Exhibit 10.3
CONFORMED COPY
AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT
AMENDMENT NO. 1 TO FORBEARANCE
AGREEMENT, dated as of July 16, 2007 (this “
Amendment ”), by and between Bally Total Fitness
Holding Corporation, a corporation organized under the laws of
Delaware (the “ Borrower ”), the Guarantors
listed on Exhibit A hereto (the “ Guarantors
”), the lenders parties to the Credit Agreement (as defined
in the Forbearance Agreement referred to below) (the “
Lenders ”), JPMORGAN CHASE BANK, N.A., as agent for
the Lenders (in such capacity, the “ Agent ”),
and MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent.
Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Forbearance Agreement (as
defined below).
WHEREAS, pursuant to a Forbearance
Agreement, dated as of April 5, 2007 (the “
Forbearance Agreement ”), by and between the Borrower,
the Guarantors, the Lenders and the Agent, the Lenders and the
Agent (i) agreed to implement a forbearance period in respect
of certain Defaults or Events of Defaults under the Credit
Agreement relating to the Known Defaults and (ii) agreed to
forbear from taking or exercising any Enforcement Action in
connection with the Known Defaults;
WHEREAS, the Lenders and the Agent
desire to extend the forbearance period in respect of the Known
Defaults and, in addition, to forbear at all times through the
Forbearance Period Termination Date (as extended hereby), from
taking or exercising any Enforcement Action in connection with the
Borrower’s failure (i) to make a scheduled payment of
interest on the Senior Notes as due on July 15, 2007 in accordance
with Section 10.1 of the Senior Notes Indenture and
(ii) to furnish reports as required under Section 7.4 of
the Subordinated Notes Indenture or under Section 7.4 of the
Senior Notes Indenture; and
WHEREAS, the Borrower has requested
an extension of the Forbearance Period Termination Date to
July 31, 2007.
NOW, THEREFORE, in consideration of
the promises and the representations, warranties, covenants and
agreements herein contained, and intending to be legally bound
hereby, the Borrower, the Guarantors, the Lenders and the Agent
hereby agree as follows:
ARTICLE I.
AMENDMENTS
Section 1.1 Amendments to
Forbearance Agreement . The Forbearance Agreement is, effective
as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2.1 hereof, hereby
amended as follows:
(a) The
fourth recital of the Forbearance Agreement is amended by deleting
the recital in its entirety and substituting the following in its
place:
“WHEREAS,
(i) the Borrower’s failure to make an interest payment
on the Subordinated Notes on April 16, 2007, (the “
Sub Notes Interest Payment Default ”); and
(ii) the Borrower’s failure to make a scheduled payment
of interest on the Senior Notes as due on July 15, 2007 (the
“ Senior Notes Interest Payment
Default
”), would constitute an event of default under the Senior
Notes Indenture and the Subordinated Notes Indenture, as
applicable.”
(b) The
eighth recital of the Forbearance Agreement is amended by inserting
the phrase “the Senior Notes Interest Payment Default, any
failure by the Borrower to furnish the reports required by
Section 7.4 of the Senior Notes Indenture or Section 7.4
of the Subordinated Notes Indenture,” immediately preceding
the phrase “the Notes Quarterly Financial Statement
Default” in the third line thereof.
(c) Section 3.1(i)
of the Forbearance Agreement is amended by deleting the phrase
“July 13, 2007” and replacing it with the phrase
“July 31, 2007”.
(d) Section 3.1(ii)(B)
of the Forbearance Agreement is amended by inserting the phrase
“or on the Senior Notes” immediately following the
phrase “on the Subordinated Notes”.
(e) Section 3.1(ii)(C)
of the Forbearance Agreement is amended by (i) deleting the
phrase “or (II) the issuance of any enforcement notice
by the trustee under the Senior Notes Indenture or the Subordinated
Notes Indenture, including in each case,” therein and
replacing it with the phrase “but not” and
(ii) inserting the phrase “without the taking of any
enforcement action” immediately following the word
“acceleration” therein.
ARTICLE II.
CONDITIONS OF EFFECTIVENESS
Section 2.1 Conditions of
Effectiveness . This Amendment shall become effective as of the
date first above written when the Agent shall have re
