Document:

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                                                                   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
----------

 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

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      .    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
------------------------

          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
                                                                  -----
                                   Total Cost                     $ 5.4

                                       3<PAGE>

                                                                  Exhibit 10.39

                                    AGREEMENT

     This AGREEMENT (the "Agreement") by and between AMF Bowling Worldwide,
Inc.("WINC"); and Roland C. Smith (the "Executive"), is dated as
of November 9, 2000 (the "Effective Date").

                                   RECITALS:

     A.   The Executive is employed by AMF Bowling, Inc. ("BINC") pursuant to
an employment agreement dated as of April 28, 1999 (the "Employment
Agreement").  A copy of the Employment Agreement is attached as Exhibit "A".

     B.   As of the Effective Date, WINC has agreed to enter into this
Agreement, provide financial support to the obligations set forth in the
Employment Agreement, and be jointly and severally liable thereunder.

     C.   The Agreement has been entered into in order to provide the
Executive with reasonable assurance that, in consideration of the efforts of
the Executive and the additional responsibilities being undertaken, and
notwithstanding the uncertainties of the anticipated Restructuring process,
the compensation due the Executive will be honored on the timely basis.

     Now, therefore, intending to be legally bound, it is hereby agreed
as follows:

     1.   WINC hereby assumes each of the obligations of BINC under the
Employment Agreement and agrees to be jointly and severally liable with
BINC as to all payments, performance and other obligations of BINC as set
forth in the Employment Agreement.

     2.   On and after the Effective Date, the word "Company" in the
Employment Agreement is amended to mean BINC and WINC, each of which is
liable for all payments, performance and other obligations of "the Company."

     3.   In order to support the performance of its obligations under the
Employment Agreement, WINC has arranged for the issuance of an irrevocable
standby letter of credit in the form attached hereto as Exhibit "B".

     4.   Incidental Parties.  AMF Bowling Products, Inc., AMF Bowling Centers,
Inc., AMF Worldwide Bowling Centers Holdings Inc. and AMF Bowling Centers (Aust)
International Inc. have signed this Agreement to evidence their assumption of
the obligations of BINC under the Employment Agreement and consent to the
provisions hereof.

     5.   Miscellaneous. (a) This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without reference to
principles of conflict of laws.  The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.  This Agreement may
not be amended or modified except by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
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     (b)  All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

     If to the Executive:

     Roland C. Smith
     225 Brookschase Lane
     Richmond, Virginia  23229

     If to WINC:

     AMF Bowling Worldwide, Inc.
     8100 AMF Drive
     Richmond, VA  23111
     Attention: Chief Executive Officer

or to such other address as either party furnishes to the other in writing in
accordance with this Section 5(b).  Notices and communications shall be
effective when actually received by the addressee.

     (c)  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

     (d)  Notwithstanding any other provision of this Agreement, WINC may
withhold from amounts payable under this Agreement all Federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.

     (e)  The Executive's or WINC's failure to insist upon strict compliance
with any provision of, or to assert any right under, this Agreement shall not
be deemed to be a waiver of such provision or right or any other provision of
or right under this Agreement.

     (f)  The Executive and WINC each acknowledge that this Agreement
constitute the entire agreement between WINC and the Executive with regard to
the subject matter hereof (other than agreement to fix the Executive's Annual
Bonus for 2000 at 50% of the maximum awardable to the Executive), and
supersedes all other agreements and understandings, both written and oral,
among the parties concerning the subject matter hereof.  The Executive hereby
represents and warrants that he is not a party to any agreement or
understanding which would prohibit him from entering into this Agreement and
accepting employment with the Companies or otherwise fulfilling his obligations
hereunder.

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     IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization of the Boards of Directors of WINC, WINC has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.

                                  WINC:

                                  AMF Bowling Worldwide, Inc.

                                  By:/s/ Stephen E. Hare
                                     -----------------------------
                                  Name: Stephen E. Hare
                                  Title: Executive Vice President and Chief
                                  Financial Officer

                                  EXECUTIVE:

                                  /s/ Roland C. Smith
                                  --------------------------------
                                  Roland C. Smith

                                  INCIDENTAL PARTIES:

                                  AMF Bowling Products, Inc.

                                  By:/s/ Stephen E. Hare
                                     -----------------------------
                                  Name:  Stephen E. Hare
                                  Title: Executive Vice President/Assistant
                                         Secretary/Treasurer

                                  AMF Bowling Centers, Inc.

                                  By:/s/ Stephen E. Hare
                                     -----------------------------
                                  Name: Stephen E. Hare
                                  Title: President/Assistant Secretary

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                                  AMF Worldwide Bowling Centers Holdings, Inc.

                                  By:/s/ Stephen E. Hare
                                     ------------------------------
                                  Name: Stephen E. Hare
                                  Title: President/Assistant Secretary

                                  AMF Bowling Centers (Aust) International Inc.

                                  By:/s/ Stephen E. Hare
                                     ------------------------------
                                  Name: Stephen E. Hare
                                  Title: President/Assistant Secretary

                                      -4-
<PAGE>

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

     AGREEMENT (The "AGREEMENT") by and between AMF Bowling Inc., a Delaware
corporation (the "Company"), and Roland Smith (the "Executive"), dated as of
the 28th day of April, 1999 (the "Effective Date").

     1.   Employment Period.  The Company shall employ the Executive, and the
Executive agrees to, and shall, serve the Company, on the terms and conditions
set forth in this Agreement, for the period commencing on the Effective Date
and ending on the third anniversary of the Effective Date (the "Employment
Period"); provided, however, that on the scheduled end of the Employment
Period, and on each anniversary of such date, the Employment Period shall
automatically be extended for a one-year period unless the Company or the
Executive gives notice to the other at least 180 days before an extension is
to take effect that they do not desire the Employment Period to be extended.

     2.   Position and Duties. (a) Position.  During the Employment Period,
the Executive shall be the President and Chief Executive Officer of the
Company with such duties, authority and responsibilities as are reasonably
assigned to him by the Board of Directors of the Company (the "Board")
consistent with his position as President and Chief Executive Officer of
the Company.  Such duties and responsibilities may, at the request of the
Board, include serving as an officer or director of certain subsidiaries of
the Company.  Upon the Effective Date, the Executive shall be appointed to the
Board.

     (b)  Duties.  During the Employment Period, excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
shall devote his full attention and

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time during normal business hours to the business and affairs of the Company
and shall perform his services primarily at the Company's headquarters,
wherever the Board may from time to time designate them to be, but in any case,
within a 30-mile radius of the Company's current corporate headquarters in
Richmond, Virginia, and to the extent necessary to discharge the
responsibilities reasonably assigned to the Executive under this Agreement,
use the Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently.  It shall not be considered a violation of the
foregoing for the Executive to (i) serve on civic or charitable boards or
committees, (ii) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (iii) manage personal investments, so long as
such activities do not compete with and are not provided to or for any
entity that competes with or intends to compete with the Company or any of
its subsidiaries and do not interfere significantly with the performance of
the Executive's responsibilities under this Agreement.

     3.   Compensation. (a) Base Salary.  During the Employment Period, the
Executive shall receive from the Company an annual base salary ("Annual Base
Salary") of $575,000, payable in equal installments at intervals not less
frequent than monthly.  The Executive's Annual Base Salary may be increased
by the Board which shall review it annually in January of each year.  The
Executive's Annual Base Salary shall not be reduced below $575,000, and the
term Annual Base Salary as utilized in this Agreement shall refer to Annual
Base Salary as so increased.

     (b)  Annual Bonus.  In addition to the Annual Base Salary, for each
calendar year or portion thereof ending during the Employment Period, the
Executive shall be eligible to earn an annual bonus from the Company (the
annual bonus from time to time in effect for the

                                      -2-
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then current year is referred to as the "Annual Bonus") in an amount equal
to 75 percent of the Executive's Annual Base Salary.  50 percent of the Annual
Bonus (the "Discretionary Bonus") shall be based on discretionary objectives
(the "Objectives") set by the Compensation Committee of the Board (the
"Committee") and 50 percent of the Annual Bonus shall be based on operation
and financial targets (the "Targets") set by the Committee (the "Target
Bonus").  The Annual Bonus shall be reduced pro rata for any year during the
Employment Period that is not a full year (based on the actual number of days
of such year included in the Employment Period).  The Objectives and the
Targets shall be determined by the Committee (provided, that the Executive may
consult with the Committee prior to its determinations), and set forth in
writing each year prior to the end of the first quarter of the year to which
such Objectives and Targets apply.  Each Annual Bonus shall be paid no later
than 30 days after the Company's audited consolidated financial statements
with respect to the year for which the Annual Bonus is awarded are available,
but in no event later than March 31 of the following year.  Notwithstanding
the foregoing, the Executive's Annual Bonus for 1999 shall not be less than
$431,250.  Nothing herein shall prevent the Committee from awarding the
Executive any additional discretionary bonus that it may deem appropriate.

     (c)  Signing Bonus.  The Executive shall be entitled to a payment of
$500,000, that shall be paid within 30 days following the Effective Date and
that shall be deemed fully earned on the Effective Date.

     (d)  Relocation Expenses.  The Executive shall be entitled to prompt
reimbursement of relocation expenses as set forth in Exhibit A hereto, plus
any losses (after deducting any costs that are not reimbursed by the Company)
incurred by the Executive in the sale of the

                                      -3-
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Executive's house (cost, including capital improvements, of $850,000) and boat
(cost, including capital improvements, of $210,000); provided, that reimburse-
ment for any losses shall not exceed $50,000 in the aggregate.

     (e)  Other Benefits.  During the Employment Period: (i) the Executive
shall be entitled to participate in all incentive, savings and retirement
plans, practices, policies and programs of the Company to the same extent as
generally applicable to other senior executives; and (ii) the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in, and shall receive all benefits under, all welfare benefit
plans, practices, policies and programs provided by the Company (including,
to the extent provided, without limitation, medical, prescription, dental,
disability, salary continuance, employee life insurance, group life insurance,
accidental death and travel accident insurance plans and programs) to the same
extent as provided generally to senior executives of the Company; provided,
however, that nothing in this Agreement shall impose on the Company any
obligation to offer to the Executive participation in any stock, stock option,
bonus or other incentive award, plan, practice, policy or program other than
the awards made pursuant to Sections 3(b) or 4 hereof.  The Executive shall
be entitled to retain for his own personal use any frequent flyer miles and
similar travel awards obtained with respect to the Executive's travel.

     (f)  Expenses.  The Executive shall be entitled to receive prompt
reimbursement for all reasonable travel and other expenses incurred by the
Executive in carrying out the Executive's duties under this Agreement,
provided that the Executive complies with the policies, practices and
procedures of the Company for submission of expense reports, receipts or
similar documentation of such expenses.

                                      -4-
<PAGE>

     (g)  Vacation.  The Executive shall be entitled to 4 weeks of paid
vacation for each full year during the Employment Period and a pro rata
portion thereof during each partial year during the Employment Period;
provided, however, that the Executive shall be entitled to 4 weeks of paid
vacation for the year ending December 31, 1999.  Up to an aggregate of 2 weeks
of unused vacation may be carried forward to the next year during the Employ-
ment Period and used therein and any unused vacation in excess of 2 weeks shall
lapse.

     4.   Option.   (a) Option Grant.  The Executive is hereby granted on the
Effective Date an option (the "Option") to purchase 1,000,000 shares of the
Company's common stock, at an exercise price per share equal to "fair market
value" on the date of grant, as defined in the Company's 1998 Stock Incentive
Plan, as amended (the "Plan").  The Executive may make payment on the exercise
of the vested portion of the Option by certified or bank check or such other
instrument as the Company may accept or by "cashless exercise" procedures
established by the Company.  Unless sooner exercised or forfeited as provided
in this Agreement, the Option shall expire on the tenth anniversary of the date
of this Agreement.  The Option is granted pursuant to the attached Option
Agreement and the Option shall, except as otherwise expressly provided
herein, be governed by the terms of the Plan and Option Agreement.  Although
the Option is not granted pursuant to the Plan, the Executive hereby
acknowledges receipt of a copy of the Plan and agrees to be bound by all terms
and provisions thereof as if the Option had been granted thereunder.  Within
a reasonable time after the Effective Date, the Company will register the
issuance of the common stock underlying the Option on Form S-8 (or any
successor form) and will use its reasonable efforts to cause such registration
statement to remain effective until the full exercise or expiration of the
Option.

                                      -5-
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     (b)  Vesting.  The Option shall vest and become exercisable in
installments according to the following schedule:

     Term of Employment
     Since the Effective Date           Vested Percentage
     ------------------------           -----------------

     Effective Date                     20 percent
     At least 1 year,
        but less than 2 years           40 percent
     At least 2 years,
        but less than 3 years           60 percent
     At least 3 years,
        but less than 4 years           80 percent
     4 years, or more                  100 percent

In the event of a Change in Control (as defined in Section 6(d) hereof), any
outstanding and unvested portion of the Option shall immediately vest and
become exercisable.

     (c)  Treatment of Option Upon Termination or Employment.  In the event of
a termination of the Executive's employment by the Company without Cause (other
than Disability) or by the Executive for Good Reason, (i) the portion of the
Option that would have vested during the two-year period following the Date
of Termination shall immediately vest and become exercisable; (ii) the portion
of the Option vested as of the Date of Termination, including that portion
vested pursuant to clause (i) above, shall be exercisable for the 90-day
period following the Date of Termination; and (ii) the portion of the Option
not vested as of the Date of Termination, shall be forfeited on the Date of
Termination.  In the event of the Executive's death or termination of the
Executive's employment, other than by the Company without Cause or by the
Executive for Good Reason, the Executive (or the Executive's estate or legal
representative): (i) shall forfeit the portion of the Option not vested as of
the Date of Termination; and (ii) shall have

                                      -6-
<PAGE>

90 days following the Date of Termination to exercise the vested portion of the
Option, if such termination of employment is for any reason other than the
Executive's death (in which event the exercise period shall be one year) or for
Cause. In the event of the Executive's termination of employment for Cause, the
Executive shall forfeit the unexercised portion of the Option (whether vested or
unvested) on the Date of Termination. The vested portion of the Option not
exercised within the specified periods of time shall be forfeited by the
Executive or the Executive's estate or legal representative.

     5.   Termination of Employment.  (a) Death or Disability.  The Executive's
employment under this Agreement shall terminate automatically in the event of
the Executive's death.  The Company shall be entitled to terminate the
Executive's employment in the event of the Executive's Disability. "Disability"
means that the Executive has been unable, for a period of (i) 120 consecutive
days or (ii) an aggregate of 180 days in a period of 365 consecutive days, to
perform, with or without reasonable accommodation to the Executive, his
essential duties under this Agreement, as a result of physical or mental
illness or injury.  A termination of the Executive's employment by the Company
for Disability shall be communicated to the Executive by written notice, and
shall be effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), unless the Executive returns to
full-time performance of his duties in accordance with the provisions of
Section 2(b) hereof before the Disability Effective Date.  In the event of a
dispute as to whether the Executive has suffered a Disability, the final
determination shall be made by a licensed physician selected by the Board and
acceptable to Executive in the Executive's reasonable judgment.

                                      -7-
<PAGE>

     (b)  Good Reason.  The Executive's employment may be terminated by the
Executive for Good Reason within 90 days following the Executive's actual
knowledge of an event constituting Good Reason.  For purposes of this
Agreement, "Good Reason" shall mean, without the Executive's written consent:
(i) any material diminution in the Executive's title, authority, duties or
responsibilities inconsistent with his position as the President and Chief
Executive Officer of the Company (other than as a result of the Executive's
physical or mental incapacity); (ii) any removal of the Executive from any of
the positions set forth in Section 2(a) hereof; (iii) any reduction in the
Executive's Annual Base Salary; (iv) the Company's requiring the Executive
to be based at any office or location other than as provided in Section 2(b)
hereof; or (v) the Company's failure to comply with its material obligations
under this Agreement.  The Executive shall provide the Company with written
notice of any of the events set forth in subsections (i) or (v) of this Section
5(b) and the Company shall have 15 days to cure.  The Executive may not
terminate employment for Good Reason as a result of any such event specified
in subsections (i) or (v) of this Section 5(b) if the Company effectuates
such cure within the 15-day period.

     (c)  Termination by the Company.  The Company may terminate the
Executive's employment at any time during the Employment Period with or
without Cause.  A termination of the Executive's employment at the end of the
Employment Period by the Company providing the notice described in Section 1
hereof, as the same may be extended from time to time as provided in Section 1
hereof, shall be deemed to be a termination of the Executive's employment by
the Company without Cause.  For purposes of this Agreement "Cause" means (i)
commission of any act of fraud or gross negligence by the Executive in the
course of his employment

                                      -8-
<PAGE>

hereunder which, in the case of gross negligence, has a materially adverse
effect on the business or financial condition of the Company; (ii) willful,
material misrepresentation at any time by the Executive to the Company; (iii)
voluntary termination of employment by the Executive; (iv) the Executive's
willful failure or refusal to comply with any of his material obligations
under this Agreement or to comply with a reasonable and lawful instruction
of the Board, which in each case continues for a period of 15 days after the
Executive's receipt of a written notice from the Board identifying the
objectionable action or inaction by the Executive; (v) any conviction of, or
plea of guilty or nolo contendere to, any felony, whether of the United States
or any state thereof or any similar foreign law to which the Executive may be
subject; (vi) any willful or grossly negligent failure substantially to comply
with any written rules, regulations, policies or procedures of the Company
furnished to the Executive which, if not complied with, would reasonably be
expected to have a material adverse effect on the business or financial
condition of the Company; or (vii) any willful failure to comply with the
Company's policies regarding insider trading.

     (d)  Date of Termination.  The "Date of Termination" means the date of
the Executive's death, the Disability Effective Date, or the date on which the
termination of the Executive's employment by the Company, or by the Executive,
is effective, as the case may be.

     6.   Obligations of the Company Upon Termination. (a) By the Company
without Cause (Other than for Death or Disability) or by the Executive for
Good Reason.  If the Company terminates the Executive's employment without
Cause (other than due to the Executive's death or Disability), or the
Executive terminates his employment for Good Reason, the Company shall: (x)
pay the amounts described in subparagraph (i) below to the Executive in a

                                      -9-
<PAGE>

lump sum within 10 days following the Date of Termination; (y) continue pay-
ments of the Executive's Annual Base Salary as described in subparagraph (ii)
below; and (z) continue the benefits described in subparagraph (iii) below
throughout the remainder of the Employment Period and thereafter for a period
of 12 months.

     (i)  the amounts to be paid in a lump sum as described in subsection (x)
above are:

          A.   The Executive's accrued but unpaid cash compensation (the "Ac-
          crued Obligations"), which shall equal the sum of (1) any portion of
          the Executive's Annual Base Salary through the Date of Termination
          that has not yet been paid; (2) any compensation previously deferred
          by the Executive (together with any accrued interest or earnings
          thereon) that has not yet been paid; and (3) any accrued but unpaid
          vacation pay; and

          B.   The Target Bonus and the Discretionary Bonus for the fiscal year
          during which the Date of Termination occurs (in lieu of any pro rata
          Annual Bonus for such fiscal year).

     (ii) The Annual Base Salary shall be continued throughout the
remainder of the Employment Period and thereafter for a period of 12 months
and shall be payable in semi-monthly installments.

     (iii)     The benefits shall be continued as described in subsection (z)
above and in paragraph (b) below and shall be benefits for the Executive and/or
the Executive's family at least as favorable as those that would have been
provided under Section 3(e)(ii) of this Agreement if the Executive's employ-
ment had continued until 12 months following the end of the Employment Period;
provided, however, that during any period when the Executive is eligible to
receive such benefits under another employer-provided plan, the benefits
provided by the Company under this subparagraph may be made secondary to those
provided under such other plan.  For purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive

                                      -10-
<PAGE>

for retiree benefits under this subparagraph, the Executive shall be deemed to
have retired on the 12-month anniversary of the end of the Employment Period.

     (b)  Death or Disability.  If the Executive's employment is terminated
by reason of the Executive's death or Disability, the Company shall (x) pay
the Accrued Obligations to the Executive or the Executive's estate or legal
representative, as applicable, in a lump sum in cash within 10 days after the
Date of Termination; (y) pay to the Executive or the Executive's estate or
legal representative on or before the date that such amounts would have been
payable but for the death or Disability of the Executive, an amount equal to
the pro-rata (based on the number of days employed) Target Bonus and
Discretionary Bonus for the year in which the Date of Termination occurs,
provided that the Objectives and Targets are achieved for such year; and (z)
continue the benefits described in Section 6(a)(iii), to the extent applicable,
until the first anniversary of the Executive's Date of Termination. Thereafter,
the Company shall have no further obligations under this Agreement.

     (c)  By the Company for Cause or by the Executive without Good Reason.
If the Company terminates the Executive's employment for Cause or if the
Executive terminates his employment without Good Reason, the Company shall pay
the Executive in a lump-sum the Accrued Obligations not later than 30 days
after the Date of Termination.  Thereafter, the Company shall have no further
obligations under this Agreement.

     (d)  Effect on Employment of the Executive of a Change in Control and
Certain Stock or Asset Purchasers.  In the event of a Change in Control of
the Company or if all or substantially all of the stock or assets of the
Company are sold or otherwise disposed of to a person or entity not affiliated
with the Company, the Executive shall have the right to resign during the

                                      -11-
<PAGE>

Employment Period, as an officer, director and employee of the Company
within nine months following such occurrence if a "Triggering Event" occurs,
and be entitled to receive, commencing on the date of such termination, the
same payments and other benefits to which the Executive would have been
entitled had the Company terminated the Executive's employment without Cause.
For purposes of this Agreement, "Triggering Event" shall mean a material and
adverse alteration in the Executive's duties, authority, responsibilities,
title or compensation following a Change in Control.  "Change in Control"
shall have the meaning given in the Plan, except that for the purposes of
this Agreement, the sale of the Company's operations of bowling centers shall
be deemed a "Change in Control".

     7.   Full Settlement.  The Company's obligations to make the payments
provided for in, and otherwise to perform its obligations under, this
Agreement shall not be affected by any set-off counterclaim, recoupment,
defense or other claim, right or action that the Company may have against the
Executive or others.  In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and,
except as specifically provided in Section 6(a)(iii), such amounts shall not
be reduced, regardless of whether the Executive obtains other employment.

     8.   Confidential Information.  The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or its subsidiaries that the
Executive obtains during the Executive's employment by the Company and that is
not public knowledge or does not become (other than as a result of the
Executive's violation of this Section 8 ("Confidential Information").  The
Executive shall,

                                      -12-
<PAGE>

not communicate, divulge or disseminate Confidential Information at any time
during or after the Executive's employment with the Company, except with the
prior written consent of the Company or as otherwise required by law.

     9.   Noncompetition: Nonsolicitation.  (a)  Unless the Executive's
employment is terminated by the Company without Cause, during the Employment
Period and during the two-year period thereafter (the "Restriction Period"),
the Executive shall 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, promoter, independent contractor,
provider of personal services or otherwise) any person, corporation, partner-
ship, firm, association or other enterprise or entity that is, or intends to
be, engaged in any business which is in competition with the "business" of the
Company or any of its subsidiaries in any country in which the Company or any of
its subsidiaries operate, compete or are engaged in such business or at such
time have an intention to operate, compete or become engaged in such business
(a "Competitor"). For purposes of this Agreement, "business" shall mean
bowling centers, movie theaters and the sale of products relating to bowling.
For purposes of this Agreement, the term "participate" includes any direct or
indirect interest, whether as an officer, director, employee, partner, sole
proprietor, trustee, beneficiary, agent, representative, independent contractor,
consultant, advisor, provider of personal services, creditor, owner (other than
by ownership of less than five percent of the stock of a publicly-held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market).

     (b)  During the Restriction Period, the Executive shall not, directly
or indirectly, encourage or solicit, or assist any other person or firm in
encouraging or soliciting, any

                                      -13-
<PAGE>

person that from the beginning of the two-year period preceding such
termination of the Executive's employment through the date of any solicitation
or other such action is or was engaged in a business relationship with the
Company or any of its subsidiaries to terminate its relationship with the
Company or any of its subsidiaries or to engage in a business relationship
with a Competitor.

     (c)  During the Restriction Period, the Executive will not, except with the
prior written consent of the Company, directly or indirectly, induce any
employee of the Company or any of its subsidiaries or Affiliates to terminate
employment with such entity.

     (d)  Promptly following the expiration of the Employment Period, the
Executive shall return to the Company all property of the Company and its
subsidiaries, and all copies thereof in the Executive's possession or under his
control, including, without limitation, all Confidential Information in whatever
media such Confidential Information is maintained.

     (e)  The Executive acknowledges and agrees that (i) the Restriction
Period and the covenants and obligations of the Executive in Sections 8 and 9
are fair and reasonable and the result of negotiation, relate to special,
unique and extraordinary matters, and a violation of any of the terms of such
covenants and obligations will cause the Company and its subsidiaries
irreparable injury for which adequate remedies are not available at law; and
(ii) the Company shall be entitled to an injunction, restraining order or such
other equitable relief as a court of competent jurisdiction may deem necessary
or appropriate to restrain the Executive from violating any such covenants
and obligations.  Such injunctive remedies shall be cumulative and in addition
to any other rights and remedies the Company may have at law or in equity.  If
a court holds that

                                      -14-
<PAGE>

such restrictions are unreasonable under circumstances then existing, the
parties hereto 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.

     10.  Successors.    (a)  This Agreement is personal to the Executive and,
without prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.  This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

     (b)  This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

     11.  Miscellaneous. (a)  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without
reference to principles of conflict of laws.  The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified except by a written agreement
executed by the parties hereto or their respective successors and legal rep-
resentatives.

     (b)  All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

     If to the Executive:

     Roland Smith
     2631 N.E. 36 Street
     Lighthouse Point, Florida  33064

                                      -15-
<PAGE>

     If to the Company

     8100 AMF Drive
     Richmond, VA  23111
     Attention: Corporate Secretary

or to such other address as either party furnishes to the other in writing in
according with this Section 11(b).  Notices and communications shall be
effective when actually received by the addressee.

     (c)  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

     (d)  Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all Federal, state,
local and foreign taxes that are required to be withheld by applicable laws
or regulations.  No later than any date as of which an amount first becomes
includible in the gross income of the Executive for federal income tax
purposes with respect to any stock option, the Executive shall pay to the
Company, as appropriate, or make arrangements reasonably satisfactory to the
Company, as appropriate, regarding the payment of, all federal, state, local
and foreign taxes that are required by applicable laws and regulations to be
withheld with respect to such amount.  If the Executive desires to use un-
restricted, unencumbered stock to pay any required withholding taxes, the
Company will cooperate with the Executive in that regard.

     (e)  The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or any other
provision of or right under this Agreement.

                                      -16-
<PAGE>

     (f)  The Executive and the Company each acknowledge that this
Agreement (together with the terms of the Plan and Option Agreement) supersede
all other agreements and understandings, both written and oral, among the
parties concerning the subject matter hereof.  The Executive hereby
represents and warrants that he is not a party to any agreement or under-
standing which would prohibit him from entering into this Agreement and
accepting employment with the Company or otherwise fulfilling his obligations
hereunder.

                                      -17-
<PAGE>

     IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to the authorization of its Boards of Directors, the Company has caused this
Agreement to be executed in its name on its behalf, all as of the day and year
first above written.

                                        AMF BOWLING, INC.

                                        By: /s/ Stephen E. Hare
                                           --------------------------
                                           Name: Stephen E. Hare
                                           Title: Chief Financial Officer

                                          /s/ Roland Smith
                                          ----------------------------
                                          Roland Smith

                                      -18-
<PAGE>

                                 Citibank, N.A.

            NORTH AMERICAN FINANCE GROUP - TRADE FINANCIAL SERVICES
                          3800 CITIBANK CENTER, F1/03
                                TAMPA, FL 33610

Date: December 28, 2000

Irrevocable Standby Letter of Credit No. NY-20512-30028992

Beneficiary:                             Applicant:
Roland Smith                             AMF Bowling Worldwide, Inc.
225 Brookschase Lane                     8100 AMF Drive
Richmond, Virginia  23229                Richmond, VA  23111

Amount:  US$2,080,000.00 (Two Million Eighty Thousand and No/100 U.S. Dollars)

Final Expiry Date:   April 28, 2003 at the close of business of this office in
                     New York, New York.

Ladies/Gentlemen:

We hereby issue our Irrevocable Standby Letter of Credit No. NY-20512-30028992
("Letter of Credit") in your favor.  This Letter of Credit is available by
sight payment with ourselves only against presentation at the counters of our
Servicer, Citicorp North America, Inc., 3800 Citibank Center, Building F,
Floor 1, Mail Sort #5000. Attn: NATF Standby Dept., Tampa, Florida  33610,
of the following documentation:

1.   A sight draft drawn on us, purportedly signed by the Beneficiary,
be marked: "Drawn under Citibank, N.A., Irrevocable Standby Letter of Credit No.
NY-20512-30028992, dated December 28, 2000."

2.   A dated statement purportedly signed by the Beneficiary stating:

     "The undersigned hereby certifies that payment in the amount of the
     requested drawing is due and owing by AMF Bowling Worldwide, Inc. under
     Section 6 of the Employment Agreement, dated as of April 28, 1999,
     between AMF Bowling, Inc., et al. and Beneficiary, and such payment has
     not been received from AMF Bowling Worldwide, Inc. on the required due
     date therefor."

The available amount under this Letter of Credit will be reduced (i) by the
amount of any drawing(s) under this Letter of Credit, (ii) by $50,000.00 on
the last day of each month during the period from January 1, 2001 through April
30, 2002 or (iii) upon our receipt at the address set forth above of written
instructions purportedly signed by each of Beneficiary and Applicant, stating
the following:

                                                                 SEE NEXT PAGE
<PAGE>

                                 Citibank, N.A.

                                                                      PAGE TWO

     "We hereby authorize Citibank, N.A. to reduce the available amount of
Irrevocable Standby Letter of Credit No._____________________by U.S.$________
(amount of reduction), making the available balance of such Letter of Credit
U.S.$_________________(amount remaining available after reduction)."

This Letter of Credit sets forth in full the terms of our understanding, and
such terms shall not be modified, amended or amplified by any document,
instrument or agreement referred to in this Letter of Credit, in which the
Letter of credit is referred to or to which this Letter of Credit relates.

Partial Drawing(s) are permitted.

Except as stated herein, this Letter of Credit is not subject to any condition
or qualification and is our individual obligation which is in no way contingent
upon reimbursement.

SPECIAL INSTRUCTIONS:

A copy of this Letter of Credit must be presented together with originals of
the above documents in order to endorse the amount of each drawing on the
reverse side.

All banking charges under this Letter of Credit are for the account of the
Applicant.

All amounts drawn in compliance with the terms and conditions of this letter
of credit will be transferred by wire to Bank of New York, New York, New York
10286, Account No. 6301866532, ABA# 021000018.

We hereby agree with you that drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored upon presentation and
delivery of the documents required hereby to Citibank, N.A., at the address
above.  Documents are to be sent in one lot by courier service, overnight
mail or hand delivery.

This Letter of Credit is subject to the "Uniform Customs and Practice for
Documentary Credits (1993 Revision)", International Chamber of Commerce
Publication No. 500, including any amendments, modifications or revisions
thereof (the "UCP").  As to matters not covered by the UCP, and to the extent
not inconsistent with the UCP, this Letter of Credit shall be governed by and
construed in accordance with the laws of the State of New York.

Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us at our address set forth above, specifically referring
to the number of this Letter of Credit.

CITIBANK, N.A.

/s/ Donald R. Smith
----------------------
By:    Donald R. Smith
Title: Vice President

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