Exhibit 10.33
Execution
Version
EMPLOYMENT
AGREEMENT
(Robert Gamgort; Chief
Executive Officer)
EMPLOYMENT AGREEMENT (the “
Agreement ”) dated as of July 13, 2009 by and
between Crunch Holding Corp. (the “ Company ”)
and Robert Gamgort (the “ Executive
”).
The Company and its Subsidiaries and
the Company’s parent, Peak Holdings LLC (the “
Partnership ”) desire to employ Executive and to enter
into an agreement embodying the terms of such
employment;
Executive desires to accept such
employment and enter into such an agreement;
In consideration of the premises and
mutual covenants herein and for other good and valuable
consideration, the parties agree as follows:
1. Term of Employment .
Subject to the provisions of Section 7 of this Agreement,
Executive shall be employed by the Company and certain of its
affiliates for a period commencing on the date of this Agreement
and ending on July 13, 2014 (the “ Employment
Term ”) on the terms and subject to the conditions set
forth in this Agreement; provided , however, that commencing
with July 13, 2014 and on each July 13 thereafter (each
an “ Extension Date ”), the Employment Term
shall be automatically extended for an additional one-year period,
unless the Company or Executive provides the other party hereto 60
days prior Notice before the next Extension Date that the
Employment Term shall not be so extended.
2. Position .
(a) During the Employment Term,
Executive shall serve as the Company’s and the
Partnership’s Chief Executive Officer. In such position,
Executive shall report directly to the Management Committee of the
Partnership (the “ Board ”) and have such duties
and authority as shall be determined from time to time by the Board
consistent with such title, duties and responsibilities including
reporting responsibilities. Executive shall also serve as a member
of the Board without additional compensation.
(b) During the Employment Term,
Executive will devote Executive’s full business time and best
efforts to the performance of Executive’s duties hereunder
and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict or interfere
with the rendition of such services either directly or indirectly,
without the prior written consent of the Board; provided
that nothing herein shall preclude Executive, (i) from
engaging in charitable and civic activities, including accepting
appointment to or continuing to serve on any board of directors or
trustees of any charitable organization or (ii) subject to the
prior approval of the Board, from accepting appointment to or
continuing to serve on any board of directors or trustees of any
business corporation; provided in each case, and in the
aggregate, that such activities do not conflict or interfere with
the performance of Executive’s duties hereunder or conflict
with Section 8.
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3. Base Salary . During the
Employment Term, the Company shall pay Executive a base salary at
the annual rate of $850,000, payable in regular installments in
accordance with the Company’s usual payment practices.
Executive shall be entitled to such increases in Executive’s
base salary, if any, as may be determined in the sole discretion of
the Board at least annually. Executive’s annual base salary,
as in effect from time to time, is hereinafter referred to as the
“Base Salary.”
4. Performance Awards
.
(a) Annual Bonus . With
respect to each full fiscal year during the Employment Term,
Executive shall be eligible to earn an annual bonus award (an
“ Annual Bonus ”) in such amount, if any, as may
be determined in the sole discretion of the Board, of 100 percent
(100%) of Executive’s Base Salary (the “ Target
Annual Bonus ”), and of 200 percent (200%) of
Executive’s Base Salary at maximum, based upon the
achievement of annual EBITDA target or maximum performance
objectives, as the case may be, established by the Board within the
first three months of each fiscal year during the Employment Term (
provided , the methodology for determining such performance
objectives from time to time shall be established in consultation
with Executive, and the achievement of such performance objectives
shall be verified by the Board by reference to the audited
financial statements of the Company). For the 2009 fiscal year,
Executive shall be paid a pro-rated portion of the Target Annual
Bonus based upon that portion of the fiscal year Executive was
employed by the Company unless Executive’s employment
hereunder is terminated by the Company for Cause or as a result of
Executive’s resignation other than as result of a
Constructive Termination, in either case prior to the date such
Annual Bonus is paid to Executive. The Annual Bonus, if any, shall
be paid to Executive within two and one-half (2.5) months
after the end of the applicable fiscal year; provided that
if the audited financial statements of the Company shall not have
been completed by such date, the Annual Bonus shall instead be
payable within 30 days of such completion and no later than
December 31 of the applicable year. During the Employment
Term, Executive hereby agrees to reinvest fifty percent
(50%) of the aggregate after-tax proceeds of any Annual Bonus
paid to Executive (commencing with the 2009 Annual Bonus) in
Class A-2 Units of the Partnership (the “ Class A-2
Units ”), on terms that are substantially consistent with
the terms of the Management Unit Subscription Agreement entered
into between the Partnership and Executive in connection with this
Agreement, within 30 days of the payment of such Annual Bonus. The
purchase price for each Class A-2 Unit shall be its Fair
Market Value (as defined in the Securityholders Agreement dated as
of April 2, 2007 among the Partnership and the other parties
thereto (including Executive) (the “ Securityholders
Agreement ”)) at the time of the purchase.
(b) Deferred Cash Incentive
Award .
(i) Eligibility; Amount; Grant
Date . With respect to each full fiscal year during the
Employment Term beginning with the 2010 fiscal year, Executive
shall be awarded a deferred cash incentive award (a “
Deferred Award ”) in an amount equal to $1,000,000,
with the grant of the Deferred Award contingent on satisfaction of
specified performance objectives (the “ Performance
Objectives ”) established by the Board within the first
three full calendar months of each such fiscal year (
provided , the methodology for determining such Performance
Objectives from time to time shall be established in consultation
with Executive). The achievement of such Performance Objectives
shall be verified by the Board by reference to the audited
financial
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statements of the Company within 30
days following completion of such audit. The grant date (the
“ Grant Date ”) of any Deferred Award shall be
the verification date by the Board that the relevant Performance
Objectives are deemed to have been achieved by reference to the
audited financial statements of the Company.
(ii) Pro-Rata Award upon
Termination without Cause, Resignation for Constructive
Termination . If Executive’s employment with the
Company is terminated without Cause or Executive resigns as a
result of a Constructive Termination (when grounds for Cause do not
exist hereunder) during any fiscal year of the Employment Term,
Executive shall be eligible to receive a pro-rated portion of the
Deferred Award for such year based upon that portion of the fiscal
year Executive was employed by the Company and contingent upon
satisfaction of the Performance Objectives, measured as of the end
of the relevant fiscal year.
(iii) Pro-Rata Award for 2009
Fiscal Year . For the 2009 fiscal year, Executive shall
receive a pro-rated portion of a Deferred Award (without regard to
the Performance Objectives) based upon that portion of the fiscal
year Executive was employed by the Company, with a Grant Date of
January 2, 2010. For the avoidance of doubt, no Deferred Award
shall otherwise be granted to Executive unless Executive is
employed by the Company on the Grant Date.
(iv) Payment of Deferred
Award; Forfeitures . Each Deferred Award shall provide for
the payment of the amount of such Deferred Award on the third
anniversary of its Grant Date; provided , however,
that
(A) Executive shall forfeit 100% of
any unpaid Deferred Award if (x) Executive’s employment
is terminated by the Company for Cause (or Executive resigns at a
time when grounds for Cause exist hereunder) at any time,
(y) Executive resigns other than as a result of a Constructive
Termination before the first anniversary of the grant of such
Deferred Award or (z) Executive breaches any of the covenants
set forth in Sections 8 or 9;
(B) Executive shall forfeit 66 2/3%
of any unpaid Deferred Award if Executive resigns other than as a
result of a Constructive Termination on or after the first
anniversary of the Grant Date of such Deferred Award, but before
the second anniversary of the Grant Date of such Deferred Award;
and
(C) Executive shall forfeit 33 1/3%
of any unpaid Deferred Award if Executive resigns other than as a
result of a Constructive Termination on or after the second
anniversary of the Grant Date of such Deferred Award, but before
the third anniversary of the Grant Date of such Deferred
Award.
(v) Early Payment upon Change
of Control, Death, Disability . Notwithstanding anything
herein to the contrary, in the event of (x) a Change of
Control (as defined in the Securityholders Agreement) that occurs
during the Employment Term or (y) a termination of
Executive’s employment hereunder for either death or
Disability (as defined in Section 7(b)), any unpaid Deferred
Award shall be paid to Executive or Executive’s estate (as
the case may be) within 30 days following such event,
provided that for subclause (x) such Change of Control
would also be a change in control under Section 409A of the
Internal Revenue Code of 1986, as amended (the “ Code
”).
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(c) Transaction Incentive
Award . In the event of a Qualified Public Offering (as defined
in the Securityholders Agreement) or a Change of Control that
occurs during the Employment Term (either event, a “
Transaction ”), Executive shall be eligible to receive
a cash or equity transaction incentive award (the “
Transaction Incentive Award ”), with the grant of the
Transaction Incentive Award contingent on the valuation of the
Class A-1 Units (as defined in the Securityholders Agreement)
held by Blackstone (as defined in the Securityholders Agreement) as
of the date of such Transaction being equal, at the time of the
Transaction, to at least 1.0 times Blackstone’s cumulative
invested capital in respect of such Class A-1 Units. The value of
the Transaction Incentive Award shall be $3,000,000 or, if the
valuation of the Class A-1 Units held by Blackstone as of the date
of such Transaction is, at the time of the Transaction, at least
2.0 times Blackstone’s cumulative invested capital in respect
of such Class A-1 Units, $4,000,000. In the case of a Change
of Control, the Transaction Incentive Award shall be payable in
cash on the first anniversary of the Change of Control and in the
case of a Qualified Public Offering, the Transaction Incentive
Award shall be payable in shares of the Company (or its affiliate
that is subject to the Qualified Public Offering, as applicable) on
the first anniversary of the Qualified Public Offering, using the
per-share price at which such shares were sold by the underwriters
in the Qualified Public Offering; provided , however, that
Executive shall forfeit 100% of any unpaid or undelivered
Transaction Incentive Award if (x) Executive’s
employment is terminated by the Company for Cause (or Executive
resigns at a time when grounds for Cause exist hereunder) at any
time, (y) Executive resigns other than as a result of a
Constructive Termination or (z) Executive breaches any of the
covenants set forth in Sections 8 or 9. In the event of
(i) Executive’s termination of employment by the Company
without Cause, (ii) Executive’s resignation as a result
of a Constructive Termination (in each case for sub-clauses
(i) and (ii), when grounds for Cause do not exist hereunder)
or (iii) termination of Executive’s employment hereunder
for either death or Disability, and a Qualified Public Offering is
priced or Change of Control is consummated within three months
following any such event, Executive or Executive’s estate (as
the case may be) shall be eligible to receive the Transaction
Incentive Award on the terms set forth above.
5. Employee Benefits . During
the Employment Term, Executive shall be entitled to participate in
the Company’s employee benefit plans (other than annual bonus
and incentive plans) as in effect from time to time (collectively
“ Employee Benefits ”), on the same basis as
those benefits are generally made available to other senior
executives of the Company. Executive shall be entitled to 4
weeks’ vacation per fiscal year.
6. Business Expenses . During
the Employment Term, reasonable business expenses incurred by
Executive in the performance of Executive’s duties hereunder
shall be advanced or promptly reimbursed by the Company in
accordance with Company policies.
7. Termination . The
Employment Term and Executive’s employment hereunder may be
terminated by the Company at any time and for any reason upon
Notice to Executive and by Executive upon at least 30 days’
advance Notice of any such resignation of Executive’s
employment; provided , that in the event that the Company
terminates Executive’s employment without Cause (as defined
in Section 7(a)(ii)) after Executive has given advance Notice
of his
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resignation but before the end of the notice
period, Executive shall receive full payment of Base Salary, any
Annual Bonus, and benefits as an active employee for the unexpired
portion of such notice period. Notwithstanding any other provision
of this Agreement, the provisions of this Section 7 shall
exclusively govern Executive’s rights to payment of
compensation, severance, employee benefits and Executive’s
business expenses upon termination of employment with the Company
and its affiliates.
(a) By the Company For Cause or
By Executive Other Than as a Result of a Constructive
Termination .
(i) The Employment Term and
Executive’s employment hereunder may be terminated by the
Company for Cause and shall terminate automatically upon the
effective date of Executive’s resignation other than as
result of a Constructive Termination (as defined in
Section 7(c)(ii)).
(ii) For purposes of this Agreement,
“ Cause ” shall mean (A) Executive’s
continued willful failure substantially to perform
Executive’s material duties under Executive’s
employment (other than as a result of total or partial incapacity
due to physical or mental illness) following Notice by the Company
to Executive of such failure and 30 days within which to cure;
(B) theft or embezzlement of Company property; (C) any
act on the part of Executive that constitutes a felony under the
laws of the United States or any state thereof ( provided,
that if a Executive is terminated for any action described in this
clause (C) and Executive is never indicted in respect of such
action, then the burden of establishing that such action occurred
shall be on the Company in respect of any proceeding related
thereto between the parties and the standard of proof shall be
clear and convincing evidence (and if the Company fails to meet
such standard, the Company shall reimburse Executive for his
reasonable legal fees in connection with such proceeding));
(D) Executive’s willful material misconduct in
connection with Executive’s duties to the Company or any act
or omission which is materially injurious to the financial
condition or business reputation of the Company or any of its
subsidiaries or affiliates, or (E) Executive’s breach of
the provisions of Section 8. No act shall be
“willful” if conducted in good faith with a reasonable
belief that such conduct was in the best interests of the
Company.
(iii) If Executive’s
employment is terminated by the Company for Cause, or if Executive
resigns other than as a result of a Constructive Termination,
Executive shall be entitled to receive:
(A) the Base Salary and unused
vacation accrued through the date of termination, payable within
fifteen days following the date of such termination;
(B) any Annual Bonus earned, but
unpaid, as of the date of termination for the immediately preceding
fiscal year, paid in accordance with Section 4 (except to the
extent payment is otherwise deferred pursuant to any applicable
deferred compensation arrangement with the Company, in which case
such amount shall be paid in full at the earliest such time as is
provided under such arrangement);
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(C) reimbursement, within 60 days
following submission by Executive to the Company of appropriate
supporting documentation) for any unreimbursed business expenses
properly incurred by Executive in accordance with Company policy
prior to the date of Executive’s termination;
provided, that claims for such reimbursement (accompanied by
appropriate supporting documentation) are submitted to the Company
within 90 days following the date of Executive’s termination
of employment; and
(D) such Employee Benefits, if any,
as to which Executive may be entitled under the employee benefit
plans of the Company (the amounts described in clauses
(A) through (D) hereof being referred to as the “
Accrued Rights ”).
Following such termination of
Executive’s employment by the Company for Cause or
resignation by Executive other than as a result of a Constructive
Termination, except as set forth in this Section 7(a)(iii),
Executive shall have no further rights to any compensation or any
other benefits under this Agreement.
(b) Disability or Death
.
(i) The Employment Term and
Executive’s employment hereunder shall terminate upon
Executive’s death and may be terminated by the Company if
Executive becomes physically or mentally incapacitated, after
providing Executive reasonable accommodation, and is therefore
unable, for a period of nine consecutive months or for an aggregate
of twelve months in any eighteen consecutive month period, to
perform Executive’s duties. The period of nine months shall
be deemed continuous unless Executive returns to work for a period
of at least 30 consecutive days during such period and performs
during such period at the level and competence that existed prior
to the beginning of the nine-month period. Such incapacity is
hereinafter referred to as “Disability”. Any question
as to the existence of the Disability of Executive as to which
Executive and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to
Executive and the Company. If Executive and the Company cannot
agree as to a qualified independent physician, each shall appoint
such a physician and those two physicians shall select a third
qualified independent physician which third such physician shall
make such determination. The determination of Disability made by
such physician in writing to the Company and Executive shall be
final and conclusive for all purposes of the Agreement and any
other agreement between any Company and Executive that incorporates
the definition of “Disability”.
(ii) Upon termination of
Executive’s employment hereunder for either Disability or
death, Executive or Executive’s estate (as the case may be)
shall be entitled to receive the Accrued Rights and continue to be
eligible to receive applicable payments under Sections 4(b) or 4(c)
on the terms and conditions described therein.
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Following Executive’s
termination of employment due to death or Disability, except as set
forth in this Section 7(b)(ii), Executive shall have no
further rights to any compensation or any other benefits under this
Agreement.
(c) By the Company Without Cause
or Resignation by Executive as a result of Constructive
Termination .
(i) The Employment Term and
Executive’s employment hereunder may be terminated by the
Company without Cause or by Executive as a result of a Constructive
Termination.
(ii) For purposes of this Agreement,
a “Constructive Termination” shall be deemed to have
occurred upon (A) the failure of the Company to pay or cause
to be paid Executive’s base salary or annual bonus (if any)
when due; (B) a reduction in Executive’s base salary or
target bonus opportunity percentage of base salary (excluding any
change in value of equity incentives or a reduction in base salary
affecting substantially all similarly situated executives by the
same percentage of base salary); (C) any substantial and
sustained diminution in Executive’s title, duties, authority
or responsibilities (including reporting responsibilities);
(D) a relocation of Executive’s primary work location
more than 50 miles without Executive’s prior written consent;
(E) the failure to assign Executive’s employment
agreement to a successor, and the failure of such successor to
assume such employment agreement, in any Public Offering or Change
of Control; (F) a Company Notice to Executive of the
Company’s election not to extend the Employment Term; or
(G) a failure to elect or reelect or the removal as a member
of the Board; provided , that none of these events shall
constitute Constructive Termination unless the Company fails to
cure such event within 30 days after Notice is given by Executive
specifying in reasonable detail the event which constitutes
Constructive Termination; provided , further, that
“Constructive Termination” shall cease to exist for an
event on the 60 th day following the later of its occurrence or
Executive’s knowledge thereof, unless Executive has given the
Company Notice thereof prior to such date.
(iii) If Executive’s
employment is terminated by the Company without Cause (other than
by reason of death or Disability) or if Executive resigns as a
result of a Constructive Termination, Executive shall be entitled
to receive:
(A) the Accrued Rights;
(B) a pro rata portion of a Target
Annual Bonus, payable within 30 days after Executive has entered
into a release of claims set forth below, based upon the percentage
of the fiscal year that shall have elapsed through the date of
Executive’s termination of employment;
(C) subject to Executive’s
continued compliance with the provisions of Sections 8 and 9,
payment of an amount equal to (x) one and one-half multiplied
by (y) the sum of the annual Base Salary amount plus
Executive’s Target Annual Bonus amount, which shall be
payable to Executive in equal installments in accordance with the
Company’s normal payroll practices, as in effect on the
date
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of termination of Executive’s
employment, for eighteen months after the date of such termination;
provided , that the aggregate amount described in this
clause (C) shall be reduced by the present value of any other
cash severance benefits payable to Executive under any other
severance plans, programs or arrangements of the Company or its
affiliates;
(D) applicable payments under
Sections 4(b) or 4(c) on the terms and conditions described
therein; and
(E) continued coverage under the
Company’s group health, life and disability plans until the
earlier of (i) eighteen months from Executive’s date of
termination of employment with the Company and (ii) the date
such Executive is or becomes eligible for comparable coverage
(determined, to the extent practicable, on a coverage-by-coverage
and benefit-by-benefit basis) under health, life and disability
plans of another employer.
Amounts payable to Executive under
subparagraphs (B), (C) and (D), above, are subject to
Executive providing a release of all claims to the Company in the
form attached hereto as Exhibit A. Following Executive’s
termination of employment by the Company without Cause (other than
by reason of Executive’s death or Disability) or by
Executive’s resignation as a result of a Constructive
Termination, except as set forth in this Section 7(c)(iii),
Executive shall have no further rights to any compensation or any
other benefits under this Agreement.
(d) Expiration of Employment
Term .
(i) Election Not to Extend the
Employment Term . In the event either party elects not to
extend the Employment Term pursuant to Section 1, unless
Executive’s employment is terminated pursuant to paragraphs
(a), (b) or (c) of this Section 7 (including,
without limitation, due to a Constructive Termination pursuant to
clause (F) under Section 7(c)(ii) hereof),
Executive’s termination of employment here
