Exhibit 10.5

 

EXECUTION COPY

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT is entered into as of February 27, 2004 between AMF
Bowling Worldwide, Inc., a Delaware corporation (the “Company”), and Frederick
R. Hipp (“Executive”).

 

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, and within the United
States, the scope of the business is national in character.

 

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 date hereof 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
Kingpin Holdings, LLC (“Holdings” ) as the board of managers (the “Board”) of
Holdings may from time to time direct. The Subsidiaries of Holdings (which
include the Company and its Subsidiaries) are referred to collectively herein as
the “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 positions (including full
profit and loss responsibility for the operations of the 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. It
anticipated that Executive will be a member of the Board of Holdings during the
Employment Period.

 

(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 the AMF Companies. Executive shall
perform his duties, responsibilities and functions to the AMF Companies
hereunder to the best of his abilities in a diligent, trustworthy, businesslike
and efficient manner.

 

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(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 $600,000.00
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 receive employee benefits
consistent with other senior management of the Company including, but not
limited to, health, dental, life, disability, paid vacation and retirement plans
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. In addition, the Company shall
reimburse Executive for (i) the rental cost of temporary housing near the
Company’s headquarters in Richmond, Virginia from the February 20, 2004 through
August 31, 2004 and (ii) reasonable and customary one-time relocation expenses
from Los Angeles, California to Richmond, Virginia, including the broker’s
commission payable by Executive in connection with the sale of his principal
residence in California, and transportation expenses between Richmond, Virginia
and Los Angeles, California in connection with a reasonable number (as approved
by the Board) of family visits prior to August 31, 2004. Executive shall make
his principal residence Richmond, Virginia not later than August 31, 2004.

 

(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 the AMF Companies’ EBITDA and other
performance goals, including, without

 

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limitation, sales growth, successful renovations, new store openings, key
executive recruitment, implementation of customer service standards and debt
retirement. Executive’s target bonus each year shall be not less than 50% of his
Base Salary then in effect, 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 and shall be paid
promptly after delivery of the Company’s audited financial statements for the
year in which the bonus is earned. 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.

 

(d) All amounts payable to Executive as compensation hereunder shall be subject
to all required withholding by the Company.

 

(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, or (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.

 

(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 and (iv) 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

 

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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 Holdings or the 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 any of the 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 the AMF Companies into substantial
public disgrace or disrepute, (iv) substantial and repeated failure to perform
duties as reasonably directed by the Board, (v) gross negligence or willful
misconduct with respect to any of the AMF Companies, (vi) 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, (vii) any other material breach of this Agreement or
(viii) any material breach of the Executive Securities Agreement between
Executive and Holdings. Notwithstanding the foregoing, in the case of clauses
(iv) through (viii) above, the Company must give written notice to the Executive
of the act or acts constituting Cause and such acts shall not be deemed to
constitute Cause if they are of such a nature that substantially all detriment
otherwise resulting to the Company and its Subsidiaries can by cured to the
Board’s reasonable satisfaction by action which the Executive causes to be taken
within 30 days following written notice from the Company.

 

(f) For purposes of this Agreement, “Good Reason” shall mean 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 in effect immediately prior thereto,
(ii) a reduction in Executive’s salary and nondiscretionary bonuses as of the
date hereof, (iii) the Company’s requiring Executive to be permanently relocated
outside a 50-mile radius from Richmond, Virginia or (iv) the failure while
employed by the Company, to be elected or re-elected as a member of the Board of
Holdings. 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 (as employee or consultant) with the Company concerning the business
and affairs of the Company

 

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and its affiliates are the property of the Company and such affiliates,
including information concerning acquisition opportunities in or reasonably
related to the Company’s business or industry of which Executive becomes aware
during the such employment. Therefore, Executive agrees that he will not
disclose to any unauthorized person or use for his own account any of such
information, observations or data 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 the Company and its
affiliates (including, without limitation, all acquisition prospects, lists and
contact information) which he may then possess or have under his control.

 

(b) Third Party Information. Executive understands that the Company and its
affiliates will receive from third parties confidential or proprietary
information (“Third Party Information”) subject to a duty on the Company’s and
its affiliates’ part to maintain the confidentiality of such information and to
use it only for certain limited purposes. During the Executive’s employment (as
employee or consultant) with the Company and thereafter, and without in any way
limiting the provisions of Section 5(a) above, Executive will hold Third Party
Information in the strictest confidence and will not disclose to anyone (other
than personnel of the Company or its affiliates or agents who need to know such
information in connection with their work for the Company or its affiliates or
agents) or use, except in connection with his work for the Company or its
affiliates, Third Party Information unless expressly authorized by a member of
the Board in writing.

 

6. Noncompetition; Non-Solicitation. Executive acknowledges that in the course
of his employment (as employee or consultant) with the Company he will become
familiar with the AMF Companies’ trade secrets and with other confidential
information concerning the AMF Companies and that his services will be of
special, unique and extraordinary value to the Company. Therefore, Executive
agrees that:

 

(a) Noncompetition. During the Employment Period and for a period of twelve (12)
months thereafter (so long as the Company is not in breach of its obligations to
Executive under Section 4(b) hereof), Executive shall not, within the United
States, the United Kingdom and Australia, or any other state or territory in
which the AMF Companies conduct business at the time of the Termination Date,
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in any business which operates
bowling centers (or other entertainment venues that feature bowling) or designs,
manufacturers, services, markets, sells, distributes or delivers
bowling-relating products and machines or billiards-related products; provided,
however, that with respect to entities other than Holdings and the AMF
Companies, the Executive may own, directly or indirectly, solely as an
investment, publicly traded securities of any entity if Executive (a) is not a
controlling person with respect to such entity and (b) does not, directly or
indirectly, own two (2%) percent or more of any class of the securities of such
entity.

 

(b) Nonsolicitation. During the Employment Period and for a period of eighteen
(18) months thereafter, Executive shall not directly or indirectly through
another entity (i) induce

 

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or attempt to induce an employee of any of the AMF Companies who is of
center-level or district-level manager seniority or higher (including, without
limitation, all executive-level employees and corporate officers)(each such
employee, a “Restricted Employee”) to leave the employ of such AMF Company, or
in any way interfere with the relationship between any AMF Company and any
Restricted Employee, (ii) hire any person who was a Restricted Employee of any
of the AMF Companies within 180 days prior to the time such Person was hired by
Executive, (iii) induce or attempt to induce any customer, supplier, licensee or
other business relation of any of the AMF Companies to cease doing business with
the AMF Companies or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and any of the AMF Companies
or (iv) directly or indirectly acquire or attempt to acquire an interest in any
business relating to the business of any of the AMF Companies and with which any
of the AMF Companies has entertained discussions or has requested and received
information relating to the acquisition of such business by any AMF Company in
the eighteen (18) month period immediately preceding the end of the Employment
Period; provided, however, that with respect to entities other than Holdings and
the AMF Companies, Executive may own, directly or indirectly, solely as an
investment, publicly traded securities of any entity if Executive (a) is not a
controlling person with respect to such entity and (b) does not, directly or
indirectly, own two percent or more of any class of the securities of such
entity.

 

(c) Enforcement. If, at the time of enforcement of Section 5 or this Section 6,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum duration,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law. Because Executive’s services are
unique and because Executive has access to confidential information, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security).

 

(d) Additional Acknowledgments. Executive acknowledges that the provisions of
this Section 6 are in consideration of: (i) employment (as employee or
consultant) with the Company, (ii) the issuance of certain securities of
Holdings under the Executive Securities Agreement between Executive and
Holdings, and (iii) additional good and valuable consideration as set forth in
this Agreement. In addition, Executive agrees and acknowledges that the
restrictions contained in Section 5 and this Section 6 do not preclude Executive
from earning a livelihood. In addition, Executive agrees and acknowledges that
the potential harm to the Company of the non-enforcement of Section 5 and this
Section 6 outweighs any potential harm to Executive of its enforcement by
injunction or otherwise. Executive acknowledges that he has carefully read this
Agreement and has given careful consideration to the restraints imposed upon
Executive by this Agreement, and is in full accord as to their necessity for the
reasonable and proper protection of confidential and proprietary information of
the Company now existing or to be developed in the future. Executive expressly
acknowledges and agrees that each and every restraint imposed by this Agreement
is reasonable with respect to subject matter, time period and geographical area.

 

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7. Executive’s Representations. Executive hereby represents and warrants to the
Company that (i) the execution, delivery and performance of this Agreement by
Executive do not and shall not conflict with, breach, violate or cause a default
under any contract, agreement, instrument, order, judgment or decree to which
Executive is a party or by which he is bound, (ii) Executive is not a party to
or bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity and (iii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of Executive, enforceable in accordance with its terms.
Executive hereby acknowledges and represents that he has consulted with
independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.

 

8. Survival. Paragraphs 5 through 16 shall survive and continue in full force in
accordance with their terms notwithstanding the expiration or termination of the
Employment Period.

 

9. Notices. Any notice provided for in this Agreement must be in writing and
must be either personally delivered, sent via facsimile, sent by first class
mail (postage prepaid and return receipt requested) or sent by reputable
overnight courier service (charges prepaid) to the Company or the Executive at
the addresses set forth below. Notices will be deemed to have been given
hereunder when delivered personally, three business days after deposit in the
U.S. mail and one business day after deposit with a reputable overnight courier
service:

 

Notices to Executive:

 

Frederick R. Hipp

321 Dalehurst Avenue

Los Angeles, CA 90024

Facsimile:

 

With Copies to:

 

Pillsbury Winthrop LLP

725 South Figueroa Street, Suite 2800

Los Angeles, California 90017-5406

Facsimile: (213) 226-4017

Attn: Anna M. Graves, Esq.

 

Notices to the Company:

 

AMF Bowling Worldwide, Inc.

8100 AMF Drive

Mechanicsville, VA

Facsimile: (804) 559-6249

Attn: General Counsel

 

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With Copies to:

 

Code Hennessy & Simmons LLC

10 South Wacker Drive

Suite 3175

Chicago, IL 60606

Telecopy No.: (312) 876-3854

Attn: Thomas J. Formolo

           Richard A. Lobo

 

Kirkland & Ellis

200 East Randolph Drive

Chicago, Illinois 60601

Telecopy No.: (312) 861-2200

Attn: Kevin R. Evanich, P.C.

 

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered, sent or mailed.

 

10. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any action in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

 

11. Complete Agreement. This Agreement, those documents expressly referred to
herein and other documents of even date herewith embody the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.

 

12. No Strict Construction. The language used in this Agreement shall be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any party.

 

13. Counterparts. This Agreement may be executed in separate counterparts, each
of which is deemed to be an original and all of which taken together constitute
one and the same agreement.

 

14. Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign his rights
or delegate his duties or obligations hereunder without the prior written
consent of the Company.

 

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15. Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Delaware, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.

 

16. Amendment and Waiver. The provisions of this Agreement may be amended or
waived only with the prior written consent of the Company (as approved by the
Board) and Executive, and no course of conduct or course of dealing or failure
or delay by any party hereto in enforcing or exercising any of the provisions of
this Agreement (including, without limitation, the Company’s right to terminate
the Employment Period for Cause) shall affect the validity, binding effect or
enforceability of this Agreement or be deemed to be an implied waiver of any
provision of this Agreement.

 

*    *    *    *    *    

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

AMF BOWLING WORLDWIDE, INC. By:  

/s/ Christopher F. Caesar

   

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Its:

 

Christopher F. Caesar

/s/ Frederick R. Hipp

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Frederick R. Hipp

 

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Exhibit A

 

GENERAL RELEASE

 

1. I, Frederick R. Hipp, in consideration of and subject to the performance by
AMF Bowling Worldwide, Inc., a Delaware corporation (together with its
subsidiaries, the “Company”), of its material obligations under the Employment
Agreement, dated as of the date as of February     , 2004 (the “Agreement”), do
hereby release and forever discharge as of the date hereof the Company, Kingpin
Holdings, LLC (the parent of the Company) and all present and former directors,
officers, agents, representatives, employees, successors and assigns of the
Company and Kingpin Holdings, LLC and their direct or indirect owners
(collectively, the “Released Parties”) to the extent provided below.

 

2. I understand that any payments or benefits paid or granted to me under
paragraph 4(b) of the Agreement represent, in part, consideration for signing
this General Release and are not salary, wages or benefits to which I was
already entitled. I understand and agree that I will not receive the payments
and benefits specified in paragraph 4(b) of the Agreement unless I execute this
General Release and do not revoke this General Release within the time period
permitted hereafter or breach this General Release.

 

3. Except as provided in paragraph 4 below, I knowingly and voluntarily release
and forever discharge the Company and the other Released Parties from any and
all claims, controversies, actions, causes of action, cross-claims,
counter-claims, demands, debts, compensatory damages, liquidated damages,
punitive or exemplary damages, other damages, claims for costs and attorneys’
fees, or liabilities of any nature whatsoever in law and in equity, both past
and present (through the date of this General Release) and whether known or
unknown, suspected, or claimed against the Company or any of the Released
Parties which I, my spouse, or any of my heirs, executors, administrators or
assigns, may have, which arise out of or are connected with my employment with,
or my separation from, the Company (including, but not limited to, any
allegation, claim or violation, arising under: Title VII of the Civil Rights Act
of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in
Employment Act of 1967, as amended (including the Older Workers Benefit
Protection Act); the Equal Pay Act of 1963, as amended; the Americans with
Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Civil
Rights Act of 1866, as amended; the Worker Adjustment Retraining and
Notification Act; the Employee Retirement Income Security Act of 1974; any
applicable Executive Order Programs; the Fair Labor Standards Act; or their
state or local counterparts; or under any other federal, state or local civil or
human rights law, or under any other local, state, or federal law, regulation or
ordinance; or under any public policy, contract or tort, or under common law; or
arising under any policies, practices or procedures of the Company; or any claim
for wrongful discharge, breach of contract, infliction of emotional distress,
defamation; or any claim for costs, fees, or other expenses, including
attorneys’ fees incurred in these matters) (all of the foregoing collectively
referred to herein as the “Claims”).

 

4. I represent that I have made no assignment or transfer of any right, claim,
demand, cause of action, or other matter covered by paragraph 2 above.

 

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5. I agree that this General Release does not waive or release any rights or
claims that I may have under the Age Discrimination in Employment Act of 1967
which arise after the date I execute this General Release. I acknowledge and
agree that my separation from employment with the Company in compliance with the
terms of the Agreement shall not serve as the basis for any claim or action
(including, without limitation, any claim under the Age Discrimination in
Employment Act of 1967). I agree that this General Release does not waive my
rights to assert a claim for which I am vested under any employee benefit plan
nor am I releasing any rights or claims that may arise from events,
circumstances or set of facts occurring solely after the date hereof.

 

6. In signing this General Release, I acknowledge and intend that it shall be
effective as a bar to each and every one of the Claims hereinabove mentioned or
implied. I expressly consent that this General Release shall be given full force
and effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected Claims (notwithstanding any
state statute that expressly limits the effectiveness of a general release of
unknown, unsuspected and unanticipated Claims), if any, as well as those
relating to any other Claims hereinabove mentioned or implied. I acknowledge and
agree that this waiver is an essential and material term of this General Release
and that without such waiver the Company would not have agreed to the terms of
the Agreement. I further agree that in the event I should bring a Claim seeking
damages against the Company, or in the event I should seek to recover against
the Company in any Claim brought by a governmental agency on my behalf, this
General Release shall serve as a complete defense to such Claims. I further
agree that I am not aware of any pending charge or complaint of the type
described in paragraph 2 as of the execution of this General Release.

 

7. I agree that neither this General Release, nor the furnishing of the
consideration for this General Release, shall be deemed or construed at any time
to be an admission by the Company, any Released Party or myself of any improper
or unlawful conduct.

 

8. I agree that I will forfeit all amounts payable by the Company pursuant to
the Agreement if I challenge the validity of this General Release. I also agree
that if I violate this General Release by suing the Company or the other
Released Parties, I will pay all costs and expenses of defending against the
suit incurred by the Released Parties, including reasonable attorneys’ fees, and
return all payments received by me pursuant to the Agreement.

 

9. I agree that this General Release is confidential and agree not to disclose
any information regarding the terms of this General Release, except to my
immediate family and any tax, legal or other counsel I have consulted regarding
the meaning or effect hereof or as required by law, and I will instruct each of
the foregoing not to disclose the same to anyone.

 

10. Any non-disclosure provision in this General Release does not prohibit or
restrict me (or my attorney) from responding to any inquiry about this General
Release or its underlying facts and circumstances by the Securities and Exchange
Commission (SEC), the National Association of Securities Dealers, Inc. (NASD),
any other self-regulatory organization or governmental entity.

 

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11. I agree to reasonably cooperate with the Company in any internal
investigation or administrative, regulatory, or judicial proceeding. I
understand and agree that my cooperation may include, but not be limited to,
making myself available to the Company upon reasonable notice for interviews and
factual investigations; appearing at the Company’s request to give testimony
without requiring service of a subpoena or other legal process; volunteering to
the Company pertinent information; and turning over to the Company all relevant
documents which are or may come into my possession all at times and on schedules
that are reasonably consistent with my other permitted activities and
commitments. I understand that in the event the Company asks for my cooperation
in accordance with this provision, the Company will reimburse me solely for
reasonable travel expenses, including lodging and meals, upon my submission of
receipts and pay me a per diem allowance which is reasonable in light of all the
circumstances at the time such cooperation is required.

 

12. Notwithstanding anything in this General Release to the contrary, this
General Release shall not relinquish, diminish, or in any way affect any rights
or claims arising out of any breach by the Company or by any Released Party of
the Agreement.

 

13. Whenever possible, each provision of this General Release shall be
interpreted in, such manner as to be effective and valid under applicable law,
but if any provision of this General Release is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this General Release shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

(a) I HAVE READ IT CAREFULLY;

 

(b) I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS,
INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED;
THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

(c) I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

(d) I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I
HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE CHOSEN NOT TO DO
SO OF MY OWN VOLITION;

 

(e) I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE
SUBSTANTIALLY IN ITS FINAL FORM ON                              ,             
TO CONSIDER IT AND THE CHANGES MADE SINCE THE                              ,
             VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE
REQUIRED 21-DAY PERIOD;

 

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(f) THE CHANGES TO THE AGREEMENT SINCE                              ,
             EITHER ARE NOT MATERIAL OR WERE MADE AT MY REQUEST.

 

(g) I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO
REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL
THE REVOCATION PERIOD HAS EXPIRED;

 

(h) I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE
ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

(i) I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED,
WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

DATE:                          ,         

                

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Frederick R. Hipp

 

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