Document:

EXHIBIT 10.51

                                    GUARANTY

      GUARANTY (this "GUARANTY"), dated as of August 15, 2007, is made by TAL
INTERNATIONAL GROUP, INC., a Delaware corporation (together with its successors
and permitted assigns, the "GUARANTOR"), in favor of the Beneficiaries (as
defined below).

                                    RECITALS:

      WHEREAS, pursuant to the Credit Agreement, dated as of August 15, 2007 (as
amended, restated, modified or supplemented from time to time in accordance with
its terms, the "CREDIT AGREEMENT"), TAL International Container Corporation, a
Delaware corporation (together with its successors and permitted assigns, the
"BORROWER"), has requested from the lenders from time to time party thereto
(each, a "LENDER" and collectively, the "LENDERS"), and National City Bank, in
its capacity as administrative agent and collateral agent (the "ADMINISTRATIVE
AGENT" or the "COLLATERAL AGENT", each of the Lenders, the Administrative Agent
and the Collateral Agent , a "BENEFICIARY") a $135,000,000 revolving credit
facility, with an incremental increase option of up to $25,000,000;

      WHEREAS, in order to induce the Administrative Agent, the Collateral Agent
and the Lenders to enter into the Credit Agreement, the Guarantor will execute
and deliver this Guaranty pursuant to which such Guarantor will guaranty, among
other things, payment of all of the Obligations, as hereinafter defined; and

      WHEREAS, the Borrower is a direct Subsidiary of the Guarantor and, as
such, will receive substantial direct or indirect benefit from the transaction
described in the Credit Agreement and therefore it is in the best interest of
the Guarantor to enter into this Guaranty.

                                   AGREEMENT:

      Accordingly, the Guarantor agrees for the benefit of the Beneficiaries and
each of their successors, permitted assigns and transferees, as follows:

      1.    CERTAIN TERMS.

            (a)   Capitalized terms used herein without definition have the
respective meanings set forth in the Credit Agreement.

            (b)   "OBLIGATIONS" means any and all present and future payment
obligations and liabilities of the Borrower of every type and description to the
Beneficiaries, or any of their successors or permitted assigns, under the Credit
Agreement and the other Loan Documents, whether for principal, interest, fees,
expenses or other amounts (including attorneys' fees and expenses), in each case
whether due or not due, direct or indirect, joint and/or several, absolute or
contingent, voluntary or involuntary, liquidated or unliquidated, determined or
undetermined, now or hereafter existing, renewed or restructured, whether or not
from time to time decreased or extinguished and later increased, created or
incurred, whether or not arising after the commencement of a proceeding under
the Federal Bankruptcy Code (including post-petition interest) and whether or
not allowed or allowable as a claim in any such proceeding, and whether

or not recovery of any such obligation or liability may be barred by a statute
of limitations or such obligation or liability may otherwise be unenforceable.
All Obligations shall be conclusively presumed to have been created in reliance
on this Guaranty.

      2.    GUARANTY. The Guarantor hereby absolutely, unconditionally and
irrevocably guaranties to each of the Beneficiaries the full and punctual
payment when due of all Obligations, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, and such guaranty is
not conditional or contingent upon pursuit by any Beneficiary of any prior
action or proceeding for collection, or for any other remedies the Beneficiaries
may have, against the Borrower or any other Person. All such amounts and all
other amounts payable hereunder shall be payable on demand.

      3.    EXPENSES. The Guarantor agrees to pay to the Beneficiaries any and
all reasonable and documented costs and expenses (including reasonable and
documented attorneys' fees and expenses), that the Beneficiaries may incur in
connection with (a) the collection of all sums guarantied hereunder and (b) the
exercise or enforcement of any of the rights, powers or remedies of the
Beneficiaries under this Guaranty or applicable law.

      4.    CONSENT. The Guarantor hereby consents and agrees that the time or
place of payment of any Obligation may be exchanged or extended, in whole or in
part, to a time certain or otherwise, and may be renewed or accelerated, in
whole or in part; that any of the provisions of the Credit Agreement and other
Loan Documents may be renewed, extended, modified, increased, accelerated,
compromised, refinanced or waived; that the Borrower or any other obligor with
respect to the Obligations may be granted indulgences or released from
liability; that the insolvency, bankruptcy and/or dissolution of the Borrower,
any other obligor or of the Guarantor shall not affect the obligations hereunder
of any Guarantor; that neither the invalidity or unenforceability of any of the
Obligations shall affect the obligations hereunder of any Guarantor; that no
claim need be asserted against any trustee in bankruptcy or receiver or other
representative in the event the Borrower, any other obligor or the Guarantor is
adjudicated bankrupt or becomes insolvent; and that any property to the credit
of the Borrower, any other obligor or the Guarantor or any other party liable
for payment of any of the Obligations may be released from time to time, in
whole or in part, at, before or after the stated, extended or accelerated
maturity of such Obligations, all of which (i) may be effected without notice to
or further assent by the Guarantor and (ii) shall not affect the obligations of
the Guarantor under this Guaranty.

      5.    WAIVER. The Guarantor hereby expressly waives, to the extent
permitted by applicable law:

            (a)   Notice of acceptance of this Guaranty;

            (b)   Presentment and demand for payment of any Obligation;

            (c)   Protest and notice of dishonor or default to the Guarantor or
to any other party with respect to any Obligation or any security for any
Obligation;

            (d)   Demand for payment under this Guaranty;

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            (e)   Notice of disposition of any security for any Obligation;

            (f)   Any defense by reason of impairment of: (i) any security now
or hereafter held for any Obligation; or (ii) recourse against any party liable
for the payment of any Obligation; and

            (g)   Any other defense or counterclaim whatsoever, other than
indefeasible payment and performance of the Obligations.

      6.    GUARANTY OF PAYMENT. This Guaranty is a guaranty of payment and not
of collection. The Guarantor (a) waives any claim to marshaling of assets and
(b) waives any right to require that an action be brought against the Borrower
or any other Person prior to action against the Guarantor hereunder. The
Guarantor shall be released from all liability hereunder only upon payment in
full of all the Obligations.

      7.    BINDING EFFECT. The provisions of this Guaranty shall be binding
upon the Guarantor and its successors and assigns, and shall inure to the
benefit of each Beneficiary and its successors and permitted assigns. The
Guarantor may not assign its rights, benefits, duties and obligations under this
Guaranty without the prior written consent of the Administrative Agent.

      8.    RIGHT OF SET OFF. To the extent that the Guarantor has made payment
to such Beneficiary hereunder to any Beneficiary of all or any portion of
principal and interest required to be paid under the Credit Agreement, the full
amount of such payment shall be deducted from amounts allocable and payable to
such Beneficiary pursuant to the Credit Agreement.

      9.    LIMITATION OF GUARANTY. Any term or provision of this Guaranty or
the Credit Agreement to the contrary notwithstanding, the maximum aggregate
amount of the Obligations for which the Guarantor shall be liable shall not
exceed the maximum amount for which the Guarantor can be liable without
rendering this Guaranty voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer.

      10.   REPRESENTATIONS AND WARRANTIES. The Guarantor makes the following
representations, warranties and agreements with the Beneficiaries:

            (a)   Corporation Status. The Guarantor is a duly organized and
      validly existing corporation in good standing under the laws of the State
      of Delaware.

            (b)   Power and Authority. The Guarantor has the power and authority
      to execute, deliver and carry out the terms and provisions of this
      Guaranty and has taken all necessary corporate action to authorize the
      execution, delivery and performance of this Guaranty. The Guarantor has
      duly executed and delivered the Guaranty and the Guaranty constitutes the
      legal, valid and binding obligation of the Guarantor enforceable in
      accordance with its terms, except to the extent that the enforceability
      thereof may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws generally affecting creditors'
      rights and by equitable principles (regardless of whether enforcement is
      sought in equity or at law).

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            (c)   No Violation. Neither the execution, delivery or performance
      by the Guarantor of the Guaranty, nor compliance by the Guarantor with the
      terms and provisions thereof, nor the consummation of the transactions
      contemplated herein or therein, (i) will contravene any material provision
      of any applicable law, statute, rule or regulation, or any order, writ,
      injunction or decree of any court or governmental instrumentality, (ii)
      will conflict or be inconsistent with or result in any breach of, any of
      the terms, covenants, conditions or provisions of, or constitute a default
      under, or result in the creation or imposition of (or the obligation to
      create or impose) any Lien upon any of the property or assets of the
      Guarantor pursuant to the terms of any indenture, mortgage, deed of trust,
      loan agreement, credit agreement or any other agreement, contract or
      instrument to which the Guarantor is a party or by which it or any of its
      material property or assets are bound or to which it may be subject, or
      (iii) will violate any provision of the certificate of incorporation,
      bylaws or any other organizational document of the Guarantor.

            (d)   Litigation. There are no actions, suits, proceedings or
      investigations pending or, to the knowledge of the Guarantor, threatened
      in writing (i) with respect to this Guaranty or (ii) with respect to any
      other matter, as to which there is a reasonable possibility of an adverse
      determination and that, if adversely determined, either individually or in
      the aggregate, would reasonably be expected to have a material adverse
      effect on the Guarantor and its Subsidiaries taken as a whole.

            (e)   Governmental Approvals. No order, consent, approval, license,
      authorization or validation of, or filing, recording or registration with,
      or exemption by, any domestic or foreign governmental or public body or
      authority, or any subdivision thereof, is required to authorize, in
      respect of the Guarantor, or is required to be obtained by the Guarantor
      in connection with (i) the execution, delivery and performance by the
      Guarantor of this Guaranty or (ii) the legality, validity, binding effect
      or enforceability of this Guaranty with respect to the Guarantor.

      11.   REINSTATEMENT. This Guaranty shall remain in full force and effect
and continue to be effective or be reinstated, as the case may be, if at any
time payment or performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations or such part thereof,
whether as a "voidable preference," "fraudulent transfer," or otherwise, all as
though such payment or performance had not been made. In the event that, and to
the extent that, any payment, or any part thereof, is rescinded, reduced,
restored or returned, the Obligations shall, to the fullest extent permitted by
law, be reinstated, and shall be deemed reduced only by such amount paid and not
so rescinded, reduced, restored or returned.

      12.   SUBROGATION. After (and not before) all amounts payable under or in
respect of the Credit Agreement and the other Loan Documents and all other
Obligations have been indefeasibly paid in full and in cash and fully performed,
the Guarantor shall be subrogated to the rights of the Beneficiaries to receive
payments in respect of the Credit Agreement and the other Loan Documents and all
other Obligations, but only to the extent of amounts paid by the Guarantor under
this Guaranty.

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      13.   AMENDMENT. This Guaranty may not be modified or amended except by a
writing duly executed by the Guarantor and the Administrative Agent.

      14.   LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THIS
GUARANTY AND ALL CLAIMS AND CAUSES OF ACTION ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE GOVERNED BY, THE LAWS (OF THE STATE OF NEW YORK
(OTHER THAN CHOICE OF LAW RULES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS
OF ANY OTHER JURISDICTION).

      15.   SEVERABILITY. Wherever possible, each provision of this Guaranty
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be invalid under
such laws, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without affecting the remainder of such provision or
the remaining provisions of this Guaranty, which shall be binding and
enforceable to the fullest extent allowable by law.

      16.   WAIVER. Waiver by the Administrative Agent of a breach of this
Guaranty shall not operate as a waiver of any subsequent breach thereof.

      17.   SIGNATURES; COUNTERPARTS. Facsimile transmissions of any executed
original document and/or retransmission of any executed facsimile transmission
shall be deemed to be the same as the delivery of an executed original. At the
request of any party hereto, the other parties hereto shall confirm facsimile
transmissions by executing duplicate original documents and delivering the same
to the requesting party or parties. This Guaranty may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.

      18.   NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or
courier service and all such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by courier, be effective
when deposited in the mails, delivered to the telegraph company, cable company
or overnight courier, as the case may be, or sent by telex or telecopier, except
that notices and communications to the Administrative Agent or the Guarantor
shall not be effective until received by the Administrative Agent or the
Guarantor, as the case may be. All notices and other communications shall be in
writing and addressed as set forth in the Credit Agreement. Notices to the
Guarantor shall be made to: TAL International Group, Inc., 100 Manhattanville
Road, Purchase, New York 10577-2135, Attention: Marc A. Pearlin, Facsimile:
(914) 697-2526, or at such other addresses for notice as the Guarantor shall
last have furnished in writing to the Person giving the notice.

      19.   CONSENTS AND WAIVERS RELATING TO LEGAL PROCEEDINGS.

            (a)   THE GUARANTOR AND EACH BENEFICIARY (BY ACCEPTANCE OF RIGHTS
HEREUNDER) WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION UNDER THIS GUARANTY
OR ANY ACTION ARISING OUT

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OF THE TRANSACTIONS CONTEMPLATED HEREBY, REGARDLESS OF WHICH PARTY INITIATES
SUCH ACTION OR ACTIONS.

            (b)   Pursuant to Section 5-1402 of the New York General Obligations
Law, all actions or proceedings arising in connection with this Guaranty shall
be tried and litigated in state or Federal courts located in the Borough of
Manhattan, New York City, State of New York. THE GUARANTOR AND (BY ACCEPTANCE OF
RIGHTS HEREUNDER) EACH BENEFICIARY WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS, TO ASSERT THAT IT IS NOT SUBJECT TO THE
JURISDICTION OF SUCH COURTS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING
IS BROUGHT IN ACCORDANCE WITH THIS SECTION. Nothing contained in this clause
shall preclude the Administrative Agent from bringing any action or proceeding
arising out of or relating to this Guaranty in the courts of any place where the
Guarantor or any of its assets or the Borrower or any of its assets may be found
or located.

      20.   GUARANTY ENFORCEABLE BY ADMINISTRATIVE AGENT. Notwithstanding
anything to the contrary contained elsewhere in this Guaranty, the Beneficiaries
agree (by their acceptance of the benefits of this Guaranty) that this Guaranty
may be enforced only by the action of the Administrative Agent, in each case
acting upon the instructions of the Majority Lenders.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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      IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the
15th day of August, 2007.

                                                TAL INTERNATIONAL GROUP, INC.

                                                By: ____________________________
                                                    Name:
                                                    Title:exv10w1

 

Exhibit 10.1

RESTRUCTURING SUPPORT AGREEMENT

     This RESTRUCTURING SUPPORT AGREEMENT is made and entered into as of August 15, 2007 (the
“Agreement”) by and among (i) Bally Total Fitness Holding Corporation, a Delaware
corporation (“BTF”), and each of its affiliates that are debtors in the Chapter 11 Cases
(collectively, “Bally”), (ii) Harbinger Capital Partners Master Fund I, Ltd., Harbinger
Capital Partners Special Situations Fund L.P. (collectively, the “Investors” or “Plan
Support Parties”), (iv) each of the holders identified on Exhibit A hereto (each, a
“Consenting Subordinated Noteholder”) of Subordinated Notes, including Tennenbaum Capital
Partners, LLC, and (v) each of the holders identified on Exhibit B hereto (each, a
“Consenting Senior Noteholder”), who in the aggregate hold in excess of a majority of the
Senior Notes. Bally, the Plan Support Parties, the Consenting Subordinated Noteholders, and the
Consenting Senior Noteholders shall hereinafter be referred to as the “Parties.”

W
H E R E A S :

     A. On July 31, 2007 (the “Petition Date”), BTF and certain of its Affiliates filed
chapter 11 petitions under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101-1330
(as amended, the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”) in order to effectuate a financial and
corporate restructuring of Bally (such chapter 11 cases, as more particularly defined in the
Amended Plan, the “Chapter 11 Cases”).

     B. Bally, the Consenting Subordinated Noteholders and the then-holders of a majority in
principal amount of the Senior Notes are parties to that certain Restructuring Support Agreement
dated as of June 15, 2007, (the “Prior Noteholder RSA”), pursuant to which each of the
Consenting Subordinated Holders and the Senior Note holders signatory thereto agreed to vote all
Senior Notes and/or Subordinated Notes beneficially owned by it or for which it is the nominee,
investment manager, or advisor for beneficial holders thereof in favor of a joint prepackaged plan
of reorganization described therein (the “Original Plan”), which plan of reorganization was
filed with the Bankruptcy Court on the Petition Date.

     C. Section 5 of the Prior Noteholder RSA entitled Bally to solicit and consummate any higher
and better Alternative Transaction (as defined in the Prior Noteholder RSA).

     D. Subsequently, and in accordance with the applicable provisions of the Prior Noteholder RSA,
Bally determined to amend and restate the Original Plan on the terms and conditions set forth in
the form of the First Amended Joint Prepackaged Plan of Reorganization, including all exhibits and
schedules thereto, attached hereto as Exhibit C (as the same may be modified from time to time in
accordance with the provisions hereof, thereof, the Investment Agreement, and the Subscription and
Backstop Purchase Agreement, the “Amended Plan”), which Amended Plan is based on either (i)
equity financing from the Investors or (ii) debt financing from the Consenting Subordinated
Noteholders (or Affiliates thereof) and/or other applicable creditors. The Amended Plan provides
the same or better treatment of the claims of each class of creditors and equity holders of Bally,
and the Parties hereto believe that the modified treatment reflected in the

 

 

Amended Plan is not adverse as compared with the Original Plan or the term sheet attached to
the Prior Noteholder RSA..

     E. In furtherance of the Amended Plan and the restructuring contemplated therein (the
“Restructuring”), concurrently with this Agreement, Bally and the Investors are entering
into that certain Investment Agreement (as amended, restated, supplemented or otherwise modified
from time to time, the “Investment Agreement”) setting forth, among other things, the terms
of the Investors’ commitment to make capital contributions to the reorganized BTF as contemplated
by the Amended Plan. The Parties’ obligations under the Investment Agreement are subject to
Bankruptcy Court approval.

     F. Bally has filed (i) a motion for an order authorizing Bally to enter into this Agreement
and the Investment Agreement and approving the break-up fee and expense provisions included in the
Investment Agreement (the “Approval Motion”), (ii) a motion for an order authorizing Bally
pursuant to Section 1127(a) of the Bankruptcy Code and Bankruptcy Rule 3019 (the “Section
1127(a) Motion”) to modify their Original Plan in the form of the Amended Plan and finding that
the Amended Plan does not adversely affect any class of creditors whose votes were solicited for
the Original Plan and that the Amended Plan is deemed accepted by all creditors who have previously
accepted the Original Plan, and (iii) a motion for an order authorizing Bally to assume the Prior
Noteholder RSA (the “Assumption Motion”).

     G. Subject to the terms and conditions set forth herein (including, without limitation, the
Bankruptcy Court’s entry of orders granting the Approval Motion and the Section 1127(a) Motion),
each of the Consenting Subordinated Noteholders and the Consenting Senior Noteholders agrees that
(i) the modifications reflected in the Amended Plan do not “adversely affect,” within the meaning
of Bankruptcy Rule 3019, the treatment of its claims as provided in the Original Plan, and (ii) its
prior vote in favor of the Original Plan shall be deemed to be a vote in favor of the Amended Plan.

     H. Subject to the terms and conditions set forth herein, all Parties agree that they have no
objection to confirmation of the Amended Plan without resolicitation of votes from any class of
creditors under Bankruptcy Rule 3019 or Section 1127 of the Bankruptcy Code.

     I. The Parties desire to enter into this Agreement to further implement the Amended Plan and
the Investment Agreement. Upon the effectiveness of this Agreement, this Agreement shall supersede
in its entirety the Prior Noteholder RSA.

     J. The effectiveness of the Investment Agreement is conditioned upon the execution and
delivery of this Agreement, which in turn is conditioned upon the entry of an order of the
Bankruptcy Court approving the Parties’ execution and delivery of, and performance under, this
Agreement.

 

 

     NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and for
other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each
Party, intending to be legally bound hereby, agrees as follows:

1. Definitions. Capitalized terms used but not defined herein shall have the meaning
ascribed to them in the Appendix to this Agreement.

2. Agreement Effective Date. This Agreement shall be effective at 12:01 a.m. prevailing
Eastern Time on the date on which the following conditions have been satisfied (the “Agreement
Effective Date”): (a) all of the Parties shall have duly executed and delivered this Agreement;
(b) the Investment Agreement has been duly executed by all of the parties thereto, and (c) on or
before August 31, 2007, the Bankruptcy Court shall have entered an order, in form and substance
reasonably satisfactory to the Parties hereto, granting the Approval Motion (the “Approval
Order”). The effectiveness of this Agreement shall not be conditioned upon the entry of any
order granting the Assumption Motion or the Section 1127(a) Motion.

3. Commitment of Plan Support Parties. Subject to (i) the occurrence of the Agreement
Effective Date, but prior to the occurrence of the Termination Date (if applicable), and (ii)
delivery and review of the Definitive Documents, including, but not limited to, the Amended Plan,
and so long as the Definitive Documents are consistent with the terms of the Restructuring as set
forth in the Amended Plan (in the form attached to the Agreement), each Plan Support Party shall:

(a) not (i) object, on any grounds, to confirmation of the Amended Plan (whether such
Amended Plan is consummated on the basis of the satisfaction of the Harbinger Investment
Effective Date Condition or the Backstop Rights Offering Effective Date Condition), except
to the extent that the terms of the Amended Plan to be confirmed are materially inconsistent
with the terms contained in the Amended Plan (in form attached to this Agreement), or (ii)
directly or indirectly seek, solicit, facilitate, support or encourage (x) any objection to
the Amended Plan (whether such Amended Plan is consummated on the basis of the satisfaction
of the Harbinger Investment Effective Date Condition or the Backstop Rights Offering
Effective Date Condition), or (y) any Alternative Restructuring Proposal or any other
transaction involving the sale or other disposition of all or substantially all of the
Debtors’ assets;

(b) not take any other action (including, without limitation, initiating any legal
proceeding) that is inconsistent with, or that would delay consummation of, the transactions
embodied in the Amended Plan and the Definitive Documents; and

(c) not otherwise fail to take any action, which inaction impedes or delays consummation of
the Restructuring and the transactions contemplated by the Amended Plan and the Definitive
Documents.

4. Commitment of Consenting Subordinated Noteholders. Subject to (i) the occurrence of the
Agreement Effective Date, but prior to the occurrence of the Termination Date (if applicable), and
(ii) delivery and review of the Definitive Documents, including, but not limited to, the Amended
Plan, and so long as the Definitive Documents are consistent with the terms of the Restructuring as
set forth in the Amended Plan (in the form attached to the Agreement), each of the Consenting

 

 

Subordinated Noteholders (on behalf of themselves and their Affiliates solely in their capacity as
Consenting Subordinated Noteholders)):

(a) hereby (i) consent to the modifications to the Original Plan as reflected in the Amended
Plan, and (ii) agree that its prior vote in favor the Original Plan shall be deemed to be a
vote in favor of the Amended Plan;

(b) shall not withdraw or revoke its vote in favor of the Amended Plan;

(c) shall not (i) object, on any grounds, to confirmation of the Amended Plan (whether such
Amended Plan is consummated on the basis of the satisfaction of the Harbinger Investment
Effective Date Condition or the Backstop Rights Offering Effective Date Condition), except
to the extent that the terms of the Amended Plan to be confirmed are materially inconsistent
with the terms contained in the Amended Plan (in the form attached to this Agreement), which
shall include, but not be limited to, the treatment of the Subordinated Notes, or (ii)
directly or indirectly seek, solicit, support or encourage (x) any objection to the Amended
Plan (whether such Amended Plan is consummated on the basis of the satisfaction of the
Harbinger Investment Effective Date Condition or the Backstop Rights Offering Effective Date
Condition), or (y) any Alternative Restructuring Proposal or any other transaction involving
the sale or other disposition of all or substantially all of the Debtors’ assets; and

(d) shall not take any other action (including, without limitation, initiating any legal
proceeding) that is inconsistent with, or that would delay consummation of, the transactions
embodied in the Amended Plan and the Definitive Documents.

5. Commitment of Consenting Senior Noteholders. Subject to (i) the occurrence of the
Agreement Effective Date, but prior to the occurrence of the Termination Date (if applicable), and
(ii) delivery and review of the Definitive Documents, including, but not limited to, the Amended
Plan, and so long as the Definitive Documents are consistent with the terms of the Restructuring as
set forth in the Amended Plan (in the form attached to the Agreement) , each of the
Consenting Senior Noteholders (on behalf of themselves and their Affiliates):

(a) hereby (i) consent to the modifications to the Original Plan as reflected in the Amended
Plan, and (ii) agree that its prior vote in favor the Original Plan shall be deemed to be a
vote in favor of the Amended Plan;

(b) shall not withdraw or revoke its vote in favor of the Amended Plan;

(c) shall not (i) object, on any grounds, to confirmation of the Amended Plan (whether such
Amended Plan is consummated on the basis of the satisfaction of the Harbinger Investment
Effective Date Condition or the Backstop Rights Offering Effective Date Condition), except
to the extent that the terms of the Amended Plan to be confirmed are materially inconsistent
with the terms contained in the Amended Plan (in the form attached to this Agreement), which
shall include, but not be limited to, the treatment of the Senior Notes, or (ii) directly or
indirectly seek, solicit, support or encourage (x) any objection to the Amended Plan
(whether such Amended Plan is consummated on the basis of the satisfaction of the Harbinger
Investment Effective Date Condition or the Backstop Rights Offering

 

 

Effective Date Condition), (y) any Alternative Restructuring Proposal or any other
transaction involving the sale or other disposition of all or substantially all of the
Debtors’ assets; and

(d) shall not take any other action, including, without limitation, initiating any legal
proceeding that is inconsistent with, or that would delay consummation of, the transactions
embodied in the Amended Plan and the Definitive Documents.

6. Bally Commitment. Subject to the provisions of the Investment Agreement and the
Subscription and Backstop Purchase Agreement, Bally shall use its commercially reasonable best
efforts to (i) support and complete the transactions contemplated by the Amended Plan and the
Definitive Documents, (ii) do all things reasonably necessary and appropriate in furtherance of the
transactions contemplated by the Amended Plan and the Definitive Documents, including, without
limitation (x) taking all steps reasonably necessary and desirable to obtain an order of the
Bankruptcy Court confirming the Amended Plan on or before September 20, 2007, and (y) taking all
steps reasonably necessary and desirable to cause the effective date of the Amended Plan to occur
on or before the Applicable Outside Date, (iii) obtain any and all required regulatory and/or
third-party approvals for the transactions contemplated by the Amended Plan and the Definitive
Documents, (iv) not take any action that is inconsistent with, or is intended or is reasonably
likely to interfere with or impede or delay consummation of, the Restructuring and the transactions
contemplated by the Amended Plan and the Definitive Documents and (v) not otherwise fail to take
any action, which inaction impedes or delays consummation of, the Restructuring and the
transactions contemplated by the Amended Plan and the Definitive Documents. If the Harbinger
Investment Effective Date Condition is not satisfied by the Applicable Outside Date, the Debtors
shall remain obligated to consummate the Amended Plan on the basis of the $90 million Rights
Offering so long as the Backstop Rights Offering Effective Date Condition has been or will be
concurrently satisfied. Bally further agrees that (1) the Amended Plan may not be modified,
revised, or otherwise changed in any manner with respect to the treatment of the Senior Notes or
Subordinated Notes thereunder without the prior written consent of the Consenting Senior
Noteholders or Consenting Subordinated Noteholders, respectively, and (2) the Amended Plan and the
Investment Agreement may not be modified, revised, or otherwise changed or waived in any manner
with respect to any material term without the prior written consent of the Consenting Senior
Noteholders and the Consenting Subordinated Noteholders, which consent shall not be unreasonably
withheld.

7. Termination.

     (a) This Agreement may be terminated:

	 	i.	 	by any Plan Support Party, upon (x) the termination of the Investment
Agreement pursuant to Section 8.1(a), 8.1(b)(i), 8.1(b)(ii), 8.1(b)(v)(C),
8.1(b)(vi) (but only to the extent the conditions described therein prevent the
satisfaction of both the Harbinger Investment Condition Effective Date and the
Backstop Rights Offering Effective Date Condition), or 8.1(b)(viii) thereof or (y)
the vacatur, reversal or material modification, on appeal or otherwise, of the
Approval Order;

 

 

	 	ii.	 	by any Consenting Subordinated Noteholder upon (x) the termination of
the Subscription and Backstop Purchase Agreement in accordance with the provisions
thereof, but only if any Plan Support Party has previously terminated this
Agreement in accordance with the provisions hereof, or (y) the vacatur, reversal or
material modification, on appeal or otherwise, of the Approval Order;
	 
	 	iii.	 	by Bally upon (x) the termination of the Investment Agreement pursuant
to Section 8.1(a) or 8.1(c) thereof, (y) the termination of the Subscription and
Backstop Purchase Agreement by Bally in accordance with the provisions thereof, but
only if the Investment Agreement is no longer then in effect, or (z) the vacatur,
reversal or material modification, on appeal or otherwise, of the Approval Order;
	 
	 	iv.	 	automatically, without any notice by any Party, upon the termination of
both the Investment Agreement and the Subscription and Backstop Purchase Agreement
in accordance with their respective terms;
	 
	 	v.	 	by any Party, if the Bankruptcy Court enters an order, in form and
substance reasonably satisfactory to the Parties hereto, granting the Section
1127(a) Motion (the “Section 1127(a) Order”) and the effective date of the
Plan does not occur by 11:59 p.m. prevailing Eastern Time on October 15, 2007;
	 
	 	vi.	 	by any Party, if the Bankruptcy Court does not enter the Section 1127
Order and the effective date of the Plan does not occur by 11:59 p.m. prevailing
Eastern Time on November 30, 2007;
	 
	 	vii.	 	by any Party other than Bally, if Bally unilaterally (1) withdraws the
Plan, (2) moves to voluntarily dismiss any of the Chapter 11 Cases, (3) moves for
conversion of any of the Chapter 11 Cases to Chapter 7 of the Bankruptcy Code, or
(4) moves for appointment of an examiner with expanded powers pursuant to Section
1104 of the Bankruptcy Code in any of the Chapter 11 Cases;
	 
	 	viii.	 	by any Party, if (1) a trustee or an examiner with expanded powers is
appointed in any of the Chapter 11 Cases, (2) any of the Chapter 11 Cases is
converted to a case under Chapter 7 of the Bankruptcy Code, or (3) Bally’s
exclusive right to file a Chapter 11 plan pursuant to section 1121 of the
Bankruptcy Code shall have terminated;
	 
	 	ix.	 	by the Consenting Subordinated Noteholders, if the Subscription and
Backstop Purchase Agreement is terminated, waived, or amended in any material
respect and for any reason during the Chapter 11 Cases; or
	 
	 	x.	 	by any Party other than Bally, if there shall be a breach by Bally of
any material representation, warranty, covenant, or agreement contained in this
Agreement, including, but not limited to, Section 6 of this Agreement, which breach
has not been cured by the earlier of (1) five Business Days after the giving of
written notice by any Consenting Senior Noteholder or any Consenting Subordinated
Noteholder to Bally of such breach and (2) the Applicable Outside Date.

 

 

     (b) The date on which any Party delivers a notice to the other Parties of the termination of
this Agreement pursuant to the immediately preceding sentence, or, in the case of clause (iv) of
the immediately preceding sentence, the date of the termination event described therein, shall be
referred to as the “Termination Date.”

     (c) In the event this Agreement is terminated by Bally in accordance with this (a)(iii)(x) of
this Section, then this Agreement shall be terminated as between the Plan Support Parties, on the
one hand, and Bally, the Consenting Subordinated Noteholders, and the Consenting Senior
Noteholders, on the other hand, but shall remain in effect and be binding as between Bally, the
Consenting Subordinated Noteholders, and the Consenting Senior Noteholders. In the event this
Agreement is terminated by any Party in accordance with this Section, then this Agreement shall
remain in effect and be binding as between and among the Parties that have not terminated this
Agreement, subject to the right of such Parties to terminate this Agreement in accordance with this
Section 7. To the extent this Agreement becomes no longer binding on the Plan Support Parties but
remains binding as between Bally, the Consenting Subordinated Noteholders, and the Consenting
Senior Noteholders, then Bally shall remain obligated to consummate the Amended Plan if and to the
extent the Backstop Rights Offering Effective Date Condition is satisfied.

8. Transfer of Common Stock, Subordinated Notes, Senior Notes, or Other Claims. If,
following execution of this Agreement by a Plan Support Party, Consenting Subordinated Noteholder,
or Consenting Senior Noteholder, such Plan Support Party, Consenting Subordinated Noteholder, or
Consenting Senior Noteholder hypothecates, pledges, conveys, transfers, assigns or sells
(collectively, a “Transfer”) all or a part of the Common Stock, Subordinated Notes, Senior
Notes, or any other claim held by such Plan Support Party, Consenting Subordinated Noteholder, or
Consenting Senior Noteholder to any Person (each such Person, a “Transferee”), such
Transferee must, as a condition precedent to the settlement of such Transfer, execute an assumption
in substantially the form set forth hereto as Exhibit D (the “Assumption
Agreement”). To the maximum extent permitted by applicable law, any Transfer that is made in
violation of the immediately preceding sentence shall be null and void. A Plan Support Party,
Consenting Subordinated Noteholder, or Consenting Senior Noteholder shall provide to Bally and
counsel to the Plan Support Parties and the Ad Hoc Noteholder Committee Counsel (as defined below),
a copy of the executed Assumption Agreement within three Business Days of the execution of an
agreement (or trade confirmation) in respect of such Transfer.

9. Plan Support Party Representations. Each Plan Support Party severally and not jointly
represents and warrants to each other Party that:

(a) as of the date of this Agreement, it is the beneficial owner of the face amount of the
Common Stock, or is the nominee, investment manager or advisor for beneficial holders of the
Common Stock, as such Plan Support Party has represented in writing to counsel for Bally,
which amount Bally and each Plan Support Party understands and acknowledges is proprietary
and confidential to such Plan Support Party;

(b) other than pursuant to this Agreement, such Common Stock is free and clear of any pledge,
lien, security interest, charge, claim, equity, option, proxy, voting restriction, right of
first refusal or other limitation on disposition or encumbrances of any kind, that would

 

 

adversely affect in any way such Plan Support Party’s performance of its obligations
contained in this Agreement at the time such obligations are required to be performed; and

(c) as of the date of this Agreement, it is not aware of any event that, due to any fiduciary
or similar duty to any other person, would prevent it from taking any action required of it
under this Agreement.

10. Consenting Subordinated Noteholder Representations. Each Consenting Subordinated
Noteholder severally and not jointly represents and warrants to each of Bally, the Plan Support
Parties, and the Consenting Senior Noteholders that:

(a) as of the date of this Agreement, it is the beneficial owner of the face amount of the
Subordinated Notes, or is the nominee, investment manager or advisor for beneficial holders
of the Subordinated Notes, as such Consenting Subordinated Noteholder has represented in
writing to counsel for the ad hoc committee of holders of Senior Notes and Subordinated Notes
(“Ad Hoc Noteholder Committee Counsel”), which amount Bally and each Plan Support
Party understands and acknowledges is proprietary and confidential to such Consenting
Subordinated Noteholder;

(b) other than pursuant to this Agreement, such Subordinated Notes are free and clear of any
pledge, lien, security interest, charge, claim, equity, option, proxy, voting restriction,
right of first refusal or other limitation on disposition or encumbrances of any kind, that
would adversely affect in any way such Consenting Subordinated Noteholder’s performance of
its obligations contained in this Agreement at the time such obligations are required to be
performed; and

(c) as of the date of this Agreement, it is not aware of any event that, due to any fiduciary
or similar duty to any other Person, would prevent it from taking any action required of it
under this Agreement.

11. Consenting Senior Noteholder Representations. Each Consenting Senior Noteholder
severally and not jointly represents and warrants to each of Bally, the Plan Support Parties, and
the Consenting Subordinated Noteholders that:

a) as of the date of this Agreement, it is the beneficial owner of the face amount
of the Senior Notes, or is the nominee, investment manager or advisor for beneficial
holders of the Senior Notes, as such Consenting Senior Noteholder has represented in
writing to the Ad Hoc Noteholder Committee Counsel, which amount Bally and each Plan
Support Party understands and acknowledges is proprietary and confidential to such
Consenting Senior Noteholder;

b) other than pursuant to this Agreement, such Senior Notes are free and clear of
any pledge, lien, security interest, charge, claim, equity, option, proxy, voting
restriction, right of first refusal or other limitation on disposition or encumbrances
of any kind (other than standard restrictions or encumbrances with respect to prime
brokerage accounts), that would adversely affect in any way such Consenting Senior
Noteholder’s performance of its obligations contained in this Agreement at the time such
obligations are required to be performed; and

 

 

c) as of the date of this Agreement, it is not aware of any event that, due to any
fiduciary or similar duty to any other Person, would prevent it from taking any action
required of it under this Agreement.

12. Service on Official Committee. Notwithstanding anything herein to the contrary,
if a Consenting Subordinated Noteholder or Consenting Senior Noteholder is appointed to and serves
on an official committee in the Chapter 11 Cases, the terms of this Agreement shall not be
construed to limit such Consenting Subordinated Noteholder’s or Consenting Senior Noteholder’s
exercise of its fiduciary duties in its role as a member of such committee, and any exercise of
such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement;
provided, however, that serving as a member of such committee shall not relieve the
Consenting Subordinated Noteholder or Consenting Senior Noteholder of any obligations to maintain
its vote in favor of the Amended Plan; provided, further, that nothing in this
Agreement shall be construed as requiring any Consenting Subordinated Noteholder or Consenting
Senior Noteholder to serve on any official committee in the Chapter 11 Cases.

13. The Subscription and Backstop Purchase Agreement. Each of the Consenting Subordinated
Noteholders agrees that any Backstop Commitment Fee (as defined in the Subscription and Backstop
Purchase Agreement) owing to them shall be deferred and paid until the earlier of the effective
date of the Amended Plan or the date of termination of this Agreement. In addition, Bally and the
Consenting Subordinated Noteholders each agree that (i) the definition of Restructuring Support
Agreement in the Subscription and Backstop Purchase Agreement is hereby amended to mean this
Agreement, and (ii) the entry into and the effectiveness of this Agreement shall neither violate
nor constitute material breaches of Sections 2.3(c), 2.3(d), 6(a), 7(a), or 8.10(d) of the
Subscription and Backstop Purchase Agreement. Moreover, Section 2.3(d) of the Subscription and
Backstop Purchase Agreement is hereby amended and restated as follows:

“(d) Notwithstanding the terms of Section 2.3(c), (i) if
the Plan is consummated on the basis of the satisfaction of the
Backstop Rights Offering Effective Date Condition (as defined in the
Plan), then upon the occurrence of the Effective Date of the Plan,
each Backstop Provider’s Backstop Commitment Fee will be automatically
reduced by an amount equal to 4.0% of its Subscription Amount, and
(ii) if the Plan is consummated on the basis of the satisfaction of
the Harbinger Investment Offering Effective Date Condition (as defined
in the Plan), then upon the occurrence of the Effective Date of the
Plan, each Backstop Provider’s Commitment Fee shall be paid in full
without reduction. Subject to Section 2.3(c), this Agreement
shall terminate and the Backstop Commitment Fee shall automatically
become due and payable to each Backstop Provider that is not in
material default under this Agreement or the Restructuring Support
Agreement upon the earlier of the Effective Date or the termination of
the Restructuring Support Agreement. If the Backstop Commitment Fee
becomes payable, but the Plan is not consummated, the Company shall
pay the Backstop Commitment Fee to each Backstop Provider in cash as
an administrative expense under Section 503 of the Bankruptcy
Code.”

 

 

Except as otherwise set forth in this Section, the Subscription and Backstop Purchase
Agreement shall remain in full force and effect.

14. Cooperation. Bally shall, except (a) in an emergency where it is not reasonably
practicable or (b) upon consent of counsel to the Plan Support Parties and the Ad Hoc Noteholder
Committee Counsel, provide draft copies of all motions or applications and other documents Bally
intends to file with the Bankruptcy Court to counsel for the Plan Support Parties and the Ad Hoc
Noteholder Committee Counsel no later than three Business Days prior to the date when Bally intends
to file any such document and shall consult in good faith with counsel to the Plan Support Parties
and the Ad Hoc Noteholder Committee Counsel regarding the form and substance of any such proposed
filing with the Bankruptcy Court.

15. Party Representations. Each Party represents to each other Party that, as of the date
of this Agreement, such Party is duly organized, validly existing, and in good standing under the
laws of the state of its organization, and has all requisite corporate, partnership, or limited
liability company power and authority to enter into this Agreement and to carry out the
transactions contemplated by, and perform its respective obligations under, this Agreement.

16. Entire Agreement. This Agreement, including schedules and annexes, constitutes the
entire agreement of the Parties with respect to the subject matter of this Agreement, and
supersedes all other prior negotiations, agreements and understandings, whether written or oral,
among the Parties with respect to the subject matter of this Agreement; provided,
however, that any confidentiality agreement executed by any Plan Support Party or any
Consenting Subordinated Noteholder shall survive this Agreement and shall continue to be in full
force and effect, in accordance with the terms thereof, irrespective of the terms hereof;
provided, further, that the Parties shall enter into various definitive documents
upon the effective date of the Amended Plan to give effect to the transactions contemplated in this
Agreement.

17. Survival of Agreement. Each of the Parties acknowledges and agrees that upon entry of
the Approval Order, (a) the rights granted in this Agreement are enforceable by each signatory
hereto without further approval of the Bankruptcy Court, (b) the exercise of such rights will not
violate the automatic stay provisions of the Bankruptcy Code and (c) Bally hereby waives its right
to assert a contrary position in the Bally bankruptcy cases, if any, with respect to the foregoing.

18. Acquisition of Additional Common Stock, Subordinated Notes, or Senior Notes. This
Agreement shall in no way be construed to preclude any Plan Support Party, Consenting Subordinated
Noteholders, or Consenting Senior Noteholder from acquiring additional Common Stock, Subordinated
Notes, or Senior Notes, respectively; provided, however, that any such additional
Common Stock, Subordinated Notes, or Senior Notes automatically shall be deemed to be subject to
the terms of this Agreement. Parties shall notify counsel for the Plan Support Parties and the Ad
Hoc Noteholder Committee Counsel, in writing, of any Common Stock, Subordinated Notes, or Senior
Notes acquired by it within three Business Days of the execution of an agreement (or trade
confirmation) in respect of such acquisition.

19. [Intentionally Omitted]

 

 

20. Waiver. If the transactions contemplated herein are not consummated, or following the
occurrence of the Termination Date, if applicable, nothing shall be construed herein as a waiver by
any Party of any or all of such Party’s rights and the Parties expressly reserve any and all of
their respective rights. Pursuant to Federal Rule of Evidence 408 and any other applicable rules
of evidence, this Agreement and all negotiations relating hereto shall not be admissible into
evidence in any proceeding other than a proceeding to enforce its terms.

21. Counterparts. This Agreement may be executed in one or more counterparts, each of
which, when so executed, shall constitute the same instrument and the counterparts may be delivered
by facsimile transmission or by electronic mail in portable document format (.pdf).

22. Amendments. Except as otherwise provided herein, this Agreement may not be modified,
amended or supplemented without prior written consent of Bally, the Consenting Subordinated
Noteholders, the Consenting Senior Noteholders, and each Plan Support Party.

23. Headings. The headings of the sections, paragraphs, subsections and subparagraphs of
this Agreement are inserted for convenience only and shall not affect the interpretation hereof.

24. Specific Performance. It is understood and agreed by the Parties that money damages
would be an insufficient remedy for any breach of this Agreement by any Party and each
non-breaching Party shall be entitled to specific performance and injunctive or other equitable
relief as a remedy of any such breach, including, without limitation, an order of the Bankruptcy
Court or other court of competent jurisdiction requiring any Party to comply promptly with any of
its obligations hereunder.

25. Relationship Among Parties. Notwithstanding anything herein to the contrary, the duties
and obligations of the Plan Support Parties, the Consenting Subordinated Noteholders, and the
Consenting Senior Noteholders under this Agreement shall be several, not joint. In this regard, it
is understood and agreed that any Plan Support Party, Consenting Subordinated Noteholder, or
Consenting Senior Noteholders may, subject to compliance with paragraphs 7 and 16 of this
Agreement, trade in the Common Stock, the Subordinated Notes, the Senior Notes, or other debt or
equity securities of Bally and its Subsidiaries without the consent of any other Party hereto,
subject to applicable securities laws and orders of the Bankruptcy Court. No Party shall have any
responsibility for any such trading by any other Party by virtue of this Agreement. No prior
history, pattern or practice of sharing confidences among or between Plan Support Parties or among
or between the Consenting Subordinated Noteholders or among or between the Consenting Senior
Noteholders shall in any way affect or negate this understanding and agreement.

26. Governing Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to such state’s choice of law provisions which
would require the application of the law of any other jurisdiction. By its execution and delivery
of this Agreement, each of the Parties irrevocably and unconditionally agrees for itself that any
legal action, suit or proceeding against it with respect to any matter arising under or arising out
of or in connection with this Agreement or for recognition or enforcement of any judgment rendered
in any such action, suit or proceeding, may be brought in the United States District Court for the
Southern District of New York, and by execution and delivery of this Agreement, each of the Parties
irrevocably accepts and submits itself to the exclusive jurisdiction of such court, generally and

 

 

unconditionally, with respect to any such action, suit or proceeding. Notwithstanding the
foregoing consent to New York jurisdiction, if the Chapter 11 Cases are commenced, each Party
agrees that the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or
in connection with this Agreement.

27. Notices. All notices, requests and other communications hereunder must be in writing
and will be deemed to have been duly given only if delivered personally or by facsimile or
electronic transmission or mailed (first class postage prepaid) to the parties at the following
addresses, email addresses, or facsimile numbers:

     If to a Plan Support Party, to the address set forth beneath such Plan Support Party’s name
below, with a copy to:

Kasowitz, Benson, Torres & Friedman LLP

1633 Broadway

New York, New York 10019

Attention: Andrew K. Glenn (aglenn@kasowitz.com)

Tel: (212) 507-1700

Fax: (212) 507-1800

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, New York 10036

Attn: Shari K. Krouner, Esq. (skrouner@kramerlevin.com)

Tel: (212) 715-9222

Fax: (212) 715-8000

     If to a Consenting Subordinated Noteholder or Consenting Senior Noteholder, to the address set
forth beneath such Consenting Subordinated Noteholder’s or Consenting Senior Noteholder’s name
below, with a copy to:

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, NY 10022

Attn: Daniel Golden, Esq. (dgolden@akingump.com)

Attn: David Botter, Esq. (dbotter@akingump.com)

Facsimile: (212) 872-1002

If to Bally:

Bally Total Fitness Holding Corporation

8700 West Bryn Mawr Avenue

Chicago, IL 60631

Attn: Marc D. Bassewitz

Facsimile: (773) 399-0126

with a copy to:

 

 

Latham & Watkins LLP

Sears Tower, Suite 5800

233 South Wacker Drive

Chicago, IL 60606

Attn: Mark D. Gerstein, Esq. (mark.gerstein@lw.com)

Attn: David S. Heller, Esq. (david.heller@lw.com)

Facsimile: (312) 993-9767

28. No Third-Party Beneficiaries. The terms and provisions of this Agreement are intended
solely for the benefit of the Parties hereto and their respective successors and permitted assigns,
and it is not the intention of the Parties to confer third-party beneficiary rights upon any other
person.

29. Not a Solicitation. This Agreement does not constitute (a) an offer for the purchase,
sale, exchange, hypothecation, or other transfer of securities for purposes of the Securities Act
of 1933 and the Securities Exchange Act of 1934, or (b) a solicitation of votes on a chapter 11
plan of reorganization for purposes of the Bankruptcy Code.

30. Prior Noteholder RSA. This Agreement shall supercede the Prior Noteholder RSA, and
accordingly, upon the effectiveness of this Agreement, the Prior Noteholder RSA shall no longer be
effective.

31. Confidentiality. Each Party to this Agreement hereby agrees to keep confidential the
names of the Consenting Senior Noteholders, except to the extent required by applicable law or at
the direction of the Bankruptcy Court.

[Signature Pages Follow]

 

 

     IN WITNESS WHEREOF, Bally, the Plan Support Parties, the Consenting Subordinated
Noteholders, and the Consenting Senior Noteholders have executed this Agreement as of the date
first written above.

	 	 	 	 	 
	 	BALLY TOTAL FITNESS HOLDING CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	On behalf of the Subsidiary Guarantors listed on Exhibit E hereto:

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

The undersigned agrees to this Restructuring Support Agreement and to become a Consenting
Subordinated Noteholder.

	 	 	 	 	 	 	 
	 	 	CONSENTING SUBORDINATED NOTEHOLDER:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 
	 	 
	 

	 	Name:
	 

	 	 
	 

	 	Title:	 	 	 
	 

	 	Address: 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Facsimile No.:	 	 
	 

	 	 	 	Attn.:	 	 

 

 

The undersigned agrees to this Restructuring Support Agreement and to become a Consenting Senior
Noteholder.

	 	 	 	 	 	 	 
	 	 	CONSENTING SENIOR NOTEHOLDER:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 

	 	 
	 

	 	Name:
	 

	 	 
	 

	 	Title:	 	 	 
	 

	 	Address: 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Facsimile No.:	 	 
	 

	 	 	 	Attn.:	 	 

 

 

	 	 	 	 	 	 	 
	 	 	PLAN SUPPORT PARTIES:	 	 
	 
	 	 	 	 	 	 
	 	 	HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	Harbinger Capital
Partners Offshore Manager, L.L.C., 
as investment manager
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 

	 	 
	 

	 	Name:
	 

	 	 
	 

	 	Title:	 	 	 
	 

	 	Address: 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Facsimile No.:	 	 
	 

	 	 	 	Attn.:	 	 
	 
	 	 	HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P.
	 
	 	 	 	 	 	 
	 	 	By:	 	Harbinger Capital
Partners Special Situations GP, LLC,
as general partner
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 

	 	 
	 

	 	Name:
	 

	 	 
	 

	 	Title:	 	 	 
	 

	 	Address:	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Facsimile No.:	 	 
	 

	 	 	 	Attn.:	 	 

 

 

Appendix – Defined Terms

The following terms shall have the following definitions:

“Affiliate” shall mean, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary,
10% or more of the stock having ordinary voting power in the election of directors of such Person,
(b) each Person that controls, is controlled by or is under common control with such Person, and
(c) each of such Person’s officers, directors, joint venturers and partners. For the purposes of
this definition, “control” of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether through the ownership
of voting securities, by contract or otherwise. Notwithstanding this definition or any other
provision in this Agreement, any and all obligations of Goldman Sachs & Co. under this Agreement
shall be limited solely to its High Yield Distressed Investing Desk and the Bank Loan
Distressed Investing Desk.

“Alternative Restructuring Proposal” shall mean any formal letter of intent, proposal
or offer from any Person (other than the Investors) relating to any Alternative Restructuring
Transaction.

“Alternative Restructuring Transaction” shall mean direct or indirect restructuring,
reorganization, recapitalization, or acquisition (regardless of form and whether in a single
transaction or a series of related transactions) relating to Bally other than any direct or
indirect restructuring, reorganization, recapitalization or acquisition contemplated by the Amended
Plan. For the avoidance of doubt, an Alternative Restructuring Transaction shall not include any
restructuring, reorganization or acquisition contemplated by (i) the Amended Plan on the basis of
the satisfaction of the Backstop Rights Offering Effective Date Condition or (ii) any other
Excluded Restructuring (as defined in the Investment Agreement).

“Applicable Outside Date” shall have the meaning given such term in the Amended Plan.

“Backstop Rights Offering Effective Date Condition” shall have the meaning given such term
in the Amended Plan.

“Bankruptcy Code” means title 11 of the United States Code.

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of
New York.

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for
general business in New York City.

“Chapter 11 Cases” means the voluntary chapter 11 proceedings to be commenced by the Filing
Entities for the principal purpose of consummating the Amended Plan.

“Consenting Subordinated Noteholder Plan Transactions” means those transactions
contemplated by the Amended Plan (or any related exhibits or schedules) in the event the Amended
Plan is consummated on the basis of the satisfaction of the Backstop Rights Offering Effective Date
Condition, and not the Harbinger Investment Effective Date Condition.

“Common Stock” means common stock in BTF.

 

 

“Definitive Documents” means the Investment Agreement, the Subscription and Backstop
Purchase Agreement, the Disclosure Statement, the Amended Plan, the DIP Financing, the Exit
Financing, and all related documents, exhibits, annexes, and schedules, as such documents may be
amended, modified or supplemented from time to time in accordance with the terms hereof, reflecting
the transactions embodied in the Amended Plan, which documents shall contain terms (i)
substantially in accordance with the terms set forth in the Amended Plan and (ii) with respect to
terms not set forth in, and not inconsistent with, the Amended Plan, reasonably acceptable to each
of the Plan Support Parties and the Consenting Subordinated Noteholders, which acceptance shall not
be unreasonably withheld or delayed; provided that (x) the consent of the Plan Support Parties
shall not be required with respect to the documents evidencing or directly relating to the DIP
Financing; provided, however, the DIP Financing may not be amended, restated, supplemented or
otherwise modified if such amendment, restatement, supplement or other modification would be
materially adverse to the Company, the Debtors or Reorganized Bally, without the consent of the
Investors and the Majority Consenting Subordinated Noteholders, such consent not to be unreasonably
withheld. and (y) any documents relating to the Investor Plan Transactions shall not be subject to
the consent or approval of the Consenting Subordinated Noteholders, and any documents relating to
the Consenting Subordinated Noteholder Plan Transactions shall not be subject to the consent or
approval of the Plan Support Parties.

“DIP Financing” means the debtor in possession financing provided to Bally and contemplated
by the DIP Credit Agreement (as defined in the Amended Plan).

“Disclosure Statement” means the disclosure statement in respect of the Original Plan
describing, among other things, the transactions contemplated by the Original Plan.

“Exit Financing” means that certain exit financing contemplated by the New Credit Agreement
(as defined by the Amended Plan).

“Harbinger Investment Effective Date Condition” shall have the meaning given such term in
the Amended Plan.

“Investment Agreement” has the meaning set forth in the Recitals.

“Investor Plan Transactions” means those transactions contemplated by the Amended Plan (or
any related exhibits or schedules) in the event the Amended Plan is consummated on the basis of the
satisfaction of the Harbinger Investment Effective Date Condition, and not the Backstop Rights
Offering Effective Date Condition.

“Investors” means, collectively, Harbinger Capital Partners Master Fund I, Ltd. and
Harbinger Capital Partners Special Situations Fund L.P.

“Majority Consenting Subordinated Noteholder” means holders of at least 50% in principal
amount of the Subordinated Notes held by the Consenting Subordinated Noteholders

“Person” means and includes an individual, a partnership, a joint venture, a limited
liability company, a corporation, a trust, an unincorporated organization, a group, or any legal
entity or association.

 

 

“Plan Support Parties”, and each individually, a “Plan Support Party”, means the
Investors.

“Rights Offering” means that certain rights offering made by BTF to holders of the
Subordinated Notes to acquire up to $90 million of new senior subordinated notes to be issued by
reorganized BTF, which will only be consummated in the event the Backstop Rights Offering Effective
Date Condition is satisfied.

“Subscription and Backstop Purchase Agreement” means the agreement (as amended or modified)
executed by Bally and the Backstop Purchasers, which, among other things, commits the Backstop
Purchasers to backstop the Rights Offering.

 

 

Exhibit A

List of Consenting Subordinated Noteholders 

 

 

Exhibit B

List of Consenting Senior Noteholders

 

 

Exhibit C

Amended Plan of Reorganization

 

 

Exhibit D

Assumption Agreement

          Reference is hereby made to that certain Restructuring Support Agreement (as such agreement
may be amended, modified or supplemented from time to time, the “Restructuring Support
Agreement”) among Bally Total Fitness Holding Corporation, the Bally Subsidiaries and the
shareholders party thereto. Capitalized terms not otherwise defined herein shall have the meaning
ascribed to such terms in the Restructuring Support Agreement. As a condition precedent to
becoming the beneficial holder or owner of [___] (as defined in the Restructuring Support
Agreement), the undersigned                      (the “Transferee”), hereby agrees to become
bound by the terms, conditions and obligations set forth in the Restructuring Support Agreement.
This Assumption Agreement shall take effect and shall become an integral part of the Restructuring
Support Agreement immediately upon its execution and the Transferee shall be deemed to be bound by
all of the terms, conditions and obligations of the Restructuring Support Agreement as of the date
thereof.

          IN WITNESS WHEREOF, the ASSUMPTION AGREEMENT has been duly executed by each of the undersigned
as of the date specified below.

     Date: __________, 200[_]

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Name of Transferor	 	 	 	Name of Transferee	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Authorized Signatory of Transferor

	 	 	 	Authorized
	 	Signatory of Transferee	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	(Type or Print Name and Title of
Authorized
 Signatory)	 	 	 	(Type or Print Name and Title of Authorized Signatory)

Address of Plan Support Party:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Attn:	 	 	 	 
	 

	 	 	 	Tel:
	 	 

	 	 
	 

	 	 	 	Fax:
	 	 

	 	 
	 

	 	 	 	Email:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

 

 

Exhibit E

List of 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.

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