1
LOAN AGREEMENT
BETWEEN
PLAYCORE, INC.
AND
JASDREW ACQUISITION CORP.
AS BORROWERS,
AND
PLAYCORE WISCONSIN, INC.
AS LENDER
Dated as of April 13, 2000
2
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "AGREEMENT") is made as of this 13th day of
April, 2000, by and among PlayCore, Inc., a Delaware corporation ("HOLDINGS" and
a "BORROWER"), Jasdrew Acquisition Corp., a Delaware corporation ("MERGER SUB"
and a "BORROWER"), and PlayCore Wisconsin, Inc., a Wisconsin corporation (the
"COMPANY").
RECITALS
WHEREAS, Holdings, Merger Sub and PlayCore Holdings, Inc. ("PARENT"), a
Delaware corporation, are parties to a certain Agreement and Plan of Merger
dated as of April 13, 2000 (the "MERGER AGREEMENT"), pursuant to which (a)
Merger Sub will be merged with and into Holdings with Holdings being the
surviving corporation by way of a two step merger consisting of (i) a joint
tender offer (the "TENDER OFFER") by Merger Sub and Holdings with respect to
Holdings' common stock, par value $.01 per share (the "COMMON STOCK") and (ii) a
subsequent merger of Merger Sub with and into Holdings, with Holdings being the
surviving corporation (the "MERGER"), and (b) immediately thereafter Holdings
will be merged with and into the Company, with the Company being the surviving
corporation (the "SECOND MERGER");
WHEREAS, the Company has entered into a certain Credit Agreement, dated
as of April 13, 2000 (the "CREDIT AGREEMENT") by and among Parent, Holdings,
the Company, its subsidiaries listed on the signature pages thereto, the lenders
party thereto and General Electric Capital Corporation, as Administrative Agent
and Credit Agricole Indosuez, as Documentation Agent, pursuant to which
approximately $95,000,000 will be disbursed to Lender at the closing of the
Tender Offer;
WHEREAS, under the terms of a certain Purchase Agreement, dated as of
April 13, 2000 by and among Parent, Holdings, the Company, its subsidiaries
listed on the signature pages thereto, GS Mezzanine Partners II, L.P. and GS
Mezzanine Partners II Offshore, L.P., the Company will sell $30,000,000
aggregate principal amount of its 18% Senior Subordinated Notes dues 2008 (the
"SENIOR NOTES"); and
WHEREAS, in order to satisfy the funding requirements of Merger Sub and
Holdings in conjunction with the closing of the Tender Offer, the Company is
willing to lend certain amounts of money to Merger Sub and/or Holdings as herein
provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good, valuable and binding consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
GENERAL TERMS
SECTION 1.1 Loan to Holdings. If immediately after the closing of the
Tender Offer, and the other transactions contemplated in Section 1.1(a) of the
Merger Agreement, Merger Sub would not be able to effect the Merger pursuant to
Section 253 of the Delaware General
3
Corporation Law ("SECTION 253"), the Company agrees, subject to the terms and
conditions of this Agreement, to lend to Holdings (or at the request of Holdings
to advance funds on behalf of Holdings), and Holdings agrees to borrow from the
Company in connection with the closing of the Tender Offer, such amount, not to
exceed $43,000,000, as is necessary for Holdings to (i) complete the Tender
Offer (to the extent that the aggregate price for all shares tendered in the
Tender Offer plus the purchase price of the GG Securities (as defined in the
Merger Agreement) exceeds $72,500,000) and (ii) purchase all of its outstanding
warrants issued on March 13, 1997 to Massachusetts Mutual Life Insurance Company
and certain of its affiliates (and initially exercisable for 592,177 shares of
Holdings' Common Stock) (the "MASSMUTUAL WARRANTS").
SECTION 1.2 Loan to Merger Sub. If immediately after the closing of the
Tender Offer and the other transactions contemplated in Section 1.1(a) of the
Merger Agreement, Merger Sub would be able to immediately effect the Merger
pursuant to Section 253, the Company agrees, subject to the terms and conditions
of this Agreement, to lend to Merger Sub, and Merger Sub may borrow from the
Company (or request that the Company advance funds on behalf of Merger Sub), in
connection with the closing of the Tender Offer, such amount in excess of
$72,500,000, which amount shall not exceed $43,000,000, as is necessary for
Merger Sub to (i) purchase all shares of Common Stock tendered in the Tender
Offer, (ii) purchase all of the outstanding MassMutual Warrants, (iii) purchase
all outstanding shares of Common Stock (or options exercisable into Common
Stock) held by officers, directors and employees of Holdings or any of its
subsidiaries; and (iv) purchase the GG Securities.
SECTION 1.3 Promissory Note. The amount borrowed by Holdings under
Section 1.1 or by Merger Sub under Section 1.2., as the case may be (such
amount, the "LOAN"), shall be evidenced by a promissory note (the "NOTE") to be
executed by Holdings or Merger Sub, as the case may be (the "BORROWER").
SECTION 1.4 Principal. To the extent not previously paid, the entire
unpaid principal balance of the Loan, plus all accrued but unpaid interest
thereon shall be due and payable on the termination date of the Merger
Agreement. On the effective date of the Second Merger, all outstanding principal
and interest shall be deemed paid in full. The date on which the principal
balance of the Loan, plus all accrued but unpaid interest thereon, is due and
payable or deemed paid in full in accordance with this Section 1.4 is referred
to herein as the "MATURITY DATE."
SECTION 1.5 Interest. The Borrower agrees to pay interest in respect of
the unpaid principal amount of the Loan from the date of the borrowing thereof
to the Maturity Date at a rate per annum equal to ten percent (10%). Interest
under this Agreement shall be due and payable upon the Maturity Date, when the
outstanding principal balance of the Loan and all accrued interest shall be due
and payable in full. Should any principal remain unpaid after the Maturity Date,
interest shall accrue from the Maturity Date at a rate of twelve percent (12%),
compounded daily.
SECTION 1.6 Payments.
(a) General. All payments under this Agreement shall be made on
the date when due and shall be made in lawful money of the United States of
America in immediately available funds. Whenever any payment to be made under
this Agreement shall be stated to be
-2-
4
due on a day that is not a business day, the due date thereof shall be extended
to the next succeeding Business Day. For the purposes of this Agreement,
"Business Day" shall mean any day other than a Saturday, Sunday or other day on
which banks in the State of New York are authorized or required to close.
(b) Interest Payments / Additional Notes. To the extent
permitted and agreed to by the Company, whenever any interest payment is due
hereunder, the Borrower may issue an additional promissory note or notes in lieu
of payment of such interest in the manner set forth in Section 1.6(a). Such
additional notes shall have the same terms as set forth in this Agreement and
under the original Note (except for the date of making and amount), including
without limitation the same Maturity Date, rate of interest, payment terms and
conversion rights.
(c) Prepayment and Prepayment Premium. The Borrower may pay the
unpaid principal amount under this Agreement, together with all unpaid interest
thereon, at any time prior to the Maturity Date.
(d) Payments After an Event of Default. Upon the occurrence of
any Event of Default (as defined in Section 4.1 herein), the Borrower shall be
considered to be in default, and the Company shall have the remedies set forth
in Section 4.2. After such occurrence of an Event of Default which remains
uncured as set forth in Section 4.1, the principal amount outstanding under this
Agreement shall accrue interest at the rate of twelve percent (12%) per annum
compounded daily and shall continue to accrue interest until such amounts are
repaid in full.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
To induce the Company to enter into this Agreement and to make the
Loan, each Borrower hereby represents and warrants to the Company that:
SECTION 2.1 Organization. Such Borrower (a) is duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
(b) is duly qualified to transact business in every jurisdiction where, because
of the nature of its business or property, such qualification is required, (c)
has full power and authority to own its property and assets and to carry on its
business as now conducted, and (d) has full power to execute, deliver and
perform its obligations under this Agreement and the Note.
SECTION 2.2 Authorization; Compliance. The execution and delivery of,
and the performance by Borrower of its obligations under this Agreement and the
Note (a) are within its corporate powers, (b) have been duly authorized by all
requisite corporate action, (c) do not violate any provision of law, any order
of any court or other agency of government, or the Certificate of Incorporation
or other charter documents of such Borrower, and (d) do not violate any
indenture, agreement or other instrument to which such Borrower is a party, or
by which it is bound, or be in conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under, or except
as may be provided by this Agreement, result in the creation or imposition of
any lien upon any of the property or assets of such Borrower pursuant to, any
such indenture, agreement or instrument.
-3-
5
SECTION 2.3 Enforceability. This Agreement and the Note are the legal,
valid and binding obligations of such Borrower and are enforceable against such
Borrower, in accordance with their terms except as such enforceability may be
limited by (a) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and (b) general principles of equity.
ARTICLE III
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to make the Loan hereunder is subject to
the satisfaction of the following conditions precedent:
(a) The representations and warranties set forth in Article II hereof
shall be true and correct.
(b) The applicable Borrower shall have executed and delivered to the
Company, or caused to be executed and delivered to the Company, on or prior to
the date of execution of this Agreement, the Note, and all other documents
reasonably necessary to consummate the lending transactions contemplated hereby.
(c) No default or Event of Default (as defined in Section 4.1 herein)
shall have occurred and be continuing or would result from the making of the
Loan.
ARTICLE IV
DEFAULTS/REMEDIES UPON DEFAULT
SECTION 4.1 Default.
(a) Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement:
(1) a Borrower fails to pay when due any principal of or
interest under this Agreement with respect to moneys borrowed by such Borrower
when and as the same shall become due and payable under this Agreement,;
(2) there is a default in the performance of any covenant,
condition, or agreement contained in, or any breach or threatened breach by
Borrower under this Agreement;
(3) a Borrower becomes insolvent or otherwise cannot pay its
debts as they become due;
(4) a Borrower takes any voluntary action with respect to or
is the subject of any involuntary action seeking bankruptcy, insolvency
administration, receivership, reorganization, arrangement among creditors,
composition or other similar action and such action is not stayed or dismissed
within a period of sixty (60) days after the date thereof; or
-4-
6
(5) Borrower's existence is terminated or it is dissolved
(other than by Merger into another Borrower or the Company).
(b) Waiver. Except as set forth herein, Borrower hereby waives
presentment, demand and presentation for payment, notice of nonpayment and
dishonor, protest and notice of protest and expressly agrees that this Agreement
or any payment hereunder may be extended from time to time by the Company
without in any way affecting the liability of such Borrower.
SECTION 4.2 Remedies. Upon the occurrence of an Event of Default which
remains uncured as set forth in Section 4.1, the Company may, at its option: (a)
declare the principal and accrued interest outstanding under this Agreement and
the Note, in whole or in part, immediately due and payable; or (b) exercise any
other rights and remedies available to the Company under this Agreement, the
Note, or applicable laws. Notwithstanding the foregoing, upon the occurrence of
an Event of Default under Section 4.1(a)(3) or Section 4.1(a)(4), the entire
unpaid principal balance under this Agreement, together with all accrued but
unpaid interest thereon, shall automatically and immediately become due and
payable, and thereafter the Company may proceed to enforce payment of the same
and to exercise any and all of the rights and remedies afforded herein as well
as all other rights and remedies possessed by the Company by law or otherwise.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Survival. This Agreement and all covenants, agreements,
representations and warranties herein and in the certificates delivered pursuant
hereto, shall survive the making by the Company of the Loan and the execution
and delivery to the Company of the Note and shall continue in full force and
effect so long as the Note and any other indebtedness of Borrower to the Company
is outstanding and unpaid.
SECTION 5.2 Indemnification. Each Borrower shall and hereby agrees to
indemnify, defend and hold harmless the Company and its officers, directors,
agents, employees and counsel from and against any and all losses, claims,
damages, liabilities, deficiencies, duties, levies, imposts, fees, charges,
judgments or expenses incurred by any of them (except to the extent that it is
finally judicially determined to have resulted from their own gross negligence
or willful misconduct) arising out of or by reason of any litigation,
investigations, claims or proceedings which arise out of or are in any way
related to (a) this Agreement or the transactions contemplated hereby, (b) any
actual or proposed use by such Borrower of the proceeds of the Loan, (c) any
breach by such Borrower of any of the provisions of this Agreement or (d) the
Company's entering into this Agreement, the Note or any other agreements and
documents relating hereto, including, without limitation, amounts paid in
settlement, court costs and fees and disbursements of counsel incurred in
connection with any such litigation, investigation, claim or proceeding or any
advice rendered in connection with any of the foregoing. Each such Borrower's
obligations set forth in this Section 5.2 shall survive any termination of this
Agreement and the Note and the payment in full of the obligations hereunder and
thereunder, and are in addition to, and not in substitution of, any other of its
obligations set forth in this Agreement or otherwise. In addition, each Borrower
shall, upon demand, pay to the Company
-5-
7
all costs and expenses (including the reasonable fees and disbursements of
counsel) paid or incurred by the Company in (i) enforcing or defending its
rights under or in respect of this Agreement, the Note or any other document or
instrument now or hereafter executed and delivered in connection herewith, (ii)
collecting any amounts due under this Agreement or the Note, and (iii) obtaining
any legal, accounting or other advice in connection with any of the foregoing,
provided that such claims were found by the applicable court or arbitrator to be
properly brought under and consistent with the terms and conditions of this
Agreement or the Note, as the case may be.
SECTION 5.3 Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of laws principles thereof.
SECTION 5.4 Amendments. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by a Borrower from a provision, shall be
effective unless the same shall be in writing and signed by the Company. A
written amendment, consent or waiver shall be effective only in the specific
instance, and for the purpose, for which given. No notice to, or demand, on a
Borrower, in any one case, shall entitle a Borrower to any other or future
notice or demand in the same, similar or other circumstances.
SECTION 5.5 Waiver. Neither any failure nor any delay on the part of
the Company in exercising any right, power or privilege hereunder, shall operate
as a waiver thereof, nor shall a single or partial exercise thereof preclude any
other or future exercise, or the exercise of any other right, power or
privilege.
SECTION 5.6 Notices. All notices and correspondence hereunder shall be
in writing and sent by certified or registered mail, return receipt requested,
or by overnight delivery service, with all charges prepaid, to the applicable
party at the addresses set forth below, or by facsimile transmission (including,
without limitation, computer generated facsimile), promptly confirmed in writing
sent by first class mail, to the fax numbers and addresses set forth below:
If to the Company: PlayCore Wisconsin, Inc.
Riverfront Center, Xxxxx 000
00 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
If to Holdings: PlayCore, Inc.
Riverfront Center, Suite 204
00 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
-6-
8
If to Merger Sub: Jasdrew Acquisition Corp.
c/o Chartwell Investments II, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices and correspondence shall be deemed given upon
the earliest to occur of (a) actual receipt, (b) if sent by certified or
registered mail, three (3) Business Days after being postmarked, (c) if sent by
overnight delivery service, when received at the above stated addresses or when
delivery is refused or (d) if sent by facsimile transmission, when receipt of
such transmission is acknowledged.
SECTION 5.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Holdings, Merger Sub and the Company and their
respective successors and assigns, except that no party hereto shall have the
right to assign this Agreement or any of its rights, obligations or interests
herein without the prior written consent of the other parties hereto.
SECTION 5.8 Severability. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 5.9 Headings. The Article and Section headings in this
Agreement are inserted for convenience of reference only and shall not in any
way affect the meaning or construction of any provision of this Agreement.
SECTION 5.10 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but both of
which shall together constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
-7-
9
IN WITNESS WHEREOF, each of Holdings, Merger Sub and the Company have
caused this Agreement to be executed by their duly authorized officers, as of
the date first set out above.
PLAYCORE, INC.
By: /s/ XXXXXXXX X. XXXXXXX
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
--------------------------------
Title: President
-------------------------------
JASDREW ACQUISITION CORP.
By: /s/ XXXXXXX XXXXX
----------------------------------
Name: Xxxxxxx Xxxxx
--------------------------------
Title: Vice President
-------------------------------
PLAYCORE WISCONSIN, INC.
By: /s/ XXXXXXXX X. XXXXXXX
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
--------------------------------
Title: Chief Executive Officer
-------------------------------
