1
Execution Copy
PURCHASE AGREEMENT
among
PLAYCORE, INC.,
PLAYCORE WISCONSIN, INC.,
PLAYCORE HOLDINGS, INC.,
and
THE SUBSIDIARIES LISTED ON THE SIGNATURE PAGES HEREOF
and
GS MEZZANINE PARTNERS II, L.P.
and
GS MEZZANINE PARTNERS II OFFSHORE, L.P.
Dated as of April 13, 2000
Relating to:
$30,000,000 Aggregate Principal Amount of
18% Senior Subordinated Notes Due 2008
2
TABLE OF CONTENTS
Page
RECITALS 1
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS......................................................................2
1.1 Definitions..........................................................................................2
1.2 Computation of Time Periods.........................................................................30
1.3 Accounting Terms....................................................................................30
SECTION 2. AUTHORIZATION AND ISSUANCE OF NOTES..................................................................30
2.1 Authorization of Issue..............................................................................30
2.2 Sale and Purchase of the Notes......................................................................30
2.3 Closing.............................................................................................30
SECTION 3. CONDITIONS TO CLOSING................................................................................31
3.1 Representations and Warranties......................................................................31
3.2 Performance; No Default under Other Agreements......................................................31
3.3 Compliance Certificates.............................................................................31
3.4 Opinions of Counsel; Solvency Opinion...............................................................32
3.5 Undertaking by Parent...............................................................................32
3.6 Refinancing of Existing Indebtedness; Credit Agreement; Equity Financing; Minimum Aggregate
Proceeds.......................................................................................32
3.7 Financial Information...............................................................................33
3.8 Material Adverse Effect.............................................................................33
3.9 Proceedings and Documents...........................................................................33
3.10 Management Employment Contracts....................................................................33
3.11 Transaction Documents..............................................................................33
3.12 Closing Payment; Payment of Expenses...............................................................33
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PLAYCORE WISCONSIN.................................................34
4.1 Due Incorporation; Power and Authority..............................................................34
4.2 Capitalization......................................................................................34
4.3 Subsidiaries........................................................................................34
4.4 Due Authorization, Execution and Delivery...........................................................35
4.5 Non-Contravention; Authorizations and Approvals.....................................................35
4.6 Financial Statements................................................................................36
4.7 Absence of Undisclosed Liabilities or Events........................................................37
4.8 No Actions or Proceedings...........................................................................37
4.9 Title to Properties.................................................................................38
4.10 Intellectual Property Rights.......................................................................38
4.11 Tax Returns and Payments...........................................................................38
4.12 Employee Benefit Plans.............................................................................39
-i-
3
4.13 Private Offering; No Integration or General Solicitation; Rule 144A Eligibility....................40
4.14 Environmental Matters..............................................................................41
4.15 Status Under Certain Statutes......................................................................42
4.16 Insurance..........................................................................................42
4.17 Use of Proceeds; Margin Regulations................................................................42
4.18 Existing Indebtedness; Future Liens................................................................42
4.19 Compliance with Laws; Permits......................................................................43
4.20 Solvency...........................................................................................43
4.21 Affiliate Transactions.............................................................................43
4.22 Material Contracts.................................................................................43
4.23 Indebtedness.......................................................................................43
4.24 Fees...............................................................................................43
4.25 Labor and Employment Matters.......................................................................43
4.26 Brokerage Fees.....................................................................................44
4.27 Activities of Holdings.............................................................................44
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.....................................................44
5.1 Purchase for Investment.............................................................................44
SECTION 6. COVENANTS TO PROVIDE INFORMATION.....................................................................45
6.1 Future Reports of Holdings to Purchasers............................................................45
6.2 Future Reports of PlayCore Wisconsin to Purchasers..................................................48
SECTION 7. OTHER AFFIRMATIVE COVENANTS..........................................................................50
7.1 Preservation of Corporate Existence and Franchises..................................................50
7.2 Maintenance of Properties...........................................................................50
7.3 Taxes...............................................................................................51
7.4 Books, Records and Access...........................................................................51
7.5 Compliance with Law.................................................................................52
7.6 Insurance...........................................................................................52
7.7 Offer to Repurchase Upon Change of Control..........................................................52
7.8 Non-Voting Observer.................................................................................54
7.9 Offer to Purchase by Application of Excess Proceeds.................................................55
7.10 Post-Closing Note Guarantees.......................................................................56
7.11 Further Assurances.................................................................................56
7.12 Redemption of Convertible Debentures...............................................................57
SECTION 8. NEGATIVE COVENANTS OF PLAYCORE WISCONSIN.............................................................57
8.1 Stay, Extension and Usury Laws......................................................................57
8.2 Restricted Payments.................................................................................57
8.3 Dividend and Other Payment Restrictions Affecting Subsidiaries......................................60
8.4 Incurrence of Additional Indebtedness...............................................................62
8.5 Asset Sales.........................................................................................62
8.6 Transactions with Affiliates........................................................................64
-ii-
4
8.7 Limitation on Liens.................................................................................64
8.8 Prohibition on Incurrence of Senior Subordinated Debt...............................................65
8.9 Limitation on Issuances and Sales of Capital Stock of Subsidiaries..................................65
8.10 Sales and Leaseback Transactions...................................................................65
8.11 Conduct of Business................................................................................66
8.12 Merger, Consolidation, or Sales of Assets..........................................................66
SECTION 9 NEGATIVE COVENANTS OF HOLDINGS........................................................................68
9.1 Business, Indebtedness, Investments, Etc............................................................68
9.2 Merger, Consolidation or Sales of Assets of Holdings................................................69
9.3 Transactions with Affiliates........................................................................69
SECTION 10. PROVISIONS RELATING TO RESALES OF NOTES.............................................................71
10.1 Private Offerings..................................................................................71
10.2 Exchange and Registration Rights Agreement.........................................................72
10.3 Exchange Right.....................................................................................72
SECTION 11. THE NOTES...........................................................................................73
11.1 Form and Execution.................................................................................73
11.2 Terms of the Notes.................................................................................73
11.3 Denominations......................................................................................73
11.4 Form of Legend for the Notes.......................................................................73
11.5 Payments and Computations..........................................................................74
11.6 Registration, Registration of Transfer and Exchange................................................74
11.7 Transfer Restrictions..............................................................................75
11.8 Mutilated, Destroyed, Lost and Stolen Notes........................................................77
11.9 Persons Deemed Owners..............................................................................77
11.10 Cancellation......................................................................................78
11.11 Home Office Payment...............................................................................78
SECTION 12. EVENTS OF DEFAULT; REMEDIES.........................................................................78
12.1 Events of Default..................................................................................78
12.2 Remedies...........................................................................................81
12.3 Waiver of Past Defaults............................................................................82
12.4 No Personal Liability of Directors, Officers, Employees and Stockholders...........................82
SECTION 13. REDEMPTION..........................................................................................82
13.1 Right of Redemption................................................................................82
13.2 Partial Redemptions................................................................................82
13.3 Notice of Redemption...............................................................................83
13.4 Deposit of Redemption Price........................................................................83
13.5 Notes Payable on Redemption Date...................................................................83
13.6 Notes Redeemed in Part.............................................................................84
SECTION 14. SUBORDINATION OF NOTES..............................................................................84
14.1 Notes Subordinate to Senior Indebtedness..........................................................84
-iii-
5
14.2 Payment Over of Proceeds Upon Dissolution, Etc.....................................................84
14.3 No Payment When Senior Indebtedness in Default.....................................................85
14.4 Payment Permitted If No Default....................................................................87
14.5 Subrogation to Rights of Holders of Senior Indebtedness............................................87
14.6 Provisions Solely to Define Relative Rights........................................................87
14.7 No Waiver of Subordination Provisions..............................................................88
14.8 Reliance on Judicial Order or Certificate of Liquidating Agent.....................................88
14.9 Reliance by Holders of Senior Indebtedness on Subordination Provisions.............................88
14.10 Reinstatement.....................................................................................88
SECTION 15. NOTE GUARANTEES.....................................................................................89
15.1 Note Guarantees....................................................................................89
15.2 Execution and Delivery of Note Guarantees..........................................................90
15.3 Guarantors May Consolidate, Etc. On Certain Terms..................................................90
15.4 Releases of Note Guarantees........................................................................91
15.5 Subordination of Note Guarantees...................................................................91
15.6 Limitation on Guarantor Liability..................................................................91
15.7 Endorsement of Note Guarantees.....................................................................92
SECTION 16. EXPENSES, INDEMNIFICATION AND CONFIDENTIALITY.......................................................92
16.1 Expenses...........................................................................................92
16.2 Indemnification....................................................................................93
16.3 Notification.......................................................................................93
16.4 Confidentiality....................................................................................94
SECTION 17. MISCELLANEOUS.......................................................................................95
17.1 Notices............................................................................................95
17.2 Benefit of Agreement; Assignments and Participations...............................................96
17.3 No Waiver; Remedies Cumulative.....................................................................96
17.4 Amendments, Waivers and Consents...................................................................96
17.5 Counterparts.......................................................................................97
17.6 Reproduction.......................................................................................97
17.7 Headings...........................................................................................97
17.8 Survival of Covenants and Indemnities..............................................................97
17.9 Governing Law; Submission to Jurisdiction; Venue...................................................97
17.10 Severability......................................................................................98
17.11 Entirety..........................................................................................99
17.12 Survival of Representations and Warranties........................................................99
17.13 Construction......................................................................................99
17.14 Intent to Limit Interest to Maximum...............................................................99
17.15 Incorporation.....................................................................................99
17.16 Acknowledgement by Parent.........................................................................99
-iv-
6
EXHIBITS:
--------
Exhibit A - Form of Note
Exhibit B - Form of Exchange and Registration Rights Agreement
Exhibit C - Form of Supplemental Agreement
Exhibit D - Form of Notation of Note Guarantee
Exhibit 3.3(a) - Form of Officers' Certificate
Exhibit 3.3(b) - Form of Secretary's Certificate
Exhibit 3.4(a) - Form of Opinion of Counsel to Company
Exhibit 3.4(b) - Form of Solvency Opinion
SCHEDULES:
---------
Schedule A - Information relating to the Purchasers
Schedule 3.10 - Management Employment Contracts
Schedule 4.2 - Stock of Employees
Schedule 4.3 - Holdings and Subsidiaries
Schedule 4.5 - Consents
Schedule 4.8 - Proceedings and Documents
Schedule 4.9 - Title to Properties
Schedule 4.11 - Taxes
Schedule 4.12 - Plans
Schedule 4.14 - Environmental Matters
Schedule 4.18 - Existing Indebtedness
Schedule 4.19 - Permits
Schedule 4.21 - Affiliate Transactions
Schedule 4.22 - Material Contracts
Schedule 4.25 - Labor Matters
Schedule 4.26 - Broker's Fee
Schedule 4.27 - Activities of Holdings
-v-
7
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of April 13, 2000, among PlayCore, Inc., a
Delaware corporation (prior to the effectiveness of the Merger, "Holdings"),
PlayCore Wisconsin, Inc., a Wisconsin corporation (together with its permitted
successors and assigns, "PlayCore Wisconsin"), PlayCore Holdings, Inc., a
Delaware corporation ("Parent", and upon the effectiveness of the Merger,
"Parent" or "Holdings") the Subsidiaries (as hereinafter defined) listed on the
signature pages hereof as Guarantors, GS Mezzanine Partners II, L.P., a limited
partnership organized under the laws of Delaware ("GS Mezzanine"), and GS
Mezzanine Partners II Offshore, L.P., an exempted limited partnership organized
under the laws of the Cayman Islands ("GS Mezzanine Offshore" and, collectively
with GS Mezzanine and their permitted successors and assigns, the "Purchasers").
RECITALS
WHEREAS, Holdings has entered into an Agreement and Plan of Merger, dated
as of April 13, 2000 (the "Merger Agreement"), by and among Holdings, Parent,
and Jasdrew Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Acquisition Company"), pursuant to which Acquisition
Company and Holdings will be merged with and into PlayCore Wisconsin with
PlayCore Wisconsin being the surviving corporation by way of a two step
transaction consisting of (a) a joint tender offer (the "Tender Offer") by
Acquisition Company and Holdings with respect to the Common Stock, par value
$0.01 per share of Holdings ("Common Stock"), which will be commenced pursuant
to an Offer to Purchase related thereto (the "Offer to Purchase"), and (b) a
subsequent mergers (collectively, the "Merger") of Acquisition Company with and
into Holdings and Holdings with and into PlayCore Wisconsin;
WHEREAS, the Merger Agreement contemplates that Parent will invest in
Acquisition Company $72,500,000 in cash which Acquisition Company will use to
purchase in connection with the Tender Offer Common Stock for an aggregate
purchase price of $72,500,000 (the "Equity Financing");
WHEREAS, pursuant to the Tender Offer, either Acquisition Company or
Holdings will acquire in the Tender Offer all shares of Common Stock not
purchased by Acquisition Company with the proceeds of the Equity Financing and,
in connection therewith, PlayCore Wisconsin will refinance all of the
outstanding Indebtedness of PlayCore Wisconsin and its Subsidiaries;
WHEREAS, the Tender Offer and the refinancing of the outstanding
Indebtedness of PlayCore Wisconsin and its Subsidiaries will be financed as
follows: (a) upon the terms and subject to the conditions set forth in this
Agreement, PlayCore Wisconsin will sell $30,000,000 aggregate principal amount
of its 18% Senior Subordinated Notes due 2008 in the form of Exhibit A hereto
(together with all notes issued in exchange or replacement therefor, the
"Notes"), and (b) PlayCore Wisconsin will enter into the Credit Agreement with
the lenders who
-1-
8
are parties thereto under which an amount equal to approximately $95,000,000
minus fees and expenses will be disbursed to PlayCore Wisconsin at the Closing;
WHEREAS, the Notes are to be guaranteed on a senior subordinated basis by
the Guarantors pursuant to Section 15 of this Agreement;
WHEREAS, the Holders will from time to time be entitled to the benefits of
the Exchange and Registration Rights Agreement in the form of Exhibit B hereto
(as amended, supplemented or modified from time to time, the "Exchange and
Registration Rights Agreement"), among Holdings, Parent, PlayCore Wisconsin,
Playcore Wisconsin's Subsidiaries who are parties to this Agreement and the
Purchasers;
WHEREAS, after consummation of the Tender Offer and the Merger, all of the
outstanding equity of PlayCore Wisconsin will be owned by Parent;
WHEREAS, PlayCore Wisconsin has duly authorized the creation and issuance
of the Notes, Holdings, Parent and PlayCore Wisconsin have duly authorized the
execution and delivery of this Agreement and the Exchange and Registration
Rights Agreement, and PlayCore Wisconsin's Subsidiaries who are parties to this
Agreement have duly authorized the execution and delivery of this Agreement and
the Exchange and Registration Rights Agreement;
WHEREAS, all things necessary to make this Agreement, the Notes and the
Exchange and Registration Rights Agreement valid and binding obligations of
Holdings, Parent and PlayCore Wisconsin in accordance with their respective
terms have been done. All things necessary to make this Agreement and the
Exchange and Registration Rights Agreement the valid and binding obligation of
the Guarantors who are parties thereto in accordance with their respective terms
have been done.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1.
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions. As used herein, the following terms shall have the
meanings specified herein unless the context otherwise requires:
"Accredited Investor" means any Person that is an "accredited investor"
within the meaning of Rule 501(a) (1), (2), (3) or (7) of Regulation D under the
Securities Act.
"Acquired Indebtedness" means with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with, into or becomes a subsidiary of such specified Person, or (ii)
assumed in connection with the acquisition of assets from such other Person and
in each case whether or not Incurred by such other Person
-2-
9
in connection with, or in anticipation or contemplation of, such other Person
becoming a Subsidiary of such specified Person or such acquisition, merger or
consolidation.
"Acquisition Company" is defined in the first recital to this Agreement.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the foregoing.
Notwithstanding the foregoing, in no event will the Purchasers or any of their
Affiliates be deemed to be an Affiliate of Holdings or PlayCore Wisconsin.
"Affiliate Transaction" is defined in Section 8.6(a).
"Agreement" is defined in Section 17.4.
"Applicable Law" means all laws, statutes, treaties, rules, codes,
ordinances, regulations, certificates, orders and licenses of, and
interpretations by, any Governmental Authority and judgments, decrees,
injunctions, writs, permits, orders or like governmental action of any
Governmental Authority (including Environmental Laws and those pertaining to
health or safety) applicable to Holdings, PlayCore Wisconsin or any of its
Subsidiaries or any of their property, assets or operations.
"Asset Acquisition" means (i) an Investment by Holdings, PlayCore Wisconsin
or any Subsidiary of PlayCore Wisconsin in any other Person pursuant to which
such Person shall become a Subsidiary of PlayCore Wisconsin, or shall be merged
with or into PlayCore Wisconsin or any Subsidiary of PlayCore Wisconsin, or (ii)
the acquisition by Holdings, PlayCore Wisconsin or any Subsidiary of PlayCore
Wisconsin of the assets or a line of business or a division of any Person (other
than a Subsidiary of PlayCore Wisconsin) other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment (other than in connection with a mortgage, pledge, lien
or security interest permitted by Section 8.7) or other transfer for value by
Holdings, PlayCore Wisconsin or any of PlayCore Wisconsin's Subsidiaries,
including any Sale and Leaseback Transaction, to any Person other than PlayCore
Wisconsin or a Wholly Owned Subsidiary of PlayCore Wisconsin of: (i) any Capital
Stock of PlayCore Wisconsin or any Subsidiary of PlayCore Wisconsin (other than
directors' qualifying shares to the extent required by applicable law); or (ii)
any other property or assets of PlayCore Wisconsin or any Subsidiary of PlayCore
Wisconsin other than in the ordinary course of business; provided, however, that
Asset Sales shall not include: (A) a transaction or series of related
transactions for which PlayCore Wisconsin or its Subsidiaries receive aggregate
consideration of less than $500,000; (B) the sale, lease, conveyance,
disposition or other transfer of all or substantially all of the assets of
PlayCore Wisconsin as
-3-
10
permitted under Section 8.12; (C) any Restricted Payment permitted by Section
8.2, (D) any Permitted Investment; (E) sales of damaged, worn-out or obsolete
equipment or assets that, in PlayCore Wisconsin's reasonable judgment, are no
longer either used or useful in the business of PlayCore Wisconsin or its
Subsidiaries; (F) the sale, lease, conveyance, disposition or other transfer of
all or substantially all of the assets of PlayCore Wisconsin or Holdings that
constitutes a Change of Control; and (G) transfers of cash or Cash Equivalents
otherwise permitted by this Agreement.
"Asset Sale Offer" is defined in Section 7.9(a).
"Asset Sale Offer Trigger Date" is defined in Section 8.5(c).
"Attributable Indebtedness" in respect of a Sale and Leaseback Transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Audit Date" means December 31, 1999.
"Bankruptcy Law" means Title 11 of the United States Code or any similar
federal or state bankruptcy, insolvency, reorganization or other law for the
relief of debtors.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Holders.
"Business Day" means any day other than a Legal Holiday.
"Capital Expenditures" means, for any period and with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing of fixed or capital assets or additions to fixed
or capital assets (including replacements, capitalized repairs and improvements
during such period) which should be capitalized under GAAP on a consolidated
balance sheet of such Person and its Subsidiaries.
"Capitalized Interest" is defined in Exhibit A hereto.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at
-4-
11
any date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP.
"Capital Stock" means, (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person; and (ii) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Ratings Group ("S&P") or Xxxxx'x
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) time
deposits, certificates of deposit, Eurocurrency deposits or bankers' acceptances
maturing within one year from the date of acquisition thereof or similar types
of investments routinely offered by any bank organized under the laws of the
United States of America or any state thereof or the District of Columbia or any
U.S. branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $300,000,000 or any commercial bank of any
other country that is a member of Organization for Economic Cooperation and
Development ("OECD") and has total assets in excess of $300,000,000; (v)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above; (vi) investments in
money market funds which invest substantially all their assets in securities of
the types described in clauses (i) through (v) above; and (vii) foreign bank
deposits and cash equivalents in jurisdictions where Holdings or its
Subsidiaries are then actively conducting business; provided that (A) all such
deposits are required to be made in the ordinary course of business, (B) such
deposits do not exceed $1,000,000 in the aggregate and (C) the funds so
deposited do not remain in such bank for more than 30 days.
"Change of Control" means the occurrence of any of the following (other
than as the result of the Transactions): (i) any sale, lease, exchange, or other
transfer (other than in connection with a grant of security interest or pledge
pursuant to the Credit Agreement or any Refinancing thereof) (in one transaction
or a series of related transactions) of all or substantially all of the
properties and assets of Holdings and its Subsidiaries or PlayCore Wisconsin and
its Subsidiaries, in each case, taken as a whole, to any Person or group of
related Persons for purposes of Section 13(d)(3) of the Exchange Act (a
"Group"), together with any Affiliates thereof (whether or not otherwise in
compliance with the provisions of this Agreement), other than to the Permitted
Holders or their Related Parties; (ii) the approval by the holders of Capital
Stock of Holdings or PlayCore Wisconsin of any plan or proposal for the
liquidation or
-5-
12
dissolution of Holdings or PlayCore Wisconsin (whether or not otherwise in
compliance with the provisions of this Agreement) other than as provided by
Section 8.12(b) with respect to a predecessor corporation which is relieved of
its obligations hereunder; (iii) any Person or Group (other than the Permitted
Holders or their Related Parties) shall become the owner, directly or
indirectly, beneficially or of record, of shares representing more than 50% of
the aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of Holdings; or (iv) the replacement of a majority of the Board of
Directors of Holdings over a two-year period from the directors who constituted
the Board of Directors of Holdings at the beginning of such period, and such
replacement shall not have been approved by the Permitted Holders or approved or
nominated for election by a vote of a majority of the Board of Directors of
Holdings then still in office who either were members of such Board of Directors
at the beginning of such period or whose election or nomination for election as
a member of such Board of Directors was previously so approved.
"Change of Control Offer" is defined in Section 7.7(a).
"Change of Control Payment" is defined in Section 7.7(a).
"Change of Control Payment Date" is defined in Section 7.7(b)(ii).
"Chartwell" means Chartwell Investments II, L.L.C.
"Closing" is defined in Section 2.3(a).
"Closing Date" is defined in Section 2.3(a).
"Closing Payment" means, with respect to each Purchaser, an amount equal to
3% of the aggregate principal amount of Notes purchased by such Purchaser as of
the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this Agreement such Commission is not existing and performing the
duties now assigned to it under the Exchange Act, the body performing such
duties at such time.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's Common Stock, whether outstanding on the Closing
Date or issued after the Closing Date, and includes, without limitation, all
series and classes of such common stock. Unless the context otherwise requires,
"Common Stock" means Common Stock of Holdings.
"Consolidated" or "consolidated" (including the correlative term
"consolidating") or on a "consolidated basis", when used with reference to any
financial term in this Agreement (but not when used with respect to any Tax
Return or Tax liability), means the aggregate for two
-6-
13
or more Persons of the amounts signified by such term for all such Persons, with
inter-company items eliminated and, with respect to net income or earnings,
after eliminating the portion of net income or earnings properly attributable to
minority interests, if any, in the capital stock of any such Person or
attributable to shares of preferred stock of any such Person not owned by any
other such Person, in accordance with GAAP.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of: (i) Consolidated Net Income; and (ii) to the
extent Consolidated Net Income has been reduced thereby: (A) all income taxes of
such Person and its Subsidiaries paid or accrued in accordance with GAAP for
such period (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains); (B) Consolidated Interest Expense; and (C) Consolidated
Non-Cash Charges less any non-cash items increasing Consolidated Net Income for
such period, all as determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, with respect to any Person,
the ratio of Consolidated EBITDA of such Person during the four full fiscal
quarters (the "Four Quarter Period") ending prior to the date of the transaction
giving rise to the need to calculate the Consolidated Interest Coverage Ratio
for which financial statements are available (the "Transaction Date") to
Consolidated Interest Expense of such Person for the Four Quarter Period. In
addition to and without limitation of the foregoing, for purposes of this
definition, "Consolidated EBITDA" and "Consolidated Interest Expense" shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to: (i) the Incurrence or repayment or retirement of any
Indebtedness of such Person or any of its Subsidiaries (and the application of
the proceeds thereof) giving rise to the need to make such calculation and any
Incurrence or repayment or retirement of other Indebtedness (and the application
of the proceeds thereof), other than the Incurrence or repayment of Indebtedness
in the ordinary course of business for working capital purposes pursuant to
working capital facilities, occurring during the Four Quarter Period or at any
time subsequent to the last day of the Four Quarter Period and on or prior to
the Transaction Date, as if such Incurrence or repayment or retirement, as the
case may be (and the application of the proceeds thereof), occurred on the first
day of the Four Quarter Period; and (ii) any Asset Sales or Asset Acquisitions
giving rise to the need to make such calculation as a result of such Person or
one of its Subsidiaries (including any Person who becomes a Subsidiary as a
result of the Asset Acquisition) Incurring Acquired Indebtedness and also
including any Consolidated EBITDA (including any pro forma expense and cost
reductions, adjustments and other operating improvements or synergies both
achieved by such Person during such period and to be achieved by such Person and
with respect to the acquired assets, all as determined in good faith by a
responsible financial or accounting officer of PlayCore Wisconsin attributable
to the assets which are the subject of the Asset Acquisition or Asset Sale
during the Four Quarter Period) occurring during the Four Quarter Period or at
any time subsequent to the last day of the Four Quarter Period and on or prior
to the Transaction Date, as if such Asset Sale or Asset Acquisition (including
the Incurrence of any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period. If such Person or any of its Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the Incurrence of such guaranteed Indebtedness as if such
Person or any Subsidiary of such Person
-7-
14
had directly Incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Interest Expense" for purposes of
determining the denominator (but not the numerator) of this "Consolidated
Interest Coverage Ratio": (A) interest on outstanding Indebtedness determined on
a fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; and (B) notwithstanding clause (A) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
agreements relating to Interest Swap Obligations, shall be deemed to accrue at
the rate per annum resulting after giving effect to the operation of such
agreements.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including, without limitation: (A)
any amortization of debt discount (including the amortization of costs relating
to interest rate caps or other similar agreements), (B) the net costs under
Interest Swap Obligations; (C) all capitalized interest; and (D) the interest
portion of any deferred payment obligation, but excluding amortization or
write-off of debt issuance costs, (ii) all cash dividends accrued during such
period (whether or not actually paid during such period) in respect of a
Disqualified Capital Stock of such Person, and (iii) the interest component of
Capitalized Lease Obligations paid (to the extent not accrued in a prior
period), accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP, minus (iv) interest income for such period. Consolidated
Interest Expense shall not include any Capitalized Interest, any Special
Interest and any premiums, fees and expenses (and any amortization thereof)
payable in connection with the Transactions, all as determined on a consolidated
basis in conformity with GAAP.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP and
before any reduction in respect of non-cash dividends on Preferred Stock;
provided that there shall be excluded therefrom: (i) after-tax gains or losses
from Asset Sales or abandonments or reserves relating thereto; (ii) items
classified as extraordinary, nonrecurring or unusual gains or losses on an
after-tax basis (including, but not limited to, fees and expenses related to the
Transactions and write-offs or other costs associated or arising in connection
with the Transactions); (iii) the net income of any Person acquired in a
"pooling-of-interests" transaction accrued prior to the date it becomes a
Subsidiary of the referent Person or is merged or consolidated with the referent
Person or any Subsidiary of the referent Person; (iv) the net income (but not
loss) of any Subsidiary of the referent Person to the extent that the
declaration of dividends and the making of loans or advances or similar
distributions, loans or advances by that Subsidiary of that income is restricted
by a contract, operation of law or otherwise; (v) the net income of any Person,
other than a Subsidiary of the referent Person, except to the extent of
dividends or distributions paid in cash or Cash Equivalents to the referent
Person or to a Wholly Owned Subsidiary of the referent Person by such Person;
(vi) in the case of a successor to the referent Person by consolidation or
-8-
15
merger or as a transferee of the referent Person's assets, any earnings of the
successor corporation prior to such consolidation, merger or transfer of assets;
and (vii) the effect of changes in accounting principles after the Closing Date.
"Consolidated Net Worth" of any Person means the consolidated shareholders'
equity of such Person and its Subsidiaries, determined on a consolidated basis
in accordance with GAAP.
"Consolidated Non-Cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Subsidiaries reducing Consolidated Net Income of such Person
and its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.
"Contract" is defined in Section 4.5.
"Credit Agreement" means the Credit Agreement dated as of April 13, 2000,
among PlayCore Wisconsin, Holdings, Parent, Heartland Industries, Inc. (DE), the
lenders party thereto in their capacities as lenders thereunder, General
Electric Capital Corporation, as administrative agent, and Credit Agricole
Indosuez, as documentation agent, together with the related documents thereto
(including, without limitation, any Guarantees and security documents), in each
case as such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
amendment, supplement, modification or agreement adding Subsidiaries of PlayCore
Wisconsin as additional borrowers or guarantors thereunder or extending the
maturity of, refinancing, replacing or otherwise restructuring (other than, in
any such case, increasing the amount of available borrowings thereunder except
to the extent permitted to be Incurred and remain outstanding under clauses
(ii), (x) and (xiv) of the definition of "Permitted Indebtedness" and, to the
extent not otherwise Incurred, under clause (iv) of the definition of "Senior
Indebtedness"), all or any portion of the Indebtedness under such agreement or
any successor or replacement agreement and whether by the same or any other
agent, lender or group of lenders.
"Credit Documents" means the Credit Agreement and all certificates,
instruments, and other documents and agreements made and delivered from time to
time in connection therewith and related thereto.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect PlayCore
Wisconsin or any Subsidiary of PlayCore Wisconsin against fluctuations in
currency values.
"Custodian" is defined in Section 12.1(i).
"Default" means any event, act or condition that is, or with the giving of
notice, lapse of time or both would constitute, an Event of Default.
"Default Amount" is defined in Section 12.2.
-9-
16
"Designated Senior Indebtedness" means (i) Senior Indebtedness under or in
respect of the Credit Agreement and (ii) any other Senior Indebtedness which, at
the time of determination, has an aggregate principal amount of at least
$25,000,000 and is specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness" by PlayCore Wisconsin.
"Director" means a member of the Board of Directors.
"Disclosure Schedule" means all schedules to this Agreement.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures (including any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole
option of the holder thereof on or prior to the Stated Maturity.
"Enforceability Exceptions" means, with respect to any specified
obligation, any limitations on the enforceability of such obligation due to
bankruptcy, insolvency, fraudulent transfer or conveyance, reorganization,
moratorium, and other similar laws of general applicability relating to or
affecting creditors' rights or general equity principles, including principles
of commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or equity).
"Entity" is defined in Section 7.8(a).
"Environmental Laws" means any Federal, state, foreign or local statute,
law, rule, regulation, ordinance, code or rule of common law now or hereafter in
effect and in each case as amended, and any legally binding judicial or written
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, employee health
and safety or Hazardous Substances, including, without limitation, CERCLA; RCRA;
the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Air Act,
42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section
3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C.
Section 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C.
Section 1801 et seq. and the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq.; and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Matter" means any matter relating to pollution,
contamination, protection of the environment, human health or safety, and health
or safety of employees, and any matter relating to emissions, discharges,
releases or threatened releases, of Hazardous Substances into the air (indoor
and outdoor), surface water, groundwater, soil, land surface or subsurface,
buildings, facilities, real or personal property or fixtures or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances.
-10-
17
"Environmental Permits" is defined in Section 4.14(a).
"Equity Financing" is defined in the second recital to this Agreement.
"Equity Offering" means a public offering of Qualified Capital Stock (other
than public offerings with respect to Holdings' Common Stock on Form S-8) of
Holdings.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
"ERISA Affiliate" is defined in Section 4.12(b).
"Event of Default" is defined in Section 12.1.
"Excess Proceeds" is defined in Section 8.5(c).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange and Registration Rights Agreement" is defined in the sixth
recital to this Agreement.
"Exchange Guarantees" means the guarantees issued in the Exchange Offer.
"Exchange Notes" means the Notes issued in the Exchange Offer.
"Exchange Offer" is defined in the Exchange and Registration Rights
Agreement.
"Existing Indebtedness" is defined in Section 4.18.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction between a
willing seller and a willing and able buyer. Fair market value in excess of
$5,000,000 but less than $10,000,000 shall be conclusively (absent manifest
error) determined by the Board of Directors of PlayCore Wisconsin acting in good
faith and shall be evidenced by a Board Resolution of such Board of Directors.
Fair market value of $10,000,000 or more shall be determined by an Independent
Financial Advisor.
"Financial Statements" is defined in Section 4.6.
"Financing Documents" means collectively, this Agreement, the Exchange and
Registration Rights Agreement, the Notes, the Exchange Notes and the Exchange
Guarantees, and all certificates, instruments, financial and other statements
and other documents made and delivered in connection herewith and therewith.
"Fiscal Month" means a monthly fiscal period of Holdings and its
Subsidiaries ending on the last day in each calendar month.
-11-
18
"Fiscal Quarter" means a quarterly fiscal period of Holdings and its
Subsidiaries ending on March 31, June 30, September 30 and December 31 of each
calendar year.
"Fiscal Year" shall mean the fiscal year of Holdings and its Subsidiaries
ending on December 31 of each calendar year.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by the accounting profession
of the United States of America, as in effect from time to time.
"Governmental Authority" means (i) the government of the United States of
America or any State or other political subdivision thereof, (ii) any government
or political subdivision of any other jurisdiction in which Holdings or any of
its Subsidiaries conducts all or any part of its business, or which asserts
jurisdiction over any properties of Holdings or any of its Subsidiaries or (iii)
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to, any such government.
"GS Mezzanine" is defined in the preamble to this Agreement.
"GS Mezzanine Offshore" is defined in the preamble to this Agreement.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantor" means (i) Holdings and, after consummation of the Merger,
Parent; (ii) each of PlayCore Wisconsin's Subsidiaries as of the Closing Date;
and (iii) each of PlayCore Wisconsin's Subsidiaries that in the future executes
a Supplemental Agreement pursuant to Section 15.2 wherein such Subsidiary agrees
to be bound by the terms of this Agreement as a Guarantor and to become a party
to the Exchange and Registration Rights Agreement as a Guarantor; provided that
any Person constituting a Guarantor as described above shall cease to constitute
a Guarantor when its respective Guarantee is released in accordance with the
terms of this Agreement.
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on Indebtedness of such Guarantor, whether
outstanding on the Closing Date or thereafter Incurred (unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Guarantee of such
Guarantor) in respect of: (i) all monetary obligations of every nature of such
Guarantor under, or with respect to, the Credit Agreement, including,
-12-
19
without limitation, obligations to pay principal and interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under Applicable Law), reimbursement obligations
under letters of credit, fees, expenses and indemnities (including Guarantees
thereof); (ii) all Interest Swap Obligations (and Guarantees thereof) entered in
connection with the Credit Agreement; (iii) all obligations (and Guarantees
thereof) under Currency Agreements entered in connection with the Credit
Agreement; and (iv) Guarantees of Senior Indebtedness permitted by clause (iv)
of the definition of "Senior Indebtedness", in each case whether outstanding on
the Closing Date or thereafter Incurred. Notwithstanding the foregoing,
"Guarantor Senior Indebtedness" shall not include: (i) any Obligations of such
Guarantor to PlayCore Wisconsin or to a Subsidiary of PlayCore Wisconsin or such
Guarantor; (ii) Indebtedness to, or guaranteed on behalf of, any shareholder,
director, officer or employee of such Guarantor or any Subsidiary of such
Guarantor (including, without limitation, amounts owed for compensation) other
than a shareholder who is also a lender (or an Affiliate of a lender) under the
Credit Agreement and who has been such lender (or an Affiliate of such lender)
prior to its becoming such shareholder; (iii) that portion of any Indebtedness
Incurred in violation of Section 8.4 (but, as to any such obligation, no such
violation shall be deemed to exist for purposes of this clause (iii) if the
holder(s) of such obligation or their representative shall have received an
Officers' Certificate of Holdings and PlayCore Wisconsin to the effect that the
Incurrence of such Indebtedness does not (or, in the case of revolving credit
Indebtedness, that the Incurrence of the entire committed amount thereof at the
date on which the initial borrowing thereunder is made would not) violate such
provisions of this Agreement); (iv) Obligations to trade creditors and other
amounts Incurred in connection with obtaining goods, materials or services; (v)
Obligations represented by Disqualified Capital Stock; (vi) any liability for
federal, state, local or other taxes owed or owing by such Guarantor; (vii)
Indebtedness which, when Incurred and without respect to any election under
Section 1111(b) of Xxxxx 00, Xxxxxx Xxxxxx Code, is without recourse to Holdings
and its Subsidiaries; and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of such
Guarantor.
"Hazardous Substances" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, polychlorinated biphenyls, and radon gas; (ii) any chemicals,
materials or substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely hazardous
substances," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar meaning and
effect, under any applicable Environmental Law; and (iii) any other chemical,
material or substance, the Release of which is prohibited, limited or regulated
by any Environmental Law.
"Xxxxxx" means, with respect to any Person, the obligations of such Person
at such time under commodity price swap agreements, commodity price cap
agreements, commodity price collar agreements and commodity price exchange
agreements, options or futures contract or other similar agreements or
arrangements or hedge contract or forward sale contract, in each case designed
to protect such Person or its Subsidiaries against fluctuations in commodity
prices.
-13-
20
"Holder" means a Person in whose name a Note is registered on the Security
Register.
"Holders' Representative" means GS Mezzanine or such other designated
representative of the Holders designated as such by written notice from the
Holders to PlayCore Wisconsin and the Senior Indebtedness Agent.
"Holdings Party" is defined in Section 4.4(d).
"Incur" is defined in Section 8.4. "Incurred" and "Incurrence" shall have
correlative meanings.
"Indebtedness" means, with respect to any Person, without duplication: (i)
all Obligations of such Person for borrowed money (including, without
limitation, Senior Indebtedness); (ii) all Obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments; (iii) all Capitalized
Lease Obligations of such Person; (iv) all Obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations and all Obligations under any title retention agreement (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business); (v) all Obligations for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction; (vi) all Obligations of such Person in respect of its Disqualified
Capital Stock; (vii) Guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (i) through (vi) above and clause (ix)
below; (viii) all Obligations of any other Person of the type referred to in
clauses (i) through (vi) which are secured by any Lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the lesser of
the fair market value of such property or asset or the amount of the Obligation
so secured; (ix) all Obligations under currency agreements and interest swap
agreements of such Person; and (x) all Attributable Indebtedness of such Person.
Notwithstanding anything to the contrary contained in this definition,
Indebtedness shall not include any contingent purchase price obligations or
other earn-out obligations of Holdings and its Subsidiaries in connection with
acquisitions, which obligations are not required to be included as indebtedness
on the face of Holdings consolidated balance sheet in accordance with GAAP.
"Indemnified Person" is defined in Section 16.2.
"Indemnitor" is defined in Section 16.2.
"Independent Financial Advisor" means an accounting, appraisal, valuation
or investment banking firm: (i) which does not, and whose directors, officers
and employees or Affiliates do not, have a direct or indirect financial interest
in PlayCore Wisconsin; and (ii) which, in the judgment of the Board of Directors
of Holdings, is otherwise independent and qualified to perform the task for
which it is to be engaged.
"Institutional Accredited Investors" is defined in Section 10.1(a).
-14-
21
"Institutional Investor" means (i) any original purchaser of a Note and any
transferee that is an Affiliate of any original purchaser, (ii) any Holder of a
Note holding more than 25% of the aggregate principal amount of the Notes then
Outstanding, and (iii) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company or
investment fund, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form organized
under the laws of the United States or a State thereof, in each case in this
clause (iii), with capital and surplus in excess of $150,000,000.
"Intellectual Property" means (i) all inventions and discoveries (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (ii)
all franchises, permits, trademarks, service marks, trade dress, logos, trade
names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, (iii) all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, (iv) all broadcast rights,
(v) all mask works and all applications, registrations and renewals in
connection therewith, (vi) all know-how, trade secrets and confidential business
information, whether patentable or unpatentable and whether or not reduced to
practice (including ideas, research and development, know-how, formulas,
compositions and manufacturing and production process and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information and business and marketing plans and proposals), (vii) all
computer software (including data and related documentation), (viii) all other
proprietary rights, (ix) all copies and tangible embodiments thereof (in
whatever form or medium) and (x) all licenses and agreements in connection
therewith.
"Interest Accrual Date" is defined in Exhibit A hereto.
"Interest Payment Date" is defined in Exhibit A hereto.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a Guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any other Person. "Investment" shall exclude extensions of trade credit by
PlayCore
-15-
22
Wisconsin and its Subsidiaries in customary trade terms in accordance with
normal trade practices of PlayCore Wisconsin or such Subsidiary, as the case may
be. For purposes of Section 8.2, the amount of any Investment shall be the
original cost of such Investment plus the cost of all additional Investments by
Holdings or any of its Subsidiaries, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced by the payment of dividends or distributions in connection
with such Investment or any other amounts received in respect of such
Investment; provided that no such payment of dividends or distributions or
receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If Holdings or any Subsidiary of
Holdings sells or otherwise disposes of any Common Stock of any direct or
indirect Subsidiary of Holdings such that, after giving effect to any such sale
or disposition, Holdings no longer owns, directly or indirectly, 100% of the
outstanding Common Stock of such Subsidiary, Holdings shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the fair
market value of the Common Stock of such Subsidiary not sold or disposed of.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If any payment date in
respect of the Notes is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
"Liabilities" is defined in Section 16.2.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind, including any conditional sale or other title
retention agreement.
"Management Employment Contracts" shall mean each of the employment
agreements dated as of the date hereof, as amended through the Closing Date, by
and between Acquisition Company and each of the individuals listed on Schedule
3.10.
"Management Options" shall mean the options to purchase shares of Common
Stock to be issued by Holdings to certain management employees of PlayCore
Wisconsin, under Holdings' stock option plan, to be effective as of the
effective date of the Merger.
"Material" means material in relation to the business, operations,
property, assets, liabilities, management, condition (financial or otherwise) or
prospects of Holdings and its Subsidiaries, taken as a whole, in each case,
other than pursuant to or as disclosed in the Merger Agreement.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, assets, liabilities, management, condition
(financial or otherwise) or prospects of Holdings and its Subsidiaries taken as
a whole in each case, other than pursuant to or as disclosed in the Merger
Agreement, (b) the rights or remedies of the Purchasers or Holders or the
ability of Holdings and its Subsidiaries taken as a whole to perform their
respective obligations to the Purchasers and the Holders under any of the
Financing Documents.
-16-
23
"Material Contracts" means any agreements, contracts or arrangements
between Holdings or its Subsidiaries, on the one hand, and any third parties on
the other, that are Material and which will remain in place following
consummation of the Tender Offer.
"Maturity", when used with respect to any Note, means the date on which the
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption or otherwise (including in connection with any offer to purchase that
this Agreement requires PlayCore Wisconsin to make).
"Merger" is defined in the first recital to this Agreement.
"Merger Agreement" is defined in the first recital to this Agreement.
"Merger Documents" means the Merger Agreement, the Offer to Purchase, the
Schedule TO and all agreements, certificates, instruments, and other documents
made and delivered in connection therewith.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which Holdings or any ERISA Affiliate is making or
accruing an obligation to make contributions or has within preceding five plan
years made or accrued an obligation to make contributions.
"Net Cash Proceeds" means with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
PlayCore Wisconsin or any of its Subsidiaries from such Asset Sale net of: (i)
reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions); (ii) taxes paid or payable after taking into account any
reduction in consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements; (iii) repayment of Indebtedness
that is required to be repaid in connection with such Asset Sale; (iv)
appropriate amounts to be provided by PlayCore Wisconsin or any Subsidiary, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by PlayCore Wisconsin or any
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale; and (v) all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Sale.
"New Documents" is defined in Section 10.3.
"Non-Voting Observer" is defined in Section 7.8(a).
"Notation of Note Guarantee" is defined in Section 15.7.
-17-
24
"Note Guarantee" means any Guarantee of the Notes by any Guarantor pursuant
to Section 15 or a Supplemental Agreement, as the case may be.
"Note Registration" means the consummation of the Exchange Offer or the
registration of Notes pursuant to the terms of this Agreement and the Exchange
and Registration Rights Agreement.
"Notes" is defined in the fourth recital to this Agreement.
"Notes Payment" is defined in Section 14.2.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnification, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offer Amount" is defined in Section 7.9(a).
"Offer Period" is defined in Section 7.9(a).
"Offer to Purchase" is defined in the first recital to this Agreement.
"Officers' Certificate" of any Person means a certificate signed by the
chairman of the Board of Directors, the chief executive officer, the president,
the chief operating officer, or any vice president, and by the chief financial
officer, treasurer, the secretary or an assistant secretary (or any such other
officer that performs similar duties) and delivered to the Holders. One of the
officers signing an Officers' Certificate given pursuant to Section 6.1(b) or
Section 6.2(b) or shall be the principal executive, financial or accounting
officer of Holdings or PlayCore Wisconsin, as the case may be. Unless the
context otherwise requires, each reference herein to an "Officers' Certificate"
means an Officers' Certificate of Holdings or PlayCore Wisconsin. References
herein, or in any Note, to any officer of a Person that is a partnership or
limited liability company means such officer of the partnership or, if none, of
a general partner or managing member of the partnership or limited liability
company authorized thereby to act on its behalf.
"Outstanding", when used with respect to the Notes, means, as of the date
of determination, all Notes theretofore executed and delivered under this
Agreement, except:
(i) Notes theretofore canceled by PlayCore Wisconsin or delivered to
PlayCore Wisconsin for cancellation;
(ii) Notes for whose payment or redemption money in the necessary amount
has been theretofore set aside by PlayCore Wisconsin with a third party in
trust for the Holders of such Notes; provided that if such Notes are to be
redeemed, notice of such redemption has been duly given as provided in this
Agreement; and
-18-
25
(iii) Notes which have been paid pursuant to Section 11.8 or in exchange
for or in lieu of which other Notes have been executed and delivered pursuant
to this Agreement;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
Holdings, PlayCore Wisconsin or any other obligor upon the Notes or any
Affiliate of Holdings or PlayCore Wisconsin or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether Holdings or PlayCore Wisconsin shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes which Holdings or PlayCore Wisconsin knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Required Holders the pledgee's right so to act with respect to such Notes and
that the pledgee is not Holdings or PlayCore Wisconsin or any other obligor upon
the Notes or any Affiliate of Holdings or PlayCore Wisconsin or of such other
obligor.
"Parent" is defined in the preamble to this Agreement.
"Payment Blockage Period" is defined in Section 14.3.
"Pension Plan" is defined in Section 4.12(b).
"Permits" means all licenses, permits, certificates of need, approvals and
authorizations from all Governmental Authorities required to lawfully conduct a
business as presently conducted.
"Permitted Holders" means Chartwell Investments II, LLC and its Affiliates.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Notes and the Guarantees and, after giving effect to
the Exchange Offer, the Exchange Notes and the Exchange Guarantees; (ii)
Indebtedness Incurred pursuant to the Credit Agreement in an aggregate principal
amount at any time outstanding not to exceed $125,000,000 (and all Guarantees of
such Indebtedness) less the amount of all term loan repayments and permanent
commitment reductions under the Credit Agreement with the Net Cash Proceeds of
an Asset Sale applied thereto to the extent required by the Section 8.5;
provided that the amount of Indebtedness permitted to be Incurred pursuant to
the Credit Agreement in accordance with this clause (ii) shall be in addition to
any Indebtedness permitted to be Incurred pursuant to the Credit Agreement in
reliance on and in accordance with clauses (x) and (xiv) below; (iii) other
Indebtedness of PlayCore Wisconsin and its Subsidiaries outstanding on the
Closing Date reduced by the amount of any scheduled amortization payments or
mandatory prepayments when actually paid or permanent reductions thereon; (iv)
Interest Swap Obligations of PlayCore Wisconsin or any Subsidiary of PlayCore
Wisconsin covering Indebtedness of PlayCore Wisconsin or any of its
Subsidiaries; provided, however, that such Interest Swap Obligations are entered
into, in the judgment of PlayCore Wisconsin, to protect PlayCore Wisconsin and
its Subsidiaries from fluctuations in interest rates on their outstanding
-19-
26
Indebtedness to the extent the notional principal amount of such Interest Swap
Obligation does not at the time of the Incurrence thereof, exceed 105% of the
principal amount of the Indebtedness to which such Interest Swap Obligations
relates; (v) Indebtedness under Currency Agreements and Xxxxxx; provided that in
the case of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of PlayCore Wisconsin and its
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder; (vi) Indebtedness of a Subsidiary of PlayCore Wisconsin to
PlayCore Wisconsin or to a Wholly Owned Subsidiary of PlayCore Wisconsin for so
long as such Indebtedness is held by PlayCore Wisconsin or a Wholly Owned
Subsidiary of PlayCore Wisconsin or the lenders or collateral agent under the
Credit Agreement, in each case subject to no Lien held by a Person other than
PlayCore Wisconsin, a Wholly Owned Subsidiary of PlayCore Wisconsin or the
lenders or collateral agent under the Credit Agreement; provided that if as of
any date any Person other than PlayCore Wisconsin, a Wholly Owned Subsidiary of
PlayCore Wisconsin or the lenders or collateral agent under the Credit Agreement
owns or holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the Incurrence of Indebtedness not
constituting Permitted Indebtedness by the issuer of such Indebtedness; (vii)
Indebtedness of PlayCore Wisconsin to a Wholly Owned Subsidiary of PlayCore
Wisconsin or the lenders or collateral agent under the Credit Agreement for so
long as such Indebtedness is held by a Wholly Owned Subsidiary of PlayCore
Wisconsin or the lenders or collateral agent under the Credit Agreement, in each
case subject to no Lien; provided that (A) any Indebtedness of PlayCore
Wisconsin to any Wholly Owned Subsidiary of PlayCore Wisconsin is unsecured and
subordinated, pursuant to a written agreement, to PlayCore Wisconsin obligations
under this Agreement and the Notes and (B) if as of any date any Person other
than a Wholly Owned Subsidiary of PlayCore Wisconsin or the lenders or
collateral agent under the Credit Agreement owns or holds any such Indebtedness
or any Person holds a Lien (other than a Lien in favor of the lenders or
collateral agent under the Credit Agreement) in respect of such Indebtedness,
such date shall be deemed the Incurrence of Indebtedness not constituting
Permitted Indebtedness by PlayCore Wisconsin; (viii) Indebtedness arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within two Business Days of
Incurrence; (ix) Indebtedness of PlayCore Wisconsin or any of its Subsidiaries
represented by letters of credit for the account of PlayCore Wisconsin or such
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance or
similar requirements in the ordinary course of business; (x) Indebtedness
represented by Capitalized Lease Obligations and Purchase Money Indebtedness of
PlayCore Wisconsin and its Subsidiaries Incurred in the ordinary course of
business or in connection with Asset Acquisitions not to exceed $7,500,000 at
any one time outstanding; provided that all or a portion of the $7,500,000
permitted to be Incurred pursuant to this clause (x) may, at the option of
PlayCore Wisconsin, be Incurred under the Credit Agreement instead of pursuant
to Capitalized Lease Obligations or Purchase Money Indebtedness; (xi)
Indebtedness arising from agreements of PlayCore Wisconsin or a Subsidiary of
PlayCore Wisconsin providing for indemnification, adjustment of purchase price
or similar obligations, in each case, Incurred in connection with the
disposition of any business, assets or a Subsidiary, other than Guarantees of
-20-
27
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition;
provided, however, that (A) such Indebtedness is not reflected on the balance
sheet of PlayCore Wisconsin or any Subsidiary of PlayCore Wisconsin (contingent
obligations referred to in a footnote to financial statements and not otherwise
reflected on the balance sheet will not be deemed to be reflected on such
balance sheet for purposes of this clause (A)) and (B) the maximum assumable
liability in respect of all such Indebtedness shall at no time exceed the gross
proceeds including non-cash proceeds (the fair market value of such non-cash
proceeds being measured at the time it is received and without giving effect to
any subsequent changes in value) actually received by PlayCore Wisconsin and its
Subsidiaries in connection with such disposition; (xii) Indebtedness of PlayCore
Wisconsin or any of its Subsidiaries in respect of performance bonds, bankers'
acceptances, workers' compensation claims, surety or appeal bonds, payment
obligations in connection with self-insurance or similar obligations, and bank
overdrafts (and letters of credit in respect thereof); (xiii) Refinancing
Indebtedness; (xiv) additional Indebtedness of PlayCore Wisconsin and its
Subsidiaries in an aggregate principal amount not to exceed $5,000,000 at any
one time outstanding (which amount may, but need not, be Incurred in whole or in
part under the Credit Agreement); and (xv) Indebtedness of PlayCore Wisconsin to
a Subsidiary (other than a Wholly Owned Subsidiary) of PlayCore Wisconsin;
provided that (A) any Indebtedness of PlayCore Wisconsin to any such Subsidiary
is unsecured and fully subordinated, pursuant to a written agreement in form and
substance satisfactory to the Required Holders, to PlayCore Wisconsin's
obligations under this Agreement and the Notes, (B) if as of any date any Person
other than a Subsidiary of PlayCore Wisconsin owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness, such
date shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by PlayCore Wisconsin, and (C) the aggregate amount of such
Indebtedness Incurred pursuant to this clause (xv) at any time outstanding shall
not exceed $10,000,000 in the aggregate. For purposes of determining compliance
with Section 8.4, in the event that an item of Indebtedness meets the criteria
of more than one of the categories of Permitted Indebtedness described in
clauses (i) through (xv) above or is entitled to be Incurred pursuant to the
Consolidated Interest Coverage Ratio test set forth in Section 8.4, PlayCore
Wisconsin shall, in its sole discretion, classify (or later reclassify) such
item of Indebtedness in any manner that complies with such test.
"Permitted Investments" means: (i) Investments by PlayCore Wisconsin or any
Subsidiary of PlayCore Wisconsin in any Person that is or will become
immediately after such Investment a Wholly Owned Subsidiary of PlayCore
Wisconsin or that will merge or consolidate into PlayCore Wisconsin or a Wholly
Owned Subsidiary of PlayCore Wisconsin; (ii) Investments in PlayCore Wisconsin
by any Subsidiary of PlayCore Wisconsin; provided that any Indebtedness
evidencing such Investment is unsecured and subordinated, pursuant to a written
agreement, to PlayCore Wisconsin's obligations under the Notes and this
Agreement; (iii) Investments in cash and Cash Equivalents; (iv) loans and
advances to employees and officers of PlayCore Wisconsin and its Subsidiaries in
the ordinary course of business for bona fide business purposes not in excess of
$1,000,000 at any one time outstanding, and loans and advances to employees and
officers of PlayCore Wisconsin and its Subsidiaries in the ordinary course of
business for bona fide business purposes to cover reasonable recruitment, travel
and relocation expenses; (v) Currency Agreements, Interest Swap Obligations and
Xxxxxx entered
-21-
28
into in the ordinary course of PlayCore Wisconsin's or its
Subsidiaries' businesses and otherwise in compliance with this Agreement; (vi)
additional Investments (including joint ventures) not to exceed $2,000,000 in
any single instance or $6,000,000 in the aggregate at any one time outstanding;
(vii) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (viii)
Investments made by PlayCore Wisconsin or its Subsidiaries as a result of
consideration received in connection with an Asset Sale made in compliance with
Section 8.5 or any Investment made by PlayCore Wisconsin or any Subsidiary in
connection with a transaction that would be an Asset Sale if it involved
aggregate consideration of $500,000 or more; (ix) Investments of a Person or any
of its Subsidiaries existing at the time such Person becomes a Subsidiary of
PlayCore Wisconsin or at the time such Person merges or consolidates with
PlayCore Wisconsin or any of its Subsidiaries, in either case in compliance with
this Agreement; provided that such Investments were not made by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Subsidiary of PlayCore Wisconsin or such merger or consolidation; (x)
repurchases of Capital Stock of PlayCore Wisconsin deemed to occur upon the
exercise of stock options if such Capital Stock represents a portion of the
exercise price thereof; (xi) Investments made by PlayCore Wisconsin or any
Subsidiary in connection with purchase price adjustments, contingent purchase
price payments or other earn-out payments required in connection with
Investments otherwise permitted under this Agreement; (xii) Investments received
in settlement of obligations owed to PlayCore Wisconsin or any Subsidiary as a
result of bankruptcy or insolvency proceedings or upon the foreclosure or
enforcement of any Lien in favor of PlayCore Wisconsin or such Subsidiary;
(xiii) any Investment existing on the date of this Agreement; (xiv) negotiable
instruments held for deposit or collection in the ordinary course of business;
(xv) Investments in the Notes and the Exchange Notes; (xvi) prepaid expenses and
workers compensation, utility, and similar deposits in the ordinary course of
business; (xvii) Investments in Capital Stock of Holdings or immediate parent of
Holdings resulting from the purchase of such Capital Stock from any employee
upon or related to termination of employment of such employee, not to exceed
$1,000,000 in any fiscal year or $5,000,000 in the aggregate at any time
outstanding; (xviii) Investments by PlayCore Wisconsin or any Subsidiary of
PlayCore Wisconsin in any Person that is or will become immediately after such
Investment a Subsidiary (other than a Wholly Owned Subsidiary) of PlayCore
Wisconsin or that will merge or consolidate into PlayCore Wisconsin or a
Subsidiary (other than a Wholly Owned Subsidiary) of PlayCore Wisconsin;
provided that the aggregate amount of Investments made under this clause (xviii)
at any time outstanding shall not exceed $10,000,000 in the aggregate; and (xix)
loans to officers and employees of Holdings and its Subsidiaries to purchase
Capital Stock or to exercise the Management Options in an amount not to exceed
$1,000,000 in the aggregate.
"Permitted Liens" means the following types of Liens: (i) Liens for taxes,
assessments or governmental charges or claims either (a) not delinquent or (b)
contested in good faith by appropriate proceedings and as to which PlayCore
Wisconsin or its Subsidiaries shall have set aside on its books such reserves as
may be required pursuant to GAAP; (ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for sums not
yet delinquent or being contested in good faith, if such reserve or other
appropriate provision,
-22-
29
if any, as shall be required by GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, including any Lien securing letters of credit issued in the
ordinary course of business consistent with past practice in connection
therewith, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money); (iv) judgment Liens not giving rise to an
Event of Default; (v) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering in
any material respect with the ordinary conduct of the business of PlayCore
Wisconsin or any of its Subsidiaries; (vi) any interest or title of a lessor
under any Capitalized Lease Obligation; provided that such Liens do not extend
to any property or asset which is not leased property and any improvements on
such property or assets and proceeds thereof subject to such Capitalized Lease
Obligation; (vii) Liens securing Capitalized Lease Obligations and Purchase
Money Indebtedness permitted pursuant to clause (x) of the definition of
"Permitted Indebtedness"; provided, however, that in the case of Purchase Money
Indebtedness (a) the Indebtedness shall not exceed the cost of such property or
assets and shall not be secured by any property or assets of PlayCore Wisconsin
or any Subsidiary of PlayCore Wisconsin other than the property and assets so
acquired and any improvements on such property or assets and proceeds thereof
and (b) the Lien securing such Indebtedness shall be created within 180 days of
such acquisition or construction or, in the case of a Refinancing of any
Purchase Money Indebtedness, within 180 days of such Refinancing; (viii) Liens
upon specific items of inventory or other goods and proceeds of any Person
securing such Person's obligations in respect of bankers' acceptances issued or
created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods; (ix) Liens securing reimbursement
obligations with respect to commercial letters of credit which encumber
documents and other property relating to such letters of credit and products and
proceeds thereof; (x) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty requirements of
PlayCore Wisconsin or any of its Subsidiaries, including rights of offset and
set-off; (xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Agreement; (xii) Liens in the ordinary course of business not exceeding
$5,000,000 at any one time outstanding that (a) are not Incurred in connection
with borrowing of money and (b) do not materially detract from the value of the
property or materially impair its use; (xiii) Liens securing Indebtedness under
Currency Agreements and Xxxxxx permitted under this Agreement; (xiv) Liens
securing Acquired Indebtedness Incurred in accordance with Section 8.4; provided
that: (A) such Liens secured such Acquired Indebtedness at the time of and prior
to the Incurrence of such Acquired Indebtedness by PlayCore Wisconsin or a
Subsidiary of PlayCore Wisconsin and were not granted in connection with, or in
anticipation of, the Incurrence of such Acquired Indebtedness by PlayCore
Wisconsin or a Subsidiary of PlayCore Wisconsin; and (B) such Liens do not
extend to or cover any property or assets of PlayCore Wisconsin or of any of its
Subsidiaries other than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of
PlayCore Wisconsin or a Subsidiary of PlayCore Wisconsin and are not materially
more favorable to the lienholders than those securing the Acquired Indebtedness
prior to the Incurrence of such Acquired Indebtedness by PlayCore Wisconsin or a
Subsidiary of PlayCore Wisconsin; (xv) Liens securing Indebtedness permitted to
-23-
30
be Incurred pursuant to clauses (ii) and (xiv) of the definition of "Permitted
Indebtedness;" (xvi) leases or subleases granted to others that do not
materially interfere with the ordinary course of business in PlayCore Wisconsin
and its Subsidiaries; (xvii) Liens arising from filing Uniform Commercial Code
financing statements regarding leases and contractual landlord's Liens not
securing Indebtedness; (xviii) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods; (xix) Liens securing Indebtedness of Subsidiaries
of PlayCore Wisconsin organized outside of the United States of America Incurred
in accordance with this Agreement; and (xx) Liens existing on the date of this
Agreement.
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Plan" is defined in Section 4.12(a).
"PlayCore Wisconsin" is defined in the preamble to this Agreement.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"principal amount" means, when used with respect to any particular Note,
the principal amount of such Note (including Capitalized Interest) at its Stated
Maturity.
"Private Offering" is any offering by any of the Purchasers of some or all
of the Notes without registration under the Securities Act.
"Proceeding" is defined in Section 14.2.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Purchase Date" is defined in Section 7.9(a).
"Purchase Money Indebtedness" means any Indebtedness Incurred at the time
of or within 180 days prior to or after the acquisition of any assets solely for
the purpose of financing all or any part of the purchase price thereof or price
of construction or improvement thereof, and any Refinancings thereof, but not
any increases in the principal amounts thereof outstanding at the time.
"Purchase Price" is defined in Section 2.2.
"Purchasers" is defined in the preamble to this Agreement.
-24-
31
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Qualified Institutional Buyer" means any Person that is a "qualified
institutional buyer" within the meaning of Rule 144A.
"Redemption Date", when used with respect to any Note to be redeemed, means
the date fixed for such redemption by or pursuant to this Agreement.
"Redemption Price", when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Agreement.
"Reference Date" is defined in Section 8.2(a).
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by PlayCore Wisconsin or
any Subsidiary of PlayCore Wisconsin of Indebtedness Incurred in accordance with
Section 8.4 (other than pursuant to clause (ii), (v), (vi), (vii), (viii), (ix),
(x) (xi) or (xii) of the definition of "Permitted Indebtedness"), in each case
that does not:
(i) result in an increase in the aggregate principal amount of
Indebtedness of such Person as of the date of such proposed Refinancing (plus
the amount of any premium required to be paid under the terms of the
instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by PlayCore Wisconsin and its Subsidiaries in connection
with such Refinancing); or
(ii) create Indebtedness with: (A) a Weighted Average Life to Maturity
that is less than the Weighted Average Life to Maturity of the Indebtedness
being Refinanced; or (B) a final maturity earlier than the final maturity of
the Indebtedness being Refinanced;
provided that if such Indebtedness being Refinanced is Indebtedness of PlayCore
Wisconsin, then such Refinancing Indebtedness shall be Indebtedness solely of
PlayCore Wisconsin.
"Regular Record Date" is defined in Exhibit A hereto.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
-25-
32
"Related Party" means (i) any controlling shareholders, 80% (or more) owned
Subsidiary, or immediate family member (in the case of an individual) of any
Permitted Holder; or (ii) any trust, corporation, partnership or other entity,
the beneficiaries, shareholders, partners, owners or Persons beneficially
holding 80% or more controlling interest of which consist of any one or more
Permitted Holders and/or such other Persons referred to in the immediately
preceding clause (i).
"Release" means the disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, pouring or migrating,
into or upon any land or water or air, or otherwise entering into the
environment.
"Replacement Notes" is defined in Section 10.3.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Indebtedness; provided that
if, and for so long as, any Designated Senior Indebtedness lacks such a
representative, then the Representative for such Designated Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding principal
amount of such Senior Indebtedness in respect of any Designated Senior
Indebtedness.
"Required Holders" means Holders holding a majority in aggregate principal
amount of the Notes at the time Outstanding.
"Restricted Payments" is defined in Section 8.2(a).
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"sale" is defined in Section 11.7(a).
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to PlayCore Wisconsin or a Subsidiary of any property, whether owned by
PlayCore Wisconsin or any Subsidiary at the Closing Date or later acquired,
which has been or is to be sold or transferred by PlayCore Wisconsin or such
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such property.
"Schedule TO" means the Schedule TO information statement filed by Holdings
in connection with the Tender Offer pursuant to the Exchange Act, together with
any amendment or supplement thereto, at the respective times such documents are
filed with the Commission or first published, sent or given to Holdings'
shareholders, and all information and documents as are exhibits thereto or are
incorporated by reference therein.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
-26-
33
"security document" means all instruments and agreements now or at any time
hereafter securing the whole or part of any Obligations.
"Security Register" is defined in Section 11.6(a).
"Senior Indebtedness" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under Applicable Law) on
Indebtedness of PlayCore Wisconsin, whether outstanding on the Closing Date or
thereafter Incurred (unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Notes) in respect of: (i) all monetary obligations of
every nature of PlayCore Wisconsin under, or with respect to, the Credit
Agreement, including, without limitation, obligations to pay principal and
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under Applicable Law),
reimbursement obligations under letters of credit, fees, expenses and
indemnities; (ii) all Interest Swap Obligations (including Guarantees thereof)
entered into in connection with the Credit Agreement; (iii) all obligations
under the Currency Agreements (including Guarantees thereof) entered into in
connection with the Credit Agreement; and (iv) all additional Indebtedness of
PlayCore Wisconsin (other than Permitted Indebtedness) Incurred in compliance
with Section 8.4 (which amount may, but need not, be Incurred (without
duplication) in whole or in part under the Credit Agreement), in each case
whether outstanding on the Closing Date or thereafter Incurred. Notwithstanding
the foregoing, "Senior Indebtedness" shall not include: (1) any Obligations of
PlayCore Wisconsin to a Subsidiary of PlayCore Wisconsin; (2) Indebtedness to,
or guaranteed on behalf of, any shareholder, director, officer or employee of
Holdings, PlayCore Wisconsin or any Subsidiary of PlayCore Wisconsin (including,
without limitation, amounts owed for compensation) other than a shareholder who
is a lender (or an Affiliate of a lender) under the Credit Agreement and who has
been such lender (or an Affiliate of such lender) prior to its becoming such
shareholder; (3) that portion of any Indebtedness Incurred in violation of this
Agreement provisions set forth in Section 8.4 (but, as to any such obligation,
no such violation shall be deemed to exist for purposes of this clause (3) if
the holder(s) of such obligation or their representative shall have received an
Officers' Certificate of PlayCore Wisconsin to the effect that the Incurrence of
such Indebtedness does not (or, in the case of revolving credit indebtedness,
that the Incurrence of the entire committed amount thereof at the date on which
the initial borrowing thereunder is made would not, violate such provisions of
this Agreement; (4) Obligations to trade creditors and other amounts incurred in
connection with obtaining goods, materials or services; (5) Obligations
represented by Disqualified Capital Stock; (6) any liability for federal, state,
local or other taxes owed or owing by PlayCore Wisconsin; (7) Indebtedness
which, when Incurred and without respect to any election under Section 1111(b)
of Xxxxx 00, Xxxxxx Xxxxxx Code, is without recourse to PlayCore Wisconsin; and
(8) any Indebtedness which is, by its express terms, subordinated in right of
payment to any other Indebtedness of PlayCore Wisconsin.
-27-
34
"Senior Indebtedness Agent" means General Electric Capital Corporation, as
Administrative Agent under the Credit Agreement.
"Senior Nonmonetary Default" is defined in Section 14.3.
"Senior Payment Default" is defined in Section 14.3.
"Significant Subsidiary" with respect to any Person, means any Subsidiary
of such Person that satisfies the criteria for a "significant subsidiary" set
forth in Rule 1.02(w) of Regulation S-X under the Securities Act of 1933 based
upon the most recent pro forma annual financial information filed by PlayCore
Wisconsin with the Commission. PlayCore Wisconsin acknowledges and agrees that
each Subsidiary that is a Guarantor on the date hereof constitutes a Significant
Subsidiary.
"Solvent" means, with respect to any Person as of the date of any
determination, that on such date (i) such Person is able to pay its debts and
other liabilities, contingent obligations and other commitments as they mature
in the normal course of business, (ii) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, taking into account the
timing and amounts to be received by such Person or its Subsidiaries from any
source and the timing of and amounts of cash to be payable in respect of or in
connection with the debts and liabilities of such Person and its Subsidiaries,
and (iii) such Person is not engaged in a business or a transaction, and is not
about to engage in a business or a transaction, for which such Person's property
would constitute unreasonably small capital after giving due consideration to
current and anticipated future capital requirements and current and anticipated
future business conduct and the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent liabilities at any
time, such liabilities shall be computed as the amount which, in light of the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Special Interest" is defined in Exhibit A hereto.
"Stated Maturity", when used with respect to any Note or any installment of
interest thereon, means the date specified in this Agreement or such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable.
"Subsequent Purchaser" means a subsequent purchaser of any Note who
acquired such Note in a Private Offering in accordance with Section 10.1.
"Subsidiary" means, with respect to any Person, (i) any corporation, of
which the outstanding Capital Stock having a majority of the votes entitled to
be cast in the election of directors under ordinary circumstances shall at the
time be owned, directly or indirectly, by such Person and/or one or more
Subsidiaries of such Person; or (ii) any partnership, limited liability company,
association, joint venture or other entity in which such Person and/or one or
more Subsidiaries of such Person has a majority of the equity interest at that
time.
-28-
35
"Supplemental Agreement" is defined in Section 15.2.
"Surviving Entity" is defined in Section 8.12(a)(i).
"Tax Returns" means all reports and returns (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be filed with respect to Taxes.
"Taxes" means all federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, production, sales, use, license, excise,
franchise, employment, withholding or other taxes, duties or assessments of any
kind whatsoever imposed on any Person, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties and includes any liability for Taxes of another Person by contract, as
a transferee or successor, under Treasury Regulation section 1.1502-6 or
analogous state, local or foreign law provision or otherwise.
"Tender Offer" is defined in the first recital to this Agreement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as amended from time to time.
"Transaction Documents" means, collectively, the Financing Documents, the
Credit Documents and the Merger Documents.
"Transactions" means the transactions provided for in, or contemplated by,
the Transaction Documents.
"Transfer Taxes" is defined in Section 7.3(e).
"United States," for purposes of Sections 10.1 and 11.7, shall have the
meaning assigned to such term in Regulation S.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the then outstanding
aggregate principal amount of such Indebtedness into (ii) the sum of the total
of the products obtained by multiplying (A) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (B) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
of which all outstanding voting securities (other than in the case of a foreign
Subsidiary, directors' qualifying shares or an immaterial number of shares
required to be owned by other Persons pursuant to applicable law) or equity
interests in the case of a partnership or a limited liability company are owned
by such Person or one or more Wholly Owned Subsidiaries of such Person.
-29-
36
1.2 Computation of Time Periods. For purposes of computation of periods of
time hereunder, the word "from" means "from and including" and the words "to"
and "until" each mean "to but excluding."
1.3 Accounting Terms. Accounting terms used but not otherwise defined
herein shall have the meanings provided, and be construed in accordance with,
GAAP.
SECTION 2.
AUTHORIZATION AND ISSUANCE OF NOTES
2.1 Authorization of Issue. On or prior to the execution and delivery of
this Agreement, PlayCore Wisconsin will authorize the issue and sale of the
Notes. The Notes shall be in the form specified in this Agreement.
2.2 Sale and Purchase of the Notes. Subject to the terms and conditions of
this Agreement, PlayCore Wisconsin will issue and sell to the Purchasers, and
the Purchasers will purchase from PlayCore Wisconsin, at the Closing provided
for in Section 2.3, the Notes for an aggregate cash purchase price (the
"Purchase Price") equal to the aggregate original principal amount of the Notes
being so purchased. Each Purchaser shall, in exchange for the payment by such
Purchaser of the portion of the Purchase Price set forth opposite such
Purchaser's name on Schedule A hereto, receive the aggregate principal amount of
Notes set forth opposite such Purchaser's name on Schedule A hereto. The
obligations of the Purchasers hereunder are several and not joint and no
Purchaser shall have any liability to any Person for the performance or
non-performance by any other Purchaser hereunder.
2.3 Closing.
(a) The sale and purchase of the Notes shall occur at the offices of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx at
10:00 a.m. local time, at a closing (the "Closing") on April 25, 2000, or at
such other place or on such Business Day not later than May 31, 2000 as may be
agreed upon by PlayCore Wisconsin and the Purchasers (in either case, the date
and time of the Closing is referred to herein as the "Closing Date"). At the
Closing, PlayCore Wisconsin will deliver to each Purchaser the certificates for
the Notes to be purchased by such Purchaser on the Closing Date, in such
denominations (which will be an integral multiple of $1,000 principal amount) as
such Purchaser may request, dated the Closing Date and registered in such
Purchaser's name, against payment by such Purchaser to PlayCore Wisconsin or to
its order of immediately available funds in the amount of the applicable portion
of the Purchase Price (as provided in Section 2.2) by wire transfer of
immediately available funds to such bank account or accounts as PlayCore
Wisconsin may request in writing at least three Business Days prior to the
Closing Date.
(b) If at the Closing PlayCore Wisconsin shall fail to deliver to the
Purchasers the certificates evidencing the Notes as provided in Section 2.3(a),
or any of the conditions specified in Section 3 shall not have been fulfilled to
the Purchasers' satisfaction, then each
-30-
37
Purchaser shall, at its election, be relieved of all further obligations under
this Agreement, without thereby waiving any rights such Purchaser may have by
reason of such failure or such nonfulfillment.
SECTION 3.
CONDITIONS TO CLOSING
Each Purchaser's obligation to purchase and pay for the Notes to be
purchased by it at the Closing is subject to the satisfaction or waiver by it
prior to or at the Closing of each of the conditions specified below in this
Section 3:
3.1 Representations and Warranties. Each of the representations and
warranties of Holdings and PlayCore Wisconsin in this Agreement and in each of
the other Transaction Documents shall be true and correct (in the case of such
other Transaction Documents only, where the failure to be true and correct would
reasonably be expected to have a Company Material Adverse Effect as defined in
Annex A to the Merger Agreement) when made and on or as of the Closing Date as
if made on and as of the Closing Date (unless stated to relate to a specific
earlier date, in which case such representations and warranties shall be true
and correct as of such earlier date).
3.2 Performance; No Default under Other Agreements. Holdings, PlayCore
Wisconsin and their respective Subsidiaries, to the extent parties hereto or
thereto, shall have performed and complied in all material respects with all
agreements and conditions contained in this Agreement and each of the other
Transaction Documents required to be performed or complied with by it prior to
or at the Closing (or such compliance shall have been waived in accordance with
the terms hereof or thereof, as applicable) and, after giving effect to the
issue and sale of the Notes and the other Transactions (and the application of
the proceeds thereof as contemplated by Section 4.17 and the other Transaction
Documents), no Default or Event of Default shall have occurred and be
continuing, and no default or event of default shall have occurred and be
continuing under any of the other Financing Documents or under the Credit
Documents.
3.3 Compliance Certificates.
(a) Officers' Certificate. Holdings and PlayCore Wisconsin each shall have
delivered to each Purchaser an Officers' Certificate, dated the Closing Date, in
the form of Exhibit 3.3(a) hereto, certifying that the conditions specified in
Sections 3.1, 3.2, 3.5 and 3.6 have been fulfilled.
(b) Secretary's Certificate. Holdings, Parent and PlayCore Wisconsin and
each Subsidiary that is a Guarantor shall have delivered to each Purchaser a
certificate in the form of Exhibit 3.3(b) hereto certifying as to Holdings',
Parent's, PlayCore Wisconsin's or such Guarantor's, as the case may be, articles
of incorporation, bylaws and resolutions attached thereto, the incumbency and
signatures of certain officers of Holdings, Parent, PlayCore
-31-
38
Wisconsin or such Guarantor, as the case may be, and other corporate proceedings
of Holdings, Parent, PlayCore Wisconsin or such Guarantor, as the case may be,
relating to the authorization, execution and delivery of the Notes, this
Agreement and the other Transaction Documents to which Holdings, Parent,
PlayCore Wisconsin or such Guarantor, as the case may be, is a party.
3.4 Opinions of Counsel; Solvency Opinion.
(a) Each Purchaser shall have received an opinion in form and substance
satisfactory to it, dated the date of the Closing, from (i) Akin, Gump, Strauss,
Xxxxx & Xxxx, L.L.P., counsel for Parent and PlayCore Wisconsin, substantially
in the form set forth in Exhibit 3.4(a) hereto and as to such other matters as
such Purchaser may reasonably request, and (ii) Xxxxx & Lardner, counsel for
Holdings, issued in connection with the Transactions.
(b) Each Purchaser shall have received from Xxxxxxxx Xxxxx Xxxxxx & Xxxxx,
Inc. a solvency opinion substantially in the form of Exhibit 3.4(b) hereto.
3.5 Undertaking by Parent. Parent shall have delivered to each Purchaser an
undertaking, in form and substance satisfactory to such Purchaser, to vote for
the Merger and to use its best efforts to consummate the Merger.
3.6 Refinancing of Existing Indebtedness; Credit Agreement; Equity
Financing; Minimum Aggregate Proceeds. Prior to or simultaneously with the
Closing of the sale and purchase of the Notes:
(a) Refinancing of Existing Indebtedness. The refinancing of the
outstanding Indebtedness of Holdings (other than the 10% Convertible
Debentures not owned by Affiliates of Holdings) and its Subsidiaries shall
have been consummated and each Purchaser shall have received evidence
thereof satisfactory to the Purchaser and such Purchaser's special counsel;
(b) Tender Offer. The Tender Offer and the other transactions
described in the Offer to Purchase and in the Schedule TO which are to
occur prior the Closing Date shall have been consummated concurrently with
the Closing in accordance with the terms and provisions of the Offer to
Purchase and the Schedule TO and the Purchasers shall have received a
certificate of a duly authorized officer of PlayCore Wisconsin certifying
as to such consummation;
(c) Equity Financing. The Equity Financing shall have been consummated
on terms and conditions satisfactory to each Purchaser and each Purchaser's
special counsel, Parent shall have made equity contribution to the
Acquisition Company of not less than 30% of the total combined
capitalization of PlayCore Wisconsin and Parent;
(d) Minimum Condition. After giving effect to the Tender Offer, the
Equity Financing and the transactions to occur immediately after the
closing of
-32-
39
the Tender Offer, Parent shall have owned not less than 85% of the
outstanding Capital Stock of Holdings; and
(e) Credit Agreement. The Credit Agreement shall be in full force and
effect, at the Closing, PlayCore Wisconsin shall receive not less than an
aggregate amount of $95,000,000 in gross cash proceeds from loans under the
Credit Agreement.
3.7 Financial Information. Each Purchaser shall have received a pro forma
consolidated balance sheet for Holdings and its Subsidiaries as of five days
prior to the Closing Date after giving effect to the Transactions, including the
issuance of the Notes and the use of the proceeds thereof, which has been
certified by the chief financial officer of Holdings and which is in form and
substance satisfactory to such Purchaser.
3.8 Material Adverse Effect. No event or events shall have occurred since
December 31, 1999 which, individually or in the aggregate, have had or would
reasonably be expected to have a Material Adverse Effect.
3.9 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and the other
Transaction Documents, and all documents and instruments incident to such
transactions and the terms thereof, shall be reasonably satisfactory to each
Purchaser, and each Purchaser and each Purchaser's special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as it or they may reasonably request.
3.10 Management Employment Contracts. The Purchasers shall have received
true and correct copies of the Management Employment Contracts and such
documents (i) shall have been duly executed and delivered by the parties
thereto, (ii) shall be in form and substance reasonably satisfactory to the
Purchasers and their special counsel and (iii) shall be valid and binding
obligations of the parties thereto, enforceable against each of them in
accordance with its respective terms, subject to the Enforceability Exceptions.
3.11 Transaction Documents. The Purchasers shall have received true and
correct copies of all Transaction Documents and such documents (i) shall have
been duly executed and delivered by the parties thereto, (ii) shall be in form
and substance reasonably satisfactory to the Purchasers and their special
counsel and (iii) shall be valid and binding obligations of the parties thereto,
enforceable against each of them in accordance with its respective terms,
subject to the Enforceability Exceptions.
3.12 Closing Payment; Payment of Expenses. At the Closing, each Purchaser
shall have received from PlayCore Wisconsin the Closing Payment and such
Purchaser and such Purchaser's special counsel shall have received from PlayCore
Wisconsin all other fees required to be paid, and, in accordance with Section
16, all costs and expenses for which invoices have been presented.
-33-
40
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF PLAYCORE WISCONSIN
Holdings and PlayCore Wisconsin, jointly and severally, represent and
warrant to the Purchasers (after giving pro forma effect to the consummation on
the Closing Date of the Tender Offer, the Equity Financing, and the consummation
on or after the Closing Date of the Merger, the transactions contemplated by
this Agreement, the Credit Agreement and the other Transaction Documents, and
the issuance of the Notes and in each case the application of the proceeds
thereof) that:
4.1 Due Incorporation; Power and Authority. Each of Holdings and each of
its Subsidiaries (a) is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of organization, (b) is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, other than any
failures to so qualify or to be in good standing which, individually or in the
aggregate, have not had and would not be reasonably expected to have a Material
Adverse Effect, (c) has full corporate power and authority to own, lease and
operate its properties and to conduct its businesses as they are currently
conducted, and (d) has full corporate power and authority to enter into and
perform its obligations under each of the Transaction Documents to which it is a
party.
4.2 Capitalization. Immediately after consummation of the Tender Offer, the
Merger, the Equity Financing and the issuance of the Notes, (a) the authorized
Capital Stock of Parent will consist of 1,000,000 shares of Common Stock, (b)
725,000 shares of Common Stock will be issued and outstanding (with an
additional up to 72,500 shares reserved for issuance upon exercise of the
Management Options), (c) 72,500 Management Options will be issued and
outstanding, (d) no shares of any class of the Capital Stock of Parent will be
held by Parent in its treasury or by Parent's Subsidiaries and (e) all of the
Common Stock of PlayCore Wisconsin will be held by Parent and all of the Common
Stock (other than the Management Options and Common Stock held by employees of
Holdings or the Company, as disclosed on Schedule 4.2) of Parent will be held by
PlayCore Holdings LLC, a Delaware limited liability company. All the issued and
outstanding shares of Common Stock after the Closing have been duly authorized
and are validly issued, fully paid and nonassessable, subject to Wisconsin
statutory exception to nonassessibility for unpaid wages.
4.3 Subsidiaries. Schedule 4.3 correctly states (a) the name of each of
PlayCore Wisconsin's Subsidiaries each of which is a Wholly Owned Subsidiary of
PlayCore Wisconsin. Except as set forth on Schedule 4.3, Holdings does not own,
directly or indirectly, any equity interests in any Person other than direct
ownership of all of issued and outstanding Capital Stock of PlayCore Wisconsin
and indirect ownership through its equity interest in PlayCore Wisconsin of
PlayCore Wisconsin's Subsidiaries. Except as set forth on Schedule 4.3, PlayCore
Wisconsin owns no equity interests in any other Person. Each issued and
outstanding share of Capital Stock of each Subsidiary of Holdings (a) has been
duly authorized, validly issued and is fully paid and nonassessable and (b) is
owned by Holdings, directly or through
-34-
41
Subsidiaries, free and clear of any Lien other than the Liens established under
the Credit Documents and Permitted Liens.
4.4 Due Authorization, Execution and Delivery.
(a) Agreement. This Agreement has been duly authorized, executed and
delivered by Holdings, PlayCore Wisconsin and the Guarantors party hereto and
constitutes a valid and legally binding obligation of Holdings, PlayCore
Wisconsin and such Guarantors, enforceable against each of them in accordance
with its terms, subject to the Enforceability Exceptions.
(b) Notes and the Exchange Notes. The Notes to be purchased by the
Purchasers from PlayCore Wisconsin are in the form contemplated by this
Agreement, have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered by PlayCore Wisconsin on the Closing
Date as provided herein, will have been duly executed, issued and delivered by
PlayCore Wisconsin, and will constitute valid and legally binding obligations of
PlayCore Wisconsin, enforceable against it in accordance with their terms,
subject to the Enforceability Exceptions. If and when the Exchange Notes are
issued pursuant to the Exchange and Registration Rights Agreement and the
Indenture (as defined in the Exchange and Registration Rights Agreement) in
accordance with the terms thereof and hereof, the Exchange Notes will have been
duly and validly authorized for issuance by PlayCore Wisconsin, will have been
duly executed, issued and delivered by PlayCore Wisconsin, and will constitute
valid and legally binding obligations of PlayCore Wisconsin, enforceable against
it in accordance with their terms, subject to the Enforceability Exceptions.
(c) Exchange and Registration Rights Agreement. The Exchange and
Registration Rights Agreement has been duly authorized, executed and delivered
by PlayCore Wisconsin and the Guarantors a party thereto and constitutes a valid
and binding obligation of PlayCore Wisconsin and such Guarantors, enforceable
against each of them in accordance with its terms, subject to the Enforceability
Exceptions.
(d) Other Transaction Documents. Each Transaction Document to which
Holdings, PlayCore Wisconsin or any of their respective Subsidiaries is a party
(each such party, a "Holdings Party") (i) has been duly authorized, executed and
delivered by each Holdings Party, a party thereto and (ii) constitutes a valid
and legally binding obligation of such Holdings Party, enforceable against such
Holdings Party in accordance with its terms, subject to the Enforceability
Exceptions.
4.5 Non-Contravention; Authorizations and Approvals. Neither Holdings nor
any of its Subsidiaries is in violation of its certificate or articles of
incorporation or bylaws (or comparable constituent or governing documents) or is
in default (or, with the giving of notice, lapse of time or both, would be in
default) under any note, bond, mortgage, indenture, deed of trust, loan or
credit agreement, license, franchise, permit, lease, contract or other
agreement, instrument, commitment or obligation to which Holdings or any of its
Subsidiaries is a party or by which Holdings or any of its Subsidiaries or any
of their respective properties or assets is bound (including, without
limitation, the Credit Agreement), (each, a "Contract"), except for any
-35-
42
such defaults that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect. None of (a) the
execution and delivery by Holdings or any of its Subsidiaries of any of the
Transaction Documents to which they are a party, (b) the performance by any of
them of their respective obligations thereunder, (c) the consummation of the
transactions contemplated thereby or (d) the issuance and delivery of the Notes
hereunder will: (i) violate, conflict with or result in a breach of any
provisions of the certificate or articles of incorporation or bylaws (or
comparable constituent or governing documents) of Holdings or any of its
Subsidiaries; (ii) except for Contracts for which consents have been obtained
and except for Outstanding Indebtedness of Holdings and its Subsidiaries being
refinanced at the Closing, violate, conflict with, result in a breach of any
provision of, constitute a default (or an event which, with notice, lapse of
time or both, would constitute a default) under, result in the termination or in
a right of termination of, accelerate the performance required by or benefit
obtainable under, result in the triggering of any payment or other obligations
(including any repurchase or repayment obligations) pursuant to, result in the
creation of any Lien (other than the Liens established under the Credit
Documents) upon any of the properties of Holdings or any of its Subsidiaries
under, or result in there being declared void, voidable, subject to withdrawal,
or without further binding effect, any of the terms, conditions or provisions of
any Contract, except for any such violations, conflicts, breaches, defaults,
accelerations, terminations or other matters which, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect; (iii) except as set forth on Schedule 4.5 and except for filings
perfecting or maintaining the perfection of Liens established under the Credit
Documents, require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority, except for those
consents, approvals, authorizations, declarations, filings or registrations
which have been obtained or made, or the failure of which to obtain or make,
individually or in the aggregate, have not had and would not be reasonably
expected to have a Material Adverse Effect; or (iv) violate any Applicable Laws,
except for violations which, individually or in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse Effect.
4.6 Financial Statements. Holdings has delivered to the Purchasers complete
and correct copies of its Annual Reports on Form 10-K containing audited
consolidated balance sheets of Holdings and its Subsidiaries as of December 31,
1999, 1998 and 1997 and the related consolidated statements of operations,
stockholders' equity, income, and cash flows for each of the three years in the
period ended December 31, 1999 (including the related notes and schedules
thereto and the report of independent public accountants) (collectively, the
"Financial Statements"). Each of the consolidated balance sheets contained in
the Financial Statements fairly present in all material respects the
consolidated financial position of Holdings and its Subsidiaries as of its date
and each of the consolidated statements of income and cash flows included in the
Financial Statements fairly presents in all material respects the consolidated
results of income, or cash flows, as the case may be, of Holdings and its
Subsidiaries for the periods to which they relate, in each case in accordance
with GAAP applied on a consistent basis during the periods involved, except as
noted therein. All projections provided by Holdings to the Purchasers in
connection with the Transactions have been prepared in good faith based on
assumptions believed by management of Holdings to be reasonable at the time, it
being understood by the Purchasers, however, that projections as to future
events are not to be viewed
-36-
43
as facts and that the actual results during the period or periods covered by any
projections may differ from projected results and that the differences may be
Material). Any forward looking statements contained therein are inherently
subject to risk and uncertainties, many of which cannot be predicted with
accuracy.
4.7 Absence of Undisclosed Liabilities or Events.
(a) Except for the liabilities and obligations arising under the
Transaction Documents neither Holdings nor any of its Subsidiaries has any
liabilities or obligations, whether accrued, contingent or otherwise, except (i)
for liabilities and obligations in the respective amounts reflected or reserved
against in the consolidated balance sheet as of the Audit Date included in
Holdings' Financial Statements, (ii) borrowings under Holdings' revolving credit
facility in the ordinary course of business, (iii) liabilities and obligations
incurred in the ordinary course of business since the Audit Date which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect or (iv) liabilities or obligations
under Contracts.
(b) The Financing Documents and the Financial Statements (but not any
projections), taken as a whole, do not contain any untrue statement of a
Material fact as to Holdings and its Subsidiaries taken as a whole or omit to
state any Material fact necessary to make the statements as to Holdings and its
Subsidiaries taken as a whole therein not misleading in light of the
circumstances under which they were made. Since the Audit Date, there has been
no change in the business, operations, property, assets, liabilities,
management, condition (financial or otherwise) or prospects of Holdings or its
Subsidiaries except for changes that, individually or in the aggregate, have not
had or would not reasonably be expected to have a Material Adverse Effect other
than pursuant to or as disclosed in the Merger Agreement. There are no facts
known to Holdings that, individually or in the aggregate, have had or would
reasonably be expected to have a Material Adverse Effect that have not been set
forth herein or in the Disclosure Schedule.
(c) The Offer to Purchase, the Schedule TO and all materials incorporated
therein by reference do not contain any untrue statement of a Material fact as
to Holdings and its Subsidiaries taken as a whole or omit to state any Material
fact necessary to make the statements as to Holdings and its Subsidiaries taken
as a whole therein not misleading in light of the circumstances under which they
were made.
4.8 No Actions or Proceedings. Except as set forth in Schedule 4.8, there
are no legal or governmental actions, suits or proceedings pending or, to the
knowledge of Holdings, threatened against or affecting Holdings, any of its
Subsidiaries, any of their Directors or officers (in their capacities as such)
or any of their property or assets which, individually or in the aggregate, have
had or would reasonably be expected to have a Material Adverse Effect or to
prohibit, delay or materially restrict the consummation of any of the
transactions contemplated by the Transaction Documents. No Governmental
Authority has notified Holdings or PlayCore Wisconsin of an intention to conduct
any audit, investigation or other review with respect to Holdings or any of its
Subsidiaries, except for those investigations or reviews which, individually
-37-
44
or in the aggregate, have not had or would not be reasonably expected to have a
Material Adverse Effect.
4.9 Title to Properties. Except as set forth in Schedule 4.9, each of
Holdings and its Subsidiaries has (a) good and marketable title to and fee
simple ownership of, or a valid and subsisting leasehold interest in, all of its
real property, and (b) good title to, or a valid and subsisting leasehold
interest in, all of its equipment and other personal property, in each case free
and clear of all Liens, except Permitted Liens and Liens being released on the
Closing Date. Holdings and its Subsidiaries have paid or discharged, or reserved
for, all lawful claims which, if unpaid, might become a Lien (other than a
Permitted Lien) against any property or assets of Holdings or its Subsidiaries.
4.10 Intellectual Property Rights. Holdings and its Subsidiaries own or
possess all Intellectual Property reasonably necessary to conduct their
businesses as now conducted, except where the expiration or loss of any of such
Intellectual Property, individually or in the aggregate, has not had and would
not reasonably be expected to have a Material Adverse Effect. To the knowledge
of Holdings and its Subsidiaries, (a) there is no infringement of, or conflict
with, such Intellectual Property by any third party and (b) the conduct of their
businesses as currently conducted do not infringe or conflict with any
Intellectual Property of any third party, in each case other than any such
infringements or conflicts which, individually or in the aggregate, have not had
or would not reasonably be expected to have a Material Adverse Effect.
4.11 Tax Returns and Payments.
(a) all Tax Returns that are required to be filed by or with respect to
Holdings or any of its Subsidiaries have been timely filed;
(b) all Taxes shown to be due on the Tax Returns referred to in clause (a)
or which are otherwise due and payable have been timely paid in full or accrued;
(c) all Taxes required to be withheld and paid over by or with respect to
Holdings or any of its Subsidiaries to any relevant taxing authority in
connection with payments to employees, independent contractors, creditors,
shareholders or to third parties have been so withheld and paid over;
(d) except as disclosed on Schedule 4.11(d), the Tax Returns referred to in
clause (a) have been examined by the Internal Revenue Service or the appropriate
state, local or foreign taxing authority or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has expired
or have been accrued on the most recent balance sheet;
(e) except as disclosed on Schedule 4.11(e), all deficiencies asserted or
assessments made by the Internal Revenue Service or the applicable state, local
or foreign taxing authority have been paid in full;
-38-
45
(f) except as disclosed on Schedule 4.11(f), no audits or examinations with
respect to Holdings or any of its Subsidiaries are ongoing, pending or, to the
knowledge of Holdings or any Subsidiaries, threatened or proposed by the
Internal Revenue Service or the appropriate state, local or foreign Tax
authority;
(g) except as disclosed on Schedule 4.11(g), no waivers or extensions of
statutes of limitation have been given by or requested with respect to any Taxes
of Holdings or any of its Subsidiaries;
(h) neither Holdings nor any Subsidiaries will be required, as a result of
(i) any adjustment under Section 481 of the Code (or any similar provision of
state, local or foreign law), or (ii) any "closing agreement" as described in
Section 7121 of the Code (or any similar provision of state, local or foreign
Tax law), to include any item of income in or exclude any item of deduction from
any Tax period ending on or after the Closing Date;
(i) except as disclosed on Schedule 4.11(i), there are no Liens for Taxes
on any of the assets of Holdings or any of its Subsidiaries other than Liens for
Taxes not yet due;
(j) except as disclosed on Schedule 4.11(j), neither Holdings nor any of
its Subsidiaries has ever been a member of an affiliated group within the
meaning of Section 1504(a) of the Code for purposes of filing any Tax Return of
which Holdings was not the common parent;
(k) neither Holdings nor any of its Subsidiaries or any predecessors to any
of such entities has made any consent under Section 341 of the Code with respect
to Holdings or any of its Subsidiaries; and
(l) no Tax authority in a jurisdiction where Holdings or any of its
Subsidiaries does not file Tax Returns has made a claim, assertion or threat
that Holdings or any of its Subsidiaries is or may be subject to Tax in such
jurisdiction.
4.12 Employee Benefit Plans.
(a) There has been no failure by any employee benefit plan, within the
meaning of Section 3(3) of ERISA, which is maintained by Holdings or any of its
Subsidiaries or to which Holdings or any of its Subsidiaries contributes (each,
a "Plan") to comply with the applicable requirements of ERISA and the Code other
than any such failures that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse Effect. There is no
material pending or, to the knowledge of Holdings threatened litigation relating
to the Plans. Neither Holdings nor any of its Subsidiaries has engaged in a
transaction with respect to any Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject Holdings or any of its
Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA other than those that, individually or in the aggregate,
have not had and would not reasonably be excepted to have a Material Adverse
Effect.
-39-
46
(b) No liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by Holdings or any of its Subsidiaries with respect to
any ongoing, frozen or terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is considered one employer with
Holdings or any of its Subsidiaries under Section 4001 of ERISA or Section 414
of the Code (an "ERISA Affiliate"). Neither Holdings, any of its Subsidiaries
nor an ERISA Affiliate has contributed to a Multiemployer Plan, at any time on
or after December 31, 1995. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") or by any ERISA Affiliate within the 12-month period ending on
the date hereof.
(c) Neither any Pension Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver. Neither Holdings nor any of its
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code. (d) Under each Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit liabilities",
within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis
of the actuarial assumptions contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Plan.
(d) Under each Pension Plan which is a single-employer plan, as of the last
day of the most recent plan year ended prior to the date hereof, the actuarially
determined present value of all "benefit liabilities", within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the Plan's most recent actuarial valuation), did not
exceed the then current value of the assets of such Plan.
(e) Neither Holdings nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any Plan, except as required by
Applicable Law or as set forth on Schedule 4.12(e). Holdings or the Subsidiaries
may amend or terminate any such Plan at any time without incurring any liability
thereunder.
4.13 Private Offering; No Integration or General Solicitation; Rule 144A
Eligibility.
(a) Subject to compliance by the Purchasers with the representations and
warranties set forth in Section 5 and with the procedures set forth in Section
11, it is not necessary in connection with the offer, sale and delivery of the
Notes to the Purchasers in the manner contemplated by this Agreement to register
the Notes under the Securities Act.
(b) Neither Holdings nor PlayCore Wisconsin have, directly or indirectly,
offered, sold or solicited any offer to buy and will not, directly or
indirectly, offer, sell or solicit any offer to buy, any security of a type or
in a manner which would be integrated with the sale of the Notes and require the
Notes to be registered under the Securities Act. None of Holdings, PlayCore
Wisconsin, its Affiliates or any Person acting on its or any of their behalf
(other than the Purchasers, as to whom Holdings and PlayCore Wisconsin make no
representation or warranty) has engaged or will engage in any form of general
solicitation or general advertising
-40-
47
(within the meaning of Rule 502(c) under the Securities Act) in connection with
the offering of the Notes. With respect to the Notes, if any, sold in reliance
upon the exemption afforded by Regulation S: (i) none of Holdings, PlayCore
Wisconsin, their respective Affiliates or any person acting on its or their
behalf (other than the Purchasers, as to whom Holdings and PlayCore Wisconsin
make no representation or warranty) has engaged or will engage in any directed
selling efforts within the meaning of Regulation S and (ii) each of Holdings,
PlayCore Wisconsin and their respective Affiliates and any person acting on its
or their behalf (other than the Purchasers, as to whom PlayCore Wisconsin makes
no representation or warranty) has complied and will comply with the offering
restrictions set forth in Regulation S.
(c) The Notes are eligible for resale pursuant to Rule 144A and will not,
at the Closing Date, be of the same class as securities listed on a national
securities exchange registered under Section 6 of the Exchange Act or quoted on
a U.S. automated interdealer quotation system.
4.14 Environmental Matters. Except as set forth in Schedule 4.14 and
except, with regard to each of the following, any matters which, individually or
in the aggregate, do not and would not reasonably be expected to have a Material
Adverse Effect:
(a) Holdings and each of the Subsidiaries is currently in compliance
with, all Environmental Laws and has obtained and is currently in
compliance with all permits, licenses, registrations, consents and other
authorizations which are required with respect to any of its facilities or
operations under any applicable Environmental Law (the "Environmental
Permits"), and all such Environmental Permits are in full force and effect;
(b) Neither Holdings nor any Subsidiary has received any written
notice of any claims, civil, criminal or administrative actions, suits,
hearings, investigations, or proceedings which are pending or, to its
knowledge, threatened against it, in each case, on the basis of, or related
to, any Environmental Matter, or indicating that such Person is or may be a
potentially responsible party or otherwise liable under Environmental Law
in connection with any location which has experienced the release or
threatened release of any Hazardous Substances;
(c) There are no conditions (including without limitation any releases
of Hazardous Substances), circumstances, actions or omissions that would
(i) give rise to any liability or obligation of Holdings or any Subsidiary
under any Environmental Laws, (ii) form the basis of any claim, action,
suit, proceeding, hearing, investigation or inquiry against Holdings or any
Subsidiary, or (iii) would interfere with or prevent continued compliance
by Holdings or any Subsidiary with Environmental Laws and/or Environmental
Permits; and
(d) There are no underground or aboveground storage tanks that are now
or ever have been used for the treatment, storage or disposal of Hazardous
-41-
48
Substances at, on or under any real property owned, leased or occupied by
Holdings or any of the Subsidiaries.
4.15 Status Under Certain Statutes. Neither Holdings nor any of its
Subsidiaries is or, after receipt of payment for the Notes and the consummation
of the other transactions contemplated by the Transaction Documents, will be (a)
an "investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, or controlled by such a company, or
(b) a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary" or a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
4.16 Insurance. Each of PlayCore Wisconsin and its Subsidiaries are insured
by financially sound institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate for their
businesses including, but not limited to, policies covering real and personal
property owned or leased by PlayCore Wisconsin and its Subsidiaries against
theft, damage, destruction and acts of vandalism.
4.17 Use of Proceeds; Margin Regulations. PlayCore Wisconsin will apply all
of the proceeds from the sale of the Notes solely to finance a portion of the
Tender Offer and the Merger and to pay fees and expenses related to the Tender
Offer and the Merger. PlayCore Wisconsin will advance proceeds from the sale of
the Notes hereunder to Acquisition Company or Holdings pursuant to the Tender
Offer and/or pursuant to the Merger, which advance will comply with the
provisions of Regulation T, Regulation U and Regulation X of the Federal Reserve
Board. Margin stock does not constitute more than 5% of the value of the
consolidated assets of PlayCore Wisconsin and its Subsidiaries and PlayCore
Wisconsin has no present intention that margin stock will constitute more than
5% of the value of such assets. As used in this Section 4.17, the terms "margin
stock" and "purpose of buying or carrying" shall have the meanings assigned to
them in Regulation U.
4.18 Existing Indebtedness; Future Liens. Schedule 4.18 sets forth a
complete and correct list of all Indebtedness of PlayCore Wisconsin and its
Subsidiaries that will be outstanding immediately after the Closing except for
any such Indebtedness not so scheduled which does not exceed $100,000
individually and $500,000 in the aggregate (such scheduled and unscheduled
Indebtedness, the "Existing Indebtedness"). Neither PlayCore Wisconsin nor any
Subsidiary of PlayCore Wisconsin is in default, and no waiver of default is
currently in effect, in the payment of the principal of or interest on any
Indebtedness of PlayCore Wisconsin or such Subsidiary and no event or condition
exists with respect to any Indebtedness of PlayCore Wisconsin or any Subsidiary
of PlayCore Wisconsin that would permit (or that with notice, lapse of time or
both, would permit) any Person to cause such Indebtedness to become due and
payable before its stated maturity or before its regularly scheduled dates of
payment. Neither PlayCore Wisconsin nor any of its Subsidiaries has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property or assets, whether now owned or hereafter
acquired, to be subject to a Lien that would be prohibited by this Agreement if
incurred after the Closing.
-42-
49
4.19 Compliance with Laws; Permits. Except as disclosed on Schedule 4.19,
each of Holdings and each of its Subsidiaries has complied, and is in
compliance, in all material respects with all Applicable Laws and has all
Permits Material to, and necessary in, the conduct of its business as currently
conducted and all such Permits are in full force and effect. No violations have
been recorded in respect of any such Permits, and no proceeding is pending or,
to the knowledge of Holdings and its Subsidiaries, threatened to revoke or limit
any Permit, except for violations and proceedings which, individually or in the
aggregate, have not and could not reasonably be expected to have a Material
Adverse Effect.
4.20 Solvency. Holdings and its Subsidiaries on a consolidated basis are,
and after giving effect to the Transactions will be, Solvent.
4.21 Affiliate Transactions. Except as set forth on Schedule 4.21, (a)
there is no Indebtedness between Holdings or any of its Subsidiaries, on the one
hand, and any officer, shareholder, director or Affiliate (other than Holdings
or any of its Subsidiaries) of Holdings, on the other, (b) no such officer,
shareholder, director or Affiliate provides or causes to be provided any asset
or facilities to Holdings or any of its Subsidiaries which, individually or in
the aggregate, are Material, (c) neither Holdings nor any of its Subsidiaries
provides or causes to be provided any assets, services, or facilities to any
such officer, shareholder, director or Affiliate which, individually or in the
aggregate, are Material (other than Affiliate Transactions permitted by Section
9.3), (d) neither Holdings nor any Subsidiary beneficially owns, directly or
indirectly, any investment in or issued by any such officer, director or
Affiliate, and (e) no such officer, shareholder or director has any direct or
indirect ownership interest in any Person with which Holdings or any of its
Subsidiaries competes or has a business relationship.
4.22 Material Contracts. Schedule 4.22 contains a true, correct and
complete list of all Material Contracts in effect on the Closing Date. Except as
described on Schedule 4.22, as of the Closing Date each Material Contract is in
full force and effect and no material defaults enforceable against Holdings or
any of its Subsidiaries currently exist thereunder. To the knowledge of Holdings
and its Subsidiaries, no party to any Material Contract intends to terminate
such Material Contract.
4.23 Indebtedness. On the Closing Date, after consummation of the
Transactions, the consolidated Indebtedness of Holdings and its Subsidiaries
will not exceed $125,000,000 (excluding the Indebtedness evidenced by the Notes
and contingent obligations).
4.24 Fees. All fees and other expenses payable in connection with the
consummation of the Transactions and all other fees payable to Parent or its
Affiliates, in each case by Holdings or any of its Subsidiaries, have been
disclosed to the Purchasers prior to the Closing Date.
4.25 Labor and Employment Matters. Except as set forth in Schedule 4.25,
(a) neither Holdings nor any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement or other Contracts or understanding with a labor
union or labor organization; and (b) there is no (i) unfair labor practice,
labor dispute (other than routine individual grievances) or labor arbitration
proceeding pending or, to the knowledge of Holdings,
-43-
50
threatened against Holdings or its Subsidiaries, (ii) to the knowledge of
Holdings activity or proceeding by a labor union or representative thereof to
organize any employees of Holdings or any of its Subsidiaries, (iii) lockout,
strike, slowdown, work stoppage or to the knowledge of Holdings threat thereof
by or with respect to any such employees or (iv) dispute, grievance or
litigation relating to labor matters involving any employee (other than routine
individual grievances). Holdings and its Subsidiaries each is in compliance with
all Applicable Laws regarding employment, employment practices, terms and
conditions of employment and wages, except for such noncompliance which,
individually or in the aggregate, do not and could not reasonably be expected to
have a Material Adverse Effect. Other than as provided pursuant to the Merger
Documents, no employee of Holdings will receive, accrue or be entitled to
received or accrue any additional benefits, service or accelerated rights to
payments of benefits, or any severance or termination payments as a result of
the consummation of the Transactions.
4.26 Brokerage Fees. Except as disclosed in Schedule 4.26, neither Holdings
nor any of its Subsidiaries has paid, or is obligated to pay, to any Person any
brokerage or finder's fees in connection with the Transactions.
4.27 Activities of Holdings. Except as set forth on Schedule 4.27, the sole
business activity of Holdings is the direct ownership of all of the Capital
Stock of PlayCore Wisconsin. Immediately after the Closing Date, Holdings (a)
will have no Indebtedness outstanding (other than Indebtedness owing to PlayCore
Wisconsin pursuant to the Transaction Documents) and no agreement to Incur any
Indebtedness other than (i) Guarantees of the Notes and (ii) Guarantees of
Senior Indebtedness evidenced by the Credit Documents, (b) will own no
Investments, except for Investments in the Capital Stock of Company and
Investments by PlayCore Wisconsin or any Subsidiary of PlayCore Wisconsin
permitted hereby, or (c) will own or hold or agree to own or hold no property or
asset other than the Capital Stock of PlayCore Wisconsin and cash or Cash
Equivalents of not more than $500,000 and cash on hand required to be used to
pay expenses due within 90 days.
SECTION 5.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and warrants to
Holdings and PlayCore Wisconsin as of the date hereof as follows:
5.1 Purchase for Investment.
(a) Such Purchaser is acquiring the Notes for its own account, for
investment and not with a view to, or present intention of, selling such Notes
in any distribution thereof within the meaning of the Securities Act in
violation of the federal securities laws or any applicable state securities
laws.
(b) Such Purchaser understands that (i) the Notes have not been registered
under the Securities Act and are being issued by PlayCore Wisconsin in
transactions exempt
-44-
51
from the registration requirements of the Securities Act and (ii) the Notes may
not be offered or sold except pursuant to an effective registration statement
under the Securities Act or pursuant to an applicable exemption from
registration under the Securities Act.
(c) Such Purchaser further understands that the exemption from registration
afforded by Rule 144 (the provisions of which are known to such Purchaser)
promulgated under the Securities Act depends on the satisfaction of various
conditions, and that, if applicable, Rule 144 may afford the basis for sales
only in limited amounts.
(d) Such Purchaser did not employ any broker or finder in connection with
the transactions contemplated in this Agreement.
(e) Such Purchaser is an "Accredited Investor" (as defined in Rule 501 (a)
under the Securities Act).
(f) Such Purchaser has received all the information it considers necessary
or appropriate for deciding whether to purchase the Notes. Such Purchaser
further represents that it has had an opportunity to ask questions and receive
answers from PlayCore Wisconsin regarding the terms and conditions of the
offering of the Notes and the business, properties, prospects and financial
condition of PlayCore Wisconsin. The foregoing, however, does not limit or
modify the representations and warranties of PlayCore Wisconsin in Section 4 of
this Agreement or the rights of the Purchasers to rely thereon.
SECTION 6.
COVENANTS TO PROVIDE INFORMATION
Holdings and PlayCore Wisconsin jointly and severally covenant and agree
with each Holder that until the principal amount of (and premium, if any, on)
all the Notes, and all interest, and other obligations hereunder in respect
thereof (other than indemnity obligations that have not yet become due and
payable), shall have been paid in full:
6.1 Future Reports of Holdings to Purchasers. Holdings shall deliver to
each Purchaser and, other than reports pursuant to Section 6.1(a)(i) and (f), to
each Holder that is an Institutional Investor so long as such Purchaser or such
Holder holds any Notes:
(a) Annual, Quarterly and Monthly Information. As soon as available,
but in any event:
(i) Monthly Reports. prior to the Note Registration, within 30
days after the end of each Fiscal Month (commencing with the May 2000
Fiscal Month), but excluding the last Fiscal Month of any Fiscal
Quarter with respect to which financial statements are delivered
pursuant to Section 6.1(a)(ii), the consolidated balance sheet of
Holdings and its Subsidiaries as at the end of such Fiscal Month and
the related
-45-
52
consolidated statements of income and retained earnings and statement
of cash flows for such Fiscal Month and for the elapsed portion of the
Fiscal Year ended with the last day of such Fiscal Month, in each case
setting forth comparative figures for the corresponding Fiscal Month
in the prior Fiscal Year and comparable budgeted figures for such
Fiscal Month, all of which shall be certified by the chief financial
officer of Holdings subject to normal year-end audit adjustments and
the absence of footnotes;
(ii) Quarterly Financial Statements. within 45 days after the
close of the first three Fiscal Quarters in each Fiscal Year, (i) the
consolidated balance sheet of Holdings and its Subsidiaries as at the
end of such Fiscal Quarter and the related consolidated statements of
income and retained earnings and statement of cash flows for such
Fiscal Quarter and for the elapsed portion of the Fiscal Year ended
with the last day of such Fiscal Quarter, in each case setting forth
comparative figures for the related periods prior Fiscal Year, all of
which shall be certified by the chief financial officer of Holdings,
subject to normal year-end audit adjustments and the absence of
footnotes and (ii) management's discussion and analysis of the
material operational and financial developments during such Fiscal
Quarter; and
(iii) Annual Financial Statements. within 90 days after the close
of each Fiscal Year, (i) the consolidated balance sheet of Holdings
and its Subsidiaries as at the end of such Fiscal Year and the related
consolidated statements of income and retained earnings and statement
of cash flows for such Fiscal Year setting forth comparative figures
for the preceding Fiscal Year and certified by such independent
certified public accountants of recognized national standing, together
with a report of such accounting firm (which report may be limited to
the extent required by accounting rules and guidelines) stating that
in the course of its regular audit of the financial statements of
Holdings and its Subsidiaries, which audit was conducted in accordance
with generally accepted auditing standards, such accounting firm
obtained no knowledge of any Default of an Event of Default which has
occurred and is continuing with respect to accounting matters
(including under Sections 8.2, 8.4, 8.5 and 8.12) or, if in the
opinion of such accounting firm such a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof (it
being understood that such accounting firm shall not be required
hereunder to perform any special audit procedures and shall not have
any liability for failure to obtain knowledge of such Default or Event
of Default) and (ii) management's discussion and analysis of the
material operational and financial developments during such Fiscal
Year;
provided, however, that if Holdings is then subject to the reporting
requirements under Section 13 or Section 15(d) of the Exchange Act, the delivery
by Holdings to such
-46-
53
Purchaser or such Holder that is an Institutional Investor of a Quarterly Report
on Form 10-Q, of an Annual Report on Form 10-K or current reports on Form 8-K or
any successor forms within the time periods above described shall satisfy the
requirements of this Section 6.1(a)(ii) and (iii).
(b) Chief Financial Officer Certificates. At the time of the delivery
of the financial statements provided for in Sections 6.1(a)(ii) and (iii),
a certificate of the chief financial officer of Holdings certifying that,
to the best of such officer's knowledge, no Default or Event of Default has
occurred and is continuing or, if any Default or Event of Default has
occurred and is continuing, specifying the nature and extent thereof, which
certificate shall set forth in reasonable detail the calculations (if any)
required to establish whether Holdings and its Subsidiaries were in
compliance with the provisions of Sections 8.2, 8.4, 8.5 and 8.12, at the
end of such Fiscal Quarter or Fiscal Year, as the case may be.
(c) Auditors' Reports. Promptly upon receipt thereof, copies of all
final reports submitted to Holdings or to any of its Subsidiaries by
independent certified public accountants in connection with each annual,
interim or special audit of the books of Holdings or any of its
Subsidiaries made by such accountants, including, without limitation, any
final comment letter submitted by such accountants to management in
connection with their annual audit.
(d) Information to Securityholders. Promptly upon their becoming
available, copies of all financial statements, reports, notices and proxy
statements and all regular and periodic reports and all registration
statements and final prospectuses, if any, filed by Holdings or any of its
Subsidiaries with any securities exchange or with the Commission or any
Governmental Authority succeeding to any of its functions and, promptly
upon request, such additional financial and other information as any
Purchasers or Holders which are Institutional Investors may from time to
time reasonably request.
(e) Notice of Default or Event of Default. Promptly, but in any event
within five (5) Business Days, after an officer of Holdings becomes aware
of the existence of any Default or Event of Default or that any Person has
given any notice or taken any other action with respect to a claimed
Default or Event of Default, a written notice thereof specifying the nature
and existence thereof and what action Holdings is taking or proposes to
take with respect thereto.
(f) Additional Information to Holders of Other Indebtedness. Prior to
the Note Registration simultaneously with the furnishing of such
information to any other holder of Indebtedness of Holdings or any of its
Subsidiaries, (i) copies of all other financial statements, reports or
projections with respect to Holdings or its Subsidiaries which are broader
in scope or on a more frequent basis than Holdings is required to provide
under this Agreement and (ii) copies of all studies, reviews, reports or
assessments relating to environmental matters that reveal
-47-
54
circumstances, events or other matters that would reasonably be expected to
have a Material Adverse Effect.
(g) Information Following Consummation of an Equity Offering.
Following the consummation of an Equity Offering, Holdings will file a copy
of all information and reports with the Commission required to be filed by
the rules and regulations of the Commission for public availability within
the time periods specified in the Commission's rules and regulations, and
make such information available to securities analysts and prospective
investors upon request. In addition, for so long as any Notes remain
Outstanding and are "restricted securities" with the meaning of Rule 144,
Holdings will furnish to the Holders and prospective investors, upon their
request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act of 1933.
6.2 Future Reports of PlayCore Wisconsin to Purchasers. PlayCore Wisconsin
shall deliver to each Purchaser and, other than reports pursuant to Section
6.2(a)(i) and (e), to each Holder that is an Institutional Investor so long as
such Purchaser or such Holder holds any Notes:
(a) Annual, Quarterly and Monthly Information. As soon as available,
but in any event:
(i) Monthly Reports. prior to the Note Registration, within 30
days after the end of each Fiscal Month (commencing with the May 2000
Fiscal Month), but excluding the last Fiscal Month of any Fiscal
Quarter with respect to which financial statements are delivered
pursuant to Section 6.2(a)(ii), the consolidated balance sheet of
PlayCore Wisconsin and its Subsidiaries as at the end of such Fiscal
Month and the related consolidated statements of income and retained
earnings and statement of cash flows for such Fiscal Month and for the
elapsed portion of the Fiscal Year ended with the last day of such
Fiscal Month, in each case setting forth comparative figures for the
corresponding Fiscal Month in the prior Fiscal Year and comparable
budgeted figures for such Fiscal Month, all of which shall be
certified by the chief financial officer of PlayCore Wisconsin subject
to normal year-end audit adjustments and the absence of footnotes;
(ii) Quarterly Financial Statements. within 45 days after the
close of the first three Fiscal Quarters in each Fiscal Year, (i) the
consolidated balance sheet of PlayCore Wisconsin and its Subsidiaries
as at the end of such Fiscal Quarter and the related consolidated
statements of income and retained earnings and statement of cash flows
for such Fiscal Quarter and for the elapsed portion of the Fiscal Year
ended with the last day of such Fiscal Quarter, in each case setting
forth comparative figures for the related periods prior Fiscal Year,
all of which shall be certified by
-48-
55
the chief financial officer of PlayCore Wisconsin, subject to
normal year-end audit adjustments and the absence of footnotes
and (ii) management's discussion and analysis of the material
operational and financial developments during such Fiscal
Quarter; and
(iii) Annual Financial Statements. within 90 days after the
close of each Fiscal Year, (i) the consolidated balance sheet of
PlayCore Wisconsin and its Subsidiaries as at the end of such
Fiscal Year and the related consolidated statements of income and
retained earnings and statement of cash flows for such Fiscal
Year setting forth comparative figures for the preceding Fiscal
Year and certified by the chief financial officer of PlayCore
Wisconsin and (ii) management's discussion and analysis of the
material operational and financial developments during such
Fiscal Year;
provided, however, that if PlayCore Wisconsin is then subject to the reporting
requirements under Section 13 or Section 15(d) of the Exchange Act, the delivery
by PlayCore Wisconsin to such Purchaser or such Holder that is an Institutional
Investor of a Quarterly Report on Form 10-Q, of an Annual Report on Form 10-K or
current reports on Form 8-K or any successor forms within the time periods above
described shall satisfy the requirements of this Section 6.2(a)(ii) and (iii).
(b) Chief Financial Officer Certificates. At the time of the
delivery of the financial statements provided for in Sections
6.2(a)(ii) and (iii), a certificate of the chief financial officer of
PlayCore Wisconsin certifying that, to the best of such officer's
knowledge, no Default or Event of Default has occurred and is
continuing or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which
certificate shall set forth in reasonable detail the calculations (if
any) required to establish whether PlayCore Wisconsin and its
Subsidiaries were in compliance with the provisions of Sections 8.2,
8.4, 8.5 and 8.12, at the end of such Fiscal Quarter or Fiscal Year,
as the case may be.
(c) Auditors' Reports. Promptly upon receipt thereof, copies of
all final reports submitted to PlayCore Wisconsin or to any of its
Subsidiaries by independent certified public accountants in connection
with each annual, interim or special audit of the books of PlayCore
Wisconsin or any of its Subsidiaries made by such accountants,
including, without limitation, any final comment letter submitted by
such accountants to management in connection with their annual audit.
(d) Notice of Default or Event of Default. Promptly, but in any
event within five (5) Business Days, after an officer of PlayCore
Wisconsin becomes aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any other
action with respect to a claimed Default or Event of Default, a
written notice thereof specifying the nature and existence
-49-
56
thereof and what action PlayCore Wisconsin is taking or proposes to
take with respect thereto.
(e) Additional Information to Holders of Other Indebtedness.
Prior to the Note Registration, simultaneously with the furnishing of
such information to any other holder of Indebtedness of PlayCore
Wisconsin or any of its Subsidiaries, (i) copies of all other
financial statements, reports or projections with respect to PlayCore
Wisconsin or its Subsidiaries which are broader in scope or on a more
frequent basis than PlayCore Wisconsin is required to provide under
this Agreement and (ii) copies of all studies, reviews, reports or
assessments relating to environmental matters that reveal
circumstances, events or other matters that would reasonably be
expected to have a Material Adverse Effect.
SECTION 7.
OTHER AFFIRMATIVE COVENANTS
Holdings and PlayCore Wisconsin further jointly and severally covenant and
agree with each Holder that (i) in the case of Sections 7.4 and 7.8, for so long
as such Sections apply by their respective terms and (ii) in the case of each
other Section in this Section 7, until the principal amount of (and premium, if
any, on) all the Notes, and all interest, and other obligations hereunder in
respect thereof (other than indemnification obligations that have not become due
and payable), shall have been paid in full:
7.1 Preservation of Corporate Existence and Franchises. Subject to Sections
8.5 and 8.12, Holdings shall, and shall cause its Subsidiaries to, do or cause
to be done all things necessary to preserve and keep in full force and effect
(a) its corporate existence, and the corporate, limited liability company or
other existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of
Holdings or any such Subsidiary and (b) the rights (charter and statutory),
licenses and franchises of Holdings and its Subsidiaries; provided, however,
that Holdings shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries if (i) the Board of Directors of Holdings shall determine in good
faith that the preservation thereof is no longer desirable in the conduct of the
business of Holdings and its Subsidiaries, taken as a whole, and (ii) the loss
thereof does not and would not reasonably be expected to result in a Material
Adverse Effect.
7.2 Maintenance of Properties. Holdings shall, and shall cause its
Subsidiaries to, cause all properties used or useful in the conduct of its
business or the business of any of its Subsidiaries to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of Holdings or any of its Subsidiaries may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that the foregoing shall not prevent
Holdings from discontinuing the operation or
-50-
57
maintenance of any of such properties if (i) the Board of Directors of Holdings
determines that such discontinuance is desirable in the conduct of its business
or the business of any Subsidiary and (ii) does not and would not reasonably be
expected to result in a Material Adverse Effect.
7.3 Taxes.
(a) Payment of Taxes. Holdings shall pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (i) all Taxes of
Holdings or any of its Subsidiaries and (ii) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a Lien upon the
property of Holdings or any of its Subsidiaries; provided, however, that
Holdings shall not be required to pay or discharge or cause to be paid or
discharged any such Tax or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings; provided that
appropriate reserves therefor are established in Holdings' consolidated
financial statements in accordance with GAAP.
(b) Tax Returns. Holdings or any of its Subsidiaries shall timely file or
cause to be filed when due all Tax Returns that are required to be filed by or
with respect to Holdings or any of its Subsidiaries for taxable years ending
after the Closing Date and shall pay any Taxes due in respect of such Tax
Returns.
(c) Contest Provisions. Holdings shall promptly notify the Purchasers in
writing upon receipt by Holdings or any of its Subsidiaries or any of their
Affiliates of notice of any pending or threatened federal, state, local or
foreign income or franchise Tax audits or assessments which, if determined
adversely to Holdings or any of its Subsidiaries, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
(d) Transfer Taxes. All transfer, transfer gains, documentary, sales, use,
stamp, registration and other similar Taxes and fees (including costs and
expenses relating to such Taxes) (collectively "Transfer Taxes") incurred in
connection with the consummation of the transactions contemplated by this
Agreement, shall be borne by PlayCore Wisconsin. PlayCore Wisconsin shall, at
its own expense, prepare and timely file, in accordance with all applicable laws
and regulations, all necessary Tax Returns and other documentation with respect
to all such Transfer Taxes. The Purchasers shall reasonably cooperate with
PlayCore Wisconsin in the preparation and filing of any such Tax Returns and
other documentation.
7.4 Books, Records and Access. Holdings, PlayCore Wisconsin and each of
their respective Subsidiaries shall keep adequate books and records of their
transactions in accordance with good accounting practices on the basis of GAAP
applied on a consistent basis (including the establishment and maintenance of
appropriate reserves). Holdings and its Subsidiaries or PlayCore Wisconsin and
its Subsidiaries, as the case may be, will provide reasonable opportunities to
GS Mezzanine to consult with and advise management of Holdings or PlayCore
Wisconsin, as the case may be, on significant business issues, including
management's proposed annual operating plans. Holdings and PlayCore Wisconsin
each agree to give due consideration to the advice given and any proposals made
by GS Mezzanine. Subject to the next succeeding sentence, Holdings shall, and
shall cause its Subsidiaries to, permit representatives of any Purchaser upon
reasonable notice (at the expense of such Purchaser unless
-51-
58
there is an occurrence and continuance of a Default or an Event of Default, in
which case, at the expense of Holdings) to visit and inspect any of the
properties of Holdings and its Subsidiaries and examine and make copies from any
of its or its Subsidiaries' books and records at any reasonable time and as
often as may reasonably be requested upon reasonable notice, and to discuss the
business, affairs, operations, properties and financial and other conditions of
Holdings and its Subsidiaries with officers and employees thereof and with their
independent public accountants (and by this provision, Holdings authorizes such
accountants to discuss with any Purchaser or its representative the business,
affairs, operations, properties, financial and accounts of Holdings and its
Subsidiaries). The rights afforded to any Purchaser in the immediately preceding
sentence will be afforded to the Purchaser or any other Holder who is an
Institutional Investor so long as such Purchaser and its Affiliates or such
Holder and its Affiliates, as the case may be, hold at least 40% in aggregate
principal amount of the Notes at the time Outstanding.
7.5 Compliance with Law. Holdings shall, and shall cause each of its
Subsidiaries to, comply with all Applicable Laws and will obtain and maintain,
and will cause each of its Subsidiaries to obtain and maintain, all Permits
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, except for (i) such non-compliances or failures the
applicability or validity of which are being contested in good faith by
appropriate proceedings or (ii) such non-compliance with Applicable Law or any
failure to obtain or maintain such Permits, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
7.6 Insurance. Holdings shall, and shall cause each of its Subsidiaries to,
maintain, insurance with respect to their respective properties and business
consistent with similarly situated companies in like industries.
7.7 Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, PlayCore Wisconsin shall
make an offer (a "Change of Control Offer") to each Holder to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of each Holder's
Notes at an offer price in cash equal to 101% of the original principal amount
thereof as of the Change of Control Payment Date, plus accrued and unpaid
interest, Capitalized Interest and any Special Interest thereon, if any, until
the Change of Control Payment Date (the "Change of Control Payment"). PlayCore
Wisconsin shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control, and PlayCore Wisconsin shall not be in
violation of this Agreement by reason of such compliance with such rule or other
applicable law.
(b) Within 30 days following any Change of Control, PlayCore Wisconsin
shall mail a notice to each Holder stating:
(i) that the Change of Control Offer is being made pursuant to this
Section 7.7 and that all Notes tendered will be accepted for payment;
-52-
59
(ii) the purchase price and the purchase date, which shall be at least
30 but no more than 60 days from the date on which PlayCore Wisconsin mails
notice of the Change of Control (the "Change of Control Payment Date");
(iii) that any Notes not tendered will continue to accrue interest,
Capitalized Interest, if any, and Special Interest, if applicable;
(iv) that, unless PlayCore Wisconsin defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest, including
Capitalized Interest, if applicable, and any Special Interest after the
Change of Control Payment Date;
(v) that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer shall be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, to PlayCore Wisconsin or its designated agent for such
purpose, at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date;
(vi) that Holders will be entitled to withdraw their election if
PlayCore Wisconsin or its designated agent for such purpose, receives, not
later than the close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
Notes delivered for purchase, and a statement that such Holder is
withdrawing its election to have the Notes purchased; and
(vii) that Holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof.
(c) On the Change of Control Payment Date, PlayCore Wisconsin shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer and (ii) pay to the Holders of
Notes or portions thereof so tendered an amount equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered. PlayCore
Wisconsin shall promptly mail to each Holder of Notes so tendered the Change of
Control Payment for such Notes, and PlayCore Wisconsin shall promptly execute
and mail (or cause to be transferred by book-entry) to each Holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any; provided, however, that each such new Note shall be in a principal
amount of $1,000 or an integral multiple thereof.
(d) PlayCore Wisconsin shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in a manner, at the times and otherwise in compliance with the
requirements set forth in this Section 7.7 and such third party purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
-53-
60
(e) Prior to the mailing of the notice referred to above in clause (b),
but in any event within 30 days following any Change of Control, PlayCore
Wisconsin covenants to:
(i) repay in full all Indebtedness under the Credit Agreement
and all other Senior Indebtedness to the extent the terms of which require
repayment upon a Change of Control or offer to repay in full all
Indebtedness under the Credit Agreement and all other such Senior
Indebtedness and to repay the Indebtedness owed to each lender which has
accepted such offer; or
(ii) obtain the requisite consents under the Credit Agreement
and all other Senior Indebtedness to permit the repurchase of the Notes as
set forth above in Section 7.7(c).
7.8 Non-Voting Observer. So long as the Purchasers and their Affiliates
(but not their assigns) own at least $5,000,000 in aggregate principal amount of
the Notes at the time Outstanding:
(a) Holdings and PlayCore Wisconsin (each being herein called an
"Entity") each shall cause, at the request of GS Mezzanine, the appointment of a
person, who may be a managing director, officer or employee of The Xxxxxxx Xxxxx
Group, Inc. or any of its Affiliates, as a non-voting observer (a "Non-Voting
Observer") to the Board of Directors of such Entity, which person may or may not
be the same person, it being understood that The Xxxxxxx Sachs Group, Inc. may
from time to time change the designation of such Non-Voting Observer. In the
event of a vacancy caused by the resignation or other cessation of service of
any Non-Voting Observer from such Entity, such Entity shall cause the
appointment of a new Non-Voting Observer nominated by GS Mezzanine at least
seven (7) days prior to the date of a regular meeting of the Board of Directors
of such Entity. Any such Non-Voting Observer shall be permitted to attend
meetings of the Board of Directors of such Entity.
(b) The Non-Voting Observer shall be entitled to be present at all
meetings of the Board of Directors of such Entity and such Non-Voting Observer
shall be notified of any meeting of any such Board of Directors, including such
meeting's time and place, in the same manner as Directors of such Entity and
shall have the same access to information (including any copies of all materials
distributed to members of such Board of Directors) concerning the business and
operations of such Entity and at the same time as Directors of such Entity and
shall be entitled to participate in discussions and consult with, and make
proposals and furnish advice to, such Board of Directors, without voting;
provided, however, that such Entity shall not be under any obligation to take
any action with respect to any proposals made or advice furnished by any
Non-Voting Observer, other than to take such proposals or advice seriously and
to give due consideration thereto. Each Non-Voting Observer shall have a duty of
confidentiality to the relevant Entity comparable to the duty of confidentiality
of a Director of such Entity.
(c) Each Entity shall indemnify and hold harmless, to the fullest
extent permitted under the Applicable Law, any Non-Voting Observer to the same
extent as all other Directors of such Entity and on terms no less favorable than
under the relevant organizational documents of such Entity on the date hereof.
-54-
61
(d) At all times after the first consummation of an Equity
Offering, the relevant Entity shall cause to be maintained directors' and
officers' liability insurance covering all Directors and officers of such Entity
and covering any Non-Voting Observer (regardless of whether such insurance shall
be obtained prior to an Equity Offering or after an Equity Offering) (i) to the
same extent as that maintained for all other Directors of such Entity and (ii)
on terms no less favorable than the coverage provided for in such Entity's
directors', officers' and corporate liability insurance then so maintained.
7.9 Offer to Purchase by Application of Excess Proceeds.
(a) In the event that, pursuant to Section 8.5(c), PlayCore
Wisconsin shall be required to commence on an Asset Sale Offer Trigger
Date an offer to all Holders to purchase Notes (an "Asset Sale Offer"),
it shall follow the procedures specified in this Section 7.9. Each
Asset Sale Offer shall remain open for not less than thirty (30) nor
more than sixty (60) days immediately following its commencement,
except to the extent that a longer period is required by Applicable Law
(the "Offer Period"). On the Business Day immediately after the
termination of the Offer Period (the "Purchase Date"), PlayCore
Wisconsin shall purchase the principal amount of Notes required to be
purchased pursuant to Section 8.5 plus accrued and unpaid interest and
any Special Interest thereon, if any, to the Purchase Date (the "Offer
Amount") or, if less than the Offer Amount has been tendered, PlayCore
Wisconsin shall purchase all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the
same manner as interest payments are made. PlayCore Wisconsin shall
comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase
of the Notes as a result of an Asset Sale Offer and PlayCore Wisconsin
shall not be in violation of this Agreement by reason of such
compliance with such rule or other applicable law.
(b) Upon the commencement of an Asset Sale Offer, PlayCore
Wisconsin shall send, by first class mail, a notice to each of the
Holders stating:
(i) that the Asset Sale Offer is being made pursuant to this
Section 7.9 and Section 8.5 and the length of time the Asset Sale
Offer shall remain open;
(ii) the Offer Amount, the purchase price and the Purchase
Date;
(iii) that any Note not tendered or accepted for payment shall
continue to accrue interest and any Special Interest;
(iv) that, unless PlayCore Wisconsin defaults in making such
payment, any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest and any Special Interest
after the Purchase Date;
(v) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note
purchased and may not elect to have only a portion of such Note
purchased;
-55-
62
(vi) that Holders electing to have a Note purchased pursuant
to any Asset Sale Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed to PlayCore Wisconsin at the address specified in the notice
at least three Business Days before the Purchase Date;
(vii) that Holders shall be entitled to withdraw their
election if PlayCore Wisconsin receives, not later than the second Business
Day preceding the Purchase Date of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing its election to have such Note
purchased;
(viii) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, PlayCore Wisconsin shall
select the Notes to be purchased on a pro rata basis (with such adjustments
as may be deemed appropriate by PlayCore Wisconsin so that only Notes (or
portions thereof) in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(ix) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
(c) On or before the Purchase Date, PlayCore Wisconsin shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Holders an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by PlayCore Wisconsin
in accordance with the terms of this Section 7.9. PlayCore Wisconsin (to the
extent lawful) shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by PlayCore
Wisconsin for purchase, and PlayCore Wisconsin shall promptly issue a new Note
and deliver it to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by PlayCore Wisconsin to the Holder thereof.
7.10 Post-Closing Note Guarantees. So long as any Notes remain
Outstanding, PlayCore Wisconsin shall cause all of its future Subsidiaries which
at any time become guarantors of the obligations of PlayCore Wisconsin under any
Senior Indebtedness to become Guarantors and to execute simultaneously with and
as a precondition to such Person becoming a Subsidiary, a Notation of Note
Guarantee and to otherwise acknowledge its agreement to be bound by the
provisions of Section 15.
7.11 Further Assurances. Holdings shall and shall cause its
Subsidiaries to make, execute, endorse, acknowledge and deliver any amendments,
modifications or supplements hereto and restatements hereof and any other
agreements, instruments or documents, and take any and all such other actions,
as may from time to time be reasonably requested by the Purchasers to effect,
confirm or further assure or protect and preserve the
-56-
63
interests, rights and remedies of the Purchasers under this Agreement and the
other Financing Documents.
7.12 Redemption of Convertible Debentures. Within 75 days after the Closing
Date, PlayCore Wisconsin shall redeem all of its 10% Convertible Debentures
which are then outstanding.
SECTION 8.
NEGATIVE COVENANTS OF PLAYCORE WISCONSIN
PlayCore Wisconsin hereby covenants and agrees with each Holder that until
the principal amount of (and premium, if any, on) all the Notes, and all
interest, and other obligations hereunder in respect thereof (other than
indemnification obligations that have not become due and payable), shall have
been paid in full:
8.1 Stay, Extension and Usury Laws. PlayCore Wisconsin covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of its obligations
under the Notes or this Agreement, and (to the extent that it may lawfully do
so) PlayCore Wisconsin hereby expressly waives all benefit or advantage of any
such law, and covenants (to the extent that it may lawfully do so) that it shall
not, by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Purchasers, but shall (to the extent it may lawfully
do so) suffer and permit the execution of every such power as though no such law
has been enacted.
8.2 Restricted Payments.
(a) Except for the consummation of the Transactions, PlayCore Wisconsin
shall not, and shall not permit any of its Subsidiaries to, (i) declare or make
any dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its Capital
Stock or other Equity Interests, (ii) purchase, redeem or otherwise acquire for
value any shares of its Capital Stock or other Equity Interests now or hereafter
outstanding, (iii) make any payment or prepayment of principal of, premium, if
any, interest, redemption, exchange, purchase, retirement, defeasance, sinking
fund or other payment with respect to, any Indebtedness that is subordinated in
any manner to the Notes or (iv) making any Investment other than Permitted
Investments (the items described in clauses (i), (ii), (iii) and (iv) are
referred to as "Restricted Payments"); except that any Subsidiary of PlayCore
Wisconsin may declare and pay dividends to PlayCore Wisconsin or any Subsidiary
of PlayCore Wisconsin, and except that PlayCore Wisconsin and its Subsidiaries
may make a Restricted Payment if, immediately after giving to such Restricted
Payment:
(A) no Default or Event of Default has occurred and is continuing or would
arise as a result of such Restricted Payment;
-57-
64
(B) after giving effect to such Restricted Payment, PlayCore
Wisconsin is able to Incur at least $1.00 of additional Indebtedness other
than Permitted Indebtedness; and
(C) the aggregate of all Restricted Payments declared or made
after the Closing Date does not exceed the sum (without duplication) of (1)
50% of the cumulative Consolidated Net Income of PlayCore Wisconsin (or
minus 100% of any cumulative deficit in Consolidated Net Income) for the
period (treated as one accounting period) from the first day of the Fiscal
Quarter in which the Closing Date occurs through the last day of the Fiscal
Quarter immediately preceding such Restricted Payment, (2) 100% of the
aggregate proceeds in cash received by PlayCore Wisconsin from the issuance
or sale, after the Closing Date (other than to a Subsidiary), of (x)
Capital Stock (other than Disqualified Capital Stock) of PlayCore Wisconsin
or (y) any Indebtedness or other securities of PlayCore Wisconsin that are
convertible into or exercisable or exchangeable for Capital Stock (other
than Disqualified Capital Stock) of PlayCore Wisconsin which have been so
converted or exercised or exchanged (other than by a Subsidiary of PlayCore
Wisconsin), excluding, in the case of clause (C)(2), any proceeds from the
initial Equity Offering to the extent used to redeem the Notes in
accordance with clause (a) of the second paragraph of the Form of Reverse
of Note in Exhibit A attached hereto and (3) 100% of the aggregate amount
return in cash on Investments (other than Permitted Investments),
subsequent to the Closing Date, in any Person, through payments of interest
on Indebtedness, dividends, repayments of loans or advances or other
transfers or distributions of Property or return of capital (but only to
the extent such interest, dividends or repayments or other transfers or
distributions of property or return of capital are not included in the
calculation of Consolidated Net Income), in each case to PlayCore Wisconsin
or any Subsidiary from any Person not to exceed in the case of any Person
the amount of Investments (other than Permitted Investments) previously
made by PlayCore Wisconsin or any Subsidiary in such Person.
(b) The provisions of this covenant shall not prohibit, so long as
no Default or Event of Default has occurred and is continuing or would result
therefrom:
(i) the payment of any distribution within 60 days after the
date of declaration thereof, if at such date of declaration such
payment would comply with the provisions hereof;
(ii) the retirement of any shares of Capital Stock of PlayCore
Wisconsin or Indebtedness that is subordinated in right of payment
to the Notes by conversion into, or by or in exchange for, shares
of Capital Stock (other than Disqualified Capital Stock of
PlayCore Wisconsin, or out of, the proceeds of the substantially
concurrent sale (other than to a Subsidiary of PlayCore Wisconsin)
of other shares of Capital Stock of PlayCore Wisconsin (other than
Disqualified Capital Stock); provided that any such proceeds are
excluded from clause (a)(C)(2) of the immediately preceding
paragraph for the purposes of this calculation (and were not
included therein at any time);
-58-
65
(iii) the redemption, repayment or retirement of Indebtedness that is
subordinated in right of payment to the Notes in exchange for, by
conversion into, or out of the proceeds of, (x) a substantially concurrent
sale or Incurrence of Indebtedness that is subordinated in right of payment
to the Notes to the same extent as the Indebtedness being so redeemed,
repaid or retired and has the same or greater Weighted Average Life to
Maturity (other than any Indebtedness owed to a Subsidiary) or (y) a
substantially concurrent sale (other than to a Subsidiary of PlayCore
Wisconsin) of shares of Capital Stock of PlayCore Wisconsin; provided that
any such proceeds are excluded from clause (C)(2) of the immediately
preceding paragraph (and were not included therein at any time);
(iv) the retirement of any shares of Disqualified Capital Stock by
conversion into, or by exchange for, shares of Disqualified Capital Stock
of PlayCore Wisconsin, or out of the proceeds of the substantially
concurrent sale (other than to a Subsidiary of PlayCore Wisconsin) of other
shares of Disqualified Capital Stock of PlayCore Wisconsin;
(v) the purchase, redemption, retirement or other acquisition for
value of Capital Stock of PlayCore Wisconsin, of Holdings or of any Person
that directly or indirectly controls (as defined in the definition of
Affiliate) Holdings held by employees or former employees of PlayCore
Wisconsin or any Subsidiary (or their estates or beneficiaries under their
estates) upon death, disability, retirement, termination of employment and
pursuant to the terms of any agreement under which such Capital Stock was
issued; provided, that the aggregate fair market value of the consideration
paid for such purchase, redemption, retirement or other acquisition of such
Capital Stock does not exceed $1,000,000 in any fiscal year;
(vi) payments that would otherwise constitute Restricted Payments, not
to exceed $1,000,000 in the aggregate;
(vii) payments that would constitute Restricted Payments in an amount
sufficient (but not in excess of the amount necessary) to pay the
transaction fee and Chartwell's expenses of the Transactions, and the
management fees and expenses (provided that the requirement that no such
Restricted Payment shall be made if a Default or an Event of Default has
occurred or is continuing or would result therefrom shall not apply to the
payment of reasonable out-of-pocket expenses of Chartwell incurred in
connection with rendering the management services to the Company or
Holdings permitted under this clause (vii)) permitted by Section
9.3(b)(viii) in the case of management fees;
(viii) Payments to Holdings in an amount sufficient (but not in excess
of the amount necessary) to permit Holdings to pay its ordinary operating
and administrative expenses, including out-of-pocket expenses (including
fees) relating to auditors, attorneys, franchise taxes and other similar
administrative
-59-
66
expenses, in an aggregate amount (exclusive of auditors' fees and expenses)
not to exceed $350,000 during any fiscal year of PlayCore Wisconsin; and
(ix) in the event PlayCore Wisconsin files a consolidated income tax
return with Holdings or a direct parent of Holdings in respect of which
Holdings or such parent is a member of a consolidated tax group of the
Company, distributions to Holdings to permit Holdings or such parent to pay
federal and state income taxes then due and owing, franchise taxes and
other similar licensing expenses incurred in the ordinary course of
business; provided that the amount of such distribution shall not be
greater, nor the receipt by PlayCore Wisconsin of tax benefits less, than
they would have been had PlayCore Wisconsin not filed a consolidated return
with Holdings.
provided, that in calculating the aggregate amount of Restricted Payments made
subsequent to the Closing Date for purposes of clause (a) of the immediately
preceding paragraph, amounts expended pursuant to clauses (i) (but only if the
declaration thereof has not been counted in a prior period), (v) and (vi) shall
be included, without duplication, in such calculation and clauses (ii), (iii)
and (iv) shall not be included in such calculation. Nothing in the immediately
preceding proviso is meant to affect whether any amount expended pursuant to
clause (viii) should be reflected in Consolidated Net Income.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by PlayCore Wisconsin or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
shall be determined by the Board of Directors of PlayCore Wisconsin whose
resolution with respect thereto shall be conclusive. The determination of the
Board of Directors of PlayCore Wisconsin must be based upon an opinion or
appraisal issued by an Independent Financial Adviser if the fair market value
equals or exceeds $10,000,000.
8.3 Dividend and Other Payment Restrictions Affecting Subsidiaries.
PlayCore Wisconsin shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary of PlayCore Wisconsin to:
(a) pay dividends or make any other distributions on or in respect of its
Capital Stock;
(b) make loans or advances or pay any Indebtedness or other obligation owed
to PlayCore Wisconsin or any other Subsidiary of PlayCore Wisconsin; or
(c) transfer any of its property or assets to PlayCore Wisconsin or any
other Subsidiary of PlayCore Wisconsin, except, with respect to each of this
clause (c) and clauses (a) and (b) above, for such encumbrances or restrictions
existing under or by reason of:
-60-
67
(i) Applicable Law;
(ii) this Agreement;
(iii) non-assignment provisions of any contract of, any lease governing a
leasehold interest of, or any license held by, any Subsidiary of PlayCore
Wisconsin;
(iv) any instrument governing Acquired Indebtedness or Capital Stock of a
Person acquired by PlayCore Wisconsin or any of its Subsidiaries or of any
Person that becomes a Subsidiary as in effect at the time of such acquisition or
such Person becoming a Subsidiary, which encumbrance or restriction is not
applicable to any Person, or the Properties or assets of any Person, other than
the Person or the Properties or assets of the Person (including any Subsidiary
of such Person) so acquired;
(v) any encumbrance or restriction pursuant to an agreement relating to an
acquisition of Property or assets, so long as the encumbrances or restrictions
in any such agreement relate solely to the Property or assets so acquired and
are not and were not created in anticipation of or in connection with the
acquisition thereof;
(vi) the Credit Agreement;
(vii) agreements existing on the Closing Date to the extent and in the
manner such agreements are in effect on the Closing Date; or
(viii) an agreement governing Indebtedness Incurred to Refinance the
Indebtedness Incurred pursuant to an agreement referred to in clauses (ii),
(iv), (vi) and (vii) above and (ix) and (xi) below; provided, however, that the
provisions relating to such encumbrance or restriction contained in any such
Indebtedness are not materially more restrictive to PlayCore Wisconsin and its
subsidiaries as a whole as determined by the Board of Directors of PlayCore
Wisconsin or senior management in its good faith judgment than the provisions
relating to such encumbrance or restriction contained in agreements referred to
in such clauses (ii), (iv), (vi), (vii), (ix) and (xi);
(ix) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature set forth in clause
(b) above on the property so acquired;
(x) contracts for the sale of assets, including without limitation,
customary restrictions with respect to a Subsidiary of PlayCore Wisconsin
pursuant to an agreement that has been entered into for the sale or disposition
of the Capital Stock or assets of such Subsidiary;
(xi) secured Indebtedness otherwise permitted to be Incurred pursuant to
Section 8.4 and Section 8.7 that limits the right of the debtor to dispose of
the assets securing such Indebtedness;
-61-
68
(xii) customary provisions in joint venture agreements, licenses and
leases and other similar agreements entered into in the ordinary course of
business;
(xiii) net worth provisions in leases and other agreements entered
into by PlayCore Wisconsin or any Subsidiary; and
(xiv) an agreement governing Indebtedness (including the Credit
Agreement) permitted to be Incurred pursuant to Section 8.4; provided that
provisions relating to such encumbrance or restriction contained in such
Indebtedness are not materially more restrictive to PlayCore Wisconsin and
its Subsidiaries as a whole as determined in good faith by the Board of
Directors of PlayCore Wisconsin in its good faith judgment than the
provisions contained in the Credit Agreement as in effect on the Closing
Date.
8.4 Incurrence of Additional Indebtedness. PlayCore Wisconsin shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume, guarantee, acquire, become liable, contingently or otherwise,
with respect to, or otherwise become responsible for payment of (collectively,
"Incur") any Indebtedness, other than Permitted Indebtedness; provided, however,
that if no Default or Event of Default shall have occurred and be continuing at
the time of or as a consequence of the Incurrence of any such Indebtedness,
PlayCore Wisconsin or any of its Subsidiaries may Incur Indebtedness including,
without limitation, Acquired Indebtedness, if on the date of the Incurrence of
such Indebtedness, after giving effect to the Incurrence thereof, the
Consolidated Interest Coverage Ratio of PlayCore Wisconsin is greater than 2.25
to 1.00. Accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Capital Stock in the form of additional shares of the same class of Disqualified
Capital Stock will not be deemed to be an Incurrence of Indebtedness or an
issuance of Disqualified Capital Stock for purposes of this Section 8.4.
Furthermore, Guarantees (or obligations with respect to letters of credit), to
the extent otherwise included in the determination of such amount, shall not be
included to such extent.
8.5 Asset Sales. PlayCore Wisconsin shall not, and shall not permit any
of its Subsidiaries to, consummate an Asset Sale unless:
(a) PlayCore Wisconsin or the applicable Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale which, taken as a whole,
is at least equal to the fair market value of the assets sold or otherwise
disposed of (except from any sale or disposition as a result of a foreclosure or
sale of by the lenders under the Credit Documents), as determined in good faith
by the Board of Directors of PlayCore Wisconsin;
(b) at least 75% of the consideration received by PlayCore Wisconsin or
such Subsidiary, as the case may be, from such Asset Sale shall be in the form
of cash or Cash
-62-
69
Equivalents and is received at the time of such disposition; provided that each
of the following shall be deemed to be cash for purposes of this provision:
(i) any liabilities (as shown on PlayCore Wisconsin's or such
Subsidiary's most recent balance sheet) of PlayCore Wisconsin or any
Subsidiary, other than liabilities that are by their terms subordinated to
the Notes, that are assumed by the transferee of any such assets; and
(ii) any notes or other obligations received by PlayCore Wisconsin or
any such Subsidiary from such transferee that are converted by PlayCore
Wisconsin or such Subsidiary into cash within 180 days after such Asset
Sale, to the extent of the cash received.
(c) upon the consummation of an Asset Sale, PlayCore Wisconsin shall, at
its option, apply, or cause such Subsidiary to apply, the Net Cash Proceeds
relating to such Asset Sale within 365 days of receipt thereof either:
(i) to prepay any Senior Indebtedness or Guarantor Senior Indebtedness
and, in the case of any prepayment of any Senior Indebtedness or Guarantor
Senior Indebtedness under any revolving credit facility, effect a permanent
reduction in the availability under such revolving credit facility;
(ii) to invest in or to acquire other properties and assets that
replace the properties and assets that were the subject of such Asset Sale
or in properties and assets that will be used in the business of PlayCore
Wisconsin and its Subsidiaries as conducted on the Closing Date or at the
time such assets are sold or in businesses reasonably related,
complementary or ancillary thereto or a reasonable expansion thereof;
and/or
(iii) to make a Capital Expenditure or commit, or cause such
Subsidiary to commit, to make a Capital Expenditure, such commitments to
include amounts anticipated to be expended pursuant to PlayCore Wisconsin's
capital investment plan as adopted by the Board of Directors of PlayCore
Wisconsin or such Subsidiary of PlayCore Wisconsin, within 24 months of
such Asset Sale.
Pending the final application of any Net Cash Proceeds, PlayCore Wisconsin may
temporarily reduce revolving credit borrowings or otherwise invest such Net Cash
Proceeds in any manner that is not prohibited by this Agreement. Any Net Cash
Proceeds from Asset Sales that are not applied or invested as provided in
Section 8.5(c)(i), (ii) or (iii) shall be deemed to constitute "Excess
Proceeds". If on the 366th day after any Asset Sale, or such earlier date, if
any, as the senior management or the Board of Directors, as the case may be, of
PlayCore Wisconsin or a Subsidiary which made such Asset Sale determines (each,
an "Asset Sale Offer Trigger Date"), the amount of Excess Proceeds of such Asset
Sale, when aggregated with Excess Proceeds of all prior Asset Sales by PlayCore
Wisconsin and its Subsidiaries that have not been reset in accordance with the
last sentence of this paragraph, equals or exceeds $3,000,000 (or such lesser
amount as the senior management or the Board of Directors, as the case may be,
of PlayCore
-63-
70
Wisconsin or such Subsidiary determines), PlayCore Wisconsin or such Subsidiary
shall make a pro rata Asset Sale Offer pursuant to Section 7.9 to purchase the
maximum principal amount of Notes and other pari passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest,
if any, thereon to the date of purchase, in accordance with the procedures set
forth in Section 7.9. To the extent that the aggregate principal amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds
allocable to the Notes, PlayCore Wisconsin or such Subsidiary may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds allocable to the Notes, PlayCore Wisconsin shall select the
Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds of all Asset Sales shall be reset at
zero.
8.6 Transactions with Affiliates.
(a) Except for the consummation of the Transactions, PlayCore Wisconsin
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction or series of related
transactions, including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service, with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than
(x) Affiliate Transactions permitted under Section 9.3.
8.7 Limitation on Liens. PlayCore Wisconsin shall not, and shall not
cause or permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume, permit or suffer to exist any Liens of any kind against or upon
any property or assets of PlayCore Wisconsin or any of its Subsidiaries whether
owned on the Closing Date or acquired after the Closing Date, or any proceeds
therefrom, or assign or otherwise convey any right to receive income or profits
therefrom unless:
(a) in the case of Liens securing Indebtedness that is expressly
subordinate or junior in right of payment to the Notes, the Notes are secured by
a Lien on such property, assets or proceeds that is senior in priority to such
Liens; and
(b) in all other cases, the Notes are equally and ratably secured, except
for:
(i) Liens existing as of the Closing Date to the extent and in the
manner such Liens are in effect on the Closing Date;
(ii) Liens securing Senior Indebtedness and Liens securing Guarantor
Senior Indebtedness;
(iii) Liens securing the Notes and the Guarantees;
(iv) Liens of PlayCore Wisconsin or a Wholly Owned Subsidiary of
PlayCore Wisconsin on assets of any Subsidiary of PlayCore Wisconsin;
-64-
71
(v) Liens securing Refinancing Indebtedness which is Incurred to
Refinance any Indebtedness which has been secured by a Lien permitted under
this Agreement and which has been Incurred in accordance with the
provisions of this Agreement; provided, however, that such Liens (A) are
not materially more restrictive to PlayCore Wisconsin and not more
favorable to the lienholders with respect to such Liens than the Liens in
respect of the Indebtedness being Refinanced and (B) do not extend to or
cover any property or assets of PlayCore Wisconsin or any of its
Subsidiaries not securing the Indebtedness so Refinanced; and
(vi) Permitted Liens.
8.8 Prohibition on Incurrence of Senior Subordinated Debt. PlayCore
Wisconsin shall not, and shall not permit any Guarantor to, Incur or suffer to
exist Indebtedness that is senior in right of payment to the Notes or such
Guarantor's guarantee thereof, as the case may be, and subordinate in right of
payment to any other Indebtedness of PlayCore Wisconsin or such Guarantor, as
the case may be.
8.9 Limitation on Issuances and Sales of Capital Stock of Subsidiaries.
PlayCore Wisconsin (a) shall not, and shall not permit any Subsidiary of
PlayCore Wisconsin to, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock of any Subsidiary of PlayCore Wisconsin to any Person (other than
PlayCore Wisconsin or a Wholly Owned Subsidiary of PlayCore Wisconsin), unless
(i) such transfer, conveyance, sale, lease or other disposition is of all the
Capital Stock of such Subsidiary and (ii) the Net Cash Proceeds from such
transfer, conveyance, sale, lease or other disposition are applied in accordance
with the provisions of Section 8.5; provided, however, that this clause (a)
shall not apply to any pledge of Capital Stock of any Subsidiary of PlayCore
Wisconsin permitted under Section 8.7, and (b) shall not permit any Subsidiary
of PlayCore Wisconsin to issue any of its Capital Stock or any securities
convertible into or exchangeable for such Capital Stock (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than (A) Capital Stock issued or sold to PlayCore
Wisconsin or a Wholly Owned Subsidiary of PlayCore Wisconsin or a Subsidiary
that is an existing shareholder of the issuer of such Capital Stock, (B) Capital
Stock issued by a Person prior to the time (x) such Person becomes a Subsidiary
or (z) a Subsidiary merges with or into such Person and (C) Capital Stock issued
by a Subsidiary pursuant to a capital call on a pro rata basis to all holders of
its Capital Stock; provided that, after giving effect to the issuance permitted
by the foregoing clauses (B) or (C) such Subsidiary is or remains to be a
Subsidiary. Upon the sale of any Subsidiary in accordance with this Section 8.9,
the Guarantee of such Subsidiary, if any, shall automatically terminate without
further action.
8.10 Sales and Leaseback Transactions. PlayCore Wisconsin shall not, and
shall not permit any Subsidiary to, enter into any Sale and Leaseback
Transaction; provided, however, that PlayCore Wisconsin may enter into a Sale
and Leaseback Transaction if (a) PlayCore Wisconsin could have (i) Incurred
Indebtedness in an amount equal to the Attributable Indebtedness relating to
such Sale and Leaseback Transaction pursuant to Section 8.4 and (ii) incurred a
Lien to secure such Indebtedness pursuant to the provisions of
-65-
72
Section 8.7, (b) the gross cash proceeds of such Sale and Leaseback Transaction
are at least equal to the fair market value (as determined in good faith by the
Board of Directors of PlayCore Wisconsin) of the property that is the subject of
such Sale and Leaseback Transaction and (c) the transfer of assets in such Sale
and Leaseback Transaction is permitted by, and PlayCore Wisconsin applies the
proceeds of such transaction in compliance with, the provisions of Section 8.5.
8.11 Conduct of Business. PlayCore Wisconsin shall not, and shall not
permit any Subsidiary to, directly or indirectly, engage in any business other
than business of the type engaged by PlayCore Wisconsin on the Closing Date or
any business reasonably related, complementing or ancillary thereto or a
reasonable expansion thereof.
8.12 Merger, Consolidation, or Sales of Assets.
(a) PlayCore Wisconsin shall not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (other than Permitted
Liens and the Merger), or cause or permit any Subsidiary of PlayCore Wisconsin
to sell, assign, transfer, lease, convey or otherwise dispose of (other than
Permitted Liens), all or substantially all of PlayCore Wisconsin's assets, which
are determined on a consolidated basis for PlayCore Wisconsin and PlayCore
Wisconsin's Subsidiaries, whether as an entirety or substantially as an entirety
to any Person unless:
(i) either:
(A) PlayCore Wisconsin shall be the surviving or continuing
corporation; or
(B) the Person, if other than PlayCore Wisconsin, formed by such
consolidation or into which PlayCore Wisconsin is merged or the Person
which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of PlayCore Wisconsin and of
PlayCore Wisconsin's Subsidiaries substantially as an entirety (the
"Surviving Entity"):
(x) shall be a corporation, partnership, trust or a limited
liability company organized and validly existing under the laws
of the United States of America or any State thereof or the
District of Columbia;
(y) shall have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth
of PlayCore Wisconsin immediately preceding the transaction; and
(z) shall expressly assume, by an assumption agreement, in
form and substance satisfactory to the Required
-66-
73
Holders, executed and delivered to the Holders, the due and
punctual payment of the principal of, and premium, if any, and
interest on all of the Notes and the performance of every
covenant of the Notes, this Agreement and the Exchange and
Registration Rights Agreement on the part of PlayCore Wisconsin
to be performed or observed; provided that if at any time
PlayCore Wisconsin or the Surviving Entity is a limited liability
company, partnership or trust there shall be a co-issuer of the
Notes that is a Subsidiary of PlayCore Wisconsin and that is a
corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia;
(ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(B)(z) above to the extent applicable,
including giving effect to any Indebtedness and Acquired Indebtedness
Incurred or anticipated to be Incurred in connection with or in respect of
such transaction, PlayCore Wisconsin or such Surviving Entity, as the case
may be, shall be able to Incur at least $1.00 of additional Indebtedness,
other than Permitted Indebtedness, pursuant to Section 8.4;
(iii) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (1)(B)(z) above to
the extent applicable, including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness Incurred or anticipated to be
Incurred and any Lien granted in connection with or in respect of the
transaction, no Default or Event of Default shall have occurred or be
continuing;
(iv) there has been delivered to the Holders an opinion of counsel to
the effect that Holders of the Notes will not recognize income, gain, or
loss for United States federal income tax purposes as a result of such
consolidation, merger, conveyance, transfer or lease and will be subject to
United States federal income tax with respect to the Notes in the same
manner, in the same amount, and at the same time as would have been the
case if such merger, conveyance, transfer or lease had not occurred; and
(v) PlayCore Wisconsin or the Surviving Entity shall have delivered to
the Holders an Officers' Certificate and an opinion of counsel, each
stating that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if an assumption agreement is required
in connection with such transaction, such assumption agreement comply with
the applicable provisions of this Agreement and that all conditions
precedent in this Agreement relating to such transaction have been
satisfied.
Notwithstanding the foregoing, the merger of PlayCore Wisconsin with an
Affiliate incorporated solely for the purpose of reincorporating PlayCore
Wisconsin in another jurisdiction shall be permitted and a Wholly Owned
Subsidiary may merge with and into PlayCore Wisconsin without complying with
clause (a)(ii) above.
-67-
74
For purposes of this Section 8.12(a), the transfer, by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions, of all or substantially all of the properties or assets of one or
more Subsidiaries of PlayCore Wisconsin, the Capital Stock of which constitutes
all or substantially all of the properties and assets of PlayCore Wisconsin,
shall be deemed to be the transfer of all or substantially all of the properties
and assets of PlayCore Wisconsin.
(b) Upon any consolidation of PlayCore Wisconsin with, or merger of
PlayCore Wisconsin into, any other Person or any transfer, conveyance, sale,
lease or other disposition of all or substantially all of the properties and
assets of PlayCore Wisconsin and its Subsidiaries taken as a whole in one or
more related transactions (other than pursuant to the Credit Documents) in which
PlayCore Wisconsin is not the continuing entity, the successor company shall
succeed to, and be substituted for, and may exercise every right and power of,
PlayCore Wisconsin under this Agreement and the Notes with the same effect as if
such successor company had been named as PlayCore Wisconsin herein, and
thereafter, except in the case of a lease, the predecessor Company shall be
relieved of all obligations and covenants under this Agreement and the Notes.
SECTION 9
NEGATIVE COVENANTS OF HOLDINGS
Holdings hereby covenants and agrees with each Holder that until the
principal amount of (and premium, if any, on) all the Notes, and all interest,
and other obligations hereunder in respect thereof (other than indemnity
obligations that have not yet become due and payable) shall have been paid in
full:
9.1 Business, Indebtedness, Investments, Etc. Holdings will not (a)
engage in any business other than (i) the direct ownership of the Capital Stock
of PlayCore Wisconsin, (ii) the performance of its obligations and activities
incidental thereto under the Credit Documents and the Financing Documents, and
(iii) the payment of taxes and general administrative costs and expenses in the
ordinary course of business; (b) Incur or suffer to exist any Indebtedness
(other than (i) any Guarantee of the Notes, (ii) any Guarantee of Senior
Indebtedness evidenced by the Credit Documents and (iii) Indebtedness to
PlayCore Wisconsin otherwise permitted to be Incurred under this Agreement); (c)
create or acquire any Subsidiary other than PlayCore Wisconsin or a Subsidiary
of PlayCore Wisconsin or make or otherwise own or hold any Investment (other
than in the Cash Equivalents and the Capital Stock of PlayCore Wisconsin); (d)
create or suffer to exist any Lien upon any property or assets now owned or
hereafter acquired by it other than the Liens created under the Credit Documents
to which it is a party; (e) sell or otherwise dispose of any Capital Stock of
PlayCore Wisconsin or make any other Asset Sale; (f) make any Asset Acquisition;
(g) fail to at all times preserve and keep in full force and effect its rights
and franchises; or (h) fail to hold itself out to the public as a legal entity
separate and distinct from all other Persons; provided that prior to the
consummation of the Merger,
-68-
75
Holdings may (i) Incur and remain liable with respect to (x) the Indebtedness
Incurred in connection with the Transactions and (y) the Existing Indebtedness
of Holdings and (ii) engage in business activities and hold Investments as
disclosed on Schedule 4.27.
9.2 Merger, Consolidation or Sales of Assets of Holdings. Holdings
shall not consolidate or merge with or into (whether or not Holdings is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the properties and assets of Holdings in
one or more related transactions, to any other Person; provided that Holdings
may consummate the Merger in accordance with the terms of the Merger Agreement
so long as, after giving effect thereto, Holdings will not be in breach of
Section 9.1.
9.3 Transactions with Affiliates.
(a) Except in connection with the Transactions, Holdings shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
or permit to exist any Affiliate Transaction or series of related Affiliate
Transactions, other than (x) Affiliate Transactions permitted under paragraph
(b) below and (y) Affiliate Transactions on terms that are not materially less
favorable than those that might reasonably have been obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is not an
Affiliate of Holdings or such Subsidiary.
All Affiliate Transactions, and each series of related Affiliate
Transactions which are similar or part of a common plan, involving aggregate
payments or other property with a fair market value in excess of $2,500,000
shall be approved by the Board of Directors of Holdings or such Subsidiary, as
the case may be, such approval to be evidenced by a Board Resolution stating
that such Board of Directors has determined that such transaction complies with
the foregoing provisions. If Holdings or any Subsidiary of Holdings enters into
an Affiliate Transaction, or a series of related Affiliate Transactions related
to a common plan, that involves an aggregate fair market value of $10,000,000 or
more, Holdings or such Subsidiary, as the case may be, shall, prior to the
consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to Holdings or the relevant
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Holders.
(b) The restrictions set forth in paragraph (a) of this Section 9.3
shall not apply to:
(i) reasonable fees, expenses and compensation paid to and indemnity
provided on behalf of officers, Directors, employees, consultants or
investment bankers of Holdings or any Subsidiary of Holdings as determined
in good faith by Holdings' Board of Directors;
(ii) transactions exclusively between or among Holdings and any of its
Subsidiaries or exclusively between or among such Subsidiaries; provided
such transactions are not otherwise prohibited by this Agreement;
-69-
76
(iii) any agreement as in effect as of the Closing Date or any
amendment thereto or any transaction contemplated thereby, including
pursuant to any amendment thereto, or any replacement agreement thereto so
long as such amendment or replacement agreement is not more disadvantageous
to the Holders in any material respect than the original agreement as in
effect on the Closing Date;
(iv) Restricted Payments or Permitted Investments permitted by this
Agreement;
(v) transactions in which Holdings or any of its Subsidiaries, as the
case may be, delivers to the Holders a letter from an Independent Financial
Advisor stating that such transaction is fair to Holdings or such
Subsidiary from a financial point of view or meets the requirements of the
first sentence of this Section 9.3;
(vi) the existence of, or the performance by Holdings or any of its
Subsidiaries of its obligations under the terms of, any shareholders'
agreement, including any registration rights agreement or purchase
agreement related thereto, to which it is a party as of the Closing Date
and any similar agreements which it may enter into thereafter; provided,
however, that the existence of, or the performance by Holdings or any of
its Subsidiaries of obligations under, any future amendment to any such
existing agreement or under any similar agreement entered into after the
Closing Date shall only be permitted by this clause (vi) to the extent that
the terms of any such amendment or new agreement are not otherwise
disadvantageous to the Holders in any material respect;
(vii) the issuance of securities or other payments, awards or grants,
in cash, securities or otherwise, pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved
by the Board of Directors of Holdings in good faith and loans to employees
of Holdings and its Subsidiaries which are approved by the Board of
Directors of Holdings in good faith;
(viii) the payment of transaction, management, consulting and advisory
fees and related expenses of Chartwell Investments II, L.L.C.; provided
that such fees shall not, in the aggregate, exceed (x) in connection with
the Transactions, the amount payable to Chartwell Investments II, L.L.C.
pursuant to the Transaction Fee Agreement, dated as of the date hereof,
among Chartwell Investments II, L.L.C., Holdings, PlayCore Wisconsin and
Acquisition Company, as in effect on the date hereof or (y) in any calendar
year commencing after the date of the Transactions, the greater of (1)
$500,000 and (2) 2% of Consolidated EBITDA of Holdings and its Subsidiaries
for the Fiscal Year immediately preceding the date of such payment;
provided that in no event the annual fee referred to in this clause (y)
shall exceed $2,000,000;
(ix) transactions with customers, franchisees, clients, suppliers,
purchasers or sellers of goods or services, in each case in the ordinary
course of business and otherwise in compliance with the terms of this
Agreement, which are fair to Holdings or its
-70-
77
Subsidiaries, in the reasonable determination of senior management of
Holdings, or are on terms at least as favorable as might reasonably have
been obtained at such time from an unaffiliated party;
(x) loans to officers and employees of Holdings and its Subsidiaries
to purchase Capital Stock of Holdings or to exercise the Management Options
in an amount not to exceed $1,000,000 in any calendar year and $5,000,000
in the aggregate; and
(xi) the sale of Qualified Capital Stock to Affiliates of Holdings.
SECTION 10.
PROVISIONS RELATING TO RESALES OF NOTES
10.1 Private Offerings. PlayCore Wisconsin and the Purchasers agree
that the following provisions will apply to any Private Offerings:
(a) Offers and Sales only to Institutional Accredited Investors or
Qualified Institutional Buyers. Offers and sales of the Notes will be made only
by the Purchasers or Affiliates thereof who are qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer or sale
shall only be made (i) to persons whom the offeror or seller reasonably believes
to be Qualified Institutional Buyers, (ii) to a limited number of other
institutional accredited investors (as such term is defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D) that the offeror or seller reasonably believes
to be and, with respect to sales and deliveries, that are Accredited Investors
("Institutional Accredited Investors") or (iii) non-U.S. persons outside the
United States to whom the offeror or seller reasonably believes offers and sales
of the Notes may be made in reliance upon Regulation S under the Securities Act.
(b) No General Solicitation. The Notes will be offered by approaching
prospective Subsequent Purchasers on an individual basis. No general
solicitation or general advertising (within the meaning of Rule 502(c) under the
Securities Act) will be used in the United States and no directed selling
efforts (as defined in Regulation S) will be made outside the United States in
connection with the offering of the Notes.
(c) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent Purchaser acting as a fiduciary for one or more third parties, in
connection with an offer and sale to such purchaser pursuant to this Section
10.1, such third parties shall, in the reasonable judgment of the applicable
Purchaser, be an Institutional Accredited Investor or a Qualified Institutional
Buyer or a non-U.S. person outside the United States.
(d) Restrictions on Transfer. Upon original issuance by PlayCore
Wisconsin, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Notes (and all securities
issued in exchange therefor or in substitution thereof, other than the Exchange
Notes) shall bear such legend as is required under Section 11.4. The
-71-
78
restrictions on transfer set forth in this Section 10.1 are in addition to any
other restrictions on transfer set forth in this Agreement.
10.2 Exchange and Registration Rights Agreement. PlayCore Wisconsin
shall, and shall cause the Guarantors a party thereto to, comply with all
provisions and obligations of the Exchange and Registration Rights Agreement and
shall comply with all applicable federal and state securities laws in connection
therewith.
10.3 Exchange Right. Upon the request of the Required Holders at any
time or from time to time, PlayCore Wisconsin will (a) exchange all or any
portion (pro rata among all the Holders) of the Outstanding Notes for any other
evidences of indebtedness or debt securities of PlayCore Wisconsin (the
"Replacement Notes") in the same aggregate principal amount as the then
principal amount of the Notes being exchanged and (b) enter into, and cause the
Guarantors to enter into, any such agreements, whether in the form of an
amendment hereto or to any other Financing Document, an indenture, a note
purchase agreement or otherwise (the "New Documents") as the Purchaser shall
deem necessary or desirable in connection with a resale of the Notes, whether as
a private placement, registered public offering or otherwise. The Replacement
Notes will have identical terms as the Notes for which they are exchanged except
for any changes to the relative ranking, interest rate or yield for such
Replacement Notes that shall be approved by all the Holders; provided, however,
that the aggregate principal amount of all Notes and Replacement Notes
Outstanding and the aggregate cash interest and premium expense and aggregate
cost on any Interest Payment Date to PlayCore Wisconsin of all Notes and
Replacement Notes Outstanding after giving effect to any such exchange shall not
exceed such principal amount or cash interest and premium expense of the Notes
and any Replacement Notes Outstanding immediately before such exchange. Each
Replacement Note shall be subject to the requirements of Sections 11.6 and 11.7.
Notwithstanding the foregoing, the New Documents will (a) contain such
additional terms and provisions as are customarily contained in such documents
governing the issuance of debt, including provisions governing the rights of
indenture trustees and/or administrative agents and bank set-off and sharing
provisions, as applicable, and such other additional terms and provisions as are
reasonably requested by the Purchasers in order to effectuate the resale of the
Replacement Notes and (b) be in such form and will contain such terms and
provisions as are necessary to comply with all Applicable Laws, including in the
case of an indenture, the TIA. All Notes and Replacement Notes will vote
together as one series on all matters requiring the vote of the Notes or
Replacement Notes, except for matters affecting one series of Notes or
Replacement Notes and not affecting another series of Notes or Replacement
Notes. Unless the context otherwise requires, all references to the Notes herein
includes the Replacement Notes and all references to the Purchasers herein
includes any trustee for any indenture pursuant to which the Replacement Notes
are issued.
-72-
79
SECTION 11.
THE NOTES
11.1 Form and Execution. The Notes shall be in the form of Exhibit A
hereto. The Notes shall be executed on behalf of PlayCore Wisconsin by its
President or one of its Vice Presidents. The signature of any of these officers
on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of PlayCore Wisconsin shall bind PlayCore
Wisconsin, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the execution and delivery of such Notes or did not
hold such offices at the date of such Notes.
11.2 Terms of the Notes. The terms of the Notes shall be as set forth
in Exhibit A hereto. Without limiting the foregoing:
(a) Stated Maturity. The Stated Maturity of the Notes shall be May 31,
2008.
(b) Interest. The Notes will bear and accrue interest as provided in
Exhibit A hereto.
11.3 Denominations. The Notes shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof.
11.4 Form of Legend for the Notes. Unless otherwise permitted by
Section 11.7, every Note issued and delivered hereunder shall bear a legend in
substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD
OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN
EFFECT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS NOTE
IS SUBJECT TO THE TERMS OF THE PURCHASE AGREEMENT, DATED AS OF APRIL
11, 2000 (AS AMENDED, SUPPLEMENTED OR MODIFIED FROM TIME TO TIME, THE
"AGREEMENT"), AMONG PLAYCORE, INC., PLAYCORE WISCONSIN, INC, PLAYCORE
HOLDINGS, INC., THE SUBSIDIARIES LISTED ON THE SIGNATURE PAGES
THEREOF, GS MEZZANINE PARTNERS II, L.P., AND GS MEZZANINE PARTNERS
OFFSHORE II, L.P.
-73-
80
11.5 Payments and Computations. All payments of interest on the Notes
shall be paid to the persons in whose names such Notes are registered on the
Security Register at the close of business on the Regular Record Date and all
payments of principal on the Notes shall be paid to the persons in whose names
such Notes are registered at Maturity. The principal of and any premium on any
Note shall be payable only against surrender therefor, while payments of
interest on Notes shall be made, in accordance with this Agreement and subject
to applicable laws and regulations, by check mailed on or before the due date
for such payment to the person entitled thereto at such person's address
appearing on the Security Register (or, in the case of a Holder holding not less
than $1,000,000 original aggregate principal amount of Notes, by wire transfer
to such account as such Holder shall designate by written instructions received
by PlayCore Wisconsin no less than 15 days prior to any applicable Interest
Payment Date, which wire instruction shall continue in effect until such time as
the Holder otherwise notifies PlayCore Wisconsin or such Holder no longer is the
registered owner of such Note or Notes).
Interest will be computed on the basis of a 360-day year of twelve
30-day months.
11.6 Registration, Registration of Transfer and Exchange.
(a) Security Register. PlayCore Wisconsin shall maintain a register
(the "Security Register") for the registration or transfer of the Notes. The
name and address of the Holder of each Note, records of any transfers of the
Notes and the name and address of any transferee of a Note shall be entered in
the Security Register and PlayCore Wisconsin shall, promptly upon receipt
thereof, update the Security Register to reflect all information received from a
Holder. There shall be no more than one Holder for each Note, including all
beneficial interests therein. PlayCore Wisconsin shall also enter in the
Register the amount of any Capitalized Interest added to the principal amount of
the Note on any Interest Accrual Date.
(b) Registration of Transfer. Upon surrender for registration of
transfer of any Note at the office or agency of PlayCore Wisconsin, PlayCore
Wisconsin shall execute and deliver, in the name of the designated transferee or
transferees, one or more new Notes, of any authorized denominations and like
aggregate principal amount.
(c) Exchange. At the option of the Holder, Notes may be exchanged for
other Notes, of any authorized denominations and of like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, PlayCore Wisconsin shall
execute and deliver the Notes which the Holder making the exchange is entitled
to receive.
(d) Effect of Registration of Transfer of Exchange. All Notes issued
upon any registration of transfer of exchange of Notes shall be the valid
obligations of PlayCore Wisconsin, evidencing the same indebtedness, and
entitled to the same benefits under this Agreement, as the Notes surrendered
upon such registration of transfer or exchange.
(e) Requirements; Charges. Every Note presented or surrendered for
registration of transfer or for exchange shall (if so required by PlayCore
Wisconsin) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to PlayCore
-74-
81
Wisconsin duly executed by the Holder thereof or its attorney duly authorized in
writing. No service charge shall be made for any registration of transfer or
exchange of Notes, but PlayCore Wisconsin may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 11.8 not involving any transfer.
(f) Certain Limitations. If the Notes are to be redeemed in part,
PlayCore Wisconsin shall not be required (i) to issue, register the transfer of
or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of any such Notes
selected for redemption under Section 13.2 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
11.7 Transfer Restrictions.
(a) No Note may be sold, transferred or otherwise disposed of (any such
sale, transfer or other disposition is herein referred to as a "sale"), except
in compliance with this Section 11.7. A pledge by any Holder of a Note shall not
constitute a sale unless and until such pledge shall be realized upon.
(b) A Holder may sell its Notes to a transferee that is an Accredited
Investor or a Qualified Institutional Buyer; provided, however, that each of the
following conditions is satisfied:
(i) such transferee shall make same the representations and
warranties with respect to itself Notes to be required to be made by the
Purchasers in clauses (a), (b), (c) and (e) of Section 5.1;
(ii) such transferee agrees to be bound by the provisions of this
Agreement (including the confidentiality provisions set forth in Section
16.4); and
(iii) (A) if such transferee is an Accredited Investor, such
transferee shall deliver to PlayCore Wisconsin a certification to that
effect and, at the option of PlayCore Wisconsin, an opinion of counsel
reasonably satisfactory to PlayCore Wisconsin to the effect that such
transfer is in compliance with the Securities Act or (B) if such
transferee is a Qualified Institutional Buyer, such transferee shall
deliver to PlayCore Wisconsin a certification to that effect.
(c) A Holder may sell its Notes to a transferee in accordance with
Regulation S under the Securities Act; provided, however, that each of the
following conditions is satisfied:
(i) if such Holder would be deemed to be PlayCore Wisconsin, a
distributor or any of their respective affiliates or any person acting on
behalf of any of the foregoing for purposes of Regulation S under the
Securities Act:
-75-
82
(A) PlayCore Wisconsin is a "reporting issuer" as such term is
defined in Rule 902(i) under the Securities Act;
(B) any distributor (as defined in Rule 902(d) under the
Securities Act) involved in a sale of Notes has agreed in writing
that all offers and sales of Notes shall be made only in accordance
with the provisions of Rule 903 or Rule 904 under the Securities
Act;
(C) all offering materials and documents (other than press
releases) used in connection with offers and sales of the Notes
shall conform to the requirements of Rule 902(g)(2) under the
Securities Act; and
(D) each distributor (as defined in clause (i)(B) above)
selling Notes to a distributor, dealer (as defined in Section 2(12)
of the Securities Act), or a person receiving a selling concession,
fee or other remuneration in respect of the Notes sold sends a
confirmation or other notice to the purchaser stating that the
purchaser is subject to the same restrictions on offers and sales
that apply to a distributor prescribed by Regulation S under the
Securities Act.
(ii) if such exercise and/or sale by a Holder is not governed by
(i) above:
(A) the offer of Notes is not made to a Person in the United
States;
(B) either:
(1) at the time the buy order is originated, the transferee
is outside the United States or the Holder and any person acting
on its behalf reasonably believes that the transferee is outside
the United States, or
(2) the transaction is executed in, on or through the
facilities of a designated offshore securities market and neither
the Holder nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States;
(C) no directed selling efforts are made in contravention of
the requirements of Rule 903(b) or 904(b) of Regulation S under the
Securities Act, as applicable; and
(D) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(d) In the event of a proposed exercise or sale that does not qualify
under either Section 11.7(b) or 11.7(c) above, a Holder may sell its Notes only
if:
-76-
83
(i) such Holder gives written notice to PlayCore Wisconsin of its
intention to exercise or effect such sale, which notice (A) shall describe
the manner and circumstances of the proposed transaction in reasonable
detail and (B) shall designate the counsel for such Holder, which counsel
shall be reasonably satisfactory to PlayCore Wisconsin;
(ii) counsel for the Holder shall render an opinion, to the effect
that such proposed sale may be effected without registration under the
Securities Act or under applicable Blue Sky laws; and
(iii) such Holder or transferee complies with Sections 11.7(b)(i)
and 11.7(b)(ii).
11.8 Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated Note
is surrendered to PlayCore Wisconsin, PlayCore Wisconsin shall executed and
deliver in exchange therefor a new Note of the same principal amount and bearing
a number not contemporaneously outstanding.
If there shall be delivered to PlayCore Wisconsin (a) evidence to its
satisfaction of the destruction, loss or theft of any Note and (b) such security
or indemnity as may be required by PlayCore Wisconsin and any agent to save each
of PlayCore Wisconsin and such agent harmless, then, in the absence of notice
that such Note has been acquired by a bona fide purchaser, PlayCore Wisconsin
shall execute and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of a like principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, PlayCore Wisconsin in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note, PlayCore Wisconsin may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith.
The provisions of this Section 11.8 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
11.9 Persons Deemed Owners. Prior to due presentment of a Note for
registration of transfer, PlayCore Wisconsin and any agent of PlayCore Wisconsin
shall treat the Person in whose name such Note is registered as the owner of
such Note for the purpose of receiving payment of principal of and interest on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue and neither PlayCore Wisconsin nor any agent of PlayCore Wisconsin shall
be affected by notice or knowledge to the contrary.
-77-
84
11.10 Cancellation. All Notes surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than PlayCore Wisconsin, be delivered to PlayCore Wisconsin and shall be
promptly canceled by it. PlayCore Wisconsin shall cancel any Notes previously
issued and delivered hereunder which PlayCore Wisconsin may have reacquired.
11.11 Home Office Payment. So long as any Purchaser or its nominee
shall be the holder of any Note, and notwithstanding anything contained in this
Agreement or such Note to the contrary, PlayCore Wisconsin will pay all sums
becoming due on such Note for principal, premium, if any, and interest by such
method and at the address specified for such purpose in Schedule B or at such
other address as such Purchaser shall have from time to time specified to
PlayCore Wisconsin in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except that upon
written request of PlayCore Wisconsin made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, such Purchaser shall
surrender such Note for cancellation reasonably promptly after any such request,
to PlayCore Wisconsin at its principal executive office. Prior to any sale or
other disposition of any Note held by such Purchaser or its nominee such
Purchaser will, at its election, either endorse thereon the amount of principal
paid thereon and the last date to which interest has been paid thereon or
surrender such Note to PlayCore Wisconsin in exchange for a new Note or Notes
pursuant to Section 11.6. PlayCore Wisconsin will afford the benefits of this
Section 11.11 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by such Purchaser under this Agreement and that
has made the same agreement relating to such Note as such Purchaser made in this
Section 11.11.
SECTION 12.
EVENTS OF DEFAULT; REMEDIES
12.1 Events of Default. An Event of Default shall exist upon the
occurrence of any of the following specified events (each an "Event of
Default"):
(a) PlayCore Wisconsin defaults in the payment when due of interest
and Special Interest, if any, on the Notes and such default continues for
a period of thirty (30) days (whether or not such payment is prohibited
under Section 14);
(b) PlayCore Wisconsin defaults in the payment when due of principal
of or premium, if any, on the Notes when the same becomes due and payable
at its Maturity, upon redemption or otherwise (whether or not such payment
is prohibited under Section 14);
(c) Holdings or PlayCore Wisconsin fail to comply with any of the
provisions of Sections 7.7, 7.8, 7.9, 8.1 through 8.12, inclusive, 9.1,
9.2 or 9.3 and, if such failure occurs after the Note Registration, such
failure continues for a period of thirty (30) days after such occurrence;
-78-
85
(d) Holdings or PlayCore Wisconsin fails to observe or perform any
other covenant or other agreement in this Agreement or the Notes and such
failure continues for a period of thirty (30) days after Holdings or
PlayCore Wisconsin has received a notice of such failure from the Holders
of at least 25% in aggregate principal amount of the Notes at the time
Outstanding, which notice must specify the failure, demand that it be
remedied and state that the notice is a "Notice of Default";
(e) any representation, warranty or certification made by or on
behalf of Holdings, PlayCore Wisconsin or any of their respective
Subsidiaries or by any officer of Holdings, PlayCore Wisconsin or any of
their respective Subsidiaries in any certificate furnished by Holdings,
PlayCore Wisconsin or any of their respective Subsidiaries pursuant
thereto shall be false in any material respect on the date as of which
made;
(f) a default occurs under any mortgage, indenture or agreement or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by Holdings,
PlayCore Wisconsin or any of their respective Subsidiaries (or payment of
which is guaranteed by Holdings, PlayCore Wisconsin or any of their
respective Subsidiaries) in an aggregate outstanding amount of $5,000,000
or more, whether such Indebtedness now exists, or is created after the
date of this Agreement, which (i) constitutes a failure to pay at final
maturity (after giving effect to any applicable grace periods and any
extensions thereof) the principal amount of such Indebtedness or (ii)
shall have resulted in such Indebtedness being accelerated or otherwise
become or being declared due and payable prior to its stated maturity;
(g) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against Holdings,
PlayCore Wisconsin or any of their respective Significant Subsidiaries (or
a group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary) and such judgment or judgments remain unpaid and
undischarged for a period (during which execution shall not be effectively
stayed) of sixty (60) days; provided that the aggregate of all such
undischarged judgments exceeds $5,000,000 (exclusive of amounts covered by
insurance or selling shareholders' indemnification);
(h) Holdings, PlayCore Wisconsin or any of their respective
Significant Subsidiaries (or a group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) pursuant to or within
the meaning of Bankruptcy Law:
(i) commences a voluntary case or proceeding under any
Bankruptcy Law,
(ii) consents to the entry of a decree or order for relief
against it in an involuntary case or proceeding or to the
commencement of any case or proceeding against it under any
Bankruptcy Law,
-79-
86
(iii) consents to the filing of a petition or to the appointment
of or taking possession by a Custodian (as defined below) of it or for
all or any substantial part of its property,
(iv) makes or consents to the making of a general assignment for
the benefit of its creditors,
(v) generally is not paying, or admits in writing that it is not
able to pay, its debts as they become due, or
(vi) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against Holdings, PlayCore Wisconsin or
any of their respective Significant Subsidiaries (or a group of
Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary), in an involuntary case or proceeding
under any Bankruptcy Law;
(B) appoints a Custodian of Holdings, PlayCore Wisconsin or
any of their respective Significant Subsidiaries (or a group of
Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary), or for all or any substantial part of
the property of Holdings, PlayCore Wisconsin or any of their
respective Significant Subsidiaries (or a group of Subsidiaries
that, taken as a whole, would constitute a Significant
Subsidiary), or approves as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of any of the foregoing; or
(C) orders the winding up or liquidation of Holdings,
PlayCore Wisconsin or any of their respective Significant
Subsidiaries (or a group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary), or adjudges any of
them a bankrupt or insolvent;
and any such order or decree remains unstayed and in effect for sixty (60)
consecutive days;
(i) Parent fails to perform any of its obligations under the
undertaking referred to in Section 3.5;
(j) any Note Guarantee ceases to be in force and effective or any Note
Guarantee is declared to be null and void and unenforceable or any Note
Guarantee is found to be invalid or any Guarantor denies its liability
under its Note Guarantee (other
-80-
87
than by reason of release of a Guarantor in accordance with the terms of
this Agreement); or
(k) PlayCore Wisconsin, for any reason, ceases to be a direct Wholly
Owned Subsidiary of Holdings.
The term "Custodian" means any custodian, receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.
12.2 Remedies. If an Event of Default (other than an Event of Default
specified in Section 12.2(h)) occurs and is continuing, and, if the Credit
Agreement is then in effect, upon the earlier of (x) 10 days advance notice to
the Senior Indebtedness Agent or (y) the acceleration of any Senior Indebtedness
under the Credit Agreement, then and in every such case the Holders of more than
25% in aggregate principal amount of the Notes at the time Outstanding may
declare all principal of, accrued and unpaid interest on, any premium on, and
all other amounts owing in respect of, all Notes (the "Default Amount") to be
due and payable immediately, by a notice in writing to PlayCore Wisconsin, and
upon any such declaration such Default Amount and any accrued interest and
Special Interest, if any, shall become immediately due and payable. If an Event
of Default specified in Section 12.1(h) occurs and is continuing, the Default
Amount of and any accrued interest and Special Interest, if any, on the
Outstanding Notes shall automatically, and without any declaration or other
action on the part of any Holder, become immediately due and payable. If a
default in the payment when due of interest on (including any Special Interest),
principal of, or premium, if any, on, this Note or an Event of Default has
occurred and is continuing, the Notes will accrue interest at 2% per annum plus
the stated interest rate on the Notes until such time as no Event of Default
shall be continuing (to the extent that the payment of such interest shall be
legally enforceable).
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained, the
Required Holders, by written notice to PlayCore Wisconsin, may rescind and annul
such declaration and its consequences if:
(a) PlayCore Wisconsin has paid a sum sufficient to pay
(i) all overdue interest and Special Interest, if any, on all Notes;
(ii) the principal of (and premium, if any, on) any Notes which have
become due otherwise than by such declaration of acceleration (including
any Notes required to have been purchased pursuant to an offer to purchase
that PlayCore Wisconsin is required to make hereunder) and any interest
and overdue interest thereon at the rate borne by the Notes; and
(iii) to the extent that payment of such interest is lawful,
interest upon overdue interest and Special Interest, if any, at the rate
provided therefor in the Notes; and
-81-
88
(b) all Events of Default, other than the nonpayment of the Default
Amount which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 12.3.
12.3 Waiver of Past Defaults. The Required Holders may on behalf of the
Holders of all the Notes waive any existing Default or Event of Default
hereunder and its consequences, except a Default or Event of Default:
(i) in the payment of the principal of (or premium, if any) or
interest or any Special Interest on, any Note (including any Note which is
required to have been purchased pursuant to an offer to purchase that
PlayCore Wisconsin is required to make hereunder), or
(ii) in respect of a covenant or provision hereof which under
Section 17.4 cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured and cease, for
every purpose of this Agreement; provided, however, no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereon.
12.4 No Personal Liability of Directors, Officers, Employees and
Stockholders. No director, officer, partner, manager, incorporator, member,
employee or stockholder of Holdings or any Subsidiary, as such, shall have any
liability for any Obligations of Holdings and its Subsidiaries under the Notes,
this Agreement or the Note Guarantees or the Exchange Guarantees or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes, by accepting a Note, waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes.
SECTION 13.
REDEMPTION
13.1 Right of Redemption. The Notes may be redeemed at the election of
PlayCore Wisconsin at such times, in such amounts and at the Redemption Prices
(together with any applicable accrued interest and any Special Interest to the
Redemption Date) specified in the form of Note attached as Exhibit A hereto.
13.2 Partial Redemptions. In case PlayCore Wisconsin elects to redeem
less than all of the Notes, PlayCore Wisconsin shall redeem the Notes pro rata
from each Holder; provided, however, that any such redemption shall be for an
aggregate principal amount of not less than $2,000,000. For all purposes of this
Agreement, unless the context otherwise requires, all provisions relating to the
redemption of Notes shall relate, in the case of any Notes redeemed or to be
redeemed only in part, to the portion of the principal amount of such Notes
which has been or is to be redeemed.
-82-
89
13.3 Notice of Redemption. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date, to each Holder of Notes to be redeemed, at its
address appearing in the Security Register. Notice of redemption of Notes to be
redeemed at the election of PlayCore Wisconsin shall be given by PlayCore
Wisconsin and at the expense of PlayCore Wisconsin.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Outstanding Notes are to be redeemed, the
portion of each Note to be redeemed,
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note to be redeemed and that interest and
Special Interest, if any, thereon will cease to accrue on and after
said date, and
(e) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
13.4 Deposit of Redemption Price. Prior to any Redemption Date,
PlayCore Wisconsin shall segregate and hold in trust an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) any applicable accrued interest and Special
Interest, if any, on, all the Notes which are to be redeemed on that date.
13.5 Notes Payable on Redemption Date. If notice of redemption shall
have been given as provided above, the Notes so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless PlayCore Wisconsin shall default
in the payment of the Redemption Price and any applicable accrued interest and
Special Interest, if any,) such Notes shall not bear interest. Upon surrender of
any such Note for redemption in accordance with said notice, such Note shall be
paid by PlayCore Wisconsin at the Redemption Price, together with any applicable
accrued interest and Special Interest, if any, to the Redemption Date; provided,
however, that installments of interest and Special Interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Notes, or one or more Predecessor Notes, registered as such at the close
of business on the relevant Regular Record Dates according to their terms and
the provisions of this Agreement.
-83-
90
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate provided by the Note.
13.6 Notes Redeemed in Part. Any Note which is to be redeemed only in
part shall be surrendered at the principal offices of PlayCore Wisconsin (with,
if PlayCore Wisconsin so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to PlayCore Wisconsin duly executed by, the
Holder thereof or its attorney duly authorized in writing), and PlayCore
Wisconsin shall execute and deliver to the Holder of such Note without service
charge, a new Note or Notes, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
SECTION 14.
SUBORDINATION OF NOTES
14.1 Notes Subordinate to Senior Indebtedness. PlayCore Wisconsin
covenants and agrees, and each Holder of a Note, by its acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Section 14, the payment of the principal of (and premium, if
any) and interest and any Special Interest on each and all of the Notes are
hereby expressly made subordinate and subject in right of payment to the prior
payment in full in cash or Cash Equivalents of all Senior Indebtedness of
PlayCore Wisconsin. The provisions of this Section 14 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by a
holder of Senior Indebtedness upon any Proceeding or otherwise, all as though
such payment had not been made.
14.2 Payment Over of Proceeds Upon Dissolution, Etc. In the event of
(a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to PlayCore Wisconsin or to its creditors, as such, or to
its assets, or (b) any liquidation, dissolution or other winding up of PlayCore
Wisconsin, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of PlayCore Wisconsin, then and
in any such event specified in clause (a), (b) or (c) above (each such event, if
any, herein sometimes referred to as a "Proceeding") the holders of Senior
Indebtedness shall be entitled to receive or retain payment in full in cash or
Cash Equivalents of all amounts due or to become due on or in respect of all
Senior Indebtedness, before the Holders of the Notes are entitled to receive any
payment or distribution of any kind or character, whether in cash, property or
securities, on account of principal of (or premium, if any) or interest or any
Special Interest on or other obligations in respect of the Notes (including any
interest or any Special Interest accruing on or after the filing of any
Proceeding relating to PlayCore Wisconsin, whether or not allowed in such
Proceeding) or on account of any purchase or other acquisition of Notes by
PlayCore Wisconsin or any Subsidiary of PlayCore
-84-
91
Wisconsin (all such payments, distributions, purchases and acquisitions herein
referred to, individually and collectively, as a "Notes Payment"), and to that
end the holders of Senior Indebtedness shall be entitled to receive, for
application to the payment thereof, any Notes Payment which may be payable or
deliverable in respect of the Notes in any such Proceeding. The holders of
Senior Indebtedness are hereby authorized to file an appropriate claim for and
on behalf of the Holders if they or any of them do not file, and there is not
otherwise filed on behalf of the Holders, a proper claim or proof of claim in
the form required in any such proceeding prior to 15 days before the expiration
of the time to file such claim or claims.
In the event that, notwithstanding the foregoing provisions of this
Section 14.2, the Holder of any Note shall have received any Notes Payment
before all Senior Indebtedness of PlayCore Wisconsin is paid in full in cash or
Cash Equivalents, then and in such event such Notes Payment shall be paid over
or delivered forthwith to the trustee in bankruptcy or other person making
payment or distribution of assets of PlayCore Wisconsin for the application to
the payment of all Senior Indebtedness remaining unpaid, to the extent necessary
to pay the Senior Indebtedness in full in cash or Cash Equivalents, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
For purposes of this Section 14 only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include (i) Capitalized Interest (including any such
Capitalized Interest accruing on or after the filing of any Proceeding relating
to PlayCore Wisconsin, whether or not allowed in such Proceeding) and (ii) a
payment or distribution of stock or securities of PlayCore Wisconsin provided
for by a plan of reorganization or readjustment authorized by an order or decree
of a court of competent jurisdiction in a reorganization proceeding under any
applicable bankruptcy law or of any other corporation provided for by such plan
of reorganization or readjustment which stock or securities (x) are subordinated
in right of payment to all then outstanding Senior Indebtedness to substantially
the same extent as, or to a greater extent than, the Notes are so subordinated
as provided in this Section 14 and (y) have been approved by the Senior
Indebtedness Agent (including by acceptance or approval by the Senior
Indebtedness Agent of such plan of reorganization or otherwise). The
consolidation of PlayCore Wisconsin with, or the merger of PlayCore Wisconsin
into, another Person or the liquidation or dissolution of PlayCore Wisconsin
following the conveyance or transfer of all or substantially all of its
properties and assets as an entirety to another Person upon the terms and
conditions set forth in Section 8.12 shall not be deemed a Proceeding for the
purposes of this Section 14.2 if the Person formed by such consolidation or into
which PlayCore Wisconsin is merged or the Person which acquires by conveyance or
transfer such properties and assets, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, complies with the conditions
set forth in Section 8.12.
14.3 No Payment When Senior Indebtedness in Default. In the event that
any Senior Payment Default (as defined below) shall have occurred and be
continuing, then no Notes Payment shall be made unless and until such Senior
Payment Default shall have been cured or waived or shall have ceased to exist or
all amounts then due and payable in respect of Senior Indebtedness shall have
been paid in full in cash or Cash Equivalents. "Senior Payment Default"
-85-
92
means any default in the payment of principal of (or premium, if any), interest
on, fees or other amounts owing in connection with any Designated Senior
Indebtedness when due, whether at the due date of any such payment or by
declaration of acceleration, prepayment, call for redemption or otherwise.
Upon the occurrence of a Senior Nonmonetary Default and receipt of
written notice by the Holders' Representative of the occurrence of such Senior
Nonmonetary Default from the Representative under the Credit Agreement, no Notes
Payment shall be made during a period (the "Payment Blockage Period") commencing
on the date of the receipt by the Holders' Representative of such notice and
ending the earlier of (i) the date on which such Senior Nonmonetary Default
shall have been cured or waived or ceased to exist or all Designated Senior
Indebtedness which was the subject of such Senior Nonmonetary Default shall have
been paid in full in cash or Cash Equivalents and (ii) the 179th day after the
date of the receipt of such notice. No Senior Nonmonetary Default that existed
or was continuing on the date of the commencement of a Payment Blockage Period
may be made the basis of the commencement of a subsequent Payment Blockage
Period whether or not within a period of 360 consecutive days, unless such
Senior Nonmonetary Default shall have been cured for a period of not less than
90 consecutive days; provided, however, any breach of any financial covenant for
a period commencing after the expiration of a Payment Blockage Period that would
give rise to a new event of default, even though such breach is a breach of a
provision under which a prior event of default previously existed, shall
constitute a new event of default for this purpose. In any event,
notwithstanding the foregoing, no more than one Payment Blockage Period may be
commenced during any 360-day period and there shall be a period of at least 181
days during each 360-day period when no Payment Blockage Period is in effect.
"Senior Nonmonetary Default" means the occurrence or existence and continuance
of an event of default with respect to Designated Senior Indebtedness, other
than a Senior Payment Default, that permits the holders of the Designated Senior
Indebtedness (or a trustee or other agent on behalf of the holders thereof) then
to declare such Designated Senior Indebtedness due and payable prior to the date
on which it would otherwise become due and payable.
The failure to make any payment on the Notes by reason of the
provisions of this Section 14.3 will not be construed as preventing the
occurrence of an Event of Default with respect to the Notes arising from any
such failure to make payment. Upon termination of any period of Payment Blockage
Period PlayCore Wisconsin shall resume making any and all required payments in
respect of the Notes, including any missed payments.
In the event that, notwithstanding the foregoing, PlayCore Wisconsin
shall make any Notes Payment to any Holder prohibited by the foregoing
provisions of this Section 14.3, then and in such event such Notes Payment shall
be paid over and delivered forthwith to the holders of the Senior Indebtedness
of PlayCore Wisconsin in the same form received and, until so turned over, the
same shall be held in trust by such Holder as the property of the holders of the
Senior Indebtedness.
By reason of such subordination, in the event of insolvency by PlayCore
Wisconsin, unsubordinated creditors of PlayCore Wisconsin who are not holders of
Senior
-86-
93
Indebtedness or of the Notes may recover less, ratably, than holders of Senior
Indebtedness and more, ratably, than Holders of the Notes.
The provisions of this Section 14.3 shall not apply to any Notes
Payment with respect to which Section 14.2 would be applicable.
14.4 Payment Permitted If No Default. Nothing contained in this Section
14 or elsewhere in this Agreement or in any of the Notes shall prevent PlayCore
Wisconsin, at any time except during the pendency of any Proceeding referred to
in Section 14.2 or under the conditions described in Section 14.3, from making
Notes Payments; provided, however, PlayCore Wisconsin shall not make any
voluntary prepayment on, or voluntarily redeem, the Notes nor voluntarily
advance the scheduled maturity date or any interest payment date, or increase
the interest rate, of the Notes, amend the financial covenants of the Notes to
make them more restrictive nor amend the subordination provisions of the Notes,
without the prior written consent of the Requisite Lenders under the Credit
Agreement (as defined therein) as long as the Credit Agreement is in effect. The
Required Holders shall give a prompt notice of any acceleration of the Notes to
the Representative under the Credit Agreement; provided, however, that all
Senior Indebtedness then due or thereafter declared to be due shall first be
paid in full before the Holders are entitled to receive any payment from
PlayCore Wisconsin of principal of, or interest on, the Notes, it being
understood that payments made to the Holders at a time when no Senior
Indebtedness is due and payable shall not be deemed a violation of this proviso.
14.5 Subrogation to Rights of Holders of Senior Indebtedness. Only
after the payment in full in cash or Cash Equivalents of all amounts due or to
become due on or in respect of Senior Indebtedness of PlayCore Wisconsin and,
unless the holders of Senior Indebtedness shall have the ability to terminate
such commitments, the termination of all commitments in respect thereof, the
Holders of the Notes shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to such Senior Indebtedness until the principal of (and
premium, if any) and interest (including any Special Interest) on the Notes
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of PlayCore Wisconsin of
any cash, property or securities to which the Holders of the Notes would be
entitled except for the provisions of this Section 14, and no payments pursuant
to the provisions of this Section 14 to the holders of Senior Indebtedness by
Holders of the Notes, shall, as among PlayCore Wisconsin, its creditors other
than holders of Senior Indebtedness and the Holders of the Notes, be deemed to
be a payment or distribution by PlayCore Wisconsin to or on account of the
Senior Indebtedness of PlayCore Wisconsin.
14.6 Provisions Solely to Define Relative Rights. The provisions of
this Section 14 are and are intended solely for the purpose of defining the
relative rights of the Holders on the one hand and the holders of Senior
Indebtedness on the other hand. Nothing contained in this Section 14 or
elsewhere in this Agreement or in the Notes is intended to or shall (a) impair,
as among PlayCore Wisconsin, its creditors other than holders of Senior
Indebtedness and the Holders of the Notes, the obligation of PlayCore Wisconsin,
which is absolute and unconditional (and which, subject to the rights under this
Section 14 of the holders of Senior
-87-
94
Indebtedness, is intended to rank equally with all other general unsecured
obligations of PlayCore Wisconsin), to pay to the Holders of the Notes the
principal of (and premium, if any) and interest (including any Special Interest)
on the Notes as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against PlayCore Wisconsin
of the Holders of the Notes and creditors of PlayCore Wisconsin other than the
holders of Senior Indebtedness; or (c) prevent the Holder of any Note from
exercising all remedies otherwise permitted by applicable law upon default under
this Agreement, subject to the rights, if any, under this Section 14 of the
holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to such Holder.
14.7 No Waiver of Subordination Provisions. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of PlayCore Wisconsin or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by PlayCore
Wisconsin with the terms, provisions and covenants of this Agreement, regardless
of any knowledge thereof any such holder may have or be otherwise charged with.
14.8 Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities of PlayCore Wisconsin
referred to in this Section 14, the Holders of the Notes shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction in
which such Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Holders of Notes, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of PlayCore Wisconsin, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Section 14.
14.9 Reliance by Holders of Senior Indebtedness on Subordination
Provisions. Each Holder of a Note, by accepting such Note, acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Note, to acquire and continue to hold, or to continue to hold,
such Senior Indebtedness, and such holder of such Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such Senior Indebtedness and
shall be deemed a third party beneficiary hereof.
14.10 Reinstatement. The provisions of this Section 14 shall continue
to be effective or be reinstated, and the Senior Indebtedness shall not be
deemed to be paid in full, as the case may be, if at any time any payment of any
of the Senior Indebtedness is rescinded or must otherwise be returned by the
holder thereof upon the insolvency, bankruptcy or reorganization of PlayCore
Wisconsin or otherwise, all as though such payment had not been made.
-88-
95
SECTION 15.
NOTE GUARANTEES
15.1 Note Guarantees. Each of the Guarantors hereby, jointly and
severally, unconditionally guarantees, on a senior subordinated basis, to each
Holder of a Note executed and delivered by PlayCore Wisconsin, irrespective of
the validity and enforceability of this Agreement, the Notes or the obligations
of PlayCore Wisconsin hereunder or thereunder, that: (a) the principal of and
premium and interest (including any Special Interest) on the Notes shall be
promptly paid in full when due, whether at Stated Maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of (and any
premium) and interest (including any Special Interest) on the Notes, and all
other obligations of PlayCore Wisconsin to the Holders hereunder or thereunder
shall be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the same shall be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. The Guarantors hereby agree that their
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Agreement, the absence of any
action to enforce the same, any waiver or consent by any Holder with respect to
any provisions hereof or thereof, the recovery of any judgment against PlayCore
Wisconsin, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of PlayCore
Wisconsin, any right to require a prior proceeding against PlayCore Wisconsin,
protest, notice and all demands whatsoever and covenant that this Note Guarantee
shall not be discharged except by complete performance of the obligations
contained in the Notes and this Agreement. If any Holder is required by any
court or otherwise to return to PlayCore Wisconsin or Guarantors, or any
Custodian, trustee, liquidator or other similar official acting in relation to
either PlayCore Wisconsin or Guarantors, any amount paid by such Holder, this
Note Guarantee, to the extent theretofore discharged, shall be reinstated in
full force and effect. Each Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders of Notes in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders, on the other hand, (a) the
Maturity of the obligations guaranteed hereby may be accelerated as provided in
Section 12 for the purposes of this Note Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby and (b) in the event of any declaration of
acceleration of such obligations as provided in Section 12, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee. The Guarantors shall have the
right to seek contribution from any non-paying Guarantor so long as the exercise
of such right does not impair the rights of the Holders under this Note
Guarantee.
-89-
96
15.2 Execution and Delivery of Note Guarantees. To evidence its Note
Guarantee set forth in Section 15.1, each Guarantor hereby agrees that this
Agreement shall be executed on behalf of such Guarantor by its President or one
of its Vice Presidents and, to the extent not a party to this Agreement on the
date hereof, each Guarantor shall execute and deliver to the Holders a
supplemental agreement substantially in the form of Exhibit C hereto
("Supplemental Agreement"), pursuant to which such Subsidiary shall become a
Guarantor under this Section 15 and a party to the Exchange and Registration
Rights Agreement as a Guarantor and shall guarantee the Obligations of PlayCore
Wisconsin under this Agreement and the Notes. Concurrently with the execution
and delivery of such Supplemental Agreement, such Guarantor shall deliver to the
Holders an opinion of counsel reasonably acceptable to the Purchasers that the
foregoing have been duly authorized, executed and delivered by such Guarantor
and that such Supplemental Agreement any Note with respect to which this Note
Guarantee is given, this is a valid and legally binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms
(subject to customary limitations, qualifications and exceptions).
If an officer whose signature is on this Agreement or on a Supplemental
Agreement no longer holds that office at the time PlayCore Wisconsin executes
and delivers any Note with respect to which this Note Guarantee is given, this
Note Guarantee shall be valid nevertheless. The execution and delivery of any
Note by PlayCore Wisconsin shall constitute due delivery of the Note Guarantee
set forth in this Agreement on behalf of the Guarantors.
15.3 Guarantors May Consolidate, Etc. On Certain Terms. No Guarantor
may consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person), another corporation, Person or entity (other than PlayCore
Wisconsin or another Guarantor) unless in the case of a Guarantor that is a
Subsidiary:
(a) subject to the provisions of Section 15.4, the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
unconditionally assumes all the obligations of such Guarantor under the Notes
and this Agreement pursuant to a Supplemental Agreement;
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(c) immediately after giving effect to such transaction, PlayCore
Wisconsin would be permitted to Incur at least $1.00 of additional Indebtedness,
other than Permitted Indebtedness, under Section 8.4.
Notwithstanding the foregoing, no Guarantor shall be permitted to
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person), another Person (other than PlayCore Wisconsin or any
Guarantor) pursuant to the preceding sentence if such consolidation or merger
would not be permitted by Section 8.12.
In case of any such consolidation or merger and upon the assumption by
the successor entity, by Supplemental Agreement executed and delivered to the
Holders, of the Note Guarantee and execution of the Notation of Note Guarantee
endorsed upon the Notes and the due
-90-
97
and punctual performance of all of the covenants and conditions of this
Agreement to be performed by the Guarantor, such successor entity shall succeed
to and be substituted for the Guarantor with the same effect as if it had been
named herein as a Guarantor. Such successor corporation thereupon may cause to
be signed any or all of the Note Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by PlayCore
Wisconsin. All the Note Guarantees so given shall in all respects have the same
legal rank and benefit under this Agreement as the Note Guarantees theretofore
and thereafter issued in accordance with the terms of this Agreement as though
all of such Note Guarantees had been issued at the date of the execution hereof.
Nothing contained in this Agreement or in any of the Notes shall
prevent any consolidation or merger of a Guarantor with or into PlayCore
Wisconsin or another Guarantor, or shall prevent any sale or conveyance of any
of the property of a Guarantor to PlayCore Wisconsin or another Guarantor.
15.4 Releases of Note Guarantees. In the event of (i) a sale or other
disposition of all or substantially all of the assets of any Subsidiary that is
a Guarantor, by way of merger, consolidation or otherwise in a transaction that
complies with the provisions of Section 15.3, (ii) a sale or other disposition
of all of the capital stock of any Subsidiary (including by way of merger or
consolidation) that is a Guarantor or (iii) a distribution of all of the capital
stock of any Subsidiary that is a Guarantor to shareholders of Holdings in a
transaction that complies with the provisions of Section 8.2, such Guarantor (in
the event of a sale or other disposition, by way of such a merger,
consolidation, distribution or otherwise, of all of the capital stock of such
Guarantor) or the entity acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) will be
released and relieved of any obligations under such Guarantor's Note Guarantee;
provided that the Net Cash Proceeds of such sale or other disposition shall be
applied in accordance with the provisions of Section 8.5. Any Guarantor not
released from its obligations under its Note Guarantee shall remain liable for
the full amount of principal of and interest on the Notes.
15.5 Subordination of Note Guarantees. The Obligations of each
Guarantor under its Note Guarantee pursuant to this Section 15 shall be junior
and subordinated to the Guarantor Senior Indebtedness of such Guarantor on the
same basis as the Notes are junior and subordinated to Senior Indebtedness of
PlayCore Wisconsin. For the purposes of the foregoing sentence, the Holders
shall have the right to receive and/or retain payments by any of the Guarantors
only at such times as they may receive and/or retain payments in respect of the
Notes pursuant to this Agreement, including Section 14.
15.6 Limitation on Guarantor Liability. Each Guarantor, and by its
acceptance of the Notes, each Holder, hereby confirms that it is the intention
of all such parties that the Note Guarantee of such Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to any Note Guarantee. To
effectuate the foregoing intention, the Holders and the Guarantors hereby
irrevocably agree that the obligations of such Guarantor under its Note
Guarantee and this Section 15 shall be limited to the
-91-
98
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Section 15, result
in the obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
15.7 Endorsement of Note Guarantees. To evidence its Note Guarantee set
forth in Section 15.1, each Guarantor hereby agrees that a notation of such Note
Guarantee substantially in the form of Exhibit D hereto ("Notation of Note
Guarantee") shall be endorsed by an officer of such Guarantor on each Note
executed and delivered by PlayCore Wisconsin.
Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 15.1 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a Notation of Note Guarantee.
SECTION 16.
EXPENSES, INDEMNIFICATION AND CONFIDENTIALITY
16.1 Expenses. Whether or not the transactions contemplated hereby are
consummated, Holdings, Parent and PlayCore Wisconsin will jointly and severally
pay all costs and expenses (including reasonable and documented attorneys' and
accountants' fees and disbursements) incurred by the Purchasers or any holder of
a Note in connection with the Transactions and in connection with any
amendments, waivers or consents under or in respect of the Financing Documents
(whether or not such amendment, waiver or consent becomes effective), including,
without limitation: (a) the Purchaser's reasonable and documented out-of-pocket
expenses in connection with the Purchaser's examinations and appraisals of
Holdings' or any or its Subsidiaries' properties, books and records; (b) the
reasonable and documented costs and expenses incurred in enforcing, defending or
declaring any rights or remedies under the Financing Documents or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with the Financing Documents or by reason of being a holder of any
Note; and (c) the costs and expenses, including reasonable and documented
consultants' and advisors' fees, incurred in connection with the insolvency or
bankruptcy of Holdings, PlayCore Wisconsin or any Subsidiary of Holdings or
PlayCore Wisconsin or in connection with any work-out or restructuring of the
transactions contemplated by the Financing Documents. Holdings, Parent and
PlayCore Wisconsin will jointly and severally pay, and will save the Purchasers
and each other holder of a Note harmless from, all claims in respect of any
fees, costs or expenses if any, of brokers and finders in relation to the
Transactions (other than any brokers or Lenders of the Purchasers or any other
Holder); provided that, in each such instance under this Section 16.1, Holdings,
Parent and PlayCore Wisconsin shall be responsible for the fees and expenses of
only one separate counsel for all Purchasers and Holders. Notwithstanding the
foregoing, if the transactions contemplated hereby are not consummated,
-92-
99
Parent (and not Holdings or PlayCore Wisconsin) shall be solely responsible for
the expenses described in this Section 16.1.
16.2 Indemnification. In addition to all other sums due hereunder or
provided for in this Agreement, Holdings and PlayCore Wisconsin jointly and
severally shall and shall cause each of the Subsidiaries that are Guarantors
(each, an "Indemnitor") to indemnify and hold harmless each Purchaser and its
Affiliates and its officers, directors, agents, employees, subsidiaries,
partners and controlling Persons (each, an "Indemnified Person") to the fullest
extent permitted by law, from and against any and all out-of-pocket losses,
claims, damages, expenses (including reasonable fees, disbursements and other
charges of counsel) or other liabilities (collectively, "Liabilities") resulting
from or arising out of any investigation or proceeding against Holdings, any of
its Subsidiaries or any Indemnified Person and arising out of or in connection
with this Agreement or any of the Transaction Documents, whether or not the
transactions contemplated by this Agreement are consummated, which investigation
or proceeding requires the participation of, or is commenced or filed against,
any Indemnified Person because of this Agreement, any other Transaction Document
or such other documents and the transactions contemplated hereby or thereby;
provided that no Indemnitor shall be liable under this Section 16.2 to an
Indemnified Person for any Liabilities resulting primarily from any actions that
involved the gross negligence or willful misconduct of such Indemnified Person
or the breach by such Indemnified Person of any representation, warranty,
covenant or other agreement of such Indemnified Person contained herein or in
the other Financing Documents; and provided, further, that if and to the extent
that such indemnification is unenforceable for any reason, each Indemnitor shall
be liable to make the maximum contribution to the payment and satisfaction of
such Liabilities for which it would otherwise be liable hereunder which shall be
permissible under applicable laws. In connection with the obligation of any
Indemnitor to indemnify for Liabilities as set forth above, any Indemnitor
further agrees, upon presentation of appropriate invoices containing reasonable
detail, to reimburse each Indemnified Person for all such Liabilities (including
reasonable fees, disbursements and other charges of counsel) as they are
incurred by such Indemnified Person; provided that if an Indemnified Person is
reimbursed hereunder for any Liabilities, such reimbursement of Liabilities
shall be refunded to the extent it is finally judicially determined that the
Liabilities in question resulted primarily from the willful misconduct or gross
negligence of such Indemnified Person. The obligations of any Indemnitor under
this paragraph will survive any transfer of the Notes or the Exchange Notes by
the Purchasers. In the event that the foregoing indemnity is unavailable or
insufficient to hold an Indemnified Person harmless, then the Indemnitors or
PlayCore Wisconsin will contribute to amounts paid or payable by such
Indemnified Person in respect of such Indemnified Person's Liabilities in such
proportions as appropriately reflect the relative benefits received by and fault
of the Indemnitors combined and such Indemnified Person in connection with the
matters as to which such Liabilities relate and other equitable considerations.
Notwithstanding the foregoing, if the transactions contemplated hereby are not
consummated, Parent (and not Holdings or PlayCore Wisconsin) shall be solely
responsible for the indemnification obligations described in this Section 16.2.
16.3 Notification. Each Indemnified Person under this Section 16 will,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or
-93-
100
other proceeding against such Indemnified Person in respect of which indemnity
may be sought from an Indemnitor under this Section 16, notify Holdings in
writing of the commencement thereof. The omission of any Indemnified Person so
to notify PlayCore Wisconsin of any such action shall not relieve any Indemnitor
from any liability which it may have to such Indemnified Person under this
Section 16 unless, and only to the extent that, such omission results in the
forfeiture by any Indemnitor of substantive rights or defenses or an Indemnitor
is otherwise irrevocably prejudiced in defending such proceeding. In case any
such action, claim or other proceeding shall be brought against any Indemnified
Person and it shall notify Holdings of the commencement thereof, Holdings shall
be entitled to assume the defense thereof at its own expense, with counsel
satisfactory to Holdings; provided that any Indemnified Person may, at its own
expense, retain separate counsel to participate in such defense. Notwithstanding
the foregoing, in any action, claim or proceeding in which both an Indemnitor,
on the one hand, and an Indemnified Person, on the other hand, is, or is
reasonably likely to become, a party, such Indemnified Person shall have the
right to employ separate counsel at Holdings' expense and to control its own
defense of such action, claim or proceeding if, (a) Holdings has failed to
assume the defense and employ counsel as provided herein, (b) Holdings has
agreed in writing to pay such fees and expenses of separate counsel or (c) in
the reasonable opinion of counsel to such Indemnified Person, a conflict or
likely conflict exists between Holdings, on the one hand, and such Indemnified
Person, on the other hand, that would make such separate representation
advisable; provided, however, that Holdings shall not in any event be required
to pay the fees and expenses of more than one separate counsel (and if deemed
necessary by such separate counsel, appropriate local counsel who shall report
to such separate counsel). Holdings agrees that it will not, without the prior
written consent of an Indemnified Person, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated hereby (if such Indemnified Person is a
party thereto or has been actually threatened to be made a party thereto) unless
such settlement, compromise or consent includes an unconditional release of such
Indemnified Person from all liability arising or that may arise out of such
claim, action or proceeding. Holdings shall not be liable for any settlement of
any claim, action or proceeding effected against an Indemnified Person without
the prior written consent of Holdings. The rights accorded to Indemnified
Persons hereunder shall be in addition to any rights that any Indemnified Person
may have at common law, by separate agreement or otherwise.
16.4 Confidentiality.
(a) Subject to the provisions of clause (b) of this Section 16.4, each
Purchaser agrees that it will use its reasonable efforts not to disclose without
the prior consent of Holdings (other than to its employees, auditors, creditors,
advisors or counsel or to another Purchaser if the Purchaser or such Purchaser's
holding or parent company in its sole discretion determines that any such party
should have access to such information; provided such Persons shall be subject
to the provisions of this Section 16.4 to the same extent as such Purchaser) any
non public information which is now or in the future furnished pursuant to this
Agreement or any other Financing Document and which is designated by Holdings to
the Purchasers in writing, as confidential; provided that any Purchaser may
disclose any such information (i) as has become generally available to the
public other than by virtue of a breach of this Section 16.4(a) by such
-94-
101
Purchaser or any other Person to whom such Purchaser has provided such
information as permitted by this Section 16.4, (ii) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
such Purchaser or to the Commission or similar organizations (whether in the
United States of America or elsewhere) or their successors, (iii) as may be
required or appropriate in respect to any summons or subpoena or in connection
with any litigation, (iv) in order to comply with any law, order, regulation or
ruling applicable to such Purchaser, and (v) to any prospective or actual
transferee or participant in connection with any contemplated transfer of any of
the Notes by such Purchaser; provided that such prospective transferee agrees to
be bound by the confidentiality provisions contained in this Section 16.4.
(b) Each of Holdings and PlayCore Wisconsin hereby acknowledges and
agrees that each Purchaser may share with any of its Affiliates, and such
Affiliates may share with such Purchaser, any information related to Holdings or
any of its Subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of Holdings and its Subsidiaries);
provided such Persons shall agree in writing to be subject to the provisions of
this Section 16.4 to the same extent as such Purchaser.
SECTION 17.
MISCELLANEOUS
17.1 Notices. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (a) when personally delivered, (b) when transmitted via telecopy (or
other facsimile device) to the number set out below (or to such other number as
such party may specify by written notice to the other parties hereto) if the
sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), (c) the day following the day on
which the same has been delivered prepaid to a reputable national overnight air
courier service or (d) the third Business Day following the day on which the
same is sent by certified or registered mail, postage prepaid, in each case to
the respective parties at the address set forth below, or at such other address
as such party may specify by written notice to the other party hereto:
(a) if to a Purchaser or its nominee, to the Purchaser or its
nominee at the address specified for such communications in Schedule B, with a
copy to Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, attention: Xxxxxx X. Xxxxxxx, Esq., Facsimile No.: (212)
859-8586, or at such other address as the Purchaser or its nominee shall have
specified to PlayCore Wisconsin in writing;
(b) if to any other Holder of any Note, to such Holder at the
address of such Holder appearing in the Security Register or such other address
as such other Holder shall have specified to Holdings in writing; or
(c) if to Holdings, Parent or PlayCore Wisconsin, to PlayCore
Wisconsin at PlayCore, Inc., Xxxxxxxxxx Xxxxxx, Xxxxx 000, 00 Xxxx Xxxxxxxxx
Street, Janesville,
-95-
102
Wisconsin 53545 Attention: President, Facsimile No.: (000) 000-0000, with copies
to (i) Holdings, c/o Chartwell Investments II, LLC, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxx, Facsimile: (000) 000-0000, and (ii)
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., 0000 Xxx Xxxxxxxxx Xxxxxx, X.X.,
Xxxxx 000, Xxxxxxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxx, Esq., Facsimile:
(000) 000-0000, or at such other address as Holdings shall have specified to the
holder of each Note in writing.
17.2 Benefit of Agreement; Assignments and Participations. Except as
otherwise expressly provided herein, all covenants, agreements and other
provisions contained in this Agreement by or on behalf of any of the parties
hereto shall bind, inure to the benefit of and be enforceable by their
respective successors and permitted assigns (including, without limitation, any
subsequent permitted Holder of a Note) whether so expressed or not; provided,
however, that neither Holdings nor PlayCore Wisconsin may assign and transfer
any of its rights or obligations without the prior written consent of the other
parties hereto and each such Holder, except as expressly permitted by Sections
8.12 and 9.2.
Nothing in this Agreement or in the Notes, express or implied, shall
give to any Person other than the parties hereto (and, with respect to Section
14 and Section 15.5 only, the holders of Senior Indebtedness and the holders of
Guarantor Senior Indebtedness), their successors and permitted assigns and the
holders from time to time of the Notes any benefit or any legal or equitable
right, remedy or claim under this Agreement.
17.3 No Waiver; Remedies Cumulative. No failure or delay on the part of
any party hereto or any Holder in exercising any right, power or privilege
hereunder or under the Notes and no course of dealing between Holdings, PlayCore
Wisconsin and any other party or Holder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under the Notes preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein and in the Notes are cumulative and not
exclusive of any rights or remedies which the parties or Holders would otherwise
have. No notice to or demand on Holdings or PlayCore Wisconsin in any case shall
entitle Holdings or PlayCore Wisconsin to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
other parties hereto or the Holders to any other or further action in any
circumstances without notice or demand.
17.4 Amendments, Waivers and Consents. This Agreement may be amended,
and the observance of any term hereof may be waived (either retroactively or
prospectively) with (and only with) the written consent of Holdings, PlayCore
Wisconsin and the Required Holders; provided, however, that no such amendment or
waiver may, without the prior written consent of the Holder of each Note then
Outstanding and affected thereby (i) subject any Holder to any additional
obligation, (ii) reduce the principal of (or premium, if any) or rate of
interest on, any Note, (iii) postpone the date fixed for any payment of
principal of (or premium, if any) or interest on, any Note or Exchange Note,
(iv) change the ranking or priority of the Notes or the percentage of the
aggregate principal amount of the Notes the Holders of which shall be required
to consent or take any other action under this Section 17.4 or any other
provision of this Agreement,
-96-
103
(v) modify or change any provision of this Agreement or the related definitions
affecting the subordination or ranking of the Notes or any Note Guarantee in a
manner which adversely affects the Holders, or (vi) release any Guarantor that
is a Significant Subsidiary from any of its obligations under its Note Guarantee
or this Agreement otherwise than in accordance with the terms of this Agreement;
provided, further, that no such amendment or waiver may, without the prior
written consent of GS Mezzanine (so long as GS Mezzanine owns any Notes or
Exchange Notes), amend or waive the provisions of Sections 7.4 or 7.8. No
amendment or waiver of this Agreement will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or thereby impair any right consequent thereon. As used herein, the term this
"Agreement" and references thereto shall mean this Agreement as it may from time
to time be amended, supplemented or modified.
17.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. Each counterpart may consist of a number of copies hereof,
each signed by less than all, but together signed by all, of the parties hereto.
17.6 Reproduction. This Agreement, the other Transaction Documents and
all documents relating, hereto and thereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Purchasers at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished in connection herewith, may be reproduced by
any photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and any original document so reproduced may be destroyed.
Holdings and PlayCore Wisconsin each agree and stipulate that, to the extent
permitted by Applicable Law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. This Section 17.6 shall not prohibit Holdings, PlayCore
Wisconsin, any other party hereto or any holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
17.7 Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
17.8 Survival of Covenants and Indemnities. All covenants and
indemnities set forth herein shall survive the execution and delivery of this
Agreement, the issuance of the Notes and, except as otherwise expressly provided
herein with respect to covenants, the payment of principal of the Notes and any
other obligations hereunder.
-97-
104
17.9 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.
(b) If any action, proceeding or litigation shall be brought by any
Purchaser or any holder of a Note in order to enforce any right or remedy under
this Agreement or any of the Notes, Holdings and PlayCore Wisconsin hereby
consent and will submit, and will cause each of their respective Subsidiaries to
submit, to the jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of New
York on the date of this Agreement. Holdings and PlayCore Wisconsin each hereby
irrevocably waive any objection, including, but not limited to, any objection to
the laying of venue or based on the grounds of forum non conveniens, which they
may now or hereafter have to the bringing of any such action, proceeding or
litigation in such jurisdiction. Holdings and PlayCore Wisconsin each further
agree that they shall not, and shall cause their respective Subsidiaries not to,
bring any action, proceeding or litigation arising out of this Agreement or the
Notes in any state or federal court other than any state or federal court of
competent jurisdiction sitting within the area comprising the Southern District
of New York on the date of this Agreement.
(c) Holdings and PlayCore Wisconsin irrevocably consent to the service
of process of any of the aforementioned courts in any such action, proceeding or
litigation by the mailing of copies thereof by registered or certified mail,
postage prepaid, to Holdings at its said address, such service to become
effective thirty (30) days after such mailing.
(d) Nothing herein shall affect the right of any holder of a Note to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Holdings or PlayCore Wisconsin in any
other jurisdiction. If service of process is made on a designated agent it
should be made by either (i) personal delivery or (ii) mailing a copy of summons
and complaint to the agent via registered or certified mail, return receipt
requested.
(e) HOLDINGS AND PLAYCORE WISCONSIN HEREBY WAIVE ANY AND ALL RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OF THE NOTES.
17.10 Severability. If any provision of this Agreement is determined to
be illegal, invalid or unenforceable, such provision shall be fully severable to
the extent of such illegality, invalidity or unenforceability and the remaining
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions.
-98-
105
17.11 Entirety. This Agreement together with the other Financing
Documents represents the entire agreement of the parties hereto and thereto, and
supersedes all prior agreements and understandings, oral or written, if any,
relating to the Financing Documents or the transactions contemplated herein or
therein, except for the provisions of the Commitment Letter, dated as of January
14, 2000, as extended as of February 28, 2000, March 31, 2000 and April 6, 2000,
from GS Mezzanine to Chartwell which shall terminate in accordance with its
terms, upon consummation of the Transactions.
17.12 Survival of Representations and Warranties. All representations
and warranties made by Holdings or PlayCore Wisconsin herein shall survive the
execution and delivery of this Agreement, the issuance and transfer of all or
any portion of the Notes, and the payment of principal of the Notes and any
other obligations hereunder issuance and delivery of the Notes hereunder,
regardless of any investigation made at any time by or on behalf of the
Purchasers or any other holder that is Affiliated with the Purchasers. All
statements contained in any certificate delivered by or on behalf of Holdings
pursuant to this Agreement shall be deemed representations and warranties of
Holdings under this Agreement.
17.13 Construction. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person, whether or not expressly specified in such provision.
17.14 Intent to Limit Interest to Maximum. In no event shall the
interest rate payable on the Notes under this Agreement, plus any other amounts
paid by PlayCore Wisconsin to the Holders in connection therewith, exceed the
highest rate permissible under law that a court of competent jurisdiction shall,
in the final determination, deem applicable. PlayCore Wisconsin and the
Purchasers, in executing and delivering this Agreement, intend legally to agree
upon the rate or rates of interest and the manner of payment stated within it;
provided, however, that, anything contained herein to the contrary
notwithstanding, if said rate or rates of interest or manner of payment exceed
the maximum allowable under applicable law, then, ipso facto as of the date of
this Agreement, PlayCore Wisconsin is and shall be liable only for the payment
of such maximum as allowed by law, and payment received from PlayCore Wisconsin
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of any Notes then outstanding to the extent of such
excess, or, if such excess exceeds the then outstanding principal balance, such
excess shall be first set-off against any other amounts then due and owing by
PlayCore Wisconsin and refunded to PlayCore Wisconsin.
17.15 Incorporation. All Exhibits and Schedules attached hereto are
incorporated as part of this Agreement as if fully set forth herein.
17.16 Acknowledgement by Parent. By executing this Agreement, Parent
acknowledges and agrees that, effective upon consummation of the Merger, it
shall succeed to all
-99-
106
of the liabilities obligations, covenants and agreements of Holdings hereunder
(including, without limitation, under the Note Guarantee set forth in Section
15) and under each other Financing Document, whereupon Parent shall be
substituted for Holdings under this Agreement and each other Financing Document,
as it had been named as Holdings herein and therein.
-100-
107
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
PLAYCORE WISCONSIN, INC.
By: /s/ XXXXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
PLAYCORE, INC.
By: /s/ XXXXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
HEARTLAND INDUSTRIES, INC. (DE)
By: /s/ XXXXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Secretary
PLAYCORE HOLDINGS, INC.
By: /s/ XXXXXXX XXXXX
------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
108
GS MEZZANINE PARTNERS II, L.P.
By: GS Mezzanine Advisors II, L.L.C.,
its general partner
By: /s/ XXXX X. XXXXXX
------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
GS MEZZANINE PARTNERS II OFFSHORE, L.P.
By: GS Mezzanine Advisors II, L.L.C.
its general partner
By: /s/ XXXX X. XXXXXX
------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
109
EXHIBIT A
FORM OF FACE OF NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS. THE HOLDER OF THIS NOTE IS SUBJECT TO THE TERMS OF THE PURCHASE
AGREEMENT, DATED AS OF APRIL 11, 2000 (AS AMENDED, SUPPLEMENTED OR MODIFIED FROM
TIME TO TIME, THE "AGREEMENT"), AMONG PLAYCORE, INC., PLAYCORE WISCONSIN, INC.,
PLAYCORE HOLDINGS, INC., THE SUBSIDIARIES LISTED ON THE SIGNATURE PAGES THEREOF,
GS MEZZANINE PARTNERS II, L.P., AND GS MEZZANINE PARTNERS OFFSHORE II, L.P.
The following information is provided pursuant to Treas. Reg. Section 1.1275-3:
THIS DEBT INSTRUMENT IS ISSUED AT THE ORIGINAL ISSUE DISCOUNT. __________
(TELEPHONE NO.: (000) 000-0000), AS A REPRESENTATIVE OF THE ISSUER, WILL MAKE
AVAILABLE ON REQUEST TO HOLDER(S) OF THIS DEBT INSTRUMENT THE FOLLOWING
INFORMATION: ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND
YIELD TO MATURITY.
18% SENIOR SUBORDINATED NOTES DUE 2008
No. __________ $________
PlayCore Wisconsin, Inc., a corporation duly organized and existing
under the laws of Wisconsin (herein called "PlayCore Wisconsin", which term
includes any successor Person under the Agreement referred to below), for value
received, hereby promises to pay to __________________, or registered assigns,
the original principal sum of _____________________ Dollars plus Capitalized
Interest (as hereinafter defined) then outstanding on May 31, 2008 (the "Stated
Maturity"), and to pay interest on such original principal sum plus Capitalized
Interest from _________, 2000* or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually in arrears on
November 30 and May 31 in each year commencing with __________** (each, an
"Interest Payment Date") at the rate of 18% per annum, until the principal
hereof is paid; provided,
--------------------------
* Insert original issue date.
** Insert first Interest Payment Date after original issue date.
-1-
110
however, that (to the extent that the payment of such interest shall be legally
enforceable) following the occurrence of a default in the payment when due of
interest on (including any Special Interest), principal of, or premium, if any,
on, this Note or an Event of Default under the Agreement, this Note shall bear
interest at the rate of 20% per annum for so long as such Event of Default shall
be continuing, and such interest shall be payable on demand. All interest
payable with respect to this Note shall be paid in cash; provided that on any
Interest Payment Date on or prior to May 31, 2004 (each, an "Interest Accrual
Date"), to the extent interest payable on this Note for the period ending on
such Interest Accrual Date exceeds the rate of 14% per annum, such interest in
excess of 14% per annum shall be capitalized as principal on each Interest
Accrual Date and thereby added to the principal amount of this Note. Such
interest capitalized as principal and thereby added to the principal amount of
this Note shall be referred to as "Capitalized Interest."
In the event that (a) a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), registering this Note for resale
(a "Resale Registration Statement") shall not have been filed with the
Securities and Exchange Commission (the "Commission") or a registration
statement under the Securities Act (the "Exchange Offer Registration Statement")
registering a note substantially identical to this Note (an "Exchange Note")
pursuant to an exchange offer (the "Exchange Offer") upon the terms and
conditions set forth in the Exchange and Registration Rights Agreement, dated
__________ __, 2000 (the "Exchange and Registration Rights Agreement"), among
PlayCore Wisconsin, PlayCore Inc., PlayCore Holdings, Inc., the Subsidiaries
parties thereto and GS Mezzanine Partners II, L.P. and GS Mezzanine Partners II
Offshore, L.P. (collectively, the "Purchasers") shall not have been filed with
the Commission, in each case by the date which is 90 days after the date on
which a written request therefore by the Purchasers in accordance with the terms
of the Exchange and Registration Rights Agreement (the "Request Date"), (b) the
Resale Registration Statement has not become or been declared effective by the
date which is 150 days after the Request Date or the Exchange Offer Registration
Statement has not been declared effective by the date which is 180 days after
the Request Date, (c) the Exchange Offer has not been consummated within 45
business days after the initial effective date of the Exchange Offer
Registration Statement (if the Exchange Offer is then required to be made) or
(d) any Resale Registration Statement or Exchange Offer Registration Statement
required by Section 2(a) of the Exchange and Registration Rights Agreement is
filed and declared effective but shall thereafter cease to be effective or
usable for transfers of Notes during the periods referred to in such Section
2(a) without being succeeded immediately by an additional registration statement
filed and declared effective (each such event referred to in clauses (a) through
(d), a "Registration Default"), then PlayCore Wisconsin shall pay, in addition
to the interest provided for above, cash interest on the principal amount of
this Note ("Special Interest") to the Holder hereof in an amount equal to 0.5%
per annum, which amount shall increase to 1.0% per annum after the first 120-day
period following the occurrence of the first Registration Default, for the
period from and including the date of occurrence of the first Registration
Default until such time as no Registration Default is in effect (after which
such Special Interest shall cease to be payable). Accrued Special Interest shall
be paid semi-annually on the Interest Payment Dates; and the amount of accrued
Special Interest shall be determined on the basis of the number of days actually
elapsed. Upon the issuance of an Exchange Note in exchange for this Note, any
accrued and unpaid interest (including Special
-2-
111
Interest) on this Note shall cease to be payable to the Holder hereof but such
accrued and unpaid interest (including Special Interest) shall be payable on the
next Interest Payment Date for such Exchange Note to the Holder thereof on the
related Regular Record Date. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Agreement, be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the "Regular Record
Date" for such interest, which shall be May 15 or November 15, as applicable
(whether or not a Business Day), immediately preceding such Interest Payment
Date. Notwithstanding the foregoing, if this Note is issued after a Regular
Record Date and prior to an Interest Payment Date, the record date for such
Interest Payment Date shall be the original issue date.
Payment of the principal of (and premium, if any) and any such
interest on this Note will be made at the principal place of business of
PlayCore Wisconsin, or as provided in Section 11.11 of the Agreement, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of PlayCore Wisconsin payment of interest and Special Interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, PlayCore Wisconsin has caused this instrument to
be duly executed as of the date first above written.
PLAYCORE WISCONSIN, INC.
By:
------------------------
Name:
Title:
-3-
112
FORM OF REVERSE OF NOTE
This Note is one of a duly authorized issue of securities of PlayCore
Wisconsin designated as its 18% Senior Subordinated Notes Due 2008 (herein,
together with all notes issued in exchange or replacement therefor, called the
"Notes"), limited in aggregate original principal amount (exclusive of
Capitalized Interest) to $30,000,000, issued and to be issued pursuant to the
Purchase Agreement, dated as of April 13, 2000 (herein, as amended, supplemented
or modified from time to time, called the "Agreement"), among PlayCore
Wisconsin, PlayCore Inc., a Delaware corporation (prior to the effectiveness of
the Merger, "Holdings"), PlayCore Holdings, Inc., a Delaware corporation
("Parent", and upon the effectiveness of the Merger, "Parent" or "Holdings"),
the Subsidiaries parties thereto and the Purchasers, to which Agreement
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of PlayCore Wisconsin and the
Holders of the Notes and of the terms upon which the Notes are, and are to be,
issued and delivered.
The Notes are subject to the redemption, at the option of PlayCore
Wisconsin, upon not less than 30 nor more than 60 days' notice by mail, as
follows:
(a) at any one time prior to May 31, 2003, PlayCore Wisconsin may
redeem up to 35% of the aggregate principal amount of the Notes then
Outstanding, from proceeds of the initial Equity Offering, at a Redemption Price
equal to 114.00% of the principal amount (excluding Capitalized Interest) of
Notes to be so redeemed; provided that at least 65% of the aggregate principal
amount of Notes Outstanding immediately prior to such prepayment, remain
Outstanding after giving effect to any such redemption; and
(b) at any time on or after May 31, 2003, PlayCore Wisconsin may
redeem the Notes then Outstanding, in whole or in part, at the following
Redemption Prices (expressed as percentages of the principal amount (excluding
Capitalized Interest) of Notes to be so redeemed) during each 12-month period
beginning May 31 of the years indicated:
Year Redemption Price
---- ----------------
2003 107.00%
2004 103.50%
2005 101.75%
2006 and thereafter 100.0000%
together in the case of any such redemption with Capitalized Interest, accrued
interest and any Special Interest to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Notes, or one or more
-4-
113
Predecessor Notes, of record at the close of business on the relevant Regular
Record Dates referred to on the face hereof, all as provided in the Agreement.
If less than all the Notes are to be redeemed, the Notes shall be
redeemed pro rata from each Holder; provided, however, that any such redemption
shall be for an aggregate principal amount of not less than $2,000,000.
The Notes do not have the benefit of any sinking fund obligations.
In the event of redemption or purchase pursuant to an Asset Sale Offer
of this Note in part only, a new Note or Notes for the unredeemed or unpurchased
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
The indebtedness evidenced by this Note is, to the extent provided in
the Agreement, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Note is issued subject to the
provisions of the Agreement with respect thereto. Each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions.
If an Event of Default under the Agreement shall occur and be
continuing, the principal of all the Notes may be declared due and payable in
the manner and with the effect provided in the Agreement. Upon payment of (i)
the principal so declared due and payable and any overdue installment of
interest, (ii) any overdue principal and premium (if any) payable upon
redemption or repurchase of this Note, and (iii) as provided on the face hereof,
interest on any overdue principal of, and any premium, interest and any Special
Interest on, this Note (in each case to the extent that the payment of such
interest shall be legally enforceable), all of PlayCore Wisconsin's obligations
in respect of the payment of the principal of, interest, any Special Interest
and any premium on, this Note shall terminate.
The Agreement provides that, subject to certain conditions, if (i)
certain Excess Proceeds are available to PlayCore Wisconsin as a result of Asset
Sales or (ii) a Change of Control occurs, PlayCore Wisconsin shall be required
to make an offer to purchase all or a specified portion of the Notes.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
PlayCore Wisconsin and certain rights of the Holders of the Notes under the
Agreement at any time by PlayCore Wisconsin with the consent of the Holders of a
majority in aggregate principal amount of the Notes at the time Outstanding. The
Agreement also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time Outstanding,
on behalf of the Holders of all the Notes, to waive compliance by PlayCore
Wisconsin with certain provisions of the Agreement and certain past defaults
under the Agreement and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
-5-
114
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Security
Register, upon surrender of this Note for registration of transfer at the
principal offices of PlayCore Wisconsin, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to PlayCore Wisconsin duly
executed by, the Holder hereof or its attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. Prior to due presentment for registration of transfer, PlayCore
Wisconsin shall treat the person in whose name this Note is registered as the
owner and holder hereof for the purpose of receiving payment and for all other
purposes, and PlayCore Wisconsin will not be affected by any notice or knowledge
to the contrary.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Agreement and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but PlayCore Wisconsin may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
In no event shall the interest rate payable on this Note under the
Agreement, plus any other amounts paid by PlayCore Wisconsin to the Holders in
connection therewith, exceed the highest rate permissible under law that a court
of competent jurisdiction shall, in the final determination, deem applicable.
PlayCore Wisconsin and the Purchasers, in executing and delivering the
Agreement, intend legally to agree upon the rate or rates of interest and the
manner of payment stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceed the maximum allowable under applicable law, then, ipso
facto as of the date of the Agreement, PlayCore Wisconsin is and shall be liable
only for the payment of such maximum as allowed by law, and payment received
from PlayCore Wisconsin in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of this Note then outstanding
to the extent of such excess, or, if such excess exceeds the then outstanding
principal balance, such excess shall be first set-off against any other amounts
then due and owing by PlayCore Wisconsin and refunded to PlayCore Wisconsin.
Interest on this Note shall be computed on the basis of a 360-day year
of twelve 30-day months.
All terms used in this Note which are defined in the Agreement shall
have the meanings assigned to them in the Agreement.
THE AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
-6-
115
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its entirety by
PlayCore Wisconsin pursuant to Section 7.7 or Section 7.9 of the Agreement,
check the box:
[ ]
If you want to elect to have only a part of the principal amount of
this Note purchased by PlayCore Wisconsin pursuant to Section 7.7 of the
Agreement, state the portion of such amount: $_________
Dated: Your Signature:
---------------------
(Sign exactly as name appears
on the other side of this Note)
-7-
116
EXHIBIT C
FORM OF SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT (this "Supplemental Agreement"), dated as of
_______________, between ____________________ (the "Guarantor"), a direct or
indirect subsidiary of PlayCore Wisconsin, Inc. (or its successor), a Wisconsin
corporation (the "Company"), GS Mezzanine Partners II, L.P., a limited
partnership organized under the laws of Delaware ("GS Mezzanine") and GS
Mezzanine Partners II Offshore, L.P., an exempted limited partnership organized
under the laws of the Cayman Islands ("GS Mezzanine Offshore" and, collectively
with GS Mezzanine, the "Purchasers").
W I T N E S S E T H
WHEREAS, PlayCore Wisconsin, PlayCore, Inc., a Delaware corporation
(prior to the effectiveness of the Merger, "Holdings"), PlayCore Holdings, Inc.,
a Delaware corporation ("Parent", and upon the effectiveness of the Merger,
"Parent" or "Holdings"), the Subsidiaries listed on the signature pages thereof,
and the Purchasers have each heretofore executed and delivered to each other a
Purchase Agreement (as amended, supplemented and modified from time to time, the
"Purchase Agreement"), dated as of April 13, 2000, providing for the issuance
and sale by PlayCore Wisconsin to the Purchasers of an aggregate original
principal amount of up to $30,000,000 of 18% Senior Subordinated Notes Due 2008
(together with all notes issued in exchange or replacement therefor, the
"Notes"); and
WHEREAS, Section 15.2 of the Purchase Agreement provides that under
certain circumstances PlayCore Wisconsin is required to cause the Guarantor to
execute and deliver to the Holders a supplemental agreement pursuant to which
the Guarantor shall unconditionally guarantee all of PlayCore Wisconsin's
obligations under the Notes pursuant to a Note Guarantee on the terms and
conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor covenants and agrees for the equal and ratable benefit of the Holders
of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Purchase Agreement.
2. AGREEMENT TO GUARANTEE; EXCHANGE AND REGISTRATION RIGHTS AGREEMENT.
The Guarantor hereby agrees, jointly and severally with all other Guarantors, to
unconditionally guarantee PlayCore Wisconsin's obligations under the Notes on
the terms and subject to the conditions set forth in Section 14 of the Purchase
Agreement and to be bound by all other applicable provisions of the Purchase
Agreement. The Guarantor further agrees to become a party to the Exchange and
Registration Rights Agreement and to be bound by all provisions thereof.
-1-
117
3. NO RECOURSE AGAINST OTHERS. No director, officer, member, partner,
manager, employee, incorporator or shareholder of the Guarantor, as such, shall
have any liability for any obligations of PlayCore Wisconsin or any Guarantor
under the Notes, the Purchase Agreement or this Supplemental Agreement or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Securities and Exchange
Commission that such a waiver is against public policy.
4. EFFECTIVENESS. This Supplemental Agreement shall be effective upon
execution by the parties hereto.
5. RECITALS. The recitals contained herein shall be taken as the
statements of PlayCore Wisconsin and the Guarantors assume no responsibility for
their correctness.
6. NEW YORK LAW TO GOVERN. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL AGREEMENT.
7. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement.
8. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
[Guarantor]
By:
-----------------------------------------
Name:
Title:
-2-
118
EXHIBIT D
FORM OF NOTATION OF NOTE GUARANTEE
The undersigned have guaranteed this Note on a subordinated basis as
provided in the Agreement.
PLAYCORE, INC.
By:
-----------------------------------------
Name:
Title:
HEARTLAND INDUSTRIES, INC. (DE)
By:
-----------------------------------------
Name:
Title:
PLAYCORE HOLDINGS, INC.
By:
-----------------------------------------
Name:
Title:
-1-
119
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
Name and Address Principal Amount of the Notes
of Purchaser to be Purchased
---------------- -----------------------------
GS MEZZANINE PARTNERS II, L.P.
00 Xxxxx Xxxxxx $ 22,989,000
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx
GS MEZZANINE PARTNERS II
OFFSHORE, L.P. $ 7,011,000
c/o GS Mezzanine Partners L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx
-2-
