exv10w1



 







Exhibit 10.1




STOCK PURCHASE AGREEMENT




     This Stock Purchase Agreement (“Agreement”) is dated as of April 11, 2006, and is made
by and between Bally Total Fitness Holding Corporation, a Delaware corporation (“Bally” or
the “Company”), and Wattles Capital Management, LLC (the “Purchaser ”).



     WHEREAS, Bally wishes to sell to the Purchaser, and the Purchaser desires to purchase from
Bally, shares of its common stock, par value $0.01 per share (“Common Stock”), pursuant to
the terms and conditions set forth below.



     NOW, THEREFORE, in consideration of the premises and the representations, warranties and
agreements herein contained and intending to be legally bound hereby, Bally and the Purchaser
hereby agree as follows:



ARTICLE I

DELIVERY OF COMMON STOCK AND RELATED MATTERS




     Section 1.1 Purchase of Common Stock. Bally shall authorize, issue and sell
to the Purchaser and, subject to the terms and conditions set forth herein, the Purchaser shall
purchase and accept from the Company, an aggregate of 400,000 shares of Common Stock (the
“Shares”) in consideration for a cash payment of $2,800,000. Upon execution of this
Agreement, (i) Bally will instruct its transfer agent to issue the Shares to Purchaser; and (ii)
Purchaser shall make its payment in respect of such Shares by wire transfer of immediately
available funds to the account(s) specified in writing by Bally to the Purchaser.



     Section 1.2 Restricted Securities. The Purchaser understands that the Shares
are being issued only in a transaction not involving any public offering in the United States
within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), the
Shares have not been registered under the Securities Act or any other applicable securities law,
that the Shares will be “restricted securities” within the meaning of Rule 144 under the Securities
Act and that (A) prior to the expiration of the holding period applicable to sales of restricted
securities pursuant to Rule 144 under the Securities Act, the Shares may be offered, resold,
pledged or otherwise transferred only in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction (i) (a) in a transaction meeting
the requirements of Rule 144 under the Securities Act, (b) outside the U.S. to a foreign purchaser
in a transaction meeting the requirements of Regulation S or (c) pursuant to a transaction that is
otherwise exempt from the registration requirements of the Securities Act and state securities
laws, (ii) to Bally or (iii) pursuant to an effective registration statement under the Securities
Act and (B) the Purchaser will notify any subsequent purchaser from it of the resale restrictions
set forth in (A) above, if then applicable. The Purchaser agrees that the certificates
representing the Shares shall bear a restrictive legend in substantially the following form:



“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ACQUIRED IN A
TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD OR OTHERWISE



 









 






DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION THEREFROM TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR
LAWS.”



     Section 1.3 Registration Rights. Promptly after the execution of this
Agreement, the Company will enter into a registration rights agreement with respect to the Shares
for the benefit of the Purchaser, substantially in the form attached hereto as Exhibit A.



     Section 1.4 Voting Agreement. The Purchaser agrees for a period from the date
hereof through December 31, 2006 that at any meeting (whether annual or special and whether or not
an adjourned or postponed meeting) of the holders of capital stock of the Company, however called,
or in connection with any written consent of the holders of capital stock of the Company solicited
by the Board of Directors, the Purchaser will appear at the meeting or otherwise cause the Shares
to be counted as present at such meeting for purposes of establishing a quorum and vote or consent
(or cause to be voted or consented) the Shares (i) in favor of any proposed strategic transaction
(including a merger or consolidation of the Company with another entity or the sale of
substantially all of the Company’s assets) approved by the Board of Directors (a
“Board-Approved Transaction”) and (ii) against any merger, consolidation, combination, sale
of substantially all of the assets, reorganization, recapitalization, dissolution, liquidation or
winding up of or by the Company or any other acquisition proposal (other than a Board-Approved
Transaction); provided, that the Purchaser holds the Shares on the record date for such meeting or
as of the date of such written consent; provided, further, that this Section 1.4 will not apply to
(x) the extent any Person has formally initiated (whether by tender offer, proxy solicitation or
other filing that has been or will be mailed directly to holders of the Company’s Common Stock) a
bona fide potential strategic transaction that is fully financed or reasonably capable of being
financed and not a Board-Approved Transaction and such transaction would, if consummated, result in
a transaction more favorable to the holders of the Company’s Common Stock from a financial point of
view than the Board-Approved Transaction and (y) any shares of Common Stock that are owned as of
the date hereof or hereafter acquired, directly or indirectly, by the Purchaser or any of its
affiliates, other than the Shares issued pursuant to this Agreement.



ARTICLE II

REPRESENTATIONS AND WARRANTIES OF BALLY




     The Company represents and warrants to the Purchaser as follows:



     Section 2.1 Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority (i) to own, lease and operate its
properties, to carry on its business as now being conducted and (ii) to execute, deliver and
perform its obligations under this Agreement.



     Section 2.2 Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders, necessary for the authorization, execution and delivery
of



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this Agreement, the performance of all obligations of the Company hereunder, and the
authorization, sale and issuance of the Shares, has been taken. This Agreement constitutes a valid
and legally binding obligation of the Company, enforceable in accordance with its terms.



     Section 2.3 No Conflicts. The execution, delivery and performance of this
Agreement and the issuance, sale and delivery of the Shares will not (i) violate any provision of
law or statute or any order of any court or other governmental authority binding on the Company;
(ii) contravene or conflict with the Company’s certificate of incorporation or bylaws; or (iii)
conflict with or result in any breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time or both) a default, or result in the creation of any
lien upon any of the properties or assets of the Company, under any indenture, mortgage, lease
agreement or other agreement or instrument to which the Company is a party or by which it or any of
its property is bound or affected.



     Section 2.4 Issuance of the Shares. The Shares will be duly authorized and
when issued in accordance with the terms hereof will be validly issued, fully paid and
nonassessable, free from all stamp taxes, liens and charges with respect to the issue or delivery
thereof and otherwise free of all other security interests, encumbrances, restrictions and claims
of any nature whatsoever (other than as set forth in Section 1.4 above and imposed under applicable
securities laws).



     Section 2.5 Certain Securities Law Matters. Assuming the accuracy of the
representations and warranties of the Purchaser set forth in Article III hereof, the Shares may be
issued to the Purchaser pursuant to this Agreement without registration under the Securities Act by
reason of Section 4(2) thereof and similar provisions under applicable state securities laws.



     Section 2.6 Rights Agreement and DGCL 203.



     (a) Subject to the accuracy of Section 3.4, the execution, delivery and performance of this
Agreement by the Company and the Purchaser does not in any way trigger, or raise any rights or
obligations under, that certain stockholder rights plan adopted by the Board of Directors of the
Company on October 18, 2005 and evidenced by that certain Rights Agreement, dated as of October 18,
2005, between the Company and LaSalle Bank National Association, as rights agent (the “Rights
Agreement”), including without limitation by reason of the fact that other Persons may be
entering into agreements with the Company similar to this Agreement. The Purchaser and its
affiliates shall not be or be deemed to be the beneficial owner (within the meaning of Section 1.3
of the Rights Agreement) of any of the shares of Common Stock issued by the Company to any other
Person pursuant to the Company’s solicitation of consents with respect to its
97/8% Senior Subordinated Notes due 2007 and 101/2%
Senior Notes due 2011 and the transactions contemplated thereby (the “Consent
Solicitations”).



     (b) Subject to the accuracy of Section 3.4, this Agreement and the transactions contemplated
hereby will not result in the Purchaser or any of its affiliates becoming an Interested Stockholder
(as such term is defined in Section 203 of the Delaware General Corporation Law).



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     Section 2.7 Common Stock Outstanding. Without giving effect to the
transaction contemplated by this Agreement and the other stock purchase agreement dated of even
date herewith by and between the Company and investment funds affiliated with Ramius Capital Group,
L.L.C., and after giving effect to the payment of consent fees in shares of Common Stock in
connection with the Consent Solicitations, the Company would have 40,481,381 shares of Common Stock
issued and outstanding as of the date hereof.



ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER




     The Purchaser represents and warrants to the Company as follows:



     Section 3.1 Organization and Standing of the Purchaser. The Purchaser is duly
organized, validly existing and in good standing under the laws of its jurisdiction of its
incorporation or formation and has all requisite power and authority to execute, deliver and, as
applicable, perform its obligations under this Agreement.



     Section 3.2 Investor Representations. The Purchaser is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in the acquisition of
the Shares, including investments in securities issued by the Company. The Purchaser is acquiring
the number of Shares set forth in Section 1.1 above in the ordinary course of its business and for
its own account only, and has no present intention of distributing any of the Shares nor any
arrangement or understanding with any other persons regarding the distribution of such Shares
within the meaning of Section 2(11) of the Securities Act. The Purchaser is an “accredited
investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act. The
Purchaser understands that the Shares are being issued to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Shares.



     Section 3.3 Information Provided. The Purchaser has received and has had an
opportunity to review, and has been furnished with, all materials relating to the business,
finances and operations of the Company and materials relating to the issuance of the Shares which
have been requested by the Purchaser. In that regard, the Purchaser acknowledges that Bally has
failed to timely file its annual report on Form 10-K for the fiscal year ended December 31, 2005.
The Purchaser has been afforded the opportunity to ask questions of the Company and has received
satisfactory answers to any such inquiries; and the Purchaser understands that its investment in
the Shares involves a high degree of risk and that no governmental body has passed on or made any
recommendation or endorsement of the Shares.



     Section 3.4 Ownership. Without giving effect to the transactions contemplated
by this Agreement, as of the date hereof the Purchaser is the beneficial owner (as defined in Rules
13d-3 and 13d-5 of the Exchange Act) of 3,425,100 shares of Common Stock.



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ARTICLE IV

INDEMNIFICATION




     The Company shall indemnify, defend and hold harmless Purchaser and its directors, officers,
employees, partners, members, affiliates and agents (collectively, the “Indemnified Persons”) from
and against and in respect of any and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including, without limitation, interest,
penalties, court costs and reasonable attorneys’ fees, including any action by Indemnified Persons
for enforcement of its rights under this Article IV against the Company, that any Indemnified
Person shall incur or suffer, which arise out of, or relate to (i) any breach of any of Company’s
representations and warranties contained in this Agreement or (ii) any failure by Company to
perform any covenant or agreement to be performed by it under this Agreement.



ARTICLE V

MISCELLANEOUS




     Section 5.1 Expenses and Taxes. The Company shall reimburse the Purchaser for
the reasonable fees and disbursements of its legal counsel and other reasonable expenses incurred
in connection with entering into this Agreement and the transactions contemplated herein. The
Company shall pay all stamp, duty, transfer, excise or similar taxes in connection with the
issuance, sale, delivery or transfer by the Company of the Shares.



     Section 5.2 Prior Agreements. This Agreement constitutes the entire agreement
between the parties concerning the subject matter hereof and supersedes any prior representations,
understandings or agreements. There are no representations, warranties, agreements, conditions or
covenants, of any nature whatsoever (whether express or implied, written or oral) between the
parties hereto with respect to such subject matter except as expressly set forth herein and in the
other agreements contemplated hereby.



     Section 5.3  Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any other provision or
the validity and enforceability of this Agreement in any other jurisdiction.



     Section 5.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CHOICE OF
LAW RULES.



     Section 5.5 Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of, or affect the interpretation
of, this Agreement.



     Section 5.6 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and either
of the parties hereto may execute this Agreement by signing any such counterpart. A facsimile
transmission of this Agreement bearing a signature on behalf of a party hereto shall be legal and
binding on such party.



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     Section 5.7 Assignment; Binding Effect. The Purchaser shall not convey,
assign or otherwise transfer any of its rights or obligations under this Agreement without the
express written consent of Bally, and Bally shall not convey, assign or otherwise transfer any of
its rights and obligations under this Agreement without the express written consent of the
Purchaser. This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.



     Section 5.8 Waiver; Remedies. No delay on the part of any Purchaser or Bally
in exercising any right, power or privilege under this Agreement shall operate as a wavier thereof,
nor shall any waiver on the part of any Purchaser or Bally of any right, power or privilege under
this Agreement operate as a waiver of any other right, power or privilege of such party under this
Agreement, nor shall any single or partial exercise of any right, power or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any other right, power
or privilege under this Agreement.



     Section 5.9 Amendment. This Agreement may be modified or amended only by
written agreement of the parties to this Agreement.



* * * *





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     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have caused this
Agreement to be executed by their respective duly authorized officers, as of the date first above
written.



	 	 	 	 	 
	 	BALLY TOTAL FITNESS HOLDING CORPORATION

 	 
	 	By:  	 /s/ Marc D. Bassewitz	 
	 	Name:	Marc D. Bassewitz 	 
	 	Title:  	Senior Vice President and General Counsel 	 
	 
	 	WATTLES CAPITAL MANAGEMENT, LLC

 	 
	 	By:  	 /s/ Mark J. Wattles	 
	 	Name:	Mark J. Wattles 	 
	 	Title:  	President 	 
	 




 









 





Exhibit A




Form of Registration Rights Agreement




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