Exhibit 10.38
AMF Bowling Worldwide, Inc.
Bonus, Severance
And Retention Program
For Certain Employees
AMF Bowling Worldwide, Inc. ("WINC") has publicly announced plans to
restructure its debt (the "Restructuring"). Because of the extraordinary effort
that will be required to successfully restructure AMF and the uncertainty and
apprehension that this reorganization will impose on AMF employees, the Boards
of Directors of WINC, AMF Bowling Centers (Aust) International Inc. ("BCO
Australia"), AMF Worldwide Bowling Centers Holdings Inc. ("International BCO"),
AMF Bowling Centers, Inc. ("Centers") and AMF Bowling Products, Inc.
("Products") have approved the implementation of the following bonus, severance
and retention programs in an effort to maintain morale and minimize the loss of
employees whose services are critical to AMF operations and a successful
Restructuring.
I Programs
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1. FY 2000 Bonus Plan
. Participants: All bonus eligible employees (excluding center managers)
who are AMF employees on March 31, 2000
. At the discretion of and at such time as determined by the CEO, reduce
the consolidated EBITDA threshold to 80% of target EBITDA for FY 2000
for bonus plans or components of bonus plans keyed to consolidated
EBITDA. Target EBITDA for FY 2000 is $150 million. Under the existing
plan, bonuses are conditioned upon achieving a threshold of 95% of
target EBITDA
. Payable on March 31, 2001, conditioned on employment at date of
payment and subject to the other provisions of the AMF Bonus Plan
2. Stock Option Retention Plan
. Participants: All option eligible employees (approximately 800) who
are AMF employees on March 31, 2000
. Cash payments in lieu of calendar 2000 stock option grants
. Cash payments based on a percentage of annual base salary from
5% to 20% based upon job grade
. Payable on March 31, 2001, conditioned upon employment at date of
payment
3. "Key Management" Retention Bonus Plan
. Participants: senior managers selected by CEO
. Retention payments based on a percentage of annual base salary:
- 25% to 100% based on level
. Payable at approval of Restructuring plan. If approval of the
Restructuring plan does not occur by June 1, 2001, 50% of such
payment will be made on June 1, 2001 and the remainder will be paid
at approval. All payments conditioned upon employment at the date of
payment.
. Retention bonuses will be in addition to Incentive compensation under
FY 2001 Bonus Plan.
4. Discretionary Bonus Plan
. Participants: Those employees not otherwise eligible for a bonus who,
in the discretion of the CEO, performed "above and beyond" during the
Restructuring
. Total of $100,000 available
. Payable on the earlier of approval of a Restructuring plan or June 1,
2001, conditioned upon employment at the date of payment
5. Enhanced Severance Plan
. Participants: Employees at Director, Vice President and Key
Management levels
. The Enhanced Severance Plan with payments upon termination Without
Cause or Good Reason will remain effective for one year following
completion of the Restructuring (at which time participants will
revert to the Company's standard severance policy)
. Severance payments to participants:
* 4 months annual base salary for Directors
* 6 months annual base salary for Vice Presidents
* 12 months annual base salary for Key Management
6. Senior Executives Retention Plan
. Participants: Roland Smith and Steve Hare
. WINC, Products, Centers, BCO Australia and International BCO will
assume the current employment agreements of Messrs. Smith and Hare.
. WINC's obligations to Messrs. Smith and Hare under their current
employment agreements will be secured by a letter of credit. The
letter of credit will be issued under the existing bank credit
agreement and will reduce quarterly as the remaining obligations
under the employment agreements are satisfied. The letter of credit
will terminate when the following has occurred (A) the payment under
all of the below described FY 2000 Bonus Plan, Stock Option Retention
Plan and
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Senior Executives Retention Plan and (B) the assumption of the
current employment agreements as part of the Restructuring or upon
execution of a new employment agreement.
. Messrs. Smith and Hare will be entitled to the following;
* FY 2000 Bonus Plan - fixed at 50% of year 2000 bonus target -
payable March 31, 200l
* Stock Option Retention Plan - cash in lieu of 2000 calendar year
stock option grants - 25% of base compensation - payable March
31, 200l
* Senior Executives Retention Plan - 200% of base compensation -
payable on the earlier of approval of a Restructuring plan on
June 1, 2001. If approval of the Restructuring plan does not
occur by June 1, 2001, 50% of such payment will be made on June
1, 2001 and the remainder will be paid upon approval. All
payments conditioned upon employment at the date of payment. The
retention bonus will be in addition to incentive compensation
under FY 2001 Bonus Plan.
II Total Retention Cost
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Bonus in lieu of Stock Option Grants $ 2.1MM
Key Management Retention Bonus Plan 1.2
Discretionary Bonus Plan 0.1
Senior Executives Retention Plan 2.0
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Total Cost $ 5.4
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