STOCK PURCHASE AGREEMENT
Exhibit 10.2
This Stock Purchase Agreement (“Agreement”) is dated as of April 11, 2006, and is made
by and between Bally Total Fitness Holding Corporation, a Delaware corporation (“Bally” or
the “Company”), and persons listed on the signature pages attached hereto (collectively,
the “Purchaser ”).
WHEREAS, Bally wishes to sell to the Purchaser, and the Purchaser desires to purchase from
Bally, shares of its common stock, par value $0.01 per share (“Common Stock”), pursuant to
the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the representations, warranties and
agreements herein contained and intending to be legally bound hereby, Bally and the Purchaser
hereby agree as follows:
ARTICLE I
DELIVERY OF COMMON STOCK AND RELATED MATTERS
DELIVERY OF COMMON STOCK AND RELATED MATTERS
Section 1.1 Purchase of Common Stock. Bally shall authorize and issue to the
Purchaser and, subject to the terms and conditions set forth herein, the Purchaser shall accept
from the Company, an aggregate of 400,000 shares of Common Stock (the “Shares”) in
consideration for a cash payment of $2,800,000. The Shares shall be purchased by each of the
persons in the quantities set forth on the signature pages attached hereto. Upon execution of this
Agreement, (i) Bally will instruct its transfer agent to issue the Shares to Purchaser as promptly
as practicable; and (ii) Purchaser shall make its payment in respect of such Shares by wire
transfer of immediately available funds to the account(s) specified in writing by Bally to the
Purchaser.
Section 1.2 Restricted Securities. The Purchaser understands that the Shares
are being issued only in a transaction not involving any public offering in the United States
within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), the
Shares have not been registered under the Securities Act or any other applicable securities law,
that the Shares will be “restricted securities” within the meaning of Rule 144 under the Securities
Act and that (A) prior to the expiration of the holding period applicable to sales of restricted
securities pursuant to Rule 144 under the Securities Act, the Shares may be offered, resold,
pledged or otherwise transferred only in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction (i) (a) in a transaction meeting
the requirements of Rule 144 under the Securities Act, (b) outside the U.S. to a foreign purchaser
in a transaction meeting the requirements of Regulation S or (c) pursuant to a transaction that is
otherwise exempt from the registration requirements of the Securities Act and state securities
laws, (ii) to Bally or (iii) pursuant to an effective registration statement under the Securities
Act and (B) the Purchaser will notify any subsequent purchaser from it of the resale restrictions
set forth in (A) above, if then applicable. The Purchaser agrees that the certificates
representing the Shares shall bear a restrictive legend in substantially the following form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ACQUIRED IN A
TRANSACTION THAT WAS NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION THEREFROM TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR
LAWS.”
Section 1.3 Registration Rights. Promptly after the execution of this
Agreement, the Company will enter into a registration rights agreement with respect to the Shares
for the benefit of the Purchaser, substantially in the form attached hereto as Exhibit A.
Section 1.4 Voting Agreement. The Purchaser agrees for a period from the date
hereof through December 31, 2006 that at any meeting (whether annual or special and whether or not
an adjourned or postponed meeting) of the holders of capital stock of the Company, however called,
or in connection with any written consent of the holders of capital stock of the Company solicited
by the Board of Directors, the Purchaser will appear at the meeting or otherwise cause the Shares
to be counted as present at such meeting for purposes of establishing a quorum and vote or consent
(or cause to be voted or consented) the Shares (i) in favor of any proposed strategic transaction
(including a merger or consolidation of the Company with another entity or the sale of
substantially all of the Company’s assets) approved by the Board of Directors (a
“Board-Approved Transaction”) and (ii) against any merger, consolidation, combination, sale
of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other acquisition proposal (other than a Board-Approved Transaction);
provided, that the Purchaser holds the Shares on the record date for such meeting or as of the date
of such written consent; provided, further, that this Section 1.4 will not apply to (x) the extent
any Person has formally initiated (whether by tender offer, proxy solicitation or other filing that
has been or will be mailed directly to holders of the Company’s Common Stock) a bona fide potential
strategic transaction that is fully financed or reasonably capable of being financed and not a
Board-Approved Transaction and such transaction would, if consummated, result in a transaction more
favorable to the holders of the Company’s Common Stock from a financial point of view than the
Board-Approved Transaction and (y) any shares of Common Stock which are owned, directly or
indirectly, by the Purchaser or any of its affiliates other than the Shares issued pursuant to this
Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BALLY
REPRESENTATIONS AND WARRANTIES OF BALLY
The Company represents and warrants to the Purchaser as follows:
Section 2.1 Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority (i) to own, lease and operate its
properties, to carry on its business as now being conducted and (ii) to execute, deliver and
perform its obligations under this Agreement.
Section 2.2 Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders, necessary for the authorization, execution and delivery
of this Agreement, the performance of all obligations of the Company hereunder, and the
authorization, sale and issuance of the Shares, has been taken. This Agreement constitutes a valid
and legally binding obligation of the Company, enforceable in accordance with its terms.
Section 2.3 No Conflicts. The execution, delivery and performance of this
Agreement and the issuance, sale and delivery of the Shares will not (i) violate any provision of
law or statute or any order of any court or other governmental authority binding on the Company;
(ii) contravene or conflict with the Company’s certificate of incorporation or bylaws; or (iii)
conflict with or result in any breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time or both) a default, or result in the creation of any
lien upon any of the properties or assets of the Company, under any indenture, mortgage, lease
agreement or other agreement or instrument to which the Company is a party or by which it or any of
its property is bound or affected.
Section 2.4 No Consents Required. Assuming the accuracy of the Purchaser’s
representations and warranties contained herein, no consent, approval, authorization, order,
registration or qualification of or with any governmental or regulatory authority or any court is
required for the execution, delivery and performance by the Company of this Agreement, except for:
(i) as may be required by rules of the New York Stock Exchange; (ii) as may be required with
respect to the Company’s obligations under Section 1.3 hereof; and (iii) such consents, approvals,
authorizations, orders and registrations or qualifications that if not obtained or made would not,
individually or in the aggregate, reasonably be expected to have material adverse effect on the
business, properties, management, financial position or results of operations of the Company and
its subsidiaries taken as a whole.
Section 2.5 Legal Proceedings. Except as described in the Company’s filings
with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, there are no legal, governmental or regulatory investigations, actions, suits or
proceedings pending to which the Company is party or to which any property of the Company is the
subject that, individually or in the aggregate, if determined adversely to the Company, could
reasonably be expected to have a material adverse effect on the business, properties, management,
financial position or results of operations of the Company and its subsidiaries taken as a whole.
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Section 2.6 Issuance of the Shares. The Shares will be duly authorized and
when issued in accordance with the terms hereof will be validly issued, fully paid and
nonassessable.
Section 2.7 Certain Securities Law Matters. Assuming the accuracy of the
representations and warranties of the Purchaser set forth in Article III hereof, the Shares may be
issued to the Purchaser pursuant to this Agreement without registration under the Securities Act by
reason of Section 4(2) thereof and similar provisions under applicable state securities laws.
Section 2.8 Rights Agreement. The Purchaser and its affiliates shall not be or
be deemed to be the beneficial owner (within the meaning of Section 1.3 of the Rights Agreement) of
any of the shares of Common Stock issued by the Company to any other Person pursuant to the
Company’s solicitation of consents with respect to its 97/8% Senior
Subordinated Notes due 2007 and 101/2% Senior Notes due 2011 and the
transactions contemplated thereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
Section 3.1 Organization and Standing of the Purchaser. The Purchaser is duly
organized, validly existing and in good standing under the laws of its jurisdiction of its
incorporation or formation and has all requisite power and authority (i) to own, lease and operate
its properties, to carry on its business as now being conducted and (ii) to execute, deliver and,
as applicable, perform its obligations under this Agreement.
Section 3.2 Investor Representations. The Purchaser is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in the acquisition of
the Shares, including investments in securities issued by the Company. The Purchaser is acquiring
the number of Shares set forth in Section 1.1 above in the ordinary course of its business and for
its own account for investment (as defined for purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976 and the regulations thereunder) only, and has no present intention of
distributing any of the Shares nor any arrangement or understanding with any other persons
regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities
Act. The Purchaser is an “accredited investor” within the meaning of Rule 501 of Regulation D
promulgated under the Securities Act. The Purchaser understands that the Shares are being issued
to it in reliance on specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Purchaser set forth herein in order to determine the availability of such
exemptions and the eligibility of the Purchaser to acquire the Shares.
Section 3.3 Information Provided. The Purchaser has received and has had an
opportunity to review, and has been furnished with, all materials relating to the business,
finances and operations of the Company and materials relating to the issuance of the Shares which
have been requested by the Purchaser. In that regard, the Purchaser acknowledges that
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Bally has failed to timely file its annual report on Form 10-K for the fiscal year ended
December 31, 2005. The Purchaser has been afforded the opportunity to ask questions of the Company
and has received satisfactory answers to any such inquiries; and the Purchaser understands that its
investment in the Shares involves a high degree of risk and that no governmental body has passed on
or made any recommendation or endorsement of the Shares.
ARTICLE IV
MISCELLANEOUS
MISCELLANEOUS
Section 4.1 Costs, Expenses and Taxes. Each party shall bear its own costs
and expenses in connection with the preparation, execution and delivery of this Agreement and the
issuance of the Shares.
Section 4.2 Prior Agreements. This Agreement constitutes the entire agreement
between the parties concerning the subject matter hereof and supersedes any prior representations,
understandings or agreements. There are no representations, warranties, agreements, conditions or
covenants, of any nature whatsoever (whether express or implied, written or oral) between the
parties hereto with respect to such subject matter except as expressly set forth herein and in the
other agreements contemplated hereby.
Section 4.3 Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any other provision or
the validity and enforceability of this Agreement in any other jurisdiction.
Section 4.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CHOICE OF
LAW RULES.
Section 4.5 Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of, or affect the interpretation
of, this Agreement.
Section 4.6 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and either
of the parties hereto may execute this Agreement by signing any such counterpart. A facsimile
transmission of this Agreement bearing a signature on behalf of a party hereto shall be legal and
binding on such party.
Section 4.7 Assignment; Binding Effect. The Purchaser shall not convey,
assign or otherwise transfer any of its rights or obligations under this Agreement without the
express written consent of Bally, and Bally shall not convey, assign or otherwise transfer any of
its rights and obligations under this Agreement without the express written consent of the
Purchaser. This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 4.8 Waiver; Remedies. No delay on the part of any Purchaser or Bally
in exercising any right, power or privilege under this Agreement shall operate as a wavier thereof,
nor shall any waiver on the part of any Purchaser or Bally of any right, power or privilege under
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this Agreement operate as a waiver of any other right, power or privilege of such party under
this Agreement, nor shall any single or partial exercise of any right, power or privilege under
this Agreement preclude any other or further exercise thereof or the exercise of any other right,
power or privilege under this Agreement.
Section 4.9 Amendment. This Agreement may be modified or amended only by
written agreement of the parties to this Agreement.
* * * *
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have caused this
Agreement to be executed by their respective duly authorized officers, as of the date first above
written.
| BALLY TOTAL FITNESS HOLDING CORPORATION | ||||||
| By: | /s/ Xxxx X. Xxxxxxxxx | |||||
| Name: | Xxxx X. Xxxxxxxxx | |||||
| Title: | Senior Vice President and General Counsel | |||||
Number of Shares Purchased: |
||||||
| 67,150 Shares | RAMIUS SECURITIES, L.L.C. | |||||
| By: | /s/ Xxxxxx Xxxxx | |||||
| Name: | Xxxxxx Xxxxx | |||||
| Title: | Authorized Signatory | |||||
| 214,812 Shares | STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD. | |||||
| By: | /s/ Xxxxxx Xxxxx | |||||
| Name: | Xxxxxx Xxxxx | |||||
| Title: | Authorized Signatory | |||||
| 17,324 Shares | RCG XXXXXXX MASTER FUND, LTD. | |||||
| By: | /s/ Xxxxxx Xxxxx | |||||
| Name: | Xxxxxx Xxxxx | |||||
| Title: | Authorized Signatory | |||||
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| 16,905 Shares | RCG HALIFAX FUND, LTD. | |||||
| By: | /s/ Xxxxxx Xxxxx | |||||
| Name: | Xxxxxx Xxxxx | |||||
| Title: | Authorized Signatory | |||||
| 83,809 Shares | RAMIUS MASTER FUND, LTD. | |||||
| By: | /s/ Xxxxxx Xxxxx | |||||
| Name: | Xxxxxx Xxxxx | |||||
| Title: | Authorized Signatory | |||||
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Exhibit A
Form of Registration Rights Agreement
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