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Exhibit 1.1
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BALLY TOTAL FITNESS HOLDING CORPORATION
a Delaware Corporation
$225,000,000
9-7/8% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
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Dated September 29, 1997
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$225,000,000
BALLY TOTAL FITNESS HOLDING CORPORATION
(a Delaware Corporation)
9-7/8% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
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September 29, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Chase Securities Inc.
Societe Generale Securities Corporation
Ladenburg Xxxxxxxx & Co. Inc.
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Bally Total Fitness Holding Corporation, a Delaware corporation (the
"Company"), confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Xxxxx Securities Inc.,
Societe Generale Securities Corporation and Ladenburg Xxxxxxxx & Co. Inc.
(collectively, the "Initial Purchasers," which term shall also include any
initial purchaser substituted as hereinafter provided in Section 11 hereof),
for whom Xxxxxxx Xxxxx is acting as representative (in such capacity, the
"Representative"), with respect to the issue and sale by the Company and the
purchase by the Initial Purchasers, acting severally and not jointly, of the
respective principal amounts set forth in Schedule A of $225,000,000 aggregate
principal amount of the Company's 9-7/8% Senior Subordinated Notes due 2007 (the
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"Securities"). The Securities are to be issued pursuant to an Indenture to be
dated as of the Closing Time (the "Indenture") between the Company and First
Trust National Association, as trustee (the "Trustee"). Securities issued in
book-entry form will be issued to Cede & Co. as nominee of The Depository Trust
Company ("DTC") pursuant to a letter agreement, to be dated as of the Closing
Time (as defined in Section 2(b)) (the "DTC Agreement"), among the Company, the
Trustee and DTC.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are to
be offered and sold through the Initial Purchasers without being registered
under the United States Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon exemptions therefrom. Pursuant to the terms of the
Securities and the Indenture, investors that acquire Securities may only resell
or otherwise transfer such Securities if such Securities are hereafter
registered under the Securities Act or if an exemption from the registration
requirements of the Securities Act is available (including, without limitation,
the exemption afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation
S") of the rules and regulations promulgated under the Securities Act by the
Securities and Exchange Commission (the "SEC")).
The holders of Securities will be entitled to the benefits of a
Registration Rights Agreement (the "Registration Rights Agreement"), between the
Company and the Initial Purchasers pursuant to which the Company will file a
registration statement (the "Registration Statement") with the SEC registering
the Notes or the Exchange Notes referred to in the Registration Rights Agreement
under the Securities Act.
The Company has prepared and delivered to each Initial Purchaser copies
of a preliminary offering memorandum dated September 15, 1997 (the "Preliminary
Offering Memorandum") and is preparing and will deliver to the Initial
Purchasers, on the date hereof or the next succeeding day, copies of a final
offering memorandum dated the date hereof (the "Final Offering Memorandum"), for
use by the Initial Purchasers in connection with its solicitation of purchases
of or offering of, the Securities. "Offering Memorandum" means, with respect to
any date or time referred to in this Agreement, the most recent offering
memorandum (whether the Preliminary Offering Memorandum or the Final Offering
Memorandum, or any amendment or supplement to either such document), including
exhibits thereto and any documents incorporated therein by reference, which has
been prepared and delivered by the Company to the Initial Purchasers in
connection with their solicitation of purchases of, or offering of, the
Securities.
The Company has obtained the consent of a sufficient number of holders
of its 13% Senior Subordinated Notes due 2003 (the "13% Notes") to execute, and
has executed, a Supplemental Indenture dated as of September 24, 1997 (the
"Supplemental Indenture") effecting certain amendments to the Indenture dated as
of January 15, 1993 between the
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Company and Amalgamated Bank of Chicago, as trustee, as more fully described in
the Company's Offer to Purchase and Consent Solicitation Statement relating
thereto dated September 3, 1997.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and other information which are
included in the Offering Memorandum.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Initial Purchaser as of the date hereof, and as
of the Closing Time referred to in Section 2(b) hereof, and agrees with each
Initial Purchaser as follows:
(i) SIMILAR OFFERINGS. The Company has not, directly or
indirectly, solicited any offer to buy or offered to sell, and will
not, directly or indirectly, solicit any offer to buy or offer to sell,
in the United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be
registered under the Securities Act.
(ii) OFFERING MEMORANDUM. As of the date hereof, the Offering
Memorandum does not, and at the Closing Time will not, include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
this representation, warranty and agreement shall not apply to
statements in or omissions from the Offering Memorandum made in
reliance upon and in conformity with information furnished to the
Company in writing by any Initial Purchaser through the Representative
expressly for use in the Offering Memorandum.
(iii) INDEPENDENT ACCOUNTANTS. Ernst & Young LLP is an
independent certified public accountant with respect to the Company and
its subsidiaries (each a "Subsidiary" and, collectively, the
"Subsidiaries") within the meaning of Rule 2-01 of Regulation S-X under
the Securities Act.
(iv) FINANCIAL STATEMENTS. The financial statements, together
with the related schedules and notes, included in the Offering
Memorandum present fairly the financial position of the Company and its
consolidated Subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated Subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as otherwise described in such financial
statements). The selected financial data and the summary financial
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information included in the Offering Memorandum present fairly the
information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the Offering
Memorandum. The pro forma financial information of the Company under
the caption "Offering Memorandum Summary - Summary Historical and Pro
Forma Consolidated Financial Data" and in the financial statements of
the Company and the related notes thereto included in the Offering
Memorandum, present fairly the information shown therein, have been
prepared in accordance with the SEC'S rules and guidelines with respect
to pro forma financial statements and have been properly compiled on
the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its Subsidiaries considered as one enterprise (a "Material Adverse
Effect"), whether or not arising in the ordinary course of business,
(B) except as set forth in the Offering Memorandum under the caption
"The Refinancing" there have been no transactions entered into by the
Company or any of its Subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its Subsidiaries considered as one enterprise, and (C) there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and to enter into and
perform its obligations under this Agreement, and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Each Subsidiary has been
duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Offering Memorandum and
each Significant Subsidiary (as defined below) is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as
otherwise disclosed in
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the Offering Memorandum, all of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and except as set forth on Schedule C
attached hereto, is wholly owned by the Company, directly or through
Subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of the Subsidiaries was issued in violation of
any preemptive or other rights of any security holder of such
Subsidiary. Attached hereto as Schedule C is a true and complete list
of the Subsidiaries of the Company. As used herein, "Significant
Subsidiary" means any subsidiary designated by the Company as a
Significant Subsidiary in Schedule C attached hereto. The assets of the
Significant Subsidiaries (i) constitute at least 95% of the total
assets of the Company and its Subsidiaries considered as one enterprise
and (ii) produced at least 95% of the operating income of the Company
and its Subsidiaries considered as one enterprise in each of the last
three fiscal years, in each case determined in accordance with GAAP.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Offering Memorandum
in the column entitled "Actual" under the caption "Capitalization",
except for subsequent issuances pursuant to the Stock Offering (as
defined in the Offering Memorandum), pursuant to reservations,
agreements, or employee benefits plans of the Company or pursuant to
the exercise of outstanding warrants, stock options or convertible
securities.
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company, and constitutes a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof
may be by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
other laws of general applicability relating to or affecting
enforcement of creditors' rights generally, or by general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law).
(x) AUTHORIZATION OF REGISTRATION RIGHTS AGREEMENT. The
Registration Rights Agreement has been duly authorized by the Company,
and when executed and delivered by the Company will constitute a valid
and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
other laws of general applicability relating to or affecting
enforcement of creditors' rights generally, or by general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law).
(xi) AUTHORIZATION OF THE INDENTURE AND THE DTC AGREEMENT.
Each of the Indenture and the DTC Agreement has been duly authorized by
the Company, and when
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executed and delivered by the Company will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
other laws of general applicability relating to or affecting
enforcement of creditors' rights generally, or by general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law).
(xii) AUTHORIZATION OF THE SECURITIES. The Securities have
been duly authorized for issuance and sale to the Initial Purchasers
pursuant to this Agreement and, at the Closing Time, will have been
duly executed by the Company and, when authenticated in the manner
provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in this Agreement, will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers) reorganization,
moratorium or other laws of general applicability relating to or
affecting enforcement of creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture.
(xiii) DESCRIPTION OF THE SECURITIES AND THE INDENTURE. The
Securities and the Indenture will conform in all material respects to
the respective statements relating thereto contained in the Offering
Memorandum and will be in substantially the respective forms previously
delivered to the Initial Purchasers.
(xiv) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company
nor any of its Subsidiaries is in violation of its charter or by-laws
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any of its Subsidiaries is
subject (collectively, "Agreements and Instruments") except for such
defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement, the Registration
Rights Agreement, the DTC Agreement, the Indenture and the Securities
and any other agreement or instrument entered into or issued or to be
entered into or issued by the Company in connection with the
transactions contemplated hereby or thereby or in the Offering
Memorandum and the consummation of the transactions contemplated herein
and in the Offering Memorandum (including the issuance and sale of the
Securities, the use of the proceeds from the sale of the Securities as
described in the Offering Memorandum under the caption "Use of
Proceeds" and the consummation of all of the other transactions
comprising the Refinancing) and compliance by the Company with its
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obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or a Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
of its Subsidiaries pursuant to, the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or
encumbrances that, singly or in the aggregate, would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any of
its Subsidiaries or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any of its Subsidiaries or any of their assets or
properties, except for such violation that would not result in a
Material Adverse Effect. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of its
Subsidiaries.
(xv) ABSENCE OF DEFAULT ON SENIOR INDEBTEDNESS. No event of
default exists under any contract, indenture, mortgage, loan agreement,
note, lease or other Agreement or Instrument constituting Senior
Indebtedness (as defined in the Indenture).
(xvi) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any of its Subsidiaries exists or, to the
knowledge of the Company, has been threatened, and the Company is not
aware of any existing or threatened labor disturbance by the employees
of any of its, or any Subsidiary's, principal suppliers, manufacturers,
customers or contractors, which, in either case, may reasonably be
expected to result in a Material Adverse Affect.
(xvii) ABSENCE OF PROCEEDINGS. Except as disclosed in the
Offering Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any Subsidiary
thereof which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets of the Company or any of its
Subsidiaries or the consummation of this Agreement or the Tender Offer
(as defined in the Offering Memorandum) or other transactions
comprising the Refinancing, or the performance by the Company of its
obligations hereunder, thereunder or under the Securities. The
aggregate of all pending legal or governmental proceedings to which the
Company or any Subsidiary thereof is a party or of which any of their
respective property or assets is the subject which are not described in
the Offering Memorandum, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
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(xviii) POSSESSION OF INTELLECTUAL PROPERTY. The Company and
its Subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property"),
necessary to carry on the business now operated by them, and neither
the Company nor any of its Subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
Subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xix) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency (other than (A) under the Securities Act and the rules and
regulations thereunder with respect to the Registration Statement to be
filed pursuant to the Registration Rights Agreement and the
transactions contemplated thereunder, and (B) under the securities or
"blue sky" laws of the various states) is necessary or required for the
performance by the Company of its obligations hereunder, in connection
with the offering, issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this Agreement or of
the Tender Offer.
(xx) POSSESSION OF LICENSES AND PERMITS. The Company and its
Subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them; the
Company and its Subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither
the Company nor any of its Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xxi) TITLE TO PROPERTY. The Company and its Subsidiaries have
good and marketable title to all real property owned by the Company and
its Subsidiaries and good title to all other properties owned by them,
in each case, free and clear of all mortgages,
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pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Offering Memorandum, (b) are listed on Schedule D hereto or (c) do not,
singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company or any of its Subsidiaries; and all of
the leases and subleases material to the business of the Company and
its Subsidiaries, considered as one enterprise, and under which the
Company or any of its Subsidiaries holds properties described in the
Offering Memorandum, are in full force and effect, and neither the
Company nor any of its Subsidiaries has any notice of any material
claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such Subsidiary to the continued possession of
the leased or subleased premises under any such lease or sublease,
which in either case, may be expected to result in a Material Adverse
Effect.
(xxii) ENVIRONMENTAL LAWS. Except as described in the Offering
Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its Subsidiaries is in violation of any statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating
to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its Subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
Subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of
its Subsidiaries relating to Hazardous Materials or the violation of
any Environmental Laws.
(xxiii) TAX RETURNS. All United States federal income tax
returns of the Company and its consolidated Subsidiaries required by
law to be filed have been filed and all taxes shown by such returns or
otherwise assessed, which are due and payable, have been paid, except
taxes or charges that are being contested in good faith or
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assessments against which appeals have been or will be promptly taken.
All United States federal income tax returns of Bally Entertainment
Corporation ("Entertainment") and its consolidated subsidiaries,
including the Company, for tax periods prior to January 9, 1996,
required by law to be filed have been filed and all taxes shown by the
said returns or otherwise assessed which are due and payable have been
paid, except assessments against which appeals have been or will be
promptly taken. The United States federal income tax returns of
Entertainment and its consolidated Subsidiaries, including the Company
and its Subsidiaries, through the fiscal year ended 1986 have been
settled and no assessment in connection therewith has been made against
the Company or Entertainment in connection with the business of the
Company. The Company and its Significant Subsidiaries have filed all
other tax returns that are required to have been filed by them pursuant
to applicable foreign, state, local or other law except insofar as the
failure to file such returns would not result in a Material Adverse
Effect, and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by the Company and its
Subsidiaries, except for such taxes or charges that are being contested
in good faith or assessments against which appeals have been or will
promptly be taken and as to which adequate reserves have been provided
and other than those the nonpayment of which would not have a Material
Adverse Effect. The charges, accruals and reserves on the books of the
Company in respect of any income and corporation tax liability for any
years not finally determined are adequate to meet any assessments or
reassessments for additional income tax for any years not finally
determined, except to the extent of any inadequacy that would not
result in a Material Adverse Effect.
(xxiv) INTERNAL CONTROLS. The Company and its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization, (B) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with GAAP and to maintain accountability for assets, (C)
access to assets is permitted only in accordance with management's
general or specific authorization and (D) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(xxv) SOLVENCY. The Company is, and immediately after the
Closing Time will be, Solvent. As used herein, the term "Solvent"
means, with respect to the Company on a particular date, that on such
date (A) the fair market value of the assets of the Company is greater
than the total amount of liabilities (including contingent liabilities)
of the Company, (B) the present fair salable value of the assets of the
Company is greater than the amount that will be required to pay the
probable liabilities of the Company on its debts as they become
absolute and matured, (C) the Company is able to realize upon its
assets and pay its debts and other liabilities, including contingent
obligations, as they mature, and (D) the Company does not have
unreasonably small capital.
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(xxvi) STABILIZATION. Neither the Company nor any of its
officers, directors or controlling persons has taken, directly or
indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(xxvii) INVESTMENT COMPANY ACT. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xxviii) COMPLIANCE WITH CUBA ACT. The Company has complied
with, and is and will be in compliance with, the provisions of that
certain Florida act relating to disclosure of doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(xxix) RULE 144A ELIGIBILITY. At the Closing Time, assuming
the Initial Purchasers are not affiliates of the Company, the
Securities will be eligible for resale by the Initial Purchasers
pursuant to Rule 144A and will not be, at the Closing Time, of the same
class as United States Securities listed on a national securities
exchange registered under Section 6 of the United States Exchange Act
of 1934, as amended (the "Exchange Act"), or quoted in a U.S. automated
interdealer quotation system.
(xxx) NO GENERAL SOLICITATION. None of the Company, its
affiliates, as such term is defined in Rule 501(b) under the Securities
Act ("Affiliates"), or any person acting on its or any of their behalf
(other than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the
offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the
Securities Act.
(xxxi) NO REGISTRATION REQUIRED. Subject to compliance by the
Initial Purchasers with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers and to each Subsequent Purchaser
in the manner contemplated by this Agreement and the Offering
Memorandum to register the Securities under the Securities Act or to
qualify the Indenture under the Trust Indenture Act of 1939, as amended
(the "1939 Act").
(xxxii) REGISTRATION RIGHTS. There are no holders of
securities (debt or equity) of the Company, or holders of rights
(including, without limitation, preemptive rights), warrants or options
to obtain securities of the Company, who in connection with the
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issuance, sale and delivery of the Securities and the execution,
delivery and performance of this Agreement and the Registration Right
Agreement, have the right to request the Company to register securities
held by them under the Securities Act.
(xxxiii) NO DIRECTED SELLING EFFORTS. With respect to those
Securities sold in reliance on Regulation S, (A) none of the Company,
its Affiliates or any person acting on its or their behalf (other than
the Initial Purchasers, as to whom the Company makes no representation)
has engaged or will engage, in any directed selling efforts within the
meaning of Regulation S and (B) each of the Company and its Affiliates
and any person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has
complied and will comply with the offering restrictions requirement of
Regulation S.
(xxxiv) COMPLIANCE WITH LAWS. The Company and its Subsidiaries
have conducted and are conducting their business in compliance with all
applicable federal, state and local laws, rules, regulations,
decisions, directives and orders, except where the failure to do so
would not have a Material Adverse Effect.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company delivered to the Representative or to counsel for the Initial
Purchasers shall be deemed a representation and warranty by the Company to each
Initial Purchaser as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO INITIAL PURCHASERS; CLOSING.
(a) Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, severally and not jointly, and
each Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate principal amount of
Securities set forth in Schedule A opposite the name of such Initial Purchaser,
plus any additional principal amount of Securities which such Initial Purchaser
may become obligated to purchase pursuant to the provisions of Section 11
hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the office of Xxxxxx,
Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, or at such
other place as shall be agreed upon by the Representative and the Company, at
10:00 A.M. (Eastern time) on the sixth business day after the date hereof
(unless postponed in accordance with the provisions of Section 11), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representative and the Company (such time and date of payment and
delivery being herein called the "Closing Time").
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Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representative for the respective accounts of the Initial Purchasers of
certificates for the Securities to be purchased by them. It is understood that
each Initial Purchaser has authorized the Representative, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. Xxxxxxx Xxxxx, individually and not
as representative of the Initial Purchasers, may (but shall not be obligated to)
make payment of the purchase price for the Securities to be purchased by any
Initial Purchaser whose funds have not been received by the Closing Time, but
such payment shall not relieve such Initial Purchaser from its obligations
hereunder. The certificates representing the Securities shall be registered in
the name of Cede & Co. pursuant to the DTC Agreement and shall be made available
for examination and packaging by the Initial Purchasers in The City of New York
not later than 10:00 A.M. (Eastern Time) on the last business day prior to the
Closing Time.
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a "qualified institutional buyer" within the meaning of Rule 144A (a "Qualified
Institutional Buyer").
(d) Denominations; Registration. Certificates for the Securities shall
be in such denominations ($1,000 or integral multiples thereof) and registered
in such names as the Representative may request in writing at least one full
business day before the Closing Time.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Initial Purchaser as follows:
(a) Delivery of Offering Memorandum. The Company, as promptly as
possible, will furnish to each Initial Purchaser, without charge, such number of
copies of the Preliminary Offering Memorandum, the Final Offering Memorandum and
any amendments and supplements as each Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any Securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
in writing from the Initial Purchasers to the Company, any material changes in
or affecting the earnings, business affairs or business prospects of the Company
and its Subsidiaries which (i) make any statement in the Offering Memorandum
false or misleading or (ii) are not disclosed in the Offering Memorandum. In
such event or if during such time any event shall occur as a result of which it
is necessary, in the reasonable opinion of the Company, its counsel, the Initial
Purchasers or counsel for the Initial Purchasers, to amend or supplement the
Final Offering Memorandum in order that the Final Offering Memorandum not
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in
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the light of the circumstances then existing, the Company will forthwith amend
or supplement the Final Offering Memorandum by preparing and furnishing to each
Initial Purchaser an amendment or amendments of, or a supplement or supplements
to, the Final Offering Memorandum (in form and substance satisfactory to counsel
for the Initial Purchasers) so that, as so amended or supplemented, the Final
Offering Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing at the time it is delivered to a
Subsequent Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement without
the consent of the Initial Purchasers, provided that the Initial Purchasers
shall object to the Company within three business days after receipt of a copy
of any such proposed amendment or supplement. Neither the consent of the Initial
Purchasers, nor the Initial Purchasers' delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Blue Sky Qualification of Securities for Offer and Sale. The
Company, in cooperation with the Initial Purchasers, will endeavor to qualify
the Securities for offering and sale under the applicable securities laws of
such jurisdictions as the Representative may designate and will maintain such
qualifications in effect as long as required for the sale of the Securities;
PROVIDED, HOWEVER, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required to complete the
distribution of the Securities contemplated by this Agreement.
(e) Rating of Securities. The Company shall take all reasonable action
necessary to enable Standard & Poor's Ratings Group ("S&P"), a division of
McGraw Hill, Inc., and Xxxxx'x Investors Service, Inc. ("Moody's") to provide
their respective credit ratings of the Securities.
(f) DTC and PORTAL. The Company will cooperate with the Representative
and use its best efforts to (i) permit the Securities to be eligible for
clearance and settlement through the facilities of DTC and (ii) include
quotation of the Securities on the Private Offerings, Resales and Trading
through Automatic Linkages (PORTAL) System of The National Association of
Securities Dealers, Inc. (the "NASD").
(g) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds."
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(h) Restriction of Sale of Securities. During a period of 120 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of Xxxxxxx Xxxxx, directly or indirectly, issue, sell, offer or
agree to sell, grant any option for the sale of, or otherwise dispose of, (i)
any other debt securities of the Company, except for the modification or
replacement of the Senior Indebtedness (as defined in the Offering Memorandum)
currently outstanding, or (ii) securities of the Company that are convertible
into, or exchangeable for, the Securities or such other debt securities, other
than the Exchange Notes referred to in the Registration Rights Agreement.
SECTION 4. PAYMENT OF EXPENSES.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of the
Preliminary Offering Memorandum and the Offering Memorandum (including financial
statements and exhibits) and of each amendment or supplement thereto, provided
however, that the Initial Purchasers shall pay $100,000 of such printing
expenses, (ii) the preparation, printing and delivery to the Initial Purchasers
of this Agreement, any Agreement among Initial Purchasers, the Indenture and
such other documents as may be required in connection with the offering,
purchase, sale and delivery of the Securities, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the Initial Purchasers,
including any charges of DTC in connection therewith, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchasers in connection therewith
and in connection with the preparation of the blue sky survey and any supplement
thereto and delivery to the Initial Purchasers of copies thereof, (vi) the
reasonable fees and expenses of the Trustee, including the reasonable fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities, (vii) any fees payable in connection with the rating of the
Securities, and (viii) any fees payable to the NASD in connection with the
initial and continued designation of the Securities as PORTAL Securities under
the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5(j) or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers.
SECTION 5. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company delivered
pursuant to the provisions hereof, to the performance by the Company of its
covenants and other obligations hereunder, and to the following further
conditions:
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(a) Opinion of Counsel for Company. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of the
Closing Time, of Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP, counsel for the
Company, in form and substance satisfactory to Xxxxxx, Xxxxx & Bockius LLP, to
the effect set forth in Exhibit A hereto and to such further effect as Xxxxxx,
Xxxxx & Xxxxxxx LLP may reasonably request. It is understood that the opinions
set forth in paragraphs (i) (as to due incorporation), (iii), (v), (xiv) and
(xvii) of Exhibit A may be delivered by Xxxx X. Gaan, Esq., on behalf of the
Company, rather than by Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Initial Purchasers shall have received the favorable opinion, dated as of the
Closing Time, of Xxxxxx, Xxxxx & Bockius LLP, counsel for the Initial
Purchasers, with respect to the matters set forth in paragraphs (i), (ii), and
(vi) through (x), inclusive, and the last paragraph, of Exhibit A hereto. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and certificates of public officials.
(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of the Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) the representations and warranties in
Section l(a) hereof are true and correct with the same force and effect as
though expressly made at and as of the Closing Time, except for any
representations and warranties which are made as of a specific date, which were
true and correct as of such date, and (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representative shall have received from Ernst & Young LLP a
letter dated such date, in form and substance satisfactory to the
Representative, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers, containing statements and information of
the type ordinarily included in accountants' "comfort letters" to Initial
Purchasers with respect to the financial statements and certain financial
information contained in the Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Representative
shall have received from Ernst & Young LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section,
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except that the specified date referred to shall be a date not more than three
business days prior to the Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Securities shall be
rated at least "B3" by Moody's and "B-" by S & P, and the Company shall have
delivered to the Representative a letter dated the Closing Time, from each such
rating agency, or other evidence satisfactory to the Representative, confirming
that the Securities have such ratings; and since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to the
securities or any of the Company's other debt securities by any nationally
recognized securities rating agency, and no such securities rating agency shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the Company's
other debt securities.
(g) PORTAL and DTC. At the Closing Time, (A) the Securities shall have
been designated for trading on PORTAL, (B) Securities issued pursuant to
Regulation S in book entry form shall have been accepted for settlement through
the facilities of Cedel Bank and Euroclear, and (C) Securities issued pursuant
to Rule 144A in book entry form shall have been accepted for settlement through
the facilities of DTC.
(h) Refinancing. At the Closing Time, (i) the Company shall have
consummated the Tender Offer, (ii) the Company shall have duly and validly
entered into a supplemental indenture with respect to the 13% Notes pursuant to
which the consummation of the transactions contemplated by this Agreement and
the other transactions constituting the Refinancing shall be permissible, and
(iii) the Company shall have consummated all other transactions comprising the
Refinancing which, as described in the Offering Memorandum under the caption
"Refinancing," are intended to occur at or prior to the Closing Time.
(i) Registration Rights Agreement and Indenture. The Company shall have
duly authorized, executed and delivered the Registration Rights Agreement and
the Indenture, in each case in form and substance reasonably satisfactory to the
Representative and counsel to the Initial Purchasers.
(j) Additional Documents. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance to
the Representative and counsel for the Initial Purchasers.
(k) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the
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Representative by notice to the Company at any time at or prior to the Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 7 and 8 shall
survive any such termination and remain in full force and effect.
SECTION 6. SUBSEQUENT OFFERS AND RESALES OF THE SECURITIES.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) OFFERS AND SALES ONLY TO QUALIFIED INSTITUTIONAL BUYERS.
Offers and sales of the Securities will be made only by the Initial
Purchasers or Affiliates thereof qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer
or sale shall only be made (A) to persons whom the offeror or seller
reasonably believes to be Qualified Institutional Buyers, and (B) to
non-U.S. persons outside the United States to whom the offeror or
seller reasonably believes offers and sales of the Securities may be
made in reliance upon Regulation S.
(ii) NO GENERAL SOLICITATION. The Securities will be offered
by the Initial Purchasers only by approaching prospective Subsequent
Purchasers on an individual basis. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the Securities
Act) will be used in the United States in connection with the offering
of the Securities.
(iii) PURCHASES BY NON-BANK FIDUCIARIES. In the case of a
non-bank Subsequent Purchaser of a Security acting as a fiduciary for
one or more third parties, in connection with an offer and sale to such
purchaser pursuant to clause (a) above, each third party shall, in the
judgment of the applicable Initial Purchaser, be a Qualified
Institutional Buyer or a non-U.S. person outside the United States.
(iv) SUBSEQUENT PURCHASER NOTIFICATION. Each Initial Purchaser
will take reasonable steps to inform, and cause each of its Affiliates
in the United States to take reasonable steps to inform, persons
acquiring Securities from such Initial Purchaser or Affiliate, as the
case may be, in the United States that the Securities (A) have not been
and will not be registered under the Securities Act, (B) are being sold
to them without registration under the Securities Act in reliance on
Rule 144A or in accordance with another exemption from registration
under the Securities Act, as the case may be, and (C) may not be
offered, sold or otherwise transferred except (1) to the Company, (2)
pursuant to a registration statement which has been declared effective
under the Securities Act, (3) for so long as the Securities are
eligible for resale pursuant to Rule 144A, to a person it reasonably
believes is a Qualified Institutional Buyer that purchases for its own
account or for the account of a Qualified Institutional Buyer to whom
notice is given that the
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transfer is being made in reliance on Rule 144A, (4) outside the United
States, pursuant to offers and sales to non-U.S. persons in an Offshore
Transaction within the meaning of Regulation S, (5) an institutional
"accredited investor" within the meaning of subparagraph (a) (1), (2),
(3) or (7) of Rule 501 under the Securities Act ("Institutional
Accredited Investor") that is acquiring the Securities for its own
account or for the account of another Institutional Accredited
Investor, for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of the
Securities Act, or (6) pursuant to any other available exemption from
the registration requirements of the Securities Act, subject in each of
the foregoing cases to any requirement of law that the disposition of
its property or the property of such investor account or accounts be at
all times within its or their control and in compliance with any
applicable state securities laws.
(v) MINIMUM PRINCIPAL AMOUNT. No sale of the Securities to any
one Subsequent Purchaser will be for less than $200,000 principal
amount and no Security will be issued in a smaller principal amount. If
the Subsequent Purchaser is a non-bank fiduciary acting on behalf of
others, each person for whom it is acting must purchase at least
$200,000 principal amount of the Securities.
(vi) RESTRICTIONS ON TRANSFER. The transfer restrictions and
the other provisions set forth in Section 2.2 of the Indenture,
including the legend required thereby, shall apply to the Securities
except as otherwise agreed by the Company and the Initial Purchasers.
Following the sale of the Securities by the Initial Purchasers to
Subsequent Purchasers pursuant to the terms hereof, the Initial
Purchasers shall not be liable or responsible to the Company for any
losses, damages or liabilities suffered or incurred by the Company,
including any losses, damages or liabilities under the Securities Act,
arising from or relating to any resale or transfer of any Security.
(vii) DELIVERY OF OFFERING MEMORANDUM. Each Initial Purchaser
will deliver to each purchaser of the Securities from such Initial
Purchaser, in connection with its original distribution of the
Securities, a copy of the Offering Memorandum, as amended and
supplemented at the date of such delivery.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) DUE DILIGENCE. In connection with the original
distribution of the Securities, the Company agrees that, prior to any
offer or resale of the Securities by the Initial Purchasers, the
Initial Purchasers and counsel for the Initial Purchasers shall have
the right to make reasonable inquiries into the business of the Company
and its Subsidiaries. The Company also agrees to provide answers to
each prospective Subsequent Purchaser of Securities who so requests
concerning the Company and its
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Subsidiaries and the terms and conditions of the offering of the
Securities, as provided in the Offering Memorandum.
(ii) INTEGRATION. The Company agrees that it will not and will
cause its Affiliates not to make any offer or sale of securities of the
Company of any class if, as a result of the of "integration" referred
to in Rule 502 under the Securities Act, such offer or sale would
render invalid (for the purpose of (i) the sale of the Securities by
the Company to the Initial Purchasers, (ii) the resale of the
Securities by the Initial Purchasers to Subsequent Purchasers or (iii)
the resale of the Securities by such Subsequent Purchasers to others)
the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof or by Rule 144A or by Regulation S
thereunder or otherwise.
(iii) RULE 144A INFORMATION. The Company agrees that, in order
to render the Securities eligible for resale pursuant to Rule 144A
under the Securities Act, while any of the Securities remain
outstanding, it will make available, upon request, to any holder of
Securities or prospective purchasers of Securities the information
specified in Rule 144A(d)(4), unless the Company furnishes information
to the SEC pursuant to Section 13 or 15(d) of the Exchange Act (such
information, whether made available to holders or prospective
purchasers or furnished to the SEC, is herein referred to as
"Additional Information").
(iv) RESTRICTION ON REPURCHASES. Until the expiration of two
years after the original issuance of the Securities, the Company will
not, and will cause its Affiliates not to, purchase or agree to
purchase or otherwise acquire any Securities which are "restricted
securities" (as such term is defined under Rule 144(a)(3) under the
Securities Act), whether as beneficial owner or otherwise (except as
agent acting as a Securities broker on behalf of and for the account of
customers in the ordinary course of business in unsolicited broker's
transactions) unless, immediately upon any such purchase, the Company
or any Affiliate shall submit such Securities to the Trustee for
cancellation.
(c) Resale Pursuant to Rule 903 of Regulation S or Rule 144A. Each
Initial Purchaser understands that the Securities have not been and will not be
registered under the Securities Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act. Each Initial
Purchaser represents and agrees that, in connection with sales of Securities
outside of the United States, except as permitted by Section 6(a) above, it has
offered and sold Securities and will offer and sell Securities (i) as part of
its distribution at any time and (ii) otherwise until forty days after the later
of the date upon which the offering of the Securities commences and the Closing
Time, only in accordance with Rule 903 of Regulation S or Rule 144A.
Accordingly, none of the Initial Purchasers, their Affiliates or any persons
acting on their behalf have engaged or will engage in any directed selling
efforts with respect to Securities, and the Initial Purchasers, their affiliates
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and any person acting on their behalf have complied and will comply with the
offering restriction requirements of Regulation S. Each Initial Purchaser agrees
that, at or prior to confirmation of a sale of Securities outside of the United
States (other than a sale of Securities pursuant to Rule 144A), it will have
sent to each distributor, dealer or person receiving a selling concession, fee
or other remuneration that purchases Securities from it or through it during the
restricted period a confirmation or notice to substantially the following
effect:
"The securities (the "Securities") covered hereby have not been registered
under the United States Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered or sold within the United States
or to or for the account or benefit of U.S. persons (i) as part of their
distribution at any time and (ii) otherwise until forty days after the
later of the date upon which the offering of the Securities commenced
and the date of closing of the offering of the Securities, except in
either case in accordance with Regulation S or Rule 144A under the
Securities Act. Terms used above have the meaning given to them by
Regulation S under the Securities Act."
Terms used in the above paragraph have the meanings given to them by Regulation
S.
Each Initial Purchaser severally represents and agrees that it has not entered
and will not enter into any contractual arrangements with respect to the
distribution of the Securities, except with its affiliates or with the prior
written consent of the Company.
SECTION 7. INDEMNIFICATION.
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Offering Memorandum or the Final Offering Memorandum (or
any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that
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(subject to Section 7(d) below) any such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
Xxxxxxx Xxxxx), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Xxxxxxx Xxxxx expressly for use in any Preliminary
Offering Memorandum or the Offering Memorandum (or any amendment or supplement
thereto) shall not inure to the benefit of any Initial Purchaser (or to the
benefit of any person controlling such Initial Purchaser) from whom the person
asserting any such losses, liabilities, claims, damages or expenses purchased
Securities if such untrue statement or omission or alleged untrue statement or
omission made in any Preliminary Offering Memorandum or the Offering Memorandum
(or any amendment or supplement thereto) is identified in writing at such time
to such Initial Purchaser and is eliminated or remedied in the Offering
Memorandum as most recently amended or supplemented (copies of such amendments
and supplements having been delivered to such Initial Purchaser in sufficient
quantity at least three business days prior to the written confirmation of the
sale of such Securities to such person) and it shall be established that a copy
of the Offering Memorandum as most recently amended or supplemented had not been
furnished to such person at or prior to the written confirmation of the sale of
such Securities to such person.
(b) Indemnification of Company, Directors and Officers. The Initial
Purchasers severally agree to indemnify and hold harmless the Company, its
directors, each of its officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Offering Memorandum in reliance upon
and in conformity with written information furnished to the Company by the
Initial Purchasers expressly for use in the Offering Memorandum.
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the
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extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 7(a) above, counsel to the indemnified parties shall be selected by
Xxxxxxx Xxxxx, and, in the case of parties indemnified pursuant to Section 7(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; PROVIDED, HOWEVER, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 7(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 8. CONTRIBUTION. If the indemnification provided for in Section
7 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand in
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connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Initial Purchasers, bear to
the aggregate initial offering price to investors of the Securities as set forth
on the cover page of the Offering Memorandum.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
necessary to make the statements made in the Offering Memorandum not misleading
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 8. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 8 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Initial Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Initial Purchaser, and each director of the Company,
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each officer of the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company. The
Initial Purchasers' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the principal amount of Securities set
forth opposite their respective names in Schedule A hereto and not joint.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Initial Purchasers.
SECTION 10. TERMINATION OF AGREEMENT.
(a) Termination; General. The Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representative,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Company has been
suspended or limited by the SEC or if trading generally on the American Stock
Exchange or The New York Stock Exchange, Inc. or in the NASDAQ National Market
System has been suspended or limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the SEC, NASD or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either United States Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 7 and 8 shall survive such termination and remain in fall force and effect.
SECTION 11. DEFAULT BY ONE OF THE INITIAL PURCHASERS. If one of the
Initial Purchasers shall fail at the Closing Time to purchase the Securities
which it is obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representative shall have the right, but not the obligation,
within 24 hours thereafter, to make arrangements for the non-
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defaulting Initial Purchasers, or any other Initial Purchasers, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the Representative
shall not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Initial Purchasers shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
purchasing obligations hereunder bear to the purchase obligations of all
non-defaulting Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement shall
terminate without liability on the part of any non-defaulting Initial Purchaser.
No action pursuant to this Section shall relieve any defaulting Initial
Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representative or the Company shall have the right
to postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangement. As used herein, the term Initial Purchaser includes any person
substituted for an Initial Purchaser under this Section 11.
SECTION 12. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Representative at Xxxxx Xxxxx, Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, facsimile no.: (000) 000-0000,
Attention of Xxx Xxxxxxxx, with a copy to Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, facsimile no.: (212) 309- 6273, Attention
of Xxxxxxx Xxxxx; notices to the Company shall be directed to it at 0000 Xxxx
Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, facsimle no.: (000) 000-0000,
Attention of Xxx X. Xxxxxxx, with a copy to Benesch, Friedlander, Xxxxxx &
Xxxxxxx LLP, 0000 XX Xxxxxxx Xxxxxxxx, 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000,
facsimile no.: (000) 000-0000, Attention of Xxx Xxxxxxxx.
SECTION 13. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions
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and provisions hereof are intended to be for the sole and exclusive benefit of
the Initial Purchasers and the Company and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of the Securities from any Initial Purchaser shall be deemed to be a
successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
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29
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
BALLY TOTAL FITNESS HOLDING CORPORATION
By: /s/ Xxx X. Xxxxxxx
---------------------------
Name: Xxx X. Xxxxxxx
Title: President and Chief
Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
CHASE SECURITIES INC.
SOCIETE GENERALE SECURITIES CORPORATION
LADENBURG XXXXXXXX & CO. INC.
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------
Authorized Signatory Xxxxxxxxxxx X. Xxxxxx
Vice President
For itself and as Representative of the Initial Purchasers named in Schedule A
hereto.
30
SCHEDULE A
Principal
Amount of
Initial Purchaser Securities
----------------- ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated..........................................$128,700,000
Chase Securities Inc................................................56,250,000
Societe Generale Securities Corporation.............................29,925,000
Ladenburg Xxxxxxxx & Co. Inc........................................10,125,000
Total.................................................$225,000,000
Sch A - 1
31
SCHEDULE B
BALLY TOTAL FITNESS HOLDING CORPORATION
$225,000,000 9-7/8% Senior Subordinated Notes due 2007
1. The initial offering price of the Securities shall be 100% of the
principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 100 % of the principal amount thereof.
3. The interest rate on the Securities shall be 9-7/8% per annum.
4. The Company may redeem up to 35 % of the originally issued
Securities, at a price of 109.875 % of the principal amount thereof.
5. The Securities shall mature on October 15, 2007.
Sch B - 1
32
SCHEDULE C
List of Subsidiaries
A. List of Significant Subsidiaries:
Bally Total Fitness Corporation
Bally's Fitness and Racquet Clubs, Inc.
Bally's Pacwest, Inc.
Holiday Health Clubs and Fitness Centers, Inc.
Holiday Spa Health Clubs of California
Holiday Universal, Inc.
Houston Health Clubs, Inc.
Xxxx XxXxxxx Fitness Centers, Inc.
Scandinavian Health Spa, Inc.
Scandinavian U.S. Swim & Fitness, Inc.
So. Cal Nautilus Fitness Centers, Inc.
Xxx Xxxxx International, Inc.
Xxx Xxxxx International of Missouri, Inc.
Xxx Xxxxx of Greater Michigan, Inc.
B. List of all Subsidiaries other than those listed in A above:
Bally Fitness Franchising, Inc.
Bally Franchise RSC, Inc.
Bally Franchising Holdings, Inc..
Bally's S.C. Management, Inc.
BFIT Rehab of Boca Raton, Inc.
BFIT Rehab of Coral Gables, Inc.
BFIT Rehab of Xxxxxxx, Inc.
BFIT Rehab of Sunrise, Inc.
BFIT Rehab of West Palm Beach, Inc.
BFIT Rehabilitation Services, Inc.
C.Z.W. Health Limited
H&T Receivable Funding Corporation
Health & Tennis Corporation of New York, Inc.
Holiday Health Clubs of the East Coast, Inc.
Holiday Health Clubs of the Southeast, Inc.
Holiday/Southeast Holding Corp.
Xxxx XxXxxxx Holding Corp.
Lincoln Indemnity Company
Manhattan Sports Clubs, Inc.
Sch C - 1
33
Scandinavian Development Company
Tidelands Holiday Health Clubs, Inc.
U.S. Health, Inc.
Vertical Fitness and Racquet Club, Ltd.
Xxx Xxxxx International of Cleveland, Inc.
Xxx Xxxxx International of Toledo, Inc.
C. List of Subsidiaries Not Wholly-owned:
Bally Matrix Fitness Centre Ltd.
Connecticut Coast Fitness Centers, Inc.
Connecticut Valley Fitness Centers, Inc.
Exercise Centers of Massachusetts, Inc.
Greater Philly Xx. 0 Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx Xx. 0 Holding Company
Health and Tennis (UK) Limited
Holiday Health & Fitness Centers of New York, Inc.
New Fitness Holding Co., Inc.
Nycon Holding Co.
Physical Fitness Centers of Philadelphia
Providence Fitness Centers, Inc.
Rhode Island Holding Company
D. Encumbrances
I Except as set forth below, the capital stock of each subsidiary
of the Company is pledged to the Company's principal lenders
pursuant to various Pledge Agreements delivered in connection
with the Old Credit Agreement and the New Credit Agreement
(except for newly formed subsidiaries who have not yet entered
into pledge agreement in connection with the Old Credit Agreement
and the New Credit Agreement).
(a) XXXX XXXXXXX FITNESS CENTERS, INC. The capital stock of
this subsidiary is pledged to Xxxxx Xxxxxxxx pursuant to
that certain Security and Escrow Agreement dated October
26, 1979 among Xxxxxxxx, Xxxx XxXxxxx Fitness Centers, Inc.
Xxxx XxXxxxx Holding Corp. and Xxxxxx X. Xxxxxx.
(b) BALLY MATRIX FITNESS CENTER, LTD. AND CZW HEALTH LIMITED.
Only 65% of the shares of capital stock of each of these
Canadian subsidiaries are pledged to the Company's lenders
under the Old Credit Agreement.
Sch C - 2
34
(c) HEALTH & TENNIS (U.K.) LIMITED. Only 65% of the shares of
capital stock of this U.K. subsidiary are pledged to the
Company's lenders under the Old Credit Agreement.
2. The transfer of encumbrance or the capital stock of Nycon Holding Co.,
New Fitness Holding Co., Inc., Connecticut Coast Fitness Centers,
Inc., Connecticut Valley Fitness Centers, Inc., Holiday Health &
Fitness Centers of New York, Inc., Rhode Island Holding Company,
Greater Philly No. 1 Holding Company, Bally Matrix Fitness Centre
Ltd., Providence Fitness Centers, Inc., Greater Philly No. 2 Holding
Company and Physical Fitness Centers of Philadelphia, Inc. is
restricted pursuant to the terms of certain Shareholders' Agreements
dated December 3, 1982 and April 29, 1987, each as amended.
Sch C - 3
35
Schedule D
BALLY TOTAL FITNESS HOLDING CORPORATION
SUMMARY OF OWNED LOCATIONS WITH MORTGAGES
AS OF SEPTEMBER 30, 1997
COMPANY NAME/ SQUARE YEAR OPENED/ MORTGAGE INTEREST
CLUB ADDRESS FEET ACQUIRED MORTGAGOR BALANCE RATE
--------------------------------- ------ ----------- ----------------- --------- --------
Hilltop 745-02 80,000 1987 Xxxxxxx'x Bank 2,239,910 9.00%
Bally Health & Racquet of Kansas
0000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, XX 00000
Glendale Heights 000-00 00,000 1989 Union Bank & Trust 226,056 9.25%
Chicago Health Clubs II
000 Xxxx Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
(includes parking)
Beachwood 819-20 41,520 1986 Ohio Savings Bank 1,626,271 10.25%
Scandinavian Health Spa
0000 Xxxx Xxxx
Xxxxxxxxx, XX 00000
Maple Heights 000-00 00,762 1987 Ohio Savings Bank 3,762,419 10.25%
Scandinavian Health Spa (Note 1)
0000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxx Xxxxxxx XX 00000
Willoughby 819-26 18,762 1987 Ohio Savings Bank (Note 1) 10.25%
Scandinavian Health Spa
0000 Xxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Brook Park 819-27 18,762 1987 Ohio Savings Bank (Note 1) 10.25%
Scandinavian Health Spa
00000 Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xxxx Xxxxx, XX 00000
Xx. Xxxxx Xxxx 000-00 00,156 1986 Nat'l City Bank 187,952 9.00%
U.S. Swim & Fitness 331,672 9.00%
0000 Xxxxxxxxx Xxxx. 695,000 6.00%
Xx. Xxxxx Xxxx, XX 00000
Notes:
(1) The mortgage balance for Maple Heights represents the total mortgage on three clubs: Maple Heights, Willoughby and Brookpark
36
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum, to enter into and perform its obligations under the Purchase
Agreement, the Indenture, the Registration Rights Agreement, the DTC Agreement,
the Securities and the Tender Offer and to enter into and perform its
obligations constituting the Refinancing.
(iii) To our knowledge, the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Offering Memorandum in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances
pursuant to the Stock Offering or pursuant to reservations, agreements, employee
benefit plans of the Company or the exercise of outstanding warrants, stock
options or convertible securities).
(v) Each Significant Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Offering Memorandum and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect; all of the
issued and outstanding capital stock of each Significant Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable and, except
at disclosed on Schedule C to the Purchase Agreement, to our knowledge, is owned
by the Company, directly or through one of its Subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
Except as set forth on Schedule C of the Purchase Agreement, there are no
outstanding rights, warrants or options to acquire, or instruments convertible
into or exchangeable for, or agreements or understandings with respect to the
sale or issuance of other equity interest in any Significant Subsidiary.
A-1
37
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution and
delivery thereof by the Initial Purchasers) constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(vii) The Registration Rights Agreement and the DTC Agreement have each
been duly authorized, executed and delivered by the Company and (assuming the
due authorization, execution and delivery thereof by the Initial Purchasers)
constitute a valid and binding agreement of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws relating to or affecting enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
(viii) The Indenture has been duly authorized, executed and delivered
by the Company and (assuming the due authorization, execution and delivery
thereof by the Trustee) constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(ix) The Securities are in the form contemplated by the Indenture, have
been duly authorized by the Company and, when executed by the Company and
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee)
and delivered against payment of the purchase price therefor will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium (including, without
limitation, all laws relating to fraudulent transfers), or other similar laws
relating to or affecting enforcement of creditor's rights generally, or by
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law), and will be entitled to the benefits of the
Indenture.
(x) The Securities and the Indenture conform in all material respects
to the descriptions thereof contained in the Offering Memorandum.
(xi) To our knowledge and other than as described in the Offering
Memorandum, there is not pending or threatened any action, suit, proceeding,
inquiry or investigation, to which the
A-2
38
Company or any of its Subsidiaries is a party, or to which, to our knowledge,
the property of the Company or any of its Subsidiaries is subject, before or
brought by any court or governmental agency or body, which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in the Purchase Agreement or
the performance by the Company of its obligations thereunder or under the
Securities or the transactions contemplated by the Offering Memorandum including
those making up the Refinancing;
(xii) The information in the Offering Memorandum under "Description of
the Notes," "Description of the Bank Credit Facility," and "Exchange Offer;
Registration Rights," to the extent that it constitutes matters of law,
summaries of legal matters or legal conclusions, has been reviewed by us and is
correct in all material respects.
(xiii) All descriptions in the Offering Memorandum of contracts and
other documents to which the Company or any of its Subsidiaries is a party are
accurate in all material respects; to our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments to which the Company or any of its Subsidiaries is a party that
would be required to be described in the Offering Memorandum that are not
described in the Offering Memorandum, and the descriptions thereof or references
thereto are correct in all material respects.
(xiv) To our knowledge, neither the Company nor any of its Subsidiaries
is in violation of its charter or bylaws and, to our knowledge, no default by
the Company or any of its Subsidiaries exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is described in the Offering Memorandum.
(xv) No authorization, approval, consent or order of any court or
governmental authority or agency, other than such as may be required under the
applicable securities laws of the various jurisdictions in which the Securities
will be offered or sold (as to which we express no opinion) is required on the
part of the Company in connection with the due authorization, execution and
delivery of the Purchase Agreement by the Company or the due execution, delivery
of the Indenture by the Company or for the offering, issuance, sale or delivery
of the Securities to the Initial Purchasers or the resale by the Initial
Purchasers in accordance with the Purchase Agreement.
(xvi) Assuming the accuracy of the representations and warranties of
the Initial Purchasers set forth in the Purchase Agreement, it is not necessary
in connection with the offer, sale and delivery of the Notes to the Initial
Purchasers in the manner contemplated by the Purchase Agreement and the Offering
Memorandum to register the Notes under the Securities Act or to qualify the
Indenture under the 1939 Act.
(xvii) The execution, delivery and performance of the Purchase
Agreement, the DTC Agreement, the Indenture and the Securities by the Company
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Offering Memorandum (including
A-3
39
the use of the proceeds from the sale of the Securities as described in the
Offering Memorandum under the caption "Use of Proceeds" and the other components
of the Refinancing) and compliance by the Company with its obligations under the
Purchase Agreement, the Indenture and the Securities will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined in Section
1(a)(xv) of the Purchase Agreement) under or, except for security interests
created by the Bank Credit Facility, result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its Subsidiaries pursuant to any material contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other material agreement or
instrument, known to us, to which the Company or any of its Subsidiaries is a
party or by which it or any of them may be bound, or to which, to our knowledge,
any of the property or assets of the Company or any of its Subsidiaries is
subject (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company or any Significant Subsidiary, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any Significant Subsidiary or any of their respective
properties, assets or operations.
(xviii) The Company is not an "investment company" or an entity
"controlled" by an investment company as such terms are defined in the 1940 Act.
In addition, although we have not undertaken to determine
independently, and do not assume any responsibility for, the accuracy or
completeness of the statements in the Offering Memorandum, we have participated
in conferences with officers and other representatives of the Company and
representatives of the independent public accountants of the Company and
representatives of the Initial Purchasers at which the contents of the Offering
Memorandum were discussed and we have reviewed certain other documents. Because
the primary purpose of our professional engagement was not to establish or
confirm factual matters or financial, accounting or statistical matters and
because of the wholly or partially non-legal character of many of the matters
and statements contained in the Offering Memorandum, we are not passing upon and
do not assume any responsibility for the accuracy, completeness or fairness of
such statement contained in the Offering Memorandum, and we make no
representation that we have independently verified the accuracy, completeness or
fairness of such statements. Without limiting the foregoing, we assume no
responsibility for, and have not independently verified, the accuracy,
completeness or fairness of the financial and statistical data included in or
excluded from the Offering Memorandum, and we have not examined the accounting,
financial or statistical records from which such financial statements, schedules
and data are derived. Although certain portions of the Offering Memorandum
(including financial statements) have been included therein on the authority of
"experts" within the meaning of the Securities Act, we are not such experts with
respect to any portion of the Offering Memorandum, including, without
limitation, such financial statements or schedules or the other financial or
statistical data included therein.
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40
On the basis of the foregoing, we confirm to you that no information
has come to our attention that would cause us to believe that the Final Offering
Memorandum, at the time such Offering Memorandum was issued or as of the date
hereof, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
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