any nonpublic information to any third parties
(other than the Excluded Parties).
(c) Notwithstanding anything to the contrary that may be set forth in
Section 6.2(b), if, during the No-Shop Period, the Board of Directors determines
in good faith that it is required to authorize such actions to comply with its
fiduciary duties under any applicable Law, including the Bankruptcy Code, the
Company or any of its Representatives may take any of the actions referred to in
clauses (ii) and (iv) of Section 6.2(b) with respect to any Person that during
the No-Shop Period delivered a written, unsolicited bona fide Alternative
Proposal so long as (A) the Company and its Representatives are not in material
violation of this Section 6.2, and (B) the Board of Directors has concluded that
such Alternative Proposal is a Superior Proposal or is reasonably likely to lead
to a Superior Proposal. In addition, at any time during the No-Shop Period, so
long as the Company and its Representatives are not in violation of this Section
6.2, the Company, its subsidiaries or any of their respective Representatives
will be permitted to execute an agreement providing for a Superior Proposal or
recommend any such Superior Proposal to the creditors or interest holders of the
Company only if (i) the Company shall have delivered such Superior Proposal to
the Investors pursuant to Section 6.2(d); (ii) the Investors do not, within five
(5) Business Days of receipt of such Superior Proposal, make an offer to revise
the transactions contemplated by this Agreement and the Plan, such that in the
good faith opinion of the Board of Directors (in consultation with its financial
advisors and legal counsel) such revised transaction provides an equal or higher
transaction value or is otherwise more favorable to the Company and its
creditors and interest holders than the Superior Proposal; (iii) the Company
pays the fees and expenses of the Investors as provided in Section 8.2
including, without limitation, the Break-Up Fee. For the avoidance of doubt, in
determining whether a revised transaction proposed by the Investors in
accordance with clause (ii) of the immediately preceding sentence "provides an
equal or higher transaction value," the Investors shall be given a
dollar-for-dollar credit of $15 million (representing the total amount of the
Break-Up Fee and Expenses potentially payable by the Company to the Investors
pursuant to Section 8.2 hereof), such that, for example, if the Company were to
receive a Superior Proposal with a transaction value of $250 million, the
Investors' revised proposal would be "equal" to such Superior Proposal if it had
a transaction value of $235 million.
(d) From the date hereof until the earlier of (x) the Closing Date and
(y) the termination of this Agreement in accordance with Section 8.1, the
Company shall promptly (and in no event later than two (2) days) deliver to the
Investors and the Excluded Parties all written communications delivered to or
received by the Company or its Representatives making or materially modifying
any Alternative Proposal, including without limitation copies of all expressions
of interest, term sheets, letters of intent, offers, proposed agreements or
otherwise, and shall regularly update (not less than once every week) the
Investors and the Excluded Parties concerning such matters. No Person who has
made an Alternative Proposal shall be provided non-public information by the
Company unless such Person has executed a customary confidentiality agreement;
provided that such confidentiality agreement shall (a) be on no more favorable
terms to the third-party than the terms of any confidentiality agreement then in
effect between the Company and any of the Investors, and (b) not prohibit the
Company from delivering any notice required by this Section 6.2(d). In addition,
the Company and its Representatives shall provide the Investors and the Excluded
Parties two (2) days prior written notice before initially delivering any
non-public information in connection with an Alternative Proposal or the
granting of access by the Company or its Representatives to the properties,
books or records of the Company to any Person that informs the Company or its
Representatives that it is considering making, or has made an Alternative
Proposal. The Company agrees that it shall not, and shall cause the Company's
subsidiaries not to, enter into any confidentiality agreement or other agreement
with any person subsequent to the date of this Agreement which prohibits the
Company from providing such information to the Investors and the Excluded
Parties. The Company agrees that neither it nor any of its subsidiaries shall
terminate, waive, amend or modify any provision or any existing standstill or
confidentiality agreement to which it or any of its subsidiaries is a party and
that it and its subsidiaries shall enforce the provisions of any such agreement,
except to the extent that the Board of Directors determines (after consultation
with its financial advisors and legal counsel) that acting in such manner would
be inconsistent with its fiduciary duties under applicable Law.
(e) As used in this Agreement, "Alternative Transaction" shall mean
any actual or proposed transaction or offer for a transaction, other than as
contemplated by the Plan, involving any or all of (i) a plan of reorganization
or other financial and/or corporate restructuring of any or all of the Debtors
(other than an Excluded Restructuring), (ii) the issuance, sale, transfer,
exchange or other disposition by the Debtors of any equity or debt interests
(other than common stock issued in respect of any employee stock options), or
any material assets, of the Debtors, (iii) a merger, consolidation, business
combination, liquidation, recapitalization or refinancing, (iv) any similar
transaction involving any or all of the Debtors, or (v) any transaction through
which the Debtors exit bankruptcy. "Alternative Proposal" shall mean a proposal
relating to an Alternative Transaction.
(f) As used in this Agreement, "Superior Transaction" shall mean an
Alternative Transaction that the Board of Directors (after consultation with its
financial advisors and legal counsel) has determined in its good faith opinion,
in comparison with the transactions contemplated by this Agreement and the Plan:
(i) constitutes a higher and better offer for each class of creditors and
stockholders of the Company, taking into account the monetary obligations of the
Company under this Agreement (provided, that such offer shall not treat the
claims or interests of any class of creditors or stockholders of the Company in
a manner that violates any provision of the Bankruptcy Code), (ii) contemplates
the payment of at least $31.5 million, in cash, to the holders of Old Common
Stock (as defined in the Plan), (iii) has at least the same certainty and timing
of closing, and (iv) is fully financed or has a commitment for full financing
that is no more conditional than the financing contemplated by the Plan.
"Superior Proposal" shall mean a proposal relating to a Superior Transaction.
Section 6.3 Cooperation; Access to Information.
(a) From the date hereof through the earlier of termination hereof and
the Closing Date, the Company shall, and shall cause each of its subsidiaries
and, to the extent any other Person is controlled directly or indirectly by the
Company, each such other Person to, give each Investor and its Representatives,
reasonable, non-exclusive access, during normal business hours upon reasonable
notice, to the books, contracts, records and other documents, and personnel of
the Company, its subsidiaries and such other Persons; provided, however, that
none of the foregoing shall unreasonably interfere with the conduct of business
of the Debtors, their subsidiaries, or such other Persons.
(b) The Company and each Investor agrees to cooperate fully in
facilitating the access provided for under this Agreement in accordance with
mutually acceptable procedures, which procedures shall require, among other
things, that all requests for such access: (i) be made to the Chief
Restructuring Officer of the Company or such other person as the Company may
designate in writing to the Investors, and (ii) specify the representatives of
each Investor to whom such access is to be provided and the scope and nature of
the access requested. Further, the Company shall be permitted to have any of its
representatives present during any requested meetings or discussions.
(c) The preceding subsections of this Section 6.3 shall not require
the disclosure of any information if, in the Company's reasonable determination
(after consultation with counsel), such information is reasonably believed to be
(i) subject to an attorney-client or work product privileges and disclosure
would result in the loss of such privileges or (ii) subject to a binding
confidentiality agreement entered into as of the date hereof and disclosure
would cause a breach of such confidentiality agreement. The Company will use its
commercially reasonable efforts, including commercially reasonable efforts to
obtain appropriate consents or waivers under any confidentiality agreement, to
disclose all such information requested by each Investor and to provide a
privilege log for any information not so provided. In the case that
attorney-client or work product privileges apply, the parties shall use their
commercially reasonable efforts to make appropriate substitute disclosure
arrangements.
(d) Any information acquired by the Investors pursuant to the
preceding subsections of this Section 6.3 shall not diminish or obviate any of
the representations, warranties, covenants or agreements of the Company
contained in this Agreement.
Section 6.4 HSR Act. No later than ten (10) Business Days after the
date of the execution hereof, at the Company's expense, the Investors and the
Company will each make any filings required under the HSR Act in connection with
the transactions contemplated hereby. Each party hereto will cooperate with the
other party hereto in accomplishing such filings and will keep the other party
apprised of the status of any inquires made by any Governmental Entity with
respect to this Agreement or the transactions contemplated hereby. Unless
otherwise agreed by the Investors, the Closing of the transactions contemplated
hereby is expressly conditioned upon the waiting period relating to any such
filings having duly expired or been duly terminated by the appropriate
Governmental Entities without the commencement of any action by any such
Governmental Entities to restrain or postpone the transactions contemplated
hereby. Each of the parties hereto shall use its commercially reasonable to
cause the waiting period under the HSR Act to expire or be terminated, and to
otherwise obtain all regulatory approvals in connection with any other antitrust
approvals, as promptly as possible after the execution of this Agreement. Until
such time as the waiting period relating to any such filings has duly expired or
been duly terminated by the appropriate Governmental Entities without the
commencement of any action relating to any such filings by any such Governmental
Entities to restrain or postpone the transactions contemplated hereby, each
Investor agrees, and agrees to cause any entities included within such
Investor's ultimate parent entity (as such term is understood under the HSR
Act), to refrain from acquiring any interest in any entity other than the
Company and its subsidiaries that derives any dollar revenues from operations in
industries within any 6-digit NAICS industry code set forth on Exhibit III
hereto.
Section 6.5 Further Actions; Reasonable Efforts. Without waiving any
right to terminate this Agreement under Section 8.1, upon the terms and subject
to the conditions hereof, the Company and each of the Investors, as the case may
be, agree to use its commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with other parties-in-interest in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by hereby, including without
limitation (w) obtaining all Governmental Requirements, (x) obtaining all
Required Consents, (y) defending any lawsuits or other legal proceedings,
whether judicial or administrative, challenging the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity or
any restraint vacated or reversed, and (z) executing and delivering any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, the Transaction Documents. In addition,
as promptly as practical, the Company shall (i) make appropriate amendments or
modifications to the Plan as permitted by the Plan, which amendments and
modifications shall be in form and substance reasonably acceptable to the
Investors and the Excluded Parties, and (ii) seek to obtain approval of the
Confirmation Order with respect to the Plan by September 20, 2007, which
Confirmation Order shall provide, among other things, that the issue and sale of
the New Common Shares pursuant to this Agreement shall at the time of their
issuance be duly authorized and validly issued and outstanding, fully paid and
non-assessable, exempt from registration and free and clear of any Encumbrances
of any kind.
Section 6.6 Use of Proceeds. The proceeds received by Reorganized
Bally in respect of the Investment shall be used by the Reorganized Debtors in
accordance with the Plan and for general corporate purposes.
Section 6.7 Notification of Certain Matters. From the date hereof
through the earlier of termination and the Closing Date, each party hereto shall
give prompt notice to the other party hereto of the occurrence, or failure to
occur, of any event that has caused any of such party's representations or
warranties contained in this Agreement to be untrue or inaccurate in any
material respect or of any failure to comply with or satisfy any covenant,
condition or agreement in any material respect to be complied with or satisfied
by it hereunder; provided, however, that no such notification shall be deemed
for any purpose under this Agreement to permit such party to alter or amend such
party's representations and warranties contained herein.
Section 6.8 Compliance with Other Agreements. Each of the parties
hereto shall comply with its obligations under the Restructuring Support
Agreement.
Section 6.9 Information.
(a) Between the date hereof and the earlier of the termination and the
Closing Date, the Investors shall comply with reasonable requests from the
Company for information concerning the Investors to the extent necessary in
connection with the Company's efforts to obtain the confirmation of, and
consummate, the Plan.
(b) The Company shall promptly provide the Investors with copies of
proposed final drafts (which shall be full, complete and accurate) of all
documents, motions, orders, filings or pleadings that the Company proposes to
file with the Bankruptcy Court which relate to the confirmation of the Plan or
any provision therein or the consummation of the transactions contemplated
hereby or thereby and will provide the Investors with reasonable opportunity to
review such filings before made.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to the Obligations of the Investors. The
obligation of the Investors to consummate the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions; provided, however, that the Investors may, in their sole
and absolute discretion, waive any or all of the following conditions:
(a) Restructuring Support Agreement. The Restructuring Support
Agreement shall not have terminated, and no material default thereunder by the
Company or any of the Consenting Noteholders shall have occurred, unless waived
by the Investors or cured within the time period specified in, and otherwise in
accordance with, the Restructuring Support Agreement;
(b) Consents and Approvals. All Required Consents and material
Governmental Requirements shall have been obtained or deemed obtained by
operation of the Plan, the Confirmation Order and/or the Assumption Orders and
shall be in full force and effect;
(c) Final Orders Approving the Plan. The Confirmation Order and any
Assumption Orders, each in form and substance reasonably satisfactory to the
Investors, approving the Plan and the assumption of the Assumed Contracts shall
have been entered by the Bankruptcy Court and shall have become Final Orders;
(d) Plan Effectiveness. All conditions precedent to the effectiveness
of the Plan (other than those relating to the Closing hereunder) shall have been
fully satisfied or waived in accordance with the Plan and the Plan shall not
have been amended or modified in any material respect without the consent of the
Investors;
(e) Material Adverse Effect. No Material Adverse Effect shall have
occurred and be continuing since August 1, 2007;
(f) Other Conditions. (i) The Debtors shall have performed in all
material respects their obligations hereunder (or cured any default thereof
within the period specified herein or as extended by waiver or consent) required
to be performed by them at or prior to the Closing, and (ii) the representations
and warranties of the Debtors contained in this Agreement shall be true and
correct in all material respects, in each case, at and as of the Closing Date
(except, if made as of a specified date, then only as of such date);
(g) No Injunction. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction (each, a "Restraint") preventing consummation of any of the
transactions contemplated hereby shall be in effect; and
(h) Financing. The New Credit Agreement shall be in full force and
effect and there shall exist no material breach of or default under the New
Credit Agreement by any party thereto that has not been waived or consented to
by the requisite lenders or the Company (as applicable) thereunder, provided
that the Investors are provided with evidence reasonably satisfactory to them of
such waiver or consent.
Section 7.2 Conditions to the Obligations of the Company. The
obligation of the Company to consummate the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
(a) Restructuring Support Agreement. The Restructuring Support
Agreement shall not have been terminated;
(b) Consents and Approvals. All Required Consents and material
Governmental Requirements shall have been obtained or deemed obtained by
operation of the Plan, the Confirmation Order and/or the Assumption Orders and
shall be in full force and effect;
(c) Orders Approving the Plan. The Confirmation Order and any
Assumption Orders, each in form and substance reasonably satisfactory to the
Investors, approving the Plan and the assumption of the Assumed Contracts shall
have been entered by the Bankruptcy Court;
(d) Plan Effectiveness. All conditions precedent to the effectiveness
of the Plan (other than those relating to the Closing hereunder) shall have been
fully satisfied or waived in accordance with the Plan;
(e) Other Conditions. (i) Each Investor shall have performed in all
material respects its obligations hereunder (or cured any default thereof within
the period specified herein or as extended by waiver or consent) required to be
performed by it at or prior to the Payment Date, and (ii) the representations
and warranties of each Investor contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date (except, if made
as of a specified date, then only as of such date); and
(f) No Injunction. No Restraint preventing consummation of any of the
transactions contemplated hereby shall be in effect.
ARTICLE VIII
TERMINATION; BREAK-UP FEE; FEES AND EXPENSES
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date notwithstanding the fact that any requisite authorization and
approval of the transactions contemplated hereby shall have been received and,
other than as provided in Section 8.2, no party hereto shall have any liability
to any other party hereto as a result of its invoking its rights to terminate
this Agreement pursuant to this Section 8.1 (provided that any such termination
shall not relieve any party from liability for a breach of any provision hereof
prior to such termination):
(a) by the mutual written consent of the Investors and the Company;
(b) by the Investors:
(i) if the Company or any of its Representatives (A) executes and
delivers a written agreement, letter of intent or agreement in principle
(whether or not binding) providing for any Alternative Transaction or publicly
announces its intention to enter into an Alternative Transaction, or (B) takes
any action in the Bankruptcy Court for the purposes of obtaining approval of any
Alternative Proposal;
(ii) if the Board of Directors withdraws or changes its
recommendation of this Agreement in a manner materially adverse to the Investors
or recommends an Alternative Proposal;
(iii) if (A) the Debtors unilaterally withdraw the Plan, move to
voluntarily dismiss any of the Chapter 11 Cases, move for conversion of any of
the Chapter 11 Cases to Chapter 7 of the Bankruptcy Code, or move for
appointment of an examiner with expanded powers pursuant to Section 1104 of the
Bankruptcy Code in any of the Chapter 11 Cases (except as permitted under the
Restructuring Support Agreement), (B) any of the Chapter 11 Cases shall have
been dismissed or converted to a case under Chapter 7 of the Bankruptcy Code,
(C) an interim or permanent trustee shall be appointed in any of the Chapter 11
Cases, or a responsible officer or an examiner with powers beyond the duty to
investigate and report (as set forth in Sections 1106(a)(3) and (4) of the
Bankruptcy Code) shall be appointed in any of the Chapter 11 Cases, or (D) the
Debtors' exclusive right to file a Chapter 11 Plan pursuant to Section 1121 of
the Bankruptcy Code shall have terminated;
(iv) if the Effective Date of the Plan has not occurred by 11:59
p.m. prevailing Eastern Time on the Outside Date;
(v) if the Company shall be (A) in breach of any representation
or warranty made by it hereunder that is qualified by materiality (taking into
account such materiality), (B) in material breach of any of any representation
or warranty made by it hereunder that is not qualified by materiality, or (C) in
material breach of any of its obligations hereunder, and such breach cannot be
or has not been cured or waived by the Investors on or before the earlier of (x)
the fifth (5th) Business Day after the giving of written notice to the Company
or (y) the Outside Date;
(vi) if there shall be any Law that makes consummation of the
transactions contemplated by this Agreement or the other Transaction Documents
illegal or otherwise prohibited or if any court of competent jurisdiction or
Governmental Entity shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the consummation of
any of the transactions contemplated hereby or by the other Transaction
Documents and such order, decree, ruling or other action shall have become final
and non-appealable;
(vii) if any Debtor breaches the Restructuring Support Agreement
in any material respect and such breach is not cured on or before the fifth
(5th) Business Day after delivery of notice of such breach or, if the Chapter 11
Cases are then pending, on or before the fifth (5th) Business Day after the
filing of a motion for relief from the automatic stay to permit the delivery of
such notice (in which case this Agreement shall automatically terminate on the
fifth (5th) Business Day after the filing of such motion unless such breach has
been cured by such time);
(viii) if the order of the Bankruptcy Court approving the
provisions governing the Investors' right to receive the Break-Up Fee or the
Expenses as set forth in Section 8.2 hereof does not become a Final Order by
11:59 p.m. prevailing Eastern Time on September 3, 2007 (provided that the
Investors shall have the right to terminate this Agreement pursuant to this
Section 8.1(b)(viii) until 11:59 p.m. prevailing Eastern Time on September 16,
2007); or
(ix) if, on or after the date hereof, there occurs or is
continuing a change, event or occurrence which, individually or in the
aggregate, has or would reasonably expected to have a Material Adverse Effect
and such Material Adverse Effect cannot be cured by the Outside Date.
(c) by the Company:
(i) if any Investor shall be in material breach of its
representations, warranties and obligations hereunder or under the Restructuring
Support Agreement, and such breach cannot be or has not been cured or waived by
the Company on or before the (x) the fifth (5th) Business Day after the giving
of written notice to the Investors or (y) the Outside Date;
(ii) if (A) the Board of Directors determines in good faith that
termination of this Agreement is necessary in order for the Company to accept
any Superior Transaction, or (B) the Bankruptcy Court on its own accord and not
at the request of (or by the acquiescence of) the Company has ordered the
Company to terminate this Agreement in favor of any Superior Transaction;
provided that the Company shall have the right to terminate this Agreement
pursuant to clause (A) above only if it has complied in all material respects
with the provisions of Section 6.2;
(iii) if the Effective Date of the Plan has not occurred by 11:59
p.m. prevailing Eastern Time on the Outside Date; or
(iv) if there shall be any Law that makes consummation of the
transactions contemplated by this Agreement or the other Transaction Documents
illegal or otherwise prohibited or if any court of competent jurisdiction or
Governmental Entity shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the consummation of
any of the transactions contemplated hereby or by the other Transaction
Documents and such order, decree, ruling or other action shall have become final
and non-appealable.
Section 8.2 Break-Up Fee; Fees and Expenses.
(a) The Company shall pay to the Investors a fee, in cash, equal to
$10 million (the "Break-Up Fee") if (X) the Company is not entitled to terminate
this Agreement pursuant to Section 8.1(c)(i) and (Y) either (A) the Investors
terminate this Agreement pursuant to Sections 8.1(b)(i), 8.1(b)(ii),
8.1(b)(iii), 8.1(b)(v)(C) or 8.1(b)(vii) in connection with the Company's
pursuit of a Superior Transaction and the Company consummates such Superior
Transaction or (B) the Company terminates this Agreement pursuant to Section
8.1(c)(ii) and the Company consummates any Superior Transaction. Any payment
required to be made pursuant to this Section 8.2(a) shall be made to the
Investors, in accordance with the percentage set forth in the Investor Share
Notice, by wire transfer of immediately available same day funds to an account
designated by each Investor upon the consummation of such Superior Transaction.
(b) In addition to any other rights or remedies available to the
Investors (subject to Section 8.2(d) hereof), upon the Closing or, so long as
the Company is not entitled to terminate this Agreement pursuant to Section
8.1(c)(i) hereof, the earlier termination of this Agreement pursuant to any
Trigger Event, the Company agrees to reimburse or pay, as the case may be, the
reasonable out-of-pocket costs, fees and expenses incurred by each Investor or
its Affiliates, including reasonable fees, costs and expenses of any
professionals (including financial advisors, outside legal counsel, accountants,
experts and consultants) retained by any of the Investors or their respective
Affiliates in connection with or related to the authorization, preparation,
investigation, negotiation, execution and performance of this Agreement, the
transactions contemplated hereby and the Chapter 11 Cases and other judicial and
regulatory proceedings related to such transactions and the Chapter 11 Cases
(collectively, the "Expenses") to the extent incurred from and after May 1, 2007
through the Effective Date (and reasonable post-Closing costs and expenses
related to the Closing) or the earlier termination of this Agreement, as set
forth in the following sentence. The Company shall provide payment to the
Investors of the Expenses as follows: (i) if the Company consummates the
transactions contemplated hereby, the Company shall provide payment to the
Investors of all Expenses upon the Closing Date; (ii) if this Agreement is
terminated pursuant to any of the Trigger Events, the Company shall provide
payment to the Investors of all Expenses upon the earliest to occur of (x)
October 15, 2007 and (y) the date on which the Company consummates any Superior
Transaction, provided that such Expenses shall be capped at an aggregate amount
of (A) $3,000,000 if the Company consummates an Excluded Restructuring, or (B)
$5,000,000 in any other case. Notwithstanding the foregoing, the Company shall
not reimburse or pay any fees, costs or expenses incurred by the Investors or
their Affiliates (the "Investor Parties") in bringing any Action against the
Debtors or the Excluded Parties except for fees, costs or expenses incurred in
connection with any Action brought by any Investor Party relating to (x) the
willful or intentional breach of this Agreement by the Company or any of the
Subsidiary Guarantors, or (y) the enforcement of the Investors' rights
hereunder, provided that such Investor Party is the prevailing party in such
Action and provided further that the reimbursement of such fees, costs and
expenses shall be capped at an aggregate amount of $1 million. For the avoidance
of doubt, the fees, costs or expenses reimbursable or payable by the Company to
the Investors in accordance with the immediately preceding sentence shall be in
addition to the payment or reimbursement of Expenses provided for in this
Section 8.2(b), and nothing in this Section 8.2(b) shall limit the Investors'
right to receive the Break-Up Fee pursuant to Section 8.2(a) hereof.
(c) The Investors shall reimburse or pay any fees, costs or expenses
incurred by the Company in bringing any Action against either Investor relating
to the willful or intentional breach of this Agreement by either Investor,
provided that the Company is the prevailing party in such Action and provided
further that the reimbursement of such fees, costs or expenses shall be capped
at an aggregate amount of $1 million. Such fees, costs or expenses shall be
borne by the Investors in accordance with the percentages set forth in the
Investor Share Notice.
(d) The provisions of this Section 8.2 shall survive termination of
this Agreement. The provision for the payment of the Break-Up Fee and the
Expenses set forth in this Section 8.2 is an integral part of the transactions
contemplated by this Agreement and without this provision the Investors would
not have entered into this Agreement and such Break-Up Fee and Expenses shall
constitute an allowed administrative expense of the Company under Section
503(b)(1) and 507(a)(1) of the Bankruptcy Code.
(e) Except as otherwise provided in Article IX or Section 11.14
hereof, to the extent that all amounts due in respect of the Break-Up Fee and
Expenses pursuant to this Section 8.2 have actually been paid in full by the
Company to the Investors, no Investor shall have any additional recourse against
any Debtor for any Losses relating to or arising from this Agreement. Further,
in connection with the payment in full of all amounts due in respect of the
Break-Up Fee and Expenses pursuant to this Section 8.2, each of the Investors,
on one hand, and the Company, the Debtors and/or Reorganized Bally (as the case
may be) and their subsidiaries, on the other, shall execute and deliver to the
other a general release, which shall fully discharge and release the other from
any further obligation or liability in respect of this Agreement and the
transactions contemplated hereby.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification. Whether or not the this Agreement is
terminated or the transactions contemplated by this Agreement or the Plan are
consummated, the Company (in such capacity, the "Indemnifying Party") shall
indemnify and hold harmless each Investor, their respective Affiliates and their
respective officers, directors, employees, agents and controlling persons (each,
an "Indemnified Person") from and against any and all losses, claims, damages,
liabilities and reasonable expenses ("Losses"), joint or several, to which any
such Indemnified Person may become subject arising out of or in connection with
any Action instituted by a third party with respect to this Agreement or the
Restructuring Support Agreement, or the transactions contemplated by any of the
foregoing and shall reimburse such Indemnified Persons for any reasonable legal
or other reasonable out-of-pocket expenses as they are incurred in connection
with investigating, responding to or defending any of the foregoing; provided
that the foregoing indemnification will not apply to Losses (i) arising out of
or in connection with the failure of any Indemnified Person to comply with the
covenants and agreements contained in this Agreement or the Restructuring
Support Agreement; or (ii) to the extent that they resulted from (a) any breach
by such Indemnified Person of this Agreement or the Restructuring Support
Agreement, or (b) gross negligence, bad faith or willful misconduct on the part
of such Indemnified Person. The indemnity, reimbursement and contribution
obligations of the Indemnifying Party under this Article IX shall be in addition
to any liability that the Indemnifying Party may otherwise have to an
Indemnified Person and shall bind and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Indemnifying Party and any
Indemnified Person.
Section 9.2 Notice; Assumed Defense. Promptly after receipt by an
Indemnified Person of notice of the commencement of any Actions with respect to
which the Indemnified Person may be entitled to indemnification hereunder, such
Indemnified Person will, if a claim is to be made hereunder against the
Indemnifying Party in respect thereof, notify the Indemnifying Party in writing
of the commencement thereof; provided that (i) the omission so to notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability
that it may have hereunder except to the extent it has been materially
prejudiced by such failure and (ii) the omission so to notify the Indemnifying
Party will not relieve it from any liability that it may have to an Indemnified
Person otherwise than on account of this Article IX. In case any such Actions
are brought against any Indemnified Person and it notifies the Indemnifying
Party of the commencement thereof, the Indemnifying Party will be entitled to
participate therein, and, to the extent that it may elect by written notice
delivered to such Indemnified Person, to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Person; provided that if the
defendants in any such Actions include both such Indemnified Person and the
Indemnifying Party and such Indemnified Person shall have concluded that there
may be legal defenses available to it that are different from or additional to
those available to the Indemnifying Party, such Indemnified Person shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such Actions on behalf of such
Indemnified Person. Upon receipt of notice from the Indemnifying Party to such
Indemnified Person of its election so to assume the defense of such Actions and
approval by such Indemnified Person of counsel, the Indemnifying Party shall not
be liable to such Indemnified Person for expenses incurred by such Indemnified
Person in connection with the defense thereof (other than reasonable costs of
investigation) unless (i) such Indemnified Person shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the Indemnifying Party shall not be liable for the expenses of more than one
separate counsel in any jurisdiction, approved by the Investors, representing
the Indemnified Persons who are parties to such Actions), (ii) the Indemnifying
Party shall not have employed counsel reasonably satisfactory to such
Indemnified Person to represent such Indemnified Person within a reasonable time
after notice of commencement of the Actions or (iii) the Indemnifying Party
shall have authorized in writing the employment of counsel for such Indemnified
Person.
Section 9.3 Settlements. The Indemnifying Party shall not be liable
for any settlement of any Actions effected without its written consent (which
consent shall not be unreasonably withheld). If any settlement of any Action is
consummated with the written consent of the Indemnifying Party or if there is a
final judgment for the plaintiff in any such Actions, the Indemnifying Party
agrees to indemnify and hold harmless each Indemnified Person from and against
any and all Losses by reason of such settlement or judgment in accordance with,
and subject to the limitations of, the provisions of this Article IX. The
Indemnifying Party shall not, without the prior written consent of an
Indemnified Person (which consent shall not be unreasonably withheld), effect
any settlement of any pending or threatened Actions in respect of which
indemnity has been sought hereunder by such Indemnified Person unless (i) such
settlement includes an unconditional release of such Indemnified Person in form
and substance satisfactory to such Indemnified Person from all liability on the
claims that are the subject matter of such Actions and (ii) such settlement does
not include any statement as to or any admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Person.
Section 9.4 Limitation on Liability. If the Company terminates this
Agreement pursuant to Section 8.1(c)(i) hereof, the Investors shall not be
liable to the Debtors for any punitive or consequential damages as a result
thereof, provided, that in no event shall the Investors be liable for damages
hereunder in excess of $50 million.
ARTICLE X
SUBSIDIARY GUARANTEE
Section 10.1 Guarantee. Each of the Subsidiary Guarantors hereby
unconditionally guarantees the prompt and complete payment of all amounts
payable by the Company hereunder and the prompt and complete performance of all
other obligations, contingent or otherwise, of the Company hereunder.
Notwithstanding anything to the contrary contained herein, the obligations of
each Subsidiary Guarantor pursuant to this Section 10.1 shall survive the
Closing or earlier termination of this Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Certain Matters.
(a) If, at the time of their execution of this Agreement, the
Investors had actual knowledge of any breach by the Company of any
representation or warranty contained herein, (i) the Investors shall not have
the right to terminate this Agreement pursuant to Section 8.1 based on such
breach, and (ii) the Investors shall have no claim against the Company for such
breach.
(b) If, at the time of their execution of this Agreement, the Debtors
had actual knowledge of any breach by the Investors of any representation or
warranty contained herein, (i) the Debtors shall not have the right to terminate
this Agreement pursuant to Section 8.1 based on such breach, and (ii) the
Debtors shall have no claim against the Investors for such breach.
Section 11.2 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal and substantive Laws of the State of
New York.
Section 11.3 Jurisdiction; Forum; Service of Process; Waiver of Jury
Trial. With respect to any Action arising out of or relating to this Agreement,
the Company and the Investors hereby irrevocably:
(a) submit to (i) the exclusive jurisdiction of the Bankruptcy Court
for so long as the Chapter 11 Cases are open or (ii) the jurisdiction of any New
York State court or any Federal court of the United States sitting in New York
for so long as the Chapter 11 Cases are not open, for any Action arising out of
or relating to this Agreement or the other Transaction Documents and the
transactions contemplated hereby and thereby (and the Company agrees not to
commence any Action relating hereto or thereto except in such Court) and waives
any objection to venue being laid in the Bankruptcy Court whether based on the
grounds of forum non conveniens or otherwise;
(b) consent to service of process in any Action by the mailing of
copies thereof by registered or certified mail, postage prepaid, or by
recognized international express carrier or delivery service, to the Company or
each Investor at their respective addresses referred to in Section 11.6 hereof;
provided, however, that nothing herein shall affect the right of any party
hereto to serve process in any other manner permitted by law; and
(c) waive, to the fullest extent permitted by law, any right it may
have to a trial by jury in any Action directly, or indirectly arising out of,
under or in connection with this Agreement or the other Transaction Documents.
Section 11.4 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors by operation of law of the parties hereto. No assignment of
this Agreement (other than assignments by any Investor to any of its Affiliates)
may be made by any party at any time, whether or not by operation of law,
without the other parties' prior written consent. Only the parties to this
Agreement or their successors shall have rights under this Agreement.
Section 11.5 Entire Agreement; Amendment. This Agreement (including
the Exhibits, Schedules and Annexes attached hereto), the other Transaction
Documents and the Plan constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and supersedes
all prior agreements relating to the subject matter hereof. Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the Company and by the Investors. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other provision
hereof (whether or not similar). No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof. For
periods prior to the Effective Date, the parties agree that to the extent any
provision of the Plan relating to the Investors conflicts with any provision of
this Agreement, the provisions of this Agreement shall control. After the
Effective Date, in the event that any terms of this Agreement conflict with any
terms of the Plan, the terms of the Plan shall control.
Section 11.6 Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient and
effective if contained in a written instrument (i) delivered in person, when
such delivery is made at the address specified at the address specified in this
Section 11.5, (ii) sent by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 11.6 and appropriate confirmation is
received, (iii) nationally recognized overnight courier, the next day or (iv)
first class registered or certified mail, return receipt requested, postage
prepaid, 5 days after deposit, in each case, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
(i) If to the Company or to any subsidiary that is a Debtor:
Bally Total Fitness Holding Corporation
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxx
With a copy to:
Xxxxxx & Xxxxxxx LLP
Sears Tower, Suite 5800
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
Xxxx X. Xxxxxxxx, Esq.
(ii) If to either Investor:
Harbinger Capital Partners Master Fund I, Ltd. or
Harbinger Capital Partners Special Situations Fund, L.P.
c/o Harbinger Capital Partners
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxx
With a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
And:
Kasowitz, Benson, Xxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
Section 11.7 Delays or Omissions. Except as expressly provided herein,
no delay or omission to exercise any right, power or remedy accruing to the
Company or the Investors upon any breach or default of any party under this
Agreement, shall impair any such right, power or remedy of the Company or the
Investors nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of the Company or the Investors of any breach or default under this
Agreement, or any waiver on the part of any such party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to the Company or the Investors
shall be cumulative and not alternative.
Section 11.8 Several Obligations of Investors. The parties agree that
all obligations of the Investors hereunder shall be several and not joint.
Section 11.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by only one of the parties
hereto, each of which shall be enforceable against the party actually executing
such counterpart, and all of which together shall constitute one instrument. Any
signature delivered by facsimile or electronic mail shall have the same effect
as an original hereto.
Section 11.10 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provisions; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
Section 11.11 Construction. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, clauses and other
subdivisions refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, clauses and other subdivisions of this Agreement unless expressly
provided otherwise. The words "this Agreement," "herein," "hereby," "hereunder"
and "hereof" and words of similar import, refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The words "this
Section," "this subsection" and words of similar import, refer only to the
Sections or subsections hereof in which such words occur. The word "including"
(in its various forms) means "including, without limitation." Pronouns in
masculine, feminine or neuter genders shall be construed to state and include
any other gender, and words, terms and titles (including terms defined herein)
in the singular form shall be construed to include the plural and vice versa,
unless the context otherwise expressly requires. Unless the context otherwise
requires, all defined terms contained herein shall include the singular and
plural and the conjunctive and disjunctive forms of such defined terms.
Section 11.12 Headings. The table of contents and headings used in
this Agreement are used for convenience only, do not constitute a part of this
Agreement and are not to be considered in construing or interpreting this
Agreement.
Section 11.13 Public Announcement. The Company and the Investors
shall, to the extent reasonably practicable, consult with the other regarding
the content of any press releases, public announcements or filings with
Governmental Entities concerning the transactions contemplated by the
Transaction Documents.
Section 11.14 Consummation; Specific Performance. In the event that,
on or before the Outside Date, the Investors are ready, willing and able to
consummate the transactions contemplated hereby and all conditions precedent to
the obligations of each of the Investors and the Company (as applicable)
hereunder have been satisfied or waived by the Investors or the Company (as
applicable) in accordance herewith, the Company shall be compelled to consummate
the transactions contemplated hereby upon the Investors' demand. The Company
specifically acknowledges that monetary damages are not an adequate remedy for
violations of this Section 11.14 and that the Investors may, in their sole
discretion, apply to the Bankruptcy Court or any other court of competent
jurisdiction for specific performance or injunctive relief as such court may
deem just and proper in order to enforce or prevent any violation of this
Section 11.14 and, to the extent permitted by applicable Law and to the extent
the Investors seek such relief, would be entitled on the merits to obtain such
relief, the Company hereby waives any objection to the imposition of such relief
or the submission by the Investors of any bond.
Section 11.15 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement will not survive the
Closing Date.
Section 11.16 Third Party Beneficiaries. The Excluded Parties shall be
third party beneficiaries of the obligations of the Company to the Excluded
Parties under Section 6.2(d) hereof. Except as set forth in the immediately
preceding sentence, there are no third party beneficiaries of this Agreement.
Section 11.17 Effectiveness of Agreement. This Agreement shall be
effective as of the date on which the Bankruptcy Court enters one or more
orders, in form and substance reasonably satisfactory to the Investors and the
Company, approving the Approval Motion, which shall occur on or before August
28, 2007.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, each of the undersigned has caused the foregoing
Agreement to be executed as of the date first above written.
BALLY TOTAL FITNESS HOLDING CORPORATION
By: /s/ Xxx X. Xxxxxxxxx
--------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Interim Chairman and
Chief Restructuring Officer
[Signature Page to Investment Agreement]
BALLY ARA CORPORATION
BALLY FITNESS FRANCHISING, INC.
BALLY FRANCHISE RSC, INC.
BALLY FRANCHISING HOLDINGS, INC.
BALLY REAL ESTATE I LLC
BALLY REFS WEST HARTFORD, LLC
BALLY SPORTS CLUBS, INC.
BALLY TOTAL FITNESS CORPORATION
BALLY TOTAL FITNESS FRANCHISING, INC.
BALLY TOTAL FITNESS HOLDING CORPORATION
BALLY TOTAL FITNESS INTERNATIONAL, INC.
BALLY TOTAL FITNESS OF CALIFORNIA, INC.
BALLY TOTAL FITNESS OF COLORADO, INC.
BALLY TOTAL FITNESS OF CONNECTICUT COAST, INC.
BALLY TOTAL FITNESS OF CONNECTICUT VALLEY, INC.
BALLY TOTAL FITNESS OF GREATER NEW YORK, INC.
BALLY TOTAL FITNESS OF MINNESOTA, INC.
BALLY TOTAL FITNESS OF MISSOURI, INC.
BALLY TOTAL FITNESS OF PHILADELPHIA, INC.
BALLY TOTAL FITNESS OF RHODE ISLAND, INC.
BALLY TOTAL FITNESS OF THE MID-ATLANTIC, INC.
BALLY TOTAL FITNESS OF THE MIDWEST, INC.
BALLY TOTAL FITNESS OF THE SOUTHEAST, INC.
BALLY TOTAL FITNESS OF TOLEDO, INC.
BALLY TOTAL FITNESS OF UPSTATE NEW YORK, INC.
BTF CINCINNATI CORPORATION
BTF EUROPE CORPORATION
BTF INDIANAPOLIS CORPORATION
BTF MINNEAPOLIS CORPORATION
BTF/CFI, INC.
BTFCC, INC.
BTFF CORPORATION
GREATER PHILLY XX. 0 XXXXXXX XXXXXXX
XXXXXXX XXXXXX XX. 0 HOLDING COMPANY
HEALTH & TENNIS CORPORATION OF NEW YORK
HOLIDAY HEALTH CLUBS OF THE EAST COAST, INC.
HOLIDAY/SOUTHEAST HOLDING CORP.
XXXX XXXXXXX HOLDING CORP.
NEW FITNESS HOLDING CO., INC.
NYCON HOLDING CO., INC.
RHODE ISLAND HOLDING COMPANY
TIDELANDS HOLIDAY HEALTH CLUBS, INC.
U.S. HEALTH, INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------
Name: Xxxx Xxxxxxxxx
Title: Senior Vice President & General
Counsel
[Signature Page to Investment Agreement]
HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.
By: Harbinger Capital Partners Offshore
Manager, L.L.C., as investment manager
By: /s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Executive Vice President
HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS
FUND, L.P.
By: Harbinger Capital Partners Special
Situations GP, LLC, as general partner
By: /s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Executive Vice President
[Signature Page to Investment Agreement]
EXHIBIT I
AMENDED PLAN OF REORGANIZATION
EXHIBIT II
FORM OF INVESTOR SHARE NOTICE
Number
of New
Investor Percentage of Total Dollar
Shares Outstanding New Amount of
Name and Address of Investor Acquired Common Shares Investment
---------------------------- -------- ------------- ----------
Harbinger Capital Partners
Master Fund I, Ltd.
Harbinger Capital Partners
Special Situations Fund,
L.P.
Total
EXHIBIT III
NAICS INDUSTRY CODES
713940 (Fitness and Recreational Sports Centers)
SCHEDULE A
LITIGATION
Xxxxx Xxxxxxxx v. Xxxx Xx Xxxxx Fitness Centers, Inc., Health and Tennis
Corporation of America, n/k/a/ Bally Total Fitness Corporation
DATE FILED: 4/11/07 and 6/8/07
COURT & CASE NUMBER: Supreme Court of the State of New York, County of New York
Index No. 601939/07
SK 03773 0003 803569
