EXHIBIT 10.2 - 03/11/2005 FORM 8-K


EXHIBIT 10.1



BALLY TOTAL FITNESS HOLDING CORPORATION
EMPLOYMENT INDUCEMENT AWARD EQUITY INCENTIVE PLAN


          
1.           Purpose of the Plan. The purpose
of this Plan is to grant equity-based compensation Awards as a material
employment inducement to newly hired officers and key employees of the Company
and its Affiliates, which will enable these individuals to acquire or increase
their ownership of Common Stock of the Company on reasonable terms. The
opportunity to own stock in the Company provided through the Plan is intended to
foster in these individuals an incentive to join the Company and put forth
maximum effort for the continued success and growth of the Company and its
Affiliates. The Plan is also intended to aid in retaining quality executives and
to assist in attracting the best available individuals to the Company and its
Affiliates in the future. All Awards granted under the Plan are intended to
constitute “employment inducement awards” within the meaning of
Section 303A.08 of the New York Stock Exchange Listed Company Manual. Awards
under the Plan may only be made in compliance with such rules and other
requirements as may be imposed by the New York Stock Exchange in connection with
employment inducement awards.


          
2.          Definitions. As used herein, the
following definitions shall apply:


	 	           
2.1      “Acquiring Person” has
the meaning set forth in Section 2.11(a) of the Plan.




	 	           
2.2      “Administrator” means the Board, any Committees or such
delegates as shall be administering the Plan in accordance with Section 4 of the
Plan.




	 	           
2.3      “Affiliate” means an “affiliate” within the meaning
of Rule 12b-2 of the General Rules and Regulations under the Exchange Act (as in
effect on the date the Plan is adopted by the Company).




	 	           
2.4      “Applicable
Laws” means the requirements relating to the administration of stock
option plans under U.S. federal and state laws, any stock exchange or quotation
system on which the Company has listed or submitted for quotation the Common
Stock to the extent provided under the terms of the Company’s agreement
with such exchange or quotation system and, with respect to Awards subject to
the laws of any foreign jurisdiction where Awards are, or will be, granted under
the Plan, the laws of such jurisdiction.




	 	           
2.5      “Associate” means an “associate” within the meaning
of Rule 12b-2 of the General Rules and Regulations under the Exchange Act (as in
effect on the date the Plan is adopted by the Company).











	 	           
2.6      “Award” means a Stock Award or Option granted in accordance
with the terms of the Plan.




	 	           
2.7      “Awardee” means an Employee of the Company or any Affiliate who
has been granted an Award under the Plan.




	 	           
2.8      “Award
Agreement” means a Stock Award Agreement and/or Option Agreement, which
may be in written or electronic format, in such form and with such terms as may
be specified by the Administrator, evidencing the terms and conditions of an
individual Award. Each Award Agreement is subject to the terms and conditions of
the Plan.




	 	           
2.9      “Beneficial
Owner” means with respect to any Person, and a Person shall be deemed
to “beneficially own” and be the beneficial owner of any securities
(i) which such Person or any of such Person’s Affiliates or Associates
beneficially owns, directly or indirectly; (ii) which such Person or any of such
Person’s Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or exchange;
or (B) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or (iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such
Person’s Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except to the extent contemplated
by the proviso to (ii)(B) above) or disposing of any securities of the Company.
Notwithstanding anything in this definition of beneficial ownership to the
contrary, the phrase “then outstanding,” when used with reference to a
Person’s beneficial ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed




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	 	to own beneficially hereunder.




	 	           
2.10      “Board” means the Board of Directors of the Company.




	 	           
2.11      “Change in
Control” means a change in control of the Company 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 Exchange Act (as in effect on the date the
Plan is approved by the Company), whether or not the Company is then subject to
such reporting requirement; provided, that, without limitation, a Change in
Control shall be deemed to have occurred if: 




	 	 	           
(a)      any Person other than an Exempt Person
(an “Acquiring Person”) is or becomes the Beneficial Owner of Shares
representing ten percent (10%) or more of the combined voting power of the
Company’s then outstanding Shares other than either in connection with a
transaction or series of related transactions approved by the Board (which Board
must include at least a majority who were Continuing Directors and which
transaction or series of related transactions must have been approved by a
majority of the Continuing Directors) or as the result of the reduction in the
number of issued and outstanding Shares pursuant to a transaction or series of
related transactions approved by the Board;




	 	 	           
(b)      any Person other than an Exempt Person
commences, or publicly announces an intent to commence, a tender or exchange
offer, the consummation of which would result in such Person becoming the
Beneficial Owner of Shares representing twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding Shares;




	 	 	           
(c)      during any period of two (2) consecutive
years (not including any period prior to the adoption of this Plan) there shall
cease to be a majority of the Board comprised of Continuing Directors;
or




	 	 	           
(d)      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 more than
eighty percent (80%) of the combined voting power of the voting securities of
the Company outstanding immediately after such merger or consolidation, or (ii)
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 all or
substantially all the Company’s assets.




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2.12      “Code” means the United
States Internal Revenue Code of 1986, as amended.




	 	           
2.13      “Committee” means
a committee of Directors appointed by the Board in accordance with Section 4 of
the Plan or the Compensation Committee of the Board.




	 	           
2.14      “Common Stock” means
the common stock of the Company.




	 	           
2.15      “Company” means Bally
Total Fitness Holding Corporation, or its successor.




	 	           
2.16      “Consultant” means any
person engaged by the Company or any Affiliate to render services to such entity
as an advisor or consultant.




	 	           
2.17      “Continuing Director”
means a Director of the Company who is not an Acquiring Person or an Affiliate
or Associate thereof or any of their representatives, and who either was a
Director of the Company before any Person became an Acquiring Person, or whose
nomination or election to the Board was recommended or approved by a majority of
the then Continuing Directors.




	 	           
2.18      “Conversion Award” has
the meaning set forth in Section 4.2(l) of the Plan.




	 	           
2.19      “Director” means a
member of the Board.“Director” means a member of the
Board.




	 	           
2.20      “Employee” means a
regular, active employee of the Company or any Affiliate, including an Officer.
The Administrator shall determine whether or not the chairman of the Board
qualifies as an “Employee.” Within the limitations of Applicable Law,
the Administrator shall have the discretion to determine the effect upon an
Award and upon an individual’s status as an Employee in the case of (i) any
individual who is classified by the Company or its Affiliate as leased from or
otherwise employed by a third party or as intermittent or temporary, even if any
such classification is changed retroactively as a result of an audit, litigation
or otherwise, (ii) any leave of absence approved by the Company or an Affiliate,
(iii) any transfer between locations of employment with the Company or an
Affiliate or between the Company and any Affiliate or between any Affiliates,
(iv) any change in the Awardee’s status from an employee to a Consultant or
Director and (v) at the request of the Company or an Affiliate an employee
becomes employed by any partnership, joint venture or corporation not meeting
the requirements of an Affiliate in which the Company or an Affiliate is a
party.




	 	           
2.21      “Exchange Act” means
the United States Securities Exchange Act of 1934, as amended.




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2.22      “Exempt Person” means
the Company, any subsidiary of the Company, any employee benefit plan of the
Company or any subsidiary of the Company, any entity holding Shares for or
pursuant to the terms of any such plan, any Director of the Company holding
office as of the close of business on the date the Plan is adopted by the
Company who are also officers of the Company on such date, any immediate family
member of or Person controlled by any such Director.




	 	           
2.23      “Fair Market Value”
means, unless the Administrator determines otherwise, as of any date, the
average of the highest and lowest quoted sales prices for such Common Stock as
of such date (or if no sales were reported on such date, the average on the last
preceding day on which a sale was made), as reported in such source as the
Administrator shall determine.




	 	           
2.24      “Grant Date” means the
date upon which an Award is granted to an Awardee pursuant to this
Plan.




	 	           
2.25      “Incentive Stock
Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.




	 	           
2.26      “Nonstatutory Stock
Option” means an Option not intended to qualify as an Incentive Stock
Option.




	 	           
2.27      “Officer” means a
person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.




	 	           
2.28      “Option” means a right
granted under Section 8 to purchase a number of Shares at such exercise price,
at such times and on such other terms and conditions as are specified in the
agreement or other documents evidencing the Award (the “Option
Agreement”).




	 	           
2.29      “Participant” means the
Awardee or any person (including any estate) to whom an Award has been assigned
or transferred as permitted hereunder.




	 	           
2.30      “Person” means any
individual, firm, corporation or other entity, and shall include any successor
(by merger or otherwise) of such entity.




	 	           
2.31      “Plan” means this Bally
Total Fitness Holding Corporation Employment Inducement Award Equity Incentive
Plan.




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2.32      “Share” means a share
of the Common Stock, as adjusted in accordance with Section 12 of the
Plan.




	 	           
2.33      “Stock Award” means an
award or issuance of Shares made under Section 10 of the Plan, the grant,
issuance, retention, vesting and/or transferability of which is subject during
specified periods of time to such conditions (including continued employment or
performance conditions) and terms as are expressed in the agreement or other
documents evidencing the Award (the “Stock Award
Agreement”).




	 	           
2.34      “Termination of
Employment” shall mean ceasing to be an Employee. The Administrator
shall determine whether any corporate transaction, such as a sale or spin-off of
a division or business unit, or a joint venture, shall be deemed to result in a
Termination of Employment.




          
3.          Stock Subject to the Plan.


	 	           
3.1      Aggregate Limits. Subject to the
provisions of Section 12 of the Plan, the aggregate number of Shares subject to
Awards granted under the Plan is six hundred thousand (600,000) Shares. Shares
subject to Awards that are cancelled, expire or are forfeited shall not be
available for re-grant under the Plan. The Shares subject to the Plan may be
either Shares reacquired by the Company, including Shares purchased in the open
market, or authorized but unissued Shares.




	 	           
3.2      Stock Award Limitation. Subject to
the provisions of Section 12 of the Plan, the aggregate number of Shares that
may be granted subject to Stock Awards made under the Plan is six hundred
thousand (600,000) Shares.




	 	           
3.3      Discounted Options Limitation. The
maximum aggregate number of Shares underlying Nonstatutory Stock Options with an
exercise price of less than Fair Market Value on the Grant Date that may be
granted under Section 8.2 of the Plan is six hundred thousand (600,000) Shares,
subject to the provisions of Section 12 of the Plan.




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4.          Administration Of The Plan

	 	           
4.1      Procedure.




	 	 	           
(a)      Multiple Administrative Bodies.
The Plan shall be administered by the Board, a Committee and/or their
delegates.




	 	 	           
(b)      Rule 16b-3. To the extent
desirable to qualify transactions hereunder as exempt under Rule 16b-3
promulgated under the Exchange Act (“Rule 16b-3”), Awards to Officers
shall be made by the entire Board or a Committee of two or more
“non-employee directors” within the meaning of Rule 16b-3.




	 	 	           
(c)      Other Administration. The Board or
a Committee may delegate to an authorized officer or officers of the Company the
power to approve Awards to individuals eligible to receive Awards under the Plan
who are not subject to Section 16 of the Exchange Act.




	 	 	           
(d)      Delegation of Authority for the
Day-to-Day Administration of the Plan. Except to the extent prohibited by
Applicable Law, the Administrator may delegate to one or more individuals the
day-to-day administration of the Plan and any of the functions assigned to it in
this Plan. Such delegation may be revoked at any time.




	 	           
4.2      Powers of the Administrator.
Subject to the provisions of the Plan and, in the case of a Committee or
delegates acting as the Administrator, subject to the specific duties delegated
to such Committee or delegates, the Administrator shall have the authority, in
its sole discretion:




	 	 	           
(a)      to select the Employees of the Company or
its Affiliates to whom Awards are to be granted hereunder;




	 	 	           
(b)      to determine the number of shares of
Common Stock to be covered by each Award granted hereunder;




	 	 	           
(c)      to determine the type of Award to be
granted to the selected Employees;




	 	 	           
(d)      to approve forms of Award Agreements for
use under the Plan;




	 	 	           
(e)      to determine the terms and conditions,
not inconsistent with the terms of the Plan, of any Award granted hereunder;
such terms and conditions 




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	 	 	 include, but
are not limited to, the exercise and/or purchase price, the time or times when
an Award may be exercised (which may or may not be based upon performance
criteria), the vesting schedule, any vesting and/or exercisability acceleration
or waiver of forfeiture restrictions, the acceptable forms of consideration, the
term and any restriction or limitation regarding any Award or the Shares
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine and may be established at the time an Award
is granted or thereafter;




	 	 	           
(f)      to correct administrative errors;




	 	 	           
(g)      to construe and interpret the terms of
the Plan and Awards granted pursuant to the Plan;




	 	 	           
(h)      to adopt rules and procedures relating to
the operation and administration of the Plan to accommodate the specific
requirements of local laws and procedures; without limiting the generality of
the foregoing, the Administrator is specifically authorized (A) to adopt rules
and procedures regarding the conversion of local currency, withholding
procedures and handling of stock certificates, which vary with local
requirements; and (B) to adopt such rules and procedures as the Administrator
deems desirable, to accommodate foreign laws, regulations and
practice;




	 	 	           
(i)      to prescribe, amend and rescind rules and
regulations relating to the Plan;




	 	 	           
(j)      to modify or amend each Award, including,
but not limited to, the acceleration of vesting and/or exercisability; provided,
however, that any such amendment is subject to Section 13 of the Plan and may
not impair any outstanding Award unless agreed to in writing by the
Participant;




	 	 	           
(k)      to allow Participants to satisfy
withholding tax amounts by electing to have the Company withhold from the Shares
to be issued upon exercise of a Nonstatutory Stock Option or vesting of a Stock
Award that number of Shares having a Fair Market Value equal to the amount
required to be withheld; the Fair Market Value of the Shares to be withheld
shall be determined in such manner and on such date that the Administrator shall
determine or, in the absence of provision otherwise, on the date that the amount
of tax to be withheld is to be determined; all elections by a Participant to
have Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may provide;




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(l)      to authorize conversion or substitution
under the Plan of any or all stock options, stock appreciation rights or other
stock awards held by service providers of an entity acquired by the Company (the
“Conversion Awards”); any conversion or substitution shall be
effective as of the close of the merger or acquisition; unless otherwise
determined by the Administrator at the time of conversion or substitution, all
Conversion Awards shall have the same terms and conditions as Awards generally
granted by the Company under the Plan;




	 	 	           
(m)      to authorize any person to execute on
behalf of the Company any instrument required to effect the grant of an Award
previously granted by the Administrator;




	 	 	           
(n)      to impose such restrictions, conditions
or limitations as it determines appropriate as to the timing and manner of any
resales by a Participant or other subsequent transfers by the Participant of any
Shares issued as a result of or under an Award, including without limitation,
(A) restrictions under an insider trading policy and (B) restrictions as to the
use of a specified brokerage firm for such resales or other
transfers;




	 	 	           
(o)      to provide, either at the time an Award
is granted or by subsequent action, that an Award shall contain as a term
thereof, a right, either in tandem with the other rights under the Award or as
an alternative thereto, of the Participant to receive, without payment to the
Company, a number of Shares, cash or a combination thereof, the amount of which
is determined by reference to the value of the Award; and




	 	 	           
(p)      to make all other determinations deemed
necessary or advisable for administering the Plan and any Award granted
hereunder.




	 	           
4.3      Effect of Administrator’s
Decision. All decisions, determinations and interpretations by the
Administrator regarding the Plan, any rules and regulations under the Plan and
the terms and conditions of any Award granted hereunder, shall be final and
binding on all Participants and/or other interested parties. The Administrator
shall consider such factors as it deems relevant, in its sole and absolute
discretion, to making such decisions, determinations and interpretations,
including, without limitation, the recommendations or advice of any officer or
other employee of the Company and such attorneys, consultants and accountants as
it may select.




          
5.          
Eligibility. Awards may be granted only to Employees of the Company or
any of its Affiliates. Awards may not be granted to (a) Consultants or (b)
Directors unless such Directors otherwise qualify as an Employee of the Company
or one of its Affiliates.


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6.           Term of
Plan. The Plan shall become effective upon its adoption by the Company. It
shall continue in effect for a term of ten (10) years, unless terminated earlier
under Section 13 of the Plan.


          
7.           Term of
Award. The term of each Award shall be determined by the Administrator and
stated in the Award Agreement. In the case of an Option, the term shall be ten
(10) years from the Grant Date or such shorter term as may be provided in the
Award Agreement.


          
8.           Options.
The Administrator may grant an Option or provide for the grant of an Option as a
material employment inducement to newly hired officers and key employees of the
Company and its Affiliates, either from time to time in the discretion of the
Administrator or automatically upon the occurrence of specified events,
including, without limitation, the achievement of performance goals, or the
satisfaction of an event or condition within the control of the Awardee or
within the control of others.


	 	           
8.1      Option Agreement. Each Option
Agreement shall contain provisions regarding (i) the number of Shares that may
be issued upon exercise of the Option, (ii) the type of Option, (iii) the
exercise price of the Shares and the means of payment for the Shares, (iv) the
term of the Option, (v) such terms and conditions on the vesting and/or
exercisability of an Option as may be determined from time to time by the
Administrator, (vi) restrictions on the transfer of the Option and forfeiture
provisions and (vii) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the
Administrator.




	 	           
8.2      Exercise Price. The per share
exercise price for the Shares to be issued pursuant to exercise of an Option
shall be determined by the Administrator, subject to the following:




	 	 	           
(a)      In the case of a Nonstatutory Stock
Option that is not part of a Conversion Award, the per Share exercise price
shall be no less than 75% of the Fair Market Value per Share on the Grant
Date.




	 	 	           
(b)      At the Administrator’s discretion, a
Nonstatutory Stock Option that is part of a Conversion Award may be granted in
substitution and/or conversion of options of an acquired entity, with a per
Share exercise price of less than 100% of the Fair Market Value per Share on the
date of such substitution and/or conversion.




	 	           
8.3      No Option Repricings. Other than
in connection with a change in the Company’s capitalization (as described
in Section 12.1 of the Plan), the exercise price of an Option may not be reduced
without shareholder approval.




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8.4      Vesting Period and Exercise Dates.
Options granted under this Plan shall vest and/or be exercisable at such time
and in such installments during the period prior to the expiration of the
Option’s term as determined by the Administrator. The Administrator shall
have the right to make the timing of the ability to exercise any Option granted
under this Plan subject to continued employment, the passage of time and/or such
performance requirements as deemed appropriate by the Administrator. At any time
after the grant of an Option, the Administrator may reduce or eliminate any
restrictions surrounding any Participant’s right to exercise all or part of
the Option.




	 	           
8.5      Form of Consideration. The
Administrator shall determine the acceptable form of consideration for
exercising an Option, including the method of payment, either through the terms
of the Option Agreement or at the time of exercise of an Option. Acceptable
forms of consideration may include:






	 	 	           
(a)      cash;




	 	 	           
(b)      check or wire transfer (denominated in
U.S. Dollars);




	 	 	           
(c)      subject to any conditions or limitations
established by the Administrator, other Shares which (A) in the case of Shares
acquired upon the exercise of an Option, have been owned by the Participant for
more than six months on the date of surrender and (B) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;




	 	 	           
(d)      consideration received by the Company
under a broker-assisted sale and remittance program acceptable to the
Administrator;




	 	 	           
(e)      such other consideration and method of
payment for the issuance of Shares to the extent permitted by Applicable Laws;
or




	 	 	           
(f)      any combination of the foregoing methods
of payment.




          
9.          Exercise of Option.


	 	           
9.1      Procedure for Exercise; Rights as a Shareholder.




	 	 	           
(a)      Any Option granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the respective
Award Agreement. Unless the Administrator provides otherwise, (A) no Option may
be exercised during any 




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	 	 	leave of
absence other than an approved personal or medical leave with an employment
guarantee upon return, (B) an Option shall continue to vest during any
authorized leave of absence and such Option may be exercised to the extent
vested and exercisable upon the Awardee’s return to active employment
status.




	 	 	           
(b)      Options shall be deemed exercised when
the Company receives (A) written or electronic notice of exercise (in accordance
with the Award Agreement) from the person entitled to exercise the Option; (B)
full payment for the Shares with respect to which the related Option is
exercised; and (C) payment of all applicable withholding taxes.




	 	 	           
(c)      Shares issued upon exercise of an Option
shall be issued in the name of the Participant or, if requested by the
Participant, in the name of the Participant and his or her spouse. Unless
provided otherwise by the Administrator or pursuant to this Plan, until the
Shares are issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Shares subject to an Option, notwithstanding the exercise of the
Option.




	 	 	           
(d)      The Company shall issue (or cause to be
issued) such Shares as administratively practicable after the Option is
exercised. An Option may not be exercised for a fraction of a Share.




	 	           
9.2      Effect of Termination of Employment on Nonstatutory Stock Options.




	 	 	           
(a)      Generally. Unless otherwise
provided for by the Administrator in an Award Agreement, upon an Awardee’s
Termination of Employment other than as a result of circumstances described in
Sections 9.2(b), (c) and (d) below, any outstanding Nonstatutory Stock Option
granted to such Awardee, whether vested or unvested, to the extent not
theretofore exercised, shall terminate immediately upon the Awardee’s
Termination of Employment.




	 	 	           
(b)      Disability or Retirement of
Awardee. Unless otherwise provided for by the Administrator, upon an
Awardee’s Termination of Employment as a result of the Awardee’s
disability or retirement due to age in accordance with the Company’s or its
Affiliate’s policies, all outstanding Nonstatutory Stock Options granted to
such Awardee shall immediately become fully vested and exercisable and the
Participant may exercise such Option until the earlier of (A) three (3) years
following Awardee’s disability or retirement or (B) the expiration of the
term of such Option. If the Participant does not exercise such Option within the
time specified, the Option (to the extent not exercised) shall automatically
terminate.




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(c)      Death of Awardee. Unless otherwise
provided for by the Administrator, upon an Awardee’s Termination of
Employment as a result of the Awardee’s death, all outstanding Nonstatutory
Stock Options granted to such Awardee shall immediately become fully vested and
exercisable and the Participant may exercise such Option until the earlier of
(A) one (1) year following the Awardee’s death or (B) the expiration of the
term of such Option. If a Nonstatutory Stock Option is held by the Awardee when
he or she dies, such Option may be exercised by the beneficiary designated by
the Awardee (as provided in Section 14 of the Plan), the executor or
administrator of the Awardee’s estate or, if none, by the person(s)
entitled to exercise the Nonstatutory Stock Option under the Awardee’s will
or the laws of descent or distribution. If the Nonstatutory Stock Option is not
so exercised within the time specified, such Option (to the extent not
exercised) shall automatically terminate.




	 	 	           
(d)      Voluntary Severance Incentive
Program. Upon an Awardee’s Termination of Employment as a result of
participation in a voluntary severance incentive program of the Company or an
Affiliate approved by the Board or a Committee, unless provided otherwise
pursuant to the terms of such voluntary severance incentive program, all
outstanding Nonstatutory Stock Options granted to such Awardee shall immediately
become fully vested and exercisable and the Participant may exercise such Option
until the earlier of (A) three (3) months following the Awardee’s
Termination of Employment (or such other period of time as provided for by the
Administrator) or (B) the expiration of the term of such Option. If, after
Awardee’s Termination of Employment, the Participant does not exercise his
or her Nonstatutory Stock Option within the time specified, the Option (to the
extent not exercised) shall automatically terminate.




	 	 	           
(e)      Divestiture. If an Awardee will
cease to be an Employee because of a divestiture by the Company, prior to such
Termination of Employment, the Administrator may, in its sole discretion, make
some or all of the outstanding Nonstatutory Stock Options granted to the Awardee
become fully vested and exercisable and provide that such Options remain
exercisable for a period of time to be determined by the Administrator. The
determination of whether a divestiture will occur shall be made by the
Administrator in its sole discretion. If, after the close of the divestiture,
the Participant does not exercise the Nonstatutory Stock Option within the time
specified therein, such Option (to the extent not exercised) shall automatically
terminate.




13






	 	 	           
(f)      Work Force Restructuring or Similar
Program. If an Awardee will cease to be an Employee because of a work force
restructuring or similar program, prior to such Termination of Employment, the
Administrator may, in its sole discretion, make some or all of the outstanding
Nonstatutory Options granted to the Awardee become fully vested and exercisable
and provide that such Options remain exercisable for a period of time to be
determined by the Administrator. The determination of whether a work force
restructuring will occur shall be made by the Administrator in its sole
discretion. If, after Awardee’s Termination of Employment, the Participant
does not exercise his or her Nonstatutory Stock Option within the time specified
therein, such Option (to the extent not exercised) shall automatically
terminate.




          
10.           Stock Awards.


	 	           
10.1      Stock Award Agreement. Each Stock
Award Agreement shall contain provisions regarding (i) the number of Shares
subject to such Stock Award or a formula for determining such number, (ii) the
purchase price of the Shares, if any, and the means of payment for the Shares,
(iii) the performance criteria, if any, and level of achievement versus these
criteria that shall determine the number of Shares granted, issued, retainable
and/or vested, (iv) such terms and conditions on the grant, issuance, vesting
and/or forfeiture of the Shares as may be determined from time to time by the
Administrator, (v) restrictions on the transferability of the Stock Award and
(vi) such further terms and conditions in each case not inconsistent with this
Plan as may be determined from time to time by the Administrator.




	 	           
10.2      Restrictions and Performance
Criteria. The grant, issuance, retention and/or vesting of each Stock Award
may be subject to such performance criteria and level of achievement of such
criteria as the Administrator shall determine, which criteria may be based on
financial performance, personal performance evaluations, completion of service
by the Awardee, or such other factor as the Administrator shall deem
appropriate.




	 	           
10.3      Forfeiture. Unless otherwise
provided for by the Administrator, upon the Awardee’s Termination of
Employment (other than as provided below in Sections 10(d), (e) and (f)), the
Stock Award and the Shares subject thereto shall be forfeited, provided that to
the extent that the Participant purchased any Shares, the Company shall have a
right to repurchase the unvested Shares at the original price paid by the
Participant.




	 	           
10.4      Disability or Retirement of
Awardee. Unless otherwise provided for by the Administrator, if an
Awardee’s Termination of Employment is due to the Awardee’s disability
or retirement due to age in accordance with the Company’s or its
Affiliate’s policies, all outstanding Stock Awards granted to such Awardee
shall continue to vest, provided the following conditions are met:




14






	 	 	           
(a)      The Awardee shall not render services for
any organization or engage directly or indirectly in any business which, in the
opinion of the Administrator, competes with, or is in conflict with the interest
of, the Company. The Awardee shall be free, however, to purchase as an
investment or otherwise stock or other securities of such organizations as long
as they are listed upon a recognized securities exchange or traded
over-the-counter, or as long as such investment does not represent a substantial
investment to the Awardee or a significant (greater than 10%) interest in the
particular organization. For purposes of this subsection, a company (other than
an Affiliate) which is engaged in the business of producing, leasing or selling
products or providing services of the type now or at any time hereafter made or
provided by the Company or any of its Affiliates shall be deemed to compete with
the Company;




	 	 	           
(b)      The Awardee shall not, without prior
written authorization from the Company, use in other than the business of the
Company or any of its Affiliates, any confidential information or material
relating to the business of the Company or its Affiliates, either during or
after employment with the Company or any of its Affiliates;




	 	 	           
(c)      The Awardee shall disclose promptly and
assign to the Company or one of its Affiliates, as appropriate, all right, title
and interest in any invention or idea, patentable or not, made or conceived by
the Awardee during employment by the Company or any of its Affiliates, relating
in any manner to the actual or anticipated business, research or development
work of the Company or any of its Affiliates and shall do anything reasonably
necessary to enable the Company or one of its Affiliates, as appropriate, to
secure a patent where appropriate in the United States and in foreign countries;
and




	 	 	           
(d)      An Awardee retiring due to age shall
render, as a Consultant and not as an Employee, such advisory or consultative
services to the Company as shall be reasonably requested in writing from time to
time by the Administrator, consistent with the state of the retired
Awardee’s health and any employment or other activities in which such
Awardee may be engaged. For purposes of this Plan, the Awardee shall not be
required to devote a major portion of time to such services and shall be
entitled to reimbursement for any reasonable out-of-pocket expenses incurred in
connection with the performance of such services.




	 	           
10.5      Death of Awardee. Unless
otherwise provided for by the Administrator, if an Awardee’s Termination of
Employment is due to his or her death, a portion of each outstanding Stock Award
granted to such Awardee shall immediately vest and all forfeiture provisions and
repurchase rights shall lapse as to a prorated number of shares 




15






	 	determined by
dividing the number of whole months since the Grant Date by the number of whole
months between the Grant Date and the date that the Stock Award would have fully
vested (as provided for in the Stock Award Agreement). The vested portion of the
Stock Award shall be delivered to the Participant (if no longer held by the
Awardee), the beneficiary designated by the Awardee (as provided in Section 14
of the Plan), the executor or administrator of the Awardee’s estate or, if
none, by the person(s) entitled to receive the vested Stock Award under the
Awardee’s will or the laws of descent or distribution.




	 	           
10.6      Voluntary Severance Incentive
Program. Upon an Awardee’s Termination of Employment as a result of
participation in a voluntary severance incentive program of the Company or an
Affiliate approved by the Administrator, then unless provided otherwise pursuant
to the terms of such voluntary severance incentive program, a portion of each
outstanding Stock Award granted to such Awardee shall immediately vest and all
forfeiture provisions and repurchase rights shall lapse as to a prorated number
of shares determined by dividing the number of whole months since the Grant Date
by the number of whole months between the Grant Date and the date that the Stock
Award would have fully vested (as provided for in the Stock Award
Agreement).




	 	           
10.7      Divestiture. If an Awardee will
cease to be an Employee because of a divestiture by the Company, prior to such
Termination of Employment, the Administrator may, in its sole discretion,
accelerate the vesting of a portion of any outstanding Stock Award granted to
such Awardee and provide that all forfeiture provisions and repurchase rights
shall lapse as to a prorated number of shares determined by dividing the number
of whole months since the Grant Date by the number of whole months between the
Grant Date and the date that the Stock Award would have fully vested (as
provided for in the Stock Award Agreement). The determination of whether a
divestiture will occur shall be made by the Administrator in its sole
discretion.




	 	           
10.8      Work Force Restructuring or Similar
Program. If an Awardee will cease to be an Employee because of a work force
restructuring by the Company, prior to such Termination of Employment, the
Administrator may, in its sole discretion, accelerate the vesting of a portion
of any outstanding Stock Award granted to such Awardee and provide that all
forfeiture provisions and repurchase rights shall lapse as to a prorated number
of shares determined by dividing the number of whole months since the Grant Date
by the number of whole months between the Grant Date and the date that the Stock
Award would have fully vested (as provided for in the Stock Award Agreement).
The determination of whether a work force restructuring will occur shall be made
by the Administrator in its sole discretion.




16






	 	           
10.9      Rights as a Shareholder. Unless
otherwise provided by the Administrator, the Participant shall have the rights
equivalent to those of a shareholder and shall be a shareholder only after
Shares are issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) to the
Participant.




          

11.          Non-Transferability
of Awards. Unless determined otherwise by the Administrator, an Award may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by beneficiary designation, will or by the laws of descent or
distribution. The Administrator may make an Award transferable to an
Awardee’s family member or any other person or entity. If the Administrator
makes an Award transferable, either at the time of grant or thereafter, such
Award shall contain such additional terms and conditions as the Administrator
deems appropriate, and any transferee shall be deemed to be bound by such terms
upon acceptance of such transfer.


          
12.          Adjustments
upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.


	 	           
12.1      Changes in Capitalization. Subject
to any required action by the shareholders of the Company, (i) the number and
kind of Shares covered by each outstanding Award, (ii) the price per Share
subject to each such outstanding Award and (iii) the Share limitations set forth
in Section 3 of the Plan, shall be proportionately adjusted for any increase or
decrease in the number or kind of issued shares resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration.”
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Award.




	 	           
12.2      Dissolution or Liquidation. In
the event of the proposed dissolution or liquidation of the Company, the
Administrator shall notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. The Administrator in its discretion
may provide for an Option to be fully vested and exercisable until ten (10) days
prior to such transaction. In addition, the Administrator may provide that any
restrictions on any Award shall lapse prior to the transaction, provided the
proposed dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, an Award will
terminate immediately prior to the consummation of such proposed
transaction.




17






	 	           
12.3      Change in Control. In the event
there is a Change in Control of the Company, as determined by the Board or a
Committee, the Board or Committee may, in its discretion, (i) provide for the
assumption or substitution of, or adjustment to, each outstanding Award; (ii)
accelerate the vesting of Options and terminate any restrictions on Cash Awards
or Stock Awards; and (iii) provide for the cancellation of Awards for a cash
payment to the Participant.




          
13.          Amendment and
Termination of the Plan.


	 	           
13.1      Amendment and Termination. The
Administrator may amend, alter or discontinue the Plan or any Award Agreement,
but any such amendment shall be subject to approval of the shareholders of the
Company in the manner and to the extent required by Applicable Law. In addition,
without limiting the foregoing, unless approved by the shareholders of the
Company, no such amendment shall be made that would:




	 	 	           
(a)      reduce the minimum exercise price for
Options granted under the Plan;




	 	 	           
(b)      reduce the exercise price of outstanding
Options; or




	 	 	           
(c)      change the class of persons eligible to
receive Awards under the Plan.




	 	           
13.2      Effect of Amendment or
Termination. No amendment, suspension or termination of the Plan shall
impair the rights of any Award, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in writing and signed
by the Participant and the Company. Termination of the Plan shall not affect the
Administrator’s ability to exercise the powers granted to it hereunder with
respect to Awards granted under the Plan prior to the date of such
termination.




	 	           
13.3      Effect of the Plan on Other
Arrangements. Neither the adoption of the Plan by the Board or a Committee
nor the submission of the Plan to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board or any
Committee to adopt such other incentive arrangements as it or they may deem
desirable, including, without limitation, the granting of restricted stock or
stock options otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.




18






          
14.          Designation of Beneficiary.


	 	           
14.1      An Awardee may file a written
designation of a beneficiary who is to receive the Awardee’s rights
pursuant to Awardee’s Award or the Awardee may include his or her Awards in
an omnibus beneficiary designation for all benefits under the Plan. To the
extent that Awardee has completed a designation of beneficiary while employed
with the Company, such beneficiary designation shall remain in effect with
respect to any Award hereunder until changed by the Awardee to the extent
enforceable under Applicable Law.




	 	           
14.2      Such designation of beneficiary may be
changed by the Awardee at any time by written notice. In the event of the death
of an Awardee and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such Awardee’s death, the Administrator
shall allow the executor or administrator of the estate of the Awardee to
exercise the Award, or if no such executor or administrator has been appointed
(to the knowledge of the Administrator), the Administrator, in its discretion,
may allow the spouse or one or more dependents or relatives of the Awardee to
exercise the Award to the extent permissible under Applicable Law.





          
15.          No Right to
Awards or to Employment. No person shall have any claim or right to be
granted an Award and the grant of any Award shall not be construed as giving an
Awardee the right to continue in the employ of the Company or its Affiliates.
Further, the Company and its Affiliates expressly reserve the right, at any
time, to dismiss any Employee or Awardee at any time without liability or any
claim under the Plan, except as provided herein or in any Award Agreement
entered into hereunder.


          
16.          Legal
Compliance. Shares shall not be issued pursuant to the exercise of an Option
or Stock Award unless the exercise of such Option or Stock Award and the
issuance and delivery of such Shares shall comply with Applicable Laws and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.


          
17.          Inability to
Obtain Authority. To the extent the Company is unable to or the
Administrator deems it infeasible to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, the
Company shall be relieved of any liability with respect to the failure to issue
or sell such Shares as to which such requisite authority shall not have been
obtained.


          
18.          Notice.
Any written notice to the Company required by any provisions of this Plan shall
be addressed to the Secretary of the Company and shall be effective when
received by the Company.



19






          
19.          Governing Law;
Interpretation of Plan and Awards.


	 	           
19.1      This Plan and all determinations made
and actions taken pursuant hereto shall be governed by the substantive laws, but
not the choice of law rules, of the state of Delaware.




	 	           
19.2      In the event that any provision of the
Plan or any Award granted under the Plan is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, such provision
shall be reformed, if possible, to the extent necessary to render it legal,
valid and enforceable, or otherwise deleted, and the remainder of the terms of
the Plan and/or Award shall not be affected except to the extent necessary to
reform or delete such illegal, invalid or unenforceable provision.




	 	           
19.3      The headings preceding the text of the
sections hereof are inserted solely for convenience of reference, and shall not
constitute a part of the Plan, nor shall they affect its meaning, construction
or effect.




	 	           
19.4      The terms of the Plan and any Award
shall inure to the benefit of and be binding upon the parties hereto and their
respective permitted heirs, beneficiaries, successors and assigns. 




          
20.          Limitation on
Liability. The Company and any Affiliate that is in existence or hereafter
comes into existence shall not be liable to a Participant, an Employee an
Awardee or any other persons as to:


	 	           
20.1      The Non-Issuance of Shares. The
non-issuance or sale of Shares as to which the Company has been unable to obtain
from any regulatory body having jurisdiction the authority deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any
shares hereunder; and




	 	           
20.2      Tax Consequences. Any tax
consequence expected, but not realized, by any Participant, Employee, Awardee or
other person due to the receipt, exercise or settlement of any Option or other
Award granted hereunder.





          
21.          Unfunded
Plan. Insofar as it provides for Awards, the Plan shall be unfunded.
Although bookkeeping accounts may be established with respect to Awardees who
are granted Stock Awards under this Plan, any such accounts will be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets which may at any time be represented by Awards, nor shall this Plan be
construed as providing for such segregation, nor shall the Company nor the
Administrator be deemed to be a trustee of stock or cash to be awarded under the
Plan. Any liability of the Company to any Participant with respect to an Award
shall be based solely upon any contractual obligations which may be created by
the Plan;



20






no such obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company. Neither the Company nor the Administrator shall be
required to give any security or bond for the performance of any obligation
which may be created by this Plan.



21








NONSTATUTORY STOCK OPTION AWARD AGREEMENT





          
This Award Agreement is made as of [Insert Date], between BALLY TOTAL
FITNESS HOLDING CORPORATION, a Delaware corporation (the “Company”),
and [Insert Name], an employee of the Company or one or more of its
Affiliates (the “Employee”). 




          
WHEREAS, the Company has heretofore adopted the Bally Total Fitness Holding
Corporation Employment Inducement Award Equity Incentive Plan (the
“Plan”); 


          
WHEREAS, the Company wishes to grant a Nonstatutory Stock Option Award to the
Employee (the “Award”); and 


          
WHEREAS, in accordance with and subject to the terms and provisions of the Plan,
this Award Agreement shall evidence the Award. 


          
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
and for other good and valuable consideration, the sufficiency of which is
hereby acknowledged by the parties hereto, the parties hereto hereby agree as
follows: 




          
1.          Grant of
Award. The Company hereby grants to the Employee the right and option (the
“Option”) to purchase all or any part of an aggregate of [Insert
Number] shares of the Common Stock of the Company (the “Shares”) (such
number being subject to adjustment as set forth herein and in the Plan ) on the
terms and conditions set forth herein and in the Plan.


          
2.          Type of
Option. The Option granted under this Award Agreement is a Nonstatutory
Stock Option and shall not be treated by the Company or the Employee as an
Incentive Stock Option for federal income tax purposes.


          
3.          Option
Price. The option price of the Shares covered by the Option is $[Insert
Amount] per Share.


          
4.          Term of Option.


          
              (a)        
The term of the Option shall be for a period of ten (10) years from the date
hereof, subject to earlier termination as hereinafter provided.










          
              (b)        
Prior to its expiration or termination, and except as hereinafter provided, the
Option may be exercised within the following time limitations:


	 	          
              (i)        
After [one (1) year] from the date of this Agreement, it may be exercised as to
not more than [one-third (1/3)] of the Shares originally subject to the
Option.




	 	          
              (ii)        
After [two (2) years] from the date of this Agreement, it may be exercised as to
not more than an aggregate of [two-thirds (2/3)] of the Shares originally
subject to the Option.




	 	          
              (iii)        
After [three (3)] years from the date of this Agreement, it may be exercised as
to [any part or all] of the Shares originally subject to the Option.





          
5.          Exercise of Option 


          
              (a)        
In order to exercise the Option, the person or persons entitled to exercise
shall notify [Charles Schwab Employee Stock Plan Services] of the number of full
Shares with respect to which the Option is to be exercised utilizing the
cashless exercise program and procedures that the Company has established and
communicated to the Employee. The exercise price for the Shares to be purchased
shall be paid in accordance with such cashlesss exercise program and
procedures.


          
              (b)        
If at any time during the term of this Option the Company discontinues its
cashless exercise program, then in order to exercise the Option, the person or
persons entitled to exercise it shall deliver to the Secretary of the Company,
or such other person designated for this purpose, written notice of the number
of full Shares with respect to which the Option is to be exercised. The notice
shall be accompanied by payment in full for any Shares being purchased. Such
payment shall be in cash, or, upon approval of the Committee, by certificates of
Shares held for more than six (6) months, duly endorsed in blank, equal in value
to the purchase price of the Shares to be purchased based upon their Fair Market
Value on the date of exercise, or, upon approval of the Committee, by a
combination of cash and Shares. No fractional Shares shall be issued.



2






          
              (c)        
No Shares shall be issued until full payment therefor has been made, and the
Employee shall have none of the rights of a shareholder in respect of such
Shares until they are so issued.


          
6.          Nontransferability.
The Option shall not be transferable other than (a) by will or the laws of
descent and distribution, and the Option may be exercised, during the lifetime
of the Employee, only by him or her, or in the event of death, his or her
designated beneficiary, or in the event of disability, his or her personal
representative, (b) pursuant to a qualified domestic relations order, as defined
in Section 414(p) the Internal Revenue Code of 1986, as amended (the
“Code”), (c) to the spouse, children, grandchildren or parents of the
Employee (the “Immediate Family Members”), (d) to a trust or trusts
for the exclusive benefit of the Employee or the Immediate Family Members, (e)
to a partnership or limited liability company in which the Employee and/or the
Immediate Family Members are the only partners or members or (f) to an entity
exempt from federal income tax pursuant to Section 501(c)(3) of the Code or any
successor provision. Following a transfer, the Option shall continue to be
subject to the same terms and conditions of this Award Agreement and the Plan as
were applicable immediately prior to the transfer. 


          
7.          Termination of
Employment. In the event that the employment of the Employee is terminated
(other than by reason of death, disability or retirement), then (a) the Option
may be exercised by the Employee (to the extent that he or she shall have been
entitled to do so at the termination of his or her employment) at any time
within ninety (90) days after such termination, but not beyond the original term
hereof, and (b) the portion of the Option that has not vested as of the date of
the termination of the Employee’s employment shall automatically terminate.
So long as the Employee continues to be an employee of the Company or of one or
more of its Affiliates, the Option shall not be affected by any change in the
Employee’s duties or position. Nothing in this Award Agreement shall confer
upon the Employee any right to continue in the employ of the Company or any of
its Affiliates or to interfere in any way with the right of the Company or any
Affiliate to terminate his or her employment at any time. Anything herein
contained to the contrary notwithstanding, in the event of any termination of
the Employee’s employment for cause, the Option, to the extent not
theretofore exercised, shall automatically



3






terminate. 


          
8.          Death of the
Employee. If the Employee dies while he or she is employed by the Company or
one or more of its Affiliates, then the Option may be exercised in full by the
Employee’s designated beneficiary at any time within three hundred sixty
five (365) days after the Employee’s death, but not beyond the original
term hereof. If the Employee dies within ninety (90) days after the termination
of his or her employment with the Company or one or more of its Affiliates, then
the Option may be exercised by the Employee’s designated beneficiary (to
the extent that the Employee would have been entitled to do so at the date of
his or her death) at any time within three hundred sixty five (365) days after
the Employee’s death, but not beyond the original term hereof. 


          
9.          Disability of
the Employee. If the employment of the Employee terminates on account of his
or her having become disabled, as defined in Section 22(e)(3) of the Code, then
the Option may be exercised in full by the Employee or the Employee’s
personal representative at any time within three hundred and sixty five (365)
days after the date on which his or her employment terminated, but not beyond
the original term hereof. 


          
10.          Retirement of
the Employee. If the employment of the Employee terminates by reason of the
Employee’s retirement on or after the Employee’s attainment of age
sixty five (65), then the Option may be exercised in full by the Employee at any
time within three hundred sixty five (365) days after the date on which his or
her employment terminated, but not beyond the original term hereof. 


          
11.          Taxes. 


          
              (a)        
The Company shall have the right to require an individual entitled to receive
Shares pursuant to the exercise of this Option to pay to the Company the amount
of any taxes that the Company is or will be required to withhold with respect to
such Shares before the certificate for such Shares is delivered pursuant to the
Option. The Company may elect to deduct such taxes from any other amounts then
payable to the Employee in cash or Shares or from any other amounts payable to
the Employee ay any time thereafter.



4






          
              (b)        
Upon approval of the Committee, the Employee may elect to satisfy his or her tax
liability with respect to the exercise of the Option by having the Company
withhold Shares otherwise issuable upon exercise of the Option; provided,
however, that if the Employee is subject to Section 16(b) of the Exchange Act at
the time that the Option is exercised, such election must satisfy the
requirements of Rule 16b-3.


          
12.          Adjustments
Upon Changes in Capitalization. In the event of changes in all of the
outstanding Shares by reason of stock dividends, stock splits,
reclassifications, recapitalizations, mergers, consolidations, combinations or
exchanges of Shares, separations, reorganizations, liquidations or similar
events, or in the event of extraordinary cash or non-cash dividends being
declared with respect to outstanding Shares, or similar transactions or events,
the number and class of Shares subject to the Option hereby granted, the option
price and all other applicable provisions thereof shall, subject to the
provisions of the Plan, be correspondingly equitably adjusted by the Committee
(which adjustment may, but need not, include payment to the holder of the
Option, in cash or in shares, in an amount equal to the difference between the
option price and the then current Fair Market Value of the Shares subject to the
Option as equitably determined by the Committee), as it shall decide in its sole
discretion. The foregoing adjustment and the manner of application of the
foregoing provisions shall be determined by the Committee, in its sole
discretion. Any such adjustment may provide for the elimination of any
fractional Share which might otherwise be subject to the Option. 


          
13.          Delivery of
Shares upon Exercise of Option. Delivery of certificates for Shares pursuant
to the exercise of this Option may be postponed by the Company for such period
as may be required for it with reasonable diligence to comply with any
applicable requirements of any federal, state or local law or regulation or any
administrative or quasi-administrative requirement applicable to the sale,
issuance, distribution or delivery of such Shares. The Committee may, in its
sole discretion, require the holder of the Option to furnish the Company with
appropriate representations and a written investment agreement prior to the
exercise of the Option and the delivery of any Shares pursuant to the Option. 



5






          
14.          Incorporation
of Provisions of the Plan. All of the terms and provisions of the Plan,
pursuant to which this Award is granted, are hereby incorporated by reference
and made a part hereof as if specifically set forth herein, and to the extent of
any conflict between this Award Agreement and the terms and provisions of the
Plan, the Plan shall control. Without limiting the generality of the foregoing
sentence and notwithstanding any other provision of this Award Agreement, the
Option shall be granted effective only upon the authorization of the Committee.
To the extent any capitalized terms used in this Award Agreement are not
otherwise defined herein, they shall have the meaning set forth in the Plan. 


          
15.          Invalidity of
Provisions. The invalidity or unenforceability of any provision of this
Award Agreement as a result of a violation of any state or federal law, or of
the rules or regulations of any governmental body or any securities exchange,
shall not affect the validity or enforceability of the remainder of this Award
Agreement. 


          
16.          
Interpretation. All decisions or interpretations made by the Committee
with regard to any question arising under the Plan or this Award Agreement shall
be binding and conclusive on the Company, the Employee and any other interested
parties. 




          
IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed
by its duly authorized officer, and the Employee has hereunto set his or her
hand, all as of the day and year first written above. 



	 	BALLY TOTAL FITNESS HOLDING CORPORATION






	 	By:	



	 	Its:	Senior Vice President






	 	EMPLOYEE






	 	



	 	Social Security Number: