CEDAR FAIR, L.P.
Executive Severance Plan
Adopted: July 26, 1995
PURPOSE:
Cedar Fair, L.P., has established this Cedar Fair, L.P. Executive Severance
Plan in order to clarify the circumstances under which certain key
executive officers of Cedar Fair Management Company could be terminated for
cause and to provide these executive officers with assurances in the event
a termination of employment occurs after a change of control of the
Company.
ELIGIBILITY:
This plan covers the President (or any other person serving as Chief
Executive Officer), the Chief Financial Officer, the Treasurer (if
different from the Chief Financial Officer), and the General Managers of
each Park owned and operated by Cedar Fair, L.P.
TERMINATION FOR CAUSE:
1. The Company or the Partnership may terminate the Executive's
employment for Cause. For the purposes of this Agreement, the
Company or the Partnership shall have "Cause" to terminate the
Executive's employment only under the following circumstances:
a. if termination shall have been the result of an act or acts by
the Executive which have been found in an applicable court
to constitute a felony; or
b. if termination shall have been the result of an act or acts of
dishonesty or significant impropriety by the Executive resulting
or intended to result directly or indirectly in significant gain
or personal enrichment (monetary or otherwise) to the Executive
at the expense of or detriment to the Company or the Partnership;
or
c. upon the willful and continued failure by the Executive
substantially to perform his duties with the Company or the
Partnership (other than any such failure resulting from
incapacity due to mental or physical illness) after a demand in
writing for substantial performance is delivered by the Board,
which demand specifically identifies the manner in which the
Board believes that the Executive has not substantially performed
his duties, and such failure results in demonstrably material
injury to the Company or the Partnership.
The Executive's employment shall in no event be considered to have
been terminated by the Company or the Partnership for Cause if such
termination took place as the result of (a) bad judgment or
negligence, or (b) any act or omission believed in good faith to
have been in or not opposed to the best interest of the Company or
the Partnership. The Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been
delivered to him a Notice of Termination that includes a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting
of the Board (after reasonable notice to the Executive and an
opportunity for him, together with his counsel, to be heard before
the Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth above in clauses (a), (b)
or (c) of the second sentence of this paragraph and specifying the
particulars thereof in detail.
2. If the Executive's employment shall be terminated for Cause, the
Executive shall be paid his full Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination
is given, and neither the Company nor the Partnership shall have
any further obligations to the Executive under this Plan or
otherwise.
DEFINITION OF CHANGE IN CONTROL:
A "Change in Control" of this Partnership or the Company shall be deemed to
have occurred if:
a. Any person becomes the beneficial owner of 20% or more of the
Partnership's limited partnership units then outstanding.
b. Substantially all of the assets of the Partnership are sold to
a party that, prior to such sale, was not affiliated with the
Company.
c. At any time during a period of 24 consecutive months,
individuals who were directors at the beginning of the 24-month
period no longer constitute a majority of the members of the
Company's Board of Directors, unless the election (or nomination)
of a majority of the new directors is approved by at least a
majority of the directors who were in office at the beginning of
the 24-month period.
d. The Company ceases to serve as the Managing General Partner of
the Partnership.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
have occurred in the event of a change in organizational structure solely
attributable to the Partnership ceasing to be a "publicly traded
partnership" for federal income tax purposes at December 31, 1997, as
currently provided in such law.
TERMINATION AFTER CHANGE IN CONTROL WOULD INCLUDE:
Any of the following events shall be deemed to be a termination of the
Executive's employment by the Company and the Partnership if they occur
within 24 months following a Change in Control:
1. Forced relocation of the Executive's place of employment by more
than 35 miles.
2. Reduction of base salary or significant reduction of
responsibility.
3. Job elimination.
SEVERANCE PAYMENT IF TERMINATION OCCURS AFTER CHANGE IN CONTROL:
If, at any time within 24 months after a Change in Control occurs, the
Executive's employment with the Company and the Partnership is deemed
terminated hereunder, the Partnership shall make the following payments and
provide the following benefits to the affected Executive:
I. President/CEO
1. Three (3) times average annual Cash Compensation for the previous
five (5) years, less one (1) dollar, preceding the calendar year in
which the Change in Control of the Company or the Partnership
occurred. Cash Compensation is defined as gross compensation paid
to an Executive as shown on Federal Form W-2, but excluding non-
cash forms of compensation such as partnership units, group life
insurance, and other fringe benefits.
2. For a thirty-six (36) month period after the date of termination,
the Partnership shall provide life, disability, accident and health
insurance benefits substantially similar to those which were
received or entitled to be received immediately before the
termination. If re-employment occurs, neither the Company nor the
Partnership shall provide these insurance benefits any longer.
II. Chief Financial Officer
1. Ninety percent (90%) of two and one-half (2.5) times average
annual Cash Compensation for the previous five (5) years preceding
the calendar year in which the Change in Control of the Company or
the Partnership occurred.
2. For a thirty (30) month period after the date of termination, the
Partnership shall provide life, disability, accident and health
insurance benefits substantially similar to those which were
received or entitled to be received immediately before the
termination. If re-employment occurs, neither the Company nor the
Partnership shall provide these insurance benefits any longer.
III. Executive Vice President/General Manager, Cedar Point;
Vice President/General Manager, Dorney Park;
Vice President/General Manager, Valleyfair;
Vice President/General Manager, Worlds of Fun and Oceans of Fun
Treasurer
1. Eighty percent (80%) of two (2) times average annual Cash
Compensation for the previous five (5) years preceding the calendar
year in which a Change in Control of the Company or the Partnership
occurred.
2. For a twenty-four (24) month period after the date of
termination, the Partnership shall provide life, disability,
accident and health insurance benefits substantially similar to
those which were received or entitled to be received immediately
before the termination. If re-employment occurs, neither the
Company nor the Partnership shall provide these insurance benefits
any longer.
TIME FRAME:
Twenty-four (24) months after the occurrence of the first Change in Control
of the Company or the Partnership. In the event of termination of
employment with the Company or the Partnership before such Change in
Control, the Executive's rights hereunder will terminate simultaneously
with the termination of employment.
PAYMENT:
In lieu of any further salary payment for periods after the date of
termination, the Partnership shall pay, not later than sixty (60) days
following the date of termination, the lump sum severance payment as
defined above.
Payment shall follow the guidelines of Internal Revenue Code Section 280G.
The Partnership may withhold any taxes as may be appropriate from amounts
otherwise payable hereunder.
EMPLOYMENT RIGHTS:
Nothing contained herein, either express or implied, shall be construed as
a contract of employment or as a creation of any right of employment by the
Executives or of any duty by the Company or the Partnership prior to the
occurrence of a Change in Control.
NO SEGREGATION OF ASSETS:
Neither the Company nor the Partnership shall be required to segregate any
assets with respect to benefits under this Plan, and nothing herein shall
be deemed to result in any pledge or encumbrance on any of their
properties.
PLAN STRUCTURE:
This Plan is designed to remain in effect through 1997. If there is a
structural form change in 1998 or earlier solely as a result of the
Partnership ceasing to be a "publicly traded partnership" for federal
income tax purposes, the Board may adopt a similar policy, if necessary,
but, until a similar policy is adopted, the general provisions of this Plan
shall remain in effect.