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EXHIBIT (d)(x)
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 Xxxx X. Xxxxxxxx (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 $70,000 (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 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
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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, including but not limited to (A) a
significant change in the nature or scope of the Employee's
authority, powers, functions, duties or responsibilities, (B) a
significant reduction in the level of support services, staff,
secretarial and other assistance, office space and accoutrements,
(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 or (D) reduction in the amount of the Employee's
base salary.
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 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
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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 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.
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3. Other Termination. If 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, 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 and Change of
Control Agreement, dated December 1, 1996, by and between the Employee
and Newco, Inc. (the "Old Severance Agreement") attached hereto as
Exhibit B, in either case, less the value of any Transaction Benefit.
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 amounts
due to the Employee hereunder shall be payable in cash within thirty
days after the Termination Date. The Employee may elect, in his sole
discretion, to receive any salary continuation payments in equal
installments on each regular payroll date of PlayCore Wisconsin after
the Termination Date. Notwithstanding any provision contained herein
to the contrary, any performance bonus payable to the Employee
hereunder may, at the
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option of either the Employee or PlayCore Wisconsin, be paid one-half (1/2)
within thirty (30) days after the Termination Date and the balance within
ninety (90) days 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;
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.
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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.
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
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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 (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.
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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.
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/ XXXX X. XXXXXXXX
--------------------------- ----------------------------
Xxxx X. Xxxxxx, President Xxxx X. Xxxxxxxx
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. SCHEDULE A
OPTION TERMS
AMOUNT OF INITIAL GRANT: A nonqualified option grant (the "Initial Grant")
of 4,350 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 IRR")
as of the "Determination Date," ("Performance
Options") and the Employee is still in the employ
of PlayCore Wisconsin on the Determination Date.
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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.
PERFORMANCE OPTIONS: All Performance Options shall
immediately terminate.
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CALL ON SHARES ACQUIRED In the event of the Employee's termination of
ON EXERCISE OF OPTION: 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 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.
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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 $65,000 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 $65,000.
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 Termination Date. The
purchase price as determined above
15
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.
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
16
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).
17
SCHEDULE C
PHANTOM STOCK TERMS
AMOUNT OF INITIAL GRANT: A grant of 855 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
Termination Date. The Employee Put must be
exercised
18
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.
RESTRICTIONS ON TRANSFER: The Phantom Shares will be non-transferable,
except with respect to a transfer to a trust or
partnership, the only
19
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.
