exv10w16



 





Exhibit 10.16


September 19, 2007




Don R. Kornstein

Chief Restructuring Officer

Bally Total Fitness Holding Corporation

8700 W. Bryn Mawr Avenue

Chicago, IL 60631




     Re: Restructuring Transaction Bonus



Dear Don:




          As you know, the board of directors of Bally Total Fitness Holding Corporation (“Bally”) has
determined that it is in the best interests of Bally to explore the possibility of accomplishing a
Restructuring. In that regard, in order to incentivize you to assist Bally in accomplishing such
Restructuring as soon as possible, Bally has determined to grant you a Restructuring Transaction
Bonus (the “Restructuring Bonus”) subject to the terms and conditions set forth in this Letter
Agreement, which shall supersede our previous letter agreement dated June 27, 2007 regarding the
Restructuring Bonus.




          A. Restructuring Transaction Bonus




          You will be eligible for a Restructuring Bonus equal to $3,000,000 in the event that:




          (i) the Restructuring occurs;




          (ii) you have performed your obligations under this Letter Agreement and are not in breach of
any of the terms hereof or thereof; and




          (iii) you are providing services to Bally pursuant to the terms of the Management Services
Agreement by and among you, Bally and Alpine Advisors LLC (the “Management Agreement”) on the
Effective Date, or your services and the Management Agreement have been terminated by Bally without
Cause or by you for Good Reason within the six-month period prior to the Effective Date.




 









 








          B. Payment of the Restructuring Bonus.




          If payable, the Restructuring Bonus will be paid as soon as practicable on or following the
Effective Date.




          C. Definitions




          “Cause” means a termination of your services with Bally due to your (i) conviction of a
crime, including by a plea of guilty or nolo contendere, involving theft, fraud, perjury, or moral
turpitude; (ii) intentional or grossly negligent disclosure of confidential or trade secret
information of Bally’s to anyone not entitled to such information; (iii) omission or dereliction of
any statutory or common law duty of loyalty to the Company; (iv) failure to cure a material
violation of Bally’s Code of Conduct or any other written policy of Bally within thirty (30) days
following Bally’s written notice to your of such material violation and the steps required by you
to effect such cure; or (v) repeated failure to carry out the material components of your duties
despite specific written notice to do so by Bally.




          “Effective Date” means the date of effectiveness of the plan of reorganization which is the
subject of the Restructuring.




          “Good Reason” means the occurrence of any of the following events without your express written
consent: (i) the assignment to you of any duties that are materially inconsistent with your
position (which may include status, offices, titles, and reporting requirements), authority,
duties, or responsibilities, which results in a material reduction in your position or authority;
or (ii) failure to pay any amount due under the Management Agreement when due. However, prior to
terminating for Good Reason, you must provide Bally with notice of Good Reason within thirty (30)
days of any event giving rise to Good Reason, and Bally shall have thirty (30) days in which to
remedy any such event. If you do not give notice of Good Reason within thirty (30) days of an
event giving rise to Good Reason, then you will not be eligible to terminate for Good Reason.




          “Restructuring” will occur at the time of the consummation of a plan of reorganization filed
under Chapter 11 of the U.S. Bankruptcy Code as to which the Company is a debtor.




          D. Other Terms




          In consideration of the agreements of Bally set forth in this Letter Agreement, you agree to
promptly comply with the reasonable requests of and provide reasonable assistance to Bally and its
representatives in connection with the Restructuring.




          This Letter Agreement shall be governed in accordance with the laws of the Sate of Illinois
and the exclusive jurisdiction for enforcing this Letter Agreement shall be the federal and/or
state courts located Cook County, Illinois. Each of the parties to this Letter Agreement
specifically waives all rights to a jury trial in connection with this Letter Agreement and any




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disputes arising hereunder. Exercise by any party hereto of a remedy set forth in this Letter
Agreement shall not constitute an election of remedies. In the event that you are awarded any
damages for breach of the Letter Agreement by the Company, such damages shall be limited to
contractual damages and shall exclude (a) punitive damages and (b) consequential and/or incidental
damages (e.g., lost profits and other indirect or speculative damages). This Letter Agreement may
be executed in one or more counterparts.




          Except as expressly set forth in this Letter Agreement or as required to be modified pursuant
to the terms hereof, this Letter Agreement does not revoke, replace, modify, change or supercede
the terms and conditions set forth in your Management Agreement with the Company.




          Please indicate your acceptance and agreement with the terms of this Letter Agreement by
signing and dating where indicated below.




	 	 	 	 	 	 	 
	 	 	Sincerely,	 	 
	 
	 	 	 	 	 	 
	 	 	BALLY TOTAL FITNESS HOLDING CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Accepted and agreed to:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Date	 	 







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