Exhibit 10.1
FORM OF INDEMNIFICATION AGREEMENT
     This Indemnification Agreement (“Agreement”) is made as of September    ,
2006 by and between Bally Total Fitness Holding Corporation, a Delaware
corporation (the “Company”), and                      (“Indemnitee”).
RECITALS
     WHEREAS, Indemnitee is a director of the Company;
     WHEREAS, highly competent persons such as Indemnitee have become more
reluctant to serve publicly-held corporations as directors unless they are
provided with adequate protection through insurance or adequate indemnification
against risks of claims and actions against them arising out of their service to
and activities on behalf of the corporation;
     WHEREAS, the Board of Directors of the Company (the “Board”) has determined
that, in order to attract and retain qualified individuals such as Indemnitee,
the Company will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its subsidiaries
from certain liabilities. In addition, the Restated Certificate of Incorporation
(the “Certificate of Incorporation”) and the Amended and Restated Bylaws (the
“Bylaws”) of the Company require indemnification of and advancement of expenses
to the directors of the Company. Indemnitee may also be entitled to
indemnification pursuant to the General Corporation Law of the State of Delaware
(“DGCL”). The Certificate of Incorporation, Bylaws and the DGCL expressly
provide that the indemnification provisions set forth therein are not exclusive,
and thereby contemplate that contracts may be entered into between the Company
and members of the board of directors with respect to indemnification and
advancement of expenses;
     WHEREAS, the Indemnitee has been serving and continues to serve as a
director of the Company in part in reliance on the aforesaid provisions of the
Certificate of Incorporation and the Bylaws.
     WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and retaining such
persons;
     WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company’s stockholders and that the Company should act to assure such
persons that there will be increased certainty of such protection in the future;
     WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify, and to advance expenses on behalf
of, such persons to the fullest extent permitted by applicable law so that they
will serve or continue to serve the Company free from undue concern that they
will not be so indemnified or provided with advancement of expenses;
     WHEREAS, this Agreement is a supplement to and in furtherance of the
Certificate of Incorporation, the Bylaws and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor to diminish or
abrogate any rights of Indemnitee thereunder or pursuant to the DGCL; and
     WHEREAS, Indemnitee does not regard the protection available under the
Certificate of Incorporation, the Bylaws and insurance as adequate in the
present circumstances.
     NOW, THEREFORE, in consideration of the premises and the covenants
contained herein and of other valuable consideration the Company duly
acknowledges, the Company and Indemnitee do hereby covenant and agree as
follows:

 

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     Section 1. Definitions. In addition to terms defined elsewhere herein, the
following terms have the following meanings when used in this Agreement:
          (a) “Change in Control” shall be deemed to have occurred if, before,
on or after the date hereof, (i) any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
20% or more of the total voting power represented by the Company’s
then-outstanding Voting Securities, or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and
any new director whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board then in
office, or (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
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 total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all the Company’s assets.
          (b) “Corporate Status” describes the status of a person who is or was
a director, officer, employee, trustee, agent or fiduciary of the Company or of
any other corporation, limited liability company, partnership or joint venture,
trust, employee benefit plan or other entity or enterprise which such person is
or was serving at the request of the Company.
          (c) “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
          (d) “Expenses” shall include all reasonable attorneys’ fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other reasonable disbursements or
expenses of the types customarily incurred in connection with prosecuting,
defending, investigating, preparing to prosecute, defend or investigate, being
or preparing to be a witness in, or otherwise participating in, a Proceeding.
Expenses also shall include (i) Expenses incurred in connection with any appeal
resulting from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond, supersedeas bond, or
other appeal bond or its equivalent, and (ii) for purposes of Section 10(b) of
this Agreement only, Expenses incurred by Indemnitee in connection with the
interpretation, enforcement or defense of Indemnitee’s rights under this
Agreement, by litigation or otherwise. Expenses, however, shall not include
amounts paid in settlement by Indemnitee or the amount of judgments or fines
against Indemnitee.
          (e) “Independent Counsel” means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company or
Indemnitee (other than with respect to matters concerning the Indemnitee under
this Agreement, or of other indemnitees under similar indemnification
agreements), or (ii) any other party to the Proceeding giving rise to a claim
for indemnification hereunder. For the avoidance of doubt, it is acknowledged
and agreed that any person who previously served as “Independent Counsel” with
respect to this Agreement or with respect to any other similar indemnification
agreement for directors of the Company shall not, solely as a result of such
service, be disqualified from service as “Independent Counsel” under this
Agreement. Notwithstanding the foregoing, the term “Independent Counsel” shall
not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee’s rights
under this Agreement. The Company agrees to pay the reasonable fees and expenses
of the Independent Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including reasonable attorneys’ fees), claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.

 

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          (f) The term “Proceeding” shall include any actual, threatened,
asserted, pending or completed action, suit, arbitration, alternate dispute
resolution mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened, asserted, pending or completed proceeding, whether
brought in the right of the Company or otherwise, whether of a civil, criminal,
administrative or investigative nature and whether occurring before, on or after
the date of this Agreement, in which Indemnitee was, is or will be involved as a
party or otherwise by reason of the fact that Indemnitee is or was a director of
the Company, by reason of any action taken by him or of a failure by him to act,
or of any action or failure to act on his part while acting as director of the
Company, or by reason of the fact that he is or was serving at the request of
the Company as a director, officer, employee, trustee, agent or fiduciary of
another corporation, limited liability company, partnership or joint venture,
trust, employee benefit plan or other entity or enterprise, in each case whether
or not serving in such capacity at the time any liability or expense is incurred
for which indemnification, reimbursement, or advancement of expenses can be
provided under this Agreement.
          (g) “Reviewing Director” means a director of the Company who (i) is
not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee and (ii) is not affiliated with, by employment, investment
or otherwise, or is or was not placed on the Board or nominated to the Board by,
or as a result of any agreement with, any plaintiff in, party to or member of a
class (other than directors solely by virtue of their owning shares or “persons”
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) that are
the “beneficial owners” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing less than 5%
of the total voting power represented by the Company’s Voting Securities)
benefiting from the Proceeding. For all purposes of this Agreement, the
responsibilities of the Reviewing Directors may be performed by a single
Reviewing Director if there is only one such Reviewing Director.
          (h) “Voting Securities” means any securities which vote generally in
the election of directors.
          (i) Reference to “other enterprise” shall include employee benefit
plans; references to “fines” shall include any excise tax assessed with respect
to any employee benefit plan; references to “serving at the request of the
Company” shall include any service as a director, officer, employee, trustee,
agent or fiduciary of the Company which position imposes duties on, or involves
services by, such director, officer, employee, trustee, agent or fiduciary with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to be in
the best interests of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in manner “not opposed to the best interests
of the Company” as referred to in this Agreement.
     Section 2. Indemnity in Third Party Proceedings. The Company shall
indemnify Indemnitee in accordance with the provisions of this Section 2 if
Indemnitee was, is, becomes or is threatened to be made, a party to or a
participant in any Proceeding, other than a Proceeding by or in the right of the
Company to procure a judgment in its favor. Pursuant to this Section 2,
Indemnitee shall be indemnified to the fullest extent permitted by applicable
law, against all Expenses, judgments, fines and amounts paid in settlement
actually incurred by Indemnitee or on his behalf in connection with such
Proceeding or any claim, issue or matter therein.
     Section 3. Indemnity in Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee in accordance with the provisions of this
Section 3 if Indemnitee was, is, becomes or is threatened to be made, a party to
or a participant in any Proceeding by or in the right of the Company to procure
a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be
indemnified to the fullest extent permitted by applicable law, against all
Expenses actually incurred by him or on his behalf in connection with such
Proceeding or any claim, issue or matter therein.
     Section 4. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this Agreement, to the
fullest extent permitted by applicable law, and to the extent that Indemnitee is
a party to (or a participant in) and is successful, on the merits or otherwise,
in any Proceeding or in defense of any claim, issue or matter therein, in whole
or in part, the Company shall indemnify Indemnitee against all Expenses actually
incurred by him in connection therewith. For the avoidance of doubt, it is
acknowledged and agreed that, if Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company

 

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shall indemnify Indemnitee against all Expenses actually incurred by him or on
his behalf in connection with each successfully resolved claim, issue or matter.
If the Indemnitee is not wholly successful in such Proceeding, the Company also
shall indemnify Indemnitee against all Expenses actually incurred in connection
with a claim, issue or matter related to any claim, issue or matter on which the
Indemnitee was successful. For purposes of this Section 4 and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
     Section 5. Indemnification For Expenses of a Witness. Notwithstanding any
other provision of this Agreement, to the fullest extent permitted by applicable
law and to the extent that Indemnitee was, is, becomes or is threatened to be
made, by reason of his Corporate Status, a witness in any Proceeding to which
Indemnitee is not a party, he shall be indemnified against all Expenses actually
incurred by him or on his behalf in connection therewith.
     Section 6. Exclusions. Notwithstanding any provision in this Agreement, the
Company shall not be obligated under this Agreement to make any indemnity in
connection with any claim made against Indemnitee:
          (a) for which payment has actually been made to or on behalf of
Indemnitee under any insurance policy or other indemnity provision, except with
respect to any excess beyond the amount paid under any insurance policy or other
indemnity provision; or
          (b) for (i) an accounting of profits made from the purchase and sale
(or sale and purchase) by Indemnitee of securities of the Company within the
meaning of Section 16(b) of the Exchange Act, or similar provisions of state
statutory law or common law, or (ii) any reimbursement of the Company by the
Indemnitee of any bonus or other incentive-based or equity-based compensation or
of any profits realized by the Indemnitee from the sale of securities of the
Company, as required in each case under the Exchange Act; or
          (c) except as provided in Sections 8 and 10 of this Agreement, in
connection with any Proceeding (or any part of any Proceeding) initiated by
Indemnitee, including any Proceeding (or any part of any Proceeding) initiated
by Indemnitee against the Company or its directors, officers, employees or other
indemnitees, unless (i) the Board authorized the Proceeding (or any part of any
Proceeding) prior to its initiation, or (ii) the Company provides the
indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law.
     Section 7. Advances of Expenses. In accordance with the pre-existing
requirement of Article VII of the Bylaws, to the fullest extent permitted by
applicable law and notwithstanding any provision of this Agreement to the
contrary, the Company shall advance the expenses incurred by Indemnitee in
connection with any Proceeding, and such advancement shall be made as promptly
as practicable (and in any event within 30 days) after the receipt by the
Company of a statement or statements requesting such advances from time to time,
whether prior to or after final disposition of any Proceeding. Advances shall be
unsecured and interest free. Advances shall be made without regard to
Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s
ultimate entitlement to indemnification under the other provisions of this
Agreement. Indemnitee’s right to advances shall not be subject to any prior
determination by any party that the Indemnitee has satisfied any applicable
standard of conduct for indemnification. Advances shall include any and all
Expenses incurred pursuing an action to enforce this right of advancement,
including Expenses incurred preparing and forwarding statements to the Company
to support the advances claimed. The Indemnitee shall qualify for advances upon
the execution and delivery to the Company of this Agreement which shall
constitute an undertaking providing that the Indemnitee undertakes to repay the
advance to the extent that it is ultimately determined that Indemnitee is not
entitled to be indemnified by the Company. This Section 7 shall not apply to any
claim for which indemnity is excluded pursuant to Section 6 of this Agreement.
     Section 8. Procedure for Notification and Defense of Claim.
          (a) Indemnitee shall notify the Company in writing of any Proceeding
with respect to which Indemnitee intends to seek indemnification or advancement
of Expenses hereunder as soon as reasonably practicable following the receipt by
Indemnitee of written notice thereof. The written notification to the Company
shall include a description of the nature of the Proceeding and the facts
underlying the Proceeding. To obtain indemnification under this Agreement,
Indemnitee shall submit to the Company a written request, including therein or
therewith such documentation and information as is reasonably available to
Indemnitee and is reasonably necessary to

 

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determine whether and to what extent Indemnitee is entitled to indemnification
following the final disposition of such Proceeding. The omission by Indemnitee
to notify the Company hereunder will not relieve the Company from any liability
or obligation, including advancement of Expenses, which it may have to
Indemnitee under this Agreement, and any delay in so notifying the Company shall
not constitute a waiver by Indemnitee of any rights under this Agreement. The
Secretary of the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board in writing that Indemnitee has requested
indemnification.
          (b) If the Company shall be obligated to pay the Expenses of any
Proceeding against the Indemnitee, the Company shall be entitled to assume and
control the defense of such Proceeding (with counsel consented to by the
Indemnitee, which consent shall not be unreasonably withheld) upon the delivery
to the Indemnitee of written notice of its election so to do. After delivery of
such notice, consent to such counsel by the Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to the Indemnitee under
this Agreement for any fees of counsel subsequently incurred by the Indemnitee
with respect to the same Proceeding, provided that if (i) the employment of
separate counsel by the Indemnitee has been previously authorized by the
Company, (ii) the Indemnitee or counsel selected by the Company shall have
concluded in good faith that there is an actual or potential conflict of
interest between the Company and the Indemnitee or among indemnitees jointly
represented in the conduct of any such defense, (iii) the named parties in the
Proceeding (including any impleaded parties) include both the Company and
Indemnitee and Indemnitee concludes in good faith that there may be one or more
legal defenses available to him that are different from or in addition to those
available to the Company, (iv) any such representation by such counsel would be
precluded under the applicable standards of professional conduct then
prevailing, (v) the Proceeding seeks to impose or reasonably could be expected
to result in an injunction or other non-monetary remedy against Indemnitee
individually, (vi) the Proceeding seeks to impose or reasonably could be
expected to result in a criminal sanction against Indemnitee, (vii) the
Proceeding is brought by or on behalf of any governmental authority with respect
to the individual conduct of the Indemnitee (as opposed to Indemnitee’s and
other directors’ actions generally) or (viii) the Company shall not, in fact,
have employed counsel, to which Indemnitee has consented as aforesaid, to assume
the defense of such Proceeding, then the Indemnitee shall be entitled to retain
separate counsel and the reasonable fees and expenses of Indemnitee’s counsel
shall be at the expense of the Company. Notwithstanding the foregoing, (x) the
Indemnitee shall have the right to employ counsel in any such Proceeding at the
Indemnitee’s expense and (y) the Company will be entitled to participate in the
Proceeding at its own expense. The Company will not, without the prior written
consent of the Indemnitee, effect any settlement of any claim made against
Indemnitee in any Proceeding to which Indemnitee is a party unless such
settlement solely involves the payment of money and includes a complete and
unconditional release of the Indemnitee from all liability with respect to such
claim; provided, that the foregoing shall not restrict in any way the Company’s
ability to effect any settlement of any Proceeding as relates to, or any claim
made in any Proceeding against, the Company or any party to such Proceeding
other than Indemnitee.
     Section 9. Procedure Upon Application for Indemnification.
          (a) Upon written request by Indemnitee for indemnification pursuant to
Section 8(a) of this Agreement, a determination, if required by applicable law,
with respect to Indemnitee’s entitlement thereto shall be made in the specific
case: (i) if a Change in Control shall have occurred, by Independent Counsel in
a written opinion to the Board, a copy of which shall be delivered to
Indemnitee; or (ii) if a Change in Control shall not have occurred: (A) by a
majority vote of the Reviewing Directors, even though less than a quorum of the
Board, (B) by a committee of Reviewing Directors designated by a majority vote
of the Reviewing Directors, even though less than a quorum of the Board or
(C) if there are no such Reviewing Directors or, if such Reviewing Directors so
direct, by Independent Counsel in a written opinion to the Board, a copy of
which shall be delivered to Indemnitee; and, if it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall cooperate with
the person, persons or entity making such determination with respect to
Indemnitee’s entitlement to indemnification, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys’ fees and expenses and
disbursements) incurred by Indemnitee in so cooperating with the person, persons
or entity making such determination shall be borne by the Company (irrespective
of the determination as to Indemnitee’s entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

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          (b) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 9(a) of this Agreement,
the Independent Counsel shall be selected as provided in this Section 9(b). If a
Change in Control shall not have occurred, the Independent Counsel shall be
selected by a majority vote of the Reviewing Directors, even though less than a
quorum of the Board, or, if there are no such Reviewing Directors, by a majority
of the entire Board, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change
in Control shall have occurred, the Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the
Reviewing Directors or the entire Board, as applicable, in which event the
preceding sentence shall apply), and Indemnitee shall give written notice to the
Company advising it of the identity of the Independent Counsel so selected. In
either event, Indemnitee or the Company, as the case may be, may, within 10 days
after such written notice of selection shall have been given, deliver to the
Company or to Indemnitee, as the case may be, a written objection to such
selection; provided, however, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the requirements
of “Independent Counsel” as defined in Section 1 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person so selected shall
act as Independent Counsel. If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has determined
that such objection is without merit. If, within 20 days after the later of
submission by Indemnitee of a written request for indemnification pursuant to
Section 9(a) of this Agreement and the final disposition of the Proceeding, no
Independent Counsel shall have been selected and not objected to, either the
Company or Indemnitee may petition a court of competent jurisdiction for
resolution of any objection which shall have been made by the Company or
Indemnitee to the other’s selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the court or by such
other person as the court shall designate, and the person with respect to whom
all objections are so resolved or the person so appointed shall act as
Independent Counsel under Section 9(a) of this Agreement. Upon the due
commencement of any judicial proceeding or arbitration pursuant to Section 10(a)
of this Agreement, Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
          (c) In connection with any determination by Reviewing Directors or a
committee thereof, or Independent Counsel, as the case may be, as to whether
Indemnitee is entitled to be indemnified hereunder such party shall presume that
the Indemnitee has satisfied the applicable standard of conduct and is entitled
to indemnification, and the burden of proof shall be on the Company to
establish, by a preponderance of the evidence, that Indemnitee is not so
entitled.
     Section 10. Remedies of Indemnitee.
          (a) Subject to Section 10(c) of this Agreement, in the event that
(i) advancement of Expenses is not timely made pursuant to Section 7 of this
Agreement, (ii) payment of indemnification is not made pursuant to Section 4 or
5 of this Agreement within ten (10) days after receipt by the Company of a
written request therefor, (iii) payment of indemnification pursuant to
Section 2, 3 or 9 of this Agreement is not made within ten (10) days after a
determination has been made that Indemnitee is entitled to indemnification,
(iv) a determination is made pursuant to Section 9(a) of this Agreement that
Indemnitee is not entitled to indemnification pursuant to this Agreement, or
(v) in the event that the Company or any other person takes or threatens to take
any action to declare this Agreement void or unenforceable, or institutes any
litigation or other action or Proceeding designed to deny, or to recover from,
the Indemnitee the benefits provided or intended to be provided to the
Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court
of his entitlement to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. Indemnitee shall commence such proceeding
seeking an adjudication or an award in arbitration within 180 days following the
date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 10(a); provided, however, that the foregoing clause
shall not apply in respect of a proceeding brought by Indemnitee to enforce his
rights under Section 4 of this Agreement. The Company shall not oppose
Indemnitee’s right to seek any such adjudication or award in arbitration and, if
Indemnitee has commenced or thereafter commences such adjudication or award in
arbitration, any determination made by Reviewing Directors or a committee
thereof or Independent Counsel, as the case may be, that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding.

 

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          (b) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company is
bound by all the provisions of this Agreement. It is the intent of the Company
that the Indemnitee not be required to incur legal fees or other Expenses
associated with the interpretation, enforcement or defense of Indemnitee’s
rights under this Agreement by litigation or otherwise because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. The Company shall indemnify Indemnitee
against any and all Expenses and, if requested by Indemnitee, shall as promptly
as practicable (and in any event within 30 days) after receipt by the Company of
a written request therefore advance such expenses to Indemnitee, which are
incurred by Indemnitee in connection with any action permitted by this Agreement
and brought by Indemnitee for indemnification or advancement of Expenses from
the Company or to interpret, defend or enforce any rights the Indemnitee may
have under this Agreement and/or under any directors’ and officers’ liability
insurance policies maintained by the Company, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of
Expenses or insurance recovery, as the case may be; provided, however, that
Indemnitee shall reimburse the Company for advancement of Expenses by the
Company in connection with any adjudication sought by Indemnitee pursuant to
clause (iv) of Section 10(a) of this Agreement if it is ultimately determined
that Indemnitee is not entitled to indemnification pursuant to this Agreement
with respect to any of the claims that are the subject of such adjudication.
          (c) Notwithstanding anything in this Agreement to the contrary, no
determination as to entitlement to indemnification under this Agreement shall be
required to be made prior to the final disposition of the Proceeding; provided
that such determination shall be made as soon as practicable, but in no event
later than 60 days, after the final disposition of the Proceeding.
     Section 11. No Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or Proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, the failure of Reviewing Directors or
a committee thereof or Independent Counsel, as the case may be, to have made a
determination as to whether Indemnitee has met any particular standard of
conduct or had any particular belief, prior to the commencement of any
proceedings by Indemnitee to secure a determination that Indemnitee should be
indemnified under applicable law shall not be a defense to Indemnitee’s claim or
create a presumption that Indemnitee has not met any particular standard of
conduct or did not have any particular belief.
     Section 12. Reliance as Safe Harbor. For purposes of this Agreement,
Indemnitee shall be deemed to have acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the Company
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his or her conduct was unlawful, if Indemnitee’s actions or omissions
to act are taken in good faith reliance upon the records of the Company,
including its financial statements, or upon information, opinions, reports or
statements furnished to Indemnitee by the officers or employees of the Company
in the course of their duties, or by committees of the Board, or by any other
person (including legal counsel, accountants and financial advisors) as to
matters Indemnitee reasonably believes are within such other person’s
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Company. In addition, the knowledge and/or actions, or
failures to act, of any director, officer, agent or employee of the Company
shall not be imputed to Indemnitee for purposes of determining the right to
indemnity hereunder.
     Section 13. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors’ and officers’ liability
insurance, Indemnitee shall be covered as a current or former director of the
Company by such policy or policies, to the extent available on commercially
reasonable terms and in accordance with its or their terms, to the maximum
extent of the coverage maintained for any current or former director or officer
of the Company.
     Section 14. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers

 

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reasonably required and shall do everything that may be reasonably necessary to
secure such rights, including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such rights.
     Section 15. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including without limitation, each portion of any Section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable law and to give
the maximum effect to the intent of the parties hereto; and (c) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.
     Section 16. Enforcement.
          (a) The Company expressly confirms and agrees that it has entered into
this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to continue to serve as a director of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in
continuing to serve as a director of the Company.
          (b) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied, between the
parties hereto with respect to the subject matter hereof; provided, however,
that this Agreement is a supplement to and in furtherance of the Certificate of
Incorporation, the Bylaws and applicable law, and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder. To the extent that a change in applicable law (whether by statute or
judicial decision) permits greater indemnification by agreement than would be
afforded currently under the Certificate of Incorporation, the Bylaws or this
Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by
this Agreement the greater benefits so afforded by such change.
     Section 17. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by the
parties thereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions of this Agreement
nor shall any waiver constitute a continuing waiver.
     Section 18. Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder. The failure of Indemnitee to so notify the Company shall not
relieve the Company of any obligation which it may have to the Indemnitee under
this Agreement or otherwise.
     Section 19. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (a) if delivered by hand and receipted for by the party to
whom said notice or other communication shall have been directed, on the date of
such delivery, (b) if mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which it is so mailed,
(c) if mailed by reputable overnight courier and receipted for by the party to
whom said notice or other communication shall have been directed, on the next
business day after the date on which it is so mailed or (d) if sent by facsimile
transmission, with receipt of confirmation that such transmission has been
received, on the date such confirmation is received:
          If to Indemnitee, at the address indicated on the signature page of
this Agreement, or such other address as Indemnitee shall provide to the
Company.
If to the Company to:
Bally Total Fitness Holding Corporation
8700 West Bryn Mawr Avenue

 

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Chicago, Illinois 60631
Attention: Secretary of Bally Total Fitness Holding Corporation
     Section 20. Identical Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
     Section 21. Specific Performance, Etc. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee may be
without an adequate remedy at law. Accordingly, in the event of any such
violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute
proceedings, either in law or at equity, to obtain damages, to enforce specific
performance, to enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
     Section 22. Binding Effect, Etc. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company), assigns, spouses, heirs, executors and personal
and legal representatives. This Agreement shall continue in effect regardless of
whether Indemnitee continues to serve as an officer and/or director of the
Company or of any other entity or enterprise at the Company’s request.
     Section 23. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without giving
effect to the principles of conflicts of laws.
     Section 24. Miscellaneous. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate. The headings of the
sections and paragraphs of this Agreement are inserted for convenience only and
shall not be deemed to constitute part of this Agreement or to affect the
construction or interpretation thereof.
[Signature page follows.]

 

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

            Bally Total Fitness Holding Corporation
      By:           Name:           Title:        

            [Name of Indemnitee]
            Name:       Address: