Exhibit 10.2

 

RETENTION AWARD AGREEMENT

THIS RETENTION AWARD AGREEMENT (this “Agreement”) is entered into and effective
as of September 8, 2020 (the “Effective Date”), by and between Town Sports
International, LLC, a New York limited liability company (the “Company”), and
Phillip Juhan, an employee of the Company (“Employee”).

RECITALS

A. The Company has determined that (i) Employee’s performance of his duties has
been and continues to be exceptional and highly valuable to the Company and (ii)
Employee’s continuation of his duties is critically important to the Company’s
ability to manage successfully its business and all activities and endeavors
necessary therefor and ancillary thereto, particularly in light of the
challenging business environment facing the Company.

B. The Company has obtained a binding commitment to receive debtor-in-possession
financing in order to effectuate the restructuring of its debts and operations.

C. The Company desires to recognize Employee’s past services and to assure
itself of Employee’s continued services for an extended period of time by paying
Employee a cash award in the amount of $750,000 (the “Award”) that is subject to
repayment by Employee if Employee’s employment with the Company is terminated
under certain circumstances prior to the expiration of the Retention Period (as
defined herein), as provided for in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, the Company and Employee agree as follows:

1.Definitions. For purposes of this Agreement:

(a) “Affiliate” shall mean a person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the person specified.

(b) “Cause” shall mean:

(i) Employee’s willful failure to perform Employee’s duties (other than any such
failure resulting from incapacity due to physical or mental illness);

 

 

(ii) Employee’s continuous willful failure to comply with any valid and legal
directive of the individual to whom Employee reports or the Board of Directors
of the Company (the “Board”) or a committee of the Board;

(iii) Employee’s willful engagement in dishonesty, illegal conduct, or gross
misconduct that is, in each case, materially injurious to the Company or its
affiliates;

(iv) Employee’s embezzlement, misappropriation, or fraud, whether or not related
to Employee’s employment with the Company;

(v) Employee’s conviction of or plea of guilty or nolo contendere to a crime
that constitutes a felony (or state law equivalent) or a crime that constitutes
a misdemeanor involving moral turpitude, if such felony or other crime (A) is
work-related, (B) materially impairs Employee’s ability to perform services for
the Company or (C) in the reasonable judgment of the Company, has resulted or
will result in material reputational or financial harm to the Company or its
affiliates; or

(vi) Employee’s material breach of any obligation under this Agreement if such
breach causes material reputational or financial harm to the Company.

For purposes of this Agreement, no act or failure to act on the part of Employee
shall be considered “willful” unless it is done, or omitted to be done, by
Employee in bad faith or without reasonable belief that Employee’s action or
omission was in the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board or
upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by Employee in good faith and in the best interests
of the Company.

Furthermore, a termination of Employee’s employment shall not be deemed for
Cause unless and until the Company delivers to Employee a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the Board
(after reasonable written notice is provided to Employee and Employee is given
an opportunity, together with counsel, to be heard before the Board), finding
that Employee has engaged in the conduct described in any of clauses (i)-(vi)
above. Except for an action or breach described in clause (iv) or (v) above, or
any other failure, breach, or refusal that, by its nature, cannot reasonably be
expected to be cured, Employee shall have ten (10) business days from the
delivery of written notice by the Company within which to cure any acts or
omissions constituting Cause, and if the Company were to determine the attempted
cure is not sufficient, Employee shall have the opportunity to appeal this
determination to a neutral mediator, selected and approved by the Company and
Employee. However, if the Company reasonably expects irreparable injury or
material reputational or financial harm from a delay of ten (10) business days,
the Company may give Employee notice of such shorter period within which to cure
as is deemed reasonable by the Board under the circumstances, which may include
the termination of Employee’s employment without notice and with immediate
effect. However, if the Company terminates Employee's employment without notice
and with immediate effect and there is a discrepancy of opinion between the
Company and Employee as to whether the termination of Employee’s employment may
be deemed for Cause, Employee shall have the opportunity to appeal this
determination to a neutral mediator, selected and approved by the Company and
Employee, whose resolution shall be binding and conclusive between the Company
and Employee.

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The Company may place Employee on paid leave for up to thirty (30) days while it
is determining whether there is a basis to terminate Employee’s employment for
Cause. The placement of Employee on paid leave for up to thirty (30) days in
such circumstances shall not constitute Good Reason.

(c) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(d) “Disability” shall mean Employee is entitled to receive long-term disability
benefits under the Company’s long-term disability plan, or if there is no such
plan, Employee’s inability, due to physical or mental incapacity, to
substantially perform Employee’s duties and responsibilities for one hundred
eighty (180) days out of any three hundred sixty-five (365) day period or one
hundred twenty (120) consecutive days; provided however, in the event that the
Company temporarily replaces Employee, or transfers Employee’s duties or
responsibilities to another individual on account of Employee’s inability to
perform such duties due to a mental or physical incapacity that is, or is
reasonably expected to become, a Disability, then Employee’s employment shall
not be deemed terminated by the Company, and Employee shall not be able to
resign for Good Reason as a result thereof. Any question as to the existence of
Employee’s Disability as to which Employee and the Company cannot agree shall be
determined in writing by a qualified independent physician mutually reasonably
acceptable to Employee and the Company. If Employee and the Company cannot agree
as to a qualified independent physician within fifteen (15) days, each shall
appoint such a physician and those two physicians, within fifteen (15) days,
shall select a third, who, within thirty (30) days, shall make such
determination in writing. The determination of Disability made in writing to the
Company and Employee shall be final and conclusive for all purposes of this
Agreement.

(f) “Good Reason” shall mean the occurrence of any of the following during the
Retention Period, in each case without Employee’s written consent:

(i) a reduction in Employee’s base salary;

(ii) a relocation of Employee’s principal place of employment by more than 50
miles;

(iii) any material breach by the Company of any material provision of this
Agreement or any material provision of any other agreement between Employee and
the Company;

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(iv) the Company’s failure to obtain an agreement from any successor to the
Company to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no succession
had taken place, except where such assumption occurs by operation of law; or

(v) a material, adverse change in Employee’s title, authority, duties, or
responsibilities (other than temporarily while Employee is physically or
mentally incapacitated) as of the date of this Agreement.

For purposes of this Agreement, Employee’s termination of his employment shall
not be deemed for Good Reason unless Employee has provided written notice to the
Company (a “Notice”) of the existence of the circumstances providing grounds for
termination for Good Reason within ninety (90) days of the later of (i) the
initial existence of such circumstances and (ii) Employee’s actual knowledge of
the existence of such circumstances, and the Company has had at least thirty
(30) days from the date on which such notice is provided to cure such
circumstances. If Employee does not (i) provide a Notice of the existence of the
circumstances providing grounds for termination for Good Reason within ninety
(90) days of the later of (A) the initial existence of such circumstances or (B)
Employee’s actual knowledge of the existence of such circumstances, or (ii)
terminate employment for Good Reason within sixty (60) days following Employee’s
delivery of a Notice to the Company (where the Company has not cured the
circumstances providing such grounds for termination for Good Reason within
thirty (30) days of the date of Employee’s delivery of such Notice), then
Employee will be deemed to have waived Employee’s right to terminate for Good
Reason with respect to such grounds.

(g) “Retention Period” shall commence on the Effective Date and terminate on the
date that is six (6) months after the Effective Date.

(h) “Termination Date” shall mean the date on which Employee’s employment by the
Company is terminated.

2.Duties. Except as specifically provided in Section 3(b) below, in order to
retain the Award, Employee agrees that, during the Retention Period, Employee
shall perform fully the terms of this Agreement and Employee’s duties for the
Company.

3.Award; Termination of Employment; Repayment.

(a) Award. On the Effective Date, the Company shall pay Employee, in cash in a
single lump sum, an amount equal to the Award, less all applicable withholdings
and deductions required by law.

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(b) Repayment of Award upon Termination. In the event that Employee’s employment
is terminated prior to the end of the Retention Period due to (x) a termination
by the Company for Cause or (y) any termination by Employee other than for Good
Reason, Employee must repay to the Company within sixty (60) days of the
Termination Date the entire, gross amount of the Award. In the event that
Employee’s employment by the Company is terminated prior to the end of the
Retention Period due to (i) Employee’s death, (ii) Employee’s Disability, (iii)
a termination by the Company without Cause, or (iv) a termination by Employee
for Good Reason, Employee shall not be obligated to repay to the Company any
amount of the Award. For the avoidance of doubt, Employee’s retirement from the
Company without Good Reason shall constitute a termination by Employee other
than for Good Reason for purposes of this Agreement and require the repayment of
the Award pursuant to this Section 3(b). Except as may be limited by Section
409A of the Code, the parties acknowledge and agree that the Company may,
subject to a judicial determination as to Employee’s obligation to repay the
Award, offset any amounts owed to the Company by Employee pursuant to Employee’s
repayment obligations under this Section 3(b) against any amounts owed to
Employee by the Company as of or following the Termination Date.

(c) Repayment of Award for Other Reason. In the event that the Company either
files a petition for protection under chapter 7 of the United States Code, 11
U.S.C. § 101-1532 (the “Bankruptcy Code”), or the Company’s petition under
chapter 11 of the Bankruptcy Code is converted to a proceeding under chapter 7
of the Bankruptcy Code (except in the event that such conversion occurs after
court approval and closing on a sale of all or substantially all of the
Company’s assets as a going concern), within the Retention Period, Employee must
repay to the Company within sixty (60) days of the Termination Date the entire,
gross amount of the Award.

4.Legal Fees and Expenses. If either party commences any proceeding, action, or
litigation against the other party concerning the terms of this Agreement or the
rights and duties of the parties hereto or for the breach of this Agreement by
the other party of any of the terms hereof, the prevailing party shall be
entitled to recover all costs and expenses incurred by the other party in
connection with responding to and prosecuting or defending such action and the
enforcement and collection of any judgment rendered therein, including without
limitation all out-of-pocket expenses, court costs, administrative fees,
attorneys’ fees, consultant fees, expert witness fees, personnel expenses,
duplicating expenses, and other related expenses that are associated with
enforcement of the other party’s legal rights under this Agreement (including
all such costs, fees, and expenses incurred in all appeals) and a right to such
costs and expenses shall be deemed to have accrued upon the commencement of such
action and shall be enforceable whether or not such action is prosecuted to
judgment.

 

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5.Covenants.

(a) Non-Disparagement. While Employee is employed by the Company and at all
times following the termination of Employee’s employment for any reason,
Employee shall not, directly or indirectly, for Employee or on behalf of, or in
conjunction with, any other person, persons, company, partnership, corporation,
business entity, or otherwise, make any statements that are inflammatory,
detrimental, slanderous, or negative in any way to the interests of the Company
or any affiliate. Nothing in this paragraph infringes on Employee’s right to
participation or cooperation in any charge or investigation by the Federal Equal
Employment Opportunity Commission or any comparable state agency, or any other
self-regulatory organization or any other state or federal regulatory authority
or making other disclosures that are produced under the whistleblower provisions
of federal or state law or regulation.

The Company agrees that it will not engage in any conduct that is injurious to
the Executive’s reputation or interest, or any conduct that would reasonably be
expected to lead to unwanted or unfavorable publicity to Executive, including
but not limited to publicly disparaging (or inducing or encouraging others to
publicly disparage) Executive. For the preceding sentence only, the Company
shall mean executive officers or directors of the Company.

6.Successors.

(a) Assignment by Employee. This Agreement is personal to Employee and, without
the prior written consent of the Company, shall not be assignable by Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by Employee’s legal
representatives.

(b) Assignment by the Company. This Agreement shall inure to the benefit of and
be binding upon the Company and its successors. The Company shall require any
successor to all or substantially all of the business or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent as the Company would be required to
perform if no such succession had taken place.

7.Miscellaneous.

(a) Applicable Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Delaware, applied
without reference to its principles of conflict of laws.

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(b) Jurisdiction and Venue. Each party irrevocably submits to the exclusive
jurisdiction of the Federal District Court for the District of Delaware, for the
purposes of any suit, action, or other proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the suit, action, or
other proceeding shall be heard and determined in any such court. Each party
agrees to commence any such suit, action, or other proceeding in the Federal
District Court for the District of Delaware. Each party waives any defense of
improper venue or inconvenient forum to the maintenance of any suit, action, or
other proceeding so brought. Each party waives its right to a jury trial with
respect to any action, or claim arising out of any dispute in connection with
this Agreement, any rights or obligations hereunder, or the performance of such
rights and obligations.

(c) Amendments. This Agreement may not be amended or modified other than by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.

(d) Entire Agreement. This Agreement shall constitute the entire agreement
between the parties hereto with respect to the Award and shall supersede all
prior or existing agreements between the parties hereto with respect to the
Award. There are no promises, representations, inducements, or statements
between the parties with respect to the Award other than those that are
expressly contained herein. Notwithstanding any rule of law to the contrary,
this Agreement may not be modified, changed, amended or waived in any way
(either in whole or in part) orally, by conduct, by informal writings or by any
combination thereof. In the event that any provision of this Agreement is
invalid or unenforceable, the validity and enforceability of the remaining
provisions hereof shall not be affected. Employee is entering into this
Agreement of his own free will and accord and has read this Agreement and
understands it and its legal consequences.

(e) Notices. All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
 

  If to Employee: To the most recent address on file at the Company         If
to the Company: Town Sports International, LLC
399 Executive Boulevard
Elmsford, New York 10523
Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.

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(f) Counterparts. This Agreement may be executed in separate counterparts,
including by facsimile and electronic delivery, each of which is deemed to be an
original and all of which taken together constitute one and the same agreement.

(g) Section 409A Compliance. The parties intend that all amounts payable under
this Agreement comply with Section 409A of the Code or an exemption therefrom,
including regulations and guidance thereunder, so as not to subject Employee to
the payment of any additional taxes, penalties, or interest imposed under
Section 409A with respect to amounts paid under this Agreement or any other
agreement or arrangement between the parties. The parties agree to amend this
Agreement to the extent necessary to bring this Agreement into compliance with
Code Section 409A (or to meet an exemption therefrom) as it may be interpreted
by any regulations, guidance, or amendments to Section 409A issued or adopted
after the date of this Agreement. Nothing in this Agreement shall be interpreted
to permit (i) accelerated payment of nonqualified deferred compensation, as
defined in Section 409A, (ii) any other payment in violation of the requirements
of Section 409A, or (iii) Employee to designate the taxable year of any payment.
No provision of this Agreement shall be interpreted or construed to transfer any
liability for failure to comply with the requirements of Section 409A from
Employee or any other individual to the Company or any Affiliate, employee, or
agent. All taxes imposed on or associated with payments made to Employee
pursuant to this Agreement, including any liability imposed under Section 409A
(but excluding the employer portion of any payroll taxes), shall be borne solely
by Employee.

(h)Confidentiality. Notwithstanding any disclosure by the Company of the fact or
content of this Agreement, whether in whole or in part, Employee hereby
covenants and agrees that Employee shall keep confidential this Agreement and
the terms hereof, including the eligibility for the Award and the amount
thereof, except as required by applicable law. Further, Employee may disclose to
his attorney, his spouse, and his tax and financial advisors the fact or content
of this Agreement, provided the Employee obtains the recipient’s agreement to
keep this Agreement and its contents confidential.

IN WITNESS WHEREOF, Employee and the Company have each executed or caused the
execution of this Agreement, as applicable, as of the Effective Date.

 

  COMPANY:       By: /s/ Justin Lundberg
 
    Name: Justin Lundberg     Title: Member, Board of Directors

 

 

  EMPLOYEE:       By: /s/ Phillip Juhan
 
    Name: Phillip Juhan

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