Exhibit 10.7
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered
into as of June 13, 2005, to be effective as of the closing of
the transactions contemplated by Section 1B of the
Contribution Agreement (as defined below) (the “ Effective
Date ”), by and between AMF Bowling Products, LLC, a
Virginia limited liability company (the “ Company
”), and John Walker (“ Executive ”). For
purposes of this Agreement, “ Contribution Agreement
” means that certain Contribution Agreement, dated as of the
date hereof, by and among Products (as defined below), the Company
and Qubica Lux, S.à.r.l., a société à
responsabilité limitée organized under the laws of
Luxembourg.
WHEREAS, the Company wishes to
employ Executive and Executive wishes to accept employment with the
Company on the terms set forth herein.
WHEREAS, the Company operates its
businesses worldwide.
NOW THEREFORE, in consideration of
the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment . The Company
shall employ Executive, and Executive hereby accepts employment
with the Company upon the terms and conditions set forth in this
Agreement for the period beginning on the Effective Date and ending
as provided in paragraph 4 hereof (the “ Employment
Period ”).
2. Position and Duties
.
(a) During the Employment Period,
Executive shall render such executive and managerial services to
the Company, its Subsidiaries and the Subsidiaries of QubicaAMF
Worldwide S.à.r.l., a société à
responsabilité limitée organized under the laws of
Luxembourg (“ Products ” ) as the board of
managers of Products (the “ Board ”) may from
time to time direct without any additional compensation or benefits
other than as provided herein. The Subsidiaries of Products (which
include the Company and its Subsidiaries) are referred to
collectively herein as the “ Qubica/AMF Companies
.” During the Employment Period, Executive shall serve as the
Chief Executive Officer of the Company and shall have the normal
duties, responsibilities, functions and authority of such position
(including full profit and loss responsibility for the operations
of the Qubica/AMF Companies), subject to the power of the Board to
expand or limit such duties, responsibilities, functions and
authority and to override actions of officers of the
Company.
(b) During the Employment Period,
Executive shall report to the Board and shall devote his best
efforts and his full business time and attention (except for
permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of Products and the
Qubica/AMF Companies. Executive shall perform his duties,
responsibilities
and functions to Products and the Qubica/AMF
Companies hereunder to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement,
“ Subsidiaries ” shall mean, with respect to any
Person, any corporation, limited liability company, partnership,
association, or business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in
the election of directors, managers, or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a limited liability company,
partnership, association, or other business entity (other than a
corporation), a majority of partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of the Person
or a combination thereof. For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a limited
liability company, partnership, association, or other business
entity (other than a corporation) if such Person or Persons shall
be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or
control any managing director or general partner of such limited
liability company, partnership, association, or other business
entity. For purposes hereof, “ Person ” shall
mean an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, or a governmental
entity or any department, agency, or political subdivision
thereof.
3. Compensation and Benefits
.
(a) During the Employment Period,
Executive’s base salary shall be $265,000 per annum or such
higher rate as the Board may determine from time to time (as
adjusted from time to time based on annual review by the Board, the
“ Base Salary ”), which salary shall be payable
by the Company in regular installments in accordance with the
Company’s general payroll practices. In addition, during the
Employment Period, Executive shall be entitled to participate in
Products’ incentive equity program and to receive employee
benefits consistent with other senior management of the Company and
which are substantially similar to, and no less favorable, in the
aggregate than such benefits received by Executive as of
immediately prior to the Effective Date as a Tier I Manager under
the AMF Senior Manager Benefit Program, including, but not limited
to, health, dental, life, disability and paid vacation, in each
case as determined by the Board.
(b) During the Employment Period,
the Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties and
responsibilities under this Agreement which are consistent with the
Company’s policies in effect from time to time with respect
to travel, entertainment and other business expenses, subject to
the Company’s requirements with respect to reporting and
documentation of such expenses.
(c) In addition to the Base Salary,
Executive shall be eligible to receive a bonus each year based upon
annual targets set by the Board in its discretion which targets
shall take into account Products’ and the Qubica/AMF
Companies’ EBITDA and other performance goals, including,
without limitation, sales growth, product development, key
executive recruitment, implementation of customer service standards
and debt retirement; provided that with respect
to
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the first year for which Executive is eligible
for a bonus, such bonus shall be paid on a pro rata basis based
upon that portion of the year that remained after the Effective
Date. Executive’s target bonus each year shall be not less
than 50% of his Base Salary then in effect (the “ Target
Salary Percentage ”), but Executive shall be eligible to
earn up to 100% of his Base Salary then in effect for results
exceeding performance targets.
Bonuses are earned as of the last
day of each calendar year (the “ Determination Date
”) and shall be paid promptly after delivery of the
Company’s audited financial statements for the year in which
the bonus is earned. Notwithstanding the foregoing, if Executive
dies, becomes Disabled (as defined below) or is terminated without
Cause or resigns for Good Reason after the end of a calendar year
but prior to Executive receiving the bonus payment earned in the
calendar year prior to such event, Executive (or Executive’s
estate) shall be entitled to any such bonus payment. In addition,
if Executive dies, becomes Disabled or is terminated without Cause
or resigns for Good Reason, then the determination of whether
Exeuctive has earned a bonus for the calendar year in which such
event occurs shall be determined (i) as if the last day of the
month immediately preceding the month in which such event occurs is
the Determination Date (i.e., comparing the actual financial
results of Products and the Qubica/AMF Companies for such short
period to the budgeted financial results of Products and the
Qubica/AMF Companies for such short period) and (ii) applying
a pro rata portion of the Target Salary Percentage based upon the
portion of such calendar year that has elapsed prior to such deemed
Determination Date.
(d) Products and the Qubica/AMF
Companies shall be entitled to deduct or withhold from any amounts
owing from Products or any of the Qubica/AMF Companies to Executive
any federal, state, local or foreign withholding taxes, excise
taxes, or employment taxes (“ Taxes ”) imposed
with respect to Executive’s compensation or other payments
from Products or any of the Qubica/AMF Companies, including,
without limitation, wages, bonuses, dividends, the receipt or
exercise of stock options and/or the receipt or vesting of
restricted stock. In the event Products or any Qubica/AMF Company
does not make such deductions or withholdings, Executive shall
indemnify Products and the Qubica/AMF Companies for any amounts
paid with respect to any such Taxes, together with any interest,
penalties and related expenses thereto.
(e) For purposes of this Agreement,
“ EBITDA ” shall mean earnings before interest,
taxes, depreciation and amortization, determined in accordance with
United States generally accepted accounting principles consistently
applied.
4. Term .
(a) The Employment Period shall
continue until the earlier of (i) Executive’s
resignation (whether with or without Good Reason), death or
Disability, and (ii) the date upon which Executive’s
employment is terminated by the Company (whether for or without
Cause) (the “ Termination Date ”). Except as
otherwise provided herein, any termination of the Employment Period
by the Company shall be effective as specified in a written notice
from the Company to Executive. For the purposes of this Agreement,
“ Disability ” or “ Disabled
” means Executive’s inability to perform his duties
hereunder (as determined by the Board) for any period of 180
consecutive days and Executive’s return to his duties for
periods of 15 days or less shall not interrupt such 180 day
period.
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(b) If the Employment Period is
terminated by the Company without Cause pursuant to
Section 4(a)(ii) or by resignation of Executive for
Good Reason, Executive shall be entitled to receive (i) his
Base Salary through the date of termination; (ii) any accrued
but unused vacation; (iii) any unreimbursed expenses incurred
in accordance with the Company’s policies for business
expenses; (iv) any bonus earned by Executive through the date
of termination as determined in accordance with the provisions of
Section 3(c) ; and (v) an amount equal to 100% of
his annual Base Salary at the time of termination, such amount to
be paid in substantially equal monthly installments over a period
of twelve (12) months from the date of such termination, if
and only if Executive has executed and delivered to the Company the
General Release substantially in form and substance as set forth in
Exhibit A attached hereto and only so long as Executive
has not breached the provisions of Sections 5, 6, and 7
hereof, and Executive shall not be entitled to any other salary,
compensation or benefits after termination of the Employment
Period.
(c) If the Employment Period is
terminated by the Company for Cause, by resignation of Executive
without Good Reason, by Executive’s death or Disability in
accordance with Section 4(a)(i) above, Executive shall
only be entitled to receive his Base Salary through the date of
termination plus any (i) accrued but unused vacation and
(ii) unreimbursed expenses incurred in accordance with the
Company’s policies for business expenses, and Executive shall
not be entitled to any other salary, compensation or benefits from
the Company thereafter.
(d) Except as otherwise expressly
provided herein, all of Executive’s rights to salary,
bonuses, fringe benefits and other compensation hereunder which
accrue or become payable after the termination or expiration of the
Employment Period shall cease upon such termination or expiration,
other than those expressly required under applicable law (such as
COBRA). The Company may offset any amounts that Executive owes to
Products or the Qubica/AMF Companies against any amounts that the
Company owes to Executive hereunder.
(e) For purposes of this Agreement,
“ Cause ” shall mean (i) the conviction of
a felony or a crime involving moral turpitude, (ii) the
commission of any other substantial act or omission involving
dishonesty, disloyalty or fraud with respect to Products or any of
the Qubica/AMF Companies or any of their customers or suppliers,
(iii) intentional conduct outside of the performance of
Executive’s normal duties having the effect of bringing any
of Products or the Qubica/AMF Companies into substantial public
disgrace or disrepute, (iv) substantial and repeated failure
to perform duties as reasonably directed by the Board, (v) any
act or omission aiding or abetting a competitor, supplier or
customer of any of the Qubica/AMF Companies to the material
disadvantage or detriment of any of the Qubica/AMF Companies,
(vi) breach of fiduciary duty, gross negligence or willful
misconduct with respect to Products or any of the Qubica/AMF
Companies, (vii) a material failure to observe policies or
standards approved by the Board regarding employment practices,
nondiscrimination and sexual harassment as the Board may address in
writing from time to time or (vii) any other material breach
of this Agreement.
(f) For purposes of this Agreement,
“ Good Reason ” shall mean if Executive resigns
from employment with the Company and its Subsidiaries prior to the
end of the Employment Period as a result of one or more of the
following reasons, in each case without Executive’s consent:
(i) a change in Executive’s status, title, position or
reporting responsibilities which represents a demotion from his
status, title, position, duties or reporting responsibilities
as
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in effect immediately prior thereto or
(ii) a reduction in Executive’s salary as of the
Effective Date. Notwithstanding the foregoing, in the case of
clause (i) above, Executive must give written notice to the
Company of his objection to such act within 30 days of the
occurrence of the change and such act shall not be deemed to
constitute Good Reason if it is of such a nature that substantially
all detriment otherwise resulting to Executive can by cured by
appropriate action which the Company causes to be taken within 30
days following written notice from Executive.
5. Confidential Information
.
(a) Obligation to Maintain
Confidentiality . Executive acknowledges that the information,
observations and data obtained by him during the course of his
employment with the Company concerning the business and affairs of
Products, the Qubica/AMF Companies and their respective Affiliates,
in each case whether prior to or after the date hereof, are the
property of Products, the Qubica/AMF Companies and such Affiliates,
including, but not limited to, information concerning
(i) product formulas and processes, technology, data, methods,
know-how, techniques, samples, trade secrets and business, price,
finance, marketing, supplier, customer and other information; and
(ii) acquisition opportunities in or reasonably related to
Products’ or the Qubica/AMF Companies’ business or
industry of which Executive becomes aware during such employment
(collectively, “ Confidential Information ”).
Therefore, Executive agrees that he will hold the Confidential
Information in strictest confidence and will not disclose to any
person or use for his own account or for the account of any other
person or entity any of the Confidential Information without the
Board’s written consent, unless and to the extent that the
aforementioned matters become generally known to, and available for
use by, the public other than as a result of Executive’s acts
or omissions to act. Executive agrees to deliver to the Company at
the termination or expiration of the Employment Period, or at any
other time the Company may request in writing, all memoranda,
notes, plans, records, reports and other documents (and copies
thereof) relating to the business of Products, the Qubica/AMF
Companies and their respective Affiliates (including, without
limitation, all acquisition prospects, lists and contact
information) which he may then possess or have under his control.
For purposes of this Agreement, “ Affiliate ”
shall mean with respect to any Person, any Person that controls, is
controlled by or is under common control with such Person or an
Affiliate of such Person.
(b) Third Party Information .
Executive understands that Products, the Qubica/AMF Companies and
their respective Affiliates will receive from third parties
confidential or proprietary information (“ Third Party
Information ”) subject to a duty on the part of Products,
the Qubica/AMF Companies and such Affiliates to maintain the
confidentiality of such information and to use it only for certain
limited purposes. During the Employment Period and thereafter, and
without in any way limiting the provisions of Section 1(a)
above, Executive will hold Third Party Information in the strictest
confidence and will not disclose to anyone (other than personnel of
Products, the Qubica/AMF Companies or their respective Affiliates
or agents who need to know such information in connection with
their wor
