exv10w3



 





Exhibit 10.3




CONFORMED COPY




AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT




     AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT, dated as of July 16, 2007 (this
“Amendment”), by and between Bally Total Fitness Holding Corporation, a corporation
organized under the laws of Delaware (the “Borrower”), the Guarantors listed on Exhibit
A hereto (the “Guarantors”), the lenders parties to the Credit Agreement (as defined in
the Forbearance Agreement referred to below) (the “Lenders”), JPMORGAN CHASE BANK, N.A., as
agent for the Lenders (in such capacity, the “Agent”), and MORGAN STANLEY SENIOR FUNDING,
INC., as Syndication Agent. Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Forbearance Agreement (as defined below).



     WHEREAS, pursuant to a Forbearance Agreement, dated as of April 5, 2007 (the “Forbearance
Agreement”), by and between the Borrower, the Guarantors, the Lenders and the Agent, the
Lenders and the Agent (i) agreed to implement a forbearance period in respect of certain Defaults
or Events of Defaults under the Credit Agreement relating to the Known Defaults and (ii) agreed to
forbear from taking or exercising any Enforcement Action in connection with the Known Defaults;



     WHEREAS, the Lenders and the Agent desire to extend the forbearance period in respect of the
Known Defaults and, in addition, to forbear at all times through the Forbearance Period Termination
Date (as extended hereby), from taking or exercising any Enforcement Action in connection with the
Borrower’s failure (i) to make a scheduled payment of interest on the Senior Notes as due on July
15, 2007 in accordance with Section 10.1 of the Senior Notes Indenture and (ii) to furnish reports
as required under Section 7.4 of the Subordinated Notes Indenture or under Section 7.4 of the
Senior Notes Indenture; and



     WHEREAS, the Borrower has requested an extension of the Forbearance Period Termination Date to
July 31, 2007.



     NOW, THEREFORE, in consideration of the promises and the representations, warranties,
covenants and agreements herein contained, and intending to be legally bound hereby, the Borrower,
the Guarantors, the Lenders and the Agent hereby agree as follows:



ARTICLE I.

AMENDMENTS




     Section 1.1 Amendments to Forbearance Agreement. The Forbearance Agreement is,
effective as of the date hereof and subject to the satisfaction of the conditions precedent set
forth in Section 2.1 hereof, hereby amended as follows:



          (a) The fourth recital of the Forbearance Agreement is amended by deleting the recital in its
entirety and substituting the following in its place:





“WHEREAS, (i) the Borrower’s failure to make an interest payment on the Subordinated
Notes on April 16, 2007, (the “Sub Notes Interest Payment Default”); and
(ii) the Borrower’s failure to make a scheduled payment of interest on the Senior
Notes as due on July 15, 2007 (the “Senior Notes Interest Payment 



 









 






Default”), would constitute an event of default under the Senior Notes
Indenture and the Subordinated Notes Indenture, as applicable.”



          (b) The eighth recital of the Forbearance Agreement is amended by inserting the phrase “the
Senior Notes Interest Payment Default, any failure by the Borrower to furnish the reports required
by Section 7.4 of the Senior Notes Indenture or Section 7.4 of the Subordinated Notes Indenture,”
immediately preceding the phrase “the Notes Quarterly Financial Statement Default” in the third
line thereof.




          (c) Section 3.1(i) of the Forbearance Agreement is amended by deleting the phrase “July 13,
2007” and replacing it with the phrase “July 31, 2007”.




          (d) Section 3.1(ii)(B) of the Forbearance Agreement is amended by inserting the phrase “or on
the Senior Notes” immediately following the phrase “on the Subordinated Notes”.




          (e) Section 3.1(ii)(C) of the Forbearance Agreement is amended by (i) deleting the phrase “or
(II) the issuance of any enforcement notice by the trustee under the Senior Notes Indenture or the
Subordinated Notes Indenture, including in each case,” therein and replacing it with the phrase
“but not” and (ii) inserting the phrase “without the taking of any enforcement action” immediately
following the word “acceleration” therein.




ARTICLE II.

CONDITIONS OF EFFECTIVENESS




     Section 2.1 Conditions of Effectiveness. This Amendment shall become effective as of
the date first above written when the Agent shall have received (a) counterparts of this Amendment
executed by the Borrower, the Guarantors and the Majority Lenders and (b) copies of the fully
executed amendments to (i) the Senior Notes Forbearance Agreement duly executed and delivered by
the Borrower and Persons holding more than 50% of the face principal amount of the Senior Notes,
and (ii) the Subordinated Notes Forbearance Agreement duly executed and delivered by the Borrower
and Persons holding more than 75% of the face principal amount of the Subordinated Notes, which
amendments, in each case, shall extend the termination of the forbearance periods described therein
to at least July 31, 2007, shall waive the Senior Notes interest payment due on July 15, 2007
during such forbearance period, and shall not provide for the payment of any consent, amendment or
similar fee to the holders of the Senior Notes and/or the Subordinated Notes in connection with the
execution and delivery of the Senior Notes Forbearance Agreement and/or the Subordinated Notes
Forbearance Agreement, as applicable.



ARTICLE III.

MISCELLANEOUS




     Section 3.1 Reference to Forbearance Agreement. On and after the effectiveness of
this Amendment, each reference in the Forbearance Agreement to “this Agreement,” “hereunder,”
“hereof” or words of like import referring to the Forbearance Agreement shall mean and be a
reference to the Forbearance Agreement as amended by this Amendment.



     Section 3.2 Full Force and Effect. The Forbearance Agreement, as specifically



2









 




amended by this Amendment, is and shall continue to be in full force and effect and is hereby
in all respects ratified and confirmed.




     Section 3.3 No Waiver. The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy
of any party under the Forbearance Agreement, nor constitute a waiver of any provision of the
Forbearance Agreement.



     Section 3.4 Execution in Counterparts. This Amendment may be executed in any number
of counterparts, all of which taken together shall constitute one and the same instrument, and each
of the parties hereto may execute this Amendment by signing any such counterpart. A facsimile or
electronic mail transmission of this Amendment bearing a signature on behalf of a party hereto
shall be legal and binding on such party.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




3









 





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



	 	 	 	 	 	 	 
	 	 	BALLY TOTAL FITNESS HOLDING CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ronald G. Eidell	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Ronald G. Eidell	 	 
	 	 	Title: Senior Vice President, CFO	 	 
	 
	 	 	 	 	 	 
	 	 	THE GUARANTORS	 	 
	 
	 	 	 	 	 	 
	 	 	Each Guarantor Listed on Exhibit A Hereto	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ronald G. Eidell	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Ronald G. Eidell	 	 
	 	 	Title: Senior Vice President, CFO	 	 






 









 






	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., as Agent and as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Douglas A. Jenks	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Douglas A. Jenks	 	 
	 	 	Title: Managing Director	 	 






 









 






	 	 	 	 	 	 	 
	 	 	CREDIT GENESIS CLO 2005-1 LTD., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher Mackey	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Christopher Mackey	 	 
	 	 	Title: Managing Principal	 	 






 









 






	 	 	 	 	 	 	 
	 	 	GOLDMAN SACHS CREDIT PARTNERS, L.P., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Pedro Ramirez	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Pedro Ramirez	 	 
	 	 	Title: Authorized Signatory	 	 






 









 






	 	 	 	 	 	 	 
	 	 	HARBOUR TOWN FUNDING LLC, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tara E. Kenny	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Tara E. Kenny	 	 
	 	 	Title: Assistant Vice Principal	 	 






 









 






	 	 	 	 	 	 	 
	 	 	MORGAN STANLEY SENIOR FUNDING, INC., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dan Gioia	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Dan Gioia	 	 
	 	 	Title: Authorized Signatory	 	 






 









 






	 	 	 	 	 	 	 
	 	 	Sankaty Advisors, LLC, as Collateral Manager for AVERY	 	 
	 	 	POINT CLO, LTD., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	Sankaty Advisors, LLC, as Collateral Manager for	 	 
	 	 	CASTLE HILL I-INGOTS, LTD., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	Sankaty Advisors, LLC, as Collateral Manager for	 	 
	 	 	CASTLE HILL II-INGOTS, LTD., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	Sankaty Advisors, LLC, as Collateral Manager for LOAN	 	 
	 	 	FUNDING XI LLC, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	Sankaty Advisors, LLC, as Collateral Manager for	 	 
	 	 	PROSPECT FUNDING I, LLC, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	PROSPECT HARBOR CREDIT PARTNERS, LP, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	Sankaty Advisors, LLC, as Collateral Manager for RACE	 	 
	 	 	POINT CLO, LIMITED, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	Sankaty Advisors, LLC, as Collateral Manager for RACE	 	 
	 	 	POINT II CLO, LIMITED, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	Sankaty Advisors, LLC, as Collateral Manager for RACE	 	 
	 	 	POINT III CLO, LIMITED, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	SANKATY HIGH YIELD PARTNERS II, L.P., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	SANKATY HIGH YIELD PARTNERS III, L.P., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan K. Halfenger	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan K. Halfenger	 	 
	 	 	Title: Chief Compliance Officer	 	 
	 

	 	 	 	Assistant Secretary	 	 






 









 






	 	 	 	 	 	 	 
	 	 	WELLS FARGO FOOTHILL, LLC, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Juan Barrera	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Juan Barrera	 	 
	 	 	Title: Vice President	 	 






 









 






EXHIBIT A




Bally Fitness Franchising, Inc.

Bally Franchise RSC, Inc.

Bally Franchising Holdings, Inc.

Bally Total Fitness Corporation

Bally Total Fitness Franchising, Inc.

Bally Total Fitness Holding Corporation

Bally Total Fitness International, Inc.

Bally Total Fitness of Missouri, Inc.

Bally Total Fitness of Toledo, Inc.

Bally Total Fitness of Connecticut Coast, Inc.

Bally Total Fitness of Connecticut Valley, Inc.

Greater Philly No. 1 Holding Company

Greater Philly No. 2 Holding Company

Health & Tennis Corporation of New York

Holiday Health Clubs of the East Coast, Inc.

Bally Total Fitness of Upstate New York, Inc.

Bally Total Fitness of Colorado, Inc.

Bally Total Fitness of the Southeast, Inc.

Holiday/Southeast Holding Corp.

Bally Total Fitness of California, Inc.

Bally Total Fitness of the Mid-Atlantic, Inc.

BTF/CFI, Inc.

Bally Total Fitness of Greater New York, Inc.

Jack La Lanne Holding Corp.

Bally Sports Clubs, Inc.

New Fitness Holding Co., Inc.

Nycon Holding Co., Inc.

Bally Total Fitness of Philadelphia, Inc.

Bally Total Fitness of Rhode Island, Inc.

Rhode Island Holding Company

Bally Total Fitness of the Midwest, Inc.

Bally Total Fitness of Minnesota, Inc.

Tidelands Holiday Health Clubs, Inc.

U.S. Health, Inc.





A-1