Draft 7/30/07
For Discussion Purposes Only
RESTRUCTURING SUPPORT AGREEMENT
This RESTRUCTURING SUPPORT AGREEMENT is made and entered into as of
July __, 2007 (the "Agreement") by and among (i) Bally Total Fitness Holding
Corporation, a Delaware corporation ("BTF") and each of its affiliates that may
or will constitute one of the debtors in the Chapter 11 Cases (collectively,
"Bally"), and (ii) Harbinger Capital Partners Master Fund I, Ltd., Harbinger
Capital Partners Special Situations Fund L.P., and Liberation Investments, L.P.
and Liberation Investments, Ltd. (each, a "Plan Support Party").
W H E R E A S :
A. Bally contemplates a restructuring (the "Restructuring") pursuant
to the terms of the form of plan of reorganization (the "Plan") attached hereto
as Exhibit A.
B. Bally and each Plan Support Party (each a "Party" and collectively,
the "Parties") anticipate that the Restructuring will be implemented through the
Plan and other documentation.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each Party, intending to be legally
bound hereby, agrees as follows:
1. Definitions. Capitalized terms used but not defined herein shall have the
meaning ascribed to them in the Appendix to this Agreement.
2. Agreement Effective Date. This Agreement shall be effective at 12:01 a.m.
prevailing Eastern Time on the date on which the following conditions have been
satisfied (the "Agreement Effective Date"): (a) Bally shall have executed and
delivered counterpart signature pages to this Agreement to the Plan Support
Parties; (b) each of the Plan Support Parties shall have delivered to Bally an
executed counterpart of this Agreement, and (c) the Investment Agreement has
been duly executed by the parties thereto.
3. Commitment of Plan Support Parties. Subject to (i) the occurrence of the
Agreement Effective Date, but prior to the occurrence of the Termination Date
(if applicable), and (ii) delivery and review of the Definitive Documents,
including, but not limited to, the Plan and the Disclosure Statement, and so
long as the Definitive Documents are consistent with the terms of the
Restructuring as set forth in the Plan, each Plan Support Party shall:
(a) following the commencement of the Chapter 11 Cases, not (i) object, on
any grounds, to confirmation of the Plan, except to the extent that the
terms of the Plan to be confirmed are inconsistent with the terms contained
in the Plan, or (ii) directly or indirectly seek, solicit, support or
encourage (x) any objection to the Plan or (y) any other plan of
reorganization or liquidation; and
(b) not take any other action, including, without limitation, initiating
any legal proceeding that is inconsistent with, or that would delay
consummation of, the transactions embodied in the Plan, and upon
completion, the Definitive Documents.
4. Bally Commitment. Subject to the provisions of the Investment Agreement,
Bally shall use its reasonable best efforts to (i) support and complete the
transactions embodied in the Plan and the Investment Agreement, (ii) do all
things reasonably necessary and appropriate in furtherance of the transactions
embodied in the Plan and the Investment Agreement, including, without limitation
(x) filing a motion and seeking Court approval of Bally's assumption of the
Investment Agreement, (y) taking all steps reasonably necessary and desirable to
obtain an order of the Bankruptcy Court confirming the Plan on or before
[________________], 2007, and (z) taking all steps reasonably necessary and
desirable to cause the effective date of the Plan to occur on or before
[________________], 2007, (iii) obtain any and all required regulatory and/or
third-party approvals for the transactions embodied in the Plan and the
Investment Agreement, and (iv) not take any action that is inconsistent with, or
is intended or is reasonably likely to interfere with or impede or delay
consummation of, the Restructuring and the transactions embodied in the Plan and
the Investment Agreement.
5. Termination. This Agreement may be terminated and shall thereafter be of no
further force or effect upon the termination of the Investment Agreement. As to
any Plan Support Party, the date on which such Plan Support Party delivers a
notice to the Investors of the occurrence of a Termination Event shall be
referred to as the "Termination Date".
6. Transfer of Common Stock. If, following execution of this Agreement by a Plan
Support Party, such Plan Support Party hypothecates, pledges, conveys,
transfers, assigns or sells (collectively, a "Transfer") all or a part of the
Common Stock held by such Plan Support Party to any Person (each such Person, a
"Transferee"), Transferee must, as a condition precedent to the settlement of
such Transfer, execute an assumption in substantially the form set forth hereto
as Exhibit B (the "Assumption Agreement"). To the maximum extent permitted by
applicable law, any Transfer that is made in violation of the immediately
preceding sentence shall be null and void. A Plan Support Party shall provide to
Bally a copy of the executed Assumption Agreement within three Business Days of
the execution of an agreement (or trade confirmation) in respect of such
Transfer.
7. Plan Support Party Representations. Each Plan Support Party severally and not
jointly represents and warrants to each other Party that:
a) as of the date of this Agreement, it is the beneficial owner of the
face amount of the Common Stock, or is the nominee, investment manager
or advisor for beneficial holders of the Common Stock, as such Plan
Support Party has represented in writing to counsel for Bally, which
amount Bally and each Plan Support Party understands and acknowledges
is proprietary and confidential to such Plan Support Party;
b) other than pursuant to this Agreement, such Common Stock is free and
clear of any pledge, lien, security interest, charge, claim, equity,
option, proxy, voting restriction, right of first refusal or other
limitation on disposition or encumbrances of any kind, that would
adversely affect in any way such Plan Support Party's performance of
its obligations contained in this Agreement at the time such
obligations are required to be performed; and
c) as of the date of this Agreement, it is not aware of any event that,
due to any fiduciary or similar duty to any other person, would
prevent it from taking any action required of it under this Agreement.
8. Cooperation. Prior to the commencement of and during the Chapter 11 Cases,
Bally shall, except (a) in an emergency where it is not reasonably practicable
or (b) upon consent of counsel to the Plan Support Parties, provide draft copies
of all motions or applications and other documents Bally intends to file with
the Bankruptcy Court to counsel for the Plan Support Parties no later than three
Business Days prior to the date when Bally intends to file any such document and
shall consult in good faith with counsel to the Plan Support Parties regarding
the form and substance of any such proposed filing with the Bankruptcy Court.
9. Service on Official Committee. Notwithstanding anything herein to the
contrary, if a Plan Support Party is appointed to and serves on an official
committee in the Chapter 11 Cases, the terms of this Agreement shall not be
construed to limit such Plan Support Party's exercise of its fiduciary duties in
its role as a member of such committee, and any exercise of such fiduciary
duties shall not be deemed to constitute a breach of the terms of this
Agreement; provided, however, that serving as a member of such committee shall
not relieve the Plan Support Party of any obligations to support confirmation of
the Plan; provided, further, that nothing in this Agreement shall be construed
as requiring any Plan Support Party to serve on any official committee in the
Chapter 11 Cases.
10. Party Representations. Each Party represents to each other Party that, as of
the date of this Agreement, such Party is duly organized, validly existing, and
in good standing under the laws of the state of its organization, and has all
requisite corporate, partnership, or limited liability company power and
authority to enter into this Agreement and to carry out the transactions
contemplated by, and perform its respective obligations under, this Agreement.
11. Entire Agreement. This Agreement, including schedules and annexes,
constitutes the entire agreement of the Parties with respect to the subject
matter of this Agreement, and supersedes all other prior negotiations,
agreements and understandings, whether written or oral, among the Parties with
respect to the subject matter of this Agreement; provided, however, that any
confidentiality agreement executed by any Plan Support Party shall survive this
Agreement and shall continue to be in full force and effect, in accordance with
the terms thereof, irrespective of the terms hereof; provided, further, that the
Parties shall enter into various definitive documents upon the effective date of
the Plan to give effect to the transactions contemplated in this Agreement.
12. Survival of Agreement. Each of the Parties acknowledges and agrees that this
Agreement is being executed in connection with negotiations concerning a
possible financial restructuring of Bally and in contemplation of a possible
bankruptcy filing by Bally, and (a) the rights granted in this Agreement are
enforceable by each signatory hereto without approval of the Bankruptcy Court,
(b) the exercise of such rights will not violate the automatic stay provisions
of the Bankruptcy Code and (c) Bally hereby waives its right to assert a
contrary position in the Bally bankruptcy cases, if any, with respect to the
foregoing.
13. Acquisition of Additional Common Stock. This Agreement shall in no way be
construed to preclude any Plan Support Party from acquiring additional Common
Stock; provided, however, that any such additional Common Stock automatically
shall be deemed to be subject to the terms of this Agreement. A Plan Support
Party shall notify counsel for the Plan Support Parties, in writing, of any
Common Stock acquired by it within three Business Days of the execution of an
agreement (or trade confirmation) in respect of such acquisition.
14. Public Announcements. Except as required by applicable law or regulation, or
the rules of any applicable stock exchange or regulatory body, or in filings to
be made with the Bankruptcy Court, neither Bally nor the Plan Support Parties
shall, nor shall they permit any of their respective affiliates to, make any
public announcement or otherwise communicate with any news media in respect of
this Agreement or the transactions contemplated hereby or by the Definitive
Documents without the prior written consent of the other parties hereto (which
consent shall not be unreasonably withheld or delayed); provided, however, that
notwithstanding the forgoing Bally shall issue a press release no later than
8:00 a.m. prevailing Eastern Time on [___________], 2007 substantially in the
form attached hereto as Exhibit D, and shall promptly thereafter, file with the
SEC a current report on Form 8-K filing the press release, this Agreement, and
the Plan. Notwithstanding the forgoing, if Bally fails to issue a press release
in compliance with the previous sentence, any of the Plan Support Parties may
issue a press release containing all material information relating to the
transactions contemplated hereby.
15. Waiver. If the transactions contemplated herein are not consummated, or
following the occurrence of the Termination Date, if applicable, nothing shall
be construed herein as a waiver by any Party of any or all of such Party's
rights and the Parties expressly reserve any and all of their respective rights.
Pursuant to Federal Rule of Evidence 408 and any other applicable rules of
evidence, this Agreement and all negotiations relating hereto shall not be
admissible into evidence in any proceeding other than a proceeding to enforce
its terms.
16. Counterparts. This Agreement may be executed in one or more counterparts,
each of which, when so executed, shall constitute the same instrument and the
counterparts may be delivered by facsimile transmission or by electronic mail in
portable document format (.pdf).
17. Amendments. Except as otherwise provided herein, this Agreement may not be
modified, amended or supplemented without prior written consent of Bally and
each Plan Support Party.
18. Headings. The headings of the sections, paragraphs, subsections and
subparagraphs of this Agreement are inserted for convenience only and shall not
affect the interpretation hereof.
19. Specific Performance. It is understood and agreed by the Parties that money
damages would be an insufficient remedy for any breach of this Agreement by any
Party and each non-breaching Party shall be entitled to specific performance and
injunctive or other equitable relief as a remedy of any such breach, including,
without limitation, an order of the Bankruptcy Court or other court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations
hereunder.
20. Relationship Among Parties. Notwithstanding anything herein to the contrary,
the duties and obligations of the Plan Support Parties under this Agreement
shall be several, not joint. In this regard, it is understood and agreed that
any Plan Support Party may, subject to compliance with paragraphs 6 and 13 of
this Agreement, trade in the Common Stock or other debt or equity securities of
Bally and its Subsidiaries without the consent of Bally or any other Plan
Support Party, subject to applicable securities laws. No Plan Support Party
shall have any responsibility for any such trading by any other entity by virtue
of this Agreement. No prior history, pattern or practice of sharing confidences
among or between Plan Support Parties shall in any way affect or negate this
understanding and agreement.
21. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to such
state's choice of law provisions which would require the application of the law
of any other jurisdiction. By its execution and delivery of this Agreement, each
of the Parties irrevocably and unconditionally agrees for itself that any legal
action, suit or proceeding against it with respect to any matter arising under
or arising out of or in connection with this Agreement or for recognition or
enforcement of any judgment rendered in any such action, suit or proceeding, may
be brought in the United States District Court for the Southern District of New
York, and by execution and delivery of this Agreement, each of the Parties
irrevocably accepts and submits itself to the exclusive jurisdiction of such
court, generally and unconditionally, with respect to any such action, suit or
proceeding. Notwithstanding the foregoing consent to New York jurisdiction, if
the Chapter 11 Cases are commenced, each Party agrees that the Bankruptcy Court
shall have exclusive jurisdiction of all matters arising out of or in connection
with this Agreement.
22. Notices. All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally
or by facsimile or electronic transmission or mailed (first class postage
prepaid) to the parties at the following addresses, email addresses, or
facsimile numbers:
If to a Plan Support Party, to the address set forth beneath such Plan
Support Party's name below, with a copy to:
Kasowitz, Benson, Xxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx (xxxxxx@xxxxxxxx.xxx)
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq. (xxxxxxxx@xxxxxxxxxxx.xxx)
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Bally:
Bally Total Fitness Holding Corporation
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx LLP
Sears Tower, Suite 5800
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq. (xxxx.xxxxxxxx@xx.xxx)
Attn: Xxxxx X. Xxxxxx, Esq. (xxxxx.xxxxxx@xx.xxx)
Facsimile: (000) 000-0000
23. No Third-Party Beneficiaries. The terms and provisions of this Agreement are
intended solely for the benefit of the Parties hereto and their respective
successors and permitted assigns, and it is not the intention of the Parties to
confer third-party beneficiary rights upon any other person.
24. Not a Solicitation. This Agreement does not constitute (a) an offer for the
purchase, sale, exchange, hypothecation, or other transfer of securities for
purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934,
or (b) a solicitation of votes on a chapter 11 plan of reorganization for
purposes of the Bankruptcy Code.
[Signature Pages Follow]
IN WITNESS WHEREOF, Bally and the Plan Support Parties have executed
this Agreement as of the date first written above.
BALLY TOTAL FITNESS HOLDING CORPORATION
By: _________________________________
Name:
Title:
On behalf of the Subsidiary Guarantors listed
on Exhibit C hereto:
By: _________________________________
Name:
Title:
The undersigned agrees to this Restructuring Support Agreement and to
become a Plan Support Party.
PLAN SUPPORT PARTY:
__________________________
By: _________________________________
Name:
Title:
Address: ______________________________
______________________________
______________________________
______________________________
Facsimile No.:
Attn.:
Appendix - Defined Terms
The following terms shall have the following definitions:
"Bankruptcy Code" means title 11 of the United States Code.
"Bankruptcy Court" means the United States Bankruptcy Court for the Southern
District of New York.
"Business Day" means a day (other than a Saturday or Sunday) on which banks are
open for general business in New York City.
"Chapter 11 Cases" means the voluntary chapter 11 proceedings to be commenced by
the Filing Entities for the principal purpose of consummating the Plan.
"Common Stock" means common stock in BTF.
"Definitive Documents" means the Investment Agreement, the Disclosure Statement,
the Plan, the DIP Financing, the Exit Financing, and all related documents,
exhibits, annexes, and schedules, as such documents may be amended, modified or
supplemented from time to time in accordance with the terms hereof, reflecting
the transactions embodied in the Plan, which documents shall contain terms (i)
substantially in accordance with the terms set forth in the Plan and (ii) with
respect to terms not set forth in, and not inconsistent with, the Plan,
reasonably acceptable to each of the Plan Support Parties, which acceptance
shall not be unreasonably withheld or delayed.
"DIP Financing" means that certain debtor in possession financing to be
described in the DIP Term Sheet (which shall be attached to the Disclosure
Statement).
"Disclosure Statement" means the disclosure statement in respect of the Plan
describing, among other things, the transactions contemplated by the Plan.
"Exit Financing" means that certain exit financing to be described in the Exit
Financing Term Sheet (which shall be attached to the Disclosure Statement).
"Investment Agreement" means the agreement to be executed by Ball and the
Investors for an equity contribution to be made by the Investors in the amount
of [___] pursuant to the Plan.
"Investors" means, collectively, Harbinger Capital Partners Master Fund I, Ltd.
and Harbinger Capital Partners Special Situations Fund L.P.
"Liberation" means Liberation Investment Group and its affiliates.
"Person" means and includes an individual, a partnership, a joint venture, a
limited liability company, a corporation, a trust, an unincorporated
organization, a group, or any legal entity or association.
"Plan Support Parties", and each individually, a "Plan Support Party", means the
holders of Common Stock that are party to this Agreement.
Exhibit A
Plan of Reorganization
----------------------
Exhibit B
Assumption Agreement
--------------------
Reference is hereby made to that certain Restructuring Support
Agreement (as such agreement may be amended, modified or supplemented from time
to time, the "Restructuring Support Agreement") among Bally Total Fitness
Holding Corporation, the Bally Subsidiaries and the shareholders party thereto.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to such terms in the Restructuring Support Agreement. As a condition precedent
to becoming the beneficial holder or owner of [_____] shares of Common Stock (as
defined in the Restructuring Support Agreement), the undersigned ______________
(the "Transferee"), hereby agrees to become bound by the terms, conditions and
obligations set forth in the Restructuring Support Agreement. This Assumption
Agreement shall take effect and shall become an integral part of the
Restructuring Support Agreement immediately upon its execution and the
Transferee shall be deemed to be bound by all of the terms, conditions and
obligations of the Restructuring Support Agreement as of the date thereof.
IN WITNESS WHEREOF, the ASSUMPTION AGREEMENT has been duly executed by
each of the undersigned as of the date specified below.
Date: __________, 200[_]
__________________________________ ___________________________________
Name of Transferor Name of Transferee
__________________________________ ___________________________________
Authorized Signatory of Transferor Authorized Signatory of Transferee
__________________________________ ___________________________________
(Type or Print Name and Title (Type or Print Name and Title of
of Authorized Signatory) Authorized Signatory)
Address of Plan Support Party:
___________________________________
___________________________________
___________________________________
Attn: ____________________________
Tel: ____________________________
Fax: ____________________________
Email: ____________________________
Exhibit C
List of Subsidiary Guarantors
-----------------------------
BALLY FITNESS FRANCHISING, INC.
BALLY FRANCHISE RSC, INC.
BALLY FRANCHISING HOLDINGS, INC.
BALLY TOTAL FITNESS CORPORATION
BALLY TOTAL FITNESS HOLDING CORPORATION
BALLY TOTAL FITNESS INTERNATIONAL, INC.
BALLY TOTAL FITNESS OF MISSOURI, INC.
BALLY TOTAL FITNESS OF TOLEDO, INC.
BALLY REFS WEST HARTFORD, LLC
BALLY TOTAL FITNESS OF CONNECTICUT COAST, INC.
BALLY TOTAL FITNESS OF CONNECTICUT VALLEY, INC.
GREATER PHILLY XX. 0 XXXXXXX XXXXXXX
XXXXXXX XXXXXX XX. 0 HOLDING COMPANY
HEALTH & TENNIS CORPORATION OF NEW YORK
HOLIDAY HEALTH CLUBS OF THE EAST COAST, INC.
BALLY TOTAL FITNESS OF UPSTATE NEW YORK, INC.
BALLY TOTAL FITNESS OF COLORADO, INC.
BALLY TOTAL FITNESS OF THE SOUTHEAST, INC.
HOLIDAY/ SOUTHEAST HOLDING CORP.
BALLY TOTAL FITNESS OF CALIFORNIA, INC.
BALLY TOTAL FITNESS OF THE MID-ATLANTIC, INC.
BTF/CFI, INC.
BALLY TOTAL FITNESS OF GREATER NEW YORK, INC.
XXXX XX XXXXX HOLDING CORP.
BALLY SPORTS CLUBS, INC.
NEW FITNESS HOLDING CO., INC.
NYCON HOLDING CO., INC.
BALLY TOTAL FITNESS OF PHILADELPHIA, INC.
BALLY TOTAL FITNESS OF RHODE ISLAND, INC.
RHODE ISLAND HOLDING COMPANY
BALLY TOTAL FITNESS OF THE MIDWEST, INC.
BALLY TOTAL FITNESS OF MINNESOTA, INC.
TIDELANDS HOLIDAY HEALTH CLUBS, INC.
U.S. HEALTH, INC.
BALLY TOTAL FITNESS FRANCHISING, INC.
Exhibit D
PRESS RELEASE
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SK 03773 0003 797398
