EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement, dated as of December 6, 2002, is between AMF Bowling
Worldwide, Inc. ("Company") and Xxxxxx X. Xxxxx ("Executive") and provides:
Section 1. Employment.
The Company employs the Executive as its interim President and Chief
Executive Officer and the Executive accepts such employment. The Executive will
serve and render his services at the direction of, and will report to, the Board
of Directors of the Company ("Board"). The Executive resides in Louisville,
Kentucky. The Company's headquarters is in Mechanicsville, Virginia. While he is
serving as interim President and Chief Executive Officer, the Executive may
continue to maintain his primary residence in Louisville, Kentucky, but will
travel to the headquarters or such other locations at which the Company conducts
operations on Monday morning and depart on Friday afternoon. However, since the
nature of his services will require time beyond normal business hours, the
Executive and the Company agree to be flexible on the Executive's hours,
recognizing that the Executive will work longer than normal business hours and
will take personal days as necessary to maintain his family life. To avoid
miscommunication on travel or personal days, the Executive will coordinate his
schedule with the Chairman of the Board, who will keep the Board advised of the
Executive's schedule. The Company will not engage or commence a search for a
permanent President and Chief Executive Officer until the earlier of March 6,
2003 or the termination of the Executive's employment pursuant to Section 6
below. The parties agree that commencing a search for a permanent President or
Chief Executive Officer will not constitute Good Reason (as defined in
Subsection 6(f) or a breach of this agreement by the Company.
Section 2. Term.
The Executive's employment will begin on December 6, 2002 and will
terminate on the earlier of (A) midnight on December 31, 2003 or (B) the date of
a sooner termination pursuant to Section 6 ("Term"). The Term may be extended by
the written agreement of both parties and the approval by the Board.
Section 3. Compensation and Benefits.
During the Term, the Executive will receive the following compensation and
benefits:
(a) Salary
The Company will pay to the Executive a salary ("Base Salary") of $350,000
per year, payable in accordance with the payroll practices of the Company.
(b) Retention Bonus
The Company will pay to the Executive a retention bonus of $275,000 on the
earlier of (i) March 31, 2003 if he is employed by the Company on such date or
(ii) the date of the termination of the Executive's employment Without Cause or
for Good Reason, Death or Disability. The Executive will not receive the
retention bonus if during the Term, the Executive resigns without Good Reason
during the Term, or the Company terminates his employment for Cause during the
Term.
(c) Equity Compensation
Subject to the approval of the Board, the Company will grant to the
Executive, as of the date of the approval of the Board, options to purchase
100,000 shares of the common stock of the Company (one option to purchase one
share of common stock being referred to as an "Option"). Each Option will have
an exercise price of $21.19 per share and, subject to the Executive's continued
employment with the Company, will vest on December 6, 2003 or earlier upon (1)
his death, (2) his termination for Disability (as defined in Subsection 6(b)),
(3) his termination by the Company without Cause (as defined Subsection 6(c)),
(4) his resignation for Good Reason, or (5) a Change in Control (as defined in
Subsection 6(g)). The Options will expire on December 5, 2009. The Options will
be subject to the following terms and conditions:
i. Termination without Cause or for Good Reason, Death or Disability
If (A) prior to December 31, 2003, either (1) the Company terminates the
Executive's employment during the Term without Cause or his employment
terminates due to death or Disability, or (2) the Executive terminates his
employment during the Term for Good Reason, or (B) Executive remains
employed through the end of the Term, he will have the right to return any
of the Options to the Company, regardless of the one-year vesting period
and will receive payment of $2.00 per Option from the Company. The parties
will complete such transaction within 30 days of the date of the
termination of employment.
If (A) the Company terminates the Executive's employment during the Term
without Cause or his employment terminates due to death or Disability, (B)
the Executive terminates his employment during the Term for Good Reason, or
(C) the Executive remains employed through the end of the Term, he will
have two years from the date of termination in which to exercise any
remaining Options, subject to expiration of the Options on December 5,
2009.
ii. Change in Control
Thirty (30) days after the consummation of a Change in Control, the
Executive will have the right to return any of the Options to the Company
in return for a payment of $8.81 per Option; provided this Subsection (ii)
will apply only (A) if the Change in Control occurs on or before September
30, 2003 or (B) if a definitive agreement to effect a Change of Control is
signed before September 30, 2003 and the Change of Control occurs within
nine months of the signing of the definitive agreement.
iii. Cause or Resignation
If the Company terminates the Executive's employment due to Cause or the
Executive submits his Resignation (as defined in Section 6(e)), any
unvested Options will expire as of the date of termination and any
unexercised vested Options will expire on the earlier of December 5, 2009
or 90 days after the date of termination.
The Options will have such other terms and conditions as set forth in a stock
option agreement and are not inconsistent with this Agreement. These provisions
do not apply to options granted to the Executive as a director of the Company.
(d) Benefits
During the Term, the Executive may participate in the Company's health
insurance, retirement and other benefit plans on the same basis as other
executives (but without being subject to any applicable waiting periods);
provided that in the event of a conflict between the
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provisions of this Agreement and any benefit plan or practice of the Company,
the provisions of this Agreement will govern. In no event, will the Executive be
entitled to participate in any other Company benefit plans or to greater or
duplicate benefit than the benefit provided herein.
(e) No Other Compensation
Except as expressly provided in this Agreement, no other compensation,
bonus or other consideration will be due or payable to the Executive for
services under this Agreement. While he serves as the interim President and
Chief Executive Officer, the Executive will no longer be entitled to fees as a
member of the Board or any committee of the Board.
Section 4. Exclusivity.
During the Term, the Executive will devote his full time to the Company's
business, will faithfully serve the Company and will in all respects conform to
and comply with the lawful and reasonable directions and instructions of the
Board. The Executive will use his best efforts to promote and serve the
interests of the Company and will not engage in any other business activity, for
profit or otherwise. Any exceptions to the foregoing obligation must be
requested in writing from and approved by the Board.
Section 5. Reimbursement for Expenses.
The Executive may incur reasonable expenses in the discharge of his
services under this Agreement, including entertainment and similar items in
accordance with the Company's expense reimbursement policy, as the same may be
modified from time to time. The Company will reimburse the Executive for
reasonable expenses incurred in traveling between his residence in Louisville,
Kentucky and the Company's principal office. The Company will reimburse the
Executive for other reasonable expenses upon presentation of itemized accounts
of expenditures. The Company will also reimburse the Executive for the
reasonable costs incurred by him for living quarters in Mechanicsville,
Virginia, which will consist of a housing and automobile allowance that will be
approved by the Compensation Committee of the Board and subsequently by the
Board.
Section 6. Termination and Default.
(a) Death
The Executive's employment will automatically terminate upon his death.
(b) Disability
If the Executive is unable to perform his duties under this Agreement
because of illness, incapacity or physical or mental disability for an aggregate
of 21 days (whether or not consecutive) during any 12 month period (a
"Disability"), the Executive's employment will terminate on a date specified by
the Company in notice to the Executive.
(c) Cause
The Company may terminate the Executive's employment at any time with or
without Cause. "Cause" will mean that the Executive will have committed a
felony; or engaged in conduct that constitutes gross neglect and results in
material economic harm to the Company; or engaged in conduct that constitutes
willful gross misconduct with respect to the Executive's employment duties; or
failed to comply in a material respect with this Agreement, a policy of the
Company or a lawful and reasonable instruction or direction of the Board;
provided that in each instance, the Board will have determined Cause in good
faith and its reasonable judgment and
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will have determined that the basis or facts relating to the Cause resulted in
or was likely to have resulted in financial or reputational harm to the Company.
The Executive will have 30 days of notice from the Company to remedy any Cause.
(d) Without Cause
The Company may terminate the Executive's employment without Cause at any
time by giving written notice to him. A termination without Cause will mean a
termination by the Company for any reason other than Cause or other than on
account of death or Disability. A termination without Cause will be effective
immediately upon notice given by the Company to the Executive.
(e) Resignation
Except in the case of termination for Good Reason, the Executive may
terminate his employment by giving 60 days' written notice of his resignation to
the Company (a "Resignation"). A resignation other than for Good Reason will be
effective at the end of the 60-day notice period or at the election of the
Company, at an earlier date selected by the Company. At its election,
resignation will include resignation of the Executive's membership on the Board.
The Company will pay to the Executive (without duplication) his Base Salary and
continue the benefits under Section 3(d), until the effective date of the
resignation.
(f) Good Reason
After giving 30 days' prior written notice to the Company, the Executive
will have the right to terminate his employment for Good Reason, which means the
Company (i) has failed to comply in any material respect with any of the
provisions in this Agreement, including any material change in responsibilities
or title (excluding any such change for up to 90 days in connection with the
appointment of a permanent President and Chief Executive officer) other than a
failure that is remedied within 30 days after receipt of notice by the Executive
or (ii) has failed to obtain and maintain standard form directors' and officers'
liability insurance with responsible carriers and in reasonable amounts.
(g) Change in Control
The Executive's employment will automatically terminate upon a Change in
Control. "Change in Control" will mean either (A) the occurrence in a single
transaction or series of related transactions of a merger, consolidation or
reorganization where the beneficial owners of the voting securities of the
Company immediately preceding such merger, consolidation or reorganization
beneficially own less than 60% of the securities possessing the right to vote to
elect directors or to authorize a merger, consolidation or reorganization with
respect to the survivor, after giving effect to such merger, consolidation or
reorganization or (B) the sale of substantially all of the assets of the Company
in a single transaction or a series of transactions ("Asset Sale"); provided
that one or a series of transactions relating to the sale transfer or
disposition, directly or indirectly, of all or a portion of the Company's
Products business and/or International Centers businesses to one or more buyers
or investors (but not related to a transaction involving the U.S. Centers
business) will not constitute an "Asset Sale".
(h) Termination Payments
i. Termination by Company Without Cause or by the Executive for Good Reason
If the Executive's employment is terminated by the Company without Cause or
the Executive terminates his employment for Good Reason, the Company will
pay or provide to him the sum of the following amounts and benefits: (A)
only unpaid Base Salary
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through the date of termination and unreimbursed expenses (collectively,
"Accrued Obligations"), and (B) for a period of 24 months following
termination of employment or until such earlier date as comparable coverage
is available to the Executive from any successor employer, medical plan
coverage, at the Company's expense, on the same basis as received by the
Executive (other than any premium cost sharing) during the Term. The
payment described in clause (B) is subject to the execution and delivery by
the Executive of a full and complete release of claims against the Company
in a form acceptable to the Company.
ii. Termination due to Death or Disability
If the Executive's employment is terminated due to the Executive's death or
Disability, (A) the Company will pay to the Executive (or to his estate, as
applicable) the Accrued Obligations and (B) for a period of 24 months
following such death or Disability, the Executive's dependents and, if
applicable, the Executive in the event of the Executive's Disability, will
be entitled to receive medical plan coverage, at the Company's expense, on
the same basis as received by the Executive (other than any premium cost
sharing) during the Term.
iii. Termination for Cause or by the Executive without Good Reason
If the Company terminates the Executive's employment for Cause or the
Executive Resigns without Good Reason, the Company will pay to him only the
Accrued Obligations.
(i) Survival of Operative Sections
Upon any termination of the Executive's employment, the provisions of
Sections 3 and 6(h) through 11 of this Agreement will survive and be effective.
Section 7. Confidential Information, Non-Competition, Non-Solicitation and
Property.
(a) Confidential Information
The Executive will hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company that he obtains during his employment and that is not public
knowledge or does not become public knowledge (other than as a result of his
violation of this Section 7) ("Confidential Information"). The Executive will
not communicate, divulge or disseminate any Confidential Information at during
or after the Term, except with prior written consent of the Company or as
otherwise required by law.
(b) Non-Competition
During his employment and a two year period following any termination of
employment (the "Restricted Period"), the Executive will not directly or
indirectly participate in or permit his name directly or indirectly to be used
by or become associated with (including as an advisor, representative, agent,
independent contractor, provider or personal services or otherwise) any person,
corporation, partnership, association or entity that is, or intends to be,
engaged in any business that competes with the Business (herein defined) of the
Company in any country in which the Company operates, competes or is engaged in
the Business or at such time intends so to operate or become engaged in the
Business ("Competitor"). "Business" means the business of operating bowling
centers or manufacturing, distributing or selling bowling equipment and
products.
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(c) Non-Solicitation
During the Restricted Period, the Executive will not directly or indirectly
(A) encourage (or solicit or assist any other person or firm in encouraging or
soliciting) any person, who was engaged in a business relationship with the
Company during the one year period preceding his termination of employment, to
engage in a business relationship with a Competitor, or (B) induce any employee
of the Company to terminate his or her employment and will not directly or
indirectly either individually or as owner, agent, employee, consultant or
otherwise, employ, offer employment or cause employment to be offered to any
person (including employment as an independent contractor) who is or was
employed by the Company unless such person will have ceased to be so employed
for a period of at least 12 months.
(d) Property
At the expiration of the Term, the Executive will return to the Company all
property of the Company and all copies of such property in his possession or
under his control, including all Confidential Information in whatever media it
is maintained.
(e) Fee
In consideration of his obligations under this Subsection 7 and subject to
the Executive fully and unconditionally releasing the Company and its affiliates
and its past and then present officers, directors, employees and agents from any
and all claims of any nature whatsoever (other than the obligations of the
Company that survive under this Agreement), the Company will pay to the
Executive on the termination of his employment for any reason a fee in the
amount of $425,000. The Executive agrees that in addition to the remedy set
forth in Subsection (f) below, he will (i) repay the fee in full to the Company
and (ii) forfeit the benefits provided under Subsections 6 (h) i (B) and 6 (h)
ii (B) pertaining to medical plan coverage, if he breaches his obligations under
this Subsection in any material respect and fails to cure the breach within 30
days of written notice specifying the nature of the breach. Notwithstanding
anything in this Agreement, the parties agree that in case of a termination with
Cause during the Term or the voluntary resignation of Executive without Good
Reason during the Term, the Company may elect to waive the provisions of Section
7 (b) above and in such event, the Executive will not be bound by the covenant
of non competition contained therein and the Company will not be obligated to
pay the fee provided in this Section.
(f) Injunctive Relief
The Executive agrees that the Restricted Period and his obligations under
this Section 7 are fair and reasonable, the result of negotiation and relate to
special, unique and extraordinary matters and that a violation of any of them
will cause the Company irreparable injury for which adequate remedies are not
available at law. Therefore, in addition to the forfeiture of the fee as set
forth on Subsection 7(e) above, the Executive agrees that the Company will be
entitled to an injunction or such other equitable relief as a court may deem
necessary or appropriate to restrain him from committing a violation. If a court
holds that any restrictions are unreasonable under circumstances then existing,
the parties agree that the maximum period, scope, or geographical area legally
permissible under such circumstances will be substituted for the period, scope
or area stated herein.
Section 8. Assignment; No Third-Party Beneficiaries
This Agreement will inure to the benefit of, and be binding on, the
successors and assigns of each of the parties. This Agreement, and the
Executive's rights and obligations hereunder, may not be assigned by the
Executive. Any purported assignment will be null and void. The Company may
assign this Agreement and its rights hereunder so long as the
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assignee expressly assumes all obligations of the Company and the Company
remains fully liable for the performance of such obligations. Nothing in this
Agreement will confer upon any person or entity not a party to this Agreement
any rights of any nature or kind whatsoever.
Section 9. Arbitration
Except for the right of the Company to apply to a court of competent
jurisdiction for an injunction to enforce the obligations of the Executive under
Section 7, any dispute between the parties under this Agreement will be
determined by binding arbitration in accordance with the commercial arbitration
rules of the American Arbitration Association in Richmond, Virginia. Arbitration
will be conducted by one arbitrator if the parties can agree or by three
arbitrators if the parties can not agree on a single arbitrator. All arbitrators
will be selected from a panel provided by the American Arbitration Association.
The arbitrators will not have the authority to award punitive or consequential
damages or attorney's fees. The cost of arbitration will be borne equally. This
Agreement will be governed by and construed in accordance with the laws of
Virginia applicable to contracts made and performed entirely within Virginia,
without regard to its conflict of laws rules.
Section 10. Notices
Communications under this Agreement will be in writing and delivered by
hand or sent by overnight courier or mailed by registered or certified mail,
postage prepaid,
if to the Executive, at 0000 Xxxxx Xxxx Xxxx, Xxxxxxxxxx, XX 00000; or
if to the Company, at 0000 XXX Xxxxx, Xxxxxxxxxxxxxx, XX 00000, marked
for the attention of the General Counsel;
or at such other address as one party may furnish in writing to the other.
Notices will be deemed given; if delivered by hand, on the delivery date; if
sent, by overnight courier, on the first business day following the date the
notice was sent; and if mailed, on the third business day after the date of
mailing.
Section 11. Miscellaneous
This Agreement constitutes the entire agreement of the parties regarding
the Executive's employment and supersedes all prior negotiations, discussions
and agreements relating to its subject matter. Any waiver or amendment of this
Agreement will be valid only if made in writing and signed by both parties. No
waiver will be a waiver for subsequent occurrences unless it specifically states
so.
WITNESS the signatures of the parties as of the date first above written.
AMF BOWLING WORLDWIDE, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
---------------------------
Title: CFO
EXECUTIVE
/s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
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