Document:

exv10w3

 

Exhibit 10.3

EXECUTION
COPY

CONSENT AGREEMENT

     This Consent Agreement (“Agreement”) is dated as of March 22, 2006, and is made by and
between Bally Total Fitness Holding Corporation, a Delaware corporation (“Bally” or the
“Company”), and the Person listed on the signature page attached hereto (the
“Holder”). Certain capitalized terms used herein and not otherwise defined have the
meanings set forth in Article VI hereof.

     WHEREAS, the Holder is the beneficial owner of $10,500,000 in aggregate principal
amount of 9 7/8% Senior Subordinated Notes due 2007 of the Company (the “Notes”) issued
pursuant to the Indenture, dated as of December 16, 1998, between the Company and U.S. Bank
National Association, as trustee (as amended and supplemented, the “Indenture”);

     WHEREAS, the Company desires to seek waivers (the “Waivers”) through the Waiver
Expiration Dates (as defined below) of any Default or Event of Default (as such terms are defined
in the Indenture) arising from the failure to timely comply with the covenants set forth in
Sections 7.4 and 10.17 of the Indenture with respect to the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2005 and the Company’s Quarterly Reports on Form 10-Q for
the fiscal periods ended March 31 and June 30, 2006 (the “Waived Matters”), which require
Bally to file with the SEC, and furnish to the Trustee and holders of Notes, the reports required
to be filed by the Company pursuant to the Exchange Act;

     WHEREAS, the Company will be undertaking a solicitation of consents (the “Consent
Solicitation”) with respect to the Notes to obtain the Waivers; and

     WHEREAS, the Holder has agreed with the Company to give its consent to the Waivers in the
Consent Solicitation, subject to the conditions set forth below.

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

ARTICLE I

AGREEMENT TO GIVE CONSENT TO WAIVERS AND RELATED MATTERS

     Section 1.1 (a) Acknowledgement. The Holder acknowledges that Bally may fail
to timely file with the SEC, and may fail to timely furnish to holders of Notes and the Trustee
certain of the reports and notices required by Sections 7.4 and 10.17 of the Indenture and
applicable provisions of the Exchange Act.

     (b) Agreement to Give Consent. In accordance with Section 1.2 below, the Holder
hereby agrees to give its consent to the Waivers in the Consent Solicitation. The Waivers will
provide that any Default or Event of Default arising from a failure to comply with the covenants
set forth in Sections 7.4 and 10.17 of the Indenture, which require Bally to file with the SEC, and
furnish to the Trustee and holders of Notes, the reports required to be filed pursuant to the
Exchange Act, will be waived through the Waiver Expiration Dates. The Waivers will also provide
that any Notice of Default in respect of the Waived Matters delivered by the Holder or the Trustee
prior to the earlier of the termination of this Agreement and effectiveness of the

 

 

Supplemental Indenture (as defined below) shall automatically be rescinded and withdrawn and shall
no longer be effective. In addition, the Waivers will provide that any Default by Bally as a
result of its failure to provide notice to the Trustee of a Default with respect to the Waived
Matters under Section 10.18(b) of the Indenture will be waived through the Waiver Expiration Dates.
The “Waiver Expiration Dates” will be: (i) 5:00 pm, New York City time, on July 10, 2006,
with respect to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2005 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006; and (ii)
5:00 pm, New York City time, on September 11, 2006 (as may be extended by 30 days), with respect to
the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006. By giving its
consent to the Waivers in the Consent Solicitation, the Holder will authorize the Trustee to enter
into a Supplemental Indenture in form and substance satisfactory to the Trustee for purposes of
implementing the Waivers (the “Supplemental Indenture”).

     Section 1.2 Further Action by Holder. As soon as practicable after
commencement of the Consent Solicitation, the Holder shall instruct the DTC Participant(s) that act
as custodian(s) for the Notes it beneficially owns to execute and deliver a letter of consent form,
which will accompany the consent solicitation materials, and shall instruct such DTC Participant(s)
to take all such further action as may be necessary to effect the consent of the Holder in the
Consent Solicitation on behalf of such Holder. In addition, the Holder shall, at the written
request of Bally, at any time and from time to time following the execution of this Agreement,
execute and deliver to Bally all such further instruments and take all such further action as may
be reasonably necessary or appropriate in order to confirm or carry out its obligations under this
Agreement and the transactions contemplated hereby.

     Section 1.3 Delivery of Consent to Waivers; Consent Payment. When (i) Bally
receives sufficient consents so that it has received consents from a majority in aggregate
principal amount of Notes outstanding under the Indenture and (ii) the other conditions set forth
in the consent solicitation materials (which are identified in, and limited to, those contained in
Article V hereof) are satisfied, Bally will enter into the Supplemental Indenture with the Trustee
as soon as practicable thereafter; provided, that the continued effectiveness of the
Supplemental Indenture will be contingent upon payment of the Consent Fee on the terms set forth in
the Consent Solicitation. In consideration of the Waivers and subject to Article V hereof, Bally
will offer to pay or deliver (directly or through an agent) and shall pay or deliver (directly or
through an agent) to all beneficial owners participating in the Consent Solicitation, including the
Holder, at their election: (i) $10.00; or (ii) 4.4444 shares of the Company’s common stock, par
value $0.01 per share (the “Common Stock”), in each case per $1,000 in principal amount of
Notes (the “Consent Fee”). In addition, if Bally does not comply with the covenants set
forth in Sections 7.4 and 10.17 of the Indenture with respect to the Company’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006 by September 11, 2006, Bally will have the option to
extend the Waiver Expiration Date with respect to such Quarterly Report to October 11, 2006 for an
additional payment of: (i) $3.33; or (ii) 1.4815 shares of Common Stock, in each case per $1,000 in
principal amount of Notes (the “Additional Fee”). Only beneficial owners that certify to
the Company that they are “Accredited Investors” as that term is defined in Rule 501 under the
Securities Act will be offered the ability to elect to receive shares of Common Stock offered in
the Consent Solicitation. In connection with its consent delivered pursuant to the Consent

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Solicitation, the Holder will elect to receive shares of Common Stock in respect of the Notes
it beneficially owns.

     Section 1.4 Restricted Securities. The Holder understands that the shares of
Common Stock to be issued to it pursuant to this Agreement (the “Shares”) will be issued
only in a transaction not involving any public offering in the United States within the meaning of
the Securities Act, the Shares have not been registered under the Securities Act or any other
applicable securities law, that the Shares will be “restricted securities” within the meaning of
Rule 144 under the Securities Act and that (A) prior to the expiration of the holding period
applicable to sales of restricted securities pursuant to Rule 144 under the Securities Act, the
Shares may be offered, resold, pledged or otherwise transferred only in accordance with any
applicable securities laws of any state of the United States or any other applicable jurisdiction
(i) (a) in a transaction meeting the requirements of Rule 144 under the Securities Act, (b) outside
the U.S. to a foreign purchaser in a transaction meeting the requirements of Regulation S, or (c)
pursuant to a transaction that is otherwise exempt from the registration requirements of the
Securities Act and state securities laws, (ii) to Bally or (iii) pursuant to an effective
registration statement under the Securities Act and (B) the Holder will notify any subsequent
purchaser from it of the resale restrictions set forth in (A) above, if then applicable. The
Holder agrees that the certificates representing the Shares shall bear a restrictive legend in
substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ACQUIRED IN A
TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION THEREFROM TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR LAWS.”

     Section 1.5 Voting Agreement. Upon satisfaction of the conditions precedent
set forth in Article V hereof, the Holder further agrees for a period from the date hereof
through December 31, 2006 that at any meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of capital stock of the Company, however called, or
in connection with any written consent of the holders of capital stock of the Company solicited by
the Board of Directors, the Holder will appear at the meeting or otherwise cause the Shares to be
counted as present at such meeting for purposes of establishing a quorum and vote or consent (or
cause to be voted or consented) the Shares (i) in favor of any proposed strategic transaction
(including a merger or consolidation of the Company with another entity or the sale of
substantially all of the Company’s assets) approved by the Board of Directors (a
“Board-Approved Transaction”) and (ii) against any merger, consolidation, combination, sale
of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other acquisition proposal (other than a Board-Approved Transaction);
provided, that the Holder holds the Shares on the record date for such meeting or as of the date of

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such written consent; provided, further, that this Section 1.5 will not apply to (x) the
extent any Person has formally initiated (whether by tender offer, proxy solicitation or other
filing that has been or will be mailed directly to holders of the Company’s Common Stock) a bona
fide potential strategic transaction that is fully financed or reasonably capable of being financed
and not a Board-Approved Transaction and such transaction would, if consummated, result in a
transaction more favorable to the holders of the Company’s Common Stock from a financial point of
view than the Board-Approved Transaction and (y) any shares of Common Stock which are owned,
directly or indirectly, by the Holder or any of its affiliates other than the Shares issued
pursuant to this Agreement.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF BALLY

     The Company represents and warrants to the Holder as follows:

     Section 2.1 Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority (i) to own, lease and operate its
properties, to carry on its business as now being conducted and (ii) to execute, deliver and
perform its obligations under this Agreement, including entering into the Supplemental Indenture,
and the other agreements to be executed by the Company in connection herewith and to consummate the
transactions contemplated hereby and thereby. The Company and its Subsidiaries are duly qualified
to do business and are in good standing in all jurisdictions wherein such qualification is
necessary and where failure so to qualify would have a material adverse effect on their business,
properties, operations, condition (financial or other), results of operations or prospects of the
Company and its Subsidiaries, taken as a whole. The Company has no equity investment in any person
other than its Subsidiaries.

     Section 2.2 Issuance of the Shares. The Shares will be duly authorized and
when issued in accordance with the terms hereof will be validly issued, fully paid and
nonassessable. There are no preemptive or similar rights of any stockholder of the Company or any
other person to acquire the Shares.

     Section 2.3 Consent Agreement and Other Transaction Documents. This Agreement
and the other agreements and instruments contemplated hereby have been duly and validly authorized
by the Company, this Agreement has been, and each of the other agreements contemplated by this
Agreement will be, duly executed and delivered by the Company and this Agreement is, and each of
the other agreements contemplated by this Agreement will be, a valid and binding obligation of the
Company enforceable in accordance with its terms, subject as to enforceability to general
principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors’ rights generally.

     Section 2.4 Non-Contravention. The execution and delivery by the Company of
this Agreement and the other agreements and transactions contemplated hereby to which the Company
is a party, do not and will not, with or without the giving of notice or the lapse of time, or both
(i) result in any violation of any terms of the charter documents of the Company; (ii) conflict
with or result in a breach by the Company or any of the terms or provisions of, or

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constitute a default under, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which the Company or any of its properties or
assets is bound or affected (other than provisions of the Credit Agreement that may prohibit the
Waivers and similar waivers under the Senior Note Indenture and the related consent payments) or
(iii) violate or contravene any applicable law, rule or regulation or any applicable decree,
judgment or order of any court or Governmental Body having jurisdiction over the Company or any of
its properties or assets.

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

     Section 2.6 Capitalization. The authorized capital stock of the Company is
(a) 60,200,000 shares of Common Stock and (b) 10,000,000 shares of preferred stock, par value $.01
per share (the “Preferred Stock”). All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and nonassessable, have no
preemptive rights and, to its knowledge, have been issued in accordance with applicable securities
laws. As of March 17, 2006, there were: (a) 38,529,964 shares of Common Stock outstanding; and (b)
there were no shares of Preferred Stock outstanding. As of March 17, 2006, without giving effect
to the Company’s stockholder rights plan pursuant to which each outstanding share of Common Stock
is accompanied by the right to purchase one one-thousandth (1/1000th) of a share of Series B Junior
Participating Preferred Stock (the “Rights Plan”), the Company had outstanding options,
warrants and similar rights entitling the holders to purchase or acquire 4,829,792 shares of Common
Stock and 54,500 shares of Common Stock reserved for future grants under the Company’s equity
incentive plans. Other than as set forth in the preceding sentence and with respect to the Rights
Plan, the Company does not have outstanding any securities (or obligation to issue any such
securities) convertible into, exchangeable for or otherwise entitling the holders thereof to
acquire shares of Common Stock. The Company has duly reserved from its authorized and unissued
shares of Common Stock the full number of shares required for (a) all options, warrants,
convertible securities and other rights to acquire shares of Common Stock which are outstanding and
(b) all shares of Common Stock and options and other rights to acquire shares of Common Stock which
may be issued or granted under the stock option and similar plans which have been adopted by the
Company or any of its Subsidiaries.

     Section 2.7 Rights Agreement and DGCL 203.

          (a) Subject to the accuracy of Section 3.4(b), the execution, delivery and performance of this
Agreement by the Company and the Holder does not in any way trigger, or raise any rights or
obligations under, that certain stockholder rights plan adopted by the Board of Directors of the
Company on October 18, 2005 and evidenced by that certain Rights Agreement, dated as of October 18,
2005, between the Company and LaSalle Bank National Association, as rights agent (the “Rights
Agreement”), including without limitation by reason of the fact that other Persons may be
entering into consent agreements with the Company similar to this Agreement. The Board of
Directors of the Company has approved this Agreement and determined that the Holder and its
affiliates shall not be or be deemed to be the beneficial owner

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(within the meaning of Section 1.3 of the Rights Agreement) of any of the shares of Common
Stock issued by the Company to any other Person pursuant to a consent agreement that is similar to
this Agreement and the transactions contemplated hereby.

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE HOLDER

     The Holder represents and warrants to the Company as follows:

     Section 3.1 Organization and Standing of the Holder. The Holder is duly
organized, validly existing and in good standing under the laws of its jurisdiction of its
incorporation or formation and has all requisite power and authority to own and operate its
properties, to carry on its business as now conducted and to enter into and, as applicable, perform
its obligations hereunder.

     Section 3.2 Consent Agreement and Other Transaction Documents. This Agreement
and each other agreement contemplated hereby to which the Holder is a party have been duly and
validly authorized on behalf of the Holder. This Agreement has been, and each of the other
agreements contemplated by this Agreement will be, duly executed and delivered by the Holder and
assuming due authorization, execution and delivery by the Company, this Agreement is, and each of
the other agreements contemplated by this Agreement will be, a valid and binding obligation of the
Holder enforceable in accordance with their terms, subject as to enforceability to general
principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors’ rights generally.

     Section 3.3 Non-Contravention. The execution and delivery by the Holder of
this Agreement and the transactions contemplated hereby to which the Holder is a party, do not and
will not, with or without the giving of notice or the lapse of time, or both (i) result in any
violation of any terms of the organizational documents of the Holder; (ii) conflict with or result
in a breach by the Holder or any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to which the Holder is a party
or by which the Holder or any of its properties or assets is bound or affected or (iii) violate or
contravene any applicable law, rule or regulation or any applicable decree, judgment or order of
any court or Governmental Body having jurisdiction over the Holder or any of its properties or
assets.

     Section 3.4 Ownership.

          (a) The Holder is the beneficial owner of the aggregate principal amount of Notes as set forth
under Holder’s name on the signature page hereto. There are no outstanding agreements,
arrangements or understandings under which such Holder or its nominee may be obligated to Transfer
any of the Notes.

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          (b) Without giving effect to the transactions contemplated by this Agreement, as of the date
hereof the Holder is the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act)
of 5,555,555 shares of Common Stock.

     Section 3.5 Investor Representations. The Holder is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in the acquisition of
the Shares, including investments in securities issued by the Company. The Holder is acquiring the
Shares in the ordinary course of its business and for its own account for investment (as defined
for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations
thereunder) only, and has no present intention of distributing any of the Shares nor any
arrangement or understanding with any other persons regarding the distribution of such Shares
within the meaning of Section 2(11) of the Securities Act. The Holder is an “accredited investor”
within the meaning of Rule 501 of Regulation D promulgated under the Securities Act. The Holder
understands that the Shares are being issued to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and that the Company
is relying upon the truth and accuracy of, and the Holder’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Holder set forth herein in order
to determine the availability of such exemptions and the eligibility of the Holder to acquire the
shares of Common Stock.

     Section 3.6 Information Provided. The Holder has been afforded the
opportunity to ask questions of the Company and has received satisfactory answers to any such
inquiries; and the Holder understands that its investment in the Shares involves a high degree of
risk and that no Governmental Body has passed on or made any recommendation or endorsement of the
Shares.

     Section 3.7 Terms of Consent. The terms of this Agreement were the result of
negotiations between the Holder, the Company, and representatives of the Company and the Holder and
the Holder was given the opportunity to review and comment upon the proposed terms of this
Agreement.

ARTICLE IV

CERTAIN COVENANTS AND AGREEMENTS OF THE PARTIES

     Section 4.1 Further Action by Bally. Bally shall, at the written request of
the Holder, at any time and from time to time following the execution of this Agreement, execute
and deliver to the Holder all such further instruments and take all such further action as may be
reasonably necessary or appropriate in order to confirm or carry out its obligations under this
Agreement and the transactions contemplated hereby.

     Section 4.2 Publicity. Neither the Company nor the Holder shall, nor shall
they permit their respective Agents to, issue or cause the publication of any press release or make
any other public statement, filing or announcement with respect to this Agreement and the
transactions contemplated hereby without the prior approval of the other party; provided,
however, that both the Company and the Holder shall be entitled, without the prior approval
of the Holder, to make any press release or other public disclosure with respect to such
transactions as is required by

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applicable law or the NYSE. The Company and the Holder shall cooperate in issuing press
releases or otherwise making public statements with respect to this Agreement and the transactions
contemplated hereby, which cooperation shall include first consulting the other party hereto
concerning the requirement for, and timing and content of, such public announcement.

     Section 4.3 Registration of Shares. (a) Promptly after the execution of this
Agreement, the Company will enter into a registration rights agreement for the benefit of the
holders that will be issued shares of Common Stock in exchange for the Waivers (the “Eligible
Holders”), in the form attached hereto as Exhibit A.

     (b) All expenses incident to the Company’s performance of or compliance with its obligations
under the registration rights agreement will be borne by the Company, including, without
limitation, the reimbursement of the Eligible Holders for the reasonable expenses of one legal
counsel incurred relating to the registration of the Shares and the Additional Shares as set forth
above.

     Section 4.4 Approval Right. Without the prior approval of each Holder,
Bally will not: increase the consideration payable to the holders of the Senior Notes for similar
waivers under the Senior Notes Indenture with respect to Bally’s failure to comply with its
reporting obligations thereunder in excess of the Consent Fee and the Additional Fee.

ARTICLE V

CONDITIONS PRECEDENT TO EFFECTIVENESS

     The effectiveness of: (i) the Waivers provided by the Holder pursuant to the Consent
Solicitation and the obligation of the Company to pay the Consent Fee and the Additional Fee
pursuant to the Consent Solicitation; and (ii) the provisions set forth in Section 1.5
hereof, will be subject to the following conditions to be set forth in the consent solicitation
materials:

     Section 5.1 Consents. Bally having received: (i) requisite consents having
been received (and not revoked) from holders of its Senior Notes in order to effect proposed
waivers under the Senior Note Indenture similar to the Waivers; (ii) requisite consents from the
necessary lenders under the Credit Agreement in order to effect proposed waivers under the Credit
Agreement similar to the Waivers; and (iii) consents relating to the Waivers and the similar
waivers under the Senior Note Indenture and the related consent payments having been received from
the necessary lenders under the Credit Agreement.

     Section 5.2 No Violations. In the reasonable judgment of the Company, there
shall not be any law or regulation, any injunction or action or other proceeding (pending or
threatened) that (in the case of any action or proceeding if adversely determined) would make
unlawful, invalid or enjoin the implementation of the Waivers or payment of the Consent Fee or the
Additional Fee or that would question the legality or the validity thereof.

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ARTICLE VI

DEFINITIONS

     Section 6.1 Definitions. As used in this Agreement, in addition to the terms
defined elsewhere, the following terms shall have the meanings set forth below, unless the context
otherwise requires:

     “Agent” shall mean, with respect to any Person, any officer, director, employee,
stockholder, controlling person (within the meaning of the Securities Act), affiliate or authorized
agent of such Person.

     “Credit Agreement” shall mean the Credit Agreement, dated as of November 18, 1997 (as
amended and restated as of October 14, 2004 and as further amended and supplemented from time to
time), among Bally Total Fitness Holding Corporation, as Borrower, the Several Banks and Other
Financial Institutions Parties Thereto, JPMorgan Chase Bank, as Agent, Deutsche Bank Securities
Inc., as Syndication Agent, LaSalle Bank National Association, as Documentation Agent, and JPMorgan
Securities Inc., as Sole Lead Arranger and Sole Bookrunner.

     “DTC” shall mean The Depository Trust Company, a limited purpose trust company.

     “DTC Participant” shall mean a participating organization in DTC.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Governmental Body” shall mean any government or political subdivision thereof,
whether federal, state, local or foreign, or any agency or instrumentality of any such government
or political subdivision thereof, or any federal or state court or arbitrator.

     “Holder” shall have the definition set forth in the first paragraph of this Agreement
and all of its successors and assigns.

     “Person” means any individual, corporation, partnership, joint venture, trust, estate,
limited liability company, unincorporated organization or governmental agency.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Senior Note Indenture” means the Indenture, dated as of July 2, 2003 (as supplemented
on July 22, 2003, December 7, 2004 and September 2, 2005), by and among Bally Total Fitness Holding
Corporation, as Issuer, the Guarantors party thereto and U.S. Bank National Association, as
Trustee.

     “Senior Notes” means the 10 1/2% Senior Notes due 2011 of Bally Total Fitness Holding
Corporation.

     “Trustee” shall mean U.S. Bank National Association.

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ARTICLE VII

MISCELLANEOUS

     Section 7.1 Costs, Expenses and Taxes. Each party shall bear its own costs
and expenses in connection with the preparation, execution and delivery of this Agreement and the
issuance of the Shares and payment of the cash consideration; provided, however, that the Company
will pay for the reasonable fees and expenses of counsel to the Holder in connection with this
Agreement and the transactions contemplated hereby, including, without limitation, any actions
requested by the Company pursuant to Section 1.2. The Company shall pay any and all stamp and
other taxes payable or determined to be payable in connection with the execution and delivery of
this Agreement and the delivery of consent for the cash and Shares.

     Section 7.2 Survival of Representations. The representations, warranties,
covenants and agreements of the Holder and the Company contained in this Agreement shall survive
the execution of the Supplemental Indenture.

     Section 7.3 Prior Agreements. This Agreement and the other agreements
contemplated hereby constitute the entire agreement between the parties concerning the subject
matter hereof and supersedes any prior representations, understandings or agreements. There are no
representations, warranties, agreements, conditions or covenants, of any nature whatsoever (whether
express or implied, written or oral) between the parties hereto with respect to such subject matter
except as expressly set forth herein and in the other agreements contemplated hereby.

     Section 7.4  Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any other provision or
the validity and enforceability of this Agreement in any other jurisdiction.

     Section 7.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CHOICE OF
LAW RULES.

     Section 7.6 Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of, or affect the interpretation
of, this Agreement.

     Section 7.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and either
of the parties hereto may execute this Agreement by signing any such counterpart. A facsimile
transmission of this Agreement bearing a signature on behalf of a party hereto shall be legal and
binding on such party.

     Section 7.8 Assignment; Binding Effect. The Holder shall not convey, assign
or otherwise transfer any of its rights or obligations under this Agreement without the express
written consent of Bally, and Bally shall not convey, assign or otherwise transfer any of its
rights and obligations under this Agreement without the express written consent of the Holder.
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement will limit or otherwise

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restrict the ability of the Holder to transfer its Notes, but the agreement of the Holder to
give its consent to the Waivers will bind every subsequent holder of the Notes.

     Section 7.9 Waiver; Remedies. No delay on the part of any Holder or Bally in
exercising any right, power or privilege under this Agreement shall operate as a wavier thereof,
nor shall any waiver on the part of any Holder or Bally of any right, power or privilege under this
Agreement operate as a waiver of any other right, power or privilege of such party under this
Agreement, nor shall any single or partial exercise of any right, power or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any other right, power
or privilege under this Agreement.

     Section 7.10 Amendment. This Agreement may be modified or amended only by
written agreement of all of the parties to this Agreement.

     Section 7.11 Termination. This Agreement shall automatically terminate without
any action by the parties hereto if the Supplemental Indenture implementing the Waivers has not
been executed and become effective by 6:00 pm Eastern Daylight Time on May 15, 2006.

     Section 7.12 Liability. The obligations hereunder of each of the entities on
the signature pages hereto that comprise the Holder shall be several, and not joint, and each such
entity shall only be obligated with respect to its pro rata portion of any such obligation based on
its percentage ownership of the aggregate principal amount of Notes reflected on the signature
pages hereto.

[Remainder of page intentionally left blank]

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

	 	 	 	 	 	 	 
	 	 	BALLY TOTAL FITNESS HOLDING CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Marc D. Bassewitz	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PARDUS EUROPEAN SPECIAL
OPPORTUNITIES MASTER FUND L.P.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	    Pardus Capital Management L.P., its
investment manager
	 
	 	 	 	 	 	 
	 

	 	By:
	 	   Pardus Capital Management LLC, its
general partner
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Karim Samii	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Karim Samii	 	 
	 

	 	 	 	Title: Sole Member	 	 
	 

	 	 	 	 	 	 

Date: March 22, 2006exv10w4

 

Exhibit
10.4

 

AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

by and among

BALLY TOTAL FITNESS HOLDING CORPORATION

and

THE HOLDERS NAMED HEREIN

 

Dated as of April 13, 2006

 

 

 

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.	 	Definitions
	 	 	1	 
	 	 	 
	 	 	 	 
	2.	 	Securities Act Registration on Request
	 	 	3	 
	 	 	(a) Request
	 	 	3	 
	 	 	(b) Registration of Other Securities
	 	 	4	 
	 	 	(c) Registration Statement Form
	 	 	4	 
	 	 	(d) Effective Registration Statement
	 	 	4	 
	 	 	 
	 	 	 	 
	3.	 	Piggyback Registration
	 	 	4	 
	 	 	 
	 	 	 	 
	4.	 	Expenses
	 	 	6	 
	 	 	 
	 	 	 	 
	5.	 	Registration Procedures
	 	 	6	 
	 	 	 
	 	 	 	 
	6.	 	Piggyback Underwritten Offerings
	 	 	9	 
	 	 	(a) Priority
	 	 	9	 
	 	 	(b) Holders of Registrable Common Stock to be Parties to Underwriting Agreement
	 	 	9	 
	 	 	(c) Holdback Agreements
	 	 	10	 
	 	 	 
	 	 	 	 
	7.	 	Postponements
	 	 	10	 
	 	 	 
	 	 	 	 
	8.	 	Indemnification
	 	 	11	 
	 	 	(a) Indemnification by the Company
	 	 	11	 
	 	 	(b) Indemnification by the Offerors and Sellers
	 	 	12	 
	 	 	(c) Notices of Losses, etc.
	 	 	12	 
	 	 	(d) Contribution
	 	 	13	 
	 	 	(e) Other Indemnification
	 	 	13	 
	 	 	(f) Indemnification Payments
	 	 	13	 
	 	 	 
	 	 	 	 
	9.	 	Registration Rights to Others
	 	 	13	 
	 	 	 
	 	 	 	 
	10.	 	Adjustments Affecting Registrable Common Stock
	 	 	14	 
	 	 	 
	 	 	 	 
	11.	 	Amendments and Waivers
	 	 	14	 
	 	 	 
	 	 	 	 
	12.	 	Nominees for Beneficial Owners
	 	 	14	 
	 	 	 
	 	 	 	 
	13.	 	No Assignment
	 	 	14	 
	 	 	 
	 	 	 	 
	14.	 	Termination of Registration Rights
	 	 	14	 
	 	 	 
	 	 	 	 
	15.	 	Miscellaneous
	 	 	14	 
	 	 	(a) Further Assurances
	 	 	14	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 	 	(b) Headings
	 	 	15	 
	 	 	(c) Conflicting Instructions
	 	 	15	 
	 	 	(d) Remedies
	 	 	15	 
	 	 	(e) Entire Agreement
	 	 	15	 
	 	 	(f) Notices
	 	 	15	 
	 	 	(g) Governing Law
	 	 	15	 
	 	 	(h) Severability
	 	 	15	 
	 	 	(i) Counterparts
	 	 	16	 
	 	 	 
	 	 	 	 
	SCHEDULES:	 	 	 	 
	 	 	 
	 	 	 	 
	SCHEDULE A –NOTICES	 	 	 	 

 

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

          AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of April 13, 2006 (this
“Agreement”), by and among Bally Total Fitness Holding Corporation, a Delaware corporation
(the “Company”), and the holders of Registrable Common Stock (as hereinafter defined) who
were signatories to the Original Registration Rights Agreement (the “Original Holders”).

          To induce the Original Holders to deliver their consent in connection with the waiver
extension relating to the 9 7/8% Notes (as hereinafter defined) and to accept the issuance of the
Common Stock by the Company, the Company has undertaken to register Registrable Common Stock under
the Securities Act (as hereinafter defined) and to take certain other actions with respect to the
Registrable Common Stock, the parties previously entered into a Registration Rights Agreement on
January 17, 2006 (the “Original Registration Rights Agreement”). In connection with the
receipt of consents in connection with a waiver relating to the 9 7/8% Notes and the 10 1/2% Notes
(as hereinafter defined) on April 7, 2006, the Company has undertaken to register additional
Registrable Common Stock under the Securities Act. The parties desire to amend and restate the
Original Registration Rights Agreement to set forth the terms and conditions of such undertakings.

          In consideration of the premises and the mutual agreements set forth herein, the parties
hereto hereby agree as follows:

     1. Definitions. Unless otherwise defined herein, capitalized terms used herein and in
the recitals above shall have the following meanings:

          “Affiliate” of a Person means any Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control with, such other
Person. For purposes of this definition, “control” means the ability of one Person to direct the
management and policies of another Person.

          “Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to be closed.

          “Commission” means the U.S. Securities and Exchange Commission.

          “Common Stock” means the shares of common stock, $.01 par value per share, of the
Company, as adjusted to reflect any merger, consolidation, recapitalization, reclassification,
split-up, stock dividend, rights offering or reverse stock split made, declared or effected with
respect to the Common Stock.

          “Company Indemnitee” has the meaning set forth in Section 8(a) hereof.

          “Consent Agreements” means the several Consent Agreements, dated as of August 24,
2005, among the Company and the Original Holders.

          “Consent Solicitation” means: (i) the Company’s receipt of consents in the Consent
Agreements pursuant to which the Company obtained an extension through November

 

 

30, 2005 of a
waiver to comply with certain covenants in the indenture relating to the Company’s 9 7/8% Senior
Subordinated Notes due 2007 (the “9 7/8% Notes”); (ii) the related solicitation of consents
described in the Offering Memorandum/Consent Solicitation Statement, dated as of October 18, 2005,
and the related Letter of Consent (the “Follow-On Consent Solicitation”); and (iii) the
Company’s solicitation of consents with respect to its 9 7/8% Notes and its 10 1/2% Senior Notes
due 2011 (the “10 1/2% Notes”) described in the Offering Memorandum/Consent Solicitation
Statements, dated as of March 27, 2006, and the related Letters of Consent (the “Third Consent
Solicitation”).

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, or any similar or successor statute.

          “Expenses” means all expenses incident to the Company’s performance of or compliance
with its obligations under this Agreement, including, without limitation, all registration, filing,
listing, stock exchange and NASD fees, all fees and expenses of complying with state securities or
blue sky laws (including the reasonable fees, disbursements and other charges of counsel for the
underwriters in connection with blue sky filings), all word processing, duplicating and printing
expenses, messenger, telephone and delivery expenses, all rating agency fees, the fees,
disbursements and other charges of counsel for the Company and of its independent public
accountants, the fees and expenses incurred in connection with the listing of the securities to be
registered on each securities exchange or national market system on which similar securities issued
by the Company are then listed, the fees and expenses of any special experts retained by the
Company in connection with such registration, the fees and expenses of other persons retained by
the Company, and the reasonable fees and expenses of one legal counsel to the Original Holders (as
designated by the Majority Holder) relating to the registration of the Registrable Common Stock as
provided herein, but excluding applicable transfer taxes, if any, which transfer taxes shall be
borne by the seller or sellers of Registrable Common Stock in all cases,.

          “Holder Indemnitee” has the meaning set forth in Section 8(b) hereof.

          “Holders” shall mean the Original Holders, the holders that received Registrable
Common Stock in the Follow-On Consent Solicitation and the holders that received Registrable Common
Stock in the Third Consent Solicitation.

          “Initiating Holder(s)” means at the time of any Initiating Request: (i) a Majority
Holder; or (ii) one or more Original Holders which collectively own a majority of the shares of
Common Stock issued in the Consent Agreements.

          “Initiating Request” has the meaning set forth in Section 2(a) hereof.

          “Loss” and “Losses” have the meanings set forth in Section 8(a) hereof.

          “Majority Holder” means any Original Holder which, together with its Affiliates,
beneficially owns a majority of the shares of Common Stock issued to the Original Holders pursuant
to the Consent Agreements.

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

2

 

          “NYSE” means the New York Stock Exchange.

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

          “Person” means any individual, corporation, partnership, firm, joint venture,
association, joint stock company, trust, unincorporated organization, governmental or regulatory
body or subdivision thereof or other entity.

          “Piggyback Requesting Holder” has the meaning set forth in Section 3 hereof.

          “Public Offering” means a public offering and sale of Common Stock pursuant to an
effective registration statement (other than a registration statement on Form S-4 or Form S-8 or
any successor or similar forms) under the Securities Act.

          “Registrable Common Stock” means any of the Common Stock owned by the Holders from
time to time, whether now or in the future, and any other securities issued or issuable with
respect to or in exchange for such shares of Common Stock; provided, however, that
a share of Common Stock will cease to be Registrable Common Stock after it has been sold: (a) under
a registration statement effected pursuant hereto; or (b) pursuant to Rule 144 promulgated under
the Securities Act.

          “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar or successor statute.

          “Selling Holders” means the Holders of Registrable Common Stock requested to be
registered pursuant to Section 2(a) or 3 hereof.

          “Transfer” means any transfer, sale, assignment, pledge, hypothecation or other
disposition of any interest. “Transferor” and “Transferee” have correlative
meanings.

     2. Securities Act Registration on Request.

          (a) Request. At any time and from time to time after the Company becomes eligible to use
a short form registration statement on Form S-3 or any successor form and if the Company’s
obligations hereunder have not terminated pursuant to and in accordance with the terms of Section
14 hereof, any Initiating Holder(s) may on one occasion make a written request (the “Initiating
Request”) for the registration with the Commission under the Securities Act of all or part of
the Registrable Common Stock of such Initiating Holder(s); provided, however, that
such request shall specify the number of shares to be disposed of by such Holders and the proposed
plan of distribution therefor; upon the receipt of any Initiating Request for registration pursuant
to this paragraph, the Company promptly shall notify in writing all other Holders of Registrable
Common Stock of the receipt of such request and will use its reasonable best efforts to effect, at
the earliest practicable date, such registration under the Securities Act, including a shelf
registration, if applicable, of:

     (i) the Registrable Common Stock which the Company has been so requested to register by
such Initiating Holder(s), and

3

 

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

all to the extent necessary to permit the disposition (in accordance with Section
2(c) hereof) of the Registrable Common Stock so to be registered; provided
that, any Holder whose Registrable Common Stock was to be included in any
such registration pursuant to this Section 2(a), by written notice to the Company,
may withdraw such request and, on receipt of such notice of the withdrawal of such
request from Holders holding a percentage of Registrable Common Stock, such that the
Holders that have not elected to withdraw do not hold, in the aggregate, the
requisite percentage of the Registrable Common Stock to constitute Initiating
Holder(s), the Company shall not effect such registration.

          (b) Registration of Other Securities. Whenever the Company shall effect a registration
pursuant to Section 2(a) hereof, no securities other than Registrable Common Stock shall be
included among the securities covered by such registration.

          (c) Registration Statement Form. Registrations under Section 2(a) hereof shall be on Form
S-3 or such other appropriate short-form registration form prescribed by the Commission under the
Securities Act as shall permit the disposition of the Registrable Common Stock pursuant to Rule 415
(or any successor rule) under the Securities Act. The Company agrees to include in any such
registration statement filed pursuant to Section 2(a) hereof all information which the Selling
Holders holding a majority of shares of the Registrable Common Stock covered by such registration
statement effected pursuant hereto, upon advice of counsel, shall reasonably request.

          (d) Effective Registration Statement. A registration requested pursuant to Section 2(a)
hereof shall not be deemed to have been effected:

     (i) unless a registration statement with respect thereto has been declared effective by
the Commission and remains effective in compliance with the provisions of the Securities Act
and the laws of any state or other jurisdiction applicable to the disposition of Registrable
Common Stock covered by such registration statement until April 13, 2008; or

     (ii) if, after it has become effective, such registration is interfered with by any
stop order, injunction or other order or requirement of the Commission or other
governmental or regulatory agency or court for any reason other than a violation of
applicable law solely by any Selling Holder and has not thereafter become effective.

          The Holders of Registrable Common Stock to be included in a registration statement may at any
time terminate a request for registration made pursuant to Section 2(a) in accordance with Section
2(a)(ii).

     3. Piggyback Registration. If the Company proposes to register any of its Common Stock
under the Securities Act by registration on any forms other than Form S-4 or S-8 (or any

4

 

successor
or similar form(s)), whether or not pursuant to registration rights granted to other holders of its
Common Stock and whether or not for sale for its own account, and a registration statement filed
pursuant to Section 2 hereof has not been declared effective, it shall give prompt written notice
to all of the Holders of its intention to do so and of such Holders’ rights (if any) under this
Section 3, which notice, in any event, shall be given at least 30 days prior to the effectiveness
of such proposed registration. Upon the written request of any Holder receiving notice of such
proposed registration that is a Holder of Registrable Common Stock (a “Piggyback Requesting
Holder”) made within 15 days after the receipt of any such notice (10 days if the Company
states in such written notice or gives telephonic notice to the relevant securityholders, with
written confirmation to follow promptly thereafter, stating that (i) such registration will be on
Form S-3 and (ii) such shorter period of time is required because of a planned effectiveness date),
which request shall specify the Registrable Common Stock intended to be disposed of by such
Piggyback Requesting Holder and the minimum offering price per share at which the Holder is willing
to sell its Registrable Common Stock, the Company shall, subject to Section 6(a) hereof, effect the
registration under the Securities Act of all Registrable Common Stock which the Company has been so
requested to register by the Piggyback Requesting Holders thereof; provided that,

     (A) prior to the effective date of the registration statement filed in
connection with such registration, promptly following receipt of notification by the
Company from the managing underwriter (if an underwritten offering pursuant to
Section 6) of the price at which such securities are to be sold, the Company shall
so advise each Piggyback Requesting Holder of such price, and if such price is below
the minimum price which any Piggyback Requesting Holder shall have indicated to be
acceptable to such Piggyback Requesting Holder, such Piggyback Requesting Holder
shall then have the right irrevocably to withdraw its request to have its
Registrable Common Stock included in such registration statement, by delivery of
written notice of such withdrawal to the Company within five Business Days of its
being advised of such price, without prejudice to the rights of any Holder(s) of
Registrable Common Stock to include Registrable Common Stock in any future
registration (or registrations) pursuant to this Section 3 or to cause a
registration to be effected under Section 2(a) hereof, as the case may be;

     (B) if at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each Piggyback
Requesting Holder and (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Common Stock in connection
with such registration (but not from any obligation of the Company to pay the
Expenses in connection therewith), without prejudice, however, to the rights of any
Holder to include Registrable Common Stock in any future registration (or
registrations) pursuant to this Section 3 or to cause a registration to be effected
under Section 2(a) hereof, as the case may be, and (ii) in the
case of a determination to delay registering, shall be permitted to delay registering any

5

 

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

     (C) if such registration was initiated by the Company for its own account and
involves an underwritten offering, each Piggyback Requesting Holder shall sell its
Registrable Common Stock on the same terms and conditions as those that apply to the
Company, and the underwriters of each such piggyback underwritten offering shall be
a nationally recognized underwriter (or underwriters) selected by the Company.

          No registration effected under this Section 3 shall relieve the Company of its obligation to
effect any registration upon request under Section 2(a) hereof and no registration effected
pursuant to this Section 3 shall be deemed to have been effected pursuant to Section 2(a) hereof.

     4. Expenses. The Company shall pay all Expenses in connection with any registration
initiated pursuant to Sections 2(a) or 3 hereof, whether or not such registration shall become
effective and whether or not all or any portion of the Registrable Common Stock originally
requested to be included in such registration are ultimately included in such registration.

     5. Registration Procedures. If and whenever the Company is required to effect any
registration under the Securities Act as provided in Sections 2(a) and 3 hereof, the Company shall,
as expeditiously as possible:

     (a) prepare and file with the Commission (within 30 days in the case of a registration
initiated pursuant to Section 2(a) hereof) the requisite registration statement to effect
such registration and thereafter use its reasonable best efforts to cause such registration
statement to become and remain effective; provided, however, that the Company may
discontinue any registration of its securities that are not shares of Registrable Common
Stock (and, under the circumstances specified in Sections 3 and 7(b) hereof, its securities
that are shares of Registrable Common Stock) at any time prior to the effective date of the
registration statement relating thereto;

     (b) prepare and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with the
provisions of the Securities Act and the Exchange Act with respect to the disposition of all
Registrable Common Stock covered by such registration statement until April 13, 2008, or
such time as all of such Registrable Common Stock has been disposed of in accordance with
the method of disposition set forth in such registration statement;

     (c) furnish to each seller of Registrable Common Stock covered by such registration
statement and each underwriter, if any, such number of copies of such drafts and final
conformed versions of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits and any documents incorporated by reference),
such number of copies of such drafts and final versions of the

6

 

prospectus contained in such
registration statement (including each preliminary prospectus and any summary prospectus)
and any other prospectus filed under Rule 424 under the Securities Act, in conformity with
the requirements of the Securities Act, and such other documents, as the sellers of a
majority of the Registrable Common Stock covered by such registration statement or any
underwriter may reasonably request in writing;

     (d) use its reasonable best efforts (i) to register or qualify all Registrable Common
Stock and other securities, if any, covered by such registration statement under such other
securities or blue sky laws of such states or other jurisdictions of the United States of
America as the sellers of Registrable Common Stock covered by such registration statement
shall reasonably request in writing, (ii) to keep such registration or qualification in
effect for so long as such registration statement remains in effect and (iii) to take any
other action that may be necessary or reasonably advisable to enable such sellers to
consummate the disposition in such jurisdictions of the securities to be sold by such
sellers, except that the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this subsection (d) be obligated to be so qualified, to subject
itself to taxation in such jurisdiction or to consent to general service of process in any
such jurisdiction;

     (e) use its reasonable best efforts to cause all Registrable Common Stock and other
securities, if any, covered by such registration statement to be registered with or approved
by such other federal or state governmental agencies or authorities as may be necessary in
the opinion of counsel to the Company and counsel to the seller or sellers of Registrable
Common Stock to enable the seller or sellers thereof to consummate the disposition of such
Registrable Common Stock;

     (f) notify each seller of Registrable Common Stock and other securities covered by such
registration statement, if any, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and, at the written
request of any such seller of Registrable Common Stock,
promptly prepare and furnish to it a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus, as supplemented or amended, shall not
include an untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in the light of
the circumstances under which they were made;

     (g) use its reasonable best efforts to obtain the withdrawal of any order suspending
the effectiveness of a registration statement relating to the Registrable Common Stock at
the earliest possible moment;

7

 

     (h) otherwise comply with all applicable rules and regulations of the Commission and
any other governmental agency or authority having jurisdiction over the offering, and make
available to its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder, and
furnish to each seller of Registrable Common Stock and to the managing underwriter, if any,
at least ten days prior to the filing thereof a copy of any amendment or supplement to such
registration statement or prospectus;

     (i) use its reasonable best efforts to cause all Registrable Common Stock covered by a
Registration Statement to be listed on a national securities exchange on which similar
securities issued by the Company are then listed, if the listing of such Registrable Common
Stock is then permitted under the rules of such exchange;

     (j) provide a transfer agent and registrar for the Registrable Common Stock covered by
a registration statement no later than the effective date thereof;

     (k) enter into such agreements and take such other actions as the Holders holding a
majority of the shares of Registrable Common Stock covered by such registration statement
shall reasonably request in order to expedite or facilitate the disposition of such
Registrable Common Stock; and

     (l) if requested by the Holders holding a majority of the shares of Registrable Common
Stock being sold, cooperate with such Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Common Stock to be sold and not bearing
any restrictive legends; and enable such Registrable Common Stock to be in such share
amounts and registered in such names as the managing underwriter(s) or, if none, the Holders
holding a majority of the shares of Registrable Common Stock being sold, may request at
least five Business Days prior to any sale of Registrable Common Stock to the underwriters;

          As a condition to the obligations of the Company to complete any registration pursuant to this
Agreement with respect to the Registrable Common Stock of any particular Holder, such Holder must
furnish to the Company in writing such information regarding itself, the Registrable Common Stock
held by it and the intended methods of disposition of the Registrable Common Stock held by it as is
necessary to effect the registration of such Holders’
Registrable Common Stock and is requested in writing by the Company. At least: (i) 20 days
prior to the first anticipated filing date of a Registration Statement for registration under
Section 2 of this Agreement; or (ii) 20 days prior to the anticipated effectiveness date of a
Registration Statement filed under Section 3 of this Agreement, the Company will notify in writing
each Holder of the information referred to in the preceding sentence which the Company is
requesting from that Holder whether or not such Holder has elected to have any of its Registrable
Common Stock included in the Registration Statement. If, within ten days prior to the anticipated
filing date or effectiveness date, as the case may be, the Company has not received the requested
information from a Holder, then the Company may file the Registration Statement without including
Registrable Common Stock of that Holder.

8

 

          Each Original Holder agrees that as of the date that a final prospectus is made available to
it for distribution to prospective purchasers of Registrable Common Stock it shall cease to
distribute copies of any preliminary prospectus prepared in connection with the offer and sale of
such Registrable Common Stock. Each Original Holder further agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in subsection (f) of
this Section 5, such Original Holder shall forthwith discontinue such Original Holder’s disposition
of Registrable Common Stock pursuant to the registration statement relating to such Registrable
Common Stock until such Original Holder’s receipt of the copies of the supplemented or amended
prospectus contemplated by subsection (f) of this Section 5 and, if so directed by the Company,
shall deliver to the Company (at the Company’s expense) all copies, other than permanent file
copies, then in such Original Holder’s possession of the prospectus relating to such Registrable
Common Stock current at the time of receipt of such notice. If any event of the kind described in
subsection (f) of this Section 5 occurs and such event is the fault solely of an Original
Holder(s), such Original Holder(s) shall pay all Expenses directly attributable to the preparation,
filing and delivery of any supplemented or amended prospectus contemplated by subsection (f) of
this Section 5. In the event a Holder that is not an Original Holder elects to have shares of its
Registrable Common Stock included in a registration statement, such Holder will have agreed with
each of the preceding requirements in the notice it provides to the Company regarding the inclusion
of shares of its Registrable Common Stock in such registration statement.

     6. Piggyback Underwritten Offerings.

          (a) Priority. Prior to the effectiveness of a registration statement filed pursuant to
Section 2 hereof, if the Company proposes to register any of its Common Stock under the Securities
Act for its own account as contemplated by Section 3 hereof and such securities are to be
distributed by or through one or more underwriters, and if the managing underwriter of such
underwritten offering shall advise the Company in writing (with a copy to the Piggyback Requesting
Holders) that if all the Registrable Common Stock requested to be included in such registration
were so included, in its opinion, the number and type of securities proposed to be included in such
registration would exceed the number and type of securities which could be sold in such offering
within a price range acceptable to the Company (such writing to state the basis of such opinion and
the approximate number and type of securities which may be included in such offering without such
effect), then the Company shall include in such registration pursuant to Section 3, to the extent
of
the number and type of securities which the Company is so advised can be sold in such
offering, (i) first, securities that the Company proposes to issue and sell for its own account,
(ii) second, Registrable Common Stock requested to be registered by Piggyback Requesting Holders
pursuant to Section 3 hereof, pro rata among the Piggyback Requesting Holders on the basis of the
number of shares of Registrable Common Stock requested to be registered by all such Piggyback
Requesting Holders and (iii) third, other securities, if any.

          Any Holder may withdraw its request to have all or any portion of its Registrable Common Stock
included in any such offering by notice to the Company within 10 Business Days after receipt of a
copy of a notice from the managing underwriter pursuant to this Section 6(b).

          (b) Holders of Registrable Common Stock to be Parties to Underwriting Agreement. The
holders of Registrable Common Stock to be distributed by underwriters in an

9

 

underwritten offering
contemplated by subsection (a) of this Section 6 shall be parties to the underwriting agreement
between the Company and such underwriters, but shall have only those obligations and make only
those representations and warranties as are customary with respect to selling stockholders, as
opposed to issuers, in an underwritten public offering.

          (c) Holdback Agreements. Each Original Holder agrees, if required by the managing
underwriter for any underwritten offering pursuant to this Agreement, not to effect any sale or
distribution of any equity securities of the Company or securities convertible into or exchangeable
or exercisable for equity securities of the Company, including any sale under Rule 144 under the
Securities Act, during the 10 days prior to the date on which an underwritten registration of
Registrable Common Stock pursuant to Section 3 hereof in which such Original Holder is
participating has become effective and until 90 days (or such lesser period as may be required by
the managing underwriter) after the effective date of such underwritten registration in which such
Original Holder is participating, except as part of such underwritten registration or to the extent
that such Original Holder is prohibited by applicable law from agreeing to withhold securities from
sale or is acting in its capacity as a fiduciary or an investment adviser. Without limiting the
scope of the term “fiduciary,” a holder shall be deemed to be acting as a fiduciary or an
investment adviser if its actions or the securities proposed to be sold are subject to the Employee
Retirement Income Security Act of 1974, as amended, the Investment Company Act of 1940, as amended,
or the Investment Advisers Act of 1940, as amended, or if such securities are held in a separate
account under applicable insurance law or regulation.

          The Company agrees not to effect any Public Offering or distribution of any equity securities
of the Company, or securities convertible into or exchangeable or exercisable for equity securities
of the Company, during the 10 days prior to the date on which any underwritten registration
pursuant to Section 2 or 3 hereof has become effective and until 90 days after the effective date
of such underwritten registration, except as part of such underwritten registration.

     7. Postponements.

          (a) If the Company shall fail to file any registration statement required to be filed pursuant
to a request for registration under Section 2(a) hereof within 30 days, the Initiating Holder(s)
requesting such registration shall have the right to withdraw the request for registration if such
withdrawal shall be made by Holders of Registrable Common Stock holding an amount of Registrable
Common Stock such that the Holders that have not elected to withdraw do not hold the requisite
percentage of shares of Registrable Common Stock to constitute Initiating Holders(s). In the event
of such withdrawal, the request for registration shall not be counted for purposes of determining
the number of registrations to which Holders are entitled pursuant to Section 2 hereof. The
Company shall pay all Expenses incurred in connection with a request for registration withdrawn
pursuant to this paragraph.

          (b) The Company may delay or suspend the filing or effectiveness of any registration
statement, or file any amendment or supplement to any registration statement, and may suspend any
Selling Holder’s rights to make sales pursuant to any effective registration statement, if the
Company provides to the Selling Holders a written notice certifying that the Board of Directors of
the Company has determined reasonably and in good faith that the initial

10

 

filing of the registration
statement (or any subsequent amendment or supplement thereto), the initial effectiveness of the
registration statement or the continuing effectiveness thereof would require the disclosure of
material non-public information that would be detrimental to the Company if so disclosed or would
otherwise materially adversely affect a financing, acquisition, disposition, merger or other
material transaction. The filing of a registration statement, or any amendment or supplement
thereto, by the Company or the effectiveness thereof cannot be deferred or suspended, as the case
may be, and the Selling Holders’ rights to make sales pursuant to an effective registration
statement cannot be suspended, pursuant to the provisions of the preceding sentence for more than
30 days after the abandonment or consummation of any of the foregoing transactions;
provided, however, that the Company may so defer or suspend the use of any
registration statement no more than 60 days in a calendar year. If the Company suspends the
Selling Holders’ rights to make sales pursuant hereto, the applicable registration period shall be
extended by the number of days of such suspension.

     8. Indemnification.

          (a) Indemnification by the Company. In connection with any registration statement filed
by the Company pursuant to Section 2(a) or 3 hereof, to the fullest extent permitted by law the
Company shall, and hereby agrees to, indemnify and hold harmless, each Original Holder and seller
of any Registrable Common Stock covered by such registration statement and each other Person, if
any, who controls (within the meaning of the Exchange Act) such Original Holder or seller, and
their respective stockholders, directors, officers, employees, partners, agents and Affiliates
(each, a “Company Indemnitee” for purposes of this Section 8(a)), against any losses,
claims, damages, liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof and whether or not such Company Indemnitee is a party thereto), joint or several,
and expenses, including, without limitation, the reasonable fees, disbursements and other charges
of legal counsel and reasonable costs of investigation, to which such Company Indemnitee may become
subject under the Securities Act or otherwise (collectively, a “Loss” or “Losses”), insofar as
such Losses arise out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such securities were registered
or otherwise offered or sold under the Securities Act or otherwise, any preliminary prospectus,
final prospectus or summary prospectus related thereto, or any amendment or supplement thereto
(collectively, “Offering Documents”) (or any document incorporated by reference therein), or any
omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in the light of the circumstances in which they were made
not misleading, or any violation by the Company of any federal or state law, rule or regulation
applicable to the Company and relating to action required of or inaction by the Company in
connection with any such registration; provided, however, the Company shall not be liable to any
particular Company Indemnitee, but only such Company Indemnitee, in any such case to the extent
that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such Offering Documents in reliance upon and in conformity
with information furnished to the Company in a writing duly executed by such Company Indemnitee
specifically stating that it is expressly for use therein. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such Company Indemnitee
and shall survive the transfer of such securities by such Company Indemnitee.

11

 

     (b) Indemnification by the Offerors and Sellers. In connection with any registration
statement filed by the Company pursuant to Section 2(a) or 3 hereof in which an Original Holder has
registered for sale Registrable Common Stock, each such Original Holder shall, and hereby agrees
to, indemnify and hold harmless to the fullest extent permitted by law the Company and each of its
directors, officers, employees, agents, partners, stockholders, Affiliates and each other Person,
if any, who controls (within the meaning of the Exchange Act) the Company and each other seller and
such seller’s employees, directors, officers, stockholders, partners, agents and Affiliates (each,
a “Holder Indemnitee” for purposes of this Section 8(b)), against all Losses insofar as
such Losses arise out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Offering Documents (or any document incorporated by reference
therein) or any omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein in the light of circumstances in which they
were made not misleading, if such untrue statement or alleged untrue statement or omission was made
in reliance upon and in conformity with information furnished to the Company in writing duly
executed by such Original Holder specifically stating that it is expressly for use therein;
provided, however, that the liability of such indemnifying party under this Section 8(b) shall be
limited to the amount of the net proceeds received by such indemnifying party in the sale of
Registrable Common Stock giving rise to such liability. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Holder Indemnitee and shall
survive the transfer of such securities by such indemnifying party.

     (c) Notices of Losses, etc. Promptly after receipt by an indemnified party of written
notice of the commencement of any action or proceeding involving a Loss referred to in the
preceding
subsections of this Section 8, such indemnified party will, if a claim in respect thereof is
to be made against an indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations under the preceding
subsections of this Section 8, except to the extent that the indemnifying party is materially and
actually prejudiced by such failure to give notice. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled to participate in and, unless in such
indemnified party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such Loss, to assume and control the defense thereof,
in each case at its own expense, jointly with any other indemnifying party similarly notified, to
the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and
after its assumption of the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the latter in connection
with the defense thereof other than reasonable costs of investigation, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and indemnifying
parties arises in respect of such claim after the assumption of the defense thereof. No
indemnifying party shall be liable for any settlement of any such action or proceeding effected
without its written consent, which shall not be unreasonably withheld. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all liability in respect of such Loss or
which requires action on the part of such indemnified party or otherwise subjects the indemnified
party to any obligation or restriction to which it would not otherwise be

12

 

subject. Notwithstanding
any of the foregoing, nothing in this Section 8 shall require the Company to reimburse the
reasonable fees and expenses of more than one counsel for any indemnified parties where the Company
is the indemnifying party.

          (d) Contribution. If the indemnification provided for in this Section 8 shall for any
reason be unavailable to an indemnified party under subsection (a) or (b) of this Section 8 in
respect of any Loss, then, in lieu of the amount paid or payable under subsection (a) or (b) of
this Section 8, the indemnified party and the indemnifying party under subsection (a) or (b) of
this Section 8 shall contribute to the aggregate Losses (including legal or other expenses
reasonably incurred in connection with investigating the same) (i) in such proportion as is
appropriate to reflect the relative fault of the Company and the prospective sellers of Registrable
Common Stock covered by the registration statement which resulted in such Loss or action in respect
thereof, with respect to the statements, omissions or action which resulted in such Loss or action
in respect thereof, as well as any other relevant equitable considerations, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in such proportion as
shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and
such prospective sellers, on the other hand, from their sale of Registrable Common Stock; provided
that, for purposes of this clause (ii), the relative benefits received by the prospective sellers
shall be deemed not to exceed the net proceeds received by such sellers. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
The obligations, if any, of the Original Holders of Registrable Common Stock to contribute as
provided in this subsection (d) are several in proportion to the relative value of their
respective Registrable Common Stock covered by such registration statement and not joint. In
addition, no Person shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or Loss effected without such Person’s consent.

          (e) Other Indemnification. The Company and each Original Holder who has registered for
sale shares of its Registrable Common Stock shall, with respect to any required registration or
other qualification of securities under any Federal or state law or regulation of any governmental
authority other than the Securities Act, indemnify Holder Indemnitees and Company Indemnitees,
respectively, against Losses, or, to the extent that indemnification shall be unavailable to a
Holder Indemnitee or Company Indemnitee, contribute to the aggregate Losses of such Holder
Indemnitee or Company Indemnitee in a manner similar to that specified in the preceding subsections
of this Section 8 (with appropriate modifications).

          (f) Indemnification Payments. The indemnification and contribution required by this
Section 8 shall be made by periodic payments of the amount thereof during the course of any
investigation or defense, as and when any Loss is incurred and is due and payable.

     9. Registration Rights to Others. The Company’s Board of Directors is expressly
permitted, by majority vote, to provide to any holder of newly issued shares of the Company’s
Common Stock or any other securities of the Company rights with respect to the registration of such
Common Stock or other securities of the Company under the Securities Act; provided that the Holders
shall have the rights specified in Section 3 with respect to any applicable registration requested
by other Holders.

13

 

     10. Adjustments Affecting Registrable Common Stock. Without the written consent of
Original Holders of a majority of the outstanding shares of Registrable Common Stock issued
pursuant to the Consent Agreements, the Company shall not effect or permit to occur any
combination, subdivision or reclassification of Registrable Common Stock that would materially
adversely affect the ability of the Holders to include such Registrable Common Stock in any
registration of its securities under the Securities Act contemplated by this Agreement or the
marketability of such Registrable Common Stock under any such registration or other offering.

     11. Amendments and Waivers. Any provision of this Agreement may be amended, modified or
waived if, but only if, the written consent to such amendment, modification or waiver has been
obtained from the Original Holder(s) of at least a majority of the shares of Registrable Common
Stock issued pursuant to the Consent Agreements affected by such amendment, modification or waiver.

     12. Nominees for Beneficial Owners. In the event that any Registrable Common Stock is held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the Holder of such Registrable Common Stock for purposes of any request or
other action by any Holder(s) pursuant to this Agreement or any determination of the number or
percentage of shares of Registrable Common Stock held by any Holder(s) contemplated by this
Agreement. If the beneficial owner of any Registrable Common Stock so elects, the Company may
require assurances reasonably satisfactory to it of such owner’s beneficial ownership of such
Registrable Common Stock.

     13. No Assignment. The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and permitted assigns.
The Holders may, at their election, at any time or from time to time, assign their rights under
this Agreement, in whole or in part, to any Transferee of shares of Registrable Common Stock held
by them to the extent such Transferee agrees in writing to be bound by all of the provisions
applicable hereunder to the transferring Holder. The Company may not assign this Agreement or any
right, remedy, obligation or liability arising hereunder or by reason hereof.

     14. Termination of Registration Rights. The Company’s obligations under Sections 2(a) and
3 hereof to register Common Stock for sale under the Securities Act shall terminate on April 13,
2008.

     15. Rule 144. The Company shall take all actions reasonably necessary to enable each
Holder to sell such securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144, or (ii) any similar rule or regulation hereafter
adopted by the Commission including, without limitation, filing on a timely basis all reports
required to be filed by the Exchange Act. Upon the request of any Holder, the Company will deliver
to such Holder a written statement as to whether it has complied with such requirements.

     16. Miscellaneous

          (a) Further Assurances. Each of the parties hereto shall execute such documents and other
papers and perform such further acts as may be reasonably required or

14

 

advisable to carry out the
provisions of this Agreement and the transactions contemplated hereby.

          (b) Headings. The headings in this Agreement are for convenience of reference only and
shall not control or affect the meaning or construction of any provisions hereof.

          (c) Conflicting Instructions. A person or entity is deemed to be a holder of Registrable Common Stock whenever such
person or entity owns of record such Registrable Common Stock. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with respect to the same
Registrable Common Stock, the Company will act upon the basis of instructions, notice or election
received from the registered owner of such Registrable Common Stock.

          (d) Remedies. Each Original Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The parties hereto agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement
and the parties hereto hereby agree to waive the defense in any action for specific performance
that a remedy at law would be adequate.

          (e) Entire Agreement. This Agreement constitutes the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein, and there are no
restrictions, promises, representations, warranties, covenants, or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties hereto with respect to the
subject matter hereof.

          (f) Notices. Any notices or other communications to be given hereunder by any party to
another party shall be in writing, shall be delivered personally, by telecopy, by certified or
registered mail, postage prepaid, return receipt requested, or by Federal Express or other
comparable delivery service, in the case of Original Holders or the Company, to the address of the
party set forth on Schedule A hereto and, in the case of other Holders, to the address found in the
records of the Company’s transfer agent and registrar, or to such other address as the party to
whom notice is to be given may provide in a written notice to the other parties hereto, a copy of
which shall be on file with the Secretary of the Company. Notice shall be effective when delivered
if given personally, when receipt is acknowledged if telecopied, three days after mailing if given
by registered or certified mail as described above, and one Business Day after deposit if given by
Federal Express or comparable delivery service.

          (g) Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.

          (h) Severability. Notwithstanding any provision of this Agreement, neither the Company
nor any other party hereto shall be required to take any action which would be in violation of any
applicable Federal or state securities law. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity, legality or
enforceability of any other provision of this Agreement in such jurisdiction or the validity,
legality or

15

 

enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.

          (i) Counterparts. This Agreement may be executed by facsimile in two or more
counterparts, each of which shall be deemed an original but all of which shall constitute one and
the same Agreement.

16

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
above written.

	 	 	 	 	 	 	 
	 	 	BALLY TOTAL FITNESS HOLDING CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Marc D. Bassewitz	 	 
	 
	 	 	 	 
 Name:
Marc D. Bassewitz
	 	 
	 

	 	 	 	 Title: Senior Vice President and General Counsel	 	 

17

 

	 	 	 	 	 	 	 
	 	 	SPECIAL VALUE BOND FUND II, LLC
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	SVIM/MSM II, LLC
	 

	 	Its:
	 	 	 	Managing Member
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	TENNENBAUM & CO., LLC
	 

	 	Its:
	 	 	 	Managing Member
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Howard Levkowitz
	 	 	 	 	 
	 	 	 	 	Name: Howard Levkowitz
	 	 	 	 	Title: Principal
	 
	 	 	 	 	 	 
	 	 	SPECIAL VALUE ABSOLUTE RETURN FUND, LLC
	 

	 	By:
	 	 	 	SVAR/MM, LLC
	 

	 	Its:
	 	 	 	Managing Member
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	TENNENBAUM CAPITAL PARTNERS, LLC
	 

	 	Its:
	 	 	 	Managing Member
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	TENNENBAUM & CO., LLC
	 	 	Its:	 	Managing Member
	 

	 	By:	 	/s/ Howard Levkowitz
	 	 	 	 	 
	 	 	 	 	Name: Howard
Levkowitz
	 	 	 	 	Title: Principal
	 
	 	 	 	 	 	 
	 	 	SPECIAL VALUE OPPORTUNITIES FUND, LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Howard Levkowitz
	 	 	 	 	 
	 	 	 	 	Name: Howard
Levkowitz
	 	 	 	 	Title: Authorized
Signatory
	 
	 	 	 	 	 	 
	 	 	SPECIAL VALUE EXPANSION FUND, LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Howard Levkowitz
	 	 	 	 	 
	 	 	 	 	Name: Howard
Levkowitz
	 	 	 	 	Title: Authorized
Signatory

18

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