EXHIBIT 10.31
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT, dated as of December 8, 1998 (this
"Amendment"), to the Credit Agreement, dated as of November 18, 1997, as in
effect immediately prior to the date hereof (the "Credit Agreement"), among
BALLY TOTAL FITNESS HOLDING CORPORATION, a Delaware corporation (the
"Borrower"), the several banks and other financial institutions (the "Banks")
parties thereto and THE CHASE MANHATTAN BANK, a New York banking corporation, as
agent (in such capacity, the "Agent") for the Banks.
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Agent and the Banks to
agree to amend certain provisions of the Credit Agreement as set forth in this
Amendment in order to permit the Borrower to issue up to $75,000,000 aggregate
principal amount of its 9-7/8% Senior Subordinated Notes due 2007, Series C; and
WHEREAS, the Agent and the Banks are willing to agree to such
amendments, but only on the terms and subject to the conditions set forth in
this Amendment;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined. In addition,
the terms defined in Section 2 are used herein as therein defined.
2. Amendments to Section 1.01.
(a) Section 1.01 of the Credit Agreement is amended by adding the
following definitions in proper alphabetical order.
"1998 Indenture" means that certain Indenture dated as of
December __, 1998 ("Original 1998 Indenture") between Borrower and U.S.
Bank National Association, as trustee (and any successor trustee
thereto) (and any other indenture, if any, entered into in connection
with a registered exchange offer as long as such other indenture is
substantially identical to, and no less favorable to the Banks than, the
Original ▇▇▇▇ ▇▇▇▇▇▇▇▇▇) relating to the 1998 Subordinated Notes and/or
entered into by the Borrower in connection with a registered exchange
offer of the 1998 Subordinated Notes and/or the
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1997 Subordinated Notes.
"1998 Subordinated Notes" has the meaning ascribed to it in the
definition of Subordinated Debt in Section 1.01.
(b) Section 1.01 of the Credit Agreement is amended by deleting
the definitions "1997 Indenture", "Senior Indebtedness" and "Subordinated Debt"
and substituting therefor the following:
"1997 Indenture" means that certain Indenture, dated as of
October 7, 1997 ("Original 1997 Indenture"), between Borrower and U.S.
Bank National Association, as trustee (and any successor trustee
thereto) (and any other indenture, if any, entered into in connection
with a registered exchange offer as long as such other indenture is
substantially identical to, and no less favorable to the Banks than, the
Original ▇▇▇▇ ▇▇▇▇▇▇▇▇▇) relating to the 1997 Subordinated Notes and/or
entered into by the Borrower in connection with a registered exchange
offer of the 1997 Subordinated Notes and/or the 1998 Subordinated Notes.
"Senior Indebtedness" means Senior Indebtedness of Borrower as
defined in each of 1993 Indenture, the 1997 Indenture, and the 1998
Indenture.
"Subordinated Debt" means (a) Borrower's 13% Senior Subordinated
Notes ("1993 Subordinated Notes") due January 15, 2003, issued under and
pursuant to the 1993 Indenture, (b) Borrower's 9-7/8% Senior
Subordinated Notes due 2007, issued under and pursuant to the 1997
Indenture (together with any of Borrower's 9-7/8% Senior Subordinated
Notes due 2007 issued under the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in exchange therefor,
"1997 Subordinated Notes"), (c) Borrower's 9-7/8% Senior Subordinated
Notes due 2007, issued under and pursuant to the 1998 Indenture
(together with any of Borrower's 9-7/8% Senior Subordinated Notes due
2007 issued under the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in exchange therefor, "1998
Subordinated Notes" and together with the 1993 Subordinated Notes and
the 1997 Subordinated Notes, the "Subordinated Notes"), and (d) any
other Debt of Borrower which is subordinated to the Debt created under
this Agreement and the Notes in a manner and containing terms and
provisions satisfactory to Majority Banks.
3. Amendment to Section 7.02. Section 7.02 of the
Credit Agreement is amended by (i) deleting the word "and" from the end of
clause (h), (ii) deleting the period from the end of clause (i) and substituting
therefor the phrase "; and" and (iii) adding the following new clause (j):
(j) without duplication of Debt permitted by Section 7.02
(b) above, Debt of the Borrower consisting of the 1997
Subordinated Notes and the 1998 Subordinated Notes.
4. Amendments to Section 7.04. (a) Section 7.04 of the
Credit Agreement is amended by deleting from paragraph (c) thereof the phrase
"the Indenture" and substituting therefor the phrase "the 1993 Indenture, the
1997 Indenture, the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇".
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(b) Section 7.04 of the Credit Agreement is amended by adding
the following new paragraph (e) at the end thereof:
(e) Pay interest, principal or premium on the 1998 Subordinated
Notes in violation of Article Thirteen (or the comparable provisions of
a successor indenture) of the 1998 Indenture, or make any payment
thereunder to any holder or the trustee named therein prior to one (1)
Banking Day preceding the times set forth therein for the payment of
same, or make any payment, purchase or redemption of the 1998
Subordinated Notes pursuant to Article Four, Five, Ten, Eleven, Twelve
or Thirteen (or the comparable provisions of a successor indenture) of
the 1998 Indenture or deliver any notice to the trustee under the 1998
Indenture or the holders of the 1998 Subordinated Notes of its intention
to make any such payment, purchase or redemption, or make any "Company
Request" under Section 12.1 (or the comparable provisions of a successor
indenture) of the 1998 Indenture.
(c) Section 7.04 of the Credit Agreement is amended by deleting
from paragraph (b) the phrase "the Indenture" and substituting therefor the
phrase "the 1997 Indenture."
5. Amendment to Section 7.09. Section 7.09 of the Credit
Agreement is amended by (a) deleting the word "and" which appears immediately
before clause (iii) of paragraph (a) and (b) adding the following at the end of
paragraph (a):
and (iv) the Borrower may make a registered exchange offer of
each of the 1997 Subordinated Notes and the 1998 Subordinated
Notes as long as the terms of the subordinated notes issued in
the exchange are substantially identical (and not less favorable
to the Banks than) to those being replaced.
6. Representations and Warranties. The Borrower hereby
confirms that, after giving effect to the amendments provided for herein the
representations and warranties contained in Article V of the Credit Agreement
are true and correct in all material respects on and as of the date hereof and
no Default or Event of Default has occurred and is continuing, and the Borrower
has all necessary power and has taken all corporate action necessary to approve
and authorize this Amendment.
7. Senior Obligations. The 1998 Subordinated Notes are being
issued pursuant to the first paragraph of Section 10.8 of the 1997 Indenture.
The Borrower hereby covenants and agrees that each time it requests that an
Advance be made or a Letter of Credit be issued, renewed or extended under the
Credit Agreement and, after giving effect to such Advance or issuance, renewal
or extension, the sum of the aggregate principal amount of the Advances, the
aggregate undrawn amount of Letters of Credit and the aggregate amount of all
unreimbursed drawings under the Letters of Credit then outstanding would exceed
$70,000,000 (or such lesser amount as is then permitted to be outstanding under
the Credit Agreement under clause (i) of the definition of Permitted
Indebtedness, as defined in the 1997 Indenture and the 1998 Indenture) (such
excess, the "Excess Amount"), it shall either deliver to the Agent a written
notice accompanying such request, demonstrating in detail consistent with past
quarterly certifications that such Excess Amount is then permitted under clause
(ix) of the definition of Permitted
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Indebtedness (as defined in the 1997 Indenture and the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇) or
deliver to the Agent a certificate from Ernst & Young addressed to the Agent
certifying that the Excess Amount is then permitted to be incurred under Section
10.8 of the 1997 Indenture and the 1998 Indenture (based on the Consolidated
Fixed Charge Coverage Ratio test set forth therein) and demonstrating in
reasonable detail its calculations supporting such certification.
8. No Other Amendments. Except as expressly amended hereby,
the Credit Agreement shall continue to be and shall remain, in full force and
effect in accordance with its terms.
9. Counterparts. This Amendment may be executed by the
parties hereto in any number of separate counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
10. Conditions and Effectiveness. This Amendment shall become
effective on the date (the "Effective Date") on which all of the following
conditions have been met:
(a) The Borrower and each Bank shall have executed a
counterpart of this Amendment and the Agent shall have received confirmation of
such execution.
(b) The Guarantors' Consent in the form of Exhibit A attached
hereto shall have been executed on behalf of each Guarantor, and Agent shall
have received confirmation of such execution.
11. Representations and Warranties, No Default. The Borrower
represents and warrants, and will be deemed to have represented and warranted on
the Effective Date, that the representations and warranties contained in Article
V of the Credit Agreement and in each Collateral Document will be true and
correct in all material respects on the Effective Date and that no Default or
Event of Default will have occurred and be continuing on the Effective Date.
12. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK.
13. Costs and Expenses. Borrower agrees to pay on demand:
(a) to Agent all reasonable costs, expenses and attorneys'
fees (including allocated costs for in-house legal services) incurred in
connection with the preparation and administration of this Amendment and
any instrument or agreement required hereunder;
(b) to Agent and to each Bank all reasonable costs, expenses
and attorney's fees (including allocated costs for in-house legal
services) incurred by Agent and each such Bank in connection with the
enforcement of this Amendment or any instrument or agreement required
hereunder; and
(c) to Agent and to each Bank all stamp, registration and
other duties and imposts to which this Amendment and any instrument or
agreement required hereunder
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may be subject. Borrower shall indemnify Agent and each Bank against any
and all liabilities and penalties resulting from any delay in paying, or
failure to pay, any such duties and imposts.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their proper and duly authorized officers
as of the date set forth above.
BALLY TOTAL FITNESS HOLDING
CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Exec. V.P., C.F.O. & Treasurer
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THE CHASE MANHATTAN BANK, as Agent and
as Bank
By:
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Title:
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U.S. BANK NATIONAL ASSOCIATION
By:
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Title:
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LASALLE NATIONAL BANK
By:
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Title:
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PNC BANK, NATIONAL ASSOCIATION
By:
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Title:
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SOCIETE GENERALE
By:
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Title:
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THE SUMITOMO BANK, LIMITED, CHICAGO
BRANCH
By:
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Title:
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▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL CORPORATION
By:
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Title:
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