Document:

exv10w1

 

Exhibit
10.1

FORBEARANCE AGREEMENT

     FORBEARANCE AGREEMENT, dated as of April 5, 2007 (this “Agreement”), under the AMENDED
AND RESTATED CREDIT AGREEMENT, dated as of October 16, 2006 (as in effect on the date immediately
prior to the date hereof, the “Credit Agreement”; unless otherwise defined herein,
capitalized terms are used herein as defined in the Credit Agreement), among BALLY TOTAL FITNESS
HOLDING CORPORATION, a Delaware corporation (the “Borrower”), the lenders parties thereto
(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.

W I T N E S S E T H:

     WHEREAS, the Borrower, the Lenders and the Agent executed and delivered the Credit Agreement,
pursuant to which, among other things, the Lenders have extended credit to the Borrower in the form
of Revolving Credit, Term Advances and Letters of Credit (collectively, the “Credit”);

     WHEREAS, a Default has occurred and is continuing under Section 8.15 of the Credit Agreement
due to the Borrower’s failure to deliver to the Lenders when due (i) a copy of its audited
financial statements for the fiscal year ended December 31, 2006 as required by Section 6.03(b) of
the Credit Agreement and certificate of KPMG LLC or other independent public accountant of national
reputation certifying that such accountants have not obtained knowledge of any event or act which
would constitute a Default or Event of Default with respect to financial covenant and certain
computations (the “Accountant’s Certificate”), and (ii) a copy of its updated financial
projections through its fiscal year ending December 31, 2010 as required by Section 6.03(f) of the
Credit Agreement, which Defaults will ripen into Events of Default following notice from the Agent
as required by the Majority Lenders pursuant to Section 8.15 of the Credit Agreement;

     WHEREAS, the Borrower has failed to deliver to the holders of the Senior Notes and the holders
of the Subordinated Notes, a copy of the Borrower’s Form 10-K for the fiscal year ended December
31, 2006, when due as required by Section 10.17 of each of the Senior Notes Indenture and the
Subordinated Notes Indenture; such failure will, upon notice, constitute defaults under Section
5.1(c) of each of the Senior Notes Indenture and the Subordinated Notes Indenture and, absent cure,
such defaults would constitute events of default under the Senior Notes Indenture and the
Subordinated Notes Indenture (collectively, the “Notes Financial Statement Default”);

     WHEREAS, the Borrower is scheduled to make an interest payment on the Subordinated Notes to
holders of the Subordinated Notes on April 16, 2007, and the failure to make such payment would
constitute an event of default under Section 5.1(e) of the Senior Notes Indenture and, upon the
expiration of the applicable grace period, constitute an event of default under Section 5.1(a) of
the Subordinated Notes Indenture (the “Sub Notes Interest Payment Default”);

     WHEREAS, the Borrower is scheduled to deliver to the holders of the Senior Notes and the
holders of the Subordinated Notes a copy of the Borrower’s Form 10-Q for the fiscal quarter ended
March 31, 2007, when due as required by Section 10.17 of each of the
Senior Notes Indenture and the Subordinated Notes Indenture; and failure to deliver such

 

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financial statements would, upon notice, constitute a default under Section 5.1(c) of each of the
Senior Notes Indenture and the Subordinated Notes Indenture and, absent cure, such defaults would
constitute events of default under the Senior Notes Indenture and the Subordinated Notes Indenture
(collectively, the “Notes Quarterly Financial Statement Default”);

     WHEREAS, pursuant to Section 6.03(a) of the Credit Agreement, the Borrower is scheduled to
deliver to the Lenders a copy of its unaudited consolidated statement of income and retained
earnings within forty-five (45) days after the close of the first fiscal quarter of 2007, and
failure to deliver such financial statements would constitute a Default, which Default would ripen
into an Event of Default following notice from the Agent as required by the Majority Lenders
pursuant to Section 8.15 of the Credit Agreement;

     WHEREAS, pursuant to Section 6.03(h) of the Credit Agreement, at each time financial
statements of the Borrower are required to be delivered pursuant to Sections 6.03(a), 6.03(b) or
6.03(d) of the Credit Agreement, the Borrower is required to deliver copies of the combined balance
sheet of the Unrestricted Subsidiaries as of the close of the applicable fiscal month and combined
statements of income and retained earnings of the Unrestricted Subsidiaries for the portion of the
fiscal year ending with such month; and failure to deliver such copies of the combined balance
sheet of the Unrestricted Subsidiaries when due would constitute a Default, which Default would
ripen into an Event of Default following notice from the Agent as required by the Majority Lenders
pursuant to Section 8.15 of the Credit Agreement;

     WHEREAS, additional Defaults and/or Events of Default may occur under Section 8.07 of the
Credit Agreement due to the Notes Annual Financial Statement Default, the Sub Notes Interest
Payment Default, the Notes Quarterly Financial Statement Default and certain other defaults as a
result of failure to deliver audited financial statements pursuant to certain other debt agreements
(collectively with Defaults and possible Events of Default described in each of the second, sixth
and seventh “WHEREAS” clause above, the “Known Defaults”);

     WHEREAS, absent the agreement of the Agent and the Lenders to implement a forbearance period
in respect of the Known Defaults, the Agent and the Lenders would, upon the expiration of the
applicable grace periods set forth in the Credit Agreement (following applicable notice, if any),
be entitled to exercise at any time all of their rights and remedies and to commence enforcement
and collection actions under the Credit Agreement, the other Credit Documents and applicable law
(such rights, remedies and actions, collectively, “Enforcement Actions”), including without
limitation, to declare to be immediately due and payable all of the Credit, all accrued interest
thereon and all fees and other obligations owing to the Agent and the Lenders under the Credit
Agreement and the other Credit Documents (collectively, the “Obligations”);

     WHEREAS, in connection with the foregoing, the Borrower and the other Credit Parties have
requested that the Agent and the Lenders (a) agree to implement a forbearance period in respect of
the Known Defaults for a limited period during which, among other things, the Credit Parties would
be afforded an opportunity to formulate and propose a comprehensive restructuring with respect to
their respective indebtedness, including the Obligations outstanding under the Credit Agreement,
(b) continue (i) extending Advances, (ii) issuing, extending and/or renewing Letters of Credit and (iii) continuing
and/or

 

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converting Eurodollar Rate Advances under the Credit Agreement and (c) consent to certain
agreements between the Borrower and the holders of the Senior Notes and the holders of the
Subordinated Notes that would otherwise be prohibited by the Credit Agreement; and

     WHEREAS, the Agent and the Lenders have (a) agreed to (i) the requested forbearance and (ii)
continue the extension of Advances, the issuance, extension or renewal, as applicable, of Letters
of Credit and the continuation and/or conversion of Eurodollar Rate Advances and (b) are willing to
so consent, but only upon the terms and subject to the conditions expressly set forth in this
Agreement, and without any advance understanding or agreement by the Lenders to consent to, or
grant a waiver to permit, the implementation of any restructuring proposal or the consummation of
any transaction for which such consent or waiver would be required under the Credit Agreement or
the other Credit Documents (including without limitation, this Agreement);

     NOW THEREFORE, in consideration of the premises and for other good and valuable consideration
the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

     SECTION 1. DEFINITIONS

     As used in this Agreement, the following terms shall have the following meanings:

     “Effective Date” shall have the meaning set forth in Section 7 hereof.

     “Forbearance Period” shall mean the period from and including the Effective Date to,
but not including, the Forbearance Period Termination Date.

     “Forbearance Period Termination Date” shall have the meaning set forth in Section 3
hereof.

     “Senior Notes Forbearance Agreement” shall have the meaning set forth in Section 5
hereof.

     “Subordinated Notes Forbearance Agreement” shall have the meaning set forth in Section
5 hereof.

     SECTION 2. ACKNOWLEDGMENTS

     Each Credit Party acknowledges and agrees that (a) as of the close of business on April 4,
2007, the Obligations include, without limitation, $281,551,794.00 on account of the outstanding
unpaid amount of principal of, and $4,356,034.29 on account of the accrued and unpaid interest on
and fees in respect of, the Credit, and (b) such Credit Party is truly and justly indebted to the
Lenders for the Obligations, without defense, counterclaim or offset of any kind, and such Credit
Party ratifies and reaffirms the validity, enforceability and binding nature of such Obligations.

 

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     SECTION 3. FORBEARANCE; ADVANCES; CONSENT

     3.1 Forbearance Period. The Agent and the Lenders party hereto agree to forbear from
taking any Enforcement Action as a result of the occurrence and continuance of the Known Defaults
during the period from and including the Effective Date until the earliest to occur of the
following (the earliest such date, the “Forbearance Period Termination Date”): (i) July
13, 2007, or (ii) the date on which any of the following shall occur: (A) the occurrence of a
Default or an Event of Default that is not a Known Default, (B) the date on which the Borrower
shall make any payment of principal of, premium, if any, or interest on the Subordinated Notes,
(C)(I) the commencement of any enforcement action by any holder(s) of the Senior Notes or
Subordinated Notes 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, the acceleration of
the Senior Notes or the Subordinated Notes, (D) to the extent applicable, a breach by any of the
parties thereto of the Senior Notes Forbearance Agreement or the Subordinated Notes Forbearance
Agreement (which has not been cured or waived by the requisite parties in accordance with the terms
of such agreement) or (E) any Credit Party shall take any action to challenge (including without
limitation, to assert in writing any challenge to) the validity or enforceability of the Credit
Agreement, this Agreement or any provision hereof.

     3.2 Advances. During the Forbearance Period, the Agent and the Lenders hereby agree
to (i) continue to make Advances (including continuing and/or converting Eurodollar Rate Advances)
to the Borrower and (ii) issue, extend or renew, as applicable, Letters of Credit on behalf of the
Borrower, in each case upon satisfaction of the terms and conditions set forth in Sections 2.19(g),
4.02(a) and 4.02(b) the Credit Agreement, as applicable (without regard to the occurrence and
continuance of the Known Defaults).

     3.3 Consent. The Agent and the Lenders party hereto consent to the Borrower’s or
other Credit Party’s entry into, and performance under, the Senior Notes Forbearance Agreement and
the Subordinated Notes Forbearance Agreement notwithstanding any provisions of the Credit Agreement
to the contrary; provided, that the terms of any such Senior Notes Forbearance Agreement
and/or Subordinated Notes Forbearance Agreement, as applicable, shall be no less favorable to the
Borrower and the other Credit Parties than those set forth in the letter from the Agent to the
Borrower dated as of even date herewith (the “Side Letter”).

     3.4 No Waiver; Limitation on Forbearance. Each Credit Party acknowledges and agrees
that, notwithstanding the agreement of the Agent and the Lenders to forbear from taking Enforcement
Actions during the Forbearance Period in respect of the Known Defaults, (a) such forbearance shall
not constitute a waiver of the occurrence or the continuance of any Default or Event of Default
which is not a Known Default, and each Known Default (and any other Default or Event of Default)
which occurs or has occurred shall continue to exist unless and until cured or waived by the
Majority Lenders or the Lenders, as applicable under the Credit Agreement and (b) nothing contained
in this Agreement shall be construed to limit or affect the right of the Agent and the Lenders to
bring or maintain during the Forbearance Period any action to enforce or interpret any term or
provision of this Agreement, or to file or record instruments of public record (or take other
action) to perfect or further protect the liens and security interests granted by the Credit
Parties to the Agent or the Lenders; it being understood that nothing in this Agreement is intended
to or shall prevent the Agent and Lenders from issuing a notice in accordance with

 

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Article XIII of the Subordinated Notes Indenture to prohibit the Borrower from making payments
in respect of the Subordinated Notes.

     3.4 Enforcement Actions After Forbearance Period. Each Credit Party acknowledges and
agrees that on the Forbearance Period Termination Date the agreement of the Lenders and the Agent
to forbear from taking any Enforcement Action in respect of the Known Defaults shall automatically
cease and be of no further force or effect, and the Agent and the Lenders shall be entitled to
immediately take Enforcement Actions under the Credit Agreement, the other Credit Documents and
applicable law, all without further notice or demand, in respect of the Known Defaults or any other
Event of Default then existing.

     SECTION 4. AGREEMENTS

     4.1 Agreements by Borrower. From and after the Effective Date through the Forbearance
Period Termination Date, and notwithstanding anything to the contrary contained in the Credit
Agreement or the other Credit Documents, the Borrower shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of the Majority Lenders:

     (a) Investments. Make any Investment or Restricted Payment of the type described in
Sections 7.01(e), 7.01(h), 7.01(l) and 7.01(n) of the Credit Agreement or any Investment of the
type described in Section 7.01(g) of the Credit Agreement in excess of $1,500,000 in the aggregate.

     (b) Indebtedness. Create, incur or assume any Debt of the type described in Sections
7.02(b), 7.02(g), 7.02(i), 7.02(j), 7.02(l) and 7.02(n) of the Credit Agreement.

     (c) Liens. Create, incur or assume any Lien of the type described in sub-clause (v)
of the definition of “Permitted Liens” or any Lien of the type described in sub-clause (ix) of the
definition of “Permitted Liens” in excess of $10,000,000 in the aggregate.

     (d) Asset Sales. Other than the sale, transfer or lease of assets or property to
which the Borrower or the relevant Subsidiary is contractually committed as of the Effective Date
and the sale or other disposition of the Credit Parties’ Canadian assets or property, make any
sale, transfer or lease of the type described in Sections 7.08(o) and Section 7.08(p) of the Credit
Agreement. Notwithstanding anything to the contrary contained in the Credit Agreement (i) the
Borrower may consummate (A) Permitted Sale/Leasebacks under Section 7.08(n) and (B) the total Fair
Market Value of all assets sold or Permitted Sale/Leasebacks pursuant to Section 7.08(n) of the
Credit Agreement shall not exceed (individually or in the aggregate) $7,500,000 (and Section
7.08(n) of the Credit Agreement is hereby amended to reflect that the Borrower may sell assets or
engage Permitted Sale/Leasebacks in the aggregate amount of up to $7,500,000 under such Section),
and (ii) the Borrower may retain (A) up to an aggregate of $5,000,000 of Net Cash Proceeds of any
asset sales permitted under Section 7.08(n) as modified hereby and (B) all Net Cash Proceeds of the
sale or other disposition of the Credit Parties’ Canadian assets or property (to the extent such
disposition is permitted hereby).

     (e) Optional Payment and Modifications of Debt Instruments. Other than the Senior
Notes Forbearance Agreement and the Subordinated Notes Forbearance

 

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Agreement, make any payment or modify any debt instrument after the Effective Date otherwise
permitted under Section 7.09 of the Credit Agreement.

     4.2 Application of Excess Cash Flow. Notwithstanding anything to the contrary
contained in the Credit Agreement or the other Credit Documents (a) from and after the Effective
Date, any and all Excess Cash Flow for the fiscal year ended December 31, 2006, shall be applied in
accordance with Section 2.13 of the Credit Agreement and (b) Excess Cash Flow for the fiscal year
ending December 31, 2006 may be calculated based on the fiscal year-end unaudited financial
statements and such calculation shall be due on or before April 16, 2007.

     4.3 Failure to Comply. The Credit Parties agree that any failure to perform timely,
and otherwise comply with, any of their respective obligations set forth in this Section 4 shall
constitute an Event of Default.

     SECTION 5. ADDITIONAL COVENANTS

     To induce the Agent and the Lenders to enter into this Agreement and forbear from taking
Enforcement Actions during the Forbearance Period in respect of the Known Defaults, the Borrower
agrees as follows:

     5.1 Delivery of Information. The Borrower shall, in addition to the existing
reporting requirements set forth in this Agreement, the Credit Agreement and the other Credit
Documents, deliver the following to the Agent (for distribution to the Lenders):

     (a) within three (3) days of receipt thereof by the Borrower, a copy of the financial
statements required to be delivered under Section 6.03(b) of the Credit Agreement;
provided, that the Borrower shall not be required to deliver the Accountant’s Certificate
in connection with the delivery of such financial statements;

     (b) as soon as possible, and in any event no later than June 28, 2007, (i) the Borrower’s
financial and operational restructuring proposal, including details regarding the intended business
restructuring tasks, sources and uses of capital required to implement such restructuring proposal
and the proposed treatment of the Credit Parties’ respective indebtedness, including the
Obligations, and (ii) a pro forma projected operating budget for the restructured business of the
Credit Parties (including income statements, balance sheets and cash flow statements) detailing, on
a monthly basis for the period through December 31, 2007, and on a quarterly basis for the period
thereafter through December 31, 2008, the Borrower’s anticipated cash receipts and disbursements
during such periods, it being understood that delivery of the reports set forth in this Section 5.1(b) shall constitute satisfaction of the Borrower’s requirement to deliver projections pursuant
to Section 6.03(f) of the Credit Agreement;

     (c) no later than forty (40) days after the end of each fiscal month beginning with the month
of March 2007 (including the last month of each fiscal quarter), a copy of the Borrower’s unaudited
consolidated statements of income for such month and that portion of the fiscal year ending with
such month and its unaudited consolidated balance sheet as of the last day of such fiscal month, in
each case certified by a responsible officer of the Borrower as being complete and correct in all
material respects and fairly presenting in all material respects, subject to appropriate
qualifications relating to the Borrower’s restatement

 

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of its quarterly results to reflect, among other things, the Borrower’s method of revenue
recognition, its results of operations and cash flows and financial condition and including a
comparison to the same period (or date, in the case of balance sheets) for the prior fiscal year.

     5.2 Financial Advisor. The Borrower acknowledges and agrees that the Agent, either
directly or indirectly through its counsel, on behalf of the Lenders, may retain one financial
advisor in connection with the Borrower’s obligations under the Credit Agreement. The Borrower
agrees to pay the reasonable fees and out-of-pocket expenses of such financial advisor within
thirty (30) days of receipt of written demand (together with backup documentation supporting such
reimbursement request, redacted to preserve privileged matters). The Credit Parties and their
advisors shall cooperate with such financial advisor and shall as promptly as reasonably possible
provide to such financial advisor such information regarding the operations, business affairs and
financial condition of any Credit Party as reasonably requested by such financial advisor.

     5.3 Senior Notes Forbearance Agreement. No later than thirty (30) days after the
Effective Date, the Borrower shall deliver to the Agent (for distribution to the Lenders) a copy of
any such agreement, duly executed and delivered by the Borrower and Persons either owning or having
investment control over more than 50% in face principal amount of the Senior Notes, which agreement
shall (a) provide for the forbearance by such holders of the exercise of any rights or remedies
under the Senior Notes or the Senior Notes Indenture, including without limitation, the
acceleration of the Senior Notes, due to any default or event of default arising out of or relating
to the Notes Annual Financial Statement Default, the Sub Notes Interest Payment Default or the
Notes Quarterly Financial Statement Default, (b) be consistent with the Side Letter and (c)
otherwise be in form and substance reasonably satisfactory to the Agent (the “Senior Notes
Forbearance Agreement”).

     5.4 Subordinated Notes Forbearance Agreement. No later than thirty (30) days after
the Effective Date, the Borrower shall deliver to the Agent (for further distribution to the
Lenders) a copy of any such agreement, duly executed and delivered by the Borrower and Persons
either owning or having investment control over more than 75% in face principal amount of the
Subordinated Notes, which agreement shall (a) provide for the forbearance by such holders of the
exercise of any rights or remedies under the Subordinated Notes or the Subordinated Notes
Indenture, including without limitation, the acceleration of the Subordinated Notes, due to any
default or event of default arising out of or relating to the Notes Annual Financial Statement
Default, the Sub Notes Interest Payment Default or the Notes Quarterly Financial Statement Default,
(b) be consistent with the Side Letter and (c) otherwise be in form and substance reasonably
satisfactory to the Agent (the “Subordinated Notes Forbearance Agreement”).

     5.5 Failure to Comply. Each Credit Party agrees that any failure to perform timely,
and otherwise comply with, any of its obligations set forth in this Section 5 shall constitute an
Event of Default if such breach or default continues for five (5) days after written notice from
the Agent.

 

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     SECTION 6. REPRESENTATIONS AND WARRANTIES

     To induce the Agent and the Lenders to enter into this Agreement and forbear from taking
Enforcement Actions during the Forbearance Period, each Credit Party hereby (a) represents and
warrants to the Agent and each Lender that (i) such Credit Party has the full right, power and
authority to make, deliver and perform this Agreement and such Credit Party has taken all necessary
corporate or other action to authorize the execution, delivery and performance of this Agreement
and (ii) this Agreement constitutes legal, valid and binding obligations of such Credit Party,
enforceable against such Credit Party in accordance with the terms hereof, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally and general equitable principles (whether
considered in a proceeding in equity or at law) and (b) confirms that each of the representations
and warranties made by such Credit Party in the Credit Documents to which such Credit Party is a
party is true and correct in all material respects as of the date hereof (except to the extent that
the Known Defaults make any such representation or warranty incorrect or false), except to the
extent that any such representation or warranty expressly relates to a specific earlier date, in
which case such Credit Party hereby confirms such representation or warranty is true and correct in
all material respects as of such earlier date (except to the extent the Known Defaults make any
such representation and warranty incorrect or false).

     SECTION 7. CONDITIONS PRECEDENT TO EFFECTIVE DATE

     This Agreement shall become effective on the date (the “Effective Date”) on which each
of the following conditions precedent shall have been satisfied or waived, as determined by the
Agent and the Majority Lenders:

     (a) Forbearance Agreement. The Agent shall have received this Agreement, duly
executed and delivered by each Credit Party, the Majority Lenders and the Agent.

     (b) Fee. The Agent shall have received a payment from the Borrower, for the account
of each Lender which executes this Agreement on or before April 12, 2007, a fee which shall be
fully earned, due and payable on the Effective Date in an amount equal to .125% of the sum of such
Lender’s Term Loan Commitments and Revolving Credit Commitments on the Effective Date.

     (c) Costs, Expenses and Fees. All invoiced out-of-pocket costs and expenses earned,
due and payable to advisors to the Agent, shall have been paid by the Borrower as required by
Section 9.06 of the Credit Agreement, and all other fees earned, due and payable in connection with
the execution and delivery of this Agreement shall have been paid by the Borrower.

     (d) Side Letter. The Agent shall have received the Side Letter, duly executed and
delivered by the Agent and the Borrower.

 

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     SECTION 8. MISCELLANEOUS

     8.1 Amendments and Waivers. Neither this Agreement, nor any terms hereof, may be
amended, waived, supplemented or otherwise modified except in a writing signed by the Credit
Parties, the Agent and the Majority Lenders.

     8.2 Notices. All notices, requests and demands to or upon the respective parties
hereto shall be given in accordance with the notice provisions set forth in the Credit Documents.

     8.3 Costs and Expenses. Without limiting the obligations of any Credit Party under
the Credit Documents, the Borrower ratifies and reaffirms its reimbursement and indemnification
obligations under Section 9.06 of the Credit Agreement, including without limitation, its
obligation to pay all out-of-pocket costs and expenses, including without limitation, the fees and
disbursements of counsel, incurred by the Agent and each Lender in connection with the negotiation,
preparation, execution, delivery, administration and enforcement of this Agreement and the
transactions contemplated hereby.

     8.4 Credit Documents Remain in Effect; Successors and Assigns. Except to the extent
expressly set forth in this Agreement, all of the provisions of the Credit Agreement and the other
Credit Documents are, and shall continue to be, in full force and effect in accordance with their
respective terms, and each Credit Party shall remain obligated to comply with all of such Credit
Party’s obligations contained in each Credit Document to which such Credit Party is a party. This
Agreement shall be deemed to be a Credit Document for all purposes under and in connection with the
Credit Agreement and the other Credit Documents and shall be binding upon and inure to the benefit
of each of the parties hereto and their respective successors and assigns. This Agreement is not
intended to confer any rights or benefits on any Person other than the parties hereto and their
respective successors and assigns.

     8.5 Acknowledgement. The Agent and the Lenders party hereto hereby acknowledge and
agree that each of the following items, which were reflected by the Borrower in its submission to
the Lenders on March 5, 2007 of its forecast of sources and uses of cash for the succeeding 13
calendar weeks, as defined in Section 6.03(j) of the Credit Agreement (the “Forecast”),
does not result in a violation of Section 5.21 of the Credit Agreement, thereby causing an Event of
Default:

     (a) Cash Disbursements: Operating. Capital expenditures in the amount of $16,295,000 in the
week of March 9, 2007 did not occur. The Borrower’s basis for representing these cash
disbursements as reflected in the Forecast relates to funds drawn by the Borrower under the
Delayed-Draw Term Loan which were to be used to make such capital expenditures, a substantial
portion of which expenditures was supported by the Borrower’s issuance of purchase orders to
various vendors that were then outstanding. However, no payments had been made and no equipment or
other value had been received by the Borrower as of March 12, 2007.

     (b) Cash Receipts: Non-Operating. Receipts in the amount of $14,500,000 were projected in
the week of April 27, 2007. The Borrower intended to sell certain assets to which these proceeds
relate; however, such sale is by no means certain and the basis for representing these cash
receipts as reflected in the Forecast is supported by a

 

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discussion between the Borrower’s management and the prospective purchasers. At this point,
no obligation exists on the part of either party to consummate a transaction in the timeframe or
for the amounts projected or at all.

     8.6 Credit Party Release. Each Credit Party, in consideration of the Agent’s and the
Lender’s execution and delivery of this Agreement and for other good and valuable consideration,
the sufficiency of which is hereby acknowledged, unconditionally, freely, voluntarily and, after
consultation with counsel and becoming fully and adequately informed as to the relevant facts,
circumstances and consequences, releases, waives and forever discharges (and further agrees not to
allege, claim or pursue) any and all claims, rights, causes of action, counterclaims or defenses of
any kind whatsoever, in contract, in tort, in law or in equity, whether known or unknown, direct or
derivative, which such Credit Party or any predecessor, successor or assign might other have or may
have against any Lender, the Agent or any of such Lender’s or Agent’s present or former
subsidiaries, Affiliates, officers, directors, employees, attorneys or other representatives or
agents on account of any conduct, condition, act, omission, event, contract, liability, obligation,
demand, covenant, promise, indebtedness, claim, right, cause of action, suit, damage, defense,
circumstance or matter of any kind whatsoever which existed, arose or occurred at any time prior to
the Effective Date, except for any obligations remaining to be respectively performed by the
Lenders or the Agent as expressly set forth in this Agreement, the Credit Agreement and the other
Credit Documents.

     8.7 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or the Lenders, any right, remedy, power or privilege under
this Agreement or any other Credit Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege under this Agreement or any other
Credit Document preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges of the Agent and the
Lenders provided under this Agreement, the Credit Agreement and the other Credit Documents are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

     8.8 Counterparts. This Agreement may be executed by one or more of the parties hereto
on any number of separate counterparts (including by telecopy or electronic transmission), and all
of said counterparts taken together shall be deemed to constitute one and the same instrument.

     8.9 Further Assurances. Each Credit Party shall from time to time, upon the
reasonable request of the Agent, promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Agreement and of the rights, remedies, powers and
privileges hereunder.

     8.10 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

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     8.11 Integration. This Agreement and the other Credit Documents constitute the entire
agreement of the Credit Parties, the Agent and the Lenders concerning the subject matter hereof and
may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements.
There are no promises, undertakings, oral agreements, representations or warranties by the Credit
Parties, the Agent or the Lenders relative to the subject matter hereof not expressly set forth
herein.

     8.12 Governing Law. This Agreement and the rights and obligations of the parties
hereto under this Agreement shall be governed by, and construed and interpreted in accordance with,
the law of the State of New York.

     8.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER THEORY) AND FOR ANY COUNTERCLAIM THEREIN.

 

12

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of the date first written above.

	 	 	 	 	 
	THE BORROWER: 	BALLY TOTAL FITNESS HOLDING CORPORATION

 	 
	 	By:  	/s/ Ronald Eidell
 	 
	 	 	Name:  	Ronald Eidell 	 
	 	 	Title:  	Senior Vice President, CFO 	 
	 
	SUBSIDIARY GUARANTORS: 	BALLY FITNESS FRANCHISING, INC.

BALLY FRANCHISE RSC, INC.

BALLY FRANCHISING HOLDINGS, INC.

BALLY TOTAL FITNESS CORPORATION

BALLY TOTAL FITNESS HOLDING CORPORATION

BALLY TOTAL FITNESS INTERNATIONAL, INC.

BALLY TOTAL FITNESS OF MISSOURI, INC.

BALLY TOTAL FITNESS OF TOLEDO, INC.

BALLY REFS WEST HARTFORD, LLC

BALLY TOTAL FITNESS OF CONNECTICUT COAST, INC.

BALLY TOTAL FITNESS OF CONNECTICUT VALLEY, INC.

GREATER PHILLY 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.

BALLY TOTAL FITNESS FRANCHISING, INC.

 	 
	 	By:  	/s/ Ronald Eidell
 	 
	 	 	Name:  	Ronald Eidell 	 
	 	 	Title:  	Senior Vice President, CFO 	 

 

13

	 	 	 	 	 

	 	 	 	 	 
	THE AGENT: 	JPMORGAN CHASE BANK, N.A., as Agent and as a

Lender

 	 
	 	By:  	/s/ Douglas A. Jenks 	 
	 	 	Name:  	Douglas A. Jenks 	 
	 	 	Title:  	Managing Director 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	LENDERS: 	ANCHORAGE CROSSOVER CREDIT 

FINANCE, LTD., as Lender

	 
	 	By:  	
Anchorage Advisors, LLC, its

Investment Manager

 	 
	 	By:  	/s/ Michael Aglialoro
 	 
	 	 	Name:  	Michael Aglialoro 	 
	 	 	Title:  	Executive Vice President 	 

 

	 	 	 	 	 
	 	BOLDWATER CBNA LOAN FUNDING, LLC, 

for itself or as agent for Boldwater CFPI 

Loan Funding LLC, as Lender

 	 
	 	By:  	/s/ Richard Newcomb
 	 
	 	 	Name:  	Richard Newcomb 	 
	 	 	Title:  	Attorney-in-fact 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CANPARTNERS INVESTMENTS IV, LLC, as Lender

 	 
	 	By:  	/s/ Mitchell R. Julis
 	 
	 	 	Name:  	Mitchell R. Julis 	 
	 	 	Title:  	Authorized Signatory
	 
	 	
By: Canpartners Investments IV, LLC, a

California limited liability company 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CASTLERIGG MASTER INVESTMENTS LTD., as Lender

 	 
	 	By:  	/s/ Timothy O’Brien
 	 
	 	 	Name:  	Timothy O’Brien 	 
	 	 	Title:  	Chief Financial Officer of Sandell Asset
Management Corp., as Investment

Manager to Castlerigg Master

Investments Ltd. 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CITIGROUP FINANCIAL PRODUCTS, INC., 

as Lender

 	 
	 	By:  	/s/ Gregory W. Frenzel
 	 
	 	 	Name:  	Gregory W. Frenzel 	 
	 	 	Title:  	Managing Director 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CREDIT GENESIS CLO 2005-1 LTD., 

as Lender

 	 
	 	By:  	/s/ Jeffrey Rosenkranz
 	 
	 	 	Name:  	Jeffrey Rosenkranz 	 
	 	 	Title:  	Principal 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	FIELD POINT I, LTD., as Lender

 	 
	 	By:  	/s/ Richard Petrilli
 	 
	 	 	Name:  	Richard Petrilli 	 
	 	 	Title:  	Authorized Signatory 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	FIELD POINT IV, LTD., as Lender

 	 
	 	By:  	/s/ Richard Petrilli
 	 
	 	 	Name:  	Richard Petrilli 	 
	 	 	Title:  	Authorized Signatory 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	FITNESS INVESTORS TRUST, as Lender

	 
	 	By:  	
Wilmington Trust Company, not in its

individual capacity, but solely as owner

trustee under the Trust Agreement dated

October 23, 2006

 	 
	 	By:  	/s/ Joseph B. Feil
 	 
	 	 	Name:  	Joseph B. Feil 	 
	 	 	Title:  	Assistant Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	THE FOOTHILL GROUP, INC., as Lender

 	 
	 	By:  	/s/ Jack Salehian
 	 
	 	 	Name:  	Jack Salehian 	 
	 	 	Title:  	V.P. 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	GOLDMAN SACHS CREDIT PARTNERS, as Lender

 	 
	 	By:  	/s/ Mark DeNatale
 	 
	 	 	Name:  	Mark DeNatale 	 
	 	 	Title:  	Managing Director 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	GRAND CENTRAL ASSET TRUST, SAN SERIES, 

as Lender

 	 
	 	By:  	/s/ Erich VanRavenswaay
 	 
	 	 	Name:  	Erich VanRavenswaay 	 
	 	 	Title:  	Assistant Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	HARBOUR TOWN FUNDING LLC, as Lender

 	 
	 	By:  	/s/ M. Cristina Higgins
 	 
	 	 	Name:  	M. Cristina Higgins 	 
	 	 	Title:  	Assistant Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	MORGAN STANLEY SENIOR FUNDING, INC., as Lender

 	 
	 	By:  	/s/ Gavin Baiera
 	 
	 	 	Name:  	Gavin Baiera 	 
	 	 	Title:  	Authorized Signatory 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Q FUNDING III, L.P., as Lender

 	 
	 	By:  	Prufrock Onshore, L.P., its general partner
 	 
	 	 	 
	 	By:  	J Alfred Onshore, LLC, its general partner
 	 
	 	 	 
	 	By:  	/s/ Noel Nesser
 	 
	 	 	Name:  	Noel Nesser 	 
	 	 	Title:  	CFO 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	RED FOX FUNDING LLC, as Lender

 	 
	 	By:  	/s/ M. Cristina Higgins
 	 
	 	 	Name:  	M. Cristina Higgins 	 
	 	 	Title:  	Assistant Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Santaky 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 and Assistant Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Santaky Advisors, Inc., as Collateral Manager

for BRANDT POINT CBO 1999-1 LTD., as Lender

 	 
	 	By:  	/s/ Alan K. Halfenger
 	 
	 	 	Name:  	Alan K. Halfenger 	 
	 	 	Title:  	Chief Compliance Officer and Assistant Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Santaky 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 and Assistant Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Santaky 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 and Assistant Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Santaky 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 and Assistant Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Santaky 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 and Assistant Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	PROSPECT HARBOR CREDIT PARTNERS, LP, as Lender

 	 
	 	By:  	/s/ Alan K. Halfenger
 	 
	 	 	Name:  	Alan K. Halfenger 	 
	 	 	Title:  	Chief Compliance Officer and Assistant Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Santaky 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 and Assistant Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Santaky 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 and Assistant Secretary 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	Santaky 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 and Assistant Secretary 	 

 

 

	 	 	 	 	 

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

 	 
	 	By:  	/s/ Alan K. Halfenger
 	 
	 	 	Name:  	Alan K. Halfenger 	 
	 	 	Title:  	Chief Compliance Officer and Assistant Secretary 	 

 

 

	 	 	 	 	 

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

 	 
	 	By:  	/s/ Alan K. Halfenger
 	 
	 	 	Name:  	Alan K. Halfenger 	 
	 	 	Title:  	Chief Compliance Officer and Assistant Secretary 	 
	 

 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	TRS LEDA LLC, as Lender

 	 
	 	By:  	Deutsche Bank AG New York Branch,
its Sole Member
 	 
	 	 	 
	 	By:  	DB Services New Jersey, Inc.
 	 
	 	 	 
	 	By:  	/s/ Alice L. Wagner
 	 
	 	 	Name:  	Alice L. Wagner 	 
	 	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By:  	                    /s/ Angeline Quintane
 	 
	 	 	Name:  	Angeline Quintane 	 
	 	 	Title:  	AVP 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	WELLS FARGO FOOTHILL, LLC, as Lender

 	 
	 	By:  	/s/ Juan Barrera
 	 
	 	 	Name:  	Juan Barrera 	 
	 	 	Title:  	Vice Presidentexv10w51

 

Exhibit 10.51

Date:

Re: Modification of Employment Agreement

Dear [Employee]:

Certain modifications to the Employment Agreement by and between you and TALX Corporation, dated
                    , (“Employment Agreement”) are necessary in order for you to avoid the adverse tax
consequences and penalties associated with noncompliance with the nonqualified deferred
compensation rules under Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) and
the regulations promulgated thereunder. This letter will modify your Employment Agreement as
follows:

	1.	 	Unless your Employment Agreement specifies a fixed date for the payment of any severance
benefits, such benefits shall be paid on the date of your termination of employment from the
Company. If the severance payment is to be made over a period of time, such payments shall be
made at regular intervals coinciding with the Company’s regular payroll practice, with the
first such payment to be made with respect to the first payroll period immediately following
your termination of employment.
	 
	2.	 	In all cases in which amounts are payable upon a fixed date, payment is deemed to be made
upon the fixed date if the payment is made on such date or a later date within the same
calendar year or, if later, by the 15th day of the third calendar month following
the specified date.
	 
	3.	 	Notwithstanding anything herein to the contrary, in the event you are determined to be a
“Specified Employee” as defined in Code Section 409A and the regulations promulgated
thereunder and you become entitled to any severance payments under your Employment Agreement
due to your termination of employment for any reason other than death or disability,
commencement of such severance benefits shall, to the extent necessary to avoid adverse
consequences under Code Section 409A occur as follows:

	 	(a)	 	Any benefits otherwise payable within the first six months of your termination
of employment shall be delayed. On the first business day of the seventh month
immediately following the date of your termination of employment, payment of the
aggregate amount of the delayed cash payments shall be paid in a lump sum, plus
interest.
	 
	 	(b)	 	With respect to the continuation of any Company-paid employee benefits (or
premiums paid by the Company for similar coverage) beyond your date of termination, you
must pay the cost of such coverage for the first six (6) months following your
termination of employment. You shall be reimbursed for such amounts with interest in a
lump sum payment on the first business day of the seventh month following your
termination of employment.
	 
	 	(c)	 	Reimbursement of any out-of-pocket expenses related to outplacement services
shall be made in a lump sum on the first day of the seventh month following your
termination of employment.

 

 

Exhibit 10.51

	4.	 	Payment of any Gross-Up Payment specified in your Employment Agreement shall, subject
to Paragraph 3 above, be made as follows:

	 	(a)	 	With respect to the Gross-Up Payment for any anticipated Excise Tax calculated
at the time of your termination of employment, payment shall be made on the fifth
business day immediately following the determination of the amount of your anticipated
Excise Tax liability.
	 
	 	(b)	 	If the amount of your anticipated Excise Tax liability as determined at the
time of your termination results in a Gross-Up Payment insufficient to satisfy your
actual Excise Tax liability, payment of any additional Gross-Up Payment to reconcile
such deficiency shall be made in the third calendar year following the calendar year in
which your termination of employment occurs unless such Gross-Up Payment can be paid
within sixty (60) days after the end of the calendar year in which your termination of
employment occurs.

The Company intends for your Employment Agreement to be administered in compliance with Code
Section 409A and the regulations promulgated thereunder. Accordingly, your Employment Agreement
may be further modified to the extent necessary for you to avoid any adverse tax consequences,
retroactively if necessary. Please confirm your acceptance of these modifications to your
Employment Agreement by signing below.

TALX Corporation

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

     William W. Canfield
	 	 
	 

	 	     President and Chief Executive Officer	 	 

BY SIGNING THIS MODIFICATION OF THE EMPLOYMENT AGREEMENT, I AM ACKNOWLEDGING THAT I (A) HAVE
RECEIVED A COPY OF THIS MODIFICATION TO THE EMPLOYMENT AGREEMENT FOR REVIEW AND STUDY BEFORE
SIGNING IT; (B) HAVE READ THIS MODIFICATION TO THE EMPLOYMENT AGREEMENT CAREFULLY BEFORE SIGNING
IT; (C) HAVE HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THIS MODIFICATION TO THE EMPLOYMENT
AGREEMENT TO ASK ANY QUESTIONS; AND (D) UNDERSTAND MY RIGHTS AND OBLIGATIONS UNDER THIS
MODIFICATION TO THE EMPLOYMENT AGREEMENT. I UNDERSTAND THAT THE EMPLOYMENT AGREEMENT WHICH IS
AMENDED BY THIS MODIFICATION CONTAINS A BINDING ARBITRATION PROVISION THAT CAN BE ENFORCED BY THE
PARTIES. ACCEPTED AND AGREED THIS ___ DAY OF ________, 2007.

	 	 	 	 	 
	 

[Employee Name]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}]]