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EXHIBIT (d)(xi)
SEVERANCE, CHANGE OF CONTROL AND NONCOMPETITION AGREEMENT
THIS SEVERANCE, CHANGE OF CONTROL AND NONCOMPETITION AGREEMENT (the
"Agreement") is made and entered into as of April 13, 2000, by and between
Jasdrew Acquisition Corp. ("Jasdrew"), and Xxxxxx X. Xxxxxxxxxx (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Employee is an officer and a key employee of PlayCore
Wisconsin, Inc. ("PlayCore Wisconsin");
WHEREAS, PlayCore, Inc. intends to enter into an Agreement and Plan of
Merger (the "Merger Agreement") with Jasdrew contemporaneously with the
execution hereof pursuant to which Jasdrew will merge (the "Merger") into
PlayCore, Inc. (after which PlayCore, Inc. is to merge into PlayCore Wisconsin);
WHEREAS, the Employee, in consideration of the agreement of Jasdrew
contained herein that Employee will receive payment of a cash bonus from
PlayCore Wisconsin in an amount of $150,000 (the "Closing Amount") promptly
following the effective date of the Merger and a grant of phantom common stock
of PlayCore Holdings, Inc. ("Holdings") to be set forth in a separate phantom
stock grant agreement, desires to enter into this Agreement to provide for the
payment of certain benefits to the Employee if the Employee's employment with
PlayCore Wisconsin is terminated under certain circumstances, including a
termination following a change of control of PlayCore Wisconsin other than the
transactions contemplated in the Merger Agreement;
WHEREAS, the Employee acknowledges and agrees that the terms of this
Agreement shall supersede all prior agreements between the parties as set forth
in Section 13.c. hereof;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and as an inducement for Jasdrew
to enter into, and to proceed with the transactions contemplated in, the Merger
Agreement, the parties hereto agree as follows:
1. Definition. The capitalized terms used in this Agreement shall have the
following meanings (unless otherwise expressly provided herein):
a. "Change of Control" shall have the meaning set forth in Exhibit A
hereto.
b. "Good Reason" means any of the following:
(1) The removal of the Employee from, or any failure to reelect or
reappoint the Employee to, any of the positions held with PlayCore
Wisconsin on the date of the Change of Control or any other positions with
PlayCore
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Wisconsin to which the Employee shall thereafter be elected, appointed or
assigned, except in the event that such removal or failure to reelect or
reappoint relates to the termination by PlayCore Wisconsin of the
Employee's employment for Just Cause or by reason of Permanent Disability;
or
(2) A good faith determination by the Employee that there has been a
significant adverse change, without the Employee's written consent, in the
Employee's working conditions or status with PlayCore Wisconsin from such
working conditions or status in effect during the 180-day period
immediately prior to the Change of Control or the effective date of this
Agreement for purposes of Section 3.c. hereof, including but not limited
to (A) a significant change in the nature or scope of the Employee's
authority, powers, functions, duties or responsibilities, or (B) a
significant reduction in the level of support services, staff, secretarial
and other assistance, office space and accoutrements, or for purposes of
Section 2 hereof alone, (C) relocation of the Employee's primary place of
employment with PlayCore Wisconsin on the effective date of the Merger to
a location more than thirty-five (35) miles from such primary place of
employment.
c. "Just Cause" means, prior to a Change in Control, willful and gross
misconduct on the part of the Employee that is materially and demonstrably
detrimental to PlayCore Wisconsin, as determined in good faith by the Board
of Directors of PlayCore Wisconsin. "Just Cause" means, following a Change
in Control, the commission by the Employee of one or more acts for which
the Employee is convicted (as evidenced by binding and final judgment.
order or decree of a court of competent jurisdiction) of a felony under
United States federal, state, or local criminal law which substantially
impairs the Employee's ability to perform his duties or responsibilities;
the engaging in by the Employee of intentional conduct not taken in good
faith which has caused demonstrable and serious financial injury to the
Employer, as evidenced by a determination in a binding and final judgment,
order, or decree of a court or administrative agency of competent
jurisdiction, in effect after exhaustion or lapse of all rights of appeal,
in an action, suit, or proceeding. whether civil, criminal, administrative,
or investigative; or the continuing willful and unreasonable refusal by the
Employee to perform the Employee's duties or responsibilities (unless
significantly changed without the Employee's consent).
d. "Permanent Disability" means that the Employee is unable by reason
of accident or illness (including mental illness) to perform the material
duties of his regular position with PlayCore Wisconsin and not expected to
recover from his disability within a period of six (6) months from the
commencement of the disability. If at any time the Employee claims or is
claimed to have a Permanent Disability, a physician acceptable to both the
Employee, or his personal representative, and PlayCore Wisconsin (which
acceptances shall not be unreasonably withheld) shall be retained by
PlayCore Wisconsin and shall examine the Employee. The Employee shall
cooperate fully with the physician. If the physician determines that the
Employee has a Permanent Disability the physician shall deliver to PlayCore
Wisconsin a certificate certifying both that the Employee has a Permanent
Disability and the date upon which the condition of
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Permanent Disability commenced. The determination of the physician shall be
conclusive.
e. "Person" means (other than with respect to the definition of
"Change of Control") any individual or any partnership, limited liability
company, corporation, joint venture, trust, or other entity (as defined in
Rule l3d-5 under the Securities Exchange Act of 1934), together with its
affiliates and the heirs, personal representatives, successors, and assigns
of the "Person" when the context so permits.
f. "Severance Period" means the applicable period of time beginning
with the Termination Date. If the Termination Date is within eighteen (18)
months after a Change of Control and the termination of employment is
either by PlayCore Wisconsin other than with Just Cause or by the Employee
for Good Reason, the Severance Period shall be eighteen (18) months (the
"18-month Severance Period"). If the Termination Date occurs other than
within such 18-month period following a Change of Control then the
Severance Period, if applicable, shall be twelve (12) months ("the 12-month
Severance Period").
g. "Termination Date" means the date upon which the Employee's
employment with PlayCore Wisconsin is terminated.
h. "Transaction Benefit" means the amount that is the greater of: (i)
the value of Employee's grant of phantom common stock on the date this
Agreement becomes effective, or (ii) the value of such grant of phantom
common stock on the Termination Date (such value to be determined by
multiplying the "equity value" of Holdings (as defined in the next
sentence) by a fraction, the numerator of which shall be the number of
shares represented by such grant and the denominator of which shall be the
total number of fully diluted shares of Holdings common stock (assuming
that all options, warrants or other securities which are convertible or
exchangeable for common stock are outstanding). The equity value of
Holdings on a Termination Date shall be determined by the Board of
Directors of PlayCore Wisconsin in good faith by selecting an appropriate
multiple and then multiplying the consolidated EBITDA for the latest four
fiscal quarters by such multiple and then subtracting from such amount all
debt, preferred stock and other obligations on a consolidated basis of
Holdings, if any.
2. Termination After Change of Control. If, within eighteen (18) months
after the occurrence of a Change of Control, the Employee's employment with
PlayCore Wisconsin is terminated either (i) by PlayCore Wisconsin (a) other than
with Just Cause or (b) due to Permanent Disability or, (ii) by the Employee for
Good Reason, then the Employee shall be entitled to receive the following
severance benefits from PlayCore Wisconsin:
a. continuation of the Employee's salary during the applicable
18-month Severance Period; and
b. continuation of coverage for the Employee and any dependents
previously covered under the group health, group life, group long-term
disability, and similar group insurance plans, if any, maintained by
PlayCore Wisconsin, at the active
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employee discounted cost, until expiration of the 18-month Severance Period
(provided, that if such continued participation is precluded by the
provisions of such plans or by applicable law, PlayCore Wisconsin shall
provide the Employee with comparable benefits of equal value at no increase
in cost to the Employee), and execution of this Agreement by the Employee
shall not be considered a waiver of any rights or entitlements he may have
under applicable law to continuation of coverage under the group health
plan maintained by PlayCore Wisconsin.
3. Other Termination. If the Employee's employment with PlayCore Wisconsin
is terminated by PlayCore Wisconsin (a) other than with Just Cause or (b) due to
Permanent Disability and Section 2, above, is not applicable because such
termination is not within the eighteen (18) month period following a Change of
Control, then the Employee shall be entitled to receive the following severance
benefits from PlayCore Wisconsin:
a. continuation of the Employee's salary during the applicable
12-month Severance Period; provided, however, if such termination occurs
prior to a Change of Control, the total salary continuation shall be
reduced by the value of any Transaction Benefit; and
b. continuation of coverage for the Employee and any dependents
previously covered under the group health, group life, group long-term
disability, and similar group insurance plans, if any, maintained by
PlayCore Wisconsin, at the active employee discounted cost, until
expiration of the 12-month Severance Period (provided, that if such
continued participation is precluded by the provisions of such plans or by
applicable law, PlayCore Wisconsin shall provide the Employee with
comparable benefits of equal value at no increase in cost to the Employee),
and execution of this Agreement by the Employee shall not be considered a
waiver of any rights or entitlements he may have under applicable law to
continuation of coverage under the group health plan maintained by PlayCore
Wisconsin.
c. To compensate the Employee for relinquishing certain rights with
PlayCore Wisconsin in order to facilitate the acquisition of PlayCore, Inc.
by Holdings, and notwithstanding the foregoing or any provision contained
herein to the contrary, if the Employee's employment with PlayCore
Wisconsin is terminated either (x) by PlayCore Wisconsin other than with
Just Cause or (y) by the Employee for Good Reason, and the termination of
employment occurs within the period that begins on the effective date of
the Merger and ends eighteen (18) months thereafter, then the Employee
shall be entitled to receive the greater of: (i) the severance benefits set
forth above in this Section 3, or (ii) the severance benefits that would
have accrued to the Employee as a result of the acquisition of PlayCore,
Inc. by Holdings pursuant to that certain Severance, Change of Control and
Noncompetition Agreement, dated August 18, 1999, by and between the
Employee and PlayCore, Inc. (the "Old Severance Agreement") attached hereto
as Exhibit B, in either case, less the value of any Transaction Benefit.
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4. Payments.
a. Promptly following the effectiveness of the Merger, Jasdrew (or its
successor) shall pay to Employee the Closing Amount.
b. Except as otherwise provided in this Agreement, any salary
continuation amounts due to the Employee hereunder shall be payable in
equal installments on each regular payroll date of PlayCore Wisconsin after
the Termination Date.
5. Deduction and Withholding. All amounts payable to or on behalf of the
Employee pursuant to this Agreement shall be subject to such deductions and
withholding as may be agreed to by the Employee but not less than required by
applicable law.
6. Death and Permanent Disability. In the event of the Employee's death,
any amount payable or distributable to the Employee pursuant hereto from rights
and benefits accrued to and through the date of his death shall be paid at the
time or times indicated in such Section to the beneficiary designated by the
Employee for purposes of his group term life insurance coverage with PlayCore
Wisconsin and, if no beneficiary is designated for such purposes or if no group
term life insurance is then in effect, to the Employee's estate. In the event
that Employee's employment is terminated due to Permanent Disability, Employee
shall be entitled to accrued compensation through the Termination Date and any
other benefits (if any) to which Employee may be entitled under PlayCore
Wisconsin's benefit plans, programs and policies as then in effect.
7. Other Benefits. The benefits provided under this Agreement shall be in
addition to, and not in derogation or diminution of, any benefits that the
Employee may be entitled to receive under any other plan or program now or
hereafter maintained by PlayCore Wisconsin other than any severance pay plan.
8. Stock Options and Other Equity. Notwithstanding anything contained in
this Agreement to the contrary, the treatment of any stock options and other
equity held by the Employee on the Termination Date shall be subject to the
terms and conditions of the applicable plan documents and agreements in
accordance with the terms set forth in Schedules A, B and C attached hereto
("Applicable Equity Agreements") and the terms of the Applicable Equity
Agreements shall govern the treatment of such options and equity in the event of
Employee's termination.
9. Covenant Not to Compete. The Employee hereby agrees that he will not,
during the period of his employment with PlayCore Wisconsin and for a period of
two (2) years thereafter, as proprietor, partner, member, shareholder (directly
or indirectly owning or controlling five percent (5%) or more of any class of
stock), employee, consultant, agent, or otherwise, on his own behalf or on
behalf of another person., do any of the following in competition with PlayCore
Wisconsin, without the prior written consent of PlayCore Wisconsin:
a. solicit or assist in the solicitation of customers of PlayCore
Wisconsin or its affiliates;
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b. render or assist in rendering services to customers of PlayCore
Wisconsin or its affiliates; or
c. divert or attempt to divert any customer's business from PlayCore
Wisconsin or its affiliates, or otherwise interfere with the business
relationship between PlayCore Wisconsin or its affiliates and any of their
respective customers, employees, or suppliers.
Notwithstanding the foregoing, this Agreement shall not in any event be
construed to prevent the Employee from earning a living utilizing his skills in
any businesses which may, as an incident to a business or activity significantly
different from the business of PlayCore Wisconsin, make or sell some products or
provide some services which may in some degree compete with the business of
PlayCore Wisconsin. However, nothing in this Section 9 shall be deemed to permit
the Employee to accept employment with companies or a division thereof which
then or thereafter will directly compete in a major way with the business of
PlayCore Wisconsin or its affiliates with which the Employee was involved or had
access to information while employed by PlayCore Wisconsin.
10. Confidential Information. The Employee agrees that he will not, while
he is employed by PlayCore Wisconsin or for a period of five (5) years
thereafter, disclose to any person to whom he is not otherwise authorized to do
so by PlayCore Wisconsin (an "Unauthorized Person"), or use for his own account,
any information (the "Confidential Information"), whether or not reduced to
written or other tangible form, in which PlayCore Wisconsin or its affiliates
has a legally protectible interest by virtue of the following:
a. such information is not generally known in the industry;
b. the Employee has had access to (or, either alone or in cooperation
with others, originated or developed) such information during his
employment with PlayCore Wisconsin;
c. such information has been treated by PlayCore Wisconsin or its
affiliates as confidential;
d. such information relates to the business of PlayCore Wisconsin or
any of its affiliates; or
e. such information is of competitive advantage to PlayCore Wisconsin
or its affiliates.
Confidential Information for which the Employee has first secured the written
consent of PlayCore Wisconsin for its disclosure or use, and Confidential
Information which becomes generally known in the industry, or which otherwise
ceases to be legally protectible (other than by the Employee's breach of this
Agreement), shall cease to be subject to the restriction set forth in this
Section 10. Notwithstanding anything contained herein to the contrary, this
Section 10 prohibits only the use and disclosure of Confidential Information and
shall not be construed as limiting the Employee's right to undertake any other
employment or business activity. The
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Employee shall be prohibited from competing with PlayCore Wisconsin only as
provided in Section 9 above.
11. Termination With Just Cause. Notwithstanding any provision contained
herein to the contrary, in the event that the Employee's employment with
PlayCore Wisconsin is terminated by PlayCore Wisconsin with Just Cause the
Employee shall not be entitled to any of the benefits identified in Sections 2
and 3 of this Agreement, and shall be entitled to receive only those benefits
that the Employee would otherwise be entitled to receive under any other
agreements entered into by the Employee and PlayCore Wisconsin or under
applicable law.
12. Rights in the Event of Dispute.
a. If a claim or dispute arises concerning the rights of the Employee
or his beneficiary (either or both of whom are hereinafter referred to as
the "claimant") to amounts or benefits described in Section 2 of this
Agreement (pertaining to benefits upon termination of employment following
a Change of Control), regardless of the party by whom such claim or dispute
is initiated, PlayCore Wisconsin shall, upon presentation of appropriate
vouchers, pay all legal expenses, including reasonable attorneys' fees,
court costs and ordinary and necessary out-of-pocket costs of attorneys'
billed to and payable by the claimant in connection with the bringing,
prosecuting, defending, litigating, negotiating, or settling such claim or
dispute; provided, however, that PlayCore Wisconsin shall not be obligated
to pay such expenses unless and until final resolution of such claim or
dispute with the claimant being entitled to a substantial part of the
rights claimed by him.
b. If a claim or dispute arises concerning the rights of the Employee
or his beneficiary (either or both of whom are hereinafter referred to as
the "claimant") to amounts or benefits described in Section 3 of this
Agreement (pertaining to termination of employment by PlayCore Wisconsin
other than as described in Section 2), regardless of the party by whom such
claim or dispute is initiated, each party shall pay its own legal expenses,
including reasonable attorneys' fees, court costs and ordinary and
necessary out-of-pocket costs in connection with the bringing, prosecuting,
defending, litigating, negotiating, or settling such claim or dispute;
provided, however, that the prevailing party in any court action shall be
entitled to recover from the other party, to the fullest extent permitted
by law, all such legal expenses that the prevailing party may reasonably
incur as a result of such action. Any payment pursuant to this subsection
shall include interest on any delayed payment at the applicable federal
rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code.
13. General Provisions.
a. All notices or other communications required or permitted hereunder
shall be in writing and shall be deemed given (i) when delivered in person
or (ii) when telecopied (at the date and time indicated on the receipt of
transmission if such day is a business day, and if not, at 9 a.m. on the
following business day) with hard copy delivered by hand or deposited in
the United States mail postage prepaid, registered or certified mail, on or
before two (2) business days after its delivery by telecopy, or
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(iii) three (3) business days after being deposited in the United States
mail, postage prepaid, registered or certified mail, or (iv) two (2)
business days after delivery to a nationally recognized express courier,
expenses prepaid, addressed to the appropriate party as follows: to the
Employee at his address on file with PlayCore Wisconsin; or to Jasdrew or
PlayCore Wisconsin, c/o PlayCore, Inc., 00 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxxx 00000, telecopier number (000) 000-0000,
Attention: Chairman; and with a copy to Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P., 0000 Xxx Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X.,
00000, Attention: Xxxxxxx X. Xxxxx, Xx.
b. Nothing herein shall be construed as an agreement to continue the
employment by PlayCore Wisconsin of the Employee.
c. This Agreement constitutes the entire agreement between the parties
and PlayCore Wisconsin with respect to the subject matter contained herein
and, as of the effective date of the Merger, supersedes any and all prior
understandings, representatives, negotiations, and agreements with respect
thereto (including, without limitation, the Old Severance Agreement).
d. No modification or amendment of any provision of this Agreement
shall be effective unless in a written instrument executed by both parties.
Either party's failure to insist upon strict compliance with any provision
hereof shall not be deemed to be a waiver of such provision or any other
provision hereof.
e. This Agreement shall be binding upon and shall inure to the benefit
of the successors and assigns of Jasdrew and PlayCore Wisconsin. Without
limiting the foregoing, Jasdrew and PlayCore Wisconsin will require any
successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of
PlayCore Wisconsin, to expressly assume and agree to perform PlayCore
Wisconsin's obligations under this Agreement in the same manner and to the
same extent that Jasdrew and PlayCore Wisconsin are required to perform
them if no such succession had taken place. As used in this Agreement,
"Company" shall mean PlayCore Wisconsin and any successor to its business
and/or assets which executes and delivers the agreement provided for in
this Section 13.e. or which otherwise becomes bound by all the terms and
provisions of this Agreement as a matter of law. This Agreement shall inure
to the benefit of, and shall be enforceable by, the Employee's heirs, legal
representative or other successors in interest, but shall not otherwise be
assignable or transferable.
f. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
g. The validity, interpretation, construction and enforceability of
this Agreement shall be governed by the laws of the State of Wisconsin,
without regard to conflicts of laws principles.
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14. Failure to Consummate. This Agreement shall be null and void if the
Merger is not consummated.
SIGNATURE PAGE FOLLOWS -
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
COMPANY: EMPLOYEE:
JASDREW ACQUISITION CORP.
By: /s/ XXXX X. XXXXXX /s/ XXXXXX X. XXXXXXXXXX
-------------------------------- ---------------------------------
Xxxx X. Xxxxxx, President Xxxxxx X. Xxxxxxxxxx
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SCHEDULE A
OPTION TERMS
AMOUNT OF INITIAL GRANT: A nonqualified option grant (the "Initial
Grant") of 7,250 shares of common stock of
PlayCore Holdings, Inc. ("Holdings"). The
Initial Grant shall be pursuant to an option
plan (and underlying option grant agreement)
established by Holdings with an initial
reserve equal to 10% of the outstanding
common shares of Holdings as of the closing
date (post transaction).
EXERCISE PRICE: The per share exercise price of the
option shall be the common stock's fair
market value on the date of grant (which
shall be equal to the fair market value of
the equivalent number of shares of common
stock as of the closing date).
TERM: Options, or any portion thereof, not
previously exercised or terminated will
expire ten years from the date of grant.
METHOD OF EXERCISE: Prior to an "initial public offering", cash
only; provided, however, the Board of
Directors or Compensation Committee of
Holdings may authorize cashless exercises.
An option may only be exercised with respect
to whole shares.
VESTING: TIME OPTIONS: 50% of the total number of
shares subject to the Initial Grant shall
vest ratably (25% a year) on each of the
first through fourth anniversaries of the
date of grant ("A Options"), provided the
Employee is in the employ of PlayCore
Wisconsin, Inc. or an affiliate ("PlayCore
Wisconsin") on each such date.
If there is a Change in Control (as defined
in the option plan) prior to the fourth
anniversary of the date of grant, and the
Employee is still in the employ of PlayCore
Wisconsin, all unvested Time Options shall
vest.
PERFORMANCE OPTIONS: The remaining 50% of
the total number of shares subject to the
Initial Grant shall vest if the net Internal
Rate of Return ("IRR") realized by PlayCore
Holdings, L.L.C. ("Holdings L.L.C.") on its
total investment in Holdings (after dilution
from options on shares held by management)
is 25% or more ("Target
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IRR") as of the "Determination Date,"
("Performance Options") and the Employee is
still in the employ of PlayCore Wisconsin on
the Determination Date.
The Determination Date regarding the
attainment of the IRR shall be the closing
date or such other time as Holdings L.L.C.
receives cash payments for its interests in
Holdings.
TERMINATION OF EMPLOYMENT:
BY PLAYCORE WISCONSIN
WITHOUT CAUSE OR
BY THE EMPLOYEE
FOR GOOD REASON OR
UPON DEATH OR DISABILITY: TIME OPTIONS: All vested Time Options remain
outstanding and exercisable for a period of
90 days and if not exercised by end of
business on the 90th day shall terminate.
All unvested Time Options shall be
immediately terminate on the Termination
Date.
PERFORMANCE OPTIONS: Performance Options
shall vest if the Target IRR would have been
achieved based upon the fair market value of
Holdings L.L.C.'s investment in Holdings as
of the Termination Date and Employee will
receive the applicable value of the
Performance Option as determined at the
Termination Date by the Board of Directors
of Holdings at such time as Holdings L.L.C.
receives cash payments for its interests in
Holdings. If the Target IRR is not achieved
on both the Termination Date and the
Determination Date, then all Performance
Options shall be terminated with no payment
to or value to Employee.
BY PLAYCORE WISCONSIN FOR
CAUSE OR BY THE
EMPLOYEE WITHOUT
GOOD REASON: TIME OPTIONS: All vested Time Options shall
remain exercisable for 90 days and if not
exercised by the end of business on the 90th
day shall terminate. All nonvested Time
Options shall terminate on the Termination
Date.
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PERFORMANCE OPTIONS: All Performance Options
shall immediately terminate.
CALL ON SHARES ACQUIRED In the event of the Employee's termination
ON EXERCISE OF OPTION: of employment for any reason, all shares in
Holdings held by Employee as a result of
exercising Options shall be subject to a
"call" by Holdings or its designee (the
"Company Call") at the fair market value on
the Termination Date. The Company Call must
be exercised within six months of the
Termination Date. The purchase price as
determined above will be paid one-half in
cash within 30 days of the exercise of the
Company Call and the remaining one-half
payable within two years of the date of
exercise of the Company Call (the "Deferred
Call Payments"). Any Deferred Call Payments
shall be credited with an appropriate
interest rate or dividend rate. In the event
that Holdings is restricted from purchasing
such shares for cash under any applicable
financing or other agreements, Holdings may
issue the Employee a note or such other
permissible security (which shall contain
commercially reasonable terms) in full
satisfaction of such call. In no event shall
the Employee be paid less cash at the time
of the exercise of the Company Call than the
Employee's income tax liability resulting
from the sale of the shares.
EMPLOYEE PUT: In the event of Employee's termination of
employment by PlayCore Wisconsin without
Cause, by the Employee for Good Reason, or
as a result of death or Permanent
Disability, the Employee or his estate as
the case may be, may exercise a "put" to
Holdings (the "Employee Put") at fair market
value on the Termination Date, subject to
Holdings' ability under its financing
documents. The Employee Put must be
exercised within six months of the
Termination Date. The purchase price as
determined above will be paid one-half in
cash within 30 days of the exercise of the
Employee Put and the remaining one-half will
be payable within two years of the date of
exercise of the Employee Put (the "Deferred
Put Payments"). Any Deferred Put Payments
shall be credited with an appropriate
interest rate or dividend rate. All payments
made by Holdings with respect to its
exercise of the Executive Put are subject to
Holdings' financing agreements. In the event
that Holdings is restricted from purchasing
such shares for cash under any applicable
financing or other agreements, Holdings may
issue the
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Employee a note or such other permissible
security (which shall contain commercially
reasonable terms) in full satisfaction of
such put.
REALIZATION: Except in the case of the exercise of the
Company Call or Employee Put as set forth
above, Employee shall be required to hold
the shares or Options until such time
Holdings L.L.C. sells or otherwise exits
from its equity interest in Holdings.
TAG-ALONG RIGHTS: In the event of a sale of Holdings by
Holdings, L.L.C., the Employee will have the
same tag-along rights as other investors.
RESTRICTIONS ON TRANSFER: The Options and shares will be
non-transferable, except with respect to a
transfer to a trust or partnership, the only
beneficiaries or partners (as the case may
be) of which are immediate family member of
Employee, or in accordance with the terms of
any applicable operating agreement or
shareholders agreement and the laws of
descent and distribution.
Other than with respect to transfers
pursuant to the preceding sentence, no third
party shall have any direct or indirect
beneficial interest in the Options.
REGISTRATION RIGHTS: Employee will have the same piggyback
registration rights as other investors.
FAIR MARKET VALUE: Fair market value of vested shares on a
Termination Date shall be determined by
multiplying the "equity value" of Holdings
by a fraction, the numerator of which shall
be the number of vested shares and the
denominator of which shall be the total
number of fully diluted shares of Holdings
common stock (assuming that all options,
warrants or other securities which are
convertible or exchangeable for common stock
are outstanding). The equity value of
Holdings on a Termination Date shall be
determined by the Board of Directors of
Holdings in good faith by selecting an
appropriate multiple and then multiplying
the consolidated EBITDA for the latest four
fiscal quarters by such multiple and then
subtracting from such amount all debt,
preferred stock and other obligations on a
consolidated basis of Holdings, if any.
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SCHEDULE B
EQUITY PURCHASE TERMS
AMOUNT OF EQUITY: A percentage equity interest in PlayCore
Holdings, L.L.C. ("Holdings L.L.C.") equal
to $75,000 and determined based on the value
paid by Chartwell Investments II, L.L.C. or
its affiliates ("Chartwell") for its
interest in Holdings L.L.C. (the
"Interest"). Upon execution of the
applicable subscription documents relating
to the Interest, Employee shall make a cash
payment to Holdings L.L.C. of $75,000.
COMPANY CALL ON INTERESTS: In the event of Employee's termination of
employment for any reason, the Interest held
by the Employee shall be subject to a "call"
by Holdings L.L.C. or its designee (the
"Company Call") at the fair market value on
the Termination Date. The Company Call must
be exercised within six months of the
Termination Date. The purchase price as
determined above will be paid as follows:
the lesser of the Employee's original
investment or fair market value of the
Interest within 30 days of the exercise of
the Company Call and the remaining amount,
if any, payable within two years of the date
of exercise of the Company Call (the
"Deferred Call Payments"). Any Deferred Call
Payments shall be credited with an
appropriate interest rate or dividend rate.
In the event that Holdings L.L.C. is
restricted from purchasing the Interest for
cash under any applicable financing or other
agreements to which Holdings L.L.C. or any
of its subsidiaries is a party which prevent
Holdings L.L.C. from obtaining cash, then
Holdings L.L.C. may issue the Employee a
note or such other permissible security
(which shall contain commercially reasonable
terms) in full satisfaction of such call.
EMPLOYEE PUT: In the event of Employee's termination of
employment by PlayCore Wisconsin, Inc. or an
affiliate ("PlayCore Wisconsin") without
Cause, by the Employee for Good Reason, or
as a result of death or Permanent
Disability, the Employee or his estate as
the case may be, may exercise a "put" to
Holdings L.L.C. (the "Employee Put") of the
Interest at fair market value on the
Termination Date, subject to compliance with
the financing documents of Holdings L.L.C.
or of any of its subsidiaries. The Employee
Put must be exercised within six months of
the
16
Termination Date. The purchase price as
determined above will be paid as follows:
the lesser of the Employee's original
investment or fair market value of the
Interest within 30 days of the exercise of
the Employee Put and the remaining amount,
if any, subject to the Company Call, will be
held by Employee until such time as Holdings
L.L.C. sells or otherwise exits from its
equity interest in PlayCore Holdings, Inc.
("Holdings"). All payments by Holdings
L.L.C. with respect to the exercise of the
Employee Put are subject to the financing
agreements of Holdings L.L.C. or any of its
subsidiaries. In the event that Holdings
L.L.C. is restricted from purchasing the
Interest for cash under any applicable
financing or other agreements to which
Holdings L.L.C. or any of its subsidiaries
is a party which prevent Holdings L.L.C.
from obtaining cash, then Holdings L.L.C.
may issue Employee a note or such other
permissible security (which shall contain
commercially reasonable terms) in full
satisfaction of such put.
REALIZATION: Except in the case of the exercise of
Company Call or Employee Put as set forth
above, Employee shall be required to hold
the Interest until such time as Chartwell
sells or otherwise exits from its equity
interest in Holdings L.L.C.
TAG-ALONG RIGHTS: In the event of a sale of Holdings L.L.C. by
Chartwell, the Employee will have the same
tag-along rights as other investors.
RESTRICTIONS ON TRANSFER: The Interest will be non-transferable,
except with respect to a transfer to a trust
or partnership, the only beneficiaries or
partners (as the case may be) of which are
immediate family member of Employee, or in
accordance with the terms of any applicable
operating agreement or shareholders
agreement and the laws of descent and
distribution.
Other than with respect to transfers
pursuant to the preceding sentence, no third
party shall have any direct or indirect
beneficial interest in the Interest.
REGISTRATION RIGHTS: Employee will have the same piggyback
registration rights as other investors.
17
FAIR MARKET VALUE: Fair market value of Employee's Interest on
a Termination Date shall be determined in
three steps as follows. (1) The equity value
of Holdings on a Termination Date shall be
determined by the Board of Directors of
Holdings in good faith by selecting an
appropriate multiple and then multiplying
the consolidated EBITDA for the latest four
fiscal quarters by such multiple and then
subtracting from such amount all debt,
preferred stock and other obligations on a
consolidated basis of Holdings, if any. (2)
Holdings L.L.C's interest in Holdings shall
be determined by multiplying the equity
value of Holdings (as determined under step
number (1)) on the Termination Date by a
fraction, the numerator of which shall be
the number of shares of common stock of
Holdings that are owned by Holdings L.L.C.,
and the denominator of which shall be the
total number of fully diluted shares of
Holdings common stock (assuming that all
options, warrants or other securities which
are convertible or exchangeable for common
stock are outstanding). (3) Finally, the
percentage representing Employee's Interest
shall be multiplied by the dollar amount of
Holdings L.L.C.'s interest in Holdings as
determined under step number (2).
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SCHEDULE C
PHANTOM STOCK TERMS
AMOUNT OF INITIAL GRANT: A grant of 878 shares of phantom common
stock of PlayCore Holdings, Inc.
("Holdings") (the "Phantom Shares") pursuant
to a grant by Holdings.
VESTING: One third of the total number of Phantom
Shares shall vest on each anniversary of the
date of the grant. In the event that the
Employee's employment with PlayCore
Wisconsin, Inc. or an affiliate ("PlayCore
Wisconsin") is terminated for any reason,
all non-vested shares shall be forfeited.
COMPANY CALL: In the event of Employee's termination of
employment for any reason, the vested
Phantom Shares held by the Employee shall be
subject to a "call" by Holdings or its
designee (the "Company Call") at the fair
market value on the Termination Date. The
Company Call must be exercised within six
months of the Termination Date. The purchase
price shall be the equivalent of the fair
market value of an equivalent number of
common shares of Holdings on the Termination
Date. It will be paid one-half in cash
within 30 days of the exercise of the
Company Call and the remaining one-half will
be payable within two years of the date of
exercise of the Company Call (the "Deferred
Call Payments"). Any Deferred Call Payments
shall be credited with an appropriate
interest rate or dividend rate. In the event
that Holdings is restricted from purchasing
such shares for cash under any applicable
financing or other agreements, Holdings may
issue the Employee a note or such other
permissible security (which shall contain
commercially reasonable terms) in full
satisfaction of such call. In no event shall
the Employee be paid less cash at the time
of the exercise of the Company Call than the
Employee's income tax liability resulting
from the sale of the Phantom Shares.
EMPLOYEE PUT: In the event of Employee's termination of
employment by PlayCore Wisconsin without
Cause, by the Employee for Good Reason, or
as a result of death or Permanent
Disability, the Employee or his estate as
the case may be, may exercise a "put" to
Holdings (the "Employee Put") of the vested
Phantom Shares at fair market value on the
19
Termination Date. The Employee Put must be
exercised within six months of the
Termination Date. The purchase price as
determined above will be paid one-half in
cash within 30 days of the exercise of the
Employee Put and the remaining one-half will
be payable within two years of the date of
exercise of the Employee Put (the "Deferred
Put Payments"). Any Deferred Put Payments
shall be credited with an appropriate
interest rate or dividend rate. All payments
by Holdings with respect to its exercise of
the Employee Put are subject to Holdings'
financing agreements. In the event that
Holdings is restricted from purchasing such
shares for cash under any applicable
financing or other agreements, Holdings may
issue the Employee a note or such other
permissible security (which shall contain
commercially reasonable terms) in full
satisfaction of such put.
REALIZATION: Except in the case of the exercise of the
Company Call or Employee Put as set forth
above, Employee shall be required to hold
the Phantom Shares until such time as
PlayCore Holdings, L.L.C. sells or otherwise
exits from its equity interest in Holdings
(any such occurrence, a "Realization
Event").
TAX GROSS-UP PAYMENT: Upon exercise of the Company Call or
Employee Put or any other Realization Event
hereunder, Holdings shall make a tax
gross-up payment to the Employee to
compensate the Employee for the difference
between ordinary income tax treatment and
capital gains tax treatment with respect to
the appreciated value ("Appreciated Value")
of the Phantom Shares from the date of
vesting to the earlier of: (i) the
Termination Date (in the case of an Employee
Put or Company Call), or (ii) the date of
the occurrence of a Realization Event;
provided, however, that in no event shall
such tax gross-up payment exceed the tax
benefit to Holdings actually realized for
such tax year, if any, related to the
deduction for (a) the tax gross-up payment
and (b) the appreciated value of the Phantom
Shares from the date of vesting to the
earlier of: (i) the Termination Date (in the
case of an Employee Put or Company Call), or
(ii) the date of the occurrence of a
Realization Event.
TAG-ALONG RIGHTS: In the event of a sale of Holdings by
PlayCore Holdings, L.L.C., the Employee will
have the same tag-along rights as other
investors.
20
RESTRICTIONS ON TRANSFER: The Phantom Shares will be non-transferable,
except with respect to a transfer to a trust
or partnership, the only beneficiaries or
partners (as the case may be) of which are
immediate family member of Employee, or in
accordance with the terms of any applicable
operating agreement or shareholders
agreement and the laws of descent and
distribution.
Other than with respect to transfers
pursuant to the preceding sentence, no third
party shall have any direct or indirect
beneficial interest in the Phantom Shares.
FAIR MARKET VALUE: Fair market value of vested Phantom Shares
on a Termination Date shall be determined by
multiplying the "equity value" of Holdings
by a fraction, the numerator of which shall
be the number of vested Phantom Shares and
the denominator of which shall be the total
number of fully diluted shares of Holdings
common stock (assuming that all options,
warrants or other securities which are
convertible or exchangeable for common stock
are outstanding). The equity value of
Holdings on a Termination Date shall be
determined by the Board of Directors of
Holdings in good faith by selecting an
appropriate multiple and then multiplying
the consolidated EBITDA for the latest four
fiscal quarters by such multiple and then
subtracting from such amount all debt,
preferred stock and other obligations on a
consolidated basis of Holdings, if any.
