EXHIBIT 10.33
EMPLOYMENT AGREEMENT
THE EMPLOYMENT AGREEMENT made and entered into the 7th day of October,
1996, and effective as of October 7, 1996, by and between Bally Total Fitness
Holding Corporation, a Delaware corporation ("BTF" or "Employer") and Xxxx
Xxxxxxx ("Employee").
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements herein contained, the parties agree as follows:
1. Employment
(a) BTF hereby employs Employee in the capacity of Senior Vice
President of Sales and Marketing. Employer may employ Employee in such other
capacities of equal status and responsibility as the Chairman of the Board and
Chief Executive Officer of BTF or his designated representative, shall
reasonably determine, and Employee hereby accepts such employment upon the terms
and conditions herein set forth.
(b) During the term of his employment, Employee will devote
his best efforts to his employment and perform such duties consistent with his
capacity as Senior Vice President of Sales and Marketing and such other
capacities as the Chairman of the Board and Chief Executive Officer of BTF shall
determine, as are reasonably assigned to him by Employer. Employee will devote
his entire working time and attention to the business and related interests of,
and will be loyal to, Employer, and Employee agrees to render service on behalf
of Employer and their subsidiaries or affiliates.
(c) Employee shall not, without prior written consent of
Employer, directly or indirectly, during the term of this Employment Agreement:
(i) Other than in the performance of duties
naturally inherent to Employer's business and in furtherance thereof, render
services of a business, professional or commercial nature to any other person or
firm, whether for compensation or otherwise, but this shall not be construed as
preventing the Employee from investing his assets in such form or manner as will
not require any services on the part of the Employee in the operation of the
affairs of the companies in which such investments are made and which are not in
violation of subparagraph (ii) below or from engaging in charitable activities
so long as such activities do not interfere with the performance of Employee's
duties hereunder;
(ii) Engage in any activity competitive with or
adverse to Employer's business or welfare, whether alone, as a partner, or as an
officer, director, employee or shareholder of any other corporation, or
otherwise, directly or indirectly, except that the ownership of not more than
one percent (1%) of the stock of any publicly traded corporation shall not be
deemed violative of this subparagraph (ii);
(iii) Be engaged by any entity which conducts
business with or acts as consultant or advisor to Employer, whether alone, as a
partner, or as an officer, director, employee or shareholder, or otherwise,
directly or indirectly, except that ownership of not more than one percent (1%)
of the stock of any publicly traded corporation shall not be deemed violative of
this subparagraph (iii).
2. Term
(a) The term of this Employment Agreement shall begin on the
effective date stated above ("commencement date") and shall continue for two (2)
years from such date and shall continue thereafter from year-to-year unless
terminated by any party in his or its sole discretion upon sixty (60) days
written notice given prior to the expiration of a term.
(b) If this contract is terminated or not renewed for any
reason other than a change of control (section 9) or cause (section 8) the
Employee shall be entitled to a year (12 months) of base salary to be paid in
the regular recurring pay periods established by the Employer, subject to the
provisions of 2 (c).
(c) Consistent with section 6, "Covenants and Confidential
Information", the 12 months of pay that the employee shall be eligible for under
2 (b) shall be payable provided the employee adheres to the restrictions imposed
by section 6. If the employee does not adhere to the restrictions imposed by
section 6, then, the one year (12 months) of base salary shall be reduced to one
half year (6 months) of base salary.
3. Compensation
(a) In consideration of the services to be rendered by the
Employee hereunder, Employer agrees to pay to the Employee, and the Employee
agrees to accept, as compensation, the sum of Two Hundred Thousand Dollars
($200,000) (the "Base Salary") for each twelve month period following the
effective date of this Employment Agreement, which shall be paid on the
regularly recurring pay periods established by Employer. The Base Salary shall
be subject to periodic increases by Employer.
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(b) In addition, the Employer shall pay Forty Thousand Dollars
($40,000) which shall be considered as a "draw against" any discretionary bonus.
In the event that the year-end bonus is less than the Forty Thousand Dollar
($40,000) "draw against" the bonus, the Forty Thousand Dollars ($40,000) shall
convert to cash compensation and will not be recoverable by the Company.
(c) It is further understood by the parties that, pursuant to
the policies of Employer, discretionary bonus payments may be made in addition
to the Base Salary above provided.
4. Vacation and Other Benefits
Employee shall be entitled to a reasonable vacation each year
of his employment with Employer as well as all other employment related
benefits, including, but not limited to hospitalization, life insurance, death
and retirement plans, an automobile allowance, and stock plans afforded to
senior executives of Employer of comparable status and tenure and consistent
with that afforded under Employer's policies. Employer may in its sole
discretion change such policies.
5. Expenses
Employer shall pay all reasonable expenses incurred by
Employee in the performance of his responsibilities and duties for and the
promotion of Employer. Employee shall submit to Employer periodic statements of
all expenses so incurred. Subject to such audits as Employer may deem necessary,
Employer shall reimburse Employee the full amount of any such expenses advanced
by Employee promptly in the ordinary course.
6. Covenants and Confidential Information
(a) During the term of this agreement, any extension of this
agreement, or any pay out under this agreement, the employee agrees that he will
not, directly or indirectly, do any of the following:
(i) Own, manage, control, or participate in the
ownership, management, or control of, or be employed or engaged by or otherwise
affiliated or associated as a consultant, independent contractor or otherwise,
with any other corporation, partnership, proprietorship, firm, association or
other business entity, or otherwise engage in any business which is engaged in
any manner in, the operation of fitness centers as a significant part of its
business (a "Facility") operates such fitness center(s) within ten (10) miles of
any fitness center owned, managed or under development to be owned or managed by
BTF, its subsidiaries, affiliates and/or its or their successors and assigns (as
conducted
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on the date mployee ceases to be employed hereunder); provided, however, that
the ownership of not more than one percent (1%) of the stock of any publicly
traded corporation shall not be deemed a violation of this covenant;
(ii) Induce any person who is an employee,
officer, or agent of Employer to terminate said relationship.
(iii) Employ, assist in employing or otherwise
associate in business with any present, former or future employee
or officer of Employer.
(iv) Disclose, divulge, discuss, copy or otherwise
use or suffer to be used in any manner, in competition with, or contrary to the
interests of Employer, the customer lists, inventions, ideas, discoveries,
manufacturing methods, product research or engineering data or other trade
secrets of Employer, it being acknowledged by Employee that all such information
regarding the business of Employer compiled or obtained by, or furnished to,
Employee while he shall have been employed by or associated with Employer is
confidential information and the exclusive property of Employer.
(b) Employee expressly agrees and understands that the remedy at law
for any breach by him of this paragraph 6 will be inadequate and that the
damages flowing from such breach are not readily susceptible to being measured
in monetary terms. Accordingly, it is acknowledged that Employer shall be
entitled to immediate injunctive relief and if the court so permits, may obtain
a temporary order restraining any threatened or further breach. Nothing
contained in this paragraph 6 shall be deemed to limit Employer's remedies at
law or in equity for any breach by Employee of the provisions of this paragraph
6 which may be pursued or availed of by Employer. Any covenant on Employee's
part contained hereinabove, which may not be specifically enforceable, shall
nevertheless, if breached, give rise to a cause of action for monetary damages.
(c) Employee has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon Employer under
this paragraph 6, and hereby acknowledges and agrees that the same are
reasonable in time and territory, are designed to eliminate competition which
otherwise would be unfair to Employer, do not stifle the inherent skill and
experience of Employee, would not operate as a bar to Employee's sole means of
support, are fully required to protect the legitimate interests of Employer and
do not confer a benefit upon Employer disproportionate to the detriment to
Employee.
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(d) The covenants contained in this paragraph 6 shall be construed to
extend to separate counties and adjacent counties, if applicable, of the states
of the United States in which BTF and its subsidiaries, affiliates and its and
their successors and assigns has a Facility, and to the extent that any such
covenant shall be illegal and/or unenforceable with respect to any one of said
counties, said covenants shall not be affected thereby with respect to each
other county, such covenants with respect to each county being construed as
severable and independent.
7. Illness, Incapacity or Death During Employment
a) If the Employee is unable to perform his services by reason
of illness or incapacity resulting in a failure to discharge his duties under
this Employment Agreement for six (6) or more consecutive months, then upon
thirty (30) days notice, Employer may terminate the employment of Employee under
this Employment Agreement and Employee, upon such termination, shall be paid his
Base Salary on a pro-rata basis to the date of termination for the thirty (30)
day notice period.
In the event of such termination, the Employee shall have the
right to the assignment of any and all insurance policies or health protection
plans if said policies and plans permit assignment out of the group to the
individual Employee.
(b) In the event that Employer elects to terminate this
Employment Agreement by reason of illness or incapacity, then Employee shall be
entitled to the greater of long-term disability (LTD) benefits provided to
senior officers by Employer but in any event at no less than no less than sixty
percent (60%) of Base Salary as of the date of termination, without reference to
set-off or caps existing in any LTD plan.
(c) In the event of Employee's death, all obligations of
Employer under this Employment Agreement shall terminate other than the payment
of that portion of his Base Salary on a pro-rata basis accrued to the date of
death, plus reimbursement of all expenses reasonably incurred by Employee in
performing his responsibilities and duties for Employer prior to and including
such date.
8. Termination
(a) The employment of Employee under this Employment
Agreement, and the term hereof, may be terminated by Employer for cause at any
time. For purposes hereof, the term "cause" means:
(i) Employee's fraud, dishonesty, willful
misconduct or gross negligence in the performance of his duties
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hereunder, including willful failure to perform such duties as may properly be
assigned him hereunder;
(ii) Employee's material breach of any provision of
this Employment Agreement which is not cured within thirty (30) days notice from
the Employer of such breach.
9. Optional Termination Upon Change of Control
a) In the event that there is a change in control of BTF and
the successor in control, without cause, terminates this Employment Agreement,
Employee shall be paid in lump sum twelve (12) months Base Salary or an amount
equal to his Base Salary for the balance of the twenty-four (24) month term,
whichever is greater, and the greater of the average of the bonuses, if any,
paid to Employee by Employer for the two (2) prior years and the bonus, if any,
for the prior year. If the successor in control changes Employee's title or
substantially changes his duties or functions from those which he previously
performed hereunder or requires Employee to perform the majority of his duties
at a location outside of the metropolitan area of Chicago, Illinois, the
successor in control shall be deemed to have terminated Employee's services
without cause.
A "Change in Control" shall mean a change in control
of BTF of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934 (as in effect on the effective date of this Employment Agreement,
the "Exchange Act"), whether or not BTF is then subject to such reporting
requirement; provided that, without limitation, such a Change in Control shall
be deemed to have occurred if:
(i) any "person" (as defined in subsections
13(d) and 14(d) of the Exchange Act), other than a person with which Xxxxxx
Xxxxxxxx is affiliated or of which he is a part, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), of securities of BTF
representing twenty percent (20%) or more of the combined voting power of BTF's
then outstanding securities;
(ii) during any period of two (2) consecutive
years or less (not including any period prior to the effective date of this
Employment Agreement) there shall cease to be a majority of the Board of
Directors of BTF comprised of Continuing Directors (as defined below); or
(iii) the stockholders of BTF approve (1) a
merger or consolidation of BTF with any other corporation, other than a merger
or consolidation that would result in the voting securities
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of BTF outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of BTF or such surviving entity outstanding immediately after such
merger or consolidation, or (2) a plan of complete liquidation of BTF or an
agreement for the sale or disposition by BTF of all or substantially all of its
assets.
The term "Continuing Directors" shall mean
individuals who constitute the Board of Directors of BTF as of the effective
date of this Employment Agreement and any new director(s) whose election by such
Board or nomination for election by BTF's stockholders was approved by a vote of
at least two-thirds of the directors then in office who either were directors as
of the effective date of this Employment Agreement or whose election or
nomination for election was previously so approved.
10. Severable Provisions
The provisions of this Employment Agreement are severable, and
if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions, and any partially
unenforceable provision to the extent enforceable in any jurisdiction, shall
nevertheless be binding and enforceable.
11. Binding Agreement
The rights and obligations of Employer under this Employment
Agreement shall inure to the benefit of and shall be binding upon the respective
successors and assigns of Employer.
12. Attorneys' Fees
In the event Employee is required to commence legal action to
enforce the provisions of this Employment Agreement and Employee prevails in
such action, any of the Employer who have been found not to comply with this
Employment Agreement shall pay Employee's costs and expenses, including
reasonable attorneys' fees, incurred in such action.
13. Notices
Any notice to be given to Employer under the terms of this
Employment Agreement shall be addressed to both Employer at the address of their
respective principal places of business, and any notice to be given to Employee
shall be addressed to him at his home address last shown on the records of the
Employer giving the
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notice, or at such other address as the parties may hereafter designate in
writing to the other. Any such notice shall have been duly given when enclosed
in a properly sealed envelope addressed as aforesaid, postage prepaid,
registered or certified, return receipt requested, and deposited in a post
office or branch post office regularly maintained by the United States
Government.
14. Waiver
Any party's failure to enforce any provision or provisions of
this Employment Agreement shall not in any way be construed as a waiver of any
such provision or provisions as to any future violations thereof, nor prevent
that party thereafter from enforcing each and every other provision of this
Employment Agreement. The rights granted the parties herein are cumulative and
the waiver by a party of any single remedy shall not constitute a waiver of such
party's right to assert all other legal remedies available to him or it under
the circumstances.
15. Governing Law
This Employment Agreement shall be governed by and construed
and interpreted according to the internal laws of the State of Illinois without
reference to principles of conflict of laws.
16. Captions and Paragraph Headings
Captions and paragraph headings used herein are for
convenience only and are not a part of this Employment Agreement and shall not
be used in construing it.
17. Entire Agreement
This Employment Agreement constitutes the entire agreement
between Employer and Employee with respect to the subject matter hereof and may
not be modified or terminated orally. No modification, termination or attempted
waiver of this Employment Agreement shall be valid unless in writing and signed
by the party against whom the same is sought to be enforced.
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IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be duly executed as of the day and year first above written.
BALLY TOTAL FITNESS HOLDING
CORPORATION
ATTEST: By: /s/ Xxxxxx Xxxxxx
-------------------------------------
"BTF"
/s/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx "Employee"
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------------
Xxxxxx Xxxxxxxx "Chairman of the Board"
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