Exhibit 10.4
 
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
by and among
BALLY TOTAL FITNESS HOLDING CORPORATION
and
THE HOLDERS NAMED HEREIN
 
Dated as of April 13, 2006
 
 

 

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Table of Contents

                      Page 1.  
Definitions
    1      
 
        2.  
Securities Act Registration on Request
    3      
(a) Request
    3      
(b) Registration of Other Securities
    4      
(c) Registration Statement Form
    4      
(d) Effective Registration Statement
    4      
 
        3.  
Piggyback Registration
    4      
 
        4.  
Expenses
    6      
 
        5.  
Registration Procedures
    6      
 
        6.  
Piggyback Underwritten Offerings
    9      
(a) Priority
    9      
(b) Holders of Registrable Common Stock to be Parties to Underwriting Agreement
    9      
(c) Holdback Agreements
    10      
 
        7.  
Postponements
    10      
 
        8.  
Indemnification
    11      
(a) Indemnification by the Company
    11      
(b) Indemnification by the Offerors and Sellers
    12      
(c) Notices of Losses, etc.
    12      
(d) Contribution
    13      
(e) Other Indemnification
    13      
(f) Indemnification Payments
    13      
 
        9.  
Registration Rights to Others
    13      
 
        10.  
Adjustments Affecting Registrable Common Stock
    14      
 
        11.  
Amendments and Waivers
    14      
 
        12.  
Nominees for Beneficial Owners
    14      
 
        13.  
No Assignment
    14      
 
        14.  
Termination of Registration Rights
    14      
 
        15.  
Miscellaneous
    14      
(a) Further Assurances
    14  

 

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                      Page    
(b) Headings
    15      
(c) Conflicting Instructions
    15      
(d) Remedies
    15      
(e) Entire Agreement
    15      
(f) Notices
    15      
(g) Governing Law
    15      
(h) Severability
    15      
(i) Counterparts
    16      
 
        SCHEDULES:            
 
        SCHEDULE A –NOTICES        

 

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AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
          AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of
April 13, 2006 (this “Agreement”), by and among Bally Total Fitness Holding
Corporation, a Delaware corporation (the “Company”), and the holders of
Registrable Common Stock (as hereinafter defined) who were signatories to the
Original Registration Rights Agreement (the “Original Holders”).
          To induce the Original Holders to deliver their consent in connection
with the waiver extension relating to the 9 7/8% Notes (as hereinafter defined)
and to accept the issuance of the Common Stock by the Company, the Company has
undertaken to register Registrable Common Stock under the Securities Act (as
hereinafter defined) and to take certain other actions with respect to the
Registrable Common Stock, the parties previously entered into a Registration
Rights Agreement on January 17, 2006 (the “Original Registration Rights
Agreement”). In connection with the receipt of consents in connection with a
waiver relating to the 9 7/8% Notes and the 10 1/2% Notes (as hereinafter
defined) on April 7, 2006, the Company has undertaken to register additional
Registrable Common Stock under the Securities Act. The parties desire to amend
and restate the Original Registration Rights Agreement to set forth the terms
and conditions of such undertakings.
          In consideration of the premises and the mutual agreements set forth
herein, the parties hereto hereby agree as follows:
     1. Definitions. Unless otherwise defined herein, capitalized terms used
herein and in the recitals above shall have the following meanings:
          “Affiliate” of a Person means any Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such other Person. For purposes of this definition,
“control” means the ability of one Person to direct the management and policies
of another Person.
          “Business Day” means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to be
closed.
          “Commission” means the U.S. Securities and Exchange Commission.
          “Common Stock” means the shares of common stock, $.01 par value per
share, of the Company, as adjusted to reflect any merger, consolidation,
recapitalization, reclassification, split-up, stock dividend, rights offering or
reverse stock split made, declared or effected with respect to the Common Stock.
          “Company Indemnitee” has the meaning set forth in Section 8(a) hereof.
          “Consent Agreements” means the several Consent Agreements, dated as of
August 24, 2005, among the Company and the Original Holders.
          “Consent Solicitation” means: (i) the Company’s receipt of consents in
the Consent Agreements pursuant to which the Company obtained an extension
through November

 

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30, 2005 of a waiver to comply with certain covenants in the indenture relating
to the Company’s 9 7/8% Senior Subordinated Notes due 2007 (the “9 7/8% Notes”);
(ii) the related solicitation of consents described in the Offering
Memorandum/Consent Solicitation Statement, dated as of October 18, 2005, and the
related Letter of Consent (the “Follow-On Consent Solicitation”); and (iii) the
Company’s solicitation of consents with respect to its 9 7/8% Notes and its 10
1/2% Senior Notes due 2011 (the “10 1/2% Notes”) described in the Offering
Memorandum/Consent Solicitation Statements, dated as of March 27, 2006, and the
related Letters of Consent (the “Third Consent Solicitation”).
          “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, or any similar or successor statute.
          “Expenses” means all expenses incident to the Company’s performance of
or compliance with its obligations under this Agreement, including, without
limitation, all registration, filing, listing, stock exchange and NASD fees, all
fees and expenses of complying with state securities or blue sky laws (including
the reasonable fees, disbursements and other charges of counsel for the
underwriters in connection with blue sky filings), all word processing,
duplicating and printing expenses, messenger, telephone and delivery expenses,
all rating agency fees, the fees, disbursements and other charges of counsel for
the Company and of its independent public accountants, the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange or national market system on which similar securities
issued by the Company are then listed, the fees and expenses of any special
experts retained by the Company in connection with such registration, the fees
and expenses of other persons retained by the Company, and the reasonable fees
and expenses of one legal counsel to the Original Holders (as designated by the
Majority Holder) relating to the registration of the Registrable Common Stock as
provided herein, but excluding applicable transfer taxes, if any, which transfer
taxes shall be borne by the seller or sellers of Registrable Common Stock in all
cases,.
          “Holder Indemnitee” has the meaning set forth in Section 8(b) hereof.
          “Holders” shall mean the Original Holders, the holders that received
Registrable Common Stock in the Follow-On Consent Solicitation and the holders
that received Registrable Common Stock in the Third Consent Solicitation.
          “Initiating Holder(s)” means at the time of any Initiating Request:
(i) a Majority Holder; or (ii) one or more Original Holders which collectively
own a majority of the shares of Common Stock issued in the Consent Agreements.
          “Initiating Request” has the meaning set forth in Section 2(a) hereof.
          “Loss” and “Losses” have the meanings set forth in Section 8(a)
hereof.
          “Majority Holder” means any Original Holder which, together with its
Affiliates, beneficially owns a majority of the shares of Common Stock issued to
the Original Holders pursuant to the Consent Agreements.
          “NASD” means the National Association of Securities Dealers, Inc.

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          “NYSE” means the New York Stock Exchange.
          “Offering Documents” has the meaning set forth in Section 8(a) hereof.
          “Person” means any individual, corporation, partnership, firm, joint
venture, association, joint stock company, trust, unincorporated organization,
governmental or regulatory body or subdivision thereof or other entity.
          “Piggyback Requesting Holder” has the meaning set forth in Section 3
hereof.
          “Public Offering” means a public offering and sale of Common Stock
pursuant to an effective registration statement (other than a registration
statement on Form S-4 or Form S-8 or any successor or similar forms) under the
Securities Act.
          “Registrable Common Stock” means any of the Common Stock owned by the
Holders from time to time, whether now or in the future, and any other
securities issued or issuable with respect to or in exchange for such shares of
Common Stock; provided, however, that a share of Common Stock will cease to be
Registrable Common Stock after it has been sold: (a) under a registration
statement effected pursuant hereto; or (b) pursuant to Rule 144 promulgated
under the Securities Act.
          “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar or successor statute.
          “Selling Holders” means the Holders of Registrable Common Stock
requested to be registered pursuant to Section 2(a) or 3 hereof.
          “Transfer” means any transfer, sale, assignment, pledge, hypothecation
or other disposition of any interest. “Transferor” and “Transferee” have
correlative meanings.
     2. Securities Act Registration on Request.
          (a) Request. At any time and from time to time after the Company
becomes eligible to use a short form registration statement on Form S-3 or any
successor form and if the Company’s obligations hereunder have not terminated
pursuant to and in accordance with the terms of Section 14 hereof, any
Initiating Holder(s) may on one occasion make a written request (the “Initiating
Request”) for the registration with the Commission under the Securities Act of
all or part of the Registrable Common Stock of such Initiating Holder(s);
provided, however, that such request shall specify the number of shares to be
disposed of by such Holders and the proposed plan of distribution therefor; upon
the receipt of any Initiating Request for registration pursuant to this
paragraph, the Company promptly shall notify in writing all other Holders of
Registrable Common Stock of the receipt of such request and will use its
reasonable best efforts to effect, at the earliest practicable date, such
registration under the Securities Act, including a shelf registration, if
applicable, of:
     (i) the Registrable Common Stock which the Company has been so requested to
register by such Initiating Holder(s), and

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     (ii) all other Registrable Common Stock which the Company has been
requested to register by any other Holders by written request given to the
Company within 15 days after the giving of written notice by the Company to such
other Holders of the Initiating Request,
all to the extent necessary to permit the disposition (in accordance with
Section 2(c) hereof) of the Registrable Common Stock so to be registered;
provided that, any Holder whose Registrable Common Stock was to be included in
any such registration pursuant to this Section 2(a), by written notice to the
Company, may withdraw such request and, on receipt of such notice of the
withdrawal of such request from Holders holding a percentage of Registrable
Common Stock, such that the Holders that have not elected to withdraw do not
hold, in the aggregate, the requisite percentage of the Registrable Common Stock
to constitute Initiating Holder(s), the Company shall not effect such
registration.
          (b) Registration of Other Securities. Whenever the Company shall
effect a registration pursuant to Section 2(a) hereof, no securities other than
Registrable Common Stock shall be included among the securities covered by such
registration.
          (c) Registration Statement Form. Registrations under Section 2(a)
hereof shall be on Form S-3 or such other appropriate short-form registration
form prescribed by the Commission under the Securities Act as shall permit the
disposition of the Registrable Common Stock pursuant to Rule 415 (or any
successor rule) under the Securities Act. The Company agrees to include in any
such registration statement filed pursuant to Section 2(a) hereof all
information which the Selling Holders holding a majority of shares of the
Registrable Common Stock covered by such registration statement effected
pursuant hereto, upon advice of counsel, shall reasonably request.
          (d) Effective Registration Statement. A registration requested
pursuant to Section 2(a) hereof shall not be deemed to have been effected:
     (i) unless a registration statement with respect thereto has been declared
effective by the Commission and remains effective in compliance with the
provisions of the Securities Act and the laws of any state or other jurisdiction
applicable to the disposition of Registrable Common Stock covered by such
registration statement until April 13, 2008; or
     (ii) if, after it has become effective, such registration is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental or regulatory agency or court for any reason
other than a violation of applicable law solely by any Selling Holder and has
not thereafter become effective.
          The Holders of Registrable Common Stock to be included in a
registration statement may at any time terminate a request for registration made
pursuant to Section 2(a) in accordance with Section 2(a)(ii).
     3. Piggyback Registration. If the Company proposes to register any of its
Common Stock under the Securities Act by registration on any forms other than
Form S-4 or S-8 (or any

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successor or similar form(s)), whether or not pursuant to registration rights
granted to other holders of its Common Stock and whether or not for sale for its
own account, and a registration statement filed pursuant to Section 2 hereof has
not been declared effective, it shall give prompt written notice to all of the
Holders of its intention to do so and of such Holders’ rights (if any) under
this Section 3, which notice, in any event, shall be given at least 30 days
prior to the effectiveness of such proposed registration. Upon the written
request of any Holder receiving notice of such proposed registration that is a
Holder of Registrable Common Stock (a “Piggyback Requesting Holder”) made within
15 days after the receipt of any such notice (10 days if the Company states in
such written notice or gives telephonic notice to the relevant securityholders,
with written confirmation to follow promptly thereafter, stating that (i) such
registration will be on Form S-3 and (ii) such shorter period of time is
required because of a planned effectiveness date), which request shall specify
the Registrable Common Stock intended to be disposed of by such Piggyback
Requesting Holder and the minimum offering price per share at which the Holder
is willing to sell its Registrable Common Stock, the Company shall, subject to
Section 6(a) hereof, effect the registration under the Securities Act of all
Registrable Common Stock which the Company has been so requested to register by
the Piggyback Requesting Holders thereof; provided that,
     (A) prior to the effective date of the registration statement filed in
connection with such registration, promptly following receipt of notification by
the Company from the managing underwriter (if an underwritten offering pursuant
to Section 6) of the price at which such securities are to be sold, the Company
shall so advise each Piggyback Requesting Holder of such price, and if such
price is below the minimum price which any Piggyback Requesting Holder shall
have indicated to be acceptable to such Piggyback Requesting Holder, such
Piggyback Requesting Holder shall then have the right irrevocably to withdraw
its request to have its Registrable Common Stock included in such registration
statement, by delivery of written notice of such withdrawal to the Company
within five Business Days of its being advised of such price, without prejudice
to the rights of any Holder(s) of Registrable Common Stock to include
Registrable Common Stock in any future registration (or registrations) pursuant
to this Section 3 or to cause a registration to be effected under Section 2(a)
hereof, as the case may be;
     (B) if at any time after giving written notice of its intention to register
any securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each
Piggyback Requesting Holder and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable Common
Stock in connection with such registration (but not from any obligation of the
Company to pay the Expenses in connection therewith), without prejudice,
however, to the rights of any Holder to include Registrable Common Stock in any
future registration (or registrations) pursuant to this Section 3 or to cause a
registration to be effected under Section 2(a) hereof, as the case may be, and
(ii) in the case of a determination to delay registering, shall be permitted to
delay registering any

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      Registrable Common Stock, for the same period as the delay in registering
such other securities; and
     (C) if such registration was initiated by the Company for its own account
and involves an underwritten offering, each Piggyback Requesting Holder shall
sell its Registrable Common Stock on the same terms and conditions as those that
apply to the Company, and the underwriters of each such piggyback underwritten
offering shall be a nationally recognized underwriter (or underwriters) selected
by the Company.
          No registration effected under this Section 3 shall relieve the
Company of its obligation to effect any registration upon request under Section
2(a) hereof and no registration effected pursuant to this Section 3 shall be
deemed to have been effected pursuant to Section 2(a) hereof.
     4. Expenses. The Company shall pay all Expenses in connection with any
registration initiated pursuant to Sections 2(a) or 3 hereof, whether or not
such registration shall become effective and whether or not all or any portion
of the Registrable Common Stock originally requested to be included in such
registration are ultimately included in such registration.
     5. Registration Procedures. If and whenever the Company is required to
effect any registration under the Securities Act as provided in Sections 2(a)
and 3 hereof, the Company shall, as expeditiously as possible:
     (a) prepare and file with the Commission (within 30 days in the case of a
registration initiated pursuant to Section 2(a) hereof) the requisite
registration statement to effect such registration and thereafter use its
reasonable best efforts to cause such registration statement to become and
remain effective; provided, however, that the Company may discontinue any
registration of its securities that are not shares of Registrable Common Stock
(and, under the circumstances specified in Sections 3 and 7(b) hereof, its
securities that are shares of Registrable Common Stock) at any time prior to the
effective date of the registration statement relating thereto;
     (b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all Registrable Common Stock covered by such registration
statement until April 13, 2008, or such time as all of such Registrable Common
Stock has been disposed of in accordance with the method of disposition set
forth in such registration statement;
     (c) furnish to each seller of Registrable Common Stock covered by such
registration statement and each underwriter, if any, such number of copies of
such drafts and final conformed versions of such registration statement and of
each such amendment and supplement thereto (in each case including all exhibits
and any documents incorporated by reference), such number of copies of such
drafts and final versions of the

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prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under
Rule 424 under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as the sellers of a majority of the
Registrable Common Stock covered by such registration statement or any
underwriter may reasonably request in writing;
     (d) use its reasonable best efforts (i) to register or qualify all
Registrable Common Stock and other securities, if any, covered by such
registration statement under such other securities or blue sky laws of such
states or other jurisdictions of the United States of America as the sellers of
Registrable Common Stock covered by such registration statement shall reasonably
request in writing, (ii) to keep such registration or qualification in effect
for so long as such registration statement remains in effect and (iii) to take
any other action that may be necessary or reasonably advisable to enable such
sellers to consummate the disposition in such jurisdictions of the securities to
be sold by such sellers, except that the Company shall not for any such purpose
be required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this subsection
(d) be obligated to be so qualified, to subject itself to taxation in such
jurisdiction or to consent to general service of process in any such
jurisdiction;
     (e) use its reasonable best efforts to cause all Registrable Common Stock
and other securities, if any, covered by such registration statement to be
registered with or approved by such other federal or state governmental agencies
or authorities as may be necessary in the opinion of counsel to the Company and
counsel to the seller or sellers of Registrable Common Stock to enable the
seller or sellers thereof to consummate the disposition of such Registrable
Common Stock;
     (f) notify each seller of Registrable Common Stock and other securities
covered by such registration statement, if any, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and, at
the written request of any such seller of Registrable Common Stock, promptly
prepare and furnish to it a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus, as supplemented
or amended, shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
     (g) use its reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement relating to the
Registrable Common Stock at the earliest possible moment;

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     (h) otherwise comply with all applicable rules and regulations of the
Commission and any other governmental agency or authority having jurisdiction
over the offering, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 promulgated thereunder, and furnish to
each seller of Registrable Common Stock and to the managing underwriter, if any,
at least ten days prior to the filing thereof a copy of any amendment or
supplement to such registration statement or prospectus;
     (i) use its reasonable best efforts to cause all Registrable Common Stock
covered by a Registration Statement to be listed on a national securities
exchange on which similar securities issued by the Company are then listed, if
the listing of such Registrable Common Stock is then permitted under the rules
of such exchange;
     (j) provide a transfer agent and registrar for the Registrable Common Stock
covered by a registration statement no later than the effective date thereof;
     (k) enter into such agreements and take such other actions as the Holders
holding a majority of the shares of Registrable Common Stock covered by such
registration statement shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Common Stock; and
     (l) if requested by the Holders holding a majority of the shares of
Registrable Common Stock being sold, cooperate with such Holders to facilitate
the timely preparation and delivery of certificates representing Registrable
Common Stock to be sold and not bearing any restrictive legends; and enable such
Registrable Common Stock to be in such share amounts and registered in such
names as the managing underwriter(s) or, if none, the Holders holding a majority
of the shares of Registrable Common Stock being sold, may request at least five
Business Days prior to any sale of Registrable Common Stock to the underwriters;
          As a condition to the obligations of the Company to complete any
registration pursuant to this Agreement with respect to the Registrable Common
Stock of any particular Holder, such Holder must furnish to the Company in
writing such information regarding itself, the Registrable Common Stock held by
it and the intended methods of disposition of the Registrable Common Stock held
by it as is necessary to effect the registration of such Holders’ Registrable
Common Stock and is requested in writing by the Company. At least: (i) 20 days
prior to the first anticipated filing date of a Registration Statement for
registration under Section 2 of this Agreement; or (ii) 20 days prior to the
anticipated effectiveness date of a Registration Statement filed under Section 3
of this Agreement, the Company will notify in writing each Holder of the
information referred to in the preceding sentence which the Company is
requesting from that Holder whether or not such Holder has elected to have any
of its Registrable Common Stock included in the Registration Statement. If,
within ten days prior to the anticipated filing date or effectiveness date, as
the case may be, the Company has not received the requested information from a
Holder, then the Company may file the Registration Statement without including
Registrable Common Stock of that Holder.

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          Each Original Holder agrees that as of the date that a final
prospectus is made available to it for distribution to prospective purchasers of
Registrable Common Stock it shall cease to distribute copies of any preliminary
prospectus prepared in connection with the offer and sale of such Registrable
Common Stock. Each Original Holder further agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
subsection (f) of this Section 5, such Original Holder shall forthwith
discontinue such Original Holder’s disposition of Registrable Common Stock
pursuant to the registration statement relating to such Registrable Common Stock
until such Original Holder’s receipt of the copies of the supplemented or
amended prospectus contemplated by subsection (f) of this Section 5 and, if so
directed by the Company, shall deliver to the Company (at the Company’s expense)
all copies, other than permanent file copies, then in such Original Holder’s
possession of the prospectus relating to such Registrable Common Stock current
at the time of receipt of such notice. If any event of the kind described in
subsection (f) of this Section 5 occurs and such event is the fault solely of an
Original Holder(s), such Original Holder(s) shall pay all Expenses directly
attributable to the preparation, filing and delivery of any supplemented or
amended prospectus contemplated by subsection (f) of this Section 5. In the
event a Holder that is not an Original Holder elects to have shares of its
Registrable Common Stock included in a registration statement, such Holder will
have agreed with each of the preceding requirements in the notice it provides to
the Company regarding the inclusion of shares of its Registrable Common Stock in
such registration statement.
     6. Piggyback Underwritten Offerings.
          (a) Priority. Prior to the effectiveness of a registration statement
filed pursuant to Section 2 hereof, if the Company proposes to register any of
its Common Stock under the Securities Act for its own account as contemplated by
Section 3 hereof and such securities are to be distributed by or through one or
more underwriters, and if the managing underwriter of such underwritten offering
shall advise the Company in writing (with a copy to the Piggyback Requesting
Holders) that if all the Registrable Common Stock requested to be included in
such registration were so included, in its opinion, the number and type of
securities proposed to be included in such registration would exceed the number
and type of securities which could be sold in such offering within a price range
acceptable to the Company (such writing to state the basis of such opinion and
the approximate number and type of securities which may be included in such
offering without such effect), then the Company shall include in such
registration pursuant to Section 3, to the extent of the number and type of
securities which the Company is so advised can be sold in such offering,
(i) first, securities that the Company proposes to issue and sell for its own
account, (ii) second, Registrable Common Stock requested to be registered by
Piggyback Requesting Holders pursuant to Section 3 hereof, pro rata among the
Piggyback Requesting Holders on the basis of the number of shares of Registrable
Common Stock requested to be registered by all such Piggyback Requesting Holders
and (iii) third, other securities, if any.
          Any Holder may withdraw its request to have all or any portion of its
Registrable Common Stock included in any such offering by notice to the Company
within 10 Business Days after receipt of a copy of a notice from the managing
underwriter pursuant to this Section 6(b).
          (b) Holders of Registrable Common Stock to be Parties to Underwriting
Agreement. The holders of Registrable Common Stock to be distributed by
underwriters in an

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underwritten offering contemplated by subsection (a) of this Section 6 shall be
parties to the underwriting agreement between the Company and such underwriters,
but shall have only those obligations and make only those representations and
warranties as are customary with respect to selling stockholders, as opposed to
issuers, in an underwritten public offering.
          (c) Holdback Agreements. Each Original Holder agrees, if required by
the managing underwriter for any underwritten offering pursuant to this
Agreement, not to effect any sale or distribution of any equity securities of
the Company or securities convertible into or exchangeable or exercisable for
equity securities of the Company, including any sale under Rule 144 under the
Securities Act, during the 10 days prior to the date on which an underwritten
registration of Registrable Common Stock pursuant to Section 3 hereof in which
such Original Holder is participating has become effective and until 90 days (or
such lesser period as may be required by the managing underwriter) after the
effective date of such underwritten registration in which such Original Holder
is participating, except as part of such underwritten registration or to the
extent that such Original Holder is prohibited by applicable law from agreeing
to withhold securities from sale or is acting in its capacity as a fiduciary or
an investment adviser. Without limiting the scope of the term “fiduciary,” a
holder shall be deemed to be acting as a fiduciary or an investment adviser if
its actions or the securities proposed to be sold are subject to the Employee
Retirement Income Security Act of 1974, as amended, the Investment Company Act
of 1940, as amended, or the Investment Advisers Act of 1940, as amended, or if
such securities are held in a separate account under applicable insurance law or
regulation.
          The Company agrees not to effect any Public Offering or distribution
of any equity securities of the Company, or securities convertible into or
exchangeable or exercisable for equity securities of the Company, during the
10 days prior to the date on which any underwritten registration pursuant to
Section 2 or 3 hereof has become effective and until 90 days after the effective
date of such underwritten registration, except as part of such underwritten
registration.
     7. Postponements.
          (a) If the Company shall fail to file any registration statement
required to be filed pursuant to a request for registration under Section 2(a)
hereof within 30 days, the Initiating Holder(s) requesting such registration
shall have the right to withdraw the request for registration if such withdrawal
shall be made by Holders of Registrable Common Stock holding an amount of
Registrable Common Stock such that the Holders that have not elected to withdraw
do not hold the requisite percentage of shares of Registrable Common Stock to
constitute Initiating Holders(s). In the event of such withdrawal, the request
for registration shall not be counted for purposes of determining the number of
registrations to which Holders are entitled pursuant to Section 2 hereof. The
Company shall pay all Expenses incurred in connection with a request for
registration withdrawn pursuant to this paragraph.
          (b) The Company may delay or suspend the filing or effectiveness of
any registration statement, or file any amendment or supplement to any
registration statement, and may suspend any Selling Holder’s rights to make
sales pursuant to any effective registration statement, if the Company provides
to the Selling Holders a written notice certifying that the Board of Directors
of the Company has determined reasonably and in good faith that the initial

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filing of the registration statement (or any subsequent amendment or supplement
thereto), the initial effectiveness of the registration statement or the
continuing effectiveness thereof would require the disclosure of material
non-public information that would be detrimental to the Company if so disclosed
or would otherwise materially adversely affect a financing, acquisition,
disposition, merger or other material transaction. The filing of a registration
statement, or any amendment or supplement thereto, by the Company or the
effectiveness thereof cannot be deferred or suspended, as the case may be, and
the Selling Holders’ rights to make sales pursuant to an effective registration
statement cannot be suspended, pursuant to the provisions of the preceding
sentence for more than 30 days after the abandonment or consummation of any of
the foregoing transactions; provided, however, that the Company may so defer or
suspend the use of any registration statement no more than 60 days in a calendar
year. If the Company suspends the Selling Holders’ rights to make sales pursuant
hereto, the applicable registration period shall be extended by the number of
days of such suspension.
     8. Indemnification.
          (a) Indemnification by the Company. In connection with any
registration statement filed by the Company pursuant to Section 2(a) or 3
hereof, to the fullest extent permitted by law the Company shall, and hereby
agrees to, indemnify and hold harmless, each Original Holder and seller of any
Registrable Common Stock covered by such registration statement and each other
Person, if any, who controls (within the meaning of the Exchange Act) such
Original Holder or seller, and their respective stockholders, directors,
officers, employees, partners, agents and Affiliates (each, a “Company
Indemnitee” for purposes of this Section 8(a)), against any losses, claims,
damages, liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof and whether or not such Company Indemnitee is a
party thereto), joint or several, and expenses, including, without limitation,
the reasonable fees, disbursements and other charges of legal counsel and
reasonable costs of investigation, to which such Company Indemnitee may become
subject under the Securities Act or otherwise (collectively, a “Loss” or
“Losses”), insofar as such Losses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered or otherwise
offered or sold under the Securities Act or otherwise, any preliminary
prospectus, final prospectus or summary prospectus related thereto, or any
amendment or supplement thereto (collectively, “Offering Documents”) (or any
document incorporated by reference therein), or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein in the light of the circumstances in which they were
made not misleading, or any violation by the Company of any federal or state
law, rule or regulation applicable to the Company and relating to action
required of or inaction by the Company in connection with any such registration;
provided, however, the Company shall not be liable to any particular Company
Indemnitee, but only such Company Indemnitee, in any such case to the extent
that any such Loss arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such Offering Documents
in reliance upon and in conformity with information furnished to the Company in
a writing duly executed by such Company Indemnitee specifically stating that it
is expressly for use therein. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Company
Indemnitee and shall survive the transfer of such securities by such Company
Indemnitee.

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     (b) Indemnification by the Offerors and Sellers. In connection with any
registration statement filed by the Company pursuant to Section 2(a) or 3 hereof
in which an Original Holder has registered for sale Registrable Common Stock,
each such Original Holder shall, and hereby agrees to, indemnify and hold
harmless to the fullest extent permitted by law the Company and each of its
directors, officers, employees, agents, partners, stockholders, Affiliates and
each other Person, if any, who controls (within the meaning of the Exchange Act)
the Company and each other seller and such seller’s employees, directors,
officers, stockholders, partners, agents and Affiliates (each, a “Holder
Indemnitee” for purposes of this Section 8(b)), against all Losses insofar as
such Losses arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Offering Documents (or any
document incorporated by reference therein) or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein in the light of circumstances in which they were
made not misleading, if such untrue statement or alleged untrue statement or
omission was made in reliance upon and in conformity with information furnished
to the Company in writing duly executed by such Original Holder specifically
stating that it is expressly for use therein; provided, however, that the
liability of such indemnifying party under this Section 8(b) shall be limited to
the amount of the net proceeds received by such indemnifying party in the sale
of Registrable Common Stock giving rise to such liability. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Holder Indemnitee and shall survive the transfer of such
securities by such indemnifying party.
     (c) Notices of Losses, etc. Promptly after receipt by an indemnified party
of written notice of the commencement of any action or proceeding involving a
Loss referred to in the preceding subsections of this Section 8, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subsections of this Section 8, except to the
extent that the indemnifying party is materially and actually prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled to participate in
and, unless in such indemnified party’s reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such Loss, to assume and control the defense thereof, in each case at its own
expense, jointly with any other indemnifying party similarly notified, to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after its assumption of the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation, unless in such
indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties arises in respect of such claim after the
assumption of the defense thereof. No indemnifying party shall be liable for any
settlement of any such action or proceeding effected without its written
consent, which shall not be unreasonably withheld. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such Loss or which requires action on
the part of such indemnified party or otherwise subjects the indemnified party
to any obligation or restriction to which it would not otherwise be

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subject. Notwithstanding any of the foregoing, nothing in this Section 8 shall
require the Company to reimburse the reasonable fees and expenses of more than
one counsel for any indemnified parties where the Company is the indemnifying
party.
          (d) Contribution. If the indemnification provided for in this
Section 8 shall for any reason be unavailable to an indemnified party under
subsection (a) or (b) of this Section 8 in respect of any Loss, then, in lieu of
the amount paid or payable under subsection (a) or (b) of this Section 8, the
indemnified party and the indemnifying party under subsection (a) or (b) of this
Section 8 shall contribute to the aggregate Losses (including legal or other
expenses reasonably incurred in connection with investigating the same) (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the prospective sellers of Registrable Common Stock covered by the
registration statement which resulted in such Loss or action in respect thereof,
with respect to the statements, omissions or action which resulted in such Loss
or action in respect thereof, as well as any other relevant equitable
considerations, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, on the one hand, and such
prospective sellers, on the other hand, from their sale of Registrable Common
Stock; provided that, for purposes of this clause (ii), the relative benefits
received by the prospective sellers shall be deemed not to exceed the net
proceeds received by such sellers. 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. The obligations, if any, of the Original Holders
of Registrable Common Stock to contribute as provided in this subsection (d) are
several in proportion to the relative value of their respective Registrable
Common Stock covered by such registration statement and not joint. In addition,
no Person shall be obligated to contribute hereunder any amounts in payment for
any settlement of any action or Loss effected without such Person’s consent.
          (e) Other Indemnification. The Company and each Original Holder who
has registered for sale shares of its Registrable Common Stock shall, with
respect to any required registration or other qualification of securities under
any Federal or state law or regulation of any governmental authority other than
the Securities Act, indemnify Holder Indemnitees and Company Indemnitees,
respectively, against Losses, or, to the extent that indemnification shall be
unavailable to a Holder Indemnitee or Company Indemnitee, contribute to the
aggregate Losses of such Holder Indemnitee or Company Indemnitee in a manner
similar to that specified in the preceding subsections of this Section 8 (with
appropriate modifications).
          (f) Indemnification Payments. The indemnification and contribution
required by this Section 8 shall be made by periodic payments of the amount
thereof during the course of any investigation or defense, as and when any Loss
is incurred and is due and payable.
     9. Registration Rights to Others. The Company’s Board of Directors is
expressly permitted, by majority vote, to provide to any holder of newly issued
shares of the Company’s Common Stock or any other securities of the Company
rights with respect to the registration of such Common Stock or other securities
of the Company under the Securities Act; provided that the Holders shall have
the rights specified in Section 3 with respect to any applicable registration
requested by other Holders.

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     10. Adjustments Affecting Registrable Common Stock. Without the written
consent of Original Holders of a majority of the outstanding shares of
Registrable Common Stock issued pursuant to the Consent Agreements, the Company
shall not effect or permit to occur any combination, subdivision or
reclassification of Registrable Common Stock that would materially adversely
affect the ability of the Holders to include such Registrable Common Stock in
any registration of its securities under the Securities Act contemplated by this
Agreement or the marketability of such Registrable Common Stock under any such
registration or other offering.
     11. Amendments and Waivers. Any provision of this Agreement may be amended,
modified or waived if, but only if, the written consent to such amendment,
modification or waiver has been obtained from the Original Holder(s) of at least
a majority of the shares of Registrable Common Stock issued pursuant to the
Consent Agreements affected by such amendment, modification or waiver.
     12. Nominees for Beneficial Owners. In the event that any Registrable
Common Stock is held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the Holder of such Registrable Common Stock for purposes
of any request or other action by any Holder(s) pursuant to this Agreement or
any determination of the number or percentage of shares of Registrable Common
Stock held by any Holder(s) contemplated by this Agreement. If the beneficial
owner of any Registrable Common Stock so elects, the Company may require
assurances reasonably satisfactory to it of such owner’s beneficial ownership of
such Registrable Common Stock.
     13. No Assignment. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. The Holders may, at their election, at any
time or from time to time, assign their rights under this Agreement, in whole or
in part, to any Transferee of shares of Registrable Common Stock held by them to
the extent such Transferee agrees in writing to be bound by all of the
provisions applicable hereunder to the transferring Holder. The Company may not
assign this Agreement or any right, remedy, obligation or liability arising
hereunder or by reason hereof.
     14. Termination of Registration Rights. The Company’s obligations under
Sections 2(a) and 3 hereof to register Common Stock for sale under the
Securities Act shall terminate on April 13, 2008.
     15. Rule 144. The Company shall take all actions reasonably necessary to
enable each Holder to sell such securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144,
or (ii) any similar rule or regulation hereafter adopted by the Commission
including, without limitation, filing on a timely basis all reports required to
be filed by the Exchange Act. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
     16. Miscellaneous
          (a) Further Assurances. Each of the parties hereto shall execute such
documents and other papers and perform such further acts as may be reasonably
required or

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advisable to carry out the provisions of this Agreement and the transactions
contemplated hereby.
          (b) Headings. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
any provisions hereof.
          (c) Conflicting Instructions. A person or entity is deemed to be a
holder of Registrable Common Stock whenever such person or entity owns of record
such Registrable Common Stock. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Common Stock, the Company will act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Common Stock.
          (d) Remedies. Each Original Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The parties
hereto agree that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and the parties hereto hereby agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
          (e) Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto in respect of the subject matter
contained herein, and there are no restrictions, promises, representations,
warranties, covenants, or undertakings with respect to the subject matter
hereof, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the parties
hereto with respect to the subject matter hereof.
          (f) Notices. Any notices or other communications to be given hereunder
by any party to another party shall be in writing, shall be delivered
personally, by telecopy, by certified or registered mail, postage prepaid,
return receipt requested, or by Federal Express or other comparable delivery
service, in the case of Original Holders or the Company, to the address of the
party set forth on Schedule A hereto and, in the case of other Holders, to the
address found in the records of the Company’s transfer agent and registrar, or
to such other address as the party to whom notice is to be given may provide in
a written notice to the other parties hereto, a copy of which shall be on file
with the Secretary of the Company. Notice shall be effective when delivered if
given personally, when receipt is acknowledged if telecopied, three days after
mailing if given by registered or certified mail as described above, and one
Business Day after deposit if given by Federal Express or comparable delivery
service.
          (g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
          (h) Severability. Notwithstanding any provision of this Agreement,
neither the Company nor any other party hereto shall be required to take any
action which would be in violation of any applicable Federal or state securities
law. The invalidity or unenforceability of any provision of this Agreement in
any jurisdiction shall not affect the validity, legality or enforceability of
any other provision of this Agreement in such jurisdiction or the validity,
legality or

15

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enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
          (i) Counterparts. This Agreement may be executed by facsimile in two
or more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same Agreement.

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                  BALLY TOTAL FITNESS HOLDING CORPORATION    
 
           
 
  By:   /s/ Marc D. Bassewitz    
 
     
 
 Name: Marc D. Bassewitz    
 
       Title: Senior Vice President and General Counsel    

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                  SPECIAL VALUE BOND FUND II, LLC
 
           
 
  By:       SVIM/MSM II, LLC
 
  Its:       Managing Member
 
           
 
  By:       TENNENBAUM & CO., LLC
 
  Its:       Managing Member
 
           
 
  By:   /s/ Howard Levkowitz                   Name: Howard Levkowitz        
Title: Principal
 
                SPECIAL VALUE ABSOLUTE RETURN FUND, LLC
 
  By:       SVAR/MM, LLC
 
  Its:       Managing Member
 
           
 
  By:       TENNENBAUM CAPITAL PARTNERS, LLC
 
  Its:       Managing Member
 
           
 
  By:       TENNENBAUM & CO., LLC     Its:   Managing Member
 
  By:   /s/ Howard Levkowitz                   Name: Howard Levkowitz        
Title: Principal
 
                SPECIAL VALUE OPPORTUNITIES FUND, LLC
 
           
 
  By:   /s/ Howard Levkowitz                   Name: Howard Levkowitz        
Title: Authorized Signatory
 
                SPECIAL VALUE EXPANSION FUND, LLC
 
           
 
  By:   /s/ Howard Levkowitz                   Name: Howard Levkowitz        
Title: Authorized Signatory

18