EXHIBIT 99.1
This Agreement is made as of December 10, 2002 (the “Effective Date”),
by and between Xxx X. Xxxxxxx (the “Executive”) and Bally Total
Fitness Holding Corporation, a Delaware corporation (the “Company”).
WHEREAS, the Executive has been employed by the Company as its Chairman,
President and Chief Executive Officer, pursuant to a 2002 Amended and Restated
Employment Agreement by and between the Company and the Executive, dated as of
March 5, 2002 (the “Employment Agreement”);
WHEREAS, the Executive is hereby resigning from his position as President and
Chief Executive Officer of the Company, member and Chairman of the Board of
Directors of the Company (the “Board”), and from all other positions
with the Company and its subsidiaries or affiliates effective as of the
Effective Date; and
WHEREAS, the Executive and the Company desire to set forth the terms of the
Executive’s separation from the Company.
NOW THEREFORE, the parties hereto, intending to be legally bound, do hereby
agree as follows:
| 1. |
Resignation; Payments; etc. |
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a) |
Resignation.
The Executive hereby resigns, as of the Effective Date, from his position as
President and Chief Executive Officer of the |
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Company, member
and Chairman of the Board, and from all other positions with the Company and its
subsidiaries or affiliates. |
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b) |
Cash Payments. |
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(i) |
The Company
shall pay to the Executive a lump sum in cash of (x) $750,000 on the Revocation
Date (as hereinafter defined) and (y) $550,000 on January 2, 2003. In addition,
the Executive shall be entitled to receive (x) his vested and unvested amounts
credited to the Executive’s account under the Bally Total Fitness
Management Retirement Savings Plan on January 2, 2003, or as soon thereafter as
permitted under such plan and (y) his vested benefits under the Company
Employees Savings Trust 401(k) Plan, in accordance with the terms
thereof. |
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(ii) |
For a period of 24
months, on the first business day of each month commencing on January 2, 2003,
the Company shall pay to the Executive by wire transfer of immediately available
funds, a monthly payment in the amount of $109,895.83. |
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(iii) |
Promptly upon
execution of this Agreement, the Executive shall provide the Company with wire
transfer instructions for the payments to be made pursuant to this Section 1(b). |
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c) |
Stock Options; Restricted Stock. |
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(i) |
At any time on
or before December 31, 2005, the Executive may elect, in accordance with the
terms of the Company’s “cashless exercise” program, to exercise
in part or in full the options to purchase common stock, par value $.01 per
share of the Company (“Common Stock”), granted to the Executive
pursuant to the Option Agreements (as hereinafter defined). Any such exercise
shall be pursuant to the cashless exercise procedures referred to in Section
11.2 of the 1996 Long-Term Incentive Plan of the Company, as amended. |
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(ii) |
In connection with the
execution of this Agreement, the Company and the Executive are entering into an
amendment to the Option Agreements pursuant to which (a) all unvested options
covered by the Option Agreements shall become immediately vested and exercisable
and (b) the exercise period under each of the Option Agreements shall be
extended until December 31, 2005. The term Option Agreements shall mean the
Award Agreements evidencing the grant of options to the Executive to purchase
150,000 shares of Common Stock entered into as of November 19, 1996 and amended
as of August 10, 2001 |
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(the “1996 Option
Agreement”), 125,000 shares of Common Stock entered into as of November 21,
1997 and amended as of August 10, 2001, 50,000 shares of Common Stock entered
into as of each of September 21, 1999 and December 5, 2000, each as amended as
of August 10, 2001 and 60,000 shares of Common Stock entered into as of
September 20, 2001 (collectively, the “Option Agreements”). |
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(iii) |
If at anytime after
September 15, 2003, the Executive exercises on one or more occasion any or all
of the options to purchase up to 150,000 shares underlying the 1996 Option
Agreement on a cashless basis pursuant to Section 1(c)(i) hereof and on the date
of exercise the per share closing price of the Common Stock on the day
immediately preceding the date of exercise is less than $8.31, the Company
promptly shall deliver to the Executive a cash payment in an amount equal to the
product of (x) the number of shares such option is being exercised for
multiplied by (y) the difference between $8.31 and $5.125, which is the amount
of the exercise price of the options underlying the 1996 Option Agreement (the
“Downside Protection Payment”). Any such payment shall be |
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in full
satisfaction of the payments otherwise due upon any such exercise. The Downside
Protection Payment shall be subject to equitable adjustments in the event of any
stock split, recapitalization or similar transaction affecting the Common Stock
or the exercise price of the options underlying the 1996 Option Agreement.
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(iv) |
In connection with the
execution of this Agreement, the Company and the Executive are entering into an
amendment to the Restricted Stock Award Agreement dated as of September 20, 2001
between the Company and the Executive, as amended as of June 6, 2002, and the
Restricted Stock Award Agreement dated as of April 1, 2002 between the Company
and the Executive, as amended as of June 6, 2002 (collectively, the
“Restricted Stock Agreements”), pursuant to which all restrictions
with respect to the Shares (as defined in the Restricted Stock Agreements) shall
lapse on, and certificates for the Shares shall be distributed to Executive as
soon as reasonably practicable on or after the Revocation Date, notwithstanding
Executive’s termination of employment by the Company or the occurrence or
non-occurrence of any other event; provided |
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that the
Executive shall have delivered to the Company a bank cashier’s check or
wire transfer in the amount sufficient to satisfy the Company’s withholding
obligations due as a result of the delivery of the shares of Common Stock to the
Executive. |
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d) |
Benefits.
For a period commencing on the Effective Date and ending on December 31, 2005
(the “Benefits Period”), the Executive (and his immediate family
members) shall be entitled to continued coverage under the Company’s
medical, prescription drug, dental, hospitalization and life insurance plans at
levels afforded other senior executive officers of the Company and consistent
with that afforded under the Company’s policies. In addition, during the
Benefits Period the Company will provide the Executive with (i) disability
insurance under the CIGNA group policy with a benefit of $10,000 per month, (ii)
supplemental disability insurance in an amount which, when combined with the
CIGNA group policy, will provide a benefit amount equal to $32,500 per month and
(iii) an amount equal to two hundred percent (200%) of the premium (and any
other costs) necessary to maintain in full force and effect a policy of term
insurance on the life of the Executive in an amount equal to $2,000,000. In
the |
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event that the
terms of any such employee benefit plan maintained by or on behalf of the
Company prohibit the Executive from receiving coverage thereunder, the Company
shall provide the Executive with the after tax economic equivalent of such
benefits. The economic equivalent of any benefit forgone shall be deemed the
cost that would be incurred by the Executive in obtaining such benefit on the
reasonably lowest available basis. At such times and to the extent that the
Executive in fact receives benefits of equal or better value from another
employer, the Company shall not be required to provide duplicative benefits to
the Executive. |
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e) |
Warrants.
Promptly after the execution of this Agreement, the Company and the Executive
shall enter into an amendment to the Warrant Agreement dated as of December 29,
1995 between the Company and Bally Entertainment Corporation (the “Warrant
Agreement”), pursuant to which (i) the Exercise Deadline (as defined in the
Warrant Agreement) shall be extended to December 31, 2007, (ii) so long as the
Executive (or his heirs) owns the warrants underlying Warrant Certificate No.
W-3 issued to the Executive by the Company (“the Warrants”), the
Exercise Price (as defined in the Warrant Agreement) shall be subject to being
reduced in an amount by which $8.31 ex- |
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ceeds the
Closing Price (as defined in the Warrant Agreement) on the trading day
immediately preceding the date of exercise, with a maximum reduction of $1.00
per share (subject to equitable adjustments in the event of any stock split,
recapitalization or similar transaction affecting the Common Stock) and (iii)
the Executive shall be responsible for any taxes due or payable by him in
connection with the execution of the amendment or otherwise in connection with
the Warrants. In addition, the Company and the Executive shall promptly enter
into an amendment of that certain Registration Rights Agreement originally
entered into as of the 29th day of December, 1995 between the Company
and Bally Entertainment Corporation (the “Registration Rights
Agreement”) to provide the Executive one demand right for shelf
registration (the “Shelf Registration Statement”) with respect to the
shares of Common Stock underlying the Warrants. Subject to the terms of the
Registration Rights Agreement, as amended, the Company shall agree to keep the
Shelf Registration Statement effective from the date of demand by the Executive
through the earlier of the date which is 30 days after the last day which the
Warrants may be exercised pursuant to the Warrant Agreement or the |
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date all shares
registered pursuant to the Shelf Registration Statement have been sold. |
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e) |
Put Right. |
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(i) |
Subject to the
terms and conditions hereof, the Executive shall be entitled, by giving notice
to the Company (the “Put Notice”) at anytime during the one week
period commencing on September 15, 2003 and ending at 5:00 p.m. Chicago time on
September 21, 2003, to require the Company to purchase at the Put Purchase Price
(as defined below) all or part of the 204,000 shares of Common Stock
beneficially owned by the Executive as of the Effective Date (the “Put
Right”). The Put Notice shall (x) specify the amount of shares of Common
Stock to be sold, (y) contain an irrevocable commitment to sell such Common
Stock in the manner set forth in this Section 1(f) and (z) specify the date such
shares are to be sold (which date shall be not less than 10 business days nor
more than 20 business days after the delivery of the Put Notice (the “Put
Closing Date”). |
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(ii) |
The aggregate purchase
price for the shares of Common Stock to be purchased pursuant to the Put Right
shall be equal to the |
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product of (x)
the number of shares of Common Stock to be purchased multiplied by (y) $8.31
(the “Put Purchase Price”). The Put Purchase Price shall be subject to
equitable adjustments in the event of any stock split, recapitalization or
similar transaction affecting the common stock. |
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(iii) |
The consummation
of the transactions pursuant to an exercised Put Right shall take place on the
Put Closing Date in accordance with this Section 1(f). On the Put Closing Date
the Company shall pay the Put Purchase Price by cashier’s check or wire
transfer of immediately available funds to an account designated by the
Executive in exchange for the Common Stock being purchased. The Executive shall
cause the shares of Common Stock being purchased pursuant to the Put Right to be
delivered to the Company at the closing free and clear of all liens, charges or
encumbrances of any kind and shall take all such actions as the Company
reasonably requests to vest in the Company title to such shares being purchased
free of any lien, charge or encumbrance. |
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(iv) |
The Company
shall have the right to assign the obligation to purchase the shares underlying
the Put Right to a third party |
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reasonably
acceptable to the Executive, provided that any such assignment shall not
relieve the Company from its obligations under this Section 1(f) in the event
the assignor fails to satisfy its obligation to purchase the shares subject to
the Put Right. In connection with any such assignment, the Executive shall take
any actions reasonably requested by such third party in connection with such
assignment, including entering into a new agreement with such third party that
would govern the Put Right and contain customary provisions relating generally
to put rights. The Company shall reimburse the Executive for reasonable counsel
fees and expenses incurred by the Executive in connection any such assignment. |
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g) |
Office Space;
Personal Assistant. In order to initially facilitate the Executive’s
cooperation with the Company in accordance with Section 5 of this Agreement, the
Company shall reimburse the Executive for the cost of furnished office space,
two phone lines, voicemail, a facsimile line and two e-mail accounts, at a
location selected by the Executive other than the Company’s facilities, for
a 12-month period commencing January 1, 2003, at an aggregate cost not to exceed
$7,500 per month. The Executive shall continue to have the services |
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of his personal
assistant (or, in the event his personal assistant is no longer employed by the
Company, another personal assistant with comparable skills) who shall work from
the Executive’s offsite office location, who shall continue to receive from
the Company salary and all employee benefits to which other employees of the
Company are entitled until December 31, 2003. In connection with the foregoing,
the Executive and his personal assistant shall continue to have access to their
voicemail boxes (or shall have their calls automatically forwarded) until
January 31, 2003. The Executive hereby agrees to release, hold harmless and
indemnify the Company for any and all claims, demands, causes of action and
controversies which may be brought by such personal assistant against the
Company as a result of the Executive’s actions after the Effective Date. |
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h) |
Health Club
Memberships. Subject to the Company’s normal rules and limitations,
until December 31, 2005, the Executive shall have the right, free of charges, to
club memberships for himself, his immediate family and 25 others, at health and
fitness club facilities operated by the Company and its affiliates. |
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i) |
Other. In
addition to the foregoing, |
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(i) |
the Executive
acknowledges that, except for accrued but unpaid salary from the last regularly
scheduled payroll period through the Effective Date and unreimbursed business
expenses incurred by Executive in the performance of his responsibilities and
duties for the Company (the “Accrued Cash Obligations”), each of which
the Company agrees to pay (in accordance with the terms of the Company business
expense polices with respect to the expenses incurred by the Executive in the
performance of his responsibilities and duties for the Company), he has received
all salary payments and all other amounts due him through the Effective Date and
that except for the Accrued Cash Obligations no further salary or other
compensation for services rendered is due to him for services rendered through
the Effective Date; |
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(ii) |
notwithstanding
anything to the contrary in this Agreement or any other agreement, the Executive
acknowledges that (a) he is responsible for all taxes that he may incur with
respect to any of the consideration to be delivered to him under this Agreement
or otherwise in connection with the transactions contem- |
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plated hereby,
including, without limitation, any taxes that he may incur under the Option
Agreements, the Restricted Stock Agreements or the Warrant Agreement or as a
result of the exercise or receipt of securities thereunder or the amendments
thereto (the “Payments”), notwithstanding anything to the contrary
contained in the Option Agreements, Restricted Stock Agreements or the Warrant
Agreement and (b) the Company shall be permitted to deduct all applicable
withholding taxes to the extent required by law from the Payments and to require
the Executive to pay by cashier’s check or wire transfer such withholding
taxes; and |
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(iii) |
the Company shall
promptly notify the Executive of any taxes that it has determined to withhold
from the Payments. |
| 2. |
Restrictive Covenants
The Executive acknowledges that the Company's trade secrets, information
concerning products and services and their development, technical information,
marketing and sales activities and procedures, promotion and pricing techniques
and credit and financial data concerning the Company and its customers are
valuable, special and unique assets of the Company, access to and knowledge of
which have been gained by virtue of the Executive's position and involvement
with the Company. Accordingly, |
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and in partial
consideration for the payments and benefits provided for in Section 1 hereof,
the Executive agrees to be bound by the restrictive covenants and the other
agreements contained in this Agreement to the maximum extent permitted by law,
it being the intent and spirit of the parties that the restrictive covenants and
the other agreements contained herein shall be valid and enforceable in all
respects. |
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a) |
Noncompetition.
The Executive shall not, during the eighteen (18) month period commencing on the
Effective Date, directly or indirectly: |
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(i) be, or be engaged or
serve as, a partner, officer, director, employee, equity holder or consultant by
any entity (other than Xxxxxx Place, P.L.C.) which is engaged in the operation
of health or fitness clubs within five (5) miles of any facility which on the
Effective Date is owned, managed or under development or to be owned or managed
by the Company and/or by a franchisee of the Company (“Facility”);
provided, however, that the ownership of not more than one percent (1%) of the
stock in a publicly-traded corporation shall not be deemed violative of this
Section 2; and provided further, however, that the foregoing shall not be
construed to prohibit the Executive from conducting speaking engagements for
industry associations, hospitals, |
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not-for-profit
entities and other similar organizations; and (ii) induce any person who is an
officer of the Company to terminate said relationship or employ, or assist in
employing or otherwise associate in a business related to the Company’s
business with any officer or employee of the Company who held such position
within three (3) months before the Effective Date provided, however, that the
foregoing shall not prohibit the Executive from employing, directly or
indirectly through a company or organization of which the Executive is an
officer or employee, the personal assistant referred to in Section 1(g) of this
Agreement. |
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b) |
Confidentiality.
The Executive shall not disclose, divulge, discuss, copy or otherwise use or
suffer to be used in any manner, in competition with, or contrary to the
interests of the Company, the customer lists, pricing information, business
strategies, expansion plans, inventions, ideas, discoveries, manufacturing
methods, product research or engineering data or other trade secrets of the
Company (collectively, the “Trade Secrets”), it being acknowledged by
the Executive that all such information regarding the business of the Company
compiled or obtained by, or furnished to, the Executive while he shall have been
employed by or associated with the Com- |
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pany is
confidential information and the exclusive property of the Company. The Company
acknowledges that the Executive possesses substantial experience and know-how in
the health and fitness club industry and that the application of such experience
and know-how to the activities of Xxxxxx Place, P.L.C. shall not constitute a
breach of this Section 2, provided that the Executive does not disclose
or divulge Trade Secrets to Xxxxxx Place, P.L.C. or its representatives. In
addition, the obligations of confidentiality set forth in this Section 2 shall
not apply (i) with respect to Trade Secrets that become generally available to
the public other than as a result of disclosure by Executive or (ii) to the
extent that disclosure is required by deposition, interrogatories, requests for
information or documents in legal proceedings, subpoenas, civil investigative
demand or similar process; provided, however, that the Executive shall give the
Company prompt notice of any such request or demand for such information upon
his receipt of same and the Executive shall reasonably cooperate with the
Company in any application the Company may make seeking a protective order
barring disclosure of the Trade Secrets by the Executive. |
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c) |
Solely for
purposes of this Section 2, the term “Company” shall be deemed to
include Bally Total Fitness Holding Corporation and each of its subsidiaries,
affiliates, franchisees and joint ventures to which Bally Total Fitness Holding
Corporation or any of its subsidiaries, affiliates, franchisees, joint ventures
or is a party, together with their respective successors or assigns, which are
involved primarily in the operation or management of health or fitness
facilities. |
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Standstill
Agreement. The Executive, during the twenty-four (24) month period
commencing on the Effective Date, agrees that he shall not, and shall cause any
person or entity controlled by him not to: (i) in any manner acquire, agree to
acquire or make any proposal to acquire ownership directly or indirectly
(including, but not limited to beneficial ownership as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) of any securities entitled to vote in the election of directors or
other equity interests in the Company or any rights or options to acquire such
ownership other than the acquisition of Common Stock pursuant to the Option
Agreements, the Restricted Stock Agreements and the Warrant Agreement; (ii)
solicit proxies or consents, directly or indirectly, or become a
“participant” in any “solicitation” (as such forms are
defined in Regulation 14A under the Exchange Act) of proxies or consents to
vote, or seek to advise |
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or influence any
person with respect to the voting of, any securities entitled to vote in the
election of directors of the Company; (iii) with respect to any securities
entitled to vote in the election of directors of the Company, form, join or be
part of any “group” (within the meaning of Section 13(d)(3) of the
Exchange Act); (iv) serve, or agree to serve, as a director, nominee for
director, officer, employee or consultant of the Company (other than to fulfill
his obligations under Section 5 of this Agreement); (v) otherwise act, alone or
in concert with others, to seek to control or influence the management or Board
or policies of the Company; (vi) initiate any communications with any employee
of the Company concerning any possible acquisition of the Company or
transaction related to the management or control of the Company; (vii) disclose
any intention, plan or arrangement inconsistent with any of the foregoing; or
(viii) advise, assist or encourage any other person in connection with any of
the foregoing. |
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| 4. |
Rights and
Remedies Upon Breach. If either party breaches, or threatens to commit a
breach of, any of the provisions of this Agreement, the non-breaching party
shall have the following rights and remedies, each of which shall be independent
of the others and severally enforceable, and each of which shall be in addition
to, and not in lieu of, any other rights or remedies available to the
non-breaching party at law or in equity under this Agreement, |
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a) |
Specific
Performance. The right and remedy to have each and every one of the
covenants in this Agreement specifically enforced and the right and remedy to
obtain injunctive relief, it being agreed that any breach or threatened breach
of any of the covenants in this Agreement would cause irreparable injury to the
non-breaching party and that money damages would not provide an adequate remedy
to the non- breaching party. |
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b) |
Accounting. The
right and remedy to require the Executive to account for and pay over to the
Company and its subsidiaries, successors or assigns, as the case may be, all
compensation, profits, monies, accruals, increments or other benefits derived
or received by the Executive that results from any transaction or activity
constituting a breach of this Agreement. |
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c) |
Severability of
Covenants. The Executive acknowledges and agrees that the restrictive
covenants in this Agreement are reasonable and valid in geographic, temporal and
subject matter scope and in all other respects, and do not impose limitations
greater than are necessary to protect the goodwill, proprietary information, and
other business interests of the Company. If, however, any court of competent
juris- |
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diction
subsequently determines that any of the restrictive covenants, or any part
thereof, is invalid or unenforceable, the remainder of the restrictive covenants
shall not thereby be affected and shall be given full effect without regard to
the invalid portions. |
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d) |
Blue-Penciling.
If any court of competent jurisdiction determines that any of the restrictive
covenants, or any part thereof, is unenforceable because of the duration or
geographical and/or subject matter scope of such provision, such court shall
have the power to reduce the duration or scope of such provision, as the case
may be, and, in its reduced form, such provision shall then be enforceable to
the maximum extent permitted by applicable law. |
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e) |
Enforceability in All
Jurisdictions. The Executive intends to and hereby confers jurisdiction to
enforce each and every one of the covenants in this Agreement upon the courts of
any jurisdiction within the geographic scope of such restrictive covenants. If
the courts of any one or more of such jurisdictions hold the restrictive
covenants unenforceable by reason of the breadth of such scope or otherwise, it
is the intention of the Executive that such determination shall not bar or in
any way affect the Company’s, or any of its subsidiaries’,
affiliates’, successors’ or assigns’ right to the relief provided
above in the |
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courts of any other
jurisdiction within the geographic scope of such restrictive covenants, as to
breaches of such restrictive covenants in such other respective jurisdictions,
such restrictive covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants. Notwithstanding the
foregoing, the Company and the Executive acknowledge that, in the event that the
Company seeks to enforce the covenants in this Agreement, the Company will first
seek to enforce such covenants in the courts of the State of Illinois and of the
United States located in Chicago, Illinois, and the Company will only seek to
enforce the covenants in this Agreement in a court in jurisdiction other than
the courts of the State of Illinois and of the United States located in Chicago,
Illinois, if such court(s) in Illinois fails to fully enforce any such covenant
in such jurisdiction. In the event that the Company seeks to enforce the
covenants in this Agreement in a jurisdiction other than the courts of the State
of Illinois and of the United States located in Chicago, Illinois, the Executive
shall not raise a defense of res judicata, claim preclusion or issue preclusion
based on the prior action in the courts of the State of Illinois and of the
United States located in Chicago, Illinois. |
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| 5. |
Cooperation.
The Executive agrees to cooperate reasonably in the Company’s handling or
resolution of any matter in which the Executive was involved in the course of
his employment, provided that such requests shall not be unduly burdensome. By
way of example only, such obligation of reasonable cooperation may include
furnishing information and assisting the Company in legal proceedings. Promptly
following submission of a written statement by the Executive, the Company shall
reimburse the Executive his reasonable out-of-pocket costs and other reasonable
expenses incurred in connection with his cooperation pursuant to this Section. |
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| 6. |
Releases. |
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(i) |
The Executive, on
behalf of himself and his agents, assignees, attorneys, heirs and executors (the
“Executive Releasors”), agrees to and does hereby forever release the
Company, any affiliated companies, and their past and present parents,
subsidiaries, and present and former employees, officers, directors,
shareholders, agents, successors and assigns of any of them (such individuals as
described and such corporate entities collectively, the “Company
Releasees”) from any and all |
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claims, demands,
causes of action, controversies, agreements, promises and remedies, of any type
which the Executive may have as of the date hereof, whether known or unknown,
including without limitation, arising out of the Employment Agreement or
otherwise in connection with or in relationship to the Executive’s capacity
as an employee, officer or director of the Company or any of its subsidiaries or
affiliates, and the termination of any such capacity, other than with respect to
the rights expressly preserved in this Agreement, the Option Agreements, the
Restricted Stock Agreements, the Warrant Agreement, the Registration Rights
Agreement or the indemnification rights referenced in clause (ii) (such released
claims are collectively referred to herein as the “Released Executive
Claims”). Without any limitation on the foregoing, the Released Executive
Claims shall include any claims arising under the Age Discrimination in
Employment Act (“ADEA”), Title VII of the Civil Rights Act, the
Americans with Disabilities Act, the Illinois Human Rights Act and all other
federal, state and local labor and anti-discrimination laws, each as
amended. |
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(ii) |
Notwithstanding
the foregoing, the Executive does not waive, and “Released Executive
Claims” shall not include, any rights to which he may be entitled (A) to
seek to enforce this Agreement, the Option Agreements, the Restricted Stock
Agreements, the Warrant Agreement, the Registration Rights Agreement or the
indemnification rights referenced in this clause (ii), or (B) to obtain
contribution as permitted by law in the event of the entry of judgment against
him as a result of any act or failure to act for which both the Executive and
the Company are held to be jointly liable. The Executive shall have all rights
of indemnification provided by the Delaware General Corporation Law, the Amended
and Restated Certificate of Incorporation of the Company (the
“Charter”), the Amended By-laws of the Company (the
“By-laws”) and the Indemnification Agreement dated January 3, 1996
between the Company and the Executive (the “Indemnification
Agreement”), each as they exist on the Effective Date. |
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(iii) |
The Executive,
on behalf of himself and the Executive Releasors, promises never to file a
lawsuit asserting any Released Executive Claims against the Company Releasees. |
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b) |
Release by the Company. |
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(i) |
The Company, on
behalf of itself and any affiliated companies and their past and present parents
and subsidiaries (the “Company Releasors”), agrees to and does hereby
forever release the Executive and his family, estate, agents, attorneys, heirs,
executors, successors and assigns (the “Executive Releasees”) from any
and all known claims, demands, causes of action, controversies, agreements,
promises and remedies, of any type which any of the Company Releasors may have
as of the date hereof, including, without limitation, any rights arising out of
or otherwise in connection with or in relationship to the Executive’s
capacity as an employee, officer or director of any of the Company Releasors
(the “Released Company Claims”). |
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(ii) |
Notwithstanding the
foregoing, the Company does not waive, and “Released Company Claims”
shall not include, any rights to which the Company may be entitled to seek to
enforce this Agreement. |
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(iii) |
The Company, on
behalf of itself and the Company Releasors, agrees never to file a lawsuit
against the Executive Releasees asserting any Released Company Claims. |
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(iv) |
In addition to
the Executive’s indemnification rights referenced in Section 6(a)(ii), in
the event that the Company files a lawsuit against the Executive for any
unknown claims, demands, causes of action, controversies, agreements, promises
or remedies, of any type which it may have as of the date hereof, the Executive
shall have the right to require the Company to promptly advance, upon receipt of
invoices, the attorney’s fees incurred by the Executive in defending any
such lawsuit, provided that the Executive hereby undertakes to repay such fees
to the Company if it shall ultimately be determined that the Executive is not
entitled to indemnification under the Delaware General Corporation Law, the
Charter, the By-laws or the Indemnification Agreement or if the Company
ultimately prevails in any such suit. |
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a) |
Mutual
Nondisparagement. The Executive shall not make any public statements,
encourage others to make statements or release information intended to
disparage or defame the Company, its subsidiaries or affiliates or their
products or services or their officers, directors, managers or employees. The
Company, on behalf of itself and its |
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subsidiaries and
affiliates shall not make any public statements, encourage others to make
statements or release information intended to disparage or defame the Executive.
Notwithstanding the foregoing, nothing in this Section 7(a) shall prohibit any
person from (i) making truthful statements when required by order of a court or
other governmental body having jurisdiction or (ii) making truthful statements
in private conversations in connection with seeking employment or other
occupational engagements such as consulting relationships or advising boards of
directors that are not intended for public dissemination. |
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b) |
Submission to
Jurisdiction. Subject to Section 4, the parties hereby irrevocably and
unconditionally submit to the exclusive jurisdiction of the courts of the State
of Illinois and of the United States located in Chicago, Illinois over any suit,
action or proceeding arising out of or relating to this Agreement. The parties
hereby irrevocably and unconditionally waive any objection that the laying of
venue of any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. |
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c) |
General. No
provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and signed by the
Executive and the Company. No waiver |
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|
by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of any similar or dissimilar provisions or
conditions at the same or any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware without regard to its conflicts of law principles. |
| 8. |
Validity.
The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. |
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| 9. |
Notices.
For the purpose of this Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be sent by
messenger, overnight courier, certified or registered mail, postage prepaid and
return receipt requested or by facsimile transmission to the parties at their
respective addresses and fax numbers set forth below or to |
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such other
address or fax number as to which notice is given. |
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If to the
Executive: |
Xxx X. Xxxxxxx |
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[REDACTED] |
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Fax: [REDACTED]; with a copy to: |
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Jenner & Block, LLC |
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Xxx XXX Xxxxx |
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Xxxxxxx, XX 00000 |
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Attention: Xxxxxx X. Xxxxxx |
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Xxxxxxx X. Xxxxx |
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Xxxxxx X. Xxxxxx |
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Fax: 000-000-0000 |
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If to the Company: |
Bally Total Fitness Holdings Corporation |
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0000 Xxxx Xxxx Xxxx Xxxxxx |
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Xxxxxxx, Xxxxxxxx 00000 |
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Attention: General Counsel |
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Fax: 000-000-0000 |
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Notices, demands and other communications shall be deemed given on delivery
thereof. |
| 10. |
Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument. |
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| 11. |
Entire Agreement;
Effect on Employment Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or |
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written, by
either party or by any officer, employee or representative of either party
hereto. Without limiting the generality of the foregoing, as of the Effective
Date, the Employment Agreement shall become null and void and of no further
force and effect. |
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| 12. |
Review and
Revocation. The Executive acknowledges that the Company has advised him to
consult with an attorney of his choosing prior to signing this Agreement. The
Executive understands and agrees that he has the right and has been given the
opportunity to review this Agreement and, specifically, the release in Section 6
hereof, with an attorney of his choice. The Executive also understands and
agrees that he has entered into this Agreement freely and voluntarily. The
Executive has twenty-one (21) days to consider the release of his rights,
although he may sign this Agreement sooner if he so desires. Furthermore, once
the Executive has signed this Agreement, he has seven (7) additional days from
the date he signs it to revoke his consent to the release of his rights. The
Executive’s release of his rights will not become effective until seven (7)
days after the date he has signed this Agreement (the expiration of such 7th day
being referred to herein as the “Revocation Date”). In the event that
the Executive revokes, on or before the Revocation Date, his consent to the
release of his rights, the Executive shall return all amounts paid by the
Company pursuant to this Agreement, and the Company and the |
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Executive shall
execute such further instruments as may be necessary to restore them to their
respective rights prior to the execution of this Agreement, including without
limitation, the nullification of the amendments to the various equity awards
contemplated herein. |
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| 13. |
No Admission of Wrongdoing.
The Company's offer to the Executive of this Agreement and the payments and
benefits set forth herein is not intended to, and shall not be construed as, an
admission of liability by the Company or of any improper conduct on the
Company's part, all of which the Company specifically denies. |
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| 14. |
Representations of
the Company. The Company represents and warrants to the Executive that the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized on
behalf of the Company and that all corporate action required to be taken by the
Company for the execution, delivery and performance of this Agreement has been
duly take by the Company. |
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| 15. |
Expenses. The
Company agrees to reimburse the Executive, in an amount not to exceed $100,000,
with respect to the reasonable fees and expenses of Jenner & Block, LLC in
connection with the negotiation of this Agreement. |
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date set forth above.
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