Sample Business Contracts

Employment Agreement - Bally Total Fitness Holding Corp. and Cary Gaan

Employment Forms

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                              EMPLOYMENT AGREEMENT

         THE EMPLOYMENT AGREEMENT made and entered into as of March 20, 1997,
among Bally Total Fitness Holding Corporation, a Delaware corporation
("Employer") and Cary Gaan ("Employee").

         NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements herein contained, the parties agree as follows:

         1.       Employment.

                  (a) Employer hereby employs Employee as a senior executive
         whose duties shall include those of Senior Vice President, Secretary
         and General Counsel. Employer may employ Employee in such other
         capacities of equal status and responsibility as the Chief Executive
         Officer of Employer, 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 status as a senior executive in such capacities as the Chief
         Executive Officer of Employer shall reasonably assign to him. 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 its subsidiaries or

                  (c) Employee shall not, without prior written consent of
         Employer, directly or indirectly, during the term of this Employment

                         (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. The term of this Employment Agreement shall begin on the
effective date stated above ("commencement date") and shall continue for three
(3) years from such date and shall continue thereafter from year to year (each
such year a "Renewal Term") unless (i) terminated by either party in his or its
sole discretion upon written notice ("Non-Renewal Notice") given, on or prior to
September 22 of the year prior to the expiration of the term or any Renewal Term
or (ii) pursuant to paragraphs 7 or 8.

         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
         Twenty-Five Thousand Dollars ($225,000) (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
         review for consideration of increase by Employer.

                  (b) 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 other
employment benefits, including hospitalization, life insurance, death and
retirement plans, an automobile allowance or the use of an automobile, and the
like, afforded to senior executives of Employer of comparable status and tenure
and consistent with that afforded under Employer's policies.


         5.       Expenses. Employer shall pay all reasonable expenses incurred
by Employee in the performance of his responsibilities and duties for Employer.
Employee shall submit to Employer periodic statements of all expenses so
incurred. Subject to such audits 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)      Employee agrees that for the applicable period
         specified below, he will not, directly or indirectly, do any
         of the following:

                         (i) Induce any person who is an employee, officer,
                  or agent of Employer to terminate said relationship.

                        (ii) Employ, assist in employing or otherwise associate
                  in business with any present, former or future employee or
                  officer of Employer.

                       (iii) 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) The provisions of subparagraphs 6(a)(i) + 6(a)(ii) shall
         only be operative during the term and any Renewal Term hereof. In the
         event of a "Change in Control", the provisions of subparagraphs 6(a)(i)
         + 6(a)(ii) shall be operative only so long as Employee remains in the
         employ of Employer. All other obligations created by the terms of this
         paragraph 6 are of a continuing nature and shall remain in full effect
         at all times during and beyond Employee's period of employment.

                  (c) 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.

                  (d) 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

                  (e) For the purposes of this paragraph 6, the term "Employer"
         shall be deemed to include Employer and its subsidiaries and affiliates
         and the successors and assigns of it and its subsidiaries and
         affiliates, involved in the operation or management of a fitness

                  (f) 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 Employer and
         its subsidiaries, affiliates and its and their successors and assigns
         has a fitness center, 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 three (3) 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 through the three (3) day notice


                  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 sixty percent (60%) of Base Salary as of the date of termination,
         without reference to set-off or caps existing in any LTD plan. The
         benefit that the employee shall receive from this LTD plan shall be
         off-set by any benefits obtained through Social Security, Medicare,
         and/or Medicaid.

                  (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 hereunder,
                  including willful failure to perform such duties as may
                  properly be assigned him hereunder; or

                        (ii) Employee's material breach of any provision of
                  this Employment Agreement.

                  (b) Any termination shall not be in limitation of any other
         right or remedy Employer or Employee may have under this Employment
         Agreement or otherwise.

         9.       Optional Termination Upon Change of Control.

                  (a) In the event that there is a change in control of Employer
         and the successor in control, without cause, terminates this Employment
         Agreement, Employee shall be paid a lump sum equal to twenty-four (24)
         months Base Salary or an amount equal to his Base Salary for the
         balance of the three year term, whichever is greater, and the greater
         of the average of the bonuses, if any, paid to Employee by Employer


         for the three (3) 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
         constructively terminated Employee's services without cause and
         Employee shall be entitled to payment set forth in the first sentence
         of this paragraph.

                  A "Change in Control" shall, except as provided below, mean a
         change in control of Employer 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 Employer 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
                  Arthur Goldberg 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 Employer representing
                  twenty percent (20%) or more of the combined voting power of
                  Employer'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 Employer comprised of Continuing
                  Directors (as defined below); or

                       (iii) the stockholders of Employer approve (1) a merger
                  or consolidation of Employer with any other corporation, other
                  than a merger or consolidation that would result in the voting
                  securities of Employer 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 Employer or such surviving entity
                  outstanding immediately after such merger or consolidation, or
                  (2) a plan of complete liquidation of Employer or an agreement
                  for the sale or disposition by Employer of all or
                  substantially all of its assets.


                  Notwithstanding anything else contained herein to the
         contrary, the acquisition of Employer securities from Employer which
         issuance was approved by the Continuing Directors (as defined below)
         shall not, either on its own or in connection with any other
         acquisition of Employer securities prior thereto, be deemed to be a
         Change in Control for purposes of this Agreement.

                  The term "Continuing Directors" shall mean individuals who
         constitute the Board of Directors of Employer as of the effective date
         of this Employment Agreement and any new director(s) whose election by
         such Board or nomination for election by Employer'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.

                  (b) If it shall be determined that any payment or distribution
         to or for the benefit of Employee pursuant to this Section 9
         ("Severance Payments") would be subject to the excise tax imposed by
         Section 4999 of the Internal Revenue Code (the "Excise Tax"), then
         Employee shall be entitled to receive from Employers an additional
         payment (the "Excise Tax Gross-Up Payment") in an amount such that the
         net amount retained by Employee, after the calculation and deduction of
         any Excise Tax on the Severance Payments and any federal, state and
         local income taxes and Excise Tax on the Gross-Up Payment provided for
         in this Section 9, shall be equal to the Severance Payments. In
         determining this amount, the amount of the Excise Tax Gross-Up Payment
         attributable to federal income taxes shall be reduced by the maximum
         reduction in federal income taxes that could be obtained by the
         deduction of the portion of the Excise Tax Gross-Up Payment
         attributable to state and local income taxes. Finally, the Excise Tax
         Gross- Up Payment shall be reduced by income or excise tax withholding
         payments made by Employer to any federal, state or local taxing
         authority with respect to the Excise Tax Gross-Up Payment that was not
         deducted from compensation payable to Employee.

         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, Employer 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 Employer at the address of its
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,
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. Either 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.      Miscellaneous. Captions and headings used herein are for
convenience only and are not a part of this Employment Agreement and shall not
be used in construing it. 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


         17.      Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Rules of the American Arbitration Association
then pertaining in Chicago, Illinois and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. The arbitrator or arbitrators shall be deemed to possess the powers to
issue mandatory orders and restraining orders in connection with such
arbitration; provided, however, that nothing in this paragraph 17 shall be
construed so as to deny the Employer's right and power to seek and obtain
injunctive relief in a court of equity for any breach or threatened breach of
Employee of any of his covenants contained in subparagraph 6(a) hereof.

         IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be duly elected as of the day and year first above written.

                                            BALLY TOTAL FITNESS HOLDING

         --------------------------         ------------------------------------

                                            Cary Gaan                 "Employee"

Approved by the Compensation Committee of Bally Total Fitness Holding
Corporation on _______________, 1996.

                                                         Chairman, Compensation
                                                         Committee - Bally Total
                                                         Fitness Holding