EXHIBIT 99.1
THIS EMPLOYMENT AGREEMENT (the “Agreement”) made in Chicago, Illinois,
dated as of January 1, 2005 (the “Effective Date”), by and between
Bally Total Fitness Holding Corporation, a Delaware Corporation with its
headquarters at 0000 Xxxx Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 00000-0000
(hereinafter called the “Company” or “Bally”), and Xxxx
Xxxxxxxxx (hereinafter called the “Executive”).
WHEREAS, the Company desires to obtain the Executive’s experience,
skills, knowledge, and background for the benefit of the Company and the
efficient achievement of its long-term strategy, and is therefore willing to
employ the Executive upon the terms and conditions, and in consideration of the
compensation and other benefits, provided herein; and
WHEREAS, the Executive is willing to serve the Company under such terms
and conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
| 1. |
Definitions.
For purposes of this Agreement, the following capitalized terms shall have the
indicated meanings: |
| |
(a) |
“Annual Bonus”
shall mean the Executive’s Annual Bonus, as defined in Section 4(b) of this
Agreement. |
| |
(b) |
“Bally”
shall mean the Company |
| |
(c) |
“Base Salary”
shall mean the Executive’s Base Salary, as defined in Section 4(a) of this
Agreement. |
| |
(d) |
“Benefit”
shall mean a Benefit, as defined in Section 8(a) of this Agreement. |
| |
(e) |
“Board”
shall mean the Board of Directors of the Company. |
| |
(f) |
“Business Relocation Beyond a Reasonable Commuting Distance”
shall mean a change in the Executive’s principal work location to a
location that (i) is more than twenty (20) highway miles from the Executive’s
principal work location immediately prior to the Change in Control, and (ii)
increases the Executive’s commuting distance in highway
mileage. |
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(g) |
“Cause”
shall mean the Executive’s: |
| |
(i) |
Conviction of
a crime, including by a plea of guilty or nolo contendere, involving
theft, fraud, perjury, or moral turpitude; |
| |
(ii) |
Intentional or
grossly negligent disclosure of confidential or trade secret information of the
Company to anyone not entitled to such information; |
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(iii) |
Omission or
dereliction of any statutory or common law duty of loyalty to the
Company; |
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(iv) |
Failure to
cure a material violation of the Company’s Code of Conduct or any other
written Company policy within thirty (30) days following the Company’s
written notice to the Executive of such material violation and the steps
required by the Executive to effect such cure; or |
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(v) |
Repeated
failure to carry out the material components of the Executive’s duties
despite specific written notice to do so by the Board. |
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(h) |
“CEO”
shall mean the Chief Executive Officer of the Company. |
| |
(i) |
“Change In Control”
shall mean the happening of any of the following events: |
| |
(i) |
An acquisition
by any individual, entity, or group (within the meaning of Sections 13(d)(3) or
14(d)(2) of the Exchange Act) (an “Entity”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of either (A) the then-outstanding shares of common stock of the Company
(the “Outstanding Company Common Stock”), or (B) the combined voting
power of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); excluding, however, the following: (1) any acquisition
directly from the Company, other than an acquisition by virtue of the exercise
of a conversion privilege unless the security being so converted was itself
acquired directly from the Company, (2) any acquisition by the Company, (3) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by, or under common
control with, the Company, or (4) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B), and (C) of subsection (iii)
of this Section (i); |
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(ii) |
A change in
the composition of the Board such that the individuals who, as of the Effective
Date, constitute the Board (such Board shall be hereinafter referred to as the
“Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that for purposes of
this definition, any individual who becomes a member of the Board subsequent to
the Effective Date, whose election, or nomination for election, by the
Company’s stockholders was approved by a vote of at least a majority of
those individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this provision), shall be
considered as though such individual |
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were a member
of the Incumbent Board; and
provided further, however, that any such individual whose initial
assumption of office occurs as a result of or in connection with either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of an Entity other than the
Board shall not be so considered as a member of the Incumbent Board; |
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(iii) |
The approval
by the stockholders of the Company of a merger, reorganization, consolidation,
or sale or other disposition of all or substantially all of the assets of the
Company (each, a “Corporate Transaction”) or, if consummation of such
Corporate Transaction is subject, at the time of such approval by stockholders,
to the consent of any government or governmental agency, the obtaining of such
consent (either explicitly or implicitly by consummation, followed by the
consummation of the Corporate Transaction); excluding, however, such a Corporate
Transaction pursuant to which (A) all or substantially all of the individuals
and entities who are the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Corporate Transaction will beneficially own, directly or indirectly,
more than sixty percent (60%) of, respectively, the outstanding shares of common
stock, and the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Corporate Transaction (including, without
limitation, a corporation or other person which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries (a “Parent Company”) in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Entity (other than the
Company, any employee benefit plan (or related trust) of the Company, such
corporation resulting from such Corporate Transaction, or, if reference was made
to equity ownership of any Parent Company for purposes of determining whether
clause (A) above is satisfied in connection with the applicable Corporate
Transaction, such Parent Company) will beneficially own, directly or indirectly,
twenty percent (20%) or more of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of such corporation
entitled to vote generally in the election of directors unless such ownership
resulted solely from ownership of securities of the Company prior to the
Corporate Transaction, and (C) individuals who were members of the Incumbent
Board will immediately after the consummation of the Corporate Transaction
constitute at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction (or, if reference was made
to |
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equity
ownership of any Parent Company for purposes of determining whether clause (A)
above is satisfied in connection with the applicable Corporate Transaction, of
the Parent Company); or |
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(iv) |
The approval
by the stockholders of the Company of a complete liquidation or dissolution of
the Company. |
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(j) |
“Code”
shall mean the Internal Revenue Code of 1986, as amended. |
| |
(l) |
“Competitive Activity”
shall mean a Competitive Activity, as defined in Section 5(a)(i)of this
Agreement. |
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(m) |
“Effective Date”
shall mean January 1, 2005. |
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(n) |
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended. |
| |
(o) |
“Excise Tax”
shall mean the Excise Tax, as defined in Section 8(a) of this Agreement. |
| |
(p) |
“Excise Tax Adjustment Payment”
shall mean the Excise Tax Adjustment Payment, as defined in Section 8(a) of this
Agreement. |
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(q) |
“Executive”
shall mean Xxxx Xxxxxxxxx. |
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(r) |
“Expiration Date”
shall mean the Expiration Date, as defined in Section 3 of this
Agreement. |
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(s) |
“Extension Date”
shall mean the Extension Date, as defined in Section 3 of this
Agreement. |
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(t) |
“Firm”
shall mean the Firm, as defined in Section 8(b) of this Agreement. |
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(u) |
“Good Reason”
shall mean the occurrence of any of the following events without the
Executive’s express written consent: |
| |
(i) |
A material
Reduction in Authority or Responsibility; |
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(ii) |
A Reduction in
Compensation; or |
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(iii) |
A Business
Relocation Beyond a Reasonable Commuting Distance. |
| |
A Reduction
in Authority or Responsibility shall be determined in accordance with the
criteria set forth in the definition of such term below; provided,
however, that (A) changes in reporting relationships (so long as
Executive still directly reports to the Chairman or Chief Executive Officer) or
(B) a reduction in the |
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Executive’s business unit’s budget or a reduction in the
Executive’s business unit’s head count, by themselves, shall not
constitute Good Reason. |
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(v) |
“Income Tax Gross-Up Payment”
shall mean the Income Tax Gross-Up Payment, as defined in Section 4(d) of this
Agreement. |
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(w) |
“Income Taxes”
shall mean any Federal, state, or local income taxes or FICA taxes. |
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(x) |
“Indemnitees”
shall mean the Indemnitees, as defined in Section 6(h) of this
Agreement. |
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(y) |
“IRS”
shall mean the Internal Revenue Service. |
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(z) |
“Long-Term Disability”
shall mean the Executive’s mental or physical condition which would render
the Executive eligible to receive disability benefits under the Basic Bally
Long-Term Disability Plan and Bally Executive Medical Plan or any successor to
such plans. |
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(aa) |
“LTIP”
shall mean the LTIP, as defined in Section 4(c) of this Agreement. |
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(bb) |
“Products”
shall mean the Products, as defined in Section 19 of this Agreement. |
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(cc) |
“Reduction in Authority or Responsibility”
shall mean, during the Term of Employment, (i) the assignment to the Executive,
within six (6) months before or any time after a Change in Control, of any
duties that are materially inconsistent in any respect with the Executive’s
position (which may include status, offices, titles, and reporting
requirements), authority, duties, or responsibilities as in effect immediately
prior to such assignment, or (ii) any other action by the Company which results
in a diminution in such position, authority, duties, or responsibilities,
excluding for this purpose (A) an isolated, insubstantial, and inadvertent
action taken in good faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive, or (B) any temporary Reduction
in Authority or Responsibility while the Executive is absent from active service
on any approved disability, or other approved leave of absence. |
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By way of
example, a reduction under this subsection (cc) shall include, but not be
limited to: |
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(A) |
The removal of
any division, business or operating unit, or other business organization from
the direct managerial responsibility of the Executive, or material reduction in
the size or scope of responsibility or operating budget of any division,
business, operating unit, or other business organization for which the Executive
has direct managerial responsibility; or |
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(B) |
A reduction in
the Executive’s authority to legally bind the Company without first
obtaining any additional authority or approval. |
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It is intended
by this definition that a Change in Control by itself, absent a Reduction in
Authority or Responsibility as described above, will not constitute Good Reason. |
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(dd) |
“Reduction in Compensation”
shall mean a reduction in the Executive’s “Total Annual
Compensation” (defined as the sum of the Executive’s annual Base
Salary rate and Target Annual Bonus) for any calendar or fiscal year, as
applicable, to an amount that is less than the Executive’s Total Annual
Compensation in effect immediately prior to such reduction. |
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(ee) |
“Related Company”
shall mean any subsidiary or affiliate of the Company. |
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(ff) |
“Target Annual Bonus”
shall mean the Executive’s Target Annual Bonus, as defined in Section 4(b)
of this Agreement. |
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(gg) |
“Term of Employment”
shall mean the Executive’s Term of Employment, as defined in Section 3 of
this Agreement. |
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(hh) |
“Termination Date”
shall mean the Termination Date, as defined in Section 3 of this
Agreement. |
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(ii) |
“Works”
shall mean the Works, as defined in Section 19 of this Agreement. |
| 2. |
Employment and Duties. |
| |
(a) |
Position.
The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to serve the Company, during the Term of Employment under the title of
Senior Vice President and General Counsel of Bally, who shall have such
authority, duties, and responsibilities as are commensurate with such position
on the terms and conditions hereinafter set forth, and who shall directly report
to the Chief Executive Officer. |
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(b) |
Performance of Duties.
The Executive shall devote his full working attention and energies to the
performance of his duties as Senior Vice President and General Counsel or as may
otherwise be directed by the Chief Executive Officer, and agrees to use his
reasonable best efforts to perform his duties faithfully and
efficiently. |
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(c) |
Related Companies.
The Executive agrees to serve, as requested, as an officer or director of any
Related Company, and shall receive no additional compensation for such
service. |
| 3. |
Term of Employment.
The Company shall employ the Executive for a period of time beginning on the
Effective Date and ending on his Termination Date as hereby described in this
Section 3 (the “Term of Employment”). Unless the Executive’s
employment is |
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sooner
terminated, as provided in Section 6 of this Agreement, the Term of Employment
shall end on December 31, 2007 (“Termination Date”); provided,
however, that on January 1, 2008, and on each anniversary of January 1,
2008 thereafter until the Term of Employment ends (each such January 1 is
hereinafter referred to as the “Extension Date”), the Term of
Employment shall be automatically extended for twelve (12) additional months
unless, at least ninety (90) days prior to any such Extension Date, either party
gives written notice to the other that the Term of Employment shall not be so
extended, in which case the Executive’s employment with the Company shall
terminate on the day immediately preceding the relevant Extension Date (the
“Expiration Date”). The day immediately preceding the relevant
extension date (the “Expiration Date”) shall then become the
“Termination Date.” |
| 4. |
Executive’s Compensation and Benefits.
As remuneration to the Executive for his services to the Company hereunder, the
Company shall compensate the Executive as follows during the Term of
Employment: |
| |
(a) |
Base Salary.
The Executive’s annual base salary (“Base Salary”) shall be
$350,000 commencing as of the Effective Date and, except as it may be modified
in accordance with this Section 4, continuing throughout the Term of Employment.
The Base Salary shall be payable in conformity with the Company’s
then-current payroll practices, as modified from time to time. The Base Salary
as of the Effective Date may not be decreased during the Term of Employment and
will be reviewed during the Term of Employment in accordance with Bally’s
usual salary review process for executive officers. Effective as of the date of
any increase in the Executive’s Base Salary, the Base Salary as so
increased shall be considered the new Base Salary for all purposes of this
Agreement. |
| |
(b) |
Annual Incentive.
For each calendar year during the Term of Employment, the Executive shall be
eligible to receive an annual cash bonus (“Annual Bonus”), based upon
the attainment of such performance criteria as may be reasonably established by
the Board. The Executive’s target Annual Bonus (“Target Annual
Bonus”) for each full calendar year shall be fifty percent (50%) of his
annual Base Salary (prorated for the calendar year in which the Term of
Employment ends prior to December 31). During the Term of Employment, the
performance goals to be achieved, and the extent to which those goals have been
achieved for purposes of calculating the amount of the actual payment as a
percentage of target (which percentage may be more or less than one hundred
percent (100%) of target), will be determined by the Chief Executive
Officer. |
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(c) |
Long-Term Incentive.
The Executive shall be eligible to participate in the Bally Total Fitness 1996
Long-Term Incentive Plan (“LTIP”) and any and all successor or
replacement plans, as may be determined by the Board or duly authorized
Committee of the Board. |
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(d) |
Restricted Shares Tax Gross-Up.
If at any time following a Change in Control the vesting of any restricted
shares of Company stock awarded to the Executive under |
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the LTIP
subjects the Executive to any Federal, state, or local income taxes or FICA
taxes (collectively, “Income Taxes”), then the Executive shall be
entitled to an additional lump-sum cash payment from the Company (the
“Income Tax Gross-Up Payment”), subject to mandatory withholding. The
Income Tax Gross-Up Payment shall equal the amount of Income Taxes payable only
with respect to the first twelve dollars ($12.00) of compensation recognized by
the Executive for each such share of stock, plus the Income Taxes attributable
to such Income Tax Gross-Up Payment. For purposes of calculating an Income Tax
Gross-Up Payment to the Executive in any year, it shall be assumed that the
Executive is subject to Income Taxes at the highest marginal Federal and
applicable state and local income tax rates, respectively, for the year in which
the Income Tax Gross-Up Payment is paid. Also, the Income Tax Gross-Up Payment
to the Executive shall reflect the Federal tax benefits attributable to the
deduction of applicable state and local income taxes. |
| |
(e) |
Supplemental Retirement Plan.
The Company shall use its reasonable best efforts to develop and adopt a
supplemental retirement plan for the benefit of the Executive, which may include
such other senior executive officers of the Company as the Board determines is
appropriate, and which may provide for benefit accruals retroactive to the
Effective Date of this Agreement. The benefits, terms, and conditions of such
plan shall be in the sole discretion of the Company. |
| |
(f) |
Car Allowance.
The Executive shall be entitled to receive a monthly payment of $1,458.00 as a
car allowance. |
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(g) |
Financial Counseling Services.
The Executive shall be entitled to receive reimbursement of up to $6,000 per
calendar year for financial counseling services from a qualified financial
counselor, including the preparation of personal income tax returns, plus a tax
adjustment payment equal to the amount, calculated in accordance with the
Company’s practice for senior executives, to cover the Income Taxes
estimated to be incurred by the Executive by reason of any imputed income for
financial counseling services and the tax adjustment payment provided for in
this Section 4(g). Reimbursement for such financial counseling services shall be
made to the Executive upon presentation of appropriate invoices from the
qualified financial counselor. |
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(h) |
Home Security Services.
The Executive shall be entitled to receive reimbursement of up to $2,000 per
calendar year for expenses incurred for the provision of personal security
services for the Executive and his immediate family. Reimbursement for such
personal security services shall be made to the Executive upon presentation of
appropriate invoices. |
| |
(i) |
Life Insurance.
The Company shall obtain at its expense life insurance coverage on the life of
the Executive for each calendar year during the Term of Employment, providing a
death benefit to the Executive’s designated beneficiary or beneficiaries in
an amount equal to three (3) times the sum of the Executive’s annual Base
Salary rate in effect as of the last day of the immediately preceding |
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calendar
year plus the amount of the Executive’s Annual Bonus paid in such preceding
calendar year. |
| |
(j) |
Vacation.
The Executive shall be entitled to no less than four (4) weeks of paid vacation
each calendar year (prorated for the calendar year in which the Term of
Employment ends prior to December 31), and such personal days and paid holidays
as are generally available to other similarly situated executive employees of
the Company. |
| |
(k) |
Deferral Account.
The Executive shall be entitled to participate in the Company’s executive
deferred compensation program in accordance with its terms. The benefits, terms,
and conditions of such program shall be in the sole discretion of the
Company. |
| |
(l) |
Expenses.
The Executive shall be entitled to receive prompt reimbursement for all
reasonable and necessary expenses incurred by the Executive in the connection
with the performance of his duties hereunder, in accordance with Company
policies for similarly situated senior executives. |
| 5. |
Restrictive Covenants. |
| |
(a) |
Noncompetition.
The following noncompetition provisions shall apply: |
| |
(i) |
The Executive
shall not, at any time during his employment with the Company or the twelve (12)
month period commencing on the day immediately following the date (the
“Termination Date”) on which his employment with the Company
terminates for any reason, without the consent of the Board, directly or
indirectly engage in any activity that the Board, in the exercise of its
reasonable business judgment, determines is competitive with the Company’s
business whether alone, as a partner of any partnership or joint venture, or as
an officer, director, employee, independent contractor, consultant, or investor
(a “Competitive Activity”). In furtherance of the immediately
foregoing sentence, the Executive shall promptly notify the Board (or its
representative) in advance in writing (which shall include a description of the
activity) of his intention to engage in any activity which could reasonably be
deemed to be subject to this noncompetition provision, and the Board shall
respond to the Executive in writing within 10 calendar days indicating its
approval or objections to the Executive’s engagement in the activity;
provided, however, that if the Board (or its representative) does
not respond to or request additional information from the Executive within such
ten (10) day period the Board’s approval shall be deemed to be granted. If
the Executive fails to notify the Board of his intended activity in advance, the
Board shall retain all its rights of objections. Notwithstanding the preceding
provisions of this subsection (a)(i), this subsection (a)(i) shall not be
construed as preventing the Executive from investing his personal assets in any
business that competes with the Company, in such form or |
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manner as will
not require any services on the part of the Executive in the operation of the
affairs of the business in which such investments are made, but only if the
Executive does not own or control five percent (5%) or more of any class of the
outstanding stock, or of any profits interest or capital interest (as
applicable), of such business. |
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(ii) |
The payments,
benefits, and other entitlements under this Agreement are being made in
consideration of, among other things, the obligations of this Section 5 and, in
particular, compliance with Section 5(a) of this Agreement; provided,
however, that all such payments, benefits, or other entitlements under
the Agreement are subject to and conditioned upon the Executive’s entering
into the Release and Agreement referred to in Section 6(h) of this
Agreement. |
| |
(iii) |
During the
twenty-four (24) month period commencing on the day immediately following the
Termination Date, the Executive shall not (A) influence or attempt to influence
any person, firm, association, partnership, corporation, or other entity that is
a contracting party with the Company to terminate any written agreement with the
Company, except to the extent the Executive is acting on behalf of the Company
in good faith, or (B) hire or attempt to hire for employment any person who is
employed by the Company, or attempt to influence any such person to terminate
employment with the Company, except to the extent the Executive is acting on
behalf of the Company in good faith; provided, however, that
nothing herein shall prohibit the Executive from generally advertising for
personnel not specifically targeting any executive or other personnel of the
Company. |
| |
(iv) |
During the
Term of Employment and for the twenty-four (24) month period immediately
thereafter, the Executive shall not publicly criticize or disparage the Company,
any Related Company, or any director, officer, executive, or agent of the
Company or any Related Company, except as may be required by law. |
| |
(v) |
During the
Term of Employment and for the twenty-four (24) month period immediately
thereafter, the Company shall not issue any defamatory statements about the
Executive. |
| |
(b) |
Confidentiality.
The Executive agrees that he will not, at any time during his Term of Employment
or thereafter, disclose or use any trade secret, proprietary, or confidential
information of the Company or any Related Company (other than any such
information that is in the public domain other than through the fault of the
Executive), except as may be required in the course of his employment by the
Company, as may be otherwise allowed with the written permission of the Company
or, as applicable, such Related Company, or as may be required by law;
provided, however, that, if the Executive is required by any
subpoena, court order, |
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regulation, or
law to disclose such information, he shall promptly notify the Company and
cooperate with the Company in seeking a protective order. |
| |
The Executive
agrees that on or prior to the Termination Date, regardless of whether his
employment is terminating at the initiative of the Executive or the Company, and
regardless of the reasons therefor, he will deliver to the Company, and not keep
or deliver to anyone else, any and all physical matter, including any and all
notes, files, memoranda, papers, and other documents, containing information
regarding the conduct of the business of the Company or any Related Company,
except that the Executive may retain such physical matter that does not contain
any trade secret, proprietary, or confidential information as may be allowed
with the written permission of the Chief Executive Officer. |
| |
(i) |
Any material
breach by the Executive of the provisions of Sections 5(a) or 5(b) of this
Agreement shall relieve the Company of all obligations to make any further
payments to the Executive pursuant to Sections 4 and 6 of this Agreement
(including under all Company equity award grants pursuant to Section 4 of this
Agreement) or otherwise under any incentive or equity awards made by the
Company, and shall entitle the Company to repayment from the Executive, upon
demand, of any previously paid equity award grants pursuant to Section 4 of this
Agreement; provided, however, that no forfeiture, cancellation, or
repayment shall take place with respect to any payments, benefits, or
entitlements under this Agreement or any other award agreement, plan, or
practice, unless the Company shall have first given the Executive written notice
of its intent to so forfeit, cancel, or require repayment and the Executive has
not, within thirty (30) days after such notice has been given, ceased such
impermissible activity; and provided further, however, that such
prior notice procedure shall not be required with respect to (A) a Competitive
Activity or violation of Section 5(b) of this Agreement which the Executive
initiated after the Company had informed the Executive in writing that it
believed such action violated this Agreement or Bally’s noncompetition
guidelines, or (B) any Competitive Activity regarding products or services which
are part of a line of business which the Executive knew or should have known
represented more than five percent (5%) of the Company’s consolidated gross
revenues for its most recent completed fiscal year at the time the
Executive’s employment is terminated. |
| |
(ii) |
The Executive
acknowledges that the restrictions contained in this Section 5 are reasonable
and necessary to protect the legitimate interests of the Company and that any
breach by the Executive of any portion of this Section 5 will result in
irreparable injury to the Company. The Executive agrees that the Company’s
remedies at law would be inadequate in the event of a breach or threatened
breach of this Section 5 and, accordingly, |
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that the
Company shall be entitled, in addition to its rights at law, to temporary,
preliminary, and permanent injunctive relief and other equitable relief, without
the need to post a bond. |
| 6. |
Termination Provisions. |
| |
(a) |
Benefits
upon Involuntary Termination Other than for Cause; Benefits upon Involuntary
Termination Other than Within Two Years Following Change in Control.
In the event that the Executive’s employment is involuntarily terminated by
the Company, and such termination is other than for Cause and other than within
two (2) years following a Change in Control, the Executive shall be entitled
to: |
| |
(i) |
An immediate
lump sum payment equal to the greater of (A) all amounts of Base Salary that
would otherwise be payable for the remainder of the then-current Term of
Employment and that remain unpaid, or (B) 1.5 times the Executive’s
then-current annual Base Salary; |
| |
(ii) |
If such
termination occurs prior to the payment of the Executive’s Annual Bonus
payable with respect to the immediately preceding calendar year, immediate
payment of the full amount of the Executive’s Annual Bonus for such
year; |
| |
(iii) |
Immediate
payment of an amount equal to 1.5 times the Executive’s Target Annual Bonus
for the then-current calendar year; |
| |
(iv) |
Immediate
payment for any unused, earned vacation days (but not for any unearned vacation
days) for the calendar year in which his employment is terminated and for any
approved and unexpired carryover days (not to exceed the number of carryover
days as approved by the Company) from the prior year; |
| |
(v) |
Immediate
vesting of, and continuation of the ability of the Executive to exercise through
the LTIP’s exercise period (as if the Executive remained an active employee
of the Company), all awards granted to the Executive under the LTIP prior to his
Termination Date, subject to the terms and conditions of the LTIP;
and |
| |
(vi) |
Company-provided
continuation of medical coverage (on either an insured or a self-insured basis,
in the sole discretion of the Company) for the Executive and his eligible
dependents (as determined under the terms of the Company’s medical expense
plan), on substantially the same terms of such coverage that are in existence
immediately prior to the Executive’s termination of employment (subject to
commercial availability of such coverage), for a period of eighteen (18) months;
provided, however, that such coverage shall run concurrently with
any coverage available to the Executive and his eligible dependents under COBRA;
and provided further, however, that the Executive shall
immediately notify the |
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| |
Company if he
becomes covered under Medicare or another employer’s group health plan, at
which time the Company’s provision of medical coverage for the Executive
and his eligible dependents will cease. |
| |
(b) |
Death or Long-Term Disability.
If, at any time after the Effective Date, the Executive’s employment
terminates before the Expiration Date as a result of the Executive’s death
or Long-Term Disability, the Executive or his estate (as applicable) shall be
entitled to: |
| |
(i) |
Immediate
payment of any unpaid Base Salary through the date of his death or Long-Term
Disability; |
| |
(ii) |
If such
termination occurs prior to the payment of the Executive’s Annual Bonus
payable with respect to the immediately preceding calendar year, immediate
payment of the full amount of the Executive’s Annual Bonus for such
preceding year; |
| |
(iii) |
Immediate
payment for any unused, earned vacation days (but not for any unearned vacation
days) for the calendar year in which his employment is terminated and for any
approved and unexpired carryover days (not to exceed the number of carryover
days as approved by the Company) from the prior year; and |
| |
(iv) |
Immediate
vesting of, and continuation of the ability of the Executive or Executive’s
beneficiaries (as applicable) to exercise (as if the Executive remained an
active employee of the Company), all awards granted to the Executive under the
LTIP prior to his Termination Date, subject to the terms and conditions of the
LTIP. |
| |
(c) |
Termination for Cause.
In the event the Executive’s employment is terminated for Cause at any time
on or after the Effective Date, the Executive shall not receive any payments,
benefits, or other amounts provided by this Agreement (but shall still be
subject to the restrictive covenants set forth in Section 5 of this Agreement).
The Executive may, however, be eligible for certain benefits under the
Company’s tax-qualified pension and other employee benefit plans. The
Executive’s employment may not be terminated for Cause prior to advance
written notice to the Executive containing reasonable detail of the activity,
facts, or circumstances constituting Cause for termination, the actions that the
Executive must take to cease such activity or cure such facts and circumstances,
and a reasonable amount of time (not to exceed thirty (30) days) for the
Executive to effectuate such cure. |
| |
(d) |
Voluntary Resignation Without Good Reason.
In the event the Executive voluntarily resigns without Good Reason on or after
the Effective Date, the Executive shall not receive any payments, benefits, or
other amounts provided by this Agreement (but shall still be subject to the
restrictive covenants set forth in Section 5 of this Agreement) other than as
required under applicable law. The |
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| |
Executive may,
however, be eligible for certain benefits under the Company’s tax-qualified
pension and other employee benefit plans. |
| |
(e) |
Termination
for Good Reason, or Involuntary Termination (Other than for Cause) Within Two
Years Following a Change in Control. If the Executive’s
employment is involuntarily terminated by the Company other than for Cause
within two (2) years following a Change in Control, or the Executive terminates
his employment for Good Reason, the Executive shall be entitled to: |
| |
(i) |
A severance
payment that is a lump sum cash payment equal to two hundred percent (200%) of
the sum of (A) the Executive’s highest annual Base Salary rate in effect on
or after the day immediately preceding the date of the Change in Control, plus
(B) the Executive’s Target Annual Bonus for the year in which the Change in
Control occurs (or, if the Change in Control occurs prior to the date in a
calendar year on which the Executive’s Target Annual Bonus is determined,
for the preceding calendar year); |
| |
(ii) |
If such
termination occurs prior to the payment of the Executive’s Annual Bonus
payable with respect to the immediately preceding calendar year, immediate
payment of the full amount of the Executive’s Annual Bonus for such
preceding year; |
| |
(iii) |
Immediate
payment for any unused, earned vacation days (but not for any unearned vacation
days) for the calendar year in which his employment is terminated and for any
approved and unexpired carryover days (not to exceed the number of carryover
days as approved by the Company) from the prior year; |
| |
(iv) |
Immediate
vesting of, and continuation of the ability of the Executive or Executive’s
beneficiaries (as applicable) to exercise (as if the Executive remained an
active employee of the Company), all awards granted to the Executive under the
LTIP prior to such Termination Date, subject to the terms and conditions of the
LTIP; |
| |
(v) |
Company-provided
continuation of medical coverage (on either an insured or a self-insured basis,
in the sole discretion of the Company) for the Executive and his eligible
dependents (as determined under the terms of the Company’s medical expense
plan), on substantially the same terms of such coverage that are in existence
immediately prior to the Executive’s termination of employment (subject to
commercial availability of such coverage), for a period of eighteen (18) months;
provided, however, that such coverage shall run concurrently with
any coverage available to the Executive and his eligible dependents under COBRA;
and provided further, however, that the Executive shall
immediately notify the Company if he becomes covered under Medicare or another
employer’s |
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| |
group health
plan, at which time the Company’s provision of medical coverage for the
Executive and his eligible dependents will cease; and |
| |
(vi) |
The services
of a Company-paid and Company-approved outplacement or career transition
consultant in accordance with the Company’s then-current practices for
senior executives in effect as of the Termination Date; provided,
however, that commencement of such transition counseling services, if
desired, must begin prior to the first anniversary of the Termination
Date. |
| |
(f) |
Payments
and Benefits upon Termination at Expiration Date.
If the Executive’s employment with the Company terminates, other than by
the Company for Cause, on the Expiration Date, the Executive shall be entitled
to: |
| |
(i) |
One (1) times
the Executive’s then-current annual Base Salary;
|
| |
(ii) |
If such
termination occurs prior to the payment of the Executive’s Annual Bonus
payable with respect to the calendar year in which such Expiration Date occurs,
immediate payment of the full amount of the Executive’s Annual Bonus for
such year; |
| |
(iii) |
Immediate
payment of an amount equal to one (1) times the Executive’s Target Annual
Bonus for such calendar year; |
| |
(iv) |
Immediate
payment for any unused, earned vacation days (but not for any unearned vacation
days) for the calendar year in which his employment is terminated and for any
approved and unexpired carryover days (not to exceed the number of carryover
days as approved by the Company) from the prior year; and |
| |
(v) |
Company-provided
continuation of medical coverage (on either an insured or a self-insured basis,
in the sole discretion of the Company) for the Executive and his eligible
dependents (as determined under the terms of the Company’s medical expense
plan), on substantially the same terms of such coverage that are in existence
immediately prior to the Executive’s termination of employment (subject to
commercial availability of such coverage), for a period of eighteen (18) months;
provided, however, that such coverage shall run concurrently with
any coverage available to the Executive and his eligible dependents under COBRA;
and provided further, however, that the Executive shall
immediately notify the Company if he becomes covered under Medicare or another
employer’s group health plan, at which time the Company’s provision of
medical coverage for the Executive and his eligible dependents will
cease. |
| |
(g) |
Notification
Requirements for Termination for Good Reason. |
| |
(i) |
In the event
the Executive determines that Good Reason exists to terminate his employment
with the Company, the Executive shall notify |
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| |
the Company in
writing of the specific event, within sixty (60) days after the occurrence of
such event, and such notice shall also include the date on which the Executive
will terminate employment with the Company, which date shall be no earlier than
fifteen (15) days after the date of such notice. The date set forth in the
notice for termination, or such earlier or later date as the Executive and the
Company shall mutually agree in writing, shall be the Executive’s
Termination Date. |
| |
(ii) |
Within seven
(7) days after the Company’s receipt of such written notice, the Company
shall notify the Executive that it agrees or disagrees with the Executive’s
determination that the event specified in the Executive’s notice
constitutes Good Reason. Notwithstanding any other provision of this Agreement,
the Company’s determination whether it agrees or disagrees with the
Executive’s determination that the event specified in the Executive’s
notice constitutes Good Reason shall be reasonable, based on all the relevant
facts and circumstances. The arbitrator in any arbitration proceeding initiated
pursuant to Section 10 of this Agreement, in which the existence of Good Reason
is an issue, shall be expressly empowered and directed to review, de novo, the
facts and circumstances claimed by the Executive to constitute Good
Reason. |
| |
(iii) |
In the event
the Company notifies the Executive that it agrees with the Executive’s
determination that the event specified in the Executive’s notice
constitutes Good Reason, the Executive shall terminate employment with the
Company on his Termination Date. |
| |
(iv) |
In the event
the Company notifies the Executive that it disagrees with the Executive’s
determination that the event specified in the Executive’s notice
constitutes Good Reason, the Executive may terminate his employment on the date
specified in the notice (or such later date as the Executive and the Company may
mutually agree in writing) or may elect to continue his employment by so
notifying the Company in writing. In either event, the Executive shall be
entitled to pursue the arbitration procedures set out in Section 10 of this
Agreement without first filing a claim. If the Executive’s claim, or
arbitration, is ultimately concluded in the Executive’s favor, the
Executive shall retain the right to receive the payments and benefits under this
Agreement. |
| |
(h) |
Conditional Payments.
Any payments or benefits made pursuant to this Section 6 will be subject to (i)
the provisions, restrictions, and limitations of Section 5 of this Agreement,
but not otherwise subject to offset or mitigation, (ii) the Executive’s
signing (following his termination of employment), and the Company’s
receipt of, a Release and Agreement releasing the Company, Related Companies,
and their respective directors, officers, employees and agents (“Indemnitees”)
from any and all claims and liabilities, and promising never to xxx any of the
Indemnitees (such Release and Agreement shall be in such form as is then
currently in use for departing Company senior executives), and (iii) the |
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| |
Company’s
receipt of the Executive’s resignation from all offices, directorships, and
fiduciary positions with the Company, its Related Companies, and their
respective employee benefit plans. |
| 7. |
Legal Fees.
In the event that it shall be necessary or desirable for the Executive to
retain legal counsel or incur other costs and expenses in connection with
enforcement of his rights following a Change in Control, or other matters
directly related to the Executive’s termination from employment with the
Company following a Change in Control, the Company shall reimburse the Executive
for his reasonable attorneys’ fees and costs and expenses if a final
decision in connection with a material issue of the litigation (or arbitration)
is issued in the Executive’s favor by an arbitrator or a court of competent
jurisdiction. |
| |
(a) |
Excise Tax
Adjustment Payment Calculation. If any element of compensation
or benefit provided to the Executive under the terms of this Agreement following
a Change in Control, or under any other plan, program, policy, or other
arrangement (“Benefit”), either alone or in combination with other
elements of compensation and benefits paid or provided to the Executive,
constitutes an “excess parachute payment”, as that term is defined in Code
Section 280G and the regulations thereunder, and subjects the Executive to the
excise tax pursuant to Code Section 4999, and any interest and penalties thereon
(collectively, the “Excise Tax”), then the Executive shall be entitled
to an additional lump-sum cash payment from the Company (the “Excise Tax
Adjustment Payment”), subject to mandatory withholding, in an amount equal
to the Excise Taxes (including the Excise Tax attributable to the Excise Tax
Adjustment Payment related to the Benefit) plus any Income Taxes and any
interest and penalties thereon attributable to the Excise Tax Adjustment
Payment. For purposes of calculating an Excise Tax Adjustment Payment to the
Executive in any year, it shall be assumed that the Executive is subject to
Income Taxes at the highest marginal Federal and applicable state and local
income tax rates, respectively, for the year in which the Excise Tax Adjustment
Payment is paid. Also, the Excise Tax Adjustment Payment to the Executive shall
reflect the Federal tax benefits attributable to the deduction of applicable
state and local income taxes. |
| |
(b) |
Independent Firm.
Subject to the provisions of Section 8(c) of this Agreement, all determinations
required to be made under this Section 8, including whether and when an Excise
Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment
Payment and the assumptions utilized in arriving at such determinations, shall
be made by an independent accounting or consulting firm chosen by the Company
(the “Firm”). The Firm shall provide detailed supporting calculations
to the Company and to the Executive within thirty (30) business days after the
receipt of notice from the Company or the Executive that there has been a
benefit provided to which these Excise Tax provisions apply (or such earlier
time as requested by the Company). Any Excise Tax Adjustment Payment shall |
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| |
be paid by the
Company to the Executive within fifteen (15) business days after the
Company’s receipt of the Firm’s determination. |
| |
(i) |
If it is
established pursuant to a final determination of a court or an IRS proceeding,
or in the opinion of independent counsel agreed upon by the Company and the
Executive, that the Excise Tax payable by the Executive on the benefit is less
than the amount initially taken into account under Section 8(a) for purposes of
calculating the Excise Tax Adjustment Payment related to such benefit, the Firm
shall recalculate the Excise Tax Adjustment Payment to reflect the actual Excise
Tax related to such benefit. Within thirty (30) business days following the
Executive’s receipt of notice of the results of such recalculation from the
Firm and/or the Company, the Executive shall repay to the Company the excess of
the initial Excise Tax Adjustment Payment over the recalculated Excise Tax
Adjustment Payment. |
| |
(ii) |
If it is
established pursuant to a final determination of a court or an IRS proceeding,
or in the opinion of an independent counsel agreed upon by the Company and the
Executive, that the Excise Tax payable by the Executive on the benefit is more
than the amount initially taken into account under subsection (b)(i) above for
purposes of calculating the Excise Tax Adjustment Payment, the Firm shall
recalculate the Excise Tax Adjustment Payment to reflect the actual Excise Tax.
Within fifteen (15) business days following the Company’s receipt of notice
of the results of such recalculation from the Firm, the Company shall pay to the
Executive the excess of the recalculated Excise Tax Adjustment Payment over the
initial Excise Tax Adjustment Payment. |
| |
(iii) |
All fees and
expenses of the Firm shall be borne solely by the Company. |
| |
(c) |
Notice.
The Executive shall notify the Company in writing of any written claim by the
IRS that, if successful, would require the payment by the Company of an Excise
Tax Adjustment Payment or the recalculation of an Excise Tax Adjustment Payment.
The notification shall apprise the Company of the nature of such claim,
including (i) a copy of the written claim from the IRS, (ii) the identification
of the element of compensation and/or benefit that is the subject of such IRS
claim, and (iii) the date on which such claim is requested to be paid. Such
notification shall be given as soon as practicable, but no later than ten (10)
business days after the Executive actually receives notice in writing of such
claim. The failure of the Executive to properly notify the Company of the IRS
claim (or to provide any required information with respect thereto) shall not
affect any rights granted to the Executive under this Section 8, except to the
extent that the Company is materially prejudiced in the challenge to such claim
as a direct result of such failure. |
| |
(d) |
Payment.
Within ten (10) business days following receipt of such written notification by
the Executive of such IRS claim, the Company shall pay to the |
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| |
Executive an
Excise Tax Adjustment Payment, or the excess of a recalculated Excise Tax
Adjustment Payment over the initial Excise Tax Adjustment Payment, as
applicable, related to the element of compensation and/or benefit which is the
subject of the IRS claim. Within ten (10) business days following such payment
to the Executive, the Executive shall provide to the Company written evidence
that he or she has paid the claim to the IRS (the United States
Treasury). |
| |
(e) |
Contest.
If the Company notifies the Executive in writing, within sixty (60) business
days following receipt from the Executive of notification of the IRS claim, that
it desires to contest such claim, the Executive shall: |
| |
(i) |
Give the
Company any information reasonably requested by the Company relating to such
claim; |
| |
(ii) |
Take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time including, without limitation, accepting
legal representation with respect to such claim by an attorney selected by the
Company and reasonably acceptable to the Executive; |
| |
(iii) |
Cooperate with
the Company in good faith in order to effectively contest such claim;
and |
| |
(iv) |
Permit the
Company to participate in any proceedings relating to such claim if the Company
elects not to assume and control the defense of such claim; |
| |
provided,
however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold harmless the Executive, on an
after-tax basis, for any Excise Tax and Income Taxes (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8, the Company shall have the right, at its sole option, to assume
the control of all proceedings in connection with such contest, in which case it
may pursue or forego any and all administrative appeals, proceedings, hearings,
and conferences with the taxing authority in respect of such claim, and may
direct the Executive to xxx for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; and provided
further, however, that any extension of the statute of limitations
relating to payment of tax for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company’s rights to assume the control
of the contest shall be limited to issues with respect to which an Excise Tax
Adjustment Payment would be payable hereunder, and the Executive shall be
entitled to settle or contest, as the case may be, any other issue |
-19-
| |
raised by the
IRS or any other taxing authority. To the extent that the contest to the IRS
claim is successful, the Excise Tax Adjustment Payment related to the element of
compensation and/or benefit that was the subject of the claim shall be
recalculated in accordance with the provisions of Section 8(a). |
| 9. |
Wage Withholding and Reporting.
All taxable payments, reimbursements, benefits, and other amounts payable
or provided by the Company pursuant to this Agreement shall be subject to
applicable wage withholding of Income Taxes and FUTA (unemployment taxes), and
shall be reported on IRS Form W-2. |
| 10. |
Dispute Resolution.
At the option of the Executive or the Company, any dispute, controversy,
or question arising under, out of, or relating to this Agreement or the breach
thereof, other than that for injunctive relief under Sections 5(c), shall be
referred for decision by arbitration in the State of Illinois by a neutral
arbitrator selected by the parties hereto. The proceeding shall be governed by
the Rules of the American Arbitration Association then in effect or such rules
last in effect (in the event such Association is no longer in existence). If the
parties are unable to agree upon such a neutral arbitrator within thirty (30)
days after either party has given the other written notice of the desire to
submit the dispute, controversy, or question for decision as aforesaid, then
either party may apply to the American Arbitration Association for an
appointment of a neutral arbitrator, or if such Association is not then in
existence or does not act in the matter within thirty (30) days after
application, either party may apply to the Presiding Judge of the Superior Court
of any county in Illinois for an appointment of a neutral arbitrator to hear the
parties and settle the dispute, controversy, or questions, and such Judge is
hereby authorized to make such appointment. In the event that either party
exercises the right to submit a dispute arising hereunder to arbitration, the
decision of the neutral arbitrator shall be final, conclusive, and binding on
all interested persons, and no action at law or equity shall be instituted or,
if instituted, further prosecuted by either party other than to enforce the
award of the neutral arbitrator. The award of the neutral arbitrator may be
entered in any court that has jurisdiction. In the event that the Executive is
successful in pursuing any material claims or disputes arising out of this
Agreement, the Company shall pay all of the Executive’s attorneys’
fees and costs reasonably incurred, including the compensation and expenses of
any arbitrator. In any other case, the Executive and the Company shall each bear
all their own respective costs and attorneys fees, except the Company shall in
all events pay the costs of any arbitrator appointed hereunder. |
| 11. |
Termination Provisions. |
| |
(a) |
Executive.
This Agreement is a personal contract, and the rights and interests of Executive
hereunder may not be sold, transferred, assigned, pledged, or hypothecated by
him, but shall be binding upon and inure to the benefit of his heirs,
administrators, and executors. |
| |
(b) |
Company.
This Agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns; provided, however, that the Company
may not assign this Agreement except in connection with an assignment or
disposition of all or substantially all of the assets or stock of the Company or
the |
-20-
| |
division,
subsidiary, or business unit for which the Executive is providing services under
this Agreement, or by law as a result of a merger or consolidation. In the event
of such assignment, a failure by the successor to specifically assume in writing
the obligations and liabilities of the Company hereunder, and to deliver notice
of such assumption to the Executive, shall be deemed a material breach of this
Agreement by the Company. |
| 12. |
Other Benefit Plans.
Executive shall be eligible to participate in plans available to Senior
Executives of the Company. Subject to the terms of this agreement, the Company
reserves the right to discontinue or modify its compensation, incentive,
benefit, and perquisite plans, programs, and practices at any time and from time
to time. Moreover, the brief summaries contained herein are subject to the terms
of such plans, programs, and practices. For purposes of any and all employee
benefit plans, the definition of compensation is as stated in such plans.
Amounts payable under any other plan, program, or practice of the Company with
regard to termination of employment shall not duplicate amounts paid under this
Agreement upon a termination of employment. |
| 13. |
Entire Agreement; Amendments.
This Agreement represents the entire agreement between the Executive and the
Company in respect of the subject matter contained herein and supersedes all
prior agreements, promises, covenants, arrangements, communications,
representations, or warranties, whether oral or written, by any officer,
executive, or representative of any party hereto. No amendments or modifications
to this Agreement may be made except in writing signed by the Company (as
authorized by the Board) and the Executive. |
| 14. |
Survivorship.
The respective rights and obligations of the parties hereunder shall survive any
termination of the Executive’s employment to the extent necessary to the
intended preservation of such rights and obligations. |
| 15. |
Notices.
Any notice and all other communications provided for in this Agreement given to
a party shall be in writing and shall be deemed to have been duly given when
delivered in person or two (2) days after being placed in the United States
mails by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the party concerned at the address indicated below
or to such changed address as such party may subsequently furnish to the other
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt: |
| |
If to the Company: |
Bally Total Fitness Holding Corporation
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attn: Senior Vice President, Chief Administrative Officer |
| |
If to the Executive: |
Xxxx Xxxxxxxxx
[Home Address] |
| 16. |
Severability.
The unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any
provision |
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| |
of this
Agreement shall be held invalid or unenforceable in part, the remaining portion
of such provision, together with all other provisions of this Agreement, shall
remain valid and enforceable and continue in full force and effect to the
fullest extent consistent with law. In furtherance and not in limitation of the
foregoing, should the duration or geographical extent of, or business activities
covered by, any provision of this Agreement be in excess of that which is valid
and enforceable under applicable law, then such provision shall be construed to
cover only that duration, extent, or activities which may be validly
enforced. |
| 17. |
Headings.
Headings to Sections hereof are for convenience of reference only and shall not
be construed to alter or affect the meaning of any provision of this
Agreement. |
| 18. |
No Assignment or Attachment.
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void, and of
no effect; provided, however, that nothing in this Section 18
shall preclude the assumption of such rights by executors, administrators, or
other legal representatives of the Executive or his estate and their assigning
any rights hereunder to the person or persons entitled thereto. |
| 19. |
Work For Hire Acknowledgment; Assignment.
The Executive acknowledges that all of the Executive’s work on and
contributions to the Company’s products (the “Products”),
including, without limitation, any and all patterns, designs, and other
expressions in any tangible medium (collectively, the “Works”) are
within the scope of the Executive’s employment and are a part of the
services, duties, and responsibilities of the Executive. All of the
Executive’s work on and contributions to the Works will be rendered and
made by the Executive for, at the instigation of, and under the overall
direction of, the Company, and all of the Executive’s said work and
contributions, as well as the Works, are and at all times shall be regarded as
“work made for hire” as that term is used in the United States
copyright laws. Without curtailing or limiting this acknowledgment, the
Executive hereby assigns, grants, and delivers exclusively to the Company, as to
work on and contribution to the Products pursuant hereto, all rights, titles,
and renewals. The Executive will execute and deliver to the Company, or its
successors and assigns, such other and further assignments, instruments, and
documents as it from time to time reasonably may request for the purpose of
establishing, evidencing, and enforcing or defending its complete, exclusive,
perpetual, and worldwide ownership of all rights, titles, and interests of every
kind and nature whatsoever, including all copyrights, in and to the Works. The
Executive hereby constitutes and appoints the Company as its agent and
attorney-in-fact, with full power of substitution, to execute and deliver said
assignments, instruments, or documents as the Executive may fail or refuse to
execute and deliver, this power and agency being coupled with an interest and
being irrevocable. |
| 20. |
Governing Law.
The validity, interpretation, construction, and performance of this Agreement
shall be governed by the laws of the State of Illinois, without consideration of
conflict of law principles. |
-22-
| 21. |
Supersession.
From and after the Effective Date, this Agreement shall supersede any other
employment or severance agreement between the parties. |
-23-
IN WITNESS WHEREOF,
the parties hereto have executed this Agreement effective as of the Effective
Date.
| Executive: |
/s/ Xxxx Xxxxxxxxx
|
| |
Xxxx Xxxxxxxxx |
Company:
| By: |
/s/ Xxxx X. Xxxxxx, Xx.
|
| |
Xxxx X. Xxxxxx, Xx., Chairperson, Compensation Committee |
| By: |
/s/ Xxxxxx Xxxxxx
|
| |
Xxxxxx Xxxxxx, SVP, Chief Administrative Officer |
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