EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated April 13, 2000 (this "Agreement"), by and
among PlayCore Holdings, Inc., a Delaware corporation ("Parent"), and Jasdrew
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Acquisition Company"), and PlayCore, Inc., a Delaware corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, Acquisition Company and the Company are entering into an Agreement and
Plan of Merger (as such agreement may hereafter be amended from time to time,
the "Merger Agreement"; capitalized terms used but not defined in this Agreement
shall have the meanings ascribed to them in the Merger Agreement), which
provides, upon the terms and subject to the conditions thereof, for (i) the
commencement by Parent, Acquisition Company and the Company of a joint tender
offer (the "Offer") to purchase all of the issued and outstanding shares of the
common stock, par value $.01, of the Company ("Common Stock") at the applicable
Offer Price and (ii) the subsequent merger of Acquisition Company into the
Company (the "Merger"); and
WHEREAS, as a condition to the willingness of Acquisition Company and
Parent to enter into the Merger Agreement, Parent and Acquisition Company have
required that the Company agree, and in order to induce Parent and Acquisition
Company to enter into the Merger Agreement the Company has agreed, to grant
Acquisition Company an option to purchase shares of Common Stock, upon the terms
and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE TOP-UP STOCK OPTION
SECTION 1.1. Grant of Top-Up Stock Option. Subject to the terms and
conditions set forth herein, the Company hereby grants to Acquisition Company an
option (the "Top-Up Stock Option") to purchase that number of shares of Common
Stock (the "Top-Up Option Shares") equal to the number of shares of Common Stock
that, when added to the number of shares of Common Stock owned by Parent and
Acquisition Company at the time of exercise shall permit the Merger to be
accomplished pursuant to Section 253 of the Delaware General Corporation Law
assuming the issuance of the Top-Up Option Shares (the "Short Form Condition")
at a purchase price per Top-Up Option Share equal to the Offer Price;
provided, however, that the Top-Up Stock Option shall not be exercisable if the
number of shares of Common Stock subject thereto exceeds the number of
authorized shares of Common Stock available for issuance.
SECTION 1.2. Exercise of Top-Up Stock Option.
(a) Subject to the conditions set forth in Section 2.1 and any additional
requirements of Law, the Top-Up Stock Option may be exercised by Acquisition
Company, in whole but not in part, at any one time after the occurrence of a
Top-Up Exercise Event (as defined below) and prior to the Top-Up Termination
Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this Agreement
on the day of the Offer Closing, provided that Acquisition Company has accepted
for payment pursuant to the Offer shares of Common Stock satisfying the Minimum
Condition.
(c) The "Top-Up Termination Date" shall occur for purposes of this
Agreement upon the earliest to occur of: (i) the Effective Time; (ii) the date
which is five (5) business days after the occurrence of Top-Up Exercise Event
(or such later date on which the closing of a purchase may be consummated, as
set forth in Section 3(d) below); and (iii) the termination of the Merger
Agreement.
(d) In the event Acquisition Company wishes to exercise the Top-Up Stock
Option, Acquisition Company shall send to the Company a written notice (a
"Top-Up Exercise Notice", the date of which notice is referred to herein as the
"Top-Up Notice Date") specifying the number of Top-Up Option Shares to be
acquired and the aggregate purchase price therefor, the place for the closing of
the purchase and sale pursuant to the Top-Up Stock Option (the "Top-Up Closing")
and a date not earlier than the Top-Up Notice Date and not later than ten (10)
business days from the Top-Up Notice Date for the Top-Up Closing (the "Top-Up
Closing Date"); provided, however, that (i) if the Top-Up Closing cannot be
consummated by reason of any applicable Laws or Orders, the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been terminated and (ii)
without limiting the foregoing, if prior notification to or approval of any
Governmental Entity is required in connection with such purchase, Acquisition
Company and the Company shall promptly file the required notice or application
for approval and shall cooperate in the expeditious filing of such notice or
application, and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which, as the case may be, (A) any
required notification period has expired or been terminated or (B) any required
approval has been obtained, and in either event, any requisite waiting period
has expired or been terminated.
(e) In the event that the exercise of the Top-Up Option would result in
the Short Form Condition being satisfied, then Acquisition Company shall
exercise the Top-Up Option to buy a sufficient number of shares to meet the
Short Form Condition unless such exercise would be prevented by Section 2.1(b)
hereof.
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ARTICLE II
CLOSING
SECTION 2.1.
(a) Conditions to Closing. The obligation of the Company to deliver
Top-Up Option Shares upon the exercise of the Top-Up Stock Option is subject to
the following conditions:
(i) All waiting periods, if any, under the HSR Act applicable to
the issuance of the Top-Up Option Shares hereunder shall have expired or
have been terminated; and
(ii) There shall be no preliminary or permanent injunction or
other final, non-appealable judgment by a court of competent jurisdiction
preventing or prohibiting the exercise of the Top-Up Stock Option or the
delivery of the Top-Up Option Shares in respect of such exercise.
(b) Limitation. Notwithstanding the foregoing, the Top-Up Stock Option
may only be exercised to the extent that such exercise would not violate
applicable rules of The American Stock Exchange then applicable to the Company.
SECTION 2.2. Closing.
(a) At the Top-Up Closing, (i) the Company shall deliver to Acquisition
Company a certificate or certificates evidencing the applicable number of Top-Up
Option Shares (in the denominations specified in the Top-Up Exercise Notice),
and (ii) Acquisition Company shall purchase each Top-Up Option Share from the
Company at the Top-Up Price. Payment by Acquisition Company of the Top-Up Price
for the Top-Up Option Shares shall be made by wire transfer of immediately
available funds to an account designated by the Company (provided that the
failure or refusal of the Company to designate such a bank account shall not
preclude Acquisition Company from exercising the Top-Up Option).
(b) The Company shall pay all expenses, and any and all Federal, state
and local taxes and other charges, that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section 2.2.
(c) Certificates evidencing Top-Up Option Shares delivered hereunder may
include legends legally required, including a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
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It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Top-Up Option Shares pursuant to a registered public offering or Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"), or any other sale
as a result of which such legend is no longer required.
(d) Upon the giving by Acquisition Company to the Company of the Top-Up
Exercise Notice and the tender of the applicable purchase price, Acquisition
Company shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be actually delivered to Acquisition Company.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants to Parent and Acquisition
Company (except as otherwise disclosed in writing on the date hereof) as
follows:
SECTION 3.1. Organization; Authority Relative to this Agreement. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has all requisite corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby have been duly and
validly executed and delivered by the Company and this Agreement constitutes a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, and by general equitable principles.
SECTION 3.2. Authority to Issue Shares. The Company has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the Top-Up Termination Date shall have
reserved, all the Top-Up Option Shares issuable pursuant to this Agreement. All
of the shares of Common Stock issuable under the Top-Up Stock Option, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable, will be delivered
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on Acquisition Company's voting
rights, charges, adverse rights and other encumbrances of any nature whatsoever
(other than this Agreement) and will not be subject to any preemptive rights.
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SECTION 3.3. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company does not,
and the performance by the Company of its obligations hereunder and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate the certificate of incorporation or bylaws of the Company, (ii)
assuming that all Consents and filings described in Section 3.3(b) have been
obtained or made, conflict with or violate any Law applicable to the Company or
by which any property or asset of the Company is bound or affected or (iii)
result in any violation pursuant to any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit or other instrument or
obligation to which the Company is a party or by which the Company or its
properties may be bound or affected.
(b) No Consent of, or filing with, any Governmental Entity is required by
the Company in connection with the execution and delivery of this Agreement, the
performance by the Company of its obligations hereunder or the consummation by
the Company of the transactions contemplated hereby, except for (i) compliance
with the HSR Act and (ii) Consents or filings the failure of which to be
obtained or made would not, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated hereby or the
performance by the Company of any of its obligations hereunder.
SECTION 3.4. Covenants of the Company. In addition to its other
agreements and covenants herein, the Company agrees:
(a) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
the Company; and
(b) promptly to take all action as may from time to time be required
(including complying with all applicable notification, filing reporting and
waiting period requirements under HSR or otherwise, and cooperating fully with
Acquisition Company in preparing any applications or notices and providing such
information to any regulatory authority as it may require) in order to permit
Acquisition Company to exercise the Top-Up Option and the Company duly and
effectively to issue shares of Common Stock pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION COMPANY
Parent and Acquisition Company hereby represent and warrant to the
Company as follows:
SECTION 4.1. Organization; Authority Relative to this Agreement. Each of
Acquisition Company and Parent is a corporation duly organized, validly existing
and in good
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standing under the laws of the jurisdiction of its incorporation. Each of
Acquisition Company and Parent has all requisite corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Acquisition Company and Parent and the consummation by
Acquisition Company and Parent of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Acquisition Company and Parent. This Agreement has been duly and validly
executed and delivered by Acquisition Company and Parent and constitutes a valid
and binding obligation of Acquisition Company and Parent, enforceable against
each of Acquisition Company and Parent in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and by general equitable principles.
SECTION 4.2. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Acquisition Company
and Parent do not, and the performance by Acquisition Company and Parent of
their obligations hereunder and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate the certificate of
incorporation or bylaws of Acquisition Company or Parent, (ii) assuming that all
Consents and filings described in Section 4.2(b) have been obtained or made,
materially conflict with or materially violate any Law applicable to Acquisition
Company or Parent or by which any property or asset of Acquisition Company or
Parent is bound or affected or (iii) result in any violation pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Acquisition Company
or Parent is a party or by which Acquisition Company or Parent or any of their
respective properties may be bound or affected.
(b) No Consent of, or filing with, any Governmental Equity is required by
Acquisition Company or Parent in connection with the execution and delivery of
this Agreement, the performance by Acquisition Company or Parent of any of its
obligations hereunder or the consummation by Acquisition Company or Parent of
the transactions contemplated hereby, except for (i) compliance with the HSR Act
and (ii) Consents or filings the failure of which to be obtained or made would
not, individually or in the aggregate, prevent or materially delay the
consummation of the transactions contemplated hereby or the performance by
Acquisition Company or Parent of any of their respective obligations hereunder.
ARTICLE V
COVENANTS OF ACQUISITION COMPANY
SECTION 5.1. Distribution. Acquisition Company shall acquire the Top-Up
Option Shares for investment purposes only (and only for the purpose of
effecting a merger of Acquisition Company with the Company pursuant to Section
253 of the Delaware General
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Corporation Law) and not with a view to any sale or distribution thereof in
violation of the Securities Act.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 6.2. Waiver. Any party hereto may (a) extend the time for or
waive compliance with the performance of any obligation or other act of any
other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
SECTION 6.3. Fees and Expenses. Except as otherwise provided herein or in
Section 8.3 of the Merger Agreement, all costs, fees and expenses incurred in
connection with this Agreement shall be paid by the party incurring such
expenses.
SECTION 6.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by telecopy or by overnight courier (providing
proof of delivery) to the respective parties at their addresses as specified in
Section 9.4 of the Merger Agreement.
SECTION 6.5. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner to the fullest extent permitted by applicable Law in order that the
transactions contemplated hereby may be consummated as originally contemplated
to the fullest extent possible.
SECTION 6.6. Assignment, Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other parties, except that Acquisition
Company may assign, in its discretion, any or all of its rights, interests and
obligations hereunder to Parent or any direct or indirect subsidiary of
Acquisition Company, but no such assignment shall relieve Acquisition Company of
any of its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective
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successors and permitted assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, express or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 6.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of laws thereof.
SECTION 6.8. ENFORCEMENT. THE PARTIES AGREE THAT IRREPARABLE DAMAGE WOULD
OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT
IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY COURT OF THE UNITED STATES OR
ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO
WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
SECTION 6.9. Headings. The descriptive headings contained in this
Agreement are included for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 6.10. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
SECTION 6.11. Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of the
date first written above.
PLAYCORE HOLDINGS, INC.
By: /s/
Name:
Title:
Jasdrew Acquisition Company
By: /s/
Name:
Title:
PLAYCORE, INC.
By: /s/
Name:
Title:
