exv4w3



 







Exhibit 4.3




 

 





REGISTRATION RIGHTS AGREEMENT


by and among


BALLY TOTAL FITNESS HOLDING CORPORATION


and


THE HOLDERS NAMED HEREIN


 




Dated as of April 11, 2006


 





 

 







 









 








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
	 	 	9	 
	 	 	 	 	 	 	 	 	 
	7.	 	Postponements	 	 	10	 
	 	 	 	 	 	 	 	 	 
	8.	 	Indemnification	 	 	11	 
	 	 	(a)	 	Indemnification by the Company
	 	 	11	 
	 	 	(b)	 	Indemnification by the Offerors and Sellers
	 	 	11	 
	 	 	(c)	 	Notices of Losses, etc.
	 	 	12	 
	 	 	(d)	 	Contribution
	 	 	12	 
	 	 	(e)	 	Other Indemnification
	 	 	13	 
	 	 	(f)	 	Indemnification Payments
	 	 	13	 
	 	 	 	 	 	 	 	 	 
	9.	 	Registration Rights to Others	 	 	13	 
	 	 	 	 	 	 	 	 	 
	10.	 	Adjustments Affecting Registrable Common Stock	 	 	13	 
	 	 	 	 	 	 	 	 	 
	11.	 	Amendments and Waivers	 	 	13	 
	 	 	 	 	 	 	 	 	 
	12.	 	Nominees for Beneficial Owners	 	 	13	 
	 	 	 	 	 	 	 	 	 
	13.	 	No Assignment	 	 	14	 
	 	 	 	 	 	 	 	 	 
	14.	 	Termination of Registration Rights	 	 	14	 
	 	 	 	 	 	 	 	 	 
	15.	 	Rule 144	 	 	14	 
	 	 	 	 	 	 	 	 	 
	16.	 	Miscellaneous	 	 	14	 
	 	 	(a)	 	Further Assurances
	 	 	14	 






 









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	 	(b)	 	Headings
	 	 	14	 
	 	 	(c)	 	Conflicting Instructions
	 	 	14	 
	 	 	(d)	 	Remedies
	 	 	14	 
	 	 	(e)	 	Entire Agreement
	 	 	15	 
	 	 	(f)	 	Notices
	 	 	15	 
	 	 	(g)	 	Governing Law
	 	 	15	 
	 	 	(h)	 	Severability
	 	 	15	 
	 	 	(i)	 	Counterparts
	 	 	15	 
	 	 	 	 	 	 	 	 	 
	SCHEDULES:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	SCHEDULE A —NOTICES	 	 	 	 







 









 








REGISTRATION RIGHTS AGREEMENT




          REGISTRATION RIGHTS AGREEMENT, dated as of April 11, 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 are signatories to this
Agreement (the “Holders”).




          This Agreement is being entered into in connection with the acquisition of Common Stock (as
hereinafter defined) by the Holders pursuant to the Stock Purchase Agreements (as hereinafter
defined).




          To induce the Holders to purchase shares of Common Stock of 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. This Agreement
sets forth the terms and conditions of such undertaking.




          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 Solicitations” means: (i) the Company’s receipt of consents in the Consent
Agreements, dated as of August 24, 2005, pursuant to which the Company obtained an extension
through November 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; 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 described in the Offering Memorandum/Consent Solicitation Statements, dated as
of March 27, 2006, and the related Letters of Consent.




 









 





          “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 Holders 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.




          “Initiating Holder” means at the time of any Initiating Request, either (i) Wattles
Capital Management, LLC (“Wattles”); or (ii) Ramius Securities, L.L.C., Starboard Value and
Opportunity Master Fund Ltd., RCG Ambrose Master Fund, Ltd., RCG Halifax Fund, Ltd. and Ramius
Master Fund, Ltd. (collectively, “Ramius”).




          “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.




          “NASD” means the National Association of Securities Dealers, Inc.




          “Offering Documents” has the meaning set forth in Section 8(a) hereof.




          “Permitted Common Stock” means the shares of Common Stock issued to consenting holders
pursuant to the Consent Solicitations, for which the holders have entered a registration rights
agreement, dated as of January 17, 2006, with the Company, as may be amended.




          “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.




2









 





          “Stock Purchase Agreements” means: (i) the Stock Purchase Agreement, dated as of April
11, 2006, by and between the Company and Wattles Capital Management, LLC; or (ii) the Stock
Purchase Agreement, dated as of April 11, 2006, by and among the Company and Ramius Securities,
L.L.C., Starboard Value and Opportunity Master Fund Ltd., RCG Ambrose Master Fund, Ltd., RCG
Halifax Fund, Ltd. and Ramius Master Fund, Ltd.




          “Registrable Common Stock” means any of the Common Stock owned by the Holders from
time to time issued pursuant to the Stock Purchase Agreements or issued in respect of any such
shares of Common Stock in 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; 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, each Initiating Holder 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; provided, however, that
such request shall specify the number of shares to be disposed of by such Holder(s) 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
Holder(s) 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, and




               (ii) all other Registrable Common Stock which the Company has been requested to
register by any other Holder(s) by written request given to the Company within 15 days after
the giving of written notice by the Company to such other Holder(s) of the Initiating
Request,



3









 






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, no registration effected pursuant to this Section 2(a) at the written
request of Wattles shall relieve the Company of its obligation to effect a
registration at the written request of Ramius and no registration effected pursuant
to this Section 2(a) at the written request of Ramius shall relieve the Company of
its obligation to effect a registration at the written request of Wattles;
provided, further, that the Company shall be required to
effect a registration pursuant to this Section 2(a) on no more than two occasions;
and provided, further, 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 the Initiating Holder, 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 (i) Registrable Common Stock
and (ii) Permitted 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, 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 12, 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
successor or similar form(s)), for sale for its own account, and a registration statement filed



4









 







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
Registrable Common Stock, for the same period as the delay in registering such other
securities; and



5









 






     (C) if such registration 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 12, 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 prospectus contained in such
registration statement (including any 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



6









 






documents, as the sellers 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;




     (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



7









 






statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;




     (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 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 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 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.




          Each 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 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 Holder shall forthwith discontinue such Holder’s disposition of Registrable Common


8









 




Stock pursuant to the registration statement relating to such Registrable Common Stock until such
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 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 a Holder(s), such 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.




     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,
Permitted Common Stock requested to be registered by the holders thereof, (iii) third, 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
(iv) fourth, 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(a).




          (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 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 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 Holder is


9









 







          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 Holder is participating, except as
part of such underwritten registration or to the extent that such 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. 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
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.




10









 





     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 Holder covered by such
registration statement and each other Person, if any, who controls (within the meaning of the
Exchange Act) such Holder, 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.




          (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 a Holder has
registered for sale Registrable Common Stock, each such 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


11









 







          Company in writing duly
executed by such 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 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


12









 




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 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 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.



     10. Adjustments Affecting Registrable Common Stock. Without the written consent of
the Holders, 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 Holders 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



13









 







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
12, 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 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 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


14









 




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, to the address of the party set forth on Schedule A hereto. 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 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.




15









 





     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 	 
	 



 









 






	 	 	 	 	 
	 	HOLDERS:



WATTLES CAPITAL MANAGEMENT, LLC

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



	 	 	 	 	 
	 	RAMIUS SECURITIES, L.L.C.

 	 
	 	By:  	/s/ Morgan B. Stark 	 
	 	Name:  	Morgan B. Stark 	 
	 	Title:  	Authorized Signatory 	 
	 



	 	 	 	 	 
	 	STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.

 	 
	 	By:  	/s/ Morgan B. Stark 	 
	 	Name:  	Morgan B. Stark 	 
	 	Title:  	Authorized Signatory 	 
	 



	 	 	 	 	 
	 	RCG AMBROSE MASTER FUND, LTD.

 	 
	 	By:  	/s/ Morgan B. Stark 	 
	 	Name:  	Morgan B. Stark 	 
	 	Title:  	Authorized Signatory 	 
	 




 









 





	 	 	 	 	 
	 	RCG HALIFAX FUND, LTD.

 	 
	 	By:  	/s/ Morgan B. Stark 	 
	 	Name:  	Morgan B. Stark 	 
	 	Title:  	Authorized Signatory 	 
	 



	 	 	 	 	 
	 	RAMIUS MASTER FUND, LTD.

 	 
	 	By:  	/s/ Morgan B. Stark 	 
	 	Name:  	Morgan B. Stark 	 
	 	Title:  	Authorized Signatory 	 
	 




 









 








SCHEDULE A




NOTICES




If to the Company, to:




Bally Total Fitness Holding Corporation

Attention: Marc Bassewitz

8700 W. Bryn Mawr Avenue

Chicago, IL 60631




Tel: (773) 399-7606

Fax: (773) 399-0126




with a copy to:




Kirkland & Ellis LLP

Attention: Dennis M. Myers, P.C.

200 East Randolph Drive

Chicago, IL 60601




Tel: (312) 861-2000

Fax: (312) 861-2200




If to the Holders, to:




Ramius Securities, L.L.C.

Starboard Value and Opportunity Master Fund Ltd.

RCG Ambrose Master Fund., Ltd.

RCG Halifax Fund, Ltd.

Ramius Master Fund, Ltd.

c/o Ramius Capital Group, L.L.C.

666 Third Avenue, 26th Floor

New York, New York 10017

Attention Jeffrey C. Smith and Owen S. Littman

Facsimile: (212) 201-4802 and (212) 845-7995




Wattles Capital Management, LLC

7945 W. Sahara Ave., Suite 205

Las Vegas, NV 89117

Attn: Mark J. Wattles, President

Facsimile: 303-412-2502




with a copy to:




Davis Graham & Stubbs LLP

1550 17th Street, Suite 500

Denver, CO 80202

Attn: Laura B. Gill

Facsimile: (303) 893-1379