EXHIBIT 10.30
EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement"), dated as of July 1, 1997, by and between
BRUNSWICK CORPORATION ("Brunswick") and AUGUSTINE NIETO II (the "Executive").
RECITALS
A. Brunswick desires to employ the Executive as President of the
Brunswick Life Fitness Group and to enter into an employment agreement setting
forth the terms of such relationship.
B. The Executive is willing to be employed by Brunswick as President of
the Brunswick Life Fitness Group on the terms set forth herein.
ARTICLE I
DEFINITIONS
"AFFILIATE" -- any person or entity of any kind which effectively
controls, is effectively controlled by or is under common control with
Brunswick, including, without limitation, any and all Subsidiaries.
"ASSET PURCHASE AGREEMENT" -- the Asset Purchase Agreement, dated as of
June 3, 1997, between Life Fitness and Brunswick.
"ASSUMED BENEFIT PLANS" -- all "business benefit plans" and "group benefit
plans," as defined in Section 4.5 of the Asset Purchase Agreement, to the
extent of any liabilities and obligations thereunder assumed by Brunswick
pursuant to the Asset Purchase Agreement.
"BOARD" -- the Board of Directors of Brunswick.
"BONUS" -- with respect to a fiscal year, any and all bonuses paid or
payable to, or earned by, the Executive, whether under the MBP or otherwise,
but excluding payments under the LTIP.
"BRUNSWICK BUSINESS" -- at any relevant time, the active exercise
businesses then being conducted by Brunswick and its Subsidiaries.
"CAUSE" -- the commission by the Executive of (a) a non-traffic offense
indictable as a felony or (b) a willful and material breach of this Agreement
which is not cured by the Executive within 15 days after receipt of notice from
Brunswick.
"CEO" -- the Chief Executive Officer of Brunswick.
"CHANGE IN CONTROL" -- the occurrence of any of the following events:
(a) any Person is or becomes a Beneficial Owner, directly or indirectly,
of stock of Brunswick representing 30% or more of the total voting power
of Brunswick's then outstanding stock and securities, excluding any Person
who becomes such a Beneficial Owner in connection with a transaction
described in clause (A) of paragraph (d) below; or
(b) if a tender offer is made for the stock of Brunswick (for which a
filing has been made with the Securities and Exchange Commission ("SEC")
which purports to comply with the requirements of Section 14(d) of the
Securities Exchange Act of 1934 and the corresponding SEC rules), which
tender offer has not been negotiated and approved by the Board, then the
first to occur of
(i) any time during the offer when the Person making the offer
owns or has accepted for payment Brunswick stock representing 25% or
more of the total voting power of Brunswick stock and securities, or
(ii) three business days before the offer is to terminate,
unless the offer is withdrawn first, if the Person making the offer
could own, by the terms of the offer plus any shares owned by this
Person, stock representing 50% or more of the total voting power of
Brunswick's then outstanding stock and securities when the offer
terminates; or
(c) individuals who were the Board's nominees for election as Directors
immediately prior to a meeting of the stockholders of Brunswick involving
a contest for the election of Directors shall not constitute a majority of
the Board following the election; or
(d) there is consummated a merger or consolidation of Brunswick (or any
direct or indirect subsidiary of Brunswick) with any other corporation,
other than (A) a merger or consolidation which would result in the voting
securities of Brunswick outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 75% of the combined voting power of the stock and
securities of Brunswick or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of
Brunswick (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of stock and securities of
Brunswick representing more than 25% of the combined voting power of
Brunswick's then outstanding stock and securities; or
(e) the stockholders of Brunswick approve a plan of complete liquidation
or dissolution of Brunswick or there is consummated an agreement for the
sale or disposition by Brunswick of all or substantially all of
Brunswick's assets, other than a sale or disposition by Brunswick of all
or substantially all of Brunswick's assets to an entity at least 75% of
the combined voting power of the stock and securities which is owned by
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Persons in substantially the same proportions as their ownership of
Brunswick voting stock immediately prior to such sale.
"Person" shall mean any person (as defined in Section 3(a)(9) of the
Securities Exchange Act (the "Exchange Act"), as such term is modified in
Sections 13(d) and 14(d) of the Exchange Act) other than (1) any employee plan
established by Brunswick, (2) Brunswick or any of its affiliates (as defined in
Rule 12b-2 promulgated under the Exchange Act), (3) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (4) a
corporation owned, directly or indirectly, by stockholders of Brunswick in
substantially the same proportions as their ownership of Brunswick.
"Beneficial Owner" shall mean beneficial owner as defined in Rule 13d-3 under
the Exchange Act.
"CLOSING DATE" -- the date indicated in, or determined pursuant to,
Section 3 of the Asset Purchase Agreement.
"CODE" -- the Internal Revenue Code of 1986, as amended, and any successor
thereto.
"COMMENCEMENT DATE" -- as defined in Section 2.2.
"CONFIDENTIAL INFORMATION" -- all information respecting the Brunswick
Business, including, without limitation, the terms and provisions of this
Agreement, clients, customers, suppliers, employees, consultants, computer or
other files, projects, products, computer disks or other media, computer
hardware, computer software programs, marketing plans, financial information,
methodologies, practices, processes, approaches, projections, forecasts,
formats, systems, data gathering methods or strategies and know-how; provided,
however, that Confidential Information shall not include any information that
is, or becomes, generally available to the public (unless such availability
occurs as a result of the Executive's breach of Section 6.1) or that is
lawfully disclosed to the Executive by a third party (other than as a
consequence of the Executive's performance of his duties and responsibilities
hereunder).
"DATE OF TERMINATION" -- the date on which the Executive's employment
hereunder is terminated in accordance with this Agreement.
"DIRECTOR(S)" -- a member (or members) of the Board.
"DISABILITY" -- the Executive's inability to render the services required
hereunder by reason of a physical or mental disability reasonably expected to
last for more than six months after the date such disability is first
diagnosed, as determined by the written medical opinion of an independent
medical physician reasonably acceptable to the Executive and Brunswick, and at
the end of such six-month period there is no reasonable probability that the
Executive can properly resume his duties and discharge his responsibilities
hereunder.
"EMPLOYMENT TERM" -- as defined in Section 2.2.
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"EXCISE TAX" -- the aggregate amount of taxes, interest and penalties
imposed under Section 4999 of the Code (or any successor provision) and/or
similar provisions of state or local law with respect to payments owing to the
Executive hereunder, including payments under a Specified Plan, by reason of
any such payment or payments being considered "contingent on a change in
ownership or control" of Brunswick within the meaning of Section 280G of the
Code (or any successor provision) or any similar provision of state or local
law.
"FISCAL YEAR" -- the fiscal year now being used by Brunswick, which is the
calendar year.
"GENERAL APPLICATION PLANS" -- the plans and programs listed in Exhibit A.
"GOOD REASON" -- shall be deemed to exist if, without the Executive's
prior written consent, any of the following events occur and is not cured by
Brunswick within 15 days after receipt of notice from the Executive (except
that Executive will not be required to give notice and Brunswick will have no
opportunity to cure with respect to events described in clause (d) or (h)
below): (a) the Executive's rate of Base Salary is reduced; (b) the
Executive's benefits (or amounts payable to the Executive) under a Specified
Plan are reduced or the terms of a Specified Plan are changed in a manner that
is material and adverse to the Executive; (c) the Executive's benefits under
the General Application Plans are in the aggregate materially reduced (unless
such reduction is part of a plan or program implementing a general reduction in
such benefits for all of Brunswick's senior executives or unless reasonably
comparable benefits are substituted); (d) there is a sale by Brunswick of all
or substantially all the assets of the LF Group, or there is a sale of all or
substantially all the assets of Brunswick to a purchaser who does not assume
Brunswick's obligations under this Agreement; (e) the Executive is assigned to
a principal employment location that increases his commuting distance, as of
the date of this Agreement, by more than 25 miles; (f) there is a material
reduction or other material adverse change in the nature or scope of the
Executive's duties, responsibilities or authority as set forth in Section 3.1
or a failure to maintain the Executive in the position of being the officer in
charge of the LF Group; (g) Brunswick or any successor thereto is in breach of
a material term of this Agreement; or (h) there is a Change in Control of
Brunswick, and the Executive elects in his discretion to terminate his
employment hereunder during the one-year period commencing 90 days after the
occurrence of such Change in Control.
"LF GROUP' -- a newly formed division of Brunswick, to be known as the
Brunswick Life Fitness Group, which will conduct the Life Fitness business and
operations of the Predecessor Employer, together with any assets, businesses or
operations acquired by or added to such division after the Closing Date.
"LTIP" -- the Long Term Incentive Plan dated as of July 1, 1997, as
adopted by Brunswick (together with any agreements entered into thereunder by
Brunswick and the Executive), pursuant to which the Executive (and certain
other key employees of the LF Group) will receive deferred bonuses based on the
performance of the LF Group during the period beginning on the Closing Date and
ending on December 31, 2002. A copy of the LTIP is attached as Exhibit B.
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"MBP" -- the Management Bonus Plan dated as of July 1, 1997, as adopted by
Brunswick (together with any agreements entered into thereunder by Brunswick
and the Executive), pursuant to which the Executive (and certain other key
employees of the LF Group) will receive a bonus, based on specified criteria,
for the remainder of fiscal year 1997 and each fiscal year thereafter through
2002. A copy of the Management Bonus Plan is attached as Exhibit C.
"PREDECESSOR EMPLOYER" -- Life Fitness, a New York general partnership,
and The Life Fitness Companies L.P., a Delaware limited partnership and the
principal general partner of Life Fitness, and the subsidiaries of Life
Fitness, including Life Fitness Asia Pacific Limited, a Hong Kong corporation,
Life Fitness Atlantic B.V., a Dutch corporation, Life Fitness China Limited, a
Hong Kong corporation, Life Fitness Europe GmbH, a German corporation, Life
Fitness Holdings B.V.B.A., a Belgian corporation, Life Fitness Italia S.r.l.,
an Italian corporation, and Life Fitness (UK) Limited, an English corporation.
"PRO RATA BONUS" -- the bonus earned by the Executive under the MBP for
the period from the Commencement Date through December 31, 1997.
"ROP" -- the Roll-Over Plan dated as of July 1, 1997, as adopted by
Brunswick (together with any agreements entered into thereunder by Brunswick
and the Executive), pursuant to which the Executive (and certain other key
employees of the LF Group) will be deemed to own an equity interest in the LF
Group which reflects the net value, as of the Closing Date, of their options to
acquire equity interests in the Predecessor Employer. A copy of the ROP is
attached as Exhibit D.
"SOA" -- (a) a Stock Option Agreement dated as of July 1, 1997 between
Brunswick and the Executive, providing, among other things, for the grant to
the Executive, pursuant to the SOP, of options to purchase 134,000 shares of
Brunswick common stock, and (b) all similar agreements entered into by
Brunswick and the Executive after the date hereof. A copy of the SOA is
attached as Exhibit E.
"SOP" -- the 1991 Stock Plan of Brunswick. A copy of the SOP is attached
as Exhibit F.
"SPECIFIED PLANS" -- the MBP, the ROP, the LTIP and the SOP.
"SUBSIDIARY" -- any corporation (other than Brunswick) in which Brunswick
has a direct or indirect legal or beneficial ownership interest, but only if
Brunswick owns or controls, directly or indirectly, stock possessing at least
20% of the total combined voting power of all classes of stock in such
corporation.
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ARTICLE II
EMPLOYMENT
2.1 GENERAL. Subject to the terms of this Agreement, Brunswick agrees to
employ the Executive as the President of the LF Group, and the Executive hereby
accepts such employment.
2.2 TERM. The term of employment under this Agreement shall commence as
of the Closing Date (the "Commencement Date") and, unless earlier terminated by
Brunswick or the Executive pursuant to Article V, shall continue until December
31, 2002 (the "Employment Term"). Notwithstanding the foregoing, in the
absence of a prior termination pursuant to Article V, this Agreement and the
Employment Term shall be automatically extended for additional one-year
periods, unless and until either party hereto notifies the other party in
writing, at least 90 days prior to the end of the then current Employment Term,
of such party's desire not to extend this Agreement.
ARTICLE III
POSITIONS, RESPONSIBILITIES AND DUTIES
3.1 POSITIONS AND DUTIES. During the Employment Term, the Executive
shall be employed and shall serve as the President of the LF Group with such
duties, responsibilities and authority as are commensurate with being the
officer in charge of the LF Group as determined from time to time by the Board.
The Executive shall serve under the direction and supervision of the Board and
the CEO and shall report to the CEO. Notwithstanding the foregoing, the
Executive shall not be required to perform any duties or responsibilities which
would result in a noncompliance with, or violation of, any applicable law.
3.2 ATTENTION TO DUTIES AND RESPONSIBILITIES. During the Employment
Term, the Executive shall, except as provided in the following sentence, devote
his full business time to the business and affairs of the LF Group, and shall
use his best efforts to perform his duties and responsibilities hereunder. The
Executive shall be allowed, to the extent such activities do not substantially
interfere with his performance of his duties and responsibilities hereunder, to
(a) manage his personal affairs, (b) serve on boards or committees of civic or
charitable organizations or trade associations and (c) serve on the board of
directors (or comparable body) of any corporation (or other business entity),
provided, however, that the Executive shall give the Board advance written
notice of any such corporate directorship subject to this clause (c) and, if
requested by the Board, the Executive shall demonstrate, to the Board's
reasonable satisfaction, that such directorship does not detract from his
performance of his duties and responsibilities under this Agreement.
ARTICLE IV
COMPENSATION AND OTHER BENEFITS
4.1 BASE SALARY. During the Employment Term, the Executive shall receive
a base salary of $365,000 per annum ("Base Salary"), payable in accordance with
Brunswick's normal
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payroll practices. Such Base Salary shall be subject to periodic review and
possible increase (but not decrease) in accordance with Brunswick's normal
compensation review procedures for senior executives as in effect on the
Commencement Date. It is understood that the first such compensation review
shall occur no later than December 31, 1998.
4.2 PLANS. The Executive shall participate in, and shall be entitled to
receive all benefits as provided in, the Specified Plans. In addition, the
Executive shall be entitled to participate in, and shall be entitled to receive
all benefits as provided in, those General Application Plans described in
Exhibit A and/or in which the Executive becomes eligible to participate after
the date hereof.
4.3 VACATION; OTHER. During the Employment Term, (a) the Executive shall
be entitled to paid vacation and sick leave in accordance with Brunswick's
policies, as from time to time in effect, provided, however, that Executive
shall be entitled to paid vacation of at least 4 weeks per year, and provided
further that Brunswick shall assume the obligations of the Predecessor Employer
to the Executive for vacation accrued as of the Closing Date; (b) Brunswick
shall reimburse the Executive for expenditures incurred by him in connection
with his performance of his duties and responsibilities hereunder, in
accordance with Brunswick's reimbursement policy, as from time to time in
effect; and (c) the Executive shall receive an automobile allowance of $10,000
per year until December 31, 1998, but not thereafter.
ARTICLE V
TERMINATION
5.1 TERMINATION DUE TO DEATH OR DISABILITY. During the Employment Term,
Brunswick or the Executive may terminate the Executive's employment hereunder
due to Disability upon at least 30 days' prior written notice to the other
party. In the event of the Executive's death or a termination of the
Executive's employment pursuant to the preceding sentence, the Employment Term
shall thereupon end and the Executive, his estate or other legal
representative, as the case may be, shall be entitled to:
(a) Base Salary and Bonus continuation for a 12-month period
commencing on the Date of Termination, payable, in the case of Base
Salary, at the rate in effect on the Date of Termination, and in the case
of Bonus, in an amount equal to (i) the Bonus paid or payable to, or
earned by, the Executive for the prior Fiscal Year or (ii) if the Date of
Termination occurs on or before December 31, 1998, the sum of $150,000
plus the Pro Rata Bonus;
(b) any Base Salary accrued to the Date of Termination and any prior
Fiscal Year Bonus earned, but not yet paid, as of the Date of Termination
as well as a pro rata share of any bonus earned under the MBP for the year
of termination to be paid after the performance level is determined;
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(c) reimbursement (under Section 4.3(b)) for all expenses incurred,
but not yet paid, as of the Date of Termination;
(d) (i) continuation of welfare benefits of the Executive and his
eligible dependents (as described in Exhibit A or in applicable plan
documents) at the level in effect on the Date of Termination for the one-
year period commencing on the Date of Termination (or, if such
continuation is not permitted by applicable law or the Board so determines
in its discretion, Brunswick shall provide the economic equivalent in lieu
thereof), and (ii) all other compensation and benefits payable as provided
in Assumed Benefit Plans and applicable General Application Plans except
for any severance plans or arrangements; and
(e) payment of the value of the Executive's interest under the ROP,
determined as of the Date of Termination.
In addition to the foregoing, and notwithstanding anything to the contrary
in the LTIP and the SOA: (x) the Executive's rights with respect to awards made
to the Executive, prior to the Date of Termination, under the LTIP shall
continue in full force and effect, and the Executive shall be entitled to
receive payment of such awards as provided in the LTIP (but without regard to
any applicable service requirements); and (y) the Executive's rights with
respect to options granted to the Executive, prior to the Date of Termination,
under the SOP and SOA, shall continue in full force and effect and shall be
exercisable (without regard to any applicable service requirements) until
December 31 of the year following the Fiscal Year in which the Date of
Termination occurs, but only to the extent such options have vested as of the
end of the Fiscal Year in which the Date of Termination occurs.
5.2 TERMINATION BY EXECUTIVE FOR GOOD REASON OR BY BRUNSWICK AT THE END
OF THE EMPLOYMENT TERM OR WITHOUT CAUSE. During the Employment Term, Brunswick
may terminate the Executive's employment hereunder without Cause, upon at least
30 days' prior written notice to the Executive, or the Executive may, subject
to Section 5.6, terminate his employment hereunder for Good Reason, upon at
least 30 days' prior written notice to Brunswick. If the Executive's
employment is terminated pursuant to the preceding sentence, or if Brunswick
terminates the Executive's employment at the end of the then current Employment
Term, then in any such event, the Employment Term shall thereupon end and the
Executive shall be entitled to:
(a) Base Salary and Bonus continuation for a 24-month period
commencing on the Date of Termination, payable, in the case of Base
Salary, at the rate in effect on the Date of Termination, and in the case
of Bonus, in an amount equal to (i) the Bonus paid or payable to, or
earned by, the Executive for the prior Fiscal Year or (ii) if the Date of
Termination occurs on or before December 31, 1998, the sum of $150,000
plus the Pro Rata Bonus;
(b) any Base Salary accrued and any prior Fiscal Year Bonus earned,
but not yet paid, as of the Date of Termination as well as a pro rata
share of any bonus earned
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under the MBP for the year of termination to be paid after the performance
level is determined;
(c) reimbursement (under Section 4.3(b)) for all expenses incurred,
but not yet paid, as of the Date of Termination;
(d) (i) continuation of the welfare benefits of the Executive and
his eligible dependents (as described in Exhibit A or in applicable plan
documents) at the level in effect on the Date of Termination for the 24-
month period commencing on the Date of Termination (or, if such
continuation is not permitted by applicable law or if the Board so
determines in its discretion, Brunswick shall provide the economic
equivalent in lieu thereof), and (ii) all other compensation and benefits
payable as provided in Assumed Benefit Plans and applicable General
Application Plans except for any severance plans or arrangements; and
(e) payment of the value of the Executive's interest under the ROP,
determined as of the Date of Termination.
In addition to the foregoing, and notwithstanding anything to the contrary
in the LTIP and the SOA: (x) the Executive's rights with respect to awards made
to the Executive, prior to the Date of Termination, under the LTIP shall
continue in full force and effect, and the Executive shall be entitled to
receive payment of such awards as provided in the LTIP (but without regard to
any applicable service requirements); and (y) the Executive's rights with
respect to options granted to the Executive, prior to the Date of Termination,
under the SOP and SOA, shall continue in full force and effect and shall be
exercisable (without regard to any applicable service requirements) through the
end of the continuation period set forth in clause (a) above, but only to the
extent such options have vested as of the end of the Fiscal Year in which the
Date of Termination occurs.
5.3 TERMINATION BY BRUNSWICK FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON. During the Employment Term, Brunswick may, subject to Section 5.6,
terminate the Executive's employment hereunder for Cause upon at least 30 days'
prior written notice to the Executive, or the Executive may terminate this
Agreement without Good Reason upon at least 30 days' prior written notice to
Brunswick. If the Executive's employment is terminated pursuant to the
preceding sentence, the Employment Term shall thereupon end and the Executive
shall be entitled to:
(a) Base Salary up to and including the Date of Termination;
(b) any prior Fiscal Year Bonus earned, but not yet paid, as of the
Date of Termination;
(c) reimbursement (under Section 4.3(b)) for all expenses incurred,
but not yet paid, as of the Date of Termination;
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(d) all other compensation and benefits payable as provided in
Assumed Benefit Plans and applicable General Application Plans except for
any severance plans or arrangements;
(e) payment of the value of the Executive's interest under the ROP,
determined as of the Date of Termination.
In addition to the foregoing, and notwithstanding anything to the contrary
in the LTIP and the SOA: (x) the Executive's rights with respect to awards made
to the Executive in Fiscal Years prior to the Fiscal Year in which the Date of
Termination occurs, under the LTIP shall continue in full force and effect, and
the Executive shall be entitled to receive payment of such awards as provided
in the LTIP; and (y) the Executive's rights with respect to options granted to
the Executive, prior to the Date of Termination, under the SOP and SOA, shall
continue in full force and effect and shall be exercisable for 30 days
following the Date of Termination, but only to the extent such options have
vested as of the end of the Fiscal Year immediately preceding the Fiscal Year
in which the Date of Termination occurs.
5.4 GROSS-UP PAYMENTS. Following a change in control of Brunswick, if
any payment or payments owing to, or any exercise of options under the SOP or
SOA by, the Executive under the other Sections of this Agreement, including
pursuant to a Specified Plan (but excluding payments made under the ROP), give
rise to an Excise Tax (the "Base Excise Tax"), Brunswick shall indemnify and
hold harmless the Executive against such Base Excise Tax by making an
additional payment or payments (collectively, a "Gross-Up Payment") to the
Executive. The Gross-Up Payment shall be in an amount such that, after payment
by the Executive of all taxes (including Excise Tax and any interest and
penalties on such taxes) imposed on the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Base Excise Tax. Brunswick
shall also indemnify and hold harmless the Executive, on an after-tax basis,
against any costs incurred by him at Brunswick's direction in contesting the
imposition of Excise Tax, and Brunswick shall be entitled, at its election and
expense, to assume control of any such contest. The Executive shall pay to
Brunswick, the after-tax amount of any refund of Excise Tax (including any
interest received with such refund) with respect to which the Executive
previously received a Gross-Up Payment from Brunswick.
5.5 NO MITIGATION OR OFFSET. In the event of any termination of
employment under this Article V, the Executive shall be under no obligation to
seek other employment, and there shall be no offset against any amounts due the
Executive under this Agreement on account of the remuneration attributable to
any subsequent employment that the Executive may obtain. Any amounts due under
this Article V are in the nature of severance payments, or liquidated damages,
or both, and are not in the nature of a penalty.
5.6 NOTICE OF TERMINATION. All notices of termination required under
this Article V in connection with a termination of the Executive's employment
shall be given to the appropriate party in accordance with Section 7.6. In the
case of a termination by Brunswick for Cause, Brunswick shall give such notice
within 60 days after a Director (excluding, if applicable, the
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Executive) has actual knowledge of the events giving rise to such purported
Cause; and in the case of a termination by the Executive for Good Reason, the
Executive shall give such notice within 60 days of the Executive's having
actual knowledge of the events giving rise to such purported Good Reason (or
in the event of a Change in Control of Brunswick, during the time period
indicated in clause (h) of the definition of Good Reason). A notice of
termination shall (a) identify the specific termination provision in this
Agreement relied upon, (b) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so identified, and (c) indicate the Date of
Termination.
5.7 PAYMENT. Except as otherwise provided in this Agreement, any
payments to which the Executive shall be entitled to under this Article V,
including, without limitation, any economic equivalent of any benefit, shall be
made, to the extent practicable, within five business days following the Date
of Termination.
5.8 STATEMENTS BY THE EXECUTIVE OR BRUNSWICK. The Executive agrees that
he will not make any disparaging statements about Brunswick or the directors,
officers or employees of Brunswick; provided that this Section 5.8 shall not
apply to truthful testimony as a witness, compliance with other legal
obligations, or truthful assertion of or defense against any claim of breach of
this Agreement, or to the Executive's truthful statements or disclosures to
officers or directors of Brunswick, and shall not require the Executive to make
false statements or disclosures. Brunswick agrees that neither the directors
nor the officers of Brunswick nor any spokesperson for Brunswick shall make any
disparaging statements about the Executive; provided that this Section 5.8
shall not apply to truthful testimony as a witness, compliance with other legal
obligations, truthful assertion of or defense against any claim of breach of
this Agreement, or truthful statements or disclosures to the Executive, and
shall not require false statements or disclosures to be made.
ARTICLE VI
CONFIDENTIAL INFORMATION AND NONCOMPETITION
6.1 CONFIDENTIAL INFORMATION. During the Employment Term and at any time
thereafter, the Executive, without the prior written consent of the Board,
shall not personally (and shall not personally cause others to) use any
Confidential Information, or divulge, disclose or make available or accessible
any Confidential Information to any person, firm, partnership, corporation,
trust or other entity (other than when required to do so in good faith to
perform the Executive's duties and responsibilities hereunder or when required
to do so by a lawful order of a court of competent jurisdiction). The
Executive shall proffer to the CEO no later than the Date of Termination, and
without retaining any copies, notes or excerpts thereof, all memoranda,
computer disks or other media, computer programs, records, data, customer
lists, marketing plans and strategies, and any other documents (including
diaries and notes) to the extent consisting of or containing any Confidential
Information that are in the Executive's possession or subject to his control at
such time. In addition, during the Employment Term and for two years following
the Date of Termination, the Executive shall immediately notify the Board if he
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becomes aware of any unauthorized use or disclosure of any Confidential
Information by any third party, shall cooperate fully in any attempts by
Brunswick or any Affiliate to obtain any relief or remedy in respect of such
unauthorized use or disclosure and shall use his best efforts to safeguard any
Confidential Information in the Executive's possession or under his control.
6.2 NONCOMPETITION. As an inducement to Brunswick to enter into the
Asset Purchase Agreement and in consideration for Brunswick's undertakings
hereunder, including, without limitation, the payment of benefits described in
Article V, the Executive agrees that during the Employment Term and for two
years following the Date of Termination for any reason, the Executive shall
not, without the prior written consent of the Board, directly or indirectly,
within the United States of America, engage in any capacity in any business or
activity that competes to a material extent with the Brunswick Business.
Executive shall not be deemed to be in violation of this Agreement (i) with
respect to any investment in any entity made with the prior approval of the CEO
or (ii) merely by reason of being the owner of up to 1% of the outstanding
stock (or other form of equity interest) in any publicly traded corporation (or
other entity), provided the Executive does not have the power to control or
direct the management or affairs of such corporation or other entity or is not
otherwise associated with it.
6.3 NONSOLICITATION. In consideration for Brunswick's undertakings
hereunder, including, without limitation, the payment of benefits described in
Article V, the Executive agrees that during the Employment Term and for two
years following the Date of Termination, the Executive shall not personally
(and shall not personally cause others to) (a) take any action to solicit or
divert any material business or customers away from the LF Group, (b) induce
customers, potential customers, suppliers, agents or other persons under
contract or otherwise associated or doing business with the LF Group to
terminate, reduce or alter any such association or business, or (c) induce any
person employed by the LF Group to (i) terminate such employment arrangement,
(ii) accept employment with anyone other than Brunswick or a Subsidiary, or
(iii) interfere with the customers or suppliers or otherwise with the LF Group
in any manner.
6.4 INJUNCTIVE RELIEF. The Executive acknowledges and agrees that: (a)
Brunswick will have no adequate remedy at law, and would be irreparably harmed,
if the Executive breaches or threatens to breach any of the provisions of this
Article VI; (b) Brunswick shall be entitled to equitable and/or injunctive
relief to prevent any breach or threatened breach of this Article VI, and to
specific performance of each of the terms of this Article VI, in addition to
any other legal or equitable remedies that Brunswick may have; and (c) the
Executive shall not, in any equity proceeding relating to the enforcement of
the terms of this Article VI, raise the defense that Brunswick has an adequate
remedy at law.
6.5 SEVERABILITY. The provisions of this Article VI are intended to be
separate and divisible and if, for any reason, any one or more of them is held
to be invalid or unenforceable, neither the validity nor the enforceability of
any other provision of this Article VI shall thereby be affected. The parties
to this Agreement intend that the potential restrictions on the Executive's
future employment imposed by this Article VI be reasonable in duration and
geographic scope
12
and in all other respects. If, for any reason, any court of competent
jurisdiction shall find any provision of this Article VI to be unreasonable
in duration or geographic scope or otherwise, the Executive and Brunswick
agree that the restrictions and prohibitions contained herein shall be
effective to the fullest extent allowed under applicable law in such
jurisdiction.
ARTICLE VII
MISCELLANEOUS
7.1 EFFECT OF AGREEMENT. This Agreement shall not become effective until
the Closing on the Closing Date.
7.2 SUCCESSORS. This Agreement is personal to the Executive and, without
the prior written consent of the Board, shall not be assignable by the
Executive, except that the Executive's rights to receive any compensation or
benefits hereunder may be transferred or disposed of pursuant to testamentary
disposition, intestate succession or pursuant to a qualified domestic relations
order. This Agreement shall inure to the benefit of and be enforceable by the
Executive's heirs, beneficiaries and/or legal representatives. This Agreement
shall also inure to the benefit of and be binding upon Brunswick and its
successors and assigns.
7.3 INDEMNIFICATION. The Executive shall be entitled to liability and
expense indemnification by Brunswick, to the fullest extent allowed under
Delaware law, as from time to time amended. The provisions of this Section 7.3
shall survive any termination of this Agreement or the Employment Term.
7.4 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without regard to principles
of conflict of laws.
7.5 AMENDMENT/WAIVER. This Agreement may not be amended, waived or
modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives. No waiver by any
party of any breach of this Agreement by the other party shall be deemed a
waiver of any similar or dissimilar breach at the same time, or at any prior or
subsequent time.
7.6 NOTICES. All notices and other communications hereunder shall be in
writing and shall be given to the other party by hand delivery, by facsimile
transmission, by overnight courier, or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive: Augustine Nieto II
Life Fitness
10601 West Belmont Avenue
Franklin Park, Illinois 60131
Phone: (847) 288-3456
Fax: (847) 288-3458
13
With a copy to: Latham & Watkins
5800 Sears Tower
Chicago, Illinois 60606
Phone: (312) 876-7652
Fax: (312) 993-9767
Attn: Stephen S. Bowen
If to Brunswick: Brunswick Corporation
1 N. Field Court
Lake Forest, Illinois 60045-4811
Phone: (847) 735-4822
Fax: (847) 735-4425
Attn: Chief Executive Officer
With a copy to: Phone: (847) 735-4305
Fax: (847) 735-4050
Attn: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
7.7 WITHHOLDING. Brunswick may withhold from any amounts payable under
this Agreement such taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
7.8 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
7.9 CAPTIONS. The captions used herein are not provisions of this
Agreement and shall have no force or effect.
7.10 ENTIRE AGREEMENT. This Agreement, the Specified Plans, the SOA, the
General Application Plans and the Assumed Benefit Plans contain the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto. In the event of any inconsistency or conflict between provision(s) of
this Agreement and provision(s) of a Specified Plan or the SOA, the
provision(s) of this Agreement shall control.
7.11 SURVIVAL. The respective rights and obligations of the parties shall
survive any termination of this Agreement or the Employment Term to the extent
necessary to the intended preservation of such rights and obligations.
14
7.12 RELEASE. The Executive hereby releases and waives as to Brunswick
all of Executive's rights under all agreements, plans and arrangements with all
Predecessor Employers except for rights under the General Application Plans.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/S/ Augustine Nieto
-----------------------------
Augustine Nieto II
BRUNSWICK CORPORATION
By: /s/ Mary D. Allen
---------------------------
Its Vice President and General Counsel
15
EXHIBIT A
GENERAL APPLICATION PLANS
1. General American Life Insurance Company Preferred Provider Organization
(PPO) Medical Plan
2. General American Life Insurance Company Point-of-Service (POS) Medical
Plan
3. General American Life Insurance Company Indemnity Dental Plan
4. First Commonwealth Managed Care Dental Plan
5. Vision Service Plan Vision Plan
6. General American Life Insurance Company Flexible Spending Account (FSA)
Plan
7. Guarantee Life Insurance Company Basic Life, Accidental Death and
Dismemberment and Optional Life Plan
8. Guarantee Life Long-Term Disability Plan
9. Guarantee Life Voluntary/Dependent Life Plan
10. Life Fitness Profit Sharing Retirement Savings Plan
11. Life Fitness Health and Welfare Benefit Plans
12. DrugCard Outpatient Prescription Plan
13. Archeus Employee Assistance Program
14. Life Fitness Strength Division LifeGuard HMO Plan
15. Brunswick Employee Stock Ownership Plan
EXHIBIT B
LIFE FITNESS LONG TERM INCENTIVE PLAN
1. PURPOSE. The purpose of the Life Fitness Long Term Incentive Plan
(the "Plan") of Brunswick Corporation ("Brunswick") is to attract, retain,
reward and provide incentives for a select group of senior executives of
Brunswick's Life Fitness business (the "Business") to achieve specified
earnings goals for the Business for the period from July 1, 1997 to December
31, 2002 (the "Performance Period").
2. ELIGIBILITY. Initially only those executives who are participants in
the Life Fitness Option Roll-Over Plan will participate in the Plan. The
President of the Business may designate additional proposed participants based
on their potential to contribute significantly to the long term success of the
Business. These additional participants are subject to the approval of the
Chief Executive of Brunswick.
3. POOLS.
(a) BASE POOL. An aggregate $6,000,000 base pool (the "Base Pool") may
be earned by the participant group as a whole for the Performance Period. If
actual cumulative earnings before interest, taxes, depreciation and
amortization ("EBITDA") of the Business for the Performance Period are less
than 90% of the cumulative EBITDA target shown on the attached Schedule 1
(I.E., $248.4 million at the end of the Performance Period), none of the Base
Pool will be earned; if 90% of the target is achieved, 50% of the Base Pool
will be earned; if 100% of the target is achieved, 100% of the Base Pool will
be earned; and if between 90% and 100% of the target is earned, the Base Pool
will be prorated.
(b) BONUS POOL. If actual cumulative EBITDA of the Business for the
Performance Period exceed the cumulative EBITDA target shown on Schedule 1 for
the Performance Period, there will be an additional bonus pool ("the Bonus
Pool") equal to $6,000,000 multiplied by 2.5
times the percentage by which actual EBITDA of the Business for the Performance
Period exceeded the cumulative EBITDA target (I.E., $248.4 million) for the
Performance Period. For example, if actual EBITDA exceeded the EBITDA target by
10%, there would be a Bonus Pool of $1,500,000 ($6,000,000 x 25%).
4. PARTICIPATION. (a) Prior to each period or year set forth on
Schedule 1, each participant will be assigned a goal amount, expressed in
dollars, as his or her share of the Base Pool for each such period and year (a
"Goal Amount"). The Base Pool for each period or year and the corresponding
aggregate Goal Amounts assigned to all participants for each period or year
will be $1,000,000. The Goal Amount for each participant will be proposed by
the President of the Business and approved by the Chief Executive Officer of
Brunswick.
(b) Schedule 2 establishes a service period requirement for each
participant with respect to his or her Goal Amounts for each year. Any
participant whose employment by the Business or Brunswick (or any entity that
is an affiliate of Brunswick either (a) by being so designated by Brunswick or
(b) by reason of Brunswick's direct or indirect ownership of at least a 51%
equity interest) terminates during a service period shall forfeit that portion
(indicated on Schedule 2) of his or her assigned Goal Amounts for the year of
termination and any subsequent years. For example, a participant who receives
a $50,000 Goal Amount for 1998 and whose employment terminates on September 15,
1999 would retain a $25,000 Goal Amount (based on his employment during all of
1998) and would forfeit the remaining $25,000 Goal Amount (because he failed to
serve during all of 1999). Exceptions from the foregoing service requirement
may be made in the sole discretion of the Chief Executive Officer of Brunswick
and shall be made for a participant to the extent expressly provided in his or
her employment agreement with the Business or Brunswick. Forfeited Goal
Amounts for a Base Pool year shall
be reallocated to those other participants having Goal Amounts in such year
who satisfy (or who are deemed, pursuant to an employment agreement with the
Business or Brunswick, to have satisfied) 100% of the applicable service
period requirements for such year in proportion to their respective Goal
Amounts for such year.
5. DISTRIBUTIONS. A participant's distribution under the Plan will
equal:
(a) the product of (i) all of his or her Goal Amounts (including any
Goal Amounts reallocated pursuant to the last sentence of Section 4(b)),
multiplied by (ii) a fraction, the numerator of which is the Base Pool earned
by all participants in accordance with Section 3(a) and the denominator of
which is $6,000,000, plus
(b) the product of (i) the Bonus Pool earned multiplied by (ii) a
fraction, the numerator of which is the participant's Goal Amounts earned (as
determined pursuant to Section 5(a)) and the denominator of which is the
aggregate of all Goal Amounts earned by all participants.
All distributions under the Plan will be made in a lump sum and shall be
paid not more than thirty (30) days after the EBITDA for the year ended
December 31, 2002 have been determined. Notwithstanding anything to the
contrary in this Section 5, no participant shall receive (i) any distribution
under the Plan if such participant shall have disqualified himself or herself
under the Plan in the manner contemplated by Section 11, or (ii) any
distribution from the Bonus Pool if such participant shall not have satisfied
his or her service period requirements pursuant to Section 4(b) for the shorter
of: (x) twelve full calendar quarters after his or her first Goal Amount award
(treating, for this purpose, all Goal Amounts awarded in the first forty-five
(45) days after the adoption of the Plan as having been awarded before the
calendar quarter beginning July 1, 1997), (y) the period from the date of his
or her first Goal Amount award to the date of his or her retirement from
employment with Brunswick on or after his or her 65th
birthday, or (z) the period from the date of his or her first Goal Amount award
to the date of the termination of the Plan. Any amounts not received by any
participant as a result of the preceding sentence shall be reallocated among
other participants in the discretion of the President of the Business, subject
to the approval of the Chief Executive Officer of Brunswick.
6. TAXES. All payments under the Plan will be subject to, and net of,
all required withholding taxes.
7. NO EMPLOYMENT RIGHTS. Nothing in the Plan shall interfere or limit in
any way the right of Brunswick to terminate any participant's employment at any
time, nor confer upon any participant any right to continue in the employ of
Brunswick for any period of time or to continue his or her present or any other
rate of compensation.
8. ADMINISTRATION. The Plan shall be administered by the Chief Executive
Officer of Brunswick or his designee. All EBITDA calculations shall be
confirmed by Brunswick's independent auditors.
9. AMENDMENT OF PLAN. The Board of Directors of Brunswick may amend the
Plan at any time, but no such amendment shall impair the rights of any
participant affected thereby, it being agreed that no agreed-upon adjustment
contemplated by footnote 2 of Schedule 1 shall be deemed to be an amendment of
the Plan.
10. TERMINATION OF PLAN UPON A CHANGE IN CONTROL. If an event (an
"Event") shall occur with respect to either Brunswick or the Business such that
the "Change in Control" provisions in Brunswick's 1991 Stock Plan are
applicable (or would be applicable if such provisions applied to the
acquisition of the Business), a lump sum cash payment shall be made to the
participants immediately prior to such Event (or as soon as practicable after
all necessary EBITDA calculations have been determined), and the Plan shall
terminate upon such payment. Such
payment shall be determined and made in accordance with the provisions of
Sections 3, 4 and 5 above, except that:
(i) the Base Pool shall be the sum of (x) the product of (A)
$1,000,000 multiplied by (B) the number of full calendar years of service
(treating the period of July 9, 1997 through December 31, 1997 as a full
calendar year) that had been completed on or before the date of such Event
and (y) the product of (A) $250,000 multiplied by (B) the number of full
calendar quarters of service that had been completed on or before the date
of such Event during the calendar year of the Event;
(ii) the cumulative EBITDA target shall be reduced from $248.4
million to the sum of (x) the aggregate of the EBITDA targets shown
on Schedule 1 for such elapsed full calendar years and (y) a prorated
portion of the EBITDA target for the calendar year of the Event based
on the number of full calendar quarters of service that had been
completed on or before the date of such Event;
(iii) the Bonus Pool shall be calculated in accordance with
Section 3(b), except that the amount determined under clause (i)
above shall be substituted for the $6,000,000 amount, and the amount
calculated under clause (ii) shall be substituted for the $248.4
million amount, set forth in Section 3(b);
(iv) for purposes of satisfying a participant's service period
requirements for prior calendar years, such participant's service
from the beginning of the calendar year to the date of the Event
shall be considered to be service for the full calendar year of the
Event;
(v) the Base Pool for each year or quarter shall be allocated
among the participants in accordance with Section 4 (treating a
participant's service from the beginning of the calendar year of the
Event through the date of the Event as service for a full calendar
year for purposes of the participant's service requirements for the
year of the Event); and
(vi) any Bonus Pool (as calculated under clause (iii) above)
shall be allocated among the participants based on their respective
Goal Amounts earned in accordance with Section 5 above and this
Section 10.
For example, if such an Event were to occur on September 15, 1999, the Base
Pool would be $2,500,000; the Bonus Pool would be determined by reference to
the actual cumulative EBITDA of the Business as of June 30, 1999; participants
employed through the date of the Event will be deemed to have satisfied their
1999 service period requirements for their Goal Amounts for 1997, 1998 and
1999; the Base Pool for each of 1997, 1998 and 1999 would be allocated among
the
participants in accordance with Section 4 above; and the Bonus Pool would
be allocated in accordance with Section 5 above.
11. DISQUALIFICATION BY A PARTICIPANT. Notwithstanding anything to the
contrary in the Plan or in any employment or other agreement between a
participant and Brunswick, the following actions or activities undertaken by a
participant, after such participant's termination of employment with Brunswick,
without the prior written consent of Brunswick, shall disqualify such
participant from any and all distributions under the Plan:
(i) making material, disparaging statements about the Business or
the directors, officers or employees of Business to the press or by
other means intended or reasonably expected to have wide circulation
and distribution to the public or within the industries in which
Brunswick does business; provided that this Section 11(a) shall not
apply to truthful testimony as a witness, compliance with other legal
obligations or truthful assertion of or defense against any claim of
breach of the Plan or any agreement between such participant and
Brunswick, or to the participant's truthful statements or disclosures
to officers or directors of Brunswick, and shall not require the
participant to make false statements or disclosures;
(ii) personally taking (or personally causing others to take)
any action to use material confidential information of the Business,
or divulge, disclose or make available or accessible any material
confidential information of the Business to any person, firm,
partnership, corporation, trust or other entity (other than when
required to do so by a lawful order of a court of competent
jurisdiction);
(iii) at any time during the three-year period beginning with
the date of the participant's termination of employment with
Brunswick, being employed by, or otherwise participating or engaging
in any capacity in, any business or activity that competes to a
material extent with the Business (in the locations where, and in the
nature that, the Business was operated on the date of such
participant's termination of employment by Brunswick); provided that
a participant shall not be deemed to be in violation of this clause
merely by reason of being the owner of up to 5% of the outstanding
stock (or other form of equity interest) in any corporation or
entity, provided the participant does not have the power to control
or direct the management or affairs of such corporation or entity; or
(iv) at any time during the three-year period beginning with
the date of the participant's termination of employment with
Brunswick, personally taking (or personally causing others to take)
any action to (a) solicit or divert any material business or
customers away from the Business, (b) induce material customers,
potential customers, suppliers, agents or other persons under
contract or otherwise associated or doing business with the Business
to terminate, reduce or alter any such association or business, or
(c) induce any key executive of the Business to (x) terminate
employment with Brunswick or (y) accept employment with anyone other
than Brunswick or a subsidiary or affiliate of Brunswick.
The provisions of this Section 11 are intended to be separate and divisible,
and if, for any reason, any one or more of them is held to be invalid or
unenforceable, neither the validity nor the enforceability of any other
provision of this Section 11 or the Plan shall thereby be affected. Brunswick
and the participants intend that, if this Section 11 is considered to have
created any potential restrictions on the participant's future employment, such
restrictions be reasonable in duration and geographic scope and in all other
respects. If, for any reason, any court of competent jurisdiction shall find
any provision of this Section 11 to be unreasonable in duration or geographic
scope or otherwise, the participant and Brunswick agree that the restrictions
and prohibitions contained herein shall be effective to the fullest extent
allowed under applicable law in such jurisdiction.
If senior management of Brunswick or the Business become aware of any
actions or activities by any participant that would form the basis for a
disqualification of such participant under this Section 11, Brunswick will
provide such participant (a) reasonably prompt notice of such activities and of
their effect on such participant's qualification for distributions under the
Plan, (b) a reasonable period to cure such activities or the impact of such
activities (if such a cure is possible under the circumstances, such as by the
prompt sale of an equity interest in excess of 5%), and (c) reasonably prompt
notice of its determination that a disqualification under this Section 11 has
occurred. Any such determination shall be made by the President of the
Business, subject to the approval of the Chief Executive Officer of Brunswick,
and shall be final and binding on the participant and Brunswick.
EXHIBIT C
LIFE FITNESS MANAGEMENT BONUS PLAN
1. PURPOSE. The purpose of the Life Fitness Management Bonus Plan (the
"Plan") of Brunswick Corporation ("Brunswick") is to motivate and reward senior
executives and other management employees of Brunswick's Life Fitness Business
(the "Business") for the achievement of specified annual financial and personal
goals.
2. ELIGIBILITY. Initially for the period ending December 31, 1997, all
executives who participated under the prior Life Fitness annual bonus plan are
eligible to participate in the Plan. The President of the Business may
designate additional participants for full or prorated participation by July 1
of each year subject to the approval of the Chief Executive Officer of
Brunswick.
3. PARTICIPATION LEVELS. Participation levels will be as follows:
Total Personal Objectives Financial Objectives
----- ------------------- --------------------
President 50% of base salary at target 20% 80%
Exec. V.P. 40% of base salary at target 20% 80%
V.P. 30-40% of base salary 20% 80%
Director 20-30% of base salary at target up to 50% at least 50%
Base salary is defined as a participant's salary at the beginning of the year
of the performance period.
4. MEASUREMENT OF TARGETS. The plan will have two sets of objectives:
financial and personal.
The Financial Objective will be a specified amount of annual earnings
before interest, taxes, depreciation and amortization ("EBITDA") of the
Business as established and approved by the Brunswick Human Resource and
Compensation Committee and as adjusted pursuant to Section 5 below.
The following relationship applies to the portion of the annual bonus
earned for Financial Objective:
Final Payout of the
Performance Result Financial Objective
------------------ -------------------
90% 50%
95% 80%
100% - target 100%
105% 125%
110% 150%
115% 175%
120% and above 200%
The Personal Objective will consist of organizational goals set by and
evaluated by the Chief Executive Officer of Brunswick (or his designee). At
least 90% of the financial target must be achieved before any amount can be
earned for Personal Objectives.
For 1997, there shall be no Personal Objectives, so that the entire bonus
for the year shall be based solely on Financial Objectives (with increases or
decreases from target based on performance against such Financial Objectives
calculated as if 80% of such bonus were the entire bonus payable).
5. ADJUSTMENTS TO EBITDA. The following adjustment will be considered in
determining the EBITDA performance for purposes of this Plan:
a. EBITDA calculations shall exclude purchase accounting for the Life
Fitness acquisition and the cost of the Bonus Pool earned for the Life Fitness
Long Term Incentive Plan.
b. Acquisitions, working capital increases, and capital investments in
excess of core plan will require agreed-upon adjustments to the EBITDA targets.
c. No charge will be made to EBITDA for amounts accrued under the Life
Fitness Option Roll-Over Plan.
6. PAYMENT. All Bonus payments hereunder shall be paid in a lump sum and
not more than thirty (30) days after the EBITDA for the relevant year have been
determined. No Bonus payments shall be made to any participant who is not
employed by the Business or Brunswick as of December 31st of the year for which
the Bonus payment is made; provided, however, that a holder of Rights who (x)
prior to December 31st of any such year, leaves employment by the Business or
Brunswick and promptly thereafter commences employment by any entity that is an
affiliate of Brunswick either (A) by being so designated by Brunswick or (B) by
reason of Brunswick's direct or indirect ownership of at least a 51% equity
interest and (y) remains employed by such entity on December 31st of such year,
shall be paid a prorated Bonus.
7. ADMINISTRATION. The Plan will be administered by the Chief Executive
Officer of Brunswick or his designee. All EBITDA calculations shall be
confirmed by Brunswick's independent auditors.
8. TAXES. All payments under the Plan will be subject to, and net of,
all required withholding taxes.
9. NO EMPLOYMENT RIGHTS. Nothing in the Plan shall interfere or limit in
any way the right of Brunswick to terminate any participant's employment at any
time, nor confer upon any participant any right to continue in the employ of
Brunswick for any period of time or to continue his or her present or any other
rate of compensation.
10. AMENDMENT OF PLAN. The Board of Directors of Brunswick may amend the
Plan, but no such amendment shall impair the rights of any participant affected
thereby, it being agreed that no agreed-upon adjustment contemplated by Section
5(b) shall be deemed to be an amendment of the Plan. Nothing in this Section
10 shall prevent the Board of Directors of Brunswick from terminating the Plan
for any future year.
EXHIBIT D
LIFE FITNESS OPTION ROLL-OVER PLAN
1. This is the Life Fitness Option Roll-Over Plan (the "Plan") of
Brunswick Corporation ("Brunswick").
2. ELIGIBILITY AND RIGHTS. The participants in the Plan are the
employees of Brunswick's Life Fitness Business (the "Business") identified on
Schedule 1 hereto who have agreed, at Brunswick's request, to waive exercise of
certain options (the "Waived Options") to purchase partnership interests in The
Life Fitness Companies, L.P., a Delaware limited partnership ("LFC"). In
consideration for such waivers, such employees will receive a number of
Brunswick Life Fitness Participation Rights ("Rights") equal to the number of
partnership interests purchasable upon exercise of such Waived Options less a
number equal to the aggregate exercise price of such Waived Options divided by
the Initial Right Value (as hereinafter defined).
3. VALUE OF RIGHTS. (a) The initial value of each Right ("Initial Right
Value") at any time prior to June 30, 1998 will be (i) the Implicit Purchase
Price determined as provided on Schedule 2 hereto divided by (ii) 11,081,380.
The value of each Right at any time after June 29, 1998 and prior to December
31, 2003 will be the cumulative earnings before interest, taxes, depreciation
and amortization ("EBITDA") of Brunswick's Life Fitness business for the four
most recently completed calendar quarters then ended, divided by 1,108,138.
(b) In addition, after the first calendar year in which EBITDA is
at least $31,000,000, the value of each Right will be increased by an amount
equal to (a) the Final Adjusted Purchase Price determined as provided on
Schedule 2 hereto reduced by ten times the earnings before interest, taxes,
depreciation, amortization and non-business related expenses listed on Schedule
3 hereto (subject to final verification of such amounts listed on Schedule 3 by
Arthur Andersen
LLP) of Life Fitness, a New York general partnership, for the twelve months
ended June 30, 1997, as finally verified by Arthur Andersen LLP, divided by
(b) 11,081,380.
(c) Any holder of Rights may irrevocably elect, on or prior to July 1,
2002, to have the value of each of his or her outstanding Rights determined by
reference to the aggregate EBITDA of the Business for the fiscal years ended
December 31, 2002 and 2003. In such case, the value of such rights shall be
such aggregate EBITDA for such years divided by 2,216,276.
(d) If an event (an "Event") shall occur with respect to the
Business or Brunswick such that the "Change in Control" provisions in
Brunswick's 1991 Stock Plan would be applicable (or would be applicable if such
provisions applied to the acquisition of the Business) prior to the termination
of the Plan, any holder of Rights may elect to be paid the value of all of his
or her Rights at the time of such Event. In such case, the value of each such
Right shall be (i) the EBITDA of the Business for the four most recently
completed calendar quarters divided by 1,108,138 or (ii) if the Event is with
respect to the Business (and not with respect to Brunswick), the aggregate
consideration received by Brunswick for the Business divided by 11,081,380;
PROVIDED; HOWEVER, that clause (ii) shall only apply if (x) such calculation
produces a higher amount than under clause (i) above and (y) the aggregate
consideration received by Brunswick for the Business is greater than
Brunswick's purchase price for the Business.
(e) The following parameters shall be followed when computing
EBITDA for any period:
1. EBITDA calculations shall exclude purchase accounting for
the Life Fitness acquisition and the cost of the Bonus Pool earned
for the Life Fitness Long Term Incentive Plan.
2. Acquisitions, working capital increases and capital
investments in excess of core plan will require agreed-upon
adjustments.
3. No charge will be made to EBITDA for amounts accrued or
payable under the Life Fitness Option Roll-Over Plan.
4. PAYMENT FOR RIGHTS. (a) At any time after July 1, 2000, each holder
of Rights may elect to be paid the value of up to 50% of his or her Rights
based on EBITDA for the prior four most recently completed calendar quarters.
Upon receipt of such payment, a corresponding portion of such holder's
outstanding Rights shall be canceled.
(b) Each holder will receive the value of all of his or her
outstanding Rights (i) as contemplated by Section 5 of the Plan in the
event of an early termination of employment, (ii) if the holder has not made
either of the elections contemplated by Sections 3(c) or (d), after the date
on which the EBITDA for the fiscal year ended December 31, 2002 are
determined; (iii) if the holder has made the election contemplated by
Section 3(c), after the date on which the EBITDA for the fiscal year ended
December 31, 2003 are determined; or (iv) if the holder has made the election
contemplated by Section 3(d), on the date of the Event.
(c) All payments hereunder for Rights will be paid in a lump sum no
later than the later of (i) thirty (30) days after (x) the date of his or her
election under Section 4(a) or (y) the applicable date under Section 4(b), or
(ii) ten (10) days after the applicable EBITDA have been determined.
5. DISABILITY, RETIREMENT, DEATH OR TERMINATION. (a) A holder of Rights
who dies, who retires after attaining age 65, who becomes permanently disabled,
or who has an employment agreement with the Business or Brunswick and
terminates employment with the Business or Brunswick for Good Reason (as
defined in such employment agreement) or whose employment is terminated by the
Business or Brunswick without cause prior to July 9, 1998 will be paid the full
value of his or her Rights determined in accordance with Section 3 at the time
of his or her death, retirement, disability, or termination of employment. A
holder of Rights whose employment with
the Business or Brunswick is terminated for any other reason prior to July 9,
1998 will forfeit all of his or her Rights. A holder of Rights whose
employment with the Business or Brunswick is terminated on or after July 9,
1998 will be paid the full value of his or her Rights determined in
accordance with Section 3 at the time of termination. For purposes of the
preceding two sentences, a holder of Rights who (x) prior to July 9, 1998,
leaves employment by the Business or Brunswick and promptly thereafter
commences employment by any entity that is an affiliate of Brunswick either
(A) by being so designated by Brunswick or (B) by reason of Brunswick's direct
or indirect ownership of at least a 51% equity interest and (y) remains
employed by such entity on July 9, 1998, shall be deemed to have terminated
employment with the Business or Brunswick on July 10, 1998.
(b) Any Rights forfeited by a holder pursuant to the second sentence of
Section 5(a) shall be reallocated among the employees of the Business by the
President of the Business, subject to the approval of the Chief Executive
Officer of Brunswick.
6. NON-TRANSFERABILITY OF RIGHTS. Except with respect to transfers to
estates, conservators, guardians, other legal representatives, or except as
otherwise consented to by Brunswick, or except as otherwise provided herein,
the Rights and rights to payment therefor cannot be transferred, assigned,
pledged or hypothecated in any way whether by operation of law or otherwise.
Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
any Rights shall be null and void.
7. ADMINISTRATION. The Plan will be administered by the Chief Executive
Officer of Brunswick or his designee. All EBITDA calculations shall be
confirmed by Brunswick's independent auditors.
8. TAXES. All payments under the Plan will be subject to, and net of,
all required withholding taxes.
9. NO EMPLOYMENT RIGHTS. Nothing in the Plan shall interfere or limit in
any way the right of Brunswick to terminate any participant's employment at any
time, nor confer upon any participant any right to continue in the employ of
Brunswick for any period of time or to continue his or her present or any other
rate of compensation.
10. AMENDMENT OF PLAN. The Board of Directors of Brunswick may amend the
Plan, but no such amendment of the Plan shall impair the rights of any
participant affected thereby, it being agreed that no agreed-upon adjustment
contemplated by Section 3(e)(2) shall be deemed to be an amendment of the Plan.
Dated as of July 1, 1997