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EXHIBIT (d)(vii)
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of April 13, 2000
is made and entered into by and between Jasdrew Acquisition Corp. and XXXXXXXX
X. XXXXXXX (the "Executive"), residing at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxxxx,
XX 00000.
WHEREAS, the Executive is an officer and a key employee of PlayCore
Wisconsin, Inc. (the "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 Executive, in consideration of the agreement of Jasdrew
contained herein that Executive will receive payment of a cash bonus from
PlayCore Wisconsin in an amount of $500,000 (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
continued employment of Executive with PlayCore Wisconsin under the terms and
conditions set forth herein;
WHEREAS, the Executive acknowledges and agrees that the terms of this
Agreement shall supersede all prior agreements between the parties as set forth
in Section 13.1 hereof;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth 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. EMPLOYMENT AND DUTIES
1.1 Subject to the terms and conditions of this Agreement, PlayCore
Wisconsin, Inc. ("PlayCore Wisconsin") shall continue to employ the Executive to
serve as the President and Chief Executive Officer of PlayCore Wisconsin. The
Executive and one other individual designated by the Executive (and consented to
by PlayCore Holdings, L.L.C. "Holdings, L.L.C."), using its good faith judgment)
shall be elected to the Board of Directors of PlayCore Wisconsin (the "Board")
effective as of the Commencement Date (as defined below). PlayCore Wisconsin
must use its best efforts to retain the Executive and his designee on the Board
during the Term (as defined below) and any extensions thereof.
1.2 The Executive shall report directly to the Board of Directors of
PlayCore Wisconsin. The Executive shall perform the duties, and assume the
responsibilities and obligations, contemplated by the title referred to in
Section 1.1, and shall perform such other duties and undertake such other
responsibilities and obligations, consistent with his position, as the Board
shall determine from time to time.
1.3 The Executive shall (i) devote his full business time and attention
and best efforts to the business and affairs of PlayCore Wisconsin and its
affiliates, (ii) use his best efforts to
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promote and further the interests of PlayCore Wisconsin, and (iii) faithfully
and diligently perform his responsibilities and duties hereunder.
1.4 The Executive shall not, without the prior written consent of
PlayCore Wisconsin, render services, whether or not compensated, to any other
person or as an employee, independent contractor or otherwise; provided,
however, that nothing herein shall prevent or restrict the Executive from (a)
rendering services to charitable, civic or other not-for-profit organizations or
managing his personal and family interests in such a manner as shall not
materially interfere with Executive's performance of his duties under this
Agreement, or (b) serving on the board of directors of a corporation not in
competition with PlayCore Wisconsin, with the consent of PlayCore Wisconsin
which shall not be unreasonably withheld; or (c) accepting speaking engagements
which do not materially interfere with the normal performance of the Executive's
duties.
1.5 The Executive shall comply with all employment policies and
practices of PlayCore Wisconsin as announced in writing from time to time,
provided that none of such policies conflict with any provision of this
Agreement, as the same may be modified from time to time.
2. TERM OF AGREEMENT
2.1 The term of employment under this Agreement shall commence on the
effective date of the Merger (the "Commencement Date").
2.2 Unless extended by mutual consent or as provided in Section 2.3
below, this Agreement shall terminate on the fifth (5th) anniversary of the
Commencement Date (such five-year period being hereinafter referred to as the
"Initial Term").
2.3 Following the initial expiration date of the Initial Term, and if
extended, each year thereafter, this Agreement shall be extended for an
additional twelve months (each such twelve month period an "Extension Year")
unless, no later than six (6) months prior to the end of the Initial Term or
Extension Year either party shall have notified the other in writing that it
does not elect to extend the Term past its then expiration date. The expression
"Term" as used herein shall mean the Initial Term and all Extension Years during
which this Agreement remains in effect.
3. COMPENSATION
3.1 Annual Base Salary. During the Term, PlayCore Wisconsin shall pay
to the Executive an annual base salary of Four Hundred Fifty Thousand Dollars
($450,000), payable in equal installments in arrears in accordance with PlayCore
Wisconsin's customary payroll practices. The Compensation Committee of the Board
(the "Compensation Committee") will review the Executive's performance within
forty-five (45) days after the end of each fiscal year of the Term and may
increase the Executive's annual base salary for the then-current year by up to
ten percent (10%) of the previous year's annual base salary, based upon a good
faith evaluation by the Board, or the Compensation Committee, of the Executive's
performance in such previous year. The increase, if any, will be retroactive to
the beginning of the then-current year.
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3.2 Incentive Bonus. In addition to the annual base salary, the
Executive shall be eligible to receive, with respect to each fiscal year, a
target incentive bonus (the "Incentive Bonus") computed in accordance as
follows. The Incentive Bonus shall equal up to two hundred percent (200%) of the
Executive's annual base salary in effect for such year for the achievement of
100% of the Board-approved corporate target or "max out" EBITDA for such fiscal
year. No Incentive Bonus shall be earned if EBITDA in a fiscal year is below the
EBITDA for the prior fiscal year. The Incentive Bonus shall be calculated
ratably for the actual increase in EBITDA versus the prior year and as compared
to the difference between the prior fiscal year's EBITDA and the corporate
target or "max out" EBITDA. The corporate target or "max out" EBITDA for the
2000 fiscal year shall be $33.1 million and the actual 1999 EBITDA is $27
million.
3.3 Calculation of Bonuses. PlayCore Wisconsin, within 15 days after
the delivery of its audited financial statements shall deliver to the Executive
a statement ("Bonus Statement"), prepared by PlayCore Wisconsin's internal
accounting staff and reviewed by PlayCore Wisconsin's regularly employed
accountants, setting forth the applicable EBITDA calculations or other relevant
financial performance criteria and the resulting Incentive Bonus calculations,
if any.
3.4 Payment of Bonuses. The Incentive Bonus will be paid within thirty
(30) days after delivery to the Executive of the applicable Bonus Statement.
3.5 Stock Options. As of the closing date Executive shall receive a
grant of a nonqualified stock option to purchase 29,000 shares of the common
stock of PlayCore Holdings, Inc. ("Holdings"), in accordance with the terms set
forth in Schedule A.
3.6 Equity Purchase. In connection with the closing of the Transaction,
Executive shall purchase an equity interest in Holdings L.L.C. in an amount of
not less than $500,000. The percentage interest in Holdings L.L.C. to be
purchased by Executive shall be based on the value of Holdings L.L.C. as of the
Closing date. The terms surrounding the purchase, holding and sale of such
equity interest in Holdings L.L.C. shall be set forth in the applicable
operating agreement and subscription agreement as agreed upon between Holdings
L.L.C. and Executive as generally set forth on Schedule B.
3.7 Phantom Stock. On the Commencement Date, Executive shall be granted
4,848 shares of phantom common stock of Holdings ("Phantom Shares") in
accordance with the terms set forth on Schedule C. In the event of the
termination of the Executive which results in the Executive's entitlement to
severance benefits set forth in Section 5, below, such severance payments shall
be reduced dollar for dollar by the greater of: (i) the value of Executive's
grant of Phantom Shares on the date this Agreement becomes effective, or (ii)
the value of such grant of Phantom Shares 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
Phantom 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 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
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subtracting from such amount all debt, preferred stock and other obligations on
a consolidated basis of Holdings, if any, provided, however, that such
severance benefits shall not be reduced for the value of the vested Phantom
Shares following a Change of Control (as defined in the attachment hereto).
3.8 Other Plans. The Executive shall be entitled to participate in
additional stock option plans or other equity plans or programs, if any, in
which executives of PlayCore Wisconsin are eligible to participate generally as
may be determined by the Board.
4. BENEFITS; EXPENSES
4.1 Benefit Plans. The Executive shall be entitled to participate in
all of the benefit plans and programs available to the senior executives of
PlayCore Wisconsin, as such plans or programs may be in effect from time to
time. PlayCore Wisconsin may, in its sole and absolute discretion, determine to
amend, revise, replace or terminate any such plans or programs at any time. In
addition, PlayCore Wisconsin shall reimburse the Executive for all costs of any
insurance (including, but not limited to, all premiums, deductibles and co-pay
requirements).
4.2 Vacation. During the Term, the Executive shall be entitled to four
(4) weeks of paid vacation per year and all other paid holidays given to
employees of PlayCore Wisconsin in accordance with PlayCore Wisconsin's regular
vacation and holiday policies. Such vacation shall be cumulative and may be
carried over to ensuing years and shall include all vacation carried over from
PlayCore, Inc. Executive shall provide PlayCore Wisconsin with reasonable notice
regarding the taking of vacation and shall always attempt to schedule vacations
so as to minimize conflict with PlayCore Wisconsin's reasonable business needs.
4.3 Business Expenses. PlayCore Wisconsin, upon presentation by the
Executive of appropriate documentation, shall reimburse the Executive for all
reasonable and necessary business expenses incurred by Executive in connection
with the performance of his duties under this Agreement, including reasonable
accommodation expenses during travel required in connection with the performance
of Executive's duties, and subject to PlayCore Wisconsin's written policies with
respect thereto as in effect from time to time. PlayCore Wisconsin shall provide
Executive with a corporate credit card, which Executive shall use solely for
purposes of performing his duties under this Agreement and not for personal use.
4.4 Use of Automobile. PlayCore Wisconsin shall lease and make
available to the Executive, during the Term, an automobile of a model of his
selection reasonably acceptable to PlayCore Wisconsin. PlayCore Wisconsin shall
pay for all expenses associated with the use and enjoyment of the automobile.
4.5 Life Insurance. PlayCore Wisconsin will reimburse Executive for the
standard rate premium for a term life insurance policy having a face amount of
five (5) times Executive's Annual Base Salary, with such additional travel and
accident benefits as may be standard with PlayCore Wisconsin's life insurance
policies provided to senior executives.
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4.6 Country Club Membership. Promptly following the Commencement Date,
PlayCore Wisconsin will reimburse the Executive for a husband and wife
membership in a reasonably appropriate country club.
4.7 Professional Services. PlayCore Wisconsin will reimburse the
Executive for up to $15,000 in the aggregate per year for: (a) his reasonable
legal services in connection with this Agreement, (b) reasonable professional
assistance in the preparation of his income tax returns, and (c) his reasonable
estate and retirement planning services.
4.8 Qualified Retirement Plans. PlayCore Wisconsin shall make
contributions to an account for Executive in such "employee pension benefits
plans" (within the meaning of Section 3(2) of ERISA) as PlayCore Wisconsin shall
maintain from time to time, all in accordance with PlayCore Wisconsin company
policies applicable generally to its employees and subject to such restrictions
and limitations as may be necessary and appropriate for such plans to remain in
compliance with all applicable laws and regulations.
4.9 Supplemental Executive Retirement Plan. PlayCore Wisconsin shall
make annual contributions to a PlayCore Wisconsin sponsored supplemental
executive retirement plan in accordance with the terms of such plan in an amount
not less than twelve percent (12%) of Executive's base salary earned in such
fiscal year.
4.10 Tax Gross-Up Payments. If any reimbursement or payment made to or
for the benefit of the Executive pursuant to this Section 4 ("Section 4
Payment"), would be subject to any federal, state or local income tax (the
"Income Tax"), PlayCore Wisconsin shall pay to the Executive an additional
payment (the "Gross-Up Amount") such that, upon receipt thereof, the sum of (a)
all Section 4 Payments less (b) any Income Tax on the Section 4 Payments and any
Income Tax upon the Gross-Up Amount, shall be equal to the aggregate of the
Section 4 Payments. The Gross-Up Amount shall (a) be calculated based upon the
highest combined federal, state and local marginal income tax rate applicable to
the Executive and (b) shall be paid on or before April 1 of each year or partial
year of Executive's employment in respect of which Section 4 Payments are made.
5. TERMINATION PAYMENTS
5.1 General. This Agreement may be terminated by PlayCore Wisconsin, at
any time, with or without Cause (as defined below).
5.2 Termination Without Cause or Good Reason. If this Agreement is
terminated by PlayCore Wisconsin without Cause or by the Executive for Good
Reason, the Executive shall be entitled to receive the payments specified in the
following subsections of this Section 5.2.
5.2.1 his Annual Base Salary through the Termination Date (as
defined in Section 5.7), pro rated to the Termination Date,
5.2.2 any cash bonus previously awarded but not yet paid,
5.2.3 reimbursement for expenses incurred in accordance with
Section 4 (but not yet reimbursed) and the Gross-up Payment due in respect
thereof,
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5.2.4 for a period of twenty-four months from the Termination Date,
continuation of any benefits available (including, but not limited to medical
and life insurance and the use of an automobile) to the Executive under the
terms of the applicable benefit plans and programs in which the Executive is a
participant on the Termination Date, as if the Executive were still employed
during such period, as the same level of benefits and at the same after-tax
dollar cost to the Executive immediately prior to the Termination Date. If and
to the extent PlayCore Wisconsin is not permitted under applicable law to
provide such benefits under its existing plans, or if the provisions of such
benefits would cause the applicable plan to be deemed to be discriminating in
favor of highly compensated employees under any applicable law or regulation,
PlayCore Wisconsin must provide equivalent benefits on an individual basis at no
additional after-tax cost to the Executive or shall provide the after-tax cash
equivalent thereof. The medical, dental and other health benefits provided in
accordance with this subparagraph 5.2.4 shall be reduced by any equivalent
benefits, without waiting period or pre-existing condition limitations, provided
to the Executive by another employer.
5.2.5 a salary continuation payment commencing on the first day of
the month following the month in which the Termination Date occurs, and
continuing for twenty four months in equal monthly installments at the rate of
the Executive's annual base salary in effect on the Termination Date. PlayCore
Wisconsin may reduce each salary continuation payment in an amount necessary to
satisfy applicable federal, state and local tax withholding requirements and in
accordance with the provisions of Section 3.7 hereof.
5.2.6 payments which in the aggregate shall equal two times the
average Incentive Bonus paid to Executive in the two fiscal years (which shall
include Executive's employment with PlayCore, Inc.) prior to the year in which
the Termination Date occurs (the "Bonus Replacement Amount"). The Bonus
Replacement Amount shall be divided into twenty-four (24) equal payments (each,
a "Monthly Bonus Amount"). A Monthly Bonus Amount shall be paid on the first day
of the month following the month in which the Termination Date occurs, and a
Monthly Bonus Amount shall be paid on the first of the month for each of the
subsequent twenty-three months thereafter. PlayCore Wisconsin may also further
reduce the Bonus Replacement Amount in an amount necessary to satisfy applicable
federal, state and local tax withholding requirements and in accordance with the
provisions of Section 3.7 hereof.
5.3 Termination with Cause. If this Agreement is terminated by PlayCore
Wisconsin with Cause (as defined below), then the Executive shall be entitled to
receive:
5.3.1 his Annual Base Salary to the Termination Date, pro rated to
the Termination Date,
5.3.2 any cash bonus previously awarded but not yet paid,
5.3.3 reimbursement for expenses incurred in accordance with
Section 4 (but not yet reimbursed) and the Gross-up Payment due in respect
thereof,
5.3.4 any benefits available to the Executive under the terms of
the benefit plans and programs in which Executive is a participant on the
Termination Date.
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5.4 Voluntary Termination. The Executive agrees to provide services to
PlayCore Wisconsin as provided herein for the duration of the Term (as the same
may be extended in accordance herewith); provided, however, that in the event of
Executive's voluntary termination, Executive shall be entitled to receive:
5.4.1 his Annual Base Salary to the Termination Date, pro rated to
the Termination Date,
5.4.2 reimbursement for expenses incurred in accordance with
Section 4 (but not yet reimbursed) and the Gross-up Payment due in respect
thereof,
5.4.3 any benefits available to the Executive under the terms of
the benefit plans and programs in which Executive is a participant on the
Termination Date, and
5.4.4 any cash bonuses awarded in respect of a year prior to the
year in which the Termination Date occurs but not yet paid.
5.5 Death or Disability of Executive. A Termination Date shall occur
without any further action, upon the death of the Executive or upon the
Executive's Disability Date. In the event of the death or the occurrence of a
Disability Date, PlayCore Wisconsin shall pay to Executive, or the Executive's
estate or personal representative:
5.5.1 his Annual Base Salary through the end of the mouth in which
the Termination Date occurs by reason of death or disability,
5.5.2 in the event of the occurrence of a Disability Date, salary
continuation payments based on his Annual Base Salary then in effect, for a
period of twelve (12) months commencing on the first day of the month following
the month in which the Termination Date occurs; provided however, that such
payments shall be reduced dollar for dollar by the amount of any payments
Executive is eligible to receive under a PlayCore Wisconsin sponsored disability
plan.
5.5.3 reimbursement for expenses required to be reimbursed in
accordance with Section 4 (but not yet reimbursed) and the Gross-up Payment due
in respect thereof, and
5.5.4 for a period of twelve (12) months following the Termination
Date, subject to applicable law, continuation of any benefits available to the
Executive or the immediate family of a deceased Executive under the terms of the
applicable benefit plans and programs in which Executive is a participant on the
Termination Date, as if the Executive were still employed during such period, at
the same level of benefits and at the same after-tax dollar cost to the
Executive immediately prior to the Termination Date.
5.6 Definitions
5.6.1 "Cause" shall mean:
(i) indictment or conviction of, or a plea of nolo contendere by,
the Executive for any felony or any other crime involving moral
turpitude, fraud or misrepresentation,
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(ii) the Executive engaging (alone or with others) in any other
illegal conduct that is materially detrimental to the business or
reputation of PlayCore Wisconsin,
(iii) the repeated refusal, failure or neglect by the Executive to
perform any material duties under the terms of this Agreement for
reasons other than onset of a disability; provided that such refusal,
failure or neglect shall constitute "Cause" only if the Board of
Directors gives Executive written notice specifically describing such
refusal or neglect, and Executive either fails promptly to cure the
same if the same is reasonably curable, or Executive thereafter repeats
such refusal, failure or neglect,
(iv) the termination by PlayCore Wisconsin of this Agreement for
Cause shall be without prejudice to any claim which PlayCore Wisconsin
may have, at law or in equity, arising out of or in connection with the
events giving rise to such termination.
5.6.2 A "Disability Date" shall be deemed to have occurred on the
120th consecutive day following the first day on which the Executive is unable
substantially to perform his duties because of a disability which is expected to
be permanent or to last for an indefinite duration, as determined by a physician
mutually acceptable to Executive and PlayCore Wisconsin; and
5.6.3 "Good Reason" means: (a) any material adverse changes in job
title, status or responsibility including diminution of duties, (b) any
reduction in base salary and aggregate benefits, (c) material breach of the
Agreement by PlayCore Wisconsin, (d) only after the occurrence of a Change of
Control, relocation of the Executive's primary place of employment with PlayCore
Wisconsin to a location more than thirty-five (35) miles from the location where
Executive maintains his primary office prior to such Change of Control, or (e)
the removal of Executive as a member of the Board of Directors, except if such
removal is for Cause or upon voluntary termination of employment by the
Executive, or due to death or disability.
5.6.4 "Termination Date" means (a) the Executive's last day of
employment on or following the date upon which written notice of termination is
delivered to him by PlayCore Wisconsin, as the same shall be stated in such
notice; (b) the Executive's last day of employment on or following the date upon
which the Executive delivers written notice of resignation to PlayCore Wisconsin
(including a resignation deemed a termination for Good Reason under Section
5.6.3); (c) the Disability Date; or (d) the date of the Executive's death.
5.7 Certain Circumstances Treated as Termination Without Cause. If a
Change of Control has occurred, the expiration of this Agreement without further
extension either at the end of its Initial Term, or at the end of any Extension
Year before December 31, 2007, shall constitute a termination of the Executive
without Cause for all purposes of this Agreement.
5.8 Resignation From Board and Other Offices. The Executive agrees,
that upon a termination of employment for any reason, the Executive shall be
deemed to have automatically tendered his resignation from the Board and any
other offices or directorships of PlayCore Wisconsin or any of its affiliates
effective as of the Termination Date.
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6. CONFIDENTIAL INFORMATION
6.1 The term "Confidential Information" shall mean and include
6.1.1 any and all confidential, proprietary, secret or non-public
information related in any way to the business or operations, present or future,
of PlayCore Wisconsin or any of its affiliates or any customer of PlayCore
Wisconsin or any of its affiliates, which is now, or in the future shall become,
known to Executive as a result of his relationship with PlayCore Wisconsin; and
6.1.2 without limitation of the foregoing, any intellectual
property rights acquired or developed by PlayCore Wisconsin or any of its
affiliates, whether or not patentable or copyrightable, including all business
plans, know-how, technical information, inventions, designs, equipment,
configurations, ideas, concepts, processes, procedures, operations, research and
development plans, computer software, specifications, documentation, trade
secrets, technology (including the expression of any of the foregoing in notes,
formulas, test procedures and results, reports, memoranda or other written
materials, software or other materials of whatsoever nature) pricing
information, business, operational and marketing plans. Notwithstanding the
above, Confidential Information shall not include such information as Executive
can establish by written documentation:
(a) to have become known to the general public without fault on the
part of the Executive;
(b) to have been received by the Executive at any time from a
source other than PlayCore Wisconsin or any of its affiliates, agents,
representatives or employees, lawfully having possession of such
information without an obligation of confidentiality; or
(c) to have been in the public domain or been part of a printed
publication available to the public.
6.2 The Executive acknowledges that the Confidential Information was
and in the future may have been acquired and/or developed by PlayCore Wisconsin
or its affiliates at great expense, may be a special, valuable and unique asset
of PlayCore Wisconsin, and represents the sole exclusive property of PlayCore
Wisconsin. The Executive in the course of his employment with PlayCore Wisconsin
will obtain Confidential Information and personal knowledge of, and influence
over, clients of PlayCore Wisconsin and its affiliates. The Executive
acknowledges that any wrongful use or disclosure of any Confidential Information
would greatly damage PlayCore Wisconsin, causing it irreparable harm and injury.
The Executive covenants and agrees that, at all times during the Term and for a
period of two years thereafter, he shall not, directly or indirectly, publish,
divulge or disclose, in whole or in part, or suffer the use by any third party,
for his own benefit or the benefit of any other person, any Confidential
Information, other than;
(i) in the due course of performing his duties on behalf of
PlayCore Wisconsin, but then only to officers or others acting on
behalf of PlayCore Wisconsin or any client, where the duties of such
person require such disclosure; or
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(ii) as may be required by law.
6.3 The Executive acknowledges and agrees that all copies (in any form
whatsoever) of all memoranda, documents, data, records, notes and other written
information in his possession or under his control which contain or pertain to
any Confidential Information, shall at all times be the sole and exclusive
property of PlayCore Wisconsin. In the event Executive's employment terminates
for any reason, Executive shall promptly deliver to PlayCore Wisconsin all
copies of all such materials.
7. NON-COMPETITION
7.1 During the Term and for an additional period ending twenty-four
(24) months after the termination of his employment the Executive will not
control, manage, operate, be employed or engaged by, or otherwise participate or
engage in business as, or own any interest in, directly or indirectly, any
individual proprietorship, partnership, corporation, joint venture, trust or any
other form of business entity (whether as an individual proprietor, partner,
shareholder, joint venturer, trustee or in any other manner whatsoever) if such
entity is engaged anywhere in the world in the manufacture and/or sale or
furnishing of products and/or services of the type and character manufactured,
sold or furnished by PlayCore Wisconsin or any of its affiliates, provided,
however, that nothing contained in this clause shall be deemed to prohibit the
Executive from owning less than 2% of the shares of a publicly held corporation
engaged in any such business.
7.2 During the Term, and for two (2) years after his termination of
employment hereunder, the Executive will not, directly or indirectly employ or
attempt to employ or assist anyone else to employ any person who is then or at
any time during the preceding year was in the employ of PlayCore Wisconsin or
any of its affiliates.
7.3 During the Term, and for two (2) years after his termination of
employment hereunder, the Executive will not, directly or indirectly interfere
with any business relationship between PlayCore Wisconsin (including its
affiliates) and any of its suppliers or customers.
8. SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF, REFORMATION OF RESTRICTIONS
8.1 The Executive acknowledges that the services to be rendered by
Executive are of a special, unique, extraordinary and intellectual character,
(ii) that Executive will develop a personal acquaintanceship and relationship
with many of PlayCore Wisconsin's customers, as well as an intimate knowledge of
those customer's requirements, (iii) that PlayCore Wisconsin's relationships
with established customers are likely to be placed in Executive's hands and (iv)
that Executive's position with PlayCore Wisconsin places him in a position of
utmost confidence and trust with respect to the clients and executives of
PlayCore Wisconsin. Executive also acknowledges that PlayCore Wisconsin's
marketing efforts are targeted not only to existing and potential customers in
the United States but throughout the entire world and accordingly, it is
reasonable that the restrictive covenants set forth above are not limited by
specific geographic area but by the location of PlayCore Wisconsin's clients.
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8.2 The parties recognize, acknowledge and agree that, if the Executive
commits a breach or PlayCore Wisconsin has reasonable evidence that the
Executive is about to commit a breach, of any of the provisions of Sections 6 or
7 above, PlayCore Wisconsin will suffer irreparable harm and injury, and money
damages will not provide an adequate remedy to PlayCore Wisconsin. Accordingly,
the Executive agrees that, in any such event, PlayCore Wisconsin shall be
entitled to have the provisions of this Agreement specifically enforced by any
court having jurisdiction, without being required to post a bond or other
security and without having to provide the inadequacy of the available remedies
at law. In addition, PlayCore Wisconsin shall be entitled to avail itself of all
such other actions and remedies available to it under law or in equity and shall
be entitled to such damages as it sustains by reason of such breach. PlayCore
Wisconsin agrees to notify the Executive within seven (7) days after the
discovery of any breach or anticipated breach of any of the provisions of
Sections 6 or 7 above.
8.3 The parties acknowledge that the type and periods of restriction
imposed on the Executive pursuant to the provisions of Sections 6 and 7 above
are fair and reasonable, and are reasonably required for the protection of
PlayCore Wisconsin and the goodwill associated with the business of PlayCore
Wisconsin. It is the express desire and intent of the parties that the
provisions of Sections 6 and 7 be enforced to the fullest extent permissible. If
any of the covenants in Sections 6 or 7 above, or any part thereof, is hereafter
constructed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions. If any of the covenants contained in
Sections 6 or 7, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties hereby
expressly agree that the court making such determination shall have the power to
reduce the duration of such provision and/or areas to which any such provision
shall apply, and, in its reduced or limited form, said provision shall then be
enforceable. The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 6 and 7 above upon the courts of any
state within the geographical scope of such covenants.
8.4 If the courts of any one or more of such states shall hold any of
the previous covenants unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect PlayCore Wisconsin's rights to the relief provided
above in the courts of any other states within the geographical scope of such
covenants, as to breaches of such covenants in such other respective
jurisdictions, the above covenants as they relate to each state being, for this
purpose, severable into diverse and independent covenants.
8.5 The prevailing party in any action arising out of a dispute in
respect of any provision of this Agreement shall be entitled to recover
reasonable attorneys' fees and costs and disbursements incurred in connection
with the prosecution or defense, as the case may be, of any such action.
9. INTELLECTUAL PROPERTY
9.1 During the Term, the Executive shall disclose to PlayCore Wisconsin
all business ideas, inventions and business plans developed by him during such
Term which relate directly or indirectly to PlayCore Wisconsin's business or any
of its affiliates, including without limitation
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any process, operation, product or improvement which may be patentable or
copyrightable. The Executive agrees that all of the foregoing will be the sole
and exclusive property of PlayCore Wisconsin and that he will at PlayCore
Wisconsin's request and cost do whatever is necessary to secure the rights
thereto, by patent, copyright or otherwise, to PlayCore Wisconsin.
10. LIFE INSURANCE
The Executive agrees that PlayCore Wisconsin shall have the right to
obtain life insurance on the Executive's life, at PlayCore Wisconsin's sole
expense and with PlayCore Wisconsin as the sole beneficiary thereof. The
Executive shall (a) cooperate fully with PlayCore Wisconsin in obtaining such
life insurance, (b) sign any necessary consents, applications and other related
forms or documents, and (c) take any reasonably required medical examinations.
The Executive does not represent that he is insurable.
11. REPRESENTATIONS
11.1 By Executive. The Executive hereby represents to PlayCore
Wisconsin that the execution and delivery of this Agreement by him, and the
performance of his obligations hereunder are not in violation of, and do not
conflict with or constitute a default under any agreement by which he is bound
or any order, decree or judgment to which he is subject; that this Agreement
constitutes the valid and binding obligation of Executive and that he is not a
party to or bound by any agreement, understanding or arrangement which would
prevent him from carrying out the terms of this Agreement or subject PlayCore
Wisconsin to liability for employing the Executive pursuant to the terms hereof.
11.2 By Jasdrew
11.2.1 Corporate Authority, etc. Jasdrew represents and warrants
that it has all requisite corporate power and authority to enter into and
perform its obligations pursuant to the terms of this Agreement. The execution
and delivery of this Agreement by Jasdrew and the performance by Jasdrew of the
transactions contemplated herein have been duly and validly authorized by the
Board of Directors of Jasdrew and this Agreement has been duly and validly
authorized by all necessary corporate action. This Agreement is a legal, valid
and binding obligation of Jasdrew.
12. INDEMNIFICATION AND INSURANCE
12.1 Indemnity. PlayCore Wisconsin hereby agrees to hold harmless and
indemnify the Executive to the full extent authorized or permitted by the
provisions of Delaware law authorizing or permitting such indemnification
currently prevailing or that are adopted after the date hereof.
12.2 Maintenance of Insurance. In the event PlayCore Wisconsin
maintains a Directors and Officers Insurance Policy, PlayCore Wisconsin shall
cover Executive to the same extent as other officers and directors of PlayCore
Wisconsin covered thereunder.
12.3 Additional Indemnity. Subject only to the exclusions set forth in
Section 12.4 hereof, PlayCore Wisconsin hereby will hold harmless and indemnify
the Executive against any
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and all expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the Executive in connection
with any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action by or in
the right of Corporation), to which the Executive is, was or at any time becomes
a party, or is threatened to be made a party, by reason of the fact that the
Executive is, was or at any time becomes a director, officer, employee or agent
of Corporation, or is or was serving or at any time serves at the request of
PlayCore Wisconsin as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
12.4 Limitation on Additional Indemnity. No indemnity pursuant to
Section 12.3, above, shall be paid by PlayCore Wisconsin:
12.4.1 except to the extent the aggregate of losses to be
indemnified thereunder exceeds the amount of such losses for which the Executive
is indemnified either pursuant to Sections 12.1 or 12.2 hereof or pursuant to
any policy or policies purchased and maintained by PlayCore Wisconsin:
12.4.2 in respect of remuneration paid to the Executive if and to
the extent it shall be determined by a final judgment or other final
adjudication that such remuneration was in violation of law;
12.4.3 on account of any suit in which final judgment is rendered
against the Executive for an accounting or profits made from the purchase or
sale by the Executive of securities of PlayCore Wisconsin pursuant to the
provisions of Section 16(b) of the Exchange Act or similar provisions of any
federal, state or local statutory law or regulation;
12.4.4 on account of the Executive's conduct that is finally
adjudged to have been knowingly fraudulent, deliberately dishonest or willful
misconduct; or
12.4.5 if a decision by a court having jurisdiction in the matter
shall finally determine that such indemnification is not lawful.
12.5 Continuation of Indemnity. All agreements and obligations of
PlayCore Wisconsin contained herein shall continue during the period the
Executive is a director, officer, employee or agent of PlayCore Wisconsin (or is
serving at the request of PlayCore Wisconsin as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise) and shall continue thereafter so long as Executive shall be subject
to any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that the Executive was a director or officer of PlayCore Wisconsin
or serving in any other capacity referred to herein.
13. MISCELLANEOUS
13.1 Entire Agreement. This Agreement (which includes the Exhibits
annexed hereto) sets forth the entire understanding between the parties hereto
and PlayCore Wisconsin as to the subject matter of this Agreement and supersede
all prior agreements, commitments, representations, writings and discussions
between the parties and PlayCore Wisconsin with
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respect to such subject matter. This Agreement may be terminated, altered,
modified or changed only by a written instrument signed by both parties hereto
prior to the Merger. After the Merger, it may be terminated, altered, modified
or changed only by a written instrument signed by both PlayCore Wisconsin and
Executive.
13.2 Subsequent Performance. The provisions of this Agreement which by
their terms call for performance subsequent to termination of this Agreement or
termination of the Executive's employment hereunder (including without
limitation the provisions of Sections 5, 6, 7, 8 and 12 hereof), shall survive
such termination.
13.3 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail
(including any private carrier guaranteeing overnight delivery), postage or
delivery charges prepaid, or sent by private overnight carrier. Any such notice
shall be deemed delivered (a) when so delivered personally or sent by confirmed
facsimile transmission (provided that a manually signed copy thereof is
delivered by any of the other means provided herein initiated no later than the
next following business day), (b) on the date of delivery if sent by express or
private carrier, or (c) if delivered by certified or registered mail, five (5)
business days after the date of deposit in the United States mail, in all cases
addressed to the recipient at the address of such recipient set forth at the
head of this Agreement or at such other address of which such recipient shall
have given notice to the other in the manner herein provided.
13.4 Government Law. This Agreement shall be deemed to be a contract
made under the internal laws of the State of Wisconsin, without regard to the
principles of the conflict of laws thereof.
13.5 Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
13.6 Counterparts. This Agreement may be executed in any number of
counterparts, and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by telefax) by the parties.
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14. FAILURE TO CONSUMMATE. This Agreement shall be null and void if the
Merger is not consummated.
IN WITNESS WHEREOF, the Executive and Jasdrew have executed this
Agreement on the date first above written.
JASDREW ACQUISITION CORP.
BY: /s/ XXXXXXX XXXXX /s/ XXXXXXXX X. XXXXXXX
---------------------------------- -------------------------------------
Vice President Xxxxxxxx X. Xxxxxxx
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SCHEDULE A
OPTION TERMS
AMOUNT OF INITIAL GRANT: A nonqualified option grant (the
"Initial Grant") of 29,000 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 Executive 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 Executive 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
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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 Executive 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 EXECUTIVE
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 Executive
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 Executive.
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BY PLAYCORE WISCONSIN FOR
CAUSE OR BY THE
EXECUTIVE 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.
CALL ON SHARES ACQUIRED In the event of the Executive's
ON EXERCISE OF OPTION: employment for any reason, all shares
in Holdings held by Executive 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-third in cash within 30 days of
the exercise of the Company Call and
the remaining two-thirds 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
Executive a note or such other
permissible security (which shall
contain commercially reasonable terms)
in full satisfaction of such call. In
no event shall the Executive be paid
less cash at the time of the exercise
of the Company Call than the
Executive's income tax liability
resulting from the sale of the shares.
EXECUTIVE PUT: In the event of Executive's
termination of employment by PlayCore
Wisconsin without Cause, by the
Executive for Good Reason, or as a
result of death or disability, the
Executive or his estate as the case
may be, may exercise a "put" to
Holdings (the "Executive Put") at fair
market value on the Termination Date,
subject to Holdings' ability under its
financing documents. The Executive Put
must be exercised within six months of
the
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Termination Date. The purchase price
as determined above will be paid
one-third in cash within 30 days of
the exercise of the Executive Put and
the remaining two-thirds will be
payable within two years of the date
of exercise of the Executive 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
Executive 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 Executive Put as
set forth above, Executive 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 Executive 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
Executive, 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: Executive 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 $500,000 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, Executive
shall make a cash payment to Holdings
L.L.C. of $500,000.
COMPANY CALL ON INTERESTS: In the event of Executive's
termination of employment for any
reason, the Interest held by the
Executive 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 Executive'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 Executive a note
or such other permissible security
(which shall contain commercially
reasonable terms) in full satisfaction
of such call.
EXECUTIVE PUT: In the event of Executive's
termination of employment by PlayCore
Wisconsin, Inc. or an affiliate
("PlayCore Wisconsin") without Cause,
by the Executive for Good Reason, or
as a result of death or disability,
the Executive or his estate as the
case may be, may exercise a "put" to
Holdings
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L.L.C. (the "Executive 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 Executive Put
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
Executive's original investment or
fair market value of the Interest
within 30 days of the exercise of the
Executive Put and the remaining
amount, if any, subject to the Company
Call, will be held by Executive 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 Executive 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
Executive 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 Executive Put as set
forth above, Executive 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 Executive
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 Executive, or in accordance
with the terms of any applicable
operating agreement or shareholders
agreement and the laws of descent and
distribution.
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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: Executive will have the same piggyback
registration rights as other
investors.
FAIR MARKET VALUE: Fair market value of Executive'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 Executive'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 4,848 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 Executive's
employment with PlayCore Wisconsin,
Inc. or an affiliate ("PlayCore
Wisconsin") is terminated for any
reason, all non-vested shares shall be
forfeited; provided, however, that if
such termination occurs (i) within 180
days after a Change of Control, if the
successor does not at the closing
agree to assume all obligations under
Executive's Employment Agreement, or
(ii) if the successor does assume such
obligations under the Executive's
Employment Agreement, after 180 days
but not more than 210 days after such
a change or control, all of
Executive's Phantom Shares shall
immediately vest.
COMPANY CALL: In the event of Executive's
termination of employment for any
reason, the vested Phantom Shares held
by the Executive 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-third in cash
within 30 days of the exercise of the
Company Call and the remaining
two-thirds 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
Executive a note or such other
permissible security (which shall
contain
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commercially reasonable terms) in full
satisfaction of such call. In no event
shall the Executive be paid less cash
at the time of the exercise of the
Company Call than the Executive's
income tax liability resulting from
the sale of the Phantom Shares.
EXECUTIVE PUT: In the event of Executive's
termination of employment by PlayCore
Wisconsin without Cause, by the
Executive for Good Reason, or as a
result of death or disability, the
Executive or his estate as the case
may be, may exercise a "put" to
Holdings (the "Executive Put") of the
vested Phantom Shares at fair market
value on the Termination Date. The
Executive Put must be exercised within
six months of the Termination Date.
The purchase price as determined above
will be paid one-third in cash within
30 days of the exercise of the
Executive Put and the remaining
two-thirds will be payable within two
years of the date of exercise of the
Executive 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 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 Executive 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 Executive Put as
set forth above, Executive 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
Executive Put or any other Realization
Event hereunder, Holdings shall make a
tax gross-up payment to the Executive
to compensate the Executive for the
difference between ordinary income tax
treatment and capital gains tax
treatment with respect to the
appreciated value ("Appreciated
Value") of the
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Phantom Shares from the date of
vesting to the earlier of: (i) the
Termination Date (in the case of an
Executive 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
Executive 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
Executive 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 beneficiaries or
partners (as the case may be) of which
are immediate family member of
Executive, 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
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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.
